FAIR VALUE MEASUREMENTS AND INVESTMENTS

3 Months Ended

Mar. 31, 2025

FAIR VALUE MEASUREMENTS AND INVESTMENTS

FAIR VALUE MEASUREMENTS AND INVESTMENTS

6. FAIR VALUE MEASUREMENTS AND INVESTMENTS

In accordance with the provisions of fair value accounting, a fair value measurement assumes that a transaction to sell an asset or transfer a liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability, and defines fair value based upon an exit price model.

The fair value measurement guidance establishes a 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. The guidance describes three levels of inputs that may be used to measure fair value:

Level 1	Quoted prices in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset and liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1 assets and liabilities include money market funds, debt and equity securities and derivative contracts that are traded in an active exchange market.
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 2 assets and liabilities include debt securities with quoted prices that are traded less frequently than exchange traded instruments and derivative contracts whose value is determined using a pricing model with inputs that are observable in the market or can be derived principally from or corroborated by observable market data. This category generally includes corporate obligations and non-exchange traded derivative contracts.
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. Level 3 assets and liabilities include financial instruments and intangible assets that have been impaired whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.

Assets and liabilities of the Company measured at fair value on a recurring basis as of March 31, 2025 and December 31, 2024 are summarized as follows (in thousands):

	March 31, 2025
	Significant Other
	Quoted Prices in		Observable		Unobservable
	Active Markets		Inputs		Inputs
Description	(Level 1)		(Level 2)		(Level 3)		Total
Short term investments	$	395	$	—	$	—	$	395
Employee benefit plan investments		2,048		—		—		2,048
Interest rate swap		—		(410)		—		(410)
Total assets and liabilities measured at fair value	$	2,443	$	(410)	$	—	$	2,033

	December 31, 2024
	Significant Other
	Quoted Prices in		Observable		Unobservable
	Active Markets		Inputs		Inputs
Description	(Level 1)		(Level 2)		(Level 3)		Total
Short term investments	$	300	$	—	$	—	$	300
Employee benefit plan investments		2,768		—		—		2,768
Interest rate swap		—		(723)		—		(723)
Warrants on Alaska Communications redeemable common units		—		—		(249)		(249)
Total assets and liabilities measured at fair value	$	3,068	$	(723)	$	(249)	$	2,096

Other Investments

The Company holds investments in equity securities consisting of noncontrolling investments in privately held companies. Historically, the investments are accounted for using equity method accounting, the measurement alternative for investments without a readily determinable fair value, or fair value. The fair value investments are valued using Level 3 inputs and the Company used the income approach to fair value the investment. The inputs consisted of a discount rate and future cash flows calculated based on the investment attributes. As of March 31, 2025, the Company’s investments are all accounted for under the measurement alternative for investments without a readily determinable value. A roll forward of the investments is below (in thousands):

	Investments without a readily determinable fair value		Fair value investments		Equity method investments		Total
Balance, December 31, 2024	$	41,956	$	—	$	—	$	41,956
Income recognized		—		—		—		—
Distributions		—		—		—		—
Sale of investment		—		—		—		—
Balance, March 31, 2025	$	41,956	$	—	$	—	$	41,956
Balance, December 31, 2023	$	41,710	$	1,197	$	—	$	42,907
Income recognized		—		19		—		19
Contributions / (distributions)		—		(140)		—		(140)
Balance, March 31, 2024	$	41,710	$	1,076	$	—	$	42,786

These investments are included with other assets on the consolidated balance sheets.

Redeemable Common Units and Warrants

The Company has issued redeemable common units, and warrants to purchase additional common units, in consolidated subsidiaries of the Company. The instruments are redeemable at the option of the holder. The common units are recorded at the higher or historical cost or fair value and the warrants to purchase common units are recorded at fair value in the Company’s financial statements. The common units are recorded in redeemable noncontrolling interest and the warrants are recorded in other liabilities on the Company’s balance sheets. The put options for the Alloy redeemable common units begin in November 2026. The put options for the Alaska Communications redeemable common units begin the earlier of a public offering or July 2028. The fair value of the Alaska Commun Units was zero at both March 31, 2025 and December 31, 2024. The fair value of the warrants to purchase Alaska common units was zero and $(0.2) million at March 31, 2025 and December 31, 2024, respectively. The Alloy common units were carried at historical cost at of $10.4 million and $10.6 million at March 31, 2025 and December 31, 2024, respectively, which exceeded its fair value. The Company calculates the fair value of the instruments using a combination of market and discounted cash flows approaches with Level 3 inputs.

Other Fair Value Disclosures

The carrying amounts of cash and cash equivalents, accounts receivable, and accounts payable and accrued expenses approximate their fair values because of the relatively short-term maturities of these financial instruments.

The fair value of long-term debt is estimated using Level 2 inputs. At March 31, 2025, the fair value of long-term debt, including the current portion, was $569.4 million and its book value was $562.4 million. At December 31, 2024, the fair value of long-term debt, including the current portion, was $564.4 million and its book value was $557.4 million.

The fair value of the customer receivable credit facility is estimated using Level 2 inputs. At March 31, 2025, the fair value of the customer receivable credit facility, including the current portion, was $41.3 million and its book value was $42.2 million. At December 31, 2024, the fair value of the customer receivable credit facility, including the current portion, was $42.7 million and its book value was $44.2 million.