Fair Value Measurements

6 Months Ended

Jun. 30, 2011

Fair Value Measurements

Fair Value Measurements

10.     Fair Value Measurements

Fair Value Hierarchy

The Company has categorized its assets and liabilities that are valued at fair value on a recurring basis into a three-level fair value hierarchy as defined by the FASB in ASC Topic No. 820 ("Fair Value Measurements and Disclosures"). The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets and liabilities (Level 1) and lowest priority to unobservable inputs (Level 3). In some cases, the inputs used to measure fair value might fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy, for disclosure purposes, is determined based on the lowest level input that is significant to the fair value measurement.

Assets and liabilities recorded in the consolidated balance sheets at fair value are categorized based on the inputs in the valuation techniques as follows:

Level 1. Assets and liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market (examples include active exchange-traded equity securities, most U.S. Government and agency securities, money market mutual funds and certain other sovereign government obligations).

Assets and liabilities utilizing Level 1 inputs include exchange traded equity securities and mutual funds.

Level 2. Assets and liabilities whose values are based on the following:

a) Quoted prices for similar assets or liabilities in active markets;

b) Quoted prices for identical or similar assets or liabilities in non-active markets (examples include corporate and municipal bonds, which trade infrequently);

c) Pricing models whose inputs are observable for substantially the full term of the asset or liability (examples include most over-the-counter derivatives, including interest rate and currency swaps); and

d) Pricing models whose inputs are derived principally from or corroborated by observable market data through correlation or other means for substantially the full asset or liability (for example, certain mortgage loans).

Assets and liabilities utilizing Level 2 inputs include corporate and mutual funds and senior notes.

Level 3. Assets and liabilities whose values are based on prices, or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. These inputs reflect management's own assumptions about the assumptions a market participant would use in pricing the asset or liability (examples include private equity investments, certain commercial mortgage whole loans, and long-dated or complex derivatives including certain foreign exchange options and long-dated options on gas and power).

Valuation Techniques

Equity Securities & Mutual Funds

Investments for which market quotations are readily available are valued at the sale price on their principal exchange, or official closing bid price for certain markets. If no sales are reported, the security is valued at its last reported bid price.

Other Sovereign Government Obligations, Municipal Bonds and Corporate Bonds

The investments listed in the caption above are valued on the basis of valuations furnished by an independent pricing service approved by the trustees or dealers. Such services or dealers determine valuations for normal institutional-size trading units of such securities using methods based on market transactions for comparable securities and various relationships, generally recognized by institutional traders, between securities.

Interest Rate Swap Derivative

The fair value of interest rate swap derivatives is based on the present value of future cash flows at each valuation date resulting from utilization of the swaps, using a constant discount rate of 1.6% compared to discount rates based on projected future yield curves. (See Note 12)

Senior Notes due 2014

The fair value of the first $250 million of Senior Notes maturing in 2014 is estimated to be the carrying value of those notes adjusted by the fair value of the interest rate swap derivative, discussed above. In the first quarter of 2011, the Company entered into two interest rate swaps to convert interest on a portion of its Senior Notes from a fixed rate to a floating rate. The swaps are designated as fair value hedging instruments. The change in the fair value of the swaps will be recorded on the balance sheet. The carrying value of the debt related to these swaps will be adjusted by an equal amount. (See Note 12)

Contingent Consideration Liability

Purchase consideration for some acquisitions made by the Company includes contingent consideration arrangements. Contingent consideration arrangements are primarily based on meeting EBITDA and revenue targets over two to four years. The fair value of contingent consideration is estimated as the present value of future cash flows that would result from the projected revenue and earnings of the acquired entities.

The following fair value hierarchy table presents information about the Company's assets and liabilities measured at fair value on a recurring basis as of June 30, 2011 and December 31, 2010.

(In millions of dollars)	Identical Assets (Level 1)				Observable Inputs (Level 2)				Unobservable Inputs (Level 3)				Total
	6/30/11		12/31/10		6/30/11		12/31/10		6/30/11		12/31/10		6/30/11		12/31/10
Assets:
Financial instruments owned:
Exchange traded equity securities (a)		$ —		$   1		$  —		$  —		$  —		$  —		$  —		$    1
Mutual funds (a)		140		137		—		—		—		—		140		137
Medium term bond funds and fixed income securities (a)		—		—		—		—		—		—		—		—
Money market funds (b)		226		8		—		—		—		—		226		8
Interest rate swap derivatives (a)		—		—		5		—		—		—		5		—
Total assets measured at fair value		$366		$146		$    5		$   —		$  —		$  —		$371		$146
Fiduciary Assets:
State and local obligations (including non-U.S. locales)		$ —		$  —		$  35		$  68		$   —		$  —		$  35		$  68
Other sovereign government obligations and supranational agencies		—		—		140		185		—		—		140		185
Corporate and other debt		—		—		4		30		—		—		4		30
Money market funds		175		152		—		—		—		—		175		152
Total fiduciary assets measured at fair value		$175		$152		$179		$283		$   —		$  —		$354		$435
Liabilities:
Contingent consideration liability (c)		$  —		$  —		$  —		$  —		$111		$106		$111		$106
Senior Notes due 2014 (d)		$  —		$  —		$255		$  —		$  —		$  —		$255		$  —
Total liabilities measured at fair value		$  —		$  —		$255		$  —		$111		$106		$366		$106

^(a) Included in other assets in the consolidated balance sheets.

^(b) Included in cash and cash equivalents in the consolidated balance sheets.

^(c) Included in accounts payable and accrued liabilities and in other liabilities in the consolidated balance sheets.

^(d) Included in long term debt in the consolidated balance sheets.

During the six month period ended June 30, 2011, there were no assets that transferred between Level 1 and Level 2.

The table below sets forth a summary of the changes in fair value of the Company's Level 3 liabilities for the quarter ended June 30, 2011 that represents contingent consideration related to acquisitions:

	Fair Value, Beginning of Period		Additions			Payments		Revaluation Impact	Fair Value, End of Period
Contingent consideration		$106		$15	$	(6)	$	(4)		$111

The fair value of the contingent liability is based on earnings projections of revenue and earnings for the acquired entities that are reassessed on a quarterly basis.