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Financial Instruments

9 Months Ended

Sep. 30, 2021

The table below presents the carrying amounts and estimated fair values of our financial instruments by hierarchy level as of September 30, 2021 and December 31, 2020:


	September 30, 2021
			Hierarchy Level (Fair Value)
	Carrying Amount		Level 1		Level 2		Level 3
Liabilities
Acquisition-related contingent consideration, including current portion (1)(2)	$	14,568	$	—	$	—	$	14,568
2023 Convertible Notes (3)	294,355		—		444,957		—
Total	$	308,923	$	—	$	444,957	$	14,568


	December 31, 2020
			Hierarchy Level (Fair Value)
	Carrying Amount		Level 1		Level 2		Level 3
Liabilities
Acquisition-related contingent consideration, including current portion (1)(2)	$	20,118	$	—	$	—	$	20,118
2023 Convertible Notes (3)	286,131		—		396,982		—
Total	$	306,249	$	—	$	396,982	$	20,118

(1)The short-term portion is included in “Accounts payable, accrued expenses and other” and the long-term portion is included in “Other liabilities” on the Condensed Consolidated Balance Sheets.

(2)During the nine months ended September 30, 2021, we acquired certain assets of a business and recorded an acquisition-related contingent consideration liability.

(3)The carrying values include unamortized deferred debt issue costs and debt discount.

The fair values of financial instruments not included in the tables above are estimated to be equal to their carrying values as of September 30, 2021 and December 31, 2020.

We estimate the fair value of our 2023 Convertible Notes based on their last actively traded prices. The fair value of our 2023 Convertible Notes is classified within Level 2 of the fair value hierarchy because it is traded in less active markets.

We estimate the fair value of acquisition-related contingent consideration using either a probability-weighted discounted cash flow model or a Monte Carlo simulation. These fair value estimates represent Level 3 measurements as they are based on significant inputs not observed in the market and reflect our own assumptions. Significant increases (or decreases) in these unobservable inputs in isolation would result in significantly lower (or higher) fair values. We reassess the fair value of our acquisition-related contingent consideration at each reporting period based on additional information as it becomes available.

The table below presents the change in our liability for acquisition-related contingent consideration for our Level 3 financial instruments:


	Contingent Consideration
Balance at December 31, 2020	$	20,118

Accretion expense (1)	1,289
Payments	(1,000)
Foreign currency translation adjustment (2)	(612)
Balance at March 31, 2021	$	19,795
Additions	1,093
Accretion expense (1)	676
Payments	(4,122)
Foreign currency translation adjustment (2)	264
Remeasurement gain (3)	(3,095)
Balance at June 30, 2021	$	14,611

Accretion expense (1)	116

Foreign currency translation adjustment (2)	(159)
Balance at September 30, 2021	$	14,568


	Contingent Consideration
Balance at December 31, 2019	$	14,826

Accretion expense (1)	506

Foreign currency translation adjustment (2)	(148)
Balance at March 31, 2020	$	15,184
Accretion expense (1)	614
Payments	(4,692)
Foreign currency translation adjustment (2)	88
Balance at June 30, 2020	$	11,194
Additions	3,460
Accretion expense (1)	3,532

Foreign currency translation adjustment (2)	359
Balance at September 30, 2020	$	18,545

(1)Accretion expense is included in SG&A expenses on the Condensed Consolidated Statements of Comprehensive Income.

(2)Foreign currency translation adjustments are included in "Other comprehensive income (loss), net of tax" on the Condensed Consolidated Statements of Comprehensive Income.

(3)Remeasurement gain or loss resulting from a change in the fair value of an acquisition's contingent consideration liability is recorded in SG&A expenses on the Condensed Consolidated Statements of Comprehensive Income.

- 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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