FAIR VALUE MEASUREMENTS

12 Months Ended

Dec. 31, 2011

Fair Value of Financial Instruments on a Recurring Basis

Fair values of financial instruments on the consolidated balance sheet (in millions):



December 31, 2011	Level 1		Level 2			Total

Assets
Marketable securities
U.S. government securities	$	295.9	$	—		$	295.9
Foreign government bonds	—		25.4			25.4
Asset-back securities	—		58.0			58.0
Mortgage-back securities	—		124.9			124.9
Corporate notes and bonds	—		522.6			522.6
Municipal securities	—		11.9			11.9
Derivative instruments
Fuel hedge contracts	—		116.9			116.9

Liabilities
Derivative instruments
Fuel hedge contracts	—		(10.3		)	(10.3		)
Interest rate swap agreements	—		(28.8		)	(28.8		)



December 31, 2010	Level 1		Level 2			Total

Assets
Marketable securities
U.S. government securities	$	472.9	$	—		$	472.9
Foreign government bonds	—		41.6			41.6
Asset-back securities	—		51.7			51.7
Mortgage-back securities	—		125.5			125.5
Corporate notes and bonds	—		420.3			420.3
Municipal securities	—		6.7			6.7
Derivative instruments
Fuel hedge contracts	—		131.3			131.3

Liabilities
Derivative instruments
Interest rate swap agreements	—		(8.8		)	(8.8		)

The Company uses the market and income approach to determine the fair value of marketable securities. U.S. government securities are Level 1 as the fair value is based on quoted prices in active markets. Foreign governments bonds, asset-back securities, mortgage-back securities, corporate notes and bonds, and municipal securities are Level 2 as the fair value is based on industry standard valuation models that are calculated based on observable inputs such as quoted interest rates, yield curves, credit ratings of the security and other observable market information.

The Company uses the market approach and the income approach to determine the fair value of derivative instruments. Fuel hedge contracts are over-the-counter, are not exchange traded and determined based on observable inputs that are readily available in active markets or can be derived from information available in active, quoted markets. Interest rate swap agreements are Level 2 as the fair value of these contracts is determined based on the difference between the fixed interest rate in the agreements and the observable LIBOR-based interest forward rates at period end, multiplied by the total notional value.

The Company has no other financial assets that are measured at fair value on a nonrecurring basis at December 31, 2011.

Fair Value of Other Financial Instruments

The Company used the following methods and assumptions to determine the fair value of financial instruments that are not recognized at fair value as described below.

Cash and Cash Equivalents: Carried at amortized costs which approximates fair value.

Debt: The carrying amounts of the Company's variable-rate debt approximates fair values. For fixed-rate debt, the Company uses the income approach to determine the estimated fair value, by using discounted cash flow using the Company's current borrowing rate.

Fixed-rate debt that is not carried at fair value on the consolidated balance sheet and the estimated fair value of long-term fixed-rate debt as of December 31 (in millions):



	2011		2010
Carrying Amount	$	1,002.5	$	1,233.6
Fair value	1,075.8		1,285.0

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References

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+ Details