REGAL REXNORD CORPRRX

REGAL REXNORD CORP Fair Value Disclosure

10-KFiled Feb 20, 20262 min read
Fair Value
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 (exit price). The inputs used to measure fair value are classified into the following hierarchy:
Level 1Unadjusted quoted prices in active markets for identical assets or liabilities
Level 2Unadjusted quoted prices in active markets for similar assets or liabilities, or
Unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or
Inputs other than quoted prices that are observable for the asset or liability
Level 3Unobservable inputs for the asset or liability
The Company uses the best available information in measuring fair value. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.
The fair values of cash equivalents and short-term deposits approximate their carrying values as of December 31, 2025 and December 31, 2024, due to the short period of time to maturity and are classified using Level 1 inputs. The fair values of trade receivables and accounts payable approximate the carrying values due to the short period of time to maturity. See Note 7 - Debt and Bank Credit Facilities for disclosure of the approximate fair value of the Company's debt as of December 31, 2025 and December 31, 2024.
The following table sets forth the Company's financial assets and liabilities that were accounted for at fair value on a recurring basis as of December 31, 2025 and December 31, 2024, respectively:
December 31, 2025December 31, 2024
Classification
Assets:
  Prepaid Expenses and Other Current Assets:
     Derivative Currency Contracts$11.2 $1.0 Level 2
     Derivative Commodity Contracts9.5 0.1 Level 2
  Other Noncurrent Assets:
Interest Rate Swap— 5.5 Level 2
Assets Held in Rabbi Trust16.8 14.6 Level 1
     Derivative Currency Contracts0.5 — Level 2
     Derivative Commodity Contracts1.1 — Level 2
Liabilities:
  Other Accrued Expenses:
     Derivative Currency Contracts2.9 13.6 Level 2
     Derivative Commodity Contracts0.4 4.4 Level 2

Level 1 fair value measurements for assets held in a Rabbi Trust are unadjusted quoted prices.
Level 2 fair value measurements for derivative assets and liabilities are measured using quoted prices in active markets for similar assets and liabilities. Interest rate swaps are valued based on the discounted cash flows using the SOFR forward yield curve for an instrument with similar contractual terms. Foreign currency forwards are valued based on exchange rates quoted by domestic and foreign banks for similar instruments. Commodity forwards are valued based on observable market transactions of forward commodity prices. Senior Notes are valued based on rates for instruments with comparable maturities and credit quality. See Note 7 - Debt and Bank Credit Facilities for further information.
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Historical Timeline

Fiscal YearFiled
2025Feb 20, 2026Showing above
2024Feb 21, 2025
2023Feb 26, 2024
2022Feb 24, 2023
2021Mar 2, 2021
2019Feb 26, 2020
2018Feb 26, 2019
2017Mar 1, 2017
2016Mar 2, 2016

About Fair Value Disclosures

Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.

Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.

Other Available Disclosures

Income TaxesRevenuePP&EGoodwill & IntangiblesLeasesSegmentsDebtCommitmentsNew StandardsPay vs Performance