Joint Venture with China Mengniu Dairy Company

6 Months Ended

Jun. 30, 2015

Equity Method Investments and Joint Ventures [Abstract]

Joint Venture with China Mengniu Dairy Company

Joint Venture with China Mengniu Dairy Company

On January 5, 2014, the Company entered into a joint venture agreement with China Mengniu Dairy Company Limited (“Mengniu”), a leading Chinese dairy company. The joint venture manufactures, markets and sells a range of premium plant-based beverage products and other nutritious products in China. Under the terms of the agreement, the Company owns a 49% stake in the venture while Mengniu owns a 51% stake. In the second quarter of 2014, the joint venture completed its purchase of Yashili Zhengzhou (“Zhengzhou”), a subsidiary of Yashili International Holdings, Ltd (“Yashili”). Zhengzhou’s primary asset is a production facility in China, where the joint venture manufactures its products. Mengniu was the majority owner of Yashili. The purchase price for Zhengzhou was approximately $80.9 million (Chinese Renminbi ("RMB") 504 million), including $60.3 million (Chinese RMB 376.7 million) for the purchase of equity and the balance for the repayment and assumption of debt and other obligations.

Based on the joint venture agreement, the Company has the ability to exert significant influence over the operations and financial policies of the joint venture and has in-substance common stock in the joint venture. Thus, the joint venture is accounted for as an equity-method investment. During the six months ended June 30, 2014, we contributed $47.3 million of cash to the joint venture. No contributions were made during the three and six months ended June 30, 2015 as the joint venture entered into a credit facility with Mengniu for up to Chinese RMB 120 million ($19.4 million USD) that is expected to support its liquidity requirements for 2015. We guarantee up to 49% on the total commitment amount of this credit facility or Chinese RMB 58.8 million ($9.5 million USD). As of June 30, 2015, the joint venture had borrowed Chinese RMB 80 million ($12.9 million USD) under the facility.

In connection with the formation of the joint venture, we incurred nil and $0.3 million in expenses for the three and six months ended June 30, 2014, respectively, related to due diligence, investment advisors and regulatory matters. The expenses have been recorded in general and administrative expenses in our unaudited condensed consolidated statements of income and have not been allocated to our segments and are reflected entirely within corporate and other.