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DERIVATIVE FINANCIAL INSTRUMENTS | 12 Months Ended
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Dec. 30, 2018
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
DERIVATIVE FINANCIAL INSTRUMENTS | DERIVATIVE FINANCIAL INSTRUMENTS The Company utilizes various raw materials in its operations, including corn, soybean meal, soybean oil, wheat, natural gas, electricity and diesel fuel, which are all considered commodities. The Company considers these raw materials generally available from a number of different sources and believes it can obtain them to meet its requirements. These commodities are subject to price fluctuations and related price risk due to factors beyond our control, such as economic and political conditions, supply and demand, weather, governmental regulation and other circumstances. Generally, the Company purchases derivative financial instruments, specifically exchange-traded futures and options, in an attempt to mitigate price risk related to its anticipated consumption of commodity inputs for approximately the next 12 months. The Company may purchase longer-term derivative financial instruments on particular commodities if deemed appropriate. The Company has operations in Mexico and Europe (including the U.K.) and, therefore, has exposure to translational foreign exchange risk when the financial results of those operations are remeasured in U.S. dollars. The Company has purchased foreign currency forward contracts to manage this translational foreign exchange risk. The fair value of derivative assets is included in the line item Prepaid expenses and other current assets on the Consolidated Balance Sheets while the fair value of derivative liabilities is included in the line item Accrued expenses and other current liabilities on the same statements. Our counterparties require that we post cash collateral for changes in the net fair value of the derivative contracts. This cash collateral is reported in the line item Restricted cash and cash equivalents on the Consolidated Balance Sheets. We have not designated certain derivative financial instruments that we have purchased to mitigate commodity purchase or foreign currency transaction exposures on our Mexico operations as cash flow hedges. Items designated as cash flow hedges are disclosed and described further below. Therefore, we recognized changes in the fair value of these derivative financial instruments immediately in earnings. Gains or losses related to these derivative financial instruments are included in the line item Cost of sales in the Consolidated and Combined Statements of Income. We have designated certain derivative financial instruments related to our U.K. and Europe segment that we have purchased to mitigate foreign currency transaction exposures as cash flow hedges. Before the settlement date of the financial derivative instruments, we recognize changes in the fair value of the effective portion of the cash flow hedge into accumulated other comprehensive income (“AOCI”) while we recognize changes in the fair value of the ineffective portion immediately in earnings. When the derivative financial instruments associated with the effective portion are settled, the amount in AOCI is then reclassified to earnings. Gains or losses related to these derivative financial instruments are included in the line item Cost of sales in the Consolidated and Combined Statements of Income. The Company recognized $27.1 million in net losses and $6.7 million in net gains related to changes in the fair value of its derivative financial instruments during 2018 and 2017, respectively. The Company recognized $4.3 million in net losses during 2016. Information regarding the Company’s outstanding derivative instruments and cash collateral posted with brokers is included in the following table:
| December 30, 2018 |  | December 31, 2017
| (Fair values in thousands)
Fair values: |  |  |
Commodity derivative assets | $ | 2,263 |  |  | $ | 722 |
Commodity derivative liabilities | (4,791 | ) |  | (3,847 | )
Foreign currency derivative assets | 1,311 |  |  | 45 |
Foreign currency derivative liabilities | (6,649 | ) |  | (211 | )
Cash collateral posted with brokers (a) | 23,192 |  |  | 8,021 |
Derivatives Coverage(b): |  |  |
Corn | 6.0 | % |  | 3.1 | %
Soybean meal | 6.0 | % |  | 1.7 | %
Period through which stated percent of needs are covered: |  |  |
Corn | March 2020 |  |  | March 2019 |
Soybean meal | December 2019 |  |  | December 2018 |
(a) | Collateral posted with brokers consists primarily of cash, short term treasury bills, or other cash equivalents.
(b) | Derivatives coverage is the percent of anticipated commodity needs covered by outstanding derivative instruments through a specified date.
The following tables present the components of the gain or loss on derivatives that qualify as cash flow hedges:
|  | Gain (Loss) Recognized in Other Comprehensive Income on Derivative (Effective Portion)
|  | December 30, 2018 |  | December 31, 2017 |  | December 25, 2016
| (In thousands)
Foreign currency derivatives |  | $ | 829 |  |  | $ | 60 |  |  | $ | (152 | )
Total |  | $ | 829 |  |  | $ | 60 |  |  | $ | (152 | )
|  | Net Realized Gain (Loss) Recognized in Income on Derivative (Ineffective Portion)
|  | December 30, 2018 |  | December 31, 2017 |  | December 25, 2016
| (In thousands)
Foreign currency derivatives |  | $ | — |  |  | $ | — |  |  | $ | — |
Total |  | $ | — |  |  | $ | — |  |  | $ | — |
|  | Gain (Loss) Reclassified from AOCI into Income (Effective Portion)
|  | December 30, 2018 |  | December 31, 2017 |  | December 25, 2016
| (In thousands)
Foreign currency derivatives |  | $ | (348 | ) |  | $ | 639 |  |  | $ | (310 | )
Total |  | $ | (348 | ) |  | $ | 639 |  |  | $ | (310 | )
At December 30, 2018, the before-tax deferred net gains on derivatives recorded in AOCI that are expected to be reclassified to the Consolidated and Combined Statements of Income during the next twelve months are $0.5 million. This expectation is based on the anticipated settlements on the hedged investments in foreign currencies that will occur over the next twelve months, at which time the Company will recognize the deferred gains (losses) to earnings.

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- Definition The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -URI http://asc.fasb.org/topic&trid=2229140 + Details
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