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Fair Value Measurements
 12 Months Ended
Dec. 31, 2014
Fair Value Disclosures [Abstract]  
Fair Value Measurements
Fair Value Measurements
The following table summarizes the Company's financial assets and liabilities that are measured at fair value on a recurring basis:
 
 
 
Fair Value Measurements
 
December 31, 2013
 
 
Level 1
 
Level 2
 
Level 3
Financial Assets
 
 
 
 
 
 
 
Cash equivalents
$
39.0

 
$
39.0

 
$
—

 
$
—

Investments in marketable securities(1)
 

 
 

 
 

 
 

Trading securities
22.5

 
22.5

 
—

 
—

Available-for-sale securities
135.4

 
135.4

 
—

 
—

Other investments
164.3

 
14.1

 
18.4

 
131.8

Financial Liabilities(2)
 

 
 

 
 

 
 

Contingent payment arrangements
$
50.2

 
$
—

 
$
—

 
$
50.2

Obligations to related parties
76.9

 
—

 
—

 
76.9

Interest rate swaps
2.5

 
—

 
2.5

 
—

 
 
 
 
Fair Value Measurements
 
December 31, 2014
 
 
Level 1
 
Level 2
 
Level 3
Financial Assets
 
 
 
 
 
 
 
Cash equivalents
$
59.1

 
$
59.1

 
$
—

 
$
—

Investments in marketable securities(1)
 

 
 

 
 

 
 

Trading securities
22.3

 
22.3

 
—

 
—

Available for sale securities
150.3

 
150.3

 
—

 
—

Other investments
167.2

 
13.6

 
19.4

 
134.2

Financial Liabilities(2)
 

 
 

 
 

 
 

Contingent payment arrangements
$
59.3

 
$
—

 
$
—

 
$
59.3

Obligations to related parties
93.1

 
—

 
—

 
93.1

Interest rate swaps
1.4

 
—

 
1.4

 
—

Foreign currency forward contracts
0.5

 
—

 
0.5

 
—

_______________________________________________________________________________

(1)
Principally investments in equity securities.

(2)
Amounts are presented within Other liabilities in the accompanying Consolidated Balance Sheets.
The following is a description of the significant financial assets and liabilities measured at fair value and the fair value methodologies used.
Cash equivalents consist primarily of highly liquid investments in daily redeeming money market funds which are classified as Level 1.
Investments in marketable securities consist primarily of investments in publicly traded securities and in funds advised by Affiliates which are valued using net asset value ("NAV"). Publicly traded securities and investments in daily redeeming funds that calculate NAVs are classified as Level 1.
Other investments consist primarily of funds advised by Affiliates and are valued using NAV. Investments in daily redeeming funds that calculate NAVs are classified as Level 1. Investments in funds that permit redemptions monthly or quarterly are classified as Level 2. Investments in funds that are subject to longer redemption restrictions are classified as Level 3. The fair value of Level 3 assets is determined using NAV one quarter in arrears (adjusted for current period calls and distributions).
Contingent payment arrangements represent the present value of the expected future settlement of contingent payment arrangements related to the Company's investments in consolidated Affiliates. The significant unobservable inputs that are used in the fair value measurement of these obligations are growth and discount rates. Increases in the growth rate result in a higher obligation while an increase in the discount rate results in a lower obligation.
Obligations to related parties include agreements to repurchase Affiliate equity and liabilities offsetting certain investments which are held by the Company but economically attributable to a related party. The significant unobservable inputs that are used in the fair value measurement of the agreements to repurchase Affiliate equity are growth and discount rates. Increases in the growth rate result in a higher obligation while an increase in the discount rate results in a lower obligation. The liability to a related party is measured based upon certain investments held by the Company, the fair value of which is determined using NAV one quarter in arrears adjusted for current period calls and distributions.
Interest rate swaps and foreign currency forward contracts use model-derived valuations in which all significant inputs are observable in active markets to determine the fair value of these derivatives.
It is the Company's policy to value financial assets or liabilities transferred as of the beginning of the period in which the transfer occurs. There were no significant transfers of financial assets or liabilities from Level 1 to Level 2 in 2014 or 2013.
Level 3 Financial Assets and Liabilities
The following table presents the changes in Level 3 assets and liabilities for the years ended December 31, 2013 and 2014:
 
For the Years Ended December 31,
 
 
2013
 
2014
 
 
Other Investments
 
Contingent Payment Arrangements
 
Obligations to Related Parties
 
Other Investments
 
Contingent Payment Arrangements
 
Obligations to Related Parties
 
Balance, beginning of period
$
118.9

 
$
31.0

 
$
77.8

 
$
131.8

 
$
50.2

 
$
76.9

 
Net gains/losses
12.3

(1) 
19.2

(2) 
6.2

(3) 
11.4

(1) 
9.1

(2) 
5.5

(3) 
Purchases and issuances
18.0

 
—

 
62.9

 
17.4

 
—

 
96.7

 
Settlements and reductions
(17.4
)
 
—

 
(70.0
)
 
(26.4
)
 
—

 
(86.0
)
 
Net transfers in and/or out of Level 3
—

 
—

 
—

 
—

 
—

 
—

 
Balance, end of period
$
131.8

 
$
50.2

 
$
76.9

 
$
134.2

 
$
59.3

 
$
93.1

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net unrealized gains/losses relating to instruments still held at the reporting date
$
16.5

 
$
19.2

 
$
2.2

 
$
17.1

 
$
9.1

 
$
(0.1
)
 
_______________________________________________________________________________

(1)
Gains and losses on Other investments are recorded in Investment and other income.

(2)
Accretion and changes to payment estimates under the Company's contingent payment arrangements are recorded in Imputed interest expense and contingent payment arrangements.

(3)
Gains and losses associated with agreements to repurchase Affiliate equity are recorded in Imputed interest expense and contingent payment arrangements. Gains and losses related to liabilities offsetting certain investments are recorded in Investment and other income.
The following table presents certain quantitative information about the significant unobservable inputs used in valuing the Company's Level 3 financial liabilities:
 
 
Quantitative Information about Level 3 Fair Value Measurements
 
 
Valuation
Techniques
 
Unobservable Input
 
Fair Value at
December 31, 2013
 
Range at December 31, 2013
 
Fair Value at
December 31, 2014
 
Range at December 31, 2014
Contingent payment arrangements
 
Discounted cash flow
 
Growth rates
 
$
50.2

 
3% - 11%
 
$
59.3

 
6%
 
 
 
 
Discount rates
 
 

 
14% - 18%
 
 
 
15%
Affiliate equity repurchase obligations
 
Discounted cash flow
 
Growth rates
 
4.0

 
8%
 
21.5

 
5% - 9%
 
 
 
 
Discount rates
 
 

 
15%
 
 
 
15% - 16%

Investments in Certain Entities that Calculate Net Asset Value
The Company uses the NAV of certain investments as their fair value. The NAVs that have been provided by the investees have been derived from the fair values of the underlying investments as of the measurement dates. The following table summarizes, as of December 31, 2013 and 2014, the nature of these investments and any related liquidity restrictions or other factors which may impact the ultimate value realized:
 
December 31, 2013
 
December 31, 2014
Category of Investment
Fair Value
 
Unfunded
Commitments
 
Fair Value
 
Unfunded
Commitments
Private equity(1)
$
131.8

 
$
62.9

 
$
134.2

 
$
67.8

Other funds(2)
82.3

 
—

 
75.8

 
—

 
$
214.1

 
$
62.9

 
$
210.0

 
$
67.8

_______________________________________________________________________________

(1)
These funds primarily invest in a broad range of private equity funds, as well as make direct investments. Distributions will be received as the underlying assets are liquidated over the life of the funds.

(2)
These are multi-disciplinary funds that invest across various asset classes and strategies including long/short equity, credit and real estate. Investments are generally redeemable on a daily or quarterly basis.
There are no current plans to sell any of these investments.
Other Financial Assets and Liabilities Not Carried at Fair Value
The carrying amount of cash, cash equivalents, receivables, and payables and accrued liabilities approximates fair value because of the short-term nature of these instruments. The carrying value of notes receivable approximates fair value because interest rates and other terms are at market rates. The carrying value of senior bank debt approximates fair value because the debt has variable interest based on selected short-term rates. The following table summarizes the Company's other financial liabilities not carried at fair value:
 
December 31, 2013
 
December 31, 2014
 
 
 
Carrying Amount
 
Fair Value
 
Carrying Amount
 
Fair Value
 
Fair Value Hierarchy
Senior notes
$
340.0

 
$
325.0

 
$
736.8

 
$
786.2

 
Level 2
Convertible securities
518.7

 
963.9

 
303.1

 
532.1

 
Level 2