FAIR VALUE OF FINANCIAL INSTRUMENTS

3 Months Ended

Mar. 31, 2012

Fair Value Of Financial Instruments [Abstract]

FAIR VALUE OF FINANCIAL INSTRUMENTS

7.       FAIR VALUE OF FINANCIAL INSTRUMENTS

Forward Foreign Exchange Contracts

The Corporation has foreign currency exposure primarily in Europe and Canada. The Corporation uses financial instruments, such as forward contracts, to hedge a portion of existing and anticipated foreign currency denominated transactions. The purpose of the Corporation's foreign currency risk management program is to reduce volatility in earnings caused by exchange rate fluctuations. Guidance on accounting for derivative instruments and hedging activities requires companies to recognize all of the derivative financial instruments as either assets or liabilities at fair value in the Condensed Consolidated Balance Sheets based upon quoted market prices for comparable instruments.

Interest Rate Risks and Related Strategies

The Corporation's primary interest rate exposure results from changes in U.S. dollar interest rates. The Corporation's policy is to manage interest cost using a mix of fixed and variable rate debt. The Corporation periodically uses interest rate swaps to manage such exposures. Under these interest rate swaps, the Corporation exchanges, at specified intervals, the difference between fixed and floating interest amounts calculated by reference to an agreed-upon notional principal amount.

For interest rate swaps designated as fair value hedges (i.e., hedges against the exposure to changes in the fair value of an asset or a liability or an identified portion thereof that is attributable to a particular risk), changes in the fair value of the interest rate swaps offset changes in the fair value of the fixed rate debt due to changes in market interest rates.

In January 2012, the Company entered into three fixed-to-floating interest rate swap agreements to convert the interest payments of the $200 million, 4.24% notes, due December 1, 2026, from a fixed rate to a floating interest rate based on 1-Month LIBOR plus a 2.02% spread, and one fixed-to-floating interest rate swap agreement to convert the interest payments of $25 million of the $100 million, 3.84% notes, due December 1, 2021, from a fixed rate to a floating interest rate based on 1-Month LIBOR plus a 1.90% spread.The notional amounts of the Company's outstanding interest rate swaps designated as fair value hedges were $200 million and $25 million at March 31, 2012.

The Corporation utilizes the bid ask pricing that is common in the dealer markets to determine the fair value of its interest rate swap agreements and forward foreign exchange contracts. The dealers are ready to transact at these prices which use the mid-market pricing convention and are considered to be at fair market value. Based upon the fair value hierarchy, all of the forward foreign exchange contracts and interest rate swaps are valued at a Level 2.

Effects on Consolidated Balance Sheets

The location and amounts of derivative instrument fair values in the consolidated balance sheet are segregated below between designated, qualifying hedging instruments, and ones that are not designated for hedge accounting.

		(In thousands)
			March 31,		December 31,
			2012		2011
Assets
Undesignated for hedge accounting
	Forward exchange contracts	$	1	$	13
	Total asset derivatives (A)	$	1	$	13
Liabilities
Designated for hedge accounting
	Interest rate swaps	$	12,713	$	-
Undesignated for hedge accounting
	Forward exchange contracts	$	264	$	356
	Total liability derivatives (B)	$	12,977	$	356

• All asset derivatives are included in Other current assets.
• All forward exchange derivatives are included in Other current liabilities and all interest rate swaps are included in Other liabilities.

Effects on Condensed Consolidated Statements of Income

Fair value hedge

The location and amount of gains or losses on the hedged fixed rate debt attributable to changes in the market interest rates and the offsetting gain (loss) on the related interest rate swaps for the three months endedMarch 31, were as follows:

	Gain/(Loss) on Swap				Gain/(Loss) on Borrowings
	Three Months Ended				Three Months Ended
	March 31,				March 31,
Income Statement Classification		2012		2011		2012		2011
Other income, net	$	(12,713)	$	-	$	12,713	$	-

Undesignated hedges

The location and amount of gains and losses recognized in income on forward exchange derivative contracts not designated for hedge accounting for the three months endedMarch 31, were as follows:

		(In thousands)
		Three Months Ended
		March 31,
Derivatives not designated as hedging instrument			2012		2011
Forward exchange contracts:
	General and administrative expenses	$	976	$	892

Debt

The estimated fair value amounts were determined by the Corporation using available market information which is primarily based on quoted market prices for the same or similar issues as of March 31, 2012. Accordingly, all of the Corporation's debt is valued at a Level 2.

The carrying amount of the variable interest rate debt approximates fair value because the interest rates are reset periodically to reflect current market conditions.

The fair values described below may not be indicative of net realizable value or reflective of future fair values. Furthermore, the use of different methodologies to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date.

	March 31,				December 31,
	2012				2011
		Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Industrial revenue bonds, due from 2012 through 2023	$	8,843	$	8,843	$	9,004	$	9,004
5.74% Senior notes due 2013		125,021		131,861		125,024		134,982
5.51% Senior notes due 2017		150,000		173,476		150,000		172,871
3.84% Senior notes due 2021		99,452		99,452		100,000		101,886
4.24% Senior notes due 2026		187,835		187,835		200,000		204,965
Other debt		2,501		2,501		2,402		2,402
	$	573,652	$	603,968	$	586,430	$	626,110