Note 9. Fair Value Measurement

Certain assets and liabilities are required to be recorded at fair value on a recurring basis. The Company’s assets and liabilities required to be adjusted to fair value on a recurring basis are pension and other postretirement benefits plan assets, available-for-sale securities, foreign exchange forward contracts and interest rate swaps. The following tables summarize the bases used to measure financial assets and liabilities that are carried at fair value on a recurring basis in the consolidated balance sheets.

			Basis of fair value measurement
	Balance as of December 31, 2016		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Assets
Foreign exchange forward contracts	$	1.7	$	—	$	1.7	$	—
Available-for-sale securities		328.7		—		328.7		—
Total assets	$	330.4	$	—	$	330.4	$	—
Liabilities
Foreign exchange forward contracts	1.5			—	1.5			—
Total liabilities	$	1.5	$	—	$	1.5	$	—

			Basis of fair value measurement
	Balance as of December 31, 2015		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Assets
Foreign exchange forward contracts	$	1.8	$	—	$	1.8	$	—
Interest rate swap	0.4			—	0.4			—
Total assets	$	2.2	$	—	$	2.2	$	—
Liabilities
Foreign exchange forward contracts	1.5			—	1.5			—
Total liabilities	$	1.5	$	—	$	1.5	$	—

The investment in LSC and Donnelley common stock of $328.7 million is categorized as a Level 2 security as these shares were not registered as of December 31, 2016. The value of this investment is based on each LSC’s and Donnelley Financial’s common stock prices as of December 31, 2016, which represents an identical equity instrument registered under the Securities Act of 1933, as amended. See Note 12, Retirement Plans, for the fair value of the Company’s pension and other postretirement benefits plan assets as of December 31, 2016 and 2015 and Note 14, Debt, for the fair value of the Company’s debt as of December 31, 2016, which is recorded at book value.

In addition to assets and liabilities that are recorded at fair value on a recurring basis, the Company is required to record certain assets and liabilities at fair value on a nonrecurring basis, generally as a result of acquisitions or the remeasurement of assets resulting in impairment charges. See Note 3, Acquisitions and Dispositions, for further discussion on the fair value of assets and liabilities associated with acquisitions.

The fair value as of the measurement date, net book value as of the end of the year and related impairment charge for assets measured at fair value on a nonrecurring basis subsequent to initial recognition during the years ended December 31, 2016, 2015 and 2014 were as follows:

	Year Ended December 31, 2016				As of December 31, 2016
	Impairment Charge		Fair Value Measurement (Level 3)		Net Book Value
Long-lived assets held for sale or disposal	$	0.6	$	—	$	—
Goodwill		527.8		15.2		15.2
Other intangible assets		29.7		4.6		4.3
Total	$	558.1	$	19.8	$	19.5

	Year Ended December 31, 2015				As of December 31, 2015
	Impairment Charge		Fair Value Measurement (Level 3)		Net Book Value
Long-lived assets held and used	$	0.3	$	—	$	—
Long-lived assets held for sale or disposal		1.5		2.8		—
Goodwill		18.0		—		—
Other intangible assets		11.9		—		—
Total	$	31.7	$	2.8	$	—

	Year Ended December 31, 2014				As of December 31, 2014
	Impairment Charge		Fair Value Measurement (Level 3)		Net Book Value
Long-lived assets held and used	$	5.2	$	0.6	$	0.7
Long-lived assets held for sale or disposal		8.7		9.2		2.0
Other intangible assets		13.2		—		—
Total	$	27.1	$	9.8	$	2.7

There were no estimated costs to sell related to long-lived assets held for sale that were remeasured during the years ended December 31, 2016 and 2015. The fair values of assets held for sale that were remeasured during the year ended December 31, 2014 were reduced by estimated costs to sell of $0.5 million.

During the year ended December 31, 2016, the goodwill related to the commercial and digital print and statement printing reporting units were written down to their respective implied fair values of zero and $15.2 million, respectively. During the year ended December 31, 2015 as performed under the previous reporting structure, goodwill within the former Europe and Latin America reporting units was written down to an implied fair value of zero. See Note 4, Restructuring, Impairment and Other Charges, for further discussion regarding these impairment charges.

For the year ended December 31, 2016, the Company recorded a non-cash charge of $29.7 million primarily for the impairment of certain acquired customer relationship intangible assets in the commercial and digital print reporting unit within the Variable Print segment. After recording this impairment charge, there was $4.6 million net book value remaining related to this customer relationship asset. See Note 4, Restructuring, Impairment and Other Charges, for further discussion regarding these impairment charges.

During the year ended December 31, 2015, the Company recorded impairment charges of $11.9 million, including $9.2 million and $2.2 million for the impairment of certain acquired customer relationship intangible assets in the previous labels reporting unit within the Variable Print segment under the previous reporting structure and the Latin America reporting unit within the International segment, respectively. After recording the impairment charges, there was no remaining value related to these customer relationship assets. See Note 4, Restructuring, Impairment and Other Charges, for further discussion regarding these impairment charges.

During the year ended December 31, 2014, the Company recorded impairment charges of $7.8 million and $4.1 million related to the impairment of acquired customer relationship intangible assets in the Canada and commercial and digital print reporting units, respectively. After recording the impairment charges, remaining customer relationship assets in the Canada and commercial and digital print reporting units were $0.2 million and $181.8 million, respectively. During the year ended December 31, 2014, $1.4 million of acquired tradenames related to the commercial and digital print reporting unit were written down to an estimated fair value of zero due to facility closures. After recording the impairment charges, remaining tradename intangible assets in the commercial and digital reporting unit were $14.3 million as of December 31, 2014. See Note 4, Restructuring, Impairment and Other Charges, for further discussion regarding these impairment charges.

The Company’s accounting and finance management determines the valuation policies and procedures for Level 3 fair value measurements and is responsible for the development and determination of unobservable inputs.

The fair values of the long-lived assets held and used and long-lived assets held for sale or disposal were determined using Level 3 inputs and were estimated based on discussions with real estate brokers, review of comparable properties, if available, discussions with machinery and equipment brokers, dealer quotes and internal expertise related to the current marketplace conditions. Unobservable inputs obtained from third parties are adjusted as necessary for the condition and attributes of the specific asset.

The following table presents the fair value, valuation techniques and related unobservable inputs for these Level 3 measurements for the years ended December 31, 2016, 2015 and 2014:

	Fair Value		Valuation Technique	Unobservable Input	Range
2016
Customer relationships	$	4.6	Excess earnings	Attrition rate		5.0%
				Discount Rate		13.0%
2015
Customer relationships	$	—	Excess earnings	Attrition rate		2.7%

2014
Customer relationships	$	—	Excess Earnings	Discount rate	12.0 - 18.0%
				Attrition Rate	6.6% - 12.0%