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EQUITY | 12 Months Ended
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Dec. 28, 2014
Equity [Abstract] |
EQUITY | EQUITY Common Stock Upon completion of the Merger, all outstanding shares of Smithfield were cancelled and the Company's shareholders received the Merger Consideration for each share of common stock held prior to the effective time of the Merger. As a result of the Merger, all of the outstanding shares of Merger Sub were converted into 1,000 shares of common stock of the Company, no par value, and such shares are owned by a wholly owned subsidiary of WH Group. There are no other shares of stock outstanding in the Company. See Note 2—Merger and Acquisitions for further information on the Merger. Common Stock Repurchases During the twelve months ended April 28, 2013, we repurchased 19,068,079 shares of our common stock for $386.4 million, including related fees. The price of the repurchased shares was allocated among common stock, additional paid-in capital and retained earnings in our consolidated condensed balance sheet in accordance with applicable accounting guidance. From June 2011 through the Merger Date, we repurchased 28,244,783 shares of our common stock for $575.9 million, including related commissions, at an average price of $20.38. Stock-Based Compensation During 2014, WH Group adopted a share incentive plan to provide incentives to various executives and management of WH Group and its subsidiaries (the WH Group Incentive Plan). The WH Group stock trades on the Stock Exchange of Hong Kong Limited. In 2014, 160,500,000 stock options were granted to Smithfield executives and management under the WH Group Incentive Plan. Stock options granted under the WH Group Incentive Plan are subject to graded vesting over five years and were valued in five separate tranches, according to the expected life of each tranche. We recognized $9.2 million of compensation expense for the stock options in 2014. The related income tax benefit recognized was $3.4 million. There was no compensation expense capitalized as part of inventory or fixed assets. The fair value of each option granted was estimated on the date of grant using a binomial option pricing model. The expected annual volatility was based on the historical volatility of comparable companies. The following table summarizes the assumptions made in determining the fair value of stock options granted in 2014(1):
|  |  |  | Twelve Months Ended
|  |  |  | December 28, 2014
Expected annual volatility |  |  |  | 42 | %
Dividend yield |  |  |  | — | %
Risk free interest rate |  |  |  | 2.06 | %
Expected option life (years) |  |  |  | 3.5 |
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(1) | The options granted in 2014 were valued in separate tranches according to the expected life of each tranche. The above table reflects the weighted average risk free interest rate and expected option life of each tranche. The expected dividend yield was the same for all options granted in 2014.
The following table summarizes stock option activity under the WH Group Incentive Plan during 2014:
|  | Number of Shares |  | Weighted Average Exercise Price (HKD) |  | Weighted Average Exercise Price (USD) |  | Weighted Average Remaining Contractual Term (Years) |  | Aggregate Intrinsic Value (HKD) |  | Aggregate Intrinsic Value (USD)
|  |  |  |  |  |  |  |  |  | (in millions)
Outstanding as of December 29, 2013 |  | — |  |  | $ | — |  |  | $ | — |  |  |  |  |  |  |
Granted |  | 160,500,000 |  |  | $ | 6.20 |  |  | $ | 0.80 |  |  |  |  |  |  |
Forfeited |  | (9,100,000 | ) |  | $ | 6.20 |  |  | $ | 0.80 |  |  |  |  |  |  |
Outstanding as of December 28, 2014 |  | 151,400,000 |  |  | $ | 6.20 |  |  | $ | 0.80 |  |  | 9.6 |  |  | $ | — |  |  | $ | — |
Exercisable as of December 28, 2014 |  | — |  |  | $ | — |  |  | $ | — |  |  | — |  |  | $ | — |  |  | $ | — |
The weighted average grant-date fair value of options granted during 2014 was $0.42 USD ($3.22 HKD). As of December 28, 2014, there was $53.7 million of total unrecognized compensation cost related to nonvested stock options granted under the WH Group Incentive Plan. That cost is expected to be recognized over a weighted average period of 3.1 years. No options vested during 2014. During the twelve months ended May 3, 2009, we adopted the 2008 Incentive Compensation Plan (the Incentive Plan), which replaced the 1998 Stock Incentive Plan and provided for the issuance of non-statutory stock options and other awards to employees, non-employee directors and consultants. Upon completion of the Merger, all then-outstanding stock-based compensation awards, whether vested or unvested, were converted into the right to receive the Merger Consideration, less the exercise price of such awards, if any. As a result, we made aggregate cash payments totaling $82.1 million to plan participants following the Merger, which were included as a component of the purchase price consideration. The Incentive Plan was discontinued as a result of the Merger. Stock-based compensation expense was $2.0 million, $8.4 million, and $11.0 million for the five months ended September 26, 2013, the twelve months ended April 28, 2013 and the twelve months ended April 29, 2012, respectively. The related income tax benefits recognized were $0.4 million, $1.8 million, and $2.4 million, for the five months ended September 26, 2013, the twelve months ended April 28, 2013 and the twelve months ended April 29, 2012, respectively. There was no compensation expense capitalized as part of inventory or fixed assets during the five months ended September 26, 2013, twelve months ended April 28, 2013 and twelve months ended April 29, 2012. Call Spread Transactions In connection with the issuance of the Convertible Notes (see Note 7—Debt), we entered into separate convertible note hedge transactions with respect to our common stock to minimize the impact of potential economic dilution upon conversion of the Convertible Notes, and separate warrant transactions. We purchased call options in private transactions that permitted us to acquire up to approximately 17.6 million shares of our common stock at an initial strike price of $22.68 per share, subject to adjustment, for $88.2 million. In general, the call options allowed us to acquire a number of shares of our common stock initially equal to the number of shares of common stock issuable to the holders of the Convertible Notes upon conversion. These call options terminated upon the maturity of the Convertible Notes. We also sold warrants in private transactions for total proceeds of approximately $36.7 million. The warrants permitted the purchasers to acquire up to approximately 17.6 million shares of our common stock at an initial exercise price of $30.54 per share, subject to adjustment. In July 2013, we repaid the outstanding principal amount on our Convertible Notes totaling $400.0 million. As part of the settlement of the Convertible Notes, we delivered 3,894,476 shares of our common stock to the holders of the notes. Simultaneously, we exercised a call option, which we entered into in connection with the original issuance of the Convertible Notes, entitling us to receive 3,894,510 shares from the counter-parties. As a result, we retired 34 net shares of our common stock upon the settlement of the Convertible Notes. In October 2013, we paid $79.4 million to holders of the warrants to unwind the contracts due to the change of control related to the Merger. Stock Held in Trust We maintain a non-qualified defined Supplemental Pension Plan (the Supplemental Plan) the purpose of which is to provide supplemental retirement income benefits for those eligible employees whose benefits under the tax-qualified plans are subject to statutory limitations. A grantor trust has been established for the purpose of satisfying the obligations under the plan. The shares of the Company's stock held by the Supplemental Plan were converted to cash as a result of the Merger. As part of the Incentive Plan director fee deferral program, we purchased shares of our common stock on the open market for the benefit of the plan's participants. These shares were held in a rabbi trust until transferred to the participants. The shares held by the rabbi trust were converted to cash as a result of the Merger. Accumulated Other Comprehensive Income (Loss) Accumulated other comprehensive income (loss) consists of the following:
|  | Successor |  | Predecessor
|  | December 28, 2014 |  | December 29, 2013 |  | April 28, 2013
|  | (in millions)
Foreign currency translation |  | $ | (127.4 | ) |  | $ | 27.3 |  |  | $ | (170.5 | )
Pension accounting |  | (117.6 | ) |  | 14.6 |  |  | (427.9 | )
Hedge accounting |  | 26.4 |  |  | (2.9 | ) |  | (17.8 | )
Accumulated other comprehensive income (loss) |  | $ | (218.6 | ) |  | $ | 39.0 |  |  | $ | (616.2 | )
Other Comprehensive Income (Loss) The following tables present changes in the accumulated balances for each component of other comprehensive income (loss) and the related effects on net income of amounts reclassified out of other comprehensive income (loss):
|  | Successor
|  | Twelve Months Ended |  |
|  | December 28, 2014 |  | September 27 - December 29, 2013
|  | Before Tax |  | Tax |  | After Tax |  | Before Tax |  | Tax |  | After Tax
|  | (in millions)
Foreign currency translation: |  |  |  |  |  |  |  |  |  |  |  |
Translation adjustment arising during the period |  | $ | (167.5 | ) |  | $ | 12.8 |  |  | $ | (154.7 | ) |  | $ | 29.6 |  |  | $ | (2.3 | ) |  | $ | 27.3 |
Pension accounting: |  |  |  |  |  |  |  |  |  |  |  |
Actuarial loss |  | (217.5 | ) |  | 83.3 |  |  | (134.2 | ) |  | — |  |  | — |  |  | — |
Amortization of actuarial losses and prior service credits reclassified to cost of sales |  | 1.0 |  |  | (0.4 | ) |  | 0.6 |  |  | 8.5 |  |  | (3.3 | ) |  | 5.2 |
Amortization of actuarial losses and prior service credits reclassified to SG&A |  | 2.3 |  |  | (0.9 | ) |  | 1.4 |  |  | 15.2 |  |  | (5.8 | ) |  | 9.4 |
Hedge accounting: |  |  |  |  |  |  |  |  |  |  |  |
Losses arising during the period |  | (166.3 | ) |  | 65.2 |  |  | (101.1 | ) |  | (2.3 | ) |  | 0.9 |  |  | (1.4 | )
(Gains) losses reclassified to sales |  | 218.7 |  |  | (85.0 | ) |  | 133.7 |  |  | (3.0 | ) |  | 1.2 |  |  | (1.8 | )
(Gains) losses reclassified to cost of sales |  | (1.7 | ) |  | 0.7 |  |  | (1.0 | ) |  | 0.9 |  |  | (0.4 | ) |  | 0.5 |
Gains reclassified to SG&A |  | (2.9 | ) |  | 0.6 |  |  | (2.3 | ) |  | (0.3 | ) |  | 0.1 |  |  | (0.2 | )
Total other comprehensive income (loss) |  | $ | (333.9 | ) |  | $ | 76.3 |  |  | $ | (257.6 | ) |  | $ | 48.6 |  |  | $ | (9.6 | ) |  | $ | 39.0 |
|  | Predecessor
|  |  |  |  |  |  |  | Twelve Months Ended
|  | April 29 - September 26, 2013 |  | April 28, 2013 |  | April 29, 2012
|  | Before Tax |  | Tax |  | After Tax |  | Before Tax |  | Tax |  | After Tax |  | Before Tax |  | Tax |  | After Tax
|  | (in millions)
Foreign currency translation: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Translation adjustment arising during the period |  | $ | 23.3 |  |  | $ | (6.4 | ) |  | $ | 16.9 |  |  | $ | (12.5 | ) |  | $ | 1.4 |  |  | $ | (11.1 | ) |  | $ | (185.7 | ) |  | $ | 25.9 |  |  | $ | (159.8 | )
Pension accounting: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Amortization of actuarial losses and prior service credits reclassified to cost of sales |  | 7.4 |  |  | (2.9 | ) |  | 4.5 |  |  | (12.3 | ) |  | 4.8 |  |  | (7.5 | ) |  | (90.8 | ) |  | 35.3 |  |  | (55.5 | )
Amortization of actuarial losses and prior service credits reclassified to SG&A |  | 17.4 |  |  | (6.8 | ) |  | 10.6 |  |  | (28.8 | ) |  | 11.1 |  |  | (17.7 | ) |  | (211.8 | ) |  | 82.3 |  |  | (129.5 | )
Hedge accounting: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Gains (losses) arising during the period |  | (26.6 | ) |  | 10.3 |  |  | (16.3 | ) |  | 53.3 |  |  | (20.8 | ) |  | 32.5 |  |  | 105.6 |  |  | (42.6 | ) |  | 63.0 |
Gains (losses) reclassified to sales |  | (5.9 | ) |  | 2.3 |  |  | (3.6 | ) |  | (54.9 | ) |  | 21.4 |  |  | (33.5 | ) |  | (32.3 | ) |  | 12.6 |  |  | (19.7 | )
Gains reclassified to cost of sales |  | (23.6 | ) |  | 9.2 |  |  | (14.4 | ) |  | (108.4 | ) |  | 42.1 |  |  | (66.3 | ) |  | (75.1 | ) |  | 29.2 |  |  | (45.9 | )
(Gains) losses reclassified to SG&A |  | 0.3 |  |  | — |  |  | 0.3 |  |  | (2.1 | ) |  | 0.4 |  |  | (1.7 | ) |  | 4.1 |  |  | (0.8 | ) |  | 3.3 |
Losses reclassified to interest expense |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 2.4 |  |  | — |  |  | 2.4 |
Total other comprehensive income (loss) |  | $ | (7.7 | ) |  | $ | 5.7 |  |  | $ | (2.0 | ) |  | $ | (165.7 | ) |  | $ | 60.4 |  |  | $ | (105.3 | ) |  | $ | (483.6 | ) |  | $ | 141.9 |  |  | $ | (341.7 | )

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- Definition The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(d),(e)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section S99 -Paragraph 4 -Subparagraph (SAB TOPIC 4.C) -URI http://asc.fasb.org/extlink&oid=27012166&loc=d3e187143-122770 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.29-31) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 310 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB TOPIC 4.E) -URI http://asc.fasb.org/extlink&oid=27010918&loc=d3e74512-122707 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Staff Accounting Bulletin (SAB) -Number Topic 4 -Section C Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Staff Accounting Bulletin (SAB) -Number Topic 4 -Section E Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Article 4 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 6 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21506-112644 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Glossary Preferred Stock -URI http://asc.fasb.org/extlink&oid=6521494 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 02 -Paragraph 29, 30, 31 -Article 5 Reference 11: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 04 -Article 3 Reference 12: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21463-112644 Reference 13: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.3-04) -URI http://asc.fasb.org/extlink&oid=27012166&loc=d3e187085-122770 Reference 14: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644 Reference 15: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 11 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21564-112644 Reference 16: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21488-112644 Reference 17: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21484-112644 Reference 18: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph d -Article 4 Reference 19: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 30 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6405834&loc=d3e23285-112656 + Details
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