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CONTINGENT CONSIDERATION
 12 Months Ended
Dec. 31, 2014
Business Combinations [Abstract]  
Business Combination Disclosure [Text Block]

10. CONTINGENT CONSIDERATION

Contingent consideration is comprised of two contingent payments that the Company is obligated to pay the former shareholders of The Combs Company (“Bogs”) related to the Company’s acquisition of Bogs in 2011. The estimate of contingent consideration is formula-driven and is based on Bogs achieving certain levels of gross margin dollars between January 1, 2011, and December 31, 2015. The first contingent payment was due in 2013 and was paid on March 28, 2013, in the amount of $1,270,000. The second payment is due in March 2016. In accordance with ASC 805, Business Combinations (“ASC 805”), the Company remeasures its estimate of the fair value of the contingent consideration at each reporting date. The change in fair value is recognized in earnings.
The Company’s estimate of the fair value of the second contingent payment was approximately $5.7 million and $5.1 million as of December 31, 2014 and December 31, 2013, respectively. The balance was recorded within other long-term liabilities in the Consolidated Balance Sheets. The total contingent consideration is reflected in the Company’s wholesale segment.
The following table summarizes the activity during 2014 and 2013 related to the contingent payments as recorded in the Consolidated Statements of Earnings (dollars in thousands):
 
 
2014
2013
Beginning balance
$
5,064
$
6,261
Payment of contingent consideration
—
(1,270
)
Net losses on remeasurement of contingent consideration
560
24
Interest expense
51
49
Ending balance
$
5,675
$
5,064
The net losses on remeasurement of contingent consideration were recorded within selling and administrative expenses in the Consolidated Statements of Earnings. The increase in the estimated liability in 2014 was primarily a result of Bogs performance in the current year. Bogs generated higher gross margin dollars in 2014 than the Company had originally projected.
The fair value measurement of the contingent consideration is based on significant inputs not observed in the market and thus represents a level 3 valuation as defined by ASC 820. The fair value measurement was determined using a probability-weighted model which includes various estimates related to Bogs future sales levels and gross margins. As of December 31, 2014, management estimates that the range of potential amounts for the second payment is between $5.3 million and $6.3 million. Management believes it is at least reasonably possible that this estimate could change in the near term.