Fair Value Disclosure

9 Months Ended

Sep. 30, 2014

Fair Value Disclosure

The following tables show our assets and liabilities that are measured at fair value on a recurring basis (in millions):



Assets	September 30, 2014		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Interest rate derivatives (1)	$	2.5	$	—	$	2.5	$	—
Foreign exchange rate derivatives (2)	2.9		—		2.9		—
Available-for-sale equity securities	4.1		4.1		—		—
Liabilities
Interest rate derivatives (1)	5.3		—		5.3		—
Foreign exchange rate derivatives (2)	3.6		—		3.6		—



Assets	December 31, 2013		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Interest rate derivatives (1)	$	6.0	$	—	$	6.0	$	—
Available-for-sale equity securities	4.7		4.7		—		—
Liabilities
Interest rate derivatives (1)	0.8		—		0.8		—
Interest rate derivatives (2)	0.2		—		0.2		—
Foreign exchange rate derivatives (2)	2.6		—		2.6		—

_________

(1) Designated as hedges.

(2) Not designated as hedges.

We base our valuations of available-for-sale equity securities on their quoted prices on an active exchange. We value derivatives using a pricing model with inputs (such as yield curves and credit spreads) that are observable in the market or that can be derived principally from observable market data.

Derivative instruments

Fair Value Hedges

We use interest rate swaps to manage the fixed-to-floating rate mix of our debt obligations by converting the fixed rate debt to floating rate debt. For fair value hedges, we recognize changes in fair value of both the derivative and the hedged item as interest expense. We had six instruments outstanding with an aggregate notional amount of $500.0 million as of September 30, 2014, and three instruments outstanding with an aggregate notional amount of $200.0 million as of December 31, 2013. These derivatives have maturities ranging from 2015 to 2019.

Cash Flow Hedges

We use interest rate swaps to convert floating rate debt to fixed rate debt. We also use Treasury rate locks to hedge our exposure to interest rate risk on anticipated transactions. We had five instruments outstanding with an aggregate notional amount of $184.5 million as of September 30, 2014, and six instruments outstanding with an aggregate notional amount of $163.6 million as of December 31, 2013. These derivatives had maturities ranging from 2014 to 2020. Within the next 12 months, we expect to reclassify $5.8 million ($3.7 million after-tax) of net losses on previously terminated derivatives from accumulated other comprehensive loss. We reclassify these amounts when interest and operating lease expense on the related hedged transactions affect earnings.

Non-designated Derivatives

We do not hold derivative financial instruments for purposes other than hedging, although certain of our derivatives are not designated as accounting hedges. We recognize changes in the fair value of these derivatives in other (income) expense immediately.

Some of our derivative instruments contain credit risk provisions that could require us to make immediate payment on net liability positions in the event that we default on certain outstanding debt obligations. The aggregate fair value of our derivative instruments with credit risk related contingent features that are in a liability position as of September 30, 2014, was $5.3 million. We are not required to post any collateral on our derivative instruments and do not expect the credit risk provisions to be triggered.

In the event that a counterparty fails to meet the terms of an interest rate swap agreement or a foreign exchange contract, our exposure is limited to the fair value of the swap, if in our favor. We manage the credit risk of counterparties by transacting with institutions that we consider financially sound and by avoiding concentrations of risk with a single counterparty. We believe that the risk of non-performance by any of our counterparties is remote.

The following table shows the impacts of our derivative instruments on our statement of comprehensive loss (in millions):



		Three Months Ended September 30					Nine Months Ended September 30
Derivative Designation	Location of Loss (Gain) Recognized	2014			2013		2014			2013
Fair value hedges (1)	Interest expense	$	3.2		$	0.8	$	4.8		$	3.1
Cash flow hedges	Other comprehensive loss (gain) (effective portion)	0.5			0.1		3.7			(0.8		)
Cash flow hedges	Interest expense (effective portion reclassified from accumulated other comprehensive loss)	1.3			1.3		3.7			3.8
Cash flow hedges	Operating lease expense (effective portion reclassified from accumulated other comprehensive loss)	0.3			0.4		3.0			1.1
Non-designated (2)	Other (income) expense	(7.0		)	1.4		(6.0		)	(0.6		)

_________

(1) The fair value adjustments related to the underlying debt equally offset the amounts recognized in interest expense.

(2) Includes losses (gains) on foreign currency derivatives which are substantially offset by foreign currency adjustments from the AAE loan also recognized in other income.

Other Financial Instruments

The carrying amounts of cash and cash equivalents, restricted cash, rent and other receivables, accounts payable, and commercial paper and bank credit facilities approximate fair value due to the short maturity of those instruments. We base the fair values of investment funds, which are accounted for under the cost method, on the best information available, which may include quoted investment fund values. We estimate the fair values of loans and fixed and floating rate debt using discounted cash flow analyses based on interest rates currently offered for loans with similar terms to borrowers of similar credit quality. The inputs we use to estimate each of these values are classified in Level 2 of the fair value hierarchy because they are directly or indirectly observable inputs.

The following table shows the carrying amounts and fair values of our other financial instruments as of (in millions):



	September 30, 2014				December 31, 2013
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Assets
Investment funds	$	1.5	$	2.8	$	1.7	$	4.0
Loans	100.5		100.6		122.7		121.5
Liabilities
Recourse fixed rate debt	$	3,408.4	$	3,555.4	$	2,871.2	$	2,994.0
Recourse floating rate debt	673.4		679.6		894.7		906.2
Nonrecourse debt	18.1		18.9		72.6		74.7

Fair Value Disclosure

The following table shows the carrying amounts and fair values of our other financial instruments as of (in millions):



	September 30, 2014				December 31, 2013
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Assets
Investment funds	$	1.5	$	2.8	$	1.7	$	4.0
Loans	100.5		100.6		122.7		121.5
Liabilities
Recourse fixed rate debt	$	3,408.4	$	3,555.4	$	2,871.2	$	2,994.0
Recourse floating rate debt	673.4		679.6		894.7		906.2
Nonrecourse debt	18.1		18.9		72.6		74.7

- Definition

Tabular disclosure of the fair value of financial instruments, including financial assets and financial liabilities, and the measurements of those instruments, assets, and liabilities.

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- 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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