What changed in this filing

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Item 1. Financial Statements

2020-11-03 compared with 2020-08-04 · 211 added, 213 removed, 730 unchanged (37% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Second Quarter First Half

Third Quarter First Nine Months

(in thousands, except per share data) 2020 2019 2020 2019

28 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Second Quarter First Half

Third Quarter First Nine Months

(in thousands) 2020 2019 2020 2019

17 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share data) June 28, 2020 December 29, 2019

(in thousands, except share data) September 27, 2020 December 29, 2019

Current Assets:

6 unchanged sentences

Prepaid expenses and other current assets 69,829 69,461

Assets held for sale 7,036 —

Total current assets 976,898 830,276

49 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

First Nine Months

(in thousands) 2020 2019

5 unchanged sentences

Fair value adjustment of acquisition related contingent consideration 35,068 62,017

Loss on sale of property, plant and equipment 1,416 4,324

Deferred income taxes 21,670 4,017

Impairment of property, plant and equipment 7,908 4,144

Stock compensation expense — 2,045

Deferred income taxes 5,302 5,254

Loss on sale of property, plant and equipment 3,656 5,474

Amortization of debt costs 778 1,032

Stock compensation expense — 2,045

Change in current assets less current liabilities 69,975 ( 54,263 )

1 unchanged sentence

Change in other noncurrent liabilities ( 11,451 ) 2,611

Other 1,048 448

Total adjustments 263,133 177,759

2 unchanged sentences

Additions to property, plant and equipment $ ( 110,717 ) $ ( 96,747 )

Other distribution agreements — ( 4,654 )

Investment in CONA Services LLC ( 1,582 ) ( 486 )

Proceeds from the sale of property, plant and equipment 2,397 1,028

Investment in CONA Services LLC ( 1,770 ) ( 1,713 )

Other distribution agreements — ( 4,654 )

Net cash used in investing activities $ ( 110,090 ) $ ( 102,086 )

13 unchanged sentences

Significant non-cash investing and financing activities:

Right-of-use assets obtained in exchange for lease obligations $ 32,224 $ 21,220

Additions to leased property under financing leases $ 61,121 $ —

Right-of-use assets obtained in exchange for operating lease obligations 38,317 39,213

Additions to property, plant and equipment accrued and recorded in accounts payable, trade 25,477 8,909

7 unchanged sentences

Stock - Class B

of Coca ‑ Cola

Consolidated,

3 unchanged sentences

Cash dividends paid:

Common Stock ($ 0.50 per share)

($ 0.75 per share)

— — — ( 5,356 ) — — — ( 5,356 ) — ( 5,356 )

Class B Common Stock ($ 0.50 per share)

Class B Common Stock

($ 0.75 per share)

— — — ( 1,670 ) — — — ( 1,670 ) — ( 1,670 )

2 unchanged sentences

Reclassification of stranded tax effects — — — 19,720 ( 19,720 ) — — — — —

Balance on June 30, 2019 $ 10,204 $ 2,860 $ 128,983 $ 383,012 $ ( 95,814 ) $ ( 60,845 ) $ ( 409 ) $ 367,991 $ 99,718 $ 467,709

Balance on September 29, 2019 $ 10,204 $ 2,860 $ 128,983 $ 393,674 $ ( 95,618 ) $ ( 60,845 ) $ ( 409 ) $ 378,849 $ 102,258 $ 481,107

Balance on December 29, 2019 $ 10,204 $ 2,860 $ 128,983 $ 381,161 $ ( 115,002 ) $ ( 60,845 ) $ ( 409 ) $ 346,952 $ 104,164 $ 451,116

2 unchanged sentences

Cash dividends paid:

Common Stock ($ 0.50 per share)

($ 0.75 per share)

— — — ( 5,356 ) — — — ( 5,356 ) — ( 5,356 )

Class B Common Stock ($ 0.50 per share)

Class B Common Stock

($ 0.75 per share)

— — — ( 1,674 ) — — — ( 1,674 ) — ( 1,674 )

Balance on June 28, 2020 $ 10,204 $ 2,860 $ 128,983 $ 430,706 $ ( 114,081 ) $ ( 60,845 ) $ ( 409 ) $ 397,418 $ 108,147 $ 505,565

Balance on September 27, 2020 $ 10,204 $ 2,860 $ 128,983 $ 480,246 $ ( 112,801 ) $ ( 60,845 ) $ ( 409 ) $ 448,238 $ 111,317 $ 559,555

See accompanying notes to condensed consolidated financial statements.

6 unchanged sentences

The condensed consolidated financial statements reflect all adjustments, including normal, recurring accruals, which, in the opinion of management, are necessary for a fair statement of the results for the interim periods presented:

• The financial position as of June 28, 2020 and December 29, 2019.

• The results of operations and comprehensive income for the 13-week periods ended June 28, 2020 (the “second quarter” of fiscal 2020 (“2020”)) and June 30, 2019 (the “second quarter” of fiscal 2019 (“2019”)), and the 26-week periods ended June 28, 2020 (the “first half” of 2020) and June 30, 2019 (the “first half” of 2019).

• The changes in cash flows and equity for the first half of 2020 and the first half of 2019.

• The financial position as of September 27, 2020 and December 29, 2019.

• The results of operations and comprehensive income for the 13-week periods ended September 27, 2020 (the “third quarter” of fiscal 2020 (“2020”)) and September 29, 2019 (the “third quarter” of fiscal 2019 (“2019”)), and the 39-week periods ended September 27, 2020 (the “first nine months” of 2020) and September 29, 2019 (the “first nine months” of 2019).

• The changes in cash flows and equity for the first nine months of 2020 and the first nine months of 2019.

The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial reporting and the instructions to Form 10-Q and Article 10 of Regulation S-X.

4 unchanged sentences

Critical Accounting Policies

In the ordinary course of business, the Company has made a number of estimates and assumptions relating to the reporting of results of operations and financial position in the preparation of its condensed consolidated financial statements in conformity with GAAP.

In the ordinary course of business, the Company has made a number of estimates and assumptions relating to the reporting of its results of operations and financial position in the preparation of its condensed consolidated financial statements in conformity with GAAP.

Actual results could differ significantly from those estimates under different assumptions and conditions.

1 unchanged sentence

Management’s Discussion and Analysis of Financial Condition and Results of Operations,” a discussion of the Company’s most critical accounting policies, which are those the Company believes to be the most important to the portrayal of its financial condition and results of operations and require management’s most difficult, subjective and complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.

Any changes in critical accounting policies and estimates are discussed with the Audit Committee of the Board of Directors of the Company during the quarter in which a change is contemplated and prior to making such change.

Any changes in critical accounting policies and estimates are discussed with the Audit Committee of the Company’s Board of Directors during the quarter in which a change is contemplated and prior to making such change.

Recently Adopted Accounting Pronouncements

2 unchanged sentences

The Company adopted ASU 2016-13 in the first quarter of 2020 and the adoption did not have a material impact on its condensed consolidated financial statements.

In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820):

Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement,” which removes, modifies and adds certain disclosure requirements in Accounting Standards Codification Topic 820, Fair Value Measurement.

In August 2018, the FASB issued ASU 2018-13, “Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement,” which removes, modifies and adds certain disclosure requirements in Accounting Standards Codification Topic 820, Fair Value Measurement.

This ASU is effective for annual and interim reporting periods beginning after December 15, 2019.

3 unchanged sentences

Recently Issued Accounting Pronouncements

In August 2018, the FASB issued ASU 2018-14, “Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans,” which is effective for fiscal years ending after December 15, 2020.

Under this guidance, disclosures will be removed for the amounts in accumulated other comprehensive income expected to be recognized as components of net periodic benefit cost over the next fiscal year, the amount and timing of assets expected to be returned to the employer, certain related party disclosures, and the effects of a one-percentage-point change in the assumed health care cost trend rates.

Additional disclosures will include the weighted average interest crediting rate for plans with promised crediting interest rates and an explanation of the reasons for significant gains and losses related to the benefit obligation for the period.

In December 2019, the FASB issued ASU 2019-12, “Simplifying the Accounting for Income Taxes,” which will simplify the accounting for income taxes by removing certain exceptions to the general principles in income tax accounting and improve consistent application of and simplify GAAP for other areas of income tax accounting by clarifying and amending existing guidance.

1 unchanged sentence

The Company is currently evaluating the impact ASU 2019-12 will have on its condensed consolidated financial statements.

In August 2018, the FASB issued ASU 2018-14, “Compensation - Retirement Benefits - Defined Benefit Plans - General (Sub-topic 715-20):

Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans,” which is effective for fiscal years ending after December 15, 2020.

Related Party Transactions

3 unchanged sentences

Frank Harrison, Jr., control shares representing approximately 86 % of the total voting power of the Company’s total outstanding Common Stock and Class B Common Stock on a consolidated basis.

As of June 28, 2020, The Coca-Cola Company owned approximately 27 % of the Company’s total outstanding Common Stock and Class B Common Stock on a consolidated basis, representing approximately 5 % of the total voting power of the Company’s Common Stock and Class B Common Stock voting together.

As of September 27, 2020, The Coca‑Cola Company owned approximately 27 % of the Company’s total outstanding Common Stock and Class B Common Stock on a consolidated basis, representing approximately 5 % of the total voting power of the Company’s Common Stock and Class B Common Stock voting together.

As long as The Coca‑Cola Company holds the number of shares of the Company’s Common Stock it currently owns, it has the right to have its designee proposed by the Company for nomination to the Company’s Board of Directors, and J.

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The following table summarizes the significant transactions between the Company and The Coca‑Cola Company:

Second Quarter First Half

Third Quarter First Nine Months

(in thousands) 2020 2019 2020 2019

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In fiscal 2017 (“2017”), The Coca‑Cola Company agreed to provide the Company a fee to compensate the Company for the net economic impact of changes made by The Coca‑Cola Company to the authorized pricing on sales of covered beverages produced at certain manufacturing facilities owned by the Company (the “Legacy Facilities Credit”).

The Company immediately recognized the portion of the Legacy Facilities Credit applicable to a regional manufacturing facility divested in fiscal 2017 and the remaining balance of the Legacy Facilities Credit will be amortized as a reduction to cost of sales over a period of 40 years.

The Company immediately recognized

the portion of the Legacy Facilities Credit applicable to a regional manufacturing facility divested in 2017 and the remaining balance of the Legacy Facilities Credit will be amortized as a reduction to cost of sales over a period of 40 years.

The portion of the deferred liability that is expected to be amortized in the next 12 months is classified as current.

Coca‑Cola Refreshments USA, Inc.

The Company, The Coca-Cola Company and CCR, a wholly owned subsidiary of The Coca-Cola Company, entered into a comprehensive beverage agreement on March 31, 2017 (as amended, the “CBA”).

The Company, The Coca‑Cola Company and CCR, a wholly owned subsidiary of The Coca‑Cola Company, entered into a comprehensive beverage agreement in 2017 (as amended, the “CBA”).

Pursuant to the CBA, the Company is required to make quarterly sub-bottling payments to CCR on a continuing basis in exchange for the grant of exclusive rights to distribute, promote, market and sell the authorized brands of The Coca‑Cola Company and related products in certain distribution territories the Company acquired from CCR.

These sub-bottling payments are based on gross profit derived from sales of certain beverages and beverage products that are sold under the same trademarks that identify a covered beverage, beverage product or certain cross-licensed brands.

Sub-bottling payments to CCR were $ 20.5 million during the first half of 2020 and $ 12.8 million during the first half of 2019.

Sub-bottling payments to CCR were $ 32.0 million during the first nine months of 2020 and $ 18.8 million during the first nine months of 2019.

The following table summarizes the liability recorded by the Company to reflect the estimated fair value of contingent consideration related to future sub-bottling payments to CCR:

(in thousands) June 28, 2020 December 29, 2019

(in thousands) September 27, 2020 December 29, 2019

Current portion of acquisition related contingent consideration $ 41,912 $ 41,087

1 unchanged sentence

Total acquisition related contingent consideration $ 448,653 $ 446,684

Upon the conversion of the Company’s then-existing bottling agreements in fiscal 2017 pursuant to the CBA, the Company received a fee from CCR (the “Territory Conversion Fee”).

Upon the conversion of the Company’s then-existing bottling agreements in 2017 pursuant to the CBA, the Company received a fee from CCR (the “Territory Conversion Fee”).

The Territory Conversion Fee was recorded as a deferred liability and will be amortized as a reduction to cost of sales over a period of 40 years.

3 unchanged sentences

The Company accounts for Southeastern as an equity method investment.

The Company’s investment in Southeastern, which was classified as other assets in the condensed consolidated balance sheets, was $ 22.6 million as of June 28, 2020 and $ 23.2 million as of December 29, 2019.

The Company’s investment in Southeastern, which was classified as other assets in the condensed consolidated balance sheets, was $ 22.8 million as of September 27, 2020 and $ 23.2 million as of December 29, 2019.

South Atlantic Canners, Inc.

2 unchanged sentences

The Company accounts for SAC as an equity method investment.

The Company’s investment in SAC, which was classified as other assets in the condensed consolidated balance sheets, was $ 8.0 million as of June 28, 2020 and $ 8.2 million as of December 29, 2019.

The Company’s investment in SAC, which was classified as other assets in the condensed consolidated balance sheets, was $ 8.0 million as of September 27, 2020 and $ 8.2 million as of December 29, 2019.

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, which were classified as a reduction to cost of sales in the condensed consolidated statements of operations, were $ 4.7 million in the first half of 2020 and $ 4.5 million in the first half of 2019.

Proceeds from management fees received from SAC, which were classified as a reduction to cost of sales in the condensed consolidated statements of operations, were $ 6.9 million in the first nine months of 2020 and $ 7.0 million in the first nine months of 2019.

Coca‑Cola Bottlers’ Sales and Services Company, LLC (“CCBSS”)

2 unchanged sentences

CCBSS negotiates the procurement for the majority of the Company’s raw materials, excluding concentrate, and the Company receives a rebate from CCBSS for the purchase of these raw materials.

The Company had rebates due from CCBSS of $ 12.4 million on June 28, 2020 and $ 10.0 million on December 29, 2019, which were classified as accounts receivable, other in the condensed consolidated balance sheets.

The Company had rebates due from CCBSS of $ 13.8 million on September 27, 2020 and $ 10.0 million on December 29, 2019, which were classified as accounts receivable, other in the condensed consolidated balance sheets.

In addition, the Company pays an administrative fee to CCBSS for its services.

The Company incurred administrative fees to CCBSS of $ 1.6 million in the first half of 2020 and $ 1.0 million in the first half of 2019, which were classified as selling, delivery and administrative (“SD&A”) expenses in the condensed consolidated statements of operations.

The Company incurred administrative fees to CCBSS of $ 2.1 million in the first nine months of 2020 and $ 1.7 million in the first nine months of 2019, which were classified as selling, delivery and administrative (“SD&A”) expenses in the condensed consolidated statements of operations.

CONA Services LLC (“CONA”)

1 unchanged sentence

The Company accounts for CONA as an equity method investment.

The Company’s investment in CONA, which was classified as other assets in the condensed consolidated balance sheets, was $ 11.3 million as of June 28, 2020 and $ 10.5 million as of December 29, 2019.

The Company’s investment in CONA, which was classified as other assets in the condensed consolidated balance sheets, was $ 11.5 million as of September 27, 2020 and $ 10.5 million as of December 29, 2019.

Pursuant to an amended and restated master services agreement with CONA, the Company is authorized to use the Coke One North America system (the “CONA System”), a uniform information technology system developed to promote operational efficiency and uniformity among North American Coca‑Cola bottlers.

In exchange for the Company’s rights to use the CONA System and receive CONA-related services, it is charged service fees by CONA.

The Company incurred CONA service fees of $ 11.6 million in the first half of 2020 and $ 11.5 million in the first half of 2019.

The Company incurred CONA service fees of $ 17.4 million in the first nine months of 2020 and $ 17.7 million in the first nine months of 2019.

Related Party Leases

The Company leases its headquarters office facility and an adjacent office facility in Charlotte, North Carolina from Beacon Investment Corporation (“Beacon”), of which J.

Frank Harrison, III, Chairman of the Board of Directors and Chief Executive Officer of the Company, is the majority stockholder and Morgan H.

Everett, Vice Chair of the Companys Board of Directors, is a minority stockholder.

Frank Harrison, III is the majority stockholder and Morgan H.

Everett, Vice Chair of the Company’s Board of Directors, is a minority stockholder.

During the first quarter of 2020, the Company entered into a new lease agreement, effective January 1, 2020, with Beacon to continue to lease its corporate facilities.

The new lease expires on December 31, 2029.

The principal balance outstanding under the new lease was $ 31.8 million on June 28, 2020 and the principal balance outstanding under the previous lease, which was replaced by the new lease, was $ 6.8 million on December 29, 2019.

See Note 9 for additional information.

The principal balance outstanding under the new operating lease was $ 31.3 million on September 27, 2020 and the principal balance outstanding under the previous financing lease, which was replaced by the new operating lease, was $ 6.8 million on December 29, 2019.

The Company leases the Snyder Production Center and an adjacent sales facility in Charlotte, North Carolina from Harrison Limited Partnership One (“HLP”), which is directly and indirectly owned by trusts of which J.

2 unchanged sentences

Everett is a permissible, discretionary beneficiary.

The principal balance outstanding under this lease was $ 2.2 million on June 28, 2020 and $ 4.3 million on December 29, 2019.

Subsequent to quarter end, the Company entered into an amendment to this lease, effective June 30, 2020, with HLP to continue to lease its production facility in Charlotte, North Carolina.

The amendment extended the term of the original lease agreement by 15 years from December 31, 2020 through December 31, 2035.

This lease will continue to be classified as a financing lease and the additional lease liability associated with this lease commitment is $ 60.1 million.

During the third quarter of 2020, the Company entered into an amendment to this lease, effective June 30, 2020, with HLP to extend the term of the original lease agreement by 15 years from December 31, 2020 through December 31, 2035.

The principal balance outstanding under the amended lease was $ 62.6 million on September 27, 2020 and the principal balance outstanding under the lease, prior to being amended, was $ 4.3 million on December 29, 2019.

A summary of rental payments related to these leases is as follows:

Second Quarter First Half

Third Quarter First Nine Months

(in thousands) 2020 2019 2020 2019

6 unchanged sentences

These awards may be settled in cash and/or shares of the Company’s Class B Common Stock, based on the average of the closing prices of the Company’s Common Stock during the last 20 trading days of the performance period.

Compensation expense for the Long-Term Performance Equity Plan, which is included in SD&A expenses in the condensed consolidated statements of operations, was $ 4.3 million in the first half of 2020 and $ 6.7 million in the first half of 2019.

Compensation expense for the Long-Term Performance Equity Plan, which was included in SD&A expenses in the condensed consolidated statements of operations, was $ 7.2 million in the first nine months of 2020 and $ 10.3 million in the first nine months of 2019.

Revenue Recognition

The Company offers a range of nonalcoholic beverage products and flavors designed to meet the demands of its consumers, including both sparkling and still beverages.

The Company offers a range of nonalcoholic beverage products and flavors, including both sparkling and still beverages, designed to meet the demands of its consumers.

Sparkling beverages are carbonated beverages and the Company’s principal sparkling beverage is Coca‑Cola.

Still beverages include energy products and noncarbonated beverages such as bottled water, tea, ready to drink coffee, enhanced water, juices and sports drinks.

The Company’s products are sold and distributed in the United States through various channels, which include selling directly to retail stores and other outlets such as food markets, institutional accounts and vending machine outlets.

The Company’s products are sold and distributed in the United States through various channels, which include selling directly to customers, including grocery stores, mass merchandise stores, club stores, convenience stores and drug stores, selling to “on-premise” accounts, where products are typically consumed immediately, such as restaurants, schools, amusement parks and recreational facilities, and selling through other channels such as vending machine outlets.

The Company typically collects payment from customers within 30 days from the date of sale.

11 unchanged sentences

Bottle/can sales, sales to other Coca‑Cola bottlers and post-mix sales are recognized when control transfers to a customer, which is generally upon delivery and is considered a single point in time (“point in time”).

Point in time sales accounted for approximately 97 % of the Company’s net sales in the first half of 2020 and approximately 96 % of the Company’s net sales in the first half of 2019.

Substantially all of the Company’s revenue is recognized at a point in time and is included in the Nonalcoholic Beverages segment.

Point in time sales accounted for approximately 97 % of the Company’s net sales in the first nine months of 2020 and approximately 96 % of the Company’s net sales in the first nine months of 2019.

Other sales, which include revenue for service fees related to the repair of cold drink equipment and delivery fees for freight hauling and brokerage services, are recognized over time (“over time”).

Revenues related to cold drink equipment repair are

recognized as the respective services are completed using a cost-to-cost input method.

Revenues related to cold drink equipment repair are recognized as the respective services are completed using a cost-to-cost input method.

Repair services are generally completed in less than one day but can extend up to one month .

3 unchanged sentences

The following table represents a disaggregation of revenue from contracts with customers:

Second Quarter First Half

Third Quarter First Nine Months

(in thousands) 2020 2019 2020 2019

18 unchanged sentences

The Company accounts for its prospective and retrospective rebates using the expected value method, which estimates the net price to the customer based on the customer’s expected annual sales volume projections.

The Company’s allowance for doubtful accounts in the condensed consolidated balance sheets includes a reserve for customer returns and an allowance for credit losses.

The Company experiences customer returns primarily as a result of damaged or out-of-date product.

At any given time, the Company estimates less than 1 % of bottle/can sales and post-mix sales could be at risk for return by customers.

The Company’s reserve for customer returns, which was classified as allowance for doubtful accounts in the condensed consolidated balance sheets, was $ 3.6 million as of both June 28, 2020 and December 29, 2019.

Returned product is recognized as a reduction to net sales.

The Company recognizes an allowance for credit losses related to its accounts receivable to present the net amount expected to be collected at the balance sheet date.

The Company estimates this allowance based on historical data such as days' sales outstanding trends, previous write-offs of balances, and monthly reviews of aged trial balances, among others.

Accounts receivable balances are written off when deemed uncollectible and are recognized as a deduction from the allowance for credit losses.

Expected recoveries, not to exceed the amount previously written off, are considered in determining the reserve balance at the balance sheet date.

Below is a summary of activity for the allowance for credit losses as of the end of the first half of 2020:

(in thousands) Allowance for Credit Losses to Accounts Receivable

Balance at December 29, 2019 $ 10,232

The Company’s reserve for customer returns was $ 3.6 million as of both September 27, 2020 and December 29, 2019.

The Company estimates an allowance for credit losses, based on historic days’ sales outstanding trends, aged customer balances, previously written-off balances and expected recoveries up to balances previously written off, in order to present the net amount expected to be collected.

Accounts receivable balances are written off when determined uncollectible and are recognized as a reduction to the allowance for credit losses.

Following is a summary of activity for the allowance for credit losses during the first nine months of 2020:

(in thousands) First Nine Months 2020

Balance at beginning of year - allowance for credit losses $ 10,232

Additions charged to costs and expenses (1)

Write-offs, net of recoveries ( 2,970 )

Balance at June 28, 2020 $ 17,694

The additions to the allowance for credit losses for the first half of 2020 include a $ 5.0 million adjustment to address the COVID-19-related collectability risk primarily for our on-premise customers.

Balance at end of period - allowance for credit losses $ 21,500

(1) Includes an allowance for credit losses for COVID-19-related collectability risk .

The Company evaluates segment reporting in accordance with the FASB Accounting Standards Codification Topic 280, Segment Reporting, each reporting period, including evaluating the reporting package reviewed by the Chief Operating Decision Maker (the “CODM”).

2 unchanged sentences

The Company believes three operating segments exist.

Nonalcoholic Beverages represents the vast majority of the Company’s consolidated revenues and income from operations.

Nonalcoholic Beverages represents the vast majority of the Company’s consolidated net sales and income from operations.

The additional two operating segments do not meet the quantitative thresholds for separate reporting, either individually or in the aggregate, and, therefore, have been combined into “All Other.”

The Company’s segment results are as follows:

Second Quarter First Half

Third Quarter First Nine Months

(in thousands) 2020 2019 2020 2019

12 unchanged sentences

Consolidated depreciation and amortization $ 48,093 $ 45,588 $ 134,489 $ 136,416

(1) The entire net sales elimination for each period presented represents net sales from the All Other segment to the Nonalcoholic Beverages segment.

(1) The entire net sales elimination represents net sales from the All Other segment to the Nonalcoholic Beverages segment.

Sales between these segments are recognized at either fair market value or cost depending on the nature of the transaction.

1 unchanged sentence

The following table sets forth the computation of basic net income per share and diluted net income per share under the two-class method:

Second Quarter First Half

Third Quarter First Nine Months

(in thousands, except per share data) 2020 2019 2020 2019

20 unchanged sentences

Numerator for basic net income per Class B Common Stock share $ 12,356 $ 3,097 $ 25,269 $ 5,123

Third Quarter First Nine Months

(in thousands, except per share data) 2020 2019 2020 2019

Numerator for diluted net income per Common Stock share:

3 unchanged sentences

Numerator for diluted net income per Common Stock share $ 51,884 $ 13,006 $ 106,115 $ 21,545

Second Quarter First Half

(in thousands, except per share data) 2020 2019 2020 2019

Numerator for diluted net income per Class B Common Stock share:

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(2) For purposes of the diluted net income per share computation for Class B Common Stock, weighted average shares of Class B Common Stock are assumed to be outstanding for the entire period and not converted.

(3) For periods presented during which the Company has net income, the denominator for diluted net income per share for Common Stock and Class B Common Stock included the dilutive effect of shares relative to the Long-Term Performance Equity Plan .

For periods presented during which the Company has net loss, the unvested performance units granted pursuant to the Long-Term Performance Equity Plan are excluded from the calculation of diluted net loss per share, as the effect of these awards would be anti-dilutive.

(3) For periods presented during which the Company had net income, the denominator for diluted net income per share for Common Stock and Class B Common Stock includes the dilutive effect of shares relative to the Long-Term Performance Equity Plan .

For periods presented during which the Company had net loss, the unvested shares granted pursuant to the Long-Term Performance Equity Plan are excluded from the computation of diluted net loss per share, as the effect would have been anti-dilutive.

See Note 2 for additional information on the Long-Term Performance Equity Plan .

(4) The Long-Term Performance Equity Plan awards may be settled in cash and/or shares of the Company’s Class B Common Stock.

Once an election has been made to settle an award in cash, the dilutive effect of shares relative to such award is prospectively removed from the denominator for the calculation of diluted net income per share.

Once an election has been made to settle an award in cash, the dilutive effect of shares relative to such award is prospectively removed from the denominator in the computation of diluted net income per share.

(5) The Company did no t have anti-dilutive shares for any periods presented.

1 unchanged sentence

(in thousands)

June 28, 2020 December 29, 2019

September 27, 2020 December 29, 2019

Finished products

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Prepaid expenses and other current assets consisted of the following:

(in thousands) June 28, 2020 December 29, 2019

(in thousands) September 27, 2020 December 29, 2019

Repair parts $ 28,342 $ 28,967

Prepaid taxes 8,099 4,359

Prepaid software 6,462 5,850

Prepaid marketing 6,134 5,658

Prepaid taxes 5,138 4,359

Prepayments for sponsorship contracts 2,462 8,696

1 unchanged sentence

Total prepaid expenses and other current assets $ 69,829 $ 69,461

Assets Held for Sale

The Company is in the process of integrating its Memphis, Tennessee manufacturing plant with its West Memphis, Arkansas operations, which is expected to greatly expand its West Memphis production capabilities and to reduce its overall production costs.

Additionally, the Company is planning to open a new, automated distribution center in Whitestown, Indiana by the spring of 2021, which will allow the Company to consolidate its Anderson, Bloomington, Lafayette, Shelbyville and Speedway, Indiana warehousing and distribution operations into this one new facility.

The increased capacity and automation in Whitestown will allow the Company to optimize its supply chain and to better serve its customers and consumers in Indiana and the surrounding areas.

As of September 27, 2020, certain locations of the Company, which are primarily those included in the Company’s supply chain optimization discussed above, met the accounting guidance criteria to be classified as assets held for sale.

All locations classified as held for sale are included in the Nonalcoholic Beverages segment.

There are not any liabilities held for sale associated with these locations and none meet the accounting guidance criteria to be classified as discontinued operations.

Following is a summary of the assets held for sale:

(in thousands) September 27, 2020

Buildings and leasehold and land improvements 5,019

Assets held for sale $ 7,036

An impairment of $ 1.6 million was recorded for these locations as a result of the net book value exceeding the agreed upon purchase price of one of the locations.

This impairment was recorded within cost of sales on the condensed consolidated statements of operations and within impairment of property, plant and equipment on the condensed consolidated statements of cash flows.

Property, Plant and Equipment, Net

The principal categories and estimated useful lives of property, plant and equipment, net were as follows:

(in thousands) June 28, 2020 December 29, 2019 Estimated Useful Lives

(in thousands) September 27, 2020 December 29, 2019 Estimated Useful Lives

Land $ 81,151 $ 76,860

11 unchanged sentences

The Company leases office and warehouse space, machinery and other equipment under noncancelable operating lease agreements and also leases certain warehouse space under financing lease agreements.

The Company uses the following policies and assumptions to evaluate its population of leases:

The Company uses the following policies and assumptions to evaluate its leases:

• Determining a lease:

3 unchanged sentences

The Company has elected the practical expedient to not separate lease and non-lease components for certain classes of underlying assets.

The Company has equipment and vehicle lease

agreements, which generally have the lease and associated non-lease components accounted for as a single lease component.

The Company has equipment and vehicle lease agreements, which generally have the lease and associated non-lease components accounted for as a single lease component.

The Company has real estate lease agreements with lease and non-lease components, which are generally accounted for separately where applicable.

18 unchanged sentences

The Company’s lease agreements do not contain residual value guarantees, restrictions or covenants.

Following is a summary of the weighted average remaining lease term and weighted average discount rate for the Company’s population of leases:

June 28, 2020 December 29, 2019

Following is a summary of the weighted average remaining lease term and the weighted average discount rate for the Company’s leases:

September 27, 2020 December 29, 2019

Weighted average remaining lease term:

4 unchanged sentences

Financing leases 3.2 % 5.7 %

During the first quarter of 2020, the Company entered into a lease agreement, effective January 1, 2020, with Beacon to continue to lease its headquarters office facility and an adjacent office facility in Charlotte, North Carolina.

The new lease has a 10 -year term and expires on December 31, 2029.

This lease is classified as an operating lease and the additional lease liability associated with this lease was $ 31.8 million as of June 28, 2020.

This lease replaced the previous lease agreement, which was classified as a financing lease and was scheduled to expire on December 31, 2021, and had a $ 6.8 million principal balance outstanding as of December 29, 2019.

As of June 28, 2020, the Company had two real estate lease commitments that had not yet commenced.

The Company amended an existing lease agreement, effective July 6, 2020, to continue to lease its warehouse in North Charleston, South Carolina.

The amendment extended the term of the original lease agreement by three years from April 5, 2027 through April 5, 2030.

This lease will continue to be classified as an operating lease and the additional lease liability associated with this lease commitment is expected to be $ 0.8 million.

The Company amended an existing lease agreement, effective June 30, 2020, with HLP to continue to lease its production facility in Charlotte, North Carolina.

The amendment extended the term of the original lease agreement by 15 years from December 31, 2020 through December 31, 2035.

This lease will continue to be classified as a financing lease and the additional lease liability associated with this lease commitment is $ 60.1 million.

Following is a summary of balances related to the Company’s lease portfolio within the condensed consolidated statements of operations:

Second Quarter First Half

As of September 27, 2020, the Company had one real estate and two vehicle operating lease commitments that had not yet commenced.

These lease commitments are expected to commence during the fourth quarter of 2020 and have lease terms of approximately three years .

The additional lease liability associated with these lease commitments is expected to be $ 2.1 million.

Following is a summary of the Company’s leases within the condensed consolidated statements of operations:

Third Quarter First Nine Months

(in thousands) 2020 2019 2020 2019

13 unchanged sentences

Total lease cost $ 12,253 $ 10,883 $ 33,756 $ 30,305

The future minimum lease payments related to the Company’s lease portfolio include renewal options the Company has determined to be reasonably certain and exclude payments to landlords for real estate taxes and common area maintenance.

Following is a summary of future minimum lease payments for all noncancelable operating leases and financing leases as of June 28, 2020 :

The future minimum lease payments related to the Company’s leases include renewal options the Company has determined to be reasonably certain and exclude payments to landlords for real estate taxes and common area maintenance.

Following is a summary of future minimum lease payments for all noncancelable operating leases and financing leases as of September 27, 2020 :

(in thousands) Operating

25 unchanged sentences

Noncurrent portion of lease liabilities - operating and financing leases $ 97,765 $ 17,403 $ 115,168

Following is a summary of balances related to the Company’s lease portfolio within the condensed consolidated statements of cash flows:

Following is a summary of the Company’s leases within the condensed consolidated statements of cash flows:

First Nine Months

(in thousands) 2020 2019

9 unchanged sentences

(in thousands)

June 28, 2020 December 29, 2019

September 27, 2020 December 29, 2019

Distribution agreements at cost

5 unchanged sentences

Customer Lists and Other Identifiable Intangible Assets, Net

Customer lists and other identifiable intangible assets, net, which are amortized on a straight-line basis and have an estimated useful life of 5 to 12 years, consisted of the following:

Customer lists and other identifiable intangible assets, net, which are amortized on a straight-line basis and have an estimated useful life of five to 12 years, consisted of the following:

(in thousands)

June 28, 2020 December 29, 2019

September 27, 2020 December 29, 2019

Customer lists and other identifiable intangible assets at cost

6 unchanged sentences

Other accrued liabilities consisted of the following:

(in thousands) June 28, 2020 December 29, 2019

(in thousands) September 27, 2020 December 29, 2019

Accrued insurance costs $ 47,775 $ 44,584

2 unchanged sentences

Employee and retiree benefit plan accruals 27,819 33,699

Current portion of deferred payroll taxes under CARES Act 12,324 —

Accrued taxes (other than income taxes) 9,076 6,366

Commodity hedges at fair market value 2,918 1,174

Checks and transfers yet to be presented for payment from zero balance cash accounts 3,140 20,199

Current deferred proceeds from Territory Conversion Fee 2,286 2,286

Commodity derivative instruments at fair market value 1,376 1,174

Federal income taxes — 1,651

1 unchanged sentence

Total other accrued liabilities $ 207,522 $ 208,834

The Company has taken advantage of certain provisions of the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”), which allow an employer to defer the deposit and payment of the employer’s portion of social security taxes that would otherwise be due on or after March 27, 2020 and before January 1, 2021.

The law permits an employer to deposit half of these deferred payments by December 31, 2021 and the other half by December 31, 2022.

The Company intends to repay a portion of the deferred payroll taxes in the next 12 months and has classified this portion as current.

Derivative Financial Instruments

The Company is subject to the risk of increased costs arising from adverse changes in certain commodity prices.

In the normal course of business, the Company manages these risks through a variety of strategies, including the use of derivative instruments.

The Company does not use derivative instruments for trading or speculative purposes.

All derivative instruments are recorded at fair value as either assets or liabilities in the condensed consolidated balance sheets.

These derivative instruments are not designated as hedging instruments under GAAP and are used as “economic hedges” to manage certain commodity price risk.

Derivative instruments held are marked to market on a monthly basis and recognized in earnings consistent with the expense classification of the underlying hedged item.

Settlements of derivative agreements are included in cash flows from operating activities in the condensed consolidated statements of cash flows.

In the normal course of business, the Company manages these risks through a variety of strategies, including the use of commodity derivative instruments.

The Company does not use commodity derivative instruments for trading or speculative purposes.

These commodity derivative instruments are not designated as hedging instruments under GAAP and are used as “economic hedges” to manage certain commodity price risk.

The Company uses several different financial institutions for commodity derivative instruments to minimize the concentration of credit risk.

While the Company would be exposed to credit loss in the event of nonperformance by these counterparties, the Company does not anticipate nonperformance by these parties.

The following table summarizes pre-tax changes in the fair value of the Company’s commodity derivative financial instruments and the classification of such changes in the condensed consolidated statements of operations:

Second Quarter First Half

(in thousands) Classification of Gain (Loss) 2020 2019 2020 2019

Commodity hedges Cost of sales $ 1,266 $ ( 4,874 ) $ ( 270 ) $ ( 969 )

Commodity hedges Selling, delivery and administrative expenses 805 ( 66 ) ( 1,524 ) 2,649

Commodity derivative instruments held by the Company are marked to market on a monthly basis and recognized in earnings consistent with the expense classification of the underlying hedged item.

Settlements of commodity derivative instruments are included in cash flows from operating activities in the condensed consolidated statements of cash flows.

The following table summarizes pre-tax changes in the fair values of the Company’s commodity derivative instruments and the classification of such changes in the condensed consolidated statements of operations:

Third Quarter First Nine Months

(in thousands) 2020 2019 2020 2019

Cost of sales $ 1,194 $ 487 $ 924 $ ( 482 )

Selling, delivery and administrative expenses 575 ( 74 ) ( 949 ) 2,575

Total gain (loss) $ 1,769 $ 413 $ ( 25 ) $ 2,093

The following table summarizes the fair values and classification in the condensed consolidated balance sheets of derivative instruments held by the Company:

(in thousands) Balance Sheet Classification June 28, 2020 December 29, 2019

Commodity hedges at fair market value Prepaid expenses and other current assets $ 823 $ 1,007

All commodity derivative instruments are recorded at fair value as either assets or liabilities in the condensed consolidated balance sheets.

The Company has master agreements with the counterparties to its commodity derivative instruments that provide for net settlement of derivative transactions.

Accordingly, the net amounts of derivative assets are recognized in either prepaid expenses and other current assets or other assets in the condensed consolidated balance sheets and the net amounts of derivative liabilities are recognized in either other accrued liabilities or other liabilities in the condensed consolidated balance sheets.

following table summarizes the fair values of the Company’s commodity derivative instruments and the classification of such instruments in the condensed consolidated balance sheets:

(in thousands) September 27, 2020 December 29, 2019

Prepaid expenses and other current assets $ 1,049 $ 1,007

Total assets $ 1,049 $ 1,007

Commodity hedges at fair market value Other accrued liabilities $ 2,918 $ 1,174

Other accrued liabilities $ 1,376 $ 1,174

Total liabilities $ 1,376 $ 1,174

The Company has master agreements with the counterparties to its derivative financial agreements that provide for net settlement of derivative transactions.

Accordingly, the net amounts of derivative assets are recognized in either prepaid expenses and other current assets or other assets in the condensed consolidated balance sheets and the net amounts of derivative liabilities are recognized in other accrued liabilities or other liabilities in the condensed consolidated balance sheets.

The following table summarizes the Company’s gross derivative assets and gross derivative liabilities in the condensed consolidated balance sheets:

(in thousands) June 28, 2020 December 29, 2019

Gross derivative assets $ 904 $ 3,298

Gross derivative liabilities 2,999 3,465

The following table summarizes the Company’s outstanding commodity derivative agreements:

(in thousands) June 28, 2020 December 29, 2019

Notional amount of outstanding commodity derivative agreements $ 123,428 $ 171,699

Latest maturity date of outstanding commodity derivative agreements December 2020 December 2020

The following table summarizes the Company’s gross commodity derivative instrument assets and gross commodity derivative instrument liabilities in the condensed consolidated balance sheets:

(in thousands) September 27, 2020 December 29, 2019

Gross commodity derivative instrument assets $ 1,049 $ 3,298

Gross commodity derivative instrument liabilities 1,376 3,465

The following table summarizes the Company’s outstanding commodity derivative instruments:

(in thousands) September 27, 2020 December 29, 2019

Notional amount of outstanding commodity derivative instruments $ 73,010 $ 171,699

Latest maturity date of outstanding commodity derivative instruments December 2020 December 2020

Fair Values of Financial Instruments

3 unchanged sentences

Unobservable inputs that are not corroborated by market data.

The following methods and assumptions were used by the Company in estimating the fair values of its financial instruments.

The below 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.

1 unchanged sentence

Methods and Assumptions

Deferred compensation plan assets and liabilities Level 1 The fair value of the Company’s non-qualified 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 value of the securities held within the mutual funds.

Commodity hedging agreements Level 2 The fair values of the Company’s commodity hedging agreements are based on current settlement values at each balance sheet date.

The fair values of the commodity hedging agreements at each balance sheet date represent the estimated amounts the Company would have received or paid upon termination of these agreements.

The Company’s credit risk related to the derivative financial instruments is managed by requiring high standards for its counterparties and periodic settlements.

The Company considers nonperformance risk in determining the fair values of derivative financial instruments.

Nonpublic variable rate debt Level 2 The carrying amounts of the Company’s nonpublic variable rate debt approximate their fair values due to variable interest rates with short reset periods.

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.

Nonpublic variable rate debt Level 2 The carrying amounts of the Company’s nonpublic variable rate debt approximate the fair values due to variable interest rates with short reset periods.

Nonpublic fixed rate debt Level 2 The fair values of the Company’s nonpublic fixed rate debt are based on estimated current market prices.

Public debt securities Level 2 The fair values of the Company’s public debt securities are based on estimated current market prices.

Acquisition related contingent consideration Level 3 The fair values of acquisition related contingent consideration are based on internal forecasts and the weighted average cost of capital (“WACC”) derived from market data.

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

June 28, 2020

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.

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

September 27, 2020

(in thousands) Carrying

Deferred compensation plan assets $ 46,602 $ 46,602 $ 46,602 $ — $ —

Commodity hedging agreements 823 823 — 823 —

Commodity derivative instruments 1,049 1,049 — 1,049 —

Deferred compensation plan liabilities 46,602 46,602 46,602 — —

Commodity hedging agreements 2,918 2,918 — 2,918 —

Commodity derivative instruments 1,376 1,376 — 1,376 —

Nonpublic variable rate debt 239,882 240,000 — 240,000 —

4 unchanged sentences

(in thousands) Carrying

Fair Value Fair Value

Level 1 Fair Value

Level 2 Fair Value

Deferred compensation plan assets $ 42,543 $ 42,543 $ 42,543 $ — $ —

Commodity hedging agreements 1,007 1,007 — 1,007 —

Commodity derivative instruments 1,007 1,007 — 1,007 —

Deferred compensation plan liabilities 42,543 42,543 42,543 — —

Commodity hedging agreements 1,174 1,174 — 1,174 —

Commodity derivative instruments 1,174 1,174 — 1,174 —

Nonpublic variable rate debt 307,250 307,500 — 307,500 —

2 unchanged sentences

Acquisition related contingent consideration 446,684 446,684 — — 446,684

The acquisition related contingent consideration is valued using a probability weighted discounted cash flow model based on internal forecasts and the WACC derived from market data, which are considered Level 3 inputs.

The acquisition related contingent consideration was valued using a probability weighted discounted cash flow model based on internal forecasts and the WACC derived from market data, which are considered Level 3 inputs.

Each reporting period, the Company adjusts its acquisition related contingent consideration liability related to the distribution territories to fair value by discounting future expected sub-bottling payments required under the CBA using the Company’s estimated WACC.

The future expected sub-bottling payments extend through the life of the applicable distribution assets acquired from CCR, which is generally 40 years.

The future expected sub-bottling payments extend through the life of applicable distribution assets acquired from CCR, which is generally 40 years.

As a result, the fair value of the acquisition related contingent consideration liability is impacted by the Company’s WACC, management’s estimate of the amounts that will be paid in the future under the CBA, and current sub-bottling payments (all Level 3 inputs).

Changes in any of these Level 3 inputs, particularly the underlying risk-free interest rate used to estimate the Company’s WACC, could result in material changes to the fair value of the acquisition related contingent consideration and could materially impact the amount of non-cash income or expense recorded each reporting period.

Changes in any of these Level 3 inputs, particularly the underlying risk-free interest rate used to estimate the Company’s WACC, could result in material changes to the fair value of the acquisition related contingent consideration liability and could materially impact the amount of non-cash income or expense recorded each reporting period.

The acquisition related contingent consideration liability is the Company’s only Level 3 asset or liability.

A reconciliation of the Level 3 activity is as follows:

Second Quarter First Half

A summary of the Level 3 activity is as follows:

Third Quarter First Nine Months

(in thousands) 2020 2019 2020 2019

4 unchanged sentences

Ending balance - Level 3 liability $ 448,653 $ 425,191 $ 448,653 $ 425,191

The increase in the fair value of the acquisition related contingent consideration liability during the first half of 2020 was primarily driven by changes in future cash flow projections of the distribution territories subject to sub-bottling fees, partially offset by an increase in the discount rate used to calculate the fair values.

The increase in the fair value of the acquisition related contingent consideration liability during the first half of 2019 was primarily driven by a decrease in the discount rate and changes in future cash flow projections of the distribution territories subject to sub-bottling fees.

The increase in the fair value of the acquisition related contingent consideration liability during the first nine months of 2020 was primarily driven by changes in future cash flow projections of the distribution territories subject to sub-bottling fees, partially offset by an increase in the discount rate used to calculate the fair value.

The increase in the fair value of the acquisition related contingent consideration liability during the first nine months of 2019 was primarily driven by a decrease in the discount rate used to calculate the fair value and changes in future cash flow projections of the distribution territories subject to sub-bottling fees.

These fair value adjustments were recorded in other expense, net in the condensed consolidated statements of operations.

The anticipated amount the Company could pay annually under acquisition related contingent consideration arrangements is expected to be in the range of $ 28 million to $ 53 million.

The Company’s effective income tax rate, calculated by dividing income tax expense by income before income taxes, was 26.1 % for the first half of 2020 and 27.0 % for the first half of 2019.

The decrease in the effective income tax rate was primarily driven by improved financial results and the extension of certain tax credits in 2020.

The Company’s effective income tax rate, calculated by dividing income tax expense by income before income taxes minus net income attributable to noncontrolling interest, was 27.5 % for the first half of 2020 and 32.8 % for the first half of 2019.

The Company had uncertain tax positions, including accrued interest, of $ 3.4 million on June 28, 2020 and $ 2.5 million on December 29, 2019, all of which would affect the Company’s effective income tax rate if recognized.

The Company’s effective income tax rate, calculated by dividing income tax expense by income before income taxes, was 25.6 % for the first nine months of 2020 and 28.7 % for the first nine months of 2019.

The decrease in the effective income tax rate was primarily driven by improved financial results.

The Company’s effective income tax rate, calculated by dividing income tax expense by income before income taxes minus net income attributable to noncontrolling interest, was 26.8 % for the first nine months of 2020 and 33.4 % for the first nine months of 2019.

The Company had uncertain tax positions, including accrued interest, of $ 3.4 million on September 27, 2020 and $ 2.5 million on December 29, 2019, all of which would affect the Company’s effective income tax rate if recognized.

While it is expected the amount of uncertain tax positions may change in the next 12 months, the Company does not expect such change would have a significant impact on the condensed consolidated financial statements.

6 unchanged sentences

Benefits under the Bargaining Plan are determined in accordance with negotiated formulas for the respective participants.

Contributions to the plans are based on actuarially determined amounts and are limited to the amounts currently deductible for income tax purposes.

Contributions to the plans are based on actuarially determined amounts and are limited to amounts currently deductible for income tax purposes.

The components of net periodic pension cost were as follows:

Second Quarter First Half

Third Quarter First Nine Months

(in thousands) 2020 2019 2020 2019

5 unchanged sentences

Net periodic pension cost $ 2,231 $ 2,602 $ 6,690 $ 7,805

The Company did no t make any contributions to the two Company-sponsored pension plans during the first half of 2020.

Contributions to the two Company-sponsored pension plans are expected to be in the range of $ 8 million to $ 12 million for the remainder of 2020.

The Company contributed $ 16.3 million to the two Company-sponsored pension plans during the first nine months of 2020 and does no t anticipate making additional contributions during the fourth quarter of 2020.

Postretirement Benefits

3 unchanged sentences

The components of net periodic postretirement benefit cost were as follows:

Second Quarter First Half

Third Quarter First Nine Months

(in thousands) 2020 2019 2020 2019

6 unchanged sentences

Other liabilities consisted of the following:

(in thousands) June 28, 2020 December 29, 2019

(in thousands) September 27, 2020 December 29, 2019

Noncurrent portion of acquisition related contingent consideration $ 406,741 $ 405,597

$ 406,725 $ 405,597

Accruals for executive benefit plans 140,795 141,380

Noncurrent deferred proceeds from Territory Conversion Fee 81,162 82,877

81,733 82,877

Noncurrent deferred proceeds from Legacy Facilities Credit 28,970 29,569

29,170 29,569

Deferral of payroll taxes under CARES Act 13,128 —

Noncurrent portion of deferred payroll taxes under CARES Act 12,324 —

Other 9,369 9,143

1 unchanged sentence

$ 679,361 $ 668,566

Following is a summary of the Company’s debt:

Long-Term Debt

Following is a summary of the Company’s long-term debt:

(in thousands) Maturity

2 unchanged sentences

Paid Public or

Nonpublic June 28,

Nonpublic September 27,

2020 December 29,

21 unchanged sentences

Changes in the fair value of this interest rate swap were classified as accumulated other comprehensive loss on the condensed consolidated balance sheets and included in the condensed consolidated statements of comprehensive income.

The indentures under which the Company’s public debt was issued do not include financial covenants but do limit the incurrence of certain liens and encumbrances as well as indebtedness by the Company’s subsidiaries in excess of certain amounts.

The indenture under which the Company’s public debt was issued does not include financial covenants but does limit the incurrence of certain liens and encumbrances as well as indebtedness by the Company’s subsidiaries in excess of certain amounts.

The agreements under which the Company’s nonpublic debt was issued include two financial covenants:

a consolidated cash flow/fixed charges ratio and a consolidated funded indebtedness/cash flow ratio, each as defined in the respective agreements.

The Company was in compliance with these covenants as of June 28, 2020.

a consolidated cash flow/fixed charges ratio and a consolidated funded indebtedness/cash flow ratio, each as defined in the respective agreement.

The Company was in compliance with these covenants as of September 27, 2020.

These covenants do not currently, and the Company does not anticipate they will, restrict its liquidity or capital resources.

5 unchanged sentences

The Company is also obligated to purchase 17.5 million cases of finished product from SAC on an annual basis through June 2024.

The Company purchased 15.1 million cases and 14.3 million cases of finished product from SAC in the first half of 2020 and the first half of 2019, respectively.

The Company purchased 21.9 million cases and 22.2 million cases of finished product from SAC in the first nine months of 2020 and the first nine months of 2019, respectively.

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

Second Quarter First Half

Third Quarter First Nine Months

(in thousands) 2020 2019 2020 2019

3 unchanged sentences

The Company guarantees a portion of SAC’s debt, which expires at various dates through 2024.

The amount guaranteed was $ 14.7 million on both June 28, 2020 and December 29, 2019.

The amount guaranteed was $ 14.7 million on both September 27, 2020 and December 29, 2019.

In the event SAC fails to fulfill its commitments under the related debt, the Company would be responsible for payment to the lenders up to the level of the guarantee.

2 unchanged sentences

The Company holds no assets as collateral against the SAC guarantee, the fair value of which is immaterial to the condensed consolidated financial statements.

The Company monitors its investment in SAC 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 investment in SAC was identified as of June 28, 2020, and there was no impairment identified in 2019.

The Company monitors its investment in SAC and would be required to write down its investment if an impairment, other than a temporary impairment, was identified.

No impairment of the Company’s investment in SAC was identified as of September 27, 2020, and there was no impairment identified in 2019.

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 $ 37.6 million on June 28, 2020 and $ 35.6 million on December 29, 2019.

These letters of credit totaled $ 37.6 million on September 27, 2020 and $ 35.6 million on December 29, 2019.

The Company participates in long-term marketing contractual arrangements with certain prestige properties, athletic venues and other locations.

As of June 28, 2020, the future payments related to these contractual arrangements, which expire at various dates through 2033, amounted to $ 178.1 million.

As of September 27, 2020, the future payments related to these contractual arrangements, which expire at various dates through 2033, amounted to $ 168.1 million.

The Company is involved in various claims and legal proceedings which have arisen in the ordinary course of its business.

Although it is difficult to predict the ultimate outcome of these claims and legal proceedings, management believes that the ultimate disposition of these matters will not have a material adverse effect on the financial condition, results of operations or cash flows of the Company.

Although it is difficult to predict the ultimate outcome of these claims and legal proceedings, management believes the ultimate disposition of these matters will not have a material adverse effect on the financial condition, results of operations or cash flows of the Company.

No material amount of loss in excess of recorded amounts is believed to be reasonably possible as a result of these claims and legal proceedings.

4 unchanged sentences

Accumulated Other Comprehensive Income (Loss)

Accumulated other comprehensive income (loss) (“AOCI(L)”) is comprised of adjustments relative to the Company’s pension and postretirement medical benefit plans and foreign currency translation adjustments required for a subsidiary of the Company that performs data analysis and provides consulting services outside the United States.

A summary of AOCI(L) for the second quarter of 2020 and the second quarter of 2019 is as follows:

(in thousands) March 29, 2020 Pre-tax Activity Tax Effect June 28, 2020

Accumulated other comprehensive income (loss) (“AOCI(L)”) is comprised of adjustments to the Company’s pension and postretirement medical benefit plans, the interest rate swap on the Company’s term loan facility and the foreign currency translation for a subsidiary of the Company that performs data analysis and provides consulting services outside the United States.

Following is a summary of AOCI(L) for the third quarter of 2020 and the third quarter of 2019:

(in thousands) June 28, 2020 Pre-tax Activity Tax Effect September 27, 2020

Net pension activity:

8 unchanged sentences

Total AOCI(L) $ ( 114,081 ) $ 1,699 $ ( 419 ) $ ( 112,801 )

(in thousands) March 31, 2019 Pre-tax Activity Tax Effect June 30, 2019

(in thousands) June 30, 2019 Pre-tax Activity Tax Effect September 29, 2019

Net pension activity:

4 unchanged sentences

Prior service costs ( 136 ) ( 324 ) 80 ( 380 )

Interest rate swap — ( 496 ) 122 ( 374 )

Foreign currency translation adjustment ( 4 ) ( 23 ) 6 ( 21 )

1 unchanged sentence

Total AOCI(L) $ ( 95,814 ) $ 259 $ ( 63 ) $ ( 95,618 )

A summary of AOCI(L) for the first half of 2020 and the first half of 2019 is as follows:

(in thousands) December 29, 2019 Pre-tax Activity Tax Effect June 28, 2020

Following is a summary of AOCI(L) for the first nine months of 2020 and the first nine months of 2019:

(in thousands) December 29, 2019 Pre-tax Activity Tax Effect September 27, 2020

Net pension activity:

8 unchanged sentences

Total AOCI(L) $ ( 115,002 ) $ 2,921 $ ( 720 ) $ ( 112,801 )

(in thousands) December 30, 2018 Pre-tax Activity Tax Effect June 30, 2019

(in thousands) December 30, 2018 Pre-tax Activity Tax Effect September 29, 2019

Net pension activity:

4 unchanged sentences

Prior service costs 351 ( 970 ) 239 ( 380 )

Interest rate swap — ( 496 ) 122 ( 374 )

Foreign currency translation adjustment — ( 26 ) 5 ( 21 )

1 unchanged sentence

Total AOCI(L) $ ( 77,265 ) $ 1,814 $ ( 20,167 ) $ ( 95,618 )

A summary of the impact of AOCI(L) on certain statements of operations line items is as follows:

Second Quarter 2020

(in thousands) Net Pension Activity Net

Postretirement Benefits Activity Interest Rate Swap Foreign Currency Translation Adjustment Total

Following is a summary of the impact of AOCI(L) on the condensed consolidated statements of operations:

Third Quarter 2020

(in thousands) Net Pension Activity Net Postretirement Benefits Activity Interest Rate Swap Foreign Currency Translation Adjustment Total

Cost of sales $ 363 $ 55 $ — $ — $ 418

3 unchanged sentences

Total after tax effect $ 900 $ 66 $ 303 $ 11 $ 1,280

Second Quarter 2019

(in thousands)

Net Pension Activity Net

Postretirement Benefits Activity Interest Rate Swap Foreign Currency Translation Adjustment Total

Third Quarter 2019

(in thousands) Net Pension Activity Net Postretirement Benefits Activity Interest Rate Swap Foreign Currency Translation Adjustment Total

Cost of sales $ 265 $ ( 67 ) $ — $ — $ 198

$ 266 $ ( 66 ) $ — $ — $ 200

Selling, delivery and administrative expenses 641 ( 61 ) ( 496 ) ( 23 ) 61

641 ( 61 ) — 7 587

Subtotal pre-tax 906 ( 128 ) ( 496 ) ( 23 ) 259

907 ( 127 ) — 7 787

Income tax expense (benefit) 223 ( 31 ) — 2 194

Income tax expense 223 ( 32 ) ( 122 ) ( 6 ) 63

Total after tax effect $ 683 $ ( 96 ) $ ( 374 ) $ ( 17 ) $ 196

$ 684 $ ( 96 ) $ — $ 5 $ 593

First Half 2020

(in thousands) Net Pension Activity Net

Postretirement Benefits Activity Interest Rate Swap Foreign Currency Translation Adjustment Total

First Nine Months 2020

(in thousands) Net Pension Activity Net Postretirement Benefits Activity Interest Rate Swap Foreign Currency Translation Adjustment Total

Cost of sales $ 1,057 $ 160 $ — $ — $ 1,217

1 unchanged sentence

Subtotal pre-tax 3,582 263 ( 942 ) 18 2,921

Income tax expense (benefit) 588 43 ( 331 ) 1 301

Income tax expense 882 65 ( 232 ) 5 720

Total after tax effect $ 2,700 $ 198 $ ( 710 ) $ 13 $ 2,201

First Half 2019

(in thousands)

Net Pension Activity Net

Postretirement Benefits Activity Interest Rate Swap Foreign Currency Translation Adjustment Total

First Nine Months 2019

(in thousands) Net Pension Activity Net Postretirement Benefits Activity Interest Rate Swap Foreign Currency Translation Adjustment Total

Cost of sales $ 794 $ ( 200 ) $ — $ — $ 594

$ 529 $ ( 133 ) $ — $ — $ 396

Selling, delivery and administrative expenses 1,925 ( 183 ) ( 496 ) ( 26 ) 1,220

1,284 ( 122 ) — ( 3 ) 1,159

Subtotal pre-tax 2,719 ( 383 ) ( 496 ) ( 26 ) 1,814

1,813 ( 255 ) — ( 3 ) 1,555

Income tax expense (benefit) 446 ( 63 ) — 1 384

Income tax expense 669 ( 95 ) ( 122 ) ( 5 ) 447

Total after tax effect $ 2,050 $ ( 288 ) $ ( 374 ) $ ( 21 ) $ 1,367

$ 1,367 $ ( 192 ) $ — $ ( 4 ) $ 1,171

Supplemental Disclosures of Cash Flow Information

Changes in current assets and current liabilities affecting cash flows were as follows:

First Nine Months

(in thousands) 2020 2019

Accounts receivable, trade, net $ ( 30,948 ) $ ( 20,374 )

Accounts receivable, trade $ ( 19,850 ) $ ( 11,638 )

Allowance for doubtful accounts 11,268 4,169

Accounts receivable from The Coca‑Cola Company 7,895 ( 15,509 )

9 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements