Fair Value Measurements

The following tables summarize the Company’s financial assets and liabilities that are measured at fair value on a recurring basis:



			Fair Value Measurements
	December 31, 2014		Fair Value Measurements
	December 31, 2014		Level 1		Level 2		Level 3
Financial Assets
Cash equivalents	$	59.1	$	59.1	$	—	$	—
Investments in marketable securities⁽¹⁾
Trading securities	22.3		22.3		—		—
Available-for-sale securities	150.3		150.3		—		—
Other investments	167.2		13.6		19.4		134.2
Financial Liabilities
Contingent payment arrangements⁽²⁾	$	59.3	$	—	$	—	$	59.3
Obligations to related parties⁽²⁾	93.1		—		—		93.1
Interest rate swaps	1.4		—		1.4		—
Foreign currency forward contracts⁽³⁾	0.5		—		0.5		—



			Fair Value Measurements
	December 31, 2015		Fair Value Measurements
	December 31, 2015		Level 1		Level 2		Level 3
Financial Assets
Cash equivalents	$	65.9	$	65.9	$	—	$	—
Investments in marketable securities⁽¹⁾
Trading securities	19.4		19.4		—		—
Available for sale securities	180.5		180.5		—		—
Other investments	149.3		20.7		2.6		126.0
Financial Liabilities
Contingent payment arrangements⁽²⁾	$	10.2	$	—	$	—	$	10.2
Obligations to related parties⁽²⁾	137.3		—		—		137.3

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⁽¹⁾	Principally investments in equity securities.


⁽²⁾	Amounts are presented within Other liabilities.


⁽³⁾	Amounts are presented within Other assets or Other liabilities.

The following are descriptions of the significant financial assets and liabilities measured at fair value and the fair value methodologies used.

Cash equivalents consist primarily of highly liquid investments in daily redeeming money market funds that are classified as Level 1.

Investments in marketable securities consist primarily of investments in publicly traded securities and in funds advised by Affiliates that are valued using net asset value (“NAV”). Publicly traded securities and investments in daily redeeming funds that calculate NAVs are classified as Level 1.

Other investments consist primarily of funds advised by Affiliates and are valued using NAV. Investments in daily redeeming funds that calculate NAVs are classified as Level 1. Investments in funds that permit redemptions monthly or quarterly are classified as Level 2. Investments in funds that are subject to longer redemption restrictions are classified as Level 3. The fair value of Level 3 assets is primarily determined using NAV one quarter in arrears (adjusted for current period calls and distributions).

Contingent payment arrangements represent the present value of the expected future settlement of contingent payment arrangements related to the Company’s investments in consolidated Affiliates. The significant unobservable inputs that are used in the fair value measurement of these obligations are growth and discount rates. Increases in the growth rate result in a higher obligation while an increase in the discount rate results in a lower obligation.

Obligations to related parties include agreements to repurchase Affiliate equity and liabilities, offsetting certain investments that are held by the Company but economically attributable to a related party. The significant unobservable inputs that are used in the fair value measurement of the agreements to repurchase Affiliate equity are growth and discount rates. Increases in the growth rate result in a higher obligation while an increase in the discount rate results in a lower obligation. The liability to a related party is measured based upon certain investments held by the Company, the fair value of which is determined using NAV one quarter in arrears adjusted for current period calls and distributions.

Interest rate swaps and foreign currency forward contracts use model-derived valuations in which all significant inputs are observable in active markets to determine the fair value of these derivatives.

It is the Company’s policy to value financial assets or liabilities transferred as of the beginning of the period in which the transfer occurs. There were no significant transfers of financial assets or liabilities from Level 1 to Level 2 in 2014 or 2015.

Level 3 Financial Assets and Liabilities

The following table presents the changes in Level 3 assets and liabilities:



	For the Years Ended December 31,
	2014											2015
	Other Investments				Contingent Payment Arrangements			Obligations to Related Parties				Other Investments				Contingent Payment Arrangements				Obligations to Related Parties
Balance, beginning of period	$	131.8			$	50.2		$	76.9			$	134.2			$	59.3			$	93.1
Net gains/losses	11.4			⁽¹⁾	9.1		⁽²⁾	5.5			⁽³⁾	(5.5		)	⁽¹⁾	(40.9		)	⁽²⁾	4.6			⁽³⁾
Purchases and issuances	17.4				—			96.7				16.3				9.3				164.1
Settlements and reductions	(26.4		)		—			(86.0		)		(25.5		)		(17.5		)		(124.5		)
Net transfers in and/or out of Level 3	—				—			—				6.5				—				—
Balance, end of period	$	134.2			$	59.3		$	93.1			$	126.0			$	10.2			$	137.3

Net change in unrealized gains/losses relating to instruments still held at the reporting date	$	17.1			$	9.1		$	(0.1	)		$	6.1			$	(40.9	)		$	(7.3	)

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⁽¹⁾	Gains and losses on Other investments are recorded in Investment and other (income) expense.


⁽²⁾	Accretion and changes to the Company’s contingent payment arrangements are recorded in Imputed interest expense and contingent payment arrangements.


⁽³⁾	Gains and losses associated with agreements to repurchase Affiliate equity are recorded in Imputed interest expense and contingent payment arrangements. Gains and losses related to liabilities offsetting certain investments are recorded in Investment and other (income) expense.

The following table presents certain quantitative information about the significant unobservable inputs used in valuing the Company’s Level 3 financial liabilities:



	Quantitative Information about Level 3 Fair Value Measurements
	Valuation Techniques	Unobservable Input	Fair Value at December 31, 2014		Range at December 31, 2014	Fair Value at December 31, 2015		Range at December 31, 2015
Contingent payment arrangements	Discounted cash flow	Growth rates	$	59.3	6%	$	10.2	3% - 8%
		Discount rates			15%			15%
Affiliate equity repurchase obligations	Discounted cash flow	Growth rates	21.5		5% - 9%	62.3		1% - 9%
		Discount rates			15% - 16%			14% - 15%

Investments in Certain Entities that Calculate Net Asset Value

The Company uses the NAV of certain investments as their fair value. The NAVs provided by the investees have been derived from the fair values of the underlying investments as of the measurement dates. The following table summarizes the nature of these investments and any related liquidity restrictions or other factors that may impact the ultimate value realized:



	December 31, 2014				December 31, 2015
Category of Investment	Fair Value		Unfunded Commitments		Fair Value		Unfunded Commitments
Private equity⁽¹⁾	$	134.2	$	67.8	$	126.0	$	76.8
Other funds⁽²⁾	75.8		—		72.3		—
	$	210.0	$	67.8	$	198.3	$	76.8

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⁽¹⁾	These funds primarily invest in a broad range of private equity funds and make direct investments. Distributions will be received as the underlying assets are liquidated over the life of the funds, which is generally 15 years.


⁽²⁾	These are multi-disciplinary funds that invest across various asset classes and strategies, including long/short equity, credit and real estate. Investments are generally redeemable on a daily or quarterly basis.

Other Financial Assets and Liabilities Not Carried at Fair Value

The carrying amount of Cash and cash equivalents, Receivables, and Payables and accrued liabilities approximates fair value because of the short-term nature of these instruments. The carrying value of notes receivable approximates fair value because interest rates and other terms are at market rates. The carrying value of Senior bank debt approximates fair value because the debt has variable interest based on selected short-term rates. The following table summarizes the Company’s other financial liabilities not carried at fair value:



	December 31, 2014				December 31, 2015
	Carrying Amount		Fair Value		Carrying Amount		Fair Value		Fair Value Hierarchy
Senior notes	$	736.8	$	786.2	$	944.6	$	966.3	Level 2
Convertible securities	303.1		532.1		305.2		483.6		Level 2