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Derivatives | 12 Months Ended
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Jan. 02, 2016
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
DERIVATIVES | DERIVATIVES The Company’s operations are exposed to market risks relating to commodity prices that affect the Company’s cost of raw materials, finished product prices and energy costs and the risk of changes in interest rates and foreign currency exchange rates. The Company makes limited use of derivative instruments to manage cash flow risks related natural gas usage, diesel fuel usage, inventory, forecasted sales and foreign currency exchange rates. The Company does not use derivative instruments for trading purposes. Natural gas swaps and options are entered into with the intent of managing the overall cost of natural gas usage by reducing the potential impact of seasonal weather demands on natural gas that increases natural gas prices. Heating oil swaps and options are entered into with the intent of managing the overall cost of diesel fuel usage by reducing the potential impact of seasonal weather demands on diesel fuel that increases diesel fuel prices. Corn options and future contracts are entered into with the intent of managing forecasted sales of BBP by reducing the impact of changing prices. Foreign currency forward contracts are entered into to mitigate the foreign exchange rate risk for transactions designated in a currency other than the local functional currency. At January 2, 2016, the Company had corn options outstanding that qualified and were designated for hedge accounting as well as corn options and foreign currency forward contracts that did not qualify and were not designated for hedge accounting. Entities are required to report all derivative instruments in the statement of financial position at fair value. The accounting for changes in the fair value (i.e., gains or losses) of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and, if so, on the reason for holding the instrument. If certain conditions are met, entities may elect to designate a derivative instrument as a hedge of exposures to changes in fair value, cash flows or foreign currencies. If the hedged exposure is a cash flow exposure, the effective portion of the gain or loss on the derivative instrument is reported initially as a component of other comprehensive income (outside of earnings) and is subsequently reclassified into earnings when the forecasted transaction affects earnings. Any amounts excluded from the assessment of hedge effectiveness as well as the ineffective portion of the gain or loss are reported in earnings immediately. If the derivative instrument is not designated as a hedge, the gain or loss is recognized in earnings in the period of change. In November 2013, the Company entered into foreign currency exchange forward contracts that did not qualify for hedge accounting to mitigate the foreign exchange rate risk of the expected acquisition price of the VION Acquisition. Under the terms of the exchange contracts, the Company exchanged U.S. dollars for €1.0 billion at a fixed weighted average price of approximately 1.346 with a maturity date of early January 2014. The foreign currency contract was not designated for hedge accounting. In the fourth quarter of fiscal 2013 the Company recorded an unrealized gain of $27.5 million and upon settlement of the exchange contracts recorded a loss in the first quarter of fiscal 2014 of $12.6 million. Cash Flow Hedges In fiscal 2014 and fiscal 2015, the Company entered into corn option contracts that are considered cash flow hedges. Under the terms of the corn option contracts the Company hedged a portion of it's forecasted sales of BBP into the second quarter of fiscal 2016. As of January 2, 2016, all fiscal 2014 contracts and some of the fiscal 2015 contracts have settled while the remaining contract positions and activity are disclosed below. From time to time, the Company may enter into corn option contracts in the future. As of January 2, 2016, the Company had the following outstanding forward contract amounts that were entered into to hedge the future payments of intercompany note transactions, foreign currency transactions in currencies other than the functional currency and forecasted transactions in currencies other than the functional currency. All of these transactions are currently not designated for hedge accounting. (in thousands):
Functional Currency |  | Contract Currency
Type | Amount |  | Type | Amount
Brazilian real | 35,305 |  |  | Euro | 8,400 |
Brazilian real | 67,670 |  |  | U.S. Dollar | 17,250 |
Euro | 251,908 |  |  | U.S. Dollar | 271,964 |
Euro | 8,834 |  |  | Polish zloty | 38,000 |
Euro | 5,356 |  |  | Japanese yen | 709,859 |
Euro | 34,707 |  |  | Chinese renminbi | 247,938 |
Euro | 9,616 |  |  | Australian dollar | 13,950 |
Polish zloty | 16,380 |  |  | Euro | 3,820 |
British pound | 72 |  |  | Euro | 100 |
Japanese yen | 53,039 |  |  | U.S. dollar | 438 |
The Company estimates the amount that will be reclassified from accumulated other comprehensive gain at January 2, 2016 into earnings over the next 12 months will be approximately $3.0 million. As of January 2, 2016, no amounts have been reclassified into earnings as a result of the discontinuance of cash flow hedges. The following table presents the fair value of the Company’s derivative instruments as of January 2, 2016 and January 3, 2015 (in thousands):
Derivatives Designated |  | Balance Sheet |  | Asset Derivatives Fair Value
as Hedges |  | Location |  | January 2, 2016 |  | January 3, 2015
Corn options |  | Other current assets |  | $ | 3,215 |  |  | $ | 247 |
Total derivatives designated as hedges |  |  |  | $ | 3,215 |  |  | $ | 247 |
Derivatives not Designated as Hedges |  |  |  |  |  |
Foreign currency contracts |  | Other current assets |  | $ | 644 |  |  | $ | 11,559 |
Corn options and futures |  | Other current assets |  | 599 |  |  | 69 |
Heating oil swaps |  | Other current assets |  | — |  |  | 353 |
Total derivatives not designated as hedges |  |  |  | $ | 1,243 |  |  | $ | 11,981 |
Total asset derivatives |  |  |  | $ | 4,458 |  |  | $ | 12,228 |
Derivatives Designated |  | Balance Sheet |  | Liability Derivatives Fair Value
as Hedges |  | Location |  | January 2, 2016 |  | January 3, 2015
Derivatives not Designated as Hedges |  |  |  |  |  |  |  |
Foreign currency contracts |  | Accrued Expenses |  | $ | 4,435 |  |  | $ | 2,019 |
Corn options and futures |  | Accrued Expenses |  | 2 |  |  | 3 |
Heating oil swaps |  | Accrued Expenses |  | — |  |  | 993 |
Total derivatives not designated as hedges |  |  |  | $ | 4,437 |  |  | $ | 3,015 |
Total liability derivatives |  |  |  | $ | 4,437 |  |  | $ | 3,015 |
The effect of the Company's derivative instruments on the consolidated financial statements for the fiscal years ended January 2, 2016 and January 3, 2015 are as follows (in thousands):
Derivatives Designated as Cash Flow Hedges | Gain or (Loss) Recognized in OCI on Derivatives (Effective Portion) (a) |  | Gain or (Loss) Reclassified From Accumulated OCI into Income (Effective Portion) (b) |  | Gain or (Loss) Recognized in Income On Derivatives (Ineffective Portion and Amount Excluded from Effectiveness Testing) (c)
| 2015 |  | 2014 |  | 2015 |  | 2014 |  | 2015 |  | 2014
Corn options | $ | 4,405 |  |  | $ | 1,812 |  |  | $ | 1,517 |  |  | $ | 3,868 |  |  | $ | 68 |  |  | $ | 92 |
Natural gas swaps | — |  |  | 11 |  |  | — |  |  | 196 |  |  | — |  |  | (1 | )
Total | $ | 4,405 |  |  | $ | 1,823 |  |  | $ | 1,517 |  |  | $ | 4,064 |  |  | $ | 68 |  |  | $ | 91 |
(a) | Amount recognized in accumulated OCI (effective portion) is reported as accumulated other comprehensive gain of approximately $4.4 million and approximately $1.8 million recorded net of taxes of approximately $1.7 million and approximately $0.7 million for the year ended January 2, 2016 and January 3, 2015, respectively.
(b) | Gains and (losses) reclassified from accumulated OCI into income (effective portion) for interest rate swaps and natural gas swaps is included in interest expense and cost of sales, respectively, in the Company’s consolidated statements of operations.
(c) | Gains and (losses) recognized in income on derivatives (ineffective portion) for interest rate swaps and natural gas swaps is included in other income/(expense), net in the Company’s consolidated statements of operations.
The table below summarizes the effect of derivatives not designated as hedges on the Company's consolidated statements of operations for the year ended January 2, 2016, January 3, 2015 and December 28, 2013 (in thousands):
|  |  |  | Loss or (Gain) Recognized in Income on Derivatives Not Designated as Hedges
|  |  |  | For The Year Ended
Derivatives not designated as hedging instruments |  | Location |  | January 2, 2016 | January 3, 2015 | December 28, 2013
Foreign Exchange |  | Foreign currency loss/(gain) |  | $ | (27,321 | ) | $ | (21,162 | ) | $ | (27,517 | )
Foreign Exchange |  | Selling, general and administrative expense |  | 7,508 |  | 4,652 |  | — |
Corn options and futures |  | Net sales |  | (2 | ) | — |  | — |
Corn options and futures |  | Cost of sales and operating expenses |  | (2,067 | ) | (71 | ) | (678 | )
Natural gas swaps and options |  | Cost of sales and operating expenses |  | — |  | — |  | 41 |
Natural gas and heating oil swaps and options |  | Cost of sales and operating expenses |  | 132 |  | 982 |  | (63 | )
Total |  |  |  | $ | (21,750 | ) | $ | (15,599 | ) | $ | (28,217 | )
At January 2, 2016, the Company had forward purchase agreements in place for purchases of approximately $15.2 million of natural gas and diesel fuel. These forward purchase agreements have no net settlement provisions and the Company intends to take physical delivery. Accordingly, the forward purchase agreements are not subject to the requirements of fair value accounting because they qualify as normal purchases as defined.

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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/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 30 -Section 45 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6441202&loc=d3e80720-113993 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4C -URI http://asc.fasb.org/extlink&oid=56946850&loc=SL5624171-113959 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=56946850&loc=d3e41620-113959 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4B -URI http://asc.fasb.org/extlink&oid=56946850&loc=SL5624163-113959 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=56946850&loc=SL5579240-113959 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4D -URI http://asc.fasb.org/extlink&oid=56946850&loc=SL5624177-113959 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 30 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=35736893&loc=d3e80784-113994 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=56946850&loc=d3e41641-113959 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 1A -URI http://asc.fasb.org/extlink&oid=56946850&loc=SL5579245-113959 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4H -URI http://asc.fasb.org/extlink&oid=56946850&loc=SL5624258-113959 Reference 11: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 30 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=35736893&loc=d3e80748-113994 Reference 12: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4K -URI http://asc.fasb.org/extlink&oid=56946850&loc=SL5708775-113959 Reference 13: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4J -URI http://asc.fasb.org/extlink&oid=56946850&loc=SL5708773-113959 Reference 14: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4A -URI http://asc.fasb.org/extlink&oid=56946850&loc=SL5618551-113959 Reference 15: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 1B -URI http://asc.fasb.org/extlink&oid=56946850&loc=SL5580258-113959 Reference 16: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4E -URI http://asc.fasb.org/extlink&oid=56946850&loc=SL5624181-113959 Reference 17: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 25 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6886632&loc=d3e76258-113986 Reference 18: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=56946850&loc=d3e41638-113959 Reference 19: 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.(n)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 + Details
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