Fair Value of Financial Instruments

12 Months Ended

Dec. 31, 2019

Investments in Marketable Securities

We have investments in mutual funds and equity securities that are carried at fair value in the financial statements. For these investments, fair value was based on quoted market prices, which we have categorized as a Level 1 valuation.

Fixed-Rate Debt

The fair value and carrying value of our fixed-rate debt, excluding any unamortized debt issuance costs, are as follows:



	December 31,
(In millions)	2019		2018

Senior unsecured notes
Carrying value	$	600.0	600.0
Fair value	624.7		519.9

The fair value estimate of our senior unsecured notes was based on the present value of future cash flows, discounted at rates for similar instruments at the measurement date, which we have categorized as a Level 3 valuation.

Forward and Swap Contracts

We have outstanding foreign currency forward and swap contracts to hedge transactional risks associated with foreign currencies. At December 31, 2019, the notional value of our outstanding foreign currency forward and swap contracts was $155 million, with average maturities of approximately one month. These foreign currency forward and swap contracts primarily offset exposures in the euro and the Brazilian real and are not designated as hedges for accounting purposes and, accordingly, changes in their fair value are recorded immediately in earnings. At December 31, 2019, the fair value of these foreign currency contracts was a net asset of approximately $0.6 million, of which $0.8 million was included in prepaid expenses and other and $0.2 million was included in accrued liabilities on the consolidated balance sheet. We recognized gains of $6.9 million on our short term foreign currency contracts in 2019, gains of $7.7 million in 2018 and gains of $0.8 million in 2017.

In the first quarter of 2019, we entered into a long term cross currency swap contract to hedge exposure in Brazilian real, which is designated as a cash flow hedge for accounting purposes. At December 31, 2019, the notional value of this long term contract was $125 million with a weighted-average maturity of 2.3 years. We recognized net gains of $0.7 million on this contract, of which gains of $5.8 million were included in other operating income (expense) to offset transaction losses of $5.8 million and expenses of $5.1 million were included in interest expense in 2019. At December 31, 2019, the fair value of the long term cross currency swap contract was a $2.1 million net asset, of which a $4.9 million asset is included in other assets and a $2.8 million liability is included in accrued liabilities on the consolidated balance sheet.

In the first quarter of 2016, we entered into two interest rate swaps to hedge cash flow risk associated with changes in variable interest rates and are designated as cash flow hedges for accounting purposes. At December 31, 2019, the notional value of these contracts was $40 million with a weighted-average maturity of 0.7 years. At December 31, 2019, the fair value of these interest rate swaps was an asset of $0.2 million and was included in prepaid expenses and other on the consolidated balance sheet. The effect of these swaps is included in interest expense and was not significant in 2019.

In the first quarter of 2019, we entered into ten interest rate swaps that hedge cash flow risk associated with changes in variable interest rates and that are designated as cash flow hedges for accounting purposes. At December 31, 2019, the notional value of these contracts was $400 million with a remaining weighted-average maturity of 2.1 years. At December 31, 2019, the fair value of these interest rate swaps was a net liability of $15.0 million, of which $3.6 million was included in accrued liabilities and $11.4 million was included in other liabilities on the consolidated balance sheet. The effect of these swaps is included in interest expense and was approximately $1.0 million in 2019.

The fair values of these forward and swap contracts are based on the present value of net future cash payments and receipts, which we have categorized as a Level 2 valuation.

Contingent Consideration

In the fourth quarter of 2019, we paid the remaining contingent consideration payable for our acquisition of Maco Transportadora. This remaining contingent consideration paid was a scheduled second installment, with the amount to be paid in the fourth quarter of 2019 based partially on the retention of customer revenue versus a target revenue amount. If there was a shortfall in revenues, a multiple of 2.5 would have been applied to the revenue shortfall and the contingent consideration to be paid to the former owners would have been reduced. Because there was no shortfall in revenues, no reduction occurred. We paid an additional $15.1 million and settled the outstanding contingent consideration.

Other Financial Instruments

Other financial instruments include cash and cash equivalents, accounts receivable, floating rate debt, accounts payable and accrued liabilities. The financial statement carrying amounts of these items approximate the fair value.

There were no transfers in or out of any of the levels of the valuation hierarchy in 2019.