Derivative Instruments and Hedging Activities

9 Months Ended

Sep. 28, 2013

Derivative Instruments and Hedging Activities

Derivative Instruments and Hedging Activities

Note 5 — Derivative Instruments and Hedging Activities

From time to time, the Company uses derivative instruments, including foreign currency forward contracts, commodity futures contracts and commodity option contracts, to manage its exposures to foreign exchange and commodity prices. Commodity futures contracts and most commodity option contracts are intended and effective as hedges of market price risks associated with the anticipated purchase of certain raw materials (primarily sugar). Foreign currency forward contracts are intended and effective as hedges of the Company’s exposure to the variability of cash flows, primarily related to the foreign exchange rate changes of products manufactured in Canada and sold in the United States from foreign suppliers denominated in a foreign currency. The Company does not engage in trading or other speculative use of derivative instruments.

The Company recognizes all derivative instruments as either assets or liabilities at fair value in the Condensed Consolidated Statement of Financial Position. Derivative assets are recorded in other receivables and derivative liabilities are recorded in accrued liabilities. The Company uses either hedge accounting or mark-to-market accounting for its derivative instruments. Derivatives that qualify for hedge accounting are designated as cash flow hedges by formally documenting the hedge relationships, including identification of the hedging instruments, the hedged items and other critical terms, as well as the Company’s risk management objectives and strategies for undertaking the hedge transaction.

Changes in the fair value of the Company’s cash flow hedges are recorded in accumulated other comprehensive loss, net of tax, and are reclassified to earnings in the periods in which earnings are affected by the hedged item. Substantially all amounts reported in accumulated other comprehensive loss for commodity derivatives are expected to be reclassified to cost of goods sold. Substantially all amounts reported in accumulated other comprehensive loss for foreign currency derivatives are expected to be reclassified to other income, net.

The following table summarizes the Company’s outstanding derivative contracts and their effects on its Condensed Consolidated Statements of Financial Position at September 28, 2013, December 31, 2012 and September 29, 2012:

	September 28, 2013
	Notional
	Amounts		Assets		Liabilities
Derivatives designated as hedging instruments:
Foreign currency forward contracts	$	30,181	$	29	$	—
Commodity futures contracts	4,376		114		(66		)
Total derivatives designated as hedging instruments			143		(66		)
Derivatives not designated as hedging instruments:
Commodity futures contracts	871		49		—
Total derivatives not designated as hedging instruments			49		—
Total derivatives			$	192	$	(66	)

	December 31, 2012
	Notional
	Amounts		Assets		Liabilities
Derivatives designated as hedging instruments:
Commodity futures contracts	$	7,868	$	127	$	(301	)
Total derivatives designated as hedging instruments			127		(301		)
Derivatives not designated as hedging instruments:
Commodity futures contracts	627		62		—
Total derivatives not designated as hedging instruments			62		—
Total derivatives			$	189	$	(301	)

	September 29, 2012
	Notional
	Amounts		Assets		Liabilities
Derivatives designated as hedging instruments:
Commodity futures contracts	$	2,252	$	53	$	(5	)
Total derivatives designated as hedging instruments			53		(5		)
Derivatives not designated as hedging instruments:
Commodity futures contracts	841		100		—
Total derivatives not designated as hedging instruments			100		—
Total derivatives			$	153	$	(5	)

The effects of derivative instruments on the Company’s Condensed Consolidated Statement of Earnings and Retained Earnings, and the Condensed Consolidated Statement of Comprehensive Earnings for periods ended September 28, 2013 and September 29, 2012 are as follows:

	For Quarter Ended September 28, 2013
						Gain (Loss)
			Gain (Loss)			on Amount Excluded
	Gain(Loss)		Reclassified from			from Effectiveness
	Recognized		Accumulated OCI			Testing Recognized
	in OCI		into Earnings			in Earnings
Foreign currency forward contracts	$	626	$	(162	)	$	—
Commodity futures contracts	142		(153		)	—
Commodity option contracts	—		—			—
Total	$	768	$	(315	)	$	—

	For Quarter Ended September 29, 2012
							Gain (Loss)
				Gain (Loss)			on Amount Excluded
	Gain (Loss)			Reclassified from			from Effectiveness
	Recognized			Accumulated OCI			Testing Recognized
	in OCI			into Earnings			in Earnings
Foreign currency forward contracts	$	94		$	164		$	—
Commodity futures contracts	(20		)	(200		)	—
Commodity option contracts	(1		)	(5		)	—
Total	$	73		$	(41	)	$	—

	For Year to Date Ended September 28, 2013
							Gain (Loss)
				Gain (Loss)			on Amount Excluded
	Gain(Loss)			Reclassified from			from Effectiveness
	Recognized			Accumulated OCI			Testing Recognized
	in OCI			into Earnings			in Earnings
Foreign currency forward contracts	$	(241	)	$	(270	)	$	—
Commodity futures contracts	(723		)	(946		)	—
Commodity option contracts	—			—			—
Total	$	(964	)	$	(1,216	)	$	—

	For Year to Date Ended September 29, 2012
							Gain (Loss)
				Gain (Loss)			on Amount Excluded
	Gain (Loss)			Reclassified from			from Effectiveness
	Recognized			Accumulated OCI			Testing Recognized
	in OCI			into Earnings			in Earnings
Foreign currency forward contracts	$	222		$	428		$	—
Commodity futures contracts	(307		)	(152		)	—
Commodity option contracts	(35		)	(35		)	—
Total	$	(120	)	$	241		$	—

During the quarters and years to date ended September 28, 2013 and September 29, 2012, the Company recognized earnings (loss) of $92 and $27, and $53 and $80 respectively, related to mark-to-market accounting for certain commodity option and future contracts.