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Fair Value Measurements | 6 Months Ended
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Sep. 30, 2014
Fair Value Measurements |
(8) | FAIR VALUE MEASUREMENTS
The company follows the provisions of ASC 820, Fair Value Measurements and Disclosures, for financial assets and liabilities that are measured and reported at fair value on a recurring basis. ASC 820 establishes a hierarchy for inputs used in measuring fair value. Fair value is calculated based on assumptions that market participants would use in pricing assets and liabilities and not on assumptions specific to the entity. The statement requires that each asset and liability carried at fair value be classified into one of the following categories:
| Level | 1: Quoted market prices in active markets for identical assets or liabilities
| Level | 2: Observable market based inputs or unobservable inputs that are corroborated by market data
| Level | 3: Unobservable inputs that are not corroborated by market data
Assets and Liabilities Measured at Fair Value on a Recurring Basis The company measures on a recurring basis and records at fair value investments held by participants in a supplemental executive retirement plan. The following table provides the fair value hierarchy for the plan assets measured at fair value as of September 30, 2014:
(In thousands) |  | Total |  |  | Quoted prices in active markets (Level 1) |  |  | Significant observable inputs (Level 2) |  |  | Significant unobservable inputs (Level 3) |
Equity securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Common stock |  | $ | 4,178 |  |  |  | 4,178 |  |  |  | --- |  |  |  | --- |
Preferred stock |  |  | --- |  |  |  | --- |  |  |  | --- |  |  |  | --- |
Foreign stock |  |  | 201 |  |  |  | 201 |  |  |  | --- |  |  |  | --- |
American depository receipts |  |  | 1,774 |  |  |  | 1,774 |  |  |  | --- |  |  |  | --- |
Preferred American depository receipts |  |  | 14 |  |  |  | 14 |  |  |  | --- |  |  |  | --- |
Real estate investment trusts |  |  | 45 |  |  |  | 45 |  |  |  | --- |  |  |  | --- |
Debt securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Government debt securities |  |  | 1,895 |  |  |  | 1,309 |  |  |  | 586 |  |  |  | --- |
Open ended mutual funds |  |  | 1,878 |  |  |  | 1,878 |  |  |  | --- |  |  |  | --- |
Cash and cash equivalents |  |  | 403 |  |  |  | 69 |  |  |  | 334 |  |  |  | --- |
Total |  | $ | 10,388 |  |  |  | 9,468 |  |  |  | 920 |  |  |  | --- |
Other pending transactions |  |  | (104 | ) |  |  | (104) |  |  |  | --- |  |  |  | --- |
Total fair value of plan assets |  | $ | 10,284 |  |  |  | 9,364 |  |  |  | 920 |  |  |  | --- |
The following table provides the fair value hierarchy for the plan assets measured at fair value as of March 31, 2014:
(In thousands) |  | Total |  |  | Quoted prices in active markets (Level 1) |  |  | Significant observable inputs (Level 2) |  |  | Significant unobservable inputs (Level 3) |
Equity securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Common stock |  | $ | 4,141 |  |  |  | 4,141 |  |  |  | --- |  |  |  | --- |
Preferred stock |  |  | --- |  |  |  | --- |  |  |  | --- |  |  |  | --- |
Foreign stock |  |  | 231 |  |  |  | 231 |  |  |  | --- |  |  |  | --- |
American depository receipts |  |  | 1,809 |  |  |  | 1,809 |  |  |  | --- |  |  |  | --- |
Preferred American depository receipts |  |  | 15 |  |  |  | 15 |  |  |  | --- |  |  |  | --- |
Real estate investment trusts |  |  | 38 |  |  |  | 38 |  |  |  | --- |  |  |  | --- |
Debt securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Government debt securities |  |  | 1,975 |  |  |  | 1,363 |  |  |  | 612 |  |  |  | --- |
Open ended mutual funds |  |  | 1,797 |  |  |  | 1,797 |  |  |  | --- |  |  |  | --- |
Cash and cash equivalents |  |  | 369 |  |  |  | 57 |  |  |  | 312 |  |  |  | --- |
Total |  | $ | 10,375 |  |  |  | 9,451 |  |  |  | 924 |  |  |  | --- |
Other pending transactions |  |  | (90 | ) |  |  | (90) |  |  |  | --- |  |  |  | --- |
Total fair value of plan assets |  | $ | 10,285 |  |  |  | 9,361 |  |  |  | 924 |  |  |  | --- |
Other Financial Instruments The company’s primary financial instruments consist of cash and cash equivalents, trade receivables and trade payables with book values that are considered to be representative of their respective fair values. The company periodically utilizes derivative financial instruments to hedge against foreign currency denominated assets and liabilities, currency commitments, or to lock in desired interest rates. These transactions are generally spot or forward currency contracts or interest rate swaps that are entered into with major financial institutions. Derivative financial instruments are intended to reduce the company’s exposure to foreign currency exchange risk and interest rate risk. The company enters into derivative instruments only to the extent considered necessary to address its risk management objectives and does not use derivative contracts for speculative purposes. The derivative instruments are recorded at fair value using quoted prices and quotes obtainable from the counterparties to the derivative instruments. Cash Equivalents. The company’s cash equivalents, which are securities with maturities less than 90 days, are held in money market funds or time deposit accounts with highly rated financial institutions. The carrying value for cash equivalents is considered to be representative of its fair value due to the short duration and conservative nature of the cash equivalent investment portfolio. Spot Derivatives. Spot derivative financial instruments are short-term in nature and generally settle within two business days. The fair value of spot derivatives approximates the carrying value due to the short-term nature of this instrument, and as a result, no gains or losses are recognized. The company had no foreign exchange spot contracts outstanding at September 30, 2014. The company had four foreign exchange spot contracts outstanding at March 31, 2014, which had a notional value of $2.3 million and settled by April 2, 2014. Forward Derivatives. Forward derivative financial instruments are generally longer-term in nature but generally do not exceed one year. The accounting for gains or losses on forward contracts is dependent on the nature of the risk being hedged and the effectiveness of the hedge. Forward contracts are valued using counterparty quotations, and we validate the information obtained from the counterparties in calculating the ultimate fair values using the market approach and obtaining broker quotations. As such, these derivative contracts are classified as Level 2. The company did not have any forward contracts outstanding at September 30, 2014 and March 31, 2014. The following table provides the fair value hierarchy for the company’s other financial instruments measured as of September 30, 2014:
(In thousands) |  | Total |  |  | Quoted prices in active markets (Level 1) |  |  | Significant observable inputs (Level 2) |  |  | Significant unobservable inputs (Level 3) |
Money market cash equivalents |  | $ | 3,851 |  |  |  | 3,851 |  |  |  | --- |  |  |  | --- |
Total fair value of assets |  | $ | 3,851 |  |  |  | 3,851 |  |  |  | --- |  |  |  | --- |
The following table provides the fair value hierarchy for the company’s other financial instruments measured as of March 31, 2014:
(In thousands) |  | Total |  |  | Quoted prices in active markets (Level 1) |  |  | Significant observable inputs (Level 2) |  |  | Significant unobservable inputs (Level 3) |
Money market cash equivalents |  | $ | 16,559 |  |  |  | 16,559 |  |  |  | --- |  |  |  | --- |
Total fair value of assets |  | $ | 16,559 |  |  |  | 16,559 |  |  |  | --- |  |  |  | --- |
Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis Asset Impairments The company accounts for long-lived assets in accordance with ASC 360-10-35, Impairment or Disposal of Long-Lived Assets. The company reviews the vessels in its active fleet for impairment whenever events occur or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. In such evaluation the estimated future undiscounted cash flows generated by an asset group are compared with the carrying amount of the asset group to determine if a write-down may be required. Active, non-stacked vessels are grouped together for impairment testing purposes with vessels of similar operating and marketing characteristics. Active vessel groupings are also subdivided between older vessels and newer vessels. The company estimates cash flows based upon historical data adjusted for the company’s best estimate of expected future market performance, which, in turn, is based on industry trends. If an asset group fails the undiscounted cash flow test, the company uses the discounted cash flow method to determine the estimated fair value of each asset group and compares such estimated fair value (considered Level 3, as defined by ASC 360) to the carrying value of each asset group in order to determine if impairment exists. If impairment exists, the carrying value of the asset group is reduced to its estimated fair value. In addition to the periodic review of its active long-lived assets for impairment when circumstances warrant, the company also performs a review of its stacked vessels and vessels withdrawn from service every six months or whenever changes in circumstances indicate that the carrying amount of a vessel may not be recoverable. Management estimates each stacked vessel’s fair value by considering items such as the vessel’s age, length of time stacked, likelihood of a return to active service, actual recent sales of similar vessels, which are unobservable inputs. In certain situations we obtain an estimate of the fair value of the stacked vessel from third-party appraisers or brokers. The company records an impairment charge when the carrying value of a vessel withdrawn from service or a stacked vessel exceeds its estimated fair value. The estimates of fair value of stacked vessels are also subject to significant variability, are sensitive to changes in market conditions, and are reasonably likely to change in the future. The below table summarizes the combined fair value of the assets that incurred impairments during the quarters and six-month periods ended September 30, 2014 and 2013, along with the amount of impairment. The impairment charges were recorded in gain on asset dispositions, net.
|  | Quarter Ended September 30, |  |  | Six Months Ended September 30, |
(In thousands) |  | 2014 |  |  | 2013 |  |  | 2014 |  |  | 2013 |
Amount of impairment incurred |  | $ | 910 |  |  |  | 175 |  |  |  | 1,860 |  |  |  | 4,047 |
Combined fair value of assets incurring impairment |  |  | 500 |  |  |  | 161 |  |  |  | 720 |  |  |  | 4,466 |

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- Definition The entire disclosure of the fair value measurement of assets and liabilities, which includes financial instruments measured at fair value that are classified in shareholders' equity, which may be measured on a recurring or nonrecurring basis. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=36462937&loc=d3e19279-110258 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=36462937&loc=d3e19190-110258 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=36462937&loc=d3e19207-110258 + Details
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