Cadre Holdings, Inc. Fair Value Disclosure
| 5. | FAIR VALUE MEASUREMENTS |
Assets and liabilities measured at fair value on a recurring basis as of December 31, 2024 and 2023 consisted of the following:
December 31, 2024 | December 31, 2023 | |||||||||||||||||||||||
Carrying | Fair Value | Carrying | Fair Value | |||||||||||||||||||||
| Amount |
| Level 1 |
| Level 2 |
| Level 3 |
| Amount |
| Level 1 |
| Level 2 |
| Level 3 | |||||||||
Assets: |
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Money market funds | $ | 110,671 | $ | 110,671 | $ | — | $ | — | $ | 74,451 | $ | 74,451 | $ | — | $ | — | ||||||||
Derivative instruments (Note 11) | $ | 4,465 | $ | — | $ | 4,465 | $ | — | $ | 6,505 | $ | — | $ | 6,505 | $ | — | ||||||||
Liabilities: | ||||||||||||||||||||||||
Derivative instruments (Note 11) | $ | — | $ | — | $ | — | $ | — | $ | 427 | $ | — | $ | 427 | $ | — | ||||||||
Contingent consideration (Note 2) | $ | 3,211 | $ | — | $ | — | $ | 3,211 | $ | — | $ | — | $ | — | $ | — | ||||||||
There were no transfers of assets or liabilities between levels during the years ended December 31, 2024 and 2023.
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.