FAIR VALUE MEASUREMENTS

12 Months Ended

Dec. 31, 2022

The Company determines the fair value of its financial instruments based on the fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Below are the three levels of inputs that may be used to measure fair value:


			Level 1			Quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

			Level 2			Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

			Level 3			Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Items Measured at Fair Value on a Recurring Basis—The fair values of the Company’s financial assets and liabilities that are required to be measured on a recurring basis at fair value were as follows:


	December 31, 2022					December 31, 2021
	Fair Value Measurements Using					Fair Value Measurements Using
	Level 1		Level 2		Level 3	Level 1		Level 2		Level 3
Assets:
Interest rate swap agreements	—		—		—	—		$	11.0	—
Investments in equity securities (1)	$	29.2	—		—	$	37.1	—		—
Liabilities:
Interest rate swap agreements	—		$	6.2	—	—		—		—
Fair value of debt related to interest rate swap agreements (2)	$	(4.9)	—		—	$	12.2	—		—

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(1) Investments in equity securities are recorded in Notes receivable and other non-current assets in the consolidated balance sheet at fair value. Unrealized holding gains and losses for equity securities are recorded in Other income (expense) in the consolidated statements of operations in the current period. During the years ended December 31, 2022 and 2021, the Company recognized unrealized (losses) gains of $(16.7) million and $6.1 million, respectively, for equity securities held as of December 31, 2022.

(2) Included in the carrying values of the corresponding debt obligations.

Interest Rate Swap Agreements

The fair value of the Company’s interest rate swap agreements is determined using pricing models with inputs that are observable in the market or can be derived principally from, or corroborated by, observable market data. For derivative instruments that are designated and qualify as fair value hedges, changes in the value of the derivatives are recognized in the consolidated statements of operations in the current period, along with the offsetting gain or loss on the hedged item attributable to the hedged risk. For derivative instruments that are designated and qualify as cash flow hedges, the Company records the change in fair value for the effective portion of the cash flow hedges in AOCL in the consolidated balance sheets and reclassifies a portion of the value from AOCL into Interest expense on a quarterly basis as the cash flows from the hedged item affects earnings. The Company records the settlement of interest rate swap agreements in (Loss) gain on retirement of long-term obligations in the consolidated statements of operations in the period in which the settlement occurs.

The Company entered into three interest rate swap agreements with an aggregate notional value of $500.0 million related to the 3.000% senior unsecured notes due 2023 (the “3.000% Notes”). These interest rate swaps, which were designated as fair value hedges at inception, were entered into to hedge against changes in fair value of the 3.000% Notes resulting from changes in interest rates. The interest rate swap agreements require the Company to pay interest at a variable interest rate of one-month LIBOR plus applicable spreads and to receive fixed interest at a rate of 3.000% through June 15, 2023.

The Company entered into three interest rate swap agreements with an aggregate notional value of $600.0 million related to the 2.250% Notes. These interest rate swaps, which were designated as fair value hedges at inception, were entered into to hedge against changes in fair value of the 2.250% Notes resulting from changes in interest rates. The interest rate swap agreements required the Company to pay interest at a variable interest rate of one-month LIBOR plus applicable spreads and to receive fixed interest at a rate of 2.250% through January 15, 2022. The interest rate swap agreements expired upon repayment of the 2.250% Notes in full on January 14, 2022 upon maturity. As of December 31, 2022, there were no amounts outstanding under the interest rate swap agreements under the 2.250% Notes.

The fair value of the U.S. interest rate swap liability of $6.2 million was included in accrued expenses on the consolidated balance sheets at December 31, 2022. The fair value of the U.S. interest rate swap asset of $11.0 million was included in Other non-current assets on the consolidated balance sheets at December 31, 2021. During the year ended December 31, 2022, the Company recorded net fair value adjustments of $(0.1) million related to interest rate swaps and the change in fair value of debt due to interest rate swaps in Other expense in the consolidated statements of operations.

Items Measured at Fair Value on a Nonrecurring Basis

Assets Held and Used—The Company’s long-lived assets are recorded at amortized cost and, if impaired, are adjusted to fair value using Level 3 inputs.

During the year ended December 31, 2022, certain long-lived assets held and used with a carrying value of $46.1 billion were written down to their net realizable value as a result of an asset impairment charge of $655.9 million. During the year ended December 31, 2021, certain long-lived assets held and used with a carrying value of $49.0 billion were written down to their net realizable value as a result of an asset impairment charge of $173.7 million. The asset impairment charges are recorded in Other operating expenses in the accompanying consolidated statements of operations. These adjustments were determined by comparing the estimated fair value utilizing projected future discounted cash flows to be provided from the long-lived assets to the asset’s carrying value.

There were no other items measured at fair value on a nonrecurring basis during the year ended December 31, 2022.

Fair Value of Financial Instruments—The Company’s financial instruments for which the carrying value reasonably approximates fair value at December 31, 2022 and 2021 include cash and cash equivalents, restricted cash, accounts receivable and accounts payable. The Company’s estimates of fair value of its long-term obligations, including the current portion, are based primarily upon reported market values. For long-term debt not actively traded, fair value is estimated using either indicative price quotes or a discounted cash flow analysis using rates for debt with similar terms and maturities. As of December 31, 2022, the carrying value and fair value of long-term obligations, including the current portion, were $38.7 billion and $35.1 billion, respectively, of which $24.5 billion was measured using Level 1 inputs and $10.6 billion was measured using

Level 2 inputs. As of December 31, 2021, the carrying value and fair value of long-term obligations, including the current portion, were $43.3 billion and $44.1 billion, respectively, of which $28.5 billion was measured using Level 1 inputs and $15.6 billion was measured using Level 2 inputs.

- 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.

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