SHORT-TERM BORROWINGS AND LONG-TERM DEBT

12 Months Ended

Dec. 31, 2011

SHORT-TERM BORROWINGS AND LONG-TERM DEBT

SHORT-TERM BORROWINGS AND LONG-TERM DEBT

15. SHORT-TERM BORROWINGS AND LONG-TERM DEBT

Short-Term Borrowings

        There were no short-term borrowings as of December 31, 2011. Short-term borrowings were $1.2 million as of December 31, 2010, and consisted of short-term loans.

        In June 2011, the Company entered into a five-year revolving credit facility agreement (2011 Credit Facility). The 2011 Credit Facility replaces the Company's three-year revolving credit facility agreement dated February 17, 2009 (2009 Credit Facility). Borrowings from the 2011 Credit Facility are to be used for working capital and other general corporate purposes. The 2011 Credit Facility is unsecured and repayable on maturity in June 2016, subject to annual extensions if a sufficient number of lenders agree. The maximum amount of outstanding borrowings and letters of credit permitted at any one time under the 2011 Credit Facility is $500.0 million, which may be increased from time to time up to $750.0 million at the Company's request and with the consent of the lenders, subject to satisfaction of customary conditions. The 2011 Credit Facility contains financial covenants, whereby the ratio of consolidated total debt to consolidated Earnings Before Interest, Income Taxes, Depreciation and Amortization (EBITDA) cannot exceed 3.25 to 1.0, and the ratio of consolidated EBITDA to consolidated interest expense cannot be less than 3.0 to 1.0. As of December 31, 2011, the Company was in compliance with these covenants.

        Borrowings under the 2011 Credit Facility bear interest at a rate that is determined as a base rate plus a margin. The base rate is either (a) LIBOR for a specified interest period, or (b) a floating rate based upon JPMorgan Chase Bank's prime rate, the Federal Funds rate or LIBOR. The margin is determined by reference to the Company's credit rating. The margin can range from 0.075% to 1.45% over the base rate. In addition, the Company incurs an annual 0.2% facility fee on the entire facility commitment of $500.0 million.

        The borrowings from the 2011 Credit Facility and 2009 Credit Facility had a weighted-average interest rate of 1.6% for the year ended December 31, 2011. The borrowings from the 2009 Credit Facility had a weighted-average interest rate of 2.73% for the year ended December 31, 2010. There were no borrowings from the 2011 Credit Facility as of December 31, 2011. There were no borrowings from the 2009 Credit Facility as of December 31, 2010.

Long-Term Debt

        The components of long-term debt were as follows:

	December 31,
(Dollars in millions)	2011			2010
Principal Value:
3.50% Notes due 2014	$	500.0		$	500.0
4.90% Notes due 2019		700.0			700.0
5.90% Notes due 2039		300.0			300.0
Subtotal		1,500.0			1,500.0
Adjustments to Principal Value:
Basis adjustment for fair value of outstanding interest rate swaps		—			20.1
Unamortized basis adjustment for terminated interest rate swaps		35.3			16.5
Unamortized bond discount		(3.4	)		(4.1	)
Long-term debt	$	1,531.9		$	1,532.5

        Based on the Company's assessment of current market conditions for debt of similar maturity, structure and risk, the estimated fair value of the Company's debt was $1,647.3 million as of December 31, 2011.

        Interest expense, interest income and cash payments for interest and under interest rate swaps were as follows:

	Years Ended December 31,
(In millions)	2011		2010		2009
Interest expense, net of amounts related to interest rate swaps	$	60.2	$	53.2	$	95.9
Interest income		8.0		4.6		3.3
Interest payments, net of amounts related to interest rate swaps		61.4		51.5		131.0