Fair Value of Assets and Liabilities

12 Months Ended

Dec. 31, 2022

Fair value is an exit price, representing 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 Company utilizes market data or assumptions that market participants would use in pricing the asset or liability. A three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value, is utilized for disclosing the fair value of the Company’s assets and liabilities. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs about which little or no market data exists, therefore requiring an entity to develop its own assumptions.

Assets and liabilities measured at fair value are based on one or more of the following three valuation techniques:

•Market approach — prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.

•Cost approach — amount that would be required to replace the service capacity of an asset or replacement cost.

•Income approach — techniques to convert future amounts to a single present amount based on market expectations, including present value techniques, option-pricing and other models.

The Company primarily applies the market approach for commodity derivatives and for all defined benefit plan investment assets and the income approach for interest rate and foreign currency derivatives for recurring fair value measurements and attempts to utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The determination of fair values incorporates various factors that include not only the credit standing of the counterparties involved and the impact of credit enhancements, but also the impact of the Company’s nonperformance risk on its liabilities. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels.

As of December 31, 2022 and January 1, 2022, the Company held certain financial assets and liabilities that are required to be measured at fair value on a recurring basis. These consisted of the Company’s derivative instruments related to forward foreign exchange derivative contracts, cross-currency swap derivative contracts, defined benefit pension plan investment assets and deferred compensation plan liabilities. The fair values of forward foreign exchange derivative contracts are determined using the cash flows of the forward contracts, discount rates to account for the passage of time and current foreign exchange market data which are all based on inputs readily available in public markets and are categorized as Level 2. The fair values of cross-currency swap derivative contracts are determined using the cash flows of the swap contracts, discount rates to account for the passage of time, current foreign exchange and interest rate market data and credit risk, which are all based on inputs readily available in public markets and are categorized as Level 2. The fair value of deferred compensation plan liabilities is based on readily available current market data and is categorized as Level 2. The fair values of defined benefit pension plan investment assets include: certain U.S. equity securities, certain foreign equity securities, cash and cash equivalents and debt securities that are determined based on quoted prices in public markets categorized as Level 1; insurance contracts that are determined based on inputs readily available in public markets or can be derived from information available in publicly quoted

markets categorized as Level 2; certain foreign equity securities, debt securities and commodity investments measured at their net asset value, which is determined based on inputs readily available in public markets; and investments in hedge fund of funds and real estate investments that are based on unobservable inputs about which little or no market data exists and are measured at a net asset value. Assets valued utilizing a net asset value are not required to be classified within the fair value hierarchy.

There were no changes during 2022 to the Company’s valuation techniques used to measure asset and liability fair values on a recurring basis. As of and for the year ended December 31, 2022, the Company did not have any non-financial assets or liabilities that were required to be measured at fair value on a recurring basis or non-recurring basis.

The following tables set forth by level within the fair value hierarchy the Company’s financial assets and liabilities within continuing operations accounted for at fair value on a recurring basis.


	Assets (Liabilities) at Fair Value as of December 31, 2022
	Total		Quoted Prices In Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Defined benefit pension plan investment assets:
U.S. equity securities	$	158,305	$	158,305	$	—	$	—
Foreign equity securities	33,713		33,713		—		—
Debt securities	81,812		81,812		—		—
Cash and other	11,045		11,045		—		—
Total plan assets in the fair value hierarchy	284,875		284,875		—		—
Plan assets measured at net asset value:(1)
Hedge fund of funds	313,521
Foreign equity securities	135,076
Debt securities	670
Real estate	65,364
Commodities	16,738
Total plan assets measured at net asset value	531,369
Total plan assets	816,244

Derivative contracts:
Forward foreign exchange contracts - assets	7,404		—		7,404		—
Cross-currency swap contracts - assets	17,510		—		17,510		—
Forward foreign exchange contracts - liabilities	(6,282)		—		(6,282)		—
Cross-currency swap contracts - liabilities	(28,005)		—		(28,005)		—
Total derivative contracts	(9,373)		—		(9,373)		—
Deferred compensation plan liability	(16,096)		—		(16,096)		—
Total	$	790,775	$	284,875	$	(25,469)	$	—

(1)Certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been categorized in the fair value hierarchy. The fair value amounts presented in the tables above are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the Consolidated Balance Sheets.


	Assets (Liabilities) at Fair Value as of January 1, 2022
	Total		Quoted Prices In Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Defined benefit pension plan investment assets:
U.S. equity securities	$	201,111	$	201,111	$	—	$	—
Foreign equity securities	47,099		47,099		—		—
Debt securities	24,125		24,125		—		—
Cash and other	1,597		1,597		—		—
Total plan assets in the fair value hierarchy	273,932		273,932		—		—
Plan assets measured at net asset value:(1)
Hedge fund of funds	356,289
Foreign equity securities	170,741
Debt securities	87,284
Real estate	57,479
Commodities	27,873
Total plan assets measured at net asset value	699,666
Total plan assets	973,598

Derivative contracts:
Forward foreign exchange contracts - assets	8,420		—		8,420		—
Cross-currency swap contracts - assets	2,953		—		2,953		—
Forward foreign exchange contracts - liabilities	(694)		—		(694)		—
Cross-currency swap contracts - liabilities	(11,609)		—		(11,609)		—
Total derivative contracts	(930)		—		(930)		—
Deferred compensation plan liability	(20,916)		—		(20,916)		—
Total	$	951,752	$	273,932	$	(21,846)	$	—

Fair Value of Financial Instruments

The carrying amounts of cash and cash equivalents, trade accounts receivable and accounts payable approximated fair value as of December 31, 2022 and January 1, 2022. The fair value of debt, which is classified as a Level 2 liability, was $3,697,856 and $3,504,412 as of December 31, 2022 and January 1, 2022, respectively. Debt had a carrying value of $3,872,275 and $3,368,634 as of December 31, 2022 and January 1, 2022, respectively. The fair values were estimated using quoted market prices as provided in secondary markets, which consider the Company’s credit risk and market related conditions.

- 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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