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Fair Value Measurement | 12 Months Ended
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Dec. 31, 2012
Fair Value Measurement [Abstract] |
Fair Value Measurement |
7. | Fair Value Measurement
Assets and liabilities measured at fair value on a recurring basis consist of the following as of December 31, 2012 (in thousands):
|  |  |  |  | Fair Value Measurements at Reporting Date Using |
|  | December 31, 2012 |  |  | 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 |  | $ | 1,380 |  |  | $ | 1,380 |  |  | $ | – |  |  | $ | – |
Total assets at fair value on a recurring basis |  | $ | 1,380 |  |  | $ | 1,380 |  |  | $ | – |  |  | $ | – |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Other liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate swaps |  | $ | 1,211 |  |  | $ | – |  |  | $ | 1,211 |  |  | $ | – |
Deferred payments |  |  | 2,119 |  |  |  | – |  |  |  | – |  |  |  | 2,119 |
Total liabilities at fair value on a recurring basis |  | $ | 3,330 |  |  | $ | – |  |  | $ | 1,211 |  |  | $ | 2,119 |
Assets and liabilities measured at fair value on a recurring basis consist of the following as of December 31, 2011 (in thousands):
|  |  |  |  | Fair Value Measurements at Reporting Date Using |
|  | December 31, 2011 |  |  | 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 December 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 swaps – The Company has two interest rate swaps with a notional amount of $125.0 million as of December 31, 2012, used to minimize the interest rate exposure on a portion of the Company’s variable rate debt. The interest rate swaps are used to fix the variable interest rate on the associated debt. The swaps are classified within Level 2 and are 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 December 31, 2012, the carrying value of the Company’s debt was $125.0 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 years ended December 31, 2011 or 2012. Assets measured at fair value on a non-recurring basis as of December 31, 2011 and 2012, include $6.8 million of goodwill and $1.6 million of other indefinite-lived intangible assets resulting from the Acquisition. The deferred payment liability was established at the time of the Acquisition on December 27, 2011, and changes in the fair value of the Company’s Level 3 liability during the year ended December 31, 2012 are as follows (in thousands):
|  | Deferred Payments |
Balance at December 31, 2011 |  | $ | 2,200 |
Amounts earned |  |  | (136 | )
Adjustments to fair value |  |  | 55 |
Transfers in or out of Level 3 |  |  | — |
Balance at December 31, 2012 |  | $ | 2,119 |

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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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