XML 48 R10.htm IDEA: XBRL DOCUMENT v2.4.0.8
Fair Value Measurements
 9 Months Ended
Sep. 30, 2014
Fair Value Measurements  
Fair Value Measurements

3. Fair Value Measurements

        We classify and disclose assets and liabilities carried at fair value in one of the following three categories:

•

Level 1—quoted prices in active markets for identical assets and liabilities;

•

Level 2—observable market based inputs or unobservable inputs that are corroborated by market data; and

•

Level 3—significant unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

        The following table summarizes the fair values and levels within the fair value hierarchy in which the fair value measurements fall for assets and liabilities measured on a recurring basis as of September 30, 2014 (in thousands):

                                                                                                                                                                                    

 

 

 

 

Fair Value Measurements at
Reporting Date Using

 

 

 

Total

 

Quoted Prices In
Active Markets
for Identical
Assets
(Level 1)

 

Significant
Other
Observable
Inputs
(Level 2)

 

Significant
Unobservable
Inputs
(Level 3)

 

Cash and cash equivalents

 

$
43,882 

 

$
43,882 

 

$

—

 

$

—

 

Life insurance—cash surrender value

 

$
3,034 

 

$

—

 

$
3,034 

 

$

—

 

Contingent earn-out obligations

 

$
635 

 

$

—

 

$

—

 

$
635 

 

        Cash and cash equivalents consist primarily of highly rated money market funds at a variety of well-known institutions with original maturities of three months or less. The original cost of these assets approximates fair value due to their short term maturity.

        One of our operations has life insurance policies covering 41 employees with a combined face value of $38.9 million. The policy is invested in mutual funds and the fair value measurement is determined using level 2 inputs within the fair value hierarchy and will vary with investment performance. The cash surrender value of these policies is $3.0 million as of September 30, 2014 and $2.9 million as of December 31, 2013. These assets are included in "Other Noncurrent Assets" in our consolidated balance sheets.

        The valuation of our contingent earn-out obligations is determined using a probability weighted discounted cash flow method. This fair value measurement is based on significant unobservable inputs in the market and thus represents a Level 3 measurement within the fair value hierarchy. This analysis reflects the contractual terms of the purchase agreements (e.g., minimum and maximum payments, length of earn-out periods, manner of calculating any amounts due, etc.) and utilizes assumptions with regard to future cash flows, probabilities of achieving such future cash flows and a discount rate. The contingent earn-out obligations are measured at fair value each reporting period and changes in estimates of fair value are recognized in earnings.

        The table below presents a reconciliation of the fair value of our contingent earn-out obligations that use significant unobservable inputs (Level 3) (in thousands).

                                                                                                                                                                                    

Balance at beginning of year

 

$
320

 

Issuances

 

 
200

 

Settlements

 

 
(95

)

Adjustments to fair value

 

 
210

 

 

 

 

 

Balance at end of period

 

$
635

 

 

 

 

 

 

 

 

 

        We measure certain assets at fair value on a nonrecurring basis. These assets are recognized at fair value when they are deemed to be other-than-temporarily impaired. During the nine months ended September 30, 2014, we recorded a goodwill impairment charge of $0.7 million based on Level 3 measurements. See Note 6 "Goodwill and Identifiable Intangible Assets, Net" for further discussion. We did not recognize any impairments, in the current quarter, on those assets required to be measured at fair value on a nonrecurring basis.