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42
Notes to Consolidated Financial Statements
Jarden Corporation Annual Report 2011 (Dollars in millions, except per share data and unless otherwise indicated)
2011
Fair Value Asset (Liability)
(In millions) Level 1 Level 2 Total
Derivatives:
Assets $ — $ 4.4 $ 4.4
Liabilities — (8.6) (8.6)
Available-for-sale securities — 19.5 19.5
2010
Fair Value Asset (Liability)
(In millions) Level 1 Level 2 Total
Derivatives:
Assets $ — $ 0.1 $ 0.1
Liabilities — (34.5) (34.5)
Available-for-sale securities 19.1 — 19.1
At December 31, 2011 and 2010, 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.
Stock-Based Compensation
The Company estimates the fair value of share-based awards on the date of grant, which is generally the date the award is approved
by the Board of Directors of the Company (the “Board”) or committee thereof. The fair value of stock options is determined using
the Black-Scholes option-pricing model. The fair value of the market-based restricted stock awards is determined using a Monte
Carlo simulation embedded in a lattice model, and for all other restricted stock awards, based on the closing price of the Company’s
common stock on the date of grant. The determination of the fair value of the Company’s stock option awards and restricted stock
awards is based on a variety of factors including, but not limited to, the Company’s common stock price, expected stock price
volatility over the expected life of awards, and actual and projected exercise behavior (see Note 13). Additionally, the Company has
estimated forfeitures for share-based awards at the dates of grant based on historical experience. The forfeiture estimate is revised
as necessary if actual forfeitures differ from these estimates.
The Company issues restricted share awards whose restrictions lapse upon either the passage of time (service vesting), achieving
performance targets, attaining Company common stock price thresholds, or some combination of these restrictions. For those
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 and 2010:
(In millions) 2011 2010
Goodwill $ 74.0 $ 6.4
Intangible assets 2.1 3.6
The following table summarizes assets and liabilities that are measured at fair value on a recurring basis at December 31, 2011
and 2010: