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This excerpt taken from the WBMD 8-K filed Jul 2, 2009. Fidelity
Human Resources Services Company LLC
In 2004, the Company entered into an agreement with Fidelity
Human Resources Services Company LLC (“FHRS”) to
integrate the Company’s private portals product into the
services FHRS provides to its clients. FHRS provides human
resources administration and benefit administration services to
employers. The Company recorded revenue of $9,399, $10,362 and
$7,802 during the years ended December 31, 2008, 2007 and
2006, respectively, and $2,070 and $2,069 is included in
accounts receivable as of December 31, 2008 and 2007,
respectively, related to the FHRS agreement. FHRS is an
affiliate of FMR Corp, which reported beneficial ownership of
approximately 5.2%, 16.5% and 10.8% of the Company’s
Class A Common Stock at December 31, 2008, 2007 and
2006, respectively, and 9.9%, 13.6% and 13.0% of HLTH’s
common stock at December 31, 2008, 2007 and 2006,
respectively.
This excerpt taken from the WBMD 10-Q filed May 11, 2009. Fidelity
Human Resources Services Company LLC
In 2004, the Company entered into an agreement with Fidelity
Human Resources Services Company LLC (“FHRS”) to
integrate the Company’s private portals product into the
services FHRS provides to its clients. FHRS provides human
resources administration and benefits administration services to
employers. The Company recorded revenue of $2,388 and $2,438
during the three months ended March 31, 2009 and 2008,
respectively. Included in accounts receivable as of
March 31, 2009 and December 31, 2008 was $2,476 and
$2,070, respectively, related to the FHRS agreement.
Effective January 1, 2008, the Company adopted
SFAS No. 157, “Fair Value Measurements”
(“SFAS 157”), for assets and liabilities measured
at fair value on a recurring basis. SFAS 157 establishes a
common definition for fair value to be applied to existing GAAP
that require the use of fair value measurements, establishes a
framework for measuring fair value and expands disclosure about
such fair value measurements. The adoption of SFAS 157 did
not have an impact on the Company’s financial position or
operating results, but did expand certain disclosures.
SFAS 157 defines fair value as 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. Additionally, SFAS 157 requires the use
of valuation techniques that maximize the use of observable
inputs and minimize the use of unobservable inputs. These inputs
are prioritized below:
Table of Contents
WEBMD
HEALTH CORP.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
The Company did not have any Level 1 or Level 2 assets
as of March 31, 2009 and December 31, 2008. The
following table sets forth the Company’s Level 3
financial assets that were measured at fair value on a recurring
basis as of March 31, 2009 and the respective fair values
at December 31, 2008:
The following table reconciles the beginning and ending balances
of the Company’s Level 3 assets, which consist of the
Company’s auction rate securities for the three months
ended March 31, 2009:
The Company holds investments in auction rate securities
(“ARS”) which have been classified as Level 3
assets as described above. The types of ARS holdings the Company
owns are backed by student loans, 97% guaranteed under the
Federal Family Education Loan Program (FFELP), and had credit
ratings of AAA or Aaa when purchased. Historically, the fair
value of the Company’s ARS holdings approximated par value
due to the frequent auction periods, generally every 7 to
28 days, which provided liquidity to these investments.
However, since February 2008, all auctions involving these
securities have failed. The result of a failed auction is that
these ARS holdings will continue to pay interest in accordance
with their terms at each respective auction date; however
liquidity of the securities will be limited until there is a
successful auction, the issuer redeems the securities, the
securities mature or until such time as other markets for these
ARS holdings develop. During the three months ended
March 31, 2008, the Company concluded that the estimated
fair value of the ARS no longer approximated the face value due
to the lack of liquidity. The securities have been classified
within Level 3 as their valuation requires substantial
judgment and estimation of factors that are not currently
observable in the market due to the lack of trading in the
securities.
The Company estimated the fair value of its ARS holdings using
an income approach valuation technique. Using this approach,
expected future cash flows were calculated over the expected
life of each security and were discounted to a single present
value using a market required rate of return. Some of the more
significant assumptions made in the present value calculations
were (i) the estimated weighted average lives for the loan
portfolios underlying each individual ARS, which ranged from 4
to 14 years as of March 31, 2008 and (ii) the
required rates of return used to discount the estimated future
cash flows over the estimated life of each security, which
considered both the credit quality for each individual ARS and
the market liquidity for these investments. As of March 31,
2008, the Company concluded the fair value of its ARS holdings
was $141,044 compared to a face value of $168,450. The
impairment in value, or $27,406, was considered to be
other-than-temporary,
and accordingly, was recorded as an impairment charge within the
statement of operations during the three months ended
March 31, 2008.
In making the determination that the impairment was
other-than-temporary
the Company considered (i) the current market liquidity for
ARS, particularly student loan backed ARS, (ii) the
long-term maturities of the loan portfolios underlying each ARS
owned by the Company and (iii) the ability and intent of
the Company to hold its ARS investments until sufficient
liquidity returns to the auction rate market to enable the sale
of these securities or until the investments mature.
During the three months ended March 31, 2009, the Company
received $600 associated with the partial redemption of certain
of its ARS holdings, which represented 100% of their face value.
As a result, as of March 31, 2009 and December 31,
2008, the total face value of the Company’s ARS holdings
was $164,200
Table of Contents
WEBMD
HEALTH CORP.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
and $164,800, compared to a fair value of $127,033 and $133,563,
respectively. In addition to the impairment charge discussed
above, during the three months ended March 31, 2009, the
Company reduced the carrying value of its ARS holdings by
$5,930. The Company assessed this reduction to be temporary in
nature, as this reduction in value resulted from fluctuations in
interest rate and discount rate assumptions, and accordingly,
this amount has been recorded as an unrealized loss in other
comprehensive income in the accompanying balance sheets. The
Company continues to monitor the market for ARS as well as the
individual ARS investments it owns. The Company may be required
to record additional losses in future periods if the fair value
of its ARS holdings deteriorates further.
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