FAIR VALUE
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market in an orderly transaction between marketplace participants.
Various valuation approaches can be used to determine fair value, each requiring different valuation inputs. The following hierarchy classifies the inputs used to determine fair value into three levels:
Level 1 – quoted prices in active markets for identical assets or liabilities.
Level 2 – inputs, other than quoted prices, observable by a marketplace participant either directly or indirectly.
Level 3 – unobservable inputs significant to the fair value measurement.
We did not have any significant non-financial assets or liabilities measured at fair value on December 31, 2025 or 2024.
Our financial instruments include cash and equivalents, accounts receivable and payable, marketable securities held in trust and other investments, short- and long-term debt, and derivative financial instruments. The carrying values of cash and equivalents and accounts receivable and payable on the Consolidated Balance Sheet approximate their fair value. The following tables present the fair values of our other financial assets and liabilities on December 31, 2025 and 2024, and the basis for determining their fair values:
Carrying
Value
Fair
Value
Quoted Prices in Active Markets for Identical Assets
(Level 1)
Significant Other Observable Inputs
(Level 2)
Significant Unobservable Inputs
(Level 3)
Financial Assets (Liabilities)December 31, 2025
Measured at fair value:
Marketable securities held in trust:
Cash and equivalents$19 $19 $17 $$— 
Available-for-sale debt securities140 140 — 140 — 
Commingled equity funds51 51 51 — — 
Commingled fixed-income funds— — 
Other investments53 53 32 — 21 
Cash flow hedge assets75 75 — 75 — 
Cash flow hedge liabilities(49)(49)— (49)— 
Measured at amortized cost:
Short- and long-term debt principal(8,074)(7,610)— (7,610)— 
December 31, 2024
Measured at fair value:
Marketable securities held in trust:
Cash and equivalents$36 $36 $27 $$— 
Available-for-sale debt securities128 128 — 128 — 
Commingled equity funds48 48 48 — — 
Commingled fixed-income funds— — 
Other investments40 40 28 — 12 
Cash flow hedge assets52 52 — 52 — 
Cash flow hedge liabilities(140)(140)— (140)— 
Measured at amortized cost:
Short- and long-term debt principal(8,826)(8,103)— (8,103)— 
Our Level 1 assets include commingled equity and fixed-income funds that are valued using a unit
price or net asset value (NAV). These funds are actively traded and valued using quoted prices for identical securities from the market exchanges. The fair value of our Level 2 assets and liabilities, which consist primarily of fixed-income securities, cash flow hedges and our fixed-rate notes, is determined under a market approach using valuation models that incorporate observable inputs such as interest rates, bond yields and quoted prices for similar assets. Our Level 3 assets include direct private equity investments that are measured using inputs unobservable to a marketplace participant.
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Historical Timeline

Fiscal YearFiled
2025Jan 30, 2026Showing above
2024Feb 7, 2025
2023Feb 8, 2024
2022Feb 7, 2023
2021Feb 9, 2022
2020Feb 9, 2021
2019Feb 10, 2020
2018Feb 13, 2019
2017Feb 12, 2018
2016Feb 6, 2017
2015Feb 8, 2016

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.