XML 26 R16.htm IDEA: XBRL DOCUMENT
v3.19.2

HEDGING ACTIVITIES | 6 Months Ended
--- | ---
Jun. 29, 2019
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
HEDGING ACTIVITIES | HEDGING ACTIVITIES The Company manages interest rate risk, commodity price risk, and foreign currency risk related to foreign currency denominated transactions and investments in foreign subsidiaries. Depending on the circumstances, the Company may manage these risks by utilizing derivative financial instruments. Some derivative financial instruments are marked to market and recorded in the Company's consolidated statements of earnings, while others may be accounted for as fair value, cash flow, or net investment hedges. Derivative financial instruments have credit and market risk. The Company manages these risks of derivative instruments by monitoring limits as to the types and degree of risk that can be taken, and by entering into transactions with counterparties who are recognized, stable multinational banks. Fair value of derivative instruments at June 29, 2019 and December 29, 2018 are as follows:
Derivatives designated as hedging instruments: | Balance sheet location |  | June 29, 2019 |  | December 29, 2018
Commodity forward contracts | Prepaid expenses and other assets |  | $ | — |  |  | $ | (285 | )
Commodity forward contracts | Accrued expenses |  | (1,030 | ) |  | — |
Foreign currency forward contracts | Prepaid expenses and other assets |  | 1,372 |  |  | 8,357 |
Cross currency swap contracts | Prepaid expenses and other assets |  | 661 |  |  | 1,075 |
Cross currency swap contracts | Accrued expenses |  | (4,216 | ) |  | — |
|  |  | $ | (3,213 | ) |  | $ | 9,147 |
Gains (losses) on derivatives recognized in the condensed consolidated statements of earnings for the thirteen and twenty-six weeks ended June 29, 2019 and June 30, 2018 are as follows:
|  |  | Thirteen Weeks Ended |  | Twenty-six weeks ended
| Statements of earnings location |  | June 29, 2019 |  | June 30, 2018 |  | June 29, 2019 |  | June 30, 2018
Commodity forward contracts | Product cost of sales |  | $ | (96 | ) |  | $ | — |  |  | $ | (96 | ) |  | $ | — |
Foreign currency forward contracts | Other income (expenses) |  | 152 |  |  | — |  |  | 704 |  |  | — |
Foreign currency forward contracts | Loss from divestiture of grinding media business |  | $ | — |  |  | (1,215 | ) |  | — |  |  | (1,215 | )
Interest rate hedges | Interest expense |  | (16 | ) |  | 25 |  |  | (32 | ) |  | 44 |
Cross currency swap contracts | Interest expense |  | 674 |  |  | — |  |  | 1,327 |  |  | — |
|  |  | $ | 714 |  |  | $ | (1,190 | ) |  | $ | 1,903 |  |  | $ | (1,171 | )
Cash Flow Hedges In 2019 and 2018, the Company entered into steel hot rolled coil (HRC) forward contracts that qualified as a cash flow hedge of the variability in cash flows attributable to future steel purchases. In 2019, the forward contracts had a notional amount of $12,128 for the purchase of 3,500 short tons for each month from May 2019 to September 2019. In 2018, the forward contracts entered into had a notional amount of $8,469 for the purchase of 3,500 short tons for each month from July 2018 to September 2018 and a notional amount of $15,563 for the purchase of 6,500 short tons for each month from October 2018 to December 2018. The gain/(loss) realized upon settlement is recorded in product cost of sales in the condensed consolidated statements of earnings over average inventory turns. The forward contracts were closed out in the third quarter of 2019. (8) HEDGING ACTIVITIES (Continued) On June 19, 2018, the Company issued and sold $200,000 aggregate principal amount of the Company’s 5.00% senior notes due 2044 and $55,000 aggregate principal amount of the Company’s 5.25% senior notes due 2054. During the second quarter of 2018, the Company executed contracts to hedge the risk of potential fluctuations in the treasury rates on the 2044 Notes and 2054 Notes which would change the amount of net proceeds received from the debt offering. These contracts had a combined notional amount of $175,000. On June 8, 2018, these contracts were settled with the Company paying $2,467 to the counterparties which was recorded in Other Comprehensive Income ("OCI") and will be amortized as an increase to interest expense over the term of the debt. Due to the retirement of the 2020 bonds in July 2018, the Company wrote off the remaining $411 unamortized loss on the related cash flow hedge. Net Investment Hedges In the second quarter of 2019, all net investment hedges incepted in 2018 were early settled and the Company received proceeds of $11,184, which will remain in OCI until either the sale or substantially complete liquidation of the related subsidiaries. In the second quarter of 2019, the Company entered into a new foreign currency forward contract to mitigate foreign currency risk of the Company's investment in its Australian dollar denominated businesses. The forward contract, which qualifies as a net investment hedge, has a maturity date of April 2021 and a notional amount to sell Australian dollars to receive $100,000. The Australian dollar forward contract effectiveness was assessed under the spot method with forward points excluded totaling $881, which the Company has elected to amortize in other income (expense) in the condensed consolidated statements of earnings using the straight-line method over the remaining term of the contract. In the second quarter of 2019, the Company entered into two new fixed-for-fixed cross currency swaps (“CCS”), swapping U.S. dollar principal and interest payments on a portion of its 5.00% senior unsecured notes due 2044 for Danish krone (DKK) and Euro denominated payments. The CCS were entered into in order to mitigate foreign currency risk on the Company's Euro and DKK investments and to reduce interest expense. Interest is exchanged twice per year on April 1 and October 1. Key terms of the two CCS are as follows:
Currency | Notional Amount | Termination Date | Swapped Interest Rate | Set Settlement Amount
Danish Krone, DKK | $ | 50,000 |  | April 1, 2024 | 2.68% | DKK 333,625
Euro | $ | 80,000 |  | April 1, 2024 | 2.825% | €71,550
The Company designated the full notional amount of the two CCS ($130,000) as a hedge of the net investment in certain Danish and European subsidiaries under the spot method, with all changes in the fair value of the CCS that are included in the assessment of effectiveness (changes due to spot foreign exchange rates) are recorded as cumulative foreign currency translation within OCI, and will remain in OCI until either the sale or substantially complete liquidation of the related subsidiaries. Net interest receipts will be recorded as a reduction of interest expense over the life of the CCS.

X
- References No definition available. + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration