XML 50 R19.htm IDEA: XBRL DOCUMENT v2.4.0.6
Derivative Financial Instruments and Fair Value Measurements
 3 Months Ended
Mar. 31, 2012
Derivative Financial Instruments and Fair Value Measurements [Abstract]  
Derivative Financial Instruments and Fair Value Measurements
(12) Derivative Financial Instruments and Fair Value Measurements

We are exposed to various risks relating to our ongoing business operations. Among these risks are foreign currency exchange rate risk and interest rate risk, which are managed through the use of derivative instruments. In certain circumstances, we enter into foreign currency forward exchange contracts (“forward contracts”) to reduce the effects of fluctuating foreign currency exchange rates on our cash flows denominated in foreign currencies. Our exposure to market risk for changes in interest rates relates primarily to our Long-Term Debt obligations. We have historically managed interest rate risk through the use of a combination of fixed and variable rate borrowings and interest rate swap agreements. In accordance with current accounting guidance on derivative instruments and hedging activities, we record all of our derivative instruments as either an asset or liability measured at their fair value.

The €300.0 ($400.2) Notes and the €200.0 ($266.6) Notes were designated as economic hedges of our net investment in our foreign subsidiaries with a Euro functional currency as of March 31, 2012. For derivatives designated as an economic hedge of the foreign currency exposure of a net investment in a foreign operation, the gain or loss associated with foreign currency translation is recorded as a component of Accumulated Other Comprehensive Income, net of taxes. As of March 31, 2012 and December 31, 2011, we had a $23.1 and $11.4, respectively, unrealized loss included in Accumulated Other Comprehensive Income, net of taxes, as the net investment hedge was deemed effective.

Our forward contracts are not designated as hedges. Consequently, any gain or loss resulting from the change in fair value is recognized in the current period earnings. These gains or losses are offset by the exposure related to receivables and payables with our foreign subsidiaries and to interest due on our Euro-denominated notes, which is paid annually in June. We recorded a gain in Interest and Other Expenses of $0.7 for the quarter ended March 31, 2012 and an insignificant gain for the quarter ended March 31, 2011, associated with our forward contracts, which offset the losses recorded for the items noted above.
 
The fair value measurements of those items recorded in our Consolidated Balance Sheets as of March 31, 2012 and December 31, 2011 were as follows:
 
        
Fair Value Measurements Using
 
　
 
March 31, 2012
   
Quoted Prices in Active Markets for Identical Assets
(Level 1)
   
Significant Other Observable Inputs
 (Level 2)
   
Significant Unobservable Inputs
(Level 3)
 
Assets
                   
Available-for-sale securities
 
$
0.4
   
$
0.4
   
$
-
   
$
-
 
Foreign currency forward contracts
   
0.6
     
-
     
0.6
     
-
 
Deferred compensation plan assets
   
52.0
     
52.0
     
-
     
-
 
   
$ 
53.0
    $ 
52.4
    $ 
0.6
   
$ 
-
 

Liabilities
            
Foreign currency forward contracts
 $0.1  $-  $0.1  $- 
   $0.1  $-  $0.1  $- 


        
Fair Value Measurements Using
 
　
 
December 31, 2011
   
Quoted Prices in Active Markets for Identical Assets
(Level 1)
   
Significant Other Observable Inputs
 (Level 2)
   
Significant Unobservable Inputs
(Level 3)
 
Assets 
                               
Available-for-sale securities 
 
$
0.4
   
$
0.4
   
$
-
   
$
-
 
Deferred compensation plan assets
   
45.2
     
45.2
     
-
     
-
 
   
$
45.6
   
$
45.6
   
$
-
   
$
-
 
                                 
Liabilities
                               
Foreign currency forward contracts
 
$
0.3
   
$
-
   
$
0.3
   
$
-
 
   
$
0.3
   
$
-
   
$
0.3
   
$
-
 

The carrying value of Long-Term Debt approximates fair value, except for the Euro-denominated notes. The fair value of the Euro-denominated notes was $676.6 and $654.9 as of March 31, 2012 and December 31, 2011, respectively, compared to a carrying value of $666.8 and $647.6, respectively.