Fair Value of Financial Instruments

Investments in Marketable Securities

We have investments in mutual funds that are carried at fair value in the financial statements. For these investments, fair value was based on quoted market prices, which we have categorized as a Level 1 valuation.

Fixed-Rate Debt

The fair value and carrying value of our fixed-rate debt, excluding any unamortized debt issuance costs, are as follows:



	December 31,
(In millions)	2018		2017

Senior unsecured notes
Carrying value	$	600.0	600.0
Fair value	519.9		590.6

The fair value estimate of our senior unsecured notes was based on the present value of future cash flows, discounted at rates for similar instruments at the measurement date, 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, 2018, the notional value of our outstanding foreign currency forward and swap contracts was $168.0 million, with average maturities of approximately two months. These foreign currency forward and swap contracts primarily offset exposures in the euro and the British pound and they are not designated as hedges for accounting purposes. At December 31, 2018, the fair value of these foreign currency contracts was a net liability of $0.4 million, of which $0.1 million was included in prepaid expenses and other and $0.5 million was included in accrued liabilities 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, 2018, the notional value of these contracts was $40 million with a weighted-average maturity of 1.2 years. At December 31, 2018, the fair value of these interest rate swaps was a net asset of $1.1 million, of which $0.5 million was included in prepaid expenses and other and $0.6 million was included in other assets on the consolidated balance sheet.

The fair values of these forward and swap contracts are based on the present value of net future cash payments and receipts, which we have categorized as a Level 2 valuation.

Contingent Consideration

The estimated fair value of our liability for contingent consideration represents the fair value of the remaining potential amount payable for our acquisition of Maco Transportadora. The remaining contingent amount is expected to be paid in a scheduled second installment in the fourth quarter of 2019, with the final amount paid based partially on the retention of customer revenue versus a target revenue amount. The remaining contingent consideration arrangement requires us to pay potential undiscounted amounts between $0 to $15.1 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 this contingent consideration payment. The fair value of the contingent consideration is the full $15.1 million potentially payable as of December 31, 2018 as we believe it is unlikely that the contingent consideration payment will be reduced for a revenue shortfall.

At December 31, 2018, this $15.1 million was included in accrued liabilities on the consolidated balance sheet. The fair value of this liability was estimated using a discounted cash flow technique with significant inputs that are not observable in the market and thus represents 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 payment.

The contingent consideration payment may differ from the amount that is ultimately paid, with any changes in the liability recorded in interest and other nonoperating income (expense) in our consolidated statements of operations until the liability is 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 2018.