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Financial Instruments and Fair Value Measurements
3 Months Ended
Mar. 31, 2013
Fair Value Disclosures [Abstract]  
Financial Instruments and Fair Value Measurements

13) FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

 

The Company uses derivative financial instruments primarily to modify its exposure to market risks from fluctuations in foreign currency exchange rates. The Company does not use derivative instruments unless there is an underlying exposure and, therefore, the Company does not hold or enter into derivative financial instruments for speculative trading purposes. The fair value of the Company's derivative instruments and the related activity was not material to the Consolidated Balance Sheets and Consolidated Statements of Operations for any of the periods presented.

 

The following tables set forth the Company's assets and liabilities measured at fair value on a recurring basis at March 31, 2013 and December 31, 2012. These assets and liabilities have been categorized according to the three-level fair value hierarchy established by the FASB, which prioritizes the inputs used in measuring fair value. Level 1 is based on publicly quoted prices for the asset or liability in active markets. Level 2 is based on inputs that are observable other than quoted market prices in active markets, such as quoted prices for the asset or liability in inactive markets or quoted prices for similar assets or liabilities. Level 3 is based on unobservable inputs reflecting the Company's own assumptions about the assumptions that market participants would use in pricing the asset or liability.

 At March 31, 2013 Level 1   Level 2   Level 3   Total
              
 Assets:           
 Investments $73 $ $ $73
 Foreign currency hedges   2    2
 Total Assets$73 $2 $ $75
              
 Liabilities:           
 Deferred compensation$ $213 $ $213
 Foreign currency hedges   1    1
 Total Liabilities$ $214 $ $214
              
              
 At December 31, 2012 Level 1   Level 2   Level 3   Total
              
 Assets:           
 Investments $70 $ $ $70
 Total Assets$70 $ $ $70
              
 Liabilities:           
 Deferred compensation$ $201 $ $201
 Foreign currency hedges    2    2
 Total Liabilities$ $203 $ $203

The fair value of investments is determined based on publicly quoted market prices in active markets. The fair value of foreign currency hedges is determined based on the present value of future cash flows using observable inputs including foreign currency exchange rates. The fair value of deferred compensation is determined based on the fair value of the investments elected by employees.

 

The Company's carrying value of financial instruments approximates fair value, except for differences with respect to the notes and debentures. At both March 31, 2013 and December 31, 2012, the carrying value of the senior debt was $5.86 billion and the fair value, which is estimated based on quoted market prices for similar liabilities and includes accrued interest, was $7.10 billion and $7.16 billion, respectively.