v2.4.0.6
Fair Value Measurements
 9 Months Ended
Sep. 30, 2012
Fair Value Measurements
Fair Value Measurements
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). The fair value accounting guidance outlines a valuation framework, creates a fair value hierarchy in order to increase the consistency and comparability of fair value measurements and the related disclosures, and prioritizes the inputs used in measuring fair value as follows:
Level 1: Observable inputs such as quoted prices in active markets;
Level 2: Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and
Level 3: Unobservable inputs for which there is little or no market data, which require the reporting entity to develop its own assumptions.

Financial assets and (liabilities) measured at fair value as of September 30, 2012 are set forth in the table below:
 
(In thousands)
Level 1
 
Level 2
 
Level 3
Derivative foreign currency forward contracts (refer to Note 8)
$
—

 
$
(1,344
)
 
$
—

TOLI policies held by the Rabbi Trust
—

 
4,229

 
—

Deferred Compensation Plan obligations
—

 
(3,791
)
 
—


Fair values of the financial assets and liabilities listed above are determined using inputs that use as their basis readily observable market data that are actively quoted and are validated through external sources, including third-party pricing services and brokers. The foreign currency forward contracts represent gains and losses on derivative contracts, which is the net difference between the U.S. dollar value to be received or paid at the contracts’ settlement date and the U.S. dollar value of the foreign currency to be sold or purchased at the current forward exchange rate. The fair value of the trust owned life insurance (“TOLI”) policies held by the Rabbi Trust is based on the cash-surrender value of the life insurance policies, which are invested primarily in mutual funds and a separately managed fixed income fund. These investments are in the same funds and purchased in substantially the same amounts as the selected investments of participants in the Under Armour, Inc. Deferred Compensation Plan (the “Deferred Compensation Plan”), which represent the underlying liabilities to participants in the Deferred Compensation Plan. Liabilities under the Deferred Compensation Plan are recorded at amounts due to participants, based on the fair value of participants’ selected investments.
The nonrecourse loan that the Company assumed in connection with the acquisition of its corporate headquarters had a carrying value of $37.6 million, $38.2 million and $38.4 million as of September 30, 2012, December 31, 2011 and September 30, 2011, respectively. The carrying value of the Company’s long term debt approximated its fair value as of September 30, 2012, December 31, 2011 and September 30, 2011. The fair value of the Company’s long term debt was estimated based upon interest rates for similar instruments (Level 2 input).