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FAIR VALUE
6 Months Ended
Jun. 30, 2012
FAIR VALUE [Abstract]  
FAIR VALUE

(7)       FAIR VALUE

The authoritative guidance for fair value measurements establishes a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy requires that the Company maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:

Level 1 — Quoted prices in active markets for identical assets or liabilities.

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

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. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

The following presents information as of June 30, 2012 and December 31, 2011 for the Company's assets and liabilities required to be measured at fair value on a recurring basis, as well as the fair value hierarchy used to determine their fair value.

Accounts Receivable and Payable - The amounts recorded in the accompanying balance sheets approximate fair value because of their short-term nature.

Debt - The Company's debt consists primarily of the Company's Credit Agreement, which permits floating-rate borrowings based upon the current Prime Rate or LIBOR plus a credit spread as determined by the Company's leverage ratio calculation (as defined in the Credit Agreement). As of June 30, 2012 and December 31, 2011, the Company had $78.0 million and $64.0 million, respectively, of borrowings outstanding under the Credit Agreement. During the three and six months ended June 30, 2012 outstanding borrowings accrued interest at an average rate of 1.6% and 1.6% per annum, respectively, excluding unused commitment fees. The amounts recorded in the accompanying balance sheets approximate fair value due to the variable nature of the debt.

Derivatives - Net derivative assets (liabilities) are measured at fair value on a recurring basis. The portfolio is valued using models based on market observable inputs, including both forward and spot foreign exchange rates, interest rates, implied volatility, and counterparty credit risk, including the ability of each party to execute its obligations under the contract. As of June 30, 2012, credit risk did not materially change the fair value of the Company's derivative contracts.

The following is a summary of the Company's fair value measurements for its net derivative assets (liabilities) as of June 30, 2012 and December 31, 2011 (amounts in thousands):

As of June 30, 2012           
   Fair Value Measurements Using   
   Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs  
   (Level 1) (Level 2) (Level 3) At Fair Value
Cash flow hedges$ - $ 7,829 $ - $ 7,829
Interest rate swaps  -   (2,874)   -   (2,874)
Embedded derivatives  -   (266)   -   (266)
Fair value hedges  -   900   -   900
 Total net derivative asset (liability)$ - $ 5,589 $ - $ 5,589
              
As of December 31, 2011           
   Fair Value Measurements Using   
   Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs  
   (Level 1) (Level 2) (Level 3) At Fair Value
Cash flow hedges$ - $ (7,170) $ - $ (7,170)
Interest rate swaps  -   (2,263)   -   (2,263)
Fair value hedges  -   (329)   -   (329)
 Total net derivative asset (liability)$ - $ (9,762) $ - $ (9,762)
              

The following is a summary of the Company's fair value measurements as of June 30, 2012 and December 31, 2011 (amounts in thousands):

As of June 30, 2012        
   Fair Value Measurements Using
   Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs
   (Level 1) (Level 2) (Level 3)
Assets        
 Money market investments$ - $ 400 $ -
 Derivative instruments, net  -   5,589   -
  Total assets$ - $ 5,989 $ -
           
Liabilities        
 Deferred compensation plan liability$ - $ (4,808) $ -
 Derivative instruments, net  -   -   -
 Purchase price payable  -   -   (3,234)
  Total liabilities$ - $ (4,808) $ (3,234)
           
As of December 31, 2011        
   Fair Value Measurements Using
   Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs
   (Level 1) (Level 2) (Level 3)
Assets        
 Money market investments$ - $ 507 $ -
 Derivative instruments, net  -   -   -
  Total assets$ - $ 507 $ -
           
Liabilities        
 Deferred compensation plan liability$ - $ (3,990) $ -
 Derivative instruments, net  -   (9,762)   -
 Purchase price payable  -   -   (4,985)
  Total liabilities$ - $ (13,752) $ (4,985)
           

Money Market InvestmentsThe Company invests in various well-diversified money market funds which are managed by financial institutions. These money market funds are not publicly traded, but have historically been highly liquid. The value of the money market funds are determined by the banks based upon the funds' net asset values (“NAV”). All of the money market funds currently permit daily investments and redemptions at a $1.00 NAV.

Deferred Compensation PlanThe Company maintains a non-qualified deferred compensation plan structured as a Rabbi trust for certain eligible employees. Participants in the deferred compensation plan select from a menu of phantom investment options for their deferral dollars offered by the Company each year, which are based upon changes in value of complementary, defined market investments. The deferred compensation liability represents the combined values of market investments against which participant accounts are tracked.

Purchase Price PayableThe Company recorded a purchase price payable related to the acquisition of iKnowtion. The purchase price payable was recognized at fair value using a discounted cash flow approach and a discount rate of 21.0%. This measurement was based on significant inputs not observable in the market. The Company will record interest expense each period using the effective interest method until the future value of this purchase price payable reaches its expected future value of $4.3 million in 2016. Interest expense related to all recorded purchase price payables is included in Interest expense in the Consolidated Statements of Comprehensive Income.

The Company also had a future payable related to the purchase of PRG. As part of the PRG acquisition, the Company paid the previously recognized purchase price payable of $5.0 million on March 1, 2012. The Company recorded interest expense each period using the effective interest rate method until the payable reached the $5.0 million payment.