Filing Date: 2011-08-09 Form Type: 10-Q Description: Quarterly report
 v2.3.0.11
Fair Value Measurements
 6 Months Ended
Jun. 30, 2011
Fair Value Measurements

(9) Fair Value Measurements

The fair value of our financial assets and liabilities was determined based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value which are the following: 

Level 1 — Unadjusted quoted prices that are available in active markets for the identical assets or liabilities at the measurement date.

Level 2 — Other observable inputs available at the measurement date, other than quoted prices included in Level 1, either directly or indirectly, including:

· Quoted prices for similar assets or liabilities in active markets;

· Quoted prices for identical or similar assets in non-active markets;

· Inputs other than quoted prices that are observable for the asset or liability; and

· Inputs that are derived principally from or corroborated by other observable market data.

Level 3 — Unobservable inputs that cannot be corroborated by observable market data and reflect the use of significant management judgment. These values are generally determined using pricing models for which the assumptions utilize management’s estimates of market participant assumptions.

Liabilities measured at fair value on a recurring basis are summarized below as of June 30, 2011 and 2010 (in thousands):

        Fair value measurement at reporting date
Description   As of June 30, 2011   Level 1   Level 2   Level 3
Contingent consideration    $                      17                        -                          -      $                 17

 

 

Description   As of December 31, 2010   Level 1   Level 2   Level 3
Contingent consideration    $                     46                        -                          -      $                 46

The following table provides a reconciliation between the beginning and ending balances of items measured at fair value on a recurring basis that used significant unobservable inputs (Level 3) (in thousands):

    Contingent
  Consideration
Balances as of December 31, 2010   $                    46
Purchases, sales and settlements, net                      (29)
Transfers in and/or (out) of Level 3     —
Balances as of June 30, 2011   $                    17

During the six months ended June 30, 2011, there were no transfers of financial assets or liabilities in or out of Level 1 or Level 2 of the fair value hierarchy.

We have financial instruments as of June 30, 2011 and December 31, 2010 for which the fair value is summarized below (in thousands):

   June 30, 2011  December 31, 2010
   Carrying Value  Estimated Fair Value  Carrying Value  Estimated Fair Value
Cash and cash equivalents  $10,578   $10,578   $14,207   $14,207 
Restricted cash   1,088    1,088    1,088    1,088 
Trade receivables   24,787    24,221    21,564    21,120 
Certificate of deposit   500    500    500    500 

The fair value of cash and cash equivalents and restricted cash approximates fair value because of the short maturity of those instruments. The fair values of the trade receivables and certificate of deposits were computed using a discounted cash flow model using estimated market rates.

Our disclosure of the estimated fair value of our financial instruments is made in accordance with generally accepted accounting guidance. The estimated fair value amounts have been determined by us using available market information and appropriate valuation methodologies. However, considerable judgment is required to interpret market data in order to develop the estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts we could realize in a current market exchange. The use of different market assumptions and estimation methodologies may have a material effect on the estimated fair value amounts. The fair value estimates presented herein are based on pertinent information available to management as of June 30, 2011 and December 31, 2010.

Regarding non-recurring fair values, we evaluated the fair value of certain intangible assets and inventory as discussed in Notes 5 and 6, and determined that they had a fair value of zero.