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Disclosures About Fair Value of Financial Instruments (Tables)
 12 Months Ended
Dec. 31, 2013
Fair Value Disclosures [Abstract]  
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis
At December 31, 2013 (in thousands):
 
Assets
Quoted Prices In Active Markets for
Identical Assets
(Level 1)
 
Significant Other
Observable
Inputs
(Level 2)
 
Significant Unobservable
Inputs
(Level 3)
 
Balance at
December 31,
2013
Available-for-sale equity securities (1)
$
26,177

 
$
15,231

 
 
 
$
41,408

Available-for-sale debt securities (1)
$
9,172

 


 

 
$
9,172

Readily marketable inventory (2)
$
2,396

 
$
5,292

 

 
$
7,688

Derivative instruments (3)
$
346

 
$
2,108

 

 
$
2,454

 
 
 
 
 
 
 
 
Liabilities
 

 
 

 
 
 
 

Derivative instruments (3)
$
436

 
$
936

 
 
 
$
1,372



At December 31, 2012 (in thousands):
 
Assets
Quoted Prices In Active Markets for Identical Assets (Level 1)
 
Significant Other Observable Inputs (Level 2)
 
Significant Unobservable Inputs
(Level 3)
 
Balance at
December 31,
2012
Available-for-sale equity securities (1)
$
27,977

 
$
12,461

 
 
 
$
40,438

Available-for-sale debt securities (1)
$
8,026

 


 

 
$
8,026

Readily marketable inventory(2)
$
2,603

 
$
5,327

 

 
$
7,930

Derivative instruments (3)
$
96

 
$
2,257

 

 
2,353

 
 
 
 
 
 
 
 
Liabilities
 

 
 

 
 
 
 

Derivative instruments (3)
$
459

 
$
104

 

 
$
563


(1) Where there are quoted market prices that are readily available in an active market, securities are classified as Level 1 of the valuation hierarchy. Level 1 available-for-sale investments are valued using quoted market prices multiplied by the number of shares owned and debt securities are valued using a market quote in an active market. All Level 2 available-for-sale securities are one class because they all contain similar risks and are valued using market prices and include securities where the markets are not active, that is where there are few transactions, or the prices are not current or the prices vary considerably over time. Inputs include directly or indirectly observable inputs such as quoted prices. Level 3 available-for-sale securities would include securities where valuation is based on unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

(2) Readily marketable inventory comprises commodity inventories that are reported at fair value based on commodity exchange quotations. Canola seed inventories are valued based on the quoted market price multiplied by the quantity of inventory and are classified as Level 1. Canola oil and meal inventories are classified as Level 2 because the inputs are directly observable, such as the quoted market price of the corresponding soybean complex.

(3) Included in this caption are three types of agricultural commodity derivative contracts: swaps, exchange traded futures, and forward commodity purchase and sale contracts. The exchange traded futures contracts are valued based on quoted prices in active markets multiplied by the number of contracts and are classified as Level 1. The swaps are classified as Level 2 because the inputs are directly observable, such as the quoted market prices for relevant commodity futures contracts. The swaps are valued based on the difference of the arithmetic average of the quoted market price of the relevant underlying multiplied by the notional quantities, and the arithmetic average of the prices specified in the instrument multiplied by the notional quantities.

Forward commodity purchase and sale contracts classified as derivatives are valued using quantitative models that require the use of multiple inputs including quoted market prices and various other assumptions including time value. These contracts are categorized as Level 2 and are valued based on the difference between the quoted market price and the price in the contract multiplied by the undelivered notional quantity deliverable under the contract.
Fair Value, Assets and Liabilities Measured on Nonrecurring Basis
The following table sets forth the Company’s non-financial assets that were measured at fair value on a non-recurring basis for the three years ended December 31, 2013, by level within the fair value hierarchy. There were no such measurements in 2012.

Year Ended December 31, 2013 (in thousands):
Asset Description
 
Quoted Prices In Active Markets for Identical Assets (Level 1)
 
Significant Other Observable Inputs
(Level 2)
 
Significant Unobservable Inputs (Level 3)
 
Total Gain
(Loss)
Intangible asset (exclusive right to use infrastructure and associated water credits) (1)
 
 
 
 
 
$
83,897

 
$
(993
)
Real estate (2)
 
 
 
 
 
$
3,674

 
$
(417
)
Investment in unconsolidated affiliate (3)
 
 
 
 
 
$
28,679

 
$
21,181


(1) The Company had a non-recurring fair value measurement for an intangible asset with a carrying amount of $84.9 million that was written down to its estimated fair value of $83.9 million resulting in an impairment charge of $993,000, which was included in earnings for December 31, 2013. The implied fair value was calculated using a discounted cash flow model that incorporated a wide range of assumptions including current asset pricing, price escalation, discount rates, absorption rates, timing of sales, and costs. Given the decline in market prices for similar assets, increases in interest rates, and extended timing of expected absorptions, the Company adjusted its assumptions and judgments in the model from original projections.

(2) The Company had a non-recurring fair value measurement of real estate assets with a carrying value of $4.1 million that was written down to its estimated fair value of $3.7 million resulting in an impairment charge of $417,000, which was included in earnings for December 31, 2013. The impairment was recorded based on the estimated sales price the Company expects to receive upon the sale of this real estate. The impairment loss relates to a property which is not part of UCP’s results of operations nor is it included in UCP’s inventory of lots.

(3) The Company had a non-recurring fair value measurement as a result of the merger transaction between Spigit and Mindjet. The transaction resulted in the deconsolidation of Spigit, and the recording of the Company’s common and preferred stock investment in Mindjet at fair value, on the date of the transaction. The transaction resulted in a gain of approximately $21.2 million before income taxes. The fair value of the investment in Mindjet was based on analysis of the financial and operational aspects of the company, including consideration of a discounted cash flow analysis which incorporated a contemporary forecast of the merged Mindjet/Spigit entity going forward.  Also considered was a guideline public company analysis which compared business enterprise value-to-revenue ratios for comparable public companies to current revenue metrics for the company.  Determination of the business enterprise value based on the foregoing was then considered in an analysis of the distribution of equity value to the various classes of equity held by PICO in order to reflect differences in value due to differing liquidation, dividend and voting rights. The fair value approach relied primarily on Level 3 unobservable inputs, whereby expected future cash flows were discounted using a rate that includes assumptions regarding an entity’s average cost of debt and equity, incorporated expected future cash flows based on internal business plans, and applied certain assumptions about risk and uncertainties. The estimates were based upon assumptions believed to be reasonable, but which by nature are uncertain and unpredictable. See Note 15, Business Combinations, for additional information.

Year Ended December 31, 2011(in thousands):
Asset Description
 
Quoted Prices In Active Markets for Identical Assets (Level 1)
 
Significant Other Observable Inputs
(Level 2)
 
Significant Unobservable Inputs (Level 3)
 
Total
Loss
Intangible asset (exclusive right to use infrastructure and associated water credits)(1) 
 
 
 
 
 
$
84,890

 
$
16,224

Real estate and options to purchase real estate(2)
 
 
 
 
 
$
579

 
$
5,180


(1) 
As of December 31, 2011, the Company had a non-recurring fair value measurement for an intangible asset with a carrying amount of $101.1 million that was written down to its implied fair value of $84.9 million, resulting in an impairment charge of $16.2 million, which was included in earnings for December 31, 2011. The implied fair value was calculated using a discounted cash flow model that incorporated a wide range of assumptions including current asset pricing, price escalation, discount rates, absorption rates, and timing of sales, and costs. Given the dramatic and prolonged slow-down in housing starts and sales in the North Valleys of Reno, Nevada, and the decline in market prices for similar assets, the Company adjusted its assumptions and judgments in the model by reducing the price and lengthening the timing of absorption of water sales from the original projections.

(2) As of December 31, 2011, the Company had a non-recurring fair value measurement for real estate and real estate option contracts with a carrying amount of $5.7 million that were written down to an implied fair value of $579,000 resulting in an impairment charge of $5.2 million, which was included in earnings for the year ended December 31, 2011. The implied fair value was calculated using a discounted cash flow model that incorporated a wide range of assumptions including current asset pricing, and timing of sales, and costs. Given the facts and circumstances in certain of the real estate markets where the Company owns and develops real estate, including declines in market prices for similar assets, the Company adjusted its assumptions and judgments in its cash flow models by reducing prices, increasing costs and lengthening the timing of sales from the original projections.
Fair Value of Financial Instruments
The following table presents the carrying value and fair value of the Company’s financial instruments which are not carried at fair value at December 31, 2013 and December 31, 2012 (in thousands):

 
December 31, 2013
 
December 31, 2012
 
Carrying
Amount
 
Estimated Fair
 Value
 
Carrying
Amount
 
Estimated Fair
 Value
Financial assets:
 
 
 
 
 
 
 
Investments in unconsolidated affiliates held at cost
$
19,380

 
$
19,380

 
$
2,060

 
$
2,060

Investment in unconsolidated affiliate at equity
$
8,697

 
$
8,697

 


 


Financial liabilities:
 
 
 
 
 
 
 
Debt
$
136,767

 
$
145,924

 
$
141,008

 
$
137,024
Schedule of Notional Amounts of Open Derivative Positions
The table below summarizes the notional amount of open derivative positions.
 
December 31, 2013
 
Exchange Traded
 
Non-exchange Traded
 
 
 
(Short)(1)
 
Long(1)
 
(Short)(1)
 
Long(1)
 
Unit of Measure
Futures:
 
 
 
 
 
 
 
 
 
Agricultural Commodities
(23,038
)
 
34,380

 
 
 
 
 
Tons
Natural Gas
 
 
460,000

 
 
 
 
 
MMBtus (2)
Forwards
 
 
 
 
(132,428
)
 
30,367

 
Tons
Swaps
 
 
 
 
 
 
75,000

 
Tons

 
December 31, 2012
 
Exchange Traded
 
Non-exchange Traded
 
 
 
(Short)(1)
 
Long(1)
 
(Short)(1)
 
Long(1)
 
Unit of Measure
Futures:
 
 
 
 
 
 
 
 
 
Agricultural Commodities
(14,242
)
 
26,132

 
 
 
 
 
Tons
Natural Gas

 
65,000

 
 
 
 
 
MMBtus (2)
Forwards
 
 
 
 
(70,897
)
 
11,728

 
Tons
Swaps
 
 
 
 
 
 
19,500

 
Tons

(1) Exchange and non-exchange traded futures, forwards, and swaps are presented on a gross (short) and long position basis.
Effect of Derivative Instruments on the Consolidated Statements of Operations and Comprehensive Income or Loss
The table below summarizes the effect of derivative instruments on the consolidated statements of operations and comprehensive income or loss (in thousands).
 
Gain (Loss) Recognized in Income on Derivatives
 
 
 
December 31,
 
Financial Statement Location
 
2013
 
2012
 
2011
Futures(1)
Cost of canola oil and meal sold
 
$
(1,339
)
 
$
(3,469
)
 
 
Forwards(1)
Cost of canola oil and meal sold
 
(130
)
 
1,637

 
 
Swaps(1)
Cost of canola oil and meal sold
 
(1,283
)
 
3,933

 
 
Total gain (loss)
 
 
$
(2,752
)
 
$
2,101

 

 
 
 
 
 
 
 
 
Futures(2)
Operating and other costs
 

 
$
(708
)
 
 
Forwards(2)
Operating and other costs
 

 
98

 
 
Swaps(2)
Operating and other costs
 

 
1,884

 
$
(2,511
)
Total gain (loss)
 
 
 
 
$
1,274

 
$
(2,511
)

(1) Represents the activity post-completion of the Company’s canola processing plant.

(2) Represents the activity pre-completion of the Company’s canola processing plant.