Employer contributions expected during the remainder of the year

ALLEGION PLCNOTES TO CONDENSED AND CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Unaudited)

|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | U.S. |
|  | Three months ended |  | Nine months ended |
| In millions | 2022 |  | 2021 |  | 2022 |  | 2021 |
| Service cost | $ | 1.7  |  |  | $ | 1.6  |  |  | $ | 4.6  |  |  | $ | 5.0  |  |
| Interest cost | 2.1  |  |  | 1.7  |  |  | 6.1  |  |  | 5.1  |  |
| Expected return on plan assets | (3.3) |  |  | (3.6) |  |  | (10.1) |  |  | (10.5) |  |
| Administrative costs and other | 0.2  |  |  | 0.3  |  |  | 0.8  |  |  | 0.9  |  |
| Net amortization of: |  |  |  |  |  |  |  |
| Prior service costs | —  |  |  | 0.1  |  |  | 0.1  |  |  | 0.2  |  |
| Plan net actuarial losses | 0.3  |  |  | 0.8  |  |  | 0.8  |  |  | 2.6  |  |
| Net periodic pension benefit cost | $ | 1.0  |  |  | $ | 0.9  |  |  | $ | 2.3  |  |  | $ | 3.3  |  |



|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Non-U.S. |
|  | Three months ended |  | Nine months ended |
| In millions | 2022 |  | 2021 |  | 2022 |  | 2021 |
| Service cost | $ | 0.4  |  |  | $ | 0.6  |  |  | $ | 1.1  |  |  | $ | 1.7  |  |
| Interest cost | 1.8  |  |  | 1.3  |  |  | 5.4  |  |  | 3.8  |  |
| Expected return on plan assets | (3.9) |  |  | (3.4) |  |  | (11.7) |  |  | (10.3) |  |
| Administrative costs and other | 0.4  |  |  | 0.4  |  |  | 1.2  |  |  | 1.4  |  |
| Net amortization of: |  |  |  |  |  |  |  |
| Prior service costs | —  |  |  | —  |  |  | 0.1  |  |  | 0.1  |  |
| Plan net actuarial losses | 0.2  |  |  | 0.4  |  |  | 0.6  |  |  | 1.1  |  |
|  |  |  |  |  |  |  |  |
| Net periodic pension benefit income | $ | (1.1) |  |  | $ | (0.7) |  |  | $ | (3.3) |  |  | $ | (2.2) |  |

Service cost is recorded in Cost of goods sold and Selling and administrative expenses, while the remaining components of Net periodic pension benefit cost (income) are recorded in Other income, net within the Condensed and Consolidated Statements of Comprehensive Income. Employer contributions were not material during the nine months ended September 30, 2022 and 2021. Contributions of approximately $5 million are expected during the remainder of 2022.  
NOTE 12 - FAIR VALUE MEASUREMENTSFair value is defined as the exchange price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Fair value measurements are based on a framework that utilizes the inputs market participants use to determine the fair value of an asset or liability and establishes a fair value hierarchy to prioritize those inputs. The fair value hierarchy is comprised of three levels that are described below:•Level 1 – Inputs based on quoted prices in active markets for identical assets or liabilities.•Level 2 – Inputs other than Level 1 quoted prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability.•Level 3 – Unobservable inputs based on little or no market activity and that are significant to the fair value of the assets and liabilities.The fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Observable inputs are obtained from independent sources and can be validated by a third party, whereas unobservable inputs reflect assumptions regarding what a third party would use in pricing an asset or liability based on the best information available under the circumstances. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement.10
