FAIR VALUE OF FINANCIAL INSTRUMENTS

3 Months Ended

Mar. 31, 2012

FAIR VALUE OF FINANCIAL INSTRUMENTS

FAIR VALUE OF FINANCIAL INSTRUMENTS

16. FAIR VALUE OF FINANCIAL INSTRUMENTS

        Financial instruments consist primarily of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses, long-term debt, and commodity forward purchase contracts. The carrying amount of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses approximate their fair value because of the nature of such instruments. The fair value of our 9.0 percent senior secured notes is based on quoted market values. Our ABL Revolver is fair valued using comparable recent third party transactions. Our natural gas forward purchase contracts are fair valued with Level 2 inputs based on quoted market values for similar but not identical financial instruments.

        The FASB ASC 820-10 establishes a fair value hierarchy that prioritizes observable and unobservable inputs to valuation techniques used to measure fair value. These levels, in order of highest to lowest priority are described below:

•         Level 1—Quoted prices (unadjusted) in active markets for identical assets or liabilities at the measurement date.

          Level 2—Observable prices that are based on inputs not quoted on active markets, but corroborated by market data.

          Level 3—Prices that are unobservable for the asset or liability and are developed based on the best information available in the circumstances, which might include the company's own data.

        The following is a summary of the carrying amount and estimated fair values of our long-term debt and natural gas forward purchase contracts as of March 31, 2012 and December 31, 2011:

	March 31, 2012				December 31, 2011
(In thousands)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Level 1
Long-term debt:
9.0% senior secured notes due 2017	$	497,563	$	556,250	$	497,464	$	525,315
Level 2
Long-term debt:
ABL Revolver due 2016		29,000		29,000		—		—
Derivative instruments:
Natural gas forward purchase contracts liability		2,084		2,084		721		721