Company: LGN
Filing Date: 2025-11-03
Form Type: DRS
Source: 0001193125-25-262782
Chunk: 258

Company: Legence Corp.
Filing Date: 2025-11-03
Form: DRS
Chunk 258
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 clarifies the definition of fair value, prescribes methods for measuring fair value, and
establishes a fair value hierarchy to classify the inputs used in measuring fair value, as follows:

Level 1: Inputs are unadjusted
quoted prices in active markets for identical assets or liabilities available at the measurement date.

Level 2: Inputs are
unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from
or corroborated by observable market data.

Level 3: Inputs are unobservable inputs that reflect the reporting entity’s own
assumptions on which assumptions the market participants would use in pricing the asset or liability based on the best available information.

Interest Rate Swaps

The Company has interest rate swap agreements to reduce its exposure to fluctuations in variable interest rates for future
interest payments on debt. The Company has designated these interest rate swaps as cash flow hedges and records the changes in the estimated fair value of the interest rate swaps to Accumulated other comprehensive income (“AOCI”) on its
Consolidated Balance Sheets in accordance with ASC Topic 815, Derivatives and Hedging. Differences between the variable interest rate payments and the fixed interest rate settlements with the swap counterparties are recognized as an
adjustment to Interest expense, net of capitalized interest on the Consolidated Statements of Operations. Amounts reported in AOCI related to cash flow hedges are reclassified to Interest expense, net of capitalized interest, as interest payments
are made on the Company’s variable-rate debt. Cash flows from derivatives designated as cash flow hedges are classified in the same category as the item being hedged in the Consolidated Statements of Cash Flows. To receive hedge accounting
treatment, cash flow hedges must be highly effective in offsetting changes to expected future cash flows on hedged transactions. The Company assesses, both at inception and at each reporting period thereafter, whether the designated derivative
instrument is highly effective in offsetting changes in cash flows of the hedged item. To the extent the interest rate swaps are determined to be ineffective, the Company recognizes the changes in the estimated fair value of the interest rate swaps
in earnings. The Company has elected not to offset the assets and liabilities from derivative agreements and instead presents the related balances on a gross basis. If it becomes probable that the forecasted transaction will not occur, the hedge
relationship will be de-designated, and amounts in