Financial Instruments and Fair Value Measurements

3 Months Ended

Mar. 31, 2022

FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

Fair Value of Financial Instruments

We use an independent pricing source to determine the fair value of our securities. The independent pricing source utilizes various pricing models for each asset class, including the market approach. The inputs and assumptions for the pricing models are market observable inputs including trades of comparable securities, dealer quotes, credit spreads, yield curves and other market-related data.

We have not adjusted the prices obtained from the independent pricing service and we believe the prices received from the independent pricing service are representative of the prices that would be received to sell the assets at the measurement date (exit price).

The carrying value of the Company's cash equivalents and restricted cash equivalents approximate their fair values due to their short-term maturities.

We did not have any Level 3 financial instruments recognized in our balance sheet as of March 31, 2022 and December 31, 2021. There were no transfers between levels as of March 31, 2022 and December 31, 2021.

Fair Value Measurements on a Recurring Basis

The following tables summarize our financial instruments by significant categories and fair value measurement on a recurring basis as of March 31, 2022 and December 31, 2021.


(in millions)	Level 1		Level 2		Total
March 31, 2022
Cash equivalents:
Money market mutual funds	$	4	$	—	$	4
U.S. treasuries	—		—		—
Total cash equivalents	4		—		4
Investments:
Asset-backed securities	—		45		45
Corporate bonds	—		137		137
U.S. government agencies and government-sponsored agencies	—		2		2
U.S. treasuries	—		127		127
Other debt securities	—		8		8
Total investments	—		319		319
Restricted cash equivalents:
Money market mutual funds	90		—		90
U.S. treasuries	—		4		4

Total restricted cash equivalents	90		4		94
Restricted investments:
Corporate bonds	—		29		29
U.S. government agencies and government-sponsored agencies	—		13		13

U.S. treasuries	—		175		175
Certificate of deposit	—		11		11
Total restricted investments	—		228		228
Total cash equivalents and investments and restricted cash equivalents and investments	$	94	$	551	$	645


(in millions)	Level 1		Level 2		Total
December 31, 2021
Cash equivalents
Money market mutual funds	$	4	$	—	$	4
U.S. treasuries	—		21		21
Total cash equivalents	4		21		25
Investments
Asset-backed securities	—		49		49
Corporate bonds	—		137		137
U.S. government agencies and government-sponsored agencies	—		2		2
U.S. treasuries	—		106		106
Other debt securities	—		9		9
Total investments	—		303		303
Restricted cash equivalents:
Money market mutual funds	93		—		93

Certificate of deposit	—		1		1

Total restricted cash equivalents	93		1		94
Restricted investments:
Corporate bonds	—		30		30
U.S. government agencies and government-sponsored agencies	—		15		15
U.S. treasuries	—		179		179
Certificate of deposit	—		11		11
Total restricted investments	—		235		235
Total investments and restricted cash equivalents and investments	$	97	$	560	$	657

Fair Value of Financial Instruments Disclosure

Long-Term Debt

The fair value of our 2029 Notes was obtained from a third-party pricing service and is based on observable market inputs. As such, the fair value of the senior notes is considered Level 2 in the hierarchy for fair value measurement. As of March 31, 2022, Our 2029 Notes were carried at their cost, net of issuance costs, and had a fair value of $463 million and $500 million as of March 31, 2022 and December 31, 2021, respectively.