XML 29 R15.htm IDEA: XBRL DOCUMENT

Fair Value Measurements

9 Months Ended

Jun. 30, 2019

The disclosures below include details of the Company’s fair value measurements, excluding those of consolidated investment products. See Note 8 – Consolidated Investment Products for information related to fair value measurements of the assets and liabilities of these entities.

The assets and liability measured at fair value on a recurring basis were as follows:



(in millions)	Level 1		Level 2		Level 3		NAV as a Practical Expedient		Total
as of June 30, 2019	Level 1		Level 2		Level 3		NAV as a Practical Expedient		Total
Assets
Equity securities, at fair value
Sponsored funds	$	310.9	$	—	$	—	$	70.9	$	381.8
Other equity securities	23.6		0.7		1.0		123.0		148.3
Debt securities
Trading	0.1		53.4		19.3		—		72.8
Available-for-sale	—		4.4		0.3		—		4.7
Life settlement contracts	—		—		11.8		—		11.8
Total Assets Measured at Fair Value	$	334.6	$	58.5	$	32.4	$	193.9	$	619.4



(in millions)	Level 1		Level 2		Level 3		Total
as of September 30, 2018	Level 1		Level 2		Level 3		Total
Assets
Investment securities, trading
Sponsored funds	$	248.1	$	—	$	—	$	248.1
Debt and other equity securities	26.6		50.5		20.5		97.6
Investment securities, available-for-sale
Sponsored funds	178.6		—		—		178.6
Debt and other equity securities	4.4		10.8		0.3		15.5
Life settlement contracts	—		—		11.8		11.8
Total Assets Measured at Fair Value	$	457.7	$	61.3	$	32.6	$	551.6

Liability
Contingent consideration liability	$	—	$	—	$	38.7	$	38.7

Level 1 assets consist primarily of sponsored funds and other equity securities for which the fair values are based on published NAV or quoted market prices. Level 2 assets consist of debt and equity securities for which the fair values are determined using independent third-party broker or dealer price quotes. Level 3 assets consist of debt and equity securities and life settlement contracts for which the fair values are based on discounted cash flows using significant unobservable inputs.

The fair value of the contingent consideration liability was determined using the net present value of anticipated future cash flows based on estimated future revenue and profits and timing of payments.

Investments for which fair value was estimated using reported NAV as a practical expedient consist of a redeemable global equity fund and nonredeemable private debt, equity, infrastructure and real estate funds. The redeemable global equity fund investment of $92.3 million at June 30, 2019 can be redeemed monthly, while the investments in nonredeemable funds are expected to be returned through distributions over the life of the funds as a result of liquidations of the funds’ underlying assets. The expected weighted-average life for $52.0 million of the nonredeemable investments was 1.6 years at June 30, 2019. The liquidation periods for a $48.5 million investment in a nonredeemable private debt fund and $1.1 million of investments in real estate funds are unknown. The Company’s unfunded commitments to the funds totaled $4.9 million at June 30, 2019.

Changes in the Level 3 assets and liability were as follows:



	2019			2018
(in millions)	Investments			Investments			Contingent Consideration Liability
for the three months ended June 30,	Investments			Investments			Contingent Consideration Liability
Balance at beginning of period	$	33.9		$	208.1		$	(31.2	)
Total realized and unrealized gains (losses)
Included in investment and other income (losses), net	2.7			1.0			—
Included in general, administrative and other expense	—			—			(4.4		)
Purchases	3.7			5.4			—
Sales	(0.4		)	(0.4		)	—
Settlements	(2.5		)	(1.1		)	—
Transfers out of Level 3	(5.0		)	—			—
Foreign exchange revaluation	—			(8.8		)	—
Balance at End of Period	$	32.4		$	204.2		$	(35.6	)
Change in unrealized gains (losses) included in net income relating to assets and liability held at end of period	$	0.4		$	0.4		$	(4.4	)



	2019						2018
(in millions)	Investments			Contingent Consideration Liability			Investments			Contingent Consideration Liability
for the nine months ended June 30,	Investments			Contingent Consideration Liability			Investments			Contingent Consideration Liability
Balance at beginning of period	$	32.6		$	(38.7	)	$	199.9		$	(51.0	)
Total realized and unrealized gains (losses)
Included in investment and other income (losses), net	6.3			—			4.0			—
Included in general, administrative and other expense	—			(2.0		)	—			(10.0		)
Purchases	8.7			—			12.1			—
Sales	(4.7		)	—			(0.4		)	—
Settlements	(3.4		)	40.7			(3.0		)	32.4
Transfers out of Level 3	(7.1		)	—			—			—
Foreign exchange revaluation and other	—			—			(8.4		)	(7.0		)
Balance at End of Period	$	32.4		$	—		$	204.2		$	(35.6	)
Change in unrealized gains (losses) included in net income relating to assets and liability held at end of period	$	3.4		$	—		$	2.4		$	(10.0	)

There were no transfers into Level 3 during the nine months ended June 30, 2019 and 2018.

Valuation techniques and significant unobservable inputs used in the Level 3 fair value measurements were as follows:



(in millions)
as of June 30, 2019	Fair Value		Valuation Technique	Significant Unobservable Inputs	Range (Weighted Average ¹)
Debt securities, trading	$	19.3	Discounted cash flow	Discount rate	3.2%–11.8% (6.3%)
Debt securities, trading	$	19.3	Discounted cash flow	Risk premium	2.0%–6.8% (4.2%)

Life settlement contracts	11.8		Discounted cash flow	Life expectancy	20–109 months (58)
Life settlement contracts	11.8		Discounted cash flow	Discount rate	8.0%–20.0% (13.4%)

^{__________________}


¹	Based on the relative fair value of the instruments.



(in millions)
as of September 30, 2018	Fair Value		Valuation Technique	Significant Unobservable Inputs	Range (Weighted Average)
Investment securities, trading – debt and other equity securities	$	20.5	Discounted cash flow	Discount rate	4.1%–12.3% (5.8%)
	$	20.5	Discounted cash flow	Risk premium	2.0%–6.7% (3.6%)

Life settlement contracts	11.8		Discounted cash flow	Life expectancy	20–115 months (61)
Life settlement contracts	11.8		Discounted cash flow	Discount rate	8.0%–20.0% (13.1%)

Contingent consideration liability	38.7		Discounted cash flow	Discount rate	13.0%

If the relevant significant inputs used in the discounted cash flow valuations were independently higher (lower) as of June 30, 2019, the resulting fair value of the assets would be lower (higher).

Financial instruments that were not measured at fair value were as follows:



(in millions)	Fair Value Level	June 30, 2019				September 30, 2018
(in millions)	Fair Value Level	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Financial Assets
Cash and cash equivalents	1	$	5,508.8	$	5,508.8	$	6,610.8	$	6,610.8
Other investments
Time deposits	2	15.9		15.9		12.3		12.3
Equity securities	3	14.8		21.7		81.8		103.6

Financial Liability
Debt	2	$	697.0	$	714.3	$	695.9	$	671.1

- 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.

+ References + Details