Note 10 - Fair Value Measurement

6 Months Ended

Jun. 30, 2020

10. Fair Value Measurement

The following tables summarize significant assets and liabilities measured at fair value in the condensed consolidated balance sheets on a recurring basis for each of the fair value levels (in thousands):

	*Fair Value Measurement at Reporting Date Using*
June 30, 2020	*Level 1*		*Level 2*		*Level 3*		*Total*
Cash equivalents
Money market funds	$	104,704	$	—	$	—	$	104,704
Other current assets
Commodity swap		—		598		—		598
Other noncurrent assets
Restricted cash		1,512		—		—		1,512
Total assets	$	106,216	$	598	$	—	$	106,814
Accrued and other current liabilities
Interest rate swap	$	—	$	9,058	$	—	$	9,058
Total liabilities	$	—	$	9,058	$	—	$	9,058

December 31, 2019
Cash equivalents
Money market funds	$	94,696	$	—	$	—	$	94,696
Other noncurrent assets
Restricted cash		5,835		—		—		5,835
Total assets	$	100,531	$	—	$	—	$	100,531
Accrued and other current liabilities
Interest rate swap	$	—	$	4,603	$	—	$	4,603
Total liabilities	$	—	$	4,603	$	—	$	4,603

June 30, 2019
Cash equivalents
Money market funds	$	17,790	$	—	$	—	$	17,790
Other noncurrent assets
Restricted cash		5,825		—		—		5,825
Total assets	$	23,615	$	—	$	—	$	23,615
Accrued and other current liabilities
Interest rate swap	$	—	$	4,985	$	—	$	4,985
Total liabilities	$	—	$	4,985	$	—	$	4,985

Interest Rate Swaps

In connection with the Third Amended and Restated Credit Agreement (as discussed further in Note 14) we entered into two interest rate swaps designated as cash flow hedges with an effective date of May 2018. The two cash flow hedges had a combined initial notional amount of $150.0 million and mature in May 2023. The interest rate swaps are designed to convert the interest rate on the term loan from a variable interest rate of LIBOR plus an applicable margin to a fixed rate of 2.76% plus the same applicable margin. The interest rate swap is measured at fair value on the consolidated balance sheets using the income approach, which discounts the future net cash settlements expected under the derivative contracts to a present value. These valuations primarily utilize indirectly observable inputs, including contractual terms, interest rates and yield curves observable at commonly quoted intervals.

Other Assets and Liabilities

The carrying values and estimated fair values of financial instruments that are not required to be recorded at fair value in the condensed consolidated balance sheets were as follows:

June 30, 2020

December 31, 2019

June 30, 2019

(in thousands)

Fair Value Hierarchy

Carrying Value

Fair Value

Carrying Value

Fair Value

Carrying Value

Fair Value

Assets:

Held-to-maturity marketable securities (1)

Level 1
$ 5,896 $ 5,896 $ 32,799 $ 32,792 $ 61,037 $ 60,887

Liabilities (including current maturities):

2.75% Convertible Notes (2),(3)

Level 2
$ 196,946 $ 184,554 $ 193,696 $ 249,895 $ — $ —

Credit Agreement - term loan (2)

Level 3
135,000 137,116 138,750 139,042 142,500 143,109

Credit Agreement - revolving credit facility (2)

Level 3
75,000 76,291 25,000 25,043 220,000 220,597

2019 Notes (2)

Level 3
— — — — 40,000 40,571

(1) All marketable securities were classified as held-to-maturity and consisted of U.S. Government and agency obligations as of June 30, 2020 and December 31, 2019, and included corporate bonds as of June 30, 2019.

(2) The fair values of the 2019 Notes, Credit Agreement term loan and revolving credit facility are based on borrowing rates available to us for long-term loans with similar terms, average maturities, and credit risk. The fair value of the 2.75% Convertible Notes is based on the median price of the notes in an active market as of June 30, 2020 and December 31, 2019. See Note 14 for definitions of, and more information about, the 2019 Notes, Credit Agreement and 2.75% Convertible Notes.

(3) Excluded from the carrying value is $33.1 and $36.3 million debt discount of as of June 30, 2020 and December 31, 2019, respectively, related to the 2.75% Convertible Notes (See note 14).

As disclosed in Note 4, we recorded fair value adjustments related to nonfinancial assets measured at fair value on a nonrecurring basis during the six months ended June 30, 2020. During the three months ended June 30, 2020, we did not record any fair value adjustments related to nonfinancial assets and liabilities measured at fair value on a nonrecurring basis. During the three and six months ended June 30, 2019, we did not record any fair value adjustments related to nonfinancial assets and liabilities measured at fair value on a nonrecurring basis.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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