FINANCIAL INSTRUMENTS

The following tables provide a summary of the Company’s significant financial assets and liabilities carried at fair value and measured on a recurring basis as of September 30, 2012 and January 1, 2012 (in thousands):



			Fair Value Measurements at September 30, 2012
	Total Carrying Value at September 30, 2012		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Interest rate swap derivative assets	$	6,997	$	—	$	6,997	$	—
Restricted investments:
Guaranteed Investment Contract	5,742		—		5,742		—
Rabbi Trust	9,341		9,341		—		—
Fixed income securities	2,172		—		2,172		—
Liabilities:
Interest rate swap derivative liabilities	$	747	$	—	$	747	$	—



			Fair Value Measurements at January 1, 2012
	Total Carrying Value at January 1, 2012		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Interest rate swap derivative assets	$	7,440	$	—	$	7,440	$	—
Restricted investments:
Guaranteed Investment Contract	5,742		—		5,742		—
Guaranteed Repurchase Agreements	33,821		—		33,821		—
Rabbi Trust	8,016		5,898		2,118		—
Fixed income securities	2,013		—		2,013		—

The Company’s Level 1 investment included in the tables above as of September 30, 2012 and January 1, 2012 relates to the Company's rabbi trust established for GEO employee and employer contributions to The GEO Group Inc. Non-qualified Deferred Compensation Plan. These contributions are invested in mutual funds for which quoted market prices in active markets are available.

The Company’s Level 2 financial instruments included in the tables above as of September 30, 2012 and January 1, 2012 consist of an interest rate swap asset held by the Company's Australian subsidiary, other interest rate swap assets of the Company, an investment in Canadian dollar denominated fixed income securities, a guaranteed investment contract which is a restricted investment related to CSC of Tacoma LLC and an Investment Repurchase Agreement (“Repo Agreement”) related to Municipal Correctional Finance, L.P. ("MCF"), the Company’s formerly consolidated VIE. On August 31, 2012, the Company closed on the purchase of MCF and in connection with the transaction, redeemed the MCF bonds and the Repo Agreement was terminated. Refer to Note 10-Variable Interest Entities and Note 11-Debt. As of January 1, 2012, the Repo Agreement consisted of guaranteed investments of $23.9 million and $9.9 million for the debt service reserve fund and the bond fund payment account, respectively. The Repo Agreement is considered a Level 2 restricted investment since its fair value is estimated by using market interest rates for similar securities. The Australian subsidiary’s interest rate swap asset is valued using a discounted cash flow model based on projected Australian borrowing rates. The Company’s other interest rate swap assets and liabilities are based on pricing models which consider prevailing interest rates, credit risk and similar instruments. The Canadian dollar denominated securities, not actively traded, are valued using quoted rates for these and similar securities. The restricted investment in the guaranteed investment contract is valued using quoted rates for these and similar securities. As of January 1, 2012, the Company's Level 2 financial instruments included a portion of the Company's rabbi trust which was invested in interest bearing assets, such as long-term bonds, which were valued using market interest rates for similar securities.