v3.25.2
Fair Values of Financial Instruments
 6 Months Ended
Jun. 27, 2025
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 InstrumentFair Value
Level		Methods and Assumptions
Deferred compensation plan assets and liabilitiesLevel 1The 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 prices of the securities held within the mutual funds.
Short-term investmentsLevel 1The 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 investmentsLevel 2The 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 instrumentsLevel 2The 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 those 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.
DebtLevel 2The 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 considerationLevel 3The 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, debt and acquisition related contingent consideration:

June 27, 2025
(in thousands)Carrying
Amount		Total
Fair Value		Fair Value
Level 1		Fair Value
Level 2		Fair Value
Level 3
Assets:
Deferred compensation plan assets$89,612 $89,612 $89,612 $— $— 
Short-term investments350,186 350,186 338,597 11,589 — 
Commodity derivative instruments3,847 3,847 — 3,847 — 
Liabilities:
Deferred compensation plan liabilities89,612 89,612 89,612 — — 
Debt1,787,669 1,828,300 — 1,828,300 — 
Acquisition related contingent consideration675,300 675,300 — — 675,300 

December 31, 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$81,123 $81,123 $81,123 $— $— 
Short-term investments301,210 301,210 283,547 17,663 — 
Commodity derivative instruments2,472 2,472 — 2,472 — 
Liabilities:
Deferred compensation plan liabilities81,123 81,123 81,123 — — 
Debt1,786,348 1,803,500 — 1,803,500 — 
Acquisition related contingent consideration654,191 654,191 — — 654,191 
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 QuarterFirst Half
(in thousands)2025202420252024
Beginning balance - Level 3 liability$681,800 $649,596 $654,191 $669,337 
Payments of acquisition related contingent consideration(15,390)(13,976)(35,209)(23,676)
Reclassification to current payables(3,500)(6,200)1,200 (10,700)
Increase in fair value12,390 27,826 55,118 22,285 
Ending balance - Level 3 liability$675,300 $657,246 $675,300 $657,246 

As of June 27, 2025 and June 28, 2024, a WACC of 8.9% and 9.0%, 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 during the first half of 2025 was primarily driven by a decrease in the WACC used to calculate the fair value of the liability and changes in projections of future cash flows in the distribution territories subject to acquisition related sub-bottling payments. 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 2025.

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 $80 million.