Quarterly report pursuant to Section 13 or 15(d)

Fair Value Measurements

Fair Value Measurements
6 Months Ended
Jun. 30, 2011
Fair Value Measurements [Abstract]  
Fair Value Measurements
(11) Fair Value Measurements
The accounting standard for fair value measurements defines fair value, and establishes a market-based framework or hierarchy for measuring fair value.  The standard is applicable whenever assets and liabilities are measured at fair value.  
The fair value hierarchy established in the standard prioritizes the inputs used in valuation techniques into three levels as follows:
Level 1 – Observable inputs – quoted prices in active markets for identical assets and liabilities;
Level 2 – Observable inputs other than the quoted prices in active markets for identical assets and liabilities – includes quoted prices for similar instruments,  quoted  prices  for identical or similar instruments in inactive markets, and amounts derived from valuation models where all significant inputs are observable in active markets; and
Level 3 – Unobservable inputs – includes amounts derived from valuation models where one or more significant inputs are unobservable and require us to develop relevant assumptions.
The following table summarizes the financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2011 and the level they fall within the fair value hierarchy (in thousands):
Amounts Recorded at Fair Value
Financial Statement Classification
Fair Value Hierarchy
Fair Value
Non-COLI assets held in DSC Plan
Other assets
Level 1
$   313
Deferred compensation liability related to the DSC Plan
Deferred compensation
Level 2
$ 8,930
Earn-out obligation
Earn-out obligations
Level 3
Changes in the fair value of the Non-COLI assets held in the deferred supplemental compensation plan, as well as changes in the related deferred compensation obligation, are recorded as selling, general and administrative expenses.
We determined the fair value of the earn-out obligations related to the Akimeka and WBI acquisitions by using a valuation model that included the evaluation of all possible outcomes and the application of an appropriate discount rate.  At the end of each reporting period, the fair value of the contingent consideration is re-measured and any changes are recorded as contract costs. The fair value of the Akimeka earn-out obligation decreased approximately $955 thousand between December 31, 2010 and June 30, 2011. There was no change in the fair value of the WBI earn-out obligation between the acquisition date and June 30, 2011.