Vital Farms, Inc. Fair Value Disclosure
5. Fair Value Measurements
Assets Measured at Fair Value on a Recurring Basis
The fair value hierarchy requires the use of observable market data when available. In instances where the inputs used to measure fair value fall into different levels of the fair value hierarchy, the fair value measurement has been determined based on the lowest level input significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a
particular item to the fair value measurement in its entirety requires judgment, including the consideration of inputs specific to the asset or liability.
The following tables present information about the Company’s financial assets measured at fair value on a recurring basis for the periods presented:
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Fair Value Measurements as of December 28, 2025, Using: |
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Level 1 |
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Level 2 |
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Level 3 |
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Total |
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Assets: |
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Cash and cash equivalents: |
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Money market |
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$ |
14,807 |
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$ |
— |
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$ |
— |
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$ |
14,807 |
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U.S. Treasury Bills |
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— |
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4,998 |
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— |
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4,998 |
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Investment securities, available-for-sale: |
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U.S. Treasury Bills |
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— |
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64,520 |
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— |
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64,520 |
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Prepaid expenses and other current assets: |
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Derivative financial instruments |
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— |
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262 |
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— |
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262 |
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Total assets measured at fair value |
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$ |
14,807 |
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$ |
69,780 |
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$ |
— |
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$ |
84,587 |
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Fair Value Measurements as of December 29, 2024, Using: |
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Level 1 |
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Level 2 |
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Level 3 |
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Total |
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Assets: |
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Cash and cash equivalents: |
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Money market |
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$ |
114,249 |
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$ |
— |
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$ |
— |
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|
$ |
114,249 |
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Investment securities, available-for-sale: |
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U.S. corporate bonds and U.S. dollar |
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— |
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9,692 |
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— |
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9,692 |
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Prepaid expenses and other current assets: |
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Derivative financial instruments |
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— |
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1,153 |
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— |
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1,153 |
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Total assets measured at fair value |
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$ |
114,249 |
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|
$ |
10,845 |
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|
$ |
— |
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$ |
125,094 |
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During the fiscal year ended December 28, 2025, there were no transfers between fair value measurement levels. For additional information on concentrations of credit risk for the Company’s financial instruments, refer to “Summary of Significant Accounting Policies” in Note 2 and “Investment Securities” in Note 3 above.
Fair Value of Other Financial Instruments
The carrying values of the Company’s short-term financial instruments not included above, including cash, trade receivables, other non-trade receivables included in prepaid expense and other current assets, accounts payable, accrued expenses and other current liabilities approximate their fair value due to their short-term nature.
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.