FAIR VALUE MEASUREMENTS
Fair value is defined as the amount that would be received for selling an asset or paid to transfer a liability in an orderly transaction between market participants. Assets and liabilities carried at fair value are classified in the following three categories:
Level 1 - Quoted prices for identical instruments in active markets.
Level 2 - Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets.
Level 3 - Valuations derived from techniques in which one or more significant inputs are unobservable.
The table below presents assets and liabilities measured at fair value on a recurring basis (in millions).
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | December 31, 2025 |
| Category | | Balance Sheet Location | | Level 1 | | Level 2 | | Level 3 | | Total |
| Assets | | | | | | | | | | |
| Cash equivalents: | | | | | | | | | | |
| Time deposits | | Cash and cash equivalents | | $ | — | | | $ | 107 | | | $ | — | | | $ | 107 | |
| Equity securities: | | | | | | | | | | |
| Money market funds | | Cash and cash equivalents | | 61 | | | — | | | — | | | 61 | |
| Mutual funds | | Prepaid expenses and other current assets | | 14 | | | — | | | — | | | 14 | |
| Company-owned life insurance contracts | | Prepaid expenses and other current assets | | — | | | 2 | | | — | | | 2 | |
| Mutual funds | | Other noncurrent assets | | 205 | | | — | | | — | | | 205 | |
| Company-owned life insurance contracts | | Other noncurrent assets | | — | | | 105 | | | — | | | 105 | |
| | | | | | | | | | |
| Total | | | | $ | 280 | | | $ | 214 | | | $ | — | | | $ | 494 | |
| Liabilities | | | | | | | | | | |
| Deferred compensation plan | | Accrued liabilities | | $ | 66 | | | $ | — | | | $ | — | | | $ | 66 | |
| Deferred compensation plan | | Other noncurrent liabilities | | 682 | | | — | | | — | | | 682 | |
| Total | | | | $ | 748 | | | $ | — | | | $ | — | | | $ | 748 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | December 31, 2024 |
| Category | | Balance Sheet Location | | Level 1 | | Level 2 | | Level 3 | | Total |
| Assets | | | | | | | | | | |
| Cash equivalents: | | | | | | | | | | |
| Time deposits | | Cash and cash equivalents | | $ | — | | | $ | 95 | | | $ | — | | | $ | 95 | |
| | | | | | | | | | |
| Equity securities: | | | | | | | | | | |
| Money market funds | | Cash and cash equivalents | | 46 | | | — | | | — | | | 46 | |
| Mutual funds | | Prepaid expenses and other current assets | | 16 | | | — | | | — | | | 16 | |
| Company-owned life insurance contracts | | Prepaid expenses and other current assets | | — | | | 1 | | | — | | | 1 | |
| Mutual funds | | Other noncurrent assets | | 216 | | | — | | | — | | | 216 | |
| Company-owned life insurance contracts | | Other noncurrent assets | | — | | | 102 | | | — | | | 102 | |
| | | | | | | | | | |
| Total | | | | $ | 278 | | | $ | 198 | | | $ | — | | | $ | 476 | |
| Liabilities | | | | | | | | | | |
| Deferred compensation plan | | Accrued liabilities | | $ | 62 | | | $ | — | | | $ | — | | | $ | 62 | |
| Deferred compensation plan | | Other noncurrent liabilities | | 650 | | | — | | | — | | | 650 | |
| Total | | | | $ | 712 | | | $ | — | | | $ | — | | | $ | 712 | |
Equity securities include money market funds, investments in mutual funds held in separate trusts, which are owned as part of the Company’s supplemental retirement plans, and company-owned life insurance contracts. (See Note 17.) The fair value of the deferred compensation plan liability was determined based on the fair value of the related investments elected by employees. Company-owned life insurance contracts are recorded at their cash surrender value, which approximates fair value (Level 2).
In addition to the financial instruments listed in the tables above, the Company holds other financial instruments, including cash deposits, accounts receivable, accounts payable, senior notes, and a bridge loan. The carrying values for such financial instruments, other than the senior notes, each approximated their fair values as of December 31, 2025 and 2024. The estimated fair value of the Company’s outstanding senior notes, including accrued interest, using quoted prices from over-the-counter markets, considered Level 2 inputs, was $15,205 million and $34,876 million as of December 31, 2025 and 2024, respectively.
The Company’s derivative financial instruments are discussed in Note 13, its investments with readily determinable fair value are discussed in Note 10, and the obligation for its revolving receivable program is discussed in Note 8.