Fair Value Measurement

9 Months Ended

Sep. 30, 2015

Fair Value Measurement

Fair value accounting standards describe three levels that may be used to measure fair value:


•	Level 1 - Quoted prices in active markets for identical assets or liabilities.


•	Level 2 - Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.


•	Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The following tables summarize significant assets and liabilities measured at fair value in the condensed consolidated balance sheets on a recurring basis for each of the fair value levels (in thousands):



	Fair Value Measurement at Reporting Date Using
September 30, 2015	Level 1		Level 2		Level 3		Total
Cash equivalents
Money market funds	$	50,006	$	—	$	—	$	50,006
Total assets	$	50,006	$	—	$	—	$	50,006



	Fair Value Measurement at Reporting Date Using
December 31, 2014	Level 1		Level 2		Level 3		Total
Cash equivalents
Money market funds	$	60,618	$	—	$	—	$	60,618
Total assets	$	60,618	$	—	$	—	$	60,618



	Fair Value Measurement at Reporting Date Using
September 30, 2014	Level 1		Level 2		Level 3		Total
Cash equivalents
Money market funds	$	50,148	$	—	$	—	$	50,148
Total assets	$	50,148	$	—	$	—	$	50,148

A reconciliation of cash equivalents to consolidated cash and cash equivalents is as follows:



(in thousands)	September 30, 2015		December 31, 2014		September 30, 2014
Cash equivalents	$	50,006	$	60,618	$	50,148
Cash	171,779		195,343		117,026
Total cash and cash equivalents	$	221,785	$	255,961	$	167,174

In March 2014, we entered into an interest rate swap with a notional amount of $100.0 million which matures in June 2018 to convert the interest rate of our 2019 Notes (defined in Note 11) from a fixed rate of 6.11% to a floating rate of 4.15% plus six-month LIBOR. The interest rate swap is reported at fair value using Level 2 inputs, and gains or losses, including net periodic settlement amounts, are recorded in other (income) expense, net in our condensed consolidated statements of operations. During the three and nine months ended September 30, 2015, we recorded net gains of $1.2 million and $2.5 million, respectively, and during the three and nine months ended September 30, 2014, we recorded net losses of $0.6 million and a net gain of $0.3 million, respectively. The fair value of the interest rate swap is recorded in other current assets on the condensed consolidated balance sheets and was $2.1 million, $0.3 million and less than $0.1 million as of September 30, 2015, December 31, 2014 and September 30, 2014, respectively.

In March 2014, we entered into two diesel commodity swaps covering the periods from May 2014 to October 2014 and from May 2015 to October 2015 which represented roughly 25% of our forecasted purchases for diesel during these periods. In May 2014, we entered into two natural gas commodity swaps covering the periods from June 2014 to October 2014 and from May 2015 to October 2015 representing roughly 25% of our forecasted purchases of natural gas during these periods. The commodity swaps are reported at fair value using Level 2 inputs, and gains or losses, including net periodic settlement amounts, are recorded in other (income) expense, net in our condensed consolidated statements of operations. During the three and nine months ended September 30, 2015, we recorded losses of $0.4 million, and during the three and nine months ended September 30, 2014, we recorded losses of $0.6 million and $0.7 million, respectively. The fair values of the commodity swaps are recorded in accrued expenses and other current liabilities on the condensed consolidated balance sheets and were $0.7 million, $1.7 million and $0.5 million as of September 30, 2015, December 31, 2014 and September 30, 2014, respectively.

The carrying values and estimated fair values of our financial instruments that are not required to be recorded at fair value in the condensed consolidated balance sheets are as follows:



		September 30, 2015				December 31, 2014				September 30, 2014
(in thousands)	Fair Value Hierarchy	Carrying Value		Fair Value		Carrying Value		Fair Value		Carrying Value		Fair Value
Assets:
Held-to-maturity marketable securities	Level 1	$	88,253	$	88,313	$	102,067	$	101,808	$	102,090	$	101,711
Liabilities (including current maturities):
Senior notes payable¹	Level 3	$	200,000	$	212,919	$	200,000	$	220,226	$	200,000	$	225,186
Credit Agreement loan¹	Level 3	70,000		69,753		70,000		70,153		70,000		70,258

¹The fair values of the senior notes payable and Credit Agreement (defined in Note 11) loan are based on borrowing rates available to us for long-term loans with similar terms, average maturities, and credit risk.

The carrying values of receivables, other current assets, and accrued expenses and other current liabilities approximate their fair values due to the short-term nature of these instruments. In addition, the fair value of non-recourse debt measured using Level 3 inputs approximates its carrying value due to its relative short-term nature and competitive interest rates. During the three and nine months ended September 30, 2015 and 2014, we did not record any fair value adjustments related to nonfinancial assets and liabilities measured at fair value on a nonrecurring basis.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details