FINANCIAL INSTRUMENTS AND CONCENTRATIONS

12 Months Ended

Dec. 31, 2011

FINANCIAL INSTRUMENTS AND CONCENTRATIONS

FINANCIAL INSTRUMENTS AND CONCENTRATIONS

NOTE 9: FINANCIAL INSTRUMENTS AND CONCENTRATIONS

Fair Values of Assets and Liabilities

        Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. We are required to use valuation techniques that are consistent with the market approach, income approach, and/or cost approach. Inputs to valuation techniques refer to the assumptions that market participants would use in pricing the asset or liability. Inputs may be observable, meaning those that reflect the assumptions market participants would use in pricing the asset or liability based on market data obtained from independent sources, or unobservable, meaning those that reflect our own estimate about the assumptions market participants would use in pricing the asset or liability based on the best information available in the circumstances. The fair value hierarchy for valuation inputs gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows:

• Level 1—Unadjusted quoted prices in active markets for identical assets or liabilities.

  Level 2—Observable inputs other than those included in Level 1, such as quoted market prices for similar assets and liabilities in active markets or quoted prices for identical assets in inactive markets.

  Level 3—Unobservable inputs for which there is little or no market data, which requires us to develop our own assumptions and best estimate of what inputs market participants would use in pricing an asset or liability.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

        The carrying value and estimated fair value of our cash equivalents, which consist of short-term money market funds, are classified as Level 1. Our Level 3 liability is valued using unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the contingent consideration.

        As of December 31, 2011 and 2010, our assets and liabilities that are measured and recorded at fair value on a recurring basis were as follows:

			Estimated Fair Value Measurements
Items Measured at Fair Value on a Recurring Basis	Carrying Value		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(in thousands)
December 31, 2011:
Assets:
Money market funds	$	34	$	34	$	—	$	—
Liabilities:
Contingent consideration(1)	$	16,226	$	-	$	—	$	16,226
December 31, 2010:
Assets:
Money market funds	$	54	$	54	$	—	$	—
Liabilities:
Contingent consideration(1)	$	7,166	$	-	$	—	$	7,166
December 31, 2009:
Assets:
Money market funds	$	44,428	$	44,428	$	—	$	—

⁽¹⁾

The contingent consideration represents the estimated fair value of the additional potential earn-out opportunities payable in connection with our acquisitions of Jupiter eSources and De Novo Legal that are contingent based upon future revenue growth. We estimated the fair value using projected revenue over the earn-out period, and applied a discount rate to the projected earn-out payments that approximated the weighted average cost of capital.

        As of December 31, 2011 and 2010, the carrying value of our trade accounts receivable, accounts payable, certain other liabilities, deferred acquisition price payments and capital leases approximated fair value. At December 31, 2011 and 2010, the amount outstanding under our credit facility was $217.0 million and $67.0 million, which approximated fair value due to the borrowing rates currently available to the company for debt with similar terms.

	Fair Value Measurements Using Significant Unobservable Inputs (Level 3) (in thousands)
	Contingent Consideration
	Jupiter eSources			De Novo Legal		Total
Beginning balance December 31, 2010	$	7,166		$	—	$	7,166
Decrease in fair value		(7,166	)		—		(7,166	)
Increase in fair value		—			16,226		16,226
Ending balance December 31, 2011	$	—		$	16,226	$	16,226

        The increase in fair value of $16.2 million during the year ended December 31, 2011, is related to the contingent consideration for the De Novo Legal acquisition which is recorded in "Long-term obligations" on the Consolidated Balance Sheet at December 31, 2011. The $7.2 million decrease attributable to the change in fair value of the contingent consideration for the Jupiter eSources acquisition is reflected in "Other operating expense" on the Consolidated Statements of Income.

Significant Customer and Concentration of Credit Risk

        During the years ended December 31, 2010, and 2009, approximately less than 1%, and 12%, respectively, of our consolidated revenue was derived from a large contract with IBM in support of the federal government's analog to digital conversion program. The contract began in the fourth quarter of 2007 and, was substantially completed in 2009. This revenue was recognized in our settlement administration segment. There were no receivables related to this contract in our accounts receivable balance at December 31, 2011 and 2010. For the year ended December 31, 2011 we had no customers which accounted for more than 10% of our consolidated revenue or consolidated accounts receivable.