FAIR VALUE MEASUREMENTS (Tables)

3 Months Ended

Mar. 31, 2020

Schedule of assets and liabilities measured at fair value on a recurring basis


	March 31, 2020
	Quoted Prices in		Other Observable		Unobservable
	Active Markets		Inputs		Inputs
$s in thousands	(Level 1)		(Level 2)		(Level 3)		Total
Assets:
Fixed-income securities ⁽¹⁾	$	2,424	$	1,842	$	—	$	4,266
Money market funds ⁽²⁾		60,394		—		—		60,394
Total	$	62,818	$	1,842	$	—	$	64,660

Liabilities:
Interest rate swap agreement ⁽³⁾	$	—	$	9,055	$	—	$	9,055
Contingent consideration ⁽⁴⁾		—		—		6,911		6,911
Total	$	—	$	9,055	$	6,911	$	15,966


	December 31, 2019
	Quoted Prices in		Other Observable		Unobservable
	Active Markets		Inputs		Inputs
$s in thousands	(Level 1)		(Level 2)		(Level 3)		Total
Assets:
Fixed-income securities ⁽¹⁾	$	2,380	$	1,830	$	—	$	4,210
Money market funds ⁽²⁾		859		—		—		859
Total	$	3,239	$	1,830	$	—	$	5,069

Liabilities:
Interest rate swap agreement ⁽³⁾	$	—	$	1,176	$	—	$	1,176
Contingent consideration ⁽⁴⁾		—		—		8,283		8,283
Total	$	—	$	1,176	$	8,283	$	9,459

(1)

We invest a portion of our Restricted cash and investments in fixed-income securities, including U.S. Treasury and U.S. agency securities. We measure the fair value of U.S. Treasury securities using quoted prices for identical assets in active markets. We measure the fair value of U.S. agency securities using observable market activity for similar assets. The fair value of our fixed-income securities approximates our cost basis in the investments.

(2)

We invest portions of our Cash and cash equivalents and Restricted cash and investments in money market funds. We measure the fair value of these money market fund investments using quoted prices for identical assets in active markets. The portion of Restricted cash and investments that is invested in money market funds is considered restricted cash for purposes of reconciling the beginning-of-period and end-of-period amounts presented in the Company’s consolidated statements of cash flows.

(3)

In order to manage interest rate exposure, we entered into an interest rate swap agreement in March 2020 that effectively converts a portion of our variable-rate debt to a fixed interest rate. The swap is designated as a highly-effective cash flow hedge, with gains and losses deferred in other comprehensive income to be recognized as an adjustment to interest expense in the same period that the hedged interest payments affect earnings. The interest rate swap has an effective date of March 31, 2020 in an initial notional amount of $500.0 million. The fair value of the interest rate swap agreement represents the difference in the present value of cash flows calculated (i) at the contracted interest rates and (ii) at current market interest rates at the end of the period. We calculate the fair value of interest rate swap agreements quarterly based on the quoted market price for the same or similar financial instruments. The fair value of the interest rate swap agreement is included in Other long-term liabilities in the Company’s consolidated balance sheet.

(4)

Our contingent consideration liabilities represent the estimated fair value of potential future payments the Company may be required to remit under the terms of historical purchase agreements entered into by NRC prior to the NRC Merger. The payments are contingent on the acquired businesses’ achievement of annual earnings targets in certain years and other events considered in the purchase agreements. The fair value of our contingent consideration liabilities are calculated using either a Monte Carlo simulation or modified Black-Scholes analyses based on earnings projections for the respective earn-out periods, corresponding earnings thresholds, and approximate timing of payments as outlined in the purchase agreements. The analyses utilize the following assumptions: (i) expected term; (ii) risk-adjusted net sales or earnings; (iii) risk-free interest rate; and (iv) expected volatility of earnings. Estimated payments, as determined through the respective models, are discounted by a credit spread assumption to account for credit risk. At March 31, 2020, the fair value of our contingent consideration liabilities of $5.5 million and $1.4 million were included in Accrued liabilities and Other long-term liabilities, respectively. At December 31, 2019, the fair value of our contingent consideration liabilities of $6.6 million and $1.7 million were included in Accrued liabilities and Other long-term liabilities, respectively. We revalue our contingent consideration payments each period and any increases or decreases to fair value are included in Selling, general and administrative expenses in our consolidated statements of operations. Fair values may be impacted by certain unobservable inputs, most significantly with regard to discount rates, expected volatility and historical and projected performance. Significant changes to these inputs in isolation could result in a significantly different fair value measurement.

Schedule of changes in Level 3 liabilities measured at fair value


	Three Months Ended
$s in thousands	March 31, 2020
Contingent consideration, beginning of period	$	8,283
Change in fair value of contingent consideration		(1,127)
Foreign currency translation		(245)
Contingent consideration, end of period	$	6,911