Fair Value Measurements

12 Months Ended

Dec. 31, 2015

ASC 820 “Fair Value Measurements and Disclosures” defines fair value, provides guidance for measuring fair value and requires certain disclosures. This standard discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost). The standard utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:


•	Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.


•	Level 2: Inputs, other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.


•	Level 3: Unobservable inputs that reflect the reporting entity’s own assumptions.

The basis used to measure the Company’s financial assets (liabilities) at fair value on a recurring basis in the balance sheet at December 31, 2015 and 2014 is summarized as follows:



	Basis of Fair Value Measurements
	Balance at December 31, 2015		Level 1		Level 2		Level 3
	(In thousands)
Money market investments	$	21,931	$	21,931	$	—	$	—
Available for sale securities	4,794		4,794		—		—
Contingent consideration	4,705		—		—		4,705



	Balance at December 31, 2014		Level 1		Level 2		Level 3
	(In thousands)
Money market investments	$	21,094	$	21,094	$	—	$	—
Available for sale securities	4,513		4,513		—		—

There were no transfers of assets or liabilities between Level 1 and Level 2 in 2015 or 2014.

The contingent consideration is based on the achievement of EBITDA targets during the 12-month period following the close. In determining the fair value of the contingent consideration due in conjunction with the acquisition of CPS, the Company used probability weighted estimates of potential EBITDA outcomes during the earn-out period. The CPS contingent consideration liability was valued at $4.7 million as of the acquisition date. The Company assesses the fair value of the contingent consideration quarterly based upon actual EBITDA, forecasted EBITDA, and other factors known to management. There have been no changes to the value of the contingent consideration liability and the $4.7 million is included in Accrued expenses in the Consolidated Balance Sheet at December 31, 2015.

The carrying value of our cash and cash equivalents, accounts receivable, accounts payable and accrued expenses approximates their fair values because of the short term nature of these instruments. At December 31, 2015, the fair value of our Revolving Facility, 4.5% Senior Notes and 4.2% Senior Notes, based on quoted market prices and current market rates for debt with similar credit risk and maturity, was approximately $859.0 million compared to the carrying value of $843.6 million. This fair value measurement is classified as Level 2 within the fair value hierarchy since it is determined based upon significant inputs observable in the market, including interest rates on recent financing transactions to entities with a credit rating similar to ours.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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