XML 29 R19.htm IDEA: XBRL DOCUMENT

FAIR VALUE

9 Months Ended

Sep. 30, 2021

11.	FAIR VALUE

The carrying amount and estimated fair value of the Company’s financial instrument assets and liabilities, which are not measured at fair value on the Condensed Consolidated Balance Sheet, are listed in the table below:

	September 30, 2021
	Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Financial Assets:
Cash and cash equivalents	$	47,150	$	47,150	$	-	$	-	$	47,150
Prepaid expenses and other current assets		2,973		-		2,973		-		2,973

Financial Liabilities:
Accrued expenses	$	15,778	$	-	$	15,778	$	-	$	15,778
Other short term liabilities		56		-		56		-		56
Derivative qualifying cash flow hedge		552		-		552		-		552
Credit facility		15,848		-		14,488		-		14,488

	December 31, 2020
	Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Financial Assets:
Cash and cash equivalents	$	38,026	$	38,026	$	-	$	-	$	38,026
Prepaid expenses and other current assets		3,723		-		3,723		-		3,723

Financial Liabilities:
Accrued expenses	$	16,692	$	-	$	16,692	$	-	$	16,692
Other short term liabilities		26		-		26		-		26
Derivative qualifying cash flow hedge		877		-		877		-		877
Credit facility		17,212		-		15,487		-		15,487

As of September 30, 2021 and December 31, 2020, we estimated the fair value of the Credit Facility based on a present value analysis utilizing aggregate market yields obtained from independent pricing sources for similar financial instruments.

The carrying amounts reported on the Consolidated Balance Sheets for Cash and cash equivalents approximate fair value because they are highly liquid.

The carrying amounts reported on the Consolidated Balance Sheets for Prepaid expenses and other current assets, Accrued expenses and Other short term liabilities approximate fair value due to the short-term nature of these items.

Qualifying Hedge Derivative

On November 14, 2019, in connection with its Credit Facility, the Company entered into an interest rate swap for the Term Loan with a notional amount of $20 million which expires on December 1, 2024. The loan has a 10-year straight line amortization. A principal amount of $0.2 million is paid monthly. This interest rate swap converts the floating interest rate Term Loan to a fixed rate, plus a borrowing spread. The interest rate is variable based on LIBOR plus 3.50% and the Company’s fixed rate is 5.36%. The Company designated this interest rate swap as a cash flow hedge.

The Company entered into this interest rate swap to hedge exposure resulting from the interest rate risk. The purpose of this hedge is to reduce the variability of the interest rate based on LIBOR. The Company manages these exposures within specified guidelines through the use of derivatives. All of our derivative instruments are utilized for risk management purposes, and the Company does not use derivatives for speculative trading purposes.

The following summarizes the fair value of the outstanding derivative:

	September 30, 2021				December 31, 2020
	Liability⁽¹⁾				Liability⁽¹⁾
	Notional		Fair Value		Notional		Fair Value
Derivative derived as a hedging instrument:
Interest Rate Swap	$	16,333	$	552	$	17,833	$	877

(1)

The Company’s derivative liability is measured at fair value using observable market inputs such as interest rates and our own credit risk as well as an evaluation of our counterparty’s credit risk. Based on these inputs the derivative liability is classified within Level 2 of the valuation hierarchy. The liability is included in other long-term liabilities in the condensed consolidated balance sheets.

The following summarizes the financial statement classification and amount of interest expense recognized on hedging instruments:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Interest Expense
Interest Rate Swap	$	100	$	100	$	200	$	100

The following summarizes the effect of derivative instruments designated as hedging instruments in Other Comprehensive Income (Loss):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Derivative qualifying as cash flow hedge
Interest rate swap income (loss)	$	65	$	56	$	326	$	(786	)

- 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