Fair Value Disclosures

9 Months Ended

Sep. 30, 2016

4. FAIR VALUE DISCLOSURES

The following methods, assumptions and valuation techniques were used to estimate the fair value of the company’s financial instruments:

Level 1 – unadjusted quoted prices in active markets for identical assets or liabilities the company can access at the measurement date. Level 1 unrealized gains and losses on commodity derivatives relate to exchange-traded open trade equity and option values in the company’s brokerage accounts.

Level 2 – directly or indirectly observable inputs such as quoted prices for similar assets or liabilities in active markets other than quoted prices included within Level 1, quoted prices for identical or similar assets in markets that are not active, and other inputs that are observable or can be substantially corroborated by observable market data through correlation or other means. Grain inventories held for sale in the agribusiness segment are valued at nearby futures values, plus or minus nearby basis.

Level 3 – unobservable inputs that are supported by little or no market activity and comprise a significant component of the fair value of the assets or liabilities. The company currently does not have any recurring Level 3 financial instruments.

There have been no changes in valuation techniques and inputs used in measuring fair value. The company’s assets and liabilities by level are as follows (in thousands):


	Fair Value Measurements at September 30, 2016
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Reclassification for Balance Sheet
	(Level 1)		(Level 2)		Presentation		Total

Assets:
Cash and cash equivalents	$	407,359	$	-	$	-	$	407,359
Restricted cash		34,219		-		-		34,219
Margin deposits		8,792		-		(8,792)		-
Inventories carried at market		-		45,199		-		45,199
Unrealized gains on derivatives		26,098		17,468		(4,989)		38,577
Other assets		116		-		-		116
Total assets measured at fair value	$	476,584	$	62,667	$	(13,781)	$	525,470

Liabilities:
Unrealized losses on derivatives	$	10,938	$	23,674	$	(13,781)	$	20,831
Other		-		15		-		15
Total liabilities measured at fair value	$	10,938	$	23,689	$	(13,781)	$	20,846


	Fair Value Measurements at December 31, 2015
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Reclassification for Balance Sheet
	(Level 1)		(Level 2)		Presentation		Total

Assets:
Cash and cash equivalents	$	384,867	$	-	$	-	$	384,867
Restricted cash		27,018		-		-		27,018
Margin deposits		7,658		-		(7,658)		-
Inventories carried at market		-		43,936		-		43,936
Unrealized gains on derivatives		19,756		7,145		3,639		30,540
Other assets		117		-		-		117
Total assets measured at fair value	$	439,416	$	51,081	$	(4,019)	$	486,478

Liabilities:
Unrealized losses on derivatives	$	4,492	$	7,772	$	(4,019)	$	8,245
Total liabilities measured at fair value	$	4,492	$	7,772	$	(4,019)	$	8,245

The company believes the fair value of its debt was approximately $913.8 million compared with a book value of $923.5 million at September 30, 2016, and the fair value of its debt was approximately $661.8 million compared with a book value of $663.6 million at December 31, 2015. The company estimated the fair value of its outstanding debt using Level 2 inputs. The company believes the fair values of its accounts receivable and accounts payable approximated book value, which were $132.6 million and $129.3 million, respectively, at September 30, 2016, and $96.2 million and $167.0 million, respectively, at December 31, 2015.

Although the company currently does not have any recurring Level 3 financial measurements, the fair values of tangible assets and goodwill acquired and the equity component of convertible debt represent Level 3 measurements which were derived using a combination of the income approach, market approach and cost approach for the specific assets or liabilities being valued.

- 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.

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