18. Fair Value Measurements

The Company measures certain financial assets and liabilities at fair value on a recurring basis, including certain note receivables and interest rate swap liabilities related to interest rate swap derivatives based on the mark-to-market position of the Company’s interest rate swap positions and other observable interest rates (see Note 17, “Derivative Financial Instruments”, for more information on these interest rate swaps).

FASB accounting guidance on fair value establishes a hierarchy for those instruments measured at fair value which distinguishes between assumptions based on market data (observable inputs) and the Company’s own assumptions (unobservable inputs). The hierarchy consists of three levels:

·	Level 1—Quoted market prices in active markets for identical assets or liabilities;

·	Level 2—Inputs other than Level 1 inputs that are either directly or indirectly observable; and

·	Level 3—Unobservable inputs developed using estimates and assumptions developed by the Company which reflect those that a market participant would use.

Determining which category an asset or liability falls within the hierarchy requires significant judgment. The Company evaluates its hierarchy disclosures each quarter. The following table summarizes the financial instruments measured at fair value in the accompanying Consolidated Balance Sheets as of December 31, 2014 and 2013 (in thousands):

	Fair Value Measurements as of December 31, 2014
			Quoted Market Prices in Active Markets for Identical Assets or Liabilities		Significant Other Observable Inputs		Significant Unobservable Inputs
	Total		Level 1		Level 2		Level 3
Assets
Convertible note receivable	$	6,775	$	-	$	-	$	6,775
Non-convertible note receivable		2,800		-		-		2,800
Liabilities
Interest rate swap liability		253		-		253		-
Total	$	9,828	$	-	$	253	$	9,575

	Fair Value Measurements as of December 31, 2013
			Quoted Market Prices in Active Markets for Identical Assets or Liabilities		Significant Other Observable Inputs		Significant Unobservable Inputs
	Total		Level 1		Level 2		Level 3
Assets
Interest rate swap asset	$	599	$	-	$	599	$	-

The carrying amount of accounts receivable at December 31, 2014 and 2013, including $360.3 million and $355.4 million, respectively, of receivables sold under the Current Receivables Securitization Program, approximates fair value because of the short-term nature of this item.

The notes above were obtained as part of the consideration received from the sale of MBS Dev in December 2014. Both have maturity dates of December 16, 2019. The convertible note can be converted into common units of a privately held company at the Company’s discretion. Both notes are carried at fair market value, which is revalued quarterly. The non-convertible promissory note was valued using a discounted cash flow analysis with a rate typical for investments in similar-sized companies. The convertible subordinated promissory note was additionally valued using an option pricing model. This method values the conversion feature by using the price paid per share by the most recent, third-party investor.

FASB accounting guidance on fair value measurements requires separate disclosure of assets and liabilities measured at fair value on a recurring basis, as noted above, from those measured at fair value on a nonrecurring basis. As of December 31, 2014, no assets or liabilities are measured at fair value on a nonrecurring basis.