Fair Values Of Assets And Liabilities

9 Months Ended

Sep. 30, 2011

Fair Values Of Assets And Liabilities

Fair Values Of Assets And Liabilities

7.   FAIR VALUES OF ASSETS AND LIABILITIES

Fair Value Hierarchy

In accordance with ASC 820, "Topic 820 – Fair Value Measurement," Chugach groups its financial assets and liabilities measured at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. These levels are:

Level 1 – Valuation is based upon quoted prices for identical instruments traded in active exchange markets, such as the New York Stock Exchange.Level 1 also includes U.S. Treasury and federal agency securities, which are traded by dealers or brokers in active markets.Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities.

Level 2 – Valuation is based upon quoted prices for similar instruments in active markets, 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 in the market.

Level 3 – Valuation is generated from model-based techniques that use significant assumptions not observable in the market. These unobservable assumptions reflect Chugach's estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include use of option pricing models, discounted cash flow models and similar techniques.

The table below presents the balance of Chugach's non-qualified deferred compensation plan and Overnight Repurchase Agreement assets measured at fair value on a recurring basis at September 30, 2011, and December 31, 2010.

	Total	Level 1	Level 2	Level 3
September 30, 2011
Deferred compensation	$375,151	$375,151	$0	$0
Repurchase agreement	$8,669,199	$0	$8,669,199	$0
Restricted cash equivalents	$121,991,586	$0	$121,991,586	$0
December 31, 2010
Deferred compensation	$395,833	$395,833	$0	$0
Repurchase agreement	$12,008,821	$0	$12,008,821	$0

Chugach had no Level 3 assets or liabilities measured at fair value on a recurring basis. Fair value estimates are dependent upon subjective assumptions and involve significant uncertainties resulting in variability in estimates with changes in assumptions. The fair value of long-term debt has been determined using discounted future cash flows at borrowing rates currently available to Chugach. The fair value of cash, accounts receivable and payable, and other short-term monetary assets and liabilities approximate carrying value due to their short-term nature.

Fair Value of Financial Instruments

The estimated fair values (in thousands) of the long-term obligations included in the financial statements at September 30, 2011, are as follows:

	Carrying Value	Fair Value
Long-term obligations  (including current installments)	$429,736	$445,811

Level 1 measurement was used to determine the fair value of the 2002 Series A Bonds. 

Level 2 measurements were used to determine all other long-term obligations.