Carbonite 2011 Annual Report Download - page 65

Table of Contents
Carbonite, Inc.
At December 31, 2010, the Company’s short-term investments consisted of a bank issued certificate of deposit.
The Company applies the guidance in ASC 820, Fair Value Measurements and Disclosures , (“ASC 820”),
which provides that fair value is based
on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement
date. In order to increase consistency and comparability in fair value measurements, ASC 820 establishes a fair value hierarchy that prioritizes
observable and unobservable inputs used to measure fair value into three broad levels, which are described below:
Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy
gives the highest priority to Level 1 inputs.
Level 2: Other inputs that are observable directly or indirectly, such as quoted prices for similar assets and liabilities or market corroborated
inputs.
Level 3: Unobservable inputs are used when little or no market data is available, which requires the Company to develop its own assumptions
about how market participants would value the assets or liabilities. The fair value hierarchy gives the lowest priority to Level 3 inputs.
In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of
unobservable inputs to the extent possible in its assessment of fair value.
The Company’s assets and liabilities that are measured at fair value on a recurring basis, by level, within the fair value hierarchy are summarized
as follows (in thousands):
Refer to Note 8 for Preferred Stock warrant liability.
5. Acquisition, Goodwill, and Acquired Intangible Assets
In June 2011, the Company acquired substantially all of the assets of Phanfare, Inc., for $1.9 million, net of cash acquired, and the assumption of
certain liabilities. Phanfare’s service enables users to create, maintain, and share online photo and video albums. The Company maintains the former
service, employees, and office location of Phanfare.
The results of operations for the acquisition have been included in the Company’s operations since the date of acquisition and were not material
for the periods presented.
61
December 31, 2011
December 31, 2010
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
Assets:
Cash equivalents
—
money market funds
$
40,943
—
—
$
40,943
—
—
—
—
Short
-
term investments
—
U.S. agency securities
—
12,684
—
12,684
—
—
—
—
Short
-
term investments
—
bank certificate of deposit
—
—
—
—
—
$
10,000
—
$
10,000
Total
$
40,943
$
12,684
—
$
53,627
—
$
10,000
—
$
10,000