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Derivative Financial Instruments
6 Months Ended
Jun. 28, 2020
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Financial Instruments Derivative Financial Instruments
The Company is subject to the risk of increased costs arising from adverse changes in certain commodity prices. In the normal course of business, the Company manages these risks through a variety of strategies, including the use of derivative instruments. The Company does not use derivative instruments for trading or speculative purposes. All derivative instruments are recorded at fair value as either assets or liabilities in the condensed consolidated balance sheets. These derivative instruments are not designated as hedging instruments under GAAP and are used as “economic hedges” to manage certain commodity price risk. Derivative instruments held are marked to market on a monthly basis and recognized in earnings consistent with the expense classification of the underlying hedged item. Settlements of derivative agreements are included in cash flows from operating activities in the condensed consolidated statements of cash flows.

The Company uses several different financial institutions for commodity derivative instruments to minimize the concentration of credit risk. While the Company would be exposed to credit loss in the event of nonperformance by these counterparties, the Company does not anticipate nonperformance by these parties.

The following table summarizes pre-tax changes in the fair value of the Company’s commodity derivative financial instruments and the classification of such changes in the condensed consolidated statements of operations:

Second QuarterFirst Half
(in thousands)Classification of Gain (Loss)2020201920202019
Commodity hedgesCost of sales$1,266  $(4,874) $(270) $(969) 
Commodity hedgesSelling, delivery and administrative expenses805  (66) (1,524) 2,649  
Total gain (loss)$2,071  $(4,940) $(1,794) $1,680  
The following table summarizes the fair values and classification in the condensed consolidated balance sheets of derivative instruments held by the Company:

(in thousands)Balance Sheet ClassificationJune 28, 2020December 29, 2019
Assets:
Commodity hedges at fair market valuePrepaid expenses and other current assets$823  $1,007  
Total assets$823  $1,007  
Liabilities:
Commodity hedges at fair market valueOther accrued liabilities$2,918  $1,174  
Total liabilities$2,918  $1,174  

The Company has master agreements with the counterparties to its derivative financial agreements that provide for net settlement of derivative transactions. Accordingly, the net amounts of derivative assets are recognized in either prepaid expenses and other current assets or other assets in the condensed consolidated balance sheets and the net amounts of derivative liabilities are recognized in other accrued liabilities or other liabilities in the condensed consolidated balance sheets.

The following table summarizes the Company’s gross derivative assets and gross derivative liabilities in the condensed consolidated balance sheets:

(in thousands)June 28, 2020December 29, 2019
Gross derivative assets$904  $3,298  
Gross derivative liabilities2,999  3,465  

The following table summarizes the Company’s outstanding commodity derivative agreements:

(in thousands)June 28, 2020December 29, 2019
Notional amount of outstanding commodity derivative agreements$123,428  $171,699  
Latest maturity date of outstanding commodity derivative agreementsDecember 2020December 2020