NOTE X - FAIR Value Measurements

ASC Topic 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability. The price in the principal (or most advantageous) market used to measure the fair value of the asset or liability is not adjusted for transaction costs. An orderly transaction is a transaction that assumes exposure to the market for a period prior to the measurement date to allow for marketing activities that are usual and customary for transactions involving such assets and liabilities; it is not a forced transaction. Market participants are buyers and sellers in the principal market that are (i) independent, (ii) knowledgeable, and (iii) able and willing to complete a transaction.

ASC Topic 820 requires the use of valuation techniques that are consistent with the market approach, the income approach and/or the cost approach. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets and liabilities. The income approach uses valuation techniques to convert future amounts, such as cash flows or earnings, to a single present value on a discounted basis. The cost approach is based on the amount that currently would be required to replace the service capacity of an asset (replacement cost). Valuation techniques should be consistently applied. Inputs to valuation techniques refer to the assumptions that market participants would use in pricing the asset or liability. Inputs may be observable, meaning those that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from independent sources, or unobservable, meaning those that reflect the reporting entity's own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. In that regard, ASC Topic 820 establishes a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows:

Level 1 Inputs - Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.

Level 2 Inputs - Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These might include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (including interest rates, volatilities, prepayment speeds, credit risks) or inputs that are derived principally from or corroborated by market data by correlation or other means.

Level 3 Inputs - Unobservable inputs for determining the fair values of assets or liabilities that reflect an entity's own assumptions about the assumptions that market participants would use in pricing the assets or liabilities.

The following table summarizes our financial assets and financial liabilities measured at fair value on a recurring basis as of December 31, 2015 and 2014, segregated by the above-described levels of valuation inputs:



(All Amounts in Thousands)	December 31, 2015
		Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Fair Value
Cash Equivalents (1)
Money Market Funds	$	476	$	-	$	-	$	476

Equities (1)
Domestic Equity Mutual Funds		18,379		-		-		18,379
International Equity Mutual Funds		6,086		-		-		6,086

Fixed Income (1)
Taxable Fixed Income Funds		10,177		-		-		10,177

Embedded Derivative (2)		-		-		(1,161)		(1,161)

(All Amounts in Thousands)	December 31, 2014
		Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Fair Value
Cash Equivalents (1)
Money Market Funds	$	464	$	-	$	-	$	464

Equities (1)
Domestic Equity Mutual Funds		21,255		-		-		21,255
International Equity Mutual Funds		4,222		-		-		4,222

Fixed Income (1)
Taxable Fixed Income Funds		9,831		-		-		9,831

Derivative Liabilities (3)		-		(7,348)		-		(7,348)

(1) Relates to assets held under our Retirement Plan - see Note N - Employee Benefit Plans.
(2) Relates to penalties on our preferred stock dividends during 2015 - see Note O – Derivative Instruments and Note T - Capital Stock.
(3) Relates to our interest rate swap and foreign exchange contracts - see Note O - Derivative Instruments.

The carrying amounts of our accounts receivable, accounts payable and accrued liabilities approximated their fair value at December 31, 2015 and 2014.

Our notes receivables were $27.2 million, the majority of which relates to a loan to PT Amas from the sale of two vessels, which has a remaining balance of $25.8 million at 7% interest annually at year end December 31, 2015. Fair market value takes into consideration the current rates at which similar notes would be made. The carrying amount of these notes approximated fair market value at December 31, 2015.

The estimated fair value of our debt obligations at December 31, 2015 was approximately $150.8 million based on the term nature, mix of fixed and variable rates of certain debt instruments. Based on the underlying value of collateral, we have determined that credit risk is not a material factor. We calculated the fair value of our debt obligations using Level 3 inputs.

The following tables reflect the fair value measurements used in testing the impairment of long-lived assets and goodwill in 2015 and 2014:



(All Amounts in Thousands)		December 31,		Level 1		Level 2		Level 3		Total
		2015		Inputs		Inputs		Inputs		Losses
Assets Held for Sale (1)	$	51,846	$	-	$	-	$	51,846	$	(94,241)
Vessels, Property, and Other Equipment, net (2)		62,645		-		-		62,645		(22,675)
Vessels, Property, and Other Equipment, net (3)		5,822		-		-		5,822		(10,444)
Vessels, Property, and Other Equipment, net (4)		-		-		-		-		(1,828)
Intangible Assets, net (5)		-		-		-		-		(411)
Intangible Assets, net (6)		-		-		-		-		(22,129)
Goodwill (7)		-		-		-		-		(1,907)
Goodwill (8)		-		-		-		-		(828)
Total Loss									$	(154,463)

(All Amounts in Thousands)		December 31,		Level 1		Level 2		Level 3		Total
		2014		Inputs		Inputs		Inputs		Losses
Assets Held for Sale (9)	$	6,976	$	-	$	-	$	6,976	$	(6,584)
Assets Held for Sale (10)		48,701		-		-		48,701		(31,629)
Total Loss									$	(38,213)

(1)

The loss of $94.2 million includes losses related to one PCTC, two handysize vessels, a capesize bulk carrier, a supramax bulk carrier, an ATB tug/barge unit, investments in chemical and asphalt tankers, FSI/Tower assets and the New Orleans office building, all of which were written down to their fair market value less costs to sell. The PCTC, one handysize vessel, the barge and the supramax bulk carrier were sold during the fourth quarter of 2015. The assets held for sale balance of $51.8 million represents the balance of the remaining assets.

(2)

Refers to four ATB tug/barge units and a harbor tug in the Jones Act segment.

(3)

Refers to the ice strengthened multi-purpose vessel included in the Specialty Contracts segment.

(4)

Refers to impairments related to two handysize vessels that were reclassified from assets held for sale to held in use during 2015. The Strategic Plan identified these vessels for divestiture in the fourth quarter of 2015; accordingly, we reclassified these assets back to assets held for sale as of December 31, 2015 – see (1) above.

(5)

Refers to trade names and customer relations associated with our FSI acquisition, which is held for sale.

(6)

Refers to trade names and customer relations associated with our UOS acquisition included in the Jones Act segment.

(7)

Refers to the goodwill associated with our UOS acquisition included in the Jones Act segment.

(8)

Refers to the goodwill associated with our FSI acquisition, which is held for sale.

(9)

The loss of $6.6 million is related to an ATB tug/barge unit, which was written down to its fair market value less costs to sell. The assets held for sale balance of $7.0 million consists of the ATB tug/barge unit of $6.4 million and $0.6 million of inventory associated with three handysize vessels that were held for sale.

(10)

The loss of $31.6 million includes the loss related to three handysize vessels of approximately $28.3 million and a tanker of approximately $3.3 million that were written down to their fair market value less costs to sell. The tanker was sold during the fourth quarter of 2014. The assets held for sale balance of $48.7 million represents the three handysize vessels and their related equipment.

See Note D – Impairment Loss for additional information on the level three inputs used in the fair value determination.