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DERIVATIVE FINANCIAL INSTRUMENTS | 9 Months Ended
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Sep. 29, 2024
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 twelve months. The Company may purchase longer-term derivative financial instruments on particular commodities if deemed appropriate. The Company has operations in Mexico, the U.K., France, the Netherlands and the Republic of Ireland. Therefore, it 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 a portion of this foreign exchange risk. The fair value of derivative assets is included in the line item Prepaid expenses and other current assets on the Condensed 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. The Company’s counterparties require that it post collateral for changes in the net fair value of the derivative contracts. This cash collateral is reported in the line item Restricted cash and restricted cash equivalents on the Condensed Consolidated Balance Sheets. Undesignated contracts may include contracts not designated as hedges or contracts that do not qualify for hedge accounting. The fair value of each of these derivatives is recognized in the Condensed Consolidated Balance Sheets within Prepaid expenses and other current assets or Accrued expenses and other current liabilities. Changes in fair value of each derivative are recognized immediately in the Condensed Consolidated Statements of Income within Net sales, Cost of sales, or Foreign currency transaction losses (gains) depending on the risk the derivative is intended to mitigate. While management believes these instruments help mitigate various market risks, they are not designated and accounted for as hedges as a result of the extensive record keeping requirements. The Company does not apply hedge accounting treatment to certain derivative financial instruments that it has purchased to mitigate commodity purchase exposures in the U.S. and Mexico or foreign currency transaction exposures on our Mexico operations. Therefore, the Company recognized changes in the fair value of these derivative financial instruments immediately in earnings. Gains or losses related to the commodity derivative financial instruments are included in the line item Cost of sales in the Condensed Consolidated Statements of Income. Realized gains and losses related to cash flows are disclosed in the Condensed Consolidated Statements of Cash Flows in Cash provided by operating activities. Unrealized gains and losses related to cash flows are disclosed in the Condensed Consolidated Statements of Cash Flows in the line item Other operating assets and liabilities. Gains or losses related to the foreign currency derivative financial instruments are included in the line item Foreign currency transaction losses (gains) in the Condensed Consolidated Statements of Income. The Company does apply hedge accounting treatment to certain derivative financial instruments related to its Europe reportable segment that it has purchased to mitigate foreign currency transaction exposures. Before the settlement date of the financial derivative instruments, the Company recognizes changes in the fair value of the cash flow hedge into accumulated other comprehensive income (“AOCI”). When the derivative financial instruments 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 Net sales and Cost of sales in the Condensed Consolidated Statements of Income. We have generally applied the normal purchase and normal sale scope exception (“NPNS”) to our forward physical grain purchase contracts delivered by truck and to our forward physical natural gas and solar-generated power purchase contracts. NPNS contracts are accounted for using the accrual method of accounting; therefore, amounts payable under these contracts are recorded when we take delivery of the contracted product and no amounts were recorded for the fair value of these contracts in the condensed consolidated financial statements at September 29, 2024 and December 31, 2023. Information regarding the Company’s outstanding derivative instruments and cash collateral posted with brokers is included in the following table:
| September 29, 2024 |  | December 31, 2023
| (In thousands)
Fair values: |  |  |
Commodity derivative assets | $ | 9,349 |  |  | $ | 1,202 |
Commodity derivative liabilities | (4,503) |  |  | (17,118) |
Foreign currency derivative assets | 1,299 |  |  | 175 |
Foreign currency derivative liabilities | (226) |  |  | (723) |
Sales contract derivative assets | 678 |  |  | 960 |
Cash collateral posted with brokers(a) | 6,431 |  |  | 33,475 |
Derivatives coverage(b): |  |  |
Corn | 10.3 | % |  | 10.9 | %
Soybean meal | 7.4 | % |  | 39.6 | %
Period through which stated percent of needs are covered: |  |  |
Corn | December 2025 |  | July 2024
Soybean meal | December 2025 |  | March 2024
(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 table presents the gains and losses of each derivative instrument held by the Company not designated or qualifying as hedging instruments:
| Three Months Ended |  | Nine Months Ended |  |  |
Gains (Losses) by Type of Contract (a) | September 29, 2024 |  | September 24, 2023 |  | September 29, 2024 |  | September 24, 2023 |  |  |  |  | Affected Line Item in the Condensed Consolidated Statements of Income
| (In thousands) |  |  |  |  |
Foreign currency derivatives loss | $ | — |  |  | $ | (6,164) |  |  | $ | — |  |  | $ | (53,818) |  |  |  |  |  | Foreign currency transaction losses
Commodity derivative gain (loss) | 12,612 |  |  | 3,324 |  |  | (3,582) |  |  | (13,023) |  |  |  |  |  | Cost of sales
Sales contract derivative gain (loss) | (3,815) |  |  | 3,100 |  |  | (282) |  |  | 5,628 |  |  |  |  |  | Net sales
Total | $ | 8,797 |  |  | $ | 260 |  |  | $ | (3,864) |  |  | $ | (61,213) |  |  |  |  |  |
(a)Amounts represent income (expenses) related to results of operations. The following tables present the components of the gain or loss on derivatives that qualify as cash flow hedges:
| Gains (Losses) Recognized in Other Comprehensive Income |  |  |  |
| Three Months Ended |  | Nine Months Ended |  |
| September 29, 2024 |  | September 24, 2023 |  | September 29, 2024 |  | September 24, 2023 |  |  |  |
| (In thousands) |  |  |  |
Foreign currency derivative gains (losses) | $ | 2,301 |  |  | $ | 1,346 |  |  | $ | 4,301 |  |  | $ | (302) |  |  |  |  |
| Gains (Losses) Reclassified from AOCI into Income
| Three Months Ended September 29, 2024 |  | Three Months Ended September 24, 2023
| Net sales(a) |  | Cost of sales(b) |  | Net sales(a) |  | Cost of sales(b)
| (In thousands)
Total amounts of income and expense line items presented in the Condensed Consolidated Statements of Income in which the effects of cash flow hedges are recorded | $ | 4,584,979 |  |  | $ | 3,901,009 |  |  | $ | 4,360,196 |  |  | $ | 4,014,314 |
Impact from cash flow hedging instruments: |  |  |  |  |  |  |
Foreign currency derivatives | 299 |  |  | (340) |  |  | 106 |  |  | 239 |
(a) Amounts represent income (expenses) related to net sales. (b) Amounts represent expenses (income) related to cost of sales.
| Gains (Losses) Reclassified from AOCI into Income
| Nine Months Ended September 29, 2024 |  | Nine Months Ended September 24, 2023
| Net sales(a) |  | Cost of sales(b) |  | Net sales(a) |  | Cost of sales(b)
| (In thousands)
Total amounts of income and expense line items presented in the Condensed Consolidated Statements of Income in which the effects of cash flow hedges are recorded | $ | 13,506,227 |  |  | $ | 11,746,722 |  |  | $ | 12,833,915 |  |  | $ | 12,036,561 |
Impact from cash flow hedging instruments: |  |  |  |  |  |  |
Foreign currency derivatives | 2,255 |  |  | (445) |  |  | 440 |  |  | 224 |
(a) Amounts represent income (expenses) related to net sales. (b) Amounts represent expenses (income) related to cost of sales. At September 29, 2024, there was a $0.3 million pre-tax deferred net loss on foreign currency derivatives recorded in AOCI that is expected to be reclassified to the Condensed Consolidated Statements of Income during the next twelve months. 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 loss 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://www.xbrl.org/2003/role/disclosureRef -Topic 815 -SubTopic 40 -Name Accounting Standards Codification -Section 50 -Paragraph 5 -Subparagraph (f) -Publisher FASB -URI https://asc.fasb.org/1943274/2147480237/815-40-50-5 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 815 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 5C -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147480434/815-10-50-5C Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 815 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/815/tableOfContent + Details
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