Financial Instruments |
9 Months Ended | ||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | |||||||||||||||||||||||||||||||||
| Financial Instruments [Abstract] | |||||||||||||||||||||||||||||||||
| Financial Instruments |
Concentrations of Credit Risk
Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash and trade accounts receivable. The Company does not generally require collateral from its customers. Concentrations of credit risk with respect to trade accounts receivable on a consolidated basis are limited due to the large number of entities comprising the Company’s customer base and their dispersion across many different industries. However, while not significant to the Company on a consolidated basis, four customers accounted for approximately 71.5% of FASI’s operating revenue for the nine months ended September 30, 2011.
In February 2010, the Company notified one of FASI’s largest customers that it would cease providing services and concluded the business relationship by July 2010. During the nine months ended September 30, 2010, revenues from this customer were 10.7% of FASI’s operating revenue and 1.5% of the Company’s consolidated operating revenue. The revenue associated with this customer was low yielding and the impact on 2011 and 2010’s operating results from curtailing these services was minimal.
Fair Value of Financial Instruments
The following methods and assumptions were used by the Company in estimating its fair value disclosures for financial instruments:
Accounts receivable and accounts payable: The carrying amounts reported in the balance sheet for accounts receivable and accounts payable approximate their fair value based on their short-term nature.
The Company’s senior credit facility bears interest at LIBOR plus 0.6% to 0.9% based upon covenants related to total indebtedness to earnings. Using interest rate quotes and discounted cash flows, the Company estimated the fair value of its senior credit facility and debt and capital lease obligations as follows:
The Company's fair value calculations for the above financial instruments are classified within level 3 of the fair value hierarchy.
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