FAIR VALUE MEASUREMENTS

12 Months Ended

Dec. 31, 2012

Fair Value Disclosures [Abstract]

FAIR VALUE MEASUREMENTS

3. FAIR VALUE MEASUREMENTS

We account for certain assets and liabilities at fair value. The hierarchy below lists three levels of fair value based on the extent to which inputs used in measuring fair value are observable in the market. We categorize each of our fair value measurements in one of these three levels based on the lowest level input that is significant to the fair value measurement in its entirety. These levels are:

● Level 1: Quoted prices in active markets for identical assets or liabilities;

● Level 2: Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and

● Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The following table represents the fair value hierarchy for our financial assets (cash equivalents and investments in marketable securities) measured at fair value on a recurring basis (in thousands):

	Level 1		Level 2		Level 3		Total
December 31, 2012:
Available for sale securities:
Money market funds(1)	$	5,003	$	—	$	—	$	5,003
December 31, 2011:
Available for sale securities:
Money market funds(1)	$	9,237	$	—	$	—	$	9,237
Accrued contingent consideration(2)	$	—	$	—	$	4,626	$	4,626

(1)   Included in “Cash and cash equivalents” in the consolidated balance sheets as of December 31, 2012 and 2011 in addition to $23.6 million and $20.6 million, respectively, of cash. Unrealized gains and losses on money market funds were nominal due to the short-term nature of the investments.

(2)   The fair value of accrued contingent consideration was calculated by discounting the known settlement amount of $5.0 million using the borrowing rate from our credit facility.

The following table provides a summary of changes in our Level 3 financial asset, accrued contingent consideration, for the years ended December 31, 2011 and 2012 (in thousands):

Balance, January 1, 2011	$	—
Accrued contingent consideration from Voxel purchase, less fair value adjustment		4,626
Balance, December 31, 2011		4,626
Fair value adjustments		374
Payment, gross of settlement adjustment of $250 (note 9)		(5,000	)
Balance, December 31, 2012	$	—

The fair value of our Level 3 liabilities, estimated using discount cash flow analysis based on incremental borrowing rates for similar types of borrowing arrangements, is as follows (in thousands):

	December 31,
	2012					2011
		Carrying Amount		Fair Value			Carrying Amount		Fair Value
Term loan		$	65,500	$	65,180		$	58,750	$	58,571
Revolving credit facility			30,501		30,342			100		100
Other liabilities			350		363			501		509