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NOTE 9. Fair Value
Assets and Liabilities Recorded at Fair Value
The fair value measurement provisions required by GAAP establish a fair value hierarchy, which prioritizes the inputs used in measuring fair
value into three broad levels as follows:
• Level 1 – Quoted prices in active markets for identical assets or liabilities.
• Level 2 – Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly.
• Level 3 – Unobservable inputs based on our own assumptions.
Assets and Liabilities Recorded at Fair Value on a Recurring Basis
The following table presents the fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of
December 31, 2015:
Level 1 Level 2 Total
Assets:
Available-for-sale securities $ 2.8 $ – $ 2.8
Foreign exchange forward contracts – 1.2 1.2
Total $ 2.8 $1.2 $ 4.0
Liabilities:
Foreign exchange forward contracts $ – $1.1 $ 1.1
Total $ – $1.1 $ 1.1
The following table presents the fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of
December 31, 2014:
Level 1 Level 2 Total
Assets:
Available-for-sale securities $ 2.7 $ – $ 2.7
Foreign exchange forward contracts – .6 .6
Total $ 2.7 $ .6 $ 3.3
Liabilities:
Foreign exchange forward contracts $ – $ 4.9 $ 4.9
Total $ – $ 4.9 $ 4.9
The tables above exclude our defined benefit pension and postretirement plan assets. See Note 11, Employee Benefit Plans, for the fair value
hierarchy for our plan assets. The available-for-sale securities include securities held in a trust in order to fund future benefit payments for
non-qualified retirement plans (see Note 11, Employee Benefit Plans). The foreign exchange forward contracts are hedges of either recorded
assets or liabilities or anticipated transactions. The underlying hedged assets and liabilities or anticipated transactions are not reflected in the
table above (see Note 8, Financial Instruments and Risk Management).
Assets and Liabilities Recorded at Fair Value on a Non-recurring Basis
December 31, 2015 – Egypt Goodwill
During the 2015 year-end close process, we completed our annual impairment assessment of the fair value of goodwill related to Egypt and
subsequently determined that the goodwill associated with Egypt was impaired. Accordingly, a non-cash impairment charge of $6.9 was
recorded to reduce the carrying amount of goodwill. There is no amount remaining associated with goodwill for our Egypt reporting unit as
a result of this impairment charge.
A V O N 2015 F-29
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