Financial Instruments and Fair Value Measurements

Our financial instruments include cash and cash equivalents, trade accounts receivable, accounts payable, debt and capital lease obligations and an amount due to VWR Holdings. Our financial instruments are held or issued by a number of institutions, which reduces the risk of material non-performance, except for the amount due to VWR Holdings.

Assets and Liabilities for which Fair Value is Only Disclosed

The carrying amount of cash and cash equivalents is stated at its fair value (Level 1 measurement). The carrying amounts for trade accounts receivable and accounts payable approximate fair value due to their short-term nature (Level 2 measurements).

The following table presents the carrying amounts and estimated fair values of other financial instruments for which fair value is only disclosed (in millions):



	March 31, 2015				December 31, 2014
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
A/R Facility	$	—	$	—	$	73.0	$	73.0
Senior Credit Facility	759.3		765.1		1,268.1		1,256.5
7.25% Senior Notes	750.0		783.8		750.0		780.2
4.625% Senior Notes	537.0		531.9		—		—
Due to VWR Holdings — ITRA	163.1		126.0		172.9		132.0

The fair values of our debt instruments are based on estimates using quoted market prices and standard pricing models that take into account the present value of future cash flows as of the respective balance sheet date. We believe that these qualify as Level 2 measurements, except for our publicly-traded 7.25% Senior Notes, which we believe qualify as a Level 1 measurement. The carrying amounts of the remainder of our debt and capital lease obligations not included in the table above approximate fair value due to their primarily short-term nature (Level 2 measurements). The amount due to VWR Holdings under the ITRA was estimated using a combination of observable and unobservable inputs using an income-based approach (Level 3 measurement).

Recurring Fair Value Measurements with Significant Unobservable Inputs

The following table presents changes in recurring fair value measurements with significant unobservable inputs (Level 3):



	Contingent Consideration
Balance at December 31, 2014	$	11.6
Acquisitions	8.7
Settlements in cash	(1.0		)
Currency translation	(0.2		)
Balance at March 31, 2015	$	19.1

Contingent Consideration

Certain of the business acquisitions we completed entitle the sellers to contingent consideration if earnings targets are met during a period of time following the acquisition. The fair value of contingent consideration was estimated using the average of probability-weighted potential earn-out payments specified in the purchase agreements, ranging from approximately $2 million to $19 million at March 31, 2015. The significant assumptions used in these calculations included forecasted results and the estimated likelihood for each performance scenario.

In the table above, acquisitions includes finalization of provisional amounts from acquisitions completed in the fourth quarter of 2014.

Derivative Instruments and Hedging Activities

We engage in hedging activities to reduce our exposure to changes in foreign currency exchange rates. Our hedging activities are designed to mitigate specific foreign currency risks according to our strategies, as summarized below, which may change from time to time. Our hedging activities consist of the following:


•	Net investment hedging — We hedge a portion of our net investment in euro-denominated foreign operations using our euro-denominated 4.625% Senior Notes; and


•	Cash flow hedging — Some of our subsidiaries hedge short-term foreign-denominated business transactions using foreign currency forward contracts. There have been no significant changes to our cash flow hedging since December 31, 2014. Cash flow hedging is not material to our consolidated financial statements.

Net Investment Hedging

On March 25, 2015, we designated our euro-denominated 4.625% Senior Notes as a hedge to help protect a portion of our net investment in euro-denominated foreign operations from the impact of changes in the euro to U.S. dollar exchange rate (see Note 13). As a result of the hedge designation, the net foreign currency remeasurement gain or loss on the 4.625% Senior Notes, which otherwise would be recognized in earnings (see Note 9), is deferred as accumulated other comprehensive income or loss. That deferred net gain or loss equally offsets the net unrealized gain or loss that is recognized in other comprehensive income from the translation of the hedged portion of our net investment in euro-denominated foreign operations. The hedge has no other impact to our financial position, financial performance or cash flows.

The following table presents the balance sheet classification and fair value of the hedging instrument, a Level 2 measurement:



	Balance Sheet Classification	March 31, 2015
4.625% Senior Notes	Debt and capital lease obligations, net of current portion	$	531.9

The following table presents information about the net unrealized gain (loss) recognized in other comprehensive income as a result of net investment hedging:



	Description	Three Months Ended March 31, 2015
Euro-denominated net investment in foreign operations	Hedged item	$	2.7
4.625% Senior Notes	Hedging instrument	(2.7		)

We determined that our hedge of the net investment was fully effective for the three months ended March 31, 2015, and no amounts were recognized in or reclassified to earnings.