Annual report pursuant to Section 13 and 15(d)

Fair Value Measurement

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Fair Value Measurement
12 Months Ended
Dec. 31, 2011
Fair Value Measurement [Abstract]  
Fair Value Measurement

Note 18 Fair Value Measurement

We record fair value at an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. We utilize a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

As of December 31, 2011, we have money market funds that qualify as cash equivalents, forward contracts for inventory purchases (Refer to Note 19) and contingent consideration related to the acquisitions of CURNA, Claros and FineTech (Refer to Note 13) that are required to be measured at fair value on a recurring basis. We valued the contingent consideration utilizing a discounted cash flow model for the expected payments. In addition, in connection with our investment in Neovasc as well as entering into our consulting agreement with Neovasc, we record our options and warrants at fair value. Refer to Note 3. During 2011, we recorded other income of $0.1 million related to a reduction of the contingent consideration related to CURNA.

The carrying value of our other assets and liabilities approximates their fair value due to their short-term nature.

Any future fluctuation in fair value related to these instruments that is judged to be temporary, including any recoveries of previous write-downs, would be recorded in accumulated other comprehensive income or loss. If we determine that any future valuation adjustment was other-than-temporary, we would record a charge to the consolidated statement of operations as appropriate.

Our financial assets and liabilities measured at fair value on a recurring basis are as follows:

 

                                 
    Fair value measurements as of December 31, 2011  
(in thousands)   Quoted prices
in active
markets for
identical
assets

(Level 1)
    Significant
other
observable
inputs

(Level 2)
    Significant
unobservable
inputs

(Level 3)
    Total  

Assets:

                               

Money market funds

  $ 68,089     $ —       $ —       $ 68,089  

Forward contracts

    —         143       —         143  

Neovasc common stock options

    —         1,031       —         1,031  

Neovasc common stock warrants

    —         814       —         814  
   

 

 

   

 

 

   

 

 

   

 

 

 

Total assets

  $ 68,089     $ 1,988     $ —       $ 70,077  
   

 

 

   

 

 

   

 

 

   

 

 

 

Liabilities:

                               

CURNA contingent consideration

  $ —       $ —       $ 510     $ 510  

Claros contingent consideration

    —         —         12,745       12,745  

FineTech contingent consideration

    —         —         4,747       4,747  
   

 

 

   

 

 

   

 

 

   

 

 

 

Total Liabilities

  $ —       $ —       $ 18,002     $ 18,002