Fair Value Accounting

Assets and liabilities measured at fair value on a recurring basis are summarized below:



	Fair Value Measurement as of September 30, 2017
	(in millions)
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents	$	247.1	$	—	$	—	$	247.1
Restricted cash	176.3		—		—		176.3
Equity instruments⁽¹⁾	—		1.7		—		1.7
Fuel derivative instruments⁽¹⁾	—		0.1		—		0.1
Interest rate hedge⁽¹⁾	—		1.8		—		1.8
Total assets	$	423.4	$	3.6	$	—	$	427.0

Liabilities:
Interest rate hedge:⁽²⁾
Partially-owned subsidiaries	$	—	$	—	$	—	$	—
Total liabilities	$	—	$	—	$	—	$	—

	Fair Value Measurement as of December 31, 2016
	(in millions)
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents	$	188.7	$	—	$	—	$	188.7
Restricted cash	178.2		—		—		178.2
Equity instruments⁽¹⁾	—		3.1		—		3.1
Fuel derivative instruments⁽¹⁾	—		0.3		—		0.3
Total assets	$	366.9	$	3.4	$	—	$	370.3

Liabilities:
Interest rate hedge:⁽²⁾
Partially-owned subsidiaries	$	—	$	0.9	$	—	$	0.9
Total liabilities	$	—	$	0.9	$	—	$	0.9

⁽¹⁾Included in other assets on the consolidated balance sheet.

⁽²⁾ Included in accrued liabilities on the consolidated balance sheet.

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for that asset or liability in an orderly transaction between market participants on the measurement date. An entity is required to establish a fair value hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. The three levels of inputs that may be used to measure fair value are listed below:

Level 1 – This level is defined as quoted prices in active markets for identical assets or liabilities. The Company’s cash equivalents and restricted cash are instruments of the U.S. Treasury or highly-rated money market mutual funds.

Level 2 – This level is defined as observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. The Company's fuel derivative instruments, which are commodity swaps, are valued using energy and commodity market data. Interest rate hedges are valued at exit prices obtained from each counterparty. See Note 7 Derivative Instruments and Note 11 Debt. The equity instruments consist of warrants for the purchase of certain publicly-traded equity securities and are valued using the Black-Scholes-Merton option pricing model and certain assumptions regarding the exercisability of the options under the related agreement.

Level 3 – This level is defined as unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The carrying amounts and estimated fair values of our long-term debt are as follows:



	September 30, 2017					December 31, 2016
	Carrying Value			Estimated Fair Value		Carrying Value			Estimated Fair Value
	(in millions)
Recourse:
Senior notes	$	399.7		$	409.0	$	399.6		$	386.3
Convertible subordinated notes	449.4			605.1		449.4			575.5
Less: unamortized discount	(12.9		)			(26.7		)
	436.5					422.7
Capital lease obligations	29.4			29.4		32.1			32.1
Other	0.5			0.5		—			—
	866.1			1,044.0		854.4			993.9
Less: unamortized debt issuance costs	(3.2		)			(3.8		)
	862.9					850.6
Non-recourse:
2006 secured railcar equipment notes	164.4			177.6		194.2			201.5
2009 secured railcar equipment notes	167.7			179.2		172.5			189.9
2010 secured railcar equipment notes	269.9			284.4		280.6			284.3
2017 promissory notes	297.4			297.4		—			—
TILC warehouse facility	166.7			166.7		204.1			204.1
TRL 2012 secured railcar equipment notes	408.2			398.1		425.5			395.6
TRIP Master Funding secured railcar equipment notes	966.2			1,011.1		955.5			960.6
	2,440.5			2,514.5		2,232.4			2,236.0
Less: unamortized debt issuance costs	(27.0		)			(26.4		)
	2,413.5					2,206.0
Total	$	3,276.4		$	3,558.5	$	3,056.6		$	3,229.9

The estimated fair values of our senior notes and convertible subordinated notes were based on a quoted market price in a market with little activity as of September 30, 2017 and December 31, 2016 (Level 2 input). The estimated fair values of our 2006, 2009, 2010, and 2012 secured railcar equipment notes and TRIP Rail Master Funding LLC (“TRIP Master Funding”) secured railcar equipment notes are based on our estimate of their fair value as of September 30, 2017 and December 31, 2016 using unobservable input values provided by a third party (Level 3 inputs). The carrying value of our Trinity Industries Leasing Company (“TILC”) warehouse facility and 2017 promissory notes approximate fair value because the interest rate adjusts to the market interest rate (Level 3 input). The fair values of all other financial instruments are estimated to approximate carrying value. See Note 11 Debt for a description of the Company's long-term debt.