
	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, 2017
	Total		(Level 1)		(Level 2)
			(Thousands of dollars)
Investments:
Money market mutual funds	$	5,601	$	5,601	$	—
Commercial paper	—		—		—
U.S. government agencies	7,467		—		7,467
Corporate bonds and notes	63,550		—		63,550
	76,618		5,601		71,017
Deferred compensation plan assets	2,685		2,685
Total	$	79,303	$	8,286	$	71,017



			December 31, 2016
	Total		(Level 1)		(Level 2)
			(Thousands of dollars)
Investments:
Money market mutual funds	$	18,118	$	18,118	$	—
Commercial paper	27,867		—		27,867
U.S. government agencies	13,263		—		13,263
Corporate bonds and notes	243,582		—		243,582
	302,830		18,118		284,712
Deferred compensation plan assets	2,394		2,394		—
Total	$	305,224	$	20,512	$	284,712

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. Management reviews these prices and reserves the right to override them if, based on additional information, management believes such changes 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, 2017 and 2016. The carrying value of our variable-rate indebtedness under our revolving credit facility approximates its fair value as of December 31, 2017. The fair value of our 5.25% Senior Notes was $499.2 million at December 31, 2017.

In connection with its impairment testing (discussed further in Note 1), the Company estimates cash flows and asset appraisals 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 or appraisal value, the Company compares the market value to the book value of each asset group in order to determine if impairment exists (considered Level 3, as defined by ASC 820, Fair Value Measurements and Disclosures). 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, 2017, 2016 and 2015, along with the amount of the impairment. The impairment charges were recorded in Impairment of assets. See Note 1 for additional information.



	Year Ended December 31,
	2017		2016		2015
	(Thousands of dollars)
Amount of impairment incurred	$	368	$	407	$	—
Combined fair value of assets incurring impairment, after impairment charges	$	1,380	$	1,380	$	—