FAIR VALUE MEASUREMENTS

12 Months Ended

Dec. 31, 2012

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS

9. FAIR VALUE MEASUREMENTS

Accounting guidance for fair value measurements establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value.  These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

As of December 31, 2012, the Company holds Contingent Consideration that is required to be measured at fair value on a recurring basis.  The contingent consideration arrangement involves the purchase of the Good Sam Travel Assist Program from a current marketing partner which requires the Company to pay an agreed upon percentage of acquisition and renewal revenue over a five year period ending on July, 31, 2017.  The contingent consideration approximates the projected amount that would have been received by the marketing partner over the next five years if the prior marketing agreement was extended.  This fair value measurement was based on significant inputs not observable in the market and thus represents a Level 3 measurement as defined in ASC 820.

The Company’s interest rate swap contracts are not traded on a public exchange.  The fair value of the interest rate swap contracts held December 31, 2011 were determined based on inputs that are readily available in public markets or can be derived from information available in publicly quoted markets.  Therefore, the Company categorized these swap contracts as Level 2.  See Note 8 - Interest Rate Swap Agreements for further information on the interest rate swap contracts.

The Company’s liability at December 31, 2012, measured at fair value on a recurring basis subject to the disclosure requirements from accounting guidance, was as follows:

			Fair Value Measurements at Reporting Date Using
(in thousands)			Active Markets for Identical Assets		Other Observable Inputs		Significant Unobservable Inputs
Description	Amount		(Level 1)		(Level 2)		(Level 3)
As of December 31, 2012:
Contingent Consideration	$	(2,693)	$	-	$	-	$	(2,693)
As of December 31, 2011:
Interest Rate Swap Contracts	(3,871)		-		(3,871)		-

The fair value of the “Contingent Consideration” was calculated using a discounted cash flow model.  The fair value of the interest rate swap contracts was calculated using the income method based on quoted interest rates.

There have been no transfers of assets or liabilities between the fair value measurement levels and there were no material re-measurements to fair value during 2012 and 2011 of assets and liabilities that are not measured at fair value on a recurring basis.

The following table presents the reported carrying value and fair value information for the Company’s Senior Secured Notes, CW Credit Facility.  The fair values shown below for the Senior Secured Notes is based on quoted prices in the market for identical assets (Level 1), and the CW Credit Facility is based on indirect observable inputs (Level 2) (in thousands):

	12/31/2012				12/31/2011
	Carrying Value		Fair Value		Carrying Value		Fair Value
11.5% Senior Secured Notes	$	320,598	$	348,364	$	326,944	$	326,340
CW Credit Facility	11,872		11,872		10,506		10,506