Fair Value of Financial Instruments

12 Months Ended

Dec. 31, 2012

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

Fair Value of Financial Instruments

Carrying amounts and estimated fair values of financial instruments as of the dates indicated were as follows (in millions):     

	December 31, 2012				December 31, 2011
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Assets
Cash surrender value of life insurance policies	$	11.9	$	11.9	$	10.6	$	10.6
Auction rate securities	14.4		14.4		13.6		13.6
Liabilities
Deferred compensation plan liabilities	$	3.3	$	3.3	$	2.2	$	2.2
Acquisition-related contingent consideration	143.6		143.6		80.5		80.5
7.625% senior notes	150.0		154.9		150.0		156.4
Original 4.0% Notes	9.7		15.9		9.7		12.5
Original 4.25% Notes	3.0		5.1		3.0		4.0
New 4.0% Notes	100.9		101.5		98.2		99.4
New 4.25% Notes	92.1		92.7		89.9		91.1

The following methods and assumptions were used to estimate the fair values of financial instruments:

Cash Surrender Value of Life Insurance Policies.Cash surrender values of life insurance policies are based on current cash surrender values as quoted by insurance carriers. Life insurance policies support the Company’s split dollar agreements and deferred compensation plan assets.

Auction Rate Securities.The fair value of the Company’s auction rate securities was estimated by an independent valuation firm, Houlihan Capital Advisors, LLC, using a probability weighted discounted cash flow model.

Deferred Compensation Plan Liabilities. Deferred compensation plan liabilities are based on employee deferrals, together with Company matching contributions, which are valued according to employee-directed investment options. The fair value of deferred compensation plan liabilities is based on quoted market prices of the underlying employees' investment selections. See Note 12 - Stock-Based Compensation and Other Employee Benefit Plans.

Acquisition-Related Contingent Consideration Acquisition-related contingent consideration in the table above represents the estimated fair value of additional future earn-outs payable for acquisitions of businesses that closed after January 1, 2009, in accordance with U.S. GAAP. The fair value of such acquisition-related contingent consideration is based on management’s estimates and entity-specific assumptions and is evaluated on an on-going basis. The Company completed eight acquisitions during 2012 and 2011, as described in Note 3 - Acquisitions and Other Investments, most of which include earn-out agreements.

Debt. The estimated fair values of the Company’s 7.625% senior notes and Original Notes, which are measured on a nonrecurring basis, are based on quoted market prices, a Level 1 input.The estimated fair value of the debt component of the Company’s New Notes is calculated using an income approach, based on a discounted cash flow model.This method is based on management’s estimates of the Company’s market interest rate for a similar nonconvertible instrument.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

As of December 31, 2012, the Company held certain assets and liabilities required to be measured at fair value on a recurring basis. The fair value hierarchy requires the use of observable market data when available. In instances in which the inputs used to measure fair value fall into different levels of the fair value hierarchy, the fair value measurement classification below has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. Management’s assessment of the significance of a particular item to the fair value measurement in its entirety requires judgment, including the consideration of inputs specific to the asset or liability. The fair values of financial assets and liabilities measured on a recurring basis were determined using the following inputs as of the dates indicated (in millions):

			Fair Value Measurements Using Inputs Considered as Significant
	Fair Value as of December 31, 2012		Level 1		Level 2	Level 3
Assets
Cash surrender value of life insurance policies	$	11.9	$	11.9	—	—
Auction rate securities	$	14.4	—		—	$	14.4
Liabilities
Deferred compensation plan liabilities	$	3.3	$	3.3	—	—
Acquisition-related contingent consideration	$	143.6	—		—	$	143.6
			Fair Value Measurements Using Inputs Considered as Significant
	Fair Value as of December 31, 2011		Level 1		Level 2	Level 3
Assets
Cash surrender value of life insurance policies	$	10.6	$	10.6	—	—
Auction rate securities	$	13.6	—		—	$	13.6
Liabilities
Deferred compensation plan liabilities	$	2.2	$	2.2	—	—
Acquisition-related contingent consideration	$	80.5	—		—	$	80.5

The following tables provide a reconciliation between the beginning and ending balances of items measured at fair value on a recurring basis using significant unobservable inputs for the periods indicated (in millions).

	Auction Rate Securities
Assets	Student Loan			Structured Finance Securities			Total
Balances as of December 31, 2010	$	16.4		$	2.6		$	19.0
Redemption or sale of securities, cost basis	(4.6		)	—			(4.6		)
Reversal of unrealized losses on redeemed or sold securities	0.5			—			0.5
Changes in fair value recorded in earnings	—			(0.6		)	(0.6		)
Changes in unrealized (losses) gains included in other comprehensive income	(0.4		)	(0.3		)	(0.7		)
Balances as of December 31, 2011	$	11.9		$	1.7		$	13.6
Changes in fair value recorded in earnings	—			—			—
Changes in unrealized (losses) gains included in other comprehensive income	(0.2		)	1.0			0.8
Balances as of December 31, 2012	$	11.7		$	2.7		$	14.4
Liabilities	Acquisition-Related Contingent Consideration
Balance as of December 31, 2010	$	45.0
Additions from new business combinations	47.7
Payments of contingent consideration	(12.2		)
Balance as of December 31, 2011	$	80.5
Additions from new business combinations	66.7
Payments of contingent consideration	(3.6		)
Valuation gains/losses recorded in earnings	—
Balance as of December 31, 2012	$	143.6

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

Assets and liabilities recognized or disclosed at fair value on a nonrecurring basis include items such as equity method investments, goodwill and long-lived assets, which are initially measured at fair value, and are subsequently remeasured in the event of an impairment or other measurement event, if applicable. Except for the assets and liabilities associated with the Globetec operation, which the Company reclassified as held-for-sale in the third quarter of 2012 and the Company’s equity investment in EC Source, which was remeasured in connection with the Company’s acquisition of EC Source’s remaining equity interests in the second quarter of 2011, the Company had no significant assets or liabilities required to be measured at fair value on a nonrecurring basis as of either December 31, 2012 or 2011.