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Fair Value of Financial Instruments
 12 Months Ended
Dec. 31, 2022
Fair Value Disclosures [Abstract]  
Fair Value of Financial Instruments

18.

Fair Value of Financial Instruments

The authoritative guidance on fair value measurement defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (referred to as an “exit price”). At December 31, 2022 and December 31, 2021, the Company’s financial instruments include cash, cash equivalents, accounts receivable, accounts payable, and other liabilities. The fair values of these financial instruments approximate their carrying values due to their short-term maturities.

Investments measured at fair value are based on one or more of the following three valuation techniques:

 

•

Market approach—Prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities;

 

•

Cost approach—Amount that would be required to replace the service capacity of an asset (i.e., replacement cost); and

 

•

Income approach—Techniques to convert future amounts to a single present amount based on market expectations (including present value techniques, option-pricing models and lattice models).

In addition, the guidance establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted market prices in active markets for identical assets and liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are:

 

Level 1

Unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets and liabilities;

 

 

Level 2

Pricing inputs that include quoted prices for similar assets and liabilities in active markets and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the derivative instrument; and

 

 

Level 3

Prices or valuations that require inputs that are both significant to the fair value measurements and unobservable.

The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

The following table sets forth assets associated with the pension plan in “Note 15—Retirement and Other Benefits Plans” that are accounted for at fair value by Level within the fair value hierarchy.

Fair value as of December 31, 2022 (in thousands):

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Mutual funds

 

$

1,924

 

 

$

—

 

 

$

—

 

 

$

1,924

 

Fixed income

 

 

—

 

 

 

7,662

 

 

 

—

 

 

 

7,662

 

Cash and cash equivalents

 

 

449

 

 

 

—

 

 

 

—

 

 

 

449

 

 

 

$

2,373

 

 

$

7,662

 

 

$

—

 

 

$

10,035

 

 

Fair value as of December 31, 2021 (in thousands):

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Mutual funds

 

$

2,951

 

 

$

—

 

 

$

—

 

 

 

2,951

 

Fixed income

 

 

—

 

 

 

9,813

 

 

 

—

 

 

 

9,813

 

Cash and cash equivalents

 

 

489

 

 

 

—

 

 

 

—

 

 

 

489

 

 

 

 

3,440

 

 

 

9,813

 

 

 

—

 

 

 

13,253

 

 

As described in “Note 15—Retirement and Other Benefits Plans”, the Company acquired a defined contribution pension plan, a defined benefit pension plan, and supplemental retirement plans. At December 31, 2022 and December 31, 2021, the Company measured the mutual funds held within the defined benefit pension plan at fair value using unadjusted quoted prices in active markets that are accessible for identical assets. The Company measured the fixed income securities using market bid and ask prices. The inputs that are significant to the valuation of fixed income securities are generally observable, and therefore have been classified as Level 2.   

 

With respect to equity-based compensation, we estimate the fair value of cash settled awards based on the 60-trading day weighted average closing price of the Company’s common stock on the NYSE at the end of each reporting period and on the vesting date. For restricted stock units containing service conditions or service and performance conditions, fair value is based on the closing stock price of a share of the Company’s common stock on the NYSE on the grant date.