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(6)ÌýÌýÌýAssets and Liabilities Measured at Fair Value
For assets and liabilities required to be reported at fair value, GAAP provides a hierarchy that prioritizes inputs to valuation techniques used to measure fair value into three broad levels. LevelÌý1 inputs are quoted market prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. LevelÌý2 inputs are inputs, other than quoted market prices included within LevelÌý1, that are observable for the asset or liability, either directly or indirectly. LevelÌý3 inputs are unobservable inputs for the asset or liability. Â鶹×îгöÆ· does not have any assets or liabilities required to be measured at fair value considered to be Level 3.
Â鶹×îгöÆ·'s assets and liabilities measured at fair value are as follows:
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FairÌýValueÌýMeasurementsÌýat |
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FairÌýValueÌýMeasurementsÌýat |
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September 30, 2024 |
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December 31, 2023 |
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ÌýÌýÌýÌý |
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ÌýÌýÌýÌý |
Quoted |
ÌýÌýÌýÌý |
​ |
ÌýÌýÌýÌý |
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ÌýÌýÌýÌý |
Quoted |
ÌýÌýÌýÌý |
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ÌýÌý |
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prices |
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prices |
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inÌýactive |
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Significant |
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inÌýactive |
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Significant |
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markets |
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other |
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markets |
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other |
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forÌýidentical |
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observable |
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forÌýidentical |
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observable |
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assets |
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inputs |
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assets |
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inputs |
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Description |
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Total |
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(LevelÌý1) |
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(LevelÌý2) |
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Total |
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(LevelÌý1) |
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(LevelÌý2) |
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amountsÌýinÌýmillions |
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Cash equivalents |
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$ |
2,677 |
Ìý |
2,677 |
Ìý |
— |
Ìý |
1,053 |
Ìý |
1,053 |
Ìý |
— |
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Debt and equity securities |
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$ |
— |
Ìý |
— |
Ìý |
— |
Ìý |
113 |
Ìý |
113 |
Ìý |
— |
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Financial instrument assets |
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$ |
185 |
Ìý |
86 |
Ìý |
99 |
Ìý |
88 |
Ìý |
64 |
Ìý |
24 |
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Debt |
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$ |
1,957 |
Ìý |
— |
Ìý |
1,957 |
Ìý |
1,797 |
Ìý |
— |
Ìý |
1,797 |
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The majority of Â鶹×îгöÆ·'s LevelÌý2 financial instruments are debt related instruments and derivative instruments, which include foreign currency forward contracts and interest rate swaps. These assets and liabilities are not always traded publicly or not considered to be traded on "active markets," as defined in GAAP. The fair values for such instruments are derived from a typical model using observable market data as the significant inputs or a trading price of a similar asset or liability is utilized. Accordingly, those debt securities, financial instruments and debt or debt related instruments are reported in the foregoing table as LevelÌý2 fair value. As of December 31, 2023, debt and equity securities included in the table above are included in the Other assets line item in the condensed consolidated balance sheet. As of September 30, 2024, $95 million and $90 million of financial instrument assets included in the table above are included in the Other current assets and Other assets line items, respectively, in the condensed consolidated balance sheet. As of December 31,
2023, financial instrument assets included in the table above are included in the Other assets line item in the condensed consolidated balance sheet.
Realized and Unrealized Gains (Losses) on Financial Instruments, net
Realized and unrealized gains (losses) on financial instruments, net is comprised of changes in the fair value of the following:
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Three months ended |
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Nine months ended |
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September 30, |
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September 30, |
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ÌýÌýÌýÌý |
2024 |
ÌýÌýÌýÌý |
2023 |
ÌýÌýÌýÌý |
2024 |
ÌýÌýÌýÌý |
2023 |
Ìý |
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amountsÌýinÌýmillions |
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Debt and equity securities |
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$ |
— |
Ìý |
3 |
Ìý |
16 |
Ìý |
19 |
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Foreign currency forward contracts |
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85 |
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— |
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93 |
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— |
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Debt measured at fair value (a) |
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(106) |
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8 |
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(109) |
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(132) |
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Other |
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Ìý |
(34) |
Ìý |
28 |
Ìý |
11 |
Ìý |
68 |
​ |
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$ |
(55) |
Ìý |
39 |
Ìý |
11 |
Ìý |
(45) |
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(a) |
The Company elected to account for its exchangeable senior debentures and convertible notes (as described in note 8) using the fair value option. Changes in the fair value of the exchangeable senior debentures and convertible notes recognized in the condensed consolidated statements of operations are due to market factors primarily driven by changes in the fair value of the underlying shares into which the debt is exchangeable. The Company isolates the portion of the unrealized gain (loss) attributable to changes in the instrument specific credit risk and recognizes such amount in other comprehensive earnings (loss). The change in the fair value of the exchangeable senior debentures and convertible notes attributable to changes in the instrument specific credit risk was a loss of $56 million and gain of $56 million for the three months ended September 30, 2024 and 2023, respectively, and a loss of $64 million and gain of $38 million for the nine months ended September 30, 2024 and 2023, respectively. The cumulative change since issuance was a gain of $70 million as of September 30, 2024, net of the recognition of previously unrecognized gains and losses.
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