Annual report pursuant to Section 13 and 15(d)

Summary of Significant Accounting Policies (Tables)

Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2015

Changes in the Company’s warranty liability for the years ended December 31, 2015, 2014 and 2013 are as follows:


(in thousands)	Year Ended December 31,
	2015			2014			2013
Warranty liability at January 1,	$	443		$	597		$	346
Warranty liability assumed in acquisitions		—			—			101
Revision of warranty estimate		(100	)		(185	)		—
Provisions for current year sales		233			196			348
Current year claims		(153	)		(165	)		(198	)

Warranty liability at December 31,	$	423		$	443		$	597

Fair Value Remeasurement Based on Significant Inputs Not Observable, Level 3 Measurement

The Company determines the fair value of certain purchase price obligations on a recurring basis based on a probability-weighted discounted cash flow analysis and Monte Carlo simulation. The fair value remeasurement is based on significant inputs not observable in the market and thus represents a Level 3 measurement as defined in the fair value hierarchy. In each period, the Company reassesses its current estimates of performance relative to the stated targets and adjusts the liability to fair value. Any such adjustments are included in Acquisition, severance and transition costs, a component of Selling, general and administrative expense in the Consolidated Statement of Operations. Changes in the fair value of purchase price obligations for the year ended December 31, 2015 were as follows:


(in thousands)	2015
Fair value, January 1	$	12,355
Fair value of contingent consideration issued during the period		1,800
Fair value of acquisition liabilities paid during the period		(6,566	)
Change in fair value		864

Fair value, December 31	$	8,453

Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques

The following table presents quantitative information about Level 3 fair value measurements as of December 31, 2015:


(in thousands)	Fair Value at December 31, 2015		Valuation Technique	Unobservable Inputs
Earnout liabilities	$	7,231	Income approach	Discount rate – 15.5%

Stock distribution price floor		1,222	Monte Carlo	Volatility – 60%
			simulation	Risk free rate – 1.2%
				Dividend yield – 0%

Fair value, December 31, 2015	$	8,453

Summary of Changes in Allowance for Doubtful Accounts

The following summarizes the changes in the allowance for doubtful accounts for the periods indicated.


(in thousands)
	2015			2014			2013
Allowance for doubtful accounts at January 1,	$	108		$	210		$	57
Additions		1,260			350			170
Write-offs		(363	)		(452	)		(17	)

Allowance for doubtful accounts at December 31,	$	1,005		$	108		$	210

Estimated Useful Lives of Property and Equipment

The estimated useful lives of property and equipment are as follows:


		Estimated useful lives
Machinery and equipment		3-7 years
Furniture and fixtures		5-7 years
Computers and software		3-7 years
Motor vehicles		5 years
Leasehold improvements		Lesser of lease term or estimated useful life

Valuation Assumptions used in Computation of Stock Option Expense

For the year ended December 31, 2014, the Company computed expense for each group utilizing the following assumptions:


	Year Ended December 31,
	2014
Expected volatility		94.2	%
Weighted-average volatility		94.2	%
Risk-free interest rate		1.64	%
Expected dividend yield		0	%
Expected life in years		3.5 – 8.6