Fair Value Measurements

12 Months Ended

Dec. 31, 2023

Fair Value Disclosures [Abstract]

Fair Value Measurements

7. Fair Value Measurements

ASC 820, “Fair Value Measurement,” establishes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the third is considered unobservable:

Level 1: Quoted prices for identical assets or liabilities in active markets which the Company can access

Level 2: Observable inputs other than those described in Level 1

Level 3: Unobservable inputs

Current Assets and Liabilities

The Company’s cash equivalents are highly liquid investments with original maturities of three months or less, which represent an asset the Company measures at fair value on a recurring basis. The Company determines the fair value of cash equivalents using a market approach based on quoted prices in active markets. The fair values of cash equivalents, accounts receivable, income taxes receivable, accounts payable, income taxes payable and accrued expenses and other current liabilities approximate their carrying values because of their short-term nature.

Foreign Currency Contracts

The Company addresses market risks from changes in foreign currency exchange rates through a risk management program that includes the use of derivative financial instruments to mitigate certain balance sheet foreign currency transaction exposures. The Company uses foreign currency forward contracts as a part of its strategy to manage exposures related to foreign currency denominated monetary assets and liabilities.

Contingent Considerations

On July 31, 2019, the Company acquired ARGES GmbH (“ARGES”). Under the purchase and sale agreement for the ARGES acquisition, the former owner of ARGES is eligible to receive contingent consideration based on the achievement of certain revenue targets by the Company from August 2019 through December 2026. The undiscounted range of possible contingent consideration is zero to €10.0 million ($11.1 million). If the revenue targets are achieved, the contingent consideration would be payable annually with the first payment due in the first quarter of 2021. The estimated fair value of the contingent consideration of €7.1 million ($7.9 million) was determined based on the Monte Carlo valuation method and was recorded as part of the purchase price as of the acquisition date. Subsequent changes in the estimated fair value of the contingent consideration liability are recorded in the consolidated statement of operations in restructuring, acquisition and related costs until the liability is fully settled. During 2020, the fair value of the contingent consideration was adjusted to €4.1 million ($5.1 million). The Company made the first installment payment of €0.4 million ($0.4 million) in March 2021 and adjusted the fair value of the contingent consideration to €3.3 million ($3.8 million) as of December 31, 2021. The Company made the second installment payment of €0.3 million ($0.4 million) in March 2022. Based on the revenue performance and revenue projections as of December 31, 2022, the fair value of the remaining

contingent consideration was adjusted to €0.4 million ($0.4 million). The Company made the third installment payment of €0.1 million ($0.1 million) in July 2023. Based on the revenue performance and revenue projections as of December 31, 2023, the Company did not make any further adjustments to the fair value of the remaining contingent consideration during the year ended December 31, 2023. The installment payments have been reported as cash outflows from financing activities in the consolidated statement of cash flows for the respective periods.

The following table summarizes the fair values of the Company’s assets and liabilities measured at fair value on a recurring basis as of December 31, 2023 (in thousands):

	Fair Value		Quoted Price in Active Market for  Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Other Unobservable Inputs (Level 3)
Assets
Cash equivalents	$	1,392	$	1,392	$	—	$	—
Prepaid expenses and other current assets:
Foreign currency forward contracts		379		—		379		—
	$	1,771	$	1,392	$	379	$	—
Liabilities
Accrued expenses and other current liabilities:
Contingent considerations - Current	$	48	$	—	$	—	$	48
Foreign currency forward contracts		312		—		312		—
Other liabilities:
Contingent considerations - Long-term		311		—		—		311
	$	671	$	—	$	312	$	359

The following table summarizes the fair values of the Company’s assets and liabilities measured at fair value on a recurring basis as of December 31, 2022 (in thousands):

	Fair Value		Quoted Price in Active Market for  Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Other Unobservable Inputs (Level 3)
Assets
Cash equivalents	$	1,369	$	1,369	$	—	$	—
Prepaid expenses and other current assets:
Foreign currency forward contracts		391		—		391		—
	$	1,760	$	1,369	$	391	$	—
Liabilities
Accrued expenses and other current liabilities:
Contingent considerations - Current	$	124	$	—	$	—	$	124
Foreign currency forward contracts		412		—		412		—
Other liabilities:
Contingent considerations - Long-term		301		—		—		301
	$	837	$	—	$	412	$	425

During the years ended December 31, 2023 and 2022, there were no transfers between fair value levels.

Changes in the fair value of Level 3 contingent considerations for the year ended December 31, 2023 were as follows (in thousands):

	Contingent Considerations
Balance at December 31, 2022	$	425
Payments		(81	)
Effect of foreign exchange rates		15
Balance at December 31, 2023	$	359

See Note 11 for a discussion of the estimated fair value of the Company’s outstanding debt and Note 14 for a discussion of the estimated fair value of the Company’s pension plan assets.