Fair Value Measurements

9 Months Ended

Sep. 30, 2012

Fair Value, Assets and Liabilities Measured on Recurring Basis [Abstract]

Fair Value Measurements

Fair Value Measurements

The company uses a three-level classification hierarchy of fair value measurements for disclosure purposes.

• Level 1 inputs, which are considered the most reliable evidence of fair value, consist of quoted prices (unadjusted) for identical assets or liabilities in active markets.

• Level 2 inputs consist of observable market data, other than level 1 inputs, such as quoted prices for similar assets and liabilities in active markets or inputs other than quoted prices that are directly observable.

• Level 3 inputs consist of unobservable inputs which are derived and cannot be corroborated by market data or other entity-specific inputs.

In general, the company uses quoted prices in active markets for identical assets to determine the fair value of marketable securities and equity investments. Level 1 assets generally include U.S. Treasury securities and exchange-traded mutual funds. If quoted prices are not available to determine fair value, the company uses other inputs that are observable either directly or indirectly.

Assets included in level 2 generally consist of asset-backed securities and interest rate swap contracts. Asset-backed securities were measured at fair value based on matrix pricing using prices of similar securities with similar inputs such as maturity dates, interest rates and credit ratings. The company determined the fair value of its interest rate swap contracts using standard valuation models with market-based observable inputs including forward and spot exchange rates and interest rate curves.

The company determined the fair value of its contingent consideration liabilities, considered level 3 liabilities, using a discounted cash flow model to calculate the present value of future payouts. The liabilities were included in level 3 because management used significant unobservable inputs, including a discount rate of 20% and probability of payout ranging from 86% to 100%. Significant increases or decreases in any of those inputs in isolation would result in a significantly higher or lower fair value.

Financial assets and liabilities recorded in the consolidated balance sheet as of September 30, 2012 were classified in their entirety based on the lowest level of input that was significant to each asset or liability's fair value measurement.

Financial Instruments Measured at Fair Value on a Recurring Basis:

	September 30, 2012
(in millions)	Level 1		Level 2		Level 3		Total
Assets at Fair Value:
Marketable securities:
U.S. Treasury securities	$	22.6	$	—	$	—	$	22.6
Mutual funds	39.1		—		—		39.1
Asset-backed securities	—		0.3		—		0.3
Total Marketable Securities	61.7		0.3		—		62.0
Equity investments	633.3		—		—		633.3
Total Assets at Fair Value	$	695.0	$	0.3	$	—	$	695.3
Liabilities at Fair Value:
Interest rate swap contracts	$	—	$	30.1	$	—	$	30.1
Contingent consideration	—		—		12.7		12.7
Total Liabilities at Fair Value	$	—	$	30.1	$	12.7	$	42.8

There were no transfers of assets between level 1 and level 2 during the first nine months of 2012. The following is a reconciliation of assets and liabilities valued at fair value on a recurring basis using significant unobservable inputs (level 3) during the first nine months of 2012.

(in millions)	Contingent Consideration
Fair value of liability at December 31, 2011	$	10.3
Contingent obligation arising from acquisition	1.2
Unrealized changes in fair value:
Included in operating expense	1.2
Fair value of liability at September 30, 2012	$	12.7