Annual report pursuant to Section 13 and 15(d)

FAIR VALUE MEASUREMENTS

v3.22.4
FAIR VALUE MEASUREMENTS
 12 Months Ended
Dec. 31, 2022
Fair Value Disclosures [Abstract]  
FAIR VALUE MEASUREMENTS FAIR VALUE MEASUREMENTS
Recurring
We currently have various financial instruments carried at fair value, such as marketable securities, derivatives and contingent consideration, but do not currently have nonfinancial assets and liabilities that are required to be measured at fair value on a recurring basis. Our financial assets and liabilities are measured using inputs from all levels of the fair value hierarchy as defined in the FASB guidance for fair value. For this categorization, only inputs that are significant to the fair value are considered. The three levels are defined as follows:
Level 1—Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that can be accessed at the measurement date.
Level 2—Inputs include quoted prices for similar assets and liabilities in active markets, 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 (i.e., interest rates, yield curves, etc.) and inputs that are derived principally from or corroborated by observable market data by correlation or other means (i.e., market corroborated inputs).
Level 3—Unobservable inputs that reflect assumptions about what market participants would use in pricing the asset or liability. These inputs would be based on the best information available, including our own data.
In accordance with the fair value hierarchy described above, the following table shows the fair value of our financial assets and liabilities that are required to be measured at fair value on a recurring basis, which are classified on the balance sheets as cash and cash equivalents, other current assets, other long-term assets, other current liabilities and other long-term liabilities:                                                                                                                                                                                                                                                                                                                                                            
  Fair Value Measurements 
 
at December 31, 2022		 Fair Value Measurements 
 
at December 31, 2021
  Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
    (in thousands)     (in thousands)  
Assets:
Cash equivalents $ 503,964  $ —  $ —  $ 503,964  $ 620,980  $ —  $ —  $ 620,980 
Interest rate swap
 —  41,515  —  41,515  —  —  —  — 
Forward currency contracts
 —  1,530  —  1,530  —  428  —  428 
Investments in nonconsolidated affiliates 3,873  —  —  3,873  6,835  —  —  6,835 
Total $ 507,837  $ 43,045  $ —  $ 550,882  $ 627,815  $ 428  $ —  $ 628,243 
Liabilities:
Interest rate swap
 $ —  $ —  $ —  $ —  $ —  $ 8,558  $ —  $ 8,558 
Forward currency contracts
 —  2,227  —  2,227  —  120  —  120 
Put option
 —  —  11,826  11,826  —  —  5,679  5,679 
Contingent consideration
 —  —  70,289  70,289  —  —  20,936  20,936 
Total $ —  $ 2,227  $ 82,115  $ 84,342  $ —  $ 8,678  $ 26,615  $ 35,293 
Cash equivalents consist of money market funds. Fair values for cash equivalents are based on quoted prices in an active market. Fair values for forward currency contracts are based on observable market transactions of spot and forward rates. The fair value of our investments in nonconsolidated affiliates are based quoted prices in an active market. The fair value for our interest rate swap is based upon inputs corroborated by observable market data with similar tenors.
Certain third parties have a put option to sell to us their noncontrolling interest in one of our subsidiaries and such put option is carried at fair value using Level 3 inputs. The put option is triggered by the occurrence of specific events, one of which is certain to occur, that requires us to buy the noncontrolling interest. The redemption price for the put option is a variable amount based on a formula linked to historical earnings. We have recorded a current liability for the put option which is valued based on the historic results of that subsidiary. Changes in the fair value are recorded in selling, general and administrative expenses.
We have certain contingent consideration obligations related to acquisitions which are measured at fair value using Level 3 inputs. The amounts due to the sellers are based on the achievement of agreed-upon financial performance metrics by the acquired companies where the contingent obligation is either earned or not earned. We record the liability at the time of the acquisition based on the present value of management’s best estimates of the future results of the acquired companies compared to the agreed-upon metrics. Subsequent to the date of acquisition, we update the original valuation to reflect current projections of future results of the acquired companies and the passage of time. Accretion of, and changes in the valuations of, contingent consideration are reported in selling, general and administrative expenses. See Note 8 – Commitments and Contingent Liabilities for additional information related to the contingent payments.
Due to their short maturity, the carrying amounts of accounts receivable, accounts payable and accrued expenses approximated their fair values at December 31, 2022 and 2021.
Our outstanding debt held by third-party financial institutions is carried at cost, adjusted for discounts or debt issuance costs. Our debt is not publicly traded and the carrying amounts typically approximate fair value for debt that accrues interest at a variable rate, which are considered to be Level 2 inputs.
The following table presents the estimated fair values of our senior secured notes, senior notes and convertible senior notes at December 31, 2022 and 2021:
Estimated Fair Value at:
December 31, 2022 December 31, 2021
Level 2
(in thousands)
6.5% Senior Secured Notes due 2027 $ 1,175,460  $ 1,315,284 
3.75% Senior Secured Notes due 2028 $ 429,035  $ 498,380 
4.75% Senior Notes due 2027 $ 847,562  $ 978,358 
4.875% Senior Notes due 2024 $ 560,027  $ 582,952 
5.625% Senior Notes due 2026 $ 285,315  $ 310,284 
2.5% Convertible Senior Notes due 2023 $ 588,473  $ 996,369 
2.0% Convertible Senior Notes due 2025 $ 397,536  $ 531,040 
The estimated fair value of our third-party fixed-rate debt is based on quoted market prices in active markets for the same or similar debt, which are considered to be Level 2 inputs.
Non-recurring
During 2022, there were no significant non-recurring fair value measurements.
During 2021, we recorded a gain related to investments in nonconsolidated affiliates of $23.7 million, as a component of other expense, net. The gain was related to the acquisition of a controlling interest in the ticketing business of OCESA on December 6, 2021, which was previously accounted for under the equity method. To calculate the gains, we remeasured this investment to fair value of $50 million using a market multiple methodology. The key inputs in the fair value measurement include a future cash flow projection, including revenue, profit margins, market multiples and adjustment related to discount for lack of marketability. The key inputs used for this non-recurring fair value measurement are considered Level 3 inputs.