FADV » Topics » Fair Value of Financial Instruments

These excerpts taken from the FADV 10-K filed Feb 26, 2009.

Fair Value of Financial Instruments

The carrying amount of the Company’s financial instruments at December 31, 2008 and 2007, which includes cash and cash equivalents, marketable equity securities and accounts receivable, approximates fair value because of the short maturity of those instruments. The Company’s marketable equity securities are classified as available for sale securities. Unrealized holding gains and losses for available for sale securities are excluded from earnings and reported, net of taxes, as accumulated other comprehensive (loss) income. The Company considers its variable rate debt to be representative of current market rates and, accordingly, estimates that the recorded amounts approximate fair market value. Fair value estimates of its fixed rate debt were determined using discounted cash flow methods with a discount rate of 3.25% and 7.25%, which are the estimated rates that similar instruments could be negotiated at December 31, 2008 and 2007, respectively.

The estimated fair values of the Company’s financial instruments, none of which are held for trading purposes, are summarized as follows:

 

     December 31, 2008     December 31, 2007  
(in thousands)    Carrying
Amount
    Estimated
Fair Value
    Carrying
Amount
    Estimated
Fair Value
 

Cash and cash equivalents

   $ 52,361     $ 52,361     $ 76,060     $ 76,060  

Accounts receivable

     121,531       121,531       148,875       148,875  

Marketable equity securities

     30,365       30,365       85,476       85,476  

Long-term debt and capital leases

     (32,829 )     (32,699 )     (32,686 )     (32,464 )

Fair Value of Financial Instruments

The carrying amount of the Company’s financial instruments at December 31, 2008 and 2007, which includes cash and cash equivalents, marketable equity securities and accounts receivable, approximates fair value because of the short maturity of those instruments. The Company’s marketable equity securities are classified as available for sale securities. Unrealized holding gains and losses for available for sale securities are excluded from earnings and reported, net of taxes, as accumulated other comprehensive (loss) income. The Company considers its variable rate debt to be representative of current market rates and, accordingly, estimates that the recorded amounts approximate fair market value. Fair value estimates of its fixed rate debt were determined using discounted cash flow methods with a discount rate of 3.25% and 7.25%, which are the estimated rates that similar instruments could be negotiated at December 31, 2008 and 2007, respectively.

The estimated fair values of the Company’s financial instruments, none of which are held for trading purposes, are summarized as follows:

 

     December 31, 2008     December 31, 2007  
(in thousands)    Carrying
Amount
    Estimated
Fair Value
    Carrying
Amount
    Estimated
Fair Value
 

Cash and cash equivalents

   $ 52,361     $ 52,361     $ 76,060     $ 76,060  

Accounts receivable

     121,531       121,531       148,875       148,875  

Marketable equity securities

     30,365       30,365       85,476       85,476  

Long-term debt and capital leases

     (32,829 )     (32,699 )     (32,686 )     (32,464 )

Fair Value
of Financial Instruments

The carrying amount of the Company’s financial instruments at December 31, 2008 and 2007, which
includes cash and cash equivalents, marketable equity securities and accounts receivable, approximates fair value because of the short maturity of those instruments. The Company’s marketable equity securities are classified as available for
sale securities. Unrealized holding gains and losses for available for sale securities are excluded from earnings and reported, net of taxes, as accumulated other comprehensive (loss) income. The Company considers its variable rate debt to be
representative of current market rates and, accordingly, estimates that the recorded amounts approximate fair market value. Fair value estimates of its fixed rate debt were determined using discounted cash flow methods with a discount rate of 3.25%
and 7.25%, which are the estimated rates that similar instruments could be negotiated at December 31, 2008 and 2007, respectively.

SIZE="2">The estimated fair values of the Company’s financial instruments, none of which are held for trading purposes, are summarized as follows:

 




















































































































   December 31, 2008  December 31, 2007 
(in thousands)  Carrying
Amount
  Estimated
Fair Value
  Carrying
Amount
  Estimated
Fair Value
 

Cash and cash equivalents

  $52,361  $52,361  $76,060  $76,060 

Accounts receivable

   121,531   121,531   148,875   148,875 

Marketable equity securities

   30,365   30,365   85,476   85,476 

Long-term debt and capital leases

   (32,829)  (32,699)  (32,686)  (32,464)

Fair Value
of Financial Instruments

The carrying amount of the Company’s financial instruments at December 31, 2008 and 2007, which
includes cash and cash equivalents, marketable equity securities and accounts receivable, approximates fair value because of the short maturity of those instruments. The Company’s marketable equity securities are classified as available for
sale securities. Unrealized holding gains and losses for available for sale securities are excluded from earnings and reported, net of taxes, as accumulated other comprehensive (loss) income. The Company considers its variable rate debt to be
representative of current market rates and, accordingly, estimates that the recorded amounts approximate fair market value. Fair value estimates of its fixed rate debt were determined using discounted cash flow methods with a discount rate of 3.25%
and 7.25%, which are the estimated rates that similar instruments could be negotiated at December 31, 2008 and 2007, respectively.

SIZE="2">The estimated fair values of the Company’s financial instruments, none of which are held for trading purposes, are summarized as follows:

 




















































































































   December 31, 2008  December 31, 2007 
(in thousands)  Carrying
Amount
  Estimated
Fair Value
  Carrying
Amount
  Estimated
Fair Value
 

Cash and cash equivalents

  $52,361  $52,361  $76,060  $76,060 

Accounts receivable

   121,531   121,531   148,875   148,875 

Marketable equity securities

   30,365   30,365   85,476   85,476 

Long-term debt and capital leases

   (32,829)  (32,699)  (32,686)  (32,464)
These excerpts taken from the FADV 10-K filed Feb 28, 2008.

Fair Value of Financial Instruments

The carrying amount of the Company’s financial instruments at December 31, 2007 and 2006, which includes cash and cash equivalents, marketable equity securities and accounts receivable, approximates fair value because of the short maturity of those instruments. The Company’s marketable equity securities are classified as available for sale securities. Unrealized holding gains and losses for available for sale securities are excluded from earnings and reported, net of taxes, as accumulated other comprehensive income (loss). The Company considers its variable rate debt to be representative of current market rates and, accordingly, estimates that the recorded amounts approximate fair market value. Fair value estimates of its fixed rate debt were determined using discounted cash flow methods with a discount rate of 7.25% and 8.25%, which are the estimated rates that similar instruments could be negotiated at December 31, 2007 and 2006, respectively.

The estimated fair values of the Company’s financial instruments, none of which are held for trading purposes, are summarized as follows:

 

     December 31, 2007     December 31, 2006  
(in thousands)    Carrying
Amount
    Estimated
Fair Value
    Carrying
Amount
    Estimated
Fair Value
 

Cash and cash equivalents

   $ 76,600     $ 76,600     $ 31,562     $ 31,562  

Accounts receivable

     151,640       151,640       137,485       137,485  

Marketable equity securities

     85,476       85,476       —         —    

Long-term debt and capital leases

     (32,686 )     (32,464 )     (200,325 )     (199,748 )

Fair Value of Financial Instruments

STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%">The carrying amount of the Company’s financial instruments at December 31, 2007 and 2006, which includes cash and cash equivalents, marketable
equity securities and accounts receivable, approximates fair value because of the short maturity of those instruments. The Company’s marketable equity securities are classified as available for sale securities. Unrealized holding gains and
losses for available for sale securities are excluded from earnings and reported, net of taxes, as accumulated other comprehensive income (loss). The Company considers its variable rate debt to be representative of current market rates and,
accordingly, estimates that the recorded amounts approximate fair market value. Fair value estimates of its fixed rate debt were determined using discounted cash flow methods with a discount rate of 7.25% and 8.25%, which are the estimated rates
that similar instruments could be negotiated at December 31, 2007 and 2006, respectively.

The estimated fair values of the
Company’s financial instruments, none of which are held for trading purposes, are summarized as follows:

 




















































































































   December 31, 2007  December 31, 2006 
(in thousands)  Carrying
Amount
  Estimated
Fair Value
  Carrying
Amount
  Estimated
Fair Value
 

Cash and cash equivalents

  $76,600  $76,600  $31,562  $31,562 

Accounts receivable

   151,640   151,640   137,485   137,485 

Marketable equity securities

   85,476   85,476   —     —   

Long-term debt and capital leases

   (32,686)  (32,464)  (200,325)  (199,748)
This excerpt taken from the FADV 10-K filed Mar 1, 2007.

Fair Value of Financial Instruments

The carrying amount of the Company’s financial instruments at December 31, 2006 and 2005, which includes cash and cash equivalents and accounts receivable, approximates fair value because of the short maturity of those instruments. The Company considers the variable rate debt to be representative of current market rates and, accordingly, estimates that the recorded amounts approximate fair market value. Fair value estimates of the fixed rate debt were determined using discounted cash flow methods with a discount rate of 8.25% and 7.25%, which estimates the rate that similar instruments could be negotiated at December 31, 2006 and 2005, respectively.

The estimated fair values of the Company’s financial instruments, none of which are held for trading purposes, are summarized as follows:

 

     December 31, 2006     December 31, 2005  
(in thousands)    Carrying
Amount
    Estimated
Fair Value
    Carrying
Amount
    Estimated
Fair Value
 

Cash and cash equivalents

   $ 31,941     $ 31,941     $ 28,380     $ 28,380  

Accounts receivable

     138,563       138,563       106,555       106,555  

Long-term debt and capital leases

     (200,325 )     (199,748 )     (220,571 )     (219,464 )

 

49


First Advantage Corporation

Notes to Consolidated Financial Statements—(Continued)

For the Years Ended December 31, 2006, 2005 and 2004

 

This excerpt taken from the FADV 10-K filed Mar 31, 2006.

Fair Value of Financial Instruments

 

The carrying amount of the Company’s financial instruments at December 31, 2004 and 2003, which includes cash and cash equivalents and accounts receivable, approximates fair value because of the short maturity of those instruments. The Company considers the variable rate debt to be representative of current market rates and, accordingly, estimates that the recorded amounts approximate fair market value. Fair value estimates of the fixed rate debt were determined using discounted cash flow methods with a discount rate of 5.25% and 4.0%, which is the rate that similar instruments could be negotiated at December 31, 2004 and 2003, respectively.

 

36


First Advantage Corporation

 

Notes to Consolidated Financial Statements—(Continued)

For the Years Ended December 31, 2004, 2003 and 2002

 

The estimated fair values of the Company’s financial instruments, none of which are held for trading purposes, are summarized as follows:

 

    December 31, 2004

    December 31, 2003

 
   

Carrying

Amount


   

Estimated

Fair Value


   

Carrying

Amount


   

Estimated

Fair Value


 

Cash and cash equivalents

  $ 7,637,000     $ 7,637,000     $ 5,637,000     $ 5,637,000  

Accounts receivable

    43,124,000       43,124,000       23,672,000       23,672,000  

Long-term debt and capital leases

    (105,780,000 )     (105,462,000 )     (20,704,000 )     (20,554,000 )

 

This excerpt taken from the FADV 10-K filed Mar 16, 2006.

Fair Value of Financial Instruments

The carrying amount of the Company’s financial instruments at December 31, 2005 and 2004, which includes cash and cash equivalents and accounts receivable, approximates fair value because of the short maturity of those instruments. The Company considers the variable rate debt to be representative of current market rates and, accordingly, estimates that the recorded amounts approximate fair market value. Fair value estimates of the fixed rate debt were determined using discounted cash flow methods with a discount rate of 7.25% and 5.25%, which is the rate that similar instruments could be negotiated at December 31, 2005 and 2004, respectively.

The estimated fair values of the Company’s financial instruments, none of which are held for trading purposes, are summarized as follows:

 

     December 31, 2005     December 31, 2004  
     Carrying
Amount
   

Estimated

Fair Value

    Carrying
Amount
   

Estimated

Fair Value

 

Cash and cash equivalents

   $ 28,380,000     $ 28,380,000     $ 9,996,000     $ 9,996,000  

Accounts receivable

     107,410,000       107,410,000       67,981,000       67,981,000  

Notes receivable

     —         —         4,000,000       4,000,000  

Long-term debt and capital leases

     (220,571,000 )     (219,464,000 )     (110,806,000 )     (106,625,000 )
This excerpt taken from the FADV 8-K filed Dec 20, 2005.

Fair Value of Financial Instruments

 

The carrying amount of the Company’s financial instruments at December 31, 2004, which includes cash and cash equivalents, accounts receivable, and accounts payable, approximates fair value because of the short maturity of those instruments.

 

This excerpt taken from the FADV DEF 14A filed Aug 8, 2005.

Fair Value of Financial Instruments

 

The carrying amount of the Company’s financial instruments at December 31, 2004 and 2003, which includes cash and cash equivalents, accounts receivable, and notes receivable approximates fair value because of the short maturity of those instruments. The Company considers the variable rate debt to be representative of current market rates and, accordingly, estimates that the recorded amounts approximate fair market value.

 

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

Fair Value of Financial Instruments

 

The carrying amount of the Company’s financial instruments at December 31, 2004 and 2003, which includes cash and cash equivalents and accounts receivable, approximates fair value because of the short maturity

 

33


First Advantage Corporation

 

Notes to Consolidated Financial Statements—(Continued)

For the Years Ended December 31, 2004, 2003 and 2002

 

of those instruments. The Company considers the variable rate debt to be representative of current market rates and, accordingly, estimates that the recorded amounts approximate fair market value. Fair value estimates of the fixed rate debt were determined using discounted cash flow methods with a discount rate of 5.25% and 4.0%, which is the rate that similar instruments could be negotiated at December 31, 2004 and 2003, respectively.

 

The estimated fair values of the Company’s financial instruments, none of which are held for trading purposes, are summarized as follows:

 

    December 31, 2004

    December 31, 2003

 
   

Carrying

Amount


   

Estimated

Fair Value


   

Carrying

Amount


   

Estimated

Fair Value


 

Cash and cash equivalents

  $ 7,637,000     $ 7,637,000     $ 5,637,000     $ 5,637,000  

Accounts receivable

    43,124,000       43,124,000       23,672,000       23,672,000  

Long-term debt and capital leases

    (105,780,000 )     (105,462,000 )     (20,704,000 )     (20,554,000 )

 

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