Fair Value Measurements and Financial Instruments

9 Months Ended

Sep. 30, 2026

Fair Value Measurements and Financial Instruments

Note 8. Fair Value Measurements and Financial Instruments

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between independent and knowledgeable parties who are willing and able to transact for an asset or liability at the measurement date. The levels of inputs used to measure fair value are:

•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 are observable in active markets; and

•Level 3—Valuations based on inputs that are unobservable, generally utilizing pricing models or other valuation techniques that reflect management’s judgment and estimates.

Assets and Liabilities

The Company bases its fair value estimates on market assumptions and available information. The carrying values of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses and current maturities of long-term debt approximated their fair values as of September 30, 2026 and December 31, 2025, due to their short-term nature.

Debt

The fair value of debt was as follows:


		September 30, 2026				December 31, 2025
(In millions)	Level	Fair Value		Carrying Value		Fair Value		Carrying Value
Unsecured notes due 2026	2	$	—	$	—	$	394	$	400
Unsecured notes due 2029	2	607		595		631		594
Unsecured notes due 2031	2	345		398		358		398
Unsecured notes due 2034	2	500		492		540		491
Euro unsecured notes due 2030	2	550		561		586		580
Five-year term loan due 2027	2	274		275		272		275

Financial Instruments

The Company directly manages its exposure to risks arising from business operations and economic factors, including fluctuations in interest rates and foreign currencies. The Company uses derivative instruments to manage the volatility related to these exposures.

The notional amount and fair value of derivative instruments were as follows:


	September 30, 2026				December 31, 2025				Balance Sheet Location
(In millions)	Notional Amount		Fair Value		Notional Amount		Fair Value
Derivatives designated as net investment hedges:
Cross-currency swaps	$	765	$	48	$	422	$	33	Other current liabilities
Cross-currency swaps	1,057		63		1,400		143		Other long-term liabilities
Derivatives designated as fair value hedges:
Cross-currency swaps	$	236	$	8	$	—	$	—	Other long-term assets
Cross-currency swaps	—		—		236		1		Other long-term liabilities
Derivatives not designated as hedges:
Foreign currency option contracts	$	294	$	6	$	308	$	3	Other current assets
Foreign currency option contracts	43		1		—		—		Other long-term assets
Foreign currency option contracts	301		1		316		4		Other current liabilities
Foreign currency option contracts	45		1		—		—		Other long-term liabilities
Foreign currency forward contracts	131		1		231		1		Other current liabilities

As of September 30, 2026 and December 31, 2025, the derivatives were classified as Level 2 within the fair value hierarchy. The derivatives are valued using inputs other than quoted prices such as foreign exchange rates and yield curves.

The effect of hedges on AOCIL and in the Condensed Consolidated Statements of Operations was as follows:


	Three Months Ended September 30, 2026						Nine Months Ended September 30, 2026
(In millions)	Amount of Gain (Loss) Recognized in Other Comprehensive Income on Derivative		Gain (Loss) Reclassified from AOCIL into Net Income		Gain (Loss) Recognized in Net Income on Derivative (Excluded from effectiveness testing)		Amount of Gain (Loss) Recognized in Other Comprehensive Income on Derivative		Gain (Loss) Reclassified from AOCIL into Net Income		Gain (Loss) Recognized in Net Income on Derivative (Excluded from effectiveness testing)
Net investment hedges
Cross-currency swaps(1)	$	20	$	2	$	—	$	65	$	2	$	2
Cash flow hedges
Interest rate swaps(1)	—		—		—		—		1		—
Fair value hedges
Cross-currency swaps(1)	2		1		—		1		2		—

(1) Amounts reclassified to Net income are reported in Interest expense, net in the Condensed Consolidated Statements of Operations.


	Three Months Ended September 30, 2025						Nine Months Ended September 30, 2025
(In millions)	Amount of Gain (Loss) Recognized in Other Comprehensive Income on Derivative		Gain (Loss) Reclassified from AOCIL into Net Income		Gain (Loss) Recognized in Net Income on Derivative (Excluded from effectiveness testing)		Amount of Gain (Loss) Recognized in Other Comprehensive Income on Derivative		Gain (Loss) Reclassified from AOCIL into Net Income		Gain (Loss) Recognized in Net Income on Derivative (Excluded from effectiveness testing)
Net investment hedges
Cross-currency swaps(1)	$	18	$	—	$	1	$	(253)	$	(3)	$	3
Cash flow hedges
Interest rate swaps(1)	—		—		—		(2)		—		—

(1) Amounts reclassified to Net income are reported in Interest expense, net in the Condensed Consolidated Statements of Operations.

Derivatives Not Designated as Hedges

Gains and losses for derivatives not designated as hedges were $2 million and $3 million gains for the three months ended September 30, 2026 and 2025, respectively, and $7 million gain and $11 million loss for the nine months ended September 30, 2026 and 2025, respectively. The Company recorded gains and losses for derivatives not designated as hedges as Other income (expense), net in the Condensed Consolidated Statements of Operations