INNOVATE Corp.VATE
INNOVATE Corp. Fair Value Disclosure
20. Fair Value of Financial Instruments
Fair Value of Financial Instruments Not Measured at Fair Value
Our financial instruments primarily include cash and cash equivalents, restricted cash, accounts receivable and contract assets, marketable and non-marketable securities, including equity investments and certain other investments, notes receivable, accounts payable and other current and non-current liabilities, redeemable non-controlling interests and debt obligations. The following tables present the carrying amounts and estimated fair values of the Company’s financial instruments, which were not measured at fair value on a recurring basis and not measured using the equity method of accounting, with fair values shown according to the fair value hierarchy. The tables exclude carrying amounts for cash and cash equivalents and restricted cash (Level 1 measurements), accounts receivable and contract assets, accounts payable, contract liabilities and other current liabilities, and other assets and liabilities (Level 2 measurements) that approximate fair value due to the relatively short periods to maturity (in millions):
| December 31, 2025 | Fair Value Measurement Using: | |||||||||||||||||||||||||||||||
| Carrying Value | Estimated Fair Value | Quoted Prices (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||||||||
Measurement alternative investment (1) | $ | 0.9 | $ | 0.9 | $ | — | $ | — | $ | 0.9 | ||||||||||||||||||||||
| Total assets not accounted for at fair value | $ | 0.9 | $ | 0.9 | $ | — | $ | — | $ | 0.9 | ||||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||||||
Debt obligations (2) | $ | 661.6 | $ | 642.1 | $ | — | $ | 447.2 | $ | 194.9 | ||||||||||||||||||||||
| Total liabilities not accounted for at fair value | $ | 661.6 | $ | 642.1 | $ | — | $ | 447.2 | $ | 194.9 | ||||||||||||||||||||||
(1) Refer to Note 6. Investments for additional information.
(2) Excludes lease obligations accounted for under ASC 842, Leases. The fair value of the Company's Level 3 debt obligations incorporates applicable exit fees, while the carrying value of the debt obligations excludes $25.8 million in exit fees which is reflected in Accrued liabilities in the Company's Consolidated Balance Sheet.
| December 31, 2024 | Fair Value Measurement Using: | |||||||||||||||||||||||||||||||
| Carrying Value | Estimated Fair Value | Quoted Prices (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||||||||
Measurement alternative investment (1) | $ | 0.9 | $ | 0.9 | $ | — | $ | — | $ | 0.9 | ||||||||||||||||||||||
| Total assets not accounted for at fair value | $ | 0.9 | $ | 0.9 | $ | — | $ | — | $ | 0.9 | ||||||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||||||||||
Debt obligations (2) | $ | 662.2 | $ | 577.1 | $ | — | $ | 577.1 | $ | — | ||||||||||||||||||||||
| Total liabilities not accounted for at fair value | $ | 662.2 | $ | 577.1 | $ | — | $ | 577.1 | $ | — | ||||||||||||||||||||||
(2) Excludes lease obligations accounted for under ASC 842, Leases.
Debt Obligations. The fair value of the Company’s long-term obligations was determined using reporting from externally quoted market prices for INNOVATE's 10.50% 2027 Senior Secured Notes, 8.50% 2026 Senior Secured Notes, 9.5% Convertible Senior Secured Notes due 2027, and 7.50% Convertible Senior Notes due 2026, which are reflected as Level 2 fair value measurements due to limited recently available observable trading activity for these instruments. The methodology for the Level 2 fair value measurements combines direct recent transaction activity or, if available, market observations from contributed sources with quantitative pricing models or fair value reports from valuation providers to generate evaluated prices and are classified as Level 2 fair value measurements. The Level 3 fair value measurements, including those for the Company's other debt instruments, were estimated using an income approach based on the expected future cash flows, discounted at an estimated market yield. The discount rate, or yield to maturity, was derived from a synthetic credit rating and corresponding market spread analysis as of the valuation date to estimate an option-adjusted spread which was then applied to the applicable risk-free curve, consistent with market observable inputs for similarly rated debt. Certain long-term obligations have a fair value estimate equal to their carrying value due to recent transaction activity. The fair value of the debt instruments is disclosed for informational purposes and does not necessarily represent the amount that would be realized upon settlement or transfer.
Fair Value of Financial Instruments Measured at Fair Value
The Company's investments in marketable securities were measured at fair value, using publicly available quoted market prices, a Level 1 input. Refer to Note 6. Investments for additional information.
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Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 26, 2026 | Showing above |
| 2024 | Mar 31, 2025 | |
| 2023 | Mar 6, 2024 | |
| 2022 | Mar 14, 2023 | |
| 2020 | Mar 10, 2021 | |
| 2019 | Mar 16, 2020 | |
| 2018 | Mar 12, 2019 | |
| 2017 | Mar 14, 2018 | |
| 2016 | Mar 9, 2017 | |
| 2015 | Mar 15, 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.