XML 37 R20.htm IDEA: XBRL DOCUMENT
v3.6.0.2

Fair Value Measurements | 12 Months Ended
--- | ---
Dec. 31, 2016
Fair Value Disclosures [Abstract] |
Fair Value Measurements | Fair Value Measurements Generally accepted accounting principles define fair value as an exit price and also establish a framework for measuring fair value. An exit price represents the amount that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants. Fair value should be determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering such assumptions, a three-tier fair value hierarchy is used, which prioritizes the inputs used in measuring fair value as follows:
• | Level 1 inputs: Quoted prices (unadjusted) for identical assets or liabilities in active markets;
• | Level 2 inputs: Inputs other than quoted prices included in Level 1 that are observable for the asset or liability either directly or indirectly; and
• | Level 3 inputs: Unobservable inputs (e.g., a reporting entity's own data).
In many cases, a valuation technique used to measure fair value includes inputs from multiple levels of the fair value hierarchy. The lowest level of significant input determines the placement of the entire fair value measurement in the hierarchy. The following table presents the Company's assets and liabilities that are measured at fair value on a nonrecurring basis at December 31, 2016. No nonrecurring fair value measurements were made at December 31, 2015:
(in thousands) | December 31, 2016
Assets (liabilities) | Level 1 |  | Level 2 |  | Level 3 |  | Total
Property, plant and equipment (a) | $ | — |  |  | $ | — |  |  | $ | 11,210 |  |  | $ | 11,210 |
Total | $ | — |  |  | $ | — |  |  | $ | 11,210 |  |  | $ | 11,210 |
(a) | The Company recognized impairment charges on certain retail and cob assets during 2016 and measured the fair value using Level 3 inputs on a nonrecurring basis. The fair value of the retail assets was determined using third-party appraisals and the cob assets were based upon liquidation value.
The following table presents the Company's assets and liabilities that are measured at fair value on a recurring basis at December 31, 2016 and 2015:
(in thousands) | December 31, 2016
Assets (liabilities) | Level 1 |  | Level 2 |  | Level 3 |  | Total
Cash equivalents | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Restricted cash | 471 |  |  | — |  |  | — |  |  | 471 |
Commodity derivatives, net (a) | 29,872 |  |  | (7,831 | ) |  | — |  |  | 22,041 |
Provisionally priced contracts (b) | (105,321 | ) |  | (64,876 | ) |  | — |  |  | (170,197 | )
Convertible preferred securities (c) | — |  |  | — |  |  | 3,294 |  |  | 3,294 |
Other assets and liabilities (d) | 9,391 |  |  | (2,530 | ) |  | — |  |  | 6,861 |
Total | $ | (65,587 | ) |  | $ | (75,237 | ) |  | $ | 3,294 |  |  | $ | (137,530 | )
(in thousands) | December 31, 2015
Assets (liabilities) | Level 1 |  | Level 2 |  | Level 3 |  | Total
Cash equivalents | $ | 26,931 |  |  | $ | — |  |  | $ | — |  |  | $ | 26,931 |
Restricted cash | 450 |  |  | — |  |  | — |  |  | 450 |
Commodity derivatives, net (a) | 26,890 |  |  | (15,101 | ) |  | — |  |  | 11,789 |
Provisionally priced contracts (b) | (133,842 | ) |  | (103,148 | ) |  | — |  |  | (236,990 | )
Convertible preferred securities (c) | — |  |  | — |  |  | 13,550 |  |  | 13,550 |
Other assets and liabilities (d) | 8,635 |  |  | (3,324 | ) |  | 350 |  |  | 5,661 |
Total | $ | (70,936 | ) |  | $ | (121,573 | ) |  | $ | 13,900 |  |  | $ | (178,609 | )
(a) | Includes associated cash posted/received as collateral
(b) | Included in "Provisionally priced contracts" are those instruments based only on underlying futures values (Level 1) and delayed price contracts (Level 2)
(c) | Recorded in “Other noncurrent assets” on the Company’s Consolidated Balance Sheets
(d) | Included in other assets and liabilities are deferred compensation assets, ethanol risk management contracts, and foreign exchange derivative contracts (Level 1), interest rate derivatives (Level 2), and contingent consideration to the former owners of Kay Flo Industries, Inc (Level 3).
Level 1 commodity derivatives reflect the fair value of the exchanged-traded futures and options contracts that the Company holds, net of the cash collateral that the Company has in its margin account. The majority of the Company’s assets and liabilities measured at fair value are based on the market approach valuation technique. With the market approach, fair value is derived using prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. The Company’s net commodity derivatives primarily consist of futures or options contracts via regulated exchanges and contracts with producers or customers under which the future settlement date and bushels (or gallons in the case of ethanol contracts) of commodities to be delivered (primarily wheat, corn, soybeans and ethanol) are fixed and under which the price may or may not be fixed. Depending on the specifics of the individual contracts, the fair value is derived from the futures or options prices on the CME or the New York Mercantile Exchange for similar commodities and delivery dates as well as observable quotes for local basis adjustments (the difference, which is attributable to local market conditions, between the quoted futures price and the local cash price). Because “basis” for a particular commodity and location typically has multiple quoted prices from other agribusinesses in the same geographical vicinity and is used as a common pricing mechanism in the Agribusiness industry, we have concluded that “basis” is typically a Level 2 fair value input for purposes of the fair value disclosure requirements related to our commodity derivatives, depending on the specific commodity. Although nonperformance risk, both of the Company and the counterparty, is present in each of these commodity contracts and is a component of the estimated fair values, based on the Company’s historical experience with its producers and customers and the Company’s knowledge of their businesses, the Company does not view nonperformance risk to be a significant input to fair value for these commodity contracts. These fair value disclosures exclude physical grain inventories measured at net realizable value. The net realizable value used to measure the Company’s agricultural commodity inventories is the fair value (spot price of the commodity in an exchange), less cost of disposal and transportation based on the local market. This valuation would generally be considered Level 2. The amount is disclosed in Note 2 Inventories. Changes in the net realizable value of commodity inventories are recognized as a component of cost of sales and merchandising revenues. Provisionally priced contract liabilities are those for which the Company has taken ownership and possession of grain but the final purchase price has not been established. In the case of payables where the unpriced portion of the contract is limited to the futures price of the underlying commodity or we have delivered provisionally priced grain and a subsequent payable or receivable is set up for any futures changes in the grain price, quoted CBOT prices are used and the liability is deemed to be Level 1 in the fair value hierarchy. For all other unpriced contracts which include variable futures and basis components, the amounts recorded for delayed price contracts are determined on the basis of local grain market prices at the balance sheet date and, as such, are deemed to be Level 2 in the fair value hierarchy. The risk management contract liability allows related ethanol customers to effectively unprice the futures component of their inventory for a period of time, subjecting the bushels to market fluctuations. The Company records an asset or liability for the market value changes of the commodities over the life of the contracts based on quoted CBOT prices and as such, the balance is deemed to be Level 1 in the fair value hierarchy. The Company’s convertible preferred securities are measured at fair value using a combination of the income approach and the market approach. Specifically, the income approach incorporates the use of the Discounted Cash Flow method, whereas the Market Approach incorporates the use of the Guideline Public Company method. Application of the Discounted Cash Flow method requires estimating the annual cash flows that the business enterprise is expected to generate in the future. The assumptions input into this method are estimated annual cash flows for a specified estimation period, the discount rate, and the terminal value at the end of the estimation period. In the Guideline Public Company method, valuation multiples, including total invested capital, are calculated based on financial statements and stock price data from selected guideline publicly traded companies. A comparative analysis is then performed for factors including, but not limited to size, profitability and growth to determine fair value. The Company’s stake in the Iowa Northern Railway Company ("IANR") was redeemed in the first quarter of 2016. The remaining convertible preferred securities are interests in two early-stage enterprises in the form of debt securities with the possibility of conversion to equity under certain circumstances. A reconciliation of beginning and ending balances for the Company’s recurring fair value measurements using Level 3 inputs is as follows:
| Convertible Securities |  | Contingent Consideration
(in thousands) | 2016 |  | 2015 |  | 2016 |  | 2015
Assets (Liabilities) at January 1, | $ | 13,550 |  |  | $ | 13,300 |  |  | $ | (350 | ) |  | $ | — |
New agreements | 2,500 |  |  | 750 |  |  | — |  |  | (350 | )
Sales proceeds | (13,485 | ) |  | (992 | ) |  | — |  |  | — |
Realized Gains (Losses) included in Earnings | 729 |  |  | 492 |  |  | 350 |  |  | — |
Unrealized Gains (Losses) included in Other Comprehensive Income | — |  |  | — |  |  | — |  |  | — |
Fair value of impaired retail properties | — |  |  | — |  |  | — |  |  | — |
Assets (Liabilities) at December 31, | $ | 3,294 |  |  | $ | 13,550 |  |  | $ | — |  |  | $ | (350 | )
The following tables summarize information about the Company's Level 3 fair value measurements as of December 31, 2016 and 2015:
Quantitative Information about Level 3 Fair Value Measurements
(in thousands) | Fair Value as of 12/31/16 |  | Valuation Method |  | Unobservable Input |  | Weighted Average
Convertible Notes | $ | 3,294 |  |  | Cost Basis, Plus Interest |  | N/A |  | N/A
Real Property | $ | 11,210 |  |  | Third-Party Appraisal |  | N/A |  | N/A
(in thousands) | Fair Value as of 12/31/15 |  | Valuation Method |  | Unobservable Input |  | Weighted Average
Convertible Preferred Securities | $ | 12,800 |  |  | Market Approach |  | EBITDA Multiples |  | 5.6
|  |  | Income Approach |  | Discount Rate |  | 14.5%
Convertible Notes | $ | 750 |  |  | Cost Basis |  | N/A |  | N/A
Fair Value of Debt Instruments Certain long-term notes payable and the Company’s debenture bonds bear fixed rates of interest and terms of up to 15 years. Based upon the Company’s credit standing and current interest rates offered by the Company on similar bonds and rates currently available to the Company for long-term borrowings with similar terms and remaining maturities, the Company estimates the fair values of its fixed rate long-term debt instruments outstanding at December 31, 2016 and 2015, as follows:
(in thousands) | Carrying Amount |  | Fair Value |  | Fair Value Hierarchy Level
2016 |  |  |  |  |
Fixed rate long-term notes payable | $ | 308,645 |  |  | $ | 310,338 |  |  | Level 2
Debenture bonds | 36,931 |  |  | 37,883 |  |  | Level 2
| $ | 345,576 |  |  | $ | 348,221 |  |  |
2015 |  |  |  |  |
Fixed rate long-term notes payable | $ | 241,111 |  |  | $ | 244,101 |  |  | Level 2
Debenture bonds | 39,375 |  |  | 40,087 |  |  | Level 2
| $ | 280,486 |  |  | $ | 284,188 |  |  |
The fair value of the Company’s cash equivalents, accounts receivable and accounts payable approximate their carrying value as they are close to maturity.

X
- References No definition available. + Details
Name: | us-gaap_FairValueDisclosuresAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: 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 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 30 -URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14172-108612 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 28 -URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14064-108612 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=49121117&loc=d3e13537-108611 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 16 -URI http://asc.fasb.org/extlink&oid=49121117&loc=d3e13504-108611 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 10 -URI http://asc.fasb.org/extlink&oid=49121117&loc=d3e13433-108611 + Details
Name: | us-gaap_FairValueDisclosuresTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration