Graco 2011 Annual Report Download - page 80

78 NEWELL RUBBERMAID 2011 Annual Report
2011 Financial Statements and Related Information
Quoted Prices in
Fair Value as Active Markets Significant Other Significant
of December 31, for Identical Observable Unobservable
Description 2010 Assets (Level 1) Inputs (Level 2) Inputs (Level 3)
Assets
Money market fund investments (1) $ 10.5 $ — $ 10.5 $ —
Investment securities, including mutual funds (2) 22.7 7.4 15.3 —
Interest rate swaps 42.3 — 42.3 —
Foreign currency derivatives 2.6 — 2.6 —
Total $ 78.1 $ 7.4 $ 70.7 $ —
Liabilities
Foreign currency derivatives $ 2.0 $ — $ 2.0 $ —
Total $ 2.0 $ — $ 2.0 $ —
(1) Investments in money market funds are classified as cash equivalents due to their short-term nature and the ability for them to be readily converted into cash. Investments
in money market funds are valued at the net asset value per share or unit multiplied by the number of shares or units held as of the measurement date and, accordingly, have
been classified as Level 2 investments.
(2) The values of investment securities, including mutual funds, are classified as cash and cash equivalents ($5.1 million and $7.4 million as of December 31, 2011 and 2010,
respectively) and other assets ($12.6 million and $15.3 million as of December 31, 2011 and 2010, respectively). For mutual funds that are publicly traded, fair value is
determined on the basis of quoted market prices and, accordingly, these investments have been classified as Level 1. Other investment securities are valued at the net asset
value per share or unit multiplied by the number of shares or units held as of the measurement date and have been classified as Level 2.
Nonrecurring Fair Value Measurements
The Company’s nonfinancial assets which are measured at fair value on a nonrecurring basis include property, plant and equipment,
goodwill, intangible assets and certain other assets.
During 2011, in conjunction with the Company’s annual impairment tests of goodwill and indefinite-lived intangible assets, the
Company recognized non-cash impairment charges of $382.6 million, primarily related to goodwill impairment in the Baby & Parenting
and Hardware global business units. In making the assessment of goodwill impairment, management relies on a number of factors
including operating results, business plans, economic projections, anticipated future cash flows, transactions, and marketplace data.
Accordingly, these fair value measurements fall in Level 3 of the fair value hierarchy. The factors used by management in the impairment
analysis are inherently subject to uncertainty. While the Company believes it has made reasonable estimates and assumptions to
determine the fair value of its reporting units, if actual results are not consistent with management’s estimates and assumptions, goodwill
and other intangible assets may be overstated and could potentially trigger additional impairment charges.
During 2011, impairments associated with plans to dispose of certain property, plant and equipment were not material. The Company
generally uses projected cash flows, discounted as necessary, to estimate the fair values of the impaired assets using key inputs such as
management’s projections of cash flows on a held-and-used basis (if applicable), management’s projections of cash flows upon
disposition and discount rates. Accordingly, these fair value measurements fall in Level 3 of the fair value hierarchy. These assets and
certain liabilities are measured at fair value on a nonrecurring basis as part of the Company’s impairment assessments and as
circumstances require.
Financial Instruments
The Company’s financial instruments include cash and cash equivalents, accounts receivable, accounts payable, derivative instruments,
notes payable and short- and long-term debt. The carrying values for current financial assets and liabilities, including cash and cash
equivalents, accounts receivable and accounts payable, approximate fair value due to the short maturity of such instruments. The fair
values of the Company’s derivative instruments are recorded in the Consolidated Balance Sheets and are disclosed in Footnote 11.
The fair values of certain of the Company’s short- and long-term debt are based on quoted market prices and are as follows (in millions):
2011 2010
Fair Value Book Value Fair Value Book Value
Medium-term notes $ 1,679.7 $ 1,632.3 $ 1,650.7 $ 1,623.0
Preferred securities underlying the junior
convertible subordinated debentures 356.0 421.2 353.8 421.2
Convertible notes 0.1 0.1 45.5 17.5
The carrying amounts of all other significant debt approximate fair value.