Print Page  |  Close Window

SEC Filings

10-Q
HEARTWARE INTERNATIONAL, INC. filed this Form 10-Q on 11/02/2015
Entire Document
 


Table of Contents

The following table summarizes the change in fair value, as determined by Level 3 inputs, of the lease exit costs for the nine months ended September 30, 2015:

 

     Lease Exit
Costs
 
     (in thousands)  

Beginning balance

   $ 1,207   

Adjustments

     431   

Payments

     (519

Change in fair value

     33   
  

 

 

 

Ending balance

   $ 1,152   
  

 

 

 

The expense associated with changes in the fair value of the lease exit costs is included in selling, general and administrative expenses in our consolidated statements of operations. The change in the fair value of the lease exit costs in the nine months ended September 30, 2015 was primarily due to a change in our estimated sublease start date, which was deferred by eight months. Potential valuation adjustments will be made in future accounting periods as additional information becomes available, including, our ability to sublease the facility in a timely manner and obtain a rate equivalent to our estimated sublease rate, with the impact of these adjustments being recorded in our condensed consolidated statements of operations.

The following table presents quantitative information about the inputs and valuation methodologies used for our fair value measurements classified in Level 3 of the fair value hierarchy as of September 30, 2015:

 

    

Valuation Methodology

  

Significant
Unobservable Input

  

Weighted Average

(range, if applicable)

Contingent consideration

   Probability weighted income approach    Milestone dates    2019 to 2022
      Discount rate    17.0% to 24.0%
      Probability of occurrence    0% to 100%

Royalties

   Discounted cash flow    Discount rate    4.8% to 7.8%

Lease exit costs

   Discounted cash flow    Sublease start date    July 1, 2016
      Sublease rate    $26.50/square foot
      Discount rate    3.5%

Assets That Are Measured at Fair Value on a Nonrecurring Basis

Non-marketable equity investments and non-financial assets such as intangible assets, goodwill and property, plant, and equipment are evaluated for impairment annually or when indicators of impairment exist and are measured at fair value only if an impairment charge is recorded. In the first quarters of 2015 and 2014, we recorded impairment charges of $1.1 million and $0.6 million, respectively, related to certain property, plant, and equipment in connection with the facility closures discussed in Note 3. Non-financial assets such as identified intangible assets acquired in connection with our acquisitions are measured at fair value using Level 3 inputs, which include discounted cash flow methodologies, or similar techniques, when there is limited market activity and the determination of fair value requires significant judgment or estimation.

Note 5. Investments

We have cash investment policies that limit investments to investment grade rated securities. At September 30, 2015 and December 31, 2014, all of our investments were classified as available-for-sale and carried at fair value. At September 30, 2015 and December 31, 2014, our short-term and long-term investments had maturity dates of less than twenty-four months.

 

18