Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2016

Summary of Significant Accounting Policies

Principles of Consolidation

(b)         Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany balances and transactions have been eliminated.

Use of Estimates

(c)         Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“US GAAP”) requires management to make estimates and judgments that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates and judgments.

Statements of Cash Flows

(d)         Statements of Cash Flows

For purposes of reporting cash flows, the Company considers all certificates of deposit and highly‑liquid debt instruments, such as U.S. Treasury bills and notes, with maturities, at the time of purchase, of three months or less to be cash equivalents. Cash equivalents are carried at cost plus accrued interest, which approximates fair market value. Supplemental cash flow information is presented below:

	Years Ended December 31,
	2016		2015		2014
Cash paid during the year for:
Interest	$	113	$	948	$	1,495
Income taxes	$	4,908	$	4,152	$	5,870

Revenue Recognition

(e)         Revenue Recognition

The Company recognizes revenue for its lime and limestone operations in accordance with the terms of its purchase orders, contracts or purchase agreements, which are generally upon shipment, and when payment is considered probable. Revenues include external freight billed to customers with related costs in cost of revenues. The Company’s returns and allowances are minimal. External freight billed to customers included in revenues was $26,568, $23,219 and $27,055 for 2016, 2015 and 2014, respectively, which approximates the amount of external freight billed to customers included in cost of revenues. Sales taxes billed to customers are not included in revenues. For its natural gas interests, the Company recognizes revenue in the month of production and delivery.

Fair Values of Financial Instruments

(f)         Fair Values of Financial Instruments

Fair value is defined as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.” The Company uses a three‑tier fair value hierarchy, which classifies the inputs used in measuring fair values, in determining the fair value of its financial assets and liabilities. These tiers include: Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets; Level 2, defined as observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. Specific inputs that had been used to value the Company’s interest rate swap liabilities included quoted three-month LIBOR rates for the remaining life of the interest rate swaps.  Specific inputs used to value the Company’s foreign exchange hedges were Euro to U.S. Dollar exchange rates for the expected future payment dates for the Company’s commitments denominated in Euros.  There were no changes in the methods and assumptions used in measuring fair value during the period.

The carrying values of cash and cash equivalents, trade receivables, other current assets, accounts payable and accrued expenses approximate fair value due to the short maturity of these instruments.  The Company’s foreign exchange hedges are carried at fair value at December 31, 2016.  See Notes 1(p), 3, 4 and 9. Financial liabilities measured at fair value on a recurring basis are summarized below:

	Fair Value Measurements as of December 31,
					Significant Other
					Observable Inputs
					(Level 2)
	December 31,		December 31,		December 31,		December 31,
	2016		2015		2016		2015		Valuation Technique
Foreign exchange hedges	$	(352)	$	—	$	(352)	$	—	Cash flows approach

Concentration of Credit Risk and Trade Receivables

(g)         Concentration of Credit Risk and Trade Receivables

Financial instruments that potentially subject the Company to a concentration of credit risk consist principally of cash and cash equivalents, trade receivables and derivative financial instruments. The Company places its cash and cash equivalents with high credit quality financial institutions and its derivative financial instruments with financial institutions and other firms that management believes have high credit ratings. The Company’s cash and cash equivalents at commercial banking institutions normally exceed federally insured limits. For a discussion of the credit risks associated with the Company’s derivative financial instruments, see Notes 3 and 9.

The majority of the Company’s trade receivables are unsecured. Payment terms for all trade receivables are based on the underlying purchase orders, contracts or purchase agreements. Credit losses relating to trade receivables have generally been within management expectations and historical trends. Uncollected trade receivables are charged‑off when identified by management to be unrecoverable. Trade receivables are presented net of the related allowance for doubtful accounts, which totaled $334 and $400 at December 31, 2016 and 2015, respectively. Additions and write‑offs to the Company’s allowance for doubtful accounts during the years ended December 31 are as follows:

	2016		2015
Beginning balance	$	400	$	350
Additions		293		63
Write-offs		(359)		(13)
Ending balance	$	334	$	400

Inventories, Net

(h)         Inventories, Net

Inventories are valued principally at the lower of cost, determined using the average cost method, or market. Costs for raw materials and finished goods include materials, labor and production overhead. A summary of inventories is as follows:

	December 31,		December 31,
	2016		2015
Lime and limestone inventories:
Raw materials	$	4,811	$	6,627
Finished goods		2,070		2,049
	$	6,881	$	8,676
Service parts inventories		5,552		6,052
	$	12,433	$	14,728

Property, Plant and Equipment

(i)         Property, Plant and Equipment

For major constructed assets, the capitalized cost includes the price paid by the Company for labor and materials plus interest and internal and external project management costs that are directly related to the constructed assets. Machinery and equipment at December 31, 2016 and 2015 included $4,284 and $4,113, respectively, of construction in progress for various capital projects. No interest costs were capitalized for the years ended December 31, 2016 and 2015. Depreciation of property, plant and equipment is being provided for by the straight‑line method over estimated useful lives as follows:

Buildings and building and leasehold improvements	3	-	20	years
Machinery and equipment	2	-	20	years
Furniture and fixtures	3	-	10	years
Automotive equipment	3	-	10	years

Maintenance and repairs are charged to expense as incurred; renewals and betterments are capitalized. When units of property are retired or otherwise disposed of, their cost and related accumulated depreciation are removed from the accounts, and any resulting gain or loss is credited or charged to income.

The Company expenses all exploration costs as incurred as well as costs incurred at an operating quarry or mine, other than capital expenditures and inventory. Costs to acquire mineral reserves or mineral interests are capitalized upon acquisition. Development costs incurred to develop new mineral reserves, to expand the capacity of a quarry or mine, or to develop quarry or mine areas substantially in advance of current production are capitalized once proven and probable reserves exist and can be economically produced. For each quarry or mine, capitalized costs to acquire and develop mineral reserves are depleted using the units‑of‑production method based on the proven and probable reserves for such quarry or mine.

The Company reviews its long‑lived assets for impairment and, when events or circumstances indicate the carrying amount of an asset may not be recoverable, the Company determines if impairment of value exists. If the estimated undiscounted future net cash flows are less than the carrying amount of the asset, an impairment exists, and an impairment loss must be calculated and recorded. If an impairment exists, the impairment loss is calculated based on the excess of the carrying amount of the asset over the asset’s fair value. Any impairment loss is treated as a permanent reduction in the carrying value of the asset. Through December 31, 2016, no events or circumstances arose that would require the Company to record a provision for impairment of its long‑lived assets.

Successful-Efforts Method Used for Natural Gas Interests

(j)         Successful‑Efforts Method Used for Natural Gas Interests

The Company uses the successful‑efforts method to account for oil and gas exploration and development expenditures. Under this method, drilling, completion and workover costs for successful exploratory wells and all development well costs are capitalized and depleted using the units‑of‑production method. Costs to drill exploratory wells that do not find proved reserves are expensed.

Asset Retirement Obligations

(k)         Asset Retirement Obligations

The Company recognizes legal obligations for reclamation and remediation associated with the retirement of long‑lived assets at their fair value at the time the obligations are incurred (“AROs”). Over time, the liability for AROs is recorded at its present value each period through accretion expense, and the capitalized cost is depreciated over the useful life of the related asset. Upon settlement of the liability, the Company either settles the AROs for the recorded amount or recognizes a gain or loss. As of December 31, 2016 and 2015, the Company’s AROs included in other liabilities and accrued expenses were $1,838 and $2,058, respectively. As of December 31, 2016, $968 of assets associated with the Company’s AROs were not fully depreciated. During 2016 and 2015, the Company spent $311 and $140, respectively, on its AROs, and recognized accretion expense of $70,  $60 and $57 in 2016, 2015 and 2014, respectively, on its AROs.

The AROs were estimated based on studies and the Company’s process knowledge and estimates, and are discounted using a credit adjusted risk-free interest rate. The AROs are adjusted when further information warrants an adjustment. The Company estimates annual expenditures of approximately $100 to $200 each in years 2017 through 2021 relating to its AROs.

Other Assets

(l)         Other Assets

Other assets consist of the following:

	December 31,
	2016		2015
Deferred financing costs	$	49	$	63
Other		93		97
	$	142	$	160

Environmental Expenditures

(m)         Environmental Expenditures

Environmental expenditures that relate to current operations are expensed or capitalized as appropriate. Expenditures that relate to an existing condition caused by past operations, and which do not contribute to current or future revenue generation, are expensed. Liabilities are recorded at their present value when environmental assessments and/or remedial efforts are probable and the costs can be reasonably estimated. Generally, the timing of these accruals will coincide with completion of a feasibility study or the Company’s commitment to a formal plan of action.

The Company incurred capital expenditures related to environmental matters of approximately $477 in 2016, $455 in 2015 and $1,038 in 2014.

Income Per Share of Common Stock

(n)         Income Per Share of Common Stock

The following table sets forth the computation of basic and diluted income per common share:

	Years Ended December 31,
	2016		2015		2014
Net income for basic and diluted income per common share	$	17,754	$	12,886	$	19,367
Weighted-average shares for basic income per common share		5,567,902		5,598,805		5,578,784
Effect of dilutive securities:
Employee and director stock options(1)		4,071		5,423		10,459
Adjusted weighted-average shares and assumed exercises for diluted income per common share		5,571,973		5,604,228		5,589,243
Basic net income per common share	$	3.19	$	2.30	$	3.47
Diluted net income per common share	$	3.19	$	2.30	$	3.47

Excludes 22,425,  24,225 and 7,500 stock options in 2016, 2015 and 2014, respectively, as antidilutive because the exercise price exceeded the average per share market price for the periods presented.

Stock-Based Compensation

(o)         Stock‑Based Compensation

The Company expenses all stock‑based payments to employees and directors, including grants of stock options and restricted stock, in the Company’s Consolidated Statements of Income based on their fair values. Compensation cost is recognized on a straight-line basis over the vesting period.

Derivative Instruments and Hedging Activities

(p)         Derivative Instruments and Hedging Activities

Every derivative instrument (including certain derivative instruments embedded in other contracts) is recorded on the Company’s Consolidated Balance Sheets as either an asset or liability measured at its fair value. Changes in the derivative’s fair value are recognized currently in earnings unless specific hedge accounting criteria are met. If the derivative is designated as a cash flow hedge, changes in fair value are recognized in comprehensive income or loss until the hedged item is recognized in earnings.  The Company estimated fair value utilizing the cash flows valuation technique. The fair values of derivative contracts that expire in less than one year are recognized as current assets or liabilities. Those that expire in more than one year are recognized as long-term assets or liabilities. See Notes 1(f), 3, 4 and 9.

Income Taxes

(q)         Income Taxes

The Company utilizes the asset and liability approach in its reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount more likely than not to be realized. Income tax related interest and penalties are included in income tax expense.

The Company also assesses individual tax positions to determine if they meet the criteria for some or all of the benefits of that position to be recognized in the Company’s financial statements. The Company only recognizes tax positions that meet the more‑likely‑than‑not recognition threshold.

Comprehensive Income

(r)         Comprehensive Income

Accounting principles generally require that recognized revenue, expenses, gains and losses be included in net income. Certain changes in assets and liabilities, such as mark‑to‑market gains or losses of interest rate and foreign exchange hedges and minimum pension liability adjustments, are reported as a separate component of the stockholders’ equity section of the balance sheet. Such items, along with net income, are components of comprehensive income. See Notes 1(p), 3, 4 and 6.