Kraft Heinz Foods Co - S-4 filing on 2014-03-10

Derivative Financial Instruments and Hedging Activities (Tables)

11 Months Ended

Dec. 29, 2013

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Fair values and corresponding balance sheet captions of the Company's derivative instruments

The following table presents the fair values and corresponding balance sheet captions of the Company’s derivative instruments as of December 29, 2013, April 28, 2013 and April 29, 2012:



	Successor						Predecessor
	December 29, 2013						April 28, 2013						April 29, 2012
	Foreign Exchange Contracts		Interest Rate Contracts		Cross-Currency Swap Contracts		Foreign Exchange Contracts		Interest Rate Contracts		Cross- Currency Interest Rate Swap Contracts		Foreign Exchange Contracts		Interest Rate Contracts		Cross- Currency Interest Rate Swap Contracts
	(In thousands)
Assets:
Derivatives designated as hedging instruments:
Other receivables, net	$	37,072	$	—	$	—	$	23,240	$	4,226	$	—	$	17,318	$	6,851	$	18,222
Other non-current assets	4,129		265,390		31,303		11,498		29,103		—		8,188		29,393		4,974
	41,201		265,390		31,303		34,738		33,329		—		25,506		36,244		23,196
Derivatives not designated as hedging instruments:
Other receivables, net	8,771		—		—		825		—		—		5,041		—		—
Other non-current assets	—		—		—		—		—		—		—		234		—
	8,771		—		—		825		—		—		5,041		234		—
Total assets⁽¹⁾	$	49,972	$	265,390	$	31,303	$	35,563	$	33,329	$	—	$	30,547	$	36,478	$	23,196
Liabilities:
Derivatives designated as hedging instruments:
Other payables	$	5,251	$	—	$	—	$	1,508	$	—	$	34,805	$	10,653	$	—	$	2,760
Other non-current liabilities	—		—		221,899		217		—		37,520		14		—		—
	5,251		—		221,899		1,725		—		72,325		10,667		—		2,760
Derivatives not designated as hedging instruments:
Other payables	—		—		—		4,860		—		—		1,952		—		—
Other non-current liabilities	10,286		—		—		—		960		—		—		—		—
	10,286		—		—		4,860		960		—		1,952		—		—
Total liabilities⁽¹⁾	$	15,537	$	—	$	221,899	$	6,585	$	960	$	72,325	$	12,619	$	—	$	2,760

⁽¹⁾The Company’s derivative financial instruments are subject to master netting arrangements that allow for the offset of asset and liabilities in the event of default or early termination of the contract. The Company elects to record the gross assets and liabilities of its derivative financial instruments in the consolidated balance sheets. If the derivative financial instruments had been netted in the consolidated balance sheets, the asset and liability positions each would have been reduced by $237.4 million, $68.9 million and $15.4 million at December 29, 2013, April 28, 2013 and April 29, 2012. No material amounts of collateral were received or posted on the Company’s derivative assets and liabilities as at December 29, 2013.

Effect of derivative instruments on the statement of income

The following table presents the pre-tax effect of derivative instruments on the statement of income for the Successor period February 8, 2013 to December 29, 2013, the Predecessor period April 29, 2013 to June 7, 2013, and fiscal year ended April 28, 2013:



	Successor									Predecessor
	February 8 - December 29, 2013									April 29 - June 7, 2013									April 28, 2013 FY2013
	Foreign Exchange Contracts			Interest Rate Contracts			Cross-Currency Swap Contracts			Foreign Exchange Contracts			Interest Rate Contracts			Cross-Currency Interest Rate Swap Contracts			Foreign Exchange Contracts			Interest Rate Contracts			Cross-Currency Interest Rate Swap Contracts
	(In thousands)
Cash flow hedges:
Net gains/(losses) recognized in other comprehensive loss (effective portion)	$	30,441		$	147,455		$	(190,597	)	$	2,603		$	—		$	(4,079	)	$	47,623		$	—		$	(77,080	)
Net gains/(losses) reclassified from other comprehensive loss into earnings (effective portion):
Sales	$	(1,020	)	$	—		$	—		$	990		$	—		$	—		$	10,940		$	—		$	—
Cost of products sold	2,874			—			—			1,814			—			—			(4,584		)	—			—
Selling, general and administrative expenses	(83		)	—			—			—			—			—			(102		)	—			—
Other income/(expense), net	2,387			—			—			(1,858		)	—			(9,821		)	13,924			—			(70,135		)
Interest income/(expense)	35			—			—			61			(20		)	(538		)	29			(236		)	(5,389		)
	4,193			—			—			1,007			(20		)	(10,359		)	20,207			(236		)	(75,524		)
Fair value hedges:
Net losses recognized in other expense, net	—			(180		)	—			—			(5,925		)	—			—			(2,915		)	70,135

Derivatives not designated as hedging instruments:
Unrealized gain on derivative instruments	—			117,934			—			—			—			—			—			—			—
Net losses recognized in other expense, net	(31,241		)	—			—			(3,890		)	—			—			(7,976		)	—			—
Net losses recognized in interest income	—			—			—			—			—			—			—			(1,193		)	—
	(31,241		)	117,934			—			(3,890		)	—			—			(7,976		)	(1,193		)	—
Total amount recognized in statement of income	$	(27,048	)	$	117,754		$	—		$	(2,883	)	$	(5,945	)	$	(10,359	)	$	12,231		$	(4,344	)	$	(5,389	)

The following table presents the pre-tax effect of derivative instruments on the statement of income for the fiscal years ended April 29, 2012 and April 27, 2011:



	Fiscal Year Ended
	April 29, 2012									April 27, 2011
	Foreign Exchange Contracts			Interest Rate Contracts			Cross-Currency Interest Rate Swap Contracts			Foreign Exchange Contracts			Interest Rate Contracts			Cross-Currency Interest Rate Swap Contracts
	(In thousands)
Cash flow hedges:
Net gains/(losses) recognized in other comprehensive loss (effective portion)	$	45,658		$	(2,341	)	$	5,725		$	3,626		$	—		$	16,649
Net gains/(losses) reclassified from other comprehensive loss into earnings (effective portion):
Sales	$	8,033		$	—		$	—		$	3,375		$	—		$	—
Cost of products sold	(19,880		)	—			—			(23,372		)	—			—
Selling, general and administrative expenses	(62		)	—			—			(141		)	—			—
Other income, net	33,401			—			8,901			35,744			—			24,644
Interest income/(expense)	199			(146		)	(5,966		)	226			—			(4,484		)
	21,691			(146		)	2,935			15,832			—			20,160
Fair value hedges:
Net losses recognized in other expense, net	—			(19,181		)	—			—			(51,125		)	—
Net losses recognized in interest expense, net	—			—			—			—			(351		)	—
	—			(19,181		)	—			—			(51,476		)	—

Derivatives not designated as hedging instruments:
Net (losses)/gains recognized in other expense, net	(2,183		)	—			—			3,351			—			—
Net gains recognized in interest income	—			234			—			—			—			—
	(2,183		)	234			—			3,351			—			—
Total amount recognized in statement of income	$	19,508		$	(19,093	)	$	2,935		$	19,183		$	(51,476	)	$	20,160