Fair Value Measurements

6 Months Ended

Jun. 30, 2020

Note 9—Fair Value Measurements

The Company’s current assets and current liabilities are financial instruments and most of these items (other than marketable securities and inventories) are recorded at cost in the Consolidated Balance Sheets. The estimated fair value of these financial instruments approximates their carrying value due to their short-term nature. The carrying value of the Company’s line of credit represents the outstanding amount of the borrowings, which approximates fair value. The Company’s financial assets that are measured at fair value on a recurring basis are its marketable securities and deferred compensation funding. The recorded values of all of the financial instruments approximate their current fair values because of their nature, stated interest rates and respective maturity dates or durations.

The Company’s marketable securities consist of tax-exempt municipal bonds, which are classified as available-for-sale and are reported at fair value. Unrealized gains and losses associated with these investments are included in other comprehensive income (net of tax) within the Consolidated Statements of Comprehensive Income. The fair value of these marketable securities is classified within Level 2 of the fair value hierarchy, as these securities are measured using quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable. Such valuations are determined by a third-party pricing service. For the three months ended June 30, 2020 and 2019, the Company recorded unrealized gains of $1.7 million and $0.8 million on marketable securities, respectively. For the six months ended June 30, 2020 and 2019, the Company recorded unrealized gains of $1.1 million and of $2.2 million on marketable securities, respectively.

For the three months ended June 30, 2020 and 2019, the Company received total proceeds, less the amount of interest received, of $4.0 million and $3.6 million, respectively, from sales of available-for-sale municipal bonds. For the three months ended June 30, 2020 and 2019, these sales resulted in realized losses of $0.1 million and realized gains of $0.1 million, respectively. For the six months ended June 30, 2020 and 2019, the Company received total proceeds, less the amount of interest received of $5.8 million and $7.1 million, respectively, from sales of available-for-sale municipal bonds. For the six months ended June 30, 2020 and 2019, these sales resulted in realized losses of $0.1 million and realized gains of $0.1 million, respectively, which were recorded in “Other income – Investment and other income, net” in the Consolidated Statements of Comprehensive Income. The basis for the sale of these securities was the specific identification of each bond sold during the period.

The investments under the funded deferred compensation plan are accounted for as trading securities and unrealized gains or losses are included in earnings. The fair value of these investments are determined based on quoted market prices (Level 1). For the three months ended June 30, 2020 and 2019, the Company’s recognized unrealized gains of $6.7 million and of $1.6 million, respectively, related to equity securities still held at the respective reporting dates. For the six months ended June 30, 2020 and 2019, the Company's recognized unrealized gains of $1.0 million and of $5.0 million, respectively, related to equity securities still held at the respective reporting dates.

The following tables provide fair value measurement information for the Company’s marketable securities and deferred compensation fund investments as of June 30, 2020 and December 31, 2019:


	As of June 30, 2020
					Fair Value Measurement Using:
	Carrying Amount		Total Fair Value		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(in thousands)
Financial Assets:
Marketable securities
Municipal bonds — available-for-sale	$	92,318	$	92,318	$	—	$	92,318	$	—

Deferred compensation fund
Money Market ¹	$	2,440	$	2,440	$	—	$	2,440	$	—
Balanced and Lifestyle	8,990		8,990		8,990		—		—
Large Cap Growth	13,305		13,305		13,305		—		—
Small Cap Growth	3,923		3,923		3,923		—		—
Fixed Income	4,153		4,153		4,153		—		—
International	1,715		1,715		1,715		—		—
Mid Cap Growth	2,691		2,691		2,691		—		—
Deferred compensation fund	$	37,217	$	37,217	$	34,777	$	2,440	$	—


	As of December 31, 2019
					Fair Value Measurement Using:
	Carrying Amount		Total Fair Value		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(in thousands)
Financial Assets:
Marketable securities
Municipal bonds — available-for-sale	$	90,711	$	90,711	$	—	$	90,711	$	—

Deferred compensation fund
Money Market ¹	$	2,625	$	2,625	$	—	$	2,625	$	—
Balanced and Lifestyle	10,294		10,294		10,294		—		—
Large Cap Growth	11,369		11,369		11,369		—		—
Small Cap Growth	4,120		4,120		4,120		—		—
Fixed Income	4,072		4,072		4,072		—		—
International	1,932		1,932		1,932		—		—
Mid Cap Growth	2,835		2,835		2,835		—		—
Deferred compensation fund	$	37,247	$	37,247	$	34,622	$	2,625	$	—

1.The fair value of the money market fund is based on the net asset value (“NAV”) of the shares held by the plan at the end of the period. The money market fund includes short-term United States dollar denominated money market instruments and the NAV is determined by the custodian of the fund. The money market fund can be redeemed at its NAV at the measurement date as there are no significant restrictions on the ability to sell this investment.


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value		Other-than-temporary Impairments
	(in thousands)
June 30, 2020
Type of security:
Municipal bonds — available-for-sale	$	87,226	$	5,092	$	—	$	92,318	$	—
Total debt securities	$	87,226	$	5,092	$	—	$	92,318	$	—

December 31, 2019
Type of security:
Municipal bonds — available-for-sale	$	87,016	$	3,695	$	—	$	90,711	$	—
Total debt securities	$	87,016	$	3,695	$	—	$	90,711	$	—

The following table summarizes the contractual maturities of debt securities held at June 30, 2020 and December 31, 2019, which are classified as marketable securities in the Consolidated Balance Sheets:


	Municipal Bonds — Available-for-Sale
Contractual maturity:	June 30, 2020		December 31, 2019
	(in thousands)
Maturing in one year or less	$	2,498	$	876
Maturing in second year through fifth year	33,476		16,071
Maturing in sixth year through tenth year	20,839		38,801
Maturing after ten years	35,505		34,963
Total debt securities	$	92,318	$	90,711