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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2021
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to        
Commission File Number 1-4717
KANSAS CITY SOUTHERN
(Exact name of registrant as specified in its charter)
Delaware 
ksu-20210630_g1.jpg
 44-0663509
(State or other jurisdiction of
incorporation or organization)
  (I.R.S. Employer
Identification No.)
427 West 12th Street
Kansas City,Missouri  64105
(Address of principal executive offices)  (Zip Code)
816.983.1303
(Registrant’s telephone number, including area code)
No Change
(Former name, former address and former fiscal year, if changed since last report.)
____________________________________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading Symbol(s)Name of Each Exchange on Which Registered
Preferred Stock, Par Value $25 Per Share, 4%, NoncumulativeKSUNew York Stock Exchange
Common Stock, $.01 Per Share Par ValueKSUNew York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ý    No  
Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ý    No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large Accelerated Filer  ý  Accelerated filer  Non-accelerated filer  Smaller reporting company  
Emerging growth company  
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes       No  ý
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Class July 9, 2021
Common Stock, $0.01 per share par value 90,964,664 Shares


Kansas City Southern and Subsidiaries
Form 10-Q
June 30, 2021
Index
 
 Page
PART I — FINANCIAL INFORMATION
Item 1.
Item 2.
Item 3.
Item 4.
PART II — OTHER INFORMATION
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.

2

PART I — FINANCIAL INFORMATION

Item 1.Financial Statements (unaudited)


Kansas City Southern and Subsidiaries
Consolidated Statements of Operations
 
Three Months EndedSix Months Ended
June 30,June 30,
2021202020212020
(In millions, except share and per share amounts)
(Unaudited)
Revenues$749.5 $547.9 $1,455.5 $1,279.6 
Operating expenses:
Compensation and benefits128.4 103.8 257.9 237.2 
Purchased services55.8 44.6 109.6 97.9 
Fuel79.0 39.5 149.9 114.4 
Equipment costs24.1 18.1 45.2 40.0 
Depreciation and amortization91.2 89.3 183.2 178.7 
Materials and other81.9 61.7 148.3 125.7 
Merger costs720.8  740.1  
Restructuring charges 10.5  16.5 
Total operating expenses1,181.2 367.5 1,634.2 810.4 
Operating income (loss)(431.7)180.4 (178.7)469.2 
Equity in net earnings of affiliates3.4 0.2 9.4 1.2 
Interest expense(39.1)(38.1)(78.1)(72.3)
Foreign exchange gain (loss)6.8 7.8 (0.5)(51.7)
Other income, net1.0 0.8 0.2 2.2 
Income (loss) before income taxes(459.6)151.1 (247.7)348.6 
Income tax expense (benefit)(81.6)40.8 (23.1)86.0 
Net income (loss)(378.0)110.3 (224.6)262.6 
Less: Net income attributable to noncontrolling interest0.5 0.6 0.9 1.1 
Net income (loss) attributable to Kansas City Southern and subsidiaries(378.5)109.7 (225.5)261.5 
Preferred stock dividends0.1  0.1 0.1 
Net income (loss) available to common stockholders$(378.6)$109.7 $(225.6)$261.4 
Earnings (loss) per share:
Basic earnings (loss) per share$(4.17)$1.16 $(2.48)$2.75 
Diluted earnings (loss) per share$(4.17)$1.16 $(2.48)$2.74 
Average shares outstanding (in thousands):
Basic90,767 94,476 90,762 95,070 
Effect of dilution 417  464 
Diluted90,767 94,893 90,762 95,534 
    
See accompanying notes to the unaudited consolidated financial statements.

3

Kansas City Southern and Subsidiaries
Consolidated Statements of Comprehensive Income (Loss)

Three Months EndedSix Months Ended
June 30,June 30,
2021202020212020
(In millions)
(Unaudited)
Net income (loss)$(378.0)$110.3 $(224.6)$262.6 
Other comprehensive income (loss):
Unrealized gain (loss) on interest rate derivative instruments, net of tax of $(9.0) million, $1.5 million, $12.0 million and $2.7 million, respectively
(33.9)5.3 45.2 10.1 
Reclassification adjustment from cash flow hedges included in net income, net of tax of $0.1 million, $0.2 million, $0.2 million and $0.3 million, respectively
0.5 0.4 1.0 0.9 
Foreign currency translation adjustments0.3 0.2 0.1 (1.5)
Other comprehensive income (loss)(33.1)5.9 46.3 9.5 
Comprehensive income (loss)(411.1)116.2 (178.3)272.1 
Less: Comprehensive income attributable to noncontrolling interest0.5 0.6 0.9 1.1 
Comprehensive income (loss) attributable to Kansas City Southern and subsidiaries$(411.6)$115.6 $(179.2)$271.0 
See accompanying notes to the unaudited consolidated financial statements.

4

Kansas City Southern and Subsidiaries
Consolidated Balance Sheets
June 30,
2021
December 31,
2020
(In millions, except share and per share amounts)
(Unaudited) 
ASSETS
Current assets:
Cash and cash equivalents$325.8 $188.2 
Accounts receivable, net298.9 247.1 
Materials and supplies135.3 127.2 
Other current assets52.0 63.3 
Total current assets812.0 625.8 
Operating lease right-of-use assets71.8 70.9 
Investments50.6 42.6 
Property and equipment (including concession assets), net9,139.0 8,997.8 
Other assets320.3 226.9 
Total assets$10,393.7 $9,964.0 
LIABILITIES AND EQUITY
Current liabilities:
Long-term debt due within one year$8.5 $6.4 
Accounts payable and accrued liabilities1,234.3 470.0 
Total current liabilities1,242.8 476.4 
Long-term operating lease liabilities47.6 45.4 
Long-term debt3,771.7 3,764.4 
Deferred income taxes1,062.2 1,185.4 
Other noncurrent liabilities and deferred credits153.0 108.8 
Total liabilities6,277.3 5,580.4 
Stockholders’ equity:
$25 par, 4% noncumulative, preferred stock, 840,000 shares authorized, 649,736 shares issued; 214,542 and 215,199 shares outstanding at June 30, 2021 and December 31, 2020, respectively
5.4 5.4 
$.01 par, common stock, 400,000,000 shares authorized; 123,352,185 shares issued; 90,947,526 and 91,047,107 shares outstanding at June 30, 2021 and December 31, 2020, respectively
0.9 0.9 
Additional paid-in capital913.2 830.9 
Retained earnings2,822.9 3,219.6 
Accumulated other comprehensive income46.7 0.4 
Total stockholders’ equity3,789.1 4,057.2 
Noncontrolling interest327.3 326.4 
Total equity4,116.4 4,383.6 
Total liabilities and equity$10,393.7 $9,964.0 
See accompanying notes to the unaudited consolidated financial statements.

5

Kansas City Southern and Subsidiaries
Consolidated Statements of Cash Flows

Six Months Ended
June 30,
20212020
(In millions)
(Unaudited)
Operating activities:
Net income (loss)$(224.6)$262.6 
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization183.2 178.7 
Deferred income taxes(135.5)34.3 
Equity in net earnings of affiliates(9.4)(1.2)
Share-based compensation14.4 13.5 
Loss on foreign currency derivative instruments4.1 27.3 
Foreign exchange (gain) loss(3.6)24.4 
Merger costs740.1  
Restructuring charges 16.5 
Distributions from affiliates2.5 2.5 
Settlement of foreign currency derivative instruments(1.9)(29.0)
Cash payments for merger costs(719.5) 
Reimbursement of merger termination fee700.0  
Refundable Mexican value added tax(34.5)(18.1)
Changes in working capital items:
Accounts receivable(52.1)44.1 
Materials and supplies(6.6)19.3 
Other current assets10.5 (29.0)
Accounts payable and accrued liabilities33.8 (19.4)
Other, net6.4 (1.0)
Net cash provided by operating activities507.3 525.5 
Investing activities:
Capital expenditures(250.5)(194.7)
Purchase or replacement of assets under operating leases (78.2)
Property investments in MSLLC(19.4)(20.0)
Investments in and advances to affiliates(7.2)(4.9)
Proceeds from disposal of property2.8 8.0 
Other, net(4.7)(9.4)
Net cash used for investing activities(279.0)(299.2)
Financing activities:
Proceeds from issuance of long-term debt 545.6 
Repayment of long-term debt(3.5)(4.8)
Dividends paid(89.3)(76.9)
Shares repurchased (211.7)
Debt issuance costs paid (6.6)
Proceeds from employee stock plans2.5 4.5 
Net cash provided by (used for) financing activities(90.3)250.1 
Effect of exchange rate changes on cash(0.4)(5.1)
Cash and cash equivalents:
Net increase during each period137.6 471.3 
At beginning of year188.2 148.8 
At end of period$325.8 $620.1 
See accompanying notes to the unaudited consolidated financial statements.
6

Kansas City Southern and Subsidiaries
Consolidated Statements of Changes in Equity
(in millions, except per share amounts)
(Unaudited)
$25 Par
Preferred
Stock
$.01 Par
Common
Stock
Additional Paid-in
Capital
Retained
Earnings
Accumulated
Other
Comprehensive Income
(Loss)
Non-
controlling
Interest
Total
Balance at December 31, 2019$5.6 $1.0 $843.7 $3,601.3 $(29.1)$323.4 $4,745.9 
Net income151.8 0.5 152.3 
Other comprehensive income3.6 3.6 
Dividends on common stock ($0.40/share)
 (38.2)(38.2)
Dividends on $25 par preferred stock ($0.25/share)
(0.1)(0.1)
Share repurchases (11.4)(182.8)(194.2)
Settlement of forward contract for accelerated share repurchases82.5 82.5 
Options exercised and stock subscribed, net of shares withheld for employee taxes (0.1)(0.1)
Share-based compensation10.3 10.3 
Balance at March 31, 20205.6 1.0 925.0 3,532.0 (25.5)323.9 4,762.0 
Net income109.7 0.6 110.3 
Other comprehensive income5.9 5.9 
Dividends on common stock ($0.40/share)
 (37.8)(37.8)
Dividends on $25 par preferred stock ($0.25/share)
  
Share repurchases  (6.8)(93.2)(100.0)
Options exercised and stock subscribed, net of shares withheld for employee taxes (0.3)(0.3)
Share-based compensation4.9 4.9 
Balance at June 30, 20205.6 1.0 922.8 3,510.7 (19.6)324.5 4,745.0 
Net income189.8 0.4 190.2 
Other comprehensive income3.3 3.3 
Contribution from noncontrolling interest0.9 0.9 
Dividends on common stock ($0.40/share)
 (37.6)(37.6)
Dividends on $25 par preferred stock ($0.25/share)
(0.1)(0.1)
Share repurchases(0.1) (6.5)(110.5)(117.1)
Options exercised and stock subscribed, net of shares withheld for employee taxes 3.9 3.9 
Share-based compensation5.4 5.4 
Balance at September 30, 20205.5 1.0 925.6 3,552.3 (16.3)325.8 4,793.9 
Net income165.7 0.6 166.3 
Other comprehensive income16.7 16.7 
Dividends on common stock ($0.44/share)
 (40.1)(40.1)
Dividends on $25 par preferred stock ($0.25/share)
  
Share repurchases(0.1)(0.1)(26.6)(458.3)(485.1)
Forward contract for accelerated share repurchases(75.0)(75.0)
Options exercised and stock subscribed, net of shares withheld for employee taxes 2.7 2.7 
Share-based compensation4.2 4.2 
Balance at December 31, 20205.4 0.9 830.9 3,219.6 0.4 326.4 4,383.6 
Net income153.0 0.4 153.4 
Other comprehensive income79.4 79.4 
Dividends on common stock ($0.54/share)
 (49.1)(49.1)
Dividends on $25 par preferred stock ($0.25/share)
  
Share repurchases  (2.1)(72.9)(75.0)
Settlement of forward contract for accelerated share repurchases75.0 75.0 
Options exercised and stock subscribed, net of shares withheld for employee taxes (3.0)(3.0)
Share-based compensation8.2 8.2 
Balance at March 31, 20215.4 0.9 909.0 3,250.6 79.8 326.8 4,572.5 
Net income (loss)(378.5)0.5 (378.0)
Other comprehensive loss(33.1)(33.1)
Dividends on common stock ($0.54/share)
 (49.1)(49.1)
Dividends on $25 par preferred stock ($0.25/share)
(0.1)(0.1)
Options exercised and stock subscribed, net of shares withheld for employee taxes (2.0)(2.0)
Share-based compensation6.2 6.2 
Balance at June 30, 2021$5.4 $0.9 $913.2 $2,822.9 $46.7 $327.3 $4,116.4 

See accompanying notes to the unaudited consolidated financial statements.
7


Kansas City Southern and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
For purposes of this report, “KCS” or the “Company” may refer to Kansas City Southern or, as the context requires, to one or more subsidiaries of Kansas City Southern.

1. Basis of Presentation
In the opinion of the management of KCS, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of normal and recurring adjustments) necessary to reflect a fair statement of the results for interim periods in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). Pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”), certain information and note disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. These consolidated financial statements should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. The results of operations for the three and six months ended June 30, 2021, are not necessarily indicative of the results to be expected for the full year ending December 31, 2021. Certain prior year amounts have been reclassified to conform to the current year presentation.

2. Merger Agreement
On March 21, 2021, KCS entered into a merger agreement with Canadian Pacific Railway Limited, a Canadian corporation (“CP”), under which CP agreed to acquire KCS in a stock and cash transaction valued at $275 per common share. On April 20, 2021, KCS received an unsolicited merger proposal valued at $325 per common share from Canadian National Railway Company, a Canadian corporation (“CN”), which, after negotiation with and a revised proposal from CN, was determined on May 13, 2021 by the Company’s board of directors to be a superior proposal as defined by the CP merger agreement. On May 21, 2021, KCS terminated the CP merger agreement and paid CP a merger termination fee of $700.0 million, which was recognized in merger costs on the consolidated statements of operations.
On May 21, 2021, KCS and CN entered into a merger agreement (The “Merger Agreement”), and a U.S. affiliate of CN paid KCS $700.0 million as reimbursement for the termination fee paid to CP. KCS is obligated to repay the termination fee to CN under certain circumstances, including but not limited to, if KCS were to terminate the Merger Agreement to accept a superior proposal as defined by the Merger Agreement. As a result, the $700.0 million reimbursement from CN was recognized within accounts payable and accrued liabilities on the consolidated balance sheets. In addition, KCS would be required to pay CN a termination fee of $700.0 million to terminate the Merger Agreement with CN.
Per the Merger Agreement, KCS would merge into a wholly-owned, U.S. subsidiary of CN (the “Merger”) and be the surviving entity of the Merger. The ownership interest of KCS would then be deposited into a voting trust subject to a voting trust agreement (the “Voting Trust Transaction”). Each share of common stock, par value $0.01 per share, of KCS that is outstanding immediately prior to the Merger will be converted into the right to receive (1) 1.129 common shares of CN and (2) $200 in cash (together, the “Merger Consideration”), and each share of preferred stock, par value $25 per share, that is outstanding immediately prior to the Merger will be converted into the right to receive $37.50 in cash.
Subject to receipt of regulatory clearances, approval by stockholders of KCS, and other customary closing conditions, the completion of the Voting Trust Transaction is currently expected to occur in the second half of 2021, and upon completion, KCS stockholders are expected to own approximately 12.65% of CN’s outstanding common shares. KCS’s management and its board of directors will continue to manage KCS while it is in the voting trust, pursuing KCS’s independent business plan and growth strategies. Final control approval from the Surface Transportation Board (“STB”) and other applicable regulatory authorities is expected to be completed in the second half of 2022.
For the three and six months ended June 30, 2021, KCS incurred $720.8 million and $740.1 million, respectively, of merger-related costs, consisting of the $700.0 million termination fee paid to CP, and bankers’ and legal fees. These merger-related costs were recognized in merger costs in the consolidated statements of operations.
On June 8, 2021, KCS entered into a letter waiver with lenders to the KCS revolving credit facility to waive the events of default that would occur under the KCS revolving credit facility as a result of the changes of control that would arise upon consummation of the Voting Trust Transaction and as a result of CN obtaining control of KCS following final approval of the transaction by the STB.




8


Kansas City Southern and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements—(Continued)
3. Revenue
Disaggregation of Revenue
The following table presents revenues disaggregated by the major commodity groups as well as the product types included within the major commodity groups (in millions). The Company believes disaggregation by product type best depicts how cash flows are affected by economic factors. See Note 12 for revenues by geographical area.
Three Months EndedSix Months Ended
June 30,June 30,
2021202020212020
Chemical & Petroleum
Chemicals$64.8 $52.2 $125.4 $114.7 
Petroleum132.9 70.6 268.1 166.4 
Plastics34.8 35.7 70.3 76.0 
Total232.5 158.5 463.8 357.1 
Industrial & Consumer Products
Forest Products62.6 57.8 120.3 126.7 
Metals & Scrap51.0 40.4 97.3 102.7 
Other31.0 22.4 61.0 50.2 
Total144.6 120.6 278.6 279.6 
Agriculture & Minerals
Grain88.9 64.1 163.6 141.9 
Food Products36.6 39.0 73.6 81.7 
Ores & Minerals6.1 5.3 11.3 11.1 
Stone, Clay & Glass8.3 6.0 15.8 14.2 
Total139.9 114.4 264.3 248.9 
Energy
Utility Coal31.2 23.2 62.9 46.8 
Coal & Petroleum Coke12.0 9.5 22.4 21.1 
Frac Sand4.2 1.7 7.6 5.5 
Crude Oil7.1 4.9 19.1 22.2 
Total 54.5 39.3 112.0 95.6 
Intermodal91.1 63.5 172.4 152.2 
Automotive49.4 15.6 93.5 69.5 
Total Freight Revenues712.0 511.9 1,384.6 1,202.9 
Other Revenue37.5 36.0 70.9 76.7 
Total Revenues$749.5 $547.9 $1,455.5 $1,279.6 
Contract Balances
The amount of revenue recognized in the second quarter of 2021 from performance obligations partially satisfied in previous periods was $27.0 million. The performance obligations that were unsatisfied or partially satisfied as of June 30, 2021, were $28.5 million, which represents in-transit shipments that are fully satisfied the following month.
A receivable is any unconditional right to consideration, and is recognized as shipments have been completed and the relating performance obligation has been fully satisfied. At June 30, 2021 and December 31, 2020, the accounts receivable, net balance was $298.9 million and $247.1 million, respectively. Contract assets represent a conditional right to consideration in exchange for goods or services. The Company did not have any contract assets at June 30, 2021 and December 31, 2020.
Contract liabilities represent consideration received in advance from customers, and are recognized as revenue over time as the relating performance obligation is satisfied. The amount of revenue recognized in the second quarter of 2021 that was included in the opening contract liability balance was $8.3 million. The Company has recognized contract liabilities within the accounts payable and accrued liabilities financial statement caption on the balance sheet. These are considered current liabilities as they will be settled in less than 12 months.
9


Kansas City Southern and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements—(Continued)
The following tables summarize the changes in contract liabilities (in millions):
Contract liabilities Three Months EndedSix Months Ended
June 30,June 30,
2021202020212020
Beginning balance$18.8 $21.1 $29.9 $30.5 
Revenue recognized that was included in the contract liability balance at the beginning of the period(8.3)(7.8)(20.1)(17.9)
Increases due to consideration received, excluding amounts recognized as revenue during the period9.2 2.8 9.9 3.5 
Ending balance$19.7 $16.1 $19.7 $16.1 


4. Earnings (Loss) Per Share Data
Basic earnings (loss) per common share is computed by dividing net income (loss) available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted earnings (loss) per share adjusts basic earnings (loss) per common share for the effects of potentially dilutive common shares, if the effect is not anti-dilutive. Potentially dilutive common shares include the dilutive effects of shares issuable under the stock option and performance award plans.
The following table reconciles the basic earnings (loss) per share computation to the diluted earnings (loss) per share computation (in millions, except share and per share amounts):
Three Months EndedSix Months Ended
June 30,June 30,
 2021202020212020
Net income (loss) available to common stockholders for purposes of computing basic and diluted earnings (loss) per share$(378.6)$109.7 $(225.6)$261.4 
Weighted-average number of shares outstanding (in thousands):
Basic shares90,767 94,476 90,762 95,070 
Effect of dilution 417  464 
Diluted shares90,767 94,893 90,762 95,534 
Earnings (loss) per share:
Basic earnings (loss) per share$(4.17)$1.16 $(2.48)$2.75 
Diluted earnings (loss) per share$(4.17)$1.16 $(2.48)$2.74 

Potentially dilutive shares excluded from the calculation (in thousands):
Stock options excluded as their inclusion would be anti-dilutive584 72 558 72 

For the three and six months ended June 30, 2021, 584,416 and 557,804 shares, respectively, were excluded from the computation of diluted shares because the impact would have been anti-dilutive due to the loss reported during the periods.
10


Kansas City Southern and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements—(Continued)
5. Property and Equipment (including Concession Assets)
Property and equipment, including concession assets, and related accumulated depreciation and amortization are summarized below (in millions):
June 30,
2021
December 31,
2020
Land$227.5 $227.5 
Concession land rights141.1 141.1 
Road property8,263.0 8,174.4 
Equipment2,804.7 2,764.6 
Technology and other379.9 372.6 
Construction in progress304.6 221.9 
Total property12,120.8 11,902.1 
Accumulated depreciation and amortization2,981.8 2,904.3 
Property and equipment (including concession assets), net$9,139.0 $8,997.8 
Concession assets, net of accumulated amortization of $704.3 million and $709.7 million, totaled $2,416.6 million and $2,383.5 million at June 30, 2021 and December 31, 2020, respectively.


6. Fair Value Measurements
The Company’s derivative financial instruments are measured at fair value on a recurring basis and consist of foreign currency forward and option contracts and treasury lock agreements, which are classified as Level 2 valuations. The Company determines the fair value of its derivative financial instrument positions based upon pricing models using inputs observed from actively quoted markets and also takes into consideration the contract terms as well as other inputs, including market currency exchange rates and in the case of option contracts, volatility, the risk-free interest rate and the time to expiration.
The Company’s short-term financial instruments include cash and cash equivalents, accounts receivable, accounts payable and short-term borrowings. The carrying value of the short-term financial instruments approximates their fair value.
The fair value of the Company’s debt is estimated using quoted market prices when available. When quoted market prices are not available, fair value is estimated based on current market interest rates for debt with similar maturities and credit quality. The carrying value of the Company’s debt was $3,780.2 million and $3,770.8 million at June 30, 2021 and December 31, 2020, respectively. If the Company’s debt were measured at fair value, the fair value measurements of the individual debt instruments would have been classified as Level 2 in the fair value hierarchy.

The fair value of the Company’s financial instruments is presented in the following table (in millions)