Fair Value Measurement

9 Months Ended

Sep. 30, 2012

Fair Value Measurement

Fair Value Measurement

14. Fair Value Measurement

The Company applies ASC 820 for fair value measurements and disclosures for its financial assets and financial liabilities. The standard requires disclosures about assets and liabilities measured at fair value. The Company’s financial assets measured at fair value on a recurring basis at September 30, 2012 and December 31, 2011 relate to the interest rate cap of $0 and $8, respectively, and the Company’s financial liabilities measured at fair value on a recurring basis relate to contingent earn-out payments of $4,570 and $6,498, respectively.

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 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 0% to 95%, with a weighted average discount rate of 10%. 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 September 30, 2012 and December 31, 2011:

	Total Fair ValueMeasurement at September 30, 2012			Level 1		Level 2		Level 3
Assets:
Interest Rate Cap	$	—		$	—	$	—	$	—
Liabilities:
Due to seller	$	(4,570	)	$	—	$	—	$	(4,570	)

	Total Fair ValueMeasurement at December 31, 2011			Level 1		Level 2		Level 3
Assets:
Interest Rate Cap	$	8		$	—	$	8	$	—
Liabilities:
Due to seller	$	(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	1,525
Contingent earn-out payments-change in fair value	403
Balance at September 30, 2012	$	(4,570	)

For the nine months ended September 30, 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 these businesses.

For the three and nine months ended September 30, 2012, the Company recognized a benefit of $35 and $403, 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.