Note 9 - Fair Value Measurement

9 Months Ended

Sep. 30, 2021

Notes to Financial Statements

Fair Value Disclosures [Text Block]

9.  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
September 30, 2021	Level 1		Level 2		Level 3		Total
Cash equivalents
Money market funds	$	61,231	$	—	$	—	$	61,231
Other noncurrent assets
Restricted cash		1,512		—		—		1,512
Total assets	$	62,743	$	—	$	—	$	62,743
Accrued and other current liabilities
Interest rate swap	$	—	$	5,001	$	—	$	5,001
Total liabilities	$	—	$	5,001	$	—	$	5,001

December 31, 2020
Cash equivalents
Money market funds	$	70,483	$	—	$	—	$	70,483
Other noncurrent assets
Restricted cash		1,512		—		—		1,512
Total assets	$	71,995	$	—	$	—	$	71,995
Accrued and other current liabilities
Interest rate swap	$	—	$	7,606	$	—	$	7,606
Total liabilities	$	—	$	7,606	$	—	$	7,606

September 30, 2020
Cash equivalents
Money market funds	$	78,981	$	—	$	—	$	78,981
Other noncurrent assets
Restricted cash		1,512		—		—		1,512
Total assets	$	80,493	$	—	$	—	$	80,493
Accrued and other current liabilities
Interest rate swap	$	—	$	8,353	$	—	$	8,353
Total liabilities	$	—	$	8,353	$	—	$	8,353

Interest Rate Swaps

In connection with entering into the Credit Agreement, we entered into two interest rate swaps with an effective date of May 2018 that were designated as cash flow hedges through the three months ended March 31, 2021. These interest rate swaps 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 swaps are measured at fair value on the condensed 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. During the three months ended  June 30, 2021, we determined that the interest rate swaps were no longer highly effective in offsetting changes to expected future cash flows on hedged transactions and were therefore de-designated as cash flow hedges. As a result of this de-designation, the $5.4 million unrealized loss recorded to accumulated other comprehensive loss prior to de-designation will continue to be amortized to interest expense through the maturity date of May 2023. The impact from the interest rate swap de-designation that was included in interest expense on the condensed consolidated statements of operations was immaterial for the three and nine months ended September 30, 2021.

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:

		September 30, 2021				December 31, 2020				September 30, 2020
(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	$	10,600	$	10,582	$	5,200	$	5,200	$	5,700	$	5,696
Liabilities (including current maturities):
2.75% Convertible Notes (2),(3)	Level 2	$	205,543	$	326,025	$	200,303	$	248,400	$	198,606	$	184,000
Credit Agreement - term loan (2)	Level 3		125,625		126,610		131,250		133,030		133,125		135,046
Credit Agreement - revolving credit facility (2)	Level 3		—		—		—		—		75,000		76,180

(1) All marketable securities were classified as held-to-maturity and consisted of U.S. Government and agency obligations maturing in one to five years.

(2) The fair value of the 2.75% Convertible Notes is based on the median price of the notes in an active market. The fair value of the Credit Agreement is based on borrowing rates available to us for long-term loans with similar terms, average maturities, and credit risk. See Note 13 for more information about the 2.75% Convertible Notes and the Credit Agreement.

(3) Excluded from the carrying value is debt discount of $24.5 million, $29.7 million and $31.4 million as of September 30, 2021, December 31, 2020 and September 30, 2020, respectively, related to the 2.75% Convertible Notes (see Note 13).

During the three and nine months ended September 30, 2021, we did not record any fair value adjustments related to nonfinancial assets and liabilities measured at fair value on a nonrecurring basis. As disclosed in Note 3, we recorded fair value adjustments related to nonfinancial assets measured at fair value on a nonrecurring basis during the three and nine months ended September 30, 2020. During the three and nine months ended September 30, 2020, we did not record any fair value adjustments related to nonfinancial liabilities measured at fair value on a nonrecurring basis.