5. Fair Value MeasurementsThe Company’s financial instruments consist of cash and cash equivalents, marketable securities, trade and supplier advances receivables, assets of the rabbi trust, AP, deferred compensation liabilities, and debt. The carrying amount of cash, trade and supplier advances receivables, and AP approximate fair value due to the short-term maturity. The estimated fair value of long-term debt is based on borrowing rates available during the period to the Company for similar debt issues. The fair value approximated the carrying value of long-term debt at the report date. In accordance with applicable accounting standards, the Company utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:
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Level 1 |
Observable inputs such as quoted market prices in active markets for identical assets or liabilities. |
Level 2 |
Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. |
Level 3 |
Unobservable inputs that reflect the reporting entity’s own assumptions. The fair value for such assets and liabilities is generally determined using pricing models, discounted cash flow methodologies, or similar techniques that incorporate the assumptions a market participant would use in pricing the asset or liability. |
When more than one level of input is used to determine the fair value, the financial instrument is classified as Level 1, 2 or 3 according to the lowest level input that has a significant impact on the fair value measurement. The Company performs a review of the fair value hierarchy classification on an annual basis. Changes in the observability of valuation inputs may result in a reclassification of certain financial assets or financial liabilities within the fair value hierarchy. Assets and Liabilities Measured at Fair Value on a Recurring BasisThe Company evaluates its financial assets and liabilities subject to fair value measurements on a recurring basis to determine the appropriate level to classify them for each reporting period. This determination requires significant judgment. The following tables present information about the Company’s assets and liabilities that are measured at fair value on a recurring basis using the above categories, as of the periods presented.
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As of March 31, 2025 |
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Description |
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Level 1 |
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Level 2 |
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Level 3 |
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Total |
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Cash equivalents |
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Money market mutual funds (1) |
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$ |
85,709 |
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$ |
- |
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$ |
- |
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$ |
85,709 |
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Rabbi trust-owned life insurance policies (at cash surrender value) (2) |
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- |
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2,731 |
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- |
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2,731 |
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Total assets |
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$ |
85,709 |
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$ |
2,731 |
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$ |
- |
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$ |
88,440 |
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Other long-term liabilities |
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Deferred compensation |
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$ |
- |
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$ |
2,373 |
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$ |
- |
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2,373 |
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Total liabilities |
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$ |
- |
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$ |
2,373 |
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$ |
- |
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$ |
2,373 |
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As of December 31, 2024 |
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Description |
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Level 1 |
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Level 2 |
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Level 3 |
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Total |
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Cash equivalents |
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Money market mutual funds (1) |
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$ |
72,686 |
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$ |
- |
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$ |
- |
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$ |
72,686 |
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Rabbi trust-owned life insurance policies (at cash surrender value) (2) |
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- |
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2,756 |
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- |
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2,756 |
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Total assets |
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$ |
72,686 |
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$ |
2,756 |
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$ |
- |
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$ |
75,442 |
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Other long-term liabilities |
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Deferred compensation |
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$ |
- |
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$ |
2,393 |
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$ |
- |
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2,393 |
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Total liabilities |
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$ |
- |
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$ |
2,393 |
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$ |
- |
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$ |
2,393 |
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________________
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(1) |
Money market funds are classified as cash equivalents in the Company’s unaudited consolidated balance sheets. As short-term, highly liquid investments readily convertible to known amounts of cash with remaining maturities of three months or |
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less at the time of purchase, the Company’s cash equivalent money market funds have carrying values that approximate fair value. |
(2) |
Fair value of insurance policies represents their cash surrender value based on the underlying investments in the account which is determined based on quoted prices for identical or similar financial instruments in active markets. |
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