| |
12. Fair Value of Financial
Instruments
The following tables provide information of the carrying amount, notional
amount and fair value of financial instruments, including derivative
financial instruments. The Company believes it is not practical to
estimate the fair value of investments in other cooperatives due to
the excessive cost involved as there is no established market for
these investments. The carrying value of financial instruments classified
as current assets and current liabilities, such as cash and short-term
investments, receivables, accounts payable and notes and short-term
obligations, approximate fair value due to the short-term maturity
of the instruments. The carrying value of LIBOR-based debt, including
the revolving credit facility, Term A loan and Term B loan, also approximates
fair market value since the interest rate automatically adjusts every
one to three months and credit spreads are not believed to have changed
materially since the facilities were established. The fair value of
fixed rate long-term debt was established through a present value
calculation, based on available information on prevailing market interest
rates for similar securities on the respective reporting dates, and
is summarized at December 31 as follows:
| |
2003 |
2002 |
|
|
Carrying
Amount |
Fair
Value |
Carrying
Amount |
Fair
Value |
|
Senior unsecured notes due 2011
|
$ |
350,000 |
$ |
295,820 |
$ |
350,000 |
$ |
275,170 |
Senior secured notes due 2010
|
175,000 |
177,048 |
– |
– |
MoArk fixed rate debt
|
46,950 |
46,950 |
– |
– |
Capital Securities of Trust Subsidiary due 2028
|
190,700 |
68,026 |
190,700 |
103,302 |
|
The Company enters into futures and options contract derivatives
to reduce risk on the market value of inventory and fixed or partially
fixed purchase and sale contracts. The notional or contractual amount
of derivatives provides an indication of the extent of the Company’s
involvement in such instruments at that time but does not represent
exposure to market risk or future cash requirements under certain
of these instruments. A summary of the notional or contractual amounts
and fair values of these instruments at December 31 is as follows:
|
|
2003 |
2002 |
|
|
Notional
Amount |
Fair
Value |
Notional
Amount |
Fair
Value |
|
Derivative financial instruments:
|
|
|
|
|
|
Commodity futures contracts: |
|
|
|
|
|
Commitments to purchase |
$ |
179,004 |
$ |
13,384 |
$ |
108,359 |
$ |
(4,543) |
|
Commitments to sell |
(43,052 |
) |
(517 |
) |
(56,969 |
) |
(615) |
|
|
|
|
|
|
|
|
|
