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Fair Values of Financial Instruments | 6 Months Ended
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Jun. 28, 2024
Fair Value Disclosures [Abstract] |
Fair Values of Financial Instruments | 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 below 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 |  | Methods and Assumptions
Deferred compensation plan assets and liabilities |  | Level 1 |  | The fair value of the Company’s nonqualified 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 values of the securities held within the mutual funds.
Short-term investments |  | Level 1 |  | The fair values of the Company’s Level 1 short-term investments, which are U.S. Treasury securities, corporate bonds and asset-backed securities, are based on the quoted market prices of those securities which are actively traded on national exchanges.
Short-term investments |  | Level 2 |  | The fair values of the Company’s Level 2 short-term investments, which are commercial paper instruments, are based on estimated current market prices and have readily determinable fair market values.
Commodity derivative instruments |  | Level 2 |  | The fair values of the Company’s commodity derivative instruments are based on current settlement values at each balance sheet date, which represent the estimated amounts the Company would have received or paid upon termination of these instruments. The Company’s credit risk related to the commodity derivative instruments is managed by requiring high standards for its counterparties and periodic settlements. The Company considers nonperformance risk in determining the fair values of commodity derivative instruments.
Long-term debt |  | Level 2 |  | The carrying amounts of the Company’s variable rate debt approximate the fair values due to variable interest rates with short reset periods. The fair values of the Company’s fixed rate debt are based on estimated current market prices.
Acquisition related contingent consideration |  | Level 3 |  | The fair value of the Company’s acquisition related contingent consideration is based on internal forecasts and the weighted average cost of capital (“WACC”) derived from market data.
The following tables summarize the carrying amounts and the fair values by level of the Company’s deferred compensation plan assets and liabilities, short-term investments, commodity derivative instruments, long‑term debt and acquisition related contingent consideration:
|  | June 28, 2024
(in thousands) |  | Carrying Amount |  | Total Fair Value |  | Fair Value Level 1 |  | Fair Value Level 2 |  | Fair Value Level 3
Assets: |  |  |  |  |  |  |  |  |  |
Deferred compensation plan assets |  | $ | 75,179 |  |  | $ | 75,179 |  |  | $ | 75,179 |  |  | $ | — |  |  | $ | — |
Short-term investments |  | 198,771 |  |  | 198,771 |  |  | 195,198 |  |  | 3,573 |  |  | — |
Commodity derivative instruments |  | 3,877 |  |  | 3,877 |  |  | — |  |  | 3,877 |  |  | — |
Liabilities: |  |  |  |  |  |  |  |  |  |
Deferred compensation plan liabilities |  | 75,179 |  |  | 75,179 |  |  | 75,179 |  |  | — |  |  | — |
Long-term debt |  | 1,785,102 |  |  | 1,790,500 |  |  | — |  |  | 1,790,500 |  |  | — |
Acquisition related contingent consideration |  | 657,246 |  |  | 657,246 |  |  | — |  |  | — |  |  | 657,246 |
|  | December 31, 2023
(in thousands) |  | Carrying Amount |  | Total Fair Value |  | Fair Value Level 1 |  | Fair Value Level 2 |  | Fair Value Level 3
Assets: |  |  |  |  |  |  |  |  |  |
Deferred compensation plan assets |  | $ | 64,769 |  |  | $ | 64,769 |  |  | $ | 64,769 |  |  | $ | — |  |  | $ | — |
Commodity derivative instruments |  | 3,747 |  |  | 3,747 |  |  | — |  |  | 3,747 |  |  | — |
Liabilities: |  |  |  |  |  |  |  |  |  |
Deferred compensation plan liabilities |  | 64,769 |  |  | 64,769 |  |  | 64,769 |  |  | — |  |  | — |
Long-term debt |  | 599,159 |  |  | 579,000 |  |  | — |  |  | 579,000 |  |  | — |
Acquisition related contingent consideration |  | 669,337 |  |  | 669,337 |  |  | — |  |  | — |  |  | 669,337 |
The acquisition related contingent consideration was 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 subject to acquisition related sub-bottling payments to fair value by discounting future expected acquisition related sub-bottling payments required under the CBA using the Company’s estimated WACC. The future expected acquisition related sub-bottling payments extend through the life of the related distribution assets acquired in each distribution territory, 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 acquisition related sub-bottling payments that will be made in the future under the CBA, and current acquisition related 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 liability and could materially impact the amount of non-cash expense (or income) recorded each reporting period. The acquisition related contingent consideration liability is the Company’s only Level 3 asset or liability. A summary of the Level 3 activity is as follows:
|  | Second Quarter |  | First Half
(in thousands) |  | 2024 |  | 2023 |  | 2024 |  | 2023
Beginning balance - Level 3 liability |  | $ | 649,596 |  |  | $ | 576,446 |  |  | $ | 669,337 |  |  | $ | 541,491 |
Payments of acquisition related contingent consideration |  | (13,976) |  |  | (6,877) |  |  | (23,676) |  |  | (13,376) |
Reclassification to current payables |  | (6,200) |  |  | (700) |  |  | (10,700) |  |  | (900) |
Increase in fair value |  | 27,826 |  |  | 25,520 |  |  | 22,285 |  |  | 67,174 |
Ending balance - Level 3 liability |  | $ | 657,246 |  |  | $ | 594,389 |  |  | $ | 657,246 |  |  | $ | 594,389 |
As of June 28, 2024 and June 30, 2023, a WACC of 9.0% and 8.9%, respectively, was utilized in the valuation of the Company’s acquisition related contingent consideration liability. The increase in the fair value of the acquisition related contingent consideration liability in the first half of 2024 was primarily driven by higher projections of future cash flows in the distribution territories subject to acquisition related sub-bottling payments, partially offset by an increase in the WACC used to calculate the fair value of the liability. This fair value adjustment was recorded in mark-to-market on acquisition related contingent consideration in the condensed consolidated statement of operations for the first half of 2024. For the next five future years, the Company anticipates that the amount it could pay annually under the acquisition related contingent consideration arrangements for the distribution territories subject to acquisition related sub-bottling payments will be in the range of approximately $50 million to $75 million.

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- 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/exampleRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 55 -Paragraph 107 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482078/820-10-55-107 Reference 2: http://www.xbrl.org/2003/role/exampleRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 55 -Paragraph 100 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482078/820-10-55-100 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (c)(3) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-2 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2E -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-2E Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (h) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (f) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (e) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (d) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (h) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-2 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (g) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-2 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Topic 940 -SubTopic 820 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org/1943274/2147478119/940-820-50-1 + Details
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