Quarterly report pursuant to Section 13 or 15(d)

FAIR VALUE MEASUREMENTS

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FAIR VALUE MEASUREMENTS
6 Months Ended
Jun. 30, 2022
FAIR VALUE MEASUREMENTS  
FAIR VALUE MEASUREMENTS

NOTE 8.FAIR VALUE MEASUREMENTS

The Company’s financial instruments consist of cash and cash equivalents, trade receivables, financed and notes receivable, accounts payable, other short-term liabilities, and debt. The carrying amounts of these financial instruments

approximate their respective fair values. The Company also has derivative instruments as further discussed in Note 10. Derivative Instruments and Hedging Activities.

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.

As of June 30, 2022, and December 31, 2021, we had investments in international bonds of $11.4 million and $12.6 million, respectively. These bonds are accounted for as available for sale securities and are level 2 assets under the fair value hierarchy. At December 31, 2021, the entire investment was recorded in other current assets. Management reassessed their intentions on the investment and at June 30, 2022, $0.5 million was included in other current assets and $10.9 million was included in other assets. The bonds are recorded at fair market value with unrealized losses of $0.4 million and $1.0 million included in other comprehensive income during the three months and six months ended June 30, 2022.

As of June 30, 2022 and December 31, 2021, the Company had $22.7 million and $25.2 million of acquisition holdback and earnout liabilities payable to former owners of acquired companies, respectively. The earnout liabilities were discounted to reflect the expected probability of payout, and both earnout and holdback liabilities were discounted to their net present value on the Company’s books and are considered level 3 liabilities. The table below presents a summary of the changes in fair value for these liabilities.

Three Months Ended

Six Months Ended

June 30, 

June 30, 

(in thousands)

    

2022

    

2021

    

2022

    

2021

Beginning balance

$

23,399

$

32,976

$

25,156

$

35,744

New acquisitions and revaluations

 

1,574

 

1,906

 

2,750

 

3,973

Payouts

 

(2,145)

 

(7,947)

 

(5,196)

 

(12,873)

Interest on outstanding contingencies

 

122

 

258

 

247

 

537

Charge offset, forfeit and other

 

(208)

 

(136)

 

(215)

 

(324)

Ending balance

$

22,742

$

27,057

$

22,742

$

27,057