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Note 10 - Fair Value Measurements
 6 Months Ended
Jun. 30, 2021
Notes to Financial Statements  
Fair Value Disclosures [Text Block]

Note 10—Fair Value Measurements

 

We follow fair value measurement authoritative accounting guidance for measuring fair values of assets and liabilities in financial statements. We have consistently used the same valuation techniques for all periods presented. Please see Note 10—Fair Value Measurements in our Annual Report for further discussion.

 

A summary of financial assets and liabilities that are measured at fair value on a recurring basis, as of June 30, 2021 and  December 31, 2020, were as follows (in thousands):

 

      

Significant

        
  

Quoted Prices

 

Other

 

Significant

    
  

in Active

 

Observable

 

Unobservable

    
  

Markets

 

Inputs

 

Inputs

    
  

(Level 1)

 

(Level 2)

 

(Level 3)

 

Total

June 30, 2021

                

Assets:

                

Investments:

                

Cash surrender value of life insurance policies - deferred compensation plan

 $— $27,261 $— $27,261

Marketable securities - other

 2 — — 2

Liabilities:

                

Deferred compensation plan

 — 20,185 — 20,185

December 31, 2020

                

Assets:

                

Investments:

                

Cash surrender value of life insurance policies - deferred compensation plan

 $— $26,167 $— $26,167

Marketable securities - other

 3 — — 3

Liabilities:

                

Deferred compensation plan

 — 20,271 — 20,271

 

Our investments associated with our deferred compensation plan consist primarily of the cash surrender value of life insurance policies and are included in other assets on the condensed consolidated balance sheets. Our investments change as a result of contributions, payments, and fluctuations in the market. Our liabilities associated with our deferred compensation plan are included in other non-current liabilities on the condensed consolidated balance sheets. Assets and liabilities, measured using significant observable inputs, are reported at fair value based on third-party broker statements, which are derived from the fair value of the funds’ underlying investments. We also have marketable securities in publicly traded equity securities as an indirect result of strategic investments. They are reported at fair value based on the price of the stock and are included in other assets on the condensed consolidated balance sheets.

 

Assets and Liabilities Measured at Fair Value on a Non-recurring Basis

 

We apply the provisions of the fair value measurement standard to our non-recurring, non-financial measurements including business combinations and assets identified as held for sale, as well as impairment related to goodwill and other long-lived assets.

 

We perform our goodwill impairment assessment for each reporting unit by comparing the estimated fair value of each reporting unit to the reporting unit’s carrying value, including goodwill. We estimate the fair value for each reporting unit using a discounted cash flow analysis based on management’s short-term and long-term forecast of operating performance. This analysis includes significant assumptions regarding discount rates, revenue growth rates, expected profitability margins, forecasted capital expenditures and the timing of expected future cash flows based on market conditions. If the estimated fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is not considered impaired. If the carrying amount of a reporting unit exceeds its estimated fair value, an impairment loss is measured and recorded.

 

When conducting an impairment test on long-lived assets, other than goodwill, we first compare estimated future undiscounted cash flows associated with the asset to the asset’s carrying amount. If the undiscounted cash flows are less than the asset’s carrying amount, we then determine the asset’s fair value by using a discounted cash flow analysis. These analyses are based on estimates such as management’s short-term and long-term forecast of operating performance, including revenue growth rates and expected profitability margins, estimates of the remaining useful life and service potential of the asset, and a discount rate based on our weighted average cost of capital.

 

The impairment assessments discussed above incorporate inherent uncertainties, including projected commodity pricing, supply and demand for our services and future market conditions, which are difficult to predict in volatile economic environments and could result in impairment charges in future periods if actual results materially differ from the estimated assumptions utilized in our forecasts. If crude oil prices decline significantly and remain at low levels for a sustained period of time, we could be required to record an impairment of the carrying value of our long-lived assets in the future which could have a material adverse impact on our operating results. Given the unobservable nature of the inputs, the discounted cash flow models are deemed to use Level 3 inputs.

 

Other Fair Value Considerations

 

The carrying values on our condensed consolidated balance sheets of our cash and cash equivalents, restricted cash, short-term investments, trade accounts receivable, other current assets, accounts payable and accrued liabilities and lines of credit approximate fair values due to their short maturities.