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Fair Value and Equity Investments | 12 Months Ended
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Dec. 31, 2021
Fair Value and Equity Investments [Abstract] |
Fair Value and Equity Investments |
10. | Fair Value and Equity Investments
Fair Value The carrying value of financial instruments including cash and cash equivalents, accounts receivable and accounts payable approximate fair values due to the short-term nature of these instruments. Fair value estimates are made at a specific point in time, based on relevant market information. The following tables present the fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis (U.S. dollars in thousands):
|  | Fair Value at December 31, 2021 |
|  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |
Financial assets (liabilities): |  |  |  |  |  |  |  |  |  |  |  |
Cash equivalents and current investments |  | $ | 66,477 |  |  | $ | — |  |  | $ | — |  |  | $ | 66,477 |
Derivative financial instruments asset |  |  | — |  |  |  | 6,590 |  |  |  | — |  |  |  | 6,590 |
Life insurance contracts |  |  | — |  |  |  | — |  |  |  | 49,851 |  |  |  | 49,851 |
Contingent consideration |  |  | — |  |  |  | — |  |  |  | (10,341 | ) |  |  | (10,341 | )
Total |  | $ | 66,477 |  |  | $ | 6,590 |  |  | $ | 39,510 |  |  | $ | 112,577 |
|  | Fair Value at December 31, 2020 |
|  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |
Financial assets (liabilities): |  |  |  |  |  |  |  |  |  |  |  |
Cash equivalents and current investments |  | $ | 56,628 |  |  | $ | — |  |  | $ | — |  |  | $ | 56,628 |
Derivative financial instruments asset |  |  | — |  |  |  | 1,145 |  |  |  | — |  |  |  | 1,145 |
Life insurance contracts |  |  | — |  |  |  | — |  |  |  | 45,453 |  |  |  | 45,453 |
Derivative financial instruments liability |  |  | — |  |  |  | (105 | ) |  |  | — |  |  |  | (105 | )
Contingent consideration |  |  | — |  |  |  | — |  |  |  | (3,125 | ) |  |  | (3,125 | )
Total |  | $ | 56,628 |  |  | $ | 1,040 |  |  | $ | 42,328 |  |  | $ | 99,996 |
The following methods and assumptions were used to determine the fair value of each class of assets and liabilities recorded at fair value in the consolidated balance sheets: Cash equivalents and current investments: Cash equivalents and current investments primarily consist of highly rated money market funds with maturities of three months or less, and are purchased daily at par value with specified yield rates. Due to the high ratings and short-term nature of the funds, the Company considers all cash equivalents and current investments as Level 1. Current investments include $5.2 million and $21.2 million as of December 31, 2021 and 2020, respectively, that is restricted for the Company’s voluntary participation in a consumer protection cooperative in South Korea, along with investments in corporate securities. Life insurance contracts: ASC 820 preserves practicability exceptions to fair value measurements provided by other applicable provisions of U.S. GAAP. The guidance in ASC 715-30-35-60 allows a reporting entity, as a practical expedient, to use cash surrender value or conversion value as an expedient for fair value when it is present. Accordingly, the Company determines the fair value of its life insurance contracts as the cash-surrender value of life insurance policies held in its Rabbi Trust as disclosed in Note 13, “Deferred Compensation Plan.” Derivative financial instruments asset and liability: Derivative financial instruments are measured at fair value based on observable market information and appropriate valuation methods. See Note 14, “Derivative Financial Instruments” for more information on derivative financial instruments. Contingent consideration: Contingent consideration represents the obligations incurred in connection with acquisitions. The estimate of fair value of the contingent consideration obligations requires subjective assumptions to be made regarding the future business results, discount rates, discount periods and probabilities assigned to various potential business result scenarios and was determined using probability assessments with respect to the likelihood of reaching various targets or of achieving certain milestones. The fair value measurement is based on significant inputs unobservable in the market and thus represents a level 3 measurement. Changes in current expectations of progress could change the probability of achieving the targets within the measurement periods and result in an increase or decrease in the fair value of the contingent consideration obligation. The following table provides a summary of changes in fair value of the Company’s Level 3 life insurance contracts (U.S. dollars in thousands):
|  | 2021 |  |  | 2020 |
Beginning balance at January 1 |  | $ | 45,453 |  |  | $ | 41,707 |
Actual return on plan assets |  |  | 5,153 |  |  |  | 3,746 |
Purchases and issuances |  |  | 6,261 |  |  |  | — |
Sales and settlements |  |  | (7,016 | ) |  |  | — |
Transfers into Level 3 |  |  | — |  |  |  | — |
Ending balance at December 31 |  | $ | 49,851 |  |  | $ | 45,453 |
The following table provides a summary of changes in fair value of the Company’s Level 3 contingent consideration (U.S. dollars in thousands):
|  | 2021 |  |  | 2020 |
Beginning balance at January 1 |  | $ | (3,125 | ) |  | $ | — |
Additions from acquisitions |  |  | (8,702 | ) |  |  | (3,125 | )
Changes in fair value of contingent consideration |  |  | 1,486 |  |  |  | — |
Ending balance at December 31 |  | $ | (10,341 | ) |  | $ | (3,125 | )
Equity Investments The Company maintains equity investments in companies which are accounted for under the measurement alternative described in ASC 321-10-35-2 for equity securities that lack readily determinable fair values. The carrying amount of equity securities held by the Company without readily determinable fair values was $28.1 million as of December 31, 2021 and $5.0 million as of December 31, 2020. During the year ended December 31, 2021, the Company made an additional investment of $5.0 million. During the year ended December 31, 2021, the Company recognized $18.1 million of upward fair value adjustments, based on the third quarter of 2021 valuation of additional equity issued by the investee which was deemed to be an observable transaction of a similar investment under ASC 321. The gain was recorded within Other income (expense), net on the consolidated statements of income. The upward fair value adjustment represents a nonrecurring fair value measurement based on observable price changes and is classified as a level 2 fair value measurement.

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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/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=123874694&loc=d3e19207-110258 + Details
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