Fair Value Measurements

3 Months Ended

Mar. 31, 2026

FAIR VALUE MEASUREMENTS

Cash and cash equivalents

Carrying value approximated fair value because of the short maturity of the instruments. Fair value of cash and cash equivalents is a Level 1 measurement. The Company's cash and cash equivalents included money market funds totaling $18,527,000 and $13,807,000 at March 31, 2026 and December 31, 2025, respectively.

Derivative assets and liabilities

Derivative assets and liabilities include the foreign currency exchange and interest rate swap contracts discussed in Note 4, Derivative Instruments, of the notes to the Company’s condensed consolidated financial statements (included in Item 1 of this Form 10-Q). Fair value and carrying value were the same because the contracts were recorded at fair value. The fair values of the foreign currency contracts were calculated as the difference between the applicable forward foreign exchange rates at the reporting date and the contracted foreign exchange rates multiplied by the contracted notional amounts. The fair value of the interest rate swap was calculated as the difference between the contracted swap rate and the floating interest rate multiplied by the present value of the notional amount of the contract.

The Company's fair value measurements for debt fall in Level 2 of the fair value hierarchy. At March 31, 2026, and December 31, 2025, the fair values and related carrying values of debt, including current maturities, were as follows (the fair value and carrying value amounts are presented without regard to unamortized debt issuance costs of $246,000 and $275,000 as of March 31, 2026 and December 31, 2025, respectively):


(In thousands)	March 31, 2026		December 31, 2025
Fair value	$	639,782	$	619,027
Carrying value		651,971		626,985

The following tables present financial assets and liabilities, excluding cash and cash equivalents, measured on a recurring basis at fair value as of March 31, 2026, and December 31, 2025, and the level within the fair value hierarchy in which the fair value measurements fall:


(In thousands)	March 31, 2026		Level 1		Level 2		Level 3
Mutual fund assets	$	13,287	$	13,287	$	—	$	—
Derivative assets:
Interest rate contracts		1,871		—		1,871		—
Foreign currency contracts		439		—		439		—
Total assets at fair value	$	15,597	$	13,287	$	2,310	$	—
Derivative liabilities:
Foreign currency contracts	$	1,026	$	—	$	1,026	$	—


(In thousands)	December 31, 2025		Level 1		Level 2		Level 3
Mutual fund assets	$	21,270	$	21,270	$	—	$	—
Derivative assets:
Interest rate contracts		1,974		—		1,974		—
Foreign currency contracts		423		—		423		—
Total assets at fair value	$	23,667	$	21,270	$	2,397	$	—
Derivative liabilities:
Foreign currency contracts	$	340	$	—	$	340	$	—

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References

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+ Details

STEPAN CO 10-Q