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Fair Value Measurements | 12 Months Ended
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Jan. 31, 2019
Fair Value Disclosures [Abstract] |
Fair Value Measurements | Note 21—Fair Value Measurements Assets and Liabilities Recorded at Fair Value on a Recurring Basis Fair value is applied to our financial assets and liabilities including money market funds, available for sale securities, derivative instruments and a contingent consideration liability relating to an earnout payment on future TrojanLabel operating results. The following tables provide a summary of the financial assets and liabilities that are measured at fair value:
Assets measured at fair value: |  | Fair value measurement at January 31, 2019 |  |  | Fair value measurement at January 31, 2018 |
(in thousands) |  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |
Money Market Funds (included in Cash and Cash Equivalents) |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 1,798 |  |  | $ | — |  |  | $ | — |  |  | $ | 1,798 |
State and Municipal Obligations (included in Securities Available for Sale) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1,511 |  |  |  | — |  |  |  | 1,511 |
Swap Contract (include in Other Assets) |  |  | — |  |  |  | 85 |  |  |  | — |  |  |  | 85 |  |  |  | — |  |  |  | 101 |  |  |  | — |  |  |  | 101 |
Total assets |  | $ | — |  |  | $ | 85 |  |  | $ | — |  |  | $ | 85 |  |  | $ | 1,798 |  |  | $ | 1,612 |  |  | $ | — |  |  | $ | 3,410 |
Liabilities measured at fair value: |  | Fair value measurement at January 31, 2019 |  |  | Fair value measurement at January 31, 2018 |
(in thousands) |  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |
Swap Contract (included in Other Liabilities) |  | $ | — |  |  | $ | 600 |  |  | $ | — |  |  | $ | 600 |  |  | $ | — |  |  | $ | 1,513 |  |  | $ | — |  |  | $ | 1,513 |
Earnout Liability (included in Other Liabilities) |  |  | — |  |  |  | — |  |  |  | 14 |  |  |  | 14 |  |  |  | — |  |  |  | — |  |  |  | 15 |  |  |  | 15 |
Total liabilities |  | $ | — |  |  | $ | 600 |  |  | $ | 14 |  |  | $ | 614 |  |  | $ | — |  |  | $ | 1,513 |  |  | $ | 15 |  |  | $ | 1,528 |
For our money market funds and municipal obligations, we utilize the market approach to measure fair value. The market approach is based on using quoted prices for identical or similar assets. We also use the market approach to measure fair value of our derivative instruments. Our derivative asset is comprised of an interest rate swap and our derivative liability is comprised of a cross-currency interest rate swap. These derivative instruments were measured at fair value using readily observable market inputs, such as quotations on interest rates and foreign exchange rates, and are classified as Level 2 because they are over-the-counter contracts with a bank counterparty that are not traded in an active market. The following table presents the changes in fair value of our Level 3 financial liability for the years ended January 31, 2019 and 2018:
|  | Contingent Earnout Liability |
(In thousands) |  |  |
Balance at January 31, 2017 |  | $ | — |
Fair value of contingent consideration acquired |  |  | 1,314 |
Change in fair value of contingent earn out liability included in earnings |  |  | (1,438 | )
Currency translation adjustment |  |  | 139 |
Balance at January 31, 2018 |  | $ | 15 |
Change in fair value of contingent earn out liability included in earnings |  |  | — |
Currency translation adjustment |  |  | (1 | )
Balance at January 31, 2019 |  | $ | 14 |
The fair value of the earn out liability incurred in connection with the Company’s acquisition of TrojanLabel was determined using the option approach methodology which includes using significant inputs that are not observable in the market and therefore classified as Level 3. Key assumptions in estimating the fair value of the contingent consideration liability included (1) the estimated earnout targets over the next seven years of $0.5 million-$1.4 million, (2) the probability of success (achievement of the various contingent events) from 0.0%-0.9% and (3) a risk-adjusted discount rate of approximately 2.68%-4.9% used to adjust the probability-weighted earnout payments to their present value. At each reporting period, the contingent consideration liability is recorded at its fair value with changes reflected in general and administrative expense in the condensed consolidated statements of operations. Subsequent to the acquisition of Trojan Label business, the Company restructured the operating model such that most of the sales and some of the expenses of the business would be transferred to other legal entities of the Company. This caused the expected earnings targets in the Danish entity, which were the basis upon which the contingent consideration was structured, to become unlikely to be met. As a result, during fiscal 2018, the value of the contingent consideration was reduced resulting in the Company recognizing an additional $1.4 million of income for the year which is offset in general and administrative expense on the Company’s consolidated income statement for the period ended January 31, 2018. Assets and Liabilities Not Recorded at Fair Value on the Consolidated Balance Sheet The Company’s long-term debt, including the current portion of long-term debt not reflected in the financial statements at fair value, is reflected in the table below:
|  | Fair Value Measurement at January 31, 2019 |  |  |  |
(In thousands) |  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |  |  | Carrying Value |
Long-Term Debt and Related Current Maturities |  | $ | — |  |  | $ | — |  |  | $ | 18,857 |  |  | $ | 18,857 |  |  | $ | 18,242 |
|  | Fair Value Measurement at January 31, 2018 |  |  |  |
(In thousands) |  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |  |  | Carrying Value |
Long-Term Debt and Related Current Maturities |  | $ | — |  |  | $ | — |  |  | $ | 24,873 |  |  | $ | 24,873 |  |  | $ | 23,372 |
The fair value of the Company’s long-term debt, including the current portion, is estimated by discounting the future cash flows using current interest rates at which similar borrowings with the same maturities would be made to borrowers with similar credit ratings and is classified as Level 3.

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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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