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Note 8 - Fair Value Measurements
 3 Months Ended
Mar. 31, 2024
Notes to Financial Statements  
Fair Value Disclosures [Text Block]

NOTE 8.     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:

 

  

March 31, 2024

 

(In thousands)

 

Balance

  

Level 1

  

Level 2

  

Level 3

 

Assets

                

Cash and cash equivalents

 $283,545  $283,545  $—  $— 

Restricted cash

  4,493   4,493   —   — 

Investment available for sale

  13,550   —   —   13,550 

 

  

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 

 

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 as of  March 31, 2024 and December 31, 2023.

 

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  March 31, 2024 and December 31, 2023. The fair value of the instrument is estimated using a discounted cash flows approach and the significant unobservable input used in the valuation at  March 31, 2024 and  December 31, 2023 is a discount rate of 12.7% and 12.4%, respectively. 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 condensed consolidated balance sheets and in the condensed consolidated statement of other comprehensive income. At both  March 31, 2024 and December 31, 2023, $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  March 31, 2024 and December 31, 2023, $12.8 million and $12.6 million, respectively, is included in other assets, net on the condensed consolidated balance sheets. The discount associated with this investment of $2.0 million at both  March 31, 2024 and December 31, 2023, 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 condensed consolidated statements of operations.

 

The following table summarizes the changes in fair value of the Company's Level 3 investment available for sale asset:

 

  

Three Months Ended

 
  

March 31,

 

(In thousands)

 

2024

  

2023

 

Balance at beginning of reporting period

 $13,327  $13,670 

Total gains (realized or unrealized):

        

Included in interest income

  44   43 

Included in other comprehensive income

  179   635 

Purchases, sales, issuances and settlements:

        

Settlements

  —   — 

Balance at end of reporting period

 $13,550  $14,348 

 

 

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.

 

Balances Disclosed at Fair Value

The following tables provide the fair value measurement information about our obligation under assessment agreements and note receivable. As of March 31, 2024, the outstanding principal balance under the note receivable was paid in full.

 

  

March 31, 2024

  Outstanding  Carrying  Estimated 

Fair Value

(In thousands)

 

Face Amount

  

Value

  

Fair Value

 

Hierarchy

Liabilities

             

Obligation under assessment arrangements

 $19,586  $17,267  $22,670 

Level 3

   

  

December 31, 2023

  Outstanding  Carrying  Estimated 

Fair Value

(In thousands)

 

Face 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

 

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

 

  

March 31, 2024

  Outstanding  Carrying  Estimated 

Fair Value

(In thousands)

 

Face Amount

  

Value

  

Fair Value

 

Hierarchy

Credit facility

 $997,000  $984,676  $975,220 

Level 2

4.750% senior notes due 2027

  1,000,000   992,695   952,500 

Level 1

4.750% senior notes due 2031

  900,000   890,226   819,000 

Level 1

Other

  467   467   467 

Level 3

Total debt

 $2,897,467  $2,868,064  $2,747,187  

 

  

December 31, 2023

  Outstanding  Carrying  Estimated 

Fair Value

(In thousands)

 

Face 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  

 

The estimated fair value of our obligation under assessment arrangements is based on a discounted cash flows approach after giving consideration to the changes in market rates of interest, creditworthiness of both parties and credit spread. 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  March 31, 2024 and December 31, 2023. The estimated fair values of our senior notes are based on quoted market prices as of  March 31, 2024 and December 31, 2023. The other debt is fixed-rate debt consisting of finance leases with various maturity dates from 2024 to 2025. The other debt is not traded and does not have an observable market input; therefore, we have estimated fair value to be equal to the carrying value for these obligations.

 

There were no transfers between Level 1, Level 2 and Level 3 measurements during the three months ended March 31, 2024 and 2023.