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Note 12 - Fair Value Measurements

12 Months Ended

Dec. 31, 2023

Notes to Financial Statements

Fair Value Disclosures [Text Block]

NOTE 12. FAIR VALUE MEASUREMENTS

We have adopted the authoritative accounting guidance for fair value measurements, which does not determine or affect the circumstances under which fair value measurements are used, but defines fair value, expands disclosure requirements around fair value and specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company's market assumptions.

These inputs create the following fair value hierarchy:

Level 1: Quoted prices for identical instruments in active markets.

Level 2: Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets.

Level 3: Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

As required by the guidance for fair value measurements, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Thus, assets and liabilities categorized as Level 3 may be measured at fair value using inputs that are observable (Levels 1 and 2) and unobservable (Level 3). Management's assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of assets and liabilities and their placement within the fair value hierarchy levels.

Balances Measured at Fair Value

The following tables show the fair values of certain of our financial instruments:

		*December 31, 2023*
*(In thousands)*		*Balance*				*Level 1*				*Level 2*				*Level 3*
Assets
Cash and cash equivalents		$	304,271			$	304,271			$	—			$	—
Restricted cash			3,659				3,659				—				—
Investment available for sale			13,327				—				—				13,327

		*December 31, 2022*
*(In thousands)*		*Balance*				*Level 1*				*Level 2*				*Level 3*
Assets
Cash and cash equivalents		$	283,472			$	283,472			$	—			$	—
Restricted cash			11,593				11,593				—				—
Investment available for sale			13,670				—				—				13,670

Cash and Cash Equivalents and Restricted Cash

The fair values of our cash and cash equivalents and restricted cash, classified in the fair value hierarchy as Level 1, are based on statements received from our banks at December 31, 2023 and 2022.

Investment Available for Sale

We have an investment in a single municipal bond issuance of $17.1 million aggregate principal amount of 7.5% Urban Renewal Tax Increment Revenue Bonds, Taxable Series 2007 that is classified as available for sale with a maturity date of June 1, 2037. We are the only holder of this instrument and there is no quoted market price for this instrument. As such, the fair value of this investment is classified as Level 3 in the fair value hierarchy. The estimate of the fair value of such investment was determined using a combination of current market rates and estimates of market conditions for instruments with similar terms, maturities, and degrees of risk and a discounted cash flows analysis as of December 31, 2023 and 2022. The fair value of the investment is estimated using a discounted cash flows approach and the significant unobservable input used in the valuation as of both December 31, 2023 and 2022 is a discount rate of 12.4%. Unrealized gains and losses on this instrument resulting from changes in the fair value of the instrument are not charged to earnings, but rather are recorded as other comprehensive income (loss) in the stockholders' equity section of the consolidated balance sheets and in the consolidated statements of other comprehensive income. At both December 31, 2023 and 2022, $0.7 million of the carrying value of the investment available for sale is included as a current asset in prepaid expenses and other current assets, and at December 31, 2023 and 2022, $12.6 million and $13.0 million, respectively, is included in other assets, net on the consolidated balance sheets. The discount associated with this investment of $2.0 million and $2.2 million as of December 31, 2023 and 2022, respectively, is netted with the investment balance and is being accreted over the life of the investment using the effective interest method. The accretion of such discount is included in interest income on the consolidated statements of operations.

The following tables summarize the changes in fair value of the Company’s Level 3 investment available for sale asset:

		Year Ended December 31,
*(In thousands)*		2023				2022
Balance at beginning of reporting period		$	13,670			$	15,822
Total gains (losses) (realized or unrealized):
Included in interest income			172				167
Included in other comprehensive income (loss)			165				(1,684	)
Purchases, sales, issuances and settlements:
Settlements			(680	)			(635	)
Balance at end of reporting period		$	13,327			$	13,670

We are exposed to valuation risk on our Level 3 financial instruments. We estimate our risk exposure using a sensitivity analysis of potential changes in the significant unobservable inputs of our fair value measurements. Our Level 3 financial instruments are most susceptible to valuation risk caused by changes in the discount rate. If the discount rate in our fair value measurements increased or decreased by 100 basis points, the change would not cause the value of our fair value measurements to change significantly.

The fair value of indefinite-lived intangible assets, classified in the fair value hierarchy as Level 3, is utilized in performing the Company's impairment analyses (see Note 4, Intangible Assets).

Balances Disclosed at Fair Value

The following tables provide the fair value measurement information about our note receivable and obligation under minimum assessment arrangements:

December 31, 2023

Outstanding Face

Carrying

Estimated

Fair Value

(In thousands)

Amount

Value

Fair Value

Hierarchy

Asset

Note receivable

$

419

$

419

$

419

Level 3

Liabilities

Obligation under assessment arrangements

20,199

17,752

23,282

Level 3

December 31, 2022

Outstanding Face

Carrying

Estimated

Fair Value

(In thousands)

Amount

Value

Fair Value

Hierarchy

Asset

Note receivable

$

118,162

$

83,791

$

82,338

Level 3

Liabilities

Obligation under assessment arrangements

22,293

19,304

25,738

Level 3

The following tables provide the fair value measurement information about our long-term debt:

		*December 31, 2023*
		*Outstanding Face*				*Carrying*				*Estimated*			*Fair Value*
*(In thousands)*		*Amount*				*Value*				*Fair Value*			*Hierarchy*
Credit Facility		$	1,046,300			$	1,032,897			$	1,021,206		Level 2
4.750% senior notes due 2027			1,000,000				992,208				957,500		Level 1
4.750% senior notes due 2031			900,000				889,889				819,000		Level 1
Other			504				504				504		Level 3
Total debt		$	2,946,804			$	2,915,498			$	2,798,210

		*December 31, 2022*
		*Outstanding Face*				*Carrying*				*Estimated*			*Fair Value*
*(In thousands)*		*Amount*				*Value*				*Fair Value*			*Hierarchy*
Credit Facility		$	1,187,800			$	1,169,935			$	1,183,565		Level 2
4.750% senior notes due 2027			1,000,000				990,260				928,750		Level 1
4.750% senior notes due 2031			900,000				888,540				784,125		Level 1
Other			674				674				674		Level 3
Total debt		$	3,088,474			$	3,049,409			$	2,897,114

The estimated fair values of our note receivable as of December 31, 2022 and our obligation under assessment arrangements as of December 31, 2023 and 2022 are based on a discounted cash flow approach after giving consideration to the changes in market rates of interest, creditworthiness of both parties and credit spreads. The fair value of our note receivable as of December 31, 2023, was estimated to equal its carrying value after consideration of the expected repayment timing of the remaining balance. The estimated fair value of our Credit Facility is based on a relative value analysis performed on or about December 31, 2023 and 2022. The estimated fair values of our senior notes are based on quoted market prices as of December 31, 2023 and 2022. The other debt is fixed-rate debt consisting of finance leases with various maturity dates from 2024 to 2025. These other debt obligations are not traded and do not have observable market inputs; therefore, we have estimated fair value to be equal to the carrying value for these obligations.

Other than the retirement of the 8.625% Senior Notes (Level 1) in June 2022, that was funded through a combination of cash on hand and borrowings under the Credit Facility (Level 2), there were no transfers between Level 1, Level 2 and Level 3 measurements during the years ended December 31, 2023 and 2022.

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.

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