|
9. FAIR VALUE MEASUREMENTS.
The fair value
hierarchy prioritizes the inputs used in valuation techniques into three levels, as follows:
|
● |
Level
1 – Observable inputs – unadjusted quoted prices in active markets for identical
assets and liabilities; |
|
● |
Level
2 – Observable inputs other than quoted prices included in Level 1 that are observable
for the asset or liability through corroboration with market data; and |
|
● |
Level
3 – Unobservable inputs – includes amounts derived from valuation models where
one or more significant inputs are unobservable. For fair value measurements using significant
unobservable inputs, a description of the inputs and the information used to develop the
inputs is required along with a reconciliation of Level 3 values from the prior reporting
period. |
Pooled
separate accounts – Pooled separate accounts invest primarily in domestic and international stocks, commercial paper or
single mutual funds. The net asset value is used as a practical expedient to determine fair value for these accounts. Each pooled
separate account provides for redemptions by the Retirement Plan at reported net asset values per share, with little to no advance notice
requirement, therefore these funds are classified within Level 2 of the valuation hierarchy.
Long-Lived Assets Held-for-Sale
– The Company recorded its long-lived assets associated with its property and equipment held-for-sale at fair value at December
31, 2021 of $1,000,000. These assets were sold during the three months ended September 30, 2022. The fair values of these assets are based
on observable values for the assets through corroboration with market data and are designated as Level 3 inputs.
Other Derivative Instruments –
The Company’s other derivative instruments consist of commodity positions. The fair values of the commodity positions are based
on quoted prices on the commodity exchanges and are designated as Level 1 inputs.
The following table summarizes recurring and
nonrecurring fair value measurements by level at September 30, 2022 (in thousands):
| |
|
Fair |
|
|
|
|
|
|
|
|
|
|
| |
|
Value |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
| Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
| Derivative financial instruments |
|
$ |
7,384 |
|
|
$ |
7,384 |
|
|
$ |
— |
|
|
$ |
— |
|
| Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Derivative financial instruments |
|
$ |
(1,106 |
) |
|
$ |
(1,106 |
) |
|
$ |
— |
|
|
$ |
— |
|
The following table summarizes recurring and nonrecurring
fair value measurements by level at December 31, 2021 (in thousands):
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefit Plan |
|
| |
|
Fair |
|
|
|
|
|
|
|
|
|
|
|
Percentage |
|
| |
|
Value |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Allocation |
|
| Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Derivative financial instruments |
|
$ |
15,839 |
|
|
$ |
15,839 |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
| Long-lived assets held-for-sale |
|
|
1,000 |
|
|
|
— |
|
|
|
— |
|
|
|
1,000 |
|
|
|
|
|
| Defined benefit plan assets (1) (pooled separate accounts): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Large U.S. Equity(2) |
|
|
5,612 |
|
|
|
— |
|
|
|
5,612 |
|
|
|
— |
|
|
|
28 |
% |
| Small/Mid U.S. Equity(3) |
|
|
3,684 |
|
|
|
— |
|
|
|
3,684 |
|
|
|
— |
|
|
|
18 |
% |
| International Equity(4) |
|
|
2,909 |
|
|
|
— |
|
|
|
2,909 |
|
|
|
— |
|
|
|
15 |
% |
| Fixed Income(5) |
|
|
7,782 |
|
|
|
— |
|
|
|
7,782 |
|
|
|
— |
|
|
|
39 |
% |
| |
|
$ |
36,826 |
|
|
$ |
15,839 |
|
|
$ |
19,987 |
|
|
$ |
1,000 |
|
|
|
|
|
| Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Derivative financial instruments |
|
$ |
(13,582 |
) |
|
$ |
(13,582 |
) |
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
(1) |
Included in other assets in the consolidated balance sheets. |
|
(2) |
This category includes investments in funds comprised of
equity securities of large U.S. companies. The funds are valued using the net asset value method in which an average of the market prices
for the underlying investments is used to value the fund. |
|
(3) |
This category includes investments in funds comprised of
equity securities of small- and medium-sized U.S. companies. The funds are valued using the net asset value method in which an average
of the market prices for the underlying investments is used to value the fund. |
|
(4) |
This category includes investments in funds comprised of
equity securities of foreign companies including emerging markets. The funds are valued using the net asset value method in which an
average of the market prices for the underlying investments is used to value the fund. |
|
(5) |
This category includes investments in funds comprised of U.S. and foreign investment-grade fixed income
securities, high-yield fixed income securities that are rated below investment-grade, U.S. treasury securities, mortgage-backed securities,
and other asset-backed securities. The funds are valued using the net asset value method in which an average of the market prices for
the underlying investments is used to value the fund. |
|