VMC Vulcan Materials

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.  20549

FORM 10-Q

‎VULCAN MATERIALS COMPANY
‎(Exact name of registrant as specified in its charter)

‎ New Jersey  ‎(State or other jurisdiction of incorporation)			‎20-8579133 ‎(I.R.S. Employer Identification No.)
‎1200 Urban Center Drive, Birmingham, Alabama ‎(Address of principal executive offices)				‎35242 ‎(zip code)
‎(205) 298-3000 ‎(Registrant's telephone number including area code)
‎Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:
‎Title of each class	‎Trading Symbol				Name of each exchange on ‎which registered
Common Stock, $1 par value	VMC				New York Stock Exchange
‎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 þ No o ‎ ‎Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No o ‎ ‎Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
‎Large accelerated filer þ		‎Accelerated filer o				‎Smaller reporting company o
‎Non-accelerated filer o						‎Emerging growth company o
‎If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
‎Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ
‎Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:
‎                    Class						Shares outstanding ‎      at April 22, 2021
Common Stock, $1 Par Value						132,665,247

 

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part I financial information

  ITEM 1

FINANCIAL STATEMENTS

VULCAN MATERIALS COMPANY AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED BALANCE SHEETS

Unaudited	March 31			December 31			March 31
in thousands	2021			2020			2020
Assets
Cash and cash equivalents	$       722,344			$    1,197,068			$       120,041
Restricted cash	168,595			945			232
Accounts and notes receivable
Accounts and notes receivable, gross	596,006			558,848			601,182
Allowance for doubtful accounts	(2,878)			(2,551)			(3,517)
Accounts and notes receivable, net	593,128			556,297			597,665
Inventories
Finished products	368,758			378,389			403,612
Raw materials	36,095			33,780			33,676
Products in process	4,573			4,555			5,010
Operating supplies and other	31,903			31,861			28,449
Inventories	441,329			448,585			470,747
Other current assets	67,612			74,270			88,095
Total current assets	1,993,008			2,277,165			1,276,780
Investments and long-term receivables	34,265			34,301			57,987
Property, plant & equipment
Property, plant & equipment, cost	9,110,336			9,102,086			8,907,788
Allowances for depreciation, depletion & amortization	(4,746,996)			(4,676,087)			(4,506,700)
Property, plant & equipment, net	4,363,340			4,425,999			4,401,088
Operating lease right-of-use assets, net	421,625			423,128			420,930
Goodwill	3,172,112			3,172,112			3,167,061
Other intangible assets, net	1,114,617			1,123,544			1,083,515
Other noncurrent assets	233,793			230,656			222,021
Total assets	$  11,332,760			$  11,686,905			$  10,629,382
Liabilities
Current maturities of long-term debt	15,436			515,435			25
Trade payables and accruals	255,624			273,080			243,019
Other current liabilities	294,797			259,368			232,632
Total current liabilities	565,857			1,047,883			475,676
Long-term debt	2,772,901			2,772,240			2,785,566
Deferred income taxes, net	733,561			706,050			648,405
Deferred revenue	172,377			174,045			178,568
Operating lease liabilities	397,306			399,582			399,489
Other noncurrent liabilities	554,517			559,775			551,352
Total liabilities	$    5,196,519			$    5,659,575			$    5,039,056
Other commitments and contingencies (Note 8)
Equity
Common stock, $1 par value, Authorized 480,000 shares,
Outstanding 132,664, 132,516 and 132,433 shares, respectively	132,664			132,516			132,433
Capital in excess of par value	2,797,687			2,802,012			2,782,738
Retained earnings	3,385,604			3,274,107			2,885,084
Accumulated other comprehensive loss	(179,714)			(181,305)			(209,929)
Total equity	$    6,136,241			$    6,027,330			$    5,590,326
Total liabilities and equity	$  11,332,760			$  11,686,905			$  10,629,382
The accompanying Notes to the Condensed Consolidated Financial Statements are an integral part of these statements.

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VULCAN MATERIALS COMPANY AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED STATEMENTS OF
‎COMPREHENSIVE INCOME

	Three Months Ended
Unaudited	March 31
in thousands, except per share data	2021			2020
Total revenues	$    1,068,344			$    1,049,242
Cost of revenues	839,077			847,519
Gross profit	229,267			201,723
Selling, administrative and general expenses	88,593			86,430
Gain on sale of property, plant & equipment
and businesses	117,165			999
Other operating expense, net	(8,326)			(3,991)
Operating earnings	249,513			112,301
Other nonoperating income (expense), net	5,913			(9,336)
Interest expense, net	33,118			30,773
Earnings from continuing operations
before income taxes	222,308			72,192
Income tax expense	60,638			12,194
Earnings from continuing operations	161,670			59,998
Earnings (loss) on discontinued operations, net of tax	(1,056)			260
Net earnings	$       160,614			$         60,258
Other comprehensive income (loss), net of tax
Deferred loss on interest rate derivative	0			(14,680)
Amortization of prior interest rate derivative loss	356			794
Amortization of actuarial loss and prior service
cost for benefit plans	1,235			1,695
Other comprehensive income (loss)	1,591			(12,191)
Comprehensive income	$       162,205			$         48,067
Basic earnings (loss) per share
Continuing operations	$             1.22			$             0.45
Discontinued operations	(0.01)			0.00
Net earnings	$             1.21			$             0.45
Diluted earnings (loss) per share
Continuing operations	$             1.21			$             0.45
Discontinued operations	(0.01)			0.00
Net earnings	$             1.20			$             0.45
Weighted-average common shares outstanding
Basic	132,749			132,567
Assuming dilution	133,415			133,259
Effective tax rate from continuing operations	27.3%			16.9%
The accompanying Notes to the Condensed Consolidated Financial Statements are an integral part of these statements.

‎

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VULCAN MATERIALS COMPANY AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

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notes to condensed consolidated financial statements

Note 1: summary of significant accounting policies

NATURE OF OPERATIONS

Vulcan Materials Company (the “Company,” “Vulcan,” “we,” “our”), a New Jersey corporation, is the nation's largest supplier of construction aggregates (primarily crushed stone, sand and gravel) and a major producer of asphalt mix and ready-mixed concrete.

We operate primarily in the United States and our principal product — aggregates — is used in virtually all types of public and private construction projects and in the production of asphalt mix and ready-mixed concrete. We serve markets in twenty states, Washington D.C., and the local markets surrounding our operations in Mexico. Our primary focus is serving metropolitan markets in the United States that are expected to experience the most significant growth in population, households and employment. These three demographic factors are significant drivers of demand for aggregates. While aggregates is our focus and primary business, we produce and sell asphalt mix and/or ready-mixed concrete in our Alabama, Arizona, California, Maryland, New Mexico, Tennessee, Texas, Virginia and Washington D.C. markets.

BASIS OF PRESENTATION

Our accompanying unaudited condensed consolidated financial statements were prepared in compliance with the instructions to Form 10-Q and Article 10 of Regulation S-X and thus do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America (GAAP) for complete financial statements. We prepared the accompanying condensed consolidated financial statements on the same basis as our annual financial statements, except for the adoption of new accounting standards as described in Note 17. Our Condensed Consolidated Balance Sheet as of December 31, 2020 was derived from the audited financial statement, but it does not include all disclosures required by GAAP. In the opinion of our management, the statements reflect all adjustments, including those of a normal recurring nature, necessary to present fairly the results of the reported interim periods. For further information, refer to the consolidated financial statements and footnotes included in our most recent Annual Report on Form 10-K. Operating results for the three month period ended March 31, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021, particularly in light of the uncertainty over the economic and operational impacts of the current novel coronavirus (COVID-19) pandemic.

While we continue to operate as an essential business, the COVID-19 pandemic has impacted our industry and the economy. Our condensed consolidated financial statements reflect estimates and assumptions made by management that affect the reported amounts of assets, liabilities, revenues and expenses. Such estimates and assumptions affect, among other things, our goodwill and long-lived asset valuations; inventory valuation; assessment of the annual effective tax rate; valuation of deferred income taxes; allowance for doubtful accounts; measurement of cash bonus plans; and pension plan assumptions. Events and changes in circumstances arising after March 31, 2021, including those resulting from the impacts of COVID-19, will be reflected in management’s estimates for future periods.

Due to the 2005 sale of our Chemicals business as described within this Note under the caption Discontinued Operations, the results of the Chemicals business are presented as discontinued operations in the accompanying Condensed Consolidated Statements of Comprehensive Income.

RESTRICTED CASH

Restricted cash primarily consists of cash proceeds from the sale of property held in escrow for the acquisition of replacement property under like-kind exchange agreements. The escrow accounts are administered by an intermediary. Cash restricted pursuant to like-kind exchange agreements remains restricted for a maximum of 180 days from the date of the property sale pending the acquisition of replacement property. Restricted cash may also include cash reserved by other contractual agreements (such as asset purchase agreements) for a specified purpose and therefore is not available for use for other purposes. Restricted cash is included with cash and cash equivalents in the accompanying Condensed Consolidated Statements of Cash Flows.

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LEASES

Our nonmineral leases with initial terms in excess of one year are recognized on the balance sheet as right-of-use (ROU) assets and lease liabilities. Mineral leases are exempt from balance sheet recognition.

ROU assets represent our right to use an underlying asset for the lease term, and lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. The lease term only includes options to extend or terminate the lease when it is reasonably certain that we will exercise that option. As our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. ROU assets are adjusted for any prepaid lease payments and lease incentives. Except for equipment with monthly monitoring service where the service component accounts for a majority of the lease cost, the non-lease components of our lease agreements are not separated from the lease components.

For additional information about leases see Note 2.

DISCONTINUED OPERATIONS

In 2005, we sold substantially all the assets of our Chemicals business to Basic Chemicals, a subsidiary of Occidental Chemical Corporation. The financial results of the Chemicals business are classified as discontinued operations in the accompanying Condensed Consolidated Statements of Comprehensive Income for all periods presented. Results from discontinued operations are as follows:

	Three Months Ended
	March 31
in thousands	2021			2020
Discontinued Operations
Pretax gain (loss)	$       (1,424)			$           354
Income tax (expense) benefit	368			(94)
Earnings (loss) on discontinued operations,
net of tax	$       (1,056)			$           260

Our discontinued operations include charges/credits related to general and product liability costs, including legal defense costs, and environmental remediation costs associated with our former Chemicals business (including certain matters as discussed in Note 8). There were no revenues from discontinued operations for the periods presented.

EARNINGS PER SHARE (EPS)

Earnings per share are computed by dividing net earnings by the weighted-average common shares outstanding (basic EPS) or weighted-average common shares outstanding assuming dilution (diluted EPS), as set forth below:

	Three Months Ended
	March 31
in thousands	2021			2020
Weighted-average common shares
outstanding	132,749			132,567
Dilutive effect of
Stock-Only Stock Appreciation Rights	296			345
Other stock compensation plans	370			347
Weighted-average common shares
outstanding, assuming dilution	133,415			133,259

All dilutive common stock equivalents are reflected in our earnings per share calculations. In periods of loss, shares that otherwise would have been included in our diluted weighted-average common shares outstanding computation would be excluded.

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Antidilutive common stock equivalents are not included in our earnings per share calculations. The number of antidilutive common stock equivalents for which the exercise price exceeds the weighted-average market price is as follows:

 

RECLASSIFICATIONS

Certain items previously reported in specific financial statement captions have been reclassified to conform to the 2021 presentation.

 

Note 2: Leases

Our portfolio of nonmineral leases is composed of leases for real estate (including office buildings, aggregates sales yards, and concrete and asphalt sites) and equipment (including railcars and rail track, barges, office equipment and plant equipment).

Lease right-of-use (ROU) assets and liabilities and the weighted-average lease term and discount rate are as follows:

		March 31			December 31			March 31
in thousands	Classification on the Balance Sheet	2021			2020			2020
Assets
Operating lease ROU assets	Operating lease right-of-use assets, net	$     488,607			$     482,513			$     461,712
Accumulated amortization		(66,982)			(59,385)			(40,782)
Finance lease assets	Property, plant & equipment, net	10,638			7,796			3,910
Accumulated amortization		(2,271)			(1,640)			(369)
Total lease assets		$     429,992			$     429,284			$     424,471
Liabilities
Current
Operating	Other current liabilities	$       38,131			$       36,969			$       32,045
Finance	Other current liabilities	2,718			2,047			1,197
Noncurrent
Operating	Operating lease liabilities	397,306			399,582			399,489
Finance	Other noncurrent liabilities	5,688			4,139			2,349
Total lease liabilities		$     443,843			$     442,737			$     435,080
Lease Term and Discount Rate
Weighted-average remaining lease term (years)
Operating leases		9.2			9.5			10.1
Finance leases		4.0			4.2			3.1
Weighted-average discount rate
Operating leases		3.3%			3.6%			4.2%
Finance leases		1.3%			1.4%			2.7%

Our lease agreements do not contain residual value guarantees, restrictive covenants or early termination options that we deem material. We have not sought or been granted any material lease concessions as a result of the COVID-19 pandemic.

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The components of lease expense are as follows:

		Three Months Ended
		March 31
in thousands		2021			2020
Lease Cost
Finance lease cost
Amortization of right-of-use assets		$           632			$           304
Interest on lease liabilities		30			22
Operating lease cost		15,292			14,106
Short-term lease cost 1		5,102			9,059
Variable lease cost		2,691			3,132
Sublease income		(824)			(734)
Total lease cost		$      22,923			$      25,889

Cash paid for operating leases was $14,521,000 and $13,328,000 for the three months ended March 31, 2021 and 2020, respectively. Cash paid for finance leases was $621,000 and $301,000 for the three months ended March 31, 2021 and 2020, respectively.

 

 

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Note 3: Income Taxes

Our estimated annual effective tax rate (EAETR) is based on full-year expectations of pretax earnings, statutory tax rates, permanent differences between book and tax accounting such as percentage depletion, and tax planning alternatives available in the various jurisdictions in which we operate. For interim financial reporting, we calculate our quarterly income tax provision in accordance with the EAETR. Each quarter, we update our EAETR based on our revised full-year expectation of pretax earnings and calculate the income tax provision so that the year-to-date income tax provision reflects the EAETR. Significant judgment is required in determining our EAETR.

In the first quarter of 2021, we recorded income tax expense from continuing operations of $60,638,000 compared to $12,194,000 in the first quarter of 2020. The increase in tax expense was primarily related to an increase in pretax earnings quarter-over-quarter and an increase in the Alabama NOL valuation allowance. In February 2021, the Alabama Business Competitiveness Act was signed into law. This Act contained a provision requiring most taxpayers to change from a three-factor, double-weighted sales method to a single-sales factor method to apportion income to Alabama. This provision had the effect of significantly reducing our apportionment of income to Alabama, thereby further inhibiting our ability to utilize our Alabama net operating loss (NOL) carryforward. As a result, we recorded a charge in the quarter to increase the valuation allowance by $13,695,000. No other material tax impacts resulted from the enactment of this Act.

We recognize deferred tax assets and liabilities (which reflect our best assessment of the future taxes we will pay) based on the differences between the book basis and tax basis of assets and liabilities. Deferred tax assets represent items to be used as a tax deduction or credit in future tax returns while deferred tax liabilities represent items that will result in additional tax in future tax returns. A summary of our deferred tax assets and liabilities is included in Note 9 “Income Taxes” in our Annual Report on Form 10-K for the year ended December 31, 2020.

Each quarter we analyze the likelihood that our deferred tax assets will be realized. Realization of the deferred tax assets ultimately depends on the existence of sufficient taxable income of the appropriate character in either the carryback or carryforward period. A valuation allowance is recorded if, based on the weight of all available positive and negative evidence, it is more likely than not (a likelihood of more than 50%) that some portion, or all, of a deferred tax asset will not be realized. We project Alabama state net operating loss (NOL) carryforward deferred tax assets at December 31, 2021 of $63,190,000 against which we have a valuation allowance of $42,931,000 (after considering the Act). Almost all of the Alabama NOL carryforward would expire between 2023 and 2029 if not utilized.

We recognize a tax benefit associated with a tax position when, in our judgment, it is more likely than not that the position will be sustained based upon the technical merits of the position. For a tax position that meets the more likely than not recognition threshold, we measure the income tax benefit as the largest amount that we judge to have a greater than 50% likelihood of being realized. A liability is established for the unrecognized portion of any tax benefit. Our liability for unrecognized tax benefits is adjusted periodically due to changing circumstances, such as the progress of tax audits, case law developments and new or emerging legislation.

 

 

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Note 4: revenueS

Revenues are measured as the amount of consideration we expect to receive in exchange for transferring goods or providing services. Sales and other taxes we collect are excluded from revenues. Costs to obtain and fulfill contracts (primarily asphalt construction paving contracts) are immaterial and are expensed as incurred when the expected amortization period is one year or less.

Our segment total revenues by geographic market for the three month periods ended March 31, 2021 and 2020 are disaggregated as follows:

	Three Months Ended March 31, 2021
in thousands	Aggregates			Asphalt			Concrete			Calcium			Total
Total Revenues by Geographic Market 1
East	$     243,351			$     17,401			$     55,090			$              0			$      315,842
Gulf Coast	518,854			41,413			17,408			2,060			579,735
West	132,704			88,353			8,861			0			229,918
Segment sales	$     894,909			$   147,167			$     81,359			$       2,060			$   1,125,495
Intersegment sales	(57,151)			0			0			0			(57,151)
Total revenues	$     837,758			$   147,167			$     81,359			$       2,060			$   1,068,344

	Three Months Ended March 31, 2020
in thousands	Aggregates			Asphalt			Concrete			Calcium			Total
Total Revenues by Geographic Market 1
East	$     239,869			$     17,883			$     62,120			$              0			$      319,872
Gulf Coast	493,297			33,856			16,965			2,026			546,144
West	135,060			88,050			15,680			0			238,790
Segment sales	$     868,226			$   139,789			$     94,765			$       2,026			$   1,104,806
Intersegment sales	(55,564)			0			0			0			(55,564)
Total revenues	$     812,662			$   139,789			$     94,765			$       2,026			$   1,049,242

Total revenues are primarily derived from our product sales of aggregates (crushed stone, sand and gravel, sand and other aggregates), asphalt mix and ready-mixed concrete, and include freight & delivery costs that we pass along to our customers to deliver these products. We also generate service revenues from our asphalt construction paving business and service revenues related to our aggregates business, such as landfill tipping fees. Our total service revenues were $41,240,000 and $39,564,000 for the three months ended March 31, 2021 and 2020, respectively.

Our products typically are sold to private industry and not directly to governmental entities. Although approximately 45% to 55% of our aggregates shipments have historically been used in publicly-funded construction, such as highways, airports and government buildings, relatively insignificant sales are made directly to federal, state, county or municipal governments/agencies. Therefore, although reductions in state and federal funding can curtail publicly-funded construction, the vast majority of our aggregates business is not directly subject to renegotiation of profits or termination of contracts with state or federal governments.

PRODUCT REVENUES

Revenue is recognized when obligations under the terms of a contract with our customer are satisfied; generally this occurs at a point in time when our aggregates, asphalt mix and ready-mixed concrete are shipped/delivered and control passes to the customer. Revenue for our products is recorded at the fixed invoice amount and payment is due by the 15^th day of the following month — we do not offer discounts for early payment.

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Freight & delivery generally represents pass-through transportation we incur (including our administrative costs) and pay to third-party carriers to deliver our products to customers and are accounted for as a fulfillment activity. Likewise, the costs related to freight & delivery are included in cost of revenues.

Freight & delivery revenues are as follows:

	Three Months Ended
	March 31
in thousands	2021			2020
Freight & Delivery Revenues
Total revenues	$  1,068,344			$  1,049,242
Freight & delivery revenues 1	(163,408)			(113,961)
Total revenues excluding freight & delivery	$     904,936			$     935,281

CONSTRUCTION PAVING SERVICE REVENUES

Revenue from our asphalt construction paving business is recognized over time using the percentage-of-completion method under the cost approach. The percentage of completion is determined by costs incurred to date as a percentage of total costs estimated for the project. Under this approach, recognized contract revenue equals the total estimated contract revenue multiplied by the percentage of completion. Our construction contracts are unit priced, and an account receivable is recorded for amounts invoiced based on actual units produced. Contract assets for estimated earnings in excess of billings, contract assets related to retainage provisions and contract liabilities for billings in excess of costs are immaterial. Variable consideration in our construction paving contracts is immaterial and consists of incentives and penalties based on the quality of work performed. Our construction paving contracts may contain warranty provisions covering defects in equipment, materials, design or workmanship that generally run from nine months to one year after project completion. Due to the nature of our construction paving projects, including contract owner inspections of the work during construction and prior to acceptance, we have not experienced material warranty costs for these short-term warranties.

VOLUMETRIC PRODUCTION PAYMENT DEFERRED REVENUES

In 2013 and 2012, we sold a percentage interest in certain future aggregates production for net cash proceeds of $226,926,000. These transactions, structured as volumetric production payments (VPPs):

relate to eight quarries in Georgia and South Carolina

provide the purchaser solely with a nonoperating percentage interest in the subject quarries’ future aggregates production

contain no minimum annual or cumulative guarantees by us for production or sales volume, nor minimum sales price

are both volume and time limited (we expect the transactions will last approximately 20 years, limited by volume rather than time)

We are the exclusive sales agent for, and transmit quarterly to the purchaser the proceeds from the sale of, the purchaser’s share of aggregates production. Our consolidated total revenues exclude the revenue from the sale of the purchaser’s share of aggregates.

The proceeds we received from the sale of the percentage interest were recorded as deferred revenue on the balance sheet. We recognize revenue on a unit-of-sales basis (as we sell the purchaser’s share of production) relative to the volume limitations of the transactions. Given the nature of the risks and potential rewards assumed by the buyer, the transactions do not reflect financing activities.

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Reconciliation of the VPP deferred revenue balances (current and noncurrent) is as follows:

	Three Months Ended
	March 31
in thousands	2021			2020
Deferred Revenue
Balance at beginning of year	$     177,962			$     185,339
Revenue recognized from deferred revenue	(1,669)			(1,342)
Balance at end of period	$     176,293			$     183,997

Based on expected sales from the specified quarries, we expect to recognize $7,500,000 of VPP deferred revenue as income during the 12-month period ending March 31, 2022 (reflected in other current liabilities in our March 31, 2021 Condensed Consolidated Balance Sheet).

 

 

Note 5: Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels as described below:

Level 1: Quoted prices in active markets for identical assets or liabilities

Level 2: Inputs that are derived principally from or corroborated by observable market data

Level 3: Inputs that are unobservable and significant to the overall fair value measurement

Our assets subject to fair value measurement on a recurring basis are summarized below:

	Level 1 Fair Value
	March 31			December 31			March 31
in thousands	2021			2020			2020
Fair Value Recurring
Rabbi Trust
Mutual funds	$       28,565			$       28,058			$       19,001
Total	$       28,565			$       28,058			$       19,001

	Level 2 Fair Value
	March 31			December 31			March 31
in thousands	2021			2020			2020
Fair Value Recurring
Rabbi Trust
Money market mutual fund	$           347			$           837			$           520
Total	$           347			$           837			$           520

We have two Rabbi Trusts for the purpose of providing a level of security for the employee nonqualified retirement and deferred compensation plans and for the directors' nonqualified deferred compensation plans. The fair values of these investments are estimated using a market approach. The Level 1 investments include mutual funds for which quoted prices in active markets are available. Level 2 investments are stated at estimated fair value based on the underlying investments in the fund (short-term, highly liquid assets in commercial paper, short-term bonds and certificates of deposit).

Net gains (losses) of the Rabbi Trusts’ investments were $1,986,000 and $(5,060,000) for the three months ended March 31, 2021 and 2020, respectively. The portions of the net gains (losses) related to investments still held by the Rabbi Trusts at March 31, 2021 and 2020 were $1,633,000 and $(5,060,000), respectively.

The carrying values of our cash equivalents, restricted cash, accounts and notes receivable, short-term debt, trade payables and accruals, and all other current liabilities approximate their fair values because of the short-term nature of these instruments. Additional disclosures for derivative instruments and interest-bearing debt are presented in Notes 6 and 7, respectively.