Note 17 - Fair Value

Fair value is defined as the price that would be expected to be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The FASB provides accounting rules that classify the inputs used to measure fair value into the following hierarchy:

Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2 – Unadjusted quoted prices in active markets for similar assets or liabilities, or unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability.

Level 3 – Unobservable inputs for the asset or liability.

The following tables present the fair value hierarchy for those financial assets and liabilities measured at fair value on a recurring basis as of September 30, 2016, and December 31, 2015:



	September 30, 2016
	Total		Level 1		Level 2		Level 3
Assets:
Cash and cash equivalents	$	112.6	$	112.6	$	—	$	—
Cash and cash equivalents measured at net asset value	16.4
Restricted cash	2.7		2.7		—		—
Short-term investments	7.0		—		7.0		—
Short-term investments measured at net asset value	0.4
Foreign currency hedges	2.8		—		2.8		—
Total Assets	$	141.9	$	115.3	$	9.8	$	—
Liabilities:
Foreign currency hedges	$	2.3	$	—	$	2.3	$	—
Total Liabilities	$	2.3	$	—	$	2.3	$	—



	December 31, 2015
	Total		Level 1		Level 2		Level 3
Assets:
Cash and cash equivalents	$	110.2	$	110.2	$	—	$	—
Cash and cash equivalents measured net asset value	19.4
Restricted cash	0.2		0.2		—		—
Short-term investments	8.9		—		8.9		—
Short-term investments measured at net asset value	0.8
Foreign currency hedges	8.2		—		8.2		—
Total Assets	$	147.7	$	110.4	$	17.1	$	—
Liabilities:
Foreign currency hedges	$	0.4	$	—	$	0.4	$	—
Total Liabilities	$	0.4	$	—	$	0.4	$	—

Cash and cash equivalents are highly liquid investments with maturities of three months or less when purchased and are generally valued at the redemption value. Short-term investments are investments with maturities between four months and one year and are generally valued at amortized cost. A portion of the cash and cash equivalents and short-term investment are valued based on net asset value. The Company uses publicly available foreign currency forward and spot rates to measure the fair value of its foreign currency forward contracts.

The Company does not believe it has significant concentrations of risk associated with the counterparties to its financial instruments.

The following table presents those assets measured at fair value on a nonrecurring basis for the nine months ended September 30, 2016, using Level 3 inputs:



	Carrying Value		Fair Value Adjustment			Fair Value
Long-lived assets held for sale:
Land	$	0.2	$	(0.2	)	$	—
Total long-lived assets held for sale	$	0.2	$	(0.2	)	$	—

Long-lived assets held and used:
Altavista bearing plant	$	5.6	$	(3.1	)	$	2.5
Equipment at Benoni bearing plant	0.5		(0.5		)	—
Total long-lived assets held and used	$	6.1	$	(3.6	)	$	2.5

Assets held for sale of $0.2 million were written down to their fair value of zero during the first quarter of 2016, resulting in an impairment charge. The fair value of these assets was based on the price that the Company expects to receive when it disposes of these assets.

On March 17, 2016, the Company announced the closure of its Altavista bearing plant. The plant is expected to close in approximately one year from the announcement date, with production transferring to the Company's bearing plant near Lincolnton, North Carolina. The Altavista bearing plant, with a carrying value of $5.6 million, was written down to its fair value of $3.2 million during the first quarter of 2016, resulting in an impairment of $2.4 million. The fair value for the plant was based on the price that the Company expects to receive from the sale of this facility. During the third quarter of 2016, the Company reevaluated the fair value of this facility. The Altavista bearing plant was written down to its fair value of $2.5 million during the third quarter of 2016, resulting in an additional impairment of $0.7 million.

In August 2016, the Company completed the consultation process to close the manufacturing operations in Benoni. The Benoni facility will continue to recondition bearings and assemble rail bearings. Equipment at this facility, with a carrying value of $0.5 million, was written down to its fair value of zero during the third quarter of 2016, resulting in an impairment of $0.5 million. The fair value for the equipment was based on the price that the Company expects to receive from the sale of the equipment.

The following table presents those assets measured at fair value on a nonrecurring basis for the nine months ended September 30, 2015, using Level 3 inputs:



	Carrying Value		Fair Value Adjustment			Fair Value
Long-lived assets held for sale:
Repair business	$	5.8	$	(3.0	)	$	2.8
Total long-lived assets held for sale	$	5.8	$	(3.0	)	$	2.8

Long-lived assets held and used:
Fixed assets	$	0.8	$	(0.3	)	$	0.5
Total long-lived assets held and used	$	0.8	$	(0.3	)	$	0.5

Assets held for sale of $5.8 million associated with the Company's repair business in Niles were written down to their fair value of $2.8 million during the first and second quarters of 2015, resulting in an impairment charge of $3.0 million. The fair value of these assets was based on the price that the Company expected to receive from the sale of these assets. This business was subsequently sold during the second quarter of 2015 for an immaterial loss.

Various items of property, plant and equipment, with a carrying value of $0.8 million, were written down to their fair value of $0.5 million during the first nine months of 2015, resulting in an impairment charge of $0.3 million. The fair value for these assets was based on the price that would be received in a current transaction to sell the assets on a standalone basis, considering the age and physical attributes of these items, as these assets had been idled.

Financial Instruments:

The Company’s financial instruments consist primarily of cash and cash equivalents, restricted cash, short-term investments, accounts receivable net, accounts payable, trade, short-term borrowings and long-term debt. Due to their short-term nature, the carrying value of cash and cash equivalents, restricted cash, short-term investments, accounts receivable net, accounts payable, trade and short-term borrowings are a reasonable estimate of their fair value. The fair value of the Company’s long-term fixed-rate debt, based on quoted market prices, was $547.4 million and $521.5 million at September 30, 2016, and December 31, 2015, respectively. The carrying value of this debt was $507.3 million and $519.2 million at September 30, 2016, and December 31, 2015, respectively. The fair value of long-term fixed-debt was measured using Level 2 inputs.