Fair Value Measurements

9 Months Ended

Sep. 30, 2021

The Company has various financial instruments that must be measured at fair value on a recurring basis, including marketable debt and equity securities held by Astec Insurance and marketable equity securities held in the Company's deferred compensation programs. The Company's deferred compensation programs include a non-qualified Supplemental Executive Retirement Plan ("SERP") and a separate non-qualified Deferred Compensation Plan. Although the deferred compensation programs' investments are allocated to individual participants and investment decisions are made solely by those participants, they are non-qualified plans. Consequently, the Company owns the assets and the related offsetting liability for disbursement until such time as a participant makes a qualifying withdrawal. The SERP assets and related offsetting liability are recorded in non-current "Investments" and "Other long-term liabilities", respectively, in the Consolidated Balance Sheets. The Company's subsidiaries also occasionally enter into foreign currency exchange contracts to mitigate exposure to fluctuations in currency exchange rates.

The carrying amount of cash and cash equivalents, trade receivables and contract assets, other receivables, accounts payable, short-term debt and long-term debt approximates their fair value because of their short-term nature and/or interest rates associated with the instruments. Investments are carried at their fair value based on quoted market prices for identical or similar assets or, where no quoted prices exist, other observable inputs for the asset. The fair values of foreign currency exchange contracts are based on quotations from various banks for similar instruments using models with market based inputs.

Financial assets and liabilities are categorized based upon the level of judgment associated with the inputs used to measure their fair value. The inputs used to measure the fair value are identified in the following hierarchy:


Level 1 -						Unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2 -						Unadjusted quoted prices in active markets for similar assets or liabilities; or unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active; or inputs other than quoted prices that are observable for the asset or liability.

Level 3 -						Inputs reflect management's best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model.

As indicated in the tables below, the Company has determined that all of its financial assets and liabilities as of September 30, 2021 and December 31, 2020 are Level 1 and Level 2 in the fair value hierarchy as defined above:


	September 30, 2021
(in millions)	Level 1		Level 2		Total
Financial assets:
Trading equity securities:

Deferred compensation programs mutual funds	$	4.5	$	—	$	4.5
Preferred stocks	0.3		—		0.3
Equity funds	3.4		—		3.4
Trading debt securities:
Corporate bonds	3.4		—		3.4
Municipal bonds	—		0.2		0.2
Floating rate notes	0.4		—		0.4
U.S. government securities	1.4		—		1.4
Asset-backed securities	—		1.5		1.5
Other	3.5		1.1		4.6
Derivative financial instruments	—		0.3		0.3
Total financial assets	$	16.9	$	3.1	$	20.0
Financial liabilities:

Deferred compensation programs liabilities	$	—	$	6.4	$	6.4
Total financial liabilities	$	—	$	6.4	$	6.4


	December 31, 2020
(in millions)	Level 1		Level 2		Total
Financial assets:
Trading equity securities:
Deferred compensation programs money market fund	$	0.2	$	—	$	0.2
Deferred compensation programs mutual funds	4.8		—		4.8
Preferred stocks	0.3		—		0.3
Equity funds	1.7		—		1.7
Trading debt securities:
Corporate bonds	4.8		—		4.8
Municipal bonds	—		0.9		0.9
Floating rate notes	0.4		—		0.4
U.S. government securities	1.8		—		1.8
Asset-backed securities	—		2.1		2.1
Other	—		1.0		1.0
Derivative financial instruments	—		0.1		0.1
Total financial assets	$	14.0	$	4.1	$	18.1
Financial liabilities:
Derivative financial instruments	$	—	$	0.5	$	0.5
Deferred compensation programs liabilities	—		7.3		7.3
Total financial liabilities	$	—	$	7.8	$	7.8

- 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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