Fair Value Measurements

12 Months Ended

Dec. 31, 2017

Fair Value Disclosures [Abstract]

Fair Value Measurements

FAIR VALUE MEASUREMENTS

Financial assets and liabilities reported at fair value on a recurring basis include the following (in thousands):

December 31,	2017		2016
Lumber derivative contracts (Level 1)	$	9	$	—
Contingent earn-out receivable (based on Level 3 inputs):
Current portion	$	373	$	359
Noncurrent portion	61		202
Total	$	434	$	561
Contingent earn-out payable (based on Level 3 inputs):	$	—	$	(967	)

Our Level 1 assets (lumber derivative contracts) fair value is based upon quoted market prices.

The following table summarizes the activity for our Level 3 assets and liabilities measured on a recurring basis (in thousands):

	Earn-Out Receivable (1)			Earn-Out Payable (2)
Balance at December 31, 2015	$	877		$	—
Add – fair value of earn-out liability at closing of EBGL Acquisition	—			(943		)
Subtract – net decrease based on re-assessments (included in earnings)	(4		)	—
Add – net increase based on re-assessments (included in earnings)	—			(24		)
Settlements	(312		)	—
Balance at December 31, 2016	561			(967		)
Add – adjustment based on re-assessments	361			—
Add – net decrease based on re-assessments	—			76
Subtract - settlements	(488		)	—
Subtract - amendment (see Note 17)	—			891
Balance at December 31, 2017	$	434		$	—

⁽¹⁾  Earn-out receivable related to the transfer of our test handler product line in 2014 (see Note 7).

⁽²⁾  Earn-out payable related to the EBGL Acquisition in 2016 (see Note 6).

Quantitative information about Level 3 fair value assets and liabilities measured on a recurring basis at December 31, 2017 is summarized in the table below:

Fair Value Asset/Liability	Valuation Technique	Unobservable Input	Amount
Contingent earn-out receivable related to transfer of test handler product line	Discounted cash flow	Total actual revenue for the remaining royalty period Performance weighted average Discount rate	$6.9 million 100% 2.41% to 2.64%

Quantitative information about Level 3 fair value assets measured on a recurring basis at December 31, 2016 is summarized in the table below:

Fair Value Asset/Liability	Valuation Technique	Unobservable Input	Amount
Contingent earn-out receivable related to transfer of test handler product line	Discounted cash flow	Estimated revenue for remaining royalty period Performance weighted average Discount rate	$11 million 60% to 125% 10%
Contingent earn-out payable related to purchase of EBGL	Discounted cash flow	Estimated gross profit for earn-out period Discount rate	$3.4 million 10%

Quantitative information about Level 3 fair value assets and liabilities measured on a nonrecurring basis at December 31, 2017 is summarized in the table below:

Fair Value Asset/Liability	Valuation Technique	Unobservable Input	Amount
Goodwill	Discounted cash flow	Projected annual revenue Annual revenue growth rate Discount rate	$17.5 million 3.0% to 7.1% 13.6%

Quantitative information about Level 3 fair value assets and liabilities measured on a nonrecurring basis at December 31, 2016 is summarized in the table below:

Fair Value Asset/Liability	Valuation Technique	Unobservable Input	Amount
Goodwill	Discounted cash flow	Projected annual revenue Annual revenue growth rate Discount rate	$32 million 0.0% 13.6%

Financial assets reported at fair value on a nonrecurring basis include the following (in thousands):

Years ended December 31,	2017					2016
	Fair Value (Level 3)		Total Gains and (Losses)(1)			Fair Value (Level 3)		Total Gains and (Losses)(2)
Goodwill	$	—	$	(3,020	)	$	—	$	(1,733	)

⁽¹⁾    We recorded a goodwill impairment charge of approximately $3.0 million in year 2017 in connection with the write-off of EBGL goodwill to it's fair value of $0 (see Note 12).

⁽²⁾    We recorded a goodwill impairment charge of approximately $1.7 million in year 2016 in connection with the write-off of the remaining goodwill related to the KBS acquisition to it's fair value of $0 (see Note 12).

The following table summarizes the activity for our Level 3 assets measured on a nonrecurring basis (in thousands):

	Goodwill (1)
Balance at December 31, 2015	$	1,733
Subtract – KBS goodwill impairment recorded at June 30, 2016 (included in earnings)	(1,733		)
Add - acquisition of EBGL	3,020
Balance at December 31, 2016	3,020
Subtract - EBGL goodwill impairment recorded at June 30, 2017 (included in earnings)	(3,020		)
Balance at December 31, 2017	$	—

⁽¹⁾  For more information regarding Goodwill, see Note 12.