Fair Value Measurements

6 Months Ended

Jun. 30, 2012

Fair Value Measurements

Fair Value Measurements

Note 4 — Fair Value Measurements

Current accounting guidance defines fair value as the price that would be received in the sale of an asset, or paid to transfer a liability in an orderly transaction between market participants at the measurement date.  Guidance requires disclosure of the extent to which fair value is used to measure financial assets and liabilities, the inputs utilized in calculating valuation measurements, and the effect of the measurement of significant unobservable inputs on earnings, or changes in net assets, as of the measurement date.  Guidance establishes a three-level valuation hierarchy based upon the transparency of inputs utilized in the measurement and valuation of financial assets or liabilities as of the measurement date.  Level 1 inputs include quoted prices for identical instruments and are the most observable.  Level 2 inputs include quoted prices for similar assets and observable inputs such as interest rates, foreign currency exchange rates, commodity rates and yield curves.  Level 3 inputs are not observable in the market and include management’s own judgments about the assumptions market participants would use in pricing the asset or liability.  The use of observable and unobservable inputs is reflected in the hierarchy assessment disclosed in the table below.

As of June 30, 2012, December 31, 2011 and July 2, 2011, the Company held certain financial assets that are required to be measured at fair value on a recurring basis.  These included derivative hedging instruments related to the purchase of certain raw materials and foreign currencies, investments in trading securities and available for sale securities, including an auction rate security.  The Company’s available-for-sale and trading securities principally consist of municipal bonds and mutual funds that are publicly traded.

The following table presents information about the Company’s financial assets and liabilities measured at fair value as of June 30, 2012, December 31, 2011 and July 2, 2011, and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value:

	Estimated Fair Value June 30, 2012
	Total			Input Levels Used
	Fair Value			Level 1			Level 2		Level 3
Cash and cash equivalents	$	66,617		$	66,617		$	—	$	—
Auction rate security	7,453			—			—		7,453
Available-for-sale securities excluding the auction rate security	74,016			—			74,016		—
Foreign currency forward contracts	70			—			70		—
Commodity futures contracts	(132		)	(132		)	—		—
Commodity options contracts	(18		)	(18		)	—		—
Trading securities	46,240			46,240			—		—
Total assets measured at fair value	$	194,246		$	112,707		$	74,086	$	7,453

	Estimated Fair Value December 31, 2011
	Total		Input Levels Used
	Fair Value		Level 1		Level 2		Level 3
Cash and cash equivalents	$	78,612	$	78,612	$	—	$	—
Auction rate security	7,453		—		—		7,453
Available-for-sale securities excluding the auction rate security	57,835		—		57,835		—
Foreign currency forward contracts	205		—		205		—
Commodity futures contracts	203		203		—		—
Commodity options contracts	—		—		—		—
Trading securities	41,768		41,768		—		—
Total assets measured at fair value	$	186,076	$	120,583	$	58,040	$	7,453

	Estimated Fair Value July 2, 2011
	Total		Input Levels Used
	Fair Value		Level 1		Level 2		Level 3
Cash and cash equivalents	$	41,282	$	41,282	$	—	$	—
Auction rate security	8,130		—		—		8,130
Available-for-sale securities excluding the auction rate security	62,953		—		62,953		—
Foreign currency forward contracts	368		—		368		—
Commodity futures contracts	573		573		—		—
Commodity options contracts	565		565		—		—
Trading securities	43,076		43,076		—		—
Total assets measured at fair value	$	156,947	$	85,496	$	63,321	$	8,130

As of June 30, 2012, the Company’s long term investments included an auction rate security, Jefferson County Alabama Sewer Revenue Refunding Warrants, reported at a fair value of $7,453 after reflecting a $5,140 other than temporary impairment and a $957 temporary decline in market value against its $13,550 par value and original cost.  This other-than-temporary impairment was recorded in other income (expense), net in 2008.  In 2008, this auction rate security was determined to be other-than-temporarily impaired due to the duration and severity of the decline in fair value.  At June 30, 2012, the Company estimated the fair value of this auction rate security utilizing market comparable bonds.  The significant unobservable inputs used in the fair value measurement of the reporting entity’s auction rate securities are the market prices on fixed income securities with terms similar to those of the auction rate securities.  Significant increases or decreases in these inputs in isolation would result in a significantly lower or higher fair value measurement. The trading range of these inputs was between 54% and 64%, with a weighted average of 60%, of the original par value.  The Company classified this auction rate security as non-current and has included it in long term investments on the Condensed Consolidated Statements of Financial Position at June 30, 2012, December 31, 2011 and July 2, 2011 because the Company believes that the current condition of the auction rate security market may take more than twelve months to improve.  Jefferson County is in bankruptcy and has asked the bankruptcy court judge to divert some money to municipal sewer repairs that would have otherwise gone to pay debtholders and other creditors. A ruling in favor of the county could further reduce the market value of this auction rate security resulting in an additional other-than-temporary impairments and charges to net earnings. The Company is not currently able to determine the outcome of this bankruptcy, or the amount and timing of the ultimate net proceeds that it may recover. See also Management’s Discussion and Analysis of Financial Condition and Results of Operations regarding Jefferson County auction rate security.

The following table presents additional information about the Company’s financial instruments (an auction rate security) measured at fair value on a recurring basis using significant unobservable inputs (Level 3) at June 30, 2012 and July 2, 2011:

	2012		2011
Balance at January 1	$	7,453	$	6,775
Unrealized gain in other comprehensive earnings	—		1,355
Balance at June 30 and July 2, respectively	$	7,453	$	8,130

Management believes that the economic situation in Spain is likely to result in additional equity method operating losses in the foreseeable future, and consequently, the Company’s equity investment (current carrying value is $3,270) may suffer an other than temporary decline in value at a future date. Should such a decline in value occur, the Company may be required to recognize a partial or full impairment of this investment asset.

The $7,500 carrying amount of the Company’s industrial revenue development bonds at June 30, 2012 and July 2, 2011 approximates its estimated fair value as the bonds have a floating interest rate.