Quarterly report pursuant to Section 13 or 15(d)

Financial Instruments

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Financial Instruments
 9 Months Ended
Sep. 30, 2012
Financial Instruments [Abstract]  
Financial Instruments [Text Block]

(4)       Financial Instruments

 

Fair Value of Financial Instruments

The fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties. At September 30, 2012 and December 31, 2011, the fair values of cash and cash equivalents, net receivables, accounts payable, accrued payroll and payroll related obligations, accrued interest, accrued liabilities, and subscriber deposits approximate their carrying value due to the short-term nature of these financial instruments. The carrying amounts and approximate fair values of our financial instruments at September 30, 2012 and December 31, 2011, follow (amounts in thousands):

      September 30,   December 31,
      2012   2011
      Carrying Amount   Fair Value   Carrying Amount   Fair Value
  Current and long-term debt and capital lease obligations $ 948,722   999,411   947,326   942,895
  Other liabilities   25,705   24,928   24,456   23,627

The following methods and assumptions were used to estimate fair values:

 

Current and long-term debt and capital lease obligations: The fair values of the $325.0 million in aggregate principal amount of 6.75% Senior Notes due 2021 issued by GCI, Inc., our wholly owned subsidiary, the $425.0 million in aggregate principal amount of 8.63% Senior Notes due 2019 issued by GCI, Inc., Rural Utilities Service debt, CoBank mortgage note payable, and capital leases are based upon quoted market prices for the same or similar issues or on the current rates offered to us for the same remaining maturities. The fair value of our $80.0 million term loan is estimated to approximate the carrying value because this instrument is subject to variable interest rates.

 

Other Liabilities: Lease escalation liabilities are valued at the discounted amount of future cash flows using quoted market prices on current rates offered to us. Deferred compensation liabilities are carried at fair value, which is the amount payable as of the balance sheet date. Asset retirement obligations are recorded at their fair value and, over time, the liability is accreted to its present value each period.

 

Fair Value Measurements

Assets measured at fair value on a recurring basis as of September 30, 2012 and December 31, 2011, are as follows (amounts in thousands):

      Fair Value Measurement at Reporting Date Using
  September 30, 2012 Assets   Quoted Prices in Active Markets for Identical Assets (Level 1)   Significant Other Observable Inputs (Level 2)   Significant Unobservable Inputs (Level 3)
  Deferred compensation plan assets (mutual funds) $ 1,728   -   -
  Total assets at fair value $ 1,728   -   -
               
  December 31, 2011 Assets            
  Deferred compensation plan assets (mutual funds) $ 1,600   -   -
  Total assets at fair value $ 1,600   -   -

The valuation of our mutual funds is determined using quoted market prices in active markets utilizing market observable inputs.