EFJI » Topics » 15. Fair Value of Financial Instruments:

These excerpts taken from the EFJI 10-K filed Mar 31, 2009.

17. Fair Value of Financial Instruments:

        The carrying amount of our current assets and liabilities approximates fair value because of the short maturity of these instruments. The carrying amount of our term loan approximates fair value as it is based on prevailing market rates of interest. The fair value of our interest rate swap agreement represents the amount required to settle the agreement using prevailing market rates of interest.

        Effective January 1, 2008, we adopted SFAS 157 related to our financial assets and liabilities which defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles and expands disclosures about fair value measurements. The adoption of SFAS 157 did not have a material impact on our financial condition and results of operations.

        Relative to SFAS 157, the FASB issued FASB Staff Positions (FSP) 157-1, 157-2 and 157-3. FSP 157-1 amends SFAS 157 to exclude SFAS No. 13, Accounting for Leases, (SFAS 13) and its related interpretive accounting pronouncements that address leasing transactions, while FSP 157-2 delays the effective date of the application of SFAS 157 to fiscal years beginning after November 15, 2008 for all non-financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a non-recurring basis. FSP 157-3 amends SFAS 157 to provide guidance regarding the manner in which SFAS No. 157 should be applied in determining fair value of a financial asset when there is no active market for such asset at the measurement date.

        SFAS 157 defines fair value as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an

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Table of Contents


EF JOHNSON TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(in thousands, except per share and per share date)

17. Fair Value of Financial Instruments: (Continued)


orderly transaction between market participants on the measurement date. SFAS 157 also describes three levels of inputs that may be used to measure fair value:

    Level 1—quoted prices in active markets for identical assets and liabilities.

    Level 2—observable inputs other than quoted prices in active markets for identical assets and liabilities.

    Level 3—unobservable inputs in which there is little or no market data available, which require the reporting entity to develop its own assumptions.

        The following table provides the liabilities carried at fair value measured on a recurring basis as of September 30, 2008:

 
   
  Fair Value Measurements at December 31, 2008 Using:  
 
  Total Carrying Value at
December 31, 2008
  Quoted prices in
active markets
(Level 1)
  Significant other
observable inputs
(Level 2)
  Significant
unobservable inputs
(Level 3)
 

Interest rate swap—liability

  $ 1,088   $   $ 1,088   $  

17. Fair Value of Financial Instruments:

        The carrying amount of our current assets and liabilities approximates fair value because of the short maturity of these instruments. The carrying amount of our term loan approximates fair value as it is based on prevailing market rates of interest. The fair value of our interest rate swap agreement represents the amount required to settle the agreement using prevailing market rates of interest.

        Effective January 1, 2008, we adopted SFAS 157 related to our financial assets and liabilities which defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles and expands disclosures about fair value measurements. The adoption of SFAS 157 did not have a material impact on our financial condition and results of operations.

        Relative to SFAS 157, the FASB issued FASB Staff Positions (FSP) 157-1, 157-2 and 157-3. FSP 157-1 amends SFAS 157 to exclude SFAS No. 13, Accounting for Leases, (SFAS 13) and its related interpretive accounting pronouncements that address leasing transactions, while FSP 157-2 delays the effective date of the application of SFAS 157 to fiscal years beginning after November 15, 2008 for all non-financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a non-recurring basis. FSP 157-3 amends SFAS 157 to provide guidance regarding the manner in which SFAS No. 157 should be applied in determining fair value of a financial asset when there is no active market for such asset at the measurement date.

        SFAS 157 defines fair value as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an

F-35


Table of Contents


EF JOHNSON TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(in thousands, except per share and per share date)

17. Fair Value of Financial Instruments: (Continued)


orderly transaction between market participants on the measurement date. SFAS 157 also describes three levels of inputs that may be used to measure fair value:

    Level 1—quoted prices in active markets for identical assets and liabilities.

    Level 2—observable inputs other than quoted prices in active markets for identical assets and liabilities.

    Level 3—unobservable inputs in which there is little or no market data available, which require the reporting entity to develop its own assumptions.

        The following table provides the liabilities carried at fair value measured on a recurring basis as of September 30, 2008:

 
   
  Fair Value Measurements at December 31, 2008 Using:  
 
  Total Carrying Value at
December 31, 2008
  Quoted prices in
active markets
(Level 1)
  Significant other
observable inputs
(Level 2)
  Significant
unobservable inputs
(Level 3)
 

Interest rate swap—liability

  $ 1,088   $   $ 1,088   $  

17. Fair Value of Financial Instruments:




        The carrying amount of our current assets and liabilities approximates fair value because of the short maturity of these instruments. The carrying amount of our term loan approximates
fair value as it is based on prevailing market rates of interest. The fair value of our interest rate swap agreement represents the amount required to settle the agreement using prevailing market
rates of interest.



        Effective
January 1, 2008, we adopted SFAS 157 related to our financial assets and liabilities which defines fair value, establishes a framework for measuring fair value in
accordance with generally accepted accounting principles and expands disclosures about fair value measurements. The adoption of SFAS 157 did not have a material impact on our financial
condition and results of operations.



        Relative
to SFAS 157, the FASB issued FASB Staff Positions (FSP) 157-1, 157-2 and 157-3. FSP 157-1 amends
SFAS 157 to exclude SFAS No. 13, Accounting for Leases, (SFAS 13) and its related interpretive accounting pronouncements that address leasing transactions, while
FSP 157-2 delays the effective date of the application of SFAS 157 to fiscal years beginning after November 15, 2008 for all non-financial assets and
liabilities that are recognized or disclosed at fair value in the financial statements on a non-recurring basis. FSP 157-3 amends SFAS 157 to provide guidance
regarding the manner in which SFAS No. 157 should be applied in determining fair value of a financial asset when there is no active market for such asset at the measurement date.



        SFAS 157
defines fair value as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the
asset or liability in an



F-35









HREF="#du43501a_main_toc">Table of Contents





EF JOHNSON TECHNOLOGIES INC. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)



(in thousands, except per share and per share date)




17. Fair Value of Financial Instruments: (Continued)






orderly
transaction between market participants on the measurement date. SFAS 157 also describes three levels of inputs that may be used to measure fair value:





    Level 1—quoted prices in active markets for identical assets and liabilities.


    Level 2—observable inputs other than quoted prices in active markets for identical assets and
    liabilities.



    Level 3—unobservable inputs in which there is little or no market data available, which require the
    reporting entity to develop its own assumptions.



        The
following table provides the liabilities carried at fair value measured on a recurring basis as of September 30, 2008:


























































 
  
 Fair Value Measurements at December 31, 2008 Using:  
 
 Total Carrying Value at

December 31, 2008
 Quoted prices in

active markets

(Level 1)
 Significant other

observable inputs

(Level 2)
 Significant

unobservable inputs

(Level 3)
 

Interest rate swap—liability

 $1,088 $ $1,088 $ 




17. Fair Value of Financial Instruments:




        The carrying amount of our current assets and liabilities approximates fair value because of the short maturity of these instruments. The carrying amount of our term loan approximates
fair value as it is based on prevailing market rates of interest. The fair value of our interest rate swap agreement represents the amount required to settle the agreement using prevailing market
rates of interest.



        Effective
January 1, 2008, we adopted SFAS 157 related to our financial assets and liabilities which defines fair value, establishes a framework for measuring fair value in
accordance with generally accepted accounting principles and expands disclosures about fair value measurements. The adoption of SFAS 157 did not have a material impact on our financial
condition and results of operations.



        Relative
to SFAS 157, the FASB issued FASB Staff Positions (FSP) 157-1, 157-2 and 157-3. FSP 157-1 amends
SFAS 157 to exclude SFAS No. 13, Accounting for Leases, (SFAS 13) and its related interpretive accounting pronouncements that address leasing transactions, while
FSP 157-2 delays the effective date of the application of SFAS 157 to fiscal years beginning after November 15, 2008 for all non-financial assets and
liabilities that are recognized or disclosed at fair value in the financial statements on a non-recurring basis. FSP 157-3 amends SFAS 157 to provide guidance
regarding the manner in which SFAS No. 157 should be applied in determining fair value of a financial asset when there is no active market for such asset at the measurement date.



        SFAS 157
defines fair value as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the
asset or liability in an



F-35









HREF="#du43501a_main_toc">Table of Contents





EF JOHNSON TECHNOLOGIES INC. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)



(in thousands, except per share and per share date)




17. Fair Value of Financial Instruments: (Continued)






orderly
transaction between market participants on the measurement date. SFAS 157 also describes three levels of inputs that may be used to measure fair value:





    Level 1—quoted prices in active markets for identical assets and liabilities.


    Level 2—observable inputs other than quoted prices in active markets for identical assets and
    liabilities.



    Level 3—unobservable inputs in which there is little or no market data available, which require the
    reporting entity to develop its own assumptions.



        The
following table provides the liabilities carried at fair value measured on a recurring basis as of September 30, 2008:


























































 
  
 Fair Value Measurements at December 31, 2008 Using:  
 
 Total Carrying Value at

December 31, 2008
 Quoted prices in

active markets

(Level 1)
 Significant other

observable inputs

(Level 2)
 Significant

unobservable inputs

(Level 3)
 

Interest rate swap—liability

 $1,088 $ $1,088 $ 




This excerpt taken from the EFJI 10-K filed Mar 9, 2006.

15. Fair Value of Financial Instruments:

The carrying amount of our current assets and liabilities approximates fair value because of the short maturity of these instruments. The carrying amount of the revolving line of credit approximates fair value as calculated by discounting the future cash flows of the instrument at rates currently offered to us for similar debt instruments of comparable maturities by our bankers.

This excerpt taken from the EFJI 10-K filed Mar 3, 2005.

14.    Fair Value of Financial Instruments:

        The carrying amount of the Company's current assets and liabilities approximates fair value because of the short maturity of these instruments. The carrying amount of the revolving line of credit approximates fair value as calculated by discounting the future cash flows of the instrument at rates currently offered to the Company for similar debt instruments of comparable maturities by the Company's bankers.

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