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Fair Value of Financial Assets and Liabilities
 3 Months Ended
Mar. 31, 2018
Fair Value Disclosures [Abstract]  
Fair Value of Financial Assets and Liabilities

NOTE I – FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES

The Company measures and records certain assets and liabilities at fair value. A fair value hierarchy is used for those assets and liabilities measured at fair value that distinguishes between assumptions based on market data, (observable inputs), and the Company’s assumptions (unobservable inputs). The hierarchy consists of the following three levels:

Level 1

Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets.

Level 2

Inputs other than Level 1 inputs that are either directly or indirectly observable, which may include:

 

o

Quoted prices for similar assets in active markets;

 

o

Quoted prices for identical or similar assets or liabilities in inactive markets;

 

o

Inputs other than quoted prices that are observable for the asset or liability; and

 

o

Inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Level 3

Inputs to the valuation methodology are unobservable and developed using estimates and assumptions developed by the Company which reflect those that a market participant would use.  

The following table summarizes the Company’s assets and liabilities, recorded and measured at fair value, in the consolidated balance sheets as of March 31, 2018 (there were no financial instruments measured at fair value at December 31, 2017):

 

Description

 

Balance as of

March 31, 2018

 

 

Quoted Prices in Active Markets for Identical Assets or Liabilities

(Level 1)

 

 

Significant Other Observable Inputs

(Level 2)

 

 

Significant Unobservable Inputs

(Level 3)

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Marketable securities

 

$

4,308

 

 

$

4,308

 

 

$

0

 

 

$

0

 

Total Assets

 

$

4,308

 

 

$

4,308

 

 

$

0

 

 

$

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Supplemental profit sharing plan

 

 

4,266

 

 

 

0

 

 

 

4,266

 

 

 

0

 

Total Liabilities

 

$

4,266

 

 

$

0

 

 

$

4,266

 

 

$

0

 

During the quarter ended March 31, 2018, the Company invested $4.3 million in marketable securities, principally equity-based mutual funds, to mitigate the risk associated with the investment returns on the Company’s Supplemental Profit Sharing Plan discussed below.  These marketable securities are comprised of available-for-sale securities and are reported at fair value within Other assets on the Company’s consolidated balance sheet as of March 31, 2018.  Changes in the fair value of the securities are recognized within Other income, net within the consolidated statements of income, and were not material for the period ended March 31, 2018.

The Company has a non-qualified Supplemental Profit Sharing Plan for its executives. The liability for this unfunded Supplemental Profit Sharing Plan was $4.7 million and $4.8 million at March 31, 2018 and December 31, 2017, respectively, and is recorded within Other noncurrent liabilities on the Company’s consolidated balance sheets. During January 2018, the Company amended the Supplemental Profit Sharing Plan to allow the participants the ability to hypothetically invest their proportionate award into various investment options, which primarily includes mutual funds. The company then credits earnings, gains and losses to the participants’ deferred compensation account balances based on the investments selected by the participants. The Company measures the fair value of the Supplemental Profit Sharing Plan liability using the market values of the participants’ underlying investment accounts.