Assets and Liabilities Measured at Fair Value

12 Months Ended

Dec. 31, 2012

Assets and Liabilities Measured at Fair Value

Note O – Assets and Liabilities Measured at Fair Value

The Company carries certain assets and liabilities at fair value in its Consolidated Balance Sheet. The fair value hierarchy is based on the quality of inputs used to measure fair value, with Level 1 being the highest quality and Level 3 being the lowest quality. Level 1 inputs are quoted prices in active markets for identical assets or liabilities. Level 2 inputs are observable inputs other than quoted prices included within Level 1. Level 3 inputs are unobservable inputs which reflect assumptions about pricing by market participants.

The fair value measurements for these assets and liabilities at December 31, 2012 and 2011 are presented in the following table.

				Fair Value Measurements at Reporting Date Using
(Thousands of dollars)	Fair Value at December 31, 2012			Quoted Prices in Active Markets for Identical Assets (Liabilities) (Level 1)			Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Assets
Commodity derivative contracts	$	3,043			0			3,043			0
Liabilities
Nonqualified employee savings plan	$	(10,293	)		(10,293	)		0			0
Foreign currency exchange derivative contracts		(1,031	)		0			(1,031	)		0
Commodity derivative contracts		(102	)		0			(102	)		0
Total	$	(11,426	)		(10,293	)		(1,133	)		0

				Fair Value Measurements at Reporting Date Using
(Thousands of dollars)	Fair Value at December 31, 2011			Quoted Prices in Active Markets for Identical Assets (Liabilities) (Level 1)			Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Assets
Commodity derivative contracts	$	197			0			197			0
Liabilities
Nonqualified employee savings plan	$	(8,030	)		(8,030	)		0			0
Foreign currency exchange derivative contracts		(8,459	)		0			(8,459	)		0
Commodity derivative contracts		(489	)		0			(489	)		0
Interest rate derivative contracts		(25,927	)		0			(25,927	)		0
Total	$	(42,905	)		(8,030	)		(34,875	)		0

At the balance sheet dates the fair value of commodity derivative contracts for corn and wet and dried distillers grain with solubles was determined based on market quotes for No. 2 yellow corn. The fair value of derivative contracts for foreign currency exchange and interest rates was based on quotes from active brokers in the respective markets. The change in fair value of commodity derivatives is recorded in the Consolidated Statement of Income in Crude Oil and Product Purchases and the change in fair value of foreign currency exchange derivatives is recorded in Interest and Other Income (Loss). The interest rate derivative contracts are accounted for under hedge accounting rules; therefore, losses were deferred and recorded net of income taxes as a component of Accumulated Other Comprehensive Income in the Consolidated Balance Sheet. The nonqualified employee savings plan is an unfunded savings plan through which the participants seek a return via phantom investments in equity securities and/or mutual funds. The fair value of this savings plan liability was based on quoted prices for these equity securities and mutual funds. The income effect of the changes in the fair value of nonqualified employee savings plan is recorded in Selling and General Expenses in the Consolidated Statement of Income. The carrying value of the Company’s Cash and Cash Equivalents, Accounts Receivable and Accounts Payable approximates fair value.

The assets of an ethanol plant acquired in 2010 were recorded at fair value based on valuation techniques including the cost and income approaches using Level 3 unobservable inputs within the fair value hierarchy.

The following table presents the carrying amounts and estimated fair values of financial instruments held by the Company at December 31, 2012 and 2011. The fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties. The table excludes cash and cash equivalents, trade accounts receivable, short-term notes payable, trade accounts payable and accrued expenses, all of which had fair values approximating carrying amounts. The carrying value of Canadian government securities is determined based on cost plus earned interest. The fair value of current and long-term debt was estimated based on rates offered to the Company at that time for debt of the same maturities. The Company has off-balance sheet exposures relating to certain financial guarantees and letters of credit. The fair value of these, which represents fees associated with obtaining the instruments, was nominal.

	At December 31,
	2012						2011
(Thousands of dollars)	Carrying Amount			Fair Value			Carrying Amount			Fair Value
Financial assets (liabilities):
Canadian government securities with maturities greater than 90 days at the date of acquisition	$	115,603			115,802			532,093			532,899
Current and long-term debt		(2,245,247	)		(2,357,972	)		(599,558	)		(715,208	)