Fair Value Measurements and Other Financial Instruments

Fair Value Measurements

In determining fair value of financial instruments, we utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible and consider counterparty credit risk in our assessment of fair value. We determine fair value of our financial instruments based on assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market. When considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following levels:


•	Level 1 Inputs: Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date.


•	Level 2 Inputs: Other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability.


•	Level 3 Inputs: Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at measurement date.

The following table details the fair value hierarchy of our financial instruments:



	March 31, 2019
(In millions)	Total Fair Value		Level 1		Level 2		Level 3
Cash equivalents	$	82.4	$	82.4	$	—	$	—
Derivative financial and hedging instruments net asset:
Foreign currency forward contracts and options	$	0.1	$	—	$	0.1	$	—



	December 31, 2018
(In millions)	Total Fair Value		Level 1		Level 2		Level 3
Cash equivalents	$	38.6	$	38.6	$	—	$	—
Derivative financial and hedging instruments net asset:
Foreign currency forward contracts	$	0.6	$	—	$	0.6	$	—

Cash Equivalents

Our cash equivalents at March 31, 2019 and December 31, 2018 consisted of bank time deposits (Level 1). Since these are short-term highly liquid investments with remaining maturities of 3 months or less at the date of purchase, they present negligible risk of changes in fair value due to changes in interest rates.

Derivative Financial Instruments

Our foreign currency forward contracts, foreign currency options, interest rate swaps and cross-currency swaps are recorded at fair value on our Condensed Consolidated Balance Sheets using a discounted cash flow analysis that incorporates observable market inputs. These market inputs include foreign currency spot and forward rates, and various interest rate curves, and are obtained from pricing data quoted by various banks, third-party sources and foreign currency dealers involving identical or comparable instruments (Level 2).

Counterparties to these foreign currency forward contracts have at least an investment grade rating. Credit ratings on some of our counterparties may change during the term of our financial instruments. We closely monitor our counterparties’ credit ratings and, if necessary, will make any appropriate changes to our financial instruments. The fair value generally reflects the estimated amounts that we would receive or pay to terminate the contracts at the reporting date.

Other Financial Instruments

The following financial instruments are recorded at fair value or at amounts that approximate fair value: (1) trade receivables, net, (2) certain other current assets, (3) accounts payable and (4) other current liabilities. The carrying amounts reported on our Condensed Consolidated Balance Sheets for the above financial instruments closely approximate their fair value due to the short-term nature of these assets and liabilities.

Other liabilities that are recorded at carrying value on our Condensed Consolidated Balance Sheets include our credit facilities and senior notes. We utilize a market approach to calculate the fair value of our senior notes. Due to their limited investor base and the face value of some of our senior notes, they may not be actively traded on the date we calculate their fair value. Therefore, we may utilize prices and other relevant information generated by market transactions involving similar securities, reflecting U.S. Treasury yields to calculate the yield to maturity and the price on some of our senior notes. These inputs are provided by an independent third party and are considered to be Level 2 inputs.

We derive our fair value estimates of our various other debt instruments by evaluating the nature and terms of each instrument, considering prevailing economic and market conditions, and examining the cost of similar debt offered at the balance sheet date. We also incorporated our credit default swap rates and currency specific swap rates in the valuation of each debt instrument, as applicable.

These estimates are subjective and involve uncertainties and matters of significant judgment, and therefore we cannot determine them with precision. Changes in assumptions could significantly affect our estimates.

The table below shows the carrying amounts and estimated fair values of our debt, excluding our lease liabilities.



	March 31, 2019				December 31, 2018
(In millions)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Term Loan A Facility due July 2023⁽¹⁾⁽²⁾	$	223.3	$	223.3	$	222.2	$	222.2
6.50% Senior Notes due December 2020	424.1		444.0		424.0		440.1
4.875% Senior Notes due December 2022	421.3		437.3		421.1		421.2
5.25% Senior Notes due April 2023	421.4		441.3		421.2		424.5
4.50% Senior Notes due September 2023⁽¹⁾	446.1		499.1		454.9		489.9
5.125% Senior Notes due December 2024	421.5		438.7		421.3		419.8
5.50% Senior Notes due September 2025	397.2		421.4		397.1		394.8
6.875% Senior Notes due July 2033	445.6		487.7		445.5		453.4
Other foreign borrowings⁽¹⁾	90.2		90.3		98.5		99.2
Other domestic borrowings	165.0		165.0		168.4		170.0
Total debt⁽³⁾	$	3,455.7	$	3,648.1	$	3,474.2	$	3,535.1


⁽¹⁾	Includes borrowings denominated in currencies other than U.S. dollars.


⁽²⁾	On July 12, 2018, the Company entered into a third amended and restated credit agreement, which included the refinancing of the term loan A facilities and revolving credit facilities.


⁽³⁾	At March 31, 2019, the carrying amount and estimated fair value of debt exclude lease liabilities.

Included among our non-financial assets and liabilities that are not required to be measured at fair value on a recurring basis are inventories, net property and equipment, goodwill, intangible assets and asset retirement obligations.