DOCUMENT AND ENTITY INFORMATION
DOCUMENT AND ENTITY INFORMATION - USD ($) | 9 Months Ended | ||
Oct. 02, 2016 | Oct. 21, 2016 | Jul. 02, 2015 | |
Document Information [Line Items] | |||
Entity registrant name | HERSHEY CO | ||
Entity central index key | 47,111 | ||
Current fiscal year end date | --12-31 | ||
Entity filer category | Large Accelerated Filer | ||
Document type | 10-Q | ||
Document period end date | Oct. 2, 2016 | ||
Document fiscal year focus | 2,016 | ||
Document fiscal period focus | Q3 | ||
Amendment flag | false | ||
Entity well-known seasoned issuer | Yes | ||
Entity voluntary filers | No | ||
Entity current reporting status | Yes | ||
Entity Public Float | $ 13,110,173,681 | ||
Common stock | |||
Document Information [Line Items] | |||
Entity common stock, shares outstanding (shares) | 151,609,649 | ||
Class B common stock | |||
Document Information [Line Items] | |||
Entity common stock, shares outstanding (shares) | 60,619,777 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 02, 2016 | Oct. 04, 2015 | Oct. 02, 2016 | Oct. 04, 2015 | |
Net sales | $ 2,003,454 | $ 1,960,779 | $ 5,469,937 | $ 5,477,404 |
Costs and expenses: | ||||
Cost of sales | 1,152,606 | 1,068,715 | 3,054,315 | 2,949,089 |
Selling, marketing and administrative | 474,494 | 500,306 | 1,408,759 | 1,469,861 |
Goodwill impairment | 0 | 30,991 | 0 | 280,802 |
Business realignment charges | 2,330 | 57,753 | 30,568 | 82,972 |
Total costs and expenses | 1,629,430 | 1,657,765 | 4,493,642 | 4,782,724 |
Operating profit | 374,024 | 303,014 | 976,295 | 694,680 |
Interest expense, net | 24,387 | 46,967 | 66,730 | 85,046 |
Other (income) expense, net | 21,800 | 9,409 | 8,703 | 4,328 |
Income before income taxes | 327,837 | 246,638 | 900,862 | 605,306 |
Provision for income taxes | 100,434 | 91,867 | 297,671 | 305,739 |
Net income | $ 227,403 | $ 154,771 | $ 603,191 | $ 299,567 |
Common stock | ||||
Net income per share—basic: | ||||
Net income per share - basic (USD per share) | $ 1.09 | $ 0.73 | $ 2.88 | $ 1.40 |
Net income per share—diluted: | ||||
Net income per share - diluted (USD per share) | 1.06 | 0.70 | 2.80 | 1.35 |
Dividends paid per share: | ||||
Dividends paid per share (USD per share) | 0.618 | 0.583 | 1.784 | 1.653 |
Class B common stock | ||||
Net income per share—basic: | ||||
Net income per share - basic (USD per share) | 0.99 | 0.66 | 2.63 | 1.27 |
Net income per share—diluted: | ||||
Net income per share - diluted (USD per share) | 0.99 | 0.66 | 2.62 | 1.28 |
Dividends paid per share: | ||||
Dividends paid per share (USD per share) | $ 0.562 | $ 0.530 | $ 1.622 | $ 1.502 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 02, 2016 | Oct. 04, 2015 | Oct. 02, 2016 | Oct. 04, 2015 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 227,403 | $ 154,771 | $ 603,191 | $ 299,567 |
Other comprehensive income (loss), net of tax: | ||||
Foreign currency translation adjustments | (8,533) | (26,631) | 5,053 | (51,681) |
Pension and post-retirement benefit plans | 7,395 | 9,969 | 9,884 | 20,896 |
Cash flow hedges: | ||||
Gains (losses) on cash flow hedging derivatives | 1,144 | (43,914) | (34,789) | 21,023 |
Reclassification adjustments | (898) | (6,214) | (7,985) | (17,711) |
Total other comprehensive income (loss), net of tax | (892) | (66,790) | (27,837) | (27,473) |
Total comprehensive income | 226,511 | 87,981 | 575,354 | 272,094 |
Comprehensive loss (income) attributable to noncontrolling interests | 751 | (820) | 2,040 | 2,111 |
Comprehensive income attributable to The Hershey Company | $ 227,262 | $ 87,161 | $ 577,394 | $ 274,205 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Oct. 02, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 333,333 | $ 346,529 |
Accounts receivable—trade, net | 759,619 | 599,073 |
Inventories | 843,519 | 750,970 |
Prepaid expenses and other | 194,046 | 152,026 |
Total current assets | 2,130,517 | 1,848,598 |
Property, plant and equipment, net | 2,159,589 | 2,240,460 |
Goodwill | 816,133 | 684,252 |
Other intangibles | 510,291 | 379,305 |
Other assets | 169,753 | 155,366 |
Deferred income taxes | 59,130 | 36,390 |
Total assets | 5,845,413 | 5,344,371 |
Current liabilities: | ||
Accounts payable | 458,028 | 474,266 |
Accrued liabilities | 683,012 | 856,967 |
Accrued income taxes | 13,588 | 23,243 |
Short-term debt | 612,383 | 363,513 |
Current portion of long-term debt | 250,024 | 499,923 |
Total current liabilities | 2,017,035 | 2,217,912 |
Long-term debt | 2,362,466 | 1,557,091 |
Other long-term liabilities | 478,707 | 468,718 |
Deferred income taxes | 45,133 | 53,188 |
Total liabilities | 4,903,341 | 4,296,909 |
Stockholders’ equity: | ||
Preferred stock, shares issued: none at October 2, 2016 and December 31, 2015, respectively | 0 | 0 |
Additional paid-in capital | 852,675 | 783,877 |
Retained earnings | 6,129,088 | 5,897,603 |
Treasury—common stock shares, at cost: 146,305,207 at October 2, 2016 and 143,124,384 at December 31, 2015 | (6,049,397) | (5,672,359) |
Accumulated other comprehensive loss | (396,822) | (371,025) |
The Hershey Company stockholders’ equity | 895,445 | 997,997 |
Noncontrolling interests in subsidiaries | 46,627 | 49,465 |
Total stockholders’ equity | 942,072 | 1,047,462 |
Total liabilities and stockholders’ equity | 5,845,413 | 5,344,371 |
Common stock | ||
Stockholders’ equity: | ||
Common stock | 299,281 | 299,281 |
Class B common stock | ||
Stockholders’ equity: | ||
Common stock | $ 60,620 | $ 60,620 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - shares | Oct. 02, 2016 | Dec. 31, 2015 |
Preferred stock, shares issued (shares) | 0 | 0 |
Treasury stock, shares (shares) | 146,305,207 | 143,124,384 |
Common stock | ||
Common stock, shares issued (shares) | 299,281,967 | 299,281,967 |
Class B common stock | ||
Common stock, shares issued (shares) | 60,619,777 | 60,619,777 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Oct. 02, 2016 | Oct. 04, 2015 | |
Operating Activities | ||
Net income | $ 603,191 | $ 299,567 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 241,901 | 182,855 |
Stock-based compensation expense | 40,699 | 39,989 |
Excess tax benefits from stock-based compensation | (20,978) | (22,966) |
Deferred income taxes | (12,703) | (10,385) |
Goodwill impairment | 0 | 280,802 |
Contributions to pension and other benefits plans | (42,566) | (45,187) |
Loss on extinguishment of debt | 0 | 28,326 |
Write-down of equity investments | 35,862 | 13,895 |
Gain on settlement of SGM liability (see Note 2) | (26,650) | 0 |
Changes in assets and liabilities, net of effects from business acquisitions and divestitures: | ||
Accounts receivable—trade, net | (157,142) | (186,156) |
Inventories | (83,221) | (2,064) |
Accounts payable and accrued liabilities | (159,871) | (55,890) |
Other assets and liabilities | 4,017 | 72,299 |
Net cash provided by operating activities | 422,539 | 595,085 |
Investing Activities | ||
Capital additions (including software) | (168,225) | (237,893) |
Proceeds from sales of property, plant and equipment | 3,032 | 1,184 |
Proceeds from sale of business | 0 | 32,408 |
Equity investments in tax credit qualifying partnerships | (35,395) | (3,775) |
Business acquisitions, net of cash and cash equivalents acquired | (285,374) | (218,654) |
Sale of short-term investments | 0 | 95,316 |
Net cash used in investing activities | (485,962) | (331,414) |
Financing Activities | ||
Net increase in short-term debt | 250,573 | 336,851 |
Long-term borrowings | 792,923 | 599,031 |
Repayment of long-term debt | (250,000) | (351,042) |
Payment of SGM liability (see Note 2) | (35,762) | 0 |
Cash dividends paid | (371,706) | (353,070) |
Exercise of stock options | 95,336 | 63,623 |
Excess tax benefits from stock-based compensation | 20,978 | 22,966 |
Purchase of noncontrolling interest | 0 | (38,270) |
Repurchase of common stock | (452,580) | (567,480) |
Net cash provided by (used in) financing activities | 49,762 | (287,391) |
Effect of exchange rate changes on cash and cash equivalents | 465 | (7,221) |
Decrease in cash and cash equivalents | (13,196) | (30,941) |
Cash and cash equivalents, beginning of period | 346,529 | 374,854 |
Cash and cash equivalents, end of period | 333,333 | 343,913 |
Supplemental Disclosure | ||
Interest paid (excluding loss on early extinguishment of debt in 2015) | 72,925 | 71,124 |
Income taxes paid | $ 306,580 | $ 256,610 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - 9 months ended Oct. 02, 2016 - USD ($) $ in Thousands | Total | Common stock | Class B common stock | Preferred Stock | Common StockCommon stock | Common StockClass B common stock | Additional Paid-in Capital | Retained Earnings | Retained EarningsCommon stock | Retained EarningsClass B common stock | Treasury Common Stock | Accumulated Other Comprehensive Loss | Noncontrolling Interests in Subsidiaries |
Beginning balance, stockholders' equity at Dec. 31, 2015 | $ 1,047,462 | $ 0 | $ 299,281 | $ 60,620 | $ 783,877 | $ 5,897,603 | $ (5,672,359) | $ (371,025) | $ 49,465 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||
Net income | 603,191 | 603,191 | |||||||||||
Other comprehensive loss | (27,837) | (25,797) | (2,040) | ||||||||||
Dividends: | |||||||||||||
Common Stock | $ (273,380) | $ (98,326) | $ (273,380) | $ (98,326) | |||||||||
Stock-based compensation | 39,621 | 39,621 | |||||||||||
Exercise of stock options and incentive-based transactions | 104,719 | 29,177 | 75,542 | ||||||||||
Repurchase of common stock | (452,580) | (452,580) | |||||||||||
Net loss attributable to noncontrolling interests | (798) | (798) | |||||||||||
Ending balance, stockholders' equity at Oct. 02, 2016 | $ 942,072 | $ 0 | $ 299,281 | $ 60,620 | $ 852,675 | $ 6,129,088 | $ (6,049,397) | $ (396,822) | $ 46,627 |
CONSOLIDATED STATEMENTS OF STO8
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Parenthetical) - $ / shares | 3 Months Ended | 9 Months Ended | ||
Oct. 02, 2016 | Oct. 04, 2015 | Oct. 02, 2016 | Oct. 04, 2015 | |
Common stock | ||||
Dividends paid per share (USD per share) | $ 0.618 | $ 0.583 | $ 1.784 | $ 1.653 |
Class B common stock | ||||
Dividends paid per share (USD per share) | $ 0.562 | $ 0.530 | $ 1.622 | $ 1.502 |
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Oct. 02, 2016 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The unaudited consolidated financial statements provided in this report include the accounts of The Hershey Company (the “Company,” “Hershey,” “we” or “us”) and our majority-owned subsidiaries and entities in which we have a controlling financial interest after the elimination of intercompany accounts and transactions. We have a controlling financial interest if we own a majority of the outstanding voting common stock and the noncontrolling shareholders do not have substantive participating rights, or we have significant control over an entity through contractual or economic interests in which we are the primary beneficiary. The financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial reporting and with the rules and regulations for reporting on Form 10-Q. Accordingly, they do not contain certain information and disclosures required by GAAP for comprehensive financial statements. Our significant interim accounting policies include the recognition of a pro-rata share of certain estimated annual amounts primarily for raw material purchase price variances, advertising expense, incentive compensation expenses and the effective income tax rate. We have included all adjustments (consisting only of normal recurring accruals) that we believe are considered necessary for a fair presentation. Operating results for the quarter ended October 2, 2016 may not be indicative of the results that may be expected for the year ending December 31, 2016 because of seasonal effects on our business. These financial statements should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2015 (our “ 2015 Annual Report on Form 10-K”), which provides a more complete understanding of our accounting policies, financial position, operating results and other matters. Reclassifications Certain prior period amounts presented in the Consolidated Statements of Cash Flows have been reclassified to conform to the current year presentation. Recent Accounting Pronouncements In March 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-09, Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting . This ASU is part of the FASB's simplification initiative. The areas for simplification in this ASU involve several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. ASU 2016-09 is effective for annual periods beginning after December 15, 2016 and interim periods within those annual periods, with early adoption permitted. We are currently evaluating the impact that the adoption of ASU 2016-09 will have on our consolidated financial statements and related disclosures. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). This ASU will require lessees to recognize a right-of-use asset and lease liability for all leases with terms of more than 12 months. Recognition, measurement and presentation of expenses will depend on classification as a finance or operating lease. This ASU also requires certain quantitative and qualitative disclosures. Accounting guidance for lessors is largely unchanged. The amendments should be applied on a modified retrospective basis. ASU 2016-02 is effective for us beginning January 1, 2019. We are beginning to evaluate the impact that the adoption of ASU 2016-02 will have on our consolidated financial statements and related disclosures. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers , which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU No. 2014-09 will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new standard was originally effective for us on January 1, 2017; however, in July 2015 the FASB decided to defer the effective date by one year. Early application is not permitted, but reporting entities may choose to adopt the standard as of the original effective date. The standard permits the use of either the retrospective or cumulative effect transition method. We are currently evaluating the effect that ASU No. 2014-09 will have on our consolidated financial statements and related disclosures, our transition date and transition method. No other new accounting pronouncement issued or effective during the fiscal year had or is expected to have a material impact on our consolidated financial statements or disclosures. |
BUSINESS ACQUISITIONS AND DIVES
BUSINESS ACQUISITIONS AND DIVESTITURES | 9 Months Ended |
Oct. 02, 2016 | |
Business Combinations [Abstract] | |
Business Acquisitions and Divestitures | BUSINESS ACQUISITIONS AND DIVESTITURES Acquisitions of businesses are accounted for as purchases and, accordingly, the results of operations of the businesses acquired have been included in the consolidated financial statements since the respective dates of the acquisitions. The purchase price for each of the acquisitions is allocated to the assets acquired and liabilities assumed. 2016 Activity Ripple Brand Collective, LLC On April 26, 2016, we completed the acquisition of all of the outstanding shares of Ripple Brand Collective, LLC, a privately held company based in Congers, New York that owns the barkTHINS mass premium chocolate snacking brand. The barkTHINS brand is largely sold in the United States in take-home resealable packages and is available in the club channel, as well as select natural and conventional grocers. The business enables us to expand our mass premium offerings and is expected to generate 2016 annual net sales of approximately $65 million to $75 million . The purchase consideration was allocated to assets acquired and liabilities assumed based on their respective fair values as follows: Goodwill $ 127,455 Trademarks 91,200 Other intangible assets 60,900 Other assets, primarily current assets, net of cash acquired totaling $674 13,030 Current liabilities (7,211 ) Net assets acquired $ 285,374 The purchase price allocation presented above is preliminary. We are in the process of refining the valuation of acquired assets and liabilities and expect to finalize the purchase price allocation by the end of 2016. Goodwill is calculated as the excess of the purchase price over the fair value of the net assets acquired. The goodwill resulting from the acquisition is attributable primarily to the value of leveraging our brand building expertise, consumer insights, supply chain capabilities and retail relationships to accelerate growth and access to barkTHINS products. Acquired trademarks were assigned estimated useful lives of 27 years , while other intangibles, including customer relationships and covenants not to compete, were assigned estimated useful lives ranging from 2 to 14 years. The recorded goodwill, trademarks and other intangibles are expected to be deductible for tax purposes. Shanghai Golden Monkey (“SGM”) On February 3, 2016, we completed the purchase of the remaining 20% of the outstanding shares of SGM for cash consideration totaling $35,762 , pursuant to a new agreement entered into during the fourth quarter of 2015 with the SGM selling shareholders which revised the originally-agreed purchase price for these shares. For accounting purposes, we treated the acquisition as if we had acquired 100% at the initial acquisition date in 2014 and financed the payment for the remaining 20% of the outstanding shares. Therefore, the cash settlement of the liability for the purchase of these remaining shares is reflected within the financing section of the Unaudited Consolidated Statements of Cash Flows. The final settlement also resulted in an extinguishment gain of $26,650 representing the net carrying amount of the recorded liability in excess of the cash paid to settle the obligation for the remaining 20% of the outstanding shares. This gain is recorded within non-operating other (income) expense, net within the Unaudited Consolidated Statements of Income. 2015 Acquisition KRAVE Pure Foods In March 2015 , we completed the acquisition of all of the outstanding shares of KRAVE Pure Foods, Inc. (“Krave”), manufacturer of KRAVE jerky, a leading all-natural snack brand of premium jerky products. The transaction was undertaken to allow Hershey to tap into the rapidly growing meat snacks category and further expand into the broader snacks space. Krave is headquartered in Sonoma, California and generated 2014 annual sales of approximately $35 million . Total purchase consideration included cash consideration of $220,016 , as well as agreement to pay additional cash consideration of up to $20,000 to the Krave shareholders if certain defined targets related to net sales and gross profit margin are met or exceeded during the twelve-month periods ending December 31, 2015 or March 31, 2016. The fair value of the contingent cash consideration was appropriately classified as a liability of $16,800 as of the acquisition date. Based on revised targets in a subsequent agreement with the Krave shareholders, the fair value was reduced over the second and third quarters of 2015 to $10,000 , with the adjustment to fair value recorded within selling, marketing and administrative expenses. The remaining $10,000 was paid in December 2015. The purchase consideration was allocated to assets acquired and liabilities assumed based on their respective fair values as follows: Goodwill $ 147,089 Trademarks 112,000 Other intangible assets 17,000 Other assets, primarily current assets, net of cash acquired totaling $1,362 9,465 Current liabilities (2,756 ) Non-current deferred tax liabilities (47,344 ) Net assets acquired $ 235,454 The goodwill resulting from the acquisition is attributable primarily to the value of leveraging our brand building expertise, consumer insights, supply chain capabilities and retail relationships to accelerate growth and access to KRAVE products. The recorded goodwill is not expected to be deductible for tax purposes. The purchase price allocation for Krave was concluded in the third quarter of 2015. Acquired trademarks were assigned estimated useful lives of 22 years , while other intangibles, including customer relationships and covenants not to compete, were assigned estimated useful lives ranging from 5 to 16 years . 2015 Divestiture In December 2014, we entered into an agreement to sell the Mauna Loa Macadamia Nut Corporation (“Mauna Loa”). The transaction closed in the first quarter of 2015, resulting in proceeds, net of selling expenses and an estimated working capital adjustment, of approximately $32,400 . As a result of the expected sale, in 2014, we recorded an estimated loss on the anticipated sale of $22,256 to reflect the disposal entity at fair value, less an estimate of the selling costs. This amount included impairment charges totaling $18,531 to write down goodwill and the indefinite-lived trademark intangible asset, based on the valuation of these assets as implied by the agreed-upon sales price. The sale of Mauna Loa resulted in the recording of an additional loss on sale of $2,667 in the first quarter of 2015, based on updates to the selling expenses and tax benefits. The loss on the sale is reflected within business realignment charges in the Unaudited Consolidated Statements of Income. |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS | 9 Months Ended |
Oct. 02, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | GOODWILL AND INTANGIBLE ASSETS The changes in the carrying value of goodwill by reportable segment for the nine months ended October 2, 2016 are as follows: North America International and Other Total Balance at December 31, 2015 $ 662,083 $ 22,169 $ 684,252 Acquired during the period (see Note 2) 127,455 — 127,455 Foreign currency translation 5,709 (1,283 ) 4,426 Balance at October 2, 2016 $ 795,247 $ 20,886 $ 816,133 The following table provides the gross carrying amount and accumulated amortization for each major class of intangible asset: October 2, 2016 December 31, 2015 Intangible assets not subject to amortization: Trademarks 43,072 43,775 Intangible assets subject to amortization: Trademarks, customer relationships, patents and other finite-lived intangibles 538,753 390,900 Less: accumulated amortization (71,534 ) (55,370 ) Total other intangible assets $ 510,291 $ 379,305 Total amortization expense for the three months ended October 2, 2016 and October 4, 2015 was $7,666 and $5,340 , respectively. Total amortization expense for the nine months ended October 2, 2016 and October 4, 2015 was $18,811 and $16,469 , respectively. |
SHORT AND LONG-TERM DEBT
SHORT AND LONG-TERM DEBT | 9 Months Ended |
Oct. 02, 2016 | |
Debt Disclosure [Abstract] | |
Short and Long-Term Debt | SHORT AND LONG-TERM DEBT Short-term Debt As a source of short-term financing, we utilize cash on hand and commercial paper or bank loans with an original maturity of three months or less. We maintain a $1.0 billion unsecured revolving credit facility, which currently expires in November 2020. This agreement also includes an option to increase borrowings by an additional $400,000 with the consent of the lenders. On June 16, 2016, we entered into an additional unsecured revolving credit facility that provided for borrowings up to $500,000 . We terminated this facility, which was scheduled to expire on June 15, 2017, effective October 24, 2016. The credit agreement contains (and the credit agreement terminated effective October 24, 2016) certain financial and other covenants, customary representations, warranties and events of default. As of October 2, 2016 , we were in compliance with all covenants pertaining to the credit agreements, and we had no significant compensating balance agreements that legally restricted these funds. For more information, refer to the Consolidated Financial Statements included in our 2015 Annual Report on Form 10-K. In addition to the revolving credit facility, we maintain lines of credit with domestic and international commercial banks. We had short-term foreign bank loans against these lines of credit for $217,017 and $313,520 at October 2, 2016 and December 31, 2015 , respectively. Commitment fees relating to our revolving credit facility and lines of credit are not material. At October 2, 2016 , we had outstanding commercial paper totaling $395,366 , at a weighted average interest rate of 0.45% . At December 31, 2015 , we had outstanding commercial paper totaling $49,993 , at a weighted average interest rate of 0.40% . Long-term Debt Long-term debt consisted of the following: October 2, 2016 December 31, 2015 5.45% Notes due 2016 (1) $ — $ 250,000 1.50% Notes due 2016 250,000 250,000 1.60% Notes due 2018 300,000 300,000 4.125% Notes due 2020 350,000 350,000 8.8% Debentures due 2021 84,715 84,715 2.625% Notes due 2023 250,000 250,000 3.20% Notes due 2025 300,000 300,000 2.30% Notes due 2026 (2) 500,000 — 7.2% Debentures due 2027 193,639 193,639 3.375% Notes due 2046 (2) 300,000 — Other obligations, net of debt issuance costs and unamortized debt discount 84,136 78,660 Total long-term debt 2,612,490 2,057,014 Less—current portion 250,024 499,923 Long-term portion $ 2,362,466 $ 1,557,091 (1) In September 2016, we repaid $250,000 of 5.45% Notes due in 2016 upon their maturity. (2) In August 2016, we issued $500,000 of 2.30% Notes due in 2026 and $300,000 of 3.375% Notes due in 2046 (the "Notes"). Proceeds from the issuance of the Notes, net of discounts and issuance costs, totaled $792,923 . The Notes were issued under a shelf registration statement on Form S-3 filed in June 2015 that registered an indeterminate amount of debt securities. Interest Expense Net interest expense consisted of the following: Three Months Ended Nine Months Ended October 2, 2016 October 4, 2015 October 2, 2016 October 4, 2015 Interest expense $ 25,882 $ 22,590 $ 72,404 $ 68,874 Less: Capitalized interest (1,141 ) (3,071 ) (4,702 ) (9,314 ) Loss on extinguishment of debt — 28,326 — 28,326 Interest expense 24,741 47,845 67,702 87,886 Interest income (354 ) (878 ) (972 ) (2,840 ) Interest expense, net $ 24,387 $ 46,967 $ 66,730 $ 85,046 |
DERIVATIVE INSTRUMENTS AND FAIR
DERIVATIVE INSTRUMENTS AND FAIR VALUE MEASUREMENTS | 9 Months Ended |
Oct. 02, 2016 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments and Fair Value Measurements | DERIVATIVE INSTRUMENTS AND FAIR VALUE MEASUREMENTS We are exposed to market risks arising principally from changes in foreign currency exchange rates, interest rates and commodity prices. We use certain derivative instruments to manage these risks. These include interest rate swaps to manage interest rate risk, foreign currency forward exchange contracts and options to manage foreign currency exchange rate risk, and commodities futures and options contracts to manage commodity market price risk exposures. In entering into these contracts, we have assumed the risk that might arise from the possible inability of counterparties to meet the terms of their contracts. We mitigate this risk by entering into exchanged-traded contracts with collateral posting requirements and/or by performing financial assessments prior to contract execution, conducting periodic evaluations of counterparty performance and maintaining a diverse portfolio of qualified counterparties. We do not expect any significant losses from counterparty defaults. Commodity Price Risk We enter into commodities futures and options contracts and other commodity derivative instruments to reduce the effect of future price fluctuations associated with the purchase of raw materials, energy requirements and transportation services. We generally hedge commodity price risks for 3 - to 24 -month periods. Through 2015, we designated the majority of our commodity derivative instruments as cash flow hedges under the hedge accounting requirements. Under hedge accounting, we account for the effective portion of mark-to-market gains and losses on commodity derivative instruments in other comprehensive income, to be recognized in cost of sales in the same period that we record the hedged raw material requirements in cost of sales. The ineffective portion of gains and losses is recorded currently in cost of sales. Effective July 6, 2015 for cocoa commodity derivatives and January 1, 2016 for other commodity derivatives, we discontinued the designation of any of our existing or new cocoa or other commodity derivatives for hedge accounting treatment. Since such dates, changes in the fair value of these derivatives have been recorded as incurred within cost of sales. Effective as of such dates, we also revised our definition of segment income to exclude gains and losses on commodity derivatives until the related inventory is sold. This change to our definition of segment income enables us to continue to align the derivative gains and losses with the underlying economic exposure being hedged and thereby eliminate the mark-to-market volatility within our reported segment income. Foreign Exchange Price Risk We are exposed to foreign currency exchange rate risk related to our international operations, including non-functional currency intercompany debt and other non-functional currency transactions of certain subsidiaries. Principal currencies hedged include the euro, Canadian dollar, Japanese yen, and Brazilian real. We typically utilize foreign currency forward exchange contracts and options to hedge these exposures for 3 - to 12 -month periods. The contracts are either designated as cash flow hedges or are undesignated. The net notional amount of foreign exchange contracts accounted for as cash flow hedges was $86,896 at October 2, 2016 and $10,752 at December 31, 2015 . The effective portion of the changes in fair value on these contracts is recorded in other comprehensive income and reclassified into earnings in the same period in which the hedged transactions affect earnings. The net notional amount of foreign exchange contracts that are not designated as accounting hedges was $2,791 at October 2, 2016 and December 31, 2015 , respectively. The change in fair value on these instruments is recorded directly in cost of sales or selling, marketing and administrative expense, depending on the nature of the underlying exposure. Interest Rate Risk In order to manage interest rate exposure, we enter into interest rate swap agreements to protect against unfavorable interest rate changes relating to forecasted debt transactions. These swaps are designated as cash flow hedges, with gains and losses deferred in other comprehensive income to be recognized as an adjustment to interest expense in the same period that the hedged interest payments affect earnings. We had one interest rate swap agreement in a cash flow hedging relationship with a notional amount of $500,000 at December 31, 2015 . This interest rate swap agreement was settled in connection with the issuance of debt in August 2016, resulting in a payment of approximately $87,000 , which is reflected as an operating outflow within the Consolidated Statement of Cash Flows. We also manage our targeted mix of fixed and floating rate debt with debt issuances and by entering into fixed-to-floating interest rate swaps in order to mitigate fluctuations in earnings and cash flows that may result from interest rate volatility. These swaps are designated as fair value hedges, for which the gain or loss on the derivative and the offsetting loss or gain on the hedged item are recognized in current earnings as interest expense (income), net. The notional amount, interest payment and maturity date of these swaps generally match the principal, interest payment and maturity date of the related debt, and the swaps are valued using observable benchmark rates (Level 2 valuation). The notional amount of interest rate derivative instruments in fair value hedge relationships was $350,000 at October 2, 2016 and December 31, 2015 , respectively. Equity Price Risk We are exposed to market price changes in certain broad market indices related to our deferred compensation obligations to our employees. We use equity swap contracts to hedge the portion of the exposure that is linked to market-level equity returns. These contracts are not designated as hedges for accounting purposes and are entered into for 3 - to 12 -month periods. The change in fair value of these derivatives is recorded in selling, marketing and administrative expense, together with the change in the related liabilities. The notional amount of the contracts outstanding was $19,740 at October 2, 2016 and $22,230 at December 31, 2015 . Fair Value Accounting guidance on fair value measurements requires that financial assets and liabilities be classified and disclosed in one of the following categories of the fair value hierarchy: Level 1 – Based on unadjusted quoted prices for identical assets or liabilities in an active market. Level 2 – Based on observable market-based inputs or unobservable inputs that are corroborated by market data. Level 3 – Based on unobservable inputs that reflect the entity's own assumptions about the assumptions that a market participant would use in pricing the asset or liability. We did not have any level 3 financial assets or liabilities, nor were there any transfers between levels during the periods presented. The following table presents assets and liabilities that were measured at fair value in the Consolidated Balance Sheet on a recurring basis as of October 2, 2016 and December 31, 2015 : October 2, 2016 December 31, 2015 Assets (1) Liabilities (1) Assets (1) Liabilities (1) Derivatives designated as cash flow hedging instruments: Commodities futures and options (2) $ — $ — $ — $ 479 Foreign exchange contracts (3) 944 2,419 367 475 Interest rate swap agreements (4) — — — 40,299 944 2,419 367 41,253 Derivatives designated as fair value hedging instruments: Interest rate swap agreements (4) 15,349 — 4,313 — Derivatives not designated as hedging instruments: Commodities futures and options (2) 425 730 — 1,574 Deferred compensation derivatives (5) 665 — 1,198 — Foreign exchange contracts (3) — 454 69 — 1,090 1,184 1,267 1,574 Total $ 17,383 $ 3,603 $ 5,947 $ 42,827 (1) Derivatives assets are classified on our balance sheet within prepaid expenses and other as well as other assets. Derivative liabilities are classified on our balance sheet within accrued liabilities and other long-term liabilities. (2) The fair value of commodities futures and options contracts is based on quoted market prices and is, therefore, categorized as Level 1 within the fair value hierarchy. As of October 2, 2016 , assets included the net of assets of $35,999 and liabilities of $35,574 associated with cash transfers receivable or payable on commodities futures contracts reflecting the change in quoted market prices on the last trading day for the period. The comparable amounts reflected on a net basis in liabilities at December 31, 2015 were assets of $54,090 and liabilities of $54,860 . At October 2, 2016 and December 31, 2015, the remaining amount in liabilities related to the fair value of other non-exchange traded derivative instruments. (3) The fair value of foreign currency forward exchange contracts is the difference between the contract and current market foreign currency exchange rates at the end of the period. We estimate the fair value of foreign currency forward exchange contracts on a quarterly basis by obtaining market quotes of spot and forward rates for contracts with similar terms, adjusted where necessary for maturity differences. These contracts are classified as Level 2 within the fair value hierarchy. (4) The fair value of interest rate swap agreements represents the difference in the present value of cash flows calculated at the contracted interest rates and at current market interest rates at the end of the period. We calculate the fair value of interest rate swap agreements quarterly based on the quoted market price for the same or similar financial instruments. Such contracts are categorized as Level 2 within the fair value hierarchy. (5) The fair value of deferred compensation derivatives is based on quoted prices for market interest rates and a broad market equity index and is, therefore, categorized as Level 2 within the fair value hierarchy. Other Financial Instruments The carrying amounts of cash and cash equivalents, short-term investments, accounts receivable, accounts payable and short-term debt approximated fair value as of October 2, 2016 and December 31, 2015 because of the relatively short maturity of these instruments. The estimated fair value of our long-term debt is based on quoted market prices for similar debt issues and is, therefore, classified as Level 2 within the valuation hierarchy. The fair values and carrying values of long-term debt, including the current portion, was as follows: Fair Value Carrying Value October 2, 2016 December 31, 2015 October 2, 2016 December 31, 2015 Current portion of long-term debt $ 250,130 $ 509,580 $ 250,024 $ 499,923 Long-term debt 2,510,841 1,668,379 2,362,466 1,557,091 Total $ 2,760,971 $ 2,177,959 $ 2,612,490 $ 2,057,014 Income Statement Impact of Derivative Instruments The effect of derivative instruments on the Consolidated Statements of Income for the three months ended October 2, 2016 and October 4, 2015 was as follows: Non-designated Hedges Cash Flow Hedges Gains (losses) recognized in income (a) Gains (losses) recognized in other comprehensive income (“OCI”) (effective portion) Gains (losses) reclassified from accumulated OCI into income (effective portion) (b) Gains recognized in income (ineffective portion) (c) 2016 2015 2016 2015 2016 2015 2016 2015 Commodities futures and options $ (37,246 ) $ — $ — $ (34,571 ) $ 7,780 $ 11,000 $ — $ 1,288 Foreign exchange contracts (27 ) 750 1,628 662 (2,659 ) 185 — — Interest rate swap agreements — — (274 ) (36,187 ) (2,833 ) (1,166 ) — — Deferred compensation derivatives 665 (1,403 ) — — — — — — Total $ (36,608 ) $ (653 ) $ 1,354 $ (70,096 ) $ 2,288 $ 10,019 $ — $ 1,288 (a) Losses recognized in income for non-designated commodities futures and options contracts were included in cost of sales. Gains (losses) recognized in income for non-designated foreign currency forward exchange contracts and deferred compensation derivatives were included in selling, marketing and administrative expenses. (b) Gains (losses) reclassified from accumulated OCI ("AOCI") into income were included in cost of sales for commodities futures and options contracts and for foreign currency forward exchange contracts designated as hedges of purchases of inventory or other productive assets. Other gains (losses) for foreign currency forward exchange contracts were included in selling, marketing and administrative expenses. Losses reclassified from AOCI into income for interest rate swap agreements were included in interest expense. (c) Gains representing hedge ineffectiveness were included in cost of sales for commodities futures and options contracts. The effect of derivative instruments on the Consolidated Statements of Income for the nine months ended October 2, 2016 and October 4, 2015 was as follows: Non-designated Hedges Cash Flow Hedges Gains (losses) recognized in income (a) Gains (losses) recognized in OCI (effective portion) Gains (losses) reclassified from AOCI into income (effective portion) (b) Gains recognized in income (ineffective portion) (c) 2016 2015 2016 2015 2016 2015 2016 2015 Commodities futures and options $ (37,176 ) $ (2,777 ) $ — $ 62,619 $ 23,648 $ 31,300 $ — $ 2,142 Foreign exchange contracts (484 ) 474 (6,404 ) 158 (3,681 ) 273 — — Interest rate swap agreements — — (47,223 ) (28,184 ) (5,903 ) (3,479 ) — — Deferred compensation derivatives 1,486 (1,024 ) — — — — — — Total $ (36,174 ) $ (3,327 ) $ (53,627 ) $ 34,593 $ 14,064 $ 28,094 $ — $ 2,142 (a) Losses recognized in income for non-designated commodities futures and options contracts were included in cost of sales. Gains (losses) recognized in income for non-designated foreign currency forward exchange contracts and deferred compensation derivatives were included in selling, marketing and administrative expenses. (b) Gains (losses) reclassified from AOCI into income were included in cost of sales for commodities futures and options contracts and for foreign currency forward exchange contracts designated as hedges of purchases of inventory or other productive assets. Other gains (losses) for foreign currency forward exchange contracts were included in selling, marketing and administrative expenses. Losses reclassified from AOCI into income for interest rate swap agreements were included in interest expense. (c) Gains representing hedge ineffectiveness were included in cost of sales for commodities futures and options contracts. The amount of net losses on derivative instruments, including interest rate swap agreements, foreign currency forward exchange contracts and options, commodities futures and options contracts, and other commodity derivative instruments expected to be reclassified from AOCI into earnings in the next 12 months was approximately $5,270 after tax as of October 2, 2016 . This amount is primarily associated with losses on interest rate swap agreements and foreign currency forward exchange contracts, which more than offset gains on commodities futures contracts. Fair Value Hedges For the three months ended October 2, 2016 and October 4, 2015 , we recognized a pretax benefit to interest expense of $1,022 and $1,548 , respectively, relating to our fixed-to-floating interest swap agreements. For the nine months ended October 2, 2016 and October 4, 2015 , we recognized a pretax benefit to interest expense of $3,477 and $5,597 , respectively, relating to our fixed-to-floating interest swap arrangements. |
NONCONTROLLING INTERESTS IN SUB
NONCONTROLLING INTERESTS IN SUBSIDIARIES | 9 Months Ended |
Oct. 02, 2016 | |
Noncontrolling Interest [Abstract] | |
Noncontrolling Interest In Subsidiaries | NONCONTROLLING INTEREST IN SUBSIDIARY We currently own a 50% controlling interest in Lotte Shanghai Foods Co., Ltd. (“LSFC”), a joint venture established in 2007 in China for the purpose of manufacturing and selling product to the venture partners. A roll-forward showing the 2016 activity relating to the noncontrolling interest follows: Noncontrolling Interests Balance, December 31, 2015 $ 49,465 Net loss attributable to noncontrolling interests (1) (798 ) Other comprehensive loss - foreign currency translation adjustments (2,040 ) Balance, October 2, 2016 $ 46,627 (1) Amount is not considered significant and is presented within selling, marketing and administrative expenses. |
COMPREHENSIVE INCOME
COMPREHENSIVE INCOME | 9 Months Ended |
Oct. 02, 2016 | |
Equity [Abstract] | |
Comprehensive Income | COMPREHENSIVE INCOME A summary of the components of comprehensive income is as follows: Three Months Ended Three Months Ended October 2, 2016 October 4, 2015 Pre-Tax Tax After-Tax Pre-Tax Tax After-Tax Net income $ 227,403 $ 154,771 Other comprehensive income (loss): Foreign currency translation adjustments $ (8,533 ) $ — (8,533 ) $ (26,631 ) $ — (26,631 ) Pension and post-retirement benefit plans (a) 11,896 (4,501 ) 7,395 15,962 (5,993 ) 9,969 Cash flow hedges: Gains (losses) on cash flow hedging derivatives 1,354 (210 ) 1,144 (70,096 ) 26,182 (43,914 ) Reclassification adjustments (b) (2,288 ) 1,390 (898 ) (10,019 ) 3,805 (6,214 ) Total other comprehensive loss $ 2,429 $ (3,321 ) (892 ) $ (90,784 ) $ 23,994 (66,790 ) Total comprehensive income $ 226,511 $ 87,981 Comprehensive loss (gain) attributable to noncontrolling interests 751 (820 ) Comprehensive income attributable to The Hershey Company $ 227,262 $ 87,161 Nine Months Ended Nine Months Ended October 2, 2016 October 4, 2015 Pre-Tax Tax After-Tax Pre-Tax Tax After-Tax Net income $ 603,191 $ 299,567 Other comprehensive income (loss): Foreign currency translation adjustments $ 5,053 $ — 5,053 $ (51,681 ) $ — (51,681 ) Pension and post-retirement benefit plans (a) 16,395 (6,511 ) 9,884 32,776 (11,880 ) 20,896 Cash flow hedges: Gains (losses) on cash flow hedging derivatives (53,627 ) 18,838 (34,789 ) 34,593 (13,570 ) 21,023 Reclassification adjustments (b) (14,064 ) 6,079 (7,985 ) (28,094 ) 10,383 (17,711 ) Total other comprehensive loss $ (46,243 ) $ 18,406 (27,837 ) $ (12,406 ) $ (15,067 ) (27,473 ) Total comprehensive income $ 575,354 $ 272,094 Comprehensive loss attributable to noncontrolling interests 2,040 2,111 Comprehensive income attributable to The Hershey Company $ 577,394 $ 274,205 (a) These amounts are included in the computation of net periodic benefit costs. For more information, see Note 11. (b) For information on the presentation of reclassification adjustments for cash flow hedges on the Consolidated Statements of Income, see Note 5. The components of accumulated other comprehensive loss, as shown on the Consolidated Balance Sheets, are as follows: October 2, 2016 December 31, 2015 Foreign currency translation adjustments $ (94,143 ) $ (101,236 ) Pension and post-retirement benefit plans, net of tax (244,764 ) (254,648 ) Cash flow hedges, net of tax (57,915 ) (15,141 ) Total accumulated other comprehensive loss $ (396,822 ) $ (371,025 ) |
OTHER (INCOME) EXPENSE, NET
OTHER (INCOME) EXPENSE, NET | 9 Months Ended |
Oct. 02, 2016 | |
Other Income and Expenses [Abstract] | |
Other (Income) Expense, Net | OTHER (INCOME) EXPENSE, NET Other (income) expense, net reports certain gains and losses associated with activities not directly related to our core operations. A summary of the components of other (income) expense, net include the following: Three Months Ended Nine Months Ended October 2, 2016 October 4, 2015 October 2, 2016 October 4, 2015 Write-down of equity investments in partnerships qualifying for tax credits $ 20,801 $ 9,249 $ 35,862 $ 13,893 Settlement of SGM (see Note 2) — — (26,650 ) — Gain on sale of non-core trademark — — — (9,950 ) Other (income) expense, net 999 160 (509 ) 385 Total $ 21,800 $ 9,409 $ 8,703 $ 4,328 |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Oct. 02, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | INCOME TAXES The majority of our taxable income is generated in the U.S. and taxed at the U.S. statutory rate of 35% . The effective tax rates for the nine months ended October 2, 2016 and October 4, 2015 were 33.0% and 50.5% , respectively. Adjusting for the impact of the 2015 non-deductible goodwill impairment charge, the 2015 year to date effective income tax rate was 34.5% . The 2016 effective tax rate benefited from the impact of non-taxable income related to the settlement of the SGM liability and investment and research and development tax credits, which were partially offset by the current period SGM valuation allowance. Hershey and its subsidiaries file tax returns in the U.S., including various state and local returns, and in foreign jurisdictions. We believe adequate provision has been made for all income tax uncertainties. We are routinely audited by taxing authorities in our filing jurisdictions, and a number of these audits are currently underway. We reasonably expect reductions in the liability for unrecognized tax benefits of approximately $12,175 within the next 12 months because of the expiration of statutes of limitations and settlement of tax audits. |
BUSINESS REALIGNMENT ACTIVITIES
BUSINESS REALIGNMENT ACTIVITIES | 9 Months Ended |
Oct. 02, 2016 | |
Restructuring and Related Activities [Abstract] | |
Business Realignment Activities | BUSINESS REALIGNMENT ACTIVITIES 2016 Operational Optimization Program In the second quarter of 2016, we commenced a program (the “Operational Optimization Program”) to optimize our production and supply chain network, which will result in select facility consolidations. The program encompasses the continued transition of our China chocolate and SGM operations into a united Golden Hershey platform, including the integration of the China sales force, as well as the consolidation of production within certain facilities in China and North America. We expect to incur pre-tax costs of approximately $120 million over three years , including approximately $65 million in non-cash asset-related incremental depreciation costs, with the remainder relating to severance and employee benefit costs, costs to consolidate and relocate production, and third-party costs incurred to execute these activities. The program is expected to drive annual savings of approximately $45 million by 2018. 2015 Productivity Initiative In mid-2015, we initiated a productivity initiative (the “2015 Productivity Initiative”) intended to move decision making closer to the customer and the consumer, to enable a more enterprise-wide approach to innovation, to more swiftly advance our knowledge agenda, and to provide for a more efficient cost structure, while ensuring that we effectively allocate resources to future growth areas. Overall, the 2015 Productivity Initiative was undertaken to simplify the organizational structure to enhance the Company's ability to rapidly anticipate and respond to the changing demands of the global consumer. The 2015 Productivity Initiative was executed throughout the third and fourth quarters of 2015, resulting in a net reduction of approximately 300 positions, with the majority of the departures taking place by the end of 2015. For the three and nine months ended October 2, 2016 , we incurred charges totaling $2,991 and $19,278 , respectively, representing pension settlement charges, adjustments to estimated severance benefits and incremental third-party costs related to the design and implementation of the new organizational structure. As of October 2, 2016 , we have completed the 2015 Productivity Initiative. We incurred total costs of $125,031 relating to this program, including pension settlement charges of $13,669 recorded in 2016 and $10,178 recorded in 2015 relating to lump sum withdrawals by employees retiring or leaving the Company as a result of this program. Other international programs Costs incurred for the three and nine months ended October 4, 2015 related principally to accelerated depreciation and amortization and employee severance costs for a couple of programs commenced in 2014 to rationalize certain non-U.S. manufacturing and distribution activities and to establish our own sales and distribution teams in Brazil in connection with our exit from the Bauducco joint venture. Expenses recorded for business realignment activities during the three and nine months ended October 2, 2016 and October 4, 2015 were classified as follows: Three Months Ended Nine Months Ended October 2, 2016 October 4, 2015 October 2, 2016 October 4, 2015 Cost of sales (1): Operational optimization program $ 24,470 $ — $ 57,948 $ — Other international restructuring programs — 2,529 — 5,205 Total cost of sales 24,470 2,529 57,948 5,205 Selling, marketing and administrative (2): Operational optimization program 414 — 9,822 — 2015 productivity initiative 748 6,515 6,149 10,017 Other international restructuring programs — 666 — 3,234 Total selling, marketing and administrative 1,162 7,181 15,971 13,251 Business realignment charges (3): Operational optimization program 87 — 17,442 — 2015 productivity initiative 2,243 57,753 13,126 80,305 Divestiture of Mauna Loa (see Note 2) — — — 2,667 Total business realignment charges 2,330 57,753 30,568 82,972 Total charges associated with business realignment activities $ 27,962 $ 67,463 $ 104,487 $ 101,428 (1) Charges primarily relate to non-cash asset-related accelerated depreciation and amortization. (2) Charges primarily relate to third-party costs incurred to execute the restructuring initiatives. (3) Charges largely relate to employee severance and benefits, including pension settlement costs for the 2015 Productivity Initiative. The costs and related benefits of the Operational Optimization Program relate approximately 15% to the North America segment and 85% to the International and Other segment. The costs and related benefits to be derived from the 2015 Productivity Initiative relate primarily to the North American segment, while the costs and related benefits of the other international programs relate primary to the International and Other segment. However, segment operating results do not include these business realignment and related charges because we evaluate segment performance excluding such charges. The following table presents the liability activity for employee-related costs qualifying as exit and disposal costs: Total Liability balance at December 31, 2015 $ 16,310 2016 business realignment charges 16,899 Cash payments (28,150 ) Other, net (206 ) Liability balance at October 2, 2016 $ 4,853 The charges reflected in the liability roll-forward above do not include items charged directly to expense, such as accelerated depreciation and amortization and the loss on the Mauna Loa divestiture and certain of the third-party charges associated with various programs, as those items are not reflected in the business realignment liability in our Consolidated Balance Sheets. |
PENSION AND OTHER POST-RETIREME
PENSION AND OTHER POST-RETIREMENT BENEFIT PLANS | 9 Months Ended |
Oct. 02, 2016 | |
Compensation and Retirement Disclosure [Abstract] | |
Pension and Other Post-Retirement Benefit Plans | PENSION AND OTHER POST-RETIREMENT BENEFIT PLANS The components of net periodic benefit cost for the third quarter were as follows: Pension Benefits Other Benefits Three Months Ended Three Months Ended October 2, 2016 October 4, 2015 October 2, 2016 October 4, 2015 Service cost $ 5,794 $ 7,068 $ 75 $ 135 Interest cost 10,130 11,025 2,435 2,516 Expected return on plan assets (14,700 ) (17,146 ) — — Amortization of prior service (credit) cost (262 ) (294 ) 144 151 Amortization of net loss (gains) 8,803 7,595 (4 ) (11 ) Net periodic benefit cost 9,765 8,248 2,650 2,791 Settlement cost 3,147 2,583 — — Total net periodic benefit cost $ 12,912 $ 10,831 $ 2,650 $ 2,791 We made contributions of $18,549 and $7,473 to the pension plans and other benefits plans, respectively, during the third quarter of 2016. In the third quarter of 2015, we made contributions of $29,349 and $5,174 to our pension plans and other benefits plans, respectively. The contributions in 2016 and 2015 also included benefit payments from our non-qualified pension plans and post-retirement benefit plans. The components of net periodic benefit cost for the year-to-date periods were as follows: Pension Benefits Other Benefits Nine Months Ended Nine Months Ended October 2, 2016 October 4, 2015 October 2, 2016 October 4, 2015 Service cost $ 17,377 $ 21,301 $ 224 $ 406 Interest cost 31,914 33,187 7,300 7,617 Expected return on plan assets (44,073 ) (51,685 ) — — Amortization of prior service (credit) cost (785 ) (881 ) 432 457 Amortization of net loss (gains) 26,411 22,899 (10 ) (40 ) Net periodic benefit cost 30,844 24,821 7,946 8,440 Settlement cost 20,085 2,583 — — Total net periodic benefit cost $ 50,929 $ 27,404 $ 7,946 $ 8,440 We made contributions of $20,385 and $22,181 to the pension plans and other benefits plans, respectively, during the first nine months of 2016. In the first nine months of 2015, we made contributions of $30,685 and $14,502 to our pension plans and other benefits plans, respectively. The contributions in 2016 and 2015 also included benefit payments from our non-qualified pension plans and post-retirement benefit plans. During the second quarter of 2016, the cumulative lump sum settlement distributions in the salaried defined benefit pension plan exceeded the anticipated annual service and interest costs, triggering the recognition of non-cash pension settlement charges due to the acceleration of a portion of the accumulated unrecognized actuarial loss. We recorded additional pension settlement charges of $3,147 in the third quarter of 2016, bringing the total to $20,085 for the first nine months of 2016. This includes lump sum withdrawals by employees retiring or leaving the Company as a result of the 2015 Productivity Initiative (see Note 10). As a result of the lump sum settlements, certain U.S. pension plan assets and liabilities were remeasured at July 3, 2016 using a discount rate of 3.25% , compared to 4.0% as of December 31, 2015 and an expected rate of return on plan assets of 6.1% . |
STOCK COMPENSATION PLANS
STOCK COMPENSATION PLANS | 9 Months Ended |
Oct. 02, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock Compensation Plans | STOCK COMPENSATION PLANS We have various stock-based compensation programs under which awards, including stock options, performance stock units (“PSUs”) and performance stock, stock appreciation rights, restricted stock units (“RSUs”) and restricted stock may be granted to employees, non-employee directors and certain service providers upon whom the successful conduct of our business is dependent. These programs and the accounting treatment related thereto are described in Note 10 to the Consolidated Financial Statements included in our 2015 Annual Report on Form 10-K. For the periods presented, compensation expense for all types of stock-based compensation programs and the related income tax benefit recognized were as follows: Three Months Ended Nine Months Ended October 2, 2016 October 4, 2015 October 2, 2016 October 4, 2015 Pre-tax compensation expense $ 14,491 $ 13,374 $ 40,699 $ 39,989 Related income tax benefit 4,406 4,334 13,186 13,676 Compensation costs for stock compensation plans are primarily included in selling, marketing and administrative expense. As of October 2, 2016 , total stock-based compensation cost related to non-vested awards not yet recognized was $74,083 and the weighted-average period over which this amount is expected to be recognized was approximately 2.2 years . Stock Options A summary of activity relating to grants of stock options for the period ended October 2, 2016 is as follows: Stock Options Shares Weighted-Average Weighted-Average Remaining Aggregate Intrinsic Value Outstanding at beginning of the period 6,842,563 $75.48 5.8 years Granted 1,354,390 $90.72 Exercised (1,649,402 ) $58.19 Forfeited (189,933 ) $100.65 Outstanding as of October 2, 2016 6,357,618 $82.46 6.5 years $ 113,418 Options exercisable as of October 2, 2016 3,597,028 $71.87 4.9 years $ 100,042 The weighted-average fair value of options granted was $11.46 and $19.18 per share for the periods ended October 2, 2016 and October 4, 2015 , respectively. The fair value was estimated on the date of grant using a Black-Scholes option-pricing model and the following weighted-average assumptions: Nine Months Ended October 2, 2016 October 4, 2015 Dividend yields 2.4 % 2.0 % Expected volatility 16.8 % 20.2 % Risk-free interest rates 1.5 % 1.9 % Expected lives in years 6.8 6.6 The total intrinsic value of options exercised was $70,009 and $60,425 for the periods ended October 2, 2016 and October 4, 2015 , respectively. Performance Stock Units and Restricted Stock Units A summary of activity relating to grants of PSUs and RSUs for the period ended October 2, 2016 is as follows: Performance Stock Units and Restricted Stock Units Number of units Weighted-average grant date fair value for equity awards (per unit) Outstanding at beginning of year 495,207 $106.40 Granted 531,019 $93.47 Performance assumption change 5,276 $97.32 Vested (214,577 ) $94.95 Forfeited (32,512 ) $100.45 Outstanding as of October 2, 2016 784,413 $102.53 The table above excludes PSU awards for 6,410 units as of October 2, 2016 and 20,586 units as of December 31, 2015 for which the measurement date has not yet occurred for accounting purposes. The following table sets forth information about the fair value of the PSUs and RSUs granted for potential future distribution to employees and non-employee directors. In addition, the table provides assumptions used to determine the fair value of the market-based total shareholder return component using the Monte Carlo simulation model on the date of grant. Nine Months Ended October 2, 2016 October 4, 2015 Units granted 531,019 315,443 Weighted-average fair value at date of grant $ 93.47 $ 107.53 Monte Carlo simulation assumptions: Estimated values $ 38.02 $ 61.22 Dividend yields 2.5 % 2.0 % Expected volatility 17.0 % 14.9 % The fair value of shares vested totaled $19,673 and $40,220 for the periods ended October 2, 2016 and October 4, 2015 , respectively. Deferred PSUs, deferred RSUs and deferred stock units representing directors’ fees totaled 483,286 units as of October 2, 2016 . Each unit is equivalent to one share of the Company’s Common Stock. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 9 Months Ended |
Oct. 02, 2016 | |
Segment Reporting [Abstract] | |
Segment Information | SEGMENT INFORMATION Our organizational structure is designed to ensure continued focus on North America, coupled with an emphasis on accelerating growth in our focus international markets, as we transform into a more global company. Our business is organized around geographic regions, which enables us to build processes for repeatable success in our global markets. As a result, we have defined our operating segments on a geographic basis, as this aligns with how our Chief Operating Decision Maker (“CODM”) manages our business, including resource allocation and performance assessment. Our North America business, which generates over 85% of our annual consolidated revenue, is our only reportable segment. None of our other operating segments meet the quantitative thresholds to qualify as reportable segments; therefore, these operating segments are combined and disclosed below as International and Other. • North America - This segment is responsible for our traditional chocolate and non-chocolate confectionery market position, as well as our grocery and growing snacks market positions, in the United States and Canada. This includes developing and growing our business in chocolate and non-chocolate confectionery, pantry, food service and other snacking product lines. • International and Other - International and Other is a combination of all other operating segments that are not individually material, including those geographic regions where we operate outside of North America. We currently have operations and manufacture product in China, Mexico, Brazil, India and Malaysia, primarily for consumers in these regions, and also distribute and sell confectionery products in export markets of Asia, Latin America, Middle East, Europe, Africa and other regions. This segment also includes our global retail operations, including Hershey's Chocolate World stores in Hershey, Pennsylvania, New York City, Chicago, Las Vegas, Shanghai, Niagara Falls (Ontario), Dubai, and Singapore, as well as operations associated with licensing the use of certain of the Company's trademarks and products to third parties around the world. For segment reporting purposes, we use “segment income” to evaluate segment performance and allocate resources. Segment income excludes unallocated general corporate administrative expenses, unallocated mark-to-market gains and losses on commodity derivatives, business realignment and impairment charges, acquisition integration costs, the non-service related portion of pension expense and other unusual gains or losses that are not part of our measurement of segment performance. These items of our operating income are managed centrally at the corporate level and are excluded from the measure of segment income reviewed by the CODM as well the measure of segment performance used for incentive compensation purposes. Accounting policies associated with our operating segments are generally the same as those described in Note 1 to the Consolidated Financial Statements included in our 2015 Annual Report on Form 10-K, with the exception of our accounting methodology for commodities derivatives. As discussed in Note 5, derivatives used to manage commodity price risk are not designated for hedge accounting treatment. These derivatives are recognized at fair market value with the resulting realized and unrealized losses recognized in unallocated derivative (gains) losses outside of the reporting segment results. The gains and losses are subsequently recognized in the operating results of the segments in the period in which the underlying transaction being economically hedged is included in earnings. Certain manufacturing, warehousing, distribution and other activities supporting our global operations are integrated to maximize efficiency and productivity. As a result, assets and capital expenditures are not managed on a segment basis and are not included in the information reported to the CODM for the purpose of evaluating performance or allocating resources. We disclose depreciation and amortization that is generated by segment-specific assets, since these amounts are included within the measure of segment income reported to the CODM. Our segment net sales and earnings were as follows: Three Months Ended Nine Months Ended October 2, 2016 October 4, 2015 October 2, 2016 October 4, 2015 Net sales: North America $ 1,764,528 $ 1,733,869 $ 4,842,840 $ 4,840,438 International and Other 238,926 226,910 627,097 636,966 Total $ 2,003,454 $ 1,960,779 $ 5,469,937 $ 5,477,404 Segment Income (Loss): North America $ 563,946 $ 546,080 $ 1,519,059 $ 1,561,053 International and Other 4,284 (13,509 ) (12,411 ) (79,754 ) Total segment income 568,230 532,571 1,506,648 1,481,299 Unallocated corporate expense (1) 121,828 117,695 370,622 383,160 Unallocated mark-to-market losses on commodity derivatives (2) 35,791 — 30,851 — Goodwill impairment — 30,991 — 280,802 Charges associated with business realignment activities 27,962 67,463 104,487 101,428 Non-service related pension expense 6,360 4,049 20,666 6,976 Acquisition integration costs 2,265 9,359 3,727 14,253 Operating profit 374,024 303,014 976,295 694,680 Interest expense, net 24,387 46,967 66,730 85,046 Other (income) expense, net 21,800 9,409 8,703 4,328 Income before income taxes $ 327,837 $ 246,638 $ 900,862 $ 605,306 (1) Includes centrally-managed (a) corporate functional costs relating to legal, treasury, finance, and human resources, (b) expenses associated with the oversight and administration of our global operations, including warehousing, distribution and manufacturing, information systems and global shared services, (c) non-cash stock-based compensation expense, and (d) other gains or losses that are not integral to segment performance. (2) Reflects gains and losses on commodity derivative instruments that are excluded from segment income until the related inventory is sold. See Note 5. Activity within the unallocated mark-to-market (gains) losses on commodity derivatives for the three and nine months ended October 2, 2016 included: Three Months Ended Nine Months Ended October 2, 2016 October 2, 2016 Net losses on mark-to-market valuation of unallocated commodity derivative positions $ 37,246 $ 37,176 Net losses on commodity derivative positions allocated to segment income 1,455 6,325 Net losses on mark-to-market valuation of commodity derivative positions remaining in unallocated derivative (gains) losses $ 35,791 $ 30,851 Based on our forecasts of the timing of the recognition of the underlying hedged items, we expect to reclassify losses on commodity derivatives of $11 million after tax to segment operating results in the next twelve months. Depreciation and amortization expense included within segment income presented above is as follows: Three Months Ended Nine Months Ended October 2, 2016 October 4, 2015 October 2, 2016 October 4, 2015 North America $ 41,592 $ 38,887 $ 120,378 $ 113,837 International and Other 13,515 13,993 37,523 34,136 Corporate (1) 30,015 11,174 84,000 34,882 Total $ 85,122 $ 64,054 $ 241,901 $ 182,855 (1) Corporate includes non-cash asset-related accelerated depreciation and amortization related to business realignment activities, as discussed in Note 10. Such amounts are not included within our measure of segment income. |
TREASURY STOCK ACTIVITY
TREASURY STOCK ACTIVITY | 9 Months Ended |
Oct. 02, 2016 | |
Equity [Abstract] | |
Treasury Stock Activity | TREASURY STOCK ACTIVITY A summary of our treasury stock activity is as follows: Nine Months Ended October 2, 2016 Shares Dollars In thousands Shares repurchased in the open market under pre-approved share repurchase programs 4,640,964 $ 420,249 Shares repurchased to replace Treasury Stock issued for stock options and incentive compensation 354,320 32,331 Total share repurchases 4,995,284 452,580 Shares issued for stock options and incentive compensation (1,814,461 ) (75,542 ) Net change 3,180,823 $ 377,038 The $250 million share repurchase program approved by our Board of Directors in February 2015 was completed in the first quarter of 2016. In February 2016, our Board of Directors approved an additional $500 million authorization to repurchase shares of our Common Stock. As of October 2, 2016 , $100 million remained available for repurchases of our Common Stock under this program. We are authorized to purchase our outstanding shares in open market and privately negotiated transactions. The program has no expiration date and acquired shares of Common Stock will be held as treasury shares. Purchases under approved share repurchase authorizations are in addition to our practice of buying back shares sufficient to offset those issued under incentive compensation plans. |
CONTINGENCIES
CONTINGENCIES | 9 Months Ended |
Oct. 02, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies | CONTINGENCIES We are subject to various pending or threatened legal proceedings and claims that arise in the ordinary course of our business. While it is not feasible to predict or determine the outcome of such proceedings and claims with certainty, in our opinion these matters, both individually and in the aggregate, are not expected to have a material effect on our financial condition, results of operations or cash flows. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 9 Months Ended |
Oct. 02, 2016 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | EARNINGS PER SHARE We compute basic earnings per share for Common Stock and Class B common stock using the two-class method. The Class B common stock is convertible into Common Stock on a share-for-share basis at any time. With respect to dividend rights, the Common Stock holders are entitled to cash dividends 10% higher than those declared and paid on the Class B common stock. The computation of diluted earnings per share for Common Stock assumes the conversion of Class B common stock using the if-converted method, while the diluted earnings per share of Class B common stock does not assume the conversion of those shares. We compute basic and diluted earnings per share based on the weighted-average number of shares of Common Stock and Class B common stock outstanding as follows: Three Months Ended October 2, 2016 October 4, 2015 Common Stock Class B Common Stock Common Stock Class B Common Stock Basic earnings per share: Numerator: Allocation of distributed earnings (cash dividends paid) $ 94,498 $ 34,068 $ 92,041 $ 32,128 Allocation of undistributed earnings 72,691 26,146 22,693 7,909 Total earnings—basic $ 167,189 $ 60,214 $ 114,734 $ 40,037 Denominator (shares in thousands): Total weighted-average shares—basic 153,259 60,620 158,111 60,620 Earnings Per Share—basic $ 1.09 $ 0.99 $ 0.73 $ 0.66 Diluted earnings per share: Numerator: Allocation of total earnings used in basic computation $ 167,189 $ 60,214 $ 114,734 $ 40,037 Reallocation of total earnings as a result of conversion of Class B common stock to Common stock 60,214 — 40,037 — Reallocation of undistributed loss — (160 ) — (27 ) Total earnings—diluted $ 227,403 $ 60,054 $ 154,771 $ 40,010 Denominator (shares in thousands): Number of shares used in basic computation 153,259 60,620 158,111 60,620 Weighted-average effect of dilutive securities: Conversion of Class B common stock to Common shares outstanding 60,620 — 60,620 — Employee stock options 1,062 — 1,192 — Performance and restricted stock units 220 — 152 — Total weighted-average shares—diluted 215,161 60,620 220,075 60,620 Earnings Per Share—diluted $ 1.06 $ 0.99 $ 0.70 $ 0.66 The earnings per share calculations for the three months ended October 2, 2016 and October 4, 2015 excluded 2,921 and 2,552 , respectively, of stock options that would have been antidilutive. Nine Months Ended October 2, 2016 October 4, 2015 Common Stock Class B Common Stock Common Stock Class B Common Stock Basic earnings per share: Numerator: Allocation of distributed earnings (cash dividends paid) $ 273,380 $ 98,326 $ 262,032 $ 91,051 Allocation of undistributed earnings (loss) 170,458 61,027 (39,750 ) (13,766 ) Total earnings—basic $ 443,838 $ 159,353 $ 222,282 $ 77,285 Denominator (shares in thousands): Total weighted-average shares—basic 153,943 60,620 159,058 60,620 Earnings Per Share—basic $ 2.88 $ 2.63 $ 1.40 $ 1.27 Diluted earnings per share: Numerator: Allocation of total earnings used in basic computation $ 443,838 $ 159,353 $ 222,282 $ 77,285 Reallocation of total earnings as a result of conversion of Class B common stock to Common stock 159,353 — 77,285 — Reallocation of undistributed (loss) earnings — (347 ) — 132 Total earnings—diluted $ 603,191 $ 159,006 $ 299,567 $ 77,417 Denominator (shares in thousands): Number of shares used in basic computation 153,943 60,620 159,058 60,620 Weighted-average effect of dilutive securities: Conversion of Class B common stock to Common shares outstanding 60,620 — 60,620 — Employee stock options 1,013 — 1,406 — Performance and restricted stock units 182 — 238 — Total weighted-average shares—diluted 215,758 60,620 221,322 60,620 Earnings Per Share—diluted $ 2.80 $ 2.62 $ 1.35 $ 1.28 The earnings per share calculations for the nine months ended October 2, 2016 and October 4, 2015 excluded 3,680 and 2,660 , respectively, of stock options that would have been antidilutive. |
SUPPLEMENTAL BALANCE SHEET INFO
SUPPLEMENTAL BALANCE SHEET INFORMATION | 9 Months Ended |
Oct. 02, 2016 | |
SUPPLEMENTAL BALANCE SHEET INFORMATION [Abstract] | |
Supplemental Balance Sheet Disclosures [Text Block] | SUPPLEMENTAL BALANCE SHEET INFORMATION The components of certain Consolidated Balance Sheet accounts are as follows: Inventories: October 2, 2016 December 31, 2015 Raw materials $ 321,781 $ 353,451 Goods in process 99,685 67,745 Finished goods 610,929 534,983 Inventories at FIFO 1,032,395 956,179 Adjustment to LIFO (188,876 ) (205,209 ) Total inventories $ 843,519 $ 750,970 Property, plant and equipment: October 2, 2016 December 31, 2015 Land $ 101,197 $ 96,666 Buildings 1,257,869 1,084,958 Machinery and equipment 2,985,841 2,886,723 Construction in progress 235,274 448,956 Property, plant and equipment, gross 4,580,181 4,517,303 Accumulated depreciation (2,420,592 ) (2,276,843 ) Property, plant and equipment, net $ 2,159,589 $ 2,240,460 Other assets: October 2, 2016 December 31, 2015 Capitalized software, net $ 85,352 $ 68,004 Income tax receivable 1,468 1,428 Other non-current assets 82,933 85,934 Total other assets $ 169,753 $ 155,366 Accrued liabilities: October 2, 2016 December 31, 2015 Payroll, compensations and benefits $ 202,131 $ 215,638 Advertising and promotion 334,902 337,945 Due to SGM shareholders — 72,025 Other 145,979 231,359 Total accrued liabilities $ 683,012 $ 856,967 Other long-term liabilities: October 2, 2016 December 31, 2015 Post-retirement benefits liabilities $ 224,974 $ 231,412 Pension benefits liabilities 137,530 122,681 Other 116,203 114,625 Total other long-term liabilities $ 478,707 $ 468,718 |
SIGNIFICANT ACCOUNTING POLICI26
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Oct. 02, 2016 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The unaudited consolidated financial statements provided in this report include the accounts of The Hershey Company (the “Company,” “Hershey,” “we” or “us”) and our majority-owned subsidiaries and entities in which we have a controlling financial interest after the elimination of intercompany accounts and transactions. We have a controlling financial interest if we own a majority of the outstanding voting common stock and the noncontrolling shareholders do not have substantive participating rights, or we have significant control over an entity through contractual or economic interests in which we are the primary beneficiary. The financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial reporting and with the rules and regulations for reporting on Form 10-Q. Accordingly, they do not contain certain information and disclosures required by GAAP for comprehensive financial statements. Our significant interim accounting policies include the recognition of a pro-rata share of certain estimated annual amounts primarily for raw material purchase price variances, advertising expense, incentive compensation expenses and the effective income tax rate. We have included all adjustments (consisting only of normal recurring accruals) that we believe are considered necessary for a fair presentation. Operating results for the quarter ended October 2, 2016 may not be indicative of the results that may be expected for the year ending December 31, 2016 because of seasonal effects on our business. These financial statements should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2015 (our “ 2015 Annual Report on Form 10-K”), which provides a more complete understanding of our accounting policies, financial position, operating results and other matters |
Reclassifications | Reclassifications Certain prior period amounts presented in the Consolidated Statements of Cash Flows have been reclassified to conform to the current year presentation. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In March 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-09, Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting . This ASU is part of the FASB's simplification initiative. The areas for simplification in this ASU involve several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. ASU 2016-09 is effective for annual periods beginning after December 15, 2016 and interim periods within those annual periods, with early adoption permitted. We are currently evaluating the impact that the adoption of ASU 2016-09 will have on our consolidated financial statements and related disclosures. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). This ASU will require lessees to recognize a right-of-use asset and lease liability for all leases with terms of more than 12 months. Recognition, measurement and presentation of expenses will depend on classification as a finance or operating lease. This ASU also requires certain quantitative and qualitative disclosures. Accounting guidance for lessors is largely unchanged. The amendments should be applied on a modified retrospective basis. ASU 2016-02 is effective for us beginning January 1, 2019. We are beginning to evaluate the impact that the adoption of ASU 2016-02 will have on our consolidated financial statements and related disclosures. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers , which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU No. 2014-09 will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new standard was originally effective for us on January 1, 2017; however, in July 2015 the FASB decided to defer the effective date by one year. Early application is not permitted, but reporting entities may choose to adopt the standard as of the original effective date. The standard permits the use of either the retrospective or cumulative effect transition method. We are currently evaluating the effect that ASU No. 2014-09 will have on our consolidated financial statements and related disclosures, our transition date and transition method. No other new accounting pronouncement issued or effective during the fiscal year had or is expected to have a material impact on our consolidated financial statements or disclosures. |
BUSINESS ACQUISITIONS AND DIV27
BUSINESS ACQUISITIONS AND DIVESTITURES (Tables) | 9 Months Ended |
Oct. 02, 2016 | |
Ripple Brand Collective, LLC | |
Business Acquisition and Divestitures [Line Items] | |
Summary of Purchase Consideration Allocation to Assets Acquired and Liabilities Assumed | The purchase consideration was allocated to assets acquired and liabilities assumed based on their respective fair values as follows: Goodwill $ 127,455 Trademarks 91,200 Other intangible assets 60,900 Other assets, primarily current assets, net of cash acquired totaling $674 13,030 Current liabilities (7,211 ) Net assets acquired $ 285,374 |
KRAVE Pure Foods, Inc. | |
Business Acquisition and Divestitures [Line Items] | |
Summary of Purchase Consideration Allocation to Assets Acquired and Liabilities Assumed | The purchase consideration was allocated to assets acquired and liabilities assumed based on their respective fair values as follows: Goodwill $ 147,089 Trademarks 112,000 Other intangible assets 17,000 Other assets, primarily current assets, net of cash acquired totaling $1,362 9,465 Current liabilities (2,756 ) Non-current deferred tax liabilities (47,344 ) Net assets acquired $ 235,454 |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS (Tables) | 9 Months Ended |
Oct. 02, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Summary of the Changes in the Carrying Value of Goodwill by Reportable Segment | The changes in the carrying value of goodwill by reportable segment for the nine months ended October 2, 2016 are as follows: North America International and Other Total Balance at December 31, 2015 $ 662,083 $ 22,169 $ 684,252 Acquired during the period (see Note 2) 127,455 — 127,455 Foreign currency translation 5,709 (1,283 ) 4,426 Balance at October 2, 2016 $ 795,247 $ 20,886 $ 816,133 |
Schedule of Gross Carrying Amount and Accumulated Amortization for Each Major Class of Intangible Asset | The following table provides the gross carrying amount and accumulated amortization for each major class of intangible asset: October 2, 2016 December 31, 2015 Intangible assets not subject to amortization: Trademarks 43,072 43,775 Intangible assets subject to amortization: Trademarks, customer relationships, patents and other finite-lived intangibles 538,753 390,900 Less: accumulated amortization (71,534 ) (55,370 ) Total other intangible assets $ 510,291 $ 379,305 |
SHORT AND LONG-TERM DEBT (Table
SHORT AND LONG-TERM DEBT (Tables) | 9 Months Ended |
Oct. 02, 2016 | |
Debt Disclosure [Abstract] | |
Schedule of Long-term Debt Instruments | Long-term debt consisted of the following: October 2, 2016 December 31, 2015 5.45% Notes due 2016 (1) $ — $ 250,000 1.50% Notes due 2016 250,000 250,000 1.60% Notes due 2018 300,000 300,000 4.125% Notes due 2020 350,000 350,000 8.8% Debentures due 2021 84,715 84,715 2.625% Notes due 2023 250,000 250,000 3.20% Notes due 2025 300,000 300,000 2.30% Notes due 2026 (2) 500,000 — 7.2% Debentures due 2027 193,639 193,639 3.375% Notes due 2046 (2) 300,000 — Other obligations, net of debt issuance costs and unamortized debt discount 84,136 78,660 Total long-term debt 2,612,490 2,057,014 Less—current portion 250,024 499,923 Long-term portion $ 2,362,466 $ 1,557,091 |
Schedule Of Net Interest Expense | Net interest expense consisted of the following: Three Months Ended Nine Months Ended October 2, 2016 October 4, 2015 October 2, 2016 October 4, 2015 Interest expense $ 25,882 $ 22,590 $ 72,404 $ 68,874 Less: Capitalized interest (1,141 ) (3,071 ) (4,702 ) (9,314 ) Loss on extinguishment of debt — 28,326 — 28,326 Interest expense 24,741 47,845 67,702 87,886 Interest income (354 ) (878 ) (972 ) (2,840 ) Interest expense, net $ 24,387 $ 46,967 $ 66,730 $ 85,046 |
DERIVATIVE INSTRUMENTS AND FA30
DERIVATIVE INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Tables) | 9 Months Ended |
Oct. 02, 2016 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Summary of Assets and Liabilities Measured at Fair Value on a Recurring Basis | The following table presents assets and liabilities that were measured at fair value in the Consolidated Balance Sheet on a recurring basis as of October 2, 2016 and December 31, 2015 : October 2, 2016 December 31, 2015 Assets (1) Liabilities (1) Assets (1) Liabilities (1) Derivatives designated as cash flow hedging instruments: Commodities futures and options (2) $ — $ — $ — $ 479 Foreign exchange contracts (3) 944 2,419 367 475 Interest rate swap agreements (4) — — — 40,299 944 2,419 367 41,253 Derivatives designated as fair value hedging instruments: Interest rate swap agreements (4) 15,349 — 4,313 — Derivatives not designated as hedging instruments: Commodities futures and options (2) 425 730 — 1,574 Deferred compensation derivatives (5) 665 — 1,198 — Foreign exchange contracts (3) — 454 69 — 1,090 1,184 1,267 1,574 Total $ 17,383 $ 3,603 $ 5,947 $ 42,827 (1) Derivatives assets are classified on our balance sheet within prepaid expenses and other as well as other assets. Derivative liabilities are classified on our balance sheet within accrued liabilities and other long-term liabilities. (2) The fair value of commodities futures and options contracts is based on quoted market prices and is, therefore, categorized as Level 1 within the fair value hierarchy. As of October 2, 2016 , assets included the net of assets of $35,999 and liabilities of $35,574 associated with cash transfers receivable or payable on commodities futures contracts reflecting the change in quoted market prices on the last trading day for the period. The comparable amounts reflected on a net basis in liabilities at December 31, 2015 were assets of $54,090 and liabilities of $54,860 . At October 2, 2016 and December 31, 2015, the remaining amount in liabilities related to the fair value of other non-exchange traded derivative instruments. (3) The fair value of foreign currency forward exchange contracts is the difference between the contract and current market foreign currency exchange rates at the end of the period. We estimate the fair value of foreign currency forward exchange contracts on a quarterly basis by obtaining market quotes of spot and forward rates for contracts with similar terms, adjusted where necessary for maturity differences. These contracts are classified as Level 2 within the fair value hierarchy. (4) The fair value of interest rate swap agreements represents the difference in the present value of cash flows calculated at the contracted interest rates and at current market interest rates at the end of the period. We calculate the fair value of interest rate swap agreements quarterly based on the quoted market price for the same or similar financial instruments. Such contracts are categorized as Level 2 within the fair value hierarchy. (5) The fair value of deferred compensation derivatives is based on quoted prices for market interest rates and a broad market equity index and is, therefore, categorized as Level 2 within the fair value hierarchy. |
Schedule of Carrying Values and Estimated Fair Values of Long-term Debt, Including Current Portion | The fair values and carrying values of long-term debt, including the current portion, was as follows: Fair Value Carrying Value October 2, 2016 December 31, 2015 October 2, 2016 December 31, 2015 Current portion of long-term debt $ 250,130 $ 509,580 $ 250,024 $ 499,923 Long-term debt 2,510,841 1,668,379 2,362,466 1,557,091 Total $ 2,760,971 $ 2,177,959 $ 2,612,490 $ 2,057,014 |
Summary of the Effect of Derivative Instruments on the Consolidated Statements of Income | The effect of derivative instruments on the Consolidated Statements of Income for the three months ended October 2, 2016 and October 4, 2015 was as follows: Non-designated Hedges Cash Flow Hedges Gains (losses) recognized in income (a) Gains (losses) recognized in other comprehensive income (“OCI”) (effective portion) Gains (losses) reclassified from accumulated OCI into income (effective portion) (b) Gains recognized in income (ineffective portion) (c) 2016 2015 2016 2015 2016 2015 2016 2015 Commodities futures and options $ (37,246 ) $ — $ — $ (34,571 ) $ 7,780 $ 11,000 $ — $ 1,288 Foreign exchange contracts (27 ) 750 1,628 662 (2,659 ) 185 — — Interest rate swap agreements — — (274 ) (36,187 ) (2,833 ) (1,166 ) — — Deferred compensation derivatives 665 (1,403 ) — — — — — — Total $ (36,608 ) $ (653 ) $ 1,354 $ (70,096 ) $ 2,288 $ 10,019 $ — $ 1,288 (a) Losses recognized in income for non-designated commodities futures and options contracts were included in cost of sales. Gains (losses) recognized in income for non-designated foreign currency forward exchange contracts and deferred compensation derivatives were included in selling, marketing and administrative expenses. (b) Gains (losses) reclassified from accumulated OCI ("AOCI") into income were included in cost of sales for commodities futures and options contracts and for foreign currency forward exchange contracts designated as hedges of purchases of inventory or other productive assets. Other gains (losses) for foreign currency forward exchange contracts were included in selling, marketing and administrative expenses. Losses reclassified from AOCI into income for interest rate swap agreements were included in interest expense. (c) Gains representing hedge ineffectiveness were included in cost of sales for commodities futures and options contracts. The effect of derivative instruments on the Consolidated Statements of Income for the nine months ended October 2, 2016 and October 4, 2015 was as follows: Non-designated Hedges Cash Flow Hedges Gains (losses) recognized in income (a) Gains (losses) recognized in OCI (effective portion) Gains (losses) reclassified from AOCI into income (effective portion) (b) Gains recognized in income (ineffective portion) (c) 2016 2015 2016 2015 2016 2015 2016 2015 Commodities futures and options $ (37,176 ) $ (2,777 ) $ — $ 62,619 $ 23,648 $ 31,300 $ — $ 2,142 Foreign exchange contracts (484 ) 474 (6,404 ) 158 (3,681 ) 273 — — Interest rate swap agreements — — (47,223 ) (28,184 ) (5,903 ) (3,479 ) — — Deferred compensation derivatives 1,486 (1,024 ) — — — — — — Total $ (36,174 ) $ (3,327 ) $ (53,627 ) $ 34,593 $ 14,064 $ 28,094 $ — $ 2,142 (a) Losses recognized in income for non-designated commodities futures and options contracts were included in cost of sales. Gains (losses) recognized in income for non-designated foreign currency forward exchange contracts and deferred compensation derivatives were included in selling, marketing and administrative expenses. (b) Gains (losses) reclassified from AOCI into income were included in cost of sales for commodities futures and options contracts and for foreign currency forward exchange contracts designated as hedges of purchases of inventory or other productive assets. Other gains (losses) for foreign currency forward exchange contracts were included in selling, marketing and administrative expenses. Losses reclassified from AOCI into income for interest rate swap agreements were included in interest expense. (c) Gains representing hedge ineffectiveness were included in cost of sales for commodities futures and options contracts. |
NONCONTROLLING INTERESTS IN S31
NONCONTROLLING INTERESTS IN SUBSIDIARIES (Tables) | 9 Months Ended |
Oct. 02, 2016 | |
Noncontrolling Interest [Abstract] | |
Rollforward of Activity Relating to Noncontrolling Interest | A roll-forward showing the 2016 activity relating to the noncontrolling interest follows: Noncontrolling Interests Balance, December 31, 2015 $ 49,465 Net loss attributable to noncontrolling interests (1) (798 ) Other comprehensive loss - foreign currency translation adjustments (2,040 ) Balance, October 2, 2016 $ 46,627 (1) Amount is not considered significant and is presented within selling, marketing and administrative expenses. |
COMPREHENSIVE INCOME (Tables)
COMPREHENSIVE INCOME (Tables) | 9 Months Ended |
Oct. 02, 2016 | |
Equity [Abstract] | |
Summary of the Components of Comprehensive Income | A summary of the components of comprehensive income is as follows: Three Months Ended Three Months Ended October 2, 2016 October 4, 2015 Pre-Tax Tax After-Tax Pre-Tax Tax After-Tax Net income $ 227,403 $ 154,771 Other comprehensive income (loss): Foreign currency translation adjustments $ (8,533 ) $ — (8,533 ) $ (26,631 ) $ — (26,631 ) Pension and post-retirement benefit plans (a) 11,896 (4,501 ) 7,395 15,962 (5,993 ) 9,969 Cash flow hedges: Gains (losses) on cash flow hedging derivatives 1,354 (210 ) 1,144 (70,096 ) 26,182 (43,914 ) Reclassification adjustments (b) (2,288 ) 1,390 (898 ) (10,019 ) 3,805 (6,214 ) Total other comprehensive loss $ 2,429 $ (3,321 ) (892 ) $ (90,784 ) $ 23,994 (66,790 ) Total comprehensive income $ 226,511 $ 87,981 Comprehensive loss (gain) attributable to noncontrolling interests 751 (820 ) Comprehensive income attributable to The Hershey Company $ 227,262 $ 87,161 Nine Months Ended Nine Months Ended October 2, 2016 October 4, 2015 Pre-Tax Tax After-Tax Pre-Tax Tax After-Tax Net income $ 603,191 $ 299,567 Other comprehensive income (loss): Foreign currency translation adjustments $ 5,053 $ — 5,053 $ (51,681 ) $ — (51,681 ) Pension and post-retirement benefit plans (a) 16,395 (6,511 ) 9,884 32,776 (11,880 ) 20,896 Cash flow hedges: Gains (losses) on cash flow hedging derivatives (53,627 ) 18,838 (34,789 ) 34,593 (13,570 ) 21,023 Reclassification adjustments (b) (14,064 ) 6,079 (7,985 ) (28,094 ) 10,383 (17,711 ) Total other comprehensive loss $ (46,243 ) $ 18,406 (27,837 ) $ (12,406 ) $ (15,067 ) (27,473 ) Total comprehensive income $ 575,354 $ 272,094 Comprehensive loss attributable to noncontrolling interests 2,040 2,111 Comprehensive income attributable to The Hershey Company $ 577,394 $ 274,205 (a) These amounts are included in the computation of net periodic benefit costs. For more information, see Note 11. (b) For information on the presentation of reclassification adjustments for cash flow hedges on the Consolidated Statements of Income, see Note 5. |
Summary of the Components of Accumulated Other Comprehensive Loss | The components of accumulated other comprehensive loss, as shown on the Consolidated Balance Sheets, are as follows: October 2, 2016 December 31, 2015 Foreign currency translation adjustments $ (94,143 ) $ (101,236 ) Pension and post-retirement benefit plans, net of tax (244,764 ) (254,648 ) Cash flow hedges, net of tax (57,915 ) (15,141 ) Total accumulated other comprehensive loss $ (396,822 ) $ (371,025 ) |
OTHER (INCOME) EXPENSE, NET (Ta
OTHER (INCOME) EXPENSE, NET (Tables) | 9 Months Ended |
Oct. 02, 2016 | |
Other Income and Expenses [Abstract] | |
Summary Other Nonoperating (Income) Expense | Other (income) expense, net reports certain gains and losses associated with activities not directly related to our core operations. A summary of the components of other (income) expense, net include the following: Three Months Ended Nine Months Ended October 2, 2016 October 4, 2015 October 2, 2016 October 4, 2015 Write-down of equity investments in partnerships qualifying for tax credits $ 20,801 $ 9,249 $ 35,862 $ 13,893 Settlement of SGM (see Note 2) — — (26,650 ) — Gain on sale of non-core trademark — — — (9,950 ) Other (income) expense, net 999 160 (509 ) 385 Total $ 21,800 $ 9,409 $ 8,703 $ 4,328 |
BUSINESS REALIGNMENT ACTIVITI34
BUSINESS REALIGNMENT ACTIVITIES (Tables) | 9 Months Ended |
Oct. 02, 2016 | |
Restructuring and Related Activities [Abstract] | |
Summary of Business Realignment And Impairment Charges | Expenses recorded for business realignment activities during the three and nine months ended October 2, 2016 and October 4, 2015 were classified as follows: Three Months Ended Nine Months Ended October 2, 2016 October 4, 2015 October 2, 2016 October 4, 2015 Cost of sales (1): Operational optimization program $ 24,470 $ — $ 57,948 $ — Other international restructuring programs — 2,529 — 5,205 Total cost of sales 24,470 2,529 57,948 5,205 Selling, marketing and administrative (2): Operational optimization program 414 — 9,822 — 2015 productivity initiative 748 6,515 6,149 10,017 Other international restructuring programs — 666 — 3,234 Total selling, marketing and administrative 1,162 7,181 15,971 13,251 Business realignment charges (3): Operational optimization program 87 — 17,442 — 2015 productivity initiative 2,243 57,753 13,126 80,305 Divestiture of Mauna Loa (see Note 2) — — — 2,667 Total business realignment charges 2,330 57,753 30,568 82,972 Total charges associated with business realignment activities $ 27,962 $ 67,463 $ 104,487 $ 101,428 (1) Charges primarily relate to non-cash asset-related accelerated depreciation and amortization. (2) Charges primarily relate to third-party costs incurred to execute the restructuring initiatives. (3) Charges largely relate to employee severance and benefits, including pension settlement costs for the 2015 Productivity Initiative. |
Summary of Business Realignment Activity | The following table presents the liability activity for employee-related costs qualifying as exit and disposal costs: Total Liability balance at December 31, 2015 $ 16,310 2016 business realignment charges 16,899 Cash payments (28,150 ) Other, net (206 ) Liability balance at October 2, 2016 $ 4,853 |
PENSION AND OTHER POST-RETIRE35
PENSION AND OTHER POST-RETIREMENT BENEFIT PLANS (Tables) | 9 Months Ended |
Oct. 02, 2016 | |
Compensation and Retirement Disclosure [Abstract] | |
Summary of Components of Net Periodic Benefit Cost | The components of net periodic benefit cost for the third quarter were as follows: Pension Benefits Other Benefits Three Months Ended Three Months Ended October 2, 2016 October 4, 2015 October 2, 2016 October 4, 2015 Service cost $ 5,794 $ 7,068 $ 75 $ 135 Interest cost 10,130 11,025 2,435 2,516 Expected return on plan assets (14,700 ) (17,146 ) — — Amortization of prior service (credit) cost (262 ) (294 ) 144 151 Amortization of net loss (gains) 8,803 7,595 (4 ) (11 ) Net periodic benefit cost 9,765 8,248 2,650 2,791 Settlement cost 3,147 2,583 — — Total net periodic benefit cost $ 12,912 $ 10,831 $ 2,650 $ 2,791 We made contributions of $18,549 and $7,473 to the pension plans and other benefits plans, respectively, during the third quarter of 2016. In the third quarter of 2015, we made contributions of $29,349 and $5,174 to our pension plans and other benefits plans, respectively. The contributions in 2016 and 2015 also included benefit payments from our non-qualified pension plans and post-retirement benefit plans. The components of net periodic benefit cost for the year-to-date periods were as follows: Pension Benefits Other Benefits Nine Months Ended Nine Months Ended October 2, 2016 October 4, 2015 October 2, 2016 October 4, 2015 Service cost $ 17,377 $ 21,301 $ 224 $ 406 Interest cost 31,914 33,187 7,300 7,617 Expected return on plan assets (44,073 ) (51,685 ) — — Amortization of prior service (credit) cost (785 ) (881 ) 432 457 Amortization of net loss (gains) 26,411 22,899 (10 ) (40 ) Net periodic benefit cost 30,844 24,821 7,946 8,440 Settlement cost 20,085 2,583 — — Total net periodic benefit cost $ 50,929 $ 27,404 $ 7,946 $ 8,440 |
STOCK COMPENSATION PLANS (Table
STOCK COMPENSATION PLANS (Tables) | 9 Months Ended |
Oct. 02, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Summary of Stock Compensation Costs | For the periods presented, compensation expense for all types of stock-based compensation programs and the related income tax benefit recognized were as follows: Three Months Ended Nine Months Ended October 2, 2016 October 4, 2015 October 2, 2016 October 4, 2015 Pre-tax compensation expense $ 14,491 $ 13,374 $ 40,699 $ 39,989 Related income tax benefit 4,406 4,334 13,186 13,676 |
Summary of Activity Relating to the Grants of Stock Options | A summary of activity relating to grants of stock options for the period ended October 2, 2016 is as follows: Stock Options Shares Weighted-Average Weighted-Average Remaining Aggregate Intrinsic Value Outstanding at beginning of the period 6,842,563 $75.48 5.8 years Granted 1,354,390 $90.72 Exercised (1,649,402 ) $58.19 Forfeited (189,933 ) $100.65 Outstanding as of October 2, 2016 6,357,618 $82.46 6.5 years $ 113,418 Options exercisable as of October 2, 2016 3,597,028 $71.87 4.9 years $ 100,042 |
Summary of Fair Value Estimated on the Grant Date and the Weighted Average Assumptions | The fair value was estimated on the date of grant using a Black-Scholes option-pricing model and the following weighted-average assumptions: Nine Months Ended October 2, 2016 October 4, 2015 Dividend yields 2.4 % 2.0 % Expected volatility 16.8 % 20.2 % Risk-free interest rates 1.5 % 1.9 % Expected lives in years 6.8 6.6 |
Summary of Activity Relating to Grants of PSUs and RSUs | A summary of activity relating to grants of PSUs and RSUs for the period ended October 2, 2016 is as follows: Performance Stock Units and Restricted Stock Units Number of units Weighted-average grant date fair value for equity awards (per unit) Outstanding at beginning of year 495,207 $106.40 Granted 531,019 $93.47 Performance assumption change 5,276 $97.32 Vested (214,577 ) $94.95 Forfeited (32,512 ) $100.45 Outstanding as of October 2, 2016 784,413 $102.53 |
Schedule of Information Pertaining to Fair Value of PSUs and RSUs Granted for Potential Future Distribution | The following table sets forth information about the fair value of the PSUs and RSUs granted for potential future distribution to employees and non-employee directors. In addition, the table provides assumptions used to determine the fair value of the market-based total shareholder return component using the Monte Carlo simulation model on the date of grant. Nine Months Ended October 2, 2016 October 4, 2015 Units granted 531,019 315,443 Weighted-average fair value at date of grant $ 93.47 $ 107.53 Monte Carlo simulation assumptions: Estimated values $ 38.02 $ 61.22 Dividend yields 2.5 % 2.0 % Expected volatility 17.0 % 14.9 % |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 9 Months Ended |
Oct. 02, 2016 | |
Segment Reporting [Abstract] | |
Summary of Net Sales and Earnings, by Segment | Our segment net sales and earnings were as follows: Three Months Ended Nine Months Ended October 2, 2016 October 4, 2015 October 2, 2016 October 4, 2015 Net sales: North America $ 1,764,528 $ 1,733,869 $ 4,842,840 $ 4,840,438 International and Other 238,926 226,910 627,097 636,966 Total $ 2,003,454 $ 1,960,779 $ 5,469,937 $ 5,477,404 Segment Income (Loss): North America $ 563,946 $ 546,080 $ 1,519,059 $ 1,561,053 International and Other 4,284 (13,509 ) (12,411 ) (79,754 ) Total segment income 568,230 532,571 1,506,648 1,481,299 Unallocated corporate expense (1) 121,828 117,695 370,622 383,160 Unallocated mark-to-market losses on commodity derivatives (2) 35,791 — 30,851 — Goodwill impairment — 30,991 — 280,802 Charges associated with business realignment activities 27,962 67,463 104,487 101,428 Non-service related pension expense 6,360 4,049 20,666 6,976 Acquisition integration costs 2,265 9,359 3,727 14,253 Operating profit 374,024 303,014 976,295 694,680 Interest expense, net 24,387 46,967 66,730 85,046 Other (income) expense, net 21,800 9,409 8,703 4,328 Income before income taxes $ 327,837 $ 246,638 $ 900,862 $ 605,306 (1) Includes centrally-managed (a) corporate functional costs relating to legal, treasury, finance, and human resources, (b) expenses associated with the oversight and administration of our global operations, including warehousing, distribution and manufacturing, information systems and global shared services, (c) non-cash stock-based compensation expense, and (d) other gains or losses that are not integral to segment performance. (2) Reflects gains and losses on commodity derivative instruments that are excluded from segment income until the related inventory is sold. See Note 5. |
Allocation Of Net Derivative Gains Losses From Economic Hedges To Operating Results Of Reporting Segments Table | Activity within the unallocated mark-to-market (gains) losses on commodity derivatives for the three and nine months ended October 2, 2016 included: Three Months Ended Nine Months Ended October 2, 2016 October 2, 2016 Net losses on mark-to-market valuation of unallocated commodity derivative positions $ 37,246 $ 37,176 Net losses on commodity derivative positions allocated to segment income 1,455 6,325 Net losses on mark-to-market valuation of commodity derivative positions remaining in unallocated derivative (gains) losses $ 35,791 $ 30,851 |
Reconciliation of Other Significant Reconciling Items from Segments to Consolidated | Depreciation and amortization expense included within segment income presented above is as follows: Three Months Ended Nine Months Ended October 2, 2016 October 4, 2015 October 2, 2016 October 4, 2015 North America $ 41,592 $ 38,887 $ 120,378 $ 113,837 International and Other 13,515 13,993 37,523 34,136 Corporate (1) 30,015 11,174 84,000 34,882 Total $ 85,122 $ 64,054 $ 241,901 $ 182,855 |
TREASURY STOCK ACTIVITY (Tables
TREASURY STOCK ACTIVITY (Tables) | 9 Months Ended |
Oct. 02, 2016 | |
Equity [Abstract] | |
Summary of Treasury Stock Activity | A summary of our treasury stock activity is as follows: Nine Months Ended October 2, 2016 Shares Dollars In thousands Shares repurchased in the open market under pre-approved share repurchase programs 4,640,964 $ 420,249 Shares repurchased to replace Treasury Stock issued for stock options and incentive compensation 354,320 32,331 Total share repurchases 4,995,284 452,580 Shares issued for stock options and incentive compensation (1,814,461 ) (75,542 ) Net change 3,180,823 $ 377,038 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 9 Months Ended |
Oct. 02, 2016 | |
Earnings Per Share [Abstract] | |
Basic and Diluted Earnings Per Share | We compute basic and diluted earnings per share based on the weighted-average number of shares of Common Stock and Class B common stock outstanding as follows: Three Months Ended October 2, 2016 October 4, 2015 Common Stock Class B Common Stock Common Stock Class B Common Stock Basic earnings per share: Numerator: Allocation of distributed earnings (cash dividends paid) $ 94,498 $ 34,068 $ 92,041 $ 32,128 Allocation of undistributed earnings 72,691 26,146 22,693 7,909 Total earnings—basic $ 167,189 $ 60,214 $ 114,734 $ 40,037 Denominator (shares in thousands): Total weighted-average shares—basic 153,259 60,620 158,111 60,620 Earnings Per Share—basic $ 1.09 $ 0.99 $ 0.73 $ 0.66 Diluted earnings per share: Numerator: Allocation of total earnings used in basic computation $ 167,189 $ 60,214 $ 114,734 $ 40,037 Reallocation of total earnings as a result of conversion of Class B common stock to Common stock 60,214 — 40,037 — Reallocation of undistributed loss — (160 ) — (27 ) Total earnings—diluted $ 227,403 $ 60,054 $ 154,771 $ 40,010 Denominator (shares in thousands): Number of shares used in basic computation 153,259 60,620 158,111 60,620 Weighted-average effect of dilutive securities: Conversion of Class B common stock to Common shares outstanding 60,620 — 60,620 — Employee stock options 1,062 — 1,192 — Performance and restricted stock units 220 — 152 — Total weighted-average shares—diluted 215,161 60,620 220,075 60,620 Earnings Per Share—diluted $ 1.06 $ 0.99 $ 0.70 $ 0.66 Nine Months Ended October 2, 2016 October 4, 2015 Common Stock Class B Common Stock Common Stock Class B Common Stock Basic earnings per share: Numerator: Allocation of distributed earnings (cash dividends paid) $ 273,380 $ 98,326 $ 262,032 $ 91,051 Allocation of undistributed earnings (loss) 170,458 61,027 (39,750 ) (13,766 ) Total earnings—basic $ 443,838 $ 159,353 $ 222,282 $ 77,285 Denominator (shares in thousands): Total weighted-average shares—basic 153,943 60,620 159,058 60,620 Earnings Per Share—basic $ 2.88 $ 2.63 $ 1.40 $ 1.27 Diluted earnings per share: Numerator: Allocation of total earnings used in basic computation $ 443,838 $ 159,353 $ 222,282 $ 77,285 Reallocation of total earnings as a result of conversion of Class B common stock to Common stock 159,353 — 77,285 — Reallocation of undistributed (loss) earnings — (347 ) — 132 Total earnings—diluted $ 603,191 $ 159,006 $ 299,567 $ 77,417 Denominator (shares in thousands): Number of shares used in basic computation 153,943 60,620 159,058 60,620 Weighted-average effect of dilutive securities: Conversion of Class B common stock to Common shares outstanding 60,620 — 60,620 — Employee stock options 1,013 — 1,406 — Performance and restricted stock units 182 — 238 — Total weighted-average shares—diluted 215,758 60,620 221,322 60,620 Earnings Per Share—diluted $ 2.80 $ 2.62 $ 1.35 $ 1.28 |
SUPPLEMENTAL BALANCE SHEET IN40
SUPPLEMENTAL BALANCE SHEET INFORMATION (Tables) | 9 Months Ended |
Oct. 02, 2016 | |
SUPPLEMENTAL BALANCE SHEET INFORMATION [Abstract] | |
Schedule of Supplemental Balance Sheet Information [Table Text Block] | The components of certain Consolidated Balance Sheet accounts are as follows: Inventories: October 2, 2016 December 31, 2015 Raw materials $ 321,781 $ 353,451 Goods in process 99,685 67,745 Finished goods 610,929 534,983 Inventories at FIFO 1,032,395 956,179 Adjustment to LIFO (188,876 ) (205,209 ) Total inventories $ 843,519 $ 750,970 Property, plant and equipment: October 2, 2016 December 31, 2015 Land $ 101,197 $ 96,666 Buildings 1,257,869 1,084,958 Machinery and equipment 2,985,841 2,886,723 Construction in progress 235,274 448,956 Property, plant and equipment, gross 4,580,181 4,517,303 Accumulated depreciation (2,420,592 ) (2,276,843 ) Property, plant and equipment, net $ 2,159,589 $ 2,240,460 Other assets: October 2, 2016 December 31, 2015 Capitalized software, net $ 85,352 $ 68,004 Income tax receivable 1,468 1,428 Other non-current assets 82,933 85,934 Total other assets $ 169,753 $ 155,366 Accrued liabilities: October 2, 2016 December 31, 2015 Payroll, compensations and benefits $ 202,131 $ 215,638 Advertising and promotion 334,902 337,945 Due to SGM shareholders — 72,025 Other 145,979 231,359 Total accrued liabilities $ 683,012 $ 856,967 Other long-term liabilities: October 2, 2016 December 31, 2015 Post-retirement benefits liabilities $ 224,974 $ 231,412 Pension benefits liabilities 137,530 122,681 Other 116,203 114,625 Total other long-term liabilities $ 478,707 $ 468,718 |
BUSINESS ACQUISITIONS AND DIV41
BUSINESS ACQUISITIONS AND DIVESTITURES - RIPPLE BRAND COLLECTIVE, LLC ASSETS ACQUIRED AND LIABILITIES ASSUMED ALLOCATION (Details) - USD ($) $ in Thousands | Oct. 02, 2016 | Apr. 26, 2016 | Dec. 31, 2015 |
Business Acquisition [Line Items] | |||
Goodwill | $ 816,133 | $ 684,252 | |
Ripple Brand Collective, LLC | |||
Business Acquisition [Line Items] | |||
Goodwill | $ 127,455 | ||
Other current assets | 13,030 | ||
Current liabilities | (7,211) | ||
Net assets acquired | 285,374 | ||
Cash acquired from acquisition | 674 | ||
Trademarks | Ripple Brand Collective, LLC | |||
Business Acquisition [Line Items] | |||
Finite-lived intangible assets | 91,200 | ||
Other intangible assets | Ripple Brand Collective, LLC | |||
Business Acquisition [Line Items] | |||
Finite-lived intangible assets | $ 60,900 |
BUSINESS ACQUISITIONS AND DIV42
BUSINESS ACQUISITIONS AND DIVESTITURES - 2016 SHANGHAI GOLDEN MONKEY (Details) - USD ($) $ in Thousands | Feb. 03, 2016 | Oct. 02, 2016 | Oct. 04, 2015 | Oct. 02, 2016 | Oct. 04, 2015 | Dec. 31, 2014 |
Business Acquisition [Line Items] | ||||||
Payments to acquire businesses | $ 35,762 | $ 0 | ||||
Business combination, gain recognized | 26,650 | 0 | ||||
Shanghai Golden Monkey Food Joint Stock Co., Ltd. | ||||||
Business Acquisition [Line Items] | ||||||
Percentage of voting interests acquired | 20.00% | 100.00% | ||||
Payments to acquire businesses | $ 35,762 | |||||
Business combination, gain recognized | $ 26,650 | $ 0 | $ 0 | $ 26,650 | $ 0 |
BUSINESS ACQUISITIONS AND DIV43
BUSINESS ACQUISITIONS AND DIVESTITURES - KRAVE PURE FOODS NARRATIVE (Details) - USD ($) | 1 Months Ended | 9 Months Ended | 10 Months Ended | 12 Months Ended | ||
Dec. 31, 2015 | Mar. 31, 2015 | Oct. 02, 2016 | Oct. 04, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | |
Business Acquisition [Line Items] | ||||||
Payments to acquire businesses | $ 35,762,000 | $ 0 | ||||
KRAVE Pure Foods, Inc. | ||||||
Business Acquisition [Line Items] | ||||||
Business acquisition, revenue reported by acquired entity for last annual period | $ 35,000,000 | |||||
Payments to acquire businesses | $ 220,016,000 | |||||
Maximum contingent consideration amount | $ 20,000,000 | |||||
Fair value of the contingent consideration | $ 16,800,000 | $ 10,000,000 | ||||
Payment of contingent consideration | $ 10,000,000 | |||||
KRAVE Pure Foods, Inc. | Trademarks | ||||||
Business Acquisition [Line Items] | ||||||
Finite-lived intangible asset, useful life | 22 years | |||||
KRAVE Pure Foods, Inc. | Other intangible assets | Minimum | ||||||
Business Acquisition [Line Items] | ||||||
Finite-lived intangible asset, useful life | 5 years | |||||
KRAVE Pure Foods, Inc. | Other intangible assets | Maximum | ||||||
Business Acquisition [Line Items] | ||||||
Finite-lived intangible asset, useful life | 16 years |
BUSINESS ACQUISITIONS AND DIV44
BUSINESS ACQUISITIONS AND DIVESTITURES - KRAVE PURE FOODS ASSETS ACQUIRED AND LIABILITIES ASSUMED ALLOCATION (Details) - USD ($) $ in Thousands | Oct. 02, 2016 | Dec. 31, 2015 | Mar. 31, 2015 |
Business Acquisition [Line Items] | |||
Goodwill | $ 816,133 | $ 684,252 | |
KRAVE Pure Foods, Inc. | |||
Business Acquisition [Line Items] | |||
Goodwill | $ 147,089 | ||
Other current assets | 9,465 | ||
Current liabilities | (2,756) | ||
Non-current deferred tax liabilities | (47,344) | ||
Net assets acquired | 235,454 | ||
Cash acquired from acquisition | 1,362 | ||
KRAVE Pure Foods, Inc. | Trademarks | |||
Business Acquisition [Line Items] | |||
Finite-lived intangible assets | 112,000 | ||
KRAVE Pure Foods, Inc. | Other intangible assets | |||
Business Acquisition [Line Items] | |||
Finite-lived intangible assets | $ 17,000 |
BUSINESS ACQUISITIONS AND DIV45
BUSINESS ACQUISITIONS AND DIVESTITURES - 2015 DIVESTITURE NARRATIVE (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Oct. 02, 2016 | Oct. 04, 2015 | Apr. 05, 2015 | Oct. 02, 2016 | Oct. 04, 2015 | Dec. 31, 2014 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Proceeds from sale of business | $ 0 | $ 32,408 | ||||
Goodwill impairment | $ 0 | $ 30,991 | $ 0 | $ 280,802 | ||
Disposal Group, Held-for-sale or Disposed of by Sale, Not Discontinued Operations | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Proceeds on disposal of business | $ 2,667 | $ 22,256 | ||||
Goodwill impairment | $ 18,531 | |||||
Disposal Group, Held-for-sale or Disposed of by Sale, Not Discontinued Operations | Mauna Loa Macadamia Nut Corporation | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Proceeds from sale of business | $ 32,400 |
BUSINESS ACQUISITIONS AND DIV46
BUSINESS ACQUISITIONS AND DIVESTITURES - RIPPLE BRAND COLLECTIVE, LLC NARRATIVE (Details) - USD ($) $ in Thousands | Apr. 26, 2016 | Oct. 02, 2016 | Oct. 04, 2015 | Oct. 02, 2016 | Oct. 04, 2015 | Dec. 31, 2016 |
Business Acquisition [Line Items] | ||||||
Net sales | $ 2,003,454 | $ 1,960,779 | $ 5,469,937 | $ 5,477,404 | ||
Trademarks | Ripple Brand Collective, LLC | ||||||
Business Acquisition [Line Items] | ||||||
Finite-lived intangible asset, useful life | 27 years | |||||
Other intangible assets | Minimum | Ripple Brand Collective, LLC | ||||||
Business Acquisition [Line Items] | ||||||
Finite-lived intangible asset, useful life | 2 years | |||||
Other intangible assets | Maximum | Ripple Brand Collective, LLC | ||||||
Business Acquisition [Line Items] | ||||||
Finite-lived intangible asset, useful life | 14 years | |||||
Scenario, Forecast | Minimum | Ripple Brand Collective, LLC | ||||||
Business Acquisition [Line Items] | ||||||
Net sales | $ 65,000 | |||||
Scenario, Forecast | Maximum | Ripple Brand Collective, LLC | ||||||
Business Acquisition [Line Items] | ||||||
Net sales | $ 75,000 |
GOODWILL AND INTANGIBLE ASSET47
GOODWILL AND INTANGIBLE ASSETS - SUMMARY OF CHANGES IN CARRYING VALUE OF GOODWILL BY REPORTABLE SEGMENT (Details) $ in Thousands | 9 Months Ended |
Oct. 02, 2016USD ($) | |
Goodwill [Roll Forward] | |
Goodwill, beginning balance | $ 684,252 |
Acquired during the period | 127,455 |
Foreign currency translation | 4,426 |
Goodwill, ending balance | 816,133 |
Operating Segments | North America | |
Goodwill [Roll Forward] | |
Goodwill, beginning balance | 662,083 |
Acquired during the period | 127,455 |
Foreign currency translation | 5,709 |
Goodwill, ending balance | 795,247 |
Operating Segments | International and Other | |
Goodwill [Roll Forward] | |
Goodwill, beginning balance | 22,169 |
Acquired during the period | 0 |
Foreign currency translation | (1,283) |
Goodwill, ending balance | $ 20,886 |
GOODWILL AND INTANGIBLE ASSET48
GOODWILL AND INTANGIBLE ASSETS - NARRATIVE (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 02, 2016 | Oct. 04, 2015 | Oct. 02, 2016 | Oct. 04, 2015 | |
Goodwill [Line Items] | ||||
Amortization expense | $ 7,666 | $ 5,340 | $ 18,811 | $ 16,469 |
GOODWILL AND INTANGIBLE ASSET49
GOODWILL AND INTANGIBLE ASSETS - CARRYING AMOUNTS AND ACCUMULATED AMORTIZATION (Details) - USD ($) $ in Thousands | Oct. 02, 2016 | Dec. 31, 2015 |
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, gross | $ 538,753 | $ 390,900 |
Finite-lived intangible assets, accumulated amortization | (71,534) | (55,370) |
Total other intangible assets | 510,291 | 379,305 |
Trademarks | ||
Finite-Lived Intangible Assets [Line Items] | ||
Indefinite-lived intangible assets, excluding goodwill | $ 43,072 | $ 43,775 |
SHORT AND LONG-TERM DEBT - SHOR
SHORT AND LONG-TERM DEBT - SHORT-TERM DEBT (Details) - USD ($) | Oct. 02, 2016 | Dec. 31, 2015 |
Line of Credit Facility [Line Items] | ||
Short-term debt | $ 612,383,000 | $ 363,513,000 |
Commercial Paper | ||
Line of Credit Facility [Line Items] | ||
Short-term debt | $ 395,366,000 | $ 49,993,000 |
Short-term debt, weighted average interest rate | 0.45% | 0.40% |
Revolving Credit Facility | Line of Credit | ||
Line of Credit Facility [Line Items] | ||
Line of credit facility, maximum borrowing capacity | $ 500,000,000 | |
Line of credit facility, accordion feature increase limit | 400,000,000 | |
Revolving Credit Facility | Foreign Line of Credit | ||
Line of Credit Facility [Line Items] | ||
Short-term foreign bank loans against the lines of credit | 217,017,000 | $ 313,520,000 |
Line of Credit | Revolving Credit Facility | Line of Credit | ||
Line of Credit Facility [Line Items] | ||
Line of credit facility, maximum borrowing capacity | $ 1,000,000,000 |
SHORT AND LONG-TERM DEBT - SUMM
SHORT AND LONG-TERM DEBT - SUMMARY OF LONG TERM DEBT (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | ||
Sep. 30, 2016 | Oct. 02, 2016 | Aug. 31, 2016 | Dec. 31, 2015 | |
Debt Instrument [Line Items] | ||||
Long-term Debt | $ 2,612,490 | $ 2,057,014 | ||
Less—current portion | 250,024 | 499,923 | ||
Long-term portion | 2,362,466 | 1,557,091 | ||
Proceeds from Issuance of Other Long-term Debt | 792,923 | |||
Corporate Debt Securities | 5.45% Notes due 2016 (1) | ||||
Debt Instrument [Line Items] | ||||
Long-term Debt | $ 0 | $ 250,000 | ||
Long-term Debt | $ 250,000 | |||
Debt Instrument, Interest Rate, Stated Percentage | 5.45% | 5.45% | 5.45% | |
Corporate Debt Securities | 1.50% Notes Due 2016 | ||||
Debt Instrument [Line Items] | ||||
Long-term Debt | $ 250,000 | $ 250,000 | ||
Debt Instrument, Interest Rate, Stated Percentage | 1.50% | 1.50% | ||
Corporate Debt Securities | 1.60% Notes due 2018 | ||||
Debt Instrument [Line Items] | ||||
Long-term Debt | $ 300,000 | $ 300,000 | ||
Debt Instrument, Interest Rate, Stated Percentage | 1.60% | 1.60% | ||
Corporate Debt Securities | 4.125% Notes due 2020 | ||||
Debt Instrument [Line Items] | ||||
Long-term Debt | $ 350,000 | $ 350,000 | ||
Debt Instrument, Interest Rate, Stated Percentage | 4.125% | 4.125% | ||
Corporate Debt Securities | 8.8% Debentures due 2021 | ||||
Debt Instrument [Line Items] | ||||
Long-term Debt | $ 84,715 | $ 84,715 | ||
Debt Instrument, Interest Rate, Stated Percentage | 8.80% | 8.80% | ||
Corporate Debt Securities | 2.625% Notes due 2023 | ||||
Debt Instrument [Line Items] | ||||
Long-term Debt | $ 250,000 | $ 250,000 | ||
Debt Instrument, Interest Rate, Stated Percentage | 2.625% | 2.625% | ||
Corporate Debt Securities | 3.20% Notes due 2025 | ||||
Debt Instrument [Line Items] | ||||
Long-term Debt | $ 300,000 | $ 300,000 | ||
Debt Instrument, Interest Rate, Stated Percentage | 3.20% | 3.20% | ||
Corporate Debt Securities | 2.30% Notes due 2026 | ||||
Debt Instrument [Line Items] | ||||
Long-term Debt | $ 500,000 | $ 0 | ||
Debt Instrument, Face Amount | $ 500,000 | |||
Debt Instrument, Interest Rate, Stated Percentage | 2.30% | 2.30% | 2.30% | |
Corporate Debt Securities | 7.2% Debentures due 2027 | ||||
Debt Instrument [Line Items] | ||||
Long-term Debt | $ 193,639 | $ 193,639 | ||
Debt Instrument, Interest Rate, Stated Percentage | 7.20% | 7.20% | ||
Corporate Debt Securities | 3.375% Notes due 2046 | ||||
Debt Instrument [Line Items] | ||||
Long-term Debt | $ 300,000 | $ 0 | ||
Debt Instrument, Face Amount | $ 300,000 | |||
Debt Instrument, Interest Rate, Stated Percentage | 3.375% | 3.375% | 3.375% | |
Notes Payable to Banks | Other obligations, net of debt issuance costs and unamortized debt discount | ||||
Debt Instrument [Line Items] | ||||
Long-term Debt | $ 84,136 | $ 78,660 |
SHORT AND LONG-TERM DEBT - LONG
SHORT AND LONG-TERM DEBT - LONG TERM DEBT INTEREST RATES (Details) - Corporate Debt Securities | Oct. 02, 2016 | Aug. 31, 2016 | Dec. 31, 2015 |
5.45% Notes due 2016 (1) | |||
Debt Instrument [Line Items] | |||
Debt Instrument, Interest Rate, Stated Percentage | 5.45% | 5.45% | 5.45% |
1.50% Notes Due 2016 | |||
Debt Instrument [Line Items] | |||
Debt Instrument, Interest Rate, Stated Percentage | 1.50% | 1.50% | |
1.60% Notes due 2018 | |||
Debt Instrument [Line Items] | |||
Debt Instrument, Interest Rate, Stated Percentage | 1.60% | 1.60% | |
4.125% Notes due 2020 | |||
Debt Instrument [Line Items] | |||
Debt Instrument, Interest Rate, Stated Percentage | 4.125% | 4.125% | |
8.8% Debentures due 2021 | |||
Debt Instrument [Line Items] | |||
Debt Instrument, Interest Rate, Stated Percentage | 8.80% | 8.80% | |
2.625% Notes due 2023 | |||
Debt Instrument [Line Items] | |||
Debt Instrument, Interest Rate, Stated Percentage | 2.625% | 2.625% | |
3.20% Notes due 2025 | |||
Debt Instrument [Line Items] | |||
Debt Instrument, Interest Rate, Stated Percentage | 3.20% | 3.20% | |
2.30% Notes due 2026 | |||
Debt Instrument [Line Items] | |||
Debt Instrument, Interest Rate, Stated Percentage | 2.30% | 2.30% | 2.30% |
7.2% Debentures due 2027 | |||
Debt Instrument [Line Items] | |||
Debt Instrument, Interest Rate, Stated Percentage | 7.20% | 7.20% | |
3.375% Notes due 2046 | |||
Debt Instrument [Line Items] | |||
Debt Instrument, Interest Rate, Stated Percentage | 3.375% | 3.375% | 3.375% |
SHORT AND LONG-TERM DEBT - INTE
SHORT AND LONG-TERM DEBT - INTEREST EXPENSE (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 02, 2016 | Oct. 04, 2015 | Oct. 02, 2016 | Oct. 04, 2015 | |
Debt Disclosure [Abstract] | ||||
Interest expense | $ 25,882 | $ 22,590 | $ 72,404 | $ 68,874 |
Less: Capitalized interest | (1,141) | (3,071) | (4,702) | (9,314) |
Loss on extinguishment of debt | 0 | 28,326 | 0 | 28,326 |
Interest expense | 24,741 | 47,845 | 67,702 | 87,886 |
Interest income | (354) | (878) | (972) | (2,840) |
Interest expense, net | $ 24,387 | $ 46,967 | $ 66,730 | $ 85,046 |
DERIVATIVE INSTRUMENTS AND FA54
DERIVATIVE INSTRUMENTS AND FAIR VALUE MEASUREMENTS - NARRATIVE (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Oct. 02, 2016 | Oct. 04, 2015 | Oct. 02, 2016 | Oct. 04, 2015 | Dec. 31, 2015 | |
Derivative [Line Items] | |||||
Cash flow hedge gain (loss) to be reclassified within twelve months | $ 5,270,000 | ||||
Significant other unobservable inputs (Level 3) | |||||
Derivative [Line Items] | |||||
Fair value, net asset (liability) | $ 0 | $ 0 | $ 0 | ||
Commodities futures and options | |||||
Derivative [Line Items] | |||||
Minimum length of time, hedged in cash flow hedge | 3 months | ||||
Maximum length of time, hedged in cash flow hedge | 24 months | ||||
Foreign exchange contracts | |||||
Derivative [Line Items] | |||||
Minimum length of time, hedged in cash flow hedge | 3 months | ||||
Maximum length of time, hedged in cash flow hedge | 12 months | ||||
Foreign exchange contracts | Designated as Hedging Instrument | Cash Flow Hedges | |||||
Derivative [Line Items] | |||||
Derivative, notional amount | 86,896,000 | $ 86,896,000 | 10,752,000 | ||
Foreign exchange contracts | Non-designated Hedges | |||||
Derivative [Line Items] | |||||
Derivative, notional amount | 2,791,000 | 2,791,000 | 2,791,000 | ||
Interest rate swap agreements | Designated as Hedging Instrument | Cash Flow Hedges | |||||
Derivative [Line Items] | |||||
Derivative, notional amount | 500,000,000 | ||||
Increase (Decrease) in Derivative Assets and Liabilities | 87,000,000 | ||||
Interest rate swap agreements | Designated as Hedging Instrument | Fair Value Hedging | Significant other observable inputs (Level 2) | |||||
Derivative [Line Items] | |||||
Derivative, notional amount | 350,000,000 | 350,000,000 | 350,000,000 | ||
Deferred compensation derivatives | |||||
Derivative [Line Items] | |||||
Derivative, notional amount | 19,740,000 | $ 19,740,000 | $ 22,230,000 | ||
Deferred compensation derivatives | Non-designated Hedges | Minimum | |||||
Derivative [Line Items] | |||||
Derivative, term of contract | 3 months | ||||
Deferred compensation derivatives | Non-designated Hedges | Maximum | |||||
Derivative [Line Items] | |||||
Derivative, term of contract | 12 months | ||||
Interest Rate Swap | Designated as Hedging Instrument | Fair Value Hedging | Interest Expense | |||||
Derivative [Line Items] | |||||
Fair value hedges, pre-tax benefit | $ 1,022,000 | $ 1,548,000 | $ 3,477,000 | $ 5,597,000 |
DERIVATIVE INSTRUMENTS AND FA55
DERIVATIVE INSTRUMENTS AND FAIR VALUE MEASUREMENTS - ASSETS AND LIABILITIES MEASURED AT FAIR VALUE (Details) - Fair Value, Measurements, Recurring - USD ($) $ in Thousands | Oct. 02, 2016 | Dec. 31, 2015 |
Derivatives, Fair Value [Line Items] | ||
Derivative asset | $ 17,383 | $ 5,947 |
Derivative liability | 3,603 | 42,827 |
Designated as Hedging Instrument | Cash Flow Hedges | ||
Derivatives, Fair Value [Line Items] | ||
Derivative asset | 944 | 367 |
Derivative liability | 2,419 | 41,253 |
Designated as Hedging Instrument | Cash Flow Hedges | Commodities futures and options | ||
Derivatives, Fair Value [Line Items] | ||
Derivative asset | 0 | 0 |
Derivative liability | 0 | 479 |
Designated as Hedging Instrument | Cash Flow Hedges | Commodities futures and options | Quoted prices in active markets of identical assets (Level 1) | ||
Derivatives, Fair Value [Line Items] | ||
Gross derivative assets, included within derivative liabilities | 35,999 | 54,090 |
Derivative liability, gross liabilities | 35,574 | 54,860 |
Designated as Hedging Instrument | Cash Flow Hedges | Foreign exchange contracts | ||
Derivatives, Fair Value [Line Items] | ||
Derivative asset | 944 | 367 |
Derivative liability | 2,419 | 475 |
Designated as Hedging Instrument | Cash Flow Hedges | Interest rate swap agreements | ||
Derivatives, Fair Value [Line Items] | ||
Derivative asset | 0 | 0 |
Derivative liability | 0 | 40,299 |
Designated as Hedging Instrument | Fair Value Hedging | Interest rate swap agreements | ||
Derivatives, Fair Value [Line Items] | ||
Derivative asset | 15,349 | 4,313 |
Derivative liability | 0 | 0 |
Non-designated Hedges | ||
Derivatives, Fair Value [Line Items] | ||
Derivative asset | 1,090 | 1,267 |
Derivative liability | 1,184 | 1,574 |
Non-designated Hedges | Commodities futures and options | ||
Derivatives, Fair Value [Line Items] | ||
Derivative asset | 425 | 0 |
Derivative liability | 730 | 1,574 |
Non-designated Hedges | Foreign exchange contracts | ||
Derivatives, Fair Value [Line Items] | ||
Derivative asset | 0 | 69 |
Derivative liability | 454 | 0 |
Non-designated Hedges | Deferred compensation derivatives | ||
Derivatives, Fair Value [Line Items] | ||
Derivative asset | 665 | 1,198 |
Derivative liability | $ 0 | $ 0 |
DERIVATIVE INSTRUMENTS AND FA56
DERIVATIVE INSTRUMENTS AND FAIR VALUE MEASUREMENTS - FAIR VALUE OF LONG TERM DEBT (Details) - USD ($) $ in Thousands | Oct. 02, 2016 | Dec. 31, 2015 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Current portion of long-term debt | $ 250,024 | $ 499,923 |
Long-term portion | 2,362,466 | 1,557,091 |
Total long-term debt | 2,612,490 | 2,057,014 |
Significant other observable inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Current portion of long-term debt | 250,130 | 509,580 |
Long-term debt | 2,510,841 | 1,668,379 |
Total | 2,760,971 | 2,177,959 |
Current portion of long-term debt | 250,024 | 499,923 |
Long-term portion | 2,362,466 | 1,557,091 |
Total long-term debt | $ 2,612,490 | $ 2,057,014 |
DERIVATIVE INSTRUMENTS AND FA57
DERIVATIVE INSTRUMENTS AND FAIR VALUE MEASUREMENTS - EFFECTS OF DERIVATIVE INSTRUMENTS ON THE CONSOLIDATED STATEMENTS OF INCOME (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 02, 2016 | Oct. 04, 2015 | Oct. 02, 2016 | Oct. 04, 2015 | |
Commodities futures and options | ||||
Derivative [Line Items] | ||||
Derivative, Gain (Loss) on Derivative, Net | $ (37,246) | $ (37,176) | ||
Non-designated Hedges | ||||
Derivative [Line Items] | ||||
Derivative, Gain (Loss) on Derivative, Net | (36,608) | $ (653) | (36,174) | $ (3,327) |
Non-designated Hedges | Commodities futures and options | ||||
Derivative [Line Items] | ||||
Derivative, Gain (Loss) on Derivative, Net | (37,246) | 0 | (37,176) | (2,777) |
Non-designated Hedges | Foreign exchange contracts | ||||
Derivative [Line Items] | ||||
Derivative, Gain (Loss) on Derivative, Net | (27) | 750 | (484) | 474 |
Non-designated Hedges | Interest rate swap agreements | ||||
Derivative [Line Items] | ||||
Derivative, Gain (Loss) on Derivative, Net | 0 | 0 | 0 | 0 |
Non-designated Hedges | Deferred compensation derivatives | ||||
Derivative [Line Items] | ||||
Derivative, Gain (Loss) on Derivative, Net | 665 | (1,403) | 1,486 | (1,024) |
Designated as Hedging Instrument | Cash Flow Hedges | ||||
Derivative [Line Items] | ||||
Gains (losses) recognized in other comprehensive income (“OCI”) (effective portion) | 1,354 | (70,096) | (53,627) | 34,593 |
Gains (losses) reclassified from accumulated OCI into income (effective portion) | 2,288 | 10,019 | 14,064 | 28,094 |
Gains recognized in income (ineffective portion) | 0 | 1,288 | 0 | 2,142 |
Designated as Hedging Instrument | Cash Flow Hedges | Commodities futures and options | ||||
Derivative [Line Items] | ||||
Gains (losses) recognized in other comprehensive income (“OCI”) (effective portion) | 0 | (34,571) | 0 | 62,619 |
Gains (losses) reclassified from accumulated OCI into income (effective portion) | 7,780 | 11,000 | 23,648 | 31,300 |
Gains recognized in income (ineffective portion) | 0 | 1,288 | 0 | 2,142 |
Designated as Hedging Instrument | Cash Flow Hedges | Foreign exchange contracts | ||||
Derivative [Line Items] | ||||
Gains (losses) recognized in other comprehensive income (“OCI”) (effective portion) | 1,628 | 662 | (6,404) | 158 |
Gains (losses) reclassified from accumulated OCI into income (effective portion) | (2,659) | 185 | (3,681) | 273 |
Gains recognized in income (ineffective portion) | 0 | 0 | 0 | 0 |
Designated as Hedging Instrument | Cash Flow Hedges | Interest rate swap agreements | ||||
Derivative [Line Items] | ||||
Gains (losses) recognized in other comprehensive income (“OCI”) (effective portion) | (274) | (36,187) | (47,223) | (28,184) |
Gains (losses) reclassified from accumulated OCI into income (effective portion) | (2,833) | (1,166) | (5,903) | (3,479) |
Gains recognized in income (ineffective portion) | 0 | 0 | 0 | 0 |
Designated as Hedging Instrument | Cash Flow Hedges | Deferred compensation derivatives | ||||
Derivative [Line Items] | ||||
Gains (losses) recognized in other comprehensive income (“OCI”) (effective portion) | 0 | 0 | 0 | 0 |
Gains (losses) reclassified from accumulated OCI into income (effective portion) | 0 | 0 | 0 | 0 |
Gains recognized in income (ineffective portion) | $ 0 | $ 0 | $ 0 | $ 0 |
NONCONTROLLING INTERESTS IN S58
NONCONTROLLING INTERESTS IN SUBSIDIARIES (Details) $ in Thousands | 9 Months Ended |
Oct. 02, 2016USD ($) | |
Stockholders' Equity Attributable to Noncontrolling Interest [Roll Forward] | |
Balance, December 31, 2015 | $ 49,465 |
Net loss attributable to noncontrolling interest | (798) |
Other comprehensive loss - foreign currency translation adjustments | (2,040) |
Balance, October 2, 2016 | 46,627 |
Noncontrolling Interest | |
Stockholders' Equity Attributable to Noncontrolling Interest [Roll Forward] | |
Net loss attributable to noncontrolling interest | $ (798) |
Lotte Shanghai Food Company | Noncontrolling Interest | |
Noncontrolling Interest [Line Items] | |
Noncontrolling Interest, Ownership Percentage by Parent | 50.00% |
COMPREHENSIVE INCOME - COMPONEN
COMPREHENSIVE INCOME - COMPONENTS OF COMPREHENSIVE INCOME (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 02, 2016 | Oct. 04, 2015 | Oct. 02, 2016 | Oct. 04, 2015 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Net income | $ 227,403 | $ 154,771 | $ 603,191 | $ 299,567 |
Pre-Tax Amount | ||||
Other comprehensive income (loss), before tax | 2,429 | (90,784) | (46,243) | (12,406) |
Other Comprehensive Income (Loss), Tax [Abstract] | ||||
Other comprehensive income (loss), tax | (3,321) | 23,994 | 18,406 | (15,067) |
Other Comprehensive Income (Loss), Reclassification Adjustment from AOCI on Derivatives, Net of Tax | 898 | 6,214 | 7,985 | 17,711 |
Gains (losses) on cash flow hedging derivatives | 1,144 | (43,914) | (34,789) | 21,023 |
Other Comprehensive (Income) Loss, Pension and Other Postretirement Benefit Plans, Adjustment, Net of Tax | (7,395) | (9,969) | (9,884) | (20,896) |
Foreign currency translation adjustments | (8,533) | (26,631) | 5,053 | (51,681) |
Other Comprehensive Income (Loss), Net of Tax [Abstract] | ||||
Total other comprehensive income (loss), net of tax | (892) | (66,790) | (27,837) | (27,473) |
Total comprehensive income | 226,511 | 87,981 | 575,354 | 272,094 |
Comprehensive loss (income) attributable to noncontrolling interests | 751 | (820) | 2,040 | 2,111 |
Comprehensive income attributable to The Hershey Company | 227,262 | 87,161 | 577,394 | 274,205 |
Foreign currency translation adjustments | ||||
Pre-Tax Amount | ||||
Other comprehensive income (loss), before reclassifications, before tax | (8,533) | (26,631) | 5,053 | (51,681) |
Other Comprehensive Income (Loss), Tax [Abstract] | ||||
Other comprehensive income (loss) before reclassifications, tax | 0 | 0 | 0 | 0 |
Other Comprehensive Income (Loss), Net of Tax [Abstract] | ||||
Other comprehensive income (loss), before reclassifications, net of tax | 5,053 | (51,681) | ||
Pension and Post-retirement benefit plans | ||||
Pre-Tax Amount | ||||
Other comprehensive income (loss), before tax | 11,896 | 15,962 | 16,395 | 32,776 |
Other Comprehensive Income (Loss), Tax [Abstract] | ||||
Other comprehensive income (loss), tax | (4,501) | (5,993) | (6,511) | (11,880) |
Other Comprehensive Income (Loss), Net of Tax [Abstract] | ||||
Total other comprehensive income (loss), net of tax | 9,884 | 20,896 | ||
Accumulated Net Gain (Loss) from Cash Flow Hedges Including Portion Attributable to Noncontrolling Interest | ||||
Pre-Tax Amount | ||||
Other comprehensive income (loss), before reclassifications, before tax | 1,354 | (70,096) | (53,627) | 34,593 |
Reclassification from accumulated other comprehensive income, current period, before tax | (2,288) | (10,019) | (14,064) | (28,094) |
Other Comprehensive Income (Loss), Tax [Abstract] | ||||
Other comprehensive income (loss) before reclassifications, tax | (210) | 26,182 | 18,838 | (13,570) |
Reclassification from AOCI, current period, tax | $ 1,390 | $ 3,805 | 6,079 | 10,383 |
Other Comprehensive Income (Loss), Net of Tax [Abstract] | ||||
Other comprehensive income (loss), before reclassifications, net of tax | (34,789) | 21,023 | ||
Reclassification from accumulated other comprehensive income, current period, net of tax | $ (7,985) | $ (17,711) |
COMPREHENSIVE INCOME - COMPON60
COMPREHENSIVE INCOME - COMPONENTS OF ACCUMULATED OTHER COMPREHENSIVE INCOME (Details) - USD ($) $ in Thousands | Oct. 02, 2016 | Dec. 31, 2015 |
Equity [Abstract] | ||
Foreign currency translation adjustments | $ (94,143) | $ (101,236) |
Pension and post-retirement benefit plans, net of tax | (244,764) | (254,648) |
Cash flow hedges, net of tax | (57,915) | (15,141) |
Total accumulated other comprehensive loss | $ (396,822) | $ (371,025) |
OTHER (INCOME) EXPENSE, NET (De
OTHER (INCOME) EXPENSE, NET (Details) - USD ($) $ in Thousands | Feb. 03, 2016 | Oct. 02, 2016 | Oct. 04, 2015 | Oct. 02, 2016 | Oct. 04, 2015 |
Finite-Lived Intangible Assets [Line Items] | |||||
Write-down of equity investments in partnerships qualifying for tax credits | $ 20,801 | $ 9,249 | $ 35,862 | $ 13,893 | |
Gain on settlement of SGM liability (see Note 2) | (26,650) | 0 | |||
Other (income) expense, net | 999 | 160 | (509) | 385 | |
Other (income) expense, net | 21,800 | 9,409 | 8,703 | 4,328 | |
Shanghai Golden Monkey Food Joint Stock Co., Ltd. | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Gain on settlement of SGM liability (see Note 2) | $ (26,650) | 0 | 0 | (26,650) | 0 |
Trademarks | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Gain on sale of non-core trademark | $ 0 | $ 0 | $ 0 | $ (9,950) |
INCOME TAXES - NARRATIVE (Detai
INCOME TAXES - NARRATIVE (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Oct. 02, 2016 | Oct. 04, 2015 | |
Income Tax Contingency [Line Items] | ||
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent | 35.00% | |
Effective Income Tax Rate Reconciliation, Percent | 33.00% | 50.50% |
Effective Income Tax Rate Reconciliation, Prior Year Income Taxes, Percent | 34.50% | |
Expected reduction in the liability for unrecognized tax benefits within the next 12 months | $ 12,175 |
BUSINESS REALIGNMENT ACTIVITI63
BUSINESS REALIGNMENT ACTIVITIES - NARRATIVE (Details) | 3 Months Ended | 6 Months Ended | 9 Months Ended | |||
Oct. 02, 2016USD ($) | Dec. 31, 2015USD ($) | Oct. 04, 2015USD ($) | Dec. 31, 2015employee | Oct. 02, 2016USD ($) | Oct. 04, 2015USD ($) | |
Restructuring Cost and Reserve [Line Items] | ||||||
Business realignment charges | $ 27,962,000 | $ 67,463,000 | $ 104,487,000 | $ 101,428,000 | ||
Costs incurred to date | 125,031,000 | 125,031,000 | ||||
2015 productivity initiative | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Restructuring and related cost, expected number of positions eliminated (employee) | employee | 300 | |||||
Business realignment charges | 2,991,000 | 19,278,000 | ||||
2015 productivity initiative | Pension Settlement | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Business realignment charges | 13,669,000 | $ 10,178,000 | ||||
Operational optimization program | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Total expected cost | $ 120,000,000 | 120,000,000 | ||||
Period of incurred restructuring costs | 3 years | |||||
Expected annual savings | $ 45,000,000 | |||||
Operational optimization program | Non-Cash Asset-Related Incremental Depreciation Costs | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Total expected cost | $ 65,000,000 | $ 65,000,000 | ||||
North America [Member] | Business realignment charges | Geographic Concentration Risk | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Concentration risk, percentage | 15.00% | |||||
International and Other | Business realignment charges | Geographic Concentration Risk | Operational optimization program | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Concentration risk, percentage | 85.00% |
BUSINESS REALIGNMENT ACTIVITI64
BUSINESS REALIGNMENT ACTIVITIES - REALIGNMENT RELATED CHARGES BY INCOME STATEMENT LOCATION (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 02, 2016 | Oct. 04, 2015 | Oct. 02, 2016 | Oct. 04, 2015 | |
Restructuring Cost and Reserve [Line Items] | ||||
Business realignment charges | $ 27,962 | $ 67,463 | $ 104,487 | $ 101,428 |
2015 productivity initiative | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Business realignment charges | 2,991 | 19,278 | ||
Cost of sales | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Business realignment charges | 24,470 | 2,529 | 57,948 | 5,205 |
Cost of sales | Operational optimization program | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Business realignment charges | 24,470 | 0 | 57,948 | 0 |
Cost of sales | Other international restructuring programs | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Business realignment charges | 0 | 2,529 | 0 | 5,205 |
Selling, marketing and administrative | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Business realignment charges | 1,162 | 7,181 | 15,971 | 13,251 |
Selling, marketing and administrative | Operational optimization program | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Business realignment charges | 414 | 0 | 9,822 | 0 |
Selling, marketing and administrative | Other international restructuring programs | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Business realignment charges | 0 | 666 | 0 | 3,234 |
Selling, marketing and administrative | 2015 productivity initiative | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Business realignment charges | 748 | 6,515 | 6,149 | 10,017 |
Business realignment charges | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Business realignment charges | 2,330 | 57,753 | 30,568 | 82,972 |
Business realignment charges | Mauna Loa Macadamia Nut Corporation | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Business realignment charges | 0 | 0 | 0 | 2,667 |
Business realignment charges | 2015 productivity initiative | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Business realignment charges | 2,243 | 57,753 | 13,126 | 80,305 |
Business realignment charges | China integration initiative | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Business realignment charges | $ 87 | $ 0 | $ 17,442 | $ 0 |
BUSINESS REALIGNMENT ACTIVITI65
BUSINESS REALIGNMENT ACTIVITIES - REALIGMNMENT RESERVE ROLLFORWARD (Details) $ in Thousands | 9 Months Ended |
Oct. 02, 2016USD ($) | |
Restructuring Reserve [Roll Forward] | |
Liability balance at December 31, 2015 | $ 16,310 |
2016 business realignment charges | 16,899 |
Cash payments | (28,150) |
Other, net | (206) |
Liability balance at October 2, 2016 | $ 4,853 |
PENSION AND OTHER POST-RETIRE66
PENSION AND OTHER POST-RETIREMENT BENEFIT PLANS - NARRATIVE (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Oct. 02, 2016 | Oct. 04, 2015 | Oct. 02, 2016 | Oct. 04, 2015 | Dec. 31, 2015 | |
Defined Benefit Plan Disclosure [Line Items] | |||||
Defined Benefit Plan, Assumptions Used Calculating Net Periodic Benefit Cost, Discount Rate | 3.25% | 4.00% | |||
Defined Benefit Plan, Assumptions Used Calculating Net Periodic Benefit Cost, Expected Long-term Return on Assets | 6.10% | ||||
Pension Benefits | |||||
Defined Benefit Plan Disclosure [Line Items] | |||||
Defined Benefit Plan, Recognized Net Gain (Loss) Due to Settlements | $ 3,147 | $ 2,583 | $ 20,085 | $ 2,583 | |
Employer contributions | 18,549 | 29,349 | 20,385 | 30,685 | |
Other Benefits | |||||
Defined Benefit Plan Disclosure [Line Items] | |||||
Defined Benefit Plan, Recognized Net Gain (Loss) Due to Settlements | 0 | 0 | 0 | 0 | |
Employer contributions | $ 7,473 | $ 5,174 | $ 22,181 | $ 14,502 |
PENSION AND OTHER POST-RETIRE67
PENSION AND OTHER POST-RETIREMENT BENEFIT PLANS - COMPONENTS OF NET PERIODIC BENEFIT COST (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 02, 2016 | Oct. 04, 2015 | Oct. 02, 2016 | Oct. 04, 2015 | |
Pension Benefits | ||||
Amounts recognized in net periodic benefit cost | ||||
Service cost | $ 5,794 | $ 7,068 | $ 17,377 | $ 21,301 |
Interest cost | 10,130 | 11,025 | 31,914 | 33,187 |
Expected return on plan assets | (14,700) | (17,146) | (44,073) | (51,685) |
Amortization of prior service (credit) cost | (262) | (294) | (785) | (881) |
Amortization of net loss (gains) | 8,803 | 7,595 | 26,411 | 22,899 |
Net periodic benefit cost | 9,765 | 8,248 | 30,844 | 24,821 |
Defined Benefit Plan, Recognized Net Gain (Loss) Due to Settlements | 3,147 | 2,583 | 20,085 | 2,583 |
Total net periodic benefit cost | 12,912 | 10,831 | 50,929 | 27,404 |
Other Benefits | ||||
Amounts recognized in net periodic benefit cost | ||||
Service cost | 75 | 135 | 224 | 406 |
Interest cost | 2,435 | 2,516 | 7,300 | 7,617 |
Expected return on plan assets | 0 | 0 | 0 | 0 |
Amortization of prior service (credit) cost | 144 | 151 | 432 | 457 |
Amortization of net loss (gains) | (4) | (11) | (10) | (40) |
Net periodic benefit cost | 2,650 | 2,791 | 7,946 | 8,440 |
Defined Benefit Plan, Recognized Net Gain (Loss) Due to Settlements | 0 | 0 | 0 | 0 |
Total net periodic benefit cost | $ 2,650 | $ 2,791 | $ 7,946 | $ 8,440 |
STOCK COMPENSATION PLANS - NARR
STOCK COMPENSATION PLANS - NARRATIVE (Details) - USD ($) $ / shares in Units, $ in Thousands | 9 Months Ended | ||
Oct. 02, 2016 | Oct. 04, 2015 | Dec. 31, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Employee service share-based compensation, nonvested awards, compensation cost not yet recognized | $ 74,083 | ||
Employee service share-based compensation, nonvested awards, compensation cost not yet recognized, period for recognition | 2 years 2 months | ||
Intrinsic value of share-based liabilities paid, combined with the fair value of shares vested (in millions of dollars) | $ 19,673 | $ 40,220 | |
Deferred performance stock units, deferred restricted stock units, and directors' fees and accumulated dividend amounts representing deferred stock units outstanding | 483,286 | ||
Employee stock options | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Weighted-average fair value of options granted (per share) | $ 11.46 | $ 19.18 | |
Intrinsic value of options exercised (in millions of dollars) | $ 70,009 | $ 60,425 | |
Performance Shares [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Performance stock units for which measurement date has not yet occurred for accounting purposes (shares) | 6,410 | 20,586 | |
Performance Stock Units and Restricted Stock Units [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Common stock, conversion basis (shares) | 1 |
STOCK COMPENSATION PLANS - COMP
STOCK COMPENSATION PLANS - COMPENSATION EXPENSE AND INCOME TAX BENEFITS FOR STOCK-BASED COMPENSATION PROGRAMS (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 02, 2016 | Oct. 04, 2015 | Oct. 02, 2016 | Oct. 04, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||
Pre-tax compensation expense | $ 14,491 | $ 13,374 | $ 40,699 | $ 39,989 |
Related income tax benefit | $ 4,406 | $ 4,334 | $ 13,186 | $ 13,676 |
STOCK COMPENSATION PLANS - STOC
STOCK COMPENSATION PLANS - STOCK OPTION ACTIVITY (Details) - USD ($) $ / shares in Units, $ in Thousands | 9 Months Ended | |
Oct. 02, 2016 | Oct. 04, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | ||
Outstanding shares at beginning of year (shares) | 6,842,563 | |
Granted (shares) | 1,354,390 | |
Exercised (shares) | (1,649,402) | |
Forfeited (shares) | (189,933) | |
Outstanding as of December 31, 2015 (shares) | 6,357,618 | |
Options exercisable as of December 31, 2015 (shares) | 3,597,028 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract] | ||
Outstanding (USD per share) | $ 75.48 | |
Granted (USD per share) | 90.72 | |
Exercises (USD per share) | 58.19 | |
Forfeited (USD per share) | 100.65 | |
Outstanding (USD per share) | 82.46 | |
Options exercisable (USD per share) | $ 71.87 | |
Options outstanding, weighted-average remaining contractual term | 6 years 6 months | 5 years 10 months |
Options exercisable, weighted aver remaining contractual term | 4 years 11 months | |
Aggregate intrinsic value of options outstanding | $ 113,418 | |
Aggregate intrinsic value of options exercisable | $ 100,042 |
STOCK COMPENSATION PLANS - FAIR
STOCK COMPENSATION PLANS - FAIR VALUE WEIGHTED-AVERAGE ASSUMPTIONS (Details) | 9 Months Ended | |
Oct. 02, 2016 | Oct. 04, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
Dividend yields | 2.40% | 2.00% |
Expected volatility | 16.80% | 20.20% |
Risk-free interest rates | 1.50% | 1.90% |
Expected lives in years | 6 years 9 months | 6 years 7 months |
STOCK COMPENSATION PLANS - SUMM
STOCK COMPENSATION PLANS - SUMMARY OF PSUs AND RSUs ACTIVITY (Details) - Performance and restricted stock units - $ / shares | 9 Months Ended | |
Oct. 02, 2016 | Oct. 04, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding [Roll Forward] | ||
Outstanding at beginning of year (shares) | 495,207 | |
Granted (shares) | 531,019 | 315,443 |
Performance assumption change (shares) | 5,276 | |
Vested (shares) | (214,577) | |
Forfeited (shares) | (32,512) | |
Outstanding at end of year (shares) | 784,413 | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract] | ||
Outstanding at beginning of year (USD per share) | $ 106.40 | |
Weighted-average fair value at date of grant (USD per share) | 93.47 | $ 107.53 |
Performance assumption change | 97.32 | |
Vested (USD per share) | 94.95 | |
Forfeited (USD per share) | 100.45 | |
Outstanding at end of year (USD per share) | $ 102.53 |
STOCK COMPENSATION PLANS - PSUs
STOCK COMPENSATION PLANS - PSUs AND RSUS FAIR VALUE WEIGHTED-AVERAGE ASSUMPTIONS (Details) - $ / shares | 9 Months Ended | |
Oct. 02, 2016 | Oct. 04, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Dividend yields | 2.40% | 2.00% |
Performance and restricted stock units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Units granted (shares) | 531,019 | 315,443 |
Weighted-average fair value at date of grant (USD per share) | $ 93.47 | $ 107.53 |
Estimated values (USD per share) | $ 38.02 | $ 61.22 |
Dividend yields | 2.50% | 2.00% |
Expected volatility | 17.00% | 14.90% |
SEGMENT INFORMATION NARRATIVE (
SEGMENT INFORMATION NARRATIVE (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended |
Oct. 02, 2016 | Oct. 02, 2016 | Dec. 31, 2016 | |
North America | Geographic Concentration Risk | Sales Revenue, Goods, Net | |||
Revenue, Major Customer [Line Items] | |||
Concentration risk, percentage | 85.00% | ||
Commodities futures and options | |||
Revenue, Major Customer [Line Items] | |||
Derivative, Gain (Loss) on Derivative, Net | $ (37,246) | $ (37,176) | |
Commodities futures and options | Operating Segments | |||
Revenue, Major Customer [Line Items] | |||
Derivative, Gain (Loss) on Derivative, Net | $ (1,455) | $ (6,325) | |
Scenario, Forecast | Commodities futures and options | Operating Segments | |||
Revenue, Major Customer [Line Items] | |||
Derivative, Gain (Loss) on Derivative, Net | $ (11,000) |
SEGMENT INFORMATION SALES AND I
SEGMENT INFORMATION SALES AND INCOME (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 02, 2016 | Oct. 04, 2015 | Oct. 02, 2016 | Oct. 04, 2015 | |
Segment Reporting Information [Line Items] | ||||
Net Sales | $ 2,003,454 | $ 1,960,779 | $ 5,469,937 | $ 5,477,404 |
Operating Income (Loss) | 374,024 | 303,014 | 976,295 | 694,680 |
Goodwill impairment | 0 | 30,991 | 0 | 280,802 |
Charges associated with business realignment activities | 27,962 | 67,463 | 104,487 | 101,428 |
Interest expense, net | 24,387 | 46,967 | 66,730 | 85,046 |
Other (income) expense, net | 21,800 | 9,409 | 8,703 | 4,328 |
Income before income taxes | 327,837 | 246,638 | 900,862 | 605,306 |
Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Operating Income (Loss) | 568,230 | 532,571 | 1,506,648 | 1,481,299 |
Operating Segments | North America | ||||
Segment Reporting Information [Line Items] | ||||
Net Sales | 1,764,528 | 1,733,869 | 4,842,840 | 4,840,438 |
Operating Income (Loss) | 563,946 | 546,080 | 1,519,059 | 1,561,053 |
Operating Segments | International and Other | ||||
Segment Reporting Information [Line Items] | ||||
Net Sales | 238,926 | 226,910 | 627,097 | 636,966 |
Operating Income (Loss) | 4,284 | (13,509) | (12,411) | (79,754) |
Corporate, Non-Segment | ||||
Segment Reporting Information [Line Items] | ||||
Operating Income (Loss) | 121,828 | 117,695 | 370,622 | 383,160 |
Segment Reconciling Items | ||||
Segment Reporting Information [Line Items] | ||||
Derivative gains (losses) recognized in income | 35,791 | 0 | 30,851 | 0 |
Goodwill impairment | 0 | 30,991 | 0 | 280,802 |
Charges associated with business realignment activities | 27,962 | 67,463 | 104,487 | 101,428 |
Non-service related pension expense | 6,360 | 4,049 | 20,666 | 6,976 |
Acquisition integration costs | $ 2,265 | $ 9,359 | $ 3,727 | $ 14,253 |
SEGMENT INFORMATION (SUMMARY OF
SEGMENT INFORMATION (SUMMARY OF DERIVATIVE INFORMATION) (Details) - Commodities futures and options - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended |
Oct. 02, 2016 | Oct. 02, 2016 | Dec. 31, 2016 | |
Segment Reporting Information [Line Items] | |||
Derivative gains (losses) recognized in income | $ 37,246 | $ 37,176 | |
Segment Reconciling Items | |||
Segment Reporting Information [Line Items] | |||
Derivative gains (losses) recognized in income | 35,791 | 30,851 | |
Operating Segments | |||
Segment Reporting Information [Line Items] | |||
Derivative gains (losses) recognized in income | $ 1,455 | $ 6,325 | |
Operating Segments | Scenario, Forecast | |||
Segment Reporting Information [Line Items] | |||
Derivative gains (losses) recognized in income | $ 11,000 |
SEGMENT INFORMATION DEPRECIATIO
SEGMENT INFORMATION DEPRECIATION AND AMORTIZATION (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 02, 2016 | Oct. 04, 2015 | Oct. 02, 2016 | Oct. 04, 2015 | |
Segment Reporting Information [Line Items] | ||||
Depreciation and amortization | $ 85,122 | $ 64,054 | $ 241,901 | $ 182,855 |
Operating Segments | North America | ||||
Segment Reporting Information [Line Items] | ||||
Depreciation and amortization | 41,592 | 38,887 | 120,378 | 113,837 |
Operating Segments | International and Other | ||||
Segment Reporting Information [Line Items] | ||||
Depreciation and amortization | 13,515 | 13,993 | 37,523 | 34,136 |
Corporate, Non-Segment | Corporate (1) | ||||
Segment Reporting Information [Line Items] | ||||
Depreciation and amortization | $ 30,015 | $ 11,174 | $ 84,000 | $ 34,882 |
TREASURY STOCK ACTIVITY - NARRA
TREASURY STOCK ACTIVITY - NARRATIVE (Details) - USD ($) $ in Millions | Oct. 02, 2016 | Feb. 29, 2016 | Feb. 28, 2015 |
2015 Share Repurchase Program | |||
Class of Stock [Line Items] | |||
Stock repurchase program, authorized amount | $ 250 | ||
2016 Share Repurchase Program | |||
Class of Stock [Line Items] | |||
Stock repurchase program, authorized amount | $ 500 | ||
Stock repurchase program, remaining authorized repurchase amount | $ 100 |
TREASURY STOCK ACTIVITY - COMMO
TREASURY STOCK ACTIVITY - COMMON STOCK OUTSTANDING (Details) | 9 Months Ended |
Oct. 02, 2016USD ($)shares | |
Class of Stock [Line Items] | |
Net change (shares) | shares | 3,180,823 |
Treasury Stock, Shares, Acquired | shares | 4,995,284 |
Stock Repurchased During Period, Value | $ | $ 452,580,000 |
Net change | $ | $ 377,038,000 |
Employee stock options | |
Class of Stock [Line Items] | |
Shares repurchased in the open market under pre-approved share repurchase programs (shares) | shares | 354,320 |
Shares issued for stock options and incentive compensation (shares) | shares | (1,814,461) |
Shares repurchased in the open market under pre-approved share repurchase programs | $ | $ 32,331,000 |
Shares issued for stock options and incentive compensation | $ | $ (75,542,000) |
Common stock | |
Class of Stock [Line Items] | |
Shares repurchased in the open market under pre-approved share repurchase programs (shares) | shares | 4,640,964 |
Shares repurchased in the open market under pre-approved share repurchase programs | $ | $ 420,249,000 |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 02, 2016 | Oct. 04, 2015 | Oct. 02, 2016 | Oct. 04, 2015 | |
Common stock | ||||
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | ||||
Dividends, Common Stock, Cash, Additional Percentage Over Class B Common Stock Dividends | 10.00% | |||
Basic earnings per share: | ||||
Allocation of distributed earnings (cash dividends paid) | $ 94,498 | $ 92,041 | $ 273,380 | $ 262,032 |
Allocation of undistributed earnings | 72,691 | 22,693 | 170,458 | (39,750) |
Total earnings—basic | $ 167,189 | $ 114,734 | $ 443,838 | $ 222,282 |
Total weighted-average shares—basic (shares) | 153,259 | 158,111 | 153,943 | 159,058 |
Earnings Per Share—basic (USD per share) | $ 1.09 | $ 0.73 | $ 2.88 | $ 1.40 |
Diluted earnings per share: | ||||
Allocation of total earnings used in basic computation | $ 167,189 | $ 114,734 | $ 443,838 | $ 222,282 |
Reallocation of total earnings as a result of conversion of Class B common stock to Common stock | 60,214 | 40,037 | 159,353 | 77,285 |
Reallocation of undistributed loss | 0 | 0 | 0 | 0 |
Total earnings—diluted | $ 227,403 | $ 154,771 | $ 603,191 | $ 299,567 |
Conversion of Class B common stock to Common shares outstanding | 60,620 | 60,620 | 60,620 | 60,620 |
Total weighted-average shares—diluted (shares) | 215,161 | 220,075 | 215,758 | 221,322 |
Earnings Per Share—diluted (USD per share) | $ 1.06 | $ 0.70 | $ 2.80 | $ 1.35 |
Common stock | Employee stock options | ||||
Diluted earnings per share: | ||||
Incremental common shares attributable to dilutive effect of share-based payment arrangements | 1,062 | 1,192 | 1,013 | 1,406 |
Common stock | Performance and restricted stock units | ||||
Diluted earnings per share: | ||||
Incremental common shares attributable to dilutive effect of share-based payment arrangements | 220 | 152 | 182 | 238 |
Class B common stock | ||||
Basic earnings per share: | ||||
Allocation of distributed earnings (cash dividends paid) | $ 34,068 | $ 32,128 | $ 98,326 | $ 91,051 |
Allocation of undistributed earnings | 26,146 | 7,909 | 61,027 | (13,766) |
Total earnings—basic | $ 60,214 | $ 40,037 | $ 159,353 | $ 77,285 |
Total weighted-average shares—basic (shares) | 60,620 | 60,620 | 60,620 | 60,620 |
Earnings Per Share—basic (USD per share) | $ 0.99 | $ 0.66 | $ 2.63 | $ 1.27 |
Diluted earnings per share: | ||||
Allocation of total earnings used in basic computation | $ 60,214 | $ 40,037 | $ 159,353 | $ 77,285 |
Reallocation of total earnings as a result of conversion of Class B common stock to Common stock | 0 | 0 | 0 | 0 |
Reallocation of undistributed loss | (160) | (27) | (347) | 132 |
Total earnings—diluted | $ 60,054 | $ 40,010 | $ 159,006 | $ 77,417 |
Conversion of Class B common stock to Common shares outstanding | 0 | 0 | 0 | 0 |
Total weighted-average shares—diluted (shares) | 60,620 | 60,620 | 60,620 | 60,620 |
Earnings Per Share—diluted (USD per share) | $ 0.99 | $ 0.66 | $ 2.62 | $ 1.28 |
Class B common stock | Employee stock options | ||||
Diluted earnings per share: | ||||
Incremental common shares attributable to dilutive effect of share-based payment arrangements | 0 | 0 | 0 | 0 |
Class B common stock | Performance and restricted stock units | ||||
Diluted earnings per share: | ||||
Incremental common shares attributable to dilutive effect of share-based payment arrangements | 0 | 0 | 0 | 0 |
EARNINGS PER SHARE - Narrative
EARNINGS PER SHARE - Narrative (Details) - shares shares in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 02, 2016 | Oct. 04, 2015 | Oct. 02, 2016 | Oct. 04, 2015 | |
Employee stock options | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from computation of earnings per share (shares) | 2,921 | 2,552 | 3,680 | 2,660 |
SUPPLEMENTAL BALANCE SHEET IN82
SUPPLEMENTAL BALANCE SHEET INFORMATION (Details) - USD ($) $ in Thousands | Oct. 02, 2016 | Dec. 31, 2015 |
Inventory, Net [Abstract] | ||
Inventory, Raw Materials, Net of Reserves | $ 321,781 | $ 353,451 |
Inventory, Work in Process, Net of Reserves | 99,685 | 67,745 |
Inventory, Finished Goods, Net of Reserves | 610,929 | 534,983 |
FIFO Inventory Amount | 1,032,395 | 956,179 |
Inventory, LIFO Reserve | (188,876) | (205,209) |
Inventories | 843,519 | 750,970 |
Property, Plant and Equipment [Abstract] | ||
Land | 101,197 | 96,666 |
Buildings and Improvements, Gross | 1,257,869 | 1,084,958 |
Machinery and Equipment, Gross | 2,985,841 | 2,886,723 |
Construction in Progress, Gross | 235,274 | 448,956 |
Property, Plant and Equipment, Gross | 4,580,181 | 4,517,303 |
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment | (2,420,592) | (2,276,843) |
Property, Plant and Equipment, Net | 2,159,589 | 2,240,460 |
Other Assets, Noncurrent [Abstract] | ||
Capitalized Computer Software, Net | 85,352 | 68,004 |
Income Taxes Receivable, Noncurrent | 1,468 | 1,428 |
Other Miscellaneous Assets, Non-Current | 82,933 | 85,934 |
Other Assets, Noncurrent | 169,753 | 155,366 |
Accrued Liabilities, Current [Abstract] | ||
Employee-related Liabilities, Current | 202,131 | 215,638 |
Accrued Marketing Costs, Current | 334,902 | 337,945 |
Due to Related Parties, Current | 0 | 72,025 |
Other Accrued Liabilities, Current | 145,979 | 231,359 |
Accrued Liabilities, Current | 683,012 | 856,967 |
Other Liabilities, Noncurrent [Abstract] | ||
Other Postretirement Defined Benefit Plan, Liabilities, Noncurrent | 224,974 | 231,412 |
Defined Benefit Pension Plan, Liabilities, Noncurrent | 137,530 | 122,681 |
Other Miscellaneous Liabilities, Non-Current | 116,203 | 114,625 |
Other Liabilities, Noncurrent | $ 478,707 | $ 468,718 |