Fair Value Measurements

12 Months Ended

Dec. 31, 2012

Fair Value Measurements [Abstract]

Fair Value Measurements

(14) Fair Value Measurements

The following tables provide a summary of the financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2012 and 2011 (in thousands):

		Fair Value Measurements at Reporting Date Using
	December 31, 2012	Level 1	Level 2	Level 3
Inventory and other current assets
Available-for-sale securities	$            9,224	$              9,224	-	-
Intangible and other long-term assets, net
Non-qualified deferred compensation assets	$          11,343	$                 825	$            10,518	-
Interest rate swap	$            1,286	-	$              1,286	-
Accounts payable
Non-qualified deferred compensation liabilities	$               125	-	$                 125	-
Contingent consideration	$            9,890	-	-	$              9,890
Other long-term liabilities
Non-qualified deferred compensation liabilities	$          13,515	-	$            13,515	-
	December 31, 2011	Level 1	Level 2	Level 3
Intangible and other long-term assets, net
Non-qualified deferred compensation assets	$          10,597	$                 815	$              9,782	-
Interest rate swap	$            1,904	-	$              1,904	-
Accounts payable
Non-qualified deferred compensation liabilities	$            2,790	-	$              2,790	-
Other long-term liabilities
Non-qualified deferred compensation liabilities	$          12,975	-	$            12,975	-

Available-for-sale securities is comprised of approximately 1.4 million shares of SandRidge common stock that the Company received as partial consideration for its 10% interest in Dynamic Offshore.  The securities are reported at fair value based on the stock’s closing price as reported on the New York Stock Exchange (see note 6). 

The Company’s non-qualified deferred compensation plans allow officers, certain highly compensated employees and non-employee directors to defer receipt of a portion of their compensation and contribute such amounts to one or more hypothetical investment funds (see note 9).  The Company entered into separate trust agreements, subject to general creditors, to segregate assets of each plan and reports the accounts of the trusts in its consolidated financial statements.  These investments are reported at fair value based on unadjusted quoted prices in active markets for identifiable assets and observable inputs for similar assets and liabilities, which represent Levels 1 and 2, respectively, in the fair value hierarchy.

In April 2012, the Company entered into an interest rate swap agreement related to its fixed rate debt maturing in December 2021 for a notional amount of $100 million, whereby the Company is entitled to receive semi-annual interest payments at a fixed rate of 7 1/8% per annum and is obligated to make semi-annual interest payments at a floating rate, adjusted every 90 days, based on LIBOR plus a fixed margin. The swap agreement, scheduled to terminate on December 15, 2021, is designated as a fair value hedge of a portion of the 7 1/8% unsecured senior notes, as the derivative has been tested to be highly effective in offsetting changes in the fair value of the underlying note.  As this derivative is classified as a fair value hedge, the changes in the fair value of the derivative are offset against the changes in the fair value of the underlying note in interest expense, net (see note 15).  The Company previously had an interest rate swap agreement for a notional amount of $150 million related to its fixed rate debt maturing in June 2014 that was designated as a fair value hedge.  In February 2012, the Company sold this interest rate swap to the counterparty for approximately $1.2 million.

Included in current liabilities is$9.9 million of contingent consideration related to Complete’sacquisition of a remedial pumping and cementing company in 2011, and to the acquisition of a wireline and well testing company in 2012.  The fair value of the contingent consideration was determined using a probability-weighted discounted cash flow approach at the acquisition and reporting date.  The approach is based on significant inputs that are not observable in the market, which are referred to as Level 3 inputs.  The fair value is based on the acquired companies reaching specific performance metrics. During the year ended December 31, 2012, the Company recorded additional purchase consideration of approximately $2.0 million related to its acquisition of the wireline and well testing company as certain performance metrics exceeded original projections.  This additional consideration was recorded in general and administrative expenses in the consolidated statements of income.   The following table summarizes the activity recorded using fair value of Level 3 liabilities for the year ended December 31, 2012 (in thousands): 

Beginning balance as of December 31, 2011	$           -
Additions related to acquisitions	10,663
Settlements	(3,000)
Losses included in earnings attributable
to additional consideration	2,227
Beginning balance as of December 31, 2012	9,890

In accordance with authoritative guidance, non-financial assets and non-financial liabilities are remeasured at fair value on a non-recurring basis.   During the year ended December 31, 2011, the Company wrote off approximately $46.1 million of certain long-lived assets to approximate the indicated fair value of the liftboats from the purchasers.  During the year ended December 31, 2010, the Company wrote off approximately $32.0 million of long-lived liftboat components primarily related to the two partially completed liftboats.  The write offs related to liftboats in both 2011 and 2010 are included in discontinued operations in the consolidated statements of income for each respective period. 

The following tables reflects the fair value measurements used in testing the impairment of long-lived assets during the years ended December 31, 2011 and 2010 (in thousands): 

		Fair Value Measurements at Reporting Date Using
	December 31, 2011	(Level 1)	(Level 2)	(Level 3)	Total Losses
Property, plant and equipment, net	$         134,000	$                    -	$                    -	$        134,000	$          (35,762)
Goodwill	-	-	-	-	(10,334)
	December 31, 2010	(Level 1)	(Level 2)	(Level 3)	Total Losses
Property, plant and equipment, net	$                     -	$                    -	$                    -	$                    -	$          (32,004)