Fair Value

6 Months Ended

Jun. 30, 2023

4. FAIR VALUE

The fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The following table summarizes, for assets or liabilities measured at fair value, the respective fair value and the classification by level of input within the fair value hierarchy:


			Fair Value Measurement at
			Reporting Date Using
Description	June 30, 2023		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
(In millions)
Prepaid expenses and other current assets:
Forward contracts	$	0.9	$	—	$	0.9	$	—
Other non-current assets:
Plan assets	$	1.4	$	—	$	—	$	1.4
Other liabilities:
Pension obligation	$	1.5	$	—	$	—	$	1.5


			Fair Value Measurement at
			Reporting Date Using
Description	December 30, 2022		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
(In millions)
Prepaid expenses and other current assets:
Forward contracts	$	0.3	$	—	$	0.3	$	—
Other non-current assets:
Plan assets	$	2.2	$	—	$	—	$	2.2
Other liabilities:
Pension obligation	$	1.6	$	—	$	—	$	1.6

The estimated fair value of foreign currency forward contracts is based upon quoted market prices obtained from independent pricing services for similar derivative contracts and these financial instruments are characterized as Level 2 assets in the fair value hierarchy.

The estimated fair value of pension obligation is based on expected years of service and average compensation. The valuation model used to value pension obligation utilizes mortality rate, inflation, interest rate risks and changes in the life expectancy for pensioners. These assumptions are routinely made in the appraisal process by the independent actuary resulting in a Level 3 classification. As of June 30, 2023, the Company's aggregate pension benefit obligations was $9.8 million and the fair value of the pension plan assets was $9.7 million. The underfunded pension benefit obligations was $0.1 million. The Company recognizes the overfunded or underfunded status of defined benefit pension plans, measured as the difference between the fair value of the plan assets and the benefit obligation. Each overfunded plan is recognized as an asset and each underfunded plan is recognized as a liability.

There were no transfers from Level 1 or Level 2. Fair value adjustments were noncash, and therefore did not impact the Company’s liquidity or capital resources. Qualitative information about Level 3 fair value measurements is as follows:


(Dollars in millions, except rate/multiple)	June 30, 2023			Valuation Techniques	Unobservable Input	Rate/ Multiple
Pension obligation, net	$	(0.1	)	Projected unit credit method	Discount rate	4.7% - 5.2%
					Rate on return	4.7% - 4.9%
					Salary increase rate	2.0% - 3.0%

Following is a summary of the Level 3 activity:


(In millions)	Plan assets			Pension Obligation
As of December 30, 2022	$	2.2		$	(1.6	)
Benefits, payments and other adjustments		(0.8	)		0.1
As of June 30, 2023	$	1.4		$	(1.5	)