FAIR VALUE OF FINANCIAL INSTRUMENTS

3 Months Ended

Mar. 31, 2013

Fair Value Of Financial Instruments [Abstract]

FAIR VALUE OF FINANCIAL INSTRUMENTS

8.FAIR VALUE OF FINANCIAL INSTRUMENTS

Forward Foreign Exchange and Currency Option Contracts

The Corporation has foreign currency exposure primarily in Europe and Canada. The Corporation uses financial instruments, such as forward and option contracts, to hedge a portion of existing and anticipated foreign currency denominated transactions. The purpose of the Corporation's foreign currency risk management program is to reduce volatility in earnings caused by exchange rate fluctuations. Guidance on accounting for derivative instruments and hedging activities requires companies to recognize all of the derivative financial instruments as either assets or liabilities at fair value in the Condensed Consolidated Balance Sheets based upon quoted market prices for comparable instruments.

Interest Rate Risks and Related Strategies

The Corporation's primary interest rate exposure results from changes in U.S. dollar interest rates. The Corporation's policy is to manage interest cost using a mix of fixed and variable rate debt. The Corporation periodically uses interest rate swaps to manage such exposures. Under these interest rate swaps, the Corporation exchanges, at specified intervals, the difference between fixed and floating interest amounts calculated by reference to an agreed-upon notional principal amount.

For interest rate swaps designated as fair value hedges (i.e., hedges against the exposure to changes in the fair value of an asset or a liability or an identified portion thereof that is attributable to a particular risk), changes in the fair value of the interest rate swaps offset changes in the fair value of the fixed rate debt due to changes in market interest rates.

In March 2013, the Corporation entered into fixed-to-floating interest rate swap agreements to convert the interest payments of the $100 million, 3.85% notes, due February 26, 2025, from a fixed rate to a floating interest rate based on 1-Month LIBOR plus a 1.77% spread, and the interest payments of the $75 million,4.05% notes, due February 26, 2028, from a fixed rate to a floating interest rate based on 1-Month LIBOR plus a 1.73% spread.

In January 2012, the Corporation entered into fixed-to-floating interest rate swap agreements to convert the interest payments of the $200 million, 4.24% notes, due December 1, 2026, from a fixed rate to a floating interest rate based on 1-Month LIBOR plus a 2.02% spread. In addition, the Corporation also entered intoa fixed-to-floating interest rate swap agreement to convert the interest payments of $25 million of the $100 million, 3.84% notes, due December 1, 2021, from a fixed rate to a floating interest rate based on 1-Month LIBOR plus a 1.90% spread.

The notional amounts of the Corporation's outstanding interest rate swaps designated as fair value hedges were $400 million at March 31, 2013.

The fair value accounting guidance requires that assets and liabilities carried at fair value be classified and disclosed in one of the following three categories:

Level 1: Quoted market prices in active markets for identical assets or liabilities that the company has the ability to access.

Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data such as quoted prices, interest rates and yield curves.

Level 3: Inputs are unobservable data points that are not corroborated by market data.

Based upon the fair value hierarchy, all of the forward foreign exchange contracts and interest rate swaps are valued at a Level 2.

Effects on Consolidated Balance Sheets

The location and amounts of derivative instrument fair values in the condensed consolidated balance sheet are below.

		(In thousands)
			March 31,		December 31,
			2013		2012
Assets
Designated for hedge accounting		$	323	$	677
	Interest rate swaps
Undesignated for hedge accounting
	Forward exchange contracts	$	142	$	250
	Total asset derivatives (A)	$	465	$	927
Liabilities
Designated for hedge accounting
	Interest rate swaps	$	11,273	$	1,419
Undesignated for hedge accounting
	Forward exchange contracts	$	280	$	170
	Total liability derivatives (B)	$	11,553	$	1,589

• Forward exchange derivatives are included in Other current assets and interest rate swap assets are included in Other assets.
• Forward exchange derivatives are included in Other current liabilities and interest rate swap liabilities are included in Other liabilities.

Effects on Condensed Consolidated Statements of Earnings

Fair value hedge

The location and amount of gains or losses on the hedged fixed rate debt attributable to changes in the market interest rates and the offsetting gain (loss) on the related interest rate swaps for the three months endedMarch 31, were as follows:

	Gain/(Loss) on Swap				Gain/(Loss) on Borrowings
	Three Months Ended				Three Months Ended
	March 31,				March 31,
Income Statement Classification		2013		2012		2013		2012
Other income, net	$	(10,950)	$	(12,713)	$	10,950	$	12,713

Undesignated hedges

The location and amount of gains and losses recognized in income on forward exchange derivative contracts not designated for hedge accounting for the three months endedMarch 31, were as follows:

		(In thousands)
		Three Months Ended
		March 31,
Derivatives not designated as hedging instrument			2013		2012
Forward exchange contracts:
	General and administrative expenses	$	(1,561)	$	976

Debt

The estimated fair value amounts were determined by the Corporation using available market information that is primarily based on quoted market prices for the same or similar issues as of March 31, 2013. Accordingly, all of the Corporation's debt is valued at a Level 2. The fair values described below may not be indicative of net realizable value or reflective of future fair values. Furthermore, the use of different methodologies to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date.

The carrying amount of the variable interest rate debt approximates fair value as the interest rates are reset periodically to reflect current market conditions.

On February 26, 2013, the Corporation issued $400 million of Senior Notes (the 2013 Notes).  The 2013 Notes consist of $225 million of 3.70% Senior Notes that mature on February 26, 2023, $100 million of 3.85% Senior Notes that mature on February 26, 2025, and $75 million of 4.05% Senior Series Notes that mature on February 26, 2028. An additional $100 million of 4.11% Senior Notes that mature on September 26, 2028, will be issued in September of 2013. The 2013 Notes are senior unsecured obligations, equal in right of payment to our existing senior indebtedness. The Corporation, at its option, can prepay at any time all or any part of the 2013 Notes, subject to a make-whole payment in accordance with the terms of the Note Purchase Agreement.  In connection with the issuance of the 2013 Notes, the Corporation paid customary fees that have been deferred and are being amortized over the term of the 2013 Notes.  Under the Note Purchase Agreement, the Corporation is required to maintain certain financial ratios, the most restrictive of which is a debt to capitalization limit of 60%, and funding obligations under the defined pension plan.  The 2013 Notes also contain a cross default provision with respect to the Corporation's other senior indebtedness.

	March 31,				December 31,
	2013				2012
		Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Industrial revenue bonds, due 2023	$	8,400	$	8,400	$	8,400	$	8,400
Revolving credit agreement, due 2017		14,000		14,000		286,800		286,800
5.74% Senior notes due 2013		125,007		127,166		125,011		128,198
5.51% Senior notes due 2017		150,000		167,607		150,000		168,491
3.84% Senior notes due 2021		100,323		100,323		100,677		100,677
3.70% Senior notes due 2023		225,000		227,803		-		-
3.85% Senior notes due 2025		97,764		97,764		-		-
4.24% Senior notes due 2026		193,462		193,462		198,581		198,581
4.05% Senior notes due 2028		72,501		72,501		-		-
Other debt		1,463		1,463		10,746		10,746
Total debt	$	987,920	$	1,010,489	$	880,215	$	901,893