10. FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company is required to record certain assets and liabilities at fair value. The valuation methods used for determining the fair value of these financial instruments by hierarchy are as follows:
Level 1 Cash and cash equivalents consist of various bank accounts used to support our operations and investments in institutional money-market funds that are traded in active markets.
Level 2 Derivative financial instruments include an interest rate swap contract and foreign exchange contracts. The fair value of our derivative instruments is estimated using standard valuation models and market-based observable inputs over the contractual term, including the prevailing SOFR-based yield curves for the interest rate swap, and forward rates and/or the Overnight Index Swap curve for forward foreign exchange contracts, among others. The fair value of our debt is estimated based on independent broker/dealer bids or by comparison to other debt securities having similar durations, yields and credit ratings.
Level 3 No Level 3 financial instruments
The following table presents financial instruments that we measure at fair value on a recurring basis. See Note 9 to our consolidated financial statements for a discussion of our debt. In instances where the inputs used to measure the fair value of an asset fall into more than one level of the hierarchy, we have classified it based on the lowest level input that is significant to the determination of the fair value.
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| Fair Value Measurements at Reporting Date Using |
| (In thousands) | Level 1 | | Level 2 | | Level 3 | | Total |
| Assets: | 2025 | 2024 | | 2025 | 2024 | | 2025 | 2024 | | 2025 | 2024 |
| Cash and cash equivalents | $ | 360.4 | | $ | 329.2 | | | $ | — | | $ | — | | | $ | — | | $ | — | | | $ | 360.4 | | $ | 329.2 | |
| Derivative financial instruments - interest rate swap - cash flow hedge | — | | — | | | — | | 7.1 | | | — | | — | | | — | | 7.1 | |
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| Total Assets | $ | 360.4 | | $ | 329.2 | | | $ | — | | $ | 7.1 | | | $ | — | | $ | — | | | $ | 360.4 | | $ | 336.3 | |
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Other Fair Value Disclosures
The fair value of our debt is considered Level 2. The estimated fair value and carrying value of our debt as of December 31, 2025 and 2024 were as follows:
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| | December 31, 2025 | | December 31, 2024 |
| (In thousands) | | Carrying Value | Fair Value | | Carrying Value | Fair Value |
| Total debt, net | | $ | 3,697.6 | | $ | 3,738.0 | | | $ | 3,981.1 | | $ | 3,909.3 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.