Vontier CorpVNT
Vontier Corp Fair Value Disclosure
FAIR VALUE MEASUREMENTS
Accounting standards define fair value based on an exit price model, establish a framework for measuring fair value for assets and liabilities required to be carried at fair value and provide for certain disclosures related to the valuation methods used within the valuation hierarchy as established within the accounting standards. This hierarchy prioritizes the inputs into three broad levels as follows:
•Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.
•Level 2 inputs are quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets in markets that are not active, or other observable characteristics for the asset or liability, including interest rates, yield curves and credit risks, or inputs that are derived principally from, or corroborated by, observable market data through correlation.
•Level 3 inputs are unobservable inputs based on our assumptions.
A financial asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement in its entirety.
Below is a summary of financial assets and liabilities that are measured at fair value on a recurring basis as of:
| ($ in millions) | Quoted Prices in Active Market (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total | |||||||||||||||||||
| December 31, 2023 | |||||||||||||||||||||||
| Contingent consideration liabilities | $ | — | $ | — | $ | 9.3 | $ | 9.3 | |||||||||||||||
| Deferred compensation liabilities | 4.2 | — | — | 4.2 | |||||||||||||||||||
| December 31, 2022 | |||||||||||||||||||||||
| Equity securities measured at fair value | $ | 21.3 | $ | — | $ | — | $ | 21.3 | |||||||||||||||
| Contingent consideration liabilities | — | — | 11.6 | 11.6 | |||||||||||||||||||
| Deferred compensation liabilities | — | 5.1 | — | 5.1 | |||||||||||||||||||
Equity Securities
The Company historically held a minority interest in Tritium Holdings Pty, Ltd (“Tritium”). On January 13, 2022, Tritium announced that it completed a business combination with Decarbonization Plus Acquisition Corporation II to make Tritium a publicly listed company on NASDAQ under the symbol “DCFC”. Once Tritium became publicly traded, the Company recorded its investment at fair value in Equity securities measured at fair value on the Consolidated Balance Sheets with changes in the value recorded in Unrealized loss on equity securities measured at fair value on the Consolidated Statements of Earnings and Comprehensive Income and the Consolidated Statements of Cash Flows.
During the year ended December 31, 2022, the Company sold shares of Tritium stock and recognized a loss of $3.1 million. During the first quarter of 2023, the Company sold its remaining interest in Tritium and recognized a loss of $0.9 million. These losses are presented in Other non-operating expense, net on the Consolidated Statements of Earnings and Comprehensive Income and Loss on equity investments in the Consolidated Statements of Cash Flows.
Contingent Consideration
The fair value of the contingent consideration liabilities relates to potential payments to previous owners of acquired companies contingent on the achievement of certain revenue targets. The Company records a liability for contingent consideration in the purchase price for acquisitions at fair value on the acquisition date, and remeasures the liability at each reporting date, based on the Company’s estimate of the expected probability of achievement of the contingency targets. This estimate is based on significant unobservable inputs and represents a Level 3 measurement within the fair value hierarchy.
Deferred Compensation
Certain management employees participate in the Company’s nonqualified deferred compensation programs that permit such employees to defer a portion of their compensation, on a pretax basis, until after their termination of employment. All amounts deferred under such plans are unfunded, unsecured obligations and are presented as a component of our compensation and benefits accrual included in Other long-term liabilities on the Consolidated Balance Sheets. Participants may choose among investment options for the amounts they defer, which are primarily based on investment options within our defined contribution plans for the benefit of U.S. employees (“401(k) Programs”) (except that the earnings rates for amounts contributed unilaterally by the Company are entirely based on changes in the value of the Company’s common stock). Changes in the deferred compensation liability under these programs are recognized based on changes in the fair value of the participants’ accounts, which are based on the applicable earnings rates.
Non-recurring Fair Value Measurements
Certain assets and liabilities are carried on the accompanying Consolidated Balance Sheets at cost and are not remeasured to fair value on a recurring basis. These assets include finite-lived intangible assets, which are tested when a triggering event occurs, and goodwill and identifiable indefinite-lived intangible assets, which are tested for impairment at least annually as of the first day of the fourth quarter or more frequently if events and circumstances indicate that the asset may not be recoverable.
As of December 31, 2023, assets carried on the balance sheet and not remeasured to fair value on a recurring basis were $1.7 billion of goodwill and $568.3 million of identifiable intangible assets, net.Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2023 | Feb 15, 2024 | Showing above |
| 2022 | Feb 17, 2023 | |
| 2021 | Feb 24, 2022 | |
| 2020 | Feb 25, 2021 | |
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.