v3.26.1
Fair Values of Financial Instruments
 3 Months Ended
Apr. 03, 2026
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.
Interest rate swapsLevel 2The fair values of the Company’s interest rate swaps are determined using standard calculations and valuation models. The significant inputs used in these standard calculations/valuation models are readily available in public markets or can be derived from observable market transactions and, therefore, have been classified as Level 2. Inputs used in these standard calculations/valuation models for derivative instruments include swap rates, interest rates and discount rates. The discount rates are based on the historical U.S. deposit rates, U.S. Treasury rates and/or U.S. swap rates. The Company’s credit risk related to the interest rate swaps is managed by requiring high standards for its counterparties and periodic settlements.
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, commodity derivative instruments, interest rate swaps, debt and acquisition related contingent consideration:

April 3, 2026
(in thousands)Carrying
Amount		Total
Fair Value		Fair Value
Level 1		Fair Value
Level 2		Fair Value
Level 3
Assets:
Deferred compensation plan assets$95,339 $95,339 $95,339 $— $— 
Commodity derivative instruments17,195 17,195 — 17,195 — 
Interest rate swaps1,521 1,521 — 1,521 — 
Liabilities:
Deferred compensation plan liabilities95,339 95,339 95,339 — — 
Commodity derivative instruments120 120 — 120 — 
Debt2,637,148 2,691,300 — 2,691,300 — 
Acquisition related contingent consideration753,029 753,029 — — 753,029 
December 31, 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$95,195 $95,195 $95,195 $— $— 
Commodity derivative instruments4,242 4,242 — 4,242 — 
Liabilities:
Deferred compensation plan liabilities95,195 95,195 95,195 — — 
Debt2,786,009 2,848,500 — 2,848,500 — 
Acquisition related contingent consideration717,908 717,908 — — 717,908 
Commodity derivative instruments42 42 — 42 — 

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:

First Quarter
(in thousands)20262025
Beginning balance - Level 3 liability$717,908 $654,191 
Payments of acquisition related contingent consideration(19,070)(19,819)
Reclassification to current payables800 4,700 
Increase in fair value53,391 42,728 
Ending balance - Level 3 liability$753,029 $681,800 

As of April 3, 2026 and March 28, 2025, a WACC of 8.1% 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 quarter of 2026 was driven by a decrease in the WACC used to calculate the fair value of the liability from 8.5% as of December 31, 2025 and higher 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 quarter of 2026.

For 2026, the Company estimates the annual sub-bottling payments will be in the range of approximately $75 million to $80 million. For the next five future years (beginning with fiscal year 2027), the Company anticipates that the amount it could pay annually will be in the range of approximately $50 million to $65 million.