FAIR VALUE OF FINANCIAL INSTRUMENTS

Fair value is defined as the price that would be received upon sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Depending on the nature of the asset or liability, various techniques and assumptions can be used to estimate fair value. The following presents the fair value hierarchy definitions utilized by the Company:



Level 1	—	Quoted prices in active markets for identical assets and liabilities.

Level 2	—	Observable inputs other than quoted prices in active markets for similar assets and liabilities.

Level 3	—	Inputs for which significant valuation assumptions are unobservable in a market and therefore value is based on the best available data, some of which is internally developed and considers risk premiums that a market participant would require.

The following table presents the carrying amount, fair values, and classification level within the fair value hierarchy of financial instruments measured or disclosed at fair value on a recurring basis (in thousands):



	December 31, 2015				December 31, 2014				Level of Fair Value Hierarchy
	Carrying Amount		Fair Value		Carrying Amount		Fair Value		Level of Fair Value Hierarchy
Assets:
Cash and cash equivalents	$	32,774	$	32,774	$	16,293	$	16,293	Level 1
Restricted cash	2,192		2,192		3,151		3,151		Level 1
Foreign currency forward contracts	163		163		307		307		Level 2
Liabilities:
Variable interest rate debt	11,771		11,771		16,225		16,225		Level 2
Foreign currency forward contracts	418		418		629		629		Level 2

The fair value of cash and cash equivalents and restricted cash are based on the fair values of identical assets in active markets. Due to the short period to maturity or the nature of the underlying liability, the fair value of variable interest rate debt approximates their respective carrying amounts. The fair value of foreign currency forward contracts is measured based on observable market inputs such as spot and forward rates. Based on the Company’s continued ability to enter into forward contracts, the markets for the fair value instruments are considered to be active. As of December 31, 2015 and December 31, 2014, there were no significant transfers in and/or out of Level 1 and Level 2.

The following table presents the fair value on the Consolidated Balance Sheets of the foreign currency forward contracts (in thousands):



	December 31, 2015			December 31, 2014
Foreign currency forwards designated as hedges:
Other current assets	$	114		$	237
Accrued expenses	(196		)	(385		)
Foreign currency forwards not designated as hedges:
Other current assets	49			70
Accrued expenses	(222		)	(244		)
Foreign currency forwards, net	$	(255	)	$	(322	)

As described in Note 2. "Acquisitions", the Company completed acquisitions in 2014 and 2013. The fair value measurements for the acquired intangible assets were calculated using discounted cash flow analysis which rely upon significant unobservable Level 3 inputs which include the following:



Unobservable inputs	Range
Discount rate	19.0	%	-	22.0%
Royalty rate	2.0	%	-	3.0%
Long term growth rate	3.0%

The Company applied fair value principles during the goodwill impairment tests performed annually. Step one of the goodwill impairment test consisted of determining a fair value for each of the Company's reporting units. The fair value for the Company's reporting units cannot be determined using readily available quoted Level 1 or Level 2 inputs that are observable or available from active markets. Therefore, the Company used valuation models to estimate the fair values of its reporting units, which use Level 3 inputs. To estimate the fair values of reporting units, the Company uses significant estimates and judgmental factors. The key estimates and factors used in the valuation models include revenue growth rates and profit margins based on internal forecasts, terminal value, WACC, and earnings multiples. As a result of the goodwill impairment test performed during 2014 and 2013, the Company recognized goodwill impairment charges (See Note 7. "Goodwill and Intangible Assets" for more information regarding the Company's goodwill impairment tests).

During 2014, the Company also recognized impairments to intangible assets associated with trade names. The impairment charges were calculated by determining the fair value of these assets. The fair value measurements were calculated using discounted cash flow analysis, which rely upon unobservable inputs classified as Level 3 inputs. The key estimates and factors used in the valuation models, for which the Company used significant estimates and judgmental factors, include revenue growth rates based on internal forecasts, royalty rates and discounts rates (See Note 7. "Goodwill and Intangible Assets" for more information regarding the impairment of intangible assets).

Pension Plan Assets

The fair values and classification of the defined benefit plan assets is as follows (in thousands):



	December 31, 2015
	Total		Level 1		Level 2		Level 3
Growth funds⁽¹⁾	$	37,472	$	37,472	$	—	$	—
Income funds⁽²⁾	23,401		23,401		—		—
Growth and income funds⁽³⁾	83,247		—		83,247		—
Hedge funds⁽⁴⁾	27,071		—		—		27,071
Real estate funds	3,246		769		2,477		—
Other assets	1,514		582		932		—
Cash and cash equivalents	4,056		4,056		—		—
Total	$	180,007	$	66,280	$	86,656	$	27,071



	December 31, 2014
	Total		Level 1		Level 2		Level 3
Growth funds⁽¹⁾	$	43,676	$	43,676	$	—	$	—
Income funds⁽²⁾	25,800		25,800		—		—
Growth and income funds⁽³⁾	81,301		—		81,301		—
Hedge funds⁽⁴⁾	27,820		—		—		27,820
Real estate funds	3,100		707		2,393		—
Other assets	1,401		602		799		—
Cash and cash equivalents	2,883		2,883		—		—
Total	$	185,981	$	73,668	$	84,493	$	27,820

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⁽¹⁾ Growth funds represent a type of fund containing a diversified portfolio of domestic and international equities with a goal of capital appreciation.

⁽²⁾ Income funds represent a type of fund with an emphasis on current income as opposed to capital appreciation. Such funds may contain a variety of domestic and international government and corporate debt obligations, preferred stock, money market instruments and dividend-paying stocks.

⁽³⁾ Growth and income funds represent a type of fund containing a combination of growth and income securities.

⁽⁴⁾ Hedge funds represent a managed portfolio of investments that use advanced investment strategies such as leveraged, long, short and derivative positions in both domestic and international markets with the goal of generating high returns. These funds are subject to quarterly redemptions and advanced notification requirements, as well as the right to delay redemption until sufficient fund liquidity exists.

A summary of the changes in the fair value of the defined benefit plans assets classified within Level 3 of the valuation hierarchy is as follows (in thousands):



	Year Ended December 31,
	2015			2014
Balance at beginning of year	$	27,820		$	25,624
Purchases	1,750			1,500
Sales and settlements	(2,300		)	(420		)
Unrealized (losses) gains	(199		)	1,117
Realized (losses)	—			(1		)
Balance at end of year	$	27,071		$	27,820

Most of the defined benefit pension plan's Level 1 assets are debt and equity investments that are traded in active markets, either domestically or internationally. They are measured at fair value using closing prices from active markets. The Level 2 assets are typically investments in pooled funds, which are measured based on the value of their underlying assets that are publicly traded with observable values. The fair value of the Level 3 plan assets are measured by compiling the portfolio holdings and independently valuing the securities in those portfolios.