(16) Fair Value Measurements

The following tables provide the financial assets and liabilities carried at fair value measured on a recurring basis as of December 31, 2017 and 2016 using the fair value hierarchy prescribed by U.S. GAAP. The fair value hierarchy has three levels based on the reliability of the inputs used to determine fair value. Level 1 refers to fair values determined based on quoted prices in active markets for identical assets. Level 2 refers to fair values estimated using significant other observable inputs, and Level 3 includes fair values estimated using significant non-observable inputs. An asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.


	Fair Value Measurements at December 31, 2017
	Total		Level 1		Level 2		Level 3
	(In thousands)
Assets
Assets associated with interest rate swap contracts	$	15,621	$	—	$	15,621	$	—
Liabilities
Liabilities associated with interest rate swap contracts	$	(10,861)	$	—	$	(10,861)	$	—
Liabilities associated with acquisition-related contingent consideration	$	(42,614)	$	—	$	—	$	(42,614)


	Fair Value Measurements at December 31, 2016
	Total		Level 1		Level 2		Level 3
	(In thousands)
Assets
Assets associated with interest rate swap contracts	$	14,137	$	—	$	14,137	$	—
Liabilities
Liabilities associated with interest rate swap contracts	$	(30,989)	$	—	$	(30,989)	$	—

As of December 31, 2017, liabilities associated with Level 2 interest rate swap contracts includes $0.1 million related to foreign currency forward contracts.

Below are descriptions of the Company’s valuation methodologies for assets and liabilities measured at fair value. The methods described below may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date.

Cash and cash equivalents, accounts and notes receivable, net of the allowance for doubtful accounts, prepaid expenses, deferred costs, and other current assets, accounts payable, accrued liabilities, and other current liabilities. These financial instruments are not carried at fair value, but are carried at amounts that approximate fair value due to their short-term nature and generally negligible credit risk.

Acquisition-related intangible assets. The estimated fair values of acquisition-related intangible assets are valued using significant non-observable inputs (Level 3 inputs). Intangible assets subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. An assessment of non-amortized intangible assets is performed on an annual basis, or more frequently based on the occurrence of events that might indicate a potential impairment.

Acquisition related contingent consideration. Liabilities from acquisition-related contingent consideration are estimated by using a Monte Carlo simulation and market observable, as well as internal projections, and other significant non-observable (Level 3) inputs based on the Company’s best estimate of future operational results upon which the payment of these obligations are contingent. As of December 31, 2017, the estimated fair value of the Company’s acquisition-related contingent consideration liability was approximately $42.6 million. For additional information related to the Spark acquisition contingent consideration, see Note 2. Acquisitions and Divestitures.

Long-term debt. The carrying amount of the long-term debt balance related to borrowings under the Company’s revolving credit facility approximates fair value due to the fact that any outstanding borrowings are subject to short-term floating interest rates. As of December 31, 2017, the fair value of the 2020 Notes, 2022 Notes, and 2025 Notes (see Note 10. Long-Term Debt) totaled $257.8 million, $240.0 million, and $272.3 million, respectively, based on the quoted prices in markets that are not active (Level 2 input) for these notes as of that date.

Additions to asset retirement obligations liability. The Company estimates the fair value of additions to its ARO liability using expected future cash outflows discounted at the Company’s credit-adjusted risk-free interest rate. Liabilities added to ARO are measured at fair value at the time of the asset installations using significant non-observable (Level 3) inputs. These liabilities are evaluated periodically based on estimated current fair value. Amounts added to the ARO liability during the years ended December 31, 2017 and 2016 totaled $11.7 million and $8.7 million, respectively.

Interest rate swap and foreign currency forward contracts. As of December 31, 2017, the fair value of the Company’s interest rate swap and foreign currency forward contracts was an asset of $15.6 million and a liability of $10.9 million (includes approximately $0.1 million related to the foreign currency forward contracts). These financial instruments are carried at fair value and calculated as the present value of amounts estimated to be received or paid to a marketplace participant in a selling transaction. These derivatives are valued using pricing models based on significant other observable (Level 2 inputs), while taking into account the creditworthiness of the party that is in the liability position with respect to each trade. For additional information related to the valuation process of this asset or liability, see Note 15. Derivative Financial Instruments.