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FAIR VALUE
 9 Months Ended
Sep. 24, 2022
Fair Value Disclosures [Abstract]  
FAIR VALUE FAIR VALUE
The Company has certain financial assets and liabilities recorded at fair value, which have been classified as Level 1, 2, or 3 within the fair value hierarchy. Assets and liabilities measured at fair value on a recurring basis are summarized below:
 September 24, 2022
Level 1Level 2Level 3Total
Current assets measured at fair value:(in thousands)
Cash equivalents$— $77 $— $77 
Other assets:
Life insurance policies— 32,738 — 32,738 
Total assets measured at fair value$— $32,815 $— $32,815 
Accrued liabilities measured at fair value:
Contingent consideration$— $— $8,661 $8,661 
Total liabilities measured at fair value$— $— $8,661 $8,661 
The Company recognizes transfers between levels within the fair value hierarchy, if any, at the end of each quarter. During the nine months ended September 24, 2022, there were no transfers between levels.
 December 25, 2021
Level 1Level 2Level 3Total
Current assets measured at fair value:(in thousands)
Cash equivalents$— $893 $— $893 
Other assets:
Life insurance policies— 42,918 — 42,918 
Total assets measured at fair value$— $43,811 $— $43,811 
Accrued liabilities measured at fair value:
Contingent consideration$— $— $11,794 $11,794 
Other long-term liabilities measured at fair value:
Contingent consideration— — 25,450 25,450 
Total liabilities measured at fair value$— $— $37,244 $37,244 
During the year ended December 25, 2021, there were no transfers between levels.
Contingent Consideration
The following table provides a rollforward of the contingent consideration related to the Company’s acquisitions.
Nine Months Ended
September 24, 2022September 25, 2021
(in thousands)
Beginning balance$37,244 $2,328 
Additions— 72,476 
Payments(11,476)(2,889)
Total gains or losses (realized/unrealized):
Adjustment of previously recorded contingent liability(15,340)(10,360)
Foreign currency translation(1,767)(226)
Ending balance$8,661 $61,329 
The Company estimates the fair value of contingent consideration obligations through valuation models, such as probability-weighted and option pricing models, that incorporate probability adjusted assumptions and simulations related to the achievement of the milestones and the likelihood of making related payments. The unobservable inputs used in the fair value measurements include the probabilities of successful achievement of certain financial targets, forecasted results or targets, volatility, and discount rates. The remaining maximum potential payments are approximately $53 million, of which the value accrued as of September 24, 2022 is approximately $9 million. The weighted average probability of achieving the maximum target is approximately 16%. The average volatility and weighted average cost of capital are approximately 40% and 16%, respectively. Increases or decreases in these assumptions may result in a higher or lower fair value measurement, respectively.
Debt Instruments
The book value of the Company’s term and revolving loans, which are variable rate loans carried at amortized cost, approximates the fair value based on current market pricing of similar debt. As the fair value is based on significant other observable inputs, including current interest and foreign currency exchange rates, it is deemed to be Level 2 within the fair value hierarchy.
The book value of the Company’s Senior Notes are fixed rate obligations carried at amortized cost. Fair value is based on quoted market prices as well as borrowing rates available to the Company. As the fair value is based on significant other observable outputs, it is deemed to be Level 2 within the fair value hierarchy. The book value and fair value of the Company’s Senior Notes is summarized below:
September 24, 2022December 25, 2021
Book ValueFair ValueBook ValueFair Value
4.25% Senior Notes due 2028
$500,000 $446,250 $500,000 $521,250 
3.75% Senior Notes due 2029
500,000 422,500 500,000 506,700 
4.0% Senior Notes due 2031
500,000 413,750 500,000 507,500 
Derivative Instrument
Early in November 2022, the Company entered into an interest rate swap with a notional amount of $500 million to manage interest rate fluctuation related to floating rate borrowings under the Credit Facility, at a fixed rate of 4.700% making the total interest rate 5.825% at our current spread. The Company designated this derivative instrument as a cash flow hedge at the inception of the contract and expects it to be highly effective.