Fair Value

6 Months Ended

Jun. 30, 2011

Fair Value

Fair Value

7. Fair Value

     The Company holds mortgage-backed securities, fixed income and equity securities, derivatives and certain other financial instruments which are carried at fair value. The Company determines fair value based upon quoted prices when available or through the use of alternative approaches, such as model pricing, when market quotes are not readily accessible or available. In determining the fair value of the Company's obligations, various factors are considered, including: closing exchange or over-the-counter market price quotations; time value and volatility factors underlying options and derivatives; price activity for equivalent instruments; and the Company's own credit standing.

     These valuation techniques may be based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company's market assumptions. These two types of inputs create the following fair value hierarchy:

• Level 1 — Quoted prices for identical instruments in active markets.

• Level 2 — Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.

• Level 3 — Instruments whose significant value drivers are unobservable.

     The following table presents the Company's assets and liabilities that are measured at fair value and the related hierarchy levels:

			Fair Value Measurements
			at Reporting Date Using
			Quoted Prices
			in Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
	June 30,		Assets		Inputs		Inputs
	2011		(Level 1)		(Level 2)		(Level 3)
Assets:
Mortgage-backed securities	$	3,284	$	—	$	3,284	$	—
Asset-backed securities		2,042		—		2,042		—
Municipal bonds		144		—		144		—
Equity securities		5,033		5,033		—		—
Total available-for-sale securities	$	10,503	$	5,033	$	5,470	$	—
Executive deferred compensation plan trust (a)	$	2,321	$	2,321	$	—	$	—
Liabilities:
Fuel price derivatives — diesel	$	5,525	$	—	$	—	$	5,525
Fuel price derivatives — unleaded fuel		12,295		—		12,295		—
Total fuel price derivatives — liabilities		17,820				12,295		5,525
Interest rate swap arrangements with a base rate of 1.35% and an aggregate notional amount of $50,000(b)		48		—		48		—
Interest rate swap arrangements with a base rate of 0.56% and an aggregate notional amount of $150,000(b)		313		—		313		—
Total interest rate swap arrangement	$	361	$	—	$	361	$	—
Contingent Consideration	$	10,000	$	—	$	—	$	10,000

(a)	The fair value of these instruments is recorded in other assets.
(b)	The fair value of these instruments is recorded in accrued expenses.

     The following table presents a reconciliation of the beginning and ending balances for assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the three months ended June 30, 2011:

				Fuel Price
	Contingent			Derivatives –
	Consideration			Diesel
Beginning balance	$	(10,000	)	$	(10,685	)
Total gains or (losses) — realized/unrealized
Included in earnings (a)		—			5,160
Included in other comprehensive income		—			—
Purchases, issuances and settlements		—			—
Transfers in/(out) of Level 3		—			—
Ending balance	$	(10,000	)	$	(5,525	)

^(a) Gains and losses (realized and unrealized) included in earnings for the three months ended June 30, 2011, are reported in net realized and unrealized losses on fuel price derivatives on the condensed consolidated statements of income.

     The following table presents a reconciliation of the beginning and ending balances for assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the six months ended June 30, 2011:

				Fuel Price
	Contingent			Derivatives –
	Consideration			Diesel
Beginning balance	$			$	(3,643	)
Total gains or (losses) — realized/unrealized
Included in earnings (a)		—			(1,882	)
Included in other comprehensive income		—			—
Purchases, issuances and settlements		(10,000	)		—
Transfers in/(out) of Level 3		—			—
Ending balance	$	(10,000	)	$	(5,525	)

^(a) Gains and losses (realized and unrealized) included in earnings for the six months ended June 30, 2011, are reported in net realized and unrealized losses on fuel price derivatives on the condensed consolidated statements of income.

     The following table presents a reconciliation of the beginning and ending balances for assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the three months ended June 30, 2010:

	Fuel Price
	Derivatives –
	Diesel
Beginning balance	$	716
Total gains or (losses) — realized/unrealized
Included in earnings (a)		1,059
Included in other comprehensive income		—
Purchases, issuances and settlements		—
Transfers in/(out) of Level 3		—
Ending balance	$	1,775

^(a) Gains and losses (realized and unrealized) included in earnings for the three months ended June 30, 2010, are reported in net realized and unrealized losses on fuel price derivatives on the condensed consolidated statements of income.

     The following table presents a reconciliation of the beginning and ending balances for assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the six months ended June 30, 2010:

	Fuel Price
	Derivatives –
	Diesel
Beginning balance	$	2,641
Total gains or (losses) — realized/unrealized
Included in earnings (a)		(866	)
Included in other comprehensive income		—
Purchases, issuances and settlements		—
Transfers in/(out) of Level 3		—
Ending balance	$	1,775

^(a) Gains and losses (realized and unrealized) included in earnings for the six months ended June 30, 2010, are reported in net realized and unrealized losses on fuel price derivatives on the condensed consolidated statements of income.

Available-for-sale securities and executive deferred compensation plan trust

     When available, the Company uses quoted market prices to determine the fair value of available-for-sale securities; such items are classified in Level 1 of the fair-value hierarchy. These securities primarily consist of exchange-traded equity securities.

     For mortgage-backed and asset-backed debt securities and bonds, the Company generally uses quoted prices for recent trading activity of assets with similar characteristics to the debt security or bond being valued. The securities and bonds priced using such methods are generally classified as Level 2.

Fuel price derivatives and interest rate swap arrangements

     The majority of derivatives entered into by the Company are executed over the counter and are valued using internal valuation techniques as no quoted market prices exist for such instruments. The valuation technique and inputs depend on the type of derivative and the nature of the underlying instrument. The principal technique used to value these instruments is a comparison of the spot price of the underlying instrument to its related futures curve adjusted for the Company's assumptions of volatility and present value, where appropriate. The fair values of derivative contracts reflect the expected cash the Company will pay or receive upon settlement of the respective contracts.

     The key inputs depend upon the type of derivative and the nature of the underlying instrument and include interest rate yield curves, the spot price of the underlying instrument, volatility, and correlation. The item is placed in either Level 2 or Level 3 depending on the observability of the significant inputs to the model. Correlation and items with longer tenures are generally less observable.

Contingent consideration

     The Company has classified its liability for contingent consideration related to its acquisition of rapid! within Level 3 of the fair value hierarchy because the fair value is determined using significant unobservable inputs, which include the projected revenues of rapid! over a twelve month period.