Fair Value Measurements

9 Months Ended

Sep. 27, 2024

Fair Value Disclosures [Abstract]

Fair Value Measurements

FAIR VALUE MEASUREMENTS

Accounting standards define fair value based on an exit price model, establish a framework for measuring fair value where the Company’s assets and liabilities are required to be carried at fair value and provide for certain disclosures related to the valuation methods used within a valuation hierarchy as established within the accounting standards. This hierarchy prioritizes the inputs into three broad levels as follows: Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 inputs are quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets in markets that are not active, or other observable characteristics for the asset or liability, including interest rates, yield curves and credit risks, or inputs that are derived principally from, or corroborated by, observable market data through correlation; and Level 3 inputs are unobservable inputs based on the Company’s assumptions. A financial asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement in its entirety.

A summary of financial assets and liabilities that are measured at fair value on a recurring basis were as follows ($ in millions):

	Quoted Prices in Active Market (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
September 27, 2024:
Assets:
Investments in rabbi trust	$	16.0	$	8.3	$	—	$	24.3
Liabilities:
Cross-currency swap derivative contract	$	—	$	5.0	$	—	$	5.0
Deferred compensation plans	$	—	$	24.3	$	—	$	24.3
Contingent consideration	$	—	$	—	$	2.0	$	2.0
December 31, 2023:
Liabilities:
Cross-currency swap derivative contract	$	—	$	3.3	$	—	$	3.3
Deferred compensation plans	$	—	$	21.4	$	—	$	21.4
Contingent consideration	$	—	$	—	$	3.8	$	3.8

Derivative Instruments

The cross-currency swap derivative contract was classified as Level 2 in the fair value hierarchy as it is measured using the income approach with the relevant foreign currency current exchange rates and forward curves as inputs. Refer to Note 8 for additional information.

Deferred Compensation Plans

Certain management employees of the Company participate in nonqualified deferred compensation programs that permit such employees to defer a portion of their compensation, on a pretax basis. Participants may choose among alternative earning rates for the amounts they defer, which are based on the programs’ investment options. These deferred compensation obligations are classified as Level 2 as inputs are derived principally from, or corroborated by observable market data.

The deferred compensation obligations are funded through a Company established irrevocable rabbi trust (refer to Note 13 Deferred Compensation Plans). The investments in the rabbi trust primarily consist of mutual funds and corporate owned life insurance policies. The mutual funds are valued based on quoted market prices and therefore are classified as Level 1. The corporate owned life insurance policies have cash surrender values (which approximate fair value), that derive their values from investments in mutual funds that are managed by an insurance company, valued using a market approach and therefore are classified within Level 2.

Contingent Consideration

Contingent consideration represents a cash hold back intended to be used for certain liabilities related to the Company’s acquisitions. Contingent consideration was classified as Level 3 in the fair value hierarchy as the estimated fair value was measured using a probability weighted discounted cash flow model.

Fair Value of Financial Instruments

The carrying amounts and fair values of the Company’s financial instruments were as follows ($ in millions):

	September 27, 2024				December 31, 2023
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Assets:
Investments in rabbi trust	$	24.3	$	24.3	$	—	$	—
Liabilities:
Contingent consideration	$	2.0	$	2.0	$	3.8	$	3.8
Cross-currency swap derivative contract	$	5.0	$	5.0	$	3.3	$	3.3
Convertible senior notes due 2028	$	489.0	$	453.8	$	486.9	$	455.7
Convertible senior notes due 2025	$	115.8	$	127.3	$	115.3	$	145.1
Other debt	$	816.6	$	816.6	$	911.2	$	911.2

The fair value of long-term debt approximates the carrying value as these borrowings are based on variable market rates. The fair value of the convertible senior notes due 2028 and convertible senior notes due 2025 were determined based on the quoted bid price of the convertible senior notes in an over-the-counter market on September 27, 2024 and December 31, 2023. The convertible senior notes are considered as Level 2 of the fair value hierarchy. The fair values of cash and cash equivalents, which consist primarily of money market funds, time and demand deposits, trade accounts receivables and trade accounts payable approximate their carrying amounts due to the short-term maturities of these instruments.