XML 42 R21.htm IDEA: XBRL DOCUMENT
v3.10.0.1

Derivative Financial Instruments | 12 Months Ended
--- | ---
Dec. 29, 2018
Derivative Instruments And Hedging Activities Disclosure [Abstract] |
Derivative Financial Instruments |
Note 12. | Derivative Financial Instruments
The company measures the fair value of its derivative portfolio by using the price that would be received to sell an asset or paid to transfer a liability in the principal market for that asset or liability. These measurements are classified into a hierarchy by the inputs used to perform the fair value calculation as follows: Level 1: Fair value based on unadjusted quoted prices for identical assets or liabilities at the measurement date Level 2: Modeled fair value with model inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly Level 3: Modeled fair value with unobservable model inputs that are used to estimate the fair value of the asset or liability Commodity Price Risk The company enters into commodity derivatives, designated as cash-flow hedges of existing or future exposure to changes in commodity prices. The company’s primary raw materials are flour, sweeteners, yeast, and shortening, along with pulp, paper, and petroleum-based packaging products. Natural gas, which is used as oven fuel, is also an important commodity used for production. As of December 29, 2018, the company’s commodity hedge portfolio contained derivatives which are recorded in the following accounts with fair values measured as indicated (amounts in thousands):
|  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |
Assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Other current assets |  | $ | 501 |  |  | $ | — |  |  | $ | — |  |  | $ | 501 |
Other long-term assets |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Total |  | $ | 501 |  |  | $ | — |  |  | $ | — |  |  | $ | 501 |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Other current liabilities |  | $ | (7,732 | ) |  | $ | — |  |  | $ | — |  |  | $ | (7,732 | )
Other long-term liabilities |  |  | (1,203 | ) |  |  | — |  |  |  | — |  |  |  | (1,203 | )
Total |  | $ | (8,935 | ) |  | $ | — |  |  | $ | — |  |  | $ | (8,935 | )
Net Fair Value |  | $ | (8,434 | ) |  | $ | — |  |  | $ | — |  |  | $ | (8,434 | )
As of December 30, 2017, the company’s commodity hedge portfolio contained derivatives which are recorded in the following accounts with fair values measured as indicated (amounts in thousands):
|  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |
Assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Other current assets |  | $ | 259 |  |  | $ | — |  |  | $ | — |  |  | $ | 259 |
Other long-term assets |  |  | 32 |  |  |  | — |  |  |  | — |  |  |  | 32 |
Total |  | $ | 291 |  |  | $ | — |  |  | $ | — |  |  | $ | 291 |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Other current liabilities |  | $ | (10,247 | ) |  | $ | — |  |  | $ | — |  |  | $ | (10,247 | )
Other long-term liabilities |  |  | (639 | ) |  |  | — |  |  |  | — |  |  |  | (639 | )
Total |  |  | (10,886 | ) |  |  | — |  |  |  | — |  |  |  | (10,886 | )
Net Fair Value |  | $ | (10,595 | ) |  | $ | — |  |  | $ | — |  |  | $ | (10,595 | )
The positions held in the portfolio are used to hedge economic exposure to changes in various raw materials and production input prices and effectively fixes the price, or limits increases in prices, for a period of time extending into fiscal 2018. These instruments are designated as cash-flow hedges. See Note 2, Summary of Significant Accounting Policies, for the accounting treatment of these hedged transactions. Interest Rate Risk The company entered into treasury rate locks on August 5, 2016 and August 8, 2016 to fix the interest rate for the 2026 notes issued on September 28, 2016. The derivative positions were closed when the debt was priced on September 23, 2016 with a cash settlement net receipt of $1.0 million that offset changes in the benchmark treasury rate between execution of the treasury rate locks and the debt pricing date. These rate locks were designated as a cash flow hedge. During fiscal 2016, the company recognized $0.1 million of ineffectiveness due to issuing the debt earlier than the settlement date of the treasury locks. The ineffectiveness amount is reported as a selling, distribution, and administrative expense in our Consolidated Statements of Income. The company entered into a treasury rate lock on March 28, 2012 to fix the interest rate for the 2022 notes issued on April 3, 2012. The derivative position was closed when the debt was priced on March 29, 2012 with a cash settlement that offset changes in the benchmark treasury rate between the execution of the treasury rate lock and the debt pricing date. This treasury rate lock was designated as a cash flow hedge. The following table outlines the company’s derivatives which were hedging the risk of changes in forecasted interest payments on forecasted issuance of long-term debt (amounts in thousands, before tax, and an asset is a positive value and a liability is a negative value):
Terminated |  | Description |  | Aggregate Notional Amount |  |  | Fair Value When Terminated |  |  | Fair Value Deferred in AOCI (1) |  |  | Ineffective Portion at Termination |
April/2012 |  | Treasury lock |  | $ | 500,000 |  |  | $ | (3,137 | ) |  | $ | 2,510 |  |  | $ | 627 |
September/2016 |  | Treasury lock |  | $ | 200,000 |  |  | $ | 1,298 |  |  | $ | (1,298 | ) |  | $ | — |
September/2016 |  | Treasury lock |  | $ | 150,000 |  |  | $ | (323 | ) |  | $ | 215 |  |  | $ | 108 |
(1) | The amount reported in AOCI will be reclassified to interest expense as interest payments are made on the related notes.
Derivative Assets and Liabilities The company had the following derivative instruments recorded on the Consolidated Balance Sheets, all of which are utilized for the risk management purposes detailed above (amounts in thousands):
|  | Derivative Assets |
|  | December 29, 2018 |  |  | December 30, 2017 |
Derivatives Designated as Hedging Instruments |  | Balance Sheet Location |  | Fair Value |  |  | Balance Sheet Location |  | Fair Value |
Commodity contracts |  | Other current assets |  | $ | 501 |  |  | Other current assets |  | $ | 259 |
Commodity contracts |  | Other long-term assets |  |  | — |  |  | Other long-term assets |  |  | 32 |
Total |  |  |  | $ | 501 |  |  |  |  | $ | 291 |
|  | Derivative Liabilities |
|  | December 29, 2018 |  |  | December 30, 2017 |
Derivatives Designated as Hedging Instruments |  | Balance Sheet Location |  | Fair Value |  |  | Balance Sheet Location |  | Fair Value |
Commodity contracts |  | Other current liabilities |  | $ | 7,732 |  |  | Other current liabilities |  | $ | 10,247 |
Commodity contracts |  | Other long-term liabilities |  |  | 1,203 |  |  | Other long-term liabilities |  |  | 639 |
Total |  |  |  | $ | 8,935 |  |  |  |  | $ | 10,886 |
Derivative AOCI transactions The company had the following derivative instruments for deferred gains and (losses) on closed contracts and the effective portion for changes in fair value recorded in AOCI (no amounts were excluded from the effectiveness test), all of which are utilized for the risk management purposes detailed above (amounts in thousands and net of tax):
|  | Amount of Gain or (Loss) Recognized in OCI on Derivatives (Effective Portion) (Net of tax) |
Derivatives in Cash Flow Hedging Relationships |  | Fiscal 2018 |  |  | Fiscal 2017 |  |  | Fiscal 2016 |
Interest rate contracts |  | $ | — |  |  | $ | — |  |  | $ | 666 |
Commodity contracts |  |  | 2,978 |  |  |  | (6,789 | ) |  |  | 5,064 |
Total |  | $ | 2,978 |  |  | $ | (6,789 | ) |  | $ | 5,730 |
|  | Amount of (Gain) or Loss Reclassified from Accumulated OCI into Income (Effective Portion)(Net of tax) |  |  | Location of (Gain) or Loss Reclassified from AOCI into Income
Derivatives in Cash Flow Hedging Relationships |  | Fiscal 2018 |  |  | Fiscal 2017 |  |  | Fiscal 2016 |  |  | (Effective Portion)
Interest rate contracts |  | $ | 107 |  |  | $ | 88 |  |  | $ | 135 |  |  | Interest expense (income)
Commodity contracts |  |  | 972 |  |  |  | 1,279 |  |  |  | 3,264 |  |  | Production costs (1)
Total |  | $ | 1,079 |  |  | $ | 1,367 |  |  | $ | 3,399 |  |  |
1. | Included in Materials, supplies, labor and other production costs (exclusive of depreciation and amortization shown separately).
The balance in accumulated other comprehensive loss (income) related to commodity price risk and interest rate risk derivative transactions that are closed or will expire over the next three years are as follows (amounts in thousands and net of tax) at December 29, 2018:
|  | Commodity Price Risk Derivatives |  |  | Interest Rate Risk Derivatives |  |  | Totals |
Closed contracts |  | $ | (2,153 | ) |  | $ | (15 | ) |  | $ | (2,168 | )
Expiring in 2019 |  |  | 5,405 |  |  |  | — |  |  |  | 5,405 |
Expiring in 2020 |  |  | 782 |  |  |  | — |  |  |  | 782 |
Expiring in 2021 |  |  | 112 |  |  |  | — |  |  |  | 112 |
Expiring in 2022 |  |  | 6 |  |  |  | — |  |  |  | 6 |
Total |  | $ | 4,152 |  |  | $ | (15 | ) |  | $ | 4,137 |
See Note 2, Summary of Significant Accounting Policies, for the accounting treatment of other comprehensive income for these hedged transactions. Derivative transactions notional amounts As of December 29, 2018, the company had entered into the following financial contracts to hedge commodity risks (amounts in thousands):
Derivatives in Cash Flow Hedging Relationships |  | Notional amount |
Wheat contracts |  | $ | 122,946 |
Soybean oil contracts |  |  | 20,372 |
Corn contracts |  |  | 10,570 |
Natural gas contracts |  |  | 16,996 |
Total |  | $ | 170,884 |
The company’s derivative instruments contained no credit-risk-related contingent features at December 29, 2018. As of December 29, 2018, the company had $15.4 million recorded in other current assets, and on December 30, 2017, the company had $16.3 million recorded in other current assets representing collateral from or with counterparties for hedged positions.

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