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Fair Value Measurement
 3 Months Ended
Mar. 31, 2013
Fair Value Measurement [Abstract]  
Fair Value Measurement
 
4.                 Fair Value Measurement
 
Assets and liabilities measured at fair value on a recurring basis consist of the following as of March 31, 2013 (in thousands):
 
         
Fair Value Measurements at Reporting Date Using
  
   
March 31, 
2013
    
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
  
$
1,381
    
$
1,381
    
$
—
    
$
—
  
Total assets at fair value on a recurring basis
  
$
1,381
    
$
1,381
    
$
—
    
$
—
  
Liabilities:
                                
Other liabilities:
                                
Interest rate swaps
  
$
980
    
$
—
    
$
980
    
$
—
  
Deferred payments
    
2,115
      
—
      
—
      
2,115
  
Total liabilities at fair value on a recurring basis
  
$
3,095
    
$
—
    
$
980
    
$
2,115
  
 
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
  
 
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 may hold in both taxable and tax-exempt money market funds and are included in cash and cash equivalents in the accompanying unaudited condensed 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, 2012 and March 31, 2013, 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 $124.2 million as of March 31, 2013, used to minimize the interest rate exposure and fix the variable interest rate on a portion of the Company’s variable rate 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 — The Company acquired certain assets and entered into a deferred payment arrangement with one of the sellers, which are classified within Level 3 as there is no liquid market for similarly priced instruments. The deferred payments are valued using a discounted cash flow model that encompassed significant unobservable inputs to estimate the operating results of the acquired assets. 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, 2013, the carrying value of the Company’s debt was $124.2 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, 2012 or 2013. Assets measured at fair value on a non-recurring basis as of December 31, 2012 and March 31, 2013, include $6.8 million of goodwill and $1.6 million of other indefinite-lived intangible assets. The changes in the fair value of the Company’s Level 3 liability during the three months ended March 31, 2013 are as follows (in thousands):
 
 
   
Deferred
Payments
  
Balance at December 31, 2012
  
$
2,119
  
Amounts earned
    
 (65
) 
Adjustments to fair value
    
 61
  
Transfers in or out of Level 3
    
—
  
Balance at March 31, 2013
  
$
2,115