|
8. 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.
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 June 30, 2023 (in thousands):
| |
|
Fair |
|
|
|
|
|
|
|
|
|
|
| |
|
Value |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
| Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
| Derivative financial instruments |
|
$ |
14,038 |
|
|
$ |
14,038 |
|
|
$ |
— |
|
|
$ |
— |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Derivative financial instruments |
|
$ |
(8,396 |
) |
|
$ |
(8,396 |
) |
|
$ |
— |
|
|
$ |
— |
|
The following table summarizes recurring and
nonrecurring fair value measurements by level at December 31, 2022 (in thousands):
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefit Plan |
|
| |
|
Fair |
|
|
|
|
|
|
|
|
|
|
|
Percentage |
|
| |
|
Value |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Allocation |
|
| Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Derivative financial instruments |
|
$ |
4,973 |
|
|
$ |
4,973 |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
| Defined benefit plan assets(1) (pooled separate accounts): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Large U.S. Equity(2) |
|
|
4,586 |
|
|
|
— |
|
|
|
4,586 |
|
|
|
— |
|
|
|
28 |
% |
| Small/Mid U.S. Equity(3) |
|
|
2,986 |
|
|
|
— |
|
|
|
2,986 |
|
|
|
— |
|
|
|
18 |
% |
| International Equity(4) |
|
|
2,406 |
|
|
|
— |
|
|
|
2,406 |
|
|
|
— |
|
|
|
14 |
% |
| Fixed Income(5) |
|
|
6,710 |
|
|
|
— |
|
|
|
6,710 |
|
|
|
— |
|
|
|
40 |
% |
| |
|
$ |
21,661 |
|
|
$ |
4,973 |
|
|
$ |
16,688 |
|
|
$ |
— |
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Derivative financial instruments |
|
$ |
6,732 |
|
|
$ |
6,732 |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
(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. |
|