XML 40 R22.htm IDEA: XBRL DOCUMENT

Fair Value Measurements

12 Months Ended

Dec. 31, 2021

12. Fair Value Measurements

GAAP defines fair value as the price that would be received to sell an asset or to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. Additionally, the inputs used to measure fair value are prioritized based on a three-level hierarchy. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:

• Level 1— Observable inputs that reflect quoted prices in active markets for identical assets or liabilities.

• Level 2 — Observable inputs other than quoted prices included in Level 1. The Company values assets and liabilities included in this level using dealer and broker quotations, certain pricing models, bid prices, quoted prices for similar assets and liabilities in active markets, or other inputs that are observable or can be corroborated by observable market data.

• 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. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

Recurring Fair Value Measurements

The following table presents the Company's financial assets and liabilities that are measured at fair value on a recurring basis, excluding assets related to the Company's defined benefit pension plans, categorized using the fair value hierarchy:


December 31,	2021
	Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
	(In thousands)
Assets:
Money market funds (1)	$	10,028	$	—	$	—	$	10,028

Liabilities:
Contingent earnout liability (2)		—		—		12,556		12,556


December 31,	2020
	Level 1		Level 2		Level 3		Total
	(In thousands)
Assets:
Money market funds (1)	$	10,026	$	—	$	—	$	10,026

Liabilities:
Contingent earnout liability (2)		—		—		6,151		6,151

(1) The fair values of the money market funds were based on recently quoted market prices and reported transactions in an active marketplace. Money market funds are included on the Company's Consolidated Balance Sheets in "Cash and cash equivalents."

(2) The contingent earnout liability relates to businesses acquired in 2021 and 2020. See Note 3, "Business Acquisitions and Dispositions" for more information. The Level 3 fair value of the contingent earnout liability was estimated using internally-prepared revenue and EBITDA projections, and discount rates determined using a combination of observable and unobservable market data. The fair value of the contingent earnout liability is included in "Other accrued liabilities" and "Other noncurrent liabilities" on the Company's Consolidated Balance Sheets, based upon the term of the contingent earnout agreement.

The following table summarizes the change in the fair value of the Company's contingent earnout consideration balance:


December 31,	2021			2020
	(In thousands)
Acquisition-related contingent consideration, beginning of the year	$	6,151		$	454
Fair value of contingent consideration upon acquisition		9,482			5,808
Change in fair value of contingent consideration		650			(111	)
Settlement of contingent consideration		(1,683	)		—
Acquisition-related contingent consideration, end of the year	$	14,600		$	6,151

As of December 31, 2021, the earnout liability of $2,044,000 for the 2021 earnout period in connection with our acquisitions of Crawford Carvallo and HBA Group is based on the actual achievement of performance targets and is no longer subject to fair value measurement and was accordingly transferred out of Level 3. Changes in fair value of contingent consideration are included in "Other Income/(Loss)" on the Consolidated Statement of Operations.

Fair Value Disclosures

The categorization of assets and liabilities within the fair value hierarchy and the measurement techniques are reviewed quarterly. Any transfers between levels are deemed to have occurred at the end of the quarter.

The fair values of accounts receivable, unbilled revenues, accounts payable and short-term borrowings approximate their respective carrying values due to the short-term maturities of the instruments. The interest rate on the Company's variable rate long-term debt resets at least every 90 days; therefore, the recorded value approximates fair value. These assets and liabilities are measured within Level 2 of the fair value hierarchy.

Nonrecurring Fair Value Disclosures

During 2020, the Company impaired and expensed goodwill of $17,674,000. During 2019, the Company impaired and expensed goodwill of $17,484,000. See Note 1, "Significant Accounting and Reporting Policies" and Note 4, "Goodwill and Intangible Assets," where discussed in more detail.

Fair Value Measurements for Defined Benefit Pension Plan Assets

The fair value hierarchy is also applied to certain other assets that indirectly impact the Company's consolidated financial statements. Assets contributed by the Company to its defined benefit pension plans become the property of the individual plans. Even though the Company no longer has control over these assets, it is indirectly impacted by subsequent fair value adjustments to these assets. The actual return on these assets impacts the Company's future net periodic benefit cost, as well as amounts recognized in its Consolidated Balance Sheets. The Company uses the fair value hierarchy to measure the fair value of assets held by its U.S. and U.K. defined benefit pension plans.

The following table summarizes the level within the fair value hierarchy used to determine the fair value of the Company's pension plan assets for its U.S Qualified Plan at December 31, 2021 and 2020:


December 31,	2021									2020
	Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3		Total
	(In thousands)
Asset Category:
Cash and cash equivalents	$	20,706	$	—	$	—	$	20,706		$	2,861	$	—	$	—	$	2,861
Short-term investment funds		—		25,569		—		25,569			—		9,827		—		9,827
Common Collective Equity funds:
U.S.		—		40,191		—		40,191			—		66,145		—		66,145
International		—		25,879		—		25,879			—		28,529		—		28,529
Common Collective Fixed Income Funds and Fixed Income Securities:
U.S.		39,304		186,542		—		225,846			36,007		207,219		—		243,226
International		—		29,300		—		29,300			—		28,501		—		28,501
Alternative strategy funds		—		8,784		13,414		22,198			—		9,248		15,938		25,186
Total Plan Assets	$	60,010	$	316,265	$	13,414		389,689		$	38,868	$	349,469	$	15,938		404,275
Other plan liabilities, net (a)								(1,522	)								(7,336	)
Net Plan Assets							$	388,167								$	396,939

(a) net amounts payable for unsettled security transactions.

The following table summarizes the level within the fair value hierarchy used to determine the fair value of the Company's pension plan assets for its U.K. plans at December 31, 2021 and 2020:


December 31,	2021								2020
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
	(In thousands)
Asset Category:
Cash and cash equivalents	$	33,518	$	—	$	—	$	33,511	$	2,613	$	—	$	—	$	2,613
Common Collective Equity funds:
U.S.		—		—		—		—		—		44,461		—		44,461
International		—		—		—		—		—		7,510		—		7,510
Common Collective Fixed Income Funds and Fixed Income Securities:
Short-term Investment funds:		—		64,704		—		64,704		—		162,276		—		162,276
Government securities		—		141,870		—		141,870		—		42,564		—		42,564
Alternative strategy funds		3,896		56,883		—		60,779		—		34,958		—		34,958
Real estate funds		—		—		11,255		11,255		—		—		9,572		9,572
Total	$	37,414	$	263,457	$	11,255	$	312,119	$	2,613	$	291,769	$	9,572	$	303,954

Short-term investment funds consist primarily of funds with a maturity of 60 days or less and are valued at amortized cost which approximates fair value.

Equity securities consist primarily of common collective funds (Level 2). Common collective funds are valued at the net asset value per share multiplied by the number of shares held as of the measurement date.

Fixed income securities consist of money market funds, government securities, corporate bonds and debt securities, mortgage-backed securities and other common collective funds. Government securities are valued by third-party pricing sources and are valued daily in an active market (Level 1). Corporate bonds are valued using either the yields currently available on comparable securities of issuers with similar credit ratings or using a discounted cash flows approach that utilizes observable inputs, such as current yields of similar instruments, and includes adjustments for valuation adjustments from internal pricing models which use observable inputs such as issuer details, interest rates, yield curves, default rates and quoted prices for similar assets (Level 2). Mortgage-backed securities are valued by pricing service providers that use broker-dealer quotations or valuation estimates from their internal pricing models (Level 2). Other common collective funds are valued at the net asset value per share multiplied by the number of shares held as of the measurement date (Level 2).

Alternative strategy funds valued at the net asset value per share multiplied by the number of shares held as of the measurement date (Level 2). Alternative strategy funds may include derivative instruments such as futures, forward contracts, options and swaps and are used to help manage risks. Derivative instruments are generally valued by the investment managers or in certain instances by third party pricing sources (Level 2) or may, due to the inherent uncertainty of valuation for those investments, differ significantly from the values that would have been used had a ready market for the investments existed, and the differences could be material (Level 3).

Real estate funds are primarily property unit trusts whose values are primarily reported by the fund manager and are based on valuation of the underlying investments which include inputs such as cost, discounted cash flows, independent appraisals and market-based comparable data (Level 3). The fair values may, due to the inherent uncertainty of valuation for those investments, differ significantly from the values that would have been used had a ready market for the investments existed, and the differences could be material.

Changes in fair value related to assets still held at the reporting date are included in "Accumulated Other Comprehensive Loss" on the Consolidated Balance Sheet. The following table provides a reconciliation of the beginning and ending balance of Level 3 assets within the Company's U.S. and U.K. pension plans during the years ended December 31, 2021 and 2020:


	U.S			U.K.
	(in thousands)
Balance at December 31, 2019	$	14,766		$	9,735
Actual return on plan assets:
Related to assets still held at the reporting date		1,172			(163	)
Balance at December 31, 2020		15,938			9,572
Actual return on plan assets:
Related to assets still held at the reporting date		3,575			1,683
Purchases, sales and settlements, net		(6,099	)		—
Balance at December 31, 2021	$	13,414		$	11,255

- 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 + Details