Quarterly report pursuant to Section 13 or 15(d)

Fair Value Measurements

v3.19.2
Fair Value Measurements
6 Months Ended
Jun. 30, 2019
Fair Value Disclosures [Abstract]  
Fair Value Measurements Fair Value Measurements
ASC 820 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Fair value is defined under ASC 820 as the exit price associated with the sale of an asset or transfer of a liability in an orderly transaction between market participants at the measurement date. ASC 820 establishes the following three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value:
Level 1 - Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.
Level 2 - Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets and liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3 - Unobservable inputs that are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs.
On April 1, 2019, as part of the sale of the Company's Argentinian subsidiary, Medix, Natus provided a loan to Medix for $2.2 million. This asset was measured at fair value less costs to sell as of June 30, 2019 and is classified as Level 3 asset. The loan is classified within other assets on our condensed consolidated balance sheet. Subsequent changes in the fair value of the loan receivable are recorded within the Company's income statement as an operating expense.
 
December 31, 2018
 
Additions
 
Receipts
 
Adjustments
 
June 30, 2019
Other assets:
 
 
 
 
 
 
 
 
 
Loan receivable
$

 
$
2,200

 
$

 
$

 
$
2,200

Total
$

 
$
2,200

 
$

 
$

 
$
2,200


The derivative financial instruments described in Note 13 are measured at fair value on a recurring basis and are presented on the consolidated balance sheets at fair value. The Company estimates the fair value of the interest rate swaps by calculating the present value of the expected future cash flows of each swap. The calculation incorporated the contractual terms of the derivatives, observable market interest rates which are considered to be Level 2 inputs, and credit risk adjustments, if any, to reflect the counterpart's as well as the Company's nonperformance risk. As of June 30, 2019, there have been no events of default under the interest rate swap agreement. The table below presents the fair value of the derivative financial instruments as well as the classification on the consolidated balance sheet (in thousands):
 
December 31, 2018
 
Additions
 
Payments
 
Adjustments
 
June 30, 2019
Liabilities:
 
 
 
 
 
 
 
 
 
Interest rate swap
$
77

 
$

 
$

 
$
307

 
$
384

Total
$
77

 
$

 
$

 
$
307

 
$
384


The following financial instruments are not measured at fair value on the Company’s consolidated balance sheet as of June 30, 2019 and December 31, 2018 but require disclosure of their fair values: cash and cash equivalents, accounts receivable, and accounts payable. The carrying value of these financial instruments approximates fair values because of their relatively short maturity.