Fair Value Measurement

6 Months Ended

Jun. 30, 2019

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, 2019	Level 1		Level 2		Level 3		Total
Cash equivalents
Money market funds	$	17,790	$	—	$	—	$	17,790
Other noncurrent assets
Restricted cash		5,825		—		—		5,825
Total assets	$	23,615	$	—	$	—	$	23,615
Other current liabilities
Interest rate cash flow hedge	$	—	$	4,985	$	—	$	4,985
Total liabilities	$	—	$	4,985	$	—	$	4,985

December 31, 2018
Cash equivalents
Money market funds	$	84,613	$	—	$	—	$	84,613
Other noncurrent assets
Restricted cash		5,825		—		—		5,825
Total assets	$	90,438	$	—	$	—	$	90,438
Other current liabilities
Interest rate cash flow hedge	$	—	$	1,098	$	—	$	1,098
Total liabilities	$	—	$	1,098	$	—	$	1,098

June 30, 2018
Cash equivalents
Money market funds	$	56,534	$	—	$	—	$	56,534
Other current assets
Interest rate cash flow hedge		—		473		—		473
Other noncurrent assets
Restricted cash		5,746		—		—		5,746
Total assets	$	62,280	$	473	$	—	$	62,753

Commodity Swap

In February 2019, we entered into a commodity swap designated as cash flow hedge covering the periods from March to October 2019 with an original notional amount of $8.7 million which represented approximately 60.0% of our forecasted purchases for fixed price asphalt during these periods. The commodity swap is reported at fair value using Level 2 inputs in the condensed consolidated balance sheets. Gains or losses on the effective portion are initially reported as a component of AOCI and subsequently reclassified to cost of revenue in the condensed consolidated statements of operations when the monthly hedged commodity payment is settled. As of June 30, 2019, the fair value of the cash flow hedge was $0.2 million and was included in other current assets in the condensed consolidated balance sheets. During the three and six months ended June 30, 2019, the unrealized gain, net of taxes, on the effective portion was immaterial, there was no ineffective portion, the cost of revenue reclassified from AOCI was immaterial and we estimate an immaterial amount to be reclassified from AOCI into pre-tax earnings within the next twelve months.

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 condensed consolidated balance sheets were as follows:

		June 30, 2019				December 31, 2018				June 30, 2018
(in thousands)	Fair Value Hierarchy	Carrying Value		Fair Value		Carrying Value		Fair Value		Carrying Value		Fair Value
Assets:
Held-to-maturity marketable securities	Level 1	$	61,037	$	60,887	$	66,100	$	65,290	$	81,205	$	80,006
Liabilities (including current maturities):
2019 Notes¹	Level 3	$	40,000	$	40,571	$	40,000	$	40,484	$	80,000	$	81,307
Credit Agreement - term loan¹	Level 3		142,500		143,109		146,250		147,141		150,000		150,608
Credit Agreement - revolving credit facility¹	Level 3		220,000		220,597		197,000		197,889		99,000		99,267
Convertible notes	Level 1		—		—		—		—		160,765		186,410

¹See Note 14 for definitions of, and more information about, the 2019 Notes and Credit Agreement.

During the three and six months ended June 30, 2019 and 2018, 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.

+ References + Details