Financial Instruments

Cash, Cash Equivalents and Equity Securities

Cash equivalents and equity securities with readily available determinable fair values (“Corporate Securities”) are classified as level 1 assets, as they have readily available market prices in an active market.

The following tables set forth the Company’s cash and cash equivalents and Corporate Securities’ adjusted cost, gross unrealized gains, gross unrealized losses and fair value by significant investment category recorded as cash and cash equivalents or long-term notes receivables and other assets, net as of June 30, 2019 and December 31, 2018 (in thousands):



	June 30, 2019
	Adjusted Cost		Unrealized Gains		Unrealized Losses		Fair Value		Cash and Cash Equivalents		Long-Term Notes Receivables and Other Assets, net
Cash	$	3,041	$	—	$	—	$	3,041	$	3,041	$	—

Level 1:
Money market funds	92		—		—		92		92		—

Total	$	3,133	$	—	$	—	$	3,133	$	3,133	$	—



	December 31, 2018
	Adjusted Cost		Unrealized Gains		Unrealized Losses			Fair Value		Cash and Cash Equivalents		Long-Term Notes Receivables and Other Assets, net
Cash	$	6,681	$	—	$	—		$	6,681	$	6,681	$	—

Level 1:
Money market funds	6,092		—		—			6,092		6,092		—
Corporate securities	3,485		—		(304		)	3,181		—		3,181
Subtotal	9,577		—		(304		)	9,273		6,092		3,181

Total	$	16,258	$	—	$	(304	)	$	15,954	$	12,773	$	3,181

The Company sold its Corporate Securities in June 2019 and realized a gain of $2.3 million. During the three and six months ended June 30, 2018, the Company recorded unrealized gains of $0.4 million and $0.7 million, respectively, associated with the change in fair value of the Corporate Securities.

The carrying amounts of the Company’s accounts and notes receivable, accounts payable and accrued and other liabilities approximate their fair values.

Long-Term Debt

Components of long-term debt including the associated interest rates and related fair values are as follows (in thousands, except interest rates):



	June 30, 2019				December 31, 2018				Stated Interest Rate
Issuance	Face Value		Estimated Fair Value		Face Value		Estimated Fair Value		Stated Interest Rate
2020 Notes	$	454,299	$	431,675	$	679,299	$	643,568	8.750	%
2022 Private Placement Notes	270,000		258,876		270,000		257,073		8.875	%
2022 Notes	900,000		862,920		900,000		855,000		7.875	%
2023 Notes	400,000		326,320		400,000		326,000		7.625	%
2024 Notes	225,000		215,033		—		—		8.500	%
Term Loan	803,925		805,950		807,975		807,975		N/A
Total	$	3,053,224	$	2,900,774	$	3,057,274	$	2,889,616

The Notes are fixed-rate debt considered Level 2 fair value measurements as the values were determined using observable market inputs, such as current interest rates, prices observable from less active markets, as well as prices observable from comparable securities. The Term Loan is floating-rate debt and approximates the carrying value as interest accrues at floating rates based on market rates.

Derivative Financial Instruments

Under the Consumer Financing Program, the Company pays a monthly fee to third-party financing providers based on the either the average daily outstanding balance of the loans or the number of outstanding loans depending on third-party financing provider. The Company also shares the liability for credit losses, depending on the credit quality of the customer. Because of the nature of certain provisions under the Consumer Financing Program, the Company records a derivative liability that is not designated as a hedging instrument and is adjusted to fair value, measured using the present value of the estimated future payments. Changes to the fair value are recorded through other income, net in the Consolidated Statement of Operations. The following represent the contractual obligations with the third-party financing providers under the Consumer Financing Program that are components of the derivative:


•	The Company pays either a monthly fee based on the average daily outstanding balance of the loans, or the number of outstanding loans, depending on the third-party financing provider

•The Company shares the liability for credit losses depending on the credit quality of the customer

•The Company pays transactional fees associated with customer payment processing

The derivative is classified as a Level 3 instrument. The derivative positions are valued using a discounted cash flow model, with inputs consisting of available market data, such as market yield discount rates, as well as unobservable internally derived assumptions, such as collateral prepayment rates, collateral default rates and loss severity rates. These derivatives are priced quarterly using a credit valuation adjustment methodology. In summary, the fair value represents an estimate of the present value of the cash flows the Company will be obligated to pay to the third-party financing provider for each component of the derivative.

The following table summarizes the fair value and the notional amount of the Company’s outstanding derivative instrument as of June 30, 2019 and December 31, 2018 (in thousands):



	June 30, 2019		December 31, 2018
Consumer Financing Program Contractual Obligations:
Fair value	$	136,254	$	117,620
Notional amount	465,864		368,708

Classified on the condensed consolidated unaudited balance sheets as:
Accrued expenses and other current liabilities	70,468		67,710
Other long-term obligations	65,786		49,910
Total Consumer Financing Program Contractual Obligation	$	136,254	$	117,620

Changes in Level 3 Fair Value Measurements

The following table summarizes the change in the fair value of the Level 3 outstanding derivative liability instrument for the six months ended June 30, 2019 and the twelve months ended December 31, 2018 (in thousands):



	Six months ended June 30, 2019			Twelve months ended December 31, 2018
Balance, beginning of period	$	117,620		$	46,496
Additions	47,115			93,095
Settlements	(29,908		)	(34,587		)
Losses included in earnings	1,427			12,616
Balance, end of period	$	136,254		$	117,620