Fair Value of Financial Instruments

12 Months Ended

Dec. 31, 2011

Fair Value of Financial Instruments

8. Fair Value of Financial Instruments

Effective January 1, 2008, the Company adopted the provisions of ASC 820, Fair Value Measurements and Disclosures, for financial assets and financial liabilities. ASC 820 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements.

ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. ASC 820 establishes a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows:

• Level 1 Inputs—Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.

• Level 2 Inputs—Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These might include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (such as interest rates, volatilities, prepayment speeds, credit risks, etc.) or inputs that are derived principally from or corroborated by market data by correlation or other means.

• Level 3 Inputs—Unobservable inputs for determining the fair values of assets or liabilities that reflect an entity’s own assumptions about the assumptions that market participants would use in pricing the assets or liabilities.

Available-for-Sales Securities. Equity securities are reported at fair value utilizing Level 1 inputs. The Company’s equity securities are comprised entirely of S1 Corporation common stock. The Company utilizes quoted prices from an active exchange market to fair value its equity securities.

The equity securities are accounted for as available-for-sale securities and are included in other noncurrent assets in the accompanying condensed consolidated balance sheets.

The Company looks at its classifications within the fair value hierarchy at each reporting period. There were no transfers between any levels of the fair value hierarchy during the periods presented in the table below.

The following table summarizes financial assets and financial liabilities measured at fair value on a recurring basis, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value (in thousands):

		September 30,		September 30,		September 30,
	Fair Value Measurements at Reporting Date Using
	Quoted Prices
	in Active		Significant
	Markets for		Other		Significant
	Identical		Observable		Unobservable
	Assets		Inputs		Inputs
Description	(Level 1)		(Level 2)		(Level 3)
Equity Securities	$	—	$	—	$	—
Total assets as of December 31, 2010	$	—	$	—	$	—
Equity Securities	$	10,594	$	—	$	—
Total assets as of December 31, 2011	$	10,594	$	—	$	—

Certain non-financial assets and non-financial liabilities measured at fair value on a recurring basis include reporting units measured at fair value in the first step of a goodwill impairment test. Certain non-financial assets measured at fair value on a non-recurring basis include non-financial assets and non-financial liabilities measured at fair value in the second step of a goodwill impairment test, as well as intangible assets and other non-financial long-lived assets measured at fair value for impairment assessment.

The Company pays interest monthly on its Revolving Credit Facility based upon the LIBOR rate plus a margin ranging from 1.50% to 2.50%, the margin being dependent upon the Company’s consolidated total leverage ratio at the end of the quarter. At December 31, 2011, the fair value of the Company’s revolving credit facility approximates its carrying value.