v2.3.0.15
Fair Value Measurements
9 Months Ended
Sep. 30, 2011
Fair Value [Abstract] 
Fair Value Disclosures
FAIR VALUE MEASUREMENTS

We have adopted the authoritative accounting guidance for fair value measurements, which does not determine or affect the circumstances under which fair value measurements are used, but defines fair value, expands disclosure requirements around fair value and specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company's market assumptions.

These 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 in which all significant inputs and significant value drivers are observable in active markets.
Level 3: Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

As required by the guidance for fair value measurements, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Thus, assets and liabilities categorized as Level 3 may be measured at fair value using inputs that are observable (Levels 1 and 2) and unobservable (Level 3). Management's assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of assets and liabilities and their placement within the fair value hierarchy levels.

Balances Measured at Fair Value
The following tables show the fair values of certain of our financial instruments.
 
September 30, 2011
 
Balance
 
Level 1
 
Level 2
 
Level 3
 
 
 
(In thousands)
 
 
Assets
 
 
 
 
 
 
 
Cash and cash equivalents
$
187,118

 
$
187,118

 
$
—

 
$
—


 
December 31, 2010
 
Balance
 
Level 1
 
Level 2
 
Level 3
 
 
 
(In thousands)
 
 
Assets
 
 
 
 
 
 
 
Cash and cash equivalents
$
145,623

 
$
145,623

 
$
—

 
$
—

 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
Derivative instruments
$
11,871

 
$
—

 
$
11,871

 
$
—


The fair value of our cash and cash equivalents, classified in the fair value hierarchy as Level 1, is based on statements received from our banks at September 30, 2011 and December 31, 2010.

Our derivative instruments are classified in the fair value hierarchy as Level 2 as the LIBOR swap rate is observable at commonly quoted intervals for the full term of the interest rate swaps. See Note 10, Derivative Instruments for further discussion regarding the fair valuation of our interest rate swaps.

Balances Disclosed at Fair Value
The following table provides the fair value measurement information about our long-term debt at September 30, 2011 and December 31, 2010.
 
September 30, 2011
 
Outstanding Face Amount
 
Carrying Value
 
Estimated Fair Value
 
Fair Value Hierarchy
 
(In thousands)
Bank credit facility
$
1,423,147

 
$
1,423,147

 
$
1,328,998

 
Level 2
9.125% Senior Notes due 2018
500,000

 
491,134

 
424,585

 
Level 1
6.75% Senior Subordinated Notes due 2014
215,668

 
215,668

 
198,173

 
Level 1
7.125% Senior Subordinated Notes due 2016
240,750

 
240,750

 
181,526

 
Level 1
Borgata bank credit facility
15,000

 
15,000

 
15,000

 
Level 2
Borgata 9.50% Senior Secured Notes due 2015
398,000

 
386,452

 
364,170

 
Level 1
Borgata 9.875% Senior Secured Notes due 2018
393,500

 
382,274

 
348,248

 
Level 1
Other
11,248

 
11,248

 
10,686

 
Level 3
Total long-term debt, including current maturities
$
3,197,313

 
$
3,165,673

 
$
2,871,386

 
 

 
December 31, 2010
 
Outstanding Face Amount
 
Carrying Value
 
Estimated Fair Value
 
Fair Value Hierarchy
 
(In thousands)
Bank credit facility
$
1,425,000

 
$
1,425,000

 
$
1,346,625

 
Level 2
9.125% Senior Notes due 2018
500,000

 
490,206

 
487,755

 
Level 1
6.75% Senior Subordinated Notes due 2014
215,668

 
215,668

 
212,163

 
Level 1
7.125% Senior Subordinated Notes due 2016
240,750

 
240,750

 
217,879

 
Level 1
Borgata bank credit facility
60,900

 
60,900

 
60,900

 
Level 2
Borgata 9.50% Senior Secured Notes due 2015
400,000

 
386,712

 
375,111

 
Level 1
Borgata 9.875% Senior Secured Notes due 2018
400,000

 
387,758

 
379,518

 
Level 1
Other
11,761

 
11,761

 
11,173

 
Level 3
Total long-term debt, including current maturities
$
3,254,079

 
$
3,218,755

 
$
3,091,124

 
 

The estimated fair value of the Amended Credit Facility is based on a relative value analysis performed on or about September 30, 2011 and December 31, 2010, respectively. The estimated fair value of Borgata's bank credit facility at September 30, 2011 and December 31, 2010 approximates its carrying value due to the short-term nature and variable repricing of the underlying Eurodollar loans comprising the Borgata bank credit facility. The estimated fair values of our senior subordinated and senior notes and Borgata's senior secured notes are based on quoted market prices as of September 30, 2011 and December 31, 2010, respectively. Debt included in the “Other” category is fixed-rate debt that is due March 2013 and is not traded and does not have an observable market input; therefore, we have estimated its fair value based on a discounted cash flow approach, after giving consideration to the changes in market rates of interest, creditworthiness of both parties, and credit spreads.

There were no transfers between Level 1 and Level 2 measurements during the nine months ended September 30, 2011 or the year ended December 31, 2010.

Fair Value of Non-Recourse Obligations of Variable Interest Entity
At September 30, 2011 and December 31, 2010, the carrying value of LVE's long-term debt approximates its fair value due to the prevailing interest rates on the debt, which are comparable to market.