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Commitments and Contingencies | 12 Months Ended
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Dec. 26, 2020
Commitments And Contingencies Disclosure [Abstract] |
Commitments and Contingencies |
L. | Commitments and Contingencies
Contractual Obligations As of December 26, 2020, projected cash outflows under non-cancelable contractual obligations for the remaining years under the contracts are as follows:
|  | Payments Due by Period |
|  | Total |  |  | 2021 |  |  | 2022 |  |  | 2023 |  |  | 2024 |  |  | 2025 |  |  | Thereafter |
|  | (in thousands) |
Ingredients (excluding hops and malt) |  | $ | 91,414 |  |  | $ | 91,414 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Brand support |  |  | 87,459 |  |  |  | 61,154 |  |  |  | 8,646 |  |  |  | 8,397 |  |  |  | 4,703 |  |  |  | 4,559 |  |  |  | — |
Equipment and machinery |  |  | 79,379 |  |  |  | 79,379 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Hops and malt |  |  | 51,988 |  |  |  | 41,103 |  |  |  | 4,667 |  |  |  | 2,317 |  |  |  | 2,175 |  |  |  | 1,726 |  |  |  | — |
Other |  |  | 11,659 |  |  |  | 9,854 |  |  |  | 1,633 |  |  |  | 172 |  |  |  | — |  |  |  | — |  |  |  | — |
Total contractual obligations |  | $ | 321,899 |  |  | $ | 282,904 |  |  | $ | 14,946 |  |  | $ | 10,886 |  |  | $ | 6,878 |  |  | $ | 6,285 |  |  | $ | — |
The Company’s accounting policy for inventory and purchase commitments is to recognize a loss by establishing a reserve to the extent inventory levels and commitments exceed forecasted needs. The computation of the excess inventory requires management to make certain assumptions regarding future sales growth, product mix, cancellation costs and supply, among others. Actual results may differ materially from management’s estimates. The Company continues to manage inventory levels and purchase commitments in an effort to maximize utilization. However, changes in management’s assumptions regarding future sales growth, product mix and hops market conditions could result in future material losses. The Company utilizes several varieties of hops in the production of its products. To ensure adequate supplies of these varieties, the Company enters into advance multi-year purchase commitments based on forecasted future hop requirements, among other factors. These purchase commitments extend through crop year 2025 and specify both the quantities and prices, denominated in U.S. Dollar, Euros, New Zealand Dollars and British Pounds, to which the Company is committed. Hops purchase commitments outstanding at December 26, 2020 totaled $29.5 million, based on the exchange rates on that date. The Company does not use forward currency exchange contracts and intends to purchase future hops using the exchange rate at the time of purchase. These contracts were deemed necessary in order to bring hop inventory levels and purchase commitments into balance with the Company’s current brewing volume and hop usage forecasts. In addition, these contracts enable the Company to secure its position for future supply with hop vendors in the face of some competitive buying activity. Currently, the Company has entered into contracts for barley and wheat used in the Company’s malt with four major suppliers. The contracts include crop year 2020 and 2021 and cover the Company’s barley, wheat, and malt requirements for 2021. These purchase commitments outstanding at December 26, 2020 totaled $22.5 million. For the fiscal year ended December 26, 2020, the Company brewed approximately 65% of its volume at Company-owned breweries. In the normal course of its business, the Company has historically entered into various production arrangements with other brewing companies. Pursuant to these arrangements, the Company supplies raw materials to those brewing companies, and incurs conversion fees for labor at the time the liquid is produced and packaged. The Company currently has a brewing services agreement with subsidiaries of City Brewing Company, LLC (“City Brewing”). During 2019 and 2020, City Brewing supplied approximately 23% and 33% of the Company’s annual shipment volume, respectively. In accordance with the brewing services agreement, the Company has paid to City $71.6 million dollars for capital improvements at City Brewing facilities and other pre-payments. The Company has the contractual right to extend its agreement with City Brewing beyond the December 31, 2024 termination date on an annual basis through December 31, 2035. At December 26, 2020, the Company had prepaid third-party brewing service fees of $14.8 million in prepaid expenses and other current assets and $56.8 million in other assets, long term. The Company plans to expense the total amount of $71.6 million over the brewing service agreement periods ending in 2026 based on committed capacity. In accordance with the City Brewing contract and other production arrangements, the Company is obligated to meet annual minimum volume commitments and is subject to contractual shortfall fees if these annual minimum volume commitments are not met. At December 26, 2020, if volume for the remaining term of the production arrangements were zero, the contractual shortfall fees would total $70.7 million through December 31, 2026. Based on current production volume projections, the Company believes that it will meet all annual volume commitments under these production arrangements and will not incur any shortfall fees. If future volume projections are reduced below the minimum annual volume commitments and the Company estimates that shortfall fees will be incurred, the Company will expense the estimated shortfall fees in the period when incurring the shortfall fees becomes probable. The Company’s arrangements with other brewing companies require it to periodically purchase equipment in support of brewery operations. As of December 26, 2020, there were no significant equipment purchase requirements outstanding under existing contracts. Changes to the Company’s brewing strategy or existing production arrangements, new production relationships or the introduction of new products in the future may require the Company to purchase equipment to support the contract breweries’ operations. The Company continues to review the impact the COVID-19 pandemic will have on its future commitments and contingencies but does not believe that the future commitments will be materially impacted. Litigation The Company is currently not a party to any pending or threatened litigation, the outcome of which would be expected to have a material adverse effect on its financial condition or the results of its operations.

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