3. Debt

Long-term debt consisted of the following (in thousands):

	June 30, 2014		December 31, 2013
2021 notes	$	350,000	$	350,000
Other long-term debt		3,939		3,971
		353,939		353,971
Less: current portion of long-term debt		71		67
Long-term debt, net of current maturities	$	353,868	$	353,904

Fair Value

The only financial instrument measured at fair value on a recurring basis was our outstanding warrants.

The table below presents the effect of our derivative financial instrument on the condensed consolidated statements of operations and comprehensive income (loss) for the three and six months ended June 30 (in thousands):

Derivative Not Designated as Hedging Instrument		Amount of Gain (Loss) Recognized in Income
	Location of Gain (Loss)	Three Months Ended June 30,					Six Months Ended June 30,
	Recognized in Income	2014		2013			2014			2013
Warrants	Interest expense, net	$	1,178	$	(329	)	$	(19	)	$	(755	)

We use the income approach to value our warrants by using the Black-Scholes option-pricing model. Using this model, the risk-free interest rate is based on the U.S. Treasury yield curve in effect on the valuation date. The expected life is based on the period of time until the expiration of the warrants. Expected volatility is based on the historical volatility of our common stock over the most recent period equal to the expected life of the warrants. The expected dividend yield is based on our history of not paying regular dividends in the past and our current intention to not pay regular dividends in the foreseeable future.

These techniques incorporate Level 1 and Level 2 inputs. Significant inputs to the derivative valuation for the warrants are observable in the active markets and are classified as Level 2 in the hierarchy.

The following fair value hierarchy table presents information about our financial instrument measured at fair value on a recurring basis using significant other observable inputs (Level 2) (in thousands):

	Carrying Value As of June 30, 2014				Fair Value Measurement as of June 30, 2014				Carrying Value As of December 31, 2013				Fair Value Measurement as of December 31, 2013
Warrants (included in Other long-term liabilities)	$	3,849			$	3,849			$	3,830			$	3,830

We have elected to report the value of our 2021 Notes at amortized cost. The fair value of the 2021 Notes at June 30, 2014 was approximately $372.5 million and was determined using Level 2 inputs based on market prices.