10-Q 1 cars-20220331.htm 10-Q 10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

b

For the quarterly period ended March 31, 2022

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

img254245005_0.jpg 

Commission File Number: 001-37869

 

Cars.com Inc.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

81-3693660

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

 

 

 

300 S. Riverside Plaza, Suite 1000

Chicago, Illinois 60606

(Address of principal executive offices)

(312) 601-5000

Registrant’s telephone number, including area code

Securities registered pursuant to Section 12(b) of the Act:

 

 

 

 

 

Title of each class

 

Trading Symbol

 

Name of each exchange on which registered

Common Stock

 

CARS

 

New York Stock Exchange

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

 

Accelerated filer

 

Non-accelerated filer

 

 

Smaller reporting company

 

 

 

 

 

Emerging growth company

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No

As of April 28, 2022, the registrant had 69,492,015 shares of common stock, $0.01 par value per share, outstanding.

 

 


 

Table of Contents

 

 

 

Page

PART I.

FINANCIAL INFORMATION

2

Item 1.

Financial Statements (unaudited):

2

 

Consolidated Balance Sheets

2

 

Consolidated Statements of Income

3

 

Consolidated Statements of Comprehensive Income

4

 

Consolidated Statements of Stockholders’ Equity

5

 

Consolidated Statements of Cash Flows

6

 

Notes to the Consolidated Financial Statements (Unaudited)

7

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

17

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

23

Item 4.

Controls and Procedures

23

PART II.

OTHER INFORMATION

24

Item 1.

Legal Proceedings

24

Item 1A.

Risk Factors

24

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

24

Item 3.

Defaults Upon Senior Securities

24

Item 4.

Mine Safety Disclosures

24

Item 5.

Other Information

24

Item 6.

Exhibits

25

Signatures

26

 

 

 

1


 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements (unaudited).

Cars.com Inc.

Consolidated Balance Sheets

(In thousands, except per share data)

 

 

 

March 31, 2022

 

 

December 31, 2021

 

 

 

(unaudited)

 

 

 

 

Assets:

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

30,453

 

 

$

39,069

 

Accounts receivable, net

 

 

96,013

 

 

 

98,893

 

Prepaid expenses

 

 

8,509

 

 

 

7,810

 

Other current assets

 

 

3,428

 

 

 

1,665

 

Total current assets

 

 

138,403

 

 

 

147,437

 

Property and equipment, net

 

 

42,949

 

 

 

43,005

 

Goodwill

 

 

101,763

 

 

 

26,227

 

Intangible assets, net

 

 

764,564

 

 

 

769,424

 

Investments and other assets, net

 

 

21,538

 

 

 

21,112

 

Total assets

 

$

1,069,217

 

 

$

1,007,205

 

Liabilities and stockholders' equity:

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

16,810

 

 

$

15,420

 

Accrued compensation

 

 

10,124

 

 

 

23,612

 

Current portion of long-term debt, net

 

 

10,226

 

 

 

8,941

 

Other accrued liabilities

 

 

58,642

 

 

 

46,317

 

Total current liabilities

 

 

95,802

 

 

 

94,290

 

Noncurrent liabilities:

 

 

 

 

 

 

Long-term debt, net

 

 

499,182

 

 

 

457,383

 

Other noncurrent liabilities

 

 

78,146

 

 

 

57,512

 

Total noncurrent liabilities

 

 

577,328

 

 

 

514,895

 

Total liabilities

 

 

673,130

 

 

 

609,185

 

Commitments and contingencies

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

Preferred Stock at par, $0.01 par value; 5,000 shares authorized; no shares
   issued and outstanding as of March 31, 2022 and December 31, 2021,
   respectively

 

 

 

 

 

 

Common Stock at par, $0.01 par value; 300,000 shares authorized; 69,803 and
   
69,170 shares issued and outstanding as of March 31, 2022 and
   December 31, 2021, respectively

 

 

698

 

 

 

692

 

Additional paid-in capital

 

 

1,537,231

 

 

 

1,544,712

 

Accumulated deficit

 

 

(1,141,042

)

 

 

(1,145,382

)

Accumulated other comprehensive loss

 

 

(800

)

 

 

(2,002

)

Total stockholders' equity

 

 

396,087

 

 

 

398,020

 

Total liabilities and stockholders' equity

 

$

1,069,217

 

 

$

1,007,205

 

 

The accompanying notes are an integral part of the Consolidated Financial Statements.

 

2


 

Cars.com Inc.

Consolidated Statements of Income

(In thousands, except per share data)

(Unaudited)

 

 

 

Three Months Ended March 31,

 

 

 

2022

 

 

2021

 

Revenue:

 

 

 

 

 

 

  Dealer

 

$

140,416

 

 

$

132,958

 

  OEM and National

 

 

15,174

 

 

 

18,069

 

  Other

 

 

2,617

 

 

 

2,268

 

     Total revenue

 

 

158,207

 

 

 

153,295

 

Operating expenses:

 

 

 

 

 

 

  Cost of revenue and operations

 

 

27,752

 

 

 

27,831

 

  Product and technology

 

 

21,307

 

 

 

16,760

 

  Marketing and sales

 

 

57,094

 

 

 

53,211

 

  General and administrative

 

 

16,560

 

 

 

13,266

 

  Depreciation and amortization

 

 

24,553

 

 

 

25,680

 

     Total operating expenses

 

 

147,266

 

 

 

136,748

 

         Operating income

 

 

10,941

 

 

 

16,547

 

Nonoperating expense:

 

 

 

 

 

 

  Interest expense, net

 

 

(9,330

)

 

 

(10,001

)

  Other income, net

 

 

208

 

 

 

38

 

     Total nonoperating expense, net

 

 

(9,122

)

 

 

(9,963

)

       Income before income taxes

 

 

1,819

 

 

 

6,584

 

       Income tax (benefit) expense

 

 

(2,521

)

 

 

1,306

 

          Net income

 

$

4,340

 

 

$

5,278

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

Basic

 

 

69,463

 

 

 

67,787

 

Diluted

 

 

70,899

 

 

 

70,254

 

Earnings per share:

 

 

 

 

 

 

Basic

 

$

0.06

 

 

$

0.08

 

Diluted

 

 

0.06

 

 

 

0.08

 

The accompanying notes are an integral part of the Consolidated Financial Statements.

 

3


 

Cars.com Inc.

Consolidated Statements of Comprehensive Income

(In thousands)

(Unaudited)

 

 

Three Months Ended March 31,

 

 

2022

 

 

2021

 

Net income

$

4,340

 

 

$

5,278

 

Other comprehensive income, net of tax:

 

 

 

 

 

Reclassification of accumulated other comprehensive loss on interest rate swap into
    Net income

 

1,202

 

 

 

1,200

 

Total other comprehensive income

 

1,202

 

 

 

1,200

 

Comprehensive income

$

5,542

 

 

$

6,478

 

 

The accompanying notes are an integral part of the Consolidated Financial Statements.

4


 

Cars.com Inc.

Consolidated Statements of Stockholders’ Equity

(In thousands)

(Unaudited)

 

 

Preferred Stock

 

 

Common Stock

 

 

Additional
Paid-In

 

 

Accumulated

 

 

Accumulated
Other
Comprehensive

 

 

Stockholders'

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Loss

 

 

Equity

 

Balance at December 31, 2021

 

 

 

$

 

 

 

69,170

 

 

$

692

 

 

$

1,544,712

 

 

$

(1,145,382

)

 

$

(2,002

)

 

$

398,020

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,340

 

 

 

 

 

 

4,340

 

Other comprehensive income, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,202

 

 

 

1,202

 

Repurchases of common stock

 

 

 

 

 

 

 

(338

)

 

 

(3

)

 

 

(4,997

)

 

 

 

 

 

 

 

 

(5,000

)

Shares issued in connection with
   stock-based compensation plans, net

 

 

 

 

 

 

 

971

 

 

 

9

 

 

 

(7,705

)

 

 

 

 

 

 

 

 

(7,696

)

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

5,221

 

 

 

 

 

 

 

 

 

5,221

 

Balance at March 31, 2022

 

 

 

 

 

 

 

69,803

 

 

 

698

 

 

 

1,537,231

 

 

 

(1,141,042

)

 

 

(800

)

 

 

396,087

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred Stock

 

 

Common Stock

 

 

Additional
Paid-In

 

 

Accumulated

 

 

Accumulated
Other
Comprehensive

 

 

Stockholders'

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Loss

 

 

Equity

 

Balance at December 31, 2020

 

 

 

$

 

 

 

67,387

 

 

$

674

 

 

$

1,530,493

 

 

$

(1,156,173

)

 

$

(6,804

)

 

$

368,190

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5,278

 

 

 

 

 

 

5,278

 

Other comprehensive income, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,200

 

 

 

1,200

 

Shares issued in connection with
   stock-based compensation plans, net

 

 

 

 

 

 

 

1,144

 

 

 

11

 

 

 

(5,641

)

 

 

 

 

 

 

 

 

(5,630

)

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

4,978

 

 

 

 

 

 

 

 

 

4,978

 

Balance at March 31, 2021

 

 

 

 

 

 

 

68,531

 

 

 

685

 

 

 

1,529,830

 

 

 

(1,150,895

)

 

 

(5,604

)

 

 

374,016

 

 

The accompanying notes are an integral part of the Consolidated Financial Statements.

 

 

5


 

Cars.com Inc.

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

 

 

Three Months Ended
March 31,

 

 

 

2022

 

 

2021

 

Cash flows from operating activities:

 

 

 

 

 

 

Net income

 

$

4,340

 

 

$

5,278

 

Adjustments to reconcile Net income to Net cash provided by operating activities:

 

 

 

 

 

 

Depreciation

 

 

4,014

 

 

 

4,021

 

Amortization of intangible assets

 

 

20,539

 

 

 

21,659

 

Amortization of accumulated other comprehensive loss on interest rate swap

 

 

1,417

 

 

 

1,417

 

Stock-based compensation

 

 

5,221

 

 

 

4,978

 

Deferred income taxes

 

 

(374

)

 

 

(226

)

Provision for doubtful accounts

 

 

27

 

 

 

129

 

Amortization of debt issuance costs

 

 

816

 

 

 

834

 

Amortization of deferred revenue related to Accu-Trade Acquisition

 

 

(442

)

 

 

 

Other, net

 

 

87

 

 

 

(34

)

Changes in operating assets and liabilities, net of acquisitions:

 

 

 

 

 

 

Accounts receivable

 

 

4,442

 

 

 

282

 

Prepaid expenses and other assets

 

 

(3,073

)

 

 

5,782

 

Accounts payable

 

 

1,081

 

 

 

6,438

 

Accrued compensation

 

 

(13,488

)

 

 

(9,141

)

Other liabilities

 

 

5,751

 

 

 

8,945

 

Net cash provided by operating activities

 

 

30,358

 

 

 

50,362

 

Cash flows from investing activities:

 

 

 

 

 

 

     Payments for acquisitions, net of cash acquired

 

 

(64,770

)

 

 

 

     Purchase of property and equipment

 

 

(4,008

)

 

 

(6,219

)

Net cash used in investing activities

 

 

(68,778

)

 

 

(6,219

)

Cash flows from financing activities:

 

 

 

 

 

 

     Proceeds from revolving loan borrowings

 

 

45,000

 

 

 

 

     Payments of long-term debt

 

 

(2,500

)

 

 

(52,500

)

     Payments for stock-based compensation plans, net

 

 

(7,696

)

 

 

(5,630

)

     Repurchases of common stock

 

 

(5,000

)

 

 

 

     Payments of debt issuance costs and other fees

 

 

 

 

 

(8

)

Net cash provided by (used in) financing activities

 

 

29,804

 

 

 

(58,138

)

Net decrease in cash and cash equivalents

 

 

(8,616

)

 

 

(13,995

)

Cash and cash equivalents at beginning of period

 

 

39,069

 

 

 

67,719

 

Cash and cash equivalents at end of period

 

$

30,453

 

 

$

53,724

 

Supplemental cash flow information:

 

 

 

 

 

 

Cash paid (received) for income taxes

 

$

17

 

 

$

(9,045

)

Cash paid for interest and swap

 

 

2,743

 

 

 

3,503

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of the Consolidated Financial Statements.

6


 

Cars.com Inc.

Notes to the Consolidated Financial Statements

(Unaudited)

NOTE 1. Description of Business and Summary of Significant Accounting Policies

 

Description of Business. Cars.com Inc. (the “Company” or “CARS”) is a leading automotive marketplace platform that provides a robust set of industry specific digital solutions. Through the marketplace, dealer websites and other digital products, the Company showcases dealer inventory, elevates and amplifies dealers’ and automotive manufacturers’ (“OEMs”) brands, connects sellers with the Company’s ready-to-buy audience and empowers shoppers with the resources and information needed to make confident car buying decisions. The Company’s digital solutions strategy builds on the rich data and audience of its digital marketplace to offer media and solutions that drive growth and efficiency for the automotive industry. The Company's portfolio of brands now includes Cars.com™, Dealer Inspire®, DealerRater®, FUEL™, Auto.com™, PickupTrucks.com™, CreditIQ™, Accu-Trade™ and NewCars.com®.

Basis of Presentation. These accompanying unaudited interim Consolidated Financial Statements (“Consolidated Financial Statements”) have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial statements. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to the rules and regulations of the SEC. These Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and the notes thereto for the year ended December 31, 2021, which are included in the Company's Annual Report on Form 10-K dated February 25, 2022 (the “December 31, 2021 Financial Statements”).

 

The significant accounting policies used in preparing these Consolidated Financial Statements were applied on a basis consistent with those reflected in the December 31, 2021 Financial Statements. In the opinion of management, the Consolidated Financial Statements contain all adjustments (consisting of a normal, recurring nature) necessary to present fairly the Company's financial position, results of operations, cash flows and changes in stockholders' equity as of the dates and for the periods indicated. The unaudited results of operations for the three months ended March 31, 2022 are not necessarily indicative of results that may be expected for the year ending December 31, 2022.

 

Use of Estimates. The preparation of the accompanying Consolidated Financial Statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect amounts reported in the Consolidated Financial Statements and accompanying disclosures. Although these estimates are based on management’s best knowledge of current events and actions that the Company may undertake in the future, actual results may differ from those estimates.

Principles of Consolidation. The accompanying Consolidated Financial Statements include the accounts of Cars.com Inc. and its 100% owned subsidiaries. All intercompany transactions and accounts are eliminated in consolidation.

 

Correction of Certain Amounts Relating to Previously Issued Financial Statements. During the three months ended March 31, 2022, the Company identified a $30.8 million overstatement of the valuation allowance recorded against deferred tax assets that originated in 2020. In addition, the Company adjusted 2020 to reflect an immaterial income tax adjustment related to this prior period. The Company has concluded that these items are not material to the previously issued Consolidated Financial Statements and has therefore corrected these prior period amounts as presented in the current period Consolidated Financial Statements. The impact of correcting the items on the related financial statement line items is as follows (in thousands):

 

7


Cars.com Inc.

Notes to the Consolidated Financial Statements (continued)

(Unaudited)

 

Consolidated Balance Sheet

 

 

As of December 31, 2021

 

Financial statement line item

As reported

 

 

Adjustment

 

 

As adjusted

 

Deferred tax liability

$

31,086

 

 

$

(31,086

)

 

$

 

Total noncurrent liabilities

 

545,981

 

 

 

(31,086

)

 

 

514,895

 

Total liabilities

 

640,271

 

 

 

(31,086

)

 

 

609,185

 

 

 

 

 

 

 

 

 

 

Consolidated Balance Sheet and Statement of Stockholders' Equity

 

 

As of December 31, 2021

 

Financial statement line item

As reported

 

 

Adjustment

 

 

As adjusted

 

Accumulated deficit

$

(1,176,468

)

 

$

31,086

 

 

$

(1,145,382

)

Total stockholders' equity

 

366,934

 

 

 

31,086

 

 

 

398,020

 

 

 

 

 

 

 

 

 

 

Consolidated Statement of Stockholders' Equity

 

 

Three Months Ended March 31, 2021

 

Financial statement line item

As reported

 

 

Adjustment

 

 

As adjusted

 

Accumulated deficit balance at December 31, 2020

$

(1,184,187

)

 

$

28,014

 

 

$

(1,156,173

)

Total stockholders' equity balance at December 31, 2020

 

340,176

 

 

 

28,014

 

 

 

368,190

 

Accumulated deficit balance at March 31, 2021

 

(1,178,909

)

 

 

28,014

 

 

 

(1,150,895

)

Total stockholders' equity balance at March 31, 2021

 

346,002

 

 

 

28,014

 

 

 

374,016

 

 

These adjustments had no impact to Net cash provided by operating activities, Net cash used in investing activities or Net cash provided by (used in) financing activities on the Consolidated Statements of Cash Flows. In addition, these adjustments had no impact to the Consolidated Statements of Income and Earnings per share for the three months ended March 31, 2021.

 

NOTE 2. Revenue

 

Revenue Summary. In the table below (in thousands), revenue is disaggregated by major products and services. The Company only has one reportable segment; therefore, further disaggregation is not applicable at this time.

 

 

 

Three Months Ended March 31,

 

Major products and services

 

2022

 

 

2021

 

Subscription advertising and digital solutions

 

$

132,247

 

 

$

125,446

 

Display advertising

 

 

21,049

 

 

 

21,957

 

Pay per lead

 

 

2,417

 

 

 

3,760

 

Other

 

 

2,494

 

 

 

2,132

 

Total revenue

 

$

158,207

 

 

$

153,295

 

 

NOTE 3. Goodwill, Indefinite-lived Intangible Asset and Business Combination

 

The changes in the carrying amount of goodwill and indefinite-lived intangible asset are as follows (in thousands):

 

 

December 31, 2021

 

 

Additions

 

 

Impairment

 

 

March 31, 2022

 

Goodwill

$

26,227

 

 

$

75,536

 

 

$

 

 

$

101,763

 

Indefinite-lived intangible asset

 

390,020

 

 

 

 

 

 

 

 

 

390,020

 

 

Business Combinations. The below transactions were accounted for as business combinations.

 

Accu-Trade Acquisition. On March 1, 2022, the Company acquired certain of the assets and assumed certain liabilities of Accu-Trade, LLC; Accu-Trade Canada, LLC; Galves Market Data; and Headstart Logistics, LLC d/b/a/ MADE Logistics (collectively, “Accu-Trade”), which provides dealers with vehicle VIN-specific valuation and appraisal data, instant guaranteed offer capabilities and logistics technology (the “Accu-Trade Acquisition”).

 

The Company expensed as incurred total acquisition costs of $1.9 million, of which $0.9 million were recorded during the three months ended March 31, 2022. These costs were recorded in General and administrative in the Consolidated Statements of Income.

 

8


Cars.com Inc.

Notes to the Consolidated Financial Statements (continued)

(Unaudited)

 

Preliminary Purchase Price Allocation. The preliminary fair values assigned to the tangible and intangible assets acquired and liabilities assumed were determined based on management’s estimates and assumptions, as well as other information compiled by management, including third-party valuations that utilize customary valuation procedures and techniques, such as the multi-period excess earnings and the relief of royalty methods. These preliminary fair values are subject to change within the one-year measurement period. The Accu-Trade Acquisition purchase price allocation is as follows (in thousands):

 

 

 

Preliminary
Acquisition-date
Fair Value

 

Cash consideration

 

$

64,770

 

Other consideration (1)

 

 

5,300

 

Contingent consideration (2)

 

 

22,505

 

Total purchase consideration

 

$

92,575

 

 

 

 

 

Assets acquired (3)

 

$

1,595

 

Identified intangible assets (4)

 

 

15,679

 

Total assets acquired

 

 

17,274

 

Total liabilities assumed (5)

 

 

(235

)

Net identifiable assets

 

 

17,039

 

Goodwill

 

 

75,536

 

Total purchase consideration

 

$

92,575

 

 

(1)
In connection with the Accu-Trade Acquisition, the Company entered into an agreement to provide one of the former owners with a one-year license to a certain product. The preliminary fair value of the license was determined to be $6.5 million, of which the Company received $1.2 million in cash upon the close of the Accu-Trade Acquisition. The $5.3 million difference between the fair value of $6.5 million and the $1.2 million in cash was recorded as non-cash consideration and the $6.5 million license fee was recorded in Other accrued liabilities as a contract liability on the Consolidated Balance Sheets and will be amortized into Other revenue on the Consolidated Statements of Income over the one-year contract term. The current period revenue related to the non-cash consideration of $5.3 million is a non-cash reconciling item titled Amortization of deferred revenue related to Accu-Trade Acquisition on the Consolidated Statements of Cash Flows.
(2)
As part of the Accu-Trade Acquisition, the Company may be required to pay additional cash and stock consideration to the former owners based on achievement of certain financial targets, which would result in a variable number of shares being issued. The Company has the option to pay consideration in cash or stock. The actual amount to be paid will be based on the acquired business’ future performance to be attained over a three-year performance period. The contingent consideration is classified as Level 3 in the fair value hierarchy. The fair value is measured based on a Monte Carlo simulation based on the following significant inputs: volatility, discount rate and projected financial information.
(3)</