Fair Value Measurements

9 Months Ended

Sep. 30, 2019

The Company applies fair value accounting for all assets and liabilities that are recognized or disclosed at fair value in its consolidated financial statements on a recurring basis. Fair value represents the amount that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities, the Company uses the hierarchy prescribed in ASC 820, Fair Value Measurements, considering the principal or most advantageous market and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability. The three levels in the hierarchy are as follows:


•	Level 1 - Quoted prices (unadjusted) for identical assets or liabilities in active markets that are accessible as of the measurement date.


•	Level 2 - Inputs other than quoted prices within Level 1 that are observable either directly or indirectly, including but not limited to quoted prices in markets that are not active, quoted prices in active markets for similar assets or liabilities and observable inputs other than quoted prices such as interest rates or yield curves.


•	Level 3 - Unobservable inputs reflecting the Company’s own assumptions about the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk.

The fair values of cash equivalents, trade accounts receivable, settlement assets and obligations, accounts payable, and client deposits approximate their respective carrying values due to the short period of time to maturity. The Company’s derivative instruments are measured on a recurring basis based on foreign currency spot rates and forwards quoted by banks and foreign currency dealers and are marked-to-market each period (see Note 17). The estimated fair value of the contingent consideration liability related to the acquisition of Elan (see Note 4) was based on the present value of a probability-weighted assessment approach derived from the likelihood of achieving the earn-out criteria. This estimated fair value has not changed since the acquisition date.

Assets and liabilities measured at fair value on a recurring basis consisted of the following:



			Fair Value at
(In millions)	Classification	Fair Value Hierarchy	September 30, 2019		December 30, 2018
Assets
Cash flow hedges	Prepaid expenses and other current assets	Level 1	$	4	$	—
Liabilities
Contingent consideration	Other long-term liabilities	Level 3	$	12	$	12

The Company’s senior notes and debt guarantee arrangements are recorded at amortized cost, but measured at fair value for disclosure purposes. The estimated fair value of senior notes was based on matrix pricing which considers readily observable inputs of comparable securities (Level 2 of the fair value hierarchy). The aggregate carrying value of the Company’s debt guarantee arrangements of $28 million and $29 million approximate the fair values at September 30, 2019 and December 31,

2018, respectively (Level 3 of the fair value hierarchy). The carrying value of the Company’s term loan credit agreement, revolving credit facility borrowings and debt associated with the receivables securitization agreement approximates fair value as these instruments have variable interest rates and the Company has not experienced any change to its credit ratings (Level 2 of the fair value hierarchy). The estimated fair value of total debt, excluding finance leases and other financing obligations, was $23.3 billion and $6.0 billion as of September 30, 2019 and December 31, 2018, respectively, and the carrying value was $22.2 billion and $6.0 billion as of September 30, 2019 and December 31, 2018, respectively. See Note 14 for a description of debt financing activities in connection with the Company’s acquisition of First Data. See Note 6 for a description of the Company’s debt guarantee arrangements with the Lending Joint Ventures.