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Debt

6 Months Ended

Jun. 30, 2012

NOTE 10: DEBT

Debt is summarized as follows:


in thousands	*June 30* *2012*		December 31 2011		June 30 2011
Short-term Borrowings
Bank line of credit						$100,000
Total short-term borrowings						$100,000
Long-term Debt
Bank line of credit		$0		$0
5.60% notes due 2012 ¹		134,535		134,508		$134,483
6.30% notes due 2013 ²		140,382		140,352		140,322
10.125% notes due 2015 ³		153,100		153,464		149,628
6.50% notes due 2016 ⁴		516,701		518,293		500,000
6.40% notes due 2017 ⁵		349,878		349,869		349,861
7.00% notes due 2018 ⁶		399,711		399,693		399,675
10.375% notes due 2018 ⁷		248,599		248,526		248,457
7.50% notes due 2021 ⁸		600,000		600,000		600,000
7.15% notes due 2037 ⁹		239,549		239,545		239,717
Medium-term notes		16,000		16,000		21,000
Industrial revenue bonds		14,000		14,000		14,000
Other notes		1,084		1,189		1,349
Fair value adjustments ¹⁰		0		0		(7,419	)
Total long-term debt including current maturities		$2,813,539		$2,815,439		$2,791,073
Less current maturities of long-term debt		285,152		134,762		5,230
Total long-term debt		$2,528,387		$2,680,677		$2,785,843

Estimated fair value of long-term debt		$2,636,409		$2,796,504		$2,857,684

¹

Includes decreases for unamortized discounts, as follows: June 30, 2012 — $22 thousand, December 31, 2011 — $49 thousand and June 30, 2011 — $74 thousand. The effective interest rate for these notes is 6.57%.

²

Includes decreases for unamortized discounts, as follows: June 30, 2012 — $62 thousand, December 31, 2011 — $92 thousand and June 30, 2011 — $122 thousand. The effective interest rate for these notes is 7.48%.

³

Includes an increase for the unamortized portion of the deferred gain realized upon the August 2011 settlement of interest rate swaps, as follows: June 30, 2012 — $3,402 thousand and December 31, 2011 — $3,802 thousand. Additionally, includes decreases for unamortized discounts, as follows: June 30, 2012 — $302 thousand, December 31, 2011 — $338 thousand, and June 30, 2011 — $372 thousand. The effective interest rate for these notes is 9.59%.

⁴

Includes an increase for the unamortized portion of the deferred gain realized upon the August 2011 settlement of interest rate swaps, as follows: June 30, 2012 — $16,701 thousand and December 31, 2011 — $18,293 thousand. The effective interest rate for these notes is 6.02%.

⁵

Includes decreases for unamortized discounts, as follows: June 30, 2012 — $122 thousand, December 31, 2011 — $131 thousand and June 30, 2011 — $139 thousand. The effective interest rate for these notes is 7.41%.

⁶

Includes decreases for unamortized discounts, as follows: June 30, 2012 — $289 thousand, December 31, 2011 — $307 thousand and June 30, 2011 — $325 thousand. The effective interest rate for these notes is 7.87%.

⁷

Includes decreases for unamortized discounts, as follows: June 30, 2012 — $1,401 thousand, December 31, 2011 — $1,474 thousand and June 30, 2011 — $1,543 thousand. The effective interest rate for these notes is 10.62%.

⁸

The effective interest rate for these notes is 7.75%.

⁹

Includes decreases for unamortized discounts, as follows: June 30, 2012 — $639 thousand, December 31, 2011 — $643 thousand and June 30, 2011 — $646 thousand. The effective interest rate for these notes is 8.05%.

¹⁰

See Note 5 for additional information about our fair value hedging strategy.

Our long-term debt is presented in the table above net of unamortized discounts from par and unamortized deferred gains realized upon settlement of interest rate swaps. Discounts, deferred gains and debt issuance costs are being amortized using the effective interest method over the respective terms of the notes.

The estimated fair value of long-term debt presented in the table above was determined by discounting expected future cash flows based on credit-adjusted interest rates on U.S. Treasury bills, notes or bonds, as appropriate. The fair value estimates were based on Level 2 information (as defined in Note 6) available to us as of the respective balance sheet dates. Although we are not aware of any factors that would significantly affect the estimated fair value amounts, such amounts have not been comprehensively revalued since those dates.

During 2011, we replaced our $1,500,000,000 bank line of credit that was set to expire on November 16, 2012 with a $600,000,000 bank line of credit. The $600,000,000 bank line of credit expires on December 15, 2016 and is secured by certain domestic accounts receivable and inventory. Borrowing capacity fluctuates with the level of eligible accounts receivable and inventory and may be less than $600,000,000 at any point in time.

Borrowings under the $600,000,000 bank line of credit bear interest at a rate determined at the time of borrowing equal to the lower of LIBOR plus a margin ranging from 1.75% to 2.25% based on the level of utilization, or an alternative rate derived from the lender’s prime rate. Borrowings bearing interest at LIBOR plus the margin are made for periods of 1, 2, 3 or 6 months, and may be extended. Borrowings bearing interest at the alternative rate are made on an overnight basis and may be extended each day. As of June 30, 2012, the applicable margin for LIBOR based borrowing was 1.75%.

Borrowings under the $600,000,000 bank line of credit are classified as long-term debt due to our ability to extend borrowings at the end of each borrowing period. Prior to December 31, 2011, we classified bank line of credit borrowings as short-term debt based on our intent to pay outstanding borrowings within one year.

In June 2011, we issued $1,100,000,000 of long-term notes in two series, as follows: $500,000,000 of 6.50% notes due in 2016 and $600,000,000 of 7.50% notes due in 2021. These notes were issued principally to:

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repay and terminate our $450,000,000 floating-rate term loan due in 2015

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fund the purchase through a tender offer of $165,443,000 of our outstanding 5.60% notes due in 2012 and $109,556,000 of our outstanding 6.30% notes due in 2013

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repay $275,000,000 outstanding under our revolving credit facility

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and for general corporate purposes

Unamortized deferred financing costs of $2,423,000 associated with the terminated $450,000,000 floating-rate term loan were recognized in June 2011 as a component of interest expense upon the termination of this floating-rate term loan.

The June 2011 purchases of the 5.60% and 6.30% notes cost $294,533,000, including a $19,534,000 premium above the $274,999,000 face value of the notes. This premium primarily reflects the trading price of the notes at the time of purchase relative to par value. Additionally, $4,711,000 of expense associated with a proportional amount of unamortized discounts, deferred financing costs and amounts accumulated in OCI was recognized in June 2011 upon the partial termination of the notes. The combined expense of $24,245,000 was recognized as a component of interest expense in June 2011.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

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