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Fair Value Measurements

6 Months Ended

Jun. 30, 2018

Fair Value Disclosures [Abstract]

Fair Value Measurements

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, 2017
					Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)
Financial Assets
Cash equivalents	$	40.4			$	40.4			$	—			$	—
Investments in marketable securities(1)	77.8				77.8				—				—
Foreign currency forward contracts(1)	0.2				—				0.2				—
Financial Liabilities(2)
Contingent payment arrangements	$	9.4			$	—			$	—			$	9.4
Affiliate equity obligations	49.2				—				—				49.2
Foreign currency forward contracts	0.6				—				0.6				—

					Fair Value Measurements
	June 30, 2018
					Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)
Financial Assets
Cash equivalents	$	30.0			$	30.0			$	—			$	—
Investments in marketable securities(1)	84.1				84.1				—				—
Foreign currency forward contracts(1)	1.0				—				1.0				—
Financial Liabilities(2)
Contingent payment arrangements	$	4.2			$	—			$	—			$	4.2
Affiliate equity obligations	36.9				—				—				36.9
Foreign currency forward contracts	1.1				—				1.1				—

__________________________

⁽¹⁾  Amounts are presented within Investments and other assets.

⁽²⁾  Amounts are presented within Other liabilities in the Consolidated Condensed Balance Sheets.

The following are descriptions of the financial assets and liabilities measured on a recurring basis at fair value and the fair value methodologies used:

Cash equivalents consist primarily of highly liquid investments in daily redeeming money market funds, without enacted liquidity fees or redemption gates that are valued at net asset value (“NAV”).

Investments in marketable securities consist primarily of investments in publicly traded securities and funds advised by Affiliates that are valued at NAV. Publicly traded securities valued using unadjusted quoted market prices for identical instruments in active markets are classified as level 1. Publicly traded securities valued using quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active are classified as level 2. Investments in funds advised by Affiliates that are valued at NAV are classified as level 1.

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 increases in the discount rate result in a lower obligation.

Affiliate equity obligations include agreements to repurchase Affiliate equity. 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 increases in the discount rate result in a lower obligation.

Foreign currency forward contracts use model-derived valuations in which all significant inputs are observable in active markets to determine fair value.

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 between level 1 and level 2 in the three and six months ended June 30, 2017 and 2018.

Level 3 Financial Assets and Liabilities

The following tables present the changes in level 3 liabilities:

	For the Three Months Ended June 30,
	2017								2018
	Contingent Payment Arrangements				Affiliate Equity Obligations				Contingent Payment Arrangements				Affiliate Equity Obligations
Balance, beginning of period	$	8.9			$	91.5			$	9.8			$	79.4
Net realized and unrealized (gains) losses(1)	1.7				—				(0.8		)		—
Purchases and issuances(2)	—				50.8				—				0.3
Settlements and reductions	(2.8		)		(71.6		)		(4.8		)		(42.8		)
Balance, end of period	$	7.8			$	70.7			$	4.2			$	36.9
Net change in unrealized (gains) losses relating to instruments still held at the reporting date(1)	$	1.7			$	—			$	0.1			$	—

	For the Six Months Ended June 30,
	2017								2018
	Contingent Payment Arrangements				Affiliate Equity Obligations				Contingent Payment Arrangements				Affiliate Equity Obligations
Balance, beginning of period	$	8.6			$	12.1			$	9.4			$	49.2
Net realized and unrealized (gains) losses(1)	2.0				—				(0.4		)		—
Purchases and issuances(2)	—				150.4				—				45.9
Settlements and reductions	(2.8		)		(91.8		)		(4.8		)		(58.2		)
Balance, end of period	$	7.8			$	70.7			$	4.2			$	36.9
Net change in unrealized (gains) losses relating to instruments still held at the reporting date(1)	$	2.0			$	—			$	0.3			$	—

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⁽¹⁾  Accretion and changes in the expected value of the Company’s contingent payment arrangements and Affiliate equity obligations are recorded in Other expenses (net) in the Consolidated Statements of Income.

⁽²⁾  Includes transfers from Redeemable non-controlling interests.

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, 2017				Range at December 31, 2017		Fair Value at June 30, 2018				Range at June 30, 2018
Contingent payment arrangements	Discounted cash flow		Growth rates		$	9.4			7% - 8%		$	4.2			7%
			Discount rates						15% - 16%						15%
Affiliate equity obligations	Discounted cash flow		Growth rates		49.2				0% - 11%		36.9				0% - 11%
			Discount rates						12% - 16%						12% - 16%

Investments Measured at NAV as a Practical Expedient

The Company’s Affiliates sponsor investment products in which the Company and Affiliates may make general partner and seed capital investments. The Company uses the NAV of these investments as a practical expedient for their fair value and reports these products within Investments and other assets. The following table summarizes the nature of the Company’s investments, unfunded commitments and any related liquidity restrictions or other factors that may impact the ultimate value realized:

	December 31, 2017								June 30, 2018
Category of Investment	Fair Value				Unfunded Commitments				Fair Value				Unfunded Commitments
Private equity funds(1)	$	156.1			$	98.8			$	176.6			$	122.8
Other funds(2)	8.9				—				8.5				—
Other investments(3)	$	165.0			$	98.8			$	185.1			$	122.8

___________________________

⁽¹⁾  The Company uses NAV as a practical expedient one quarter in arrears (adjusted for current period calls and distributions) to determine the fair value. These funds primarily invest in a broad range of private equity funds, as well as making direct investments. Distributions will be received as the underlying assets are liquidated over the life of the funds, which is generally up to 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, monthly or quarterly basis.

⁽³⁾  Fair value attributable to the controlling interest was $80.1 million and $106.7 million as of December 31, 2017 and June 30, 2018, respectively.

Other Financial Assets and Liabilities Not Carried at Fair Value

The carrying amount of Receivables and Payables and accrued liabilities which is reported in the Consolidated Condensed Balance Sheets, approximates fair value because of the short-term nature of these instruments. The carrying value of notes receivable, which is reported in Investments and other assets, approximates fair value because interest rates and other terms are at market rates. The carrying value of the credit facilities, which is reported in Senior debt in the Consolidated Condensed Balance Sheets, approximates fair value because the credit facilities have 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, 2017								June 30, 2018
	Carrying Value				Fair Value				Carrying Value				Fair Value				Fair Value Hierarchy
Senior notes(1)	$	745.7			$	765.2			$	746.0			$	744.0			Level 2
Convertible securities	309.9				549.8				311.2				513.8				Level 2

___________________________

⁽¹⁾  The carrying value of the senior notes is reported in Senior debt.

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- References

No definition available.

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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.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 820
-URI http://asc.fasb.org/topic&trid=2155941

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