Page 46 - SWGas Annual Report 2015

cash and cash equivalents fall within Level 1 (quoted prices for identical financial instruments) of the three-level fair
value hierarchy that ranks the inputs used to measure fair value by their reliability. However, cash and cash
equivalents at December 31, 2015 and 2014 also includes two money market fund investments totaling
approximately $250,000 which fall within Level 2 (significant other observable inputs) of the fair value hierarchy,
due to the asset valuation methods used by money market funds.

Significant non-cash investing activities for the natural gas operations segment included the following: Upon
contract expiration, customer advances of approximately $3.1 million, $8.1 million, and $9.3 million during 2015,
2014, and 2013, respectively, were applied as contributions toward utility construction activity and represent non-
cash investing activity. In 2014, investing activities included an $18.9 million non-cash investing outflow due to the
equity of the noncontrolling interest associated with businesses acquired. In addition, a non-cash investing outflow
activity of $10.8 million in 2014 related to acquisition consideration payable.

Goodwill. Goodwill is assessed for impairment annually in October, as required by U.S. GAAP, or otherwise, if
circumstances indicate impairment to the carrying value of goodwill may have occurred. The goodwill impairment
analysis may start with an assessment of qualitative factors (Step 0) to determine whether it is more likely than not
that the fair value of a reporting unit is less than its carrying amount. If, after assessing the qualitative factors,
management determines that it is more likely than not that the fair value of a reporting unit is less than its carrying
amount, or if management does not perform a qualitative assessment, a Step 1 impairment test will be performed.
Management considered the qualitative factors and the evidence obtained and determined that it is not more likely
than not that the fair value of any reporting unit is less than its carrying amount in 2014 or 2015. Thus, no
impairment was recorded in 2014 or 2015. The acquisition date adjustment shown in the table below was recorded
in the first quarter of 2015. No acquisition date adjustments occurred subsequently. The business of Brigadier was
acquired via asset purchase. Therefore, goodwill assigned to Brigadier is expected to be deductible for tax
purposes, resulting in an after-tax value of $4.9 million. All other goodwill associated with the acquisition is not
deemed deductible for tax purposes.

Natural
Gas Construction

Operations Services Consolidated

(In thousands of dollars) $10,095 $133,065 $143,160
— 1,380 1,380
December 31, 2014 —
Acquisition date adjustment (18,395) (18,395)
Foreign currency translation adjustment $10,095
December 31, 2015 $116,050 $126,145

Intangible Assets. Intangible assets (other than goodwill) are amortized using the straight-line method to reflect
the pattern of economic benefits consumed over the estimated periods benefited. The recoverability of intangible
assets is evaluated when events or circumstances indicate that a revision of estimated useful lives is warranted or
that an intangible asset may be impaired. Intangible assets are primarily associated with the 2014 acquisition of
construction services businesses and have finite lives.

Southwest Gas Corporation