5. Fair Value Measurements

Our assets and liabilities subject to fair value measurements on a recurring basis and the required disclosures:

	Fair		Fair Value Measurements
	Value		Using Fair Value Hierarchy
As of September 30, 2014	Total		Level 1		Level 2		Level 3
Assets:
Cash and cash equivalents	$	24,952	$	24,952	$	—	$	—
Corporate bonds		29,273		29,273		—		—
Mortgage-backed and asset-backed securities		1,532		1,532		—		—
Agency bonds		299		299		—		—
Marketable securities		31,104		31,104		—		—
Deferred compensation plan investments		1,226		1,226		—		—
Assets at fair value	$	57,282	$	57,282	$	—	$	—
Liabilities:
Interest rate swap	$	127		—	$	127		—
Deferred compensation		803		803		—		—
Liabilities at fair value	$	930	$	803	$	127	$	—

	Fair		Fair Value Measurements
	Value		Using Fair Value Hierarchy
As of December 31, 2013	Total		Level 1		Level 2		Level 3
Assets:
Cash and cash equivalents	$	41,904	$	41,904	$	—	$	—
Corporate bonds		18,833		18,833		—		—
Mortgage-backed and asset-backed securities		1,171		1,171		—		—
Marketable securities		20,004		20,004		—		—
Deferred compensation plan investments		1,003		1,003		—		—
Assets at fair value	$	62,911	$	62,911	$	—	$	—
Liabilities:
Deferred compensation	$	637	$	637	$	—	$	—
Contractual acquisition earn-outs		369		—		—		369
Liabilities at fair value	$	1,006	$	637	$	—	$	369

The carrying values of financial instruments, including accounts receivable, unbilled receivables, and accounts payable approximate their fair values due to their short-term maturities.

We hold marketable securities that are investment grade and are classified as available-for-sale. The securities include corporate bonds, agency bonds, and mortgage and asset-backed securities that are carried at fair market value based on quoted market prices.

We hold trading securities as part of a rabbi trust to fund supplemental executive retirement plans and deferred income plans. The funds held are all managed by a third party and include fixed income funds, equity securities, and money market accounts, or other investments for which there is an active quoted market. The related deferred compensation liabilities are valued based on the underlying investment selections in each participant’s account.

The interest rate swap was valued based on forward curves observable in the market, using Level 2 inputs; see Note 11. The effectiveness of the interest rate swap is computed by comparing the present value of the cumulative change in the expected future cash flows of the variable leg of the swap and the present value of the cumulative change in the expected future variable interest payments designated in the hedging relationship.

The contractual acquisition earn-outs were part of the consideration paid for acquisitions. The fair value of the earn-outs was based on probability-weighted payouts under different scenarios, discounted using a discount rate commensurate with the risk. The following table provides a summary of the changes in the our contractual acquisition earn-outs measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the nine months ended September 30, 2014:

	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
Balance at January 1, 2014	$	369
Fair value adjustment recognized in earnings		(101	)
Settlements		(268	)
Balance at September 30, 2014	$	—

Assets and liabilities that are measured at fair value on a non-recurring basis include long-lived assets, intangible assets, and goodwill. These items are recognized at fair value when they are considered to be other than temporarily impaired using significant unobservable inputs and are classified as Level 3.

Long-term debt, excluding leases, consists of borrowings under Senior Credit Facilities, and 4.5% and 7.75% convertible senior notes; see Note 11. The long-term debt, excluding leases, is reported at the borrowed amounts outstanding. At September 30, 2014, the estimated fair value of long-term debt, excluding leases, was approximately $124,000 versus a carrying value of $125,390. At September 30, 2013, the estimated fair value of long-term debt, excluding leases, was approximately $129,000 versus a carrying value of $140,829. The estimated fair value is based on a market approach using quoted market prices or current market rates for similar debt with approximately the same remaining maturities, where possible, and are classified as Level 2.

There were no transfers in or out of Level 1, 2, or 3 (as defined in Note 1) during the nine months ended September 30, 2014.