Note 9 - Fair Value Measurements

9 Months Ended

Sep. 30, 2020

Notes to Financial Statements

Fair Value Disclosures [Text Block]

NOTE

9

— FAIR VALUE MEASUREMENTS

 

Fair Value of Financial Instruments

 

The carrying amounts of the Company's financial instruments, which include cash, accounts receivable, accounts payable and customer deposits, approximate their respective fair values due to the relatively short-term nature of these instruments. Based upon interest rates currently available to the Company for debt with similar terms, the carrying value of the Company's long-term debt is approximately equal to its fair value. 

The Company entered into an interest rate swap in

June 2019

to mitigate the exposure to the variability of LIBOR for its floating rate debt described in Note

7,

“Debt and Credit Agreements,” of these condensed consolidated financial statements. The fair value of the interest rate swap is reported in “Accrued liabilities” and the change in fair value is reported in “Interest expense, net” of these condensed consolidated financial statements. The fair value of the interest rate swap is estimated as the net present value of projected cash flows based on forward interest rates at the balance sheet date.

The Company is required to provide disclosure and categorize assets and liabilities measured at fair value into

one

of

three

different levels depending on the assumptions (i.e., inputs) used in the valuation. Level

1

provides the most reliable measure of fair value while Level

3

generally requires significant management judgment. Financial assets and liabilities are classified in their entirety based on the lowest level of input significant to the fair value measurement. Financial instruments are assessed quarterly to determine the appropriate classification within the fair value hierarchy. Transfers between fair value classifications are made based upon the nature and type of the observable inputs. The fair value hierarchy is defined as follows:

Level

1

— Valuations are based on unadjusted quoted prices in active markets for identical assets or liabilities.

Level

2

— Valuations are based on quoted prices for similar assets or liabilities in active markets, or quoted prices in markets that are

not

active for which significant inputs are observable, either directly or indirectly. For the Company's corporate and municipal bonds, although quoted prices are available and used to value said assets, they are traded less frequently.

Level

3

— Valuations are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. Inputs reflect management's best estimate of what market participants would use in valuing the asset or liability at the measurement date.

The following tables represent the fair values of the Company's financial liabilities as of

September 30, 2020

and

December 31, 2019

:

	September 30, 2020
	Level 1		Level 2		Level 3		Total
Liabilities measured on a recurring basis:
Interest rate swap	$	—	$	177	$	—	$	177
Total liabilities at fair value	$	—	$	177	$	—	$	177

	December 31, 2019
	Level 1		Level 2		Level 3		Total
Liabilities measured on a recurring basis:
Interest rate swap	$	—	$	78	$	—	$	78
Total liabilities at fair value	$	—	$	78	$	—	$	78