FAIR VALUE MEASUREMENTS

12 Months Ended

Dec. 31, 2024

Fair Value Disclosures [Abstract]

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS

The fair value hierarchy consists of the following three levels:

•Level 1 — Quoted prices in active markets that we have the ability to access for identical assets or liabilities;

•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-based valuations in which all significant inputs are observable in the market; and

•Level 3 — Valuations using significant inputs that are unobservable in the market and include the use of judgment by management about the assumptions market participants would use in pricing the asset or liability.

The following tables summarize our assets and liabilities that are measured at fair value on a recurring basis.

			Basis of fair value measurement
(in millions)	Balance as of December 31, 2024		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Assets
Foreign exchange contracts	$	7	$	—	$	7	$	—
Available-for-sale debt securities	1		—		—		1
Marketable equity securities	13		13		—		—
Total	$	21	$	13	$	7	$	1
Liabilities
Foreign exchange contracts	$	2	$	—	$	2	$	—
Contingent payments related to acquisitions	12		—		—		12
Total	$	14	$	—	$	2	$	12

			Basis of fair value measurement
(in millions)	Balance as of December 31, 2023		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Assets
Foreign exchange contracts	$	45	$	—	$	45	$	—
Available-for-sale debt securities	1		—		—		1
Marketable equity securities	44		44		—		—
Total	$	90	$	44	$	45	$	1
Liabilities
Foreign exchange contracts	$	5	$	—	$	5	$	—
Contingent payments related to acquisitions	14		—		—		14
Total	$	19	$	—	$	5	$	14

As of December 31, 2024 and 2023, cash and cash equivalents of $1.76 billion and $3.08 billion, respectively, included money market and other short-term funds of approximately $583 million and $1.63 billion, respectively, that are considered Level 2 in the fair value hierarchy.

For assets that are measured using quoted prices in active markets, the fair value is the published market price per unit multiplied by the number of units held, without consideration of transaction costs. A majority of the derivatives entered into by us are valued using internal valuation techniques as no quoted market prices exist for such instruments. The principal techniques used to value these instruments are discounted cash flow and Black-Scholes models. The key inputs, which are considered observable and vary depending on the type of derivative, include contractual terms, interest rate yield curves, foreign exchange rates and volatility.

Available-for-sale debt securities, which consist of convertible debt and convertible redeemable preferred shares issued by nonpublic entities, are measured using discounted cash flow and option pricing models. Those available-for-sale debt securities are classified as Level 3 fair value measurements when there are no observable transactions near the balance sheet date due to the lack of observable data over certain fair value inputs such as equity volatility. The fair values of available-for-sale debt securities increase when interest rates decrease, equity volatility increases, or the fair values of the equity shares underlying the conversion options increase.

Contingent payments related to acquisitions, which consist of milestone payments and sales-based payments, are valued using discounted cash flow techniques incorporating management's expectations of future outcomes. The fair value of milestone payments increases as the estimated probability of payment increases or the expected timing of payments is accelerated. The fair value of sales-based payments is based upon probability-weighted future

revenue estimates, and increases as revenue estimates increase, probability weighting of higher revenue scenarios increases or the expected timing of payment is accelerated.

The following table is a reconciliation of recurring fair value measurements that use significant unobservable inputs (Level 3), which consist of contingent payments related to acquisitions and available-for-sale debt securities.

	2024				2023
as of and for the years ended December 31 (in millions)	Contingent payments related to acquisitions		Available-for-sale debt securities		Contingent payments related to acquisitions		Available-for-sale debt securities
Fair value at beginning of period	$	14	$	1	$	84	$	27
Change in fair value recognized in earnings	—		—		(19)		(21)
Payments	(2)		—		(51)		—
Transfers out of Level 3	—		—		—		(5)
Fair value at end of period	$	12	$	1	$	14	$	1

During the year ended December 31, 2023, available-for-sale debt securities were reclassified from Level 3, upon conversion to marketable equity securities, which are classified as Level 1 in the fair value hierarchy, upon initial public offerings of the investees.

Financial Instruments Not Measured at Fair Value

In addition to the financial instruments that we are required to recognize at fair value in the consolidated balance sheets, we have certain financial instruments that are recognized at amortized cost or some basis other than fair value. For these financial instruments, the following table provides the values recognized in the consolidated balance sheets and the estimated fair values.

	Book values				Fair values(a)
as of December 31 (in millions)	2024		2023		2024		2023
Liabilities
Short-term debt	$	2,126	$	—	$	2,126	$	—
Current maturities of long-term debt and finance lease obligations	626		2,667		619		2,621
Long-term debt and finance lease obligations	10,374		11,089		9,295		10,026

(a)    These fair value amounts are classified as Level 2 within the fair value hierarchy as they are estimated based on observable inputs.

The carrying value of short-term debt approximates its fair value due to the short-term maturities of the obligations. The estimated fair values of current and long-term debt were computed by multiplying price by the notional amount of the respective debt instruments. Price is calculated using the stated terms of the respective debt instrument and yield curves commensurate with our credit risk. The carrying values of other financial instruments not presented in the table above, such as accounts receivable and accounts payable, approximate their fair values due to the short-term maturities of most of those assets and liabilities.

The carrying values of equity investments without readily determinable fair values that we measure at cost, less impairment were $37 million and $33 million at December 31, 2024 and 2023, respectively. When applicable, we also adjust the measurement of such equity investments for observable prices in orderly transactions for an identical or similar investment of the same issuer. These investments are included in Other non-current assets on our consolidated balance sheets.