Fair Value Measurement

3 Months Ended

Mar. 31, 2012

Fair Value Measurement

Fair Value Measurement

14. Fair Value Measurement

The Company applies the accounting standards for fair value measurements and disclosures for its financial assets and financial liabilities. The guidance requires disclosures about assets and liabilities measured at fair value. The Company’s financial assets relate to the interest rate cap of $2 and the Company’s financial liabilities relate to contingent earn-out payments of $5,171 as of March 31, 2012.

The accounting guidance for fair value measurements and disclosures includes a fair value hierarchy that is intended to increase consistency and comparability in fair value measurements and related disclosures. The fair value hierarchy is based on observable or unobservable inputs to valuation techniques that are used to measure fair value. Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on market data obtained from independent sources while unobservable inputs reflect a reporting entity’s pricing based upon its own market assumptions. The fair value hierarchy consists of the following three levels:

·Level 1: Inputs are quoted prices in active markets for identical assets or liabilities.

·Level 2: Inputs are quoted prices for similar assets or liabilities in an active market, quoted prices for identical or similar assets or liabilities in markets that are not active, and inputs other than quoted prices that are observable and market-corroborated inputs, which are derived principally from or corroborated by observable market data.

·Level 3: Inputs that are derived from valuation techniques in which one or more significant inputs or value drivers are unobservable.

The significant inputs used to derive the fair value of the contingent earn-out amounts due to seller include financial forecasts of future operating results, the probability of reaching the forecast and the associated discount rate. The probability of the contingent consideration ranges from 95% to 10%, with a weighted average discount rate of 12%. The following table sets forth the Company’s financial assets and liabilities measured at fair value on a recurring basis and the basis of measurement at March 31, 2012 and December 31, 2011:

	Total Fair ValueMeasurement at March 31, 2012			Level 1		Level 2		Level 3
Assets:
Interest rate cap	$	2		$	—	$	2	$	—
Liabilities:
Contingent consideration	$	(5,171	)	$	—	$	—	$	(5,171	)

	Total Fair Value Measurement at December 31, 2011			Level 1		Level 2		Level 3
Assets:
Interest rate cap	$	8		$	—	$	8	$	—
Liabilities:
Contingent consideration	$	(6,498	)	$	—	$	—	$	(6,498	)

The following table provides a reconciliation of the beginning and ending balances for the liabilities measured at fair value using significant unobservable inputs (Level 3):

	Due to Seller
Balance at December 31, 2011	$	(6,498	)
Contingent earn-out payments-payments made to seller	1,158
Contingent earn-out payments-change in fair value	169
Balance at March 31, 2012	$	(5,171	)

For the three months ended March 31, 2012, the Company recorded adjustments to the original contingent consideration obligation recorded upon the acquisition of Gameday Management Group U.S and Expert Parking. The adjustments were the result of using revised forecasts and updated fair value measurements that adjusted the Company’s potential earn-out payments related to the purchase of this business.

For the three months ended March 31, 2012 and 2011, the Company recognized a benefit of $169 and $117, respectively, which is included in general and administrative expenses in the statement of income due to the change in fair value measurements using level three valuation techniques.

The carrying and estimated fair values of the Company’s financial instruments at March 31, 2012 and December 31, 2011 were as follows:

	March 31, 2012						December 31, 2011
	Carrying amount			Fair Value			Carrying amount			Fair Value
Cash and cash equivalents	$	9,047		$	9,047		$	13,220		$	13,220
Long-term debt
Senior credit facility	(86,700		)	(86,700		)	(80,000		)	(80,000		)
Capital lease obligation	(837		)	(837		)	(972		)	(972		)
Obligations on seller notes and other	(1,005		)	(1,005		)	(1,041		)	(1,041		)

The carrying values of cash and cash equivalents approximate their fair value due to the short-term nature of these financial instruments. Long-term debt has a carrying value that approximates fair value because these instruments bear interest at variable market rates. The fair value of the capital lease and obligations on Seller notes and other obligations were estimated to not be materially different from the carrying amount.