FAIR VALUE DISCLOSURES

6 Months Ended

Jun. 30, 2023

The Company uses fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures.

Following is a discussion of the fair value hierarchy and the valuation methodologies used for assets and liabilities recorded at fair value on a recurring and nonrecurring basis and for estimating fair value for financial instruments not recorded at fair value.

Fair Value Hierarchy

Fair value measurements of assets and liabilities are categorized based on the following hierarchy:

Level 1 — Fair value determined based on quoted prices in active markets for identical assets or liabilities.

Level 2 — Fair value determined using significant observable inputs, such as quoted prices for similar assets or liabilities or quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability, or inputs that are derived principally from or corroborated by observable market data, by correlation or other means.

Level 3 — Fair value determined using significant unobservable inputs, such as pricing models, discounted cash flows, or similar techniques.

Estimation of Fair Value

The following table summarizes the fair value measurement methodologies, including significant inputs and assumptions, and classification of the Company’s assets and liabilities.

Asset/Liability Class

Valuation Methodology, Inputs and

Assumptions

Classification

Cash and cash equivalents

Carrying value is a reasonable estimate of fair value based on the short-term nature of the instruments.

Level 1 estimated fair value measurement.

Restricted cash

Carrying value is a reasonable estimate of fair value based on the short-term nature of the instruments.

Level 1 estimated fair value measurement.

Marketable securities

Debt securities

Prices obtained from third-party vendors that compile prices from various sources and often apply matrix pricing for similar securities when no price is observable.

Level 2 recurring fair value measurement.

Equity securities

Price is quoted given the securities are traded on an exchange.

Level 1 recurring fair value measurement.

Other current assets

Mortgage loans held for sale

Fair value is estimated based on observable market data including quoted market prices and deal price quotes.

Level 2 recurring fair value measurement.

Non-recourse asset-backed debt

Credit facilities

Fair value is estimated using discounted cash flows based on current lending rates for similar credit facilities with similar terms and remaining time to maturity.

Carried at amortized cost.

Level 2 estimated fair value measurement.

Convertible senior notes

Fair value is estimated using broker quotes and other observable market inputs.

Carried at amortized cost.
Level 2 estimated fair value measurement.

Assets and Liabilities Recorded at Fair Value on a Recurring Basis

The following tables present the levels of the fair value hierarchy for the Company’s assets measured at fair value on a recurring basis (in millions):


June 30, 2023	Balance at Fair Value		Level 1		Level 2		Level 3
Marketable securities:

Corporate debt securities	$	71	$	—	$	71	$	—

Equity securities	18		18		—		—


Asset-backed securities	1		—		1		—






Total assets	$	90	$	18	$	72	$	—


December 31, 2022	Balance at Fair Value		Level 1		Level 2		Level 3
Marketable securities:
Corporate debt securities	$	122	$	—	$	122	$	—

Equity securities	11		11		—		—
Certificates of deposit	9		—		9		—

Asset-backed securities	2		—		2		—




Other current assets:
Mortgage loans held for sale	1		—		1		—

Total assets	$	145	$	11	$	134	$	—

Fair Value of Financial Instruments

The following presents the carrying value, estimated fair value and the levels of the fair value hierarchy for the Company’s financial instruments other than assets and liabilities measured at fair value on a recurring basis (in millions):


	June 30, 2023
	Carrying Value		Fair Value		Level 1		Level 2
Assets:
Cash and cash equivalents	$	1,120	$	1,120	$	1,120	$	—
Restricted cash	1,684		1,684		1,684		—

Liabilities:
Non-recourse asset-backed debt	$	2,542	$	2,565	$	—	$	2,565

Convertible senior notes	501		353		—		353


	December 31, 2022
	Carrying Value		Fair Value		Level 1		Level 2
Assets:
Cash and cash equivalents	$	1,137	$	1,137	$	1,137	$	—
Restricted cash	654		654		654		—

Liabilities:
Non-recourse asset-backed debt	$	4,396	$	4,427	$	—	$	4,427

Convertible senior notes	959		391		—		391

- Definition

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.

+ References + Details