FAIR VALUE MEASUREMENTS

6 Months Ended

Jun. 30, 2018

Fair Value Disclosures [Abstract]

FAIR VALUE MEASUREMENTS

NOTE 8 – FAIR VALUE MEASUREMENTS

The following table summarizes the basis used to measure financial assets and liabilities that are carried at fair value on a recurring basis on the Condensed Consolidated Balance Sheets:

In millions
			Fair Value Measurements Using
	Total as of June 30, 2018		Level 1 Inputs		Level 2 Inputs		Level 3 Inputs
Assets:
Derivative financial instruments	$	0.3	$	-	$	0.3	$	-
Total assets	$	0.3	$	-	$	0.3	$	-
Liabilities:
Contingent consideration	$	10.5	$	-	$	-	$	10.5
Total liabilities	$	10.5	$	-	$	-	$	10.5

In millions
			Fair Value Measurements Using
	Total as of December 31, 2017		Level 1 Inputs		Level 2 Inputs		Level 3 Inputs
Assets:
Derivative financial instruments	$	0.4	$	-	$	0.4	$	-
Total assets	$	0.4	$	-	$	0.4	$	-
Liabilities:
Contingent consideration	$	12.4	$	-	$	-	$	12.4
Total liabilities	$	12.4	$	-	$	-	$	12.4

For our derivative financial instruments, we use a market approach valuation technique based on observable market transactions of spot and forward rates.

As of June 30, 2018 and December 31, 2017, we recorded an asset of $0.3 million and $0.4 million, respectively, related to the fair value of the U.S. dollar-Canadian dollar foreign currency swap which was classified as Other assets as of June 30, 2018.  The objective of the swap is to offset the foreign exchange risk to the U.S. dollar equivalent cash outflows for our Canadian subsidiary.

Our contingent consideration liabilities are recorded using Level 3 inputs and were $10.5 million as of June 30, 2018, of which $2.8 million was classified as Other current liabilities.  Contingent consideration liabilities were $12.4 million at December 31, 2017, of which $4.6 million was classified as Other current liabilities.  Contingent consideration represents amounts expected to be paid as part of acquisition consideration only if certain future events occur.  These events are usually the achievement of targets for revenues, earnings, or other milestones related to the business acquired.  We arrive at the fair value of contingent consideration by applying a weighted probability of potential payment outcomes.  The calculation of these potential outcomes is dependent on both past financial performance and management assumptions about future performance.  If the financial performance measures were all fully met, our maximum liability would be $13.6 million at June 30, 2018.  Contingent consideration liabilities are reassessed each reporting period and are reflected on the Condensed Consolidated Balance Sheets as part of Other current liabilities and Other liabilities.

Changes to contingent consideration were as follows:

In millions
Contingent consideration as of January 1, 2017	$	24.1
Increase due to current year acquisitions		0.1
Purchase accounting adjustments		(9.6	)
Decrease due to payments		(1.5	)
Change in fair value reflected in Selling, general, and administrative expenses		(0.4	)
Changes due to foreign currency fluctuations and other		(0.3	)
Contingent consideration as of December 31, 2017		12.4
Purchase accounting adjustments		(0.4	)
Decrease due to payments		(1.3	)
Change in fair value reflected in Selling, general, and administrative expenses		0.4
Changes due to foreign currency fluctuations		(0.6	)
Contingent consideration as of June 30, 2018	$	10.5

In addition to assets and liabilities that are recorded at fair value on a recurring basis, the Company is required to record certain assets and liabilities at fair value on a nonrecurring basis, generally as result of acquisitions or the remeasurement of assets resulting in impairment charges.  See Note 3 – Acquisitions and Note 4 – Restructuring, Divestitures and Assets Held for Sale, for further discussion on the fair value of assets and liabilities associated with acquisitions and assets held for sale.

Fair Value of Debt: At June 30, 2018, the fair value of the Company’s debt obligations was estimated, using Level 2 inputs, at $2.62 billion compared to a carrying amount of $2.66 billion.  At December 31, 2017, the fair value of the Company’s debt obligations was estimated, using Level 2 inputs, at $2.74 billion compared to a carrying amount of $2.75 billion.  The fair values were estimated using an income approach by applying market interest rates for comparable instruments.

Accounts receivable, accounts payable and accrued liabilities are financial assets and liabilities, respectively, with carrying values that approximate fair value, using Level 3 inputs.