Fair Value of Financial Instruments

3 Months Ended

Mar. 31, 2017

FAIR VALUE OF FINANCIAL INSTRUMENTS

Our financial instruments include cash and cash equivalents, short-term investments, accounts receivable, customer deposits, accounts payable and accrued liabilities. The carrying amounts of such financial instruments approximate their fair value due to the short-term nature of these instruments.

Assets and liabilities measured at fair value on a recurring basis are categorized in the tables below based upon the lowest level of significant input to the valuations:



	As of March 31, 2017
	Level 1		Level 2		Level 3
Assets:
Short-term investments (1)	$	42,912	$	—	$	—
Total	$	42,912	$	—	$	—
Liabilities:
Contingent consideration (2)	$	—	$	—	$	2,100
Total	$	—	$	—	$	2,100
	As of December 31, 2016
	Level 1		Level 2		Level 3
Assets:
Short-term investments (1)	$	42,942	$	—	$	—
Total	$	42,942	$	—	$	—
Liabilities:
Contingent consideration (2)	$	—	$	—	$	2,100
Total	$	—	$	—	$	2,100


(1)	Short-term investments in the accompanying consolidated balance sheets are six-month U.S. Treasury Bills. The fair values of these assets are based on Level 1 inputs in the fair value hierarchy.

(2)

Contingent consideration liability represents arrangements to pay the former owners of certain companies we acquired. The undiscounted maximum payment under the arrangements was $7.9 million, based on future revenues, gross profits and certain milestones. We estimated the fair value of the contingent consideration using a Monte Carlo Simulation, which is based on significant inputs, primarily forecasted future results of the acquired businesses not observable in the market, and thus represents a Level 3 measure. For the three months ended March 31, 2017 and March 31, 2016, we made no payments as part of these arrangements.