NOTE 8.     FAIR VALUE MEASUREMENTS

We have adopted the authoritative accounting guidance for fair value measurements, which does not determine or affect the circumstances under which fair value measurements are used, but defines fair value, expands disclosure requirements around fair value and specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company's market assumptions.

These inputs create the following fair value hierarchy:

Level 1: Quoted prices for identical instruments in active markets.

Level 2: Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets.

Level 3: Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

As required by the guidance for fair value measurements, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Thus, assets and liabilities categorized as Level 3 may be measured at fair value using inputs that are observable (Levels 1 and 2) and unobservable (Level 3). Management's assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of assets and liabilities and their placement within the fair value hierarchy levels.

Balances Measured at Fair Value

The following tables show the fair values of certain of our financial instruments:

Cash and Cash Equivalents and Restricted Cash

The fair values of our cash and cash equivalents and restricted cash, classified in the fair value hierarchy as Level 1, are based on statements received from our banks as of  June 30, 2026 and December 31, 2025.

Investment Available for Sale

We have an investment in a single municipal bond issuance of $14.7 million aggregate principal amount of 7.5% Urban Renewal Tax Increment Revenue Bonds, Taxable Series 2007 that is classified as available for sale with a maturity date of June 1, 2037. We are the only holder of this instrument and there is no quoted market price for this instrument. As such, the fair value of this investment is classified as Level 3 in the fair value hierarchy. The estimate of the fair value of such investment was determined using a combination of current market rates and estimates of market conditions for instruments with similar terms, maturities and degrees of risk and a discounted cash flows analysis as of  June 30, 2026 and December 31, 2025. The fair value of the instrument is estimated using a discounted cash flows approach and the significant unobservable input used in the valuation at  June 30, 2026 and  December 31, 2025 is a discount rate of 12.9% and 12.6%, respectively. Unrealized gains and losses on this instrument resulting from changes in the fair value of the instrument are not charged to earnings, but rather are recorded as other comprehensive income (loss) in the stockholders' equity section of the condensed consolidated balance sheets and in the condensed consolidated statement of other comprehensive income. At June 30, 2026 and December 31, 2025, $0.9 million and $0.8 million, respectively, of the carrying value of the investment available for sale is included as a current asset in prepaid expenses and other current assets, and at  June 30, 2026 and December 31, 2025, $10.7 million and $11.5 million, respectively, is included in other assets, net on the condensed consolidated balance sheets. The discount associated with this investment of $1.5 million and $1.6  million as of June 30, 2026 and December 31, 2025, respectively, is netted with the investment balance and is being accreted over the life of the investment using the effective interest method. The accretion of such discount is included in interest income on the condensed consolidated statements of operations.

The following table summarizes the changes in fair value of the Company's Level 3 investment available for sale asset:

We are exposed to valuation risk on our Level 3 financial instruments. We estimate our risk exposure using a sensitivity analysis of potential changes in the significant unobservable inputs of our fair value measurements. Our Level 3 financial instruments are most susceptible to valuation risk caused by changes in the discount rate. If the discount rate in our fair value measurements increased or decreased by 100-basis points, the change would not cause the value of our investment available for sale fair value measurements to change significantly.

The fair value of indefinite-lived intangible assets, long-lived assets and operating right-of-use assets, classified in the fair value hierarchy as Level 3, is utilized in performing the Company's impairment analyses (see Note 2, Property and Equipment, Net).

Assets acquired and contingent liabilities assumed as part of an asset acquisition, along with noncontrolling interests, are recorded at fair value upon acquisition and all are classified in the fair value hierarchy as Level 3, other than cash or restricted cash acquired, which are classified as Level 1.

Balances Disclosed at Fair Value

The following tables provide the fair value measurement information about our obligation under assessment agreements and note receivable. 

The following tables provide the fair value measurement information about our long-term debt:

The estimated fair values of our note receivable and our obligation under assessment arrangements are based on a discounted cash flows approach after giving consideration to the changes in market rates of interest, creditworthiness of both parties and credit spread. The estimated fair value of our Credit Facility and Prior Credit Facility is based on a relative value analysis performed on or about  June 30, 2026 and December 31, 2025, respectively. The estimated fair values of our senior notes are based on quoted market prices as of  June 30, 2026 and December 31, 2025. 

There were no transfers between Level 1, Level 2 and Level 3 measurements during the six months ended June 30, 2026 and 2025.