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FAIR VALUE | 9 Months Ended
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Sep. 30, 2018
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 September 30, 2018 and December 31, 2017 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, including cost and equity method 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 September 30, 2018, the investment in CaféX Communication, Inc., which consisted of the Company’s total $15.6 million investment was fully impaired to zero (See Note 2). 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 September 30, 2018 and December 31, 2017, the Company had $272.5 million and $344.0 million, respectively, of borrowings outstanding under the Credit Agreement. During the third quarter of 2018 outstanding borrowings accrued interest at an average rate of 3.3% 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 based on Level 2 inputs. 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 September 30, 2018, 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 September 30, 2018 and December 31, 2017 (in thousands): As of September 30, 2018
|  | 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 |  | $ | — |  | $ | (16,163) |  | $ | — |  | $ | (16,163) |
Fair value hedges |  |  | — |  |  | 820 |  |  | — |  |  | 820 |
Total net derivative asset (liability) |  | $ | — |  | $ | (15,343) |  | $ | — |  | $ | (15,343) |
As of December 31, 2017
|  | 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 |  | $ | — |  | $ | (26,256) |  | $ | — |  | $ | (26,256) |
Fair value hedges |  |  | — |  |  | 1,470 |  |  | — |  |  | 1,470 |
Total net derivative asset (liability) |  | $ | — |  | $ | (24,786) |  | $ | — |  | $ | (24,786) |
The following is a summary of the Company’s fair value measurements as of September 30, 2018 and December 31, 2017 (in thousands): As of September 30, 2018
|  | 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 |  | $ | — |  | $ | (16,470) |  | $ | — |
Derivative instruments, net |  |  | — |  |  | (15,343) |  |  | — |
Contingent consideration |  |  | — |  |  | — |  |  | (2,751) |
Total liabilities |  | $ | — |  | $ | (31,813) |  | $ | (2,751) |
As of December 31, 2017
|  | 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 |  | $ | — |  | $ | (13,219) |  | $ | — |
Derivative instruments, net |  |  | — |  |  | (24,786) |  |  | — |
Contingent consideration |  |  | — |  |  | — |  |  | (399) |
Total liabilities |  | $ | — |  | $ | (38,005) |  | $ | (399) |
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 a revenue servicing agreement with Welltok in the fourth quarter of 2016, in which a maximum of $1.25 million would be paid over eight quarters based on the dollar value of revenue earned by the Company. The contingent payable was recognized at fair value of $1.25 million as of December 31, 2016. Payments totaling $851 thousand were completed during 2017 and the final payment of $399 thousand was made during the first quarter of 2018. The Company recorded contingent consideration related to the SCS acquisition. These contingent payables were recognized at fair value using a discounted cash flow approach and a discount rate of 4.7%. The measurements were based on significant inputs not observable in the market. The Company will record interest expense each quarter using the effective interest method until the future value of these contingent payments reaches their expected total future value. 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 / |  | September 30, |
|  | 2017 |  | Acquisitions |  | Payments |  | Adjustments |  | 2018 |
Welltok |  | $ | 399 |  | $ | — |  | $ | (399) |  | $ | — |  | $ | — |
SCS |  |  | — |  |  | 2,731 |  |  | — |  |  | 20 |  |  | 2,751 |
Total |  | $ | 399 |  | $ | 2,731 |  | $ | (399) |  | $ | 20 |  | $ | 2,751 |

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -URI http://asc.fasb.org/topic&trid=2155941 + Details
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