FAIR VALUE OF FINANCIAL INSTRUMENTS

Fair value is defined as the price that would be received upon sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Depending on the nature of the asset or liability, various techniques and assumptions can be used to estimate fair value. The following presents the fair value hierarchy definitions utilized by the Company:



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

Level 2	—	Observable inputs other than quoted prices in active markets for similar assets and liabilities.

Level 3	—	Inputs for which significant valuation assumptions are unobservable in a market and therefore value is based on the best available data, some of which is internally developed and considers risk premiums that a market participant would require.

The following table presents the carrying amount, fair values, and classification level within the fair value hierarchy of financial instruments measured or disclosed at fair value on a recurring basis (in thousands):



	December 31, 2017				December 31, 2016				Level of Fair Value Hierarchy
	Carrying Amount		Fair Value		Carrying Amount		Fair Value		Level of Fair Value Hierarchy
Assets:
Cash and cash equivalents	$	44,958	$	44,958	$	28,255	$	28,255	Level 1
Restricted cash	2,717		2,717		2,923		2,923		Level 1
Foreign currency forward contracts	583		583		308		308		Level 2
Liabilities:
Variable interest rate debt	—		—		5,986		5,986		Level 2
Foreign currency forward contracts	1,048		1,048		566		566		Level 2

The fair value of cash and cash equivalents and restricted cash are based on the fair values of identical assets in active markets. Due to the short period to maturity or the nature of the underlying liability, the fair value of variable interest rate debt approximates their respective carrying amounts. The fair value of foreign currency forward contracts is measured based on observable market inputs such as spot and forward rates. Based on the Company’s continued ability to enter into forward contracts, the markets for the fair value instruments are considered to be active. As of December 31, 2017 and December 31, 2016, there were no significant transfers in and/or out of Level 1 and Level 2.

The following table presents the fair value on the Consolidated Balance Sheets of the foreign currency forward contracts (in thousands):



	December 31, 2017			December 31, 2016
Foreign currency forwards designated as hedges:
Other current assets	$	413		$	153
Accrued expenses	(686		)	(264		)
Foreign currency forwards not designated as hedges:
Other current assets	170			155
Accrued expenses	(362		)	(302		)
Foreign currency forwards, net	$	(465	)	$	(258	)

The Company applied fair value principles during goodwill impairment tests. Step one of the goodwill impairment test consisted of determining a fair value for each of the Company's reporting units. The fair value for the Company's reporting units cannot be determined using readily available quoted Level 1 or Level 2 inputs that are observable or available from active markets. Therefore, the Company used valuation models to estimate the fair values of its reporting units, which use Level 3 inputs. To estimate the fair values of reporting units, the Company uses significant estimates and judgmental factors. The key estimates and factors used in the valuation models included revenue growth rates and profit margins based on internal forecasts, terminal value, WACC, and earnings multiples. See Note 6. "Goodwill and Intangible Assets" for more information regarding the Company's goodwill impairment tests.

Pension Plan Assets

The fair values and classification of the defined benefit plan assets is as follows (in thousands):



	December 31, 2017
	Total		Level 1		Level 2		Level 3
Growth funds⁽¹⁾	$	54,627	$	54,627	$	—	$	—
Income funds⁽²⁾	28,429		28,429		—		—
Growth and income funds⁽³⁾	97,114		—		97,114		—
Hedge funds⁽⁴⁾	14,105		—		—		14,105
Real estate funds	3,608		769		2,839		—
Other assets	2,355		706		1,618		31
Cash and cash equivalents	2,110		2,110		—		—
Total	$	202,348	$	86,641	$	101,571	$	14,136



	December 31, 2016
	Total		Level 1		Level 2		Level 3
Growth funds⁽¹⁾	$	39,247	$	39,247	$	—	$	—
Income funds⁽²⁾	25,276		25,276		—		—
Growth and income funds⁽³⁾	84,176		—		84,176		—
Hedge funds⁽⁴⁾	22,860		—		—		22,860
Real estate funds	3,327		761		2,566		—
Other assets	2,128		618		1,510		—
Cash and cash equivalents	3,735		3,735		—		—
Total	$	180,749	$	69,637	$	88,252	$	22,860

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⁽¹⁾ Growth funds represent a type of fund containing a diversified portfolio of domestic and international equities with a goal of capital appreciation.

⁽²⁾ Income funds represent a type of fund with an emphasis on current income as opposed to capital appreciation. Such funds may contain a variety of domestic and international government and corporate debt obligations, preferred stock, money market instruments, and dividend-paying stocks.

⁽³⁾ Growth and income funds represent a type of fund containing a combination of growth and income securities.

⁽⁴⁾ Hedge funds represent a managed portfolio of investments that use advanced investment strategies such as leveraged, long, short, and derivative positions in both domestic and international markets with the goal of generating high returns. These funds are subject to quarterly redemptions and advanced notification requirements, as well as the right to delay redemption until sufficient fund liquidity exists.

A summary of the changes in the fair value of the defined benefit plans assets classified within Level 3 of the valuation hierarchy is as follows (in thousands):



	Year Ended December 31,
	2017			2016
Balance at beginning of year	$	22,860		$	27,071
Purchases	—			1,000
Sales and settlements	(9,829		)	(5,335		)
Unrealized (losses) gains	1,070			124
Exchange Rate Impact	3			—
Transfers in/(out) and Other	32			—
Balance at end of year	$	14,136		$	22,860

Most of the defined benefit pension plan's Level 1 assets are debt and equity investments that are traded in active markets, either domestically or internationally. They are measured at fair value using closing prices from active markets. The Level 2 assets are typically investments in pooled funds, which are measured based on the value of their underlying assets that are publicly traded with observable values. The fair value of the Level 3 plan assets are measured by compiling the portfolio holdings and independently valuing the securities in those portfolios.