Fair Value Measurements

9 Months Ended

Sep. 30, 2022

Fair value is the price that would be received from selling an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. Our financial instruments consist primarily of certain short-term and long-term assets and liabilities, customer accounts receivable, margin deposits and guaranty funds, equity and equity method investments, and short-term and long-term debt.

The fair value of our financial instruments is measured based on a three-level hierarchy:

•Level 1 inputs — quoted prices for identical assets or liabilities in active markets.

•Level 2 inputs — observable inputs other than Level 1 inputs such as quoted prices for similar assets and liabilities in active markets or inputs other than quoted prices that are directly observable.

•Level 3 inputs — unobservable inputs supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Financial assets and liabilities recorded or disclosed at fair value in the accompanying consolidated balance sheets as of September 30, 2022 and December 31, 2021 were classified in their entirety based on the lowest level of input that is significant to the asset or liability’s fair value measurement.

Our mutual funds are equity and fixed income mutual funds held for the purpose of providing future payments for our supplemental executive savings plan and the supplemental executive retirement plan. These mutual funds are classified as equity investments and measured at fair value using Level 1 inputs with adjustments recorded in net income.

The fair values of all other financial instruments are determined to materially approximate carrying value due to the short period of time to their maturities.

We did not use Level 3 inputs to determine the fair value of assets or liabilities measured at fair value on a recurring basis as of September 30, 2022 or December 31, 2021.

We measure certain assets, such as intangible assets and equity method investments, at fair value on a non-recurring basis. These assets are recognized at fair value if they are deemed to be impaired. As of September 30, 2022, none of our intangible assets were required to be recorded at fair value since no impairments were recorded.

We measure certain equity investments at fair value on a non-recurring basis using our policy election under ASU 2016-01. During the nine months ended September 30, 2022, we evaluated these investments and determined that the value of our equity method investment in Bakkt was impaired using a Level 1 input, which was the publicly-traded closing stock price of Bakkt on September 30, 2022 (Note 4). No other fair value adjustments were required under our accounting policy election related to these investments.

See Note 12 for the fair value considerations related to our margin deposits, guaranty funds and delivery contracts receivable.

The table below displays the fair value of our debt as of September 30, 2022. The fair values of our fixed rate notes were estimated using quoted market prices for these instruments. The fair value of other short-term debt approximates par value since the interest rates on this short-term debt approximate market rates as of September 30, 2022.


	As of September 30, 2022
	(in millions)
Debt:	Carrying Amount		Fair value



Other short-term debt	$	7	$	7



2025 Senior Notes (3.65% senior unsecured notes due May 23, 2025)	1,243		1,210
2025 Senior Notes (3.75% senior unsecured notes due December 1, 2025)	1,247		1,207
2027 Senior Notes (4.00% senior unsecured notes due September 15, 2027)	1,485		1,423
2027 Senior Notes (3.10% senior unsecured notes due September 15, 2027)	497		455
2028 Senior Notes (3.75% senior unsecured notes due September 21, 2028)	594		553
2029 Senior Notes (4.35% senior unsecured notes due June 15, 2029)	1,239		1,183
2030 Senior Notes (2.10% senior unsecured notes due June 15, 2030)	1,235		999
2032 Senior Notes (1.85% senior unsecured notes due September 15, 2032)	1,484		1,096
2033 Senior Notes (4.60% senior unsecured notes due March 15, 2033)	1,488		1,400
2040 Senior Notes (2.65% senior unsecured notes due September 15, 2040)	1,231		840
2048 Senior Notes (4.25% senior unsecured notes due September 21, 2048)	1,231		1,019
2050 Senior Notes (3.00% senior unsecured notes due June 15, 2050)	1,221		817
2052 Senior Notes (4.95% senior unsecured notes due June 15, 2052)	1,464		1,332
2060 Senior Notes (3.00% senior unsecured notes due September 15, 2060)	1,471		893
2062 Senior Notes (5.20% senior unsecured notes due June 15, 2062)	983		900
Total debt	$	18,120	$	15,334

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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