Fair Value
The areas in which we utilize fair value measures of financial assets and liabilities are presented in the table below: | | | | | | | | | | | | | | | | | | | | | | | |
| | As of December 31, 2025 |
| | Level 1 | | Level 2 | | Level 3 | | Total |
| Assets: | | | | | | | |
| Cash equivalents: | | | | | | | |
| Bank time deposits with original maturities of three months or less | $ | — | | | $ | 217.0 | | | $ | — | | | $ | 217.0 | |
Derivative assets (see Note R) | — | | | 4.5 | | | — | | | 4.5 | |
Diversified investments associated with the ESU program (see Note L) | 60.2 | | | — | | | — | | | 60.2 | |
| Total assets | $ | 60.2 | | | $ | 221.5 | | | $ | — | | | $ | 281.7 | |
| Liabilities: | | | | | | | |
Derivative liabilities (see Note R) | $ | — | | | $ | 1.2 | | | $ | — | | | $ | 1.2 | |
Liabilities associated with the ESU program (see Note L) | 62.4 | | | — | | | — | | | 62.4 | |
| Total liabilities | $ | 62.4 | | | $ | 1.2 | | | $ | — | | | $ | 63.6 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | As of December 31, 2024 |
| | Level 1 | | Level 2 | | Level 3 | | Total |
| Assets: | | | | | | | |
| Cash equivalents: | | | | | | | |
| Bank time deposits with original maturities of three months or less | $ | — | | | $ | 156.0 | | | $ | — | | | $ | 156.0 | |
Derivative assets (see Note R) | — | | | 5.1 | | | — | | | 5.1 | |
Diversified investments associated with the ESU program (see Note L) | 55.1 | | | — | | | — | | | 55.1 | |
| Total assets | $ | 55.1 | | | $ | 161.1 | | | $ | — | | | $ | 216.2 | |
| Liabilities: | | | | | | | |
Derivative liabilities (see Note R) | $ | — | | | $ | 7.0 | | | $ | — | | | $ | 7.0 | |
Liabilities associated with the ESU program (see Note L) | 53.9 | | | — | | | — | | | 53.9 | |
| Total liabilities | $ | 53.9 | | | $ | 7.0 | | | $ | — | | | $ | 60.9 | |
There were no transfers between Level 1 and Level 2 for any of the periods presented.
The fair value for fixed rate debt (Level 1) was approximately $175.0 less than carrying value of $1,490.0 at December 31, 2025 and was approximately $245.0 less than carrying value of $1,488.3 at December 31, 2024.
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.