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FAIR VALUE MEASUREMENT:
 3 Months Ended
Mar. 31, 2019
FAIR VALUE MEASUREMENT:  
FAIR VALUE MEASUREMENT:

NOTE 12 – FAIR VALUE MEASUREMENT:

 

Subtopic 820-10 of ASC “Fair value measurement and disclosures – Overall” establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value.  The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under Subtopic 820-10 are described below:

 

Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

 

Level 2 - Inputs that are observable, either directly or indirectly, but do not qualify as Level 1 inputs. (i.e., quoted prices for similar assets or liabilities).

 

Level 3 - Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).

 

The carrying amounts of certain financial instruments, including cash and cash equivalents, accounts receivable (other than accounts receivable associated with provisionally priced sales) and accounts payable approximate fair value due to their short maturities.  Consequently, such financial instruments are not included in the following table that provides information about the carrying amounts and estimated fair values of other financial instruments that are not measured at fair value in the condensed consolidated balance sheet as of March 31, 2019 and December 31, 2018 (in millions):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At March 31, 2019

 

At December 31, 2018

 

    

Carrying Value

    

Fair Value

    

Carrying Value

    

Fair Value

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Long-term debt level 1

 

$

5,211.3

 

$

6,055.4

 

$

5,210.7

 

$

5,540.0

Long-term debt level 2

 

 

749.6

 

 

776.9

 

 

749.4

 

 

761.7

Total long-term debt

 

$

5,960.9

 

$

6,832.3

 

$

5,960.1

 

$

6,301.7

 

Long-term debt is carried at amortized cost and its estimated fair value is based on quoted market prices classified as Level 1 in the fair value hierarchy except for the cases of the Yankee bonds, the notes due 2020 and the notes due 2022, which qualify as Level 2 in the fair value hierarchy as they are based on quoted priced in market that are not active.

 

Fair values of assets and liabilities measured at fair value on a recurring basis were calculated as follows as of March 31, 2019 and December 31, 2018 (in millions):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair Value at Measurement Date Using:

 

    

 

 

    

Quoted prices in

    

Significant other

    

Significant

 

 

Fair Value as

 

active markets for

 

observable

 

unobservable

 

 

of March

 

identical assets

 

inputs

 

inputs

Description

 

31, 2019

 

(Level 1)

 

(Level 2)

 

(Level 3)

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

Short term investment:

 

 

 

 

 

 

 

 

 

 

 

 

- Trading securities

 

$

212.7

 

$

212.7

 

$

 —

 

$

 —

- Available-for-sale debt securities:

 

 

 

 

 

 

 

 

 

 

 

 

Corporate bonds

 

 

 —

 

 

 —

 

 

 —

 

 

 —

Asset backed securities

 

 

0.4

 

 

 —

 

 

0.4

 

 

 —

Mortgage backed securities

 

 

0.4

 

 

 —

 

 

0.4

 

 

 —

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts receivable:

 

 

 

 

 

 

 

 

 

 

 

 

- Embedded derivatives - Not classified as hedges:

 

 

 

 

 

 

 

 

 

 

 

 

Provisionally priced sales:

 

 

 

 

 

 

 

 

 

 

 

 

Copper

 

 

308.4

 

 

308.4

 

 

 —

 

 

 —

Molybdenum

 

 

124.1

 

 

124.1

 

 

 —

 

 

 —

Total

 

$

646.0

 

$

645.2

 

$

0.8

 

$

 —

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair Value at Measurement Date Using:

 

    

 

 

    

Quoted prices in

    

Significant other

    

Significant

 

 

Fair Value as

 

active markets for

 

observable

 

unobservable

 

 

of December

 

identical assets

 

inputs

 

inputs

Description

 

31, 2018

 

(Level 1)

 

(Level 2)

 

(Level 3)

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

Short term investment:

 

 

 

 

 

 

 

 

 

 

 

 

- Trading securities

 

$

213.1

 

$

213.1

 

$

 —

 

$

 —

- Available-for-sale debt securities:

 

 

 

 

 

 

 

 

 

 

 

 

Corporate bonds

 

 

 —

 

 

 —

 

 

 —

 

 

 —

Asset backed securities

 

 

0.4

 

 

 —

 

 

0.4

 

 

 —

Mortgage backed securities

 

 

0.3

 

 

 —

 

 

0.3

 

 

 —

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts receivable:

 

 

 

 

 

 

 

 

 

 

 

 

- Embedded derivatives - Not classified as hedges:

 

 

 

 

 

 

 

 

 

 

 

 

Provisionally priced sales:

 

 

 

 

 

 

 

 

 

 

 

 

Copper

 

 

274.3

 

 

274.3

 

 

 —

 

 

 —

Molybdenum

 

 

107.4

 

 

107.4

 

 

 —

 

 

 —

Total

 

$

595.5

 

$

594.8

 

$

0.7

 

$

 —

 

The Company’s short-term trading securities investments are classified as Level 1 because they are valued using quoted prices of the same securities as they consist of bonds issued by public companies and publicly traded.  The Company’s short-term available-for-sale investments are classified as Level 2 because they are valued using quoted prices for similar investments.

 

The Company’s accounts receivables associated with provisionally priced copper sales are valued using quoted market prices based on the forward price on the LME or on the COMEX.  Such value is classified within Level 1 of the fair value hierarchy.  Molybdenum prices are established by reference to the publication Platt’s Metals Week and are considered Level 1 in the fair value hierarchy.