Quarterly report pursuant to Section 13 or 15(d)

Fair Value

v2.4.0.6
Fair Value
 9 Months Ended
Sep. 30, 2012
Fair Value  
Fair Value

2.                                                                                      Fair Value

 

Fair value is the price at which an asset could be exchanged in a current transaction between knowledgeable, willing parties. A liability’s fair value is defined as the amount that would be paid to transfer the liability to a new obligor, not the amount that would be paid to settle the liability with the creditor.  Fair value measurements are categorized into one of three levels based on the lowest level of significant input used: Level 1 (unadjusted quoted prices in active markets); Level 2 (observable market inputs available at the measurement date, other than quoted prices included in Level 1); and Level 3 (unobservable inputs that cannot be corroborated by observable market data). The following table presents financial assets and liabilities measured at fair value on a recurring basis and discloses the fair value of long-term debt:

 

 

 

Fair Value at
9/30/2012

 

Fair Value at
12/31/2011

 

Assets:

 

 

 

 

 

Assets (a)

 

$

—

 

$

—

 

 

 

 

 

 

 

Total Assets

 

$

—

 

$

—

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

Long term debt (b)

 

$

110,805

 

$

122,709

 

Other non-current liabilities -

 

 

 

 

 

Interest rate swap (c)

 

600

 

621

 

 

 

 

 

 

 

Total Liabilities

 

$

111,405

 

$

123,330

 

 

 

(a)                                       The Company does not have any financial assets that are required to be measured at fair value on a recurring basis.

 

(b)                                       The fair value of the Company’s long-term debt, including current maturities, is estimated using discounted cash flows based on the Company’s current incremental borrowing rates for similar types of borrowing arrangements, which is a Level 2 input for all periods presented.  Meanwhile, long-term debt is recorded at carrying amount, net of discount, as disclosed on face of the balance sheet.

 

(c)                                        Valuation models are calibrated to initial trade price. Subsequent valuations are based on observable inputs to the valuation model (e.g. interest rates and credit spreads). Model inputs are changed only when corroborated by market data. A credit risk adjustment is made using observable market credit spreads. Thus, inputs used to determine fair value of the interest rate swap are Level 2 inputs.