Fair Value Measurements

9 Months Ended

Sep. 28, 2021

Fair Value Measurements

Fair Value Measurements

2.   Fair Value Measurements

Fair value measurements are estimated based on valuation techniques and inputs categorized as follows:

● Level 1: Quoted prices in active markets for identical assets or liabilities

● Level 2: Observable inputs other than quoted prices in active markets for identical assets and liabilities

● Level 3: Unobservable inputs in which little or no market activity exists, therefore requiring the Company to develop its own assumptions

The following tables present the components and classification of our assets and liabilities that are measured at fair value on a recurring basis (in thousands):

	September 28, 2021
	Level 1		Level 2		Level 3
Assets/(Liabilities)
Non-qualified deferred compensation assets	$	89,047	$	—	$	—
Non-qualified deferred compensation liabilities		(88,126)		—		—
Acquisition-related deferred consideration		—		(38,599)		—
Acquisition-related contingent consideration and compensation liabilities		—		—		(19,020)

	December 29, 2020
	Level 1		Level 2		Level 3
Assets/(Liabilities)
Non-qualified deferred compensation assets	$	83,485	$	—	$	—
Non-qualified deferred compensation liabilities		(83,702)		—		—
Interest rate swap		—		(4,591)		—
Acquisition-related deferred consideration		—		(38,119)		—
Acquisition-related contingent consideration and compensation liabilities		—		—		(7,465)

The following table presents a reconciliation of the beginning and ending amounts of the fair value of the acquisition-related contingent consideration and compensation liabilities categorized as Level 3 (in thousands):

	Thirty-Nine		Thirty-Nine
	Weeks Ended		Weeks Ended
	September 28, 2021		September 29, 2020
Beginning balance	$	7,465	$	13,218
Change in fair value		11,555		(5,575)
Ending balance	$	19,020	$	7,643

The fair value of the acquisition-related contingent consideration and compensation liabilities was determined utilizing a Monte Carlo model based on estimated future revenues, margins and volatility factors, among other variables and estimates and has no minimum or maximum payment. The undiscounted range of outcomes per the Monte Carlo model was $0 to $162.7 million. Results could change materially if different estimates and assumptions were used. The significant increase in the fair value of the contingent consideration during the first three quarters of fiscal 2021 primarily related to the impact in the second fiscal quarter of an amendment to the agreement for the acquisitions of North Italia and FRC (the “Acquisition”) that, among other things, extended the measurement period through fiscal 2026.

The fair values of our cash and cash equivalents, accounts and other receivable, income taxes receivable, prepaid expenses, accounts payable, income taxes payable and other accrued expenses approximate their carrying amounts due to their short duration.

As of September 28, 2021, we had $345.0 million aggregate principal amount of Notes outstanding. The estimated fair value of the Notes based on a market approach as of September 28, 2021 was approximately $333.3 million and determined based on the estimated or actual bids and offers of the Notes in an over-the-counter market on the last business day of the reporting period. See Note 5 for further discussion of the Notes.