Annual report pursuant to Section 13 and 15(d)

Fair Value Measurements

v3.24.0.1
Fair Value Measurements
 12 Months Ended
Dec. 31, 2023
Fair Value Disclosures [Abstract]  
Fair Value Measurements Fair Value Measurements
Assets and liabilities carried at fair value on a recurring basis consisted of the following (in thousands):
December 31, 2023 December 31, 2022
Fair Value Level 1 Level 2 Level 3 Fair Value Level 1 Level 2 Level 3
Assets:
Assets held in rabbi trust $ 10,838  $ —  $ 10,838  $ —  $ 9,553  $ —  $ 9,553  $ — 
Convertible notes $ 5,081  $ —  $ —  $ 5,081  $ —  $ —  $ —  $ — 
Cash equivalents (1):
             
Commercial paper $ 27,998  $ —  $ 27,998  $ —  $ 41,324  $ —  $ 41,324  $ — 
Money market funds 68,364  68,364  —  —  139,025  139,025  —  — 
$ 96,362  $ 68,364  $ 27,998  $ —  $ 180,349  $ 139,025  $ 41,324  $ — 
Marketable debt securities, available-for-sale:                
Short-term investments:                
U.S. treasuries $ 91,840  $ 91,840  $ —  $ —  $ 134,549  $ 134,549  $ —  $ — 
Corporate debt 77,041  —  77,041  —  118,041  —  118,041  — 
ABS and other —  —  —  —  844  —  844  — 
$ 168,881  $ 91,840  $ 77,041  $ —  $ 253,434  $ 134,549  $ 118,885  $ — 
Long-term investments:                
U.S. treasuries $ 9,852  $ 9,852  $ —  $ —  $ 20,715  $ 20,715  $ —  $ — 
U.S. government sponsored entities 1,040  —  1,040  —  536  —  536  — 
Corporate debt 44,565  —  44,565  —  41,358  —  41,358  — 
ABS and other 12,002  —  12,002  —  5,986  —  5,986  — 
$ 67,459  $ 9,852  $ 57,607  $ —  $ 68,595  $ 20,715  $ 47,880  $ — 
Liabilities:                
Contingent consideration $ 5,482  $ —  $ —  $ 5,482  $ 7,067  $ —  $ —  $ 7,067 
Deferred consideration $ 1,571  $ —  $ 1,571  $ —  $ 5,119  $ —  $ 5,119  $ — 
Deferred compensation liability $ 8,356  $ 8,356  $ —  $ —  $ 6,661  $ 6,661  $ —  $ — 
(1)
Included in cash, cash equivalents, and restricted cash on the accompanying consolidated balance sheets.
There were no transfers in or out of Level 3 during the years ended December 31, 2023 and 2022.
During the year ended December 31, 2023, the Company considered current interest rates and the probability of achieving EBITDA and other performance targets in its determination of fair value for the contingent consideration. The Company is uncertain as to the extent of the volatility in the unobservable inputs in the foreseeable future. Deferred consideration in connection with acquisitions is carried at fair value and calculated using a discounted cash flow estimate with the only remaining condition on such payments being the passage of time.
As of December 31, 2023 and December 31, 2022, contingent and deferred consideration had a maximum undiscounted payment to be settled in cash or stock of $14.7 million and $21.3 million, respectively. Assuming the achievement of the applicable performance criteria and/or service and time requirements, the Company anticipates these payments will be made over the next one to four-year period. Changes in fair value are included in selling, general and administrative expense in the consolidated statements of operations.
A reconciliation of contingent consideration measured at fair value on a recurring basis consisted of the following (in thousands):
Twelve Months Ended
December 31,
2023 2022
Beginning balance $ 7,067  $ 9,312 
Change in fair value of contingent consideration(1)
(16) (161)
Payments of contingent consideration (1,569) (2,084)
Ending balance $ 5,482  $ 7,067 
(1)
 Includes immaterial impact of foreign currency translation.
Quantitative information about the valuation technique and significant unobservable inputs used in the valuation of the Company’s Level 3 financial liabilities measured at fair value on a recurring basis consisted of the following (dollars in thousands):
Fair Value at
December 31, 2023		 Valuation Technique Unobservable inputs
Range (Weighted Average)(1)
Contingent
consideration
 $ 5,482  Discounted cash flow Expected life of cash flows
0.75-3.83 years
 (1.42 years)
Discount rate
5.3%-6.4%
(6.1%)
Probability of achievement
11.1%-100.0%
(96.5%)
Fair Value at
December 31, 2022		 Valuation Technique Unobservable inputs
Range (Weighted Average)(1)
Contingent
consideration
 $ 7,067  Discounted cash flow Expected life of cash flows
0.4-4.8 years
 (2.7 years)
Discount rate
6.0%-7.0%
(6.5)%
Probability of achievement
0.0%-100.0%
(95.4)%
(1)
 Unobservable inputs were weighted by the relative fair value of the instruments.
The fair value of the convertible notes considered (i) the contractual maturity which may be extended at the option of the holders, (ii) a weighted average premium at settlement of 112% upon a subsequent financing, equity financing or a change in control, and (iii) a weighted average discount rate of 15.3%. During the three months ended December 31, 2023, the fair value of the convertible notes increased by approximately $81,000 due to the reduction in the estimated time to the settlement from a weighed average of 1.9 years to 1.7 years.
Nonrecurring Fair Value Measurements
In accordance with U.S. GAAP, from time to time, the Company measures certain assets at fair value on a nonrecurring basis. The Company reviews the carrying value of intangibles, goodwill and other assets for indications of impairment at least annually. When indications of potential impairment are identified, the Company may be required to determine the fair value of those assets and record an adjustment for the carrying amount in excess of the fair value
determined. Any fair value determination would be based on valuation approaches, which are appropriate under the circumstances and utilize Level 2 and Level 3 measurements as required.