What changed in this filing

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Item 1. Financial Statements

2022-05-03 compared with 2021-11-09 · 182 added, 274 removed, 625 unchanged (42% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Third Quarter First Nine Months

First Quarter

(in thousands, except per share data) 2022 2021

5 unchanged sentences

Interest expense, net 7,699 8,746

Other expense, net 34,982 21,394 94,078 39,826

Income before income taxes 93,952 73,417 232,790 152,179

Other (income) expense, net ( 3,279 ) 12,055

Income before taxes 126,565 73,383

Income tax expense 33,175 20,020

Net income $ 93,390 $ 53,363

Net income attributable to noncontrolling interest — 3,170 — 7,153

Net income attributable to Coca‑Cola Consolidated, Inc.

$ 68,930 $ 51,884 $ 170,473 $ 106,115

Basic net income per share based on net income attributable to Coca‑Cola Consolidated, Inc.:

Basic net income per share:

Common Stock $ 9.96 $ 5.69

2 unchanged sentences

Weighted average number of Class B Common Stock shares outstanding 2,016 2,232

Diluted net income per share based on net income attributable to Coca‑Cola Consolidated, Inc.:

Diluted net income per share:

Common Stock $ 9.94 $ 5.67

8 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Third Quarter First Nine Months

First Quarter

(in thousands) 2022 2021

2 unchanged sentences

Defined benefit plans reclassification including pension costs:

Actuarial gains 916 896 2,745 2,689

Actuarial gain 746 916

Prior service credits — 1

Postretirement benefits reclassification including benefits costs:

Actuarial gains 140 66 419 198

Postretirement benefits reclassification including benefit costs:

Actuarial gain 69 140

Interest rate swap — 312

2 unchanged sentences

Comprehensive income $ 94,205 $ 54,695

Comprehensive income attributable to noncontrolling interest — 3,170 — 7,153

Comprehensive income attributable to Coca‑Cola Consolidated, Inc.

$ 69,981 $ 53,164 $ 174,180 $ 108,316

See accompanying notes to condensed consolidated financial statements.

1 unchanged sentence

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share data) October 1, 2021 December 31, 2020

(in thousands, except share data) April 1, 2022 December 31, 2021

Current Assets:

25 unchanged sentences

Accrued interest payable 6,238 4,096

Current portion of debt 125,000 —

Total current liabilities 894,071 834,856

9 unchanged sentences

30,000,000 shares authorized;

10,203,821 shares issued

11,431,367 and 10,203,821 shares issued, respectively

11,431 10,204

1 unchanged sentence

10,000,000 shares authorized;

2,860,356 shares issued

1,632,810 and 2,860,356 shares issued, respectively

Additional paid-in capital 135,953 135,953

12 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

First Nine Months

First Quarter

(in thousands) 2022 2021

2 unchanged sentences

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation expense from property, plant and equipment and financing leases 117,910 117,203

Depreciation and amortization expense from property, plant and equipment and financing leases 37,361 37,716

Deferred income taxes 33,130 19,980

Amortization of intangible assets and deferred proceeds, net 5,908 5,810

Fair value adjustment of acquisition related contingent consideration ( 5,457 ) 10,998

Deferred payroll taxes under CARES Act ( 18,739 ) 24,648

Deferred income taxes 10,907 5,302

Loss on sale of property, plant and equipment 439 1,098

Impairment and abandonment of property, plant and equipment 3,200 7,908

Amortization of debt costs 249 277

Impairment and abandonment of property, plant and equipment — 500

Change in current assets less current liabilities ( 32,415 ) ( 38,662 )

6 unchanged sentences

Additions to property, plant and equipment $ ( 104,353 ) $ ( 37,204 )

Acquisition of BODYARMOR distribution rights ( 30,149 ) ( 1,998 )

Proceeds from the sale of property, plant and equipment 2,178 74

Investment in CONA Services LLC ( 197 ) ( 514 )

Other distribution agreements ( 1,998 ) —

Net cash used in investing activities $ ( 132,521 ) $ ( 39,642 )

Cash Flows from Financing Activities:

Borrowings under revolving credit facility $ 55,000 $ 235,000

Payments on revolving credit facility ( 55,000 ) ( 280,000 )

Borrowings under term loan facility 70,000 —

Payments on term loan facility ( 217,500 ) ( 22,500 )

Payments of acquisition related contingent consideration $ ( 9,822 ) $ ( 10,046 )

2 unchanged sentences

Debt issuance fees ( 48 ) ( 147 )

Payments on term loan facility — ( 31,250 )

Net cash used in financing activities $ ( 13,589 ) $ ( 45,233 )

Net increase in cash during period $ 132,085 $ 155,209

Net decrease in cash during period $ ( 15,229 ) $ ( 2,965 )

Cash at beginning of period 142,314 54,793

1 unchanged sentence

Significant non-cash investing and financing activities:

Right-of-use assets obtained in exchange for operating lease obligations $ 21,759 $ 38,317

Reductions to leased property under financing leases $ 55,465 $ —

Additions to property, plant and equipment accrued and recorded in accounts payable, trade 12,703 16,192

Additions to leased property under financing leases — 61,121

Right-of-use assets obtained in exchange for operating lease obligations 5,048 —

See accompanying notes to condensed consolidated financial statements.

COCA ‑ COLA CONSOLIDATED, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(in thousands, except share data) Common

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Stock - Common

Stock Treasury

Stock - Class B

Consolidated,

Interest Total

Balance on July 2, 2021 $ 10,204 $ 2,860 $ 135,953 $ 641,136 $ ( 116,397 ) $ ( 60,845 ) $ ( 409 ) $ 612,502 $ — $ 612,502

Net income — — — 68,930 — — — 68,930 — 68,930

Other comprehensive income, net of tax — — — — 1,051 — — 1,051 — 1,051

Cash dividends paid:

($ 0.25 per share)

— — — ( 1,785 ) — — — ( 1,785 ) — ( 1,785 )

Class B Common Stock

($ 0.25 per share)

— — — ( 558 ) — — — ( 558 ) — ( 558 )

Balance on October 1, 2021 $ 10,204 $ 2,860 $ 135,953 $ 707,723 $ ( 115,346 ) $ ( 60,845 ) $ ( 409 ) $ 680,140 $ — $ 680,140

Stock Treasury Stock - Class B Common Stock Total

Balance on December 31, 2021 $ 10,204 $ 2,860 $ 135,953 $ 724,486 $ ( 100,463 ) $ ( 60,845 ) $ ( 409 ) $ 711,786

2 unchanged sentences

Cash dividends paid:

($ 0.75 per share)

Common Stock ($ 0.25 per share)

— — — ( 1,786 ) — — — ( 1,786 )

Class B Common Stock

($ 0.75 per share)

Class B Common Stock ($ 0.25 per share)

— — — ( 558 ) — — — ( 558 )

Balance on October 1, 2021 $ 10,204 $ 2,860 $ 135,953 $ 707,723 $ ( 115,346 ) $ ( 60,845 ) $ ( 409 ) $ 680,140 $ — $ 680,140

Conversion of 1,227,546 shares of Class B Common Stock

1,227 ( 1,227 ) — — — — — —

Balance on April 1, 2022 $ 11,431 $ 1,633 $ 135,953 $ 815,532 $ ( 99,648 ) $ ( 60,845 ) $ ( 409 ) $ 803,647

(in thousands, except share data) Common

6 unchanged sentences

Stock - Common

Stock Treasury

Stock - Class B

Consolidated,

Interest Total

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

Net income — — — 51,884 — — — 51,884 3,170 55,054

Other comprehensive income, net of tax — — — — 1,280 — — 1,280 — 1,280

Cash dividends paid:

($ 0.25 per share)

— — — ( 1,785 ) — — — ( 1,785 ) — ( 1,785 )

Class B Common Stock

($ 0.25 per share)

— — — ( 559 ) — — — ( 559 ) — ( 559 )

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

Stock Treasury Stock - Class B Common Stock Total

Balance on December 31, 2020 $ 10,204 $ 2,860 $ 135,953 $ 544,280 $ ( 119,053 ) $ ( 60,845 ) $ ( 409 ) $ 512,990

2 unchanged sentences

Cash dividends paid:

($ 0.75 per share)

Common Stock ($ 0.25 per share)

— — — ( 1,785 ) — — — ( 1,785 )

Class B Common Stock

($ 0.75 per share)

Class B Common Stock ($ 0.25 per share)

— — — ( 558 ) — — — ( 558 )

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

Balance on April 2, 2021 $ 10,204 $ 2,860 $ 135,953 $ 595,300 $ ( 117,721 ) $ ( 60,845 ) $ ( 409 ) $ 565,342

See accompanying notes to condensed consolidated financial statements.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Critical Accounting Policies and Recent Accounting Pronouncements

The condensed consolidated financial statements include the accounts of Coca‑Cola Consolidated, Inc.

Critical Accounting Policies

The condensed consolidated financial statements include the accounts and the consolidated operations of Coca‑Cola Consolidated, Inc.

and its majority-owned subsidiaries (the “Company”).

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The condensed consolidated financial statements presented are:

• The financial position as of October 1, 2021 and December 31, 2020.

• The results of operations, comprehensive income and changes in equity for the three-month periods ended October 1, 2021 (the “third quarter” of fiscal 2021 (“2021”)) and September 27, 2020 (the “third quarter” of fiscal 2020 (“2020”)) and the nine-month periods ended October 1, 2021 (the “first nine months” of 2021) and September 27, 2020 (the “first nine months” of 2020).

• The changes in cash flows for the first nine months of 2021 and the first nine months of 2020.

The condensed consolidated financial statements include the consolidated operations of the Company and its majority-owned subsidiaries.

During 2020, Piedmont Coca-Cola Bottling Partnership (“Piedmont”) was the Company’s only subsidiary that had a significant noncontrolling interest.

On December 9, 2020, an indirect wholly owned subsidiary of the Company purchased the remaining 22.7 % general partnership interest in Piedmont from an indirect wholly owned subsidiary of The Coca‑Cola Company, and Piedmont became an indirect wholly owned subsidiary of the Company.

• The financial position as of April 1, 2022 and December 31, 2021.

• The results of operations, comprehensive income and changes in stockholders’ equity for the three-month periods ended April 1, 2022 (the “first quarter” of fiscal 2022 (“2022”)) and April 2, 2021 (the “first quarter” of fiscal 2021 (“2021”)).

• The changes in cash flows for the first quarter of 2022 and the first quarter of 2021.

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.

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Actual results could differ from those estimates.

Critical Accounting Policies

Critical Accounting Estimates

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.

The Company included in its Annual Report on Form 10-K for 2020 under the caption “Discussion of Critical Accounting Policies and Estimates and Recent Accounting Pronouncements” in “Item 7.

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 Company’s Board of Directors during the quarter in which a change is contemplated and prior to making such change.

Recently Adopted Accounting Pronouncements

In December 2019, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2019‑12, “Simplifying the Accounting for Income Taxes,” which simplifies the accounting for income taxes by removing certain exceptions to the general principles in income tax accounting and improves consistent application of and simplifies GAAP for

other areas of income tax accounting by clarifying and amending existing guidance.

The new guidance is effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years.

The Company adopted ASU 2019-12 in the first quarter of 2021 and the adoption did not have a material impact on its condensed consolidated financial statements.

The Company included in its Annual Report on Form 10-K for 2021 under the caption “Discussion of Critical Accounting Estimates” in “Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations,” a discussion of the Company’s most critical accounting estimates, 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 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.

Related Party Transactions

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The Company’s business consists primarily of the distribution, marketing and manufacture of nonalcoholic beverages of The Coca‑Cola Company, which is the sole owner of the formulas under which the primary components of its soft drink products, either concentrate or syrup, are manufactured.

Frank Harrison, III, Chairman of the Board of Directors and Chief Executive Officer of the Company, together with the trustees of certain trusts established for the benefit of certain relatives of the late J.

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 October 1, 2021, 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.

On March 17, 2022, the Company entered into a stockholder conversion agreement (the “Stockholder Conversion Agreement”) with the JFH Family Limited Partnership—SW1, the Anne Lupton Carter Trust f/b/o Sue Anne H.

Wells, the JFH Family Limited Partnership—DH1 and the Anne Lupton Carter Trust f/b/o Deborah S.

Harrison (collectively, the “Converting Stockholders”), pursuant to which the Company and the Converting Stockholders agreed upon the process for converting an aggregate of 1,227,546 shares of the Company’s Class B Common Stock owned by the Converting Stockholders on a one share for one share

basis into shares of the Company’s Common Stock, effective as of March 17, 2022 (the “Converted Shares”).

In the Stockholder Conversion Agreement, the Company agreed to cause the Converted Shares to be registered for resale pursuant to the Company’s existing automatic shelf registration statement and the Converting Stockholders agreed to certain restrictions on their resale of the Converted Shares, including a trade volume limitation that prohibits the sale of more than 175,000 of the Converted Shares in the aggregate during any three -consecutive month period.

Frank Harrison, III, Chairman of the Board of Directors and Chief Executive Officer of the Company, controls 1,004,394 shares of the Company’s Class B Common Stock, which represent approximately 71 % of the total voting power of the Company’s outstanding Common Stock and Class B Common Stock on a consolidated basis.

In addition, other members of the Harrison family control shares of the Company’s Common Stock representing approximately 4 % of the total voting power of the Company’s outstanding Common Stock and Class B Common Stock on a consolidated basis.

As of April 1, 2022, The Coca‑Cola Company owned shares of the Company’s Common Stock representing approximately 9 % of the total voting power of the Company’s outstanding Common Stock and Class B Common Stock on a consolidated basis.

The number of shares of the Company’s Common Stock currently held by The Coca‑Cola Company gives it the right to have a designee proposed by the Company for nomination to the Company’s Board of Directors in the Company’s annual proxy statement.

Frank Harrison, III and the trustees of the J.

Frank Harrison, Jr.

family trusts described above, have agreed to vote the shares of the Company’s Class B Common Stock that they control in favor of such designee.

Frank Harrison, III and the trustees of certain trusts established for the benefit of descendants of the late J.

Frank Harrison, Jr., have agreed to vote the shares of the Company’s Class B Common Stock and Common Stock that they control in favor of such designee.

The Coca‑Cola Company does not own any shares of the Company’s Class B Common Stock.

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

Third Quarter First Nine Months

First Quarter

(in thousands) 2022 2021

2 unchanged sentences

Payments made by The Coca-Cola Company to the Company 59,669 29,677

(1) This excludes payments by the Company to Coca-Cola Refreshments USA, Inc., a wholly owned subsidiary of The Coca‑Cola Company, as discussed in the next section.

(1) This excludes acquisition related sub-bottling payments made by the Company to Coca-Cola Refreshments USA, Inc., a wholly owned subsidiary of The Coca‑Cola Company, but includes the purchase price of certain additional BODYARMOR distribution rights, each as discussed below.

On January 1, 2022, the Company entered into an agreement to acquire $ 30.1 million of additional BODYARMOR distribution rights with an estimated useful life of 40 years.

More than 80 % of the payments made by the Company to The Coca‑Cola Company were for concentrate, syrup, sweetener and other finished goods products, which were recorded in cost of sales in the condensed consolidated statements of operations and represent the primary components of the soft drink products the Company manufactures and distributes.

5 unchanged sentences

Coca‑Cola Refreshments USA, Inc.

The Company, The Coca‑Cola Company and CCR entered into comprehensive beverage agreements (collectively, the “CBA”).

The Company, The Coca‑Cola Company and CCR entered into comprehensive beverage agreements (collectively, the “CBA”), related to a multi-year series of transactions, which were completed in October 2017, through which the Company acquired and exchanged distribution territories and manufacturing plants (the “System Transformation”).

The CBA requires the Company 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 the Company’s sales of certain beverages and beverage products that are sold under the same trademarks that identify a covered beverage, a beverage product or certain cross-licensed brands.

Sub-bottling payments to CCR were $ 28.6 million in the first nine months of 2021 and $ 32.0 million in the first nine months of 2020.

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) October 1, 2021 December 31, 2020

These sub-bottling payments are based on gross profit derived from the Company’s sales of

certain beverages and beverage products that are sold under the same trademarks that identify a covered beverage, a beverage product or certain cross-licensed brands applicable to the System Transformation (“acquisition related sub-bottling payments”).

Acquisition related sub-bottling payments to CCR were $ 9.8 million in the first quarter of 2022 and $ 10.0 million in the first quarter of 2021.

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

(in thousands) April 1, 2022 December 31, 2021

Current portion of acquisition related contingent consideration $ 47,218 $ 51,518

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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 $ 22.4 million as of October 1, 2021 and $ 21.9 million as of December 31, 2020.

The Company’s investment in Southeastern, which was classified as other assets in the condensed consolidated balance sheets, was $ 21.8 million as of April 1, 2022 and $ 21.7 million as of December 31, 2021.

South Atlantic Canners, Inc.

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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 $ 8.2 million as of October 1, 2021 and $ 8.0 million as of December 31, 2020.

The Company’s investment in SAC, which was classified as other assets in the condensed consolidated balance sheets, was $ 8.2 million as of both April 1, 2022 and December 31, 2021.

The Company also guarantees a portion of SAC’s debt;

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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 recorded as a reduction to cost of sales in the condensed consolidated statements of operations, were $ 6.6 million in the first nine months of 2021 and $ 6.9 million in the first nine months of 2020.

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

Proceeds from management fees received from SAC, which were recorded as a reduction to cost of sales in the condensed consolidated statements of operations, were $ 2.1 million in the first quarter of 2022 and $ 2.3 million in the first quarter of 2021.

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

Along with all other Coca‑Cola bottlers in the United States and Canada, the Company is a member of CCBSS, a company formed to provide certain procurement and other services with the intention of enhancing the efficiency and competitiveness of the Coca‑Cola bottling system.

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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 $ 4.4 million on October 1, 2021 and $ 6.3 million on December 31, 2020, which were classified as accounts receivable, other in the condensed consolidated balance sheets.

The Company had rebates due from CCBSS of $ 8.9 million on April 1, 2022 and $ 7.9 million on December 31, 2021, 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 $ 2.2 million in the first nine months of 2021 and $ 2.1 million in the first nine months of 2020, 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 $ 0.3 million in the first quarter of 2022 and $ 0.6 million in the first quarter of 2021, which were classified as selling, delivery and administrative (“SD&A”) expenses in the condensed consolidated statements of operations.

CONA Services LLC (“CONA”)

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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 $ 13.3 million as of October 1, 2021 and $ 11.5 million as of December 31, 2020.

The Company’s investment in CONA, which was classified as other assets in the condensed consolidated balance sheets, was $ 14.7 million as of April 1, 2022 and $ 13.7 million as of December 31, 2021.

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 $ 18.9 million in the first nine months of 2021 and $ 17.4 million in the first nine months of 2020.

The Company incurred CONA service fees of $ 6.0 million in the first quarter of 2022 and $ 5.9 million in the first quarter of 2021.

Related Party Leases

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The annual base rent the Company is obligated to pay under this lease is subject to an adjustment for an inflation factor and the lease expires on December 31, 2029.

The principal balance outstanding under this lease was $ 28.9 million on October 1, 2021 and $ 30.8 million on December 31, 2020.

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

The principal balance outstanding under this lease was $ 27.6 million on April 1, 2022 and $ 28.2 million on December 31, 2021.

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

Frank Harrison, III and Sue Anne H.

Wells, a director of the Company, are trustees and beneficiaries and of which Morgan H.

Wells, a former director of the Company, are trustees and beneficiaries and of which Morgan H.

Everett is a permissible, discretionary beneficiary.

The annual base rent the Company is obligated to pay under this lease is subject to an adjustment for an inflation factor and the lease expires on December 31, 2035.

The principal balance outstanding under this lease was $ 59.8 million on October 1, 2021 and $ 61.9 million on December 31, 2020.

A summary of rental payments for these leases related to the third quarter and the first nine months of 2021 and 2020 is as follows:

Third Quarter First Nine Months

On March 17, 2022, CCBCC Operations, LLC (“Operations”), a wholly owned subsidiary of the Company, entered into a definitive purchase and sale agreement with HLP, pursuant to which Operations purchased the Snyder Production Center from HLP on such date for a purchase price of $ 60.0 million.

This lease, which was scheduled to expire on December 31, 2035, was terminated in connection with the purchase of the Snyder Production Center by Operations.

There was no principal balance outstanding under this lease on April 1, 2022 and there was a principal balance outstanding of $ 59.1 million on December 31, 2021.

A summary of rental payments for these leases related to the first quarter of 2022 and the first quarter of 2021 is as follows:

First Quarter

(in thousands) 2022 2021

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Harrison under the Long-Term Performance Equity Plan are earned based on the Company’s attainment during a performance period of certain performance measures, each as specified by the Compensation Committee of the Company’s Board of Directors.

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

Compensation expense for the Long-Term Performance Equity Plan, which was included in SD&A expenses in the condensed consolidated statements of operations, was $ 7.6 million in the first nine months of 2021 and $ 7.2 million in the first nine months of 2020.

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 shares 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 was included in SD&A expenses in the condensed consolidated statements of operations, was $ 2.0 million in the first quarter of 2022 and $ 1.9 million in the first quarter of 2021.

Revenue Recognition

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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 both the first nine months of 2021 and the first nine months of 2020.

Point in time sales accounted for approximately 97 % of the Company’s net sales in the first quarter of 2022 and approximately 96 % of the Company’s net sales in the first quarter of 2021.

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”).

2 unchanged sentences

Revenues related to freight hauling and brokerage services are recognized as the delivery occurs using a miles driven output method.

Generally, delivery occurs and freight charges are recognized in the same day.

Generally, delivery occurs and freight charges are recognized in the same

Over time sales orders open at the end of a financial period are not material to the condensed consolidated financial statements.

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

Third Quarter First Nine Months

First Quarter

(in thousands) 2022 2021

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Returned product is recognized as a reduction to net sales.

The Company’s reserve for customer returns was $ 3.0 million as of October 1, 2021 and $ 3.6 million as of December 31, 2020.

The Company’s reserve for customer returns was $ 3.0 million as of both April 1, 2022 and December 31, 2021.

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.

A reconciliation of the activity for the allowance for credit losses is as follows:

First Nine Months

Following is a summary of activity for the allowance for credit losses during the first quarter of 2022 and the first quarter of 2021:

First Quarter

(in thousands) 2022 2021

Beginning balance - allowance for credit losses $ 14,336 $ 18,070

Additions charged to costs and expenses 2,619 14,238

Additions charged to expenses and as reductions to net sales 27 1,270

Deductions ( 601 ) ( 2,242 )

Ending balance - allowance for credit losses $ 13,762 $ 17,098

The Company evaluates segment reporting in accordance with 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”).

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

The Company has concluded the Chief Executive Officer, the Chief Operating Officer and the Chief Financial Officer, as a group, represent the CODM.

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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:

Third Quarter First Nine Months

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:

First Quarter

(in thousands) 2022 2021

4 unchanged sentences

Consolidated net sales $ 1,404,358 $ 1,269,857

(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.

Third Quarter First Nine Months

(in thousands) 2021 2020 2021 2020

Income from operations:

6 unchanged sentences

Consolidated depreciation and amortization $ 43,269 $ 43,526

(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.

Net Income Per Share

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

Third Quarter First Nine Months

First Quarter

(in thousands, except per share data) 2022 2021

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

Net income attributable to Coca‑Cola Consolidated, Inc.

$ 68,930 $ 51,884 $ 170,473 $ 106,115

Net income $ 93,390 $ 53,363

Less dividends:

16 unchanged sentences

Numerator for basic net income per Class B Common Stock share $ 20,141 $ 12,707

First Quarter

(in thousands, except per share data) 2022 2021

Numerator for diluted net income per Common Stock share:

7 unchanged sentences

Numerator for diluted net income per Class B Common Stock share $ 20,316 $ 12,856

Third Quarter First Nine Months

(in thousands, except per share data) 2021 2020 2021 2020

Denominator for basic net income per Common Stock and Class B Common Stock share:

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

(6) 1,227,546 shares of the Company’s Class B Common Stock were converted on a one share for one share basis into shares of the Company’s Common Stock, effective as of March 17, 2022.

See Note 2 for additional information on the Stockholder Conversion Agreement.

Inventories consisted of the following:

(in thousands) October 1, 2021 December 31, 2020

(in thousands) April 1, 2022 December 31, 2021

Finished products $ 173,622 $ 181,751

$ 142,715 $ 140,080

Manufacturing materials 62,857 81,183

55,296 47,081

Plastic shells, plastic pallets and other inventories 39,799 39,917

42,484 38,596

Total inventories $ 276,278 $ 302,851

$ 240,495 $ 225,757

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following:

(in thousands) October 1, 2021 December 31, 2020

(in thousands) April 1, 2022 December 31, 2021

Repair parts $ 27,568 $ 26,643

6 unchanged sentences

Assets Held for Sale

As of October 1, 2021, certain properties owned by the Company met the accounting guidance criteria to be classified as assets held for sale.

As of April 1, 2022, certain properties owned by the Company met the accounting guidance criteria to be classified as assets held for sale.

The properties primarily relate to warehousing and distribution operations that have been consolidated into new facilities.

2 unchanged sentences

Following is a summary of the assets held for sale:

(in thousands) October 1, 2021 December 31, 2020

(in thousands) April 1, 2022 December 31, 2021

Land $ 1,691 $ 2,906

3 unchanged sentences

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

(in thousands) October 1, 2021 December 31, 2020 Estimated Useful Lives

(in thousands) April 1, 2022 December 31, 2021 Estimated Useful Lives

Land $ 87,037 $ 80,261

11 unchanged sentences

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

October 1, 2021 December 31, 2020

April 1, 2022 December 31, 2021

Weighted average remaining lease term:

4 unchanged sentences

Financing leases 5.2 % 3.1 %

During the first quarter of 2022, the Company terminated its financing lease for the Snyder Production Center, which was scheduled to expire on December 31, 2035.

See Note 2 for additional information on the lease termination.

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

Third Quarter First Nine Months

First Quarter

(in thousands) 2022 2021

5 unchanged sentences

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 October 1, 2021:

Following is a summary of future minimum lease payments for all noncancelable operating leases and financing leases as of April 1, 2022:

(in thousands) Operating Leases Financing Leases

24 unchanged sentences

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

First Nine Months

First Quarter

(in thousands) 2022 2021

6 unchanged sentences

Total cash flows from financing activities impact $ 1,375 $ 1,447

As of October 1, 2021, the Company had one operating lease commitment that had not yet commenced.

This lease commitment has a lease term of approximately three years and is expected to commence during the fourth quarter of 2021.

The additional lease liability associated with this lease commitment is expected to be $ 2.0 million.

As of April 1, 2022, the Company had three operating lease commitments that had not yet commenced.

These lease commitments have a lease term of approximately three to five years and are expected to commence during the second quarter of 2022.

The additional lease liability associated with these lease commitments is expected to be $ 2.5 million.

Distribution Agreements, Net

Distribution agreements, net, which are amortized on a straight-line basis and have an estimated useful life of 20 to 40 years, consisted of the following:

(in thousands) October 1, 2021 December 31, 2020

(in thousands) April 1, 2022 December 31, 2021

Distribution agreements at cost $ 990,191 $ 960,042

$ 952,547 $ 952,533

Accumulated amortization 129,488 123,265

117,144 98,780

Distribution agreements, net $ 860,703 $ 836,777

$ 835,403 $ 853,753

Following is a summary of activity for distribution agreements, net during the first quarter of 2022 and the first quarter of 2021:

First Quarter

(in thousands) 2022 2021

Beginning balance - distribution agreements, net $ 836,777 $ 853,753

BODYARMOR distribution rights 30,149 14

Additional accumulated amortization ( 6,223 ) ( 6,122 )

Ending balance - distribution agreements, net $ 860,703 $ 847,645

Customer Lists, Net

Customer lists, 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) October 1, 2021 December 31, 2020

(in thousands) April 1, 2022 December 31, 2021

Customer lists at cost $ 25,288 $ 25,288

3 unchanged sentences

Other accrued liabilities consisted of the following:

(in thousands) October 1, 2021 December 31, 2020

(in thousands) April 1, 2022 December 31, 2021

Accrued insurance costs $ 53,619 $ 51,645

2 unchanged sentences

Employee and retiree benefit plan accruals 31,061 32,007

Accrued taxes (other than income taxes) 7,662 6,178

Current deferred proceeds from related parties 3,064 3,085

Current portion of deferred payroll taxes under CARES Act 18,739 18,739

Accrued taxes (other than income taxes) 8,590 6,638

All other accrued expenses 39,352 33,973

Total other accrued liabilities $ 230,568 $ 226,769

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 have been due on or after March 27, 2020 and before January 1, 2021.

The Company has taken advantage of certain provisions of the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”), which allowed an employer to defer the deposit and payment of the employer’s portion of social security taxes that would otherwise have been 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.

During the third quarter of 2021, the Company repaid the portion of the deferred payroll taxes classified as current as of December 31, 2020.

The Company intends to

repay the remaining portion of the deferred payroll taxes during the fourth quarter of 2022, and, thus, classified the balance as noncurrent as of October 1, 2021.

Derivative Financial Instruments

The Company repaid a portion of the deferred payroll taxes during 2021 and intends to repay the remaining portion of the deferred payroll taxes during 2022.

Commodity Derivative Instruments

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

8 unchanged sentences

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

First Quarter

(in thousands) 2022 2021

1 unchanged sentence

Selling, delivery and administrative expenses 6,225 560

Total gain (loss) $ 4,220 $ 1,769 $ 7,701 $ ( 25 )

Total gain $ 13,719 $ 848

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

1 unchanged sentence

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.

The 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) October 1, 2021 December 31, 2020

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) April 1, 2022 December 31, 2021

Prepaid expenses and other current assets $ 21,433 $ 7,714

Other assets 1,367 56

Total assets $ 21,433 $ 7,714

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) October 1, 2021 December 31, 2020

(in thousands) April 1, 2022 December 31, 2021

Gross commodity derivative instrument assets $ 24,911 $ 9,200

1 unchanged sentence

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

(in thousands) October 1, 2021 December 31, 2020

(in thousands) April 1, 2022 December 31, 2021

Notional amount of outstanding commodity derivative instruments $ 53,346 $ 74,558

13 unchanged sentences

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

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

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

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

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 assets and liabilities, commodity derivative instruments, long-term debt and acquisition related contingent consideration:

October 1, 2021

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

April 1, 2022

(in thousands) Carrying

5 unchanged sentences

Deferred compensation plan liabilities 58,260 58,260 58,260 — —

Long-term debt 793,177 857,200 — 857,200 —

Debt 723,574 734,100 — 734,100 —

Acquisition related contingent consideration 527,926 527,926 — — 527,926

7 unchanged sentences

Deferred compensation plan liabilities 60,461 60,461 60,461 — —

Long-term debt 940,465 1,015,700 — 1,015,700 —

Debt 723,443 772,600 — 772,600 —

Acquisition related contingent consideration 542,105 542,105 — — 542,105

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 subject to sub-

bottling fees 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.

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).

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

The future expected acquisition related sub-bottling payments extend through the life of the 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 acquisition related sub-bottling payments that will be made in the future under the CBA, and current acquisition related 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 liability and could materially impact the amount of non-cash expense (or income) recorded each reporting period.

1 unchanged sentence

A summary of the Level 3 activity is as follows:

Third Quarter First Nine Months

First Quarter

(in thousands) 2022 2021

2 unchanged sentences

Reclassification to current payables 1,100 100

Increase in fair value 33,924 19,808 90,905 35,068

Increase (decrease) in fair value ( 5,457 ) 10,998

Ending balance - Level 3 liability $ 527,926 $ 435,746

As of October 1, 2021 and September 27, 2020, discount rates of 7.6 % and 7.4 %, respectively, were utilized in the valuation of the Company’s acquisition related contingent consideration liability.

The increase in the fair value of the acquisition related contingent consideration liability in the first nine months of 2021 was primarily driven by higher projections of future cash flows in the distribution territories subject to sub-bottling fees.

This fair value adjustment was recorded in other expense, net in the condensed consolidated statement of operations for the first nine months of 2021.

The Company anticipates that the amount it could pay annually under the acquisition related contingent consideration arrangements for the distribution territories subject to sub-bottling fees will be in the range of $ 32 million to $ 59 million.

The Company’s effective income tax rate was 26.8 % for the first nine months of 2021 and 25.6 % for the first nine months of 2020.

The Company’s income tax expense was $ 62.3 million for the first nine months of 2021 and $ 38.9 million for the first nine months of 2020.

The increase in income tax expense was primarily attributable to improved financial results during the first nine months of 2021 compared to the first nine months of 2020.

The Company had uncertain tax positions, including accrued interest, of $ 2.8 million on October 1, 2021 and $ 2.6 million on December 31, 2020, 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.

Prior tax years beginning in year 2007 remain open to examination by the Internal Revenue Service, and various tax years beginning in year 1998 remain open to examination by certain state taxing authorities.

As of April 1, 2022 and April 2, 2021, discount rates of 8.1 % and 7.9 %, respectively, were utilized in the valuation of the Company’s acquisition related contingent consideration liability.

The decrease in the fair value of the acquisition related contingent consideration liability in the first quarter of 2022 was primarily driven by an increase in the discount rate used to calculate fair value, partially offset by higher projections of future cash flows in the distribution territories subject to acquisition related sub-bottling payments.

This fair value adjustment was recorded in other (income) expense, net in the condensed consolidated statement of operations for the first quarter of 2022.

The Company anticipates that the amount it could pay annually under the acquisition related contingent consideration arrangements for the distribution territories subject to acquisition related sub-bottling payments will be in the range of $ 38 million to $ 64 million.

The Company’s effective income tax rate was 26.2 % for the first quarter of 2022 and 27.3 % for the first quarter of 2021.

The Company’s income tax expense was $ 33.2 million for the first quarter of 2022 and $ 20.0 million for the first quarter of 2021.

The increase in income tax expense was primarily attributable to higher income before taxes during the first quarter of 2022 compared to the first quarter of 2021.

The Company had uncertain tax positions, including accrued interest, of $ 1.7 million on both April 1, 2022 and December 31, 2021, 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 material impact on the condensed consolidated financial statements.

Prior tax years beginning in year 2018 remain open to examination by the Internal Revenue Service, and various tax years beginning in year 1999 remain open to examination by certain state tax jurisdictions due to loss carryforwards.

Pension and Postretirement Benefit Obligations

6 unchanged sentences

The components of net periodic pension cost were as follows:

Third Quarter First Nine Months

First Quarter

(in thousands) 2022 2021

5 unchanged sentences

Net periodic pension cost $ 3,473 $ 2,286

The Company contributed $ 6.8 million to the two Company-sponsored pension plans during the first nine months of 2021 and does no t anticipate making additional contributions during the fourth quarter of 2021.

The Company did not make any contributions to the two Company-sponsored pension plans during the first quarter of 2022.

Contributions to the two Company-sponsored pension plans in 2022 are expected to be in the range of $ 20 million to $ 30 million.

Postretirement Benefits

3 unchanged sentences

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

Third Quarter First Nine Months

First Quarter

(in thousands) 2022 2021

5 unchanged sentences

Other liabilities consisted of the following:

(in thousands) October 1, 2021 December 31, 2020

(in thousands) April 1, 2022 December 31, 2021

Noncurrent portion of acquisition related contingent consideration $ 480,708 $ 490,587

1 unchanged sentence

Noncurrent deferred proceeds from related parties 105,538 106,304

Noncurrent portion of deferred payroll taxes under CARES Act 18,739 18,706

Other 14,141 14,584

Total other liabilities $ 734,337 $ 758,610

Long-Term Debt

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

Following is a summary of the Company’s debt:

(in thousands) Maturity

1 unchanged sentence

Rate Interest

Nonpublic October 1,

Nonpublic April 1,

2022 December 31,

2016 Term Loan Facility (1)

6/7/2021 Variable Varies Nonpublic $ — $ 217,500

Senior notes 2/27/2023 3.28 % Semi-annually Nonpublic $ 125,000 $ 125,000

2018 Revolving Credit Facility 6/8/2023 Variable Varies Nonpublic — —

2021 Term Loan Facility 7/9/2024 Variable Varies Nonpublic 70,000 —

Senior bonds (1)

6 unchanged sentences

Debt issuance costs ( 1,394 ) ( 1,523 )

Total debt 723,574 723,443

Current portion of debt 125,000 —

Total long-term debt $ 598,574 $ 723,443

(1) As of December 31, 2020, the 2016 Term Loan Facility (as defined below) balance was classified as long term as the Company intended to refinance outstanding principal payments due in the next 12 months using the 2018 Revolving Credit Facility (as defined below), which was classified as long-term debt, and the Company was not restricted by any subjective acceleration clause within the agreement for the 2018 Revolving Credit Facility.

(1) The senior bonds due in 2025 were issued at 99.975 % of par.

1 unchanged sentence

The Company monitors counterparty credit ratings on an ongoing basis.

On June 7, 2021, the Company used a combination of cash on hand and borrowings under its previous revolving credit facility (the “2018 Revolving Credit Facility”) to repay the remaining balance of its previous term loan facility (the “2016 Term Loan Facility”) that matured on that date.

On July 9, 2021, the Company entered into a credit agreement, providing for a five-year unsecured revolving credit facility with an aggregate maximum borrowing capacity of $ 500 million (the “2021 Revolving Credit Facility”), maturing on July 9, 2026.

Borrowings under the 2021 Revolving Credit Facility bear interest at a base rate or adjusted LIBOR, at the Company’s option, plus an applicable rate, depending on the rating for the Company’s long-term senior unsecured, non-credit-enhanced debt (“Debt Rating”).

In addition, the Company must pay a facility fee on the lenders’ aggregate commitments under the 2021 Revolving Credit Facility ranging from 0.060 % to 0.175 % per annum, depending on the Company’s Debt Rating.

The Company currently believes all banks participating in the 2021 Revolving Credit Facility have the ability to and will meet any funding requests from the Company.

The 2021 Revolving Credit Facility replaced the 2018 Revolving Credit Facility, which had a maturity date of June 8, 2023.

Also on July 9, 2021, the Company entered into a term loan agreement, providing for a three-year senior unsecured term loan facility in the aggregate principal amount of $ 70 million (the “2021 Term Loan Facility”), maturing on July 9, 2024.

Borrowings under the 2021 Term Loan Facility bear interest at a base rate or adjusted LIBOR, at the Company’s option, plus an applicable rate, depending on the Company’s Debt Rating.

The entire amount of the 2021 Term Loan Facility was fully drawn on July 9, 2021.

The Company used approximately $ 55 million of the proceeds of the 2021 Term Loan Facility to repay outstanding indebtedness under the 2018 Revolving Credit Facility and used the remaining proceeds for general corporate purposes.

Subsequent to the end of the third quarter of 2021, the Company notified the lender of its intent to repay the $ 70 million of borrowings outstanding under the 2021 Term Loan Facility during the fourth quarter of 2021.

The indenture under which the Company’s senior bonds were 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.

1 unchanged sentence

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 October 1, 2021.

The Company was in compliance with these covenants as of April 1, 2022.

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

All outstanding long-term debt has been issued by the Company and none has been issued by any of its subsidiaries.

All outstanding debt has been issued by the Company and none has been issued by any of its subsidiaries.

There are no guarantees of the Company’s debt.

3 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 21.0 million cases and 21.9 million cases of finished product from SAC in the first nine months of 2021 and the first nine months of 2020, respectively.

The Company purchased 6.5 million cases and 7.2 million cases of finished product from SAC in the first quarter of 2022 and the first quarter of 2021, respectively.

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

Third Quarter First Nine Months

First Quarter

(in thousands) 2022 2021

2 unchanged sentences

Total purchases from manufacturing cooperatives $ 77,388 $ 68,797

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 October 1, 2021 and December 31, 2020.

The Company guarantees a portion of SAC’s debt, which expires in 2024.

The amount guaranteed was $ 9.5 million on both April 1, 2022 and December 31, 2021.

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.

3 unchanged sentences

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 October 1, 2021, and there was no impairment identified in 2020.

No impairment of the Company’s investment in SAC was identified as of April 1, 2022, and there was no impairment identified in 2021.

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 both October 1, 2021 and December 31, 2020.

These letters of credit totaled $ 37.6 million on both April 1, 2022 and December 31, 2021.

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

As of October 1, 2021, the future payments related to these contractual arrangements, which expire at various dates through 2033, amounted to $ 140.6 million.

As of April 1, 2022, the future payments related to these contractual arrangements, which expire at various dates through 2033, amounted to $ 139.7 million.

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

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Accumulated other comprehensive income (loss) (“AOCI(L)”) is comprised of adjustments to the Company’s pension and postretirement medical benefit plans 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 2021 and the third quarter of 2020:

(in thousands) July 2, 2021 Pre-tax Activity Tax Effect October 1, 2021

Following is a summary of AOCI(L) for the first quarter of 2022 and the first quarter of 2021:

(in thousands) December 31, 2021 Pre-tax Activity Tax Effect April 1, 2022

Net pension activity:

7 unchanged sentences

Total AOCI(L) $ ( 100,463 ) $ 1,081 $ ( 266 ) $ ( 99,648 )

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

(in thousands) December 31, 2020 Pre-tax Activity Tax Effect April 2, 2021

Net pension activity:

9 unchanged sentences

Total AOCI(L) $ ( 119,053 ) $ 1,772 $ ( 440 ) $ ( 117,721 )

(1) In 2019, the Company entered into a $ 100 million fixed rate swap to hedge a portion of the interest rate risk on the 2016 Term Loan Facility, both of which matured on June 7, 2021.

(1) In 2019, the Company entered into a $ 100 million fixed rate swap to hedge a portion of the interest rate risk on its previous term loan facility, both of which matured on June 7, 2021.

This interest rate swap was designated as a cash flow hedging instrument and changes in its fair value were not material to the condensed consolidated balance sheets.

Following is a summary of AOCI(L) for the first nine months of 2021 and the first nine months of 2020:

(in thousands) December 31, 2020 Pre-tax Activity Tax Effect October 1, 2021

Net pension activity:

Actuarial loss $ ( 93,847 ) $ 3,654 $ ( 909 ) $ ( 91,102 )

Prior service credits 8 2 — 10

Net postretirement benefits activity:

Actuarial loss ( 4,328 ) 557 ( 138 ) ( 3,909 )

Prior service costs ( 624 ) — — ( 624 )

Interest rate swap ( 556 ) 739 ( 183 ) —

Foreign currency translation adjustment 14 ( 21 ) 6 ( 1 )

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

Total AOCI(L) $ ( 119,053 ) $ 4,931 $ ( 1,224 ) $ ( 115,346 )

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

Net pension activity:

Actuarial loss $ ( 93,174 ) $ 3,568 $ ( 879 ) $ ( 90,485 )

Prior service credits (costs) ( 7 ) 14 ( 3 ) 4

Net postretirement benefits activity:

Actuarial loss ( 1,191 ) 263 ( 65 ) ( 993 )

Prior service costs ( 624 ) — — ( 624 )

Interest rate swap ( 270 ) ( 942 ) 232 ( 980 )

Foreign currency translation adjustment ( 16 ) 18 ( 5 ) ( 3 )

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

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

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

Third Quarter 2021

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

Cost of sales $ 364 $ 97 $ — $ 461

Selling, delivery and administrative expenses 856 89 ( 8 ) 937

Subtotal pre-tax 1,220 186 ( 8 ) 1,398

Income tax expense 303 46 ( 2 ) 347

Total after tax effect $ 917 $ 140 $ ( 6 ) $ 1,051

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

Selling, delivery and administrative expenses 831 33 402 15 1,281

Subtotal pre-tax 1,194 88 402 15 1,699

Income tax expense 294 22 99 4 419

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

First Nine Months 2021

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

First Quarter 2022

(in thousands) Net Pension Activity Net Postretirement Benefits Activity Total

Cost of sales $ 278 $ 41 $ 319

Selling, delivery and administrative expenses 711 51 762

Subtotal pre-tax 3,656 557 739 ( 21 ) 4,931

Subtotal before taxes 989 92 1,081

Income tax expense 243 23 266

Total after tax effect $ 746 $ 69 $ 815

First Nine Months 2020

First Quarter 2021

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

1 unchanged sentence

Selling, delivery and administrative expenses 872 83 415 ( 49 ) 1,321

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

Income tax expense 882 65 ( 232 ) 5 720

Subtotal before taxes 1,220 186 415 ( 49 ) 1,772

Income tax expense (benefit) 303 46 103 ( 12 ) 440

Total after tax effect $ 917 $ 140 $ 312 $ ( 37 ) $ 1,332

Supplemental Disclosures of Cash Flow Information

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

First Nine Months

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

First Quarter

(in thousands) 2022 2021

12 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