FAIR VALUE

6 Months Ended

Jun. 30, 2011

FAIR VALUE

FAIR VALUE

NOTE 18 - FAIR VALUE

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price).  The following hierarchy is used to classify the inputs used to measure fair value:

Level 1 Unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2 Unadjusted quoted prices in active markets for similar assets or liabilities, or unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability.

Level 3 Unobservable inputs for the asset or liability.

The following table provides a summary of assets and liabilities as of June 30, 2011 measured at fair value on a recurring basis:

	Balance as of		Quoted Prices in Active Markets for Identical Assets or Liabilities		Significant Other Observable Inputs		Significant Unobservable Inputs
Description	June 30, 2011		(Level 1)		(Level 2)		(Level 3)
Assets:
Foreign exchange contracts	$	780	$	—	$	780	$	—
Commodity contracts	457		—		457		—
Total assets	$	1,237	$	—	$	1,237	$	—
Liabilities:
Foreign exchange contracts	$	2,655	$	—	$	2,655	$	—
Commodity contracts	45		—		45		—
Contingent consideration	4,023		—		—		4,023
Total liabilities	$	6,723	$	—	$	2,700	$	4,023

The following table provides a summary of assets and liabilities as of December 31, 2010 measured at fair value on a recurring basis:

Description	Balance as of December 31, 2010		Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Foreign exchange contracts	$	633	$	—	$	633	$	—
Liabilities:
Foreign exchange contracts	$	1,956	$	—	$	1,956	$	—
Commodity contracts	1,051		—		1,051		—
Total liabilities	$	3,007	$	—	$	3,007	$	—

The Company’s derivative contracts are valued at fair value using the market approach.  The Company measures the fair value of foreign exchange contracts using Level 2 inputs based on observable spot and forward rates in active markets.  The Company measures the fair value of commodity contracts using Level 2 inputs through observable market transactions in active markets provided by financial institutions.  During the quarter ended June 30, 2011, there were no transfers between Levels 1, 2 or 3.

In connection with the Arc Products acquisition, the Company recorded a contingent consideration fair valued at $3,806 at January 31, 2011 and $4,023 at June 30, 2011, reflecting $217 of non-cash accretion.  The contingent consideration is based upon estimated sales for the five-year period ending December 31, 2015 and will be paid in 2016 based on actual sales during the five-year period.  The fair value of the contingent consideration is considered a Level 3 valuation and is estimated using a probability weighted discounted cash flow analysis.

The fair value of “Cash and cash equivalents,” “Accounts receivable,” “Amounts due banks” and “Trade accounts payable” approximated book value due to the short-term nature of these instruments at both June 30, 2011 and December 31, 2010.  The fair value of long-term debt at June 30, 2011 and December 31, 2010, including the current portion, was approximately $86,196 and $88,120, respectively, which was determined using available market information and methodologies requiring judgment.  The carrying value of this debt at such dates was $83,116 and $86,422, respectively.  Since considerable judgment is required in interpreting market information, the fair value of the debt is not necessarily the amount that could be realized in a current market exchange.