Fair Value Measurements

9 Months Ended

Sep. 30, 2011

Fair Value Measurements [Abstract]

Fair Value Disclosures [Text Block]

Fair Value Measurements

As of September 30, 2011 and 2010 our financial instruments included cash and cash equivalents, accounts receivable, accounts payable and derivative contracts. The fair values of cash and cash equivalents, accounts receivable and accounts payable approximated carrying values due to the short-term nature of these instruments. In addition, certain derivative instruments are recorded at fair value as discussed below.

Fair value measurements are categorized into one of three levels based on the lowest level of significant input used: Level 1 (unadjusted quoted prices in active markets for identical assets); Level 2 (significant observable market inputs available at the measurement date, other than quoted prices included in Level 1); and Level 3 (unobservable inputs that cannot be corroborated by observable market data).

Assets and Liabilities that are Measured at Fair Value on a Recurring Basis

The assets in our postretirement benefit plans are measured at fair value on a recurring basis (at least annually). See Note 9 herein for additional discussion concerning pension and postretirement benefit plans.

We maintain a foreign currency exposure management policy that allows the use of derivative instruments, principally foreign currency forwards, option contracts and option combination strategies to manage risks associated with foreign exchange rate volatility. Generally, these contracts are entered into to fix the U.S. dollar amount of the eventual cash flows. The derivative instruments range in duration at inception up to fifteen months. We do not hold or issue derivative financial instruments for speculative or trading purposes and we are not a party to leveraged derivatives.

We are exposed to the risk of nonperformance by our counter-parties, but we do not anticipate nonperformance by any of these counter-parties. We actively monitor our exposure to credit risk through the use of credit approvals and credit limits and by using major international banks and financial institutions as counter-parties.

As of September 30, 2011 we held derivative instruments that are required to be measured at fair value on a recurring basis. Our derivative instruments consist of currency forwards, option contracts and option combination strategies. The fair value of our derivative instruments is determined based on inputs that are observable in the public market, but are other than publicly quoted prices (Level 2).

Hedge gains of $0.4 million and $0.6 million were reclassified into the Condensed Consolidated Statements of Operations during the three months ended September 30, 2011 and 2010, respectively. Hedge gains of $0.6 million and $1.0 million were reclassified into the Condensed Consolidated Statements of Operations during the nine months ended September 30, 2011 and 2010, respectively. The amount of net deferred gains on foreign currency cash flow hedges included in accumulated other comprehensive income (loss) in shareholders’ equity as of September 30, 2011 was $0.1 million, pre-tax, which, depending on market factors, is expected to be reversed in the Condensed Consolidated Balance Sheet or be reclassified into operations during the next three to six months.

Our financial assets and liabilities that are measured at fair value on a recurring basis were as follows:

	September 30, 2011							December 31, 2010
(In millions)	Level 1		Level 2			Level 3		Level 1		Level 2			Level 3
Derivative assets
Foreign currency option contracts	$	—	$	1.4		$	—	$	—	$	3.5		$	—
Foreign currency forward contracts	—		—			—		—		—			—
Derivative liabilities
Foreign currency option contracts	—		(1.2		)	—		—		(2.3		)	—
Foreign currency forward contracts	—		—			—		—		—			—
Total	$	—	$	0.2		$	—	$	—	$	1.2		$	—

Cash Flow Hedges

We attempt to mitigate the risk that forecasted cash flows denominated in foreign currencies may be adversely affected by changes in currency exchange rates through the use of option, forward and combination option contracts. The degree of our hedging can fluctuate based on management judgment and forecasted projections. We formally document all relationships between hedging instruments and hedged items, as well as our risk management objective and strategy for undertaking the hedge items. This process includes linking all derivatives to forecasted transactions.

We also formally assess, both at the hedge’s inception and on an ongoing basis, whether the derivatives used in hedging transactions are highly effective in offsetting changes in the cash flows of hedged items. Gains and losses related to cash flow hedges are deferred in accumulated other comprehensive income (loss) with a corresponding asset or liability. When the hedged transaction occurs, the gains and losses in accumulated other comprehensive income (loss) are reclassified into the Condensed Consolidated Statements of Operations in the same line as the item being hedged. If at any time it is determined that a derivative is not highly effective as a hedge, we discontinue hedge accounting prospectively, with deferred gains and losses being recognized in current period operations.

Other Hedges

We enter into foreign currency forward contracts, generally with durations of less than two months, to manage the foreign currency exposure related to our monetary assets and liabilities denominated in foreign currencies. We record the estimated fair value of these forwards within other current assets or other current liabilities in the Condensed Consolidated Balance Sheets, and all changes in their fair value are immediately recognized in the Condensed Consolidated Statements of Operations.

The notional amounts and fair values of our derivative instruments in the Condensed Consolidated Financial Statements were as follows:

	September 30, 2011							December 31, 2010
			Fair Value							Fair Value
(In millions)	Notional Amount		Other Current Assets		Other Current Liabilities			Notional Amount		Other Current Assets		Other Current Liabilities
Cash flow hedges designated as hedging instruments	$	133.5	$	1.4	$	(1.2	)	$	246.0	$	3.5	$	(2.3	)
Other hedges not receiving hedge accounting	76.5		—		—			47.1		—		—
Total	$	210.0	$	1.4	$	(1.2	)	$	293.1	$	3.5	$	(2.3	)

On September 30, 2011 we entered into certain hedges not receiving hedge accounting treatment. In accordance with trade date accounting, these hedges and related exposures are recorded as of September 30, 2011, but do not have a value until the subsequent day.

The derivative gains and losses in the Condensed Consolidated Statements of Operations were as follows:

(In millions)	Pretax Gain (Loss) Recognized in Other Comprehensive Income on Effective Portion of Derivative			Pretax Gain (Loss) on Effective Portion of Derivative Reclassification from Accumulated Other Comprehensive Income to Cost of Goods Sold, net		Pretax Gain (Loss) Recognized in the Condensed Statements of Operations in Other Expenses, net
For the three months ended September 30, 2011
Cash flow hedges designated as hedging instruments	$	(1.6	)	$	0.4	$	—
Other hedges not receiving hedge accounting	—			—		(4.2		)
Total	$	(1.6	)	$	0.4	$	(4.2	)
For the three months ended September 30, 2010
Cash flow hedges designated as hedging instruments	$	(1.6	)	$	0.6	$	—
Other hedges not receiving hedge accounting	—			—		(2.3		)
Total	$	(1.6	)	$	0.6	$	(2.3	)

(In millions)	Pretax Gain (Loss) Recognized in Other Comprehensive Income on Effective Portion of Derivative			Pretax Gain (Loss) on Effective Portion of Derivative Reclassification from Accumulated Other Comprehensive Income to Cost of Goods Sold, net		Pretax Gain (Loss) Recognized in the Condensed Statements of Operations in Other Expenses, net
For the nine months ended September 30, 2011
Cash flow hedges designated as hedging instruments	$	(0.4	)	$	0.6	$	—
Other hedges not receiving hedge accounting	—			—		(4.3		)
Total	$	(0.4	)	$	0.6	$	(4.3	)
For the nine months ended September 30, 2010
Cash flow hedges designated as hedging instruments	$	(0.8	)	$	1.0	$	—
Other hedges not receiving hedge accounting	—			—		(3.5		)
Total	$	(0.8	)	$	1.0	$	(3.5	)