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Fair value measurement

12 Months Ended

Dec. 31, 2022

We measure and record certain assets and liabilities at fair value in the accompanying consolidated financial statements. U.S. GAAP establishes a fair value hierarchy for those instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and our own assumptions (unobservable inputs). The hierarchy consists of three levels:

Level 1 – Quoted market prices in active markets for identical assets or liabilities;

Level 2 – Inputs other than Level 1 inputs that are either directly or indirectly observable; and

Level 3 – Unobservable inputs developed using our own estimates and assumptions, which reflect those that a market participant would use.

Equity investments in private companies that we do not significantly influence are recorded at cost, less impairments, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment. In 2022, we recorded a $2.5 million impairment charge due to the decline in the fair value of one of our investments. The fair value was determined using a market approach which was based on significant inputs not observable in the market, and thus represented a Level 3 fair value measurement. In 2021, we recognized a $1.9 million gain on one such investment and a $1.9 million impairment charge on another, which related to fair value changes. These adjustments were a result of observable price changes in their fair values (Level 2).

In 2021, we recorded an unrealized gain of $20.8 million due to the increase in the fair value of an available-for-sale debt security, which included features that allow us to convert the investment into equity ownership upon the occurrence of certain events. The fair value of the available for sale debt security was determined to be $23.8 million. The valuation utilized a market based fair value approach relying on observable market data (Level 3). The unrealized gain was initially recorded in "Accumulated other comprehensive loss” on the Consolidated Balance Sheet until it was realized in 2022 and recorded as a gain in the Consolidated Statement of Income.

We additionally hold other financial instruments, including cash and cash equivalents, receivables, accounts payable and long-term debt. The carrying amounts for cash and cash equivalents, receivables and accounts payable approximated their fair values due to the short-term nature of these instruments. The fair value of our total long-term debt, determined based on the bid and ask quotes for the related debt (Level 2), totaled $2.95 billion as of December 31, 2022 and $3.40 billion as of December 31, 2021.

The below fair value tables relate to our TRP pension plan assets (in thousands):

Pension Plan Assets

Fair value measurement as of Dec. 31, 2022

Level 1

Level 2

Level 3

Total

Assets:

Pension plan investments valued using net asset value as a practical expedient:

Common collective trust - equities

54,917

Common collective trust - fixed income

329,821

Partnership/joint venture interests

267

Total fair value of plan assets

385,005


Fair value measurement as of Dec. 31, 2021
	Level 1		Level 2		Level 3		Total
Assets:
Cash and other	$	544	$	—	$	—	$	544
Corporate stock	25,324		—		—		25,324
Interest in registered investment companies	6,239		—		—		6,239
Total	$	32,107	$	—	$	—	$	32,107
Pension plan investments valued using net asset value as a practical expedient:
Common collective trust - equities							$	22,356
Common collective trust - fixed income							465,842
Hedge fund							19,156
Partnership/joint venture interests							2,297
Total fair value of plan assets							$	541,758

Valuation methodologies used for TRP pension assets measured at fair value in 2021 and 2022 are as follows:

Corporate stock classified as Level 1 was valued primarily at the closing price reported on the active market on which the individual securities are traded. These investments were liquidated in 2022.

Interest in registered investment companies was valued using the published net asset values as quoted through publicly available pricing sources. These investments were redeemable on request. Investments were liquidated in 2022.

Interest in common/collective trusts are valued using the net asset value as provided monthly by the investment manager or fund company. As of December 31, 2022, there were primarily five investments in collective trusts of which four are fixed income funds, whose strategy is to use individual subfunds to efficiently add a representative sample of securities in individual market sectors to the portfolio. The remaining collective fund is invested in equity securities. The strategy of the fund is to generate returns predominantly from developed equity markets. The collective funds are generally redeemable with a short-term written or verbal notice. There are no unfunded commitments related to these types of funds.

Investments in partnerships are valued at the net asset value of our investment in the fund as reported by the fund managers. The Plan held investments in two partnerships in 2021. One partnership’s strategy is to generate returns through real estate-related investments. Certain distributions are received from this fund as the underlying assets are liquidated. The other partnership’s strategy was to generate returns through investment in developing equity markets. This fund was redeemable with a 30-day notice, subject to a withdrawal charge to 0.45% of the amount redeemed, and was redeemed in 2022. Future funding commitments to our real estate partnership investments totaled $0.7 million as of December 31, 2022 and 2021.

As of December 31, 2021, pension plan assets included a hedge fund of funds whose objective was to produce a return that is uncorrelated with market movements. Investments in the hedge fund were valued at the net asset value as reported by the fund managers. Shares in the hedge fund are generally redeemable twice a year or on the last business day of each quarter with at least 95 days written notice subject to a potential 5% holdback. There are no unfunded commitments related to the hedge funds. These investments were liquidated in 2022.

We review audited financial statements and additional investor information to evaluate fair value estimates from our investment managers or fund administrator. Our policy is to recognize transfers between levels at the beginning of the reporting period. There were no transfers between levels during the year.

- 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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