FAIR VALUE

12 Months Ended

Dec. 31, 2020

Fair Value Disclosures [Abstract]

FAIR VALUE

FAIR VALUE

Authoritative guidelines require the categorization of assets and liabilities into three levels based upon the assumptions (inputs) used to price the assets or liabilities. Level 1 provides the most reliable measure of fair value, whereas Level 3 generally requires significant management judgment. The three levels are defined as follows:

•Level 1: Unadjusted quoted prices in active markets for identical assets and liabilities.

•Level 2: Observable inputs other than those included in Level 1. For example, quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets.

•Level 3: Unobservable inputs reflecting management’s own assumptions about the inputs used in pricing the asset or liability.

As of December 31, 2020, the fair values of our financial assets and liabilities were categorized as follows:

	Total		Level 1		Level 2		Level 3
Assets
Foreign exchange contracts (1)	$	322	$	—	$	322	$	—
Cross currency swap contract (1)	—		—		—		—
Total assets at fair value	$	322	$	—	$	322	$	—
Liabilities
Foreign exchange contracts (1)	$	146	$	—	$	146	$	—
Cross currency swap contract (1)	8,309		—		8,309		—
Contingent consideration obligation	31,140		—		—		31,140
Total liabilities at fair value	$	39,595	$	—	$	8,455	$	31,140

As of December 31, 2019, the fair values of our financial assets and liabilities were categorized as follows:

	Total		Level 1		Level 2		Level 3
Assets
Foreign exchange contracts (1)	$	206	$	—	$	206	$	—
Cross currency swap contract (1)	2,552		—		2,552		—
Total assets at fair value	$	2,758	$	—	$	2,758	$	—
Liabilities
Foreign exchange contracts (1)	$	401	$	—	$	401	$	—
Contingent consideration obligation	5,930		—		—		5,930
Total liabilities at fair value	$	6,331	$	—	$	401	$	5,930

(1)Market approach valuation technique based on observable market transactions of spot and forward rates.

The carrying amounts of our other current financial instruments such as cash and equivalents, accounts and notes receivable, notes payable and current maturities of long-term obligations approximate fair value due to the short-term maturity of the instrument. We consider our long-term obligations a Level 2 liability and utilize the market approach valuation technique based on interest rates that are currently available to us for issuance of debt with similar terms and maturities. The estimated fair value of our long-term obligations was $1.1 billion as of December 31, 2020 and December 31, 2019.

As discussed in Note 19 – Acquisitions, we have a contingent consideration obligation to the selling equity holders of:

–Fusion in connection with the Fusion Acquisition (as defined herein) based on 2022 cumulative performance targets,

–Noble in connection with the Noble Acquisition (as defined herein) based on 2024 cumulative performance targets, and

–Gateway in connection with the Gateway Acquisition (as defined herein) based on 2020 and 2022 performance targets.

We consider these obligations a Level 3 liability and have estimated the aggregate fair value for these contingent consideration arrangements as follows:

	December 31, 2020		December 31, 2019
Fusion Acquisition	$	26,910	$	—
Noble Acquisition	4,230		2,930
Gateway Acquisition	—		3,000
	$	31,140	$	5,930

Changes in the fair value of these obligations are recorded within selling, research & development and administrative expense in our consolidated statements of income. Significant changes to the inputs, as noted above, can result in a significantly higher or lower fair value measurements. The following table provides a summary of changes in our Level 3 fair value measurements:

Balance, December 31, 2018	$	—
Acquisition	5,930
Increase (decrease) in fair value recorded in earnings	—
Payments	—
Balance, December 31, 2019	$	5,930
Acquisition	22,745
Increase (decrease) in fair value recorded in earnings	5,230
Payments	(2,765)
Balance, December 31, 2020	$	31,140