Central Garden & Pet Company Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Fair Value Measurements (Tables)

Fair Value Measurements (Tables)

6 Months Ended

Mar. 26, 2022

Schedule of Financial Assets and Liabilities Measured at Fair Value on Recurring Basis

The following table presents the Company’s financial assets and liabilities measured at fair value on a recurring basis based upon the level within the fair value hierarchy in which the fair value measurements fall, as of March 26, 2022:


	Level 1		Level 2		Level 3		Total
	(in thousands)
Liabilities:
Liability for contingent consideration (a)	$	—	$	—	$	1,481	$	1,481
Total liabilities	$	—	$	—	$	1,481	$	1,481


	Level 1		Level 2		Level 3		Total
	(in thousands)
Liabilities:
Liability for contingent consideration (a)	$	—	$	—	$	1,180	$	1,180
Total liabilities	$	—	$	—	$	1,180	$	1,180

The following table presents the Company's financial assets and liabilities at fair value on a recurring basis based upon the level within the fair value hierarchy in which the fair value measurements fall, as of September 25, 2021:


	Level 1		Level 2		Level 3		Total
	(in thousands)
Liabilities:
Liability for contingent consideration (a)	$	—	$	—	$	1,606	$	1,606
Total liabilities	$	—	$	—	$	1,606	$	1,606

(a)The fair values of the Company's contingent consideration liabilities from previous business acquisitions are considered "Level 3" measurements because the Company uses various estimates in the valuation models to project timing and amount of future contingent payments. The liability for contingent consideration relates to future performance-based contingent payments for Hydro-Organics Wholesale, Inc., acquired in October 2015. The performance period related to Hydro-Organics Wholesale extends through fiscal year 2025. The fair value of the estimated contingent consideration arrangement is determined based on the Company’s evaluation as to the probability and amount of any earn-out that will be achieved based on expected future performance by the acquired entity. This is presented as part of long-term liabilities in the Company's consolidated balance sheets.

Schedule of Changes in Fair Value of Level 3 Financial Instruments

The following table provides a summary of the changes in fair value of the Company's Level 3 financial instruments for the periods ended March 26, 2022 and March 27, 2021:


	Amount
	(in thousands)
Balance September 25, 2021	$	1,606
Estimated contingent performance-based consideration established at the time of acquisition	—
Changes in the fair value of contingent performance-based payments established at the time of acquisition	—
Performance-based payments	(125)
Balance March 26, 2022	$	1,481

	Amount
	(in thousands)
Balance September 26, 2020	$	1,369
Estimated contingent performance-based consideration established at the time of acquisition	—
Changes in the fair value of contingent performance-based payments established at the time of acquisition	(32)
Performance-based payments	(157)
Balance March 27, 2021	$	1,180

- Definition

Tabular disclosure of financial instruments measured at fair value, including those classified in shareholders' equity measured on a recurring or nonrecurring basis. Disclosures include, but are not limited to, fair value measurements recorded and the reasons for the measurements, level within the fair value hierarchy in which the fair value measurements are categorized and transfers between levels 1 and 2. Nonrecurring fair value measurements are those that are required or permitted in the statement of financial position in particular circumstances.

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