Amtrak 2014 Annual Report Download - page 45

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National Railroad Passenger Corporation and Subsidiaries (Amtrak)
Notes to Consolidated Financial Statements (continued)
1509-1694994 37
8. Fair Value Measurements
FASB ASC Topic 820, Fair Value Measurements and Disclosures, clarifies the definition of fair
value for financial reporting, establishes a framework for measuring fair value, and requires
additional disclosures about the use of fair value measurements. FASB ASC Topic 820
established a three-level valuation hierarchy for disclosure of fair value measurements. The
valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or
liability as of the measurement date. The three levels are defined as follows:
• Level 1 – observable market inputs that are unadjusted quoted prices for identical assets
or liabilities in active markets.
• Level 2 – other significant observable inputs (including quoted prices for similar
securities, interest rates, credit risk, etc.).
• Level 3 – significant unobservable inputs (including the Company’ s own assumptions in
determining the fair value of investments).
The Company’ s derivative financial instruments are valued by a third-party consultant based on
prevailing market data derived from proprietary models and are carried at fair value on the
consolidated balance sheet per FASB ASC Topic 820. A financial instrument’ s categorization
within the valuation hierarchy is based upon the lowest level of input that is significant to the fair
value measurement. The following tables present the Company’ s assets measured at fair value on
a recurring basis as of September 30, 2014 and 2013, by the FASB ASC Topic 820 valuation
hierarchy (in thousands).
Level 1 Level 2 Level 3 Total
September 30, 2014
Fuel derivative contracts $ – $ 872 $ – $ 872
Interest rate swaps – 481 – 481
Total $ – $ 1,353 $ – $ 1,353
September 30, 2013
Fuel derivative contracts $ –
$ 3,254 $ – $ 3,254
Interest rate swap – 1,025 – 1,025
Total $ –
$ 4,279 $ – $ 4,279