Fair Value Measurement

9 Months Ended

Sep. 30, 2012

Fair Value Measurement

6. Fair Value Measurement

The Company values its assets and liabilities using the methods of fair value as described in ASC 820, Fair Value Measurements and Disclosures. ASC 820 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The three levels of fair value hierarchy are described below:

Level 1-Quoted prices in active markets for identical assets or liabilities.

Level 2-Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3-Inputs that are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability.

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, and considers counter-party credit risk in its assessment of fair value. Observable or market inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s assumptions based on the best information available. There have been no transfers of assets or liabilities between the fair value measurement classifications for the three months ended September 30, 2012. The Company has certain assets and liabilities that are required to be recorded at fair value on a recurring basis in accordance with U.S. GAAP.

The following table summarizes those assets and liabilities measured at fair value on a recurring basis as of September 30, 2012:

	Level 1		Level 2		Level 3		Total
Assets:
Bank time deposits	$	—	$	64,452	$	—	$	64,452
U.S. and foreign government obligations		45,122		21,077		—		66,199
Bankers’ acceptances		—		8,865		—		8,865
Foreign exchange contracts		—		14		—		14
Total Assets	$	45,122	$	94,408	$	—	$	139,530
Liabilities:
Foreign exchange contracts	$	—	$	531	$	—	$	531
Lease exit liabilities		—		—		15,427		15,427
Total Liabilities	$	—	$	531	$	15,427	$	15,958

The following table summarizes those assets and liabilities measured at fair value on a recurring basis as of December 31, 2011:

	Level 1		Level 2		Level 3		Total
Assets:
Bank time deposits	$	—	$	114,839	$	—	$	114,839
Commercial paper		—		75,066		—		75,066
Bankers’ acceptance		—		8,630		—		8,630
Government bond—foreign		—		7,143		—		7,143
Foreign exchange contracts		—		215		—		215
Total Assets	$	—	$	205,893	$	—	$	205,893
Liabilities:
Lease exit liabilities	$	—	$	—	$	14,938	$	14,938
Total Liabilities	$	—	$	—	$	14,938	$	14,938

We recognize a liability for costs to terminate an operating lease obligation before the end of its term when we no longer derive economic benefit from the lease. The lease exit liabilities within the Level 3 tier relate to vacated facilities associated with previously discontinued operations and restructuring activities of the Company and are recorded in accrued expenses and other current liabilities in the consolidated balance sheet. The liability is recognized and measured based on a discounted cash flow model when the cease use date has occurred. The fair value of the liability is determined based on the remaining lease rentals due, reduced by estimated sublease rental income that could be reasonably obtained for the property. The Company reviews the assumptions within the discounted cash flow model and determines whether any changes to the previously recorded amounts require a change in estimate. During the three months ended September 30, 2012, the Company determined that there were no material changes to the underlying assumptions within the discounted cash flow model.

The changes in the fair value of the Level 3 liabilities are as follows:

	Lease Exit Liability
	Nine Months Ended September 30,
	2012			2011
Balance, Beginning of Period	$	14,938		$	13,913
Expense		4,768			3,540
Cash Payments		(4,279	)		(2,625	)
Balance, End of Period	$	15,427		$	14,828

The carrying value for cash and cash equivalents, accounts receivable, accounts payable, certain accrued expenses and other current liabilities approximate fair value because of the immediate or short-term maturity of these financial instruments. The Company’s debt relates to borrowings under its revolving credit facilities and term loan (see Note 13, Financing Agreements ), which approximates fair value due to the debt bearing fluctuating market interest rates.