FAIR VALUE MEASUREMENTS

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. A three

level valuation hierarchy based upon observable and non-observable inputs is utilized. Observable inputs reflect market data

obtained from independent sources, while unobservable inputs reflect the Company's market assumptions. Preference is given to observable inputs.

These two types of inputs create the following fair value hierarchy:


•	Level 1 - Quoted prices for identical assets or liabilities in active markets.


•	Level 2 - Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.


•	Level 3 - Significant inputs to the valuation model are unobservable.

The Company's financial assets and liabilities measured at fair value include derivative instruments, securitized beneficial interests and guarantees. The application of the fair value guidance to the non-financial assets and liabilities primarily includes assessments of investments in subsidiaries, goodwill and other intangible assets and long-lived assets for potential impairment. Following are descriptions of the valuation methodologies the Company uses to measure different assets or liabilities at fair value.

Debt

The fair value of debt is measured for purpose of disclosure. Debt is shown at historical value in the Condensed Consolidated Balance Sheets. When possible, to measure the fair value of its debt the Company uses quoted market prices of its own debt with approximately the same remaining maturities. When this is not possible, the fair value of debt is calculated using discounted cash flow models with interest rates based upon market based expectations, the Company's credit risk and the contractual terms of the debt instrument. The Company also has portions of its debt with maturities of one year or less for which book value is a reasonable approximation of the fair value of this debt. The fair value of debt is considered to fall within Level 2 of the fair value hierarchy as significant value drivers such as interest rates are readily observable. The carrying value and estimated fair value of the Company's Long-Term Debt are shown in the table below.



	December 31, 2015		December 31, 2014		March 31, 2015
Carrying value	$	950,056	$	926,512	$	741,837
Estimated fair value	786,520		861,499		653,548

Derivative financial instruments

The Company's derivatives consist of foreign currency contracts. The fair value of the derivatives are determined using a discounted cash flow analysis on the expected future cash flows of each derivative. This analysis utilizes observable market data including forward yield curves and implied volatilities to determine the market's expectation of the future cash flows of the variable component. The fixed and variable components of the derivative are then discounted using calculated discount factors developed based on the

LIBOR swap rate and are netted to arrive at a single valuation for the period. The Company also incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty's nonperformance risk in the fair value measurements. As of December 31, 2015 and 2014 and March 31, 2015 the inputs used to value the Company's derivatives fall within Level 2 of the fair value hierarchy. However, credit valuation adjustments associated with its derivatives could utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself and its counterparties. Should the use of such credit valuation adjustment estimates result in a significant impact on the overall valuation, this would require reclassification to Level 3.

Securitized beneficial interests

The fair value of securitized beneficial interests is based upon a valuation model that calculates the present value of future expected cash flows using key assumptions for payment speeds and discount rates. The assumptions for payment speed are based on the Company's historical experience. The discount rates are based upon market trends and anticipated performance relative to the

17. FAIR VALUE MEASUREMENTS (continued)

particular assets securitized which have been assumed to be commercial paper rate plus a margin or LIBOR plus a margin. Due to the use of the Company's own assumptions and the uniqueness of these transactions, securitized beneficial interests fall within Level 3 of the fair value hierarchy. Since the discount rate and the payment speed are components of the same equation, a change

in either by 10% or 20% would change the value of the recorded beneficial interest at December 31, 2015 by $63 and $126, respectively.

Guarantees

The Company guarantees funds issued to tobacco suppliers by third party lending institutions and also guarantees funds borrowed by certain unconsolidated subsidiaries. The fair value of guarantees is based upon either the premium the Company would require to issue the same inputs or historical loss rates and as such these guarantees fall into Level 3 of the fair value hierarchy.

Tobacco supplier guarantees - The Company provides guarantees to third parties for indebtedness of certain tobacco suppliers to finance their crops. The fair value of these guarantees is determined using historical loss rates on both guaranteed and non-guaranteed tobacco supplier loans. Should the loss rates change 10% or 20%, the fair value of the guarantee at December 31, 2015 would change by $478 or $946, respectively.

Unconsolidated subsidiary guarantees - The fair value of these guarantees is determined using a discounted cash flow model based on the differential between interest rates available with and without the guarantees. The fair value of these guarantees is most closely tied to the theoretical interest rate differential. Should interest rates used in the model change by 10% or 20%, the fair value of the guarantee, at December 31, 2015 would change by $452 or $895, respectively.

Input Hierarchy of Items Measured at Fair Value on a Recurring Basis

The following table summarizes the items measured at fair value on a recurring basis:



	December 31, 2015						December 31, 2014						March 31, 2015
					Total Assets /						Total Assets /						Total Assets /
					Liabilities						Liabilities						Liabilities
	Level 2		Level 3		at Fair Value		Level 2		Level 3		at Fair Value		Level 2		Level 3		at Fair Value
Assets
Derivative financial instruments	$	—	$	—	$	—	$	409	$	—	$	409	$	1,373	$	—	$	1,373
Securitized beneficial interests	—		20,796		20,796		—		27,221		27,221		—		40,712		40,712
Total Assets	$	—	$	20,796	$	20,796	$	409	$	27,221	$	27,630	$	1,373	$	40,712	$	42,085
Liabilities
Guarantees	$	—	$	5,852	$	5,852	$	—	$	8,507	$	8,507	$	—	$	8,650	$	8,650
Derivative financial instruments	—		—		—		—		—		—		—		—		—
Total liabilities	$	—	$	5,852	$	5,852	$	—	$	8,507	$	8,507	$	—	$	8,650	$	8,650

Reconciliation of Change in Recurring Level 3 Balances

The following tables present the changes in Level 3 instruments measured on a recurring basis:



	Three Months Ended December 31, 2015						Nine Months Ended December 31, 2015
	Securitized Beneficial Interests			Guarantees			Securitized Beneficial Interests			Guarantees
Beginning Balance	$	21,792		$	4,865		$	40,712		$	8,650
Issuances of guarantees/sales of receivables	65,710			1,291			135,477			7,660
Settlements	(65,763		)	(304		)	(153,723		)	(9,550		)
Losses recognized in earnings	(943		)	—			(1,670		)	(908		)
Ending Balance December 31, 2015	$	20,796		$	5,852		$	20,796		$	5,852

17. FAIR VALUE MEASUREMENTS (continued)



	Three Months Ended December 31, 2014						Nine Months Ended December 31, 2014
	Securitized Beneficial Interest			Guarantees			Securitized Beneficial Interest			Guarantees
Beginning Balance	$	35,252		$	7,272		$	35,559		$	7,344
Issuances of guarantees/sales of receivables	50,549			2,158			144,616			10,677
Settlements	(57,955		)	(923		)	(150,451		)	(7,203		)
Losses recognized in earnings	(625		)	—			(2,503		)	(2,311		)
Ending Balance December 31, 2014	$	27,221		$	8,507		$	27,221		$	8,507

The amount of unrealized losses relating to assets still held at the respective dates of December 31, 2015 and 2014 and March 31, 2015 were $542, $838 and $2,034 on securitized beneficial interests.

Gains and losses included in earnings are reported in Other Income.

Information About Fair Value Measurements Using Significant Unobservable Inputs

The following table summarizes significant unobservable inputs and the valuation techniques thereof at December 31, 2015:



	Fair Value at December 31, 2015			Unobservable Input	Range (Weighted Average)
Securitized Beneficial Interests	$	20,796	Discounted Cash Flow	Discount Rate	2.92% to 3.48%
				Payment Speed	67 to 120 days
Tobacco Supplier Guarantees	$	370	Historical Loss	Historical Loss	5.00% to 15.92%
Tobacco Supplier Guarantees	$	3,143	Discounted Cash Flow	Market Interest Rate	15.75% to 21.95%
Unconsolidated Subsidiary Guarantees	$	2,339	Discounted Cash Flow	Market Interest Rate	12.00	%