Fair Value Measurements

9 Months Ended

Sep. 28, 2024

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

The Company utilizes fair value measurements for its financial assets and financial liabilities and fair value measurements of nonfinancial items that are recognized or disclosed at fair value in the financial statements on a recurring basis. Fair value is based upon a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:

•Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

•Level 2 inputs are inputs other than unadjusted quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

•Level 3 inputs are unobservable inputs for the asset or liability.

The level in the fair value hierarchy within which a fair value measurement in its entirety falls is based on the lowest level input that is significant to the fair value measurement.

The following table presents financial assets and financial liabilities that are measured at fair value on a recurring basis at September 28, 2024:

	Fair Value Hierarchy
(in thousands)	Level 1		Level 2		Level 3		Total
Assets:
Money market funds	$	38,000	$	—	$	—	$	38,000
Total	$	38,000	$	—	$	—	$	38,000
Liabilities:
Forward contracts	$	—	$	1,225	$	—	$	1,225
Acquisition-related contingent consideration	—		—		453		453
Total	$	—	$	1,225	$	453	$	1,678

The following table presents financial assets and financial liabilities that are measured at fair value on a recurring basis at December 30, 2023:

	Fair Value Hierarchy
(in thousands)	Level 1		Level 2		Level 3		Total
Assets:
Money market funds	$	90,000	$	—	$	—	$	90,000
Interest rate swaps	—		10,379		—		10,379
Cross currency swaps	—		20,831		—		20,831
Total	$	90,000	$	31,210	$	—	$	121,210
Liabilities:
Cross currency swaps	$	—	$	466	$	—	$	466
Forward contracts	—		384		—		384
Total	$	—	$	850	$	—	$	850

Money market funds consist of short-term deposits with an original maturity of three months or less. Interest rate swaps, cross currency swaps and forward contracts are fair valued using independent pricing services and the Company obtains an understanding of the methods used in pricing. As such, these derivative instruments are classified within Level 2.

The fair value of the Company’s Senior Secured Notes, based on Level 1 inputs, was $471.2 million and $525.5 million at September 28, 2024 and December 30, 2023, respectively. The fair value of borrowings under the Company’s Senior Secured Credit Facilities approximate their carrying value as the current rates approximate rates on similar debt and were based on rate notices provided by the Administrative Agent (Level 2 inputs) at September 28, 2024 and December 30, 2023.

The fair value of the acquisition-related contingent consideration liability is based on significant unobservable inputs, including management estimates and assumptions, and is measured based on the probability-weighted present value of the potential payment. Accordingly, the fair value of acquisition-related contingent consideration has been classified as Level 3 within the fair value hierarchy.

The following table provides quantitative information regarding Level 3 inputs used in the fair value measurement of the acquisition-related contingent consideration liability as of September 28, 2024:

Acquisition-related contingent consideration liabilities	Valuation Technique	Unobservable Input	Range
Potential payment	Probability-weighted present value	Probability of payment	0% - 100%
		Discount rate	11% - 12%
		Projected years of payments	2025 - 2027

The following table provides a reconciliation of the acquisition-related contingent consideration liability measured at fair value using Level 3 significant unobservable inputs:

(in thousands)
Balance at May 6, 2024(1)	$	1,898
Change in fair value recorded in selling, general and administrative expenses	73
Balance at June 29, 2024	1,971
Change in fair value recorded in selling, general and administrative expenses	(1,518)
Balance at September 28, 2024	$	453

(1)May 6, 2024 reflects the acquisition date of 2 Peaches.