Page 69 - SWGas Annual Report 2015

(1) Common stock, Real Estate Investment Trusts, Mutual funds, and U.S. Government securities listed or regularly
traded on a national securities exchange are valued at quoted market prices as of the last business day of the
calendar year.

The Mutual funds category above is an intermediate-term bond fund whose manager employs multiple
concurrent strategies and takes only moderate risk in each, thereby reducing the risk of poor performance
arising from any single source, and a balanced fund that invests in a diversified portfolio of common stocks,
preferred stocks and fixed-income securities. Strategies utilized by the bond fund include duration
management, yield curve or maturity structuring, sector rotation, and all bottom-up techniques including in-
house credit and quantitative research. Strategies employed by the balanced fund include pursuit of regular
income, conservation of principal, and an opportunity for long-term growth of principal and income.

(2) The fair value of investments in debt securities with remaining maturities of one year or more is determined by
dealers who make markets in such securities or by an independent pricing service, which considers yield or
price of bonds of comparable quality, coupon, maturity, and type.

The pooled funds and mutual funds are two collective short-term funds that invest in Treasury bills and money
market funds. These funds are used as a temporary cash repository for the pension plan’s various investment
managers.

(3) The commingled equity funds include private equity funds that invest in domestic and international securities
regularly traded on securities exchanges. These funds are shown in the above table at net asset value, which
is the value of securities in the fund less the amount of any liabilities outstanding. Investment strategies
employed by the funds include:

• Domestic large capitalization value equities
• International developed countries value and growth equities
• Emerging markets equities
• International small capitalization equities

The terms and conditions under which shares in the commingled equity funds may be redeemed vary among
the funds; the notice required ranges from one day to 30 days prior to the valuation date (month end). One of
the commingled equity funds requires the payment of a minimal impact fee to be applied to redemptions and
subscriptions of $5 million or greater; the relative fee diminishes the greater the transaction. Other such funds
may impose fees to recover direct costs incurred by the fund at redemption, but are indeterminable prior to
redemption.

Early adoption of ASU No. 2015-07: As permitted the Company adopted (earlier than the required adoption
date) FASB ASU No. 2015-07 “Disclosures for Investments in Certain Entities that Calculate Net Asset Value
per Share (or its Equivalent)” as of December 31, 2015. This guidance simplifies disclosure requirements
relating to investments for which fair value is measured using the NAV per share, or its equivalent. The update
removes the requirement to categorize within the fair value hierarchy all investments for which fair value is
measured using the NAV per share practical expedient. The FASB determined that including those assets in
the fair value hierarchy is potentially confusing and misleading to financial statement users. The fair value of
the commingled equity funds was determined using NAV as an expedient since no significant observable
inputs were available (these funds are not publicly traded on an exchange). Because of the requirements of

Southwest Gas Corporation