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Fair Value Measurements | 9 Months Ended
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Sep. 30, 2012
Fair Value Measurements [Abstract] |
Fair Value Measurements |
(5) | Fair Value Measurements
The Company measures certain financial instruments, including cash and cash equivalents, such as money market funds, at their fair values. The fair values were determined based on a three-tier valuation hierarchy for disclosure of significant inputs. These hierarchical tiers are defined as follows: Level 1 – inputs are unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 –inputs are other than quoted prices in active markets that are either directly or indirectly observable through market corroboration. Level 3 –inputs are unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions based on the best information available in the circumstances. The following tables provide the assets and liabilities carried at fair value measured on a recurring basis as of September 30, 2012 and December 31, 2011 (in thousands):
|  | Fair Value Measurements at September 30, 2012 Using |
|  | Total Carrying Value at September 30, 2012 |  |  | Quoted prices in active markets (Level 1) |  |  | Significant other observable i nputs (Level 2) |  |  | Significant unobservable inputs (Level 3) |
Assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and Cash Equivalents (1) |  | $ | 180,777 |  |  | $ | 180,777 |  |  | $ | - |  |  | $ | - |
Restricted Cash (1) |  |  | 38,700 |  |  |  | 38,700 |  |  |  | - |  |  |  | - |
Short-term investments (2) |  |  | 3,555 |  |  |  | - |  |  |  | 3,555 |  |  |  |  |
Bonds substituted for retainage (3) |  |  | 14,893 |  |  |  | - |  |  |  | 14,893 |  |  |  | - |
Long-term Investments – Auction rate securities (4) |  |  | 46,283 |  |  |  | - |  |  |  | - |  |  |  | 46,283 |
Total |  | $ | 284,208 |  |  | $ | 219,477 |  |  | $ | 18,448 |  |  | $ | 46,283 |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate swap contract (5) |  | $ | 2,214 |  |  | $ | - |  |  | $ | 2,214 |  |  | $ | - |
Contingent Consideration (6) |  |  | 46,706 |  |  |  | - |  |  |  | - |  |  |  | 46,706 |
|  | $ | 48,920 |  |  | $ | - |  |  | $ | 2,214 |  |  | $ | 46,706 |
|  | Fair Value Measurements at December 31, 2011 Using |
|  | Total Carrying Value at December 31, 2011 |  |  | Quoted prices in active markets (Level 1) |  |  | Significant other observable inputs (Level 2) |  |  | Significant unobservable inputs (Level 3) |
Assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and Cash Equivalents (1) |  | $ | 204,240 |  |  | $ | 204,240 |  |  | $ | - |  |  | $ | - |
Restricted Cash (1) |  |  | 35,437 |  |  |  | 35,437 |  |  |  | - |  |  |  |  |
Short-term investments (2) |  |  | 3,465 |  |  |  | 1,026 |  |  |  | 2,439 |  |  |  |  |
Bonds substituted for retainage (3) |  |  | 12,488 |  |  |  | - |  |  |  | 12,488 |  |  |  |  |
Long-term Investments – Auction rate securities (4) |  |  | 62,311 |  |  |  | - |  |  |  | - |  |  |  | 62,311 |
Total |  | $ | 317,941 |  |  | $ | 240,703 |  |  | $ | 14,927 |  |  | $ | 62,311 |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate swap contract (5) |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |
Contingent Consideration (6) |  |  | 51,555 |  |  |  | - |  |  |  | - |  |  |  | 51,555 |
|  | $ | 51,555 |  |  | $ | - |  |  | $ | - |  |  | $ | 51,555 |
| (1) | Cash, cash equivalents and restricted cash consist primarily of money market funds with original maturity dates of three months or less, for which fair value is determined through quoted market prices.
| (2) | Short-term investments are classified as other current assets and are comprised of municipal bonds, the majority of which are rated Aa2 or better. The fair values of the municipal bonds are obtained from readily-available pricing sources for comparable instruments, and as such, the Company has classified these assets as Level 2.
| (3) | Bonds substituted for retainage are classified as accounts receivable, including retainage and are comprised of U.S. Treasury Notes and other municipal bonds, the majority of which are rated Aa3 or better. The fair values of these assets are obtained from readily-available pricing sources for comparable instruments, and as such, the Company has classified these assets as Level 2.
| (4) | At September 30, 2012 the Company had $46.3 million invested in auction rate securities ("ARS") which the Company considers as available-for-sale long-term investments. The long-term investments ARS held by the Company at September 30, 2012 are in securities collateralized by student loan portfolios. At September 30, 2012 most of the Company's ARS were rated AAA and AA+. The Company estimated the fair value of its ARS utilizing an income approach valuation model which considered, among other items, the following inputs: (i) the underlying structure of each security; (ii) the present value of future principal and interest payments discounted at rates considered to reflect current market conditions (discount rates range from 3% to 7%); (iii) consideration of the probabilities of default or repurchase at par for each period (term periods range from 6 to 8 years); (iv) prices from recent comparable transactions; and (v) other third party pricing information without adjustment. See the Level 3 ARS rollforward below for disclosure of the Company's valuation approach.
| (5) | As discussed in Note 10 – Financial Commitments, the Company entered into a swap agreement with Bank of America, N.A. to establish a long-term interest rate for its $200 million five-year term loan. The swap agreement became effective for the term loan principal balance outstanding at January 31, 2012 and will remain effective through the maturity date of the term loan. The Company values the interest rate swap liability utilizing a discounted cash flow model that takes into consideration forward interest rates observable in the market and the counterparty's credit risk. This liability is classified as a component of other long-term liabilities.
| (6) | The liabilities listed as of September 30, 2012 above represent the contingent consideration for the Company's recent acquisitions for which the measurement period for purchase price analysis has concluded. See the Level 3 contingent consideration rollforward below for disclosure of the Company's valuation approach.
Assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the three and nine months ended September 30, 2012 and 2011 are as follows (in thousands):
|  | Auction Rate Securities |
Balance at December 31, 2011 |  | $ | 62,311 |
Purchases |  |  | - |
Settlements |  |  | (16,553 | )
Realized loss included in other income (expense), net |  |  | (2,699 | )
Reversal of pretax impairment charges included in accumulated other comprehensive income (loss) |  |  | 3,224 |
Balance at March 31, 2012 |  | $ | 46,283 |
Purchases |  |  | - |
Settlements |  |  | - |
Balance at June 30, 2012 |  | $ | 46,283 |
Purchases |  |  | - |
Settlements |  |  | - |
Balance at September 30, 2012 |  | $ | 46,283 |
|  | Auction Rate Securities |
Balance at December 31, 2010 |  | $ | 88,129 |
Purchases |  |  | - |
Settlements |  |  | - |
Balance at March 31, 2011 |  | $ | 88,129 |
Purchases |  |  | - |
Settlements |  |  | - |
Balance at June 30, 2011 |  | $ | 88,129 |
Purchases |  |  | - |
Settlements |  |  | - |
Balance at September 30, 2011 |  | $ | 88,129 |
The Company has classified its ARS investment as long-term investments in the Consolidated Condensed Balance Sheets as the Company believes the market for government-backed student loans may take in excess of twelve months to fully recover. The Company performs a fair market value assessment of its auction rate securities (ARS) on a quarterly basis. To estimate fair value, the Company utilizes an income approach valuation model, with consideration given to market-based valuation inputs. The model considers, among other items, the following inputs: (i) the underlying structure of each security; (ii) the present value of future principal and interest payments discounted at rates considered to reflect current market conditions (discount rates range from 3% to 7% for investment grade securities); (iii) consideration of the probabilities of default or repurchase at par for each period (term periods range from 6 to 8 years); (iv) prices from recent comparable transactions; and (v) other third party pricing information. The inputs and the Company's analysis consider: (i) contractual terms of the ARS instruments; (ii) government-backed guarantees, if any; (iii) credit ratings on the ARS; (iv) current interest rates on the ARS and other market interest rate data; (v) trade data available, including trade data from secondary markets, for the Company's ARS or similar ARS; (vi) recovery rates for any non-government guaranteed assets; (vii) historical transactions of the Company's ARS being called at par; (viii) refunding initiatives of ARS; and (ix) risk of downgrade and default. Current market conditions, including repayment status of student loans, credit market risk, market liquidity and macro-economic influences are reflected in these inputs. On a quarterly basis, the Company also assesses the recoverability of the ARS balance by reviewing: (i) the regularity and timely payment of interest on the securities; (ii) the probabilities of default or repurchase at par; (iii) the risk of loss of principal from government-backed versus non-government-backed securities; and (iv) the prioritization of the Company's tranche of securities within the investment in case of default. The potential impact of any principal loss is included in the valuation model. When the Company's analysis indicates an impairment of a security, several factors are considered to determine the proper classification of the charge including: (i) any requirement or intent to sell the security; (ii) failure of the issuer to pay interest or principal; (iii) volatility of fair value; (iv) changes to the ratings of the security; (v) adverse conditions specific to the security or market; (vi) expected defaults; and (vii) length of time and extent that fair value has been less than the cost basis. The accumulation of this data is used to conclude if a credit loss exists for the specific security, and then to determine the classification of the impairment charge as temporary or other-than-temporary. In the first quarter of 2012, the Company sold one ARS at auction for its full par value and two ARS in a secondary market. The settlement of the three securities resulted in a pre-tax impairment charge of $2.7 million. Liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the three and nine months ended September 30, 2012 and 2011 are as follows (in thousands):
|  | Contingent Consideration |
Balance at December 31, 2011 |  | $ | 51,555 |
Fair value adjustments included in other income (expense), net |  |  | 142 |
Balance at March 31, 2012 |  | $ | 51,697 |
Fair value measured at conclusion of purchase price analysis measurement period |  |  | 3,344 |
Fair value adjustments included in other income (expense), net |  |  | (298 | )
Balance at June 30, 2012 |  | $ | 54,743 |
Fair value adjustments included in other income (expense), net |  |  | (37 | )
Contingent consideration settled |  |  | (8,000 | )
Balance at September 30, 2012 |  | $ | 46,706 |
|  | Contingent Consideration |
Balance at December 31, 2010 |  | $ | - |
Fair value measured prior to conclusion of purchase price analysis measurement period |  |  | 4,200 |
Balance at March 31, 2011 |  | $ | 4,200 |
Fair value measured prior to conclusion of purchase price analysis measurement period |  |  | 5,500 |
Balance at June 30, 2011 |  | $ | 9,700 |
Fair value adjustments included in other income (expense), net |  |  | (1,432 | )
Fair value measured prior to conclusion of purchase price analysis measurement period |  |  | 40,432 |
Balance at September 30, 2011 |  | $ | 48,700 |
The fair values of the contingent consideration were estimated utilizing an income approach which is based on the cash flows that the acquired entity is expected to generate in the future. This approach requires management to project revenues, operating expenses, working capital investment, capital spending and cash flows for the reporting unit over a multi-year period, as well as determine the weighted average cost of capital to be used as a discount rate (weighted average cost of capital inputs have ranged from 14%-18%). The carrying amount of cash and cash equivalents approximates fair value due to the short-term nature of these items. The carrying values of receivables, payables, other amounts arising out of normal contract activities, including retainage, which may be settled beyond one year, are estimated to approximate fair value. Of the Company's long-term debt, the fair value of the fixed rate senior unsecured notes as of September 30, 2012 was $303.8 million, compared to its carrying value of $298.2 million. The fair value of the senior unsecured notes was estimated based on market quotations at September 30, 2012. The carrying value of the remaining balance of the Company's long-term debt of $402.6 million at September 30, 2012 is estimated to approximate fair value. There were no significant transfers between Level 1 and Level 2 financial assets and liabilities that are fair valued on a recurring basis during the nine months ended September 30, 2012 and 2011.

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- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 16 -URI http://asc.fasb.org/extlink&oid=7491637&loc=d3e13504-108611 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 107 -Paragraph 15C, 15D -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. 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Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 10 -URI http://asc.fasb.org/extlink&oid=7491637&loc=d3e13433-108611 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 159 -Paragraph 17-22, 27, 28 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. 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