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Fair Value Measurements
 6 Months Ended
Jun. 30, 2016
Fair Value Disclosures [Abstract]  
Fair Value Measurements
FAIR VALUE MEASUREMENTS
The Company uses a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy maximizes the use of observable inputs and minimizes the use of unobservable inputs. Observable inputs are developed based on market data obtained from independent sources, while unobservable inputs reflect the Company’s assumptions about valuation based on the best information available in the circumstances. The three levels of inputs are classified as follows:
•
Level 1 — quoted prices in active markets for identical assets or liabilities;
•
Level 2 — observable inputs, other than quoted prices included in Level 1, such as quoted prices for markets that are not active, or other inputs that are observable or can be corroborated by observable market data; and
•
Level 3 — unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities, including certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.
In determining fair value, the Company uses various valuation approaches within the fair value measurement framework. The valuation methodologies used for the Company's assets and liabilities measured at fair value and their classification in the valuation hierarchy are summarized below:
Cash Equivalents
Cash equivalents primarily consist of time-based deposits with maturities of three months or less and highly liquid AAA-rated money market funds. The Company classified cash equivalents as Level 1 due to the short-term nature of these instruments and measured the fair value based on quoted prices in active markets for identical assets.
Contingent Consideration
The Company has a contingent obligation to transfer cash to the former owners of JJE if specified financial results are met over future reporting periods (i.e., an earn-out). Liabilities for contingent consideration are measured at fair value each reporting period, with the acquisition-date fair value included as part of the consideration transferred. Any subsequent changes in fair value after the finalization of the purchase price allocation would be recorded as a component of Acquisition and integration related expenses on the Condensed Consolidated Statements of Operations. As indicated in Note 2 – Acquisitions, the JJE purchase price allocation as of June 30, 2016 is not yet finalized and, as such, there were no changes in the fair value of the contingent consideration in the six months ended June 30, 2016.
The Company uses an income approach to value the contingent consideration obligation based on future financial performance, which is determined based on the present value of expected future cash flows. Due to the lack of relevant observable market data over fair value inputs, the Company has classified the contingent consideration liability within Level 3 of the fair value hierarchy outlined in ASC 820, Fair Value Measurements. Increases in the expected payout under a contingent consideration arrangement contribute to increases in the fair value of the related liability. Conversely, decreases in the expected payout under a contingent consideration arrangement contribute to decreases in the fair value of the related liability. Changes in assumptions could have an impact on the fair value of the contingent consideration, which has a maximum payout of C$10.0 million (approximately $7.7 million).
The following tables summarize the Company's assets and liabilities that are measured at fair value on a recurring basis as of June 30, 2016:
 
Fair Value Measurement at Reporting Date Using
Description
Level 1
 
Level 2
 
Level 3
 
Total
Assets:
 
 
 
 
 
 
 
Cash equivalents
$
12.3

 
$
—

 
$
—

 
$
12.3

Liabilities:
 
 
 
 
 
 
 
Contingent consideration
$
—

 
$
—

 
$
5.0

 
$
5.0


The following table provides a roll-forward of the fair value of recurring Level 3 fair value measurements for the six months ended June 30, 2016:
(in millions)
Six Months Ended June 30, 2016
Contingent consideration liability at January 1
$
—

Issuance of contingent consideration in connection with acquisitions
4.9

Settlements of contingent consideration liabilities
—

Foreign currency translation
0.1

Total losses (gains) included in earnings (a)
—

Contingent consideration liability at June 30
$
5.0

(a)
Changes in the fair value of contingent consideration liabilities subsequent to the finalization of the purchase price allocation, if any, would be included as a component of Acquisition and integration related expenses within the Condensed Consolidated Statements of Operations.