Fair Value Measurement

6 Months Ended

Jun. 30, 2013

Fair Value Measurement

Fair Value Measurement

15.  Fair Value Measurement

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.  The fair value hierarchy distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs).  The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3).  The three levels of the fair value hierarchy are described below:

· Level 1 — Quoted prices (unadjusted) in active markets for identical assets or liabilities;

· Level 2 — Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and

· Level 3 — Unobservable inputs that reflect the reporting entity’s own assumptions.

The following financial instrument assets (liabilities) are presented below at carrying amount, fair value, and classification within the fair value hierarchy (refer to Notes 7 and 10 for details relating to the derivative instruments and borrowing arrangements).  The only financial instruments measured at fair value on a recurring basis are derivative instruments and the acquisition earn-out liability:

	June 30, 2013
	Carrying			Fair Value
(Dollars in thousands)	Amount			Total			Level 1		Level 2			Level 3
Derivative assets	$	1,883		$	1,883		$	—	$	1,883		$	—
Derivative liabilities	(350		)	(350		)	—		(350		)	—
Acquisition earn-out liability	(1,546		)	(1,546		)	—		(1,546		)	—
U.S. credit facility	(45,700		)	(45,700		)	—		(45,700		)	—
Japanese term loan	(10,193		)	(10,193		)	—		(10,193		)	—
China credit facility	(61		)	(61		)	—		(61		)	—
Other loans	(156		)	(156		)	—		(156		)	—

	December 31, 2012
	Carrying			Fair Value
(Dollars in thousands)	Amount			Total			Level 1		Level 2			Level 3
Derivative assets	$	1,120		$	1,120		$	—	$	1,120		$	—
Derivative liabilities	(646		)	(646		)	—		(646		)	—
Acquisition earn-out liability	(1,300		)	(1,300		)	—		(1,300		)	—
U.S. credit facility	(44,250		)	(44,250		)	—		(44,250		)	—
Japanese working capital loan	(18,611		)	(18,611		)	—		(18,611		)	—
Japanese term loan	(954		)	(954		)	—		(954		)	—
Other loans	(158		)	(158		)	—		(158		)	—

Cash and cash equivalents, accounts receivable, and accounts payable included in the condensed consolidated balance sheets approximate fair value and are excluded from the table above.  The recorded debt amounts are primarily based of the prime rate, LIBOR, or Fed Funds rate and, accordingly, the carrying value of these obligations equals fair value.  Fair value for the acquisition earn-out liability is based upon Level 2 inputs which are periodically re-evaluated for changes in future projections and the discount rate. This liability is recorded in accrued pension and other liabilities within the condensed consolidated balance sheets.

Assets and Liabilities Reported at Fair Value on a Nonrecurring Basis:

As a result of the Company’s restructuring plan, as discussed in Note 1, long-lived assets with a carrying amount of $4.7 million were written down to their fair value of $0.7 million at December 31, 2012.  As a result, the Company recorded a charge of $4.0 million which was included in restructuring charges for the year ended December 31, 2012 within the Company’s consolidated statement of comprehensive income. These long-lived assets were valued using Level 3 inputs.