XML 42 R24.htm IDEA: XBRL DOCUMENT
v3.22.4

Derivatives | 12 Months Ended
--- | ---
Dec. 31, 2022
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. At December 31, 2022, the Company had foreign currency option and forward contracts, soybean meal forward contracts and corn option contracts outstanding that qualified and were designated for hedge accounting as well as corn forward contracts, soybean meal forward contracts, heating oil options and foreign currency forward contracts that did not qualify and were not designated for hedge accounting. Cash Flow Hedges In fiscal 2022, fiscal 2021 and fiscal 2020, the Company entered into foreign exchange option and forward contracts that are considered cash flow hedges. Under the terms of the foreign exchange contracts, the Company hedged a portion of its forecasted collagen sales in currencies other than the functional currency through the fourth quarter of fiscal 2024. At December 31, 2022 and January 1, 2022, the aggregate fair value of these foreign exchange contracts was approximately $13.8 million and $0.6 million, respectively. The amounts are included in other current assets, other noncurrent assets, accrued expenses and noncurrent liabilities on the balance sheet, with an offset recorded in accumulated other comprehensive loss. In fiscal 2022, fiscal 2021 and fiscal 2020, 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 its forecasted sales of BBP into the second quarter of fiscal 2023. At December 31, 2022 and January 1, 2022, the aggregate fair value of the corn contracts was $0.9 million and $2.8 million, respectively. The amounts are included in other current assets and accrued expenses on the balance sheet. In fiscal 2022, fiscal 2021 and fiscal 2020, the Company entered into soybean meal forward contracts to hedge a portion of its forecasted poultry meal sales into the third quarter of fiscal 2023. At December 31, 2022 and January 1, 2022, the aggregate fair value of the soybean meal contracts was $0.6 million and $0.1 million, respectively. The amounts are included in other current assets on the balance sheet. At December 31, 2022, 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 | 627 |  |  | Euro | 110 |
Brazilian real | 3,458,502 |  |  | U.S. Dollar | 807,739 |
Euro | 33,631 |  |  | U.S. Dollar | 35,505 |
Euro | 26,798 |  |  | Polish zloty | 126,500 |
Euro | 12,982 |  |  | Japanese yen | 1,859,840 |
Euro | 18,827 |  |  | Chinese renminbi | 138,363 |
Euro | 17,221 |  |  | Australian dollar | 26,800 |
Euro | 3,398 |  |  | British pound | 2,972 |
Euro | 34 |  |  | Canadian dollar | 50 |
Polish zloty | 38,373 |  |  | Euro | 8,155 |
Polish zloty | 1,212 |  |  | U.S. dollar | 274 |
British pound | 284 |  |  | Euro | 325 |
British pound | 446 |  |  | U.S. dollar | 544 |
Japanese yen | 360,425 |  |  | U.S. dollar | 2,753 |
U.S. dollar | 746 |  |  | Japanese yen | 101,000 |
U.S. dollar | 352 |  |  | Euro | 330 |
Australian dollar | 159 |  |  | Euro | 100 |
The above foreign currency contracts had an aggregate fair value of approximately $11.7 million and are included in other current assets, noncurrent assets, accrued expenses and noncurrent liabilities at December 31, 2022. The Company estimates the amount that will be reclassified from accumulated other comprehensive loss at December 31, 2022 into earnings over the next 12 months will be approximately $12.2 million. As of December 31, 2022, 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 year ended December 31, 2022, January 1, 2022 and January 2, 2021 (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 |  | December 31, 2022 | January 1, 2022 | January 2, 2021
Foreign exchange |  | Foreign currency loss/(gain) |  | $ | 42,690 |  | $ | 21,698 |  | $ | (3,840) |
Foreign exchange |  | Net sales |  | (1,108) |  | 1,178 |  | (778) |
Foreign exchange |  | Cost of sales and operating expenses |  | (949) |  | (844) |  | (664) |
Foreign exchange |  | Selling, general and administrative expense |  | (4,200) |  | 3,405 |  | 4,976 |
Corn options and futures |  | Net sales |  | (2,092) |  | (3,564) |  | (1,091) |
Corn options and futures |  | Cost of sales and operating expenses |  | 5,447 |  | 5,669 |  | (50) |
Heating oil swaps and options |  | Net sales |  | — |  | — |  | (38) |
Heating oil swaps and options |  | Selling, general and administrative expense |  | 122 |  | — |  | — |
Soybean meal |  | Net sales |  | (1,730) |  | — |  | — |
Total |  |  |  | $ | 38,180 |  | $ | 27,542 |  | $ | (1,485) |
At December 31, 2022, the Company had forward purchase agreements in place for purchases of approximately $243.3 million of natural gas and diesel fuel. The Company intends to take physical delivery of the commodities under the forward purchase agreements and accordingly, these contracts are not subject to the requirements of fair value accounting because they qualify as normal purchases.

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 https://asc.fasb.org/topic&trid=2229140 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 40 -Section 50 -Paragraph 5 -Subparagraph (f) -URI https://asc.fasb.org/extlink&oid=126731327&loc=d3e90205-114008 + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration