Fair Value Measurements

12 Months Ended

Dec. 31, 2011

Fair Value Measurement Abstract

Fair Value Measurements

FAIR VALUE MEASUREMENTS

ASC 820 establishes a framework for measuring fair value that is based on the inputs market participants use to determine the fair value of an asset or liability and establishes a fair value hierarchy to prioritize those inputs. The fair value hierarchy outlined in ASC 820 is comprised of three levels that are described below:

• Level 1 – Inputs based on quoted prices in active markets for identical assets or liabilities.

• Level 2 – Inputs other than Level 1 quoted prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability.

• Level 3 – Unobservable inputs based on little or no market activity and that are significant to the fair value of the assets and liabilities.

The fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Observable inputs are obtained from independent sources and can be validated by a third party, whereas unobservable inputs reflect assumptions regarding what a third party would use in pricing an asset or liability based on the best information available under the circumstances. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

Assets and liabilities measured at fair value on a recurring basis at December 31, 2011 are as follows:

	Fair value measurements						Total fair value
In millions	Level 1		Level 2		Level 3
Assets:
Cash and cash equivalents	$	1,160.7	$	—	$	—	$	1,160.7
Marketable securities	10.4		—		—		10.4
Derivative instruments	—		9.3		—		9.3
Benefit trust assets	13.3		156.2		—		169.5
Total	$	1,184.4	$	165.5	$	—	$	1,349.9
Liabilities:
Derivative instruments	$	—	$	22.2	$	—	$	22.2
Benefit trust liabilities	15.9		162.4		—		178.3
Total	$	15.9	$	184.6	$	—	$	200.5

Assets and liabilities measured at fair value on a recurring basis at December 31, 2010 are as follows:

	Fair value measurements						Total fair value
In millions	Level 1		Level 2		Level 3
Assets:
Cash and cash equivalents	$	1,014.3	$	—	$	—	$	1,014.3
Marketable securities	15.5		—		—		15.5
Derivative instruments	—		21.5		—		21.5
Benefit trust assets	17.3		155.2		—		172.5
Total	$	1,047.1	$	176.7	$	—	$	1,223.8
Liabilities:
Derivative instruments	$	—	$	2.6	$	—	$	2.6
Benefit trust liabilities	17.4		178.4		—		195.8
Total	$	17.4	$	181.0	$	—	$	198.4

See Note 10 for disclosure of fair value measurements related to the Company’s pension assets.

ASC 820 defines fair value as the exchange price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company determines the fair value of its financial assets and liabilities using the following methodologies:

• Cash and cash equivalents – These amounts include cash on hand, demand deposits and all highly liquid investments with original maturities at the time of purchase of three months or less and are held in U.S and non-U.S. currencies.

• Marketable securities – These securities include investments in publicly traded stock of non-U.S. companies held by non-U.S. subsidiaries of the Company. The fair value is obtained for the securities based on observable market prices quoted on public stock exchanges.

• Derivative instruments – These instruments include forward contracts related to non-U.S. currencies. The fair value of the derivative instruments are determined based on a pricing model that uses inputs from actively quoted currency markets that are readily accessible and observable.

• Benefit trust assets – These assets include money market funds and insurance contracts that are the underlying for the benefit assets. The fair value of the assets is based on observable market prices quoted in a readily accessible and observable market.

• Benefit trust liabilities – These liabilities include deferred compensation and executive death benefits. The fair value is based on the underlying investment portfolio of the deferred compensation and the specific benefits guaranteed in a death benefit contract with each executive.

These methodologies used by the Company to determine the fair value of its financial assets and liabilities at December 31, 2011 are the same as those used at December 31, 2010. There have been no significant transfers between Level 1 and Level 2 categories.