SEABOARD CORP /DE/ - Quarter Report: 2012 June (Form 10-Q)

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

 

FORM 10-Q

 

(Mark One)

 

{ X }                     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended June 30, 2012

 

OR

 

{    }                      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from_____________________________ to _____________________________

 

Commission File Number 1-3390

 

(Exact name of registrant as specified in its charter)

 

 

 

(913) 676-8800

(Registrant’s telephone number, including area code)

 

(Former name, former address and former fiscal year, if changed since last report.)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  X   No ___

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes  X   No ___

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large Accelerated Filer [ X ]		Accelerated Filer [   ]
Non-Accelerated Filer   [   ] (Do not check if a smaller reporting company)		Smaller Reporting Company [   ]

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ___   No  X .

 

There were 1,202,122 shares of common stock, $1.00 par value per share, outstanding on July 27, 2012.

 

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PART I – FINANCIAL INFORMATION

Item 1.  Financial Statements

 

SEABOARD CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income

(Thousands of dollars except share and per share amounts)

(Unaudited)

 

					Three Months Ended													Six Months Ended
					June 30,						July 2,							June 30,						July 2,
					2012						2011							2012						2011
Net sales:
Products (includes sales to affiliates of $194,836, $189,807, $363,184 and $352,075)					$	1,194,991					$	1,128,574						$	2,385,813					$	2,326,196
Services					248,354						245,343							493,109						483,555
Other					67,248						24,670							102,784						57,015
Total net sales					1,510,593						1,398,587							2,981,706						2,866,766
Cost of sales and operating expenses:
Products					1,108,998						1,003,292							2,176,963						2,053,089
Services					226,407						235,274							446,924						441,492
Gain on sale of power generating facilities					-						(51,423		)					-						(51,423		)
Other					54,622						21,020							82,659						48,078
Total cost of sales and operating expenses					1,390,027						1,208,163							2,706,546						2,491,236
Gross income					120,566						190,424							275,160						375,530
Selling, general and administrative expenses					59,843						53,459							121,081						108,289
Operating income					60,723						136,965							154,079						267,241
Other income (expense):
Interest expense					(3,231		)				(1,506		)					(4,938		)				(3,022		)
Interest income					3,044						2,047							5,163						4,344
Interest income from affiliates					5,033						4,014							10,250						7,847
Income from affiliates					9,816						5,365							19,385						11,527
Other investment income (loss), net					(969		)				286							2,490						2,626
Foreign currency gain (loss), net					(3,849		)				2,381							(585		)				7,145
Miscellaneous, net					(4,005		)				(2,952		)					(2,656		)				(2,164		)
Total other income, net					5,839						9,635							29,109						28,303
Earnings before income taxes					66,562						146,600							183,188						295,544
Income tax expense					(16,870		)				(33,236		)					(51,496		)				(65,487		)
Net earnings					$	49,692					$	113,364						$	131,692					$	230,057
Less: Net loss attributable to noncontrolling interests					405						122							614						293
Net earnings attributable to Seaboard					$	50,097					$	113,486						$	132,306					$	230,350
Earnings per common share		$	41.58					$	93.34						$	109.63					$	189.45
Other comprehensive income (loss), net of income tax benefit of $1,752, $114, $2,565 and $409:
Foreign currency translation adjustment					(3,601		)				(998		)					(3,141		)				(1,591		)
Unrealized gain (loss) on investments					(313		)				704							1,171						803
Unrealized loss on cash flow hedges					-						-							(91		)				-
Unrecognized pension cost					2,243						730							3,320						1,071
Other comprehensive income (loss), net of tax					$	(1,671	)				$	436						$	1,259					$	283
Comprehensive income					48,021						113,800							132,951						230,340
Less: Comprehensive loss attributable to noncontrolling interests					422						120							575						278
Comprehensive income attributable to Seaboard					$	48,443					$	113,920						$	133,526					$	230,618
Average number of shares outstanding					1,204,837						1,215,879							1,206,871						1,215,879

 

See accompanying notes to condensed consolidated financial statements.

 

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SEABOARD CORPORATION AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(Thousands of dollars)

(Unaudited)

 

		June 30,			December 31,
		2012			2011
Assets
Current assets:
Cash and cash equivalents		$	48,126		$	71,510
Short-term investments		440,037			323,256
Receivables, net of allowance		472,774			477,209
Inventories		606,214			644,930
Deferred income taxes		23,344			23,203
Other current assets		99,576			91,934
Total current assets		1,690,071			1,632,042
Investments in and advances to affiliates		384,071			364,840
Net property, plant and equipment		812,501			796,822
Notes receivable from affiliate		116,096			110,903
Goodwill		43,218			40,628
Intangible assets, net		19,826			19,496
Other assets		44,384			41,997
Total assets		$	3,110,167		$	3,006,728
Liabilities and Stockholders’ Equity
Current liabilities:
Notes payable to banks		$	30,354		$	16,219
Current maturities of long-term debt		44,183			40,885
Accounts payable		146,022			151,869
Deferred revenue		55,381			29,147
Deferred revenue from affiliates		10,079			27,806
Other current liabilities		246,980			295,483
Total current liabilities		532,999			561,409
Long-term debt, less current maturities		139,814			116,367
Deferred income taxes		47,593			66,300
Other liabilities		187,622			183,185
Total non-current and deferred liabilities		375,029			365,852
Stockholders’ equity:
Common stock of $1 par value,
Authorized 1,250,000 shares;
issued and outstanding 1,202,472 and 1,210,597 shares		1,202			1,211
Accumulated other comprehensive loss		(154,806		)	(156,065		)
Retained earnings		2,350,143			2,233,778
Total Seaboard stockholders’ equity		2,196,539			2,078,924
Noncontrolling interests		5,600			543
Total equity		2,202,139			2,079,467
Total liabilities and stockholders’ equity		$	3,110,167		$	3,006,728

 

See accompanying notes to condensed consolidated financial statements.

 

3

 

SEABOARD CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(Thousands of dollars)

(Unaudited)

 

 

		Six Months Ended
		June 30,			July 2,
		2012			2011
Cash flows from operating activities:
Net earnings		$	131,692		$	230,057
Adjustments to reconcile net earnings to cash from operating activities:
Depreciation and amortization		44,333			40,417
Gain on sale of power generating facilities		-			(51,423		)
Gain from sale of fixed assets		(2,951		)	(503		)
Deferred income taxes		(17,689		)	(15,564		)
Pay-in-kind interest and accretion on note receivable from affiliate		(5,758		)	(5,142		)
Income from affiliates		(19,385		)	(11,527		)
Other investment income, net		(2,490		)	(2,626		)
Other		3,029			1,662
Changes in current assets and liabilities, net of business acquired:
Receivables, net of allowance		(15,590		)	(74,689		)
Inventories		83,692			(91,316		)
Other current assets		(1,421		)	65,140
Current liabilities, exclusive of debt		(64,732		)	(88,516		)
Other, net		10,523			7,489
Net cash from operating activities		143,253			3,459
Cash flows from investing activities:
Purchase of short-term investments		(434,890		)	(99,984		)
Proceeds from the sale of short-term investments		300,911			101,308
Proceeds from the maturity of short-term investments		19,993			11,973
Investments in and advances to affiliates, net		(6,791		)	(6,351		)
Capital expenditures		(68,056		)	(76,489		)
Proceeds from the sale of fixed assets		5,839			953
Proceeds from the sale of power generating facilities		-			58,103
Principal payments received on long-term notes receivable from affiliate		564			-
Purchase of long-term investments		(6,525		)	(308		)
Acquisition of business, net of cash acquired		(2,825		)	-
Other, net		545			164
Net cash from investing activities		(191,235		)	(10,631		)
Cash flows from financing activities:
Notes payable to banks, net		14,135			13,251
Proceeds from the issuance of long-term debt		32,682			16,056
Principal payments of long-term debt		(5,928		)	(195		)
Repurchase of common stock		(15,949		)	-
Other, net		208			157
Net cash from financing activities		25,148			29,269
Effect of exchange rate change on cash		(550		)	1,307
Net change in cash and cash equivalents		(23,384		)	23,404
Cash and cash equivalents at beginning of year		71,510			41,124
Cash and cash equivalents at end of period		$	48,126		$	64,528

 

See accompanying notes to condensed consolidated financial statements.

 

4

 

SEABOARD CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

Note 1 – Accounting Policies and Basis of Presentation

 

The Condensed Consolidated Financial Statements include the accounts of Seaboard Corporation and its domestic and foreign subsidiaries (“Seaboard”).  All significant intercompany balances and transactions have been eliminated in consolidation.  Seaboard’s investments in non-consolidated affiliates are accounted for by the equity method.  The unaudited Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements of Seaboard for the year ended December 31, 2011 as filed in its Annual Report on Form 10-K.  Seaboard’s first three quarterly periods include approximately 13 weekly periods ending on the Saturday closest to the end of March, June and September.  Seaboard’s year-end is December 31.

 

The accompanying unaudited Condensed Consolidated Financial Statements include all adjustments (consisting only of normal recurring accruals) which, in the opinion of management, are necessary for a fair presentation of financial position, results of operations and cash flows.  Results of operations for interim periods are not necessarily indicative of results to be expected for a full year.  As Seaboard conducts its commodity trading business with third parties, consolidated subsidiaries and non-consolidated affiliates on an interrelated basis, gross margin on non-consolidated affiliates cannot be clearly distinguished without making numerous assumptions primarily with respect to mark-to-market accounting for commodity derivatives.

 

Use of Estimates

The preparation of the Condensed Consolidated Financial Statements in conformity with U.S. generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the Condensed Consolidated Financial Statements, and the reported amounts of revenues and expenses during the reporting period.  Significant items subject to such estimates and assumptions include those related to allowance for doubtful accounts, valuation of inventories, impairment of long-lived assets, goodwill and other intangible assets, income taxes and accrued pension liability.  Actual results could differ from those estimates.

 

Supplemental Non-Cash Transactions

As discussed in Note 9, effective January 1, 2012, Seaboard began consolidation accounting and discontinued the equity method of accounting for their investment in PS International, LLC with Seaboard’s ownership interest increasing from 50% to 70% as a result of Seaboard’s payment of $3,660,000 in January 2012. Total cash paid, net of cash acquired was $2,825,000 and increased working capital by $14,419,000, fixed assets by $163,000, goodwill by $2,590,000, intangible assets by $621,000, other long-term assets by $96,000, non-controlling interest by $5,649,000 and decreased investment in and advances to affiliates by $9,415,000. See Note 9 for additional information.

 

As discussed in Note 9, Seaboard had a note receivable from an affiliate which accrues pay-in-kind interest income. Seaboard recognized $2,940,000 and $5,758,000, respectively, of non-cash, pay-in-kind interest income and accretion of discount for the three and six months ended June 30, 2012 and $2,621,000 and $5,142,000, respectively, for the three and six months ended July 2, 2011, respectively, related to this note receivable.

 

Recently Adopted Accounting Standards

In May 2011, the Financial Accounting Standards Board (FASB) issued guidance to amend the requirements related to fair value measurement which changed the wording used to describe many requirements in GAAP for measuring fair value and for disclosing information about fair value measurements. Additionally, the amendments clarify the FASB’s intent about the application of existing fair value measurement requirements. Seaboard adopted this guidance on January 1, 2012.  The adoption of this guidance did not have a material impact on Seaboard’s financial position or net earnings.

 

In June 2011, the FASB issued guidance to revise the manner in which entities present comprehensive income in the financial statements.  The new guidance removed the footnote presentation option and required entities to report components of comprehensive income in either a continuous statement of comprehensive income or two separate but consecutive statements.  Seaboard adopted this guidance in the first quarter of 2012.  The adoption of this guidance did not have an impact on Seaboard’s financial position or net earnings.

 

In September 2011, the FASB issued guidance to allow entities the option of performing a qualitative assessment to test goodwill for impairment.  This guidance permits an entity to first perform a qualitative assessment to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying value.  If it is concluded that this is the case, it is necessary to perform the currently prescribed two-step goodwill

 

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impairment test.  Otherwise, the two-step goodwill impairment test is not required.  Seaboard adopted this guidance on January 1, 2012. The adoption of this guidance did not have an impact on Seaboard’s financial position or net earnings.

 

In July 2012, the FASB issued guidance to allow entities the option of performing a qualitative assessment to test indefinite-lived intangible assets for impairment.  This guidance permits an entity to first perform a qualitative assessment to determine whether it is more likely than not that the fair value of the intangible asset is less than its carrying value.  If it is concluded that this is the case, it is necessary to calculate the fair value of the intangible asset.  Otherwise, calculating the fair value of the intangible asset is not required.  Early adoption is permitted and Seaboard adopted this guidance on June 30, 2012. The adoption of this guidance did not have an impact on Seaboard’s financial position or net earnings.

 

Note 2– Investments

 

Seaboard’s short-term investments are treated as either available-for-sale securities or trading securities.  All of Seaboard’s available-for-sale and trading securities are classified as current assets as they are readily available to support Seaboard’s current operating needs.  Available-for-sale securities are recorded at their estimated fair value with unrealized gains and losses reported, net of tax, as a separate component of accumulated other comprehensive loss.  Trading securities are recorded at their estimated fair value with unrealized gains and losses reflected in other investment income (loss), net.  At June 30, 2012 and December 31, 2011, amortized cost and estimated fair value were not materially different for these investments.

 

At June 30, 2012, money market deposit accounts included $6,106,000 denominated in Canadian dollars and money market funds included $5,214,000 denominated in Euros.  As of June 30, 2012, the trading securities primarily consisted of high yield debt securities.  Unrealized (losses) gains related to trading securities for the three and six months ended June 30, 2012 were $(135,000) and $656,000, respectively, and $(203,000) and $1,366,000 for the three and six months ended July 2, 2011, respectively.

 

The following is a summary of the amortized cost and estimated fair value of short-term investments for both available-for-sale and trading securities at June 30, 2012 and December 31, 2011.

 

		2012						2011
		Amortized			Fair			Amortized			Fair
(Thousands of dollars)		Cost			Value			Cost			Value
Corporate bonds		$	134,965		$	136,258		$	88,589		$	89,146
Money market funds and deposit accounts		101,011			101,011			139,420			139,420
Enhanced cash mutual fund		50,000			50,072			-			-
Collateralized mortgage obligations		24,859			24,944			14,915			15,011
Fixed rate municipal notes and bonds		23,553			23,592			17,718			17,788
U.S. Government agency securities		22,424			22,572			9,720			9,757
U.S. Treasury securities		20,458			20,526			4,848			4,905
Emerging markets debt mutual fund		17,693			17,035			17,693			16,399
Asset backed debt securities		15,499			15,514			3,533			3,533
Other		680			683			1,480			1,484
Total available-for-sale short-term investments		411,142			412,207			297,916			297,443
High yield trading debt securities		21,129			22,084			20,155			20,750
Emerging markets trading debt mutual fund		2,966			2,919			2,620			2,487
Emerging markets trading debt securities		2,004			2,073			2,444			2,355
Other trading debt securities		684			754			218			221
Total available-for-sale and trading short-term investments		$	437,925		$	440,037		$	323,353		$	323,256

 

The following table summarizes the estimated fair value of fixed rate securities designated as available-for-sale classified by the contractual maturity date of the security as of June 30, 2012.

 

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(Thousands of dollars)		2012
Due within one year		$	44,983
Due after one year through three years		88,072
Due after three years		67,516
Total fixed rate securities		$	200,571

 

In addition to its short-term investments, Seaboard also has trading securities related to Seaboard’s deferred compensation plans classified in other current assets on the Condensed Consolidated Balance Sheets.  See Note 5 to the Condensed Consolidated Financial Statements for information on the types of trading securities held related to the deferred compensation plans.

 

Note 3 – Inventories

 

The following is a summary of inventories at June 30, 2012 and December 31, 2011:

 

		June 30,			December 31,
(Thousands of dollars)		2012			2011
At lower of LIFO cost or market:
Live hogs and materials		$	225,877		$	228,624
Fresh pork and materials		29,777			29,426
		255,654			258,050
LIFO adjustment		(68,383		)	(57,783		)
Total inventories at lower of LIFO cost or market		187,271			200,267
At lower of FIFO cost or market:
Grains and oilseeds		218,840			251,839
Sugar produced and in process		53,750			78,730
Other		77,093			63,449
Total inventories at lower of FIFO cost or market		349,683			394,018
Grain, flour and feed at lower of weighted average cost or market		69,260			50,645
Total inventories		$	606,214		$	644,930

 

Note 4 – Income Taxes

 

Seaboard’s tax returns are regularly audited by federal, state and foreign tax authorities, which may result in adjustments.  Seaboard’s 2010 U.S. income tax return is currently under IRS examination.  There have not been any material changes in unrecognized income tax benefits since December 31, 2011.  Interest related to unrecognized tax benefits and penalties was not material for the six months ended June 30, 2012.

 

Note 5 –Derivatives and Fair Value of Financial Instruments

 

U.S. GAAP discusses valuation techniques, such as the market approach (prices and other relevant information generated by market conditions involving identical or comparable assets or liabilities), the income approach (techniques to convert future amounts to single present amounts based on market expectations including present value techniques and option-pricing), and the cost approach (amount that would be required to replace the service capacity of an asset which is often referred to as replacement cost).  U.S. GAAP 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:

 

Level 1: Observable inputs such as unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

 

Level 2:   Inputs other than quoted prices included within Level 1 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.

 

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The following table shows assets and liabilities measured at fair value on a recurring basis as of June 30, 2012 and also the level within the fair value hierarchy used to measure each category of assets.  Seaboard uses the end of the reporting period to determine if there were any transfers between levels.  There were no transfers between levels that occurred in the first six months of 2012.  The trading securities classified as other current assets below are assets held for Seaboard’s deferred compensation plans.

 

		Balance
		June 30,
(Thousands of dollars)		2012			Level 1			Level 2			Level 3
Assets:
Available-for-sale securities - short-term investments:
Corporate bonds		$	136,258		$	-		$	136,258		$	-
Money market funds and deposit accounts		101,011			101,011			-			-
Enhanced cash mutual fund		50,072			50,072			-			-
Collateralized mortgage obligations		24,944			-			24,944			-
Fixed rate municipal notes and bonds		23,592			-			23,592			-
U.S. Government agency securities		22,572			-			22,572			-
U.S. Treasury securities		20,526			-			20,526			-
Emerging markets debt mutual fund		17,035			17,035			-			-
Asset backed debt securities		15,514			-			15,514			-
Other		683			-			683			-
Trading securities - short-term investments:
High yield debt securities		22,084			-			22,084			-
Emerging markets trading debt mutual fund		2,919			2,919			-			-
Emerging markets trading debt securities		2,073			-			2,073			-
Other debt securities		754			-			754			-
Trading securities - other current assets:
Domestic equity securities		16,667			16,667			-			-
Foreign equity securities		6,232			3,573			2,659			-
Fixed income mutual funds		5,011			5,011			-			-
Money market funds		3,078			3,078			-			-
U.S. Government agency securities		2,402			-			2,402			-
U.S. Treasury securities		1,433			-			1,433			-
Corporate bonds		62			-			62			-
Other		276			233			43			-
Derivatives:
Commodities(1)		11,732			11,732			-			-
Foreign currencies		647			-			647			-
Total Assets		$	487,577		$	211,331		$	276,246		$	-
Liabilities:
Derivatives:
Commodities(1)		$	11,917		$	11,917		$	-		$	-
Interest rate swaps		13,566			-			13,566			-
Foreign currencies		1,133			-			1,133			-
Total Liabilities		$	26,616		$	11,917		$	14,699		$	-
(1) Seaboard’s commodities derivative assets and liabilities are presented in the Condensed Consolidated Balance Sheets on a net basis, including netting the derivatives with the related margin accounts.  As of June 30, 2012, the commodity derivatives had a margin account balance of $8,788,000 resulting in a net other current asset on the Condensed Consolidated Balance Sheets of $8,603,000.

 

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The following table shows assets and liabilities measured at fair value on a recurring basis as of December 31, 2011 and also the level within the fair value hierarchy used to measure each category of assets.

 

		Balance
		December 31,
(Thousands of dollars)		2011			Level 1			Level 2			Level 3
Assets:
Available-for-sale securities - short-term investments:
Money market funds		$	139,420		$	139,420		$	-		$	-
Corporate bonds		89,146			-			89,146			-
Fixed rate municipal notes and bonds		17,788			-			17,788			-
Emerging markets debt mutual fund		16,399			16,399			-			-
Collateralized mortgage obligations		15,011			-			15,011			-
U.S. Government agency securities		9,757			-			9,757			-
U.S. Treasury securities		4,905			-			4,905			-
Asset backed debt securities		3,533			-			3,533			-
Other		1,484			-			1,484			-
Trading securities - short term investments:
High yield debt securities		20,750			-			20,750			-
Emerging markets trading debt mutual fund		2,487			2,487			-			-
Emerging markets trading debt securities		2,355			-			2,355			-
Other debt securities		221			-			221			-
Trading securities - other current assets:
Domestic equity securities		13,563			13,563			-			-
Foreign equity securities		7,490			3,991			3,499			-
Money market funds		4,521			4,521			-			-
Fixed income mutual funds		4,483			4,483			-			-
U.S. Government agency securities		2,085			-			2,085			-
U.S. Treasury securities		1,474			-			1,474			-
Corporate bonds		72			-			72			-
Other		236			159			77			-
Derivatives:
Commodities(1)		5,144			5,144			-			-
Foreign currencies		2,247			-			2,247			-
Total Assets		$	364,571		$	190,167		$	174,404		$	-
Liabilities:
Derivatives:
Commodities(1)		$	5,529		$	5,529		$	-		$	-
Interest rate swaps		11,268			-			11,268			-
Foreign currencies		3,380			-			3,380			-
Total Liabilities		$	20,177		$	5,529		$	14,648		$	-
(1)  Seaboard’s commodities derivative assets and liabilities are presented in the Condensed Consolidated Balance Sheets on a net basis, including netting the derivatives with the related margin accounts.  As of December 31, 2011, the commodity derivatives had a margin account balance of $8,619,000 resulting in a net other current asset on the Condensed Consolidated Balance Sheets of $8,234,000.

 

Financial instruments consisting of cash and cash equivalents, net receivables, notes payable, and accounts payable are carried at cost, which approximates fair value, as a result of the short-term nature of the instruments.

 

The fair value of long-term debt is estimated by comparing interest rates for debt with similar terms and maturities. If Seaboard’s debt was measured at fair value on its Condensed Consolidated Balance Sheets, it would have been classified as level 2 in the fair value hierarchy. The amortized cost and estimated fair values of investments and long-term debt at June 30, 2012 and December 31, 2011 are presented below.

 

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