Fair Value Measurement

9 Months Ended

Sep. 30, 2012

Fair Value Measurement [Abstract]

FAIR VALUE MEASUREMENT

6. FAIR VALUE MEASUREMENT:

We utilize the following valuation hierarchy for disclosure of the inputs to valuation used to measure fair value. This hierarchy prioritizes the inputs into three broad levels as follows:

• Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.

• Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument.

• Level 3 inputs are unobservable inputs based on our own assumptions used to measure assets and liabilities at fair value.

A financial asset or liability’s classification within the hierarchy is determined based upon the lowest level input that is significant to the fair value measurement.

As of September 30, 2012 and December 31, 2011, the Company’s only financial assets and liabilities required to be measured on a recurring basis were its money market investments and the accrued contingent earnout consideration payable in connection with Company’s acquisition Meridian Consulting International (“Meridian”), which is more fully described in Note 8.

The following table represents the Company’s fair value hierarchy for its financial assets and liabilities required to be measured on a recurring basis:

	Basis of Fair Value Measurements
	Balance		Quoted Prices in Active Markets for Identical Items (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(In Thousands)
Balance at September 30, 2012:
Financial assets:
Money market investment	$	4,084	$	4,084	$	—	$	—
Total financial assets	$	4,084	$	4,084	$	—	$	—
Balance at December 31, 2011:
Financial assets:
Money market investment	$	4,084	$	4,084	$	—	$	—
Total financial assets	$	4,084	$	4,084	$	—	$	—
Financial liabilities:
Contingent earnout consideration	$	231	$	—	$	—	$	231
Total financial liabilities	$	231	$	—	$	—	$	231

The Company has classified its liabilities for contingent earnout consideration relating to its acquisition of Meridian Consulting International within Level 3 of the fair value hierarchy because the fair value is determined using significant unobservable inputs, which includes probability weighted cash flows. A description of this acquisition is included within Note 8.

A reconciliation of the beginning and ending Level 3 net liabilities for the nine-month period ended September 30, 2012 is as follows:

	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	(In Thousands)
Balance at December 31, 2011	$	231
Change in fair value related to Meridian contingent earnout consideration		(231	)
Ending balance at September 30, 2012	$	—

The Company routinely evaluates the estimated fair value of potential contingent consideration associated with earnout arrangements. Our evaluations during the third quarters of 2012 and 2011, identified that Meridian’s projected financial operating performance was trending below the required minimum financial performance measures necessary for the former Meridian stockholders to achieve additional contingent consideration payments. Accordingly, we reduced the accrual associated with our estimate of the fair value of contingent earnout consideration to be earned by the former Meridian stockholders by $246 thousand and $231 thousand during the three- and nine-month periods ended September 30, 2012, respectively. Similarly, we reduced the accrual associated with our estimate of the fair value of contingent earnout consideration to be earned by the former Meridian stockholders by $1.2 million and $1.1 million during the three- and nine-month periods ended September 30, 2011, respectively. Each of the adjustments, as required by Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 805, “Business Combinations,” was reported as part of our selling, general and administrative expenses.

No financial instruments were transferred into or out of Level 3 classification during the three- or nine-month periods ended September 30, 2012.

As of September 30, 2012 and December 31, 2011, the fair values of our other financial instruments, which include cash and cash equivalents, accounts receivable and accounts payable, approximate the carrying amounts of the respective asset and/or liability due to the short-term nature of these financial instruments.