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Fair Value Measurement
 12 Months Ended
Dec. 31, 2015
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 December 31, 2015 (in thousands):

 

 

 

 

 

 

Fair Value Measurements at Reporting Date Using

 

 

December 31, 2015

 

 

 

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

 

$

100

 

 

 

$

100

 

 

 

$

—

 

 

 

$

—

Total assets at fair value on a recurring basis

 

$

100

 

 

 

$

100

 

 

 

$

—

 

 

 

$

—

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other long-term liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deferred payments

 

$

3,278

 

 

 

$

—

 

 

 

$

—

 

 

 

$

3,278

Total liabilities at fair value on a recurring basis

 

$

3,278

 

 

 

$

—

 

 

 

$

—

 

 

 

$

3,278
 

Assets and liabilities measured at fair value on a recurring basis consist of the following as of December 31, 2014 (in thousands):

 

 

 

 

 

 

 

Fair Value Measurements at Reporting Date Using

 

 

 

December 31,
2014

 

 

 

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

 

 

$

8,275

 

 

 

$

8,275

 

 

 

$

—

 

 

 

$

—

Interest rate swaps

 

 

 

143

 

 

 

 

—

 

 

 

 

143

 

 

 

 

—

Total assets at fair value on a recurring basis

 

 

$

8,418

 

 

 

$

8,275

 

 

 

$

143

 

 

 

$

—

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other long-term liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deferred payments

 

 

$

2,398

 

 

 

$

—

 

 

 

$

—

 

 

 

$

2,398

Total liabilities at fair value on a recurring basis

 

 

$

2,398

 

 

 

$

—

 

 

 

$

—

 

 

 

$

2,398

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. The Company’s cash and cash equivalents held at December 31, 2014 and 2015, approximate fair value and are not disclosed in the above tables because of the short-term nature of the financial instruments.

•       Interest rate swap — The Company had an interest rate swap with a notional amount of $118.8 million as of December 31, 2014, used to minimize the interest rate exposure and fix the variable interest rate on a portion of the Company’s variable rate debt. The swap was classified within Level 2 and was valued using readily available pricing sources which utilize market observable inputs including the current variable interest rate for similar types of instruments. The swap was terminated when the Company repaid all its outstanding debt in July 2015 upon completion of its Amended Credit Facility (see Note 6).

•       Deferred payments — The Company acquired certain assets and entered into a deferred payment arrangement with one of the sellers in connection with an acquisition completed in 2011, which is classified within Level 3 as there is no liquid market for similarly priced instruments. The deferred payment is valued using a discounted cash flow model that encompasses 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.

The Company’s lease loss liability incorporates an assessment of current sublease market conditions and uses Level 3 inputs, but is not deemed a fair value liability as the future lease payments are required to be discounted using the Company’s incremental borrowing rate at the date of lease abandonment without subsequent adjustment. See Note 3 for further discussion of the Company’s lease loss liability.

At December 31, 2014, the carrying value of the Company’s debt was $118.8 million, which approximated fair value. All of the Company’s debt was variable interest rate debt and classified within Level 2 because it was valued using readily available pricing sources which utilize market observable inputs. The Company has no outstanding debt as of December 31, 2015.

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, 2014 or 2015. Changes in the fair value of the Company’s Level 3 deferred payment liability that was outstanding throughout the years ended December 31, 2014 and 2015 are as follows (in thousands):

 

 

2014

 

2015

Balance at beginning of year

 

$

2,115

 

 

$

2,398

 

Amounts earned

 

 

(545

)

 

 

(756

)

Adjustments to fair value

 

 

828

 

 

 

1,636

 

Balance at end of year

 

$

2,398

 

 

$

3,278