Fair Value Measurements

3 Months Ended

Mar. 31, 2023

Fair Value Measurements

Fair Value Measurements

Note 7. Fair Value Measurements

GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the principal or most advantageous market for the asset or liability at the measurement date (an exit price). These standards also establish a hierarchy that prioritizes observable and unobservable inputs used in measuring fair value of an asset or liability, as described below:

● Level 1 – Inputs to measure fair value are based on quoted prices (unadjusted) in active markets on identical assets or liabilities;

● Level 2 – Inputs to measure fair value are based on the following: a) quoted prices in active markets on similar assets or liabilities, b) quoted prices for identical or similar instruments in inactive markets, or c) observable (other than quoted prices) or collaborated observable market data used in a pricing model from which the fair value is derived; and

● Level 3 – Inputs to measure fair value are unobservable and the assets or liabilities have little, if any, market activity; these inputs reflect the Company’s own assumptions about the assumptions that market participants would use in pricing the assets or liabilities based on best information available in the circumstances.

As of March 31, 2023, cash equivalents include money market accounts and corporate and municipal bonds with original maturities of less than three months. Investments consist of certificates of deposit as well as investment-grade corporate, agency and municipal bonds with original maturity dates between three and twelve months. The certificates of deposit are carried at amortized cost in the Company’s condensed consolidated balance sheets, which approximates their fair value determined based on Level 2 inputs. The corporate, agency and municipal bonds are classified as held-to-maturity and are carried at amortized cost net of allowance for credit losses, which approximates their fair value determined based on Level 2 inputs. The restrictions on restricted cash and investments have an immaterial effect on the fair value of these financial assets.

The fair value of the Company’s financial assets and liabilities measured on a recurring basis as of March 31, 2023 and December 31, 2022, are as follows:

	Total		(Level 1)		(Level 2)		(Level 3)
	(in thousands)
Cash equivalents	$	123,064	$	123,064	$	—	$	—
Restricted cash		235		235		—		—
Short-term investments		4,600		—		4,600		—
Restricted short-term investments		2,200		—		2,200		—
Corporate, agency and municipal bonds		11,603		—		11,603		—
Interest rate swaps related to variable rate loans		5,084		—		5,084		—
Fair value measurement as of March 31, 2023	$	146,786	$	123,299	$	23,487	$	—
Cash equivalents	$	130,199	$	130,199	$	—	$	—
Restricted cash		235		235		—		—
Short-term investments		4,600		—		4,600		—
Restricted short-term investments		2,200		—		2,200		—
Corporate, agency and municipal bonds		14,931		—		14,931		—
Interest rate swaps related to variable rate loans		6,048		—		6,048		—
Fair value measurement as of December 31, 2022	$	158,213	$	130,434	$	27,779	$	—

The Company does not hold any Level 3 instruments that are measured at fair value on a recurring basis.

Nonfinancial assets and liabilities are not measured at fair value on a recurring basis but are subject to fair value adjustments in certain circumstances. These items primarily include investments in unconsolidated affiliates, long-lived assets, goodwill, and intangible assets for which the fair value is determined as part of the related impairment test. As of March 31, 2023 and December 31, 2022, there were no significant adjustments to fair value for nonfinancial assets or liabilities.

The deferred compensation plan assets are valued using the cash surrender value of the life insurance policies and are not included in the table above.