Fair Value of Financial Instruments

Investments in Trading Securities and Available-for-sale Securities

We have investments in mutual funds designated as trading securities and as available-for-sale securities that are carried at fair value in the financial statements. For these investments, fair value was estimated based on quoted prices categorized as a Level 1 valuation.

Fixed-Rate Debt

The fair values and carrying values of our significant fixed-rate debt, excluding any unamortized issuance costs, was as follows:



	December 31,
(In millions)	2017		2016

Unsecured notes issued in a private placement^(a)
Carrying value	$	—	85.7
Fair value	—		88.2

Senior unsecured notes
Carrying value	600.0		—
Fair value	590.6		—


(a)	Prepaid in September 2017.

The fair value estimates of our unsecured notes issued in a private-placement and our senior unsecured notes were based on the present value of future cash flows, discounted at rates for similar instruments at the respective measurement dates, which we have categorized as a Level 3 valuation.

Forward and Swap Contracts

We have outstanding foreign currency forward and swap contracts to hedge transactional risks associated with foreign currencies. At December 31, 2017, the notional value of our shorter term outstanding foreign currency forward and swap contracts was $145.5 million, with average maturities of approximately one month. These shorter term foreign currency forward and swap contracts primarily offset exposures in the euro, the British pound and the Mexican peso and are not designated as hedges for accounting purposes. At December 31, 2017, the fair value of these shorter term foreign currency contracts was not significant.

In 2013, we entered into a longer term cross-currency swap to hedge against the change in value of a long-term intercompany loan denominated in Brazilian real. This longer term swap contract, which matures in January 2018, is designated as a cash flow hedge for accounting purposes. At December 31, 2017, the notional value of this contract was $1.6 million with a weighted-average maturity of 0.1 years. At December 31, 2017, the fair value of this swap contract was an asset of $0.6 million, which is included in prepaid expenses and other on the consolidated balance sheet.

In the first quarter of 2016, we entered into two interest rate swaps to hedge cash flow risk associated with changes in variable interest rates and are designated as cash flow hedges for accounting purposes. At December 31, 2017, the notional value of this contract was $40 million with a weighted-average maturity of 1.7 years. At December 31, 2017, the fair value of these interest rate swaps was a net asset of $1.0 million, of which $0.2 million was included in prepaid expenses and other and $0.8 million was included in other assets on the consolidated balance sheet.

The fair values of these forward and swap contracts are determined using Level 2 valuation techniques and are based on the present value of net future cash payments and receipts.

Contingent Consideration

The estimated fair value of our liabilities for contingent consideration represents the fair value of the potential amounts payable for our acquisition of Maco Transportadora. These contingent amounts will be paid in scheduled installments over the next two years with the final amounts based partially on the retention of customer revenue versus a target revenue amount. The contingent consideration arrangement requires us to pay potential undiscounted amounts between $0 to $30.3 million based on retaining the revenue levels of existing customers at the acquisition dates. If there is a shortfall in revenues, a multiple of 2.5 is applied to the revenue shortfall and the contingent consideration to be paid to the former owners is reduced.

We used a probability-weighted approach to estimate the fair value of these contingent consideration payments. The fair value of the contingent consideration is the present value of the full $30.3 million potentially payable as of December 31, 2017 as we believe it is unlikely that the contingent consideration payments will be reduced for a revenue shortfall.

At December 31, 2017, we had recognized contingent consideration liabilities of $29.1 million of which $14.8 million was included in accrued liabilities and $14.3 million in other. The fair value of these liabilities was estimated using a discounted cash flow technique with significant inputs that are not observable in the market and thus represent a Level 3 valuation. The significant inputs in the Level 3 valuation not supported by market activity included our probability assessments of expected future cash flows related to our acquisition of this entity during the period from acquisition to the estimated settlement date of the remaining payments. Subsequent to the respective acquisition dates

to each measurement date, changes in these liabilities due to the passage of time and the corresponding impact of discounting as well as the impact of changes in exchange rates between the Argentine peso and the U.S. dollar, were and will be recognized in earnings.

The contingent consideration payments may differ from the amounts that are ultimately paid, with any changes in the liabilities recorded in interest and other expense in our consolidated statements of operations until the liabilities are settled.

Other Financial Instruments

Other financial instruments include cash and cash equivalents, accounts receivable, floating rate debt, accounts payable and accrued liabilities. The financial statement carrying amounts of these items approximate the fair value.

There were no transfers in or out of any of the levels of the valuation hierarchy in 2017.