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Fair Value Measurements
 6 Months Ended
Jun. 30, 2011
Fair Value Measurements  
Fair Value Measurements

NOTE 5 — FAIR VALUE MEASUREMENTS

Marketable Equity Securities

The Company holds marketable equity securities and interest rate swaps that are measured at fair value on each reporting date.

The marketable equity securities are measured at fair value using quoted prices in active markets. Due to the fact that the inputs used to measure the marketable equity securities at fair value are observable, the Company has categorized the fair value measurements of the securities as Level 1 in accordance with ASC 820-10-35. The cost, unrealized holding gains or losses, and fair value of the Company's investments at June 30, 2011 and December 31, 2010 are as follows:

 

(In thousands)    June 30, 2011      December 31, 2010  
     

Cost

     

Gross
Unrealized

Losses

     

Gross
Unrealized

Gains

     

Fair

Value

     

Cost

     

Gross
Unrealized

Losses

     

Gross
Unrealized

Gains

     

Fair

Value

  

Investments

                        

Available-for-sale

    $ 12,614       $ —       $ 79,928       $ 92,542       $ 12,614       $ —       $ 57,945       $ 70,559   

Interest Rate Swap Agreement

The Company's $2.5 billion notional amount interest rate swap agreement is designated as a cash flow hedge and the effective portions of the gain or loss on the swap are reported as a component of other comprehensive income. The Company entered into the swap to effectively convert a portion of its floating-rate debt to a fixed basis, thus reducing the impact of interest-rate changes on future interest expense. The interest rate swap agreement matures in 2013.

The swap agreement is valued using a discounted cash flow model that takes into account the present value of the future cash flows under the terms of the agreement by using market information available as of the reporting date, including prevailing interest rates and credit spread. Due to the fact that the inputs are either directly or indirectly observable, the Company classified the fair value measurements of its swap agreement as Level 2 in accordance with ASC 820-10-35.

The Company continually monitors its positions with, and credit quality of, the financial institution which is counterparty to its interest rate swap. The Company may be exposed to credit loss in the event of nonperformance by the counterparty to the interest rate swap. However, the Company considers this risk to be low. If a derivative instrument no longer qualifies as a cash flow hedge, hedge accounting is discontinued and the gain or loss that was recorded in other comprehensive income is recognized currently in income.

In accordance with ASC 815-20-35-9, as the critical terms of the swap and the floating-rate debt being hedged were the same at inception and remained the same during the current period, no ineffectiveness was recorded in earnings related to the interest rate swap.

The fair value of the Company's interest rate swap designated as a hedging instrument and recorded in "Other long-term liabilities" was $194.0 million and $213.1 million at June 30, 2011 and December 31, 2010, respectively.

The following table details the beginning and ending accumulated other comprehensive loss and the current period activity, net of tax, related to the interest rate swap agreement:

 

(In thousands)    Accumulated other
comprehensive loss		  

Balance at January 1, 2011

    $ 134,067   

Other comprehensive income

      (11,943 ) 
  

 

 

  

Balance at June 30, 2011

    $ 122,124   
  

 

 

  

Other Comprehensive Income (Loss)

The following table discloses the amount of income tax benefit (expense) allocated to each component of other comprehensive income for the three and six months ended June 30, 2011 and 2010, respectively:

 

     Three Months Ended June 30,      Six Months Ended June 30,  
(In thousands)    2011     2010      2011     2010  

Unrealized holding gain (loss) on marketable securities

    $ (12,643 )    $ 3,470       $ (13,772 )    $ (914 ) 

Unrealized holding gain (loss) on cash flow derivatives

      835        2,999         (7,129 )      4,887   
  

 

 

    

 

 

     

 

 

    

 

 

  

Income tax benefit (expense)

    $ (11,808 )    $ 6,469       $ (20,901 )    $ 3,973