Risks and Uncertainties

12 Months Ended

Jan. 03, 2016

Risks And Uncertainties [Abstract]

Risks and Uncertainties

21. Risks and Uncertainties

Approximately 87% of the Company’s 2015 bottle/can volume to retail customers consists of products of The Coca-Cola Company, which is the sole supplier of these products or of the concentrates or syrups required to manufacture these products. The remaining 13% of the Company’s 2015 bottle/can volume to retail customers consists of products of other beverage companies or those owned by the Company. The Company has beverage agreements with The Coca-Cola Company and other beverage companies under which it has various requirements to meet. Failure to meet the requirements of these beverage agreements could result in the loss of distribution rights for the respective products.

The Company’s products are sold and distributed directly by its employees to retail stores and other outlets. During 2015, approximately 68% of the Company’s bottle/can volume to retail customers was sold for future consumption, while the remaining bottle/can volume to retail customers of approximately 32% was sold for immediate consumption. The Company’s largest customers, Wal-Mart Stores, Inc. and Food Lion, LLC, accounted for approximately 22% and 7%, respectively, of the Company’s total bottle/can volume to retail customers during 2015; accounted for approximately 22% and 9%, respectively, of the Company’s total bottle/can volume to retail customers during 2014; and accounted for approximately 21% and 8%, respectively, of the Company’s total bottle/can volume to retail customers during 2013. Wal-Mart Stores, Inc. accounted for approximately 15% of the Company’s total net sales during each year 2015, 2014 and 2013. No other customer represented greater than 10% of the Company’s total net sales for any years presented.

The Company obtains all of its aluminum cans from two domestic suppliers. The Company currently obtains all of its plastic bottles from two domestic entities. See Note 14 and Note 19 of the consolidated financial statements for additional information.

The Company is exposed to price risk on such commodities as aluminum, corn and resin which affects the cost of raw materials used in the production of finished products. The Company both produces and procures these finished products. Examples of the raw materials affected are aluminum cans and plastic bottles used for packaging and high fructose corn syrup used as a product ingredient. Further, the Company is exposed to commodity price risk on crude oil which impacts the Company’s cost of fuel used in the movement and delivery of the Company’s products. The Company participates in commodity hedging and risk mitigation programs administered both by CCBSS and by the Company. In addition, there is no limit on the price The Coca-Cola Company and other beverage companies can charge for concentrate.

Certain liabilities of the Company are subject to risk of changes in both long-term and short-term interest rates. These liabilities include floating rate debt, retirement benefit obligations and the Company’s pension liability.

The Company’s contingent consideration liability resulting from the acquisition of the 2015 and 2014 Expansion Territories is subject to risk due to changes in the Company’s probability weighted discounted cash flow model that is based on internal forecasts and changes in the Company’s WAAC, which is derived from market data.

Approximately 5% of the Company’s labor force is covered by collective bargaining agreements. One collective bargaining agreement covering approximately 25 of the Company’s employees expired during 2015 and the Company entered into new agreements in 2015. Three collective bargaining agreements covering approximately 65 of the Company’s employees will expire during 2016.