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Fair Value Of Financial Instruments

9 Months Ended

Sep. 30, 2011

Fair Value Of Financial Instruments

Fair Value Of Financial Instruments

Note 6 – Fair Value of Financial Instruments

The Company's financial instruments include cash and cash equivalents, accounts and notes receivable, cash collateral deposited with insurance carriers, cash surrender value of life insurance policies, auction rate securities, cost and equity method investments, deferred compensation plan assets and liabilities, accounts payable and other current liabilities, acquisition-related contingent consideration and debt obligations.

Fair value is the price that would be received to sell 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. The fair value guidance establishes a valuation hierarchy, which requires maximizing the use of observable inputs when measuring fair value. The three levels of inputs that may be used are:

Level 1 -		Quoted market prices in active markets for identical assets or liabilities.
Level 2 -		Observable market based inputs or other observable inputs.
Level 3 -		Significant unobservable inputs that are not corroborated by observable market data. These values are generally determined using valuation models incorporating management's estimates of market participant assumptions.

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

		September 30, 2011								December 31, 2010
		Carrying Amount				Fair Value				Carrying Amount				Fair Value
Assets:
Cash surrender value of life insurance policies		$	8.3			$	8.3			$	8.3			$	8.3
Auction rate securities			13.6				13.6				19.0				19.0
Liabilities:
Acquisition-related contingent consideration		$	81.9			$	81.9			$	45.0			$	45.0
7.625% senior notes			150.0				150.0				150.0				151.9
Original 4.0% senior convertible notes			9.7				12.5				115.0				139.2
Original 4.25% senior convertible notes			3.0				4.1				100.0				120.4
New 4.0% senior convertible notes			97.6				95.5				—				—
New 4.25% senior convertible notes			89.4				87.0				—				—

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. See Note 7 - Securities Available for Sale.

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 December 15, 2008. The fair value of such acquisition-related contingent consideration is based on management's estimates and entity-specific assumptions. The Company completed certain acquisitions during the second quarter of 2011, as described in Note 3 - Acquisitions and Other Investments, certain of which include earn-out agreements.

Debt. The estimated fair values of the Company's 7.625% senior notes and Original Notes are based on quoted market prices. 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 market interest rate for a similar nonconvertible instrument. See Note 9 - Debt.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

As of September 30, 2011, the Company held certain assets and liabilities required to be measured at fair value on a recurring basis. 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 September 30, 2011				Quoted Prices in Active  Markets for Identical Assets (Level 1)				Significant  Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)
Assets:
Cash surrender value of life insurance policies		$	8.3			$	8.3				—				—
Auction rate securities		$	13.6				—				—			$	13.6
Liabilities:
Acquisition-related contingent consideration		$	81.9				—				—			$	81.9

						Fair Value Measurements Using Inputs Considered as Significant
		Fair Value as of December 31, 2010				Quoted Prices in Active  Markets for Identical Assets (Level 1)				Significant  Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)
Assets:
Cash surrender value of life insurance policies		$	8.3			$	8.3				—				—
Auction rate securities		$	19.0				—				—			$	19.0
Liabilities:
Acquisition-related contingent consideration		$	45.0				—				—			$	45.0

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 (Level 3 inputs) for the periods indicated:

			$000.0				$000.0				$000.0
		Auction Rate Securities
		Student Loan				Structured Finance  Securities				Total
Assets:
Balances at June 30, 2011		$	12.1			$	2.3			$	14.4
Changes in fair value recorded in earnings			—				(0.5	)			(0.5	)
Changes in unrealized (losses)/gains included in other comprehensive income			(0.3	)			—				(0.3	)
Balances at September 30, 2011		$	11.8			$	1.8			$	13.6
		Contingent Consideration
Liabilities:
Balances at June 30, 2011		$	81.9
Additions from new business combinations			—
Changes in fair value recorded in earnings			—
Payments of contingent consideration			—
Balances at September 30, 2011		$	81.9

			$000.0				$000.0				$000.0
		Auction Rate Securities
		Student Loan				Structured Finance Securities				Total
Assets:
Balances at June 30, 2010		$	16.2			$	7.8			$	24.0
Changes in fair value recorded in earnings			—				(0.4	)			(0.4	)
Changes in unrealized (losses)/gains included in other comprehensive income			0.2				0.6				0.8
Balances at September 30, 2010		$	16.4			$	8.0			$	24.4
		Contingent Consideration
Liabilities:
Balances at June 30, 2010		$	30.6
Changes in fair value recorded in earnings			—
Balances at September 30, 2010		$	30.6

			$000.0				$000.0				$000.0
		Auction Rate Securities
		Student Loan				Structured Finance  Securities				Total
Assets:
Balances at December 31, 2010		$	16.4			$	2.6			$	19.0
Redemption of security by issuer			(4.6	)			—				(4.6	)
Reversal of unrealized losses on redeemed security			0.4				—				0.4
Changes in fair value recorded in earnings			—				(0.5	)			(0.5	)
Changes in unrealized (losses)/gains included in other comprehensive income			(0.4	)			(0.3	)			(0.7	)
Balances at September 30, 2011		$	11.8			$	1.8			$	13.6
		Contingent Consideration
Liabilities:
Balances at December 31, 2010		$	45.0
Additions from new business combinations			49.2
Changes in fair value recorded in earnings			—
Payments of contingent consideration			(12.3	)
Balances at September 30, 2011		$	81.9

			$000.0				$000.0				$000.0
		Auction Rate Securities
		Student Loan				Structured Finance  Securities				Total
Assets:
Balances at December 31, 2009		$	16.4			$	8.1			$	24.5
Changes in fair value recorded in earnings			—				(0.8	)			(0.8	)
Changes in unrealized (losses)/gains included in other comprehensive income			—				0.7				0.7
Balances at September 30, 2010		$	16.4			$	8.0			$	24.4
		Contingent Consideration
Liabilities:
Balances at December 31, 2009		$	40.3
Changes in fair value recorded in earnings			—
Payments of contingent consideration			(9.7	)
Balances at September 30, 2010		$	30.6

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 measured at fair value as a result of an impairment or other measurement event, if applicable. Except for the Company's 33% equity investment in EC Source, which was remeasured in the second quarter of 2011 in connection with the Company's acquisition of the remaining 67% of EC Source's outstanding equity interests, the Company had no significant assets or liabilities measured at fair value on a nonrecurring basis during the three or nine months ended September 30, 2011 and 2010. See Note 3 – Acquisitions and Other Investments for details.

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- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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