Derivatives and Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2016

Recorded Amounts and Estimated Fair Values of Long-term Debt and Derivative Financial Instruments

The recorded amounts and estimated fair values of total debt, excluding unamortized issuance costs and discounts, were as follows:

	June 30, 2016				December 31, 2015
In millions	Recorded Amount		Fair Value		Recorded Amount		Fair Value
Variable rate debt	$	1,221.2	$	1,221.2	$	1,360.9	$	1,360.9
Fixed rate debt	3,351.3		3,472.0		3,349.1		3,395.4
Total debt	$	4,572.5	$	4,693.2	$	4,710.0	$	4,756.3

Financial Assets and Liabilities Measured at Fair Value on Recurring Basis

Financial assets and liabilities measured at fair value on a recurring and nonrecurring basis were as follows:

	June 30, 2016
In millions	Level 1		Level 2			Level 3		Total
Recurring fair value measurements
Foreign currency contract assets	$	—	$	2.1		$	—	$	2.1
Foreign currency contract liabilities	—		(16.8		)	—		(16.8		)
Deferred compensation plan assets (1)	39.7		6.4			—		46.1
Total recurring fair value measurements	$	39.7	$	(8.3	)	$	—	$	31.4

	December 31, 2015
In millions	Level 1		Level 2			Level 3		Total
Recurring fair value measurements
Foreign currency contract assets	$	—	$	0.1		$	—	$	0.1
Foreign currency contract liabilities	—		(7.6		)	—		(7.6		)
Deferred compensation plan assets (1)	43.8		7.0			—		50.8
Total recurring fair value measurements	$	43.8	$	(0.5	)	$	—	$	43.3
Nonrecurring fair value measurements
Goodwill (2)	$	—	$	—		$	996.4	$	996.4
Trade name intangibles (3)	—		—			138.1		138.1
Total nonrecurring fair value measurements	$	—	$	—		$	1,134.5	$	1,134.5

(1) Deferred compensation plan assets include mutual funds, common/collective trusts and cash equivalents for payment of certain non-qualified benefits for retired, terminated and active employees. The fair value of mutual funds and cash equivalents were based on quoted market prices in active markets. The underlying investments in the common/collective trusts primarily include intermediate and long-term debt securities, corporate debt securities, equity securities and fixed income securities. The overall fair value of the common/collective trusts are based on observable inputs.

(2) During the fourth quarter of 2015, we performed a goodwill impairment test for our Valves & Controls reporting unit using the required two-step process as of December 31, 2015. As a result, we recorded a non-cash goodwill impairment charge of $515.2 million. The first step of this process includes comparing the fair value to the carrying value of the reporting unit to which the goodwill is allocated to identify potential impairment. If the fair value of the reporting unit exceeds its carrying value, goodwill allocated to that reporting unit is considered not impaired. If the inverse result is observed, the reporting unit is considered to be impaired and step two of the test to measure the amount of impairment must be completed.

The fair value of the reporting unit was determined using a discounted cash flow analysis and market approach. Projecting discounted future cash flows requires us to make significant estimates regarding future revenues and expenses, projected capital expenditures, changes in working capital and the appropriate discount rate. Use of the market approach consists of comparisons to comparable publicly-traded companies that are similar in size and industry. Actual results may differ from those used in our valuations.

Step two compares the implied fair value of the goodwill with the carrying value of that goodwill. If the carrying value of the goodwill exceeds its implied fair value, an impairment loss is recognized in an amount equal to that excess. The implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a business combination. That is, the fair value of the reporting unit is allocated to all of its assets and liabilities as if the reporting unit had been acquired in a business combination and its fair value was the purchase price paid to acquire the reporting unit.

(3) During the fourth quarter of 2015, we performed an impairment test for our Valves & Controls trade names. As a result, we recorded a pre-tax, non-cash trade name impairment charge of $39.5 million. The fair value of trade names is measured using the relief-from-royalty method. This method assumes the trade name has value to the extent that the owner is relieved of the obligation to pay royalties for the benefits received from them. This method requires us to estimate the future revenue for the related brands, the appropriate royalty rate and the weighted average cost of capital.