v3.26.1
FAIR VALUE OF FINANCIAL INSTRUMENTS
 6 Months Ended
Jun. 30, 2026
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract]  
FAIR VALUE OF FINANCIAL INSTRUMENTS

NOTE 9: FAIR VALUE OF FINANCIAL INSTRUMENTS

The estimated fair value and carrying value of our long-term debt consisted of the following:

 

 

JUNE 30,
2026

 

 

DECEMBER 31,
2025

 

DOLLAR AMOUNTS IN MILLIONS

 

CARRYING
VALUE

 

 

FAIR VALUE
(LEVEL 2)

 

 

CARRYING
VALUE

 

 

FAIR VALUE
(LEVEL 2)

 

Long-term debt (including current maturities), line of credit and commercial paper:

 

 

 

 

 

 

 

 

 

 

 

 

Fixed rate

 

$

3,828

 

 

$

3,776

 

 

$

4,225

 

 

$

4,242

 

Variable rate

 

 

1,347

 

 

 

1,350

 

 

 

1,347

 

 

 

1,350

 

Commercial paper program

 

 

250

 

 

 

250

 

 

 

—

 

 

 

—

 

Total debt

 

$

5,425

 

 

$

5,376

 

 

$

5,572

 

 

$

5,592

 

 

To estimate the fair value of fixed rate long-term debt, we used the market approach, which is based on quoted market prices we received for the same types and issues of our debt. We believe that our variable-rate long-term debt and line of credit instruments have net carrying values that approximate their fair value with only insignificant differences. The inputs to the valuations of our long-term debt are based on market data obtained from independent sources or information derived principally from observable market data. The difference between the fair value and the carrying value represents the theoretical net premium or discount we would pay or receive to retire all debt at the measurement date.

Derivative Instruments Designated as Cash Flow Hedges

Interest Rate Swap Hedging Relationship

During third quarter 2025, we entered into interest rate swaps with the risk management objective of managing exposure to interest rate volatility by converting variable rate debt obligations associated with our $800 million term loan due in 2028 into fixed rate payments. The interest rate swaps provide the right to make fixed rate payments to the counterparty in exchange for variable, SOFR-based payments on a monthly settlement schedule. As of June 30, 2026 and December 31, 2025, our interest rate swap agreements with an aggregate notional amount of $800 million were designated as cash flow hedging instruments of variable, SOFR-based interest payments on our $800 million term loan.

Foreign Currency Hedging Relationship

During first quarter 2025, we entered into forward contracts with the risk management objective of reducing foreign exchange risk associated with the variability in cash flows from the settlement of forecasted foreign currency-denominated purchases of equipment. Our forward contracts provide the right to buy specified quantities of euros during predetermined future periods at predetermined future rates. As of June 30, 2026 and December 31, 2025, all forward contracts with an aggregate notional amount of $14 million and $32 million, respectively, were designated as cash flow hedging instruments of hedged forecasted foreign-currency denominated purchases of equipment.

The current and noncurrent fair value of our outstanding derivatives designated as cash flow hedging instruments as recorded on our Consolidated Balance Sheet are summarized below:

 

 

DERIVATIVE ASSETS

 

 

DERIVATIVE LIABILITIES

 

DOLLAR AMOUNTS IN MILLIONS

 

PREPAID EXPENSES AND OTHER CURRENT ASSETS

 

 

OTHER ASSETS

 

 

ACCRUED LIABILITIES

 

 

OTHER LIABILITIES

 

AS OF JUNE 30, 2026

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate swaps

 

$

4

 

 

$

5

 

 

$

—

 

 

$

—

 

Foreign currency forward contracts

 

 

1

 

 

 

—

 

 

 

—

 

 

 

—

 

Total fair value

 

$

5

 

 

$

5

 

 

$

—

 

 

$

—

 

 

 

 

 

 

 

 

 

 

 

 

 

AS OF DECEMBER 31, 2025

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate swaps

 

$

—

 

 

$

—

 

 

$

1

 

 

$

2

 

Foreign currency forward contracts

 

 

2

 

 

 

1

 

 

 

—

 

 

 

—

 

Total fair value

 

$

2

 

 

$

1

 

 

$

1

 

 

$

2

 

The pre-tax unrealized gain on our outstanding derivative instruments recognized in "Other comprehensive income" in our Consolidated Statement of Comprehensive Income and recorded in "Accumulated other comprehensive loss" on our Consolidated Balance Sheet are summarized below:

 

 

QUARTER ENDED

 

 

YEAR-TO-DATE ENDED

 

DOLLAR AMOUNTS IN MILLIONS

 

JUNE 2026

 

 

JUNE 2025

 

 

JUNE 2026

 

 

JUNE 2025

 

Interest rate swaps

 

$

6

 

 

$

—

 

 

$

11

 

 

$

—

 

Foreign currency forward contracts

 

 

—

 

 

 

4

 

 

 

—

 

 

 

6

 

Total unrealized gain on cash flow hedges

 

$

6

 

 

$

4

 

 

$

11

 

 

$

6

 

Fair Value of Other Financial Instruments

We believe that our other financial instruments, including cash and cash equivalents, short-term investments, receivables and payables, have net carrying values that approximate their fair values with only insignificant differences. This is primarily due to the short-term nature of these instruments and the allowance for doubtful accounts.