Fair Value Measurements

6 Months Ended

Jun. 30, 2012

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

The Company measures assets and liabilities at fair value on a recurring basis in three levels of input. The three-tier fair value hierarchy, which prioritizes the inputs used in the valuation methodologies, is:

Level 1 — Valuations based on quoted prices for identical assets and liabilities in active markets.

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

Level 3 — Valuations based on unobservable inputs reflecting our own assumptions, consistent with reasonably available assumptions made by other market participants. These valuations require significant judgment.

The Company is exposed to foreign currency exchange risk as a result of transactions in currencies other than the functional currency of certain subsidiaries. The Company utilizes foreign currency forward purchase and sale contracts to manage the volatility associated with foreign currency purchases and certain intercompany transactions in the normal course of business. Contracts typically have maturities of less than one year. Principal currencies include the euro, British pound, and Czech koruna. The Company’s foreign currency forward contracts do not qualify as hedges as defined by accounting guidance. Changes in their fair value are recorded in the consolidated statement of income and comprehensive income as foreign currency gains or losses. The changes in fair value generated net losses of $167 and $104 for the three months ended June 30, 2012 and 2011, respectively and a net loss and a net gain of $551 and $564 for the six months ended June 30, 2012 and 2011, respectively. As of June 30, 2012, the Company held forward currency contracts to sell (i) 26,600 euros against the U.S. dollar, (ii) 3,040 euros against the Czech koruna, (iii) 1,250 Polish złoty against the euro, (iv) 60,000 Japanese yen against the U.S. dollar, (v) 900 British pounds against the U.S. dollar, (vi) 1,500 Norwegian kroner against the euro, (vii) 760 British pounds against the Czech koruna, (viii) 200 Canadian dollars against the U.S. dollar, and (ix) 350 British pounds against the euro. As of June 30, 2012, the fair value of the Company’s derivative liabilities representing foreign currency forward contracts was $448 and was recorded in the unaudited condensed consolidated balance sheet as other current liabilities. As of December 31, 2011, the Company held forward currency contracts to buy 17,500 Czech koruna against the euro and to sell (i) 11,500 euros against the U.S. dollar, (ii) 4,700 Czech koruna against the U.S. Dollar, (iii) 130,000 Japanese yen against the U.S. dollar, (iv) 3,340 euros against the Czech koruna, (v) 3,000 Norwegian kroner against the euro, and (vi) 250 British pounds against the U.S. dollar. As of December 31, 2011, the fair value of the Company’s derivative assets and liabilities representing foreign currency forward contracts was $489 and $191, respectively. These were recorded in the condensed consolidated balance sheet as other current assets and liabilities. The Company’s foreign currency forward contracts are not exchange traded instruments and, accordingly, are classified as being valued using Level 2 inputs which are based on observable inputs such as quoted prices for similar assets and liabilities in active markets.

The Company does not enter into derivative instruments for trading or speculative purposes.

The fair value of the Company’s term loan portions of both the former Senior Credit Facility and the Restated Credit Facility (as defined in Note C below) is estimated based on the present value of the underlying cash flows discounted using market interest rates. Under this method, the fair value of the Company’s Restated Credit Facility approximated its carrying amount as of June 30, 2012, and the fair value of the former Senior Credit Facility approximated its carrying amount as of December 31, 2011. The Company’s term loan uses other inputs that are observable and, accordingly, are classified as being valued using Level 2 inputs.

The fair value of the Convertible Notes exceeded its carrying amount by approximately 123% as of June 30, 2012 and approximately 108% as of December 31, 2011. The Convertible Notes are actively quoted instruments and, accordingly, are classified as being valued using Level 1 inputs. The fair value of the liability component of the Convertible Notes is based on the present value of its associated cash flows using a market interest rate for similar debt instruments without a conversion feature. The liability component of the Convertible Notes uses observable inputs other than quoted prices for similar liabilities in active markets and, accordingly, is classified as being valued using Level 2 inputs.

The estimated fair value of total contingent consideration relating to prior BioMedical and Distribution & Storage segment acquisitions as of June 30, 2012 and December 31, 2011 was $3,202 and $7,067, respectively, and was valued using a discounted cash flow approach, which includes assumptions for the probabilities of achieving gross sales or gross profit targets and the discount rate applied to the projected payments. The decrease in fair value of total contingent consideration for the three months ended June 30, 2012 was $4,382 which included a net gain of $4,550 and a net loss of $168 related to prior BioMedical and Distribution & Storage acquisitions, respectively. The decrease in fair value of total contingent consideration for the six months ended June 30, 2012 was $3,865 which included a net gain of $4,309 and a net loss of $444 related to prior BioMedical and Distribution & Storage acquisitions, respectively. The majority of the decrease in fair value was caused by an adjustment to a contingent consideration obligation related to a prior BioMedical segment acquisition; as a result of higher forecasted costs and project delays of certain BioMedical projects as noted in the Goodwill and Other Intangible Assets paragraph in Note A above, the Company determined that it would no longer meet the forecasted gross profit target required to satisfy its contingent consideration obligation. Therefore, the contingent consideration obligation was adjusted to zero. The changes in fair value were recorded as selling, general and administrative expenses in the condensed consolidated statements of income and comprehensive income. Based on achieving gross sales targets, the remaining maximum potential payouts related to prior BioMedical and Distribution & Storage segment acquisitions are $3,000 and $1,300, respectively. The valuation of contingent consideration is classified utilizing Level 3 inputs with reasonably available assumptions consistent with those made by other market participants.