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Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2020

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis

The following tables present our assets and liabilities measured at fair value on a recurring basis aggregated by the level within which measurements fall in the fair value hierarchy (in thousands):



	Quoted Market Prices (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)		Total
June 30, 2020
Assets
Restricted Investment:
Ashford Trust common stock	$	245		⁽²⁾	$	—			$	—	$	245
Braemar common stock	129			⁽²⁾	—				—		129
Total	$	374			$	—			$	—	$	374
Liabilities
Contingent consideration	$	(2,225	)	⁽¹⁾	$	—			$	—	$	(2,225	)
Subsidiary compensation plan	—				(50		)	⁽²⁾	—		(50		)
Deferred compensation plan	(2,026		)		—				—		(2,026		)
Total	$	(4,251	)		$	(50	)		$	—	$	(4,301	)
Net	$	(3,877	)		$	(50	)		$	—	$	(3,927	)

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⁽¹⁾Represents the fair value of the contingent consideration liability of $2.2 million related to the stock consideration collar associated with JSAV’s acquisition of BAV. The contingent consideration liabilities are reported as “other liabilities” in our condensed consolidated balance sheets. See notes 1 and 4.

⁽²⁾The assets acquired in our acquisition of Remington Lodging included shares of common stock of Ashford Trust and Braemar purchased by Remington Lodging on the open market and held for the purpose of providing compensation to certain employees. The compensation agreement liability is based on ratably accrued vested shares through June 30, 2020, which are exercisable upon vesting. The liability is the total accrued vested shares multiplied by the fair value of the quoted market price of the underlying investment.



	Quoted Market Prices (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)				Total
December 31, 2019
Assets
Restricted Investment:
Ashford Trust common stock	$	768		⁽³⁾	$	—			$	—			$	768
Braemar common stock	427			⁽³⁾	—				—				427
Total	$	1,195			$	—			$	—			$	1,195
Liabilities
Contingent consideration	$	(2,668	)	⁽¹⁾	$	—			$	(2,959	)	⁽²⁾	$	(5,627	)
Subsidiary compensation plan	—				(415		)	⁽³⁾	—				(415		)
Deferred compensation plan	(4,729		)		—				—				(4,729		)
Total	$	(7,397	)		$	(415	)		$	(2,959	)		$	(10,771	)
Net	$	(6,202	)		$	(415	)		$	(2,959	)		$	(9,576	)

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⁽¹⁾Represents the fair value of the contingent consideration liability of $1.6 million related to the stock consideration collar associated with JSAV’s acquisition of BAV and $1.0 million related to the stock consideration collar associated with RED’s acquisition of Sebago. The contingent consideration liabilities related to BAV and Sebago are reported as “other liabilities” in our consolidated balance sheets. See notes 1 and 4.

⁽²⁾Represents the fair value of the contingent consideration liability related to the achievement of certain performance targets associated with the acquisition of BAV, which is reported within “other liabilities” in our consolidated balance sheets. See notes 1 and 4.

⁽³⁾The assets acquired in our acquisition of Remington Lodging included shares of common stock of Ashford Trust and Braemar purchased by Remington Lodging on the open market and held for the purpose of providing compensation to certain employees. The compensation agreement liability is based on ratably accrued vested shares through December 31, 2019, which are exercisable upon vesting. The liability is the total accrued vested shares multiplied by the fair value of the quoted market price of the underlying investment.

Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation

The following table presents the rollforward of our Level 3 contingent consideration liability (in thousands):



	Contingent Consideration Liability
Balance at December 31, 2019	$	(2,959	)
Acquisitions	—
Gains (losses) included in earnings ⁽¹⁾	(41		)
Dispositions and settlements	—
Transfers into/out of Level 3 ⁽²⁾	3,000
Balance at June 30, 2020	$	—

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⁽¹⁾	Reported as “other” operating expense in our condensed consolidated statements of operations.

⁽²⁾

Includes JSAV’s contingent consideration associated with the acquisition of BAV in March of 2019. In the first quarter of 2020, BAV fully achieved the operating performance targets during the earn-out period, in accordance with the applicable agreement. On May 6, 2020, the Company executed the Second Amendment to the Asset Purchase Agreement in which we agreed to immediately pay $1.5 million in cash and modified certain contingent consideration and stock consideration collar payment terms related to the acquisition of BAV to extend remaining payments of cash or stock on various payment dates through March 2021. Pursuant to the agreement, we paid $1.5 million cash to the BAV sellers on May 7, 2020. The final liability of $1.5 million owed to the sellers of BAV is no longer contingent and is reported in our condensed consolidated balance sheets within “other liabilities”

Effect of Fair Value Measured Liabilities on Statements of Operations and Comprehensive Income (Loss)

The following table summarizes the effect of fair value measured assets and liabilities on our condensed consolidated statements of operations (in thousands):



	Gain (Loss) Recognized
	Three Months Ended June 30,								Six Months Ended June 30,
	2020				2019				2020			2019
Assets
Restricted investment: ⁽¹⁾
Ashford Trust common stock	$	13			$	—			$	(200	)	$	—
Braemar common stock	(24		)		—				(186		)	—
Goodwill	—				—				(170,572		)	—
Intangible assets, net	—				—				(7,641		)	—
Total	(11		)		—				(178,599		)	$	—
Liabilities
Contingent consideration ⁽²⁾	$	(154	)	⁽¹⁾	$	(1,621	)	⁽²⁾	$	(617	)	$	(1,639	)
Subsidiary compensation plan ⁽³⁾	(37		)		—				165			—
Deferred compensation plan ⁽³⁾	(880		)		4,817				2,697			4,077
Total	$	(1,071	)		$	3,196			$	2,245		$	2,438
Net	$	(1,082	)		$	3,196			$	(176,354	)	$	2,438

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⁽¹⁾	Represents the realized loss on shares of common stock of Ashford Trust and Braemar purchased by Remington on the open market and held for the purpose of providing compensation to certain employees.


⁽²⁾	Represents the changes in fair value of the contingent consideration liabilities related to the level of achievement of certain performance targets and stock consideration collars associated with the acquisition of BAV. Changes in the fair value of contingent consideration are reported within “other” operating expense in our condensed consolidated statements of operations. See note 4.

⁽³⁾Reported as a component of “salaries and benefits” in our condensed consolidated statements of operations.

Restricted Investment

The historical cost and approximate fair values, together with gross unrealized gains and losses, of securities restricted for use in our subsidiary compensation plan are as follows (in thousands):



	Historical Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available-for-sale securities:
June 30, 2020
Equity securities ⁽¹⁾	$	1,136	$	10	$	(772	)	$	374

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⁽¹⁾	Distribution of $200,000 of available-for-sale securities were recognized in the six months ended June 30, 2020. Unrealized gains and losses associated with available-for-sale securities are included within “accumulated other comprehensive income” in our condensed consolidated balance sheets.



	Historical Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available-for-sale securities:
December 31, 2019
Equity securities ⁽¹⁾	$	1,309	$	—	$	(114	)	$	1,195

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⁽¹⁾

No distributions of available-for-sale securities occurred as of December 31, 2019. Unrealized losses associated with available-for-sale securities are included within “accumulated other comprehensive income” in our condensed consolidated balance sheets.