Fair Value Measurement Disclosures

9 Months Ended

Sep. 30, 2014

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Fair Value Measurement Disclosures

7. Fair Value Measurement Disclosures

Fair Value of Financial Instruments

Cash and cash equivalents, receivables, as well as accounts payable and accrued expenses, and other current liabilities, as reflected in the consolidated financial statements, approximate fair value because of the short-term maturity of these instruments. The estimated fair value of our other long-term debt instruments, approximate their carrying amounts as the interest rates approximate our current borrowing rate for similar debt instruments of comparable maturity, or have variable interest rates.

Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

The fair value of the senior secured notes are estimated using market quotes from a major financial institution taking into consideration the most recent activity and are considered Level 2 measurements within the fair value hierarchy.  The fair value of the Series B cumulative exchangeable redeemable preferred stock and the promissory notes payable were based upon either: (a)  unobservable market quotes from a major financial institution taking into consideration the most recent activity or (b) discounted cash flow analyses based on the current borrowing rates for similar types of borrowing arrangements resulting in a Level 3 classification.

The estimated fair values of our financial instruments are as follows (in millions):

		September 30, 2014				December 31, 2013
	Fair Value	Carrying		Fair		Carrying		Fair
Description	Hierarchy	Amount		Value		Amount		Value
12.5% senior secured notes due 2017	Level 2	$	275.0		296.8	$	275.0		297.7
10 3/4% Series B cumulative exchangeable      redeemable preferred stock	Level 3		133.9		60.1		126.6		37.8
Promissory note payable, included in other long-      term debt	Level 3		5.3		4.6		5.5		4.5
Promissory note payable, included in other long-      term debt	Level 3		—		—		2.7		2.7

Fair Value of Derivative Instruments

The following table represents required quantitative disclosures regarding fair values of our derivative instruments (in thousands).

			Fair value measurements at September 30, 2014
			Liabilities
Description	September 30, 2014 carrying value and balance sheet location of derivative instruments		Quoted prices in active markets for identical instruments (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Derivative designated as a cash flow hedging instrument:
Interest rate swap liability	$	456		—		456		—

			Fair value measurements at December 31, 2013
			Liabilities
Description	December 31, 2013 carrying value  and balance sheet location of derivative instruments		Quoted prices in active markets for identical instruments (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Derivative designated as a cash flow hedging instrument:
Interest rate swap liability	$	602		—		602		—

The interest rate swap fair value is derived from the present value of the difference in cash flows based on the forward-looking LIBOR yield curve rates, as compared to our fixed rate applied to the hedged amount through the term of the agreement, less adjustments for credit risk. There were no transfers between Levels during the three- and nine-month periods ended September 30, 2014 and 2013, respectively.

	Three-Months Ended				Nine-Months Ended
	September 30,				September 30,
Interest rate swaps	2014		2013		2014		2013
Gain recognized in other comprehensive loss      (effective portion)	$	71		18		146		156