Fair Value Measurements

12 Months Ended

Dec. 31, 2018

3. Fair Value Measurements

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 an unqualified Supplemental Executive Retirement Plan (“SERP”). The financial assets held in the SERP also constitute a liability of the Company for financial reporting purposes. The Company’s subsidiaries also occasionally enter into foreign currency exchange contracts to mitigate exposure to fluctuations in currency exchange rates.

For cash and cash equivalents, trade receivables, other receivables and accounts payable, the carrying amount approximates the fair value because of the short-term nature of these 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.

As indicated in the tables below, the Company has determined that its financial assets and liabilities at December 31, 2018 and 2017 are level 1 and level 2 in the fair value hierarchy:

	December 31, 2018
	Level 1		Level 2		Total
Financial Assets:
Trading equity securities:
SERP money market fund	$	229	$	--	$	229
SERP mutual funds		4,755		--		4,755
Preferred stocks		248		--		248
Trading debt securities:
Corporate bonds		5,398		--		5,398
Municipal bonds		--		1,546		1,546
Floating rate notes		1,300		--		1,300
U.S. Treasury bills		2,210		--		2,210
Asset-backed securities		--		442		442
Other		--		708		708
Derivative financial instruments		--		333		333
Total financial assets	$	14,140	$	3,029	$	17,169
Financial Liabilities:
SERP liabilities	$	--	$	6,641	$	6,641
Total financial liabilities	$	--	$	6,641	$	6,641

	December 31, 2017
	Level 1		Level 2		Total
Financial Assets:
Trading equity securities:
SERP money market fund	$	124	$	--	$	124
SERP mutual funds		4,839		--		4,839
Preferred stocks		364		--		364
Trading debt securities:
Corporate bonds		5,661		--		5,661
Municipal bonds		--		1,912		1,912
Floating rate notes		753		--		753
U.S. Treasury bills		1,030		--		1,030
Asset-backed securities		--		526		526
Other		--		968		968
Total financial assets	$	12,771	$	3,406	$	16,177
Financial Liabilities:
SERP liabilities	$	--	$	8,552	$	8,552
Derivative financial instruments		--		112		112
Total financial liabilities	$	--	$	8,664	$	8,664

The Company reevaluates the volume of trading activity for each of its investments at the end of each reporting period and adjusts the level within the fair value hierarchy as needed.

- 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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