Fair Value of Financial Instruments

3 Months Ended

Mar. 31, 2013

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

Fair Value of Financial Instruments

The Company’s financial instruments include cash and cash equivalents, accounts and notes receivable, cash collateral deposited with insurance carriers, cash surrender value of life insurance policies, auction rate securities, cost and equity method investments, deferred compensation plan assets and liabilities, accounts payable and other current liabilities, acquisition-related contingent consideration and debt obligations.

    Fair value is 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 fair value guidance establishes a valuation hierarchy, which requires maximizing the use of observable inputs when measuring fair value. The three levels of inputs that may be used are:

Level 1 - Quoted market prices in active markets for identical assets or liabilities.

Level 2 - Observable market based inputs or other observable inputs.

Level 3 - Significant unobservable inputs that cannot be corroborated by observable market data. These values are generally determined using valuation models incorporating management’s estimates of market participant assumptions.

Carrying amounts and estimated fair values of financial instruments as of the dates indicated were as follows (in millions):     

	March 31, 2013				December 31, 2012
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Assets:
Cash surrender value of life insurance policies	$	12.8	$	12.8	$	11.9	$	11.9
Auction rate securities	14.8		14.8		14.4		14.4
Liabilities:
Deferred compensation plan liabilities	$	3.9	$	3.9	$	3.3	$	3.3
Acquisition-related contingent consideration	142.6		142.6		143.6		143.6
4.875% senior notes	400.0		397.0		—		—
7.625% senior notes	—		—		150.0		154.9
Original 4.0% Notes	9.6		18.1		9.7		15.9
Original 4.25% Notes	3.0		5.8		3.0		5.1
New 4.0% Notes	101.6		103.4		100.9		101.5
New 4.25% Notes	92.7		94.8		92.1		92.7

The following methods and assumptions were used to estimate the fair values of financial instruments:

Cash Surrender Value of Life Insurance Policies.Cash surrender values of life insurance policies are based on current cash surrender values as quoted by insurance carriers. Life insurance policies support the Company’s split dollar agreements and deferred compensation plan assets.

Auction Rate Securities.The fair value of the Company’s auction rate securities was estimated by an independent valuation firm, Houlihan Capital Advisors, LLC, using a probability weighted discounted cash flow model.

Deferred Compensation Plan Liabilities. Deferred compensation plan liabilities are based on employee deferrals, together with Company matching contributions, which are valued according to employee-directed investment options. The fair value of deferred compensation plan liabilities is based on quoted market prices of the employees' underlying investment selections.

Acquisition-Related Contingent Consideration Acquisition-related contingent consideration in the table above represents the estimated fair value of additional future earn-outs payable for acquisitions of businesses that closed after January 1, 2009, in accordance with U.S. GAAP. The fair value of such acquisition-related contingent consideration is based on management’s estimates and entity-specific assumptions and is evaluated on an on-going basis.

Debt. The estimated fair values of the Company’s 4.875% senior notes, 7.625% senior notes and Original Convertible Notes, which are measured on a nonrecurring basis, are based on quoted market prices, a Level 1 input. During the first quarter of 2013, the Company repurchased and redeemed all of its outstanding 7.625% senior notes. See Note 10 - Debt. The estimated fair value of the debt component of the Company’s New Convertible Notes is calculated using an income approach, based on a discounted cash flow model.This method is based on management’s estimates of the Company’s market interest rate for a similar nonconvertible instrument.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

As of March 31, 2013, the Company held certain assets and liabilities required to be measured at fair value on a recurring basis. The fair values of financial assets and liabilities measured on a recurring basis were determined using the following inputs as of the dates indicated (in millions):

			Fair Value Measurements Using Inputs Considered as Significant
	Fair Value as of March 31, 2013		Level 1		Level 2	Level 3
Assets
Cash surrender value of life insurance policies	$	12.8	$	12.8	—	—
Auction rate securities	$	14.8	—		—	$	14.8
Liabilities
Deferred compensation plan liabilities	$	3.9	$	3.9	—	—
Acquisition-related contingent consideration	$	142.6	—		—	$	142.6
			Fair Value Measurements Using Inputs Considered as Significant
	Fair Value as of December 31, 2012		Level 1		Level 2	Level 3
Assets
Cash surrender value of life insurance policies	$	11.9	$	11.9	—	—
Auction rate securities	$	14.4	—		—	$	14.4
Liabilities
Deferred compensation plan liabilities	$	3.3	$	3.3	—	—
Acquisition-related contingent consideration	$	143.6	—		—	$	143.6

The following tables, which may contain summation differences due to rounding, provide a reconciliation between the beginning and ending balances of items measured at fair value on a recurring basis using significant unobservable inputs for the periods indicated (in millions):

	Auction Rate Securities
Assets	Student Loan			Structured Finance Securities		Total
Balance as of December 31, 2011	$	11.8		$	1.7	$	13.5
Changes in fair value recorded in earnings	—			—		—
Unrealized gains included in other comprehensive income	$	0.2		$	0.3	$	0.5
Balance as of March 31, 2012	$	12.0		$	2.0	$	14.0
Balance as of December 31, 2012	$	11.7		$	2.7	$	14.4
Changes in fair value recorded in earnings	—			—		—
Unrealized gains included in other comprehensive income	—			0.4		0.4
Balance as of March 31, 2013	$	11.7		$	3.0	$	14.8
Liabilities	Acquisition-Related Contingent Consideration
Balance as of December 31, 2011	$	79.3
Payments of contingent consideration	—
Valuation gains (losses) recorded in earnings	—
Balance as of March 31, 2012	$	79.3
Balance as of December 31, 2012	$	143.6
Payments of contingent consideration	(0.6		)
Valuation gains (losses) recorded in earnings	—
Currency translation adjustments included in other comprehensive income	(0.4		)
Balance as of March 31, 2013	$	142.6

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

Assets and liabilities recognized or disclosed at fair value on a nonrecurring basis include items such as equity method investments, goodwill and long-lived assets, which are initially measured at fair value, and are subsequently remeasured in the event of an impairment or other measurement event, if applicable. Except for the Company's 7.625% senior notes, which the Company repurchased and redeemed during the first quarter of 2013, and the assets and liabilities associated with the Globetec operation, which the Company reclassified as held-for-sale in the third quarter of 2012, the Company had no significant assets or liabilities required to be measured at fair value on a nonrecurring basis as of either March 31, 2013 or December 31, 2012. Refer to Note 10 - Debt and Note 4 - Discontinued Operations.