Fair Value Measurement

9 Months Ended

Sep. 30, 2013

Fair Value Disclosures [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, 2013, the Company’s only financial assets and liabilities required to be measured on a recurring basis were our money market investments. As of December 31, 2012, the Company’s only financial assets and liabilities required to be measured on a recurring basis were our money market investments and the accrued contingent earnout consideration payable in connection with the Company’s acquisition of Meridian Consulting International (“Meridian”).

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, 2013:
Financial assets:
Money market investment	$	4,084	$	4,084	$	—	$	—
Total financial assets	$	4,084	$	4,084	$	—	$	—
Balance at December 31, 2012:
Financial assets:
Money market investment	$	4,084	$	4,084	$	—	$	—
Total financial assets	$	4,084	$	4,084	$	—	$	—

The Company had historically classified its liability for contingent earnout consideration relating to its acquisition of Meridian within Level 3 of the fair value hierarchy because the fair value is determined using significant unobservable inputs, which includes probability weighted cash flows. The former Meridian stockholders’ third and final twelve-month earnout period concluded in May 2013. None of the minimum financial performance measures necessary to earn additional contingent earnout consideration were achieved.

A reconciliation of the beginning and ending Level 3 net liabilities is as follows:

	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	(In Thousands)
Balance at January 1, 2012	$	231
Change in fair value related to Meridian contingent earnout consideration		(231	)
Balance at December 31, 2012		—
Change in fair value related to Meridian contingent earnout consideration		—
Ending balance at September 30, 2013	$	—

The Company routinely examined, on a periodic basis, actual results in comparison to the performance measurements utilized in the earnout calculation and assesses the carrying value of the contingent earnout consideration. No adjustment was made to fair value during the three- or nine-month periods ended September 30, 2013. During the three- and nine-month periods ended September 30, 2012, the Company decreased the estimated accrual of contingent earnout consideration earned by the former Meridian stockholders by $246 thousand and $231 thousand, respectively. The reduction was due to our estimate 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.

No financial instruments were transferred into or out of Level 3 classification during the three- or nine-month period ended September 30, 2013.

As of September 30, 2013 and December 31, 2012, 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.