FAIR VALUE OF FINANCIAL INSTRUMENTS

3 Months Ended

Mar. 31, 2023

4. FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company’s disclosable financial instruments consist of cash equivalents, interest rate swaps, and debt. Assets and liabilities measured at fair value on a recurring basis (cash equivalents and interest rates) and a nonrecurring basis (debt) are categorized in the tables below.

Financial instrument assets recorded at fair value as of March 31, 2023 and December 31, 2022 are as follows (in thousands):


	As of March 31, 2023
	Level 1		Level 2		Level 3		Total
Money market funds (cash equivalents)	$	40,779	$	—	$	—	$	40,779
Derivative assets:
Interest rate swaps	—		6,947		—		6,947
	$	40,779	$	6,947	$	—	$	47,726


	As of December 31, 2022
	Level 1		Level 2		Level 3		Total
Money market funds (cash equivalents)	$	20,462	$	—	$	—	$	20,462
Derivative assets:
Interest rate swaps	—		9,032		—		9,032
	$	20,462	$	9,032	$	—	$	29,494

The fair value of the Company’s money market funds is based on quoted active market prices for the funds and is determined using the market approach. The fair value of the Company’s interest rate swap contracts are based on market quotes provided by the counterparty. Quotes by the counterparty are calculated based on observable current rates and forward interest rate curves. The Company recalculates and validates this fair value using publicly available market inputs using the market approach.

Financial instrument liabilities recorded or disclosed at fair value as of March 31, 2023 and December 31, 2022 are as follows (in thousands):


	As of March 31, 2023
	Level 1		Level 2		Level 3		Total
Term Loans	$	—	$	1,137,364	$	—	$	1,137,364
Senior Notes	—		299,625		—		299,625
	$	—	$	1,436,989	$	—	$	1,436,989


	As of December 31, 2022
	Level 1		Level 2		Level 3		Total
Term Loans	$	—	$	1,112,990	$	—	$	1,112,990
Senior Notes	—		297,354		—		297,354
	$	—	$	1,410,344	$	—	$	1,410,344

The fair value of the Company’s Term Loans and Senior Notes are based on market quotes provided by a third-party pricing source.

- 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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