Fair Value of Financial Instruments

9 Months Ended

Sep. 30, 2013

The Company’s financial instruments include cash and cash equivalents, accounts and notes receivable, cash collateral deposited with insurance carriers, life insurance assets, 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.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

As of September 30, 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 September 30, 2013		Level 1		Level 2	Level 3
Assets
Life insurance surrender values	$	5.0	$	5.0
Auction rate securities (See Note 7)	$	9.2				$	9.2

Liabilities
Acquisition-related contingent consideration ⁽¹⁾	$	169.8				$	169.8

			Fair Value Measurements Using Inputs Considered as Significant
	Fair Value as of December 31, 2012		Level 1		Level 2	Level 3
Assets
Life insurance surrender values	$	11.9	$	11.9
Auction rate securities (See Note 7)	$	14.4				$	14.4

Liabilities
Acquisition-related contingent consideration ⁽¹⁾	$	143.6				$	143.6

(1) For acquisitions that closed after January 1, 2009.

Changes in Acquisition-Related Contingent Consideration Measured at Fair Value on a Recurring Basis

For the nine month period ended September 30, 2013, the Company made $2.7 million of payments for acquisition-related contingent consideration obligations. Foreign currency translation gains included in other comprehensive income totaled $1.1 million for the nine month period ended September 30, 2013. Additions from the Company's 2013 acquisitions totaled $30.0 million for the nine month period ended September 30, 2013.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

Assets and liabilities recognized or disclosed at fair value on a nonrecurring basis, which are initially measured at fair value, and are subsequently remeasured in the event of an impairment or other measurement event, include items such as cost and equity method investments, goodwill and other intangible assets, long-lived assets and debt instruments.

Carrying amounts and estimated fair values of selected financial instruments measured on a non-recurring basis as of the dates indicated were as follows (in millions):



	September 30, 2013				December 31, 2012
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
4.875% senior notes	$	400.0	$	378.0	$	—	$	—
7.625% senior notes	$	—	$	—	$	150.0	$	154.9
2009 Convertible Notes	$	12.6	$	24.7	$	12.7	$	21.0
2011 Convertible Notes	$	197.0	$	397.8	$	193.0	$	338.3

The estimated fair values of the Company’s 4.875% senior notes, 7.625% senior notes, 2009 Convertible Notes and 2011 Convertible Notes are based on quoted market prices, a Level 1 input. During the first quarter of 2013, the Company repurchased and redeemed its 7.625% senior notes. A debt extinguishment loss of $5.6 million was recorded in connection with the transaction. See Note 10 - Debt for additional information.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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