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Fair Value Measurement
 3 Months Ended
Mar. 31, 2012
Fair Value Measurement [Abstract]  
Fair Value Measurement
5. Fair Value Measurement

Assets and liabilities measured at fair value on a recurring basis consist of the following as of March 31, 2012 (in thousands):

 

March 31,   
2012		      Fair Value Measurements at Reporting Date Using  
        Quoted Prices in
Active Markets for
Identical Assets/
Liabilities
(Level 1)		      Significant
Other
Observable
Inputs
(Level 2)		      Significant
Unobservable
Inputs
(Level 3)		  

Assets:

            

Cash equivalents (including restricted cash equivalent):

            

Money market funds

    $ 7,606       $ 7,606       $ —         $ —     
  

 

 

     

 

 

     

 

 

     

 

 

  

Total assets at fair value on a recurring basis

    $ 7,606       $ 7,606       $ —         $ —     
  

 

 

     

 

 

     

 

 

     

 

 

  

Liabilities:

            

Other Liabilities:

            

Interest rate swap

    $ 1,073       $ —         $ 1,073       $ —     

Deferred payments

      2,200         —           —           2,200   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total liabilities at fair value on a recurring basis

    $ 3,273       $ —         $ 1,073       $ 2,200   
  

 

 

     

 

 

     

 

 

     

 

 

  

Assets and liabilities measured at fair value on a recurring basis consist of the following as of December 31, 2011 (in thousands):

 

     December 31,
2011		      Fair Value Measurements at Reporting Date Using  
        Quoted Prices in
Active Markets for
Identical Assets/
Liabilities
(Level 1)		      Significant
Other
Observable
Inputs
(Level 2)		      Significant
Unobservable
Inputs
(Level 3)		  

Assets:

            

Cash equivalents:

            

Money market funds

    $ 7,606       $ 7,606       $ —         $ —     
  

 

 

     

 

 

     

 

 

     

 

 

  

Total assets at fair value on a recurring basis

    $ 7,606       $ 7,606       $ —         $ —     
  

 

 

     

 

 

     

 

 

     

 

 

  

Liabilities:

            

Other Liabilities:

            

Interest rate swap

    $ 1,010       $ —         $ 1,010       $ —     

Deferred payments

      2,200         —           —           2,200   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total liabilities at fair value on a recurring basis

    $ 3,210       $ —         $ 1,010       $ 2,200   
  

 

 

     

 

 

     

 

 

     

 

 

  

The Company measures the above items on a recurring basis at fair value as follows:

 

  •  

Money market funds — Classified in Level 1 is excess cash the Company holds in both taxable and tax-exempt money market funds and are included in cash and cash equivalents in the accompanying consolidated balance sheets. The Company records any net unrealized gains and losses for changes in fair value as a component of accumulated other comprehensive income in stockholders' equity. Realized gains and losses from the sale of marketable securities are based on the specific identification method. The Company's remaining cash and cash equivalents held at March 31, 2011 and 2012, approximate fair value and is not disclosed in the above tables because of the short-term nature of the financial instruments.

 

  •  

Interest rate swap — The Company has an interest rate swap with a notional amount of $92.5 million as of March 31, 2012, used to minimize the interest rate exposure on a portion of the Company's variable rate debt. The interest rate swap is used to fix the variable interest rate on the associated debt. The swap is classified within Level 2 and is valued using readily available pricing sources which utilize market observable inputs including the current variable interest rate for similar types of instruments.

 

  •  

Deferred payments — Classified within Level 3 as there is no liquid market for similarly priced instruments, and valued using a discounted cash flow model that encompassed significant unobservable inputs to estimate the operating results of the Acquisition. The assumptions used to prepare the discounted cash flows include estimates for interest rates, enrollment growth, retention rates and pricing strategies. These assumptions are subject to change as the underlying data sources evolve and the program matures.

At March 31, 2012, the carrying value of the Company's debt was $92.5 million. All of the Company's debt is variable interest rate debt and the carrying amount approximates fair value.

 

The Company did not change its valuation techniques associated with recurring fair value measurements from prior periods, and no assets or liabilities were transferred between levels of the fair value hierarchy during the three months ended March 31, 2011 or 2012. Assets measured at fair value on a non-recurring basis as of December 31, 2011 and March 31, 2012, include $6.8 million of goodwill and $1.6 million of other indefinite-lived intangible assets resulting from the Acquisition. The changes in the fair value of the Company's Level 3 liability during the three months ended March 31, 2012 are as follows (in thousands):

 

     Deferred
Payments		  

Balance at December 31, 2011

    $ 2,200   

Amounts earned

      (20 ) 

Adjustments to fair value

      20   

Transfers in or out of Level 3

      —     
  

 

 

  

Balance at March 31, 2012

    $ 2,200