FAIR VALUE

FASB Codification topic, Fair Value Measurements and Disclosures, establishes a framework for measuring fair value and expands financial statement disclosures about fair value measurements. Fair value is the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. The Codification topic does not require any new fair value measurements, but rather applies to all other accounting pronouncements that require or permit fair value measurements. The Codification topic requires that assets and liabilities carried at fair value be classified and disclosed in one of the following three categories:

Level 1: Quoted market prices in active markets for identical assets or liabilities.

Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data.

Level 3: Unobservable inputs that are not corroborated by market data.

The accrued contingent consideration depicted below represents the remaining potential earnout incentive for former Rycan shareholders, relating to the purchase of Rycan by HHI in 2015. As a result of 2017 Rycan performance, a payout of $625,000 for the year ended December 31, 2017, was paid prior to December 31, 2017. We have estimated the fair value of the remaining contingent consideration based on the amount of revenue we expect to be earned by Rycan for the year ending December 31, 2018 in accordance with the agreement.



			Fair Value at December 31, 2017 Using
			Quoted Prices in
	Carrying		Active Markets for		Significant Other		Significant
	Amount at		Identical Assets		Observable Inputs		Unobservable Inputs
(In thousands)	12/31/2017		(Level 1)		(Level 2)		(Level 3)
Description
Contingent consideration	$	586	$	—	$	—	$	586
Total	$	586	$	—	$	—	$	586

The following table summarizes the carrying amounts and fair values of certain assets at December 31, 2016:



			Fair Value at December 31, 2016 Using
			Quoted Prices in
	Carrying		Active Markets for		Significant Other		Significant
	Amount at		Identical Assets		Observable Inputs		Unobservable Inputs
(In thousands)	12/31/2016		(Level 1)		(Level 2)		(Level 3)
Description
Contingent consideration	$	1,120	$	—	$	—	$	1,120
Total	$	1,120	$	—	$	—	$	1,120

The carrying amount of other financial instruments reported in the consolidated balance sheets for current assets and current liabilities approximates their fair values because of the short-term nature of these instruments.