FAIR VALUE

6 Months Ended

Jun. 30, 2021

Fair Value Disclosures [Abstract]

FAIR VALUE

FAIR VALUE

Authoritative guidelines require the categorization of assets and liabilities into three levels based upon the assumptions (inputs) used to price the assets or liabilities. Level 1 provides the most reliable measure of fair value, whereas Level 3 generally requires significant management judgment. The three levels are defined as follows:

•Level 1: Unadjusted quoted prices in active markets for identical assets and liabilities.

•Level 2: Observable inputs other than those included in Level 1. For example, quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets.

•Level 3: Unobservable inputs reflecting management’s own assumptions about the inputs used in pricing the asset or liability.

As of June 30, 2021, the fair values of our financial assets and liabilities were categorized as follows:

	Total		Level 1		Level 2		Level 3
Assets
Investment in equity securities (1)	$	20,595	$	20,595	$	—	$	—
Foreign exchange contracts (2)	30		—		30		—
Total assets at fair value	$	20,625	$	20,595	$	30	$	—
Liabilities
Foreign exchange contracts (2)	$	1,526	$	—	$	1,526	$	—
Cross currency swap contract (2)	4,056		—		4,056		—
Contingent consideration obligation	33,090		—		—		33,090
Total liabilities at fair value	$	38,672	$	—	$	5,582	$	33,090

As of December 31, 2020, the fair values of our financial assets and liabilities were categorized as follows:

	Total		Level 1		Level 2		Level 3
Assets
Foreign exchange contracts (2)	$	322	$	—	$	322	$	—
Total assets at fair value	$	322	$	—	$	322	$	—
Liabilities
Foreign exchange contracts (2)	$	146	$	—	$	146	$	—
Cross currency swap contract (2)	8,309		—		8,309		—
Contingent consideration obligation	31,140		—		—		31,140
Total liabilities at fair value	$	39,595	$	—	$	8,455	$	31,140

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(1)Investment in PureCycle Technologies (PCT). See Note 18 - Investment in Equity Securities for discussion of this investment.

(2)Market approach valuation technique based on observable market transactions of spot and forward rates.

The carrying amounts of our other current financial instruments such as cash and equivalents, accounts and notes receivable, notes payable and current maturities of long-term obligations approximate fair value due to the short-term maturity of the instruments. We consider our long-term obligations a Level 2 liability and utilize the market approach valuation technique based on interest rates that are currently available to us for issuance of debt with similar terms and maturities. The estimated fair value of our long-term obligations was $1.1 billion as of June 30, 2021 and $1.1 billion as of December 31, 2020.

As discussed in Note 19 - Acquisitions of our Annual Report on Form 10-K for the year ended December 31, 2020, we have a contingent consideration obligation to the selling equity holders of:

–Fusion Packaging, Inc. ("Fusion") in connection with the acquisition of 100% of the equity interests of Fusion (the "Fusion Acquisition") based on 2022 cumulative performance targets, and

–Noble International Holdings, Inc., Genia Medical, Inc. and JBCB Holdings, LLC (collectively referred to as "Noble") in connection with the acquisition of 100% of the equity interests of Noble (the "Noble Acquisition") based on 2024 cumulative performance targets.

We consider these obligations Level 3 liabilities and have estimated the aggregate fair value for these contingent consideration arrangements as follows:

	June 30, 2021		December 31, 2020
Fusion Acquisition	$	28,010	$	26,910
Noble Acquisition	5,080		4,230
	$	33,090	$	31,140

Changes in the fair value of these obligations are recorded within selling, research & development and administrative expenses in our Condensed Consolidated Statements of Income. Significant changes to the inputs, as noted above, can result in a significantly higher or lower fair value measurement. The following table provides a summary of changes in our Level 3 fair value measurements:

Balance, December 31, 2020	$	31,140
Increase in fair value recorded in earnings	1,950
Balance, June 30, 2021	$	33,090