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FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS
 12 Months Ended
Dec. 31, 2014
FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS  
FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

 

NOTE C — FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

 

Financial Instruments

 

The following table presents the components of cash and cash equivalents, short-term investments, and restricted funds:

 

 

 

December 31

 

December 31

 

 

 

2014

 

2013

 

 

 

(in thousands)

 

Cash and cash equivalents

 

 

 

 

 

Cash deposits(1)

 

$
99,615 

 

$
63,547 

 

Variable rate demand notes(1)(2)

 
16,326 

 
29,706 

 

Money market funds(3)

 
41,101 

 
12,101 

 

Total cash and cash equivalents

 

$
157,042 

 

$
105,354 

 

 

 

 

 

 

 

Short-term investments

 

 

 

 

 

Certificates of deposit(1)

 

$
45,909 

 

$
35,906 

 

Restricted cash, cash equivalents, and short-term investments(4)

 

 

 

 

 

Cash deposits(1)

 

$
1,386 

 

$
1,902 

 

 

(1)

Recorded at cost plus accrued interest, which approximates fair value.

(2)

Amounts may be redeemed on a daily basis with the original issuer.

(3)

Recorded at fair value as determined by quoted market prices (see amounts presented in the table of financial assets measured at fair value within this Note).

(4)

Amounts restricted for use are subject to change based on the requirements of the Company’s collateralized facilities (see Note H).

 

The Company’s long-term investment financial instruments are presented in the table of financial assets and liabilities measured at fair value within this note.

 

Concentrations of Credit Risk of Financial Instruments

 

The Company is potentially subject to concentrations of credit risk related to its cash, cash equivalents, and short-term investments. The Company reduces credit risk by maintaining its cash deposits primarily in FDIC-insured accounts and placing its unrestricted short-term investments primarily in FDIC-insured certificates of deposit with varying original maturities of ninety-one days to one year. However, certain cash deposits and certificates of deposit may exceed federally insured limits. At December 31, 2014 and 2013, cash, cash equivalents, and certificates of deposit totaling $77.3 million and $49.4 million, respectively, were not FDIC insured.

 

Fair Value Disclosure of Financial Instruments

 

The fair value of the Company’s Term Loan and notes payable debt obligations (see Note H) approximate the amounts recorded in the consolidated balance sheets as presented in the following table:

 

 

 

December 31

 

December 31

 

 

 

2014

 

2013

 

 

 

(in thousands)

 

 

Carrying

 

Fair

 

Carrying

 

Fair

 

 

 

Value

 

Value

 

Value

 

Value

 

Term loan(1) 

 

$
70,000 

 

$
70,000 

 

$
83,750 

 

$
83,750 

 

Notes payable(2)

 
56,759 

 
56,743 

 
22,082 

 
22,092 

 

 

 

$
126,759 

 

$
126,743 

 

$
105,832 

 

$
105,842 

 

 

(1)

The Term Loan, which was entered into on June 15, 2012 and amended January 2, 2015, carries a variable interest rate based on LIBOR, plus a margin, that is considered to be priced at market for debt instruments having similar terms and collateral requirements (Level 2 of the fair value hierarchy).

(2)

Fair value of the notes payable was determined using a present value income approach based on quoted interest rates from lending institutions with which the Company would enter into similar transactions (Level 2 of the fair value hierarchy).

 

Assets and Liabilities Measured at Fair Value on a Recurring Basis

 

The following table presents the assets and liabilities that are measured at fair value on a recurring basis as of December 31:

 

 

 

2014

 

2013

 

 

 

(in thousands)

 

Assets:

 

 

 

 

 

Money market funds(1)(3)

 

$
41,101 

 

$
12,101 

 

Equity, bond, and money market mutual funds held in trust related to the Voluntary Savings Plan(2)(3)

 
2,968 

 
3,063 

 

 

 

$
44,069 

 

$
15,164 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

Interest rate swap(4)

 

$
576 

 

$

—

 

 

(1)

Included in cash equivalents.

(2)

Nonqualified deferred compensation plan investments consist of U.S. and international equity mutual funds, government and corporate bond mutual funds, and money market funds which are held in a trust with a third-party brokerage firm. Quoted market prices are used to determine fair values of the investments which are included in other long-term assets, with a corresponding liability reported within other long-term liabilities.

(3)

Fair value measured using quoted prices of identical assets in active markets (Level 1 of the fair value hierarchy).

(4)

The interest rate swap fair value was determined by discounting future cash flows and receipts based on expected interest rates observed in market interest rate curves (Level 2 of the fair value hierarchy) adjusted for estimated credit valuation considerations reflecting nonperformance risk of the Company and the counterparty (Level 3 of the fair value hierarchy). The Company assessed Level 3 inputs as insignificant to the valuation at December 31, 2014 and considers the interest rate swap valuation in Level 2 of the fair value hierarchy.