FAIR VALUE MEASUREMENTS

9 Months Ended

Sep. 30, 2013

The Company’s financial instruments consist of cash and cash equivalents, marketable securities, receivables, trade payables, auction rate securities, derivative financial instruments and long-term debt. The estimated fair value of cash equivalents, receivables, and trade payables approximate their carrying value due to the short maturity of these instruments and are deemed to be Level 2 in the fair value hierarchy. The fair value of the Company’s unsecured senior notes (due 2020 and 2021) at September 30, 2013 were $780.9 million and $573.1 million, respectively, and at December 31, 2012 were $816.0 million and $623.5 million, respectively, based on quoted market prices or available market data. The senior unsecured notes fair value is Level 2 in the fair value hierarchy.

The Company's assets measured at fair value on a recurring basis at September 30, 2013 and December 31, 2012 were as follows (in thousands):



September 30, 2013
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance at September 30, 2013
Assets:
Auction rate securities (i)	$	—	$	—	$	4,352	$	4,352
Derivative instruments (ii)	$	—	$	60	$	—	$	60
Marketable securities (iii)	$	11,787	$	—	$	—	$	11,787
Liabilities:
Derivative instruments (ii)	$	—	$	239	$	—	$	239



December 31, 2012
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance at December 31, 2012
Assets:
Auction rate securities (i)	$	—	$	—	$	4,354	$	4,354
Derivative instruments (ii)	$	—	$	165	$	—	$	165
Marketable securities (iii)	$	11,778	$	—	$	—	$	11,778
Liabilities:
Derivative instruments (ii)	$	—	$	1,242	$	—	$	1,242

________________________________________________

(i)

The auction rate securities are classified as available-for-sale and the fair value of these securities was estimated utilizing a probability discounted cash flow analysis. As of September 30, 2013, all of the Company's auction rate securities continue to have AAA underlying ratings. The Company attributes the $0.3 million decline in the fair value of the securities from the original cost basis to external liquidity issues rather than credit issues. The Company assessed the decline in value to be temporary because it does not intend to sell and it is more likely than not that the Company will not have to sell the securities before their maturity. During the nine months ended September 30, 2013 and 2012, the Company recorded an unrealized pre-tax loss of less than $0.1 million and a pre-tax gain of $0.1 million, respectively, on its auction rate securities.


(ii)	The fair value of derivatives is recorded based on the present value of cash flows using a crude oil forward rate curve.


(iii)	The fair value of marketable securities is recorded based on quoted market prices and changes in fair value were included in other comprehensive income.

The following table presents the changes in the Company’s auction rate securities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the three and nine months ended September 30, 2013 and 2012 (in thousands):



	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2013		2012		2013			2012
Balance at beginning of period	$	4,352	$	4,326	$	4,354		$	4,245
Unrealized (loss) gain included in other comprehensive income	—		—		(2		)	81
Balance at September 30,	$	4,352	$	4,326	$	4,352		$	4,326

Derivative Financial Instruments

The Company acquired several commodity derivatives with the Safety-Kleen acquisition on December 28, 2012. The Company uses commodity derivatives to manage against significant fluctuations in oil and oil derivative commodity prices and indices, specifically the ICIS-LOR rate and 6-oil index. All commodity derivatives are comprised of cashless collar contracts related to crude oil prices, pursuant to which the Company sells a call to a bank and then purchases a put from the same bank. The derivative instruments are not designated as hedges and expire in 2013 and 2014. The following table presents the fair value for those assets and liabilities measured at fair value as of September 30, 2013 (fair value amounts in thousands):



Financial Institution	Trade Date	Start Date	End Date	Barrels of oil per Month	Commodity	Floor		Cap		Upfront Costs	Fair Value as of September 30, 2013
Bank of America	2/7/2013	4/1/2014	4/30/2014	148,810	Brent	$	75.00	$	134.70	—	$	24
Bank of America	4/2/2013	6/1/2014	6/30/2014	148,810	Brent	75.00		130.00		—	21
Bank of America	9/11/2013	11/1/2014	11/28/2014	148,810	Brent	75.00		124.00		—	15
Total derivative instrument asset											$	60

JP Morgan	9/11/2012	11/1/2013	11/30/2013	148,810	Brent	$	75.00	$	137.50	—	$	3
JP Morgan	12/7/2012	2/1/2014	2/28/2014	148,810	Brent	75.00		124.70		—	33
JP Morgan	3/7/2013	5/1/2014	5/31/2014	148,810	Brent	75.00		125.75		—	10
JP Morgan	5/6/2013	7/1/2014	7/31/2014	148,810	Brent	75.00		122.00		—	37
JP Morgan	7/8/2013	9/1/2014	9/30/2014	148,810	Brent	75.00		120.75		—	39
Bank of America	8/3/2012	10/1/2013	10/31/2013	148,810	Brent	75.00		130.00		—	—
Bank of America	10/4/2012	12/1/2013	12/31/2013	148,810	Brent	75.00		127.50		—	14
Bank of America	11/9/2012	1/1/2014	1/31/2014	148,810	Brent	75.00		130.00		—	13
Bank of America	1/8/2013	3/1/2014	3/31/2014	148,810	Brent	75.00		129.00		—	10
Bank of America	6/10/2013	8/1/2014	8/29/2014	148,810	Brent	75.00		120.65		—	66
Bank of America	8/13/2013	10/1/2014	10/31/2014	148,810	Brent	75.00		122.60		—	14
Total derivative instrument liability											$	239

Total derivative instrument asset and total derivative instrument liability as noted in the table above are included in the consolidated balance sheets as a component of prepaid expenses and other current assets and accrued expenses, respectively.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References

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Reference 3: http://www.xbrl.org/2003/role/presentationRef

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