Fair Value and Equity Investments

12 Months Ended

Dec. 31, 2023

Fair Value and Equity Investments [Abstract]

Fair Value and Equity Investments

10. Fair Value and Equity Investments

Fair Value

The carrying value of financial instruments including cash and cash equivalents, accounts receivable and accounts payable approximate fair values due to the short-term nature of these instruments. Fair value estimates are made at a specific point in time, based on relevant market information.

The following tables present the fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis (U.S. dollars in thousands):

	Fair Value at December 31, 2023
	Level 1		Level 2		Level 3			Total
Financial assets (liabilities):
Cash equivalents and current investments	$	42,916	$	—	$	—		$	42,916
Derivative financial instruments asset		—		12,689		—			12,689
Life insurance contracts		—		—		45,041			45,041
Contingent consideration		—		—		(6,300	)		(6,300	)
Total	$	42,916	$	12,689		38,741		$	94,346

	Fair Value at December 31, 2022
	Level 1		Level 2		Level 3			Total
Financial assets (liabilities):
Cash equivalents and current investments	$	55,356	$	—	$	—		$	55,356
Derivative financial instruments asset		—		19,738		—			19,738
Life insurance contracts		—		—		40,055			40,055
Contingent consideration		—		—		(6,364	)		(6,364	)
Total	$	55,356	$	19,738	$	33,691		$	108,785

The following methods and assumptions were used to determine the fair value of each class of assets and liabilities recorded at fair value in the consolidated balance sheets:

Cash equivalents and current investments: Cash equivalents and current investments primarily consist of highly rated money market funds with maturities of three months or less, and are purchased daily at par value with specified yield rates. Due to the high ratings and short-term nature of the funds, the Company considers all cash equivalents and current investments as Level 1. Current investments include $4.0 million and $4.9 million as of December 31, 2023 and 2022, respectively, that is restricted for the Company’s voluntary participation in a consumer protection cooperative in South Korea, along with investments in corporate securities.

Life insurance contracts: ASC 820 preserves practicability exceptions to fair value measurements provided by other applicable provisions of U.S. GAAP. The guidance in ASC 715-30-35-60 allows a reporting entity, as a practical expedient, to use cash surrender value or conversion value as an expedient for fair value when it is present. Accordingly, the Company determines the fair value of its life insurance contracts as the cash-surrender value of life insurance policies held in its Rabbi Trust as disclosed in Note 13, “Deferred Compensation Plan.”

Derivative financial instruments asset and liability: Derivative financial instruments are measured at fair value based on observable market information and appropriate valuation methods.  See Note 14, “Derivative Financial Instruments” for more information on derivative financial instruments.

Contingent consideration: Contingent consideration represents the obligations incurred in connection with acquisitions. The estimate of fair value of the contingent consideration obligations requires subjective assumptions to be made regarding the future business results, discount rates, discount periods and probabilities assigned to various potential business result scenarios and was determined using probability assessments with respect to the likelihood of reaching various targets or of achieving certain milestones. The fair value measurement is based on significant inputs unobservable in the market and thus represents a level 3 measurement. Changes in current expectations of progress could change the probability of achieving the targets within the measurement periods and result in an increase or decrease in the fair value of the contingent consideration obligation.

The following table provides a summary of changes in fair value of the Company’s Level 3 life insurance contracts (U.S. dollars in thousands):

	2023			2022
Beginning balance at January 1	$	40,055		$	49,851
Actual return on plan assets		6,216			(9,180	)
Sales and settlements		(1,230	)		(616	)
Ending balance at December 31	$	45,041		$	40,055

The following table provides a summary of changes in fair value of the Company’s Level 3 contingent consideration (U.S. dollars in thousands):

	2023			2022
Beginning balance at January 1	$	(6,364	)	$	(10,341	)
Changes in fair value of contingent consideration		64			3,977
Ending balance at December 31	$	(6,300	)	$	(6,364	)

Equity Investments

The Company maintains equity investments in companies which are accounted for under the measurement alternative described in ASC 321-10-35-2 for equity securities that lack readily determinable fair values. The carrying amount of equity securities held by the Company without readily determinable fair values was $28.1 million as of December 31, 2023 and 2022. During the year ended December 31, 2021, the Company recognized $18.1 million of upward fair value adjustments, based on the third quarter of 2021 valuation of additional equity issued by the investee which was deemed to be an observable transaction of a similar investment under ASC 321. The gain was recorded within Other expense, net on the consolidated statement of income. The upward fair value adjustment represents a nonrecurring fair value measurement based on observable price changes and is classified as a level 2 fair value measurement.