XML 47 R15.htm IDEA: XBRL DOCUMENT v2.4.0.6
Fair Value Measurements
 6 Months Ended
Jun. 30, 2012
Fair Value Disclosures [Abstract]  
Fair Value Disclosures [Text Block]
8. Fair Value Measurements

 

Effective January 1, 2008, the Company adopted guidance regarding accounting for Fair Value Measurements, for financial assets and liabilities. This guidance defines fair value, establishes a framework for measuring fair value and expands the related disclosure requirements. The statement indicates, among other things, that a fair value measurement assumes a transaction to sell an asset or transfer a liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability.

 

In order to increase consistency and comparability in fair value measurements, the guidance establishes a hierarchy for observable and unobservable inputs used to measure fair value into three broad levels, which are described below:

 

  • Level 1:   Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.

 

  • Level 2:   Observable prices that are based on inputs not quoted on active markets, but corroborated by market data.

 

  • Level 3:   Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs.

 

In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible as well as considers counterparty credit risk in its assessment of fair value.

 

On a nonrecurring basis, the Company uses fair value measures when analyzing asset impairment. Long-lived assets and certain identifiable intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If it is determined such indicators are present and the review indicates that the assets will not be fully recoverable, based on undiscounted estimated cash flows over the remaining amortization periods, their carrying values are reduced to estimated fair value. Measurements based on undiscounted cash flows are considered to be level 3 inputs. During the fourth quarter of each year, the Company evaluates goodwill and indefinite-lived intangibles for impairment at the reporting unit level. For each acquisition, the Company performed a detailed review to identify intangible assets and a valuation is performed for all such identified assets. The Company used several market participant measurements to determine estimated value. This approach includes consideration of similar and recent transactions, as well as utilizing discounted expected cash flow methodologies. The amounts allocated to assets acquired and liabilities assumed in the acquisitions were determined using level 3 inputs. Fair value for property and equipment was based on other observable transactions for similar property and equipment. Accounts receivable represents the best estimate of balances that will ultimately be collected, which is based in part on allowance for doubtful accounts reserve criteria and an evaluation of the specific receivable balances.

 

 

The following tables present certain information for our financial liabilities that is disclosed at fair value on a recurring basis at June 30, 2012 and 2011: 

    Level 1     Level 1  
    June 30, 2012     June 30, 2011  
    Carrying
Amount		     Fair Value     Carrying
Amount		     Fair Value  
Liabilities:                                
11% Notes due 2016   $ 344,447     $ 376,050     $ 344,450     $ 386,400  

 

Our long term debt includes fixed rate debt. The fair value of this instrument is based on quoted market prices.

 

The following table presents changes in Deferred Acquisition Consideration.

 

   

Fair Value

Measurements Using

Significant

Unobservable Inputs

(Level 3)

  
    June 30,  
    2012     2011  
Beginning Balance of contingent payments   $ 129,759     $ 98,534  
Payments     (35,999 )     (24,131 )
Grants     65,700       9,784  
Redemption value adjustments     6,711       (550 )
Foreign translation adjustment     16       370  
Ending Balance of contingent payments   $ 166,187     $ 84,007  

 

In addition to the above amounts, there are fixed payments of $7,137 and $6,760 for total deferred acquisition consideration of $173,324 and $90,767, which reconciles to the consolidated financial statements at June 30, 2012 and 2011, respectively.

 

Level 3 payments relate to payments made for deferred acquisition consideration. Level 3 grants relate to contingent purchase price obligations related to acquisitions. The Company records the initial liability of the estimated present value. The estimated liability is determined in accordance with various contractual valuation formulas that may be dependent on future events, such as the growth rate of the earnings of the relevant subsidiary during the contractual period, and, in some cases, the currency exchange rate of the date of payment. Level 3 redemption value adjustments relate to the remeasurement and change in these various contractual valuation formulas as well as adjustments of present value.

 

At June 30, 2012 and December 31, 2011, the carrying amount of the Company’s financial instruments, including cash and cash equivalents, accounts receivable and accounts payable, approximated fair value because of their short-term maturity.