Quarterly report pursuant to Section 13 or 15(d)

Acquisition-related contingent consideration

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Acquisition-related contingent consideration
 3 Months Ended
Dec. 31, 2011
Acquisition-related contingent consideration.  
Acquisition-related contingent consideration

8. Acquisition-related contingent consideration

 

In February 2010, the Company acquired 100% of the share capital of DeltaWare Systems, Inc. (“DeltaWare). As part of the acquisition arrangement, certain payments were to be made to the previous owners of DeltaWare based upon profitability and sales targets. The fair value of these payments was estimated at the time of acquisition based upon a probability-weighted approach based upon management’s estimates of likely payments and the balance is updated on a quarterly basis as more information comes available. Changes to the liability based upon these changes in estimates are recorded within earnings. The Financial Accounting Standards Board (“FASB”) requires the classification of all assets and liabilities subject to fair value measurement based upon the inputs required for their valuation. As the inputs required for the valuation of these liabilities require significant judgment, they are considered to be Level 3 inputs under the FASB classification.

 

The Company has not recorded a charge in the three month period ended December 31, 2011, but did record a charge of $150,000 in the corresponding period in the 2011 fiscal year. No payments of contingent consideration were made in either period. At December 31, 2011, the Company has a current liability of $1.9 million and a non-current liability of $0.4 million.