FAIR VALUE MEASUREMENT

6 Months Ended

Jun. 30, 2013

Notes to Financial Statements [Abstract]

FAIR VALUE MEASUREMENT

FAIR VALUE MEASUREMENT

The Company records financial instruments at fair value with unrealized gains and losses related to certain financial instruments reflected in AOCI on the Consolidated Balance Sheets.  In addition, the Company recognizes certain liabilities at fair value.  The Company applies the market approach for recurring fair value measurements.  Accordingly, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs.

The fair value of financial instruments is determined by reference to various market data and other valuation techniques as appropriate. The Company believes the carrying amounts of cash and cash equivalents, accounts receivable (net of allowance for doubtful accounts), prepaid expenses and other current assets, accounts payable, accrued liabilities, income taxes payable and notes payable approximate fair value due to the short-term nature of these instruments.  The Company estimated the fair value and carrying value of total long-term debt, including the current portion, was $1,480.0 million and $1,450.3 million, respectively, at June 30, 2013.   At December 31, 2012, the Company estimated the fair value and carrying value, including the current portion, was $1,515.2 million and $1,472.9 million respectively.  The interest rate on the $450.0 million Senior Notes, the $300.0 million Senior Notes, and the $250.0 million PPN are fixed rates of 4.1%, 2.8% and 4.1%, respectively, and their fair value is based on the interest rates as of June 30, 2013. The interest rates on variable rate term loan debt and commercial paper are consistent with current market conditions, therefore the fair value of these instruments approximates their carrying values.

The following tables set forth by level within the fair value hierarchy the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis at June 30, 2013 and December 31, 2012, which are classified as “Cash and cash equivalents,” “Prepaid expenses and other current assets,” “Other noncurrent assets, net,” “Accrued liabilities,” and “Other noncurrent liabilities” in the Consolidated Balance Sheets.  Financial assets and liabilities that are recorded at fair value as of the balance sheet date are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

	June 30, 2013
(in thousands)	Total		Level 1		Level 2		Level 3
Assets
Interest rate swaps	$	3,547	$	—	$	3,547	$	—
Cross currency basis swaps	25,785		—		25,785		—
Foreign exchange forward contracts	5,652		—		5,652		—
DIO Corporate convertible bonds	61,558		—		—		61,558
Total assets	$	96,542	$	—	$	34,984	$	61,558
Liabilities
Interest rate swaps	$	1,141	$	—	$	1,141	$	—
Commodity contracts	1,258		—		1,258		—
Cross currency basis swaps	99,034		—		99,034		—
Foreign exchange forward contracts	7,719		—		7,719		—
Long term debt	153,214		—		153,214		—
DIO equity option contracts	139		—		—		139
Total liabilities	$	262,505	$	—	$	262,366	$	139

	December 31, 2012
(in thousands)	Total		Level 1		Level 2		Level 3
Assets
Interest rate swaps	$	4,727	$	—	$	4,727	$	—
Cross currency basis swaps	8,728		—		8,728		—
Foreign exchange forward contracts	9,070		—		9,070		—
DIO Corporate convertible bonds	75,143		—		—		75,143
Total assets	$	97,668	$	—	$	22,525	$	75,143
Liabilities
Interest rate swaps	$	2,003	$	—	$	2,003	$	—
Commodity contracts	95		—		95		—
Cross currency basis swaps	194,753		—		194,753		—
Foreign exchange forward contracts	4,440		—		4,440		—
Long term debt	154,560		—		154,560		—
DIO equity option contracts	153		—		—		153
Total liabilities	$	356,004	$	—	$	355,851	$	153

Derivative valuations are based on observable inputs to the valuation model including interest rates, foreign currency exchange rates, future commodities prices and credit risks.  The commodity contracts, certain interest rate swaps and foreign exchange forward contracts are considered cash flow hedges and certain cross currency interest rate swaps are considered hedges of net investments in foreign operations as discussed in Note 10, Financial Instruments and Derivatives.

The Company uses the income method valuation technique to estimate the fair value of the DIO corporate bonds.  The significant unobservable inputs for valuing the corporate bonds are DIO Corporation’s stock volatility factor of approximately 40% and corporate bond rating which implies approximately a 15% discount rate on the valuation model.  Significant observable inputs used to value the corporate bonds include foreign exchange rates and DIO Corporation’s period-ending market stock price.

The Company has valued the DIO equity option contracts using a Monte Carlo simulation which uses several estimates and probability assumptions by management including the future stock price, the stock price as a multiple of DIO earnings and the probability of the sellers to reduce their shares held by selling into the open market.  The fair value of equity option contracts are reported in “Other noncurrent liabilities,” on the Consolidated Balance Sheets and changes in the fair value are reported in “Other expense (income), net” in the Consolidated Statements of Operations.

The following table presents a reconciliation of the Company’s Level 3 holdings measured at fair value on a recurring basis using unobservable inputs:

(in thousands)	DIO Corporate Convertible Bonds			DIO Equity Options Contracts
Balance at December 31, 2012	$	75,143		$	(153	)
Unrealized loss:
Reported in AOCI, pretax	(12,707		)	—
Unrealized gain:
Reported in other expense (income), net	—			13
Effects of exchange rate changes	(878		)	1
Balance at June 30, 2013	$	61,558		$	(139	)

For the six months ended June 30, 2013, there were no purchases, issuances or transfers of Level 3 financial instruments.