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42 Jarden Corporation Annual Report 2012
Notes to Consolidated Financial Statements
Jarden Corporation Annual Report 2012 (Dollars in millions, except per share data and unless otherwise indicated)
2012
Fair Value Asset (Liability)
(In millions) Level 1 Level 2 Level 3 Total
Derivatives:
Assets $ — $ 1.9 $ — $ 1.9
Liabilities — (10.4) — (10.4)
Available-for-sale securities — 20.0 — 20.0
2011
Fair Value Asset (Liability)
(In millions) Level 1 Level 2 Level 3 Total
Derivatives:
Assets $ — $ 4.4 $ — $ 4.4
Liabilities — (8.6) — (8.6)
Available-for-sale securities — 19.5 — 19.5
At December 31, 2011, goodwill of certain reporting units and certain intangible assets are recorded at fair value based upon the
Company’s impairment testing and as circumstances require.
The Company’s goodwill and indefinite-lived intangibles are fair valued using discounted cash flows and market multiple methods.
Goodwill impairment testing requires significant use of judgment and assumptions including the identification of reporting units; the
assignment of assets and liabilities to reporting units; and the estimation of future cash flows, business growth rates, terminal values
and discount rates. The testing of indefinite-lived intangibles under established guidelines for impairment also requires significant
use of judgment and assumptions, such as the estimation of cash flow projections, terminal values and discount rates.
Derivative assets and liabilities relate to interest rate swaps, foreign currency contracts and commodity contracts. Fair values are
determined by the Company using market prices obtained from independent brokers or determined using valuation models that use as
their basis readily observable market data that is actively quoted and can be validated through external sources, including independent
pricing services, brokers and market transactions. Available-for-sale securities are valued based on quoted market prices.
The following table summarizes the assets that are measured at Level 3 fair value on a non-recurring basis at December 31, 2011:
(In millions) 2011
Goodwill $ 74.0
Intangible assets 2.1
Fair Value Measurements
GAAP defines three levels of inputs that may be used to measure fair value and requires that the assets or liabilities carried at fair
value be disclosed by the input level under which they were valued. The input levels are defined as follows:
Level 1: Quoted market prices in active markets for identical assets and liabilities.
Level 2: Observable inputs other than defined in Level 1, such as quoted prices for similar assets or liabilities; quoted prices
in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for
substantially the full term of the assets or liabilities.
Level 3: Unobservable inputs that are not corroborated by observable market data.
The following table summarizes assets and liabilities that are measured at fair value on a recurring basis at December 31, 2012
and 2011: