Fair Value Measurements

3 Months Ended

Mar. 31, 2017

Fair Value Disclosures [Abstract]

Fair Value Measurements

Note 8. Fair Value Measurements

The following table summarizes our assets and liabilities at March 31, 2017 and December 31, 2016 that are measured at fair value on a recurring basis subsequent to initial recognition and indicates the fair value hierarchy of the valuation techniques utilized by us to determine such fair value (in thousands):

	Level	March 31, 2017			December 31, 2016
Deferred compensation plan assets	1	$	72,890		$	69,912
Corporate and municipal bonds	1	$	52,073		$	44,573
Interest rate swaps	2	$	676		$	529
Contingent purchase price liabilities	3	$	(32,422	)	$	(33,709	)

During the three months ended March 31, 2017 and 2016, there were no transfers between the valuation hierarchy Levels 1, 2 and 3. The following table summarizes the change in Level 3 fair values of our contingent purchase price liabilities for the three months ended March 31, 2017 and 2016 (pre-tax basis) (in thousands):

	2017			2016
Beginning balance – January 1	$	(33,709	)	$	(24,817	)
Additions from business acquisitions		(1,661	)		(1,206	)
Settlement of contingent purchase price liabilities		3,564			2,335
Change in fair value of contingencies		(485	)		1,263
Change in net present value of contingencies		(131	)		(36	)
Ending balance – March 31	$	(32,422	)	$	(22,461	)

Contingent Purchase Price Liabilities

Contingent purchase price liabilities arise from business acquisitions and are classified as Level 3 due to the utilization of a probability weighted discounted cash flow approach to determine the fair value of the contingency. A contingent liability is established for each acquisition that has a contingent purchase price component extending over a term of two to six years. The significant unobservable input used in the fair value measurement of the contingent purchase price liabilities is the future performance of the acquired business. The future performance of the acquired business directly impacts the contingent purchase price that is paid to the seller; thus, performance that exceeds estimates would result in a higher payout, and a performance under estimates would result in a lower payout. Changes in the expected amount of potential payouts are recorded as adjustments to the initial contingent purchase price liability, with the same amount being recorded in the accompanying Consolidated Statements of Comprehensive Income. These liabilities are reviewed quarterly and adjusted if necessary. Refer to Note 12, Acquisitions, for further discussion of contingent purchase price liabilities.

The carrying amounts of our cash and cash equivalents, accounts receivable and accounts payable approximate fair value because of the short maturity of these instruments, and the carrying value of bank debt approximates fair value as the interest rate on the bank debt is variable and approximates current market rates. As a result, the fair value measurement of our bank debt is considered to be Level 2.