Fair Value Measurements

The fair-value hierarchy established in ASC 820 prioritizes the inputs used in valuation techniques into three levels as follows:



	Level-1 – Observable inputs – quoted prices in active markets for identical assets and liabilities
	Level-2 – Observable inputs other than the quoted prices in active markets for identical assets and liabilities – such as quoted prices for similar instruments, quoted prices for identical or similar instruments in inactive markets, or other inputs that are observable or can be corroborated by observable market data;
	Level-3 – Unobservable inputs – includes amounts derived from valuation models where one or more significant inputs are unobservable and require the Company to develop relevant assumptions.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following tables summarizes the financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2014 and 2013, and the basis for that measurement, by level within the fair value hierarchy:



(In thousands)	Balance as of December 31, 2014			Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)			Significant unobservable inputs (Level 3)
Financial assets	Balance as of December 31, 2014					Significant other observable inputs (Level 2)			Significant unobservable inputs (Level 3)
Short-term bond mutual funds	$	18,961		$	18,961	$	—		$	—
Certificates of deposit	1,101			—		1,101			—
Foreign exchange forward contracts	405			—		405			—
Deferred compensation plan assets (1)	962			962		—			—
Total	$	21,429		$	19,923	$	1,506		$	—
Financial liabilities
Foreign exchange forward contracts	$	(8	)	$	—	$	(8	)	$	—

(1) Recorded as an Other asset with an offsetting liability for the obligation to employees in Other liabilities.



(In thousands)	Balance as of December 31, 2013			Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)			Significant unobservable inputs (Level 3)
Financial assets	Balance as of December 31, 2013					Significant other observable inputs (Level 2)			Significant unobservable inputs (Level 3)
Short-term bond mutual funds	$	7,985		$	7,985	$	—		$	—
Certificates of deposit	1,070			—		1,070			—
Foreign exchange forward contracts	44					44
Deferred compensation plan assets (1)	1,007			1,007		—			—
Total	$	10,106		$	8,992	$	1,114		$	—
Financial liabilities
Foreign exchange forward contracts	$	(225	)	$	—	$	(225	)	$	—

(1) Recorded as an Other asset with an offsetting liability for the obligation to employees in Other liabilities.

The Company values its investments in equity securities within the deferred compensation plan and its investments in short term bond mutual funds using level 1 inputs, by obtaining quoted prices in active markets. The deferred compensation plan assets consist of shares of mutual funds. The Company also enters into both cash flow and fair value hedges by purchasing foreign currency exchange forward contracts. These contracts are valued using level 2 inputs, primarily observable forward foreign exchange rates. The certificates of deposit that are used to collateralize some of the Company’s letters of credit have been valued using information classified as level 2, as these are not traded on the open market and are held unsecured by one counterparty.

The carrying values of cash and cash equivalents, trade and other receivables and trade payables are considered to be representative of their respective fair values.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

The Company is required, on a non-recurring basis, to adjust the carrying value or provide valuation allowances for certain assets using fair value measurements in accordance with ASC 820. The Company’s assets and liabilities measured at fair value on a nonrecurring basis include property, plant and equipment, goodwill, intangibles, its ViSalus investment and other assets. These assets are not measured at fair value on a recurring basis; however, they are subject to fair value adjustments in certain circumstances, such as when there is evidence that impairment may exist. The Company's investment in ViSalus was evaluated for impairment at December 31, 2014 and, as a result, a $2.9 million impairment charge was recorded to the ViSalus investment bringing the ending investment value to $6.9 million. The Company used a discounted cash flow model to estimate the fair value of its ViSalus investment. This model incorporated the most recent long term strategic forecast of the business to determine the estimated cash flows, which were then discounted to arrive at its net present value. The discount rate used to determine its present value considers the time value of money, certain growth rate assumptions, other investment risk factors and the terminal value of the business.

Goodwill and indefinite-lived intangibles are subject to impairment testing on an annual basis, or sooner if circumstances indicate a condition of impairment may exist. The valuation uses assumptions such as interest and discount rates, growth projections and other assumptions of future business conditions. These valuation methods require a significant degree of management judgment concerning the use of internal and external data. In the event these methods indicate that fair value is less than the carrying value, the asset is recorded at fair value as determined by the valuation models. As such, the Company classifies goodwill and other intangibles subjected to nonrecurring fair value adjustments as level 3.

The fair value of the Company’s long-lived assets, primarily property, plant and equipment, is reviewed whenever events or changes in circumstances indicate that carrying amounts of a long-lived assets may not be recoverable. Management determines whether there has been an impairment of long-lived assets held for use in the business by comparing anticipated undiscounted future cash flows from the use and eventual disposition of the asset or asset group to the carrying value of the asset. The amount of any resulting impairment is calculated by comparing the carrying value to the fair value. For the year ended December 31, 2014, earnings within the Candles & Home Décor segment include a one-time fixed asset impairment charge of $0.6 million on certain machinery and equipment held and used at the Cumbria, United Kingdom facility (see Note 21 to the Consolidated Financial Statements). Long-lived assets that meet the definition of held for sale are valued at the lower of carrying amount or net realizable value. Assets or asset groups are determined at the lowest level possible for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. For assets whose aggregate undiscounted cash flows are less than carrying value, the assets are considered potentially impaired and actual impairments, if any, would be determined to the extent the assets' carrying values exceeds its aggregate fair values.

The valuation of these assets uses a significant amount of management’s judgment and uses information provided by third parties. The local real estate market, regional comparatives, estimated concessions and transaction costs are all considered when determining the fair value of these assets. Due to the nature of this information and the assumptions made by management, the Company has classified the inputs used in valuing these assets as level 3.