Equity Method Investments

As a result of the Infrastructure transaction, the Company owned an approximate 29% equity interest in Brand at December 31, 2013. See Note 3, Acquisitions and Dispositions, for additional information related to the Infrastructure transaction.

Brand is a leading provider of specialized services to the global energy, industrial and infrastructure markets that combines a global footprint, broad service offerings and rigorous operating processes to support customer required facility maintenance and turnaround needs and capital driven upgrade and expansion plans. Brand's range of services includes work access, corrosion management, atmospheric and immersion coatings, insulation services, fireproofing and refractory, mechanical services, forming and shoring and other complementary specialty services. Brand delivers services through a global network of strategically located branches in six continents with a particular focus on major hydrocarbon and power generation markets globally. In addition, Brand has co-located branches at energy-related customer facilities providing a consistent presence for required maintenance work.

The Company will record the Company's proportionate share of Brand's net income or loss one quarter in arrears. Accordingly, the Company's Consolidated Statement of Operations for the year ended December 31, 2013 does not include any amounts related to the Infrastructure strategic venture in the caption Equity in income of unconsolidated entities, net. The Company will begin recording the Company's proportionate share of Brand's net income or loss during the first quarter of 2014. The book value of the Company's investment in Brand at December 31, 2013 was $296.1 million.

The initial determination of fair value of the Company's equity method investment (Level 3) in Brand was derived with a primary reliance upon the income approach. Various DCF models were created based on the Company's most likely case view of cash flow projections for Brand over a five year horizon. The following table details quantitative information about significant unobservable inputs:



	Fair Value at December 31 2013				Range
(Dollars in thousands)	Fair Value at December 31 2013		Valuation Technique	Unobservable Input	Low		High
Equity method investment - Brand	$	296,082	Discounted cash flow	EBITDA Margin	10.9	%	12.6	%
				Ratio of capital expenditures to revenues	2.9	%	3.8	%
				Long-term revenue growth	3.0	%	3.0	%
				WACC Rate	9.25	%	9.25	%
				Cost of equity	12.5	%	12.5	%
				Implied exit EBITDA multiple	7.0X		7.5X
				Discount for lack of marketability	15	%	15	%

As part of the Infrastructure transaction, the Company is required to make quarterly payments to its partner in the Infrastructure strategic venture, either (at the Company's election) (i) in cash, with total payments to equal approximately $22 million per year on a pre-tax basis (approximately $15 million per year after-tax), or (ii) in kind through the transfer of approximately 2.5% of the Company's ownership interest in the Infrastructure strategic venture on an annual basis (the "unit adjustment liability"). The resulting liability is reflected in the caption, Unit adjustment liability, on the Company's Consolidated Balance Sheets. The Company will recognize the change in the fair value of the unit adjustment liability each period until the Company is no longer required to make these payments or chooses not to make these payments. The change in the fair value of the unit adjustment liability is a non-cash expense. For the year ended December 31, 2013, the Company recognized $1.0 million of change in the fair value of the unit adjustment liability.

The Company's obligation to make such quarterly payments will cease upon the earlier of (i) Brand achieving $479.0 million in last twelve months' earnings before interest, taxes, depreciation and amortization ("EBITDA") for three quarters, which need not be consecutive, or (ii) eight years after the closing of the Infrastructure transaction. In addition, upon the initial public offering of Brand, the Company's quarterly payment obligation will decrease by the portion of CD&R's ownership interest sold and is eliminated completely once CD&R's ownership interest in Brand falls below 20%. In the event of a liquidation event of Brand, CD&R is entitled to a liquidation preference of approximately $336 million, plus any quarterly payments that had been paid in kind.

At December 31, 2013, the balance related to the unit adjustment liability is $106.3 million and is included in the current and non-current captions, Unit adjustment liability, on the Consolidated Balances Sheets. The initial fair value of the unit adjustment liability (Level 3) was determined using key unobservable inputs including the expectation to continue to make cash payments over various exit horizons and a WACC of 9.5%. A reconciliation of beginning and ending balances related to the unit adjustment liability is included in Note 15, Financial Instruments.

The Company intends to make these quarterly payments in cash and will continue to evaluate the implications of making payments in cash or in kind based upon performance of the Infrastructure strategic venture. In the future, should the Company decide not to make the cash payment, the value of both the equity method investment in Brand and the related unit adjustment liability may be impacted, and the change may be reflected in earnings in that period.

Balances related to transactions between the Company and Brand at December 31, 2013 are as follows:



(In thousands)	December 31 2013
Balances due from Brand	$	85,908
Balances due to Brand	149,325

These balances between the Company and Brand relate primarily to the finalization of the Infrastructure transaction, including transition services and the funding of certain transferred defined benefit pension plan obligations through 2018. There is not expected to be any significant level of revenue or expense between the Company and Brand on an on-going basis once all aspects of the Infrastructure transaction have been finalized.