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Fair Value Measurements
 9 Months Ended
Sep. 30, 2012
Fair Value Measurements [Abstract]  
Fair Value Measurements

NOTE 5 – FAIR VALUE MEASUREMENTS

The Company's marketable equity securities and interest rate swap are measured at fair value on each reporting date.

 

Marketable Equity Securities

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 September 30, 2012 and December 31, 2011 are as follows:

 

(In thousands) September 30,  December 31,
  2012  2011
Cost$ 7,786 $ 7,786
Gross unrealized losses  (1,087)   -
Gross unrealized gains  94,727   65,214
Fair value$ 101,426 $ 73,000

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 portion of the gain or loss on the swap is reported as a component of other comprehensive income (loss). Ineffective portions of a cash flow hedging derivative's change in fair value are recognized currently in earnings. 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 for the three and nine months ended September 30, 2012.

 

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 September 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 in earnings.

 

The fair value of the Company's $2.5 billion notional amount interest rate swap designated as a hedging instrument and recorded in “Other current liabilities” was $102.2 million at September 30, 2012. The fair value of the notional amount interest rate swap was $159.1 million at December 31, 2011 and recorded in “Other long-term liabilities”.

 

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

 

(In thousands)Accumulated other comprehensive loss
Balance at December 31, 2011$ 100,292
Other comprehensive income  (36,322)
Balance at September 30, 2012$ 63,970

Other Comprehensive Income (Loss)

The following table discloses the amount of income tax (asset) liability allocated to each component of other comprehensive income (loss) for the three and nine months ended September 30, 2012 and 2011, respectively:

(In thousands) Three Months Ended  Nine Months Ended
   September 30,  September 30,
  2012  2011  2012  2011
Foreign currency translation adjustments$ (1,659) $ 8,603 $ (3,009) $ 2,796
Unrealized holding gain (loss) on marketable securities  (10,599)   9,738   (11,028)   1,773
Unrealized holding loss on cash flow derivatives  (7,048)   (6,474)   (20,648)   (13,602)
 Total income tax benefit (expense)$ (19,306) $ 11,867 $ (34,685) $ (9,033)