7. Financial Instruments

Fair Value Measurements

Fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. There are three levels of inputs that may be used to measure fair value, which are as follows:

Level 1 – Observable inputs, such as quoted market prices for identical assets and liabilities in active public markets.

Level 2 – Observable inputs other than Level 1 prices based on quoted prices in markets with insufficient volume or infrequent transactions, or valuations in which all significant inputs are observable for substantially the full term of the asset or liability.

Level 3 – Unobservable inputs to the valuation techniques that are significant to the fair value of the asset or liability.

Assets and liabilities are measured at fair value based on one or more of the following three valuation techniques:

Market Approach – Fair value is determined based on prices and other relevant information generated by market transactions involving identical or comparable assets and liabilities.

Income Approach – Fair value is determined by converting relevant future amounts to a single present amount, based on market expectations (including present value techniques and option pricing models).

Cost Approach – Fair value represents the amount that currently would be required to replace the service capacity of the relevant asset (often referred to as replacement cost).

The fair value hierarchy of ICG’s financial assets measured at fair value on a recurring basis was as follows (in thousands):

	Asset (liability) at September 30, 2013					Valuation Technique (Approach)		Level 1									Level 2									Level 3
Cash equivalents (money market accounts)	$		53,391			Market		$		53,391					$				—					$				—
	$		53,391					$		53,391					$				—					$				—

	Asset (liability) at December 31, 2012					Valuation Technique (Approach)		Level 1									Level 2									Level 3
Cash equivalents (money market accounts and commercial paper investments)	$		13,918			Market		$		13,918					$				—					$				—
	$		13,918					$		13,918					$				—					$				—

The carrying value of certain of ICG’s other financial instruments, including accounts receivable and accounts payable approximates fair value due to the short-term nature of those instruments. The fair value of ICG’s long-term debt is based on assumptions concerning the amount and timing of estimated future cash flows and assumed risk-adjusted discount rates. See Note 8, “Debt” for further discussion.