Fair Value Measurements

12 Months Ended

Dec. 31, 2019

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 14). The Company’s net contingent consideration liability relating to the acquisition of Elan (see Note 4) was estimated at a fair value of $1 million and $12 million at December 31, 2019 and 2018, respectively, based on the present value of a probability-weighted assessment approach derived from the likelihood of achieving the earn-out criteria. During 2019, the Company made a cash payment of $13 million, included in cash flows from financing activities in the consolidated statement of cash flows, as a result of the achievement of various earn-out criteria, and also adjusted the contingent consideration liability by $2 million as a result of an increased likelihood of achieving the remaining earn-out criteria.

Assets and liabilities measured at fair value on a recurring basis consisted of the following at December 31:



			Fair Value
(In millions)	Classification	Fair Value Hierarchy	2019		2018
Assets
Cash flow hedges	Prepaid expenses and other current assets	Level 2	$	4	$	—
Liabilities
Contingent consideration	Other long-term liabilities	Level 3	$	1	$	12

The Company’s senior notes 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 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 $22.6 billion and $6.0 billion at December 31, 2019 and 2018, respectively, and the carrying value was $21.5 billion and $6.0 billion at December 31, 2019 and 2018, respectively. See Note 12 for a description of debt financing activities in connection with the Company’s acquisition of First Data.

The Company’s debt guarantee arrangements are recorded at amortized cost, but measured at fair value for disclosure purposes. The aggregate carrying value of the Company’s debt guarantee arrangements of $26 million and $29 million approximate the

fair values at December 31, 2019 and 2018, respectively (Level 3 of the fair value hierarchy). See Note 9 for a description of the Company’s debt guarantee arrangements with the Lending Joint Ventures.