Fair Value Measurements

6 Months Ended

Jun. 30, 2020

Fair Value Disclosures [Abstract]

Fair Value Measurements

FAIR VALUE MEASUREMENTS

Factors used in determining the fair value of financial assets and liabilities are summarized into three broad categories:

•Level 1 - observable inputs such as quoted prices (unadjusted) in active liquid markets for identical securities as of the reporting date;

•Level 2 - other significant directly or indirectly observable inputs, including quoted prices for similar securities, interest rates, prepayment speeds and credit risk; or observable market prices in markets with insufficient volume and/or infrequent transactions; and

•Level 3 - significant inputs that are generally unobservable inputs for which there is little or no market data available, including our own assumptions in determining fair value.

Assets and liabilities measured at fair value on a recurring basis were as follows (in thousands):

	June 30, 2020
	Level 1		Level 2		Level 3		Total
Assets:
Derivatives
Foreign currency forward contracts	$	—	$	93	$	—	$	93
Total assets measured at fair value	$	—	$	93	$	—	$	93
Liabilities:
Derivatives
Foreign currency forward contracts	$	—	$	2	$	—	$	2
Total liabilities measured at fair value	$	—	$	2	$	—	$	2

	December 31, 2019
	Level 1		Level 2		Level 3		Total
Assets:
Derivatives
Foreign currency forward contracts	$	—	$	295	$	—	$	295
Total assets measured at fair value	$	—	$	295	$	—	$	295
Liabilities:
Derivatives
Foreign currency forward contracts	$	—	$	9	$	—	$	9
Total liabilities measured at fair value	$	—	$	9	$	—	$	9

For our assets measured at fair value on a recurring basis, we recognize transfers between levels at the actual date of the event or change in circumstance that caused the transfer. There were no transfers between levels during the six months period ended June 30, 2020, nor for the year ended December 31, 2019.

We did not have any changes to our valuation techniques during the six months ended June 30, 2020, nor for the year ended December 31, 2019.

The fair values of our foreign currency forward contracts are calculated as the present value of estimated future cash flows using discount factors derived from relevant Level 2 market inputs, including forward curves and volatility levels.

We recognize or disclose the fair value of certain assets, such as non-financial assets, primarily property, plant and equipment, goodwill, other intangible assets and certain other long-lived assets in connection with impairment evaluations. All of our nonrecurring valuations use significant unobservable inputs and therefore fall under Level 3 of the fair value hierarchy.

As of June 30, 2020, there were held-for-sale assets of $29.1 million and liabilities of $14.2 million that were recorded at fair value on a nonrecurring basis.

In accordance with ASC 360 — Property, Plant and Equipment ("ASC 360"), we met the criteria for classification of held-for-sale for the Octane Fitness^® disposal group as of the reporting date. We performed an evaluation during the second quarter of 2020 to determine the held-for-sale fair values of assets and liabilities less related costs to sell, which resulted in a non-cash charge for loss on disposal group of $29.0 million. For additional information related to asset and liabilities held-for-sale, see Note 2.

The held-for-sale value evaluation was performed using a quantitative assessment of the disposal group and we determined the fair value less costs to sell of the disposal group was less than the carrying amount. We assigned assets and liabilities to the disposal group either by specific identification or assumptions for the assets and liabilities that are specific to the held-for-sale disposal group. We determined the fair value of the disposal group using the income approach and the market approach. In addition, we determined observed or recent transactions of comparable multiples from publicly traded companies in our

industry to determine the reasonableness of assumptions and the fair values of the disposal group estimated. Significant unobservable inputs and assumptions inherent in the valuation methodologies from Level 3 inputs were employed and include, but were not limited to, prospective financial information, growth rates, terminal value and discount rates. We compared the carrying amount of the disposal group to its respective fair value. We reconciled the aggregate fair values of the disposal group determined (as described above) to the carrying value less related costs to sell.

As of December 31, 2019, there were no assets or liabilities that were recorded at fair value on a nonrecurring basis.

The carrying values of cash and cash equivalents, restricted cash, trade receivables, prepaids and other current assets, trade payables and accrued liabilities approximate fair value due to their short maturities. The carrying value of our debt approximates its fair value and falls under Level 2 of the fair value hierarchy, as the interest rate is variable and based on current market rates.