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Fair Value Of Assets And Liabilities
3 Months Ended
Mar. 31, 2016
Fair Value Disclosures [Abstract]  
Fair Value Of Assets And Liabilities
NOTE 7 — FAIR VALUE OF ASSETS AND LIABILITIES
We endeavor to utilize the best available information in measuring fair value. Financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. The following tables present our assets and liabilities measured at fair value on a recurring basis:
 
March 31, 2016
(in millions)
Level 1
 
Level 3
Cash equivalents and restricted cash
$
23.6

 
$

Big Fish Games deferred payments

 
55.0

Big Fish Games earnout liability

 
66.1

Bluff contingent consideration liability

 
2.3

Total
$
23.6


$
123.4


 
December 31, 2015
 
Level 1
 
Level 3
Cash equivalents and restricted cash
$
30.1

 
$

Big Fish Games deferred payments

 
54.8

Big Fish Games earnout liability

 
345.2

Bluff contingent consideration liability

 
2.3

Total
$
30.1

 
$
402.3

The following table presents the change in fair value of our Level 3:
 
Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
(in millions)
Big Fish Games Deferred Payments
 
Big Fish Games Earnout Liability
 
Bluff Contingent Consideration
 
Total
Balances as of December 31, 2015
$
54.8

 
$
345.2

 
$
2.3

 
$
402.3

Payments

 
(281.6
)
 

 
(281.6
)
Change in fair value
0.2

 
2.5

 

 
2.7

Balances as of March 31, 2016
$
55.0

 
$
66.1

 
$
2.3

 
$
123.4


Our cash equivalents and restricted cash, which are held in interest-bearing accounts, qualify for Level 1 in the fair value hierarchy which includes unadjusted quoted market prices in active markets for identical assets.
We estimated the fair value of the Big Fish Games deferred payment and earnout liability as of March 31, 2016 using a discounted cash flows analysis over the period in which the obligation is expected to be settled, and applied a discount rate of 2.7% based on our cost of debt. The cost of debt was based on the observed market yields of our $600 million, 5.375% Senior Unsecured Notes ("Senior Unsecured Notes"), a Level 3 fair value measurement, and was adjusted for the difference in seniority and term of the deferred payments and earnout liability. The increase in fair values of the Big Fish Games deferred payment and earnout liability of $2.7 million during the three months ended March 31, 2016 was recorded as acquisition-related charges in the Condensed Consolidated Statements of Comprehensive Income (Loss). During 2015, Big Fish Games achieved its earnout milestones and in March 2016, we made our first earnout payment totaling $281.6 million. Changes to our cost of debt could lead to a different fair value estimate for the deferred payments and earnout liability. A one-percentage point change in the discount rate would increase or decrease the fair value of the Big Fish Games deferred payment and earnout liability by $1.2 million.
Our accrued liability for a contingent consideration recorded in conjunction with the Bluff Media ("Bluff") acquisition was based on significant inputs not observed in the market and represent a Level 3 fair value measurement. The estimate of the contingent consideration liability uses an income approach and is based on the probability of achieving enabling legislation which permits Internet poker gaming and the probability-weighted discounted cash flows. Any change in the fair value of the Bluff contingent consideration subsequent to the acquisition date will be recognized in our Condensed Consolidated Statements of Comprehensive Income (Loss).
We currently have no other assets or liabilities subject to fair value measurement on a recurring basis. Our $600.0 million par value Senior Unsecured Notes are disclosed at fair value which is based on unadjusted quoted prices for similar liabilities in markets that are not active. The fair value of the Senior Unsecured Notes was $618.0 million at March 31, 2016 and $604.1 million at December 31, 2015.
The following methods and assumptions were used in estimating our fair value disclosures for financial instruments:
Cash Equivalents—The carrying amount reported in the balance sheet for cash equivalents approximates our fair value due to the short-term maturity of these instruments.
Long-Term Debt: Senior Secured Credit Facility—The carrying amounts of the borrowings under the Senior Secured Credit Facility approximate fair value, based upon current interest rates and represent a Level 2 fair value measurement.
We did not measure any assets at fair value on a non-recurring basis for 2016 and 2015.