Fair Value Measurements

12 Months Ended

Dec. 31, 2011

Fair Value Measurements [Abstract]

Fair Value Measurements

Note 10 — Fair Value Measurements

Fair value is defined as the amount that would be received for selling an asset or paid to transfer an asset in an orderly transaction between market participants at the measurement date. The Company categorizes financial assets and liabilities into the three levels of the fair value hierarchy. The hierarchy prioritizes the inputs to valuation techniques used to measure fair value and bases the categorization within the hierarchy on the lowest level of input that is available and significant to the fair value measurement.

Ÿ Level 1 – Quoted prices in active markets for identical assets or liabilities;

Ÿ Level 2 – Observable inputs other than Level 1, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and

Ÿ Level 3 – Significant unobservable inputs that are supported by little or no market activity or that are based on the reporting entity's assumptions about the inputs.

Liabilities Measured at Fair Value on a Recurring Basis

The Company's liabilities required to be measured at fair value on a recurring basis, including identification of the fair value hierarchy of the valuation techniques used by the Company to determine these fair values, are as follows (in thousands):

	Fair Value Measurements Using
	Level 1		Level 2		Level 3		Total
At December 31, 2011:
Common stock warrants (1)	$	-	$	-	$	16,622	$	16,622
At December 31, 2010:
Common stock warrants (1)	$	-	$	-	$	26,193	$	26,193

(1) The fair value of common stock warrants was estimated using a Black-Scholes option-pricing model. See Note 13 for additional information regarding warrants.

There were no significant transfers in or out of either Level 1 and Level 2 fair value measurements during the years ended December 31, 2011 and 2010. Changes in Level 3 liabilities are as follow (in thousands):

Warrant Liability	December 31,
	2011			2010
Balance, beginning of year	$	26,193		$	4,729
Fair value adjustments, net		(9,571	)		21,464
Net transfers in/(out)		-			-
Balance, end of year	$	16,622		$	26,193

Assets Measured at Fair Value on a Nonrecurring Basis

The Company's non-financial assets, including property and equipment, goodwill and other intangible assets are measured at fair value on a non-recurring basis and are subject to fair value adjustment in certain circumstances. See Notes 6, 7 and 8 for discussion of non-financial assets and assessment of impairment. During the year ended December 31, 2011, the Company recorded no impairments. During the year ended December 31, 2010, the Company recorded an impairment of $8.9 million relating to property and equipment held and used and $0.4 million relating to other intangible assets. During the year ended December 31, 2009, the Company recorded $18.5 million of goodwill impairment. Loss on impairment is reported in operating expenses. The fair value of impaired assets was measured using both Level 2 and Level 3 inputs.

Fair Value of Other Financial Instruments

The carrying amounts of certain financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued expenses, approximate fair value due to the short-term nature of these accounts. The Company had no cash equivalents at December 31, 2011 or 2010.

The carrying value and estimated fair value of the Company's convertible notes and long-term debt are as follows (in thousands):

	December 31,
	2011				2010
	Carrying Value		Fair Value		Carrying Value		Fair Value
Convertible senior notes (2008 Notes) (1)	$	65,604	$	69,880	$	65,858	$	64,688
Convertible senior secured notes (2010 Notes) (1)		34,134		37,561		32,697		32,684
Term loan		-		-		33,621		33,875
Capital lease obligations		1,647		1,611		960		942

(1) The carrying value of the 2008 and 2010 notes are representative of the bifurcated debt component only, while the fair value is based on the market value of the notes, which includes the convertible equity features.

The estimated the fair value of the 2008 Notes was based on the quoted market price of the notes. The estimated fair value of the 2010 Notes and term loan were determined based on rates available for instruments with similar risks and maturities. The fair value of capital lease obligations was determined based on recent lease rates adjusted for a risk premium. The estimated fair value of the convertible notes and long-term debt were measured using Level 2 inputs.