Fair Value

6 Months Ended

Jun. 30, 2012

Fair Value [Abstract]

Fair Value

14. Fair Value

Aggregate information concerning assets and liabilities at June 30, 2012 and December 31, 2011 that are measured at fair value using Level 1 and Level 2 inputs on a recurring basis is presented below (in thousands):

	June 30, 2012
				Fair Value Measurements Using
	Total Fair Value Measurements			Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1)			Significant Other  Observable Inputs (Level 2)
Investments classified as current assets:
Investments available for sale:
Bonds and notes:
U.S. Government and agencies	$	187,866		$	187,866		$	–
All other corporates		1,517			1,517			–
Other		91			–			91
Non-current investments:
Investments available for sale:
Bonds and notes:
U.S. Government and agencies		2,541			–			2,541
U.S. Government-Sponsored Enterprises		575,824			–			575,824
All other corporates		99,308			62,733			36,575
Equity securities:
Common stocks:
Banks, trusts and insurance companies		47,771			47,771			–
Industrial, miscellaneous and all other		646,388			646,388			–
Investments in associated companies		1,197,407			1,197,407			–
Total	$	2,758,713		$	2,143,682		$	615,031
Commodity contracts - other current assets	$	6,974		$	6,974		$	–
Other current liabilities:
Commodity contracts	$	(4,453	)	$	–		$	(4,453	)
Other		(1,626	)		(1,626	)		–
Total	$	(6,079	)	$	(1,626	)	$	(4,453	)

	December 31, 2011
				Fair Value Measurements Using
	Total Fair Value Measurements			Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1)			Significant Other  Observable Inputs (Level 2)
Investments classified as current assets:
Investments available for sale:
Bonds and notes:
U.S. Government and agencies	$	139,952		$	139,952		$	–
All other corporates		5,719			5,719			–
Other		306			–			306
Non-current investments:
Investments available for sale:
Bonds and notes:
U.S. Government-Sponsored Enterprises		622,191			–			622,191
All other corporates		66,542			26,703			39,839
Equity securities:
Common stocks:
Banks, trusts and insurance companies		50,971			50,971			–
Industrial, miscellaneous and all other		1,313,688			1,313,688			–
Other		501			–			501
Investments in associated companies		1,198,029			1,198,029			–
Total	$	3,397,899		$	2,735,062		$	662,837
Commodity contracts - other current assets	$	3,816		$	88		$	3,728
Other current liabilities:
Commodity contracts	$	(2,802	)	$	–		$	(2,802	)
Other		(955	)		(955	)		–
Total	$	(3,757	)	$	(955	)	$	(2,802	)

The estimated fair values for securities measured using Level 1 inputs are determined using publicly quoted market prices in active markets.  The Company has a segregated portfolio of mortgage pass-through certificates issued by U.S. Government-Sponsored Enterprises (FHLMC or FNMA) which are carried on the balance sheet at their estimated fair value.  Although the markets that these types of securities trade in are generally active, market prices are not always available for the identical security.  The fair value of these investments are based on observable market data including benchmark yields, reported trades, issuer spreads, benchmark securities, bids and offers.  The estimates of fair value of the portfolios of mortgage pass-through certificates and corporate bonds are considered to be based on Level 2 inputs.

Other than the redeemable noncontrolling interest, the Company did not have significant fair value measurements using unobservable inputs (Level 3) for assets and liabilities measured at fair value on a recurring basis at June 30, 2012 or December 31, 2011.  As more fully discussed in the 2011 10-K, the minority owners of National Beef have the right to require the Company to purchase their interests for fair value under certain specified circumstances in the future.  At December 31, 2011, the fair value of the redeemable noncontrolling interests was determined based on the amount paid by the Company for its interest.

The following table reconciles National Beef's redeemable noncontrolling interest activity during the six months ended June 30, 2012 (in thousands):

As of January 1, 2012	$	235,909
Income allocated to redeemable noncontrolling interests		5,936
Distributions to redeemable noncontrolling interests		(6,289	)
Increase in fair value of redeemable noncontrolling interests
charged to additional paid-in capital		10,990
Balance, June 30, 2012	$	246,546

At acquisition, the Company prepared a projection of future cash flows of National Beef, which was used along with other information to allocate the purchase price to National Beef's individual assets and liabilities.  At June 30, 2012, the Company calculated the fair value of the redeemable noncontrolling interest by updating its estimate of future cash flows, as well as considering other market comparable information deemed appropriate.  The projected future cash flows consider estimated revenue growth, cost of sales changes, capital expenditures and other unobservable inputs.  However, the most significant unobservable inputs affecting the estimate of fair value are the discount rate (12.01%) and the terminal growth rate (2%) used to calculate the capitalization rate of the terminal value.

The table below is a sensitivity analysis which shows the fair value of the redeemable noncontrolling interests using the discount and the terminal growth rates assumed by the Company and fair values under different rate assumptions as of June 30, 2012 (dollars in millions):

	Discount Rates
		11.76	%		12.01	%		12.26	%
Terminal Growth Rates
1.75%	$	251.2		$	243.4		$	236.1
2.00%	$	254.4		$	246.5		$	238.9
2.25%	$	257.8		$	249.7		$	241.9

The projection of future cash flows is updated with input from National Beef personnel and the Company's personnel who originally prepared the projection in connection with its acquisition valuation.  The estimate is reviewed by personnel at the Company's corporate office, and is later reviewed with the Company's audit committee as part of the normal process for the preparation of the Company's quarterly and annual financial statements.

At June 30, 2012 and December 31, 2011, the Company did not have significant assets and liabilities that were measured at fair value on a nonrecurring basis.

The following table presents fair value information about certain financial instruments, whether or not recognized on the balance sheet.  Fair values are determined as described below.  These techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows.  The fair value amounts presented do not purport to represent and should not be considered representative of the underlying "market" or franchise value of the Company.  The methods and assumptions used to estimate the fair values of each class of the financial instruments described below are as follows:

(a) Investments:  The fair values of marketable equity securities and fixed maturity securities (which include securities sold not owned) are substantially based on quoted market prices.

Other non-current investments which do not trade publicly include private equity fund investments where the Company's voting interest isn't large enough to apply the equity method of accounting, a portfolio of non-agency mortgage-backed bond securitizations where the underlying assets are various individual mortgage loans, the zero-coupon component of the FMG Note and various other non-publicly traded investments.  For the investments in private equity funds and the FMG zero-coupon note, the Company has concluded that the carrying amount approximates the fair value of these investments based primarily on reviews of issuer financial statements or statements of net asset value.  The fair values of the Company's other non-publicly traded investments that are principally accounted for under the cost method were assumed to be at least equal to the carrying amount.  For these non-publicly traded investments, the Company reviews cash flows and/or other information obtained from investee companies on a regular basis to determine if impairment charges are required.

(b) Cash and cash equivalents:  For cash equivalents, the carrying amount approximates fair value.

(c) Notes receivable:  The fair values of variable rate notes receivable are estimated to be the carrying amount.

(d) Long-term and other indebtedness:  The fair values of non-variable rate debt are estimated using quoted market prices and estimated rates that would be available to the Company for debt with similar terms.  The fair value of variable rate debt is estimated to be the carrying amount.

(e) Redeemable noncontrolling interests:  Redeemable noncontrolling interests at June 30, 2012 and at December 31, 2011 were valued as described above.

The carrying amounts and estimated fair values of the Company's financial instruments at June 30, 2012 and December 31, 2011 are as follows (in thousands):

	June 30, 2012				December 31, 2011
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value
Financial Assets:
Investments:
Current	$	193,742	$	193,742	$	150,135	$	150,135
Non-current		1,542,199		1,542,199		2,226,875		2,226,875
Cash and cash equivalents		186,665		186,665		168,490		168,490
Notes receivable:
Current		1,959		1,959		1,675		1,675
Non-current		12,998		12,998		13,531		13,531
Commodity contracts		6,974		6,974		3,816		3,816
Financial Liabilities:
Indebtedness:
Current		411,097		411,097		447,612		447,612
Non-current		1,370,845		1,461,272		1,875,571		1,944,879
Securities sold not owned		1,626		1,626		955		955
Commodity contracts		4,453		4,453		2,802		2,802
Redeemable noncontrolling interests		246,546		246,546		235,909		235,909