Fair Value of Financial Instruments

4 Months Ended

Apr. 19, 2025

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

. FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying value of cash and cash equivalents, accounts receivable, and short-term debt approximates fair value because of the short-term maturity of the instruments. Notes receivable are entered into in connection with the purchase of independent distributors’ distribution rights by IDPs. These notes receivable are recorded in the Condensed Consolidated Balance Sheets at carrying value, which represents the closest approximation of fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The company financed approximately 2,500 and 2,600 IDPs’ distribution rights as of April 19, 2025 and December 28, 2024, respectively, all with varied financial histories and credit risks. However, the current stated interest rates used to record the carrying values are appropriately reflective of our estimated interest rates that would be made to borrowers with similar credit ratings for the remaining maturities of the distributor notes receivable. The distribution rights are generally purchased by the IDP with a 5% down payment with the remainder financed for up to 10 years. The distributor notes receivable are collateralized by the IDPs’ distribution rights. The company maintains a wholly-owned subsidiary to assist in financing the distribution rights purchase activities if requested by new IDPs, using the distribution rights and certain associated assets as collateral. These notes receivable earn interest at a fixed rate.

Interest income was primarily related to the IDPs’ notes receivable and was as follows (amounts in thousands):

	Interest Income
For the sixteen weeks ended April 19, 2025	$	5,626
For the sixteen weeks ended April 20, 2024	$	5,690

At April 19, 2025 and December 28, 2024, respectively, the carrying value of the distributor notes receivable was as follows (amounts in thousands):

	April 19, 2025			December 28, 2024
Distributor notes receivable	$	128,862		$	128,199
Less: current portion of distributor notes receivable recorded in    accounts and notes receivable, net		(22,007	)		(20,117	)
Long-term portion of distributor notes receivable	$	106,855		$	108,082

The distributor notes receivable balance as of April 19, 2025 and December 28, 2024 include a reserve of $0.4 million and $2.4 million, respectively, related to a legal settlement. See Note 16, Commitments and Contingencies, for additional information.

The fair value of the company’s variable rate debt at April 19, 2025 approximates the recorded value. The fair value of the company's senior notes, as discussed in Note 14, Debt and Other Obligations, of this Form 10-Q, are estimated using yields obtained from independent pricing sources for similar types of borrowing arrangements and are considered a Level 2 valuation. The fair value of the senior notes are presented in the table below (amounts in thousands, except level classification):

	Carrying Value		Fair Value		Level
2035 notes	$	494,375	$	499,320	2
2055 notes	$	294,458	$	295,189	2
2031 notes	$	495,676	$	425,305	2
2026 notes	$	399,170	$	392,816	2

For fair value disclosure information about our derivative assets and liabilities see Note 10, Derivative Financial Instruments.