XML 58 R15.htm IDEA: XBRL DOCUMENT v2.4.0.6
Note I - Fair Value Measurement
 3 Months Ended
Mar. 31, 2012
Fair Value Disclosures [Text Block]

Note I – Fair Value Measurement


The accounting guidance under “Fair Value Measurements and Disclosures” (“ASC 820-10”) requires the Company to make disclosures about the fair value of certain of its assets and liabilities. ASC 820-10 clarifies the principle that fair value should be based on the assumptions market participants would use when pricing an asset or liability and establishes a fair value hierarchy that prioritizes the information used to develop those assumptions. ASC 820-10 utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. A brief description of those three levels is as follows:


  • Level 1: Observable inputs such as quoted prices in active markets for identical assets or liabilities.
  • Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly.
  • Level 3: Significant unobservable inputs.

The Company’s financial assets and liabilities subject to fair value measurements as of March 31, 2012 and December 31, 2011 are as follows:


          March 31, 2012  
          Fair Value Measurements
Using Fair Value Hierarchy 		 
    Fair value     Level 1     Level 2     Level 3  
Assets:                                
Cash equivalents   $ 17,056     $ 17,056     $ —     $ —  
Current marketable securities – available for sale     4,629       4,629       —       —  
Investment in Bakers     996       —       996       —  
Note receivable – related party     3,522       —       —       3,522  
Note receivable – Bakers     4,110       —       —       4,110  
Note receivable – Betsey Johnson     2,310       —       —       2,310  
Note receivable – Seller of SM Canada     3,085       —       —       3,085  
Long-term marketable securities – available for sale     98,410       98,410       —       —  
                                 
Total assets   $ 134,118     $ 120,095     $ 996     $ 13,027  
                                 
Liabilities:                                
Contingent consideration   $ 64,805       —       —     $ 64,805  
                                 
Total liabilities   $ 64,805       —       —     $ 64,805  

          December 31, 2011  
          Fair Value Measurements
Using Fair Value Hierarchy 		 
    Fair value     Level 1     Level 2     Level 3  
Assets:                                
Cash equivalents   $ 57,652     $ 57,652     $ —     $ —  
Current marketable securities – available for sale     5,659       5,659       —       —  
Investment in Bakers     996       —       996       —  
Note receivable – related party     4,090       —       —       4,090  
Note receivable – Bakers     4,092       —       —       4,092  
Note receivable – Betsey Johnson     3,309       —       —       3,309  
Long-term marketable securities – available for sale     72,004       72,004       —       —  
                                 
Total assets   $ 147,802     $ 135,315     $ 996     $ 11,491  
                                 
Liabilities:                                
Contingent consideration   $ 37,921       —       —     $ 37,921  
                                 
Total liabilities   $ 37,921       —       —     $ 37,921  

Pursuant to the Debenture and Stock Purchase Agreement with Bakers (see Note F), the Company acquired 1,844,860 unregistered shares of Bakers common stock, which trades on the OTC Bulletin Board. These shares, which are thinly traded, were valued using the quoted price of similar registered shares of Bakers common stock adjusted for the effect of the transfer restriction, considering factors such as the nature and duration of the transfer restriction, the volatility of the stock and the risk free interest rate. The shares are included in deposits and other assets on the Company’s Condensed Consolidated Balance Sheets. For the note receivable due from Bakers (see Note F), which was purchased at a substantial discount, the carrying value was determined to be the fair value. For the note receivable due from related party, due from Betsey Johnson and due from the sellers of SM Canada (see Note R), the carrying value was determined to be the fair value, based upon their imputed or actual interest rates, which approximate current market interest rates.


The Company has recorded a liability for potential contingent consideration in connection with the February 21, 2012 acquisition of SM Canada (see Note R). Pursuant to the terms of an earn-out agreement between the Company and the sellers of SM Canada, earn-out payments may be due annually to the sellers of SM Canada based on the financial performance of SM Canada for each of the twelve-month periods ending on March 31, 2013 through 2017, inclusive. The fair value of the contingent payments was estimated using the present value of management’s projections of the financial results of SM Canada during the earn-out period.


The Company has recorded a liability for potential contingent consideration in connection with the May 25, 2011 acquisition of Cejon (see Note R). Pursuant to the terms of an earn-out agreement between the Company and the sellers of Cejon, earn-out payments may be due annually to the sellers of Cejon based on the financial performance of Cejon for each of the twelve-month periods ending on June 30, 2012 through 2016, inclusive. The fair value of the contingent payments was estimated using the present value of management’s projections of the financial results of Cejon during the earn-out period.


The Company has recorded a liability for potential contingent consideration in connection with the May 20, 2011 acquisition of Topline (see Note R). Pursuant to the terms of the acquisition agreement, an earn-out payment may be due to the seller of Topline based on the financial performance of Topline for the twelve-month period ending on June 30, 2012. The fair value of the contingent payment was estimated using the present value of management’s projections of the financial results of Topline during the earn-out period.


The Company has recorded a liability for contingent consideration as a result of the February 10, 2010 acquisition of Big Buddha, Inc. The contingent consideration may be payable to the seller of Big Buddha based on the financial performance of Big Buddha for each of the twelve-month periods ending on March 31, 2011, 2012 and 2013. The fair value of the contingent payments was estimated using the present value of management’s projections of the financial results of Big Buddha during the earn-out period.


Accounting guidance permits entities to choose to measure financial instruments and certain other items at fair value that are not currently required to be measured at fair value. The accounting guidance also establishes presentation and disclosure requirements designed to facilitate comparisons between entities that chose different measurement attributes for similar assets and liabilities. The Company has elected not to measure any eligible items at fair value.