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Financial Instruments
 3 Months Ended
Mar. 31, 2012
Financial Instruments [Abstract]  
Financial Instruments

Note 15—Financial instruments:

The following table summarizes the valuation of our marketable securities and financial instruments recorded on a fair value basis as of:

 

     Fair Value Measurements  
     Total     Quoted
Prices in
Active
Markets
(Level 1)		     Significant
Other
Observable
Inputs
(Level 2)		      Significant
Unobservable
Inputs
(Level 3) 		 
     (In millions)  

December 31, 2011:

          

Marketable securities:

          

Current

    $ 22.5      $ 20.9      $ 1.6       $ —     

Noncurrent

      354.1        100.3        3.8         250.0   

Currency forward contracts

      (.8 )      (.8 )      —           —     

March 31, 2012:

          

Marketable securities:

          

Current

    $ .9      $ —        $ .9       $ —     

Noncurrent

      343.4        88.4        5.0         250.0   

Currency forward contracts

      .5        .5        —           —     

See Note 3 for information on how we determine fair value of our noncurrent marketable securities.

We periodically use currency forward contracts to manage a nominal portion of currency exchange rate market risk associated with trade receivables, or similar exchange rate risk associated with future sales, denominated in a currency other than the holder's functional currency. These contracts generally relate to our Chemicals and Component Products operations. We have not entered into these contracts for trading or speculative purposes in the past, nor do we currently anticipate entering into such contracts for trading or speculative purposes in the future. Some of the currency forward contracts we enter into meet the criteria for hedge accounting under GAAP and are designated as cash flow hedges. For these currency forward contracts, gains and losses representing the effective portion of our hedges are deferred as a component of accumulated other comprehensive income, and are subsequently recognized in earnings at the time the hedged item affects earnings. For the currency forward contracts we enter into which do not meet the criteria for hedge accounting, we mark-to-market the estimated fair value of such contracts at each balance sheet date, with any resulting gain or loss recognized in income currently as part of net currency transactions. The fair value of the currency forward contracts is determined using Level 1 inputs based on the currency spot forward rates quoted by banks or currency dealers.

At March 31, 2012, our Chemicals Segment had currency forward contracts to exchange an aggregate of $36 million for an equivalent value of Canadian dollars at exchange rates ranging from Cdn. $1.0 to Cdn. $1.03 per U.S. dollar. These contracts with Wachovia Bank, National Association, mature from April 2012 through December 2012 at a rate of $4.0 million per month, subject to early redemption provisions at our option. The estimated fair value of our currency forward contracts at March 31, 2012 was a $.2 million net asset, of which $.3 million is recognized as part of accounts and other receivables and $.1 million is recognized as part of accounts payable and accrued liabilities. There is also a corresponding $.2 million currency transaction gain recognized in our Condensed Consolidated Statement of Income. Our Chemicals Segment is not currently using hedge accounting for our outstanding currency forward contracts at March 31, 2012, and it did not use hedge accounting for any of such contracts it previously held in 2011.

At March 31, 2012, our Component Products Segment held a series of contracts to exchange an aggregate of U.S. $13.3 million for an equivalent value of Canadian dollars at exchange rates ranging from Cdn. $1.03 to Cdn. $0.99. per U.S. dollar. These contracts qualified for hedge accounting and mature through December 2012. The exchange rate was Cdn. $1.00 per U.S. dollar at March 31, 2012. The estimated fair value of the contracts based on quoted market prices was an asset of approximately $.3 million at March 31, 2012.

 

The following table presents the financial instruments that are not carried at fair value but which require fair value disclosure:

 

     December 31, 2011      March 31,2012  
     Carrying
amount		      Fair
value		      Carrying
amount		      Fair
value		  
     (In millions)  

Cash, cash equivalents and restricted cash equivalents

    $ 109.3       $ 109.3       $ 73.1       $ 73.1   

Note receivable from Contran

      11.2         11.2         11.2         11.2   

Long-term debt (excluding capitalized leases):

            

Publicly-traded fixed rate debt - KII Senior Secured Notes

    $ 360.6       $ 362.6       $ 371.0       $ 375.6   

Snake River Sugar Company fixed rate loans

      250.0         250.0         250.0         250.0   

Kronos variable rate bank credit facility

      —           —           106.4         106.4   

WCS fixed rate debt

      82.8         82.8         82.5         82.5   

CompX variable rate bank credit facility

      2.0         2.0         2.0         2.0   

CompX variable rate promissory note

      22.2         22.2         21.2         21.2   

NL variable rate promissory note

      9.0         9.0         9.0         9.0   

Noncontrolling interest in:

            

Kronos common stock

    $ 240.2       $ 409.4       $ 265.9       $ 566.0   

NL common stock

      84.6         107.3         83.5         123.3   

CompX common stock

      11.0         23.9         11.1         22.6   

Valhi stockholders' equity

    $ 657.2       $ 6,835.3       $ 742.1       $ 5,996.6   

The fair value of our publicly-traded marketable securities, noncontrolling interest in NL, Kronos and CompX and our common stockholders' equity are all based upon quoted market prices, Level 1 inputs at each balance sheet date. The fair value of our KII Senior Secured 6.5% Notes are also based on quoted market prices at each balance sheet date; however, these quoted market prices represent Level 2 inputs because the markets in which the Notes trade are not active. At December 31, 2011 and March 31, 2012, the estimated market price of the 6.5% Notes was approximately €1,004 and €1,011, respectively, per €1,000 principal amount. The fair value of our fixed-rate nonrecourse loans from Snake River Sugar Company is based upon the $250 million redemption price of our investment in Amalgamated, which collateralizes the nonrecourse loans (this is a Level 3 input). Fair values of the variable interest rate note receivable and variable interest debt and other fixed-rate debt are deemed to approximate book value. Due to their near-term maturities, the carrying amounts of accounts receivable and accounts payable are considered equivalent to fair value. See Notes 4 and 7.