FAIR VALUE DISCLOSURES (Tables)

12 Months Ended

Dec. 31, 2015

Schedule of Liabilities Categorized by Fair Value Measurements Hierarchy

The following tables present our fair value hierarchy for liabilities measured at fair value on a recurring basis as of December 31, 2015 and 2014 (in thousands):



	As of December 31, 2015
	Total		Level 1		Level 2		Level 3
Derivative – Warrants	$	67,401	$	—	$	67,401	$	—
Contingent consideration, including current portion^{(1) (2) (3) (4) (5) (6)}	30,119		—		—		30,119
	$	97,520	$	—	$	67,401	$	30,119



	As of December 31, 2014
	Total		Level 1		Level 2		Level 3
Derivative – Warrants	$	25,246	$	—	$	—	$	25,246
Contingent consideration^{(1) (2)}	5,344		—		—		5,344
	$	30,590	$	—	$	—	$	30,590


(1)	The current portion of contingent consideration is included in accrued liabilities in our consolidated balance sheets. The long-term portion of contingent consideration is included in other long-term obligations and deferred credits in our consolidated balance sheets.

(2)

Includes the fair value of the earn-out payments associated with the 2012 acquisition of Bode Gravel Co. and Bode Concrete LLC. The fair value was determined based on expected payouts that will be due to the former owners based on the achievement of certain incremental sales volume milestones, using a contractual discount rate of 7.0%. These payments were capped at a fair value of $3.5 million as of December 31, 2015 and $5.3 million as of December 31, 2014.

(3)

Includes the fair value of the Mobile-Crete Earn-out (see Note 2). The fair value was determined based on expected payouts that will be due to the former owners based on probability-weighted assumptions related to average annual WTI prices reaching certain predetermined levels from December 8, 2015 through December 7, 2016, using a discount rate of 3.50%. The fair value of the Mobile-Crete Earn-out was less than $0.1 million as of December 31, 2015.


(4)	Includes the fair value of the Right Away Earn-out (see Note 2). The fair value was determined based on expected payouts that will be due to the former owners based on probability-weighted assumptions related to the achievement of sales volume milestones, using a discount rate of 8.50%. The fair value of the Right Away Earn-out was $4.7 million as of December 31, 2015.

(5)

Includes the fair value of the Ferrara Bros. Contingent Consideration (see Note 2). The fair value was determined based on the expected vesting of incentive awards granted to the former owners at acquisition based on probability-weighted assumptions related to the achievement of certain EBITDA thresholds, using a discount rate of 10.53%. The fair value of the Ferrara Bros. Contingent Consideration was $21.2 million as of December 31, 2015.


(6)	Includes the fair value of the DuBrook Earn-out (see Note 2). The fair value was determined based on the expected payouts that will be due to the former owners based on probability-weighted assumptions related to the achievement of sales volume milestones, using a discount rate of 15.75%. The fair value of the DuBrook Earn-out was $0.7 million as of December 31, 2015.

Schedule of Changes in Level 3 Fair Value Measurements

A reconciliation of the changes in Level 3 fair value measurements is as follows for December 31, 2015 and 2014 (in thousands):



	Warrants			Contingent Consideration
Balance at January 1, 2014	$	21,690		$	7,000
Total losses included in earnings ⁽¹⁾	3,560			—
Payment on contingent consideration	—			(1,656		)
Write-off of derivative on exercised Warrants ⁽²⁾	(4		)	—
Balance at December 31, 2014	25,246			5,344
Acquisitions ⁽³⁾	—			25,707
Total losses included in earnings ⁽¹⁾	19,551			932
Payment on contingent consideration	—			(1,864		)
Write-off of derivative on exercised Warrants ⁽²⁾	(4		)	—
Issuances of equity, net of cash proceeds ⁽⁴⁾	(56		)	—
Transfer out⁽⁵⁾	(44,737		)	—
Balance at December 31, 2015	$	—		$	30,119

(1)

Represents the loss on revaluation of Warrants from January 1, 2014 through June 30, 2015, which is included in derivative loss in our consolidated statements of operations, and the net gain on revaluation of contingent consideration, which is included in gain on revaluation of contingent consideration in our consolidated statements of operations. We recorded a net loss on revaluation of contingent consideration of $0.9 million in the year ended December 31, 2015, as result of the estimate of future WTI prices offset by accretion of interest for the passage of time as well as changes in the probability-weighted assumptions related to the achievement of sales volumes and certain EBITDA thresholds. No gain or loss on revaluation of contingent consideration was recognized in the year ended December 31, 2014.


(2)	Represents the pro rata portion of the derivative liability associated with exercised Warrants from January 1, 2014 through June 30, 2015 and measured at the date of share issuance, which is included in derivative loss in our consolidated statements of operations.

(3)

The liabilities for earn-outs and contingent considerations for acquisitions from 2014 and 2015 were valued using Monte Carlo simulations which incorporated probability-weighted assumptions related to the achievement of varying thresholds of pre-determined sales volumes, WTI prices for the applicable year, and EBITDA. Inputs into the models were based upon observable market data where possible. Where observable market data did not exist, we modeled inputs based upon similar observable inputs. The key inputs included discount rates ranging from 3.50% to 15.75%, a forecasted average of WTI prices from December 8, 2014 through December 7, 2016 from quoted sources, and management's estimates of future sales volumes and EBITDA.


(4)	Represents the pro rata portion of the derivative liability associated with exercised Warrants from January 1, 2014 through June 30, 2015 and measured at the date of share issuance, which is included in additional paid-in capital in our condensed consolidated balance sheets.


(5)	Transfer out of Level 3 financial liabilities was due to changes in the observability of market inputs used in the valuation of our Warrants. The transfer was measured as of June 30, 2015, the end of the period in which the transfer occurred.