Quarterly report pursuant to Section 13 or 15(d)

Fair Value Measurement

v3.19.2
Fair Value Measurement
6 Months Ended
Jun. 30, 2019
Fair Value Disclosures [Abstract]  
Fair Value Measurement FAIR VALUE MEASUREMENT
The fair value hierarchy prioritizes the inputs used in measuring fair value as follows:
Level 1 — Quoted prices for identical instruments in active markets.
Level 2 — Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-derived valuations, in which all significant inputs are observable in active markets.
Level 3 — Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
A summary of assets (liabilities) measured at fair value is as follows:
   
As of June 30, 2019
   
Total
 
Level 1
 
Level 2
 
Level 3
Commodity contract derivatives
$
(2,250
)
 
$
(722
)
 
$
(1,528
)
 
$

Contingent considerations for acquisitions
$
(4,037
)
 

 

 
(4,037
)
 
$
(6,287
)
 
$
(722
)
 
$
(1,528
)
 
$
(4,037
)
   
As of December 31, 2018
   
Total
 
Level 1
 
Level 2
 
Level 3
Commercial paper
$
22,872

 
$

 
$
22,872

 
$

Corporate bonds
$
28,060

 

 
28,060

 

Commodity contract derivatives
$
10,044

 
499

 
9,545

 

Contingent considerations for acquisitions
$
(9,861
)
 

 

 
(9,861
)
   
$
51,115

 
$
499

 
$
60,477

 
$
(9,861
)

The following is a reconciliation of the beginning and ending balances for liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3):
 
Contingent Consideration for Acquisitions
 
2019
 
2018
Balance at beginning of period, January 1
$
9,861

 
$
20,485

Change in estimates included in earnings
304

 
459

Settlements
(3,316
)
 
(2,813
)
Balance at end of period, March 31
$
6,849

 
$
18,131

Change in estimates included in earnings

 
30

Settlements
(2,812
)
 
(2,846
)
Balance at end of period, June 30
$
4,037

 
$
15,315


The estimated fair values of the Company’s financial instruments, which are not recorded at fair value, are as follows:
   
As of June 30, 2019
 
As of December 31, 2018
   
Asset (Liability)
Carrying
Amount
 
Fair Value
 
Asset (Liability)
Carrying
Amount
 
Fair Value
Financial liabilities:
   
 
   
 
   
 
   
Debt and lines of credit
$
(187,695
)
 
$
(256,387
)
 
$
(200,067
)
 
$
(410,564
)

The carrying amounts reported in the Condensed Consolidated Balance Sheets for cash and cash equivalents, accounts receivable, accounts payable and accrued expenses approximate their fair values. Money market funds are included in cash and cash equivalents on the Condensed Consolidated Balance Sheets.
The Company used the following methods and assumptions to estimate fair value of its financial instruments:
Marketable securities: The fair value of marketable securities, which include commercial papers and corporate notes/bonds is obtained using quoted prices for similar assets or liabilities in active markets; quoted prices for
identical or similar assets in markets that are not active and inputs other than quoted prices, e.g., interest rates and yield curves.
Commodity derivatives: The instruments held by the Company consist primarily of futures contracts, swap agreements, purchased put options and written call options. The fair value of contracts based on quoted prices of identical assets in an active exchange-traded market is reflected in Level 1. Contract fair value that is determined based on quoted prices of similar contracts in over-the-counter markets is reflected in Level 2.
Contingent consideration for acquisitions: The fair value of all other contingent consideration is determined using an expected present value technique. Expected cash flows are determined using the probability weighted-average of possible outcomes that would occur should the achievement of certain milestones related to the production and/or sale of biomass-based diesel at the specific production facility. A discount rate ranging from 5.8% to 12.5% is used to estimate the fair value of the expected payments.
Debt and lines of credit: The fair value of long-term debt and lines of credit was established using discounted cash flow calculations and current market rates reflecting Level 2 inputs.