(3)

FAIR VALUE

Accounting guidance defines fair value as the price that would be received to sell an asset or transfer a liability in an orderly transaction between market participants at the measurement date. This guidance establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. The hierarchy for inputs is categorized into three levels based on the reliability of inputs as follows:

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

Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data.

Level 3: Unobservable inputs that are not corroborated by market data.

The following tables summarize the valuation of our investments and financial instruments by the above pricing levels as of the valuation dates listed:


			December 31, 2014
	Total		(Level 1)		(Level 2)
Investments:
Money Market Mutual Funds	$	68,612	$	68,612	$	—
Municipal bonds and notes		1,502		—		1,502
Corporate bonds and notes		130,615		—		130,615

		200,729		68,612		132,117
Deferred compensation plan assets		2,386		2,386		—

Total	$	203,115	$	70,998	$	132,117


			December 31, 2013
	Total		(Level 1)		(Level 2)
Investments:
Money Market Mutual Funds	$	18,470	$	18,470	$	—
Commercial Paper		2,999		—		2,999
Municipal bonds and notes		1,499		—		1,499
Corporate bonds and notes		77,633		—		77,633

		100,601		18,470		82,131
Deferred compensation plan assets		2,109		2,109		—

Total	$	102,710	$	20,579	$	82,131

The Company holds its short-term investments in an investment fund consisting of high quality money market instruments of governmental and private issuers, which is classified as a short-term investment. Level 1 inputs are quoted prices (unadjusted) for identical assets or liabilities in active markets. These items are traded with sufficient frequency and volume to provide pricing on an ongoing basis. The fair values of the shares of these funds are based on observable market prices, and therefore, have been categorized in Level 1 in the fair value hierarchy. Level 2 inputs reflect quoted prices for identical assets or liabilities that are not active. These items may not be traded daily; examples include corporate bonds and U.S. government agencies. Assets are valued based on prices derived by independent third parties that use inputs such as benchmark yields, reported trades, broker/dealer quotes, and issuer spreads. Prices are reviewed and can be challenged with the independent parties and/or overridden by the Company, if it is believed such would be more reflective of fair value. Investments included in other assets, which relate to the liability for the Officers’ Deferred Compensation Plan, consist mainly of multiple investment funds that are highly liquid and diversified.

Cash, accounts receivable, accounts payable and accrued liabilities all had fair values approximating their carrying amounts at December 31, 2014 and 2013.

The Company reviews its aircraft for impairment on an annual basis or on an interim basis whenever events occur or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. In such evaluation, the estimated future undiscounted cash flows generated by a particular asset group are compared with the book value of the asset group to determine if an impairment charge is necessary. Similar aircraft model types are grouped together for impairment testing purposes.

The Company estimates cash flows based upon historical data adjusted for the company’s best estimate of expected future market performance. If an asset group fails the undiscounted cash flow test, the company uses the discounted cash flow method to determine the estimated fair value of each asset group and compares such estimated fair value to the book value of each asset group in order to determine if impairment exists. If impairment exists, the book value of the asset group is reduced to its estimated fair value.

The below table summarizes the combined fair value of the assets that incurred impairments during the years ended December 31, 2014 and 2013, along with the amount of the impairment. The impairment charges were recorded in Impairment of assets.


	Year Ended December 31,
	2014		2013
	(Thousands of dollars)
Amount of impairment incurred	$	10,508	$	1,648
Combined fair value of assets incurring impairment	$	6,000	$	2,400