Fair Value Measurements

12 Months Ended

Dec. 31, 2013

Fair Value Measurements

 FAIR VALUE MEASUREMENTS

Generally accepted accounting principles establish a fair value hierarchy that prioritizes the inputs used to measure fair value. The three levels of the fair value hierarchy are as follows:

Level 1—Quoted prices in active markets accessible at the reporting date for identical assets and liabilities.

Level 2—Quoted prices for similar assets or liabilities in active markets. Quoted prices for identical or similar assets and liabilities in markets that are not considered active or financial instruments for which all significant inputs are observable, either directly or indirectly.

Level 3—Prices or valuations that require inputs that are significant to the valuation and are unobservable.

A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

Financial Assets Measured at Fair Value on a Recurring Basis

The following table presents the Company’s financial assets and liabilities that are measured at fair value on a recurring basis at December 31, 2013 and 2012.

	December 31, 2013								December 31, 2012
(In thousands)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents
Commercial paper	$	—	$	49,988	$	—	$	49,988	$	—	$	59,980	$	—	$	59,980
Money market fund deposits	118,090		—		—		118,090		73,026		—		—		73,026
Short-term investments
Commercial paper	—		—		—		—		—		19,995		—		19,995
Total assets measured and recorded at fair value	$	118,090	$	49,988	$	—	$	168,078	$	73,026	$	79,975	$	—	$	153,001
Liabilities:
Foreign exchange forward contracts	$	—	$	514	$	—	$	514	$	—	$	4,603	$	—	$	4,603
Contingent consideration	$	—	$	—	$	1,282	$	1,282	$	—	$	—	$	—	$	—
Total liabilities measured and recorded at fair value	$	—	$	514	$	1,282	$	1,796	$	—	$	4,603	$	—	$	4,603

The following table provides information about derivative positions held by the Company as of December 31, 2013 and 2012:

	December 31, 2013			December 31, 2012
(In thousands)	Gross amounts of recognized liabilities	Gross amounts offset in the consolidated balance sheet	Net amount of liabilities in the consolidated balance sheet	Gross amounts of recognized liabilities	Gross amounts offset in the consolidated balance sheet	Net amount of liabilities in the consolidated balance sheet
Foreign exchange forward contracts	$620	$106	$514	$4,730	$127	$4,603

Gains and losses associated with derivatives are recorded in other income, net, in the consolidated statements of operations. Losses associated with derivative instruments not designated as hedging instruments for the years ended December 31, 2013 and 2012 were as follows:

(In thousands)	2013	2012
Losses on foreign currency forward contracts	$5,726	$5,759

Items Measured at Fair Value on a Nonrecurring Basis

As described in note 2 to the consolidated financial statements, the Company acquired businesses in 2013 and 2012. As part of the accounting for these transactions, the Company allocated the purchase price of the acquired entities based on the fair value of all the assets acquired and liabilities assumed. The valuation of the assets acquired and liabilities assumed, as well as the Company's contingent consideration obligation in the case of Jetalon and the Company's previously held equity interest in the case of EPT, was based on the information that was available as of the acquisition date and the expectations and assumptions that have been deemed reasonable by the Company's management.

In performing these valuations, the Company used independent appraisals, discounted cash flows and other factors as the best evidence of fair value. The key underlying assumptions of the discounted cash flows were projected revenues, gross margin expectations and operating cost estimates. There are inherent uncertainties and management judgment required in these determinations. No assurance can be given that the underlying assumptions will occur as projected. The fair value measurements of the assets acquired and liabilities assumed were based on valuations involving significant unobservable inputs, or Level 3 in the fair value hierarchy.

In the second quarter of 2011, the Company recorded a gain of $1.5 million on the sale of an equity investment that was classified within other income, net, in the consolidated statements of operations. The gain comprised two components—a $0.2 million loss related to the disposition of the equity interest and a $1.7 million gain related to the cumulative translation reclassification adjustment associated with the equity method investee. The carrying value of the investment at the time of the sale was $4.1 million. The Company received assets recorded at fair value of $3.9 million ($1.8 million of cash, $0.4 million of equipment, and $1.7 million of intangible assets) resulting in the aforementioned loss. The fair value measurement of the intangible assets received was based on valuations involving significant unobservable inputs, generally utilizing the market approach, or Level 3 in the fair value hierarchy.