Fair Value of Financial Instruments

12 Months Ended

Dec. 31, 2011

Fair Value Disclosures [Abstract]

Fair Value Measurements

Note 13: Fair Value Measurements

We define fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

The following fair value hierarchy classifies the inputs to valuation techniques used to measure fair value into one of three levels:

·   Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities.

·   Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

·   Level 3: Unobservable inputs that reflect the reporting entity’s own assumptions.

The following tables present the assets and liabilities that are measured at fair value on a recurring basis in our balance sheets:

	Balance at		Basis of Fair Value Measurements
	December 31,
($ in millions)	2011		Level 1		Level 2		Level 3
Assets:
Short-term investments	$	26.5	$	26.5	$	-	$	-
Deferred compensation assets		3.3		3.3		-		-
	$	29.8	$	29.8	$	-	$	-
Liabilities:
Contingent consideration	$	2.1	$	-	$	-	$	2.1
Deferred compensation liabilities		4.6		4.6		-		-
Interest rate swap contracts		8.8		-		8.8		-
	$	15.5	$	4.6	$	8.8	$	2.1

	Balance at		Basis of Fair Value Measurements
	December 31,
($ in millions)	2010		Level 1		Level 2		Level 3
Assets:
Short-term investments	$	0.6	$	0.6	$	-	$	-
Deferred compensation assets		3.6		3.6		-		-
	$	4.2	$	4.2	$	-	$	-
Liabilities:
Contingent consideration	$	2.3	$	-	$	-	$	2.3
Deferred compensation liabilities		5.4		5.4		-		-
Interest rate swap contracts		6.1		-		6.1		-
	$	13.8	$	5.4	$	6.1	$	2.3

Short-term investments, which are comprised of certificates of deposit and mutual funds, are included within other current assets and are valued using a market approach based on quoted market prices in an active market. Deferred compensation assets are included within other current assets and are also valued using a market approach based on quoted market prices in an active market. The fair value of deferred compensation liabilities is based on quoted prices of the underlying employees’ investment selections and is included within other long-term liabilities.

Interest rate swaps are valued using a discounted cash flow analysis based on the terms of the contract and observable market inputs (i.e. LIBOR, Eurodollar forward rates, and swap spreads). Refer to Note 12, Derivative Financial Instruments, for further discussion of our derivatives.

The fair value of the contingent consideration was determined using a probability-weighted income approach at the acquisition date and is revalued at each reporting date or more frequently if circumstances dictate. Changes in the fair value of these obligations are recorded as income or expense within restructuring and other items in our consolidated statements of income. The fair value measurement is based on significant inputs not observable in the market, which are referred to as Level 3 inputs.

The following table provides a summary of changes in our Level 3 fair value measurements during 2011:

	($ in millions)
Balance, December 31, 2010	$	2.3
Increase in fair value recorded in earnings		0.5
Reduction in fair value recorded in earnings		(0.8	)
Changes in foreign currency exchange rates		0.1
Balance, December 31, 2011	$	2.1

The following table provides a summary of changes in our Level 3 fair value measurements during 2010:

	($ in millions)
Balance, December 31, 2009	$	2.8
Additional contingent consideration acquired		1.8
Increase in fair value recorded in earnings		0.2
Reduction in fair value recorded in earnings		(2.1	)
Changes in foreign currency exchange rates		(0.4	)
Balance, December 31, 2010	$	2.3

Refer to Note 3, Restructuring and Other Items, for further discussion of acquisition-related contingencies.

Other Financial Instruments

Cash and cash equivalents, accounts receivable and short-term debt are held at carrying amounts that approximate fair value due to their near term maturities. Quoted market prices are used to estimate the fair value of publicly traded long-term debt. Debt that is not quoted on an exchange is valued using a discounted cash flow method based on interest rates that are currently available to us for debt issuances with similar terms and maturities. At December 31, 2011, the estimated fair value of long-term debt was $279.2 million compared to a carrying amount of $299.3 million. At December 31, 2010, the estimated fair value of long-term debt was $344.2 million and the carrying amount was $358.1 million.