XML 23 R13.htm IDEA: XBRL DOCUMENT
v3.8.0.1

Derivative Financial Instruments and Fair Value Measurements | 9 Months Ended
--- | ---
Sep. 30, 2017
Derivative Instruments And Hedging Activities Disclosure [Abstract] |
Derivatives and Fair Value [Text Block] | 6. Derivative Financial Instruments and Fair Value Measurements The following table presents for each of the fair value hierarchies, the assets and liabilities that are measured at fair value on a recurring basis as of September 30, 2017 and December 31, 2016:
|  |  |  | September 30, 2017
|  |  |  | Fair value |  |  |
|  |  |  | asset (liability) | Level 1 | Level 2 | Level 3
|  |  |  | $ | $ | $ | $
(a) | Commodity futures and forward contracts(1) |  |  |  |
|  |  | Unrealized short-term derivative asset | 376 | 54 | 322 | -
|  |  | Unrealized short-term derivative liability | (242) | - | (242) | -
|  |  | Unrealized long-term derivative liability | (2) | - | (2) | -
(b) | Inventories carried at market(2) | 3,179 | - | 3,179 | -
(c) | Forward foreign currency contracts |  |  |  |
|  |  | Not designated as hedging instruments(3) | (1,237) | - | (1,237) | -
|  |  | Designated as a hedging instruments(4) | 368 | - | 368 | -
(d) | Contingent consideration(5) | (11,236) | - | - | (11,236)
(e) | Embedded derivative(6) | 2,690 | - | - | 2,690
|  |  |  | December 31, 2016
|  |  |  | Fair value |  |  |
|  |  |  | asset (liability) | Level 1 | Level 2 | Level 3
|  |  |  | $ | $ | $ | $
(a) | Commodity futures and forward contracts(1) |  |  |  |
|  |  | Unrealized short-term derivative asset | 787 | 43 | 744 | -
|  |  | Unrealized short-term derivative liability | (916) | - | (916) | -
|  |  | Unrealized long-term derivative liability | (8) | - | (8) | -
(b) | Inventories carried at market(2) | 8,231 | - | 8,231 | -
(c) | Forward foreign currency contracts |  |  |  |
|  |  | Not designated as hedging instruments(3) | 1,345 | - | 1,345 | -
(d) | Contingent consideration(5) | (15,279) | - | - | (15,279)
(e) | Embedded derivative(6) | 2,944 | - | - | 2,944
(1) Unrealized short-term derivative asset was included in prepaid expenses and other current assets, unrealized short-term derivative liability was included in other current liabilities and unrealized long-term derivative liability wa s included in long-term liabilities on the consolidated balance sheets. (2) Inventories carried at market were included in inventories on the consolidated balance sheets. (3) F orward foreign currency contracts not designated as a hedge were included in accounts receivable or accounts payable and accrued liabilities on the consolidated balance sheets. (4) F orward foreign currency contracts designated as a hedge were included in other assets or other current liabilities on the consolidated balance sheets. (5) Contingent consi deration obligations were included in long-term liabilities (including the current portion thereof) on the consolidated balance sheets. (6) The embedded derivative wa s included in other assets (long-term) on the consolidated balance sheets. (a) Commodity futures and forward contracts The Company’s derivative contracts that are measured at fair value include exchange-traded commodity futures and forward commodity purchase and sale contracts. Exchange-traded futures are valued based on unadjusted quotes for identical assets priced in active markets and are classified as level 1. Fair value for forward commodity purchase and sale contracts is estimated based on exchange-quoted prices adjusted for differences in local markets. Local mark et adjustments use observable inputs or market transactions for similar assets or liabilities, and, as a result, are classified as level 2. Based on historical experience with the Company’s suppliers and customers, the Company’s own credit risk, and the C ompany’s knowledge of current market conditions, the Company does not view non-performance risk to be a significant input to fair value for the majority of its forward commodity purchase and sale contracts. These exchange-traded commodity futures and fo rward commodity purchase and sale contracts are used as part of the Company’s risk management strategy, and represent economic hedges to limit risk related to fluctuations in the price of certain commodity grains, as well as the prices of cocoa and coffee. These derivative instruments are not designated as hedges for accounting purposes. Gains and losses on changes in fair value of these derivative instruments are included in cost of goods sold on the consolidated statement of operations. For the quarter ended September 30, 2017, the Company recognized a loss of $0.1 million (October 1, 2016 – gain of $0.7 million) and for the three quarters ended September 30, 2017, the Company recognized a gain of $0.3 million (October 1, 2016 – gain of $1.3 million) related to changes in the fair value of these derivatives. As at September 30, 2017, the notional am ounts of open commodity futures and forward purchase and sale contracts were as follows (in thousands of bushels):
|  |  |  | Number of bushels purchased (sold)
|  |  |  | Corn | Soybeans
Forward commodity purchase contracts | (120) | 44
Forward commodity sale contracts | (493) | (676)
Commodity futures contracts | 365 | 495
In addition, as at September 30, 2017, the Company had net open forward contracts to sell 235 lots of cocoa and 4 lots of coffee. (b) Inventories carried at market Grains inventory carried at fair value is determined using quoted market prices from the Chicago Board of Trade (“CBoT”). Estimated fair market values for grains inventory quantities at period end are valued using the quoted price on the CBoT adjusted for differences in local markets, and broker or dealer quotes. These assets are placed i n level 2 of the fair value hierarchy, as there are observable quoted prices for similar assets in active markets. Gains and losses on commodity grains inventory are included in cost of goods sold on the consolidated statements of operations. As at September 30, 2017, the Company had 228,722 bushels of commodity corn and 183,325 bushels of commodity soybeans in inventories carried at market. (c) Foreign forward currency contracts As part of its risk management strategy, the Company enters into forward foreign exchange contracts to reduce its exposure to fluctuations in foreign currency exchange rates. For any open forward foreign exchange contracts at period end, the contract rate is compared to the forward rate, and a gain or loss is recorded. These contracts are placed in level 2 of the fair value hierarchy, as the inputs used in making the fair value determination are derived from and ar e corroborated by observable market data. Certain of these forward foreign exchange contracts may be designated as cash flow hedges for accounting purposes, while other of these contracts represent economic hedges that are not designated as hedging instru ments. (i) Not designated as hedging instruments As at September 30, 2017, the Company had open forward foreign exchange contracts to sell euros to buy U.S. dollars with a notional value of € 28.4 million ($ 32.5 million), and to sell British pounds to buy euros with a notional value of £ 0.8 million (€ 0.9 million). As these contracts were not designated as hedging instruments, gains and losses on changes in the fair value of the d erivative instruments are included in foreign exchange loss or gain on the consolidated statement of operations. For the quarter ended September 30, 2017, the Company recognized a gain of $0.3 million (October 1, 2016 – loss of $0.3 million) related to changes in the fair value of these derivatives and for the three quarters ended September 30, 2017, the Company recognized a loss of $2.6 million (October 1, 2016 – loss of $0.5 million) related to changes in the fair value of these derivatives. (ii) Designated as hedging instruments In the first quarter of 2017, the Company initiated a foreign currency cash flow hedging program with the objective of managing the variability of cash flows associated with a portion of forecasted purchases of raw fruit inventories denominate d in Mexican pesos. As at September 30, 2017, t he Company had net open forward foreign exchange contracts to sell U.S. dollars to buy Mexican pesos with a notional value of $ 2.4 million (M$ 51.8 million), and to sell Mexican pesos to buy U.S. dollars with a notional value of M$ 46.0 million ($ 2.5 million). As these contracts have been designated as hedging instruments, the effective portion of the gains and losses on changes in the fair value of the derivative instruments are included in other comprehensive earnings and reclassified to cost of goods sold in the same period the hedged transaction affects earnings, which is upon the sale of the inventories. For the quarter and three quarters ended September 30, 2017, the Company recognized unrealized gain s in other comprehensive earnings of $0.2 million and $2.3 million, respectively, related to change s in the fair value of these derivatives. For the quarter and three quarters ended September 30, 2017, the Company r eclassif ied from other comprehensive earnings realized gains on these derivatives of $0.2 million and $1.0 million, respectively, to cost of goods sold. In addition, in the second quarter of 2017, the Company reclassified an unrealized gain of $0.9 millio n related to the ineffective portion of the hedge to foreign exchange loss on the consolidated statement s of operations. During the fourth quarter of 2017, the Company expects to reclassify the $0.4 million remaining amount of th e unrealized gain recorded in accumulated other comprehensive loss to earnings. (d) Contingent consideration The fair value measurement of contingent consideration arising from business acquisitions is determined using unobservable (level 3) inputs. These inputs include: (i) the estimated amount and timing of the projected cash flows on which the contingency is based; and (ii) the risk-adjusted discount rate used to calculate the present value of those cash flows. The following table presents a reconciliation of contingent consideration obligations for the quarters and three quarters ended September 30, 2017 and October 1, 2016:
|  |  |  | Quarter ended | Three quarters ended
|  |  |  | September 30, 2017 | October 1, 2016 | September 30, 2017 | October 1, 2016
|  |  |  | $ | $ | $ | $
Balance, beginning of period | (11,153) | (15,051) | (15,279) | (21,010)
| Issuances | - | - | - | -
| Fair value adjustments(1) | (83) | (124) | (287) | 1,281
| Payments(2) | - | - | 4,330 | 4,554
Balance, end of period | (11,236) | (15,175) | (11,236) | (15,175)
(1) For all periods presented, r eflect ed the accretion for the time value of money, which was included in other income/expense (see note 12). In addition, for the three quarters ended October 1, 2016, included a gain of $1.7 million on the settlement of the contingent consideration obligation related to the Company’s acquisition of Niagara Natural Fruit Snack Company Inc. (“Niagara Natural”) in August 2015. (2) For the three quarters ended September 30, 2017, r eflect ed the second installment payment of deferred considerat ion to the former unitholders of Citrusource, LLC (“Citrusource”), which was acquired by the Company in March 2015, and payment of the remaining deferred consideration to a former shareholder of Organic Land Corporation OOD, which was acquired by the Compa ny in December 2012. For the three quarters ended October 1, 2016, r eflect ed the first installment payment related to Citrusource and cash settlement of the remaining obligation related to Niagara Natural. (e) Embedded derivative On August 5, 2011 and August 29, 2014, the Company invested $0.5 million and $0.9 million, respectively, in convertible subordinated notes issued by Enchi Corporation (“Enchi”), a developer of advanced bioconversion products for the renewable fuels industry. The Company’s investment includes the value of an accelerated payment option embedded in the notes, which may result in a maximum payout to the Company of $5.1 million. Due to a lack of level 1 or level 2 observable market quotes for the notes, the Company used a discounted cash flow analysis (income approach) to estimate the original fair value of the embedded derivative based on unobservable level 3 inputs. The Company assesses changes in the fair value of the embedded de rivative based on the performance of actual cash flows derived from certain royalty rights owned by Enchi, which are expected to be the primary source of funds available to settle the embedded derivative, relative to the financial forecasts used in the val uation analysis. As at September 30, 2017 and December 31, 2016, the Company determined that the fair value of this embedded derivative was $2.7 million and $2.9 million, respectively, based on distributions received from Enchi on the notes up to those date s and on expectations related to the remaining royalty r ights.

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 derivatives and fair value of assets and liabilities. + References No definition available. + Details
Name: | us-gaap_DerivativesAndFairValueTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration