Fair Value

Assets and Liabilities Recorded at Fair Value

The fair value measurement provisions required by GAAP establish a fair value hierarchy, which prioritizes the inputs used in measuring fair value into three broad levels as follows:


•	Level 1 - Quoted prices in active markets for identical assets or liabilities.


•	Level 2 - Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly.


•	Level 3 - Unobservable inputs based on our own assumptions.

Assets and Liabilities Recorded at Fair Value on a Recurring Basis

The following table presents the fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of December 31, 2014:



	Level 1		Level 2		Total
Assets:
Available-for-sale securities	$	2.7	$	—	$	2.7
Foreign exchange forward contracts	—		.6		.6
Total	$	2.7	.6		3.3
Liabilities:
Foreign exchange forward contracts	$	—	$	5.0	$	5.0
Total	$	—	$	5.0	$	5.0

The following table presents the fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of December 31, 2013:



	Level 1		Level 2		Total
Assets:
Money market funds	$	.5	$	—	$	.5
Available-for-sale securities	2.5		—		2.5
Foreign exchange forward contracts	—		3.4		3.4
Total	$	3.0	$	3.4	$	6.4
Liabilities:
Foreign exchange forward contracts	$	—	$	.3	$	.3
Total	$	—	$	.3	$	.3

The tables above exclude our defined benefit pension and postretirement plan assets. See Note 11, Employee Benefit Plans, for the fair value hierarchy for our plan assets. The money market funds were held in a Healthcare trust in order to fund future benefit payments for both active and retiree benefit plans (see Note 11, Employee Benefit Plans). The available-for-sale securities include securities held in a trust in order to fund future benefit payments for non-qualified retirement plans (see Note 11, Employee Benefit Plans). The foreign exchange forward contracts are hedges of either recorded assets or liabilities or anticipated transactions. The underlying hedged assets and liabilities or anticipated transactions are not reflected in the table above (see Note 8, Financial Instruments and Risk Management).

Assets and Liabilities Recorded at Fair Value on a Non-recurring Basis

December 31, 2013 - SMT

In December 2013, we decided to halt further roll-out of our SMT project beyond the pilot program in Canada, in light of the potential risk of further business disruption. As a result, in the fourth quarter of 2013, we completed an impairment assessment of the SMT asset and subsequently determined that the SMT asset was impaired. As a result of the non-cash impairment charge of $117.2 before tax ($74.1 after tax), the remaining carrying amount of the SMT asset is not material.

The fair value of the SMT asset was determined using a risk-adjusted DCF model under the relief-from-royalty method. The impairment analysis performed for the asset group, which includes the SMT asset, required several estimates, including revenue and cash flow projections, and royalty and discount rates.

See Note 1, Description of the Business and Summary of Significant Accounting Policies for more information on SMT.

September 30, 2013 - China

In the third quarter of 2013, we completed an interim impairment assessment of the fair value of goodwill related to China and subsequently determined that the goodwill associated with China was impaired. As a result, the carrying amount of China's goodwill was reduced from $38.4 to $0, resulting in a non-cash impairment charge of $38.4. In addition, the carrying amount of China's finite-lived intangible assets was reduced from $3.7 to $0, resulting in a non-cash impairment charge of $3.7.

The impairment analyses performed for goodwill and intangible assets require several estimates in computing the estimated fair value of a reporting unit and finite-lived intangible assets. As part of our goodwill impairment analysis, we typically use a DCF approach to estimate the fair value of a reporting unit, which we believe is the most reliable indicator of fair value of a business, and is most consistent with the approach that we would generally expect a market participant would use. In estimating the fair value of our reporting units utilizing a DCF approach, we typically forecast revenue and the resulting cash flows for periods of five to ten years and include an estimated terminal value at the end of the forecasted period. When determining the appropriate forecast period for the DCF approach, we consider the amount of time required before the reporting unit achieves what we consider a normalized, sustainable level of cash flows. The estimation of fair value utilizing a DCF approach includes numerous uncertainties which require our significant judgment when making assumptions of expected growth rates and the selection of discount rates, as well as assumptions regarding general economic and business conditions, and the structure that would yield the highest economic value, among other factors.

Key assumptions used in measuring the fair value of China included projections of revenue and the resulting cash flows, as well as the discount rate (based on the estimated weighted-average cost of capital). To estimate the fair value of China, we forecasted revenue and the resulting cash flows over ten years using a DCF model which included a terminal value at the end of the projection period. We believed that a ten-year period was a reasonable amount of time in order to return China's cash flows to normalized, sustainable levels.

See Note 16, Goodwill and Intangible Assets for more information on China.

Fair Value of Financial Instruments

Our financial instruments include cash and cash equivalents, available-for-sale securities, short-term investments, money market funds, accounts receivable, loans receivable, debt maturing within one year, accounts payable, long-term debt and foreign exchange forwards contracts. The carrying value for cash and cash equivalents, accounts receivable, accounts payable and short-term investments approximate fair value because of the short-term nature of these instruments.

The net asset (liability) amounts recorded in the balance sheet (carrying amount) and the estimated fair values of our remaining financial instruments at December 31 consisted of the following:



	2014						2013
	Carrying Amount			Fair Value			Carrying Amount			Fair Value
Available-for-sale securities	$	2.7		$	2.7		$	2.5		$	2.5
Money market funds	—			—			.5			.5
Debt maturing within one year⁽¹⁾	(137.1		)	(137.1		)	(188.0		)	(188.0		)
Long-term debt⁽¹⁾	(2,463.9		)	(2,242.5		)	(2,532.7		)	(2,511.6		)
Foreign exchange forward contracts	(4.4		)	(4.4		)	3.1			3.1

(1) The carrying value of debt maturing within one year and long-term debt includes any related discount or premium and unamortized deferred gains on terminated interest-rate swap agreements, as applicable.

The methods and assumptions used to estimate fair value are as follows:

Available-for-sale securities and money market funds - The fair values of these investments were the quoted market prices for issues listed on securities exchanges.

Debt maturing within one year and long-term debt - The fair values of our debt and other financing were determined using Level 2 inputs based on indicative market prices.

Foreign exchange forward contracts - The fair values of forward contracts were estimated based on quoted forward foreign exchange prices at the reporting date.