Fair Value Measurements

3 Months Ended

Sep. 30, 2013

Fair Value Measurements [Abstract]

Fair Value Measurements

4.Fair Value Measurements

The Company follows the authoritative guidance on fair value measurements and disclosures with respect to assets and liabilities that are measured at fair value on both a recurring and non-recurring basis. Under this guidance, fair value is defined as the exit price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. The authoritative guidance also establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. The hierarchy is broken down into three levels defined as follows:

• Level 1 - Inputs are quoted prices in active markets for identical assets or liabilities.

• Level 2 - Inputs include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active and inputs (other than quoted prices) that are observable for the asset or liability, either directly or indirectly.

• Level 3 - Inputs are unobservable for the asset or liability.

As part of the consideration for the Prostiva acquisition, the estimated royalty payments between the minimum and maximum amounts are considered contingent consideration.  The contingent consideration was measured at fair value at the acquisition date and is remeasured to fair value at each reporting date until the contingency is resolved using Level 3 inputs.  The Level 3 inputs consist of the projected fiscal year of payments based on projected revenues and an estimated discount rate.  The fair value is determined by applying an appropriate discount rate that reflects the risk factors associated with the payment streams.  The changes in fair value that do not relate to the initial recognition of the liability as of the acquisition date are recognized in earnings.  The Company estimates the fair value of the future contingent consideration at $1.5 million at September 30, 2013. The Company recognized a reduction in fair value of contingent consideration of $9,000 during the three-month period ended September 30, 2013.  There was no change in the fair value of non-contingent consideration.  The following table provides a reconciliation of the beginning and ending balances of the contingent consideration liability:

	Three months ended
(in thousands)	September 30, 2013
Beginning Balance	$	1,471
Accretion expense		33
Change in fair value of contingent consideration		(9)
Ending Balance	$	1,495