FAIR VALUE

9 Months Ended

Sep. 30, 2012

FAIR VALUE

NOTE 10. FAIR VALUE

The table below presents information about items, which are carried at fair value on a recurring basis at September 30, 2012 and December 31, 2011:

		Fair Value Measurement as of September 30, 2012
	Description	Balance		Level 1		Level 2		Level 3
Assets:
	Derivatives (a)	$	20.4	$	—	$	20.4	$	—
	Total	$	20.4	$	—	$	20.4	$	—
Liabilities:
	Derivatives (a)	$	3.9	$	—	$	3.9	$	—
	Contingent consideration arising from acquisitions (b)		6.8		—		—		6.8
	Total	$	10.7	$	—	$	3.9	$	6.8
		Fair Value Measurement as of December 31, 2011
	Description	Balance		Level 1		Level 2		Level 3
Assets:
	Derivatives (a)	$	12.6	$	—	$	12.6	$	—
	Total	$	12.6	$	—	$	12.6	$	—
Liabilities:
	Derivatives (a)	$	6.8	$	—	$	6.8	$	—
	Contingent consideration arising from acquisitions (b)		9.1		—		—		9.1
	Total	$	15.9	$	—	$	6.8	$	9.1

^(a) Represents interest rate swaps and FX forwards on certain assets and liabilities as well as on certain non-U.S. dollar net investments in certain foreign subsidiaries as more fully described in Note 7 to the financial statements

^(b) Represents contingent consideration liabilities pursuant to the agreements for certain MA acquisitions which are more fully discussed in Note 8 to the consolidated financial statements

The following table summarizes the changes in the fair value of the Company’s Level 3 liabilities:

	Contingent Consideration
	Nine Months Ended September 30,
	2012			2011
Balance as of January 1	$	9.1		$	2.1
Purchases		—			—
Issuances		—			—
Settlements		(0.5	)		—
Total gains (realized and unrealized):
Included in earnings		(2.2	)		—
Included in other comprehensive income		—			—
Transfer in and/or out of Level 3		—			—
Foreign currency translation adjustments		0.4			(0.1	)
Balance as of September 30	$	6.8		$	2.0

The gains included in earnings in the table above are recorded within SG&A expenses in the Company’s consolidated statement of operations. These gains relate to contingent consideration obligations outstanding at September 30, 2012.

Of the $6.8 million in contingent consideration obligations as of September 30, 2012, $1.4 million is classified within accounts payable and accrued liabilities with the remaining $5.4 million classified in other liabilities within the Company’s consolidated balance sheet.

The following are descriptions of the methodologies utilized by the Company to estimate the fair value of its derivative contracts and contingent consideration obligations:

Derivatives:

In determining the fair value of the derivative contracts in the table above, the Company utilizes industry standard valuation models. Where applicable, these models project future cash flows and discount the future amounts to a present value using spot rates, forward points, currency volatilities, interest rates as well as the risk of non-performance of the Company and the counterparties with whom it has derivative contracts. The Company established strict counterparty credit guidelines and only enters into transactions with financial institutions that adhere to these guidelines. Accordingly, the risk of counterparty default is deemed to be minimal.

Contingent consideration:

At September 30, 2012, the Company has contingent consideration obligations related to the acquisitions of CSI and Copal which are based on certain financial and non-financial metrics set forth in the acquisition agreements. These obligations are measured using Level 3 inputs as defined in the ASC. The Company recorded the obligations for these contingent consideration arrangements on the date of each respective acquisition based on management’s best estimates of the achievement of the metrics and the value of the obligations are adjusted quarterly.

The contingent consideration obligation for CSI is based on the achievement of a certain contractual milestone by January 2016. The Company utilizes a discounted cash flow methodology to value this obligation. The future expected cash flow for this obligation is discounted using an interest rate available to borrowers with similar credit risk profiles to that of the Company. The most significant unobservable input involved in the measurement of this obligation is the probability that the milestone will be reached by January 2016. At September 30, 2012, the Company expects that this milestone will be reached by the aforementioned date.

There are several contingent consideration obligations relating to the acquisition of Copal which are more fully discussed in Note 8. The Company utilizes discounted cash flow methodologies to value these obligations. The expected future cash flows for these obligations are discounted using a risk-free interest rate plus a credit spread based on the option adjusted spread of the Company’s publicly traded debt as of the valuation date. The most significant unobservable input involved in the measurement of these obligations is the projected future financial results of the applicable Copal entities. Also, for the portion of the obligations which are dependent upon the exercise of the call/put option, the Company has utilized a Monte Carlo simulation model to estimate when the option will be exercised, thus triggering the payment of contingent consideration.

A significant increase or decrease in any of the aforementioned significant unobservable inputs related to the fair value measurement of the Company’s contingent consideration obligations would result in a significantly higher or lower reported fair value for these obligations.