Financial Instruments

9 Months Ended

Sep. 30, 2020

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following table presents information about our financial assets that are measured at fair value on a recurring basis, and indicates the fair value hierarchy of the valuation techniques we utilize to determine such fair value at September 30, 2020 and December 31, 2019 (in thousands).


	Fair Value as of September 30, 2020
	Level 1		Level 2		Level 3		Total

Equity securities	$	31	$	70	$	—	$	101

Total	$	31	$	70	$	—	$	101


	Fair Value as of December 31, 2019
	Level 1		Level 2		Level 3		Total

Equity securities	$	26	$	43	$	—	$	69
Lumber derivative contracts	10		—		—		10
Total	$	36	$	43	$	—	$	79

The investment in equity securities consists of common stock of publicly traded companies. The Company occasionally enters into lumber derivative contracts in order to protect its gross profit margins from fluctuations caused by volatility in lumber prices. At September 30, 2020, the Company had no lumber derivative contracts.

The level 1 and 2 securities and derivative contracts are included in equity securities and other assets, respectively, on the Company’s condensed unaudited consolidated balance sheet. The fair values are based on the closing prices observed on September 30, 2020. During the nine months ended September 30, 2020 and September 30, 2019, the Company recorded net unrealized gain of $33 thousand and $29 thousand, respectively, in the other income (expenses) of condensed unaudited consolidated statement of operations.

We did not reclassify any investments between levels in the fair value hierarchy during the nine months ended September 30, 2020.

The fair values of the Company’s revolving credit facility approximate carrying value due to the variable rate nature of these borrowings.

- 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.

+ References + Details