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FAIR VALUE MEASUREMENTS | 6 Months Ended
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Jun. 30, 2023
Fair Value Disclosures [Abstract] |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS Fair value measurements are estimated based on valuation techniques and inputs categorized as follows: •Level 1 — Quoted prices in active markets for identical assets or liabilities; •Level 2 — Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and •Level 3 — Unobservable inputs that are supported by little or no market activity and that are financial instruments whose values are determined using discounted cash flow methodologies, pricing models, or similar techniques, as well as instruments for which the determination of fair value requires significant judgment or estimation. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument. Assets and Liabilities Measured at Fair Value on a Recurring Basis The following fair value hierarchy table presents the components and classification of the Company’s financial assets and liabilities measured at fair value on a recurring basis:
|  | June 30, 2023 |  | December 31, 2022
(in millions) |  | Carrying Value |  | Level 1 |  | Level 2 |  | Level 3 |  | Carrying Value |  | Level 1 |  | Level 2 |  | Level 3
Assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash equivalents |  | $ | 57 |  |  | $ | 49 |  |  | $ | 8 |  |  | $ | — |  |  | $ | 81 |  |  | $ | 72 |  |  | $ | 9 |  |  | $ | — |
Foreign currency exchange contracts |  | $ | 2 |  |  | $ | — |  |  | $ | 2 |  |  | $ | — |  |  | $ | 5 |  |  | $ | — |  |  | $ | 5 |  |  | $ | — |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Acquisition-related contingent consideration |  | $ | 10 |  |  | $ | — |  |  | $ | — |  |  | $ | 10 |  |  | $ | 4 |  |  | $ | — |  |  | $ | — |  |  | $ | 4 |
Foreign currency exchange contracts |  | $ | 1 |  |  | $ | — |  |  | $ | 1 |  |  | $ | — |  |  | $ | 2 |  |  | $ | — |  |  | $ | 2 |  |  | $ | — |
Cross-currency swaps |  | $ | 62 |  |  | $ | — |  |  | $ | 62 |  |  | $ | — |  |  | $ | 39 |  |  | $ | — |  |  | $ | 39 |  |  | $ | — |
Cash equivalents consist of highly liquid investments, primarily money market funds, with maturities of three months or less when purchased, and are reflected in the Condensed Consolidated Balance Sheets at carrying value, which approximates fair value due to their short-term nature. There were no transfers into or out of Level 3 during the six months ended June 30, 2023 and 2022. Cross-currency Swaps During the third quarter of 2022, the Company entered into cross-currency swaps, with an aggregate notional value of $1,000 million, to mitigate fluctuation in the value of a portion of its euro-denominated net investment in its Condensed Consolidated Financial Statements from fluctuation in exchange rates. The euro-denominated net investment being hedged is the Company’s investment in certain euro-denominated subsidiaries. Prior to the third quarter of 2022, the Company had no cross-currency swaps for any period presented. The assets and liabilities associated with the Company's cross-currency swaps as included in the Condensed Consolidated Balance Sheets as of June 30, 2023 and December 31, 2022 are as follows:
(in millions) | June 30, 2023 |  | December 31, 2022
Other non-current liabilities | $ | 68 |  |  | $ | 45 |
Prepaid expenses and other current assets | $ | 6 |  |  | $ | 6 |
Net fair value | $ | 62 |  |  | $ | 39 |
The following table presents the effect of hedging instruments on the Condensed Consolidated Statements of Comprehensive Loss and the Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2023 and 2022:
| Three Months Ended June 30, |  | Six Months Ended June 30,
(in millions) | 2023 |  | 2022 |  | 2023 |  | 2022
Loss recognized in Other comprehensive loss | $ | 17 |  |  | $ | — |  |  | $ | 23 |  |  | $ | — |
Gain excluded from assessment of hedge effectiveness | $ | 3 |  |  | $ | — |  |  | $ | 6 |  |  | $ | — |
Location of gain of excluded component | Interest expense |  | Interest Expense
No portion of the cross-currency swaps were ineffective for the six months ended June 30, 2023. During the six months ended June 30, 2023, the Company received $6 million in interest settlements, which are reported as investing activities in the Condensed Consolidated Statements of Cash Flows. Foreign Currency Exchange Contracts The Company enters into foreign currency exchange contracts to economically hedge the foreign exchange exposure on certain of the Company's intercompany balances. As of June 30, 2023, these contracts had an aggregate notional amount of $258 million. The assets and liabilities associated with the Company’s foreign exchange contracts as included in the Condensed Consolidated Balance Sheets as of June 30, 2023 and December 31, 2022 are as follows:
(in millions) | June 30, 2023 |  | December 31, 2022
Accrued and other current liabilities | $ | 1 |  |  | $ | 2 |
Prepaid expenses and other current assets | $ | 2 |  |  | $ | 5 |
Net fair value | $ | 1 |  |  | $ | 3 |
The following table presents the effect of the Company’s foreign exchange contracts on the Condensed Consolidated Statements of Operations and the Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2023 and 2022:
| Six Months Ended June 30,
(in millions) | 2023 |  | 2022
(Loss) Gain related to changes in fair value | $ | (2) |  |  | $ | (4) |
Gain related to settlements | $ | 3 |  |  | $ | 4 |
Acquisition-related Contingent Consideration Obligations Acquisition-related contingent consideration, which primarily consists of potential milestone payments, is recorded in the Condensed Consolidated Balance Sheets at its acquisition date estimated fair value, in accordance with the acquisition method of accounting. The fair value of the acquisition-related contingent consideration is remeasured each reporting period, with changes in fair value recorded in the Condensed Consolidated Statements of Operations. The fair value measurement is based on significant inputs not observable in the market and thus represents a Level 3 measurement as defined in fair value measurement accounting. The fair value measurement of contingent consideration obligations arising from business combinations is determined via a probability-weighted discounted cash flow analysis, using unobservable (Level 3) inputs. These inputs may include: (i) the estimated amount and timing of projected cash flows, (ii) the probability of the achievement of the factor(s) on which the contingency is based and (iii) the risk-adjusted discount rate used to present value the probability-weighted cash flows. Significant increases or decreases in any of those inputs in isolation could result in a significantly higher or lower fair value measurement. At June 30, 2023, the fair value measurements of acquisition-related contingent consideration were determined using risk-adjusted discount rates ranging from 14% to 28%, and a weighted average risk-adjusted discount rate of 16%. The weighted average risk-adjusted discount rate was calculated by weighting each contract’s relative fair value at June 30, 2023. The following table presents a reconciliation of contingent consideration obligations measured on a recurring basis using significant unobservable inputs (Level 3) for the six months ended June 30, 2023 and 2022:
| June 30,
(in millions) | 2023 |  | 2022
Balance, beginning of period |  | $ | 4 |  |  |  | $ | 9 |
Adjustments to Acquisition-related contingent consideration: |  |  |  |  |
Accretion for the time value of money | $ | 1 |  |  |  | $ | — |  |
Fair value adjustments due to changes in estimates of future payments | — |  |  |  | (5) |  |
Acquisition-related contingent consideration adjustments |  | 1 |  |  |  | (5) |
Additions (Note 5) |  | 5 |  |  |  | — |
Payments/Settlements |  | — |  |  |  | — |
Balance, end of period |  | 10 |  |  |  | 4 |
Current portion included in Accrued and other current liabilities |  | 4 |  |  |  | — |
Non-current portion |  | $ | 6 |  |  |  | $ | 4 |
Fair Value of Long-term Debt The fair value of long-term debt as of June 30, 2023 and December 31, 2022 was $2,588 million and $2,354 million, respectively, and was estimated using the quoted market prices for similar debt issuances (Level 2).

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- References No definition available. + Details
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- 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. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482106/820-10-50-2 + Details
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