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Fair Value Measurements
 9 Months Ended
Sep. 30, 2016
Fair Value Measurements
9. Fair Value Measurements

ASC requirements for Fair Value Measurements and Disclosures establish a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels. Level 1 inputs, the highest priority, are quoted prices in active markets for identical assets or liabilities. Level 2 inputs reflect inputs other than quoted prices included in level 1 that are either observable directly or through corroboration with observable market data. Level 3 inputs are unobservable inputs, due to little or no market activity for the asset or liability, such as internally-developed valuation models.

The carrying value, net of underwriting commissions, price discounts and debt issuance costs and fair value of debt as of September 30, 2016 and December 31, 2015 were as follows:

 

(In millions)    September 30, 2016      December 31, 2015  
     Carrying
Value		      Fair
Value		      Carrying
Value		      Fair
Value		  

Revolving credit facility

    $ 695.0       $ 695.0       $ —         $ —     

Notes payable to bank

      —           —           0.8         0.8   

Term loan

      —           —           279.0         280.0   

Senior Notes, net of underwriting commissions and price discounts

      890.8         944.5         889.7         894.1   

The estimated fair value of our Senior notes and term loan is determined primarily using broker quotes, which are level 2 inputs.

Assets and liabilities measured at fair value on a recurring basis as of September 30, 2016 and December 31, 2015 were as follows:

 

(In millions)    Fair Value  
     September 30,
2016		      December 31,
2015		  

Assets

      

Derivative financial instruments (level 2)

    $ 1.2       $ 6.8   

Deferred compensation program assets (level 2)

      3.3         3.1   
  

 

 

     

 

 

  

Total assets

    $ 4.5       $ 9.9   

Liabilities

      

Derivative financial instruments (level 2)

    $ 3.8       $ 3.1   

During the second quarter of 2016, we entered into a joint venture arrangement with a partner to operate a manufacturing facility in China. Under the arrangement, we are required to make certain fixed payments to our partner each year starting in June 2017 and through June 2024 (final year of the agreement) and also purchase the outstanding preferred shares of our partner in 2024. During the second quarter of 2016, we recognized the fair value of $8.2 million of these contractual payments, including a redemption of the preferred shares ($7.2 million within other non-current liabilities and $1.0 million due within one year in other current liabilities). We have also recognized the excess of $5.2 million of this liability fair value over the $3.0 million cash contributed by our partner within paid-in capital.