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Fair Value Measurements | 3 Months Ended
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Mar. 29, 2025
Fair Value Measurements [Abstract] |
Fair Value Measurements | Note 7 – Fair Value Measurements Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described as follows: • Level 1— Unadjusted quoted prices in active markets for identical assets or liabilities that are accessible at the measurement date. • Level 2— Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include: quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability; and inputs that are derived principally from or corroborated by observable market data by correlation or other means. • Level 3— Inputs that are unobservable for the asset or liability. The following section describes the fair values of our financial instruments and the methodologies that we used to measure their fair values. Investments and notes receivable There are no quoted market prices available for investments in unconsolidated affiliates and notes receivable. Certain of our notes receivable contain variable interest rates. We believe the carrying amounts of the notes receivable are a reasonable estimate of fair value based on the interest rates in the applicable markets. Our notes receivable fair value is based on Level 3 inputs within the fair value hierarchy. Debt The fair value of our debt (including bank credit lines, current maturities of long-term debt and long-term debt) is based on Level 3 inputs within the fair value hierarchy, and as of March 29, 2025 and December 28, 2024 was estimated at $ 2,891 million and $ 2,536 million, respectively. Factors that we considered when estimating the fair value of our debt include market conditions, such as interest rates and credit spreads. Derivative contracts Derivative contracts are valued using quoted market prices and significant other observable inputs. Our derivative instruments primarily include foreign currency forward contracts, interest rate swaps, and total return swaps. The fair values for the majority of our foreign currency derivative contracts are obtained by comparing our contract rate to a published forward price of the underlying market rates, which are based on market rates for comparable transactions that are classified within Level 2 of the fair value hierarchy. The fair value of the interest rate swap, which is classified within Level 2 of the fair value hierarchy, is determined by comparing our contract rate to a forward market rate as of the valuation date. The fair value of total return swaps is determined by valuing the underlying exchange traded funds of the swap using market-on-close pricing by industry providers as of the valuation date that are classified within Level 2 of the fair value hierarchy. Redeemable noncontrolling interests The values for redeemable noncontrolling interests are based on recent transactions and/or implied multiples of earnings that are classified within Level 3 of the fair value hierarchy. Intangible Assets Assets measured on a non-recurring basis at fair value include intangibles. Inputs for measuring intangibles are classified as Level 3 within the fair value hierarchy. Defined Benefit Plans Assets of our defined benefit plans are measured on a recurring basis and are classified as Level 1 within the fair value hierarchy. Contingent Consideration We estimate the fair value of contingent consideration payments as part of the acquisition price and record the estimated fair value of contingent consideration as a liability on our condensed consolidated balance sheet. For transactions accounted for as business combinations, subsequent changes in the estimated fair value of contingent consideration payments are included in selling, general, and administrative expenses in our condensed consolidated statements of income For transactions involving changes in our ownership in subsidiaries without a change in our control, subsequent changes in the estimated fair value of contingent consideration payments are recognized in additional paid-in capital in our condensed consolidated balance sheet. During the three months ended March 29, 2025, we recognized contingent consideration related to the acquisition of noncontrolling interest in a subsidiary of $ 83 million and a change in fair value of $ 3 million. We measure contingent consideration at the fair value on a recurring basis using significant unobservable inputs classified as Level 3 of the fair value hierarchy. We use various valuation techniques, including the Monte Carlo simulation and probability-weighted scenarios, to determine the fair value of the contingent consideration liabilities on the acquisition date and at each reporting period. Our fair value measurement inputs include expected operating performance, discount and risk-free rates, and credit spread. The components of the change in the fair value of contingent consideration for the three months ended March 29, 2025 and March 30, 2024 are presented in the following table: March 29, March 30, 2025 2024 Balance, beginning of period $ 30 $ 6 Increase in contingent consideration due to business acquisitions and acquisitions of noncontrolling interests in subsidiaries 93 - Decrease in contingent consideration due to payments (12) - Change in fair value of contingent consideration 1 15 Balance, end of period $ 112 $ 21 The following table presents our assets and liabilities that are measured and recognized at fair value on a recurring basis classified under the appropriate level of the fair value hierarchy as of March 29, 2025 and December 28, 2024: March 29, 2025 Level 1 Level 2 Level 3 Total Assets: Derivative contracts designated as hedges $ - $ 5 $ - $ 5 Derivative contracts undesignated - 1 - 1 Total assets $ - $ 6 $ - $ 6 Liabilities: Derivative contracts designated as hedges $ - $ 5 $ - $ 5 Derivative contracts undesignated - 1 - 1 Total return swap - 5 - 5 Contingent consideration - - 112 112 Total liabilities $ - $ 11 $ 112 $ 123 Redeemable noncontrolling interests $ - $ - $ 765 $ 765 December 28, 2024 Level 1 Level 2 Level 3 Total Assets: Derivative contracts designated as hedges $ - $ 10 $ - $ 10 Derivative contracts undesignated - 7 - 7 Total assets $ - $ 17 $ - $ 17 Liabilities: Derivative contracts designated as hedges $ - $ 5 $ - $ 5 Derivative contracts undesignated - 4 - 4 Total return swap - 3 - 3 Contingent consideration - - 30 30 Total liabilities $ - $ 12 $ 30 $ 42 Redeemable noncontrolling interests $ - $ - $ 806 $ 806

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- Definition The entire disclosure of the fair value measurement of assets and liabilities, which includes financial instruments measured at fair value that are classified in shareholders' equity, which may be measured on a recurring or nonrecurring basis. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 820 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/820/tableOfContent + Details
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