FAIR VALUE MEASUREMENTS

3 Months Ended

Mar. 31, 2013

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS

NOTE 2—FAIR VALUE MEASUREMENTS

        ASC 820, Fair Value Measurements and Disclosures, provides guidance for measuring the fair value of assets and liabilities and requires expanded disclosures about fair value measurements. ASC 820 indicates that fair value should be determined based on the assumptions marketplace participants would use in pricing the asset or liability and provides additional guidelines to consider in determining the market-based measurement.

        ASC 820 requires fair value measurements be classified and disclosed in one of the following categories:

Level 1:	Unadjusted quoted market prices for identical assets and liabilities.
Level 2:	Inputs other than Level 1 that are observable, either directly or indirectly, for the asset or liability through corroboration with market data for substantially the full term of the asset or liability.
Level 3:	Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities (management's own assumptions about what market participants would use in pricing the asset or liability at the measurement date).

        Cash equivalents:    Cash equivalents include investments in money market funds. Investments in this category can be redeemed immediately at the current net asset value per share. A money market fund is a mutual fund whose investments are primarily in short-term debt securities designed to maximize current income with liquidity and capital preservation, usually maintaining per share net asset value at a constant amount, such as one dollar. The carrying amounts approximate fair value because of the short maturity of these instruments.

        Acquisition-related contingent considerations:    Contingent consideration related to the July 2003 acquisition of Scioto Downs represents the estimate of amounts to be paid to shareholders of Scioto Downs under certain earn-out provisions. We consider the acquisition related contingency's fair value measurement to be Level 3 within the fair value hierarchy.

        The following table presents assets and liabilities measured at fair value on a recurring basis at March 31, 2013 and December 31, 2012:

	March 31, 2013
Description	(Level 1)		(Level 2)		(Level 3)		Total
	(in thousands)
Assets
Cash equivalents	$	43,312	$	—	$	—	$	43,312
Total assets	$	43,312	$	—	$	—	$	43,312
Liabilities
Acquisition-related contingent considerations	$	—	$	—	$	542	$	542
Total liabilities	$	—	$	—	$	542	$	542

	December 31, 2012
Description	(Level 1)		(Level 2)		(Level 3)		Total
	(in thousands)
Assets
Cash equivalents	$	43,301	$	—	$	—	$	43,301
Total assets	$	43,301	$	—	$	—	$	43,301
Liabilities
Acquisition-related contingent considerations	$	—	$	—	$	517	$	517
Total liabilities	$	—	$	—	$	517	$	517

        The following table represents the change in acquisition-related contingent consideration liabilities during the three months ended March 31, 2013:

Balance as of December 31, 2012	$	517
Amortization of present value discount(1)		19
Fair value adjustment for change in consideration expected to be paid(2)		6
Settlements		—
Balance as of March 31, 2013	$	542

(1)

Changes in present value are included as a component of interest expense in the consolidated statement of operations.

(2)

Fair value adjustments for changes in earn-out estimates are recorded to indefinite-lived intangibles in the consolidated balance sheet.

        The carrying amounts for cash, trade accounts receivable, and trade accounts payable approximate their respective fair values based on the short-term nature of these instruments. The fair value of our 11.5% Senior Secured Second Lien Notes was $592.1 million at March 31, 2013 compared to a carrying value of $557.2 million at March 31, 2013. The fair value of our 11.5% Senior Secured Second Lien Notes was $609.9 million at December 31, 2012 compared to a carrying value of $556.7 million at December 31, 2012. The fair values of our Senior Secured Second Lien Notes were determined based on Level 2 inputs including quoted market prices and bond terms and conditions.