Fair Value Measurement
 9 Months Ended
Sep. 30, 2016
Fair Value Disclosures [Abstract]  
Fair Value Measurement
Fair Value Measurement
The following table provides the assets and liabilities carried at fair value measured on a recurring basis at September 30, 2016 and December 31, 2015 (in thousands):
 
Fair Value Measurements at September 30, 2016
 
Carrying
Value
 
Level 1
 
Level 2
 
Level 3
Assets:
 
 
 
 
 
 
 
  Equity method investment - FOX
$
197,742

 
$
197,742

 
$
—

 
$
—

Liabilities:
 
 
 
 
 
 
 
Put option of noncontrolling shareholder (1)
(50
)
 
—

 
—

 
(50
)
Put option of noncontrolling shareholders (2)
(50
)
 
—

 
—

 
(50
)
Contingent consideration - acquisitions (3)
(4,830
)
 
—

 
—

 
(4,830
)
Interest rate swap
(18,691
)
 
—

 
(18,691
)
 
—

Total recorded at fair value
$
174,121

 
$
197,742

 
$
(18,691
)
 
$
(4,930
)

(1) 
Represents a put option issued to a noncontrolling shareholder in connection with the 5.11 Tactical acquisition.
(2) 
Represents put options issued to noncontrolling shareholders in connection with the Liberty acquisition.
(3) 
Represents potential earn-outs payable by Sterno Products for the acquisition of NII and Ergobaby in connection with their acquisition of Baby Tula.

 
Fair Value Measurements at December 31, 2015
 
Carrying
Value
 
Level 1
 
Level 2
 
Level 3
Assets:
 
 
 
 
 
 
 
Equity method investment - FOX
$
249,747

 
$
249,747

 
$
—

 
$
—

Liabilities:

 

 

 

Put option of noncontrolling shareholders
(50
)
 
—

 
—

 
(50
)
Interest rate swaps
(13,483
)
 
—

 
(13,483
)
 
—

Total recorded at fair value
$
236,214

 
$
249,747

 
$
(13,483
)
 
$
(50
)

Reconciliations of the change in the carrying value of the Level 3 fair value measurements from January 1, 2016 through September 30, 2016 are as follows (in thousands):

 
2016
Balance at January 1st
$
(50
)
Contingent consideration - acquisition
(1,500
)
Balance at March 31st
$
(1,550
)
Balance at June 30th
$
(1,550
)
Contingent consideration acquisition
(3,780
)
Put option - noncontrolling shareholder
(50
)
Contingent consideration - payment
450

Balance at September 30th
$
(4,930
)

Valuation Techniques
Contingent Consideration:
Sterno Products entered into a contingent consideration arrangement associated with the purchase of NII in January 2016. The earnout provision provides for payments up to $1.8 million over a two year period subsequent to acquisition. Earnings before interest, taxes, depreciation and amortization ("EBITDA") is the performance target defined and measured to determine the earnout payment due, if any, after each defined measurement period. The contingent consideration was valued at $1.5 million using probability weighted models. During the quarter ended September 30, 2016, Sterno paid $0.5 million of the contingent consideration and determined that the remaining fair value of the liability was appropriate.
In connection with the acquisition of Baby Tula in May 2016, Ergobaby entered into a contingent consideration arrangement with the sellers. The earnout provision provides for additional consideration of $8.2 million if the gross profit for Baby Tula for the 2017 fiscal year exceeds a specified level. No earnout amount will be paid if the specified gross profit level is not met. Ergobaby valued the contingent consideration at a fair value of $3.8 million using a a probability weighted option pricing model.
The Company has not changed its valuation techniques in measuring the fair value of any of its other financial assets and liabilities during the period. For details of the Company’s fair value measurement policies under the fair value hierarchy, refer to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015.

2014 Term Loan

At September 30, 2016, the carrying value of the principal under the Company’s outstanding Term Loans, including the current portion, was $567.1 million, which approximates fair value because it has a variable interest rate that reflects market changes in interest rates and changes in the Company's net leverage ratio. The estimated fair value of the outstanding 2014 Term Loan is based on quoted market prices for similar debt issues and is, therefore, classified as Level 2 in the fair value hierarchy.

Nonrecurring Fair Value Measurements

The following table provides the assets carried at fair value measured on a non-recurring basis as of September 30, 2016.

 
 
 
 
 
 
 
 
 
Expense
 
Fair Value Measurements at September 30, 2016
 
Three months ended
 
Nine months ended
(in thousands)
Carrying
Value
 
Level 1
 
Level 2
 
Level 3
 
September 30, 2016
 
 
 
 
 
 
 
 
 
 
 
 
Property, Plant and Equipment (1)
—

 
—

 
—

 
—

 
—

 
375

Tradename (1)
—

 
—

 
—

 
—

 
—

 
20

Technology (1)
—

 
—

 
—

 
—

 
—

 
3,460

Customer relationships (1)
—

 
—

 
—

 
—

 
—

 
2,007

 

(1) Represents the fair value of the respective assets of the Orbitbaby product line. Refer to Note H "Goodwill and Other Intangible Assets" for a description of the loss on disposal of long-lived asset charge recognized during 2016.