Lineage, Inc.LINE
Lineage, Inc. Fair Value Disclosure
Fair value measurements
As of December 31, 2025 and December 31, 2024, the carrying amount of certain financial instruments, including cash and cash equivalents, restricted cash, accounts receivable, accounts payable, and accrued liabilities, were representative of their fair values due to the short-term maturity of these instruments. Certain non-financial assets such as property, plant and equipment, operating right-of-use assets, equity method investments, goodwill, and other intangible assets are subject to nonrecurring fair value measurements if they are deemed to be impaired. During the year ended December 31, 2025, the Company performed an impairment analysis of goodwill for two of its reporting units, which required a fair value measurement and resulted in an impairment. See Note 6, Goodwill and other intangible assets, net for more information.
The hierarchy for inputs used in measuring fair value is as follows:
Level 1 – Inputs represent unadjusted quoted prices for identical assets or liabilities exchanged in active markets.
Level 2 – Inputs include directly or indirectly observable inputs (other than Level 1 inputs), such as quoted prices for similar assets or liabilities exchanged in active or inactive markets, quoted prices for identical assets or liabilities exchanged in inactive markets, other inputs that may be considered in fair value determinations of these assets or liabilities, such as interest rates and yield curves, volatilities, prepayment speeds, loss severities, credit risks, and default rates, and inputs that are derived principally from or corroborated by observable market data by correlation or other means. Pricing evaluations generally reflect discounted expected future cash flows, which incorporate yield curves for instruments with similar characteristics, such as credit ratings, estimated durations, and yields for other instruments of the issuer or entities in the same industry sector.
Level 3 – Inputs include unobservable inputs used in the measurement of assets and liabilities. Management is required to use its own assumptions regarding unobservable inputs because there is little, if any, market activity in the assets or liabilities and it may be unable to corroborate the related observable inputs. Unobservable inputs require management to make certain projections and assumptions about the information that would be used by market participants in valuing assets or liabilities.
The following table presents the fair value hierarchy levels of the Company’s assets and liabilities at fair value:
| (in millions) | Fair Value Hierarchy | December 31, 2025 | December 31, 2024 | ||||||||||||||
| Measured at fair value on a recurring basis: | |||||||||||||||||
Non-qualified deferred compensation plan assets (1) | Level 1 | $ | 7 | $ | 4 | ||||||||||||
Non-qualified deferred compensation plan liabilities (1) | Level 1 | $ | 7 | $ | 4 | ||||||||||||
| Interest rate derivative financial instrument assets | Level 2 | $ | 3 | $ | 69 | ||||||||||||
| Acquisition related contingent consideration | Level 3 | $ | 14 | $ | 13 | ||||||||||||
Put options - not exercised (2) | Level 3 | $ | — | $ | 107 | ||||||||||||
| Measured at fair value on a non-recurring basis: | |||||||||||||||||
Other investments (included in Other assets) (3) | Level 3 | $ | 26 | $ | 18 | ||||||||||||
| Disclosed at fair value: | |||||||||||||||||
5.25% Notes (4) | Level 2 | $ | 505 | $ | — | ||||||||||||
Long-term debt, excluding 5.25% Notes (4) | Level 3 | $ | 5,567 | $ | 4,868 | ||||||||||||
Kloosterboer Preference Shares (5) | Level 3 | $ | 279 | $ | 259 | ||||||||||||
(1) For more details, refer to Note 16, Employee benefit plans. | |||||||||||||||||
(2) For more details, refer to Note 2, Capital structure and noncontrolling interests. | |||||||||||||||||
| (3) The investments in equity securities carried at fair value are subject to transfer restrictions and generally cannot be sold without consent. | |||||||||||||||||
(4) The carrying value of long-term debt is disclosed in Note 10, Debt. | |||||||||||||||||
(5) The carrying value of Kloosterboer Preference Shares is disclosed in Note 17, Other long-term liabilities. | |||||||||||||||||
In accordance with GAAP, the Company has elected to remeasure investments without readily determinable fair values only when an observable transaction occurs for an identical or similar investment of the same issuer. During the years ended December 31, 2025, 2024, and 2023, the Company recorded non-recurring fair value adjustments of $1 million, $3 million, and less than $1 million, respectively, within Other nonoperating income (expense), net in the consolidated statements of operations and comprehensive income (loss) related to certain other investments without readily determinable fair values.
The Company’s long-term debt is reported at the aggregate principal amount less unamortized deferred financing costs and any above or below market adjustments (as required in purchase accounting) in the consolidated balance sheets. For instruments with no prepayment option, the fair value is estimated utilizing a discounted cash flow model where the contractual cash flows (i.e., coupon and principal repayments) were discounted at a risk-adjusted yield reflective of both the time value of money and the credit risk inherent in each instrument. For instruments that include a prior-to-maturity prepayment option, the fair value is estimated using a Black-Derman-Toy lattice model. The inputs used to estimate the fair value of the Company’s debt instruments, excluding the 5.25% Notes, are comprised of Level 2 inputs, including risk-free interest rates, credit ratings, and financial metrics for comparable publicly listed companies, and Level 3 inputs, such as risk-adjusted credit spreads based on adjusted yields implied at issuance, and yield volatility (used for instruments with a prepayment option). For the 5.25% Notes, the estimated fair value is determined based on quoted market prices in markets with low trading volumes, which is considered to be Level 2 inputs.
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.