XML 54 R23.htm IDEA: XBRL DOCUMENT
v3.19.3

Fair Values of Financial Instruments | 9 Months Ended
--- | ---
Sep. 29, 2019
Fair Value Disclosures [Abstract] |
Fair Values of Financial Instruments | 15.Fair Values of Financial Instruments GAAP requires assets and liabilities carried at fair value to be classified and disclosed in one of the following categories:
• | Level 1: Quoted market prices in active markets for identical assets or liabilities.
• | Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data.
• | Level 3: Unobservable inputs that are not corroborated by market data.
The following methods and assumptions were used by the Company in estimating the fair values of its financial instruments. There were no transfers of assets or liabilities between levels in any period presented.
Financial Instrument |  | Fair Value Level |  | Method and Assumptions
Deferred compensation plan assets and liabilities |  | Level 1 |  | The fair value of the Company’s non-qualified deferred compensation plan for certain executives and other highly compensated employees is based on the fair values of associated assets and liabilities, which are held in mutual funds and are based on the quoted market value of the securities held within the mutual funds.
Commodity hedging agreements |  | Level 2 |  | The fair values of the Company’s commodity hedging agreements are based on current settlement values at each balance sheet date. The fair values of the commodity hedging agreements at each balance sheet date represent the estimated amounts the Company would have received or paid upon termination of these agreements. The Company’s credit risk related to the derivative financial instruments is managed by requiring high standards for its counterparties and periodic settlements. The Company considers nonperformance risk in determining the fair value of derivative financial instruments.
Nonpublic variable rate debt |  | Level 2 |  | The carrying amounts of the Company’s nonpublic variable rate debt approximate their fair values due to variable interest rates with short reset periods.
Nonpublic fixed rate debt |  | Level 2 |  | The fair values of the Company’s nonpublic fixed rate debt are based on estimated current market prices.
Public debt securities |  | Level 2 |  | The fair values of the Company’s public debt securities are based on estimated current market prices.
Acquisition related contingent consideration |  | Level 3 |  | The fair values of acquisition related contingent consideration are based on internal forecasts and the weighted average cost of capital (“WACC”) derived from market data.
The following tables summarize, by assets and liabilities, the carrying amounts and fair values by level of the Company’s deferred compensation plan, commodity hedging agreements, debt and acquisition related contingent consideration:
|  | September 29, 2019 |
|  | Carrying |  |  | Total |  |  | Fair Value |  |  | Fair Value |  |  | Fair Value |
(in thousands) |  | Amount |  |  | Fair Value |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |
Assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Deferred compensation plan assets |  | $ | 38,920 |  |  | $ | 38,920 |  |  | $ | 38,920 |  |  | $ | - |  |  | $ | - |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Deferred compensation plan liabilities |  |  | 38,920 |  |  |  | 38,920 |  |  |  | 38,920 |  |  |  | - |  |  |  | - |
Commodity hedging agreements |  |  | 8,212 |  |  |  | 8,212 |  |  |  | - |  |  |  | 8,212 |  |  |  | - |
Nonpublic variable rate debt |  |  | 304,706 |  |  |  | 305,000 |  |  |  | - |  |  |  | 305,000 |  |  |  | - |
Nonpublic fixed rate debt |  |  | 374,710 |  |  |  | 383,700 |  |  |  | - |  |  |  | 383,700 |  |  |  | - |
Public debt securities |  |  | 347,927 |  |  |  | 369,800 |  |  |  | - |  |  |  | 369,800 |  |  |  | - |
Acquisition related contingent consideration |  |  | 425,191 |  |  |  | 425,191 |  |  |  | - |  |  |  | - |  |  |  | 425,191 |
|  | December 30, 2018 |
|  | Carrying |  |  | Total |  |  | Fair Value |  |  | Fair Value |  |  | Fair Value |
(in thousands) |  | Amount |  |  | Fair Value |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |
Assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Deferred compensation plan assets |  | $ | 33,160 |  |  | $ | 33,160 |  |  | $ | 33,160 |  |  | $ | - |  |  | $ | - |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Deferred compensation plan liabilities |  |  | 33,160 |  |  |  | 33,160 |  |  |  | 33,160 |  |  |  | - |  |  |  | - |
Commodity hedging agreements |  |  | 10,305 |  |  |  | 10,305 |  |  |  | - |  |  |  | 10,305 |  |  |  | - |
Nonpublic variable rate debt |  |  | 372,074 |  |  |  | 372,500 |  |  |  | - |  |  |  | 372,500 |  |  |  | - |
Nonpublic fixed rate debt |  |  | 274,717 |  |  |  | 261,200 |  |  |  | - |  |  |  | 261,200 |  |  |  | - |
Public debt securities |  |  | 457,612 |  |  |  | 455,400 |  |  |  | - |  |  |  | 455,400 |  |  |  | - |
Acquisition related contingent consideration |  |  | 382,898 |  |  |  | 382,898 |  |  |  | - |  |  |  | - |  |  |  | 382,898 |
The acquisition related contingent consideration is valued using a probability weighted discounted cash flow model based on internal forecasts and the WACC derived from market data, which are considered Level 3 inputs. Each reporting period, the Company adjusts its acquisition related contingent consideration liability related to the distribution territories to fair value by discounting future expected sub-bottling payments required under the CBA using the Company’s estimated WACC. The future expected sub-bottling payments extend through the life of the applicable distribution assets acquired in each System Transformation transaction, which is generally 40 years. As a result, the fair value of the acquisition related contingent consideration liability is impacted by the Company’s WACC, management’s estimate of the amounts that will be paid in the future under the CBA, and current sub-bottling payments (all Level 3 inputs). Changes in any of these Level 3 inputs, particularly the underlying risk-free interest rate used to estimate the Company’s WACC, could result in material changes to the fair value of the acquisition related contingent consideration and could materially impact the amount of noncash income or expense recorded each reporting period. The acquisition related contingent consideration is the Company’s only Level 3 asset or liability. A reconciliation of the Level 3 activity is as follows:
|  | Third Quarter |  |  | First Nine Months |
(in thousands) |  | 2019 |  |  | 2018 |  |  | 2019 |  |  | 2018 |
Beginning balance - Level 3 liability |  | $ | 412,450 |  |  | $ | 374,537 |  |  | $ | 382,898 |  |  | $ | 381,291 |
Measurement period adjustments(1) |  |  | - |  |  |  | (1,279 | ) |  |  | - |  |  |  | 813 |
Payments of acquisition related contingent consideration |  |  | (5,948 | ) |  |  | (7,049 | ) |  |  | (18,784 | ) |  |  | (18,312 | )
Reclassification to current payables |  |  | (60 | ) |  |  | - |  |  |  | (940 | ) |  |  | (1,540 | )
Increase (decrease) in fair value |  |  | 18,749 |  |  |  | (2,373 | ) |  |  | 62,017 |  |  |  | 1,584 |
Ending balance - Level 3 liability |  | $ | 425,191 |  |  | $ | 363,836 |  |  | $ | 425,191 |  |  | $ | 363,836 |
(1) | Measurement period adjustments relate to post-closing adjustments made in accordance with the terms and conditions of the applicable asset purchase agreement or asset exchange agreement for distribution territories acquired or exchanged by the Company in April 2017 and October 2017 as part of the System Transformation. All final post-closing adjustments for these transactions were completed during 2018.
The increase in the fair value of the acquisition related contingent consideration liability during the first nine months of 2019 was primarily driven by a decrease in the discount rate and changes in future cash flow projections of the distribution territories subject to sub-bottling fees. The increase in the fair value of the acquisition related contingent consideration liability during the first nine months of 2018 was primarily driven by changes to the discount rate and future cash flow projections of the distribution territories subject to sub-bottling fees, partially offset by cash payments. These fair value adjustments were recorded in other income (expense), net in the condensed consolidated statements of operations. The anticipated amount the Company could pay annually under acquisition related contingent consideration arrangements is expected to be in the range of $25 million to $49 million.

X
- References No definition available. + Details
Name: | us-gaap_FairValueDisclosuresAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=117815213&loc=d3e19207-110258 + Details
Name: | us-gaap_FairValueDisclosuresTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration