Estee Lauder 2013 Annual Report Download - page 164

162 THE EST{E LAUDER COMPANIES INC.
Level 1: Inputs based on quoted market prices for identi-
cal assets or liabilities in active markets at the
measurement date.
Level 2: Observable inputs other than quoted prices
included in Level 1, such as quoted prices for
similar assets and liabilities in active markets;
quoted prices for identical or similar assets and
liabilities in markets that are not active; or other
inputs that are observable or can be corrobo-
rated by observable market data.
Level 3: Inputs reflect management’s best estimate
of what market participants would use in pricing
the asset or liability at the measurement date.
The inputs are unobservable in the market and
significant to the instrument’s valuation.
NOTE 11 — FAIR VALUE MEASUREMENTS
The Company records its financial assets and liabilities at
fair value, which is defined as the price that would be
received to sell an asset or paid to transfer a liability, in the
principal or most advantageous market for the asset or
liability, in an orderly transaction between market partici-
pants at the measurement date. The accounting for fair
value measurements must be applied to nonfinancial
assets and nonfinancial liabilities, which principally consist
of assets and liabilities acquired through business com-
binations, goodwill, indefinite-lived intangible assets and
long-lived assets for the purposes of calculating potential
impairment, and liabilities associated with restructuring
activities. The Company is required to maximize the use
of observable inputs and minimize the use of unobserv-
able inputs when measuring fair value. The three levels
of inputs that may be used to measure fair value are
as follows:
The following table presents the Company’s hierarchy for its financial assets and liabilities measured at fair value on a
recurring basis as of June 30, 2013:
Level 1 Level 2 Level 3 Total
(In millions)
Assets:
Foreign currency forward contracts $ — $21.7 $ — $21.7
Available-for-sale securities 6.5 — — 6.5
Total $6.5 $21.7 $ — $28.2
Liabilities:
Foreign currency forward contracts $ — $ 9.1 $ — $ 9.1
The following table presents the Company’s hierarchy for its financial assets and liabilities measured at fair value on a
recurring basis as of June 30, 2012:
Level 1 Level 2 Level 3 Total
(In millions)
Assets:
Foreign currency forward contracts $ — $17.7 $ — $17.7
Available-for-sale securities 5.9 — — 5.9
Total $5.9 $17.7 $ — $23.6
Liabilities:
Foreign currency forward contracts $ — $ 6.2 $ — $ 6.2
The following table presents the Company’s hierarchy and impairment charges for certain of its nonfinancial assets mea-
sured at fair value on a nonrecurring basis during fiscal 2013:
Impairment Date of
Charges Carrying Value Carrying Value Level 3
(In millions)
Goodwill $ 9.6 April 1, 2013 $ — $ —
Other intangible assets, net (trademark) 8.1 April 1, 2013 — —
Total $17.7