Fair Value Measurements

9 Months Ended

Sep. 30, 2014

FAIR VALUE MEASUREMENTS

The fair value of an asset or liability is the price that would be received to sell an asset or transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company utilizes a fair value hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value and defines three levels of inputs that may be used to measure fair value. Level 1 inputs are quoted prices in active markets for identical assets or liabilities. Level 2 inputs are observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets, quoted prices in markets that are not active, inputs other than quoted prices that are observable for the asset or liability, or inputs derived from observable market data. Level 3 inputs are unobservable inputs that are supported by little or no market activity and are significant to the fair value of the assets or liabilities.

The Company’s financial assets and liabilities as of September 30, 2014 that are measured at fair value on a recurring basis were as follows (in thousands):



	Level 1		Level 2		Level 3
ASSETS
Marketable securities⁽¹⁾	$	43,286	$	—	$	—
Derivative instruments (included in other receivables)	1,419		5,958		—
Construction reserve funds and Title XI reserve funds	321,278		—		—
LIABILITIES
Short sale of marketable securities (included in other current liabilities)	10,351		—		—
Derivative instruments (included in other current liabilities)	3,268		864		—

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(1)

Marketable security gains (losses), net include unrealized gains of $9.7 million and unrealized losses of $1.2 million for the three months ended September 30, 2014 and 2013, respectively, related to marketable security positions held by the Company as of September 30, 2014. Marketable security gains (losses), net include unrealized gains of $15.3 million and $9.4 million for the nine months ended September 30, 2014 and 2013, respectively, related to marketable security positions held by the Company as of September 30, 2014.

The estimated fair values of the Company’s other financial assets and liabilities as of September 30, 2014 were as follows (in thousands):



			Estimated Fair Value
	Carrying Amount		Level 1		Level 2		Level 3
ASSETS
Cash, cash equivalents and restricted cash	$	463,288	$	463,288	$	—	$	—
Investments, at cost, in 50% or less owned companies (included in other assets)	13,728		see below
Notes receivable from third parties (included in other receivables and other assets)	22,592		see below
LIABILITIES
Long-term debt, including current portion⁽¹⁾	881,948		—		1,015,744		—

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(1)	The estimated fair value includes the conversion options on the Company's 2.5% and 3.0% Convertible Senior Notes.

The carrying value of cash, cash equivalents and restricted cash approximates fair value. The fair value of the Company’s long-term debt was estimated based upon quoted market prices or by using discounted cash flow analyses based on estimated current rates for similar types of arrangements. It was not practicable to estimate the fair value of the Company’s investments, at cost, in 50% or less owned companies because of the lack of quoted market prices and the inability to estimate fair value without incurring excessive costs. It was not practicable to estimate the fair value of the Company’s notes receivable from third parties as the overall returns are uncertain due to certain provisions for additional payments contingent upon future events. Considerable judgment was required in developing certain of the estimates of fair value and, accordingly, the estimates presented herein are not necessarily indicative of the amounts that the Company could realize in a current market exchange.

The Company’s non-financial assets and liabilities that were measured at fair value during the nine months ended September 30, 2014 were as follows (in thousands):



	Level 1		Level 2		Level 3
ASSETS
Long-lived assets held for sale⁽¹⁾	$	—	$	11,700	$	—
Investment in Witt O'Brien's LLC⁽²⁾	—		50,569		—

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(1)	During the nine months ended September 30, 2014, the Company recognized impairment charges of $3.9 million related to two aircraft following the adjustment of their carrying value to fair value based on the expected sales price of each.


(2)	During the nine months ended September 30, 2014, the Company marked its equity investment in Witt O'Brien's LLC ("Witt O'Brien's") to fair value following its acquisition of a controlling interest (See Note 4). The investment's fair value was based on the Company's purchase price of the acquired interest.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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