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Fair Value Measurements
9 Months Ended
Sep. 30, 2011
Fair Value Measurements [Abstract] 
Fair Value Measurements
13. Fair Value Measurements

GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. GAAP describes three approaches to measuring the fair value of assets and liabilities: the market approach, the income approach and the cost approach. Each approach includes multiple valuation techniques. GAAP does not prescribe which valuation technique should be used when measuring fair value, but does establish a fair value hierarchy that prioritizes the inputs used in applying the various techniques. Inputs broadly refer to the assumptions that market participants use to make pricing decisions, including assumptions about risk. Level 1inputs are given the highest priority in the hierarchy while Level 3 inputs are given the lowest priority. Assets and liabilities carried at fair value are classified in one of the following three categories based on the nature of the inputs to the valuation technique used:

 

  •  

Level 1 — Observable inputs that reflect unadjusted quoted prices for identical assets or liabilities in active markets as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.

 

  •  

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. These inputs reflect management’s best estimate of fair value using its own assumptions about the assumptions a market participant would use in pricing the asset or liability.

 

Summary of significant valuation techniques for assets measured at fair value on a recurring basis

Level 1

Cash equivalents: Comprise actively traded money market funds that have daily quoted net asset values for identical assets that the Company can access.

U.S. government obligations and agencies: Comprise U.S. Treasury Bills or Notes. Valuation is based on unadjusted quoted prices for identical assets in active markets that the Company can access.

Foreign government bonds: Comprise actively traded fixed-rate bonds of foreign governments rated AAA. Valuation is based on unadjusted quoted prices for identical assets in active markets that the Company can access.

Common stock: Comprise actively traded, exchange-listed U.S. and international equity securities. Valuation is based on unadjusted quoted prices for identical assets in active markets that the Company can access.

Exchange traded and mutual funds: Comprise actively traded funds. Valuation is based on daily quoted net asset values for identical assets in active markets that the Company can access.

Level 2

U.S. government obligations and agencies: Comprise U.S. Treasury Inflation Protected Securities (TIPS). The primary inputs to the valuation include quoted prices for identical assets in inactive markets or similar assets in active or inactive markets, contractual cash flows, benchmark yields and credit spreads.

Derivatives: The primary inputs to the valuation include quoted prices or quoted net asset values for identical or similar assets in markets that are not active or highly active.

As required by GAAP, assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect their placement within the fair value hierarchy levels.

The following tables set forth by level within the fair value hierarchy the Company’s assets that were accounted for at fair value on a recurring basis as of September 30, 2011 and December 31, 2010 (in thousands):

 

                                 
    Fair Value Measurements
As of September 30, 2011		  
    Level 1     Level 2     Level 3     Total  

Cash equivalents

   $ 326,276     $ —       $ —       $ 326,276  

Trading portfolio:

                                

Debt securities:

                                

U.S. government securities obligations and agencies

     175       3,536       —         3,711  

Foreign government bonds

     54,352       —         —         54,352  

Equity securities:

                                

Common stock:

                                

Metals and mining

     30,829       —         —         30,829  

Other

     16,173       —         —         16,173  

Exchange-traded and mutual funds:

                                

Metals and mining

     23,295       —         —         23,295  

Agriculture

     15,411       —         —         15,411  

Energy

     8,333       —         —         8,333  

Indices

     1,372       —         —         1,372  

Derivatives:

                                

Non-hedging instruments

     —         1,545       —         1,545  

Other investments

     366       —         —         366  
   

 

 

    

 

 

    

 

 

    

 

 

  

Total trading portfolio investments

     150,306       5,081       —         155,387  
   

 

 

    

 

 

    

 

 

    

 

 

  

Total investments

   $ 476,582     $ 5,081     $ —       $ 481,663  
   

 

 

    

 

 

    

 

 

    

 

 

  
   
    Fair Value Measurements
As of December 31, 2010		  
    Level 1     Level 2     Level 3     Total  

Cash equivalents

   $ 145,121     $ —       $ —       $ 145,121  

Trading portfolio:

                                

Debt securities:

                                

U.S. government securities obligations and agencies

     179       129,937       —         130,116  

Equity securities:

                                

Common stock:

                                

Metals and mining

     25,752       —         —         25,752  

Other

     362       —         —         362  

Exchange-traded and mutual funds:

                                

Metals and mining

     42,209       —         —         42,209  

Agriculture

     14,877       —         —         14,877  

Energy

     5,559       —         —         5,559  

Indices

     4,613       —         —         4,613  

Other

     1,044       —         —         1,044  

Derivatives:

                                

Non-hedging instruments

     —         182       —         182  
   

 

 

    

 

 

    

 

 

    

 

 

  

Total trading portfolio investments

     94,595       130,119       —         224,714  
   

 

 

    

 

 

    

 

 

    

 

 

  

Total investments

   $ 239,716     $ 130,119     $ —       $ 369,835  
   

 

 

    

 

 

    

 

 

    

 

 

  

 

The Company did not have any transfers between Level 1 and Level 2 for the nine-month periods ended September 30, 2011, and 2010.

The following table summarizes the carrying value, net unrealized gains (losses) and estimated fair values of the Company’s financial instruments that are not carried at fair value (in thousands):

 

                         
    As of September 30, 2011
Fair Value Measurements		  
    Carrying
value		     Net unrealized
Gains/(Losses)		     Estimated Fair
Value		  

Assets:

                        

Cash

   $ 2,562     $ —       $ 2,562  
   

 

 

    

 

 

    

 

 

  
    $ 2,562     $ —       $ 2,562  
   

 

 

    

 

 

    

 

 

  

Liabilities:

                        

Long-term debt

   $ 22,059     $ (4,481 )    $ 17,578  
   

 

 

    

 

 

    

 

 

  
    $ 22,059     $ (4,481 )    $ 17,578  
   

 

 

    

 

 

    

 

 

  
   
    As of December 31, 2010
Fair Value Measurements		  
    Carrying
value		     Net unrealized
Gains/(Losses)		     Estimated Fair
Value		  

Assets:

                        

Cash

   $ 2,464     $ —       $ 2,464  
   

 

 

    

 

 

    

 

 

  
    $ 2,464     $ —       $ 2,464  
   

 

 

    

 

 

    

 

 

  

Liabilities:

                        

Long-term debt

   $ 23,162     $ (4,063 )    $ 19,099  
   

 

 

    

 

 

    

 

 

  
    $ 23,162     $ (4,063 )    $ 19,099  
   

 

 

    

 

 

    

 

 

  

The carrying value of cash approximates fair value due to its liquid nature.

The carrying value of long-term debt was determined from the expected cash flows discounted using the interest rate quoted by the issuer of the note, the State Board of Administration of Florida (“SBA”) which is below prevailing rates quoted by private lending institutions. However, as the Company’s use of funds from the surplus note is limited by the terms of the agreement, the Company has determined the interest rate quoted by the SBA to be appropriate for purposes of establishing the fair value of the note.