Fair Values of Financial Instruments (Tables)

3 Months Ended

Apr. 02, 2021

Fair Value Disclosures [Abstract]

Methods and Assumptions Used in Estimating Fair Value

The following 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 Instrument	Fair Value Level	Methods and Assumptions
Deferred compensation plan assets and liabilities	Level 1	The 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 values of the securities held within the mutual funds.
Commodity derivative instruments	Level 2	The 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 these 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.
Long-term debt	Level 2	The 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 consideration	Level 3	The 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.

Deferred Compensation Plan, Commodity Derivative Instruments, Debt and Acquisition Related Contingent Consideration

The following tables summarize the carrying amounts and fair values by level of the Company’s deferred compensation plan assets and liabilities, commodity derivative instruments, long-term debt and acquisition related contingent consideration:

	April 2, 2021
(in thousands)	Carrying Amount		Total Fair Value		Fair Value Level 1		Fair Value Level 2		Fair Value Level 3
Assets:
Deferred compensation plan assets	$	52,595	$	52,595	$	52,595	$	—	$	—
Commodity derivative instruments	3,321		3,321		—		3,321		—
Liabilities:
Deferred compensation plan liabilities	52,595		52,595		52,595		—		—
Long-term debt	909,304		967,350		—		967,350		—
Acquisition related contingent consideration	435,746		435,746		—		—		435,746

	December 31, 2020
(in thousands)	Carrying Amount		Total Fair Value		Fair Value Level 1		Fair Value Level 2		Fair Value Level 3
Assets:
Deferred compensation plan assets	$	51,742	$	51,742	$	51,742	$	—	$	—
Commodity derivative instruments	2,473		2,473		—		2,473		—
Liabilities:
Deferred compensation plan liabilities	51,742		51,742		51,742		—		—
Long-term debt	940,465		1,015,700		—		1,015,700		—
Acquisition related contingent consideration	434,694		434,694		—		—		434,694

Summary of Acquisition Related Contingent Consideration Liability

A summary of the Level 3 activity is as follows:

	First Quarter
(in thousands)	2021		2020
Beginning balance - Level 3 liability	$	434,694	$	446,684
Payments of acquisition related contingent consideration	(10,046)		(10,452)
Reclassification to current payables	100		150
Increase in fair value	10,998		712
Ending balance - Level 3 liability	$	435,746	$	437,094