Note 8 - Fair Value Measurement

12 Months Ended

Dec. 31, 2021

Notes to Financial Statements

Fair Value Disclosures [Text Block]

8. Fair Value Measurement

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

	Fair Value Measurement at Reporting Date Using
December 31, 2021	Level 1		Level 2		Level 3		Total
Cash equivalents
Money market funds	$	65,233	$	—	$	—	$	65,233
Total assets	$	65,233	$	—	$	—	$	65,233
Accrued and other current liabilities
Interest rate swap	$	—	$	3,514	$	—	$	3,514
Total liabilities	$	—	$	3,514	$	—	$	3,514
December 31, 2020
Cash equivalents
Money market funds	$	70,483	$	—	$	—	$	70,483
Total assets	$	70,483	$	—	$	—	$	70,483
Accrued and other current liabilities
Interest rate swap	$	—	$	7,606	$	—	$	7,606
Total liabilities	$	—	$	7,606	$	—	$	7,606

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 with a combined initial notional amount of $150.0 million and an effective date of  May 2018 that 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 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. The interest rate swaps were designated as cash flow hedges through the three months ended  March 31, 2021. 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 consolidated statements of operations was immaterial for the year ended December 31, 2021.

Commodity Swaps

In December 2021, we entered into two commodity swaps designed as cash flow hedges for crude oil covering the period from April 2022 to October 2022 with a total notional value of $8.1 million. The financial statement impact during the year ended  December 31, 2021 was immaterial.

Other Assets and Liabilities

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

December 31,		2021				2020
	Fair Value Hierarchy	Carrying Value		Fair Value		Carrying Value		Fair Value
Assets:
Held-to-maturity marketable securities (1)	Level 1	$	15,600	$	15,459	$	5,200	$	5,200
Liabilities (including current maturities):
2.75% Convertible Notes (2),(3)	Level 2	$	207,354	$	313,785	$	200,303	$	248,400
Credit Agreement - term loan (2)	Level 3	$	123,750	$	124,598	$	131,250	$	133,030

(1) All marketable securities were classified as held-to-maturity and consisted of U.S. Government and agency obligations as of  December 31, 2021 and 2020.

(2) The fair value of the 2.75% Convertible Notes is based on the median price of the notes in an active market as of  December 31, 2021 and 2020. The fair value of the Credit Agreement term loan is based on borrowing rates available to us for long-term loans with similar terms, average maturities, and credit risk. See Note 14 for definitions of, and more information about the 2.75% Convertible Notes and Credit Agreement.

(3) Excluded from carrying value is $22.6 million and $29.7 million of debt discount as of  December 31, 2021 and 2020, respectively, related to the 2.75% Convertible Notes (see Note 14).

The carrying value of marketable securities approximates their fair value as determined by market quotes. Rates currently available to us for debt with similar terms and remaining maturities are used to estimate the fair value of existing debt. The carrying value of receivables and other amounts arising out of normal contract activities, including retentions, which may be settled beyond one year, is estimated to approximate fair value. 

At least annually, we measure certain nonfinancial assets and liabilities at fair value on a nonrecurring basis. As of  December 31, 2021 and 2020, the nonfinancial assets and liabilities included our asset retirement and reclamation obligations, as well as assets and corresponding liabilities associated with performance guarantees. Asset retirement and reclamation obligations were measured using Level 3 inputs and performance guarantees were measured using Level 2 inputs.

Asset retirement and reclamation obligations were initially measured using internal discounted cash flow calculations based upon our estimates of future retirement costs. To determine the fair value of the obligation, we estimate the cost for a third-party to perform the legally required reclamation including a reasonable profit margin. This cost is then increased for future estimated inflation based on the estimated years to complete and discounted to fair value using present value techniques with a credit-adjusted, risk-free rate. In estimating the settlement date, we evaluate the current facts and conditions to determine the most likely settlement date. We review reclamation obligations at least annually for a revision to the cost or a change in the estimated settlement date. Additionally, reclamation obligations are reviewed in the period that a triggering event occurs that would result in either a revision to the cost or a change in the estimated settlement date. See Note 11 for details of the asset retirement balances.

We estimate our liability for performance guarantees for our unconsolidated construction joint ventures and line item joint ventures using estimated partner bond rates, which are Level 2 inputs, and include them in accrued expenses and other current liabilities (see Note 13) with a corresponding increase in equity in construction joint ventures in the consolidated balance sheets. See Note 1 for further discussion on performance guarantees.

During the years ended December 31, 2021 and 2020, we had no material nonfinancial asset and liability fair value adjustments related to our continuing operations.