FAIR VALUE MEASUREMENT

3 Months Ended

Mar. 31, 2026

The estimated fair and carrying values of the Company’s total debt were $2,142 million and $2,236 million, respectively, at March 31, 2026. At December 31, 2025, the estimated fair and carrying values were $2,217 million and $2,329 million, respectively. The fair value of long-term debt is determined by discounting future cash flows using interest rates available at March 31, 2026 and December 31, 2025 and interest rates for companies with similar credit ratings for issuances with similar terms and maturities. It is considered a Level 2 fair value measurement for disclosure purposes.

In January 2026, the Company settled Swiss franc foreign exchange forward contracts designated as net investment hedges with an aggregate notional amount of 100 million Swiss francs, which resulted in a net cash payment of approximately $7 million, with the effective portion of the hedge recognized in accumulated other comprehensive income (“AOCI”). The Company subsequently entered into Swiss franc foreign exchange forward contracts designated as net investment hedges with a total notional amount of 200 million Swiss francs. This portfolio of contracts has maturity dates extending through October 2029. These net investment hedges have excluded components, such as forward points, and the associated gains or losses recognized in earnings are reflected within operating activities in the Unaudited Consolidated Statements of Cash Flows.

Assets and liabilities measured at fair value on a recurring basis

The Company’s financial assets and liabilities set forth by level within the fair value hierarchy that were accounted for at fair value on a recurring basis were as follows:



	March 31, 2026
(in millions)	Total		Level 1		Level 2		Level 3

Assets

Interest rate swap asset related to long-term debt	$	14	$	—	$	14	$	—

Cross currency basis swaps	$	42	$	—	$	42	$	—
Foreign exchange forward contracts	$	14	$	—	$	14	$	—

Total assets	$	70	$	—	$	70	$	—

Liabilities
Interest rate swaps	$	14	$	—	$	14	$	—

Cross currency basis swaps	72		—		72		—
Foreign exchange forward contracts	61		—		61		—


Total liabilities	$	147	$	—	$	147	$	—



	December 31, 2025
(in millions)	Total		Level 1		Level 2		Level 3

Assets

Interest rate swap asset related to long-term debt	$	14	$	—	$	14	$	—



Foreign exchange forward contracts	8		—		8		—

Total assets	$	22	$	—	$	22	$	—

Liabilities
Interest rate swaps	$	14	$	—	$	14	$	—

Cross currency basis swaps	31		—		31		—
Foreign exchange forward contracts	67		—		67		—



Total liabilities	$	112	$	—	$	112	$	—

Derivative valuations are based on observable inputs to the valuation model including interest rates, foreign currency exchange rates, and credit risks.

There were no transfers between fair value measurement levels during the three months ended March 31, 2026.

- 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.

+ References

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+ Details