Download 2011 Annual Report - Opnet

OPNET Technologies, Inc. 2011 Annual Report
The following table details the fair value measurements within the three levels of fair value hierarchy of our financial assets, consisting of
cash, cash equivalents, and marketable securities, at March 31, 2011 and 2010:
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Fair Value Measurement at March 31, 2011 Using
Total Fair Value Level 1 Level 2 Level 3
(in thousands)
Cash $ 30,821 $ 30,821 $ — $ —
Money market funds 48,976 48,976 — —
United States government obligations
included in cash & cash equivalents
United States government obligations
3,499 3,499 — —
included in marketable securities 31,432 31,432 — —
Total $ 114,728 $ 114,728 $ — $ —
Fair Value Measurement at March 31, 2010 Using
Total Fair Value Level 1 Level 2 Level 3
(in thousands)
Cash $ 21,545 $ 21,545 $ — $ —
Money market funds 83,136 83,136 — —
Total $104,681 $ 104,681 $ — $ —
At March 31, 2011 and 2010, we valued money market funds and
United States government obligations using a Level 1 valuation because
market prices in active markets for identical assets were readily
available. The per-share net asset value of our money market
funds has remained at a constant amount of $1.00 per share. Also,
as of March 31, 2011, there were no withdrawal limits on redemptions
for any of the money market funds that we hold. We did not
group any financial assets using Level 2 or Level 3 valuations at
March 31, 2011 or 2010.
Allowance for Doubtful Accounts. We maintain an allowance for
doubtful accounts receivable for estimated losses resulting from the
inability of our customers to make required payments and for the
limited circumstances when the customer disputes the amounts
due us. Our methodology for determining this allowance requires
significant estimates. In estimating the allowance, we consider the
age of the receivable, the creditworthiness of the customer, the
economic conditions of the customer’s industry and general economic
conditions. While we believe that the estimates we use are
reasonable, should any of these factors change, our estimates may
also change, which could affect the amount of our future allowance
for doubtful accounts as well as future operating income. Specifically,
if the financial condition of our customers were to deteriorate,
resulting in an impairment of their ability to make payments to us,
additional allowances could be required. As of March 31, 2011 and
2010, accounts receivable and unbilled accounts receivable totaled
$34.5 million and $32.8 million, net of an allowance for doubtful
accounts of $346,000 and $336,000, respectively.
Valuation of Intangible Assets and Goodwill. We account for our
goodwill and intangible assets in accordance with ASC 805, Business
Combinations and ASC 350, Intangibles – Goodwill and Other.
Our intangible assets consist of acquired technology related to our
acquisitions of a software product for modeling voice communications
in December 2003, Altaworks in October 2004, purchased
technology we purchased from RadView Software, Ltd. in December
2005, SQMworks, Inc. in April 2006, Network Physics, Inc. in October
2007, and substantially all of the assets of Embarcadero Technologies,
Inc. in August 2010. Our intangible assets also consist of
customer relationships and acquired workforce assets we purchased
from Network Physics, Inc. related to the purchase of specified assets
of Network Physics in October 2007 and trade names, trademark,
customer relationships, and non-compete agreements we
acquired from Embarcadero, Inc. related to the acquisition of substantially
all the assets associated with the DSAuditor product line in
August 2010. The acquired and purchased technologies are stated
at the lower of unamortized cost or net realizable value and are
amortized on a straight-line basis over their expected useful lives
of three to five years. We amortize our customer relationship and
workforce intangible assets we purchased from Network Physics,
Inc. on an accelerated depreciation basis over their expected useful
lives of four and one half years and five years, respectively. We
amortize our trade names, trademark, customer relationships, and
non-compete agreements we acquired from Embarcadero, Inc. on a
straight-line basis over the expected useful lives. The trade names,
trademark and customer relationships have useful lives of five years.
The non-compete agreements have a useful life of one year.