Fair Value Measurements

3 Months Ended

Mar. 31, 2013

Fair Value Measurements

Fair Value Measurements

Note 10—Fair Value Measurements

Fair value is defined as the 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 the asset or liability in an orderly transaction between market participants on the measurement date. Fair value may be measured using three levels of inputs:

Level 1—quoted prices in active markets for identical assets and liabilities.

Level 2—observable inputs other than quoted prices in active markets for identical assets and liabilities.

Level 3—unobservable inputs in which there is little or no market data available, which requires the reporting entity to develop its own assumptions.

Recurring Measurements

The fair value of the Company’s financial assets and liabilities measured at fair value on a recurring basis were as

follows:

				Quoted Prices
				In Active		Significant
				Markets for		Other			Significant
	Balance at			Identical		Observable			Unobservable
	March 31,			Assets		Inputs			Inputs
(in millions)	2013			Level 1		Level 2			Level 3
Cash and cash equivalents	$	116.0		$	116.0	$	—		$	—
Short-term investments	1.0			1.0		—			—
Commodity swap agreements	(0.4		)	—		(0.4		)	—
Foreign currency forward contracts	0.7			—		0.7			—
Total assets measured at fair value	$	117.3		$	117.0	$	0.3		$	—
Contingent consideration	$	10.0		$	—	$	—		$	10.0
Total liabilities measured at fair value	$	10.0		$	—	$	—		$	10.0

Cash and cash equivalents include $3.0 million in money market accounts for the Company’s deferred compensation program.  Short-term investments of $1.0 million at March 31, 2013 consist of investments held in mutual funds for the Company’s deferred compensation program and are classified in the condensed consolidated balance sheet at March 31, 2013 in Prepaid expenses and other current assets.

Commodity swap agreements at March 31, 2013 relate to swap agreements held for purposes of mitigating the Company’s exposure to fluctuations in the prices of silver and copper, which are key raw materials within the Interconnect Technologies segment.  Such swaps are valued using third-party valuation models that measure fair value using observable market inputs such as forward prices and spot prices of the underlying commodities. Based on these inputs, the derivative assets and liabilities are classified within Level 2 of the valuation hierarchy.  The Company has not designated these swaps as cash flow hedges and, accordingly, recognizes associated changes in fair value of the swaps through Other income.  The fair value of these swaps is recorded within Accrued expenses in the condensed consolidated balance sheet as of March 31, 2013 as none of the swap terms exceed one year from the balance sheet date.

Foreign exchange forward contracts at March 31, 2013 relate to contracts held for purposes of mitigating the Company’s exposure to fluctuations in foreign exchange rates, resulting from assets or liabilities that are held by certain of its operating subsidiaries in currencies other than the subsidiary’s functional currency.  Such forward contracts are valued at fair value using observable market inputs such as forward prices and spot prices of the underlying exchange rate pair. Based on these inputs, the derivative assets and liabilities are classified within Level 2 of the valuation hierarchy.  The Company has not designated these forward contracts as cash flow hedges and, accordingly, recognizes associated changes in fair value of the forwards through Other income (expense).  The fair value of these contracts is recorded within Prepaid expenses and other assets in the condensed consolidated balance sheet as of March 31, 2013 as none of the contract terms exceed one year from the balance sheet date.

Contingent consideration represents fair value of the earn-out associated with the purchase of PDT.  The fair value was €7.8 million, or $10.0 million, at March 31, 2013 and is recorded within Other long-term liabilities in the condensed consolidated balance sheet.  See Note 4 for further information regarding the PDT acquisition.

			Quoted Prices
			In Active		Significant
			Markets for		Other		Significant
	Balance at		Identical		Observable		Unobservable
	December 31,		Assets		Inputs		Inputs
(in millions)	2012		Level 1		Level 2		Level 3
Cash and cash equivalents	$	112.5	$	112.5	$	—	$	—
Short-term investments	0.6		0.6		—		—
Commodity swap agreements	0.1		—		0.1		—
Foreign currency forward contracts	0.3		—		0.3		—
Total assets measured at fair value	$	113.5	$	113.1	$	0.4	$	—
Contingent consideration	$	9.9	$	—	$	—	$	9.9
Total liabilities measured at fair value	$	9.9	$	—	$	—	$	9.9

Cash and cash equivalents at December 31, 2012 include $1.6 million in money market accounts for the Company’s Deferred Compensation Plan.  Short-term investments of $0.6 million at December 31, 2012 consist of investments held in mutual funds for the Company’s deferred compensation program and are classified in the condensed consolidated balance sheet at December 31, 2012 in Prepaid expenses and other current assets.  Commodity swap agreements relate to swap agreements held for purposes of mitigating the Company’s exposure to fluctuations in the prices of silver and copper, which are key raw materials within the Interconnect Technologies segment and are classified in the condensed consolidated balance sheet at December 31, 2012 in Prepaid expenses and other current assets.  Foreign exchange forward contracts relate to contracts held for purposes of mitigating the Company’s exposure to fluctuations in foreign exchange rates, resulting from assets or liabilities that are held by certain of its operating subsidiaries in currencies other than the subsidiary’s functional currency and are classified in the condensed consolidated balance sheet at December 31, 2012 in Prepaid expenses and other current assets.  Contingent consideration represents fair value of the earn-out associated with the purchase of PDT.

Non-Recurring Measurements

For the three months ended March 31, 2013 and 2012, there were no non-recurring fair value measurements subsequent to initial recognition.  See Note 4 for information regarding assets acquired and liabilities assumed in the Thermax/Raydex and Hertalan acquisitions measured at fair value at initial recognition.