15.Commitments and Contingencies

Manufacturing Cooperatives

The Company is a shareholder of South Atlantic Canners, Inc. (“SAC”), a manufacturing cooperative in Bishopville, South Carolina. All eight shareholders of SAC are Coca‑Cola bottlers and each has equal voting rights. The Company receives a fee for managing the day-to-day operations of SAC pursuant to a management agreement. Proceeds from management fees received from SAC were $6.9 million in the first three quarters of 2017 and $7.0 million in the first three quarters of 2016.

The Company is obligated to purchase 17.5 million cases of finished product from SAC on an annual basis through June 2024. The Company purchased 22.6 million cases and 23.2 million cases of finished product from SAC in the first three quarters of 2017 and the first three quarters of 2016, respectively.

The Company is also a shareholder of Southeastern Container (“Southeastern”), a plastic bottle manufacturing cooperative from which the Company is obligated to purchase at least 80% of its requirements of plastic bottles for certain designated territories.

The following table summarizes the Company’s purchases from these manufacturing cooperatives:

	Third Quarter				First Three Quarters
(in thousands)	2017		2016		2017		2016
Purchases from SAC	$	37,267	$	39,831	$	111,408	$	115,563
Purchases from Southeastern		29,344		20,530		80,301		57,839
Total purchases from manufacturing cooperatives	$	66,611	$	60,361	$	191,709	$	173,402

The Company guarantees a portion of SAC’s and Southeastern’s debt, which resulted primarily from the purchase of production equipment and facilities and expires at various dates through 2023. The amounts guaranteed were as follows:

(in thousands)	October 1, 2017		January 1, 2017
Guaranteed portion of debt - SAC	$	23,938	$	23,297
Guaranteed portion of debt - Southeastern		8,551		9,277
Total guaranteed portion of debt - manufacturing cooperatives	$	32,489	$	32,574

In the event either of these cooperatives fails to fulfill its commitments under the related debt, the Company would be responsible for payments to the lenders up to the level of the guarantees. The following table summarizes the Company’s maximum exposure under these guarantees if these cooperatives had borrowed up to their aggregate borrowing capacity:

	October 1, 2017
(in thousands)	South Atlantic Canners, Inc.		Southeastern Container		Total Manufacturing Cooperatives
Maximum guaranteed debt	$	23,938	$	25,251	$	49,189
Equity investments⁽¹⁾		7,327		17,768		25,095
Maximum total exposure, including equity investments	$	31,265	$	43,019	$	74,284

⁽¹⁾

Recorded in other assets on the Company’s consolidated condensed balance sheets.

The members of both cooperatives consist solely of Coca‑Cola bottlers. The Company does not anticipate either of these cooperatives will fail to fulfill its commitments. The Company further believes each of these cooperatives has sufficient assets, including production equipment, facilities and working capital, and the ability to adjust selling prices of its products to adequately mitigate the risk of material loss from the Company’s guarantees.

The Company holds no assets as collateral against the SAC or Southeastern guarantees, the fair value of which is immaterial to the Company’s consolidated condensed financial statements. The Company monitors its investments in SAC and Southeastern and would be required to write down its investment if an impairment was identified and the Company determined it to be other than temporary. No impairment of the Company’s investments in SAC or Southeastern was identified as of October 1, 2017, and there was no impairment identified in 2016.

Other Commitments and Contingencies

The Company has standby letters of credit, primarily related to its property and casualty insurance programs. These letters of credit totaled $35.6 million on October 1, 2017 and $29.7 million on January 1, 2017.

The Company participates in long-term marketing contractual arrangements with certain prestige properties, athletic venues and other locations. As of October 1, 2017, the future payments related to these contractual arrangements, which expire at various dates through 2030, amounted to $124.4 million.

The Company is from time to time a party to various lawsuits, claims and other legal proceedings that arise in the ordinary course of business. With respect to all such lawsuits, claims and proceedings, the Company records reserves when it is probable a liability has been incurred and the amount of loss can be reasonably estimated. The Company does not believe that any of these proceedings, individually or in the aggregate, would be expected to have a material adverse effect on its results of operations, financial position or cash flows. The Company maintains liability insurance for certain risks that is subject to certain self-insurance limits.

The Company is subject to audits by tax authorities in jurisdictions where it conducts business. These audits may result in assessments that are subsequently resolved with the authorities or potentially through the courts. Management believes the Company has adequately provided for any assessments likely to result from these audits; however, final assessments, if any, could be different than the amounts recorded in the consolidated condensed financial statements.