Fair Value Measurement

6 Months Ended

Jun. 30, 2013

Fair Value Measurement

Fair Value Measurement

17. 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. As of June 30, 2013, the Company’s financial assets relate to Interest Rate Swaps of $1,142 and the Company’s financial liabilities relate to contingent acquisition consideration payments of $2,874.

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 10% to 95%, with a weighted average discount rate of 11%. The following tables set forth the Company’s financial assets and liabilities measured at fair value on a recurring basis and the basis of measurement at June 30, 2013 and December 31, 2012 (unaudited):

	Total Fair Value Measurement at June 30, 2013			Level 1	Level 2	Level 3
Assets:
Interest Rate Swaps	$	1,142		—	1,142	—
Liabilities:				—	—
Contingent acquisition consideration	$	(2,874	)			(2,874	)

	Total Fair Value Measurement at December 31, 2012			Level 1	Level 2		Level 3
Liabilities:
Interest Rate Swaps	$	(794	)	—	(794	)	—
Contingent acquisition consideration	$	(3,324	)	—	—		(3,324	)

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, unaudited):

	Contingent acquisition consideration
Balance at December 31, 2012	$	(3,324	)
Contingent earn-out payments-payments made to seller	142
Contingent earn-out payments-change in fair value	308
Balance at June 30, 2013	$	(2,874	)

For the three and six months ended June 30, 2013 and 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.

The Company recognized no benefit in the three months ended June 30, 2013 and a benefit of $308 in the six months ended June 30, 2013 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. For the three and six months ended June 30, 2012, the Company recognized a benefit of $169 and $368, 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.

Nonrecurring Fair Value Measurements

The purchase price of business acquisitions is primarily allocated to the tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values on the acquisition dates, with the excess recorded as goodwill. We utilize Level 3 inputs in the determination of the initial fair value. Non-financial assets such as goodwill, intangible assets, and leasehold improvements, equipment land and construction in progress are subsequently measured at fair value when there is an indicator of impairment and recorded at fair value only when an impairment is recognized. We assess the impairment of intangible assets annually or whenever events or changes in circumstances indicate that the carrying amount of an intangible asset may not be recoverable. The fair value of our goodwill and intangible assets is not estimated if there is no change in events or circumstances that indicate the carrying amount of an intangible asset may not be recoverable. We have not recorded impairment charges related to our business acquisitions.