Fair Value of Financial Instruments

12 Months Ended

Dec. 31, 2016

FAIR VALUE OF FINANCIAL INSTRUMENTS

GAAP establishes a fair value hierarchy that prioritizes the inputs to valuation methods used to measure fair value. The three levels of the fair value hierarchy are the following:

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

Level 2: Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability; and

Level 3: Prices or valuation techniques requiring inputs that are both significant to the fair value measurement and unobservable (i.e. supported by little or no market activity).

Financial Assets and Liabilities Measured at Fair Value

The following tables summarize our financial assets and liabilities that are measured at fair value on a recurring basis and the fair value measurements, by level, within the fair value hierarchy as of December 31, 2016 and 2015, respectively:



			Fair Value Measurements Using:
As of December 31, 2016	Fair Value		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
(in thousands)
Assets:
Investments—equity securities	$	21	$	21	$	—	$	—
Investments—guaranteed income fund	$	561	$	—	$	—	$	561
Investments—mutual funds and other	$	4,320	$	4,320	$	—	$	—
Mark-to-market energy assets, including put options	$	823	$	—	$	823	$	—
Liabilities:
Mark-to-market energy liabilities, including swap agreements and natural gas futures contracts	$	773	$	—	$	773	$	—



			Fair Value Measurements Using:
As of December 31, 2015	Fair Value		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
(in thousands)
Assets:
Investments—equity securities	$	18	$	18	$	—	$	—
Investments—guaranteed income fund	$	279	$	—	$	—	$	279
Investments—mutual funds and other	$	3,347	$	3,347	$	—	$	—
Mark-to-market energy assets, including put options	$	153	$	—	$	153	$	—
Liabilities:
Mark-to-market energy liabilities, including swap agreements and natural gas futures contracts	$	433	$	—	$	433	$	—

The following valuation techniques were used to measure fair value assets on a recurring basis as of December 31, 2016 and 2015:

Level 1 Fair Value Measurements:

Investments - equity securities — The fair values of these trading securities are recorded at fair value based on unadjusted quoted prices in active markets for identical securities.

Investments - mutual funds and other — The fair values of these investments, comprised of money market and mutual funds, are recorded at fair value based on quoted net asset values of the shares.

Level 2 Fair Value Measurements:

Mark-to-market energy assets and liabilities — These forward contracts are valued using market transactions in either the listed or OTC markets.

Propane put/call options, swap agreements and natural gas futures contracts — The fair value of the propane put/call options, swap agreements and natural gas futures contracts are measured using market transactions for similar assets and liabilities in either the listed or OTC markets.

Investments measured at net asset value — The fair value is based on net asset value per unit of investments, which uses significant observable inputs. However, these investments were not traded publicly and did not have quoted market prices in active markets.

Level 3 Fair Value Measurements:

Investments - guaranteed income fund — The fair values of these investments are recorded at the contract value, which approximates their fair value.

The following table sets forth the summary of the changes in the fair value of Level 3 investments for the years ended December 31, 2016 and 2015:



	For the Year Ended December 31,
	2016		2015
(in thousands)
Beginning Balance	$	279	$	287
Purchases and adjustments	123		69
Transfers/disbursements	151		(82		)
Investment income	8		5
Ending Balance	$	561	$	279

Investment income from the Level 3 investments is reflected in other (expense) income in the accompanying consolidated statements of income.

At December 31, 2016 and 2015, there were no non-financial assets or liabilities required to be reported at fair value. We review our non-financial assets for impairment at least on an annual basis, as required.

Other Financial Assets and Liabilities

Financial assets with carrying values approximating fair value include cash and cash equivalents and accounts receivable. Financial liabilities with carrying values approximating fair value include accounts payable and other accrued liabilities and short-term debt. The fair value of cash and cash equivalents is measured using the comparable value in the active market and approximates its carrying value (Level 1 measurement). The fair value of short-term debt approximates the carrying value due to its short maturities and because interest rates approximate current market rates (Level 3 measurement).

At December 31, 2016, long-term debt, which includes the current maturities but excludes a capital lease obligation, had a carrying value of $145.9 million, compared to a fair value of $161.5 million, using a discounted cash flow methodology that incorporates a market interest rate based on published corporate borrowing rates for debt instruments with similar terms and average maturities, adjusted for duration, optionality and risk profile. At December 31, 2015, long-term debt, which includes the current maturities but excludes a capital lease obligation, had a carrying value of $153.7 million compared to the estimated fair value of $165.1 million. The valuation technique used to estimate the fair value of long-term debt would be considered a Level 3 measurement.

See Note 16, Employee Benefit Plans, for fair value measurement information related to our pension plan assets.

- 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.

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