Fair Value Measurements

3 Months Ended

Mar. 31, 2012

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

The Company measures assets and liabilities at fair value on a recurring basis in three levels of input. The three-tier fair value hierarchy, which prioritizes the inputs used in the valuation methodologies, is:

Level 1 — Valuations based on quoted prices for identical assets and liabilities in active markets.

Level 2 — Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.

Level 3 — Valuations based on unobservable inputs reflecting our own assumptions, consistent with reasonably available assumptions made by other market participants. These valuations require significant judgment.

The Company is exposed to foreign currency exchange risk as a result of transactions in currencies other than the functional currency of certain subsidiaries. The Company utilizes foreign currency forward purchase and sale contracts to manage the volatility associated with foreign currency purchases and certain intercompany transactions in the normal course of business. Contracts typically have maturities of less than one year. Principal currencies include the euro, British pound, and Czech koruna. The Company’s foreign currency forward contracts do not qualify as hedges as defined by accounting guidance. Changes in their fair value are recorded in the consolidated statement of income and comprehensive income as foreign currency gains or losses. The changes in fair value generated a net loss and net gain of $384 and $668 for the three months ended March 31, 2012 and 2011, respectively. As of March 31, 2012, the Company held forward currency contracts to sell (i) 13,700 euros against the U.S. dollar, (ii) 3,370 euros against the Czech koruna, (iii) 1,300 Polish złoty against the euro, (iv) 60,000 Japanese yen against the U.S. dollar, (v) 325 Australian dollars against the U.S. dollar, (vi) 925 British pounds against the U.S. dollar, (vii) 2,250 Norwegian kroner against the euro, and (viii) 4,700 Czech koruna against the U.S. dollar. As of March 31, 2012, the fair value of the Company’s derivative assets and liabilities representing foreign currency forward contracts was $44 and $282, respectively. These amounts were recorded in the unaudited condensed consolidated balance sheet as other current assets and liabilities. As of December 31, 2011, the Company held forward currency contracts to buy 17,500 Czech koruna against the euro and to sell (i) 11,500 euros against the U.S. dollar, (ii) 4,700 Czech koruna against the U.S. Dollar, (iii) 130,000 Japanese yen against the U.S. dollar, (iv) 3,340 euros against the Czech koruna, (v) 3,000 Norwegian kroner against the euro, and (vi) 250 British pounds against the U.S. dollar. As of December 31, 2011, the fair value of the Company’s derivative assets and liabilities representing foreign currency forward contracts was $489 and $191, respectively. These were recorded in the condensed consolidated balance sheet as other current assets and liabilities. The Company’s foreign currency forward contracts are not exchange traded instruments and, accordingly, are classified as being valued using Level 2 inputs which are based on observable inputs such as quoted prices for similar assets and liabilities in active markets.

The Company does not enter into derivative instruments for trading or speculative purposes.

The fair value of the Company’s term loan as described in Note C below is estimated based on the present value of the underlying cash flows discounted using market interest rates. Under this method, the fair value of the Company’s term loan was $44,659 and $45,426 as of March 31, 2012 and December 31, 2011, respectively. The Company’s term loan uses other inputs that are observable and, accordingly, are classified as being valued using Level 2 inputs.

The the fair value of the Convertible Notes exceeded its carrying amount by approximately 128% to 129% as of March 31, 2012 and approximately 107% to 108% as of December 31, 2011. The Convertible Notes are actively quoted instruments and, accordingly, are classified as being valued using Level 1 inputs. The fair value of the liability component of the Convertible Notes is based on the present value of its associated cash flows using a market interest rate for similar debt instruments without a conversion feature. The liability component of the Convertible Notes use quoted prices for similar liabilities in active markets and, accordingly, are classified as being valued using Level 2 inputs.

The estimated fair value of the contingent consideration relating to the acquisitions of Clever Fellows Innovation Consortium, Inc., SeQual Technologies, Inc., and Cryotech International, Inc. as of March 31, 2012 and December 31, 2011 was $7,584 and $7,067, respectively, valued according to a discounted cash flow approach, which includes assumptions for the probabilities of achieving the gross sales targets and the discount rate applied to the projected payments. The increase in fair value of the contingent consideration for the three months ended March 31, 2012 of $517 was recorded as selling, general and administrative expenses in the condensed consolidated statement of income and comprehensive income. The valuation of contingent consideration is classified as utilizing Level 3 inputs consistent with reasonably available assumptions which would be made by other market participants.