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Fair Value Measurement
 12 Months Ended
Dec. 31, 2013
Fair Value Measurement [Abstract]  
Fair Value Measurement
8.          Fair Value Measurement
 
Assets and liabilities measured at fair value on a recurring basis consist of the following as of December 31, 2013 (in thousands):
 
     
Fair Value Measurements at Reporting Date Using
  
   
December 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
   $ 8,382     $ 8,382     $ –     $ –  
Interest rate swaps
     45       –       45       –  
Total assets at fair value on a recurring basis
   $ 8,427     $ 8,382     $ 45     $ –  
Liabilities:
                                
Other liabilities:
                                
Deferred payments
   $ 2,115     $ –     $ –     $ 2,115  
Total liabilities at fair value on a recurring basis
   $ 2,115     $ –     $ –     $ 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 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, 2012 and 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 $121.9 million as of December 31, 2013, 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, 2013, the carrying value of the Company’s debt was $121.9 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, 2012 or 2013. Assets measured at fair value on a non-recurring basis as of December 31, 2012 and 2013, 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 that was outstanding throughout the year ended December 31, 2013 are as follows (in thousands):

 
 
Deferred
Payments
 
Balance at December 31, 2012
 
$
2,119
 
Amounts earned
 
 
(311
)
Adjustments to fair value
 
 
307
  
Transfers in or out of Level 3
 
 
—
 
Balance at December 31, 2013
 
$
2,115