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FAIR VALUE | 3 Months Ended
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Mar. 31, 2016
FAIR VALUE [Abstract] |
FAIR VALUE | (7)FAIR VALUE The authoritative guidance for fair value measurements establishes a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy requires that the Company 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 — 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 similar assets and liabilities in active markets, similar assets and liabilities in markets that are not active 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. The following presents information as of March 31, 2016 and December 31, 2015 for the Company’s assets and liabilities required to be measured at fair value on a recurring basis, as well as the fair value hierarchy used to determine their fair value. Accounts Receivable and Payable - The amounts recorded in the accompanying balance sheets approximate fair value because of their short-term nature. Investments – The Company measures investments at fair value on a nonrecurring basis when they are deemed to be other-than-temporarily impaired. The fair values of these investments are determined based on valuation techniques using the best information available, and may include market observable inputs, and discounted cash flow projections. An impairment charge is recorded when the cost of the investment exceeds its fair value and this condition is determined to be other-than-temporary. As of March 31, 2016, the investment, which consists of the Company’s first quarter 2015 $9.0 million investment in Café X Communication, Inc., continues to be recorded at $9.0 million. Debt - The Company’s debt consists primarily of the Company’s Credit Agreement, which permits floating-rate borrowings based upon the current Prime Rate or LIBOR plus a credit spread as determined by the Company’s leverage ratio calculation (as defined in the Credit Agreement). As of March 31, 2016 and December 31, 2015, the Company had $133.0 million and $100.0 million, respectively, of borrowings outstanding under the Credit Agreement. During the first quarter of 2016 outstanding borrowings accrued interest at an average rate of 1.5% per annum, excluding unused commitment fees. The amounts recorded in the accompanying Balance Sheets approximate fair value due to the variable nature of the debt. Derivatives - Net derivative assets (liabilities) are measured at fair value on a recurring basis. The portfolio is valued using models based on market observable inputs, including both forward and spot foreign exchange rates, interest rates, implied volatility, and counterparty credit risk, including the ability of each party to execute its obligations under the contract. As of March 31, 2016, credit risk did not materially change the fair value of the Company’s derivative contracts. The following is a summary of the Company’s fair value measurements for its net derivative assets (liabilities) as of March 31, 2016 and December 31, 2015 (in thousands): As of March 31, 2016
|  | Fair Value Measurements Using |  |  |  |
|  | Quoted Prices in |  | Significant |  |  |  |  |  |  |
|  | Active Markets |  | Other |  | Significant |  |  |  |
|  | for Identical |  | Observable |  | Unobservable |  |  |  |
|  | Assets |  | Inputs |  | Inputs |  |  |  |
|  | (Level 1) |  | (Level 2) |  | (Level 3) |  | At Fair Value |
Cash flow hedges |  | $ | — |  | $ | (36,318) |  | $ | — |  | $ | (36,318) |
Interest rate swaps |  |  | — |  |  | (476) |  |  | — |  |  | (476) |
Fair value hedges |  |  | — |  |  | 6,493 |  |  | — |  |  | 6,493 |
Total net derivative asset (liability) |  | $ | — |  | $ | (30,301) |  | $ | — |  | $ | (30,301) |
As of December 31, 2015
|  | Fair Value Measurements Using |  |  |  |
|  | Quoted Prices in |  | Significant |  |  |  |  |  |  |
|  | Active Markets |  | Other |  | Significant |  |  |  |
|  | for Identical |  | Observable |  | Unobservable |  |  |  |
|  | Assets |  | Inputs |  | Inputs |  |  |  |
|  | (Level 1) |  | (Level 2) |  | (Level 3) |  | At Fair Value |
Cash flow hedges |  | $ | — |  | $ | (45,722) |  | $ | — |  | $ | (45,722) |
Interest rate swaps |  |  | — |  |  | (651) |  |  | — |  |  | (651) |
Fair value hedges |  |  | — |  |  | 2,373 |  |  | — |  |  | 2,373 |
Total net derivative asset (liability) |  | $ | — |  | $ | (44,000) |  | $ | — |  | $ | (44,000) |
The following is a summary of the Company’s fair value measurements as of March 31, 2016 and December 31, 2015 (in thousands): As of March 31, 2016
|  | Fair Value Measurements Using |
|  | Quoted Prices in |  |  |  |  | Significant |
|  | Active Markets for |  | Significant Other |  | Unobservable |
|  | Identical Assets |  | Observable Inputs |  | Inputs |
|  | (Level 1) |  | (Level 2) |  | (Level 3) |
Assets |  |  |  |  |  |  |  |  |  |
Derivative instruments, net |  | $ | — |  | $ | — |  | $ | — |
Total assets |  | $ | — |  | $ | — |  | $ | — |
Liabilities |  |  |  |  |  |  |  |  |  |
Deferred compensation plan liability |  | $ | — |  | $ | (10,221) |  | $ | — |
Derivative instruments, net |  |  | — |  |  | (30,301) |  |  | — |
Contingent consideration |  |  | — |  |  | — |  |  | (7,802) |
Total liabilities |  | $ | — |  | $ | (40,522) |  | $ | (7,802) |
As of December 31, 2015
|  | Fair Value Measurements Using |
|  | Quoted Prices in |  |  |  |  | Significant |
|  | Active Markets for |  | Significant Other |  | Unobservable |
|  | Identical Assets |  | Observable Inputs |  | Inputs |
|  | (Level 1) |  | (Level 2) |  | (Level 3) |
Assets |  |  |  |  |  |  |  |  |  |
Derivative instruments, net |  | $ | — |  | $ | — |  | $ | — |
Total assets |  | $ | — |  | $ | — |  | $ | — |
Liabilities |  |  |  |  |  |  |  |  |  |
Deferred compensation plan liability |  | $ | — |  | $ | (9,821) |  | $ | — |
Derivative instruments, net |  |  | — |  |  | (44,000) |  |  | — |
Contingent consideration |  |  | — |  |  | — |  |  | (13,450) |
Total liabilities |  | $ | — |  | $ | (53,821) |  | $ | (13,450) |
Deferred Compensation Plan — The Company maintains a non-qualified deferred compensation plan structured as a Rabbi trust for certain eligible employees. Participants in the deferred compensation plan select from a menu of phantom investment options for their deferral dollars offered by the Company each year, which are based upon changes in value of complementary, defined market investments. The deferred compensation liability represents the combined values of market investments against which participant accounts are tracked. Contingent Consideration — The Company recorded contingent consideration related to the acquisitions of iKnowtion, Sofica and rogenSi. These contingent payables were recognized at fair value using a discounted cash flow approach and a discount rate of 21.0%, 5.0% or 4.6%, respectively. The discount rates vary dependant on the specific risks of each acquisition including the country of operation, the nature of services and complexity of the acquired business, and other similar factors. These measurements were based on significant inputs not observable in the market. The Company will record interest expense each period using the effective interest method until the future value of these contingent payables reaches their expected future value of $8.0 million. Interest expense related to all recorded contingent payables is included in Interest expense in the Consolidated Statements of Comprehensive Income (Loss). During the second quarter of 2015, the Company recorded a fair value adjustment of the contingent consideration associated with the Sofica reporting unit within the CMS segment based on revised estimates reflecting Sofica earnings would be lower than revised estimates for 2015. Accordingly a $0.5 million decrease in the payable was recorded as of September 30, 2015 and was included in Other income (expense) in the Consolidated Statements of Comprehensive Income (Loss). During the third and fourth quarters of 2015, the Company recorded fair value adjustments of the contingent consideration associated with the rogenSi reporting unit within the CSS segment based on revised estimates reflecting rogenSi earnings would be higher and then lower than anticipated for 2015. Accordingly a $0.5 million increase and a $0.3 million decrease to the payable was recorded as of September 30, 2015 and December 31, 2015, respectively, and was included in Other income (expense) in the Consolidated Statements of Comprehensive Income (Loss). A rollforward of the activity in the Company’s fair value of the contingent consideration payable is as follows (in thousands):
|  |  |  |  |  |  |  |  |  |  | Imputed |  |  |  |
|  | December 31, |  |  |  |  |  |  |  | Interest / |  | March 31, |
|  | 2015 |  | Acquisitions |  | Payments |  | Adjustments |  | 2016 |
iKnowtion |  | $ | 500 |  | $ | — |  | $ | — |  | $ | — |  | $ | 500 |
Sofica |  |  | 3,153 |  |  | — |  |  | — |  |  | (7) |  |  | 3,146 |
rogenSi |  |  | 9,797 |  |  | — |  |  | (5,793) |  |  | 152 |  |  | 4,156 |
Total |  | $ | 13,450 |  | $ | — |  | $ | (5,793) |  | $ | 145 |  | $ | 7,802 |

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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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