Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs.

The three levels of inputs used to measure fair value are as follows:


•	Level 1 – Quoted prices in active markets for identical assets and liabilities.


•	Level 2 – Quoted prices in active markets for similar assets and liabilities, or other inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.


•	Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

Cash, Cash Equivalents, Accounts Receivable and Accounts Payable

The Company considers the recorded value of its cash and cash equivalents, accounts receivable, and accounts payable, to approximate the fair value of the respective assets and liabilities at June 30, 2019, and December 31, 2018, based upon the short-term nature of the assets and liabilities.

Marketable Securities

The Company's investments in marketable debt securities, which consist of U.S. Treasury bills and commercial paper, are classified and accounted for as available-for-sale. The Company classifies its marketable debt securities as either short-term or long-term based on each instrument's underlying contractual maturity date. Unrealized gains and losses on marketable debt securities classified as available-for-sale are recognized in Accumulated other comprehensive income in the Condensed Consolidated Balance Sheets until realized.

The Company's cash, cash equivalents, and marketable securities by significant investment category are as follows:



	Fair Value								Balance Sheet Classification
	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value		Cash and Cash Equivalents		Marketable Securities
Balance at June 30, 2019
Cash									$	78,982	$	—

Level 1⁽¹⁾:
Money market funds	5,518		—		—		5,518		5,518		—
U.S. Treasury securities	57,501		12		—		57,513		18,815		38,698
Total Level 1	63,019		12		—		63,031		24,333		38,698

Level 2⁽²⁾:
Commercial paper	1,999		—		—		1,999		1,999		—

Total	$	65,018	$	12	$	—	$	65,030	$	105,314	$	38,698



	Fair Value								Balance Sheet Classification
	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value		Cash and Cash Equivalents		Marketable Securities
Balance at December 31, 2018
Cash									$	279,829	$	—

Level 1⁽¹⁾:
Money market funds	77		—		—		77		77		—

Total	$	77	$	—	$	—	$	77	$	279,906	$	—


(1)	Level 1 – Quoted prices in active markets for identical assets and liabilities.


(2)	Level 2 – Quoted prices in active markets for similar assets and liabilities, or other inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

Investments, Assets Designated for Retirement and Pension Plans and Associated Liabilities

The Company has a U.S. non-qualified deferred compensation plan that consists primarily of U.S. marketable securities and mutual funds. The aggregate cost basis for these investments was $16.4 million and $14.6 million as of June 30, 2019 and December 31, 2018, respectively.

The Company also maintains a pension plan for certain current and former employees in Germany. The pensions are individually fixed Euro amounts that vary depending on the function and the eligible years of service of the employee. The Company’s investment strategy is to support its pension obligations through reinsurance contracts. The BaFin—German Federal Financial Supervisory Authority—supervises the insurance companies and the reinsurance contracts. The BaFin requires each reinsurance contract to guarantee a fixed minimum return. The Company’s pension benefits are fully reinsured by group insurance contracts with ERGO Lebensversicherung AG, and the group insurance contracts are measured in accordance with BaFin guidelines (including mortality tables and discount rates) which are considered Level 2 inputs.

The following tables provide a summary of the fair value measurements for each major category of investments, assets designated for retirement and pension plans and associated liabilities measured at fair value on a recurring basis:



				Balance Sheet Classification
	Fair Value			Other Current Assets		Assets Designated for Retirement and Pension Plans		Investments		Other Current Liabilities			Retirement and Pension Plans
Balance at June 30, 2019

Level 1⁽¹⁾:
U.S. non-qualified deferred compensation plan	$	23,647		$	—	$	—	$	23,647	$	—		$	—

Level 2⁽²⁾:
Retirement and pension plan assets	16,246			1,337		14,909		—		—			—
Pension benefit obligation	(20,275		)	—		—		—		(1,338		)	(18,937		)
Total Level 2	(4,029		)	1,337		14,909		—		(1,338		)	(18,937		)

Total	$	19,618		$	1,337	$	14,909	$	23,647	$	(1,338	)	$	(18,937	)



				Balance Sheet Classification
	Fair Value			Other Current Assets		Assets Designated for Retirement and Pension Plans		Investments		Other Current Liabilities			Retirement and Pension Plans
Balance at December 31, 2018

Level 1⁽¹⁾:
U.S. non-qualified deferred compensation plan	$	19,442		$	—	$	—	$	19,442	$	—		$	—

Level 2⁽²⁾:
Retirement and pension plan assets	16,384			1,349		15,035		—		—			—
Pension benefit obligation	(20,908		)	—		—		—		(1,349		)	(19,559		)
Total Level 2	(4,524		)	1,349		15,035		—		(1,349		)	(19,559		)

Total	$	14,918		$	1,349	$	15,035	$	19,442	$	(1,349	)	$	(19,559	)


(1)	Level 1 – Quoted prices in active markets for identical assets and liabilities.


(2)	Level 2 – Quoted prices in active markets for similar assets and liabilities, or other inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

Contingent Consideration

The former owners of the Company's prior year acquisitions are eligible to receive additional cash consideration based on the attainment of certain operating metrics in the periods subsequent to acquisition. Contingent consideration is valued using significant inputs that are not observable in the market which are defined as Level 3 inputs pursuant to fair value measurement accounting. The Company determines the fair value of contingent consideration using discounted cash flow models.

The following table provides a reconciliation of the beginning and ending balance of Level 3 liabilities for the six months ended June 30, 2019:



	Acquisition Earnout Accruals
Balance at December 31, 2018	$	(6,627	)
Earnout accretion	(327		)
Earnout payments	553
DSI earnout adjustment	(56		)
Foreign currency translation	20
Balance at June 30, 2019	$	(6,437	)