Quarterly report pursuant to Section 13 or 15(d)

Financial Instruments

v3.19.1
Financial Instruments
 3 Months Ended
Mar. 31, 2019
Fair Value Disclosures [Abstract]  
Financial Instruments
Financial Instruments
The composition of financial instruments is as follows:
 
March 31, 2019
 
December 31, 2018
 
(in thousands)
Assets
 
 
 
Interest rate swap
$
1,005

 
$
1,623


The fair value of the Company’s financial instrument is the amount that would be received in an asset sale or paid to transfer a liability in an orderly transaction between unaffiliated market participants and is recorded using a hierarchical disclosure framework based upon the level of subjectivity of the inputs used in measuring assets and liabilities. The levels are described below:
Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities.
Level 2: Observable prices that are based on inputs not quoted on active markets, but corroborated by market data.
Level 3: Unobservable inputs are used when little or no market data is available.
The Company classifies its financial instrument within Level 2 of the fair value hierarchy on the basis of models utilizing market observable inputs. The interest rate swap has been valued on the basis of valuations provided by third-party pricing services, as derived from standard valuation or pricing models. Market-based observable inputs for the interest rate swap include one month LIBOR-based yield curves over the term of the swap. The Company reviews third-party pricing provider models, key inputs and assumptions and understands the pricing processes at its third-party providers in determining the overall reasonableness of the fair value of its Level 2 financial instruments. The Company also considers the risk of nonperformance by assessing the swap counterparty's credit risk in the estimate of fair value of the interest rate swap. As of March 31, 2019 and December 31, 2018, the Company has not made any adjustments to the valuations obtained from its third-party pricing providers. 
The following table presents a summary of the Company’s financial instruments that are measured on a recurring basis:
 
 
 
Fair Value Measurements
 
Balance
 
Quoted Prices
in Active Markets for Identical Assets
(Level 1)
 
Significant Other
Observable Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
 
(in thousands)
Assets
 
 
 
 
 
 
 
Interest rate swap, March 31, 2019
$
1,005

 
$
—

 
$
1,005

 
$
—

Interest rate swap, December 31, 2018
$
1,623

 
$
—

 
$
1,623

 
$
—



The following table summarizes activity for the interest rate swap:
 
Three Months Ended
 
March 31,
2019
 
March 31,
2018
 
(in thousands)
Interest rate swap asset
 
 
 
Beginning balance
$
1,623

 
$
734

Unrealized gain (loss) recognized in other comprehensive income (loss)
(618
)
 
1,384

Ending balance
$
1,005

 
$
2,118


There were no transfers between Level 1, Level 2 or Level 3 financial instruments in the three months ended March 31, 2019 and 2018.
Financial Instruments Not Recorded at Fair Value on a Recurring Basis

Some of the Company’s financial instruments are not measured at fair value on a recurring basis but are recorded at amounts that approximate fair value due to their liquid or short-term nature. Such financial assets and financial liabilities include: cash and cash equivalents, restricted cash, net receivables, certain other assets, accounts payable, accrued price protection liability, accrued expenses, accrued compensation costs, and other current liabilities.

The Company’s long-term debt is not recorded at fair value on a recurring basis, but is measured at fair value for disclosure purposes (Note 7).