Fair Value of Financial Instruments

9 Months Ended

Sep. 30, 2011

Fair Value of Financial Instruments

Fair Value of Financial Instruments

4. Fair Value of Financial Instruments

The following tables set forth the company’s financial assets and liabilities that were accounted for at fair value according to ASC Topic 820-10, “Fair Value Measurements and Disclosures,” on a recurring basis as of September 30, 2011 and December 31, 2010 by level within the fair value hierarchy.  Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

	Fair Value as of September 30, 2011
(in millions)	Level 1		Level 2		Level 3		Total
Current Assets:
Foreign currency exchange contracts	$	0.6	$	—	$	—	$	0.6
Forward commodity contracts	—		—		—		—
Marketable securities	2.7		—		—		2.7
Total current assets at fair value	$	3.3	$	—	$	—	$	3.3
Non-Current Assets:
Interest rate cap contracts	$	—	$	0.4	$	—	$	0.4
Total non-current assets at fair value	$	—	$	0.4	$	—	$	0.4
Current Liabilities:
Foreign currency exchange contracts	$	6.6	$	—	$	—	$	6.6
Forward commodity contracts	—		2.8		—		2.8
Total current liabilities at fair value	$	6.6	$	2.8	$	—	$	9.4
Non-current Liabilities:
Interest rate swap contracts	$	—	$	14.9	$	—	$	14.9
Total non-current liabilities at fair value	$	—	$	14.9	$	—	$	14.9

	Fair Value as of December 31, 2010
(in millions)	Level 1		Level 2		Level 3		Total
Current Assets:
Foreign currency exchange contracts	$	2.3	$	—	$	—	$	2.3
Forward commodity contracts	—		1.1		—		1.1
Marketable securities	2.7		—		—		2.7
Total current assets at fair value	$	5.0	$	1.1	$	—	$	6.1
Current Liabilities:
Foreign currency exchange contracts	$	0.6	$	—	$	—	$	0.6
Forward commodity contracts	—		0.3		—		0.3
Total current liabilities at fair value	$	0.6	$	0.3	$	—	$	0.9
Non-current Liabilities:
Interest rate swap contracts	$	—	$	38.4	$	—	$	38.4
Total non-current liabilities at fair value	$	—	$	38.4	$	—	$	38.4

The carrying value of the amounts reported in the Consolidated Balance Sheets for cash, accounts receivable, accounts payable, deferred purchase price notes and short-term variable debt, including any amounts outstanding under our revolving credit facility, approximate fair value, without being discounted, due to the short time periods during which these amounts are outstanding.  The fair value of the company’s 7.125% Senior Notes due 2013 was approximately $147.0 million and $152.4 million at September 30, 2011 and December 31, 2010, respectively. The fair value of the company’s 9.50% Senior Notes due 2018 was approximately $392.0 million and $438.8 million at September 30, 2011 and December 31, 2010, respectively. The fair value of the company’s 8.50% Senior Notes due 2020 was approximately $546.0 million and $645.0 million at September 30, 2011 and December 31, 2010, respectively. The fair values of the company’s term loans under the previous senior credit facility dated November 8, 2008 and the $1,250.0 million Second Amended and Restated Credit Agreement dated May 13, 2011 (the “New Senior Credit Agreement”) were as follows at September 30, 2011 and December 31, 2010, respectively:  Term Loan A — $328.7 million and $461.2 million; and Term Loan B — $385.5 million and $342.0 million.  See Note 9, “Debt,” for the related carrying values of these debt instruments.

ASC Topic 820-10 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820-10 classifies the inputs used to measure fair value into the following hierarchy:

Level 1	Unadjusted quoted prices in active markets for identical assets or liabilities
Level 2	Unadjusted quoted prices in active markets for similar assets or liabilities, or
	Unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or
	Inputs other than quoted prices that are observable for the asset or liability
Level 3	Unobservable inputs for the asset or liability

The company endeavors to utilize the best available information in measuring fair value. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The company has determined that its financial assets and liabilities are level 1 and level 2 in the fair value hierarchy.

As a result of its global operating and financing activities, the company is exposed to market risks from changes in interest rates, foreign currency exchange rates, and commodity prices, which may adversely affect the company’s operating results and financial position. When deemed appropriate, the company minimizes its risks from interest and foreign currency exchange rate and commodity price fluctuations through the use of derivative financial instruments. Derivative financial instruments are used to manage risk and are not used for trading or other speculative purposes, and the company does not use leveraged derivative financial instruments. The forward foreign currency exchange and interest rate swap contracts and forward commodity purchase agreements are valued using broker quotations, or market transactions in either the listed or over-the-counter markets. As such, these derivative instruments are classified within level 1 and level 2.