Fair Value of Financial Instruments | 9 Months Ended |
Sep. 30, 2013 |
Fair Value Disclosures [Abstract] | ' |
Fair Value of Financial Instruments | ' |
Note 6. Fair Value of Financial Instruments |
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The Company's financial assets and liabilities are measured at fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company classifies the inputs used to measure fair value into the following hierarchy: |
Level 1 Quoted prices in active markets for identical assets or liabilities. |
Level 2 Quoted prices in active markets for similar assets or liabilities, or quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable or can be corroborated by observable market data for the asset or liability. |
Level 3 Unobservable inputs for the asset or liability that are supported by little or no market activity. These fair values are determined using pricing models for which the assumptions utilize management's estimates or market participant assumptions. |
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Assets and Liabilities Measured at Fair Value on a Recurring Basis. The fair value hierarchy requires the use of observable market data when available. In instances where inputs used to measure fair value fall into different levels of the fair value hierarchy, the fair value measurement has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Company's assessment of the significance of a particular item to the fair value measurement in its entirety requires judgment, including the consideration of inputs specific to the asset or liability. |
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The fair value of interest rate swaps are determined by the counterparty based on interest rate changes. Interest rate swaps are valued based on observable interest rate yield curves for similar instruments. The fair value of the redeemable noncontrolling interest in DiscoverReady is determined by management using a market approach, calculated as trailing 12 month earnings before interest, taxes, depreciation and amortization multiplied by an estimated multiple of earnings, less net debt. |
The following table summarizes the balances of liabilities measured at fair value on a recurring basis as of September 30, 2013 (in thousands): | | |
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| | Level 1 | | Level 2 | | Level 3 | | Total | | |
Interest rate swaps | $ | — | | $ | 711 | | $ | — | | $ | 711 | | |
Redeemable noncontrolling interest in DiscoverReady | — | | — | | 7,836 | | 7,836 | | |
Total | $ | — | | $ | 711 | | $ | 7,836 | | $ | 8,547 | | |
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The following table summarizes the balances of liabilities measured at fair value on a recurring basis as of December 31, 2012 (in thousands): | | |
| | Level 1 | | Level 2 | | Level 3 | | Total | | |
Interest rate swaps | $ | — | | $ | 1,421 | | $ | — | | $ | 1,421 | | |
Redeemable noncontrolling interest in DiscoverReady | — | | — | | 7,283 | | 7,283 | | |
Total | $ | — | | $ | 1,421 | | $ | 7,283 | | $ | 8,704 | | |
The following table summarizes the changes in fair value for all liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three months ended September 30, 2013 (in thousands): | |
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| | | | | | | | Redeemable NCI in DiscoverReady | | |
Balance at June 30, 2013 | | | | | | | | | | $ | 14,946 | | |
Minority partners’ share of earnings | | | | | | | | | | | -78 | | |
| Distributions to minority partners | | | | | | | | | | | -246 | | |
| Fair value adjustment included in additional paid-in capital | | | | | | -6,786 | | |
Balance at September 30, 2013 | | | | | | | | | | $ | 7,836 | | |
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The following table summarizes the changes in fair value for all liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the nine months ended September 30, 2013 (in thousands): | |
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| | | | | | | | Redeemable NCI in DiscoverReady | | |
Balance at December 31, 2012 | | | | | | | | | | $ | 7,283 | | |
Minority partners’ share of earnings | | | | | | | | | | | 892 | | |
| Distributions to minority partners | | | | | | | | | | | -498 | | |
| Fair value adjustment included in additional paid-in capital | | | | | | 159 | | |
Balance at September 30, 2013 | | | | | | | | | | $ | 7,836 | | |
Non-Financial Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis. Certain assets and liabilities are measured at fair value on a nonrecurring basis and are subject to fair value adjustments in certain circumstances (e.g., when there is evidence of impairment). |
The following table summarizes the adjusted basis of non-financial assets measured at fair value on a non-recurring basis as of September 30, 2013 (in thousands): | | | |
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| Level 1 | | Level 2 | | Level 3 | | Total | | | |
Long-lived assets, indefinite lived assets, and goodwill held for sale (a) | $ | - | | $ | - | | $ | 4,985 | | $ | 4,985 | | | |
Goodwill (b) | | - | | | - | | | 23,899 | | | 23,899 | | | |
| $ | - | | $ | - | | $ | 28,884 | | $ | 28,884 | | | |
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The following table summarizes the adjusted basis on non-financial assets measured at fair value on a non-recurring basis as of December 31, 2012 (in thousands): | | | |
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| Level 1 | | Level 2 | | Level 3 | | Total | | | |
Long-lived assets held and used (c) | $ | - | | $ | - | | $ | 1,120 | | $ | 1,120 | | | |
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In the first quarter of 2013, the Company recorded held for sale impairment charges of $10.7 million, of which $0.9 million was property and equipment, $7.9 million was finite-lived intangible assets, $1.3 million was indefinite-lived intangible assets, and $0.6 million was goodwill, related to two of its stand-alone businesses within the Business Information segment, reducing the original carrying value of these assets from $15.7 million to $5.0 million. See Note 2 for additional discussion of these impairments recorded within discontinued operations. |
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The Company recorded a preliminary goodwill impairment charge of $35.4 million during the third quarter of 2013 in its Business Information segment. This impairment reduced goodwill in the Business Information segment to a carrying value of $23.9 million. See Note 8 for additional discussion of this impairment. |
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The Company recorded an impairment charge of $19.9 million, of which $0.3 million was property and equipment and $19.6 million was finite-lived intangible assets, in 2012 related to certain long-lived assets held and used in its Mortgage Default Processing Services segment. This impairment reduced the original carrying value of these assets from $21.0 million to $1.1 million. |
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Fair Value of Financial Instruments: The carrying value of cash equivalents, accounts receivable, notes receivable, accounts payable and accrued expenses approximate fair value because of the short-term nature of these instruments. The carrying value of the Company's debt is the remaining amount due to its debtors under borrowing arrangements. To estimate the fair value of its debt, the Company estimates an interest rate it would be required to pay if it had to refinance its debt. At September 30, 2013, the fair value of variable-rate debt under the Company's senior credit facility |