| Fair value measurements |
6. Fair value measurements
The Company measures certain financial assets and liabilities, including derivative instruments, at fair value on a recurring basis. The fair value measurements of these derivative instruments were determined using the following inputs as of December 31, 2016 and June 30, 2017:
|
|
|
As of December 31, 2016 |
|
|
|
|
Fair Value Measurements at Reporting Date Using |
|
|
|
|
|
|
|
|
Quoted Prices in
Active Markets for
Identical Assets |
|
|
Significant Other
Observable Inputs |
|
|
Significant Other
Unobservable
Inputs |
|
|
|
|
Total |
|
|
(Level 1) |
|
|
(Level 2) |
|
|
(Level 3) |
|
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative instruments (Note a, c) |
|
$ |
55,386 |
|
|
$ |
— |
|
|
$ |
55,386 |
|
|
$ |
— |
|
|
Total |
|
$ |
55,386 |
|
|
$ |
— |
|
|
$ |
55,386 |
|
|
$ |
— |
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earn-out consideration (Note b, d) |
|
$ |
22,435 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
22,435 |
|
|
Derivative instruments (Note b, c) |
|
$ |
17,353 |
|
|
$ |
— |
|
|
$ |
17,353 |
|
|
$ |
— |
|
|
Total |
|
$ |
39,788 |
|
|
$ |
— |
|
|
$ |
17,353 |
|
|
$ |
22,435 |
|
|
Redeemable non-controlling interest (Note e) |
|
$ |
4,520 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
4,520 |
|
6. Fair value measurements (Continued)
|
|
|
As of June 30, 2017 |
|
|
|
|
Fair Value Measurements at Reporting Date Using |
|
|
|
|
|
|
|
|
Quoted Prices in
Active Markets for
Identical Assets |
|
|
Significant Other
Observable Inputs |
|
|
Significant Other
Unobservable
Inputs |
|
|
|
|
Total |
|
|
(Level 1) |
|
|
(Level 2) |
|
|
(Level 3) |
|
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative instruments (Note a, c) |
|
$ |
69,371 |
|
|
$ |
— |
|
|
$ |
69,371 |
|
|
$ |
— |
|
|
Total |
|
$ |
69,371 |
|
|
$ |
— |
|
|
$ |
69,371 |
|
|
$ |
— |
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earn-out consideration (Note b, d) |
|
$ |
23,274 |
|
|
|
— |
|
|
|
— |
|
|
$ |
23,274 |
|
|
Derivative instruments (Note b, c) |
|
$ |
16,795 |
|
|
$ |
— |
|
|
$ |
16,795 |
|
|
$ |
— |
|
|
Total |
|
$ |
40,069 |
|
|
$ |
— |
|
|
$ |
16,795 |
|
|
$ |
23,274 |
|
|
Redeemable non-controlling interest (Note e) |
|
$ |
4,680 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
4,680 |
|
|
(a) |
Included in prepaid expenses and other current assets and other assets in the consolidated balance sheets. |
|
(b) |
Included in accrued expenses and other current liabilities and other liabilities in the consolidated balance sheets. |
|
(c) |
The Company values its derivative instruments based on market observable inputs, including both forward and spot prices for the relevant currencies and interest rate indices for relevant interest rates. The quotes are taken from an independent market database. |
|
(d) |
The fair value of earn-out consideration, calculated as the present value of expected future payments to be made to the sellers of acquired businesses, was derived by estimating the future financial performance of the acquired businesses using the earn-out formula and performance targets specified in each purchase agreement and adjusting the result to reflect the Company’s estimate of the likelihood of achievement of such targets. Given the significance of the unobservable inputs, the valuations are classified in level 3 of the fair value hierarchy. |
|
(e) |
The Company’s estimate of the fair value of redeemable non-controlling interest is based on unobservable inputs considering the assumptions that market participants would make in pricing the obligation. Given the significance of the unobservable inputs, the valuation is classified in level 3 of the fair value hierarchy. See Note 3—Business Acquisitions. |
The following table provides a roll-forward of the fair value of earn-out consideration categorized as level 3 in the fair value hierarchy for the three and six months ended June 30, 2016 and 2017:
|
|
|
Three months ended
June 30, |
|
|
Six months ended
June 30, |
|
|
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
Opening balance |
|
$ |
20,853 |
|
|
$ |
21,262 |
|
|
$ |
22,820 |
|
|
$ |
22,435 |
|
|
Earn-out consideration payable in connection with acquisitions |
|
|
2,070 |
|
|
|
- |
|
|
|
10,190 |
|
|
|
2,320 |
|
|
Payments made on earn-out consideration |
|
|
(187 |
) |
|
|
(275 |
) |
|
|
(1,152 |
) |
|
|
(1,482 |
) |
|
Changes in fair value of earn-out consideration (note a) |
|
|
(5,490 |
) |
|
|
1,713 |
|
|
|
(14,996 |
) |
|
|
(1,425 |
) |
|
Others (note b) |
|
|
1,192 |
|
|
|
574 |
|
|
|
1,576 |
|
|
|
1,426 |
|
|
Ending balance |
|
$ |
18,438 |
|
|
$ |
23,274 |
|
|
$ |
18,438 |
|
|
$ |
23,274 |
|
a) Changes in the fair value of earn-out consideration are reported in other operating (income) expense, net in the consolidated statements of income.
b) Interest expense is included in interest income (expense), net and the impact of changes in foreign exchange is reported in foreign exchange gains (losses), net in the consolidated statements of income. The cumulative translation adjustment is reported as a component of other comprehensive income (loss).
|