FAIR VALUE MEASUREMENTS

9 Months Ended

Oct. 03, 2021

FAIR VALUE MEASUREMENTS

Accounting guidance on fair value measurements requires that financial assets and liabilities be classified and disclosed in one of the following categories of the fair value hierarchy:


Level 1 – Based on unadjusted quoted prices for identical assets or liabilities in an active market.
Level 2 – Based on observable market-based inputs or unobservable inputs that are corroborated by market data.
Level 3 – Based on unobservable inputs that reflect the entity’s own assumptions about the assumptions that a market participant would use in pricing the asset or liability.

We did not have any Level 3 financial assets or liabilities, nor were there any transfers between levels during the periods presented.

The following table presents assets and liabilities that were measured at fair value in the Consolidated Balance Sheets on a recurring basis as of October 3, 2021 and December 31, 2020:


	Assets (Liabilities)
	Level 1		Level 2		Level 3		Total
October 3, 2021:
Derivative Instruments:
Assets:
Foreign exchange contracts (1)	$	—	$	1,649	$	—	$	1,649

Deferred compensation derivatives (2)	—		82		—		82
Commodities futures and options (3)	1,924		—		—		1,924
Liabilities:
Foreign exchange contracts (1)	—		1,292		—		1,292


Commodities futures and options (3)	1,743		—		—		1,743
December 31, 2020:
Assets:
Foreign exchange contracts (1)	$	—	$	2,564	$	—	$	2,564

Deferred compensation derivatives (2)	—		3,630		—		3,630
Commodities futures and options (3)	3,299		—		—		3,299
Liabilities:
Foreign exchange contracts (1)	—		5,615		—		5,615


Commodities futures and options (3)	1,648		—		—		1,648

(1)The fair value of foreign currency forward exchange contracts is the difference between the contract and current market foreign currency exchange rates at the end of the period. We estimate the fair value of foreign currency forward exchange contracts on a quarterly basis by obtaining market quotes of spot and forward rates for contracts with similar terms, adjusted where necessary for maturity differences.

(2)The fair value of deferred compensation derivatives is based on quoted prices for market interest rates and a broad market equity index.

(3)The fair value of commodities futures and options contracts is based on quoted market prices.

Other Financial Instruments

The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and short-term debt approximated fair values as of October 3, 2021 and December 31, 2020 because of the relatively short maturity of these instruments.

The estimated fair value of our long-term debt is based on quoted market prices for similar debt issues and is, therefore, classified as Level 2 within the valuation hierarchy. The fair values and carrying values of long-term debt, including the current portion, were as follows:


	Fair Value				Carrying Value
	October 3, 2021		December 31, 2020		October 3, 2021		December 31, 2020
Current portion of long-term debt	$	2,812	$	443,215	$	2,812	$	438,829
Long-term debt	4,310,889		4,479,499		4,095,159		4,089,755
Total	$	4,313,701	$	4,922,714	$	4,097,971	$	4,528,584

Other Fair Value Measurements

In addition to assets and liabilities that are recorded at fair value on a recurring basis, GAAP requires that, under certain circumstances, we also record assets and liabilities at fair value on a nonrecurring basis.

In connection with the acquisition of Lily’s in the second quarter of 2021, as discussed in Note 2, we used various valuation techniques to determine fair value, with the primary techniques being discounted cash flow analysis, relief-from-royalty and a form of the multi-period excess earnings, which use significant unobservable inputs, or Level 3 inputs, as defined by the fair value hierarchy.

During the nine months ended October 3, 2021, we recorded no impairment charges. During the nine months ended September 27, 2020, we recorded the following impairment charges, which use significant unobservable inputs, or Level 3 inputs, as defined by the fair value hierarchy:


	2020
Adjustment to disposal group (1)	$	6,200
Other asset write-down (2)	2,943
Long-lived asset impairment charges	$	9,143

(1)In connection with the sale of the LSFC joint venture (disposal group previously classified as held for sale), we recorded impairment charges to adjust long-lived asset values. The fair value of the disposal group was supported by potential sales prices with third-party buyers. The sale of the LSFC joint venture was completed in January 2021.

(2)In connection with a previous sale, the Company wrote-down certain receivables deemed uncollectible.