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Derivative Instruments | 9 Months Ended
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Oct. 02, 2022
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivative Instruments | Derivative Instruments Commodity Price Risk The Company uses forward contracts to protect against the effects of commodity price fluctuations in the cost of ingredients of its products, of which flour, sugar and shortening are the most significant, and the cost of gasoline used by its delivery vehicles. Management has not designated these forward contracts as hedges. As of October 2, 2022 and January 2, 2022, the total notional amount of commodity derivatives was 2.1 million and 1.9 million gallons of gasoline, respectively. They were scheduled to mature between October 3, 2022 and December 1, 2024 and January 3, 2022 and March 31, 2023, respectively. As of October 2, 2022 and January 2, 2022, the Company recorded an asset of $0.6 million and $1.5 million, respectively, related to the fair market values of its commodity derivatives. The settlement of commodity derivative contracts is reported in the Condensed Consolidated Statements of Cash Flows as a cash flow from operating activities. Interest Rate Risk The Company uses interest rate swaps to manage its exposure to interest rate volatility from its debt arrangements. Management has designated the swap agreements as cash flow hedges and recognized the changes in the fair value of these swaps in other comprehensive income. As of October 2, 2022 and January 2, 2022, the Company has recorded assets of $18.4 million and liabilities of $14.7 million, respectively, related to the fair market values of its interest rate derivatives. The cash flows associated with the interest rate swaps are reflected in operating activities in the Condensed Consolidated Statements of Cash Flows, which is consistent with the classification as operating activities of the interest payments on the term loan. Foreign Currency Exchange Rate Risk The Company is exposed to foreign currency risk primarily from its investments in consolidated subsidiaries that operate in Canada, the U.K., Ireland, Australia, New Zealand, Mexico and Japan. In order to mitigate the impact of foreign exchange fluctuations on commercial and financial transactions with these subsidiaries, the Company enters into foreign exchange forward contracts. Management has not designated these forward contracts as hedges. As of October 2, 2022 and January 2, 2022, the total notional amount of foreign exchange derivatives was $59.3 million and $51.8 million, respectively. They were scheduled to mature between October 2022 and November 2022 and between January 2022 and February 2022, respectively. The Company recorded an asset (net of liabilities) of $0.3 million and a liability of $0.1 million as of October 2, 2022 and January 2, 2022, respectively, related to the fair market values of its foreign exchange derivatives. Quantitative Summary of Derivative Positions and Their Effect on Results of Operations The following tables present the fair values of derivative instruments included in the Condensed Consolidated Balance Sheets as of October 2, 2022 and January 2, 2022, for derivatives not designated as hedging instruments and derivatives designated as hedging instruments, respectively. The Company only has cash flow hedges that are designated as hedging instruments.
| Derivatives Fair Value |  |
Derivatives Not Designated as Hedging Instruments | October 2, 2022 |  | January 2, 2022 |  | Balance Sheet Location
Commodity derivatives | $ | 570 |  |  | $ | 1,486 |  |  | Prepaid expense and other current assets
Foreign currency derivatives | 562 |  |  | — |  |  | Prepaid expense and other current assets
Total Assets | $ | 1,132 |  |  | $ | 1,486 |  |  |
Foreign currency derivatives | $ | 219 |  |  | $ | 80 |  |  | Accrued liabilities
Total Liabilities | $ | 219 |  |  | $ | 80 |  |  |
| Derivatives Fair Value |  |
Derivatives Designated as Hedging Instruments | October 2, 2022 |  | January 2, 2022 |  | Balance Sheet Location
Interest rate derivatives (current) | $ | 11,623 |  |  | $ | — |  |  | Prepaid expense and other current assets
Interest rate derivatives (noncurrent) | 6,774 |  |  | — |  |  | Other assets
Total Assets | $ | 18,397 |  |  | $ | — |  |  |
Interest rate derivatives (current) | $ | — |  |  | $ | 8,535 |  |  | Accrued liabilities
Interest rate derivatives (noncurrent) | — |  |  | 6,132 |  |  | Other long-term obligations and deferred credits
Total Liabilities | $ | — |  |  | $ | 14,667 |  |  |
The effect of derivative instruments on the Condensed Consolidated Statements of Operations for the quarter and three quarters ended October 2, 2022 and October 3, 2021 is as follows:
| Derivative Gain/(Loss) Recognized in Income for the Quarter Ended |  | Derivative Gain/(Loss) Recognized in Income for the Three Quarters Ended |  |
Derivatives Designated as Hedging Instruments | October 2, 2022 |  | October 3, 2021 |  | October 2, 2022 |  | October 3, 2021 |  | Location of Derivative Gain/(Loss) Recognized in Income
Loss on interest rate derivatives | $ | (107) |  |  | $ | (2,613) |  |  | $ | (4,478) |  |  | $ | (7,704) |  |  | Interest expense, net
| $ | (107) |  |  | $ | (2,613) |  |  | $ | (4,478) |  |  | $ | (7,704) |  |  |
| Derivative Gain/(Loss) Recognized in Income for the Quarter Ended |  | Derivative Gain/(Loss) Recognized in Income for the Three Quarters Ended |  |
Derivatives Not Designated as Hedging Instruments | October 2, 2022 |  | October 3, 2021 |  | October 2, 2022 |  | October 3, 2021 |  | Location of Derivative Gain/(Loss) Recognized in Income
Gain on foreign currency derivatives | $ | 678 |  |  | $ | 632 |  |  | $ | 423 |  |  | $ | 256 |  |  | Other non-operating expense/(income), net
(Loss)/gain on commodity derivatives | (1,589) |  |  | (114) |  |  | (917) |  |  | 1,356 |  |  | Other non-operating expense/(income), net
| $ | (911) |  |  | $ | 518 |  |  | $ | (494) |  |  | $ | 1,612 |  |  |

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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 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
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