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Fair Value Measurements

12 Months Ended

Dec. 31, 2021

2.	Fair Value Measurements

Fair Value Hierarchy

Accounting guidance on fair value measurements and disclosures establishes a hierarchy that prioritizes the inputs used to measure fair value (generally, assumptions that market participants would use in pricing an asset or liability) based on the quality and reliability of the information provided by the inputs, as follows:

Level 1: Quoted market prices in active markets for identical assets or liabilities.

Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data.

Level 3: Unobservable inputs that are not corroborated by market data.

Fair Values of Other Financial Instruments

The following table presents the carrying amounts and estimated fair values of the Company’s other financial instruments at December 31, 2021 and December 31, 2020:

		December 31, 2021				December 31, 2020
	Input	Carrying		Fair		Carrying		Fair
	Level	Amount		Value		Amount		Value
Financial Assets:
Cash equivalents	Level 1	$	17.1	$	17.1	$	73.7	$	73.7
Financial Liabilities:
Short-term borrowings	Level 2		252.8		252.8		351.4		351.4
Term loan due May 1, 2022	Level 2		0.0		0.0		300.0		300.0
2.45% Senior notes due August 1, 2022	Level 2		300.0		302.9		299.9		310.1
2.875% Senior notes due October 1, 2022	Level 2		399.9		406.4		399.9		416.6
Term loan due December 22, 2024	Level 2		400.0		400.0		0.0		0.0
3.15% Senior notes due August 1, 2027	Level 2		424.7		450.1		424.7		472.4
2.3% Senior notes due December 15, 2031	Level 2		399.2		403.5		0.0		0.0
3.95% Senior notes due August 1, 2047	Level 2		397.5		471.6		397.4		502.2
Interest Rate Swap Lock Agreement liability	Level 2		41.6		41.6		57.0		57.0
Business Acquisition Liabilities	Level 3		34.0		34.0		118.0		118.0

The Company recognizes transfers between input levels as of the actual date of the event. There were no transfers between input levels during the twelve months ended December 31, 2021.

The following methods and assumptions were used to estimate the fair value of each class of financial instruments reflected in the Consolidated Balance Sheets:

Cash Equivalents: Cash equivalents consist of highly liquid short-term investments and term bank deposits, which mature within three months. The estimated fair value of the Company’s cash equivalents approximates their carrying value.

Short-Term Borrowings: The carrying amounts of the Company’s unsecured lines of credit and commercial paper issuances approximates fair value because of their short maturities and variable interest rates.

Senior Notes: The Company determines the fair value of its senior notes based on their quoted market value or broker quotes, when possible. In the absence of observable market quotes, the notes are valued using non-binding market consensus prices that the Company seeks to corroborate with observable market data.

Interest Rate Swap Lock Agreement: The Company entered into interest rate swap lock agreements (“Interest Rate Swap Lock Agreements”) which are used to hedge the risk of changes in the interest payments attributable to changes in the benchmark U.S. Dollar London Interbank Offered Rate (“LIBOR”) interest rate associated with anticipated issuances of debt in 2022. These interest rate swap lock agreements have been designated as cash flow hedges and have a notional amount of $300.0. The liability decreased by $15.4 during the year ended December 31, 2021 primarily due to higher current and projected interest rates with the offset in Accumulated Other Comprehensive Loss and Deferred Taxes. The liability was reclassified to Accounts Payable and Accrued Expenses during the third quarter of 2021.

Business Acquisition Liabilities: The business acquisition liabilities represent the estimated fair value of additional future contingent consideration payable for acquisitions of businesses that included contingent consideration clauses. The fair value of business acquisition liabilities is evaluated on an ongoing basis and is based on management estimates and entity-specific assumptions which are considered Level 3 inputs. As of December 31, 2021, the Company had a business acquisition liability of $20.0 in connection with the Zicam Acquisition and a $14.0 business acquisition liability in connection with the TheraBreath Acquisition (both of which are defined in Note 6). Any amount that may be due for the Zicam business acquisition liability is payable five years from the closing date. Any amount that may be due for the TheraBreath business acquisition liability is payable in installments between two and four years from the closing. As of December 31, 2020, the Company had a business acquisition liability related to the Flawless Acquisition of $98.0 and a $20.0 liability in connection with the Zicam acquisition which is payable five years from the closing date.

The initial fair value of the Flawless business acquisition liability was $182.0. That amount was established based on initial projections in the purchase price allocation. Since the initial fair value was established, the Company has recorded a reduction in fair value of the entire

$182.0 business acquisition liability of which $98.0 was recorded in the twelve months ended December 31, 2021, based on the revised valuation due to updated sales forecasts. The reduction in fair value was recorded as a reduction in SG&A expense within the Consumer Domestic and Consumer International segments. At December 31, 2021, which was the end of the earn out period, the business acquisition liability value was $0.0. See Note 15 for further details.

The fair value measurement of the business acquisition liabilities is determined using Level 3 inputs. The fair value is determined using the present value of the weighted probabilities of the possible payments due to randomly changing revenue growth. These fair value measurements represent Level 3 measurements as they are based on significant inputs not observable in the market. Significant judgment is employed in determining the appropriateness of these assumptions as of the acquisition date and for each subsequent period. Accordingly, changes in assumptions could have a material impact on the fair value of the business acquisition liabilities. Changes in the fair value of the business acquisition liabilities are recorded in general and administrative expenses in the accompanying consolidated statements of operations.

Other: The carrying amounts of accounts receivable, and accounts payable and accrued expenses, approximated estimated fair values as of December 31, 2021 and 2020.

- 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.

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