Fair Value Measurements and Disclosures

3 Months Ended

Mar. 31, 2012

Fair Value Disclosures [Abstract]

Fair Value Measurements and Disclosures

Fair Value Measurements and Disclosures

Fair value is defined as the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The standard assumes that the transaction to sell the asset or transfer the liability occurs in the principal or most advantageous market for the asset or liability and establishes that the fair value of an asset or liability shall be determined based on the assumptions that market participants would use in pricing the asset or liability.

The Company determines the fair values of its financial instruments based on the fair value hierarchy established in ASC 820, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The classification of a financial asset or liability within the hierarchy is based upon the lowest level input that is significant to the fair value measurement. The fair value hierarchy prioritizes the inputs into three levels that may be used to measure fair value:

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

Level 2 — Inputs other than Level 1 that are observable, either directly or indirectly, such as 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 — Unobservable inputs that are supported by little or no market activity and are significant to the fair value of the assets or liabilities. Such unobservable inputs include an estimated discount rate used in our discounted present value analysis of future cash flows, which reflects our estimate of debt with similar terms in the current credit markets. As there is currently minimal activity in such markets, the actual rate could be materially different.

The following table presents the Company’s fair value measurements that are measured at the estimated fair value, on a recurring basis, categorized in accordance with the fair value hierarchy (in thousands):

As of March 31, 2012	Quoted Prices in Active Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)		Total
Fair value of deferred payments to Zygo Corporation related to acquisition	—	—	$	2,641	$	2,641
Total financial liabilities	—	—	$	2,641	$	2,641

As of December 31, 2011	Quoted Prices in Active Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)		Total
Fair value of royalty payments to RTM related to acquisition of Nanda	—	—	$	561	$	561
Fair value of deferred payments to Zygo Corporation related to acquisition	—	—	2,633		2,633
Total financial liabilities	—	—	$	3,194	$	3,194

	Level 3
Fair value at December 31, 2011	$	3,194
Payments made to Zygo Corporation	(107		)
Change in fair value included in earnings	115
Adjustment to the purchase price allocation of royalty payments to RTM related to acquisition of Nanda Technologies GmbH	(561		)
Fair Value at March 31, 2012	$	2,641

As of March 31, 2012, the Company had liabilities of $2.6 million resulting from the acquisition of certain assets from Zygo Corporation (“Zygo”) which are measured at fair value on a recurring basis. Of the $2.6 million of Zygo liability at March 31, 2012, $0.8 million was current liability and $1.8 million was long-term liability. The fair values of these liabilities were determined using level 3 inputs. In the three month period ended March 31, 2012, the Company recorded a $0.6 million reduction in the fair value of royalty payments to RTM to intangible assets and goodwill with a corresponding decrease of $0.4 million decrease to goodwill and $0.2 million decrease to intangible assets. See Note 4 for a summary of the acquisition and goodwill impairment analysis.

As of December 31, 2011, the Company had liabilities of $0.6 million resulting from the acquisition of Nanda and $2.6 million resulting from the acquisition of certain assets from Zygo which are measured at fair value on a recurring basis. Of the $2.6 million of Zygo liability at December 31, 2011, $0.7 million was current liability and $1.9 million was long-term liability. The fair value of these liabilities were determined using level 3 inputs.

Other financial instruments included cash and cash equivalents, accounts receivable, accounts payable and debt obligations. Cash equivalents were stated at fair market value based on quoted market prices. The carrying values of accounts receivable and accounts payable approximated their fair values because of the short term maturity of these financial instruments.

Refer to Note 10 "Line of Credit and Debt Obligations" for the carrying value and fair value of our debt obligations.