Notes Receivable from Participants
Notes receivable from participants
are measured at their unpaid principal balance plus any accrued but unpaid interest. Interest income is recorded on an accrual basis. Related fees are recorded as administrative expenses and are expensed when they are incurred. No allowance for
credit losses has been recorded as of December 31, 2018 and 2017. If a participant ceases to make loan repayments, such loans are considered delinquent loans, or delinquent participant notes receivable, as specified in the Plan. Delinquent
participant notes receivable are reclassified as distributions based upon the terms of the plan document.
Payment of
Benefits
Benefit payments are recorded when paid.
New Accounting Pronouncements
In August 2018, Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU,
No. 2018-13,
Fair Value Measurement
(Topic 820):
Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurements,
or ASU
2018-13
.
ASU
2018-13
eliminates, amends and adds disclosure requirements under Topic 820, including (i) removal of certain disclosure requirements regarding
transfers between Levels 1 and 2 of the fair value hierarchy and timing thereof and the valuation processes for Level 3 measurements (ii) modified requirements for investments in companies that calculate net asset value, or NAV, and
information about measurement uncertainty and (iii) a requirement to provide additional information regarding Level 3 measurements. The ASU is effective for all reporting periods beginning after December 15, 2019, with early adoption
permitted for the eliminated or modified disclosure requirements. We early adopted ASU
2018-13
on January 1, 2018, which did not have a material effect on the Plans financial statements.
3. Stable Value Fund
During 2018 and
2017, the Plan held an interest in the MIP II Fund. The MIP II Fund is a common/collective trust fund sponsored by Fidelity and is considered to be a stable value fund with underlying investments in investment contracts that carry a benefit
responsiveness feature, which among other things, guarantees that participant-initiated withdrawals from the fund will be covered at contract value. The MIP II Fund may invest in fixed interest insurance investment contracts (or wrap
contracts), money market funds, corporate and governmental bonds, mortgage-backed securities, bond funds, and other fixed income securities. A wrap contract is an agreement by another party, such as a bank or insurance company, to make payments to
the MIP II Fund in certain circumstances. Wrap contracts are designed to allow a stable value portfolio to maintain a constant NAV and protect a portfolio in extreme circumstances. In a typical wrap contract, the wrap issuer agrees to pay a
portfolio the difference between the contract value and the market value of the underlying assets once the market value has been totally exhausted. The Plan is required to provide a one (1) year redemption notice to liquidate its entire share
in the MIP II Fund.
The MIP II Fund imposes certain restrictions on the Plan, and the MIP II Fund itself may be subject to circumstances
that impact its ability to transact at contract value. However, Plan management believes that the occurrence of events that would cause the MIP II Fund to transact at less than contract value is not probable.
4. Fair Value Measurements
The
Plans investments are stated at fair value using a fair value hierarchy prescribed by GAAP that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. There are three
levels of input that may be used to measure fair value:
Level 1 Inputs to the valuation methodology are unadjusted quoted prices for
identical assets or liabilities in active markets that the Plan has the ability to access.
Level 2 Inputs to the valuation methodology
include: quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets or liabilities in inactive markets; inputs other than quoted prices that are observable for the asset or liability; and inputs
that are derived principally from or corroborated by observable market data by correlation or other means.
If the asset or liability has
a specified (contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability.
Level 3
Inputs to the valuation methodology are unobservable and significant to the fair value measurement.
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