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Derivatives | 9 Months Ended
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Sep. 29, 2018
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 to 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. Soybean meal options are entered into with the intent of managing the impact of changing prices for poultry meal sales. Corn options and future contracts are entered into with the intent of managing U.S. forecasted sales of bakery by-products (“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 September 29, 2018, the Company had corn option contracts, soybean meal option contracts and foreign exchange forward contracts outstanding that qualified and were designated for hedge accounting as well as corn option and forward contracts 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. Cash Flow Hedges In the first nine months of fiscal 2018, the Company entered into foreign exchange forward contracts that are considered cash flow hedges. Under the terms of the foreign exchange contracts, the Company hedged a portion of its forecasted peptan sales in currencies other than the functional currency through the fourth quarter of fiscal 2019. As of September 29, 2018, the contract positions and activity are not significant to the Company. At September 29, 2018 and December 30, 2017, the aggregate fair value of these foreign exchange contracts was approximately $0.5 million and zero, respectively. The September 29, 2018 amounts are included in other current assets and other assets on the balance sheet, with an offset recorded in accumulated other comprehensive loss for the effective portion. In the first nine months of fiscal 2018, the Company entered into soybean meal option contracts that are considered cash flow hedges. Under the terms of the soybean meal option contracts, the Company hedged a portion of its forecasted poultry meal sales into the fourth quarter of fiscal 2018. As of September 29, 2018, some of the contracts have been settled while the remaining contract positions and activity are not significant to the Company. At September 29, 2018 and December 30, 2017, the aggregate fair value of these soybean meal option contracts was approximately $0.4 million and zero, respectively. The September 29, 2018 amounts are included in other current assets on the balance sheet, with an offset recorded in accumulated other comprehensive loss for the effective portion. In fiscal 2017 and the first nine months of fiscal 2018, the Company entered into corn option contracts on the Chicago Board of Trade that are designated as cash flow hedges. Under the terms of the corn option contracts, the Company hedged a portion of its U.S. forecasted sales of BBP into the fourth quarter of fiscal 2018. As of September 29, 2018, some of the contracts have been settled while the remaining contract positions and activity are not significant to the Company. At September 29, 2018 and December 30, 2017, the aggregate fair value of these corn option contracts was approximately $0.7 million and $3.4 million, respectively. These amounts are included in other current assets on the balance sheet, with an offset recorded in accumulated other comprehensive loss for the effective portion. From time to time, the Company may enter into corn option contracts in the future. As of September 29, 2018, 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 (in thousands):
Functional Currency |  | Contract Currency
Type | Amount |  | Type | Amount
Brazilian real | 59,258 |  |  | Euro | 12,536 |
Brazilian real | 242,809 |  |  | U.S. dollar | 58,903 |
Euro | 109,577 |  |  | U.S. dollar | 129,276 |
Euro | 19,425 |  |  | Polish zloty | 83,780 |
Euro | 5,592 |  |  | Japanese yen | 734,893 |
Euro | 34,973 |  |  | Chinese renminbi | 284,178 |
Euro | 12,284 |  |  | Australian dollar | 19,850 |
Euro | 3,191 |  |  | British pound | 2,833 |
Polish zloty | 21,742 |  |  | Euro | 5,046 |
British pound | 161 |  |  | Euro | 179 |
British pound | 106 |  |  | U.S. dollar | 81 |
Japanese yen | 184,030 |  |  | U.S. dollar | 1,674 |
U.S. dollar | 692 |  |  | Japanese yen | 78,000 |
The Company estimates the amount that will be reclassified from accumulated other comprehensive loss at September 29, 2018 into earnings over the next 12 months will be approximately $1.1 million. As of September 29, 2018, no amounts have been reclassified into earnings as a result of the discontinuance of cash flow hedges. The table below summarizes the effect of derivatives not designated as hedges on the Company's consolidated statements of operations for the three and nine months ended September 29, 2018 and September 30, 2017 (in thousands):
|  |  |  | Loss or (Gain) Recognized in Income on Derivatives Not Designated as Hedges
|  |  |  | Three Months Ended | Nine Months Ended
Derivatives not designated as hedging instruments |  | Location |  | September 29, 2018 | September 30, 2017 | September 29, 2018 | September 30, 2017
Foreign exchange |  | Foreign currency loss/(gain) |  | $ | (1,389 | ) | $ | 3,142 |  | $ | (3,216 | ) | $ | 12,418 |
Foreign exchange |  | Net sales |  | 3,652 |  | — |  | 3,652 |  | — |
Foreign exchange |  | Cost of sales and operating expenses |  | (880 | ) | — |  | (880 | ) | — |
Foreign exchange |  | Selling, general and administrative expense |  | 359 |  | (2,118 | ) | 3,354 |  | (3,107 | )
Corn options and futures |  | Net sales |  | 294 |  | 165 |  | 748 |  | 125 |
Corn options and futures |  | Cost of sales and operating expenses |  | (403 | ) | (1,566 | ) | (709 | ) | (1,250 | )
Heating oil swaps and options |  | Net sales |  | — |  | 492 |  | — |  | 492 |
Soybean meal |  | Net sales |  | — |  | (131 | ) | — |  | (412 | )
Soybean oil |  | Net sales |  | — |  | — |  | — |  | 45 |
Total |  |  |  | $ | 1,633 |  | $ | (16 | ) | $ | 2,949 |  | $ | 8,311 |
At September 29, 2018, the Company had forward purchase agreements in place for purchases of approximately $20.9 million of natural gas and diesel fuel. These forward purchase agreements have no net settlement provisions and the Company intends to take physical delivery of the underlying product. Accordingly, the forward purchase agreements are not subject to the requirements of fair value accounting because they qualify and the Company has elected to account for these as normal purchases as defined in the FASB authoritative guidance.

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- References No definition available. + Details
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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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