FAIR VALUE MEASUREMENT
The estimated fair and carrying values of the Company’s total debt were $2,217 million and $2,329 million, respectively, at December 31, 2025. At December 31, 2024, the estimated fair and carrying values were $2,037 million and $2,135 million, respectively. The fair value of long-term debt is determined by discounting future cash flows using interest rates available at December 31, 2025 to companies with similar credit ratings for issuances with similar terms and maturities. It is considered a Level 2 fair value measurement for disclosure purposes.
Assets and liabilities measured at fair value on a recurring basis
The Company’s financial assets and liabilities set forth by level within the fair value hierarchy that were accounted for at fair value on a recurring basis were as follows:
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| | Year Ended December 31, 2025 |
| (in millions) | | Total | | Level 1 | | Level 2 | | Level 3 |
| | | | | | | | |
| Assets | | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| Interest rate swap asset related to long-term debt | | $ | 14 | | | $ | — | | | $ | 14 | | | $ | — | |
| | | | | | | | |
| Foreign exchange forward contracts | | 8 | | | — | | | 8 | | | — | |
| | | | | | | | |
| Total assets | | $ | 22 | | | $ | — | | | $ | 22 | | | $ | — | |
| | | | | | | | |
| Liabilities | | | | | | | | |
| Interest rate swaps | | $ | 14 | | | $ | — | | | $ | 14 | | | $ | — | |
| | | | | | | | |
| Cross currency basis swaps | | 31 | | | — | | | 31 | | | — | |
| Foreign exchange forward contracts | | 67 | | | — | | | 67 | | | — | |
| | | | | | | | |
| Contingent considerations on acquisitions | | — | | | — | | | — | | | — | |
| | | | | | | | |
| Total liabilities | | $ | 112 | | | $ | — | | | $ | 112 | | | $ | — | |
| | | | | | | | |
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| | | Year Ended December 31, 2024 |
| (in millions) | | Total | | Level 1 | | Level 2 | | Level 3 |
| | | | | | | | |
| Assets | | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| Cross currency interest rate swaps | | $ | 18 | | | $ | — | | | $ | 18 | | | $ | — | |
| Foreign exchange forward contracts | | 18 | | | — | | | 18 | | | — | |
| | | | | | | | |
| | | | | | | | |
| Total assets | | $ | 36 | | | $ | — | | | $ | 36 | | | $ | — | |
| | | | | | | | |
| Liabilities | | | | | | | | |
| Interest rate swaps | | $ | 21 | | | $ | — | | | $ | 21 | | | $ | — | |
| | | | | | | | |
| | | | | | | | |
| Foreign exchange forward contracts | | 9 | | | — | | | 9 | | | — | |
| | | | | | | | |
| Contingent considerations on acquisitions | | 4 | | | — | | | — | | | 4 | |
| | | | | | | | |
| Total liabilities | | $ | 34 | | | $ | — | | | $ | 30 | | | $ | 4 | |
Derivative valuations are based on observable inputs to the valuation model including interest rates, foreign currency exchange rates, and credit risks.
There were no transfers between fair value measurement levels during the years ended December 31, 2025 and 2024.
Assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (level 3)
The Company’s Level 3 liabilities at December 31, 2024 are related to earn-out obligations from acquisitions and licensing arrangements.
For the year ended December 31, 2025, there was a gain of $4 million recorded to other income in relation to a release of contingent consideration related to a prior acquisition. There were no additional purchases or transfers of Level 3 financial instruments in 2025 and 2024.