Fair Value of Financial Instruments

9 Months Ended

Sep. 30, 2011

Notes to Financial Statements [Abstract]

11.	Fair Value of Financial Instruments

Roper's long-term debt at September 30, 2011 included $500 million of fixed-rate senior notes due 2019, with a fair value of $605 million, and $500 million of fixed-rate senior notes due 2013, with a fair value of $549 million, based on the trading prices of the notes. Short-term debt included $68 million of fixed-rate convertible notes that were reported at fair value due to the ability of note holders to exercise the conversion option of the notes.

The Company manages interest rate risk by maintaining a combination of fixed- and variable-rate debt, which may include interest rate swaps to convert fixed-rate debt to variable-rate debt, or to convert variable-rate debt to fixed-rate debt. At September 30, 2011 an aggregate notional amount of $500 million in interest rate swaps designated as fair value hedges effectively changed the Company's $500 million senior notes due 2013 with a fixed interest rate of 6.625% to a variable rate obligation at a weighted average spread of 4.377% plus the 3 month London Interbank Offered Rate ("LIBOR").

The swaps are recorded at fair value in the balance sheet as an asset or liability, and the changes in fair value of both the interest rate swap and the hedged senior notes due 2013 are recorded as interest expense. At September 30, 2011, the fair value of the swap was an asset balance of $14.84 million and was reported in other assets, with a corresponding increase of $14.81 million in the notes being hedged, which was reported as long-term debt. The impact on earnings for the three and nine month periods ended September 30, 2011 was immaterial. The Company has determined the swaps to be Level 2 in the FASB fair value hierarchy, and uses inputs other than quoted prices that are observable for the asset or liability, including interest rates, yield curves and credit risks in order to value the instruments.

In the third quarter of 2011, the Company entered into foreign currency forward contracts expiring in the fourth quarter of 2011 to offset the foreign currency remeasurement gains and losses related to intercompany notes structured as non-permanent advances. At September 30, 2011, the fair value of the forward contracts was an asset balance of $3.4 million and was reported in other receivables. The Company has determined the swaps to be Level 2 in the FASB fair value hierarchy, and uses foreign currency exchange rates that are observable for the asset in order to value the instruments.

- Definition

This item represents the complete disclosure regarding the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments, 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 Company 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 risk is 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.

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