FAIR VALUE MEASUREMENTS

12 Months Ended

Dec. 31, 2011

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS

7.  FAIR VALUE MEASUREMENTS

Derivative Instruments and Hedging Activities

The values of our derivative instruments are derived from pricing models using inputs based upon market information, including contractual terms, market prices and yield curves.  The inputs to the valuation pricing models are observable in the market, and as such are generally classified as Level 2 in the fair value hierarchy.

Restructuring Charges

Accrued restructuring costs were valued using a discounted cash flow model.  Significant assumptions used in determining the amount of the estimated liability for closing a facility are the estimated liability for future lease payments on vacant facilities and the discount rate utilized to determine the present value of the future expected cash flows. If the assumptions regarding early termination and the timing and amounts of sublease payments prove to be inaccurate, we may be required to record additional losses, or conversely, a future gain, in the Consolidated Statements of Operations and Other Comprehensive Income (Loss).

As described in Note 2, “Impairment Losses and Restructuring Charges,” during the year ended December 31, 2011 and 2010, we closed several facilities.  These costs were valued using a discounted cash flow model.  The cash flows consist of the future lease payment obligations required under the lease agreement.  We have assumed that we can sublease our facility in Grand Junction for a portion of the remaining lease term and sell our facility in Laramie, Wyoming based on our knowledge of the respective marketplaces, as well as our historical ability to sublease our facilities in other locations in which we operate.  During 2010, we recorded a reduction of restructuring charges in the Consolidated Statements of Operations of $1,802, or $0.12 per share, to adjust the estimated restructuring liability for our Regina, Saskatchewan facility, due to a sublease proposal.  In 2011, we recorded expense of $1,168, or $0.08 per share, for our Regina facility due to a proposal to buy-out the lease at this facility.  In the future, if we sublease for periods that differ from our assumption or if an actual buy-out of a lease differs from our estimate, we may be required to record a gain or loss in the Consolidated Statements of Operations and Other Comprehensive Income (Loss).  Future cash flows also include estimated property taxes through the remainder of the lease term, which are valued based upon historical tax payments.  Given that the restructuring charges were valued using our internal estimates using a discounted cash flow model, we have classified the accrued restructuring costs as Level 3 in the fair value hierarchy.

Long-Lived Assets

As described in Note 2, “Impairment Losses and Restructuring Charges,” during the year ended December 31, 2011, 2010 and 2009, we recorded impairment losses in our U.S. and Canadian segments, due to the impairment of certain long-lived assets for which the carrying value of those assets is not recoverable based upon our estimated future cash flows.  We periodically, on at least an annual basis, evaluate potential impairments of our long-lived assets.  In our annual evaluation or when we determine that the carrying value of a long-lived asset may not be recoverable, based upon the existence of one or more indicators of impairment, we evaluate the projected undiscounted cash flows related to the assets. If these cash flows are less than the carrying values of the assets, we measure the impairment based on the excess of the carrying value of the long-lived asset over the long-lived asset’s fair value.  Where appropriate we use a probability-weighted approach to determine our future cash flows, based upon our estimate of the likelihood of certain scenarios, primarily whether we expect to sell new business within a current location.  These estimates are consistent with our internal projections and external communications and public disclosures.  The measurement of the fair value of the buildings was based upon our third-party real estate broker’s non-binding estimate of fair value using the observable market information regarding sale prices of comparable assets.  The fair value of these long-lived assets after the impairment charges were $1,606 ($1,384 U.S. and $222 Canada).  Given that the impairment losses were valued using internal estimates of future cash flows or upon non-identical assets using significant unobservable inputs, we have classified the remaining fair value of long-lived assets as Level 3 in the fair value hierarchy.

In 2010, we committed to a plan to sell the buildings and land at our closed facilities in Laramie, Wyoming and Greeley, Colorado.  We received estimates of the selling prices of this real estate, and have reduced the value of the buildings and land to fair value, less costs to sell, or approximately $4,102 at December 31, 2011.  Included in impairment losses during the year ended December 31, 2011 and 2010 was $1,001 and $364, respectively, related to a change in estimated fair value of the buildings in Greeley and Laramie.  The measurement of the fair value of the buildings was based upon our third-party real estate broker’s non-binding estimate of fair value using the observable market information regarding sale prices of comparable assets.  As these inputs to the determination of fair value are based upon non-identical assets and use significant unobservable inputs, we have classified the assets as Level 3 in the fair value hierarchy.

Fair Value Hierarchy

The following tables set forth our assets and liabilities measured at fair value on a recurring basis and a non-recurring basis by level within the fair value hierarchy.  Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

	Assets Measured at Fair Value
	on a Recurring Basis as of December 31, 2011
	Level 1		Level 2		Level 3		Total
Assets:
Foreign exchange contracts	$	—	$	106	$	—	$	106
Total fair value of assets measured on a recurring basis	$	—	$	106	$	—	$	106
Liabilities:
Foreign exchange contracts	$	—	$	616	$	—	$	616
Total fair value of liabilities measured on a recurring basis	$	—	$	616	$	—	$	616

	Assets Measured at Fair Value
	on a Recurring Basis as of December 31, 2010
	Level 1		Level 2		Level 3		Total
Assets:
Foreign exchange contracts	$	—	$	1,078	$	—	$	1,078
Total fair value of assets measured on a recurring basis	$	—	$	1,078	$	—	$	1,078
Liabilities:
Derivative instruments	$	—	$	91	$	—	$	91
Total fair value of liabilities measured on a recurring basis	$	—	$	91	$	—	$	91

	Assets and Liabilities Measured at Fair Value on a
	Non-Recurring Basis During the Year ended December 31, 2011
	Level 1		Level 2		Level 3		Total
Assets:
Assets held for sale	$	—	$	—	$	4,102	$	4,102
Property, plant and equipment, net	—		—		1,606		1,606
Total fair value of assets measured on a non-recurring basis	$	—	$	—	$	5,708	$	5,708
Liabilities:
Accrued restructuring costs	$	—	$	—	$	5,875	$	5,875
Total fair value of liabilities measured on a non-recurring basis	$	—	$	—	$	5,875	$	5,875

	Assets and Liabilities Measured at Fair Value on a
	Non-Recurring Basis During the Year ended December 31, 2010
	Level 1		Level 2		Level 3		Total
Assets:
Assets held for sale	$	—	$	—	$	5,103	$	5,103
Property, plant and equipment, net	—		—		5,407		5,407
Total fair value of assets measured on a non-recurring basis	$	—	$	—	$	10,510	$	10,510
Liabilities:
Accrued restructuring costs	$	—	$	—	$	2,760	$	2,760
Total fair value of liabilities measured on a non-recurring basis	$	—	$	—	$	2,760	$	2,760