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Fair value measurement | 12 Months Ended
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Dec. 31, 2015
Fair Value Disclosures [Abstract] |
Fair value measurement | Fair value measurement Fair value is defined as the exit price that would be received from the sale of an asset or paid to transfer a liability, using assumptions that market participants would use in pricing an asset or liability. The FASB's fair value guidance establishes a three-level hierarchy of the inputs (i.e., assumptions that market participants would use in pricing an asset or liability) used to measure fair value, which is designed to maximize the use of observable inputs and minimize the use of unobservable inputs in measuring fair value. The levels within the hierarchy are as follows: Level 1 inputs — quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. Level 2 inputs — inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. If the asset or liability has a specified (contractual) term, a Level 2 input must be observable for substantially the full term of the asset or liability. Level 2 inputs include:
1. | Quoted prices for similar assets or liabilities in active markets.
2. | Quoted prices for identical or similar assets or liabilities in markets that are not active.
3. | Inputs other than quoted prices that are observable for the asset or liability.
4. | Inputs that are derived principally from or corroborated by observable market data by correlation or other means.
Level 3 inputs — unobservable inputs for the asset or liability. Unobservable inputs may be used to measure fair value only when observable inputs are not available. Nevertheless, the objective of a fair value measurement, namely to arrive at an exit price at the measurement date from the perspective of a market participant that holds the asset or owes the liability, continues to apply. In making a fair value measurement using Level 3 inputs, a reporting entity may begin with its own data, but it must adjust that data if reasonably available information indicates that other market participants would use different data or there is something particular to the reporting entity that is not available to other market participants. The following tables provide information regarding the financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2015 and 2014:
| Total carrying value at December 31, 2015 |  | Quoted prices in active markets (Level 1) |  | Significant other observable inputs (Level 2) |  | Significant unobservable inputs (Level 3)
| (Dollars in thousands)
Investments in marketable securities | $ | 6,922 |  |  | $ | 6,922 |  |  | $ | — |  |  | $ | — |
Derivative assets | 329 |  |  | — |  |  | 329 |  |  | — |
Derivative liabilities | 1,298 |  |  | — |  |  | 1,298 |  |  | — |
Contingent consideration liabilities | 20,829 |  |  | — |  |  | — |  |  | 20,829 |
| Total carrying value at December 31, 2014 |  | Quoted prices in active markets (Level 1) |  | Significant other observable inputs (Level 2) |  | Significant unobservable inputs (Level 3)
| (Dollars in thousands)
Investments in marketable securities | $ | 6,863 |  |  | $ | 6,863 |  |  | $ | — |  |  | $ | — |
Contingent consideration liabilities | 33,433 |  |  | — |  |  | — |  |  | 33,433 |
There were no changes in the inputs used to measure fair value of financial assets or liabilities among Level 1, Level 2 or Level 3 within the fair value hierarchy during the years ended December 31, 2015 or 2014. The following table provides information regarding changes in financial liabilities, the fair value of which is based on Level 3 inputs, related to contingent consideration in connection with various Company acquisitions, including those described in Note 3 to the consolidated financial statements, during the years ended December 31, 2015 and 2014:
| Contingent consideration
| 2015 |  | 2014
| (Dollars in thousands)
Beginning balance – January 1 | $ | 33,433 |  |  | $ | 20,313 |
Initial estimate upon acquisition | — |  |  | 20,538 |
Payment | (8,054 | ) |  | — |
Revaluations | (4,550 | ) |  | (7,418 | )
Ending balance – December 31 | $ | 20,829 |  |  | $ | 33,433 |
The Company reduced contingent consideration liabilities and selling, general and administrative expense by $4.4 million and $8.2 million for the years ended December 31, 2015 and 2014, respectively, after determining that relevant conditions for the payment of certain contingent consideration would not be satisfied. This reduction is included in revaluations in the above table. See Note 8 to the consolidated financial statements for a discussion of the fair value of the Company’s borrowings. Valuation Techniques The Company’s financial assets valued based upon Level 1 inputs are comprised of investments in marketable securities held in trust, which are available to satisfy benefit obligations under Company benefit plans and other arrangements. The investment assets of the trust are valued using quoted market prices. The Company’s financial assets and liabilities valued based upon Level 2 inputs are comprised of foreign currency forward contracts. The Company uses foreign currency forward contracts to manage foreign currency transaction exposure as well as exposure to foreign currency denominated monetary assets and liabilities. The Company measures the fair value of the foreign currency forward contracts by calculating the amount required to enter into offsetting contracts with similar remaining maturities, based on quoted market prices, and taking into account the creditworthiness of the counterparties. The Company’s financial liabilities valued based upon Level 3 inputs are comprised of contingent consideration arrangements pertaining to the Company’s acquisitions. The Company accounts for contingent consideration in accordance with applicable accounting guidance related to business combinations. The Company determines the fair value of the liabilities for contingent consideration based on a probability-weighted discounted cash flow analysis. This fair value measurement is based on significant inputs not observable in the market and, therefore, constitutes a Level 3 measurement within the fair value hierarchy. The fair value of the contingent consideration liability associated with future payments under contingent consideration arrangements is based on several factors, including:
• | estimated cash flows projected from the success of market launches;
• | the estimated time and resources needed to complete the development of acquired technologies;
• | the uncertainty of obtaining regulatory approvals within the required time periods; and
• | the risk adjusted discount rate for fair value measurement.
In connection with the Company's contingent consideration arrangements in effect at December 31, 2015, the Company estimates that it will make payments from 2016 through 2029. As of December 31, 2015, the range of undiscounted amounts the Company could be required to pay under contingent consideration arrangements is between $7.0 million and $43.8 million. The Company reevaluates the fair value of contingent consideration arrangements each reporting period and, based on new developments, records changes in fair value until either the contingent consideration obligation is satisfied through payment upon the achievement of the specified objectives or the obligation no longer exists due to failure to achieve the specified objectives. The following table provides information regarding the valuation techniques and inputs used in determining the fair value of assets or liabilities measured by use of Level 3 inputs as of December 31, 2015:
| Valuation Technique |  | Unobservable Input |  | Range (Weighted Average)
Contingent consideration | Discounted cash flow |  | Discount rate |  | 2.6% - 10% (8.3%)
|  |  | Probability of payment |  | 0% - 100% (69.6%)
As of December 31, 2015, the Company recorded $20.8 million of total liabilities for contingent consideration, of which $7.3 million was recorded as the current portion of contingent consideration and $13.5 million was recorded as other liabilities in the consolidated balance sheet.

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- 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. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=36462937&loc=d3e19207-110258 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 30 -URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14172-108612 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 28 -URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14064-108612 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=49121117&loc=d3e13537-108611 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 16 -URI http://asc.fasb.org/extlink&oid=49121117&loc=d3e13504-108611 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 10 -URI http://asc.fasb.org/extlink&oid=49121117&loc=d3e13433-108611 + Details
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