Fair Value of Financial Instruments
Debt
The fair value and carrying value of our debt as of June 29, 2025 and June 30, 2024 are as follows:
| | | | | | | | | | | |
| June 29, 2025 | | June 30, 2024 |
| Carrying value | $ | 1,321,790 | | | $ | 1,152,200 | |
| Fair value | 1,316,993 | | | 1,152,200 | |
The fair value of our debt is estimated based on trading levels of lenders buying and selling their participation levels of funding (Level 2).
There were no transfers in or out of any of the levels of the valuation hierarchy in fiscal years 2025 and 2024.
Items Measured at Fair Value on a Recurring Basis
The Company holds certain assets and liabilities that are required to be measured at fair value on a recurring basis. The following table is a summary of fair value measurements and hierarchy level as of June 29, 2025 and June 30, 2024:
| | | | | | | | | | | | | | | | | | | | | | | |
| June 29, 2025 |
| Level 1 | | Level 2 | | Level 3 | | Total |
| Interest rate collars | $ | — | | | $ | 16 | | | $ | — | | | $ | 16 | |
| Earnout shares | — | | | — | | | 36,183 | | | 36,183 | |
| Total liabilities | $ | — | | | $ | 16 | | | $ | 36,183 | | | $ | 36,199 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| June 30, 2024 |
| Level 1 | | Level 2 | | Level 3 | | Total |
| Interest rate collars | $ | — | | | $ | 696 | | | $ | — | | | $ | 696 | |
| Total assets | $ | — | | | $ | 696 | | | $ | — | | | $ | 696 | |
| | | | | | | |
| Earnout Shares | $ | — | | | $ | — | | | $ | 137,636 | | | $ | 137,636 | |
| Total liabilities | $ | — | | | $ | — | | | $ | 137,636 | | | $ | 137,636 | |
The fair value of earn-out shares was established using a Monte Carlo simulation Model (level 3 inputs). The key inputs into the Monte Carlo simulations as of June 29, 2025 and June 30, 2024 were as follows:
| | | | | | | | | | | |
| June 29, 2025 | | June 30, 2024 |
| Expected term in years | 1.46 | | 2.46 |
| Expected volatility | 50% | | 50% |
| Risk-free interest rate | 3.86% | | 4.62% |
| Stock price | $ | 9.31 | | $ | 14.49 |
| Dividend yield | 2.36% | | 1.52% |
The following table sets forth a summary of changes in the estimated fair value of the Company's Level 3 Earnout liability for the years ended June 29, 2025 and June 30, 2024:
| | | | | | | | | | | |
| Fiscal Year Ended |
| June 29, 2025 | | June 30, 2024 |
| Balance as of beginning of period | $ | 137,636 | | | $ | 112,041 | |
| Issuances | 31 | | | 139 | |
| Changes in fair value | (101,484) | | | 25,456 | |
| Balance as of end of period | $ | 36,183 | | | $ | 137,636 | |
Items Measured at Fair Value on a Non-Recurring Basis
The Company’s assets measured at fair value on a non-recurring basis subsequent to their initial recognition include assets held for sale. We utilize third party broker estimate of value amounts to record the assets held for sale at their fair value less costs to sell. These inputs are classified as Level 2 fair value measurements.
Other Financial Instruments
Other financial instruments include cash and cash equivalents, accounts and notes receivable, accounts payable and accrued expenses. The financial statement carrying amounts of these items approximate the fair value due to their short duration.