INVESTMENTS IN AND RECEIVABLES FROM AFFILIATES

3 Months Ended

Jan. 29, 2023

Equity Method Investments and Joint Ventures [Abstract]

INVESTMENTS IN AND RECEIVABLES FROM AFFILIATES

NOTE C - INVESTMENTS IN AND RECEIVABLES FROM AFFILIATES

The Company accounts for its majority-owned operations under the consolidation method. Investments in which the Company owns a minority interest and for which there are no other indicators of control are accounted for under the equity method. These investments, along with any related receivables from affiliates, are included in the Consolidated Condensed Statements of Financial Position as Investments In and Receivables From Affiliates. Financial results for certain foreign entities are reported on a lag. The Company reviewed the investments in affiliates as of January 29, 2023, and did not recognize any other-than-temporary impairment.

On December 15, 2022, the Company purchased a 29% common stock interest in PT Garudafood Putra Putri Jaya Tbk (Garudafood), a food and beverage company in Indonesia. This investment expands the Company's presence in Southeast Asia and supports the global execution of the snacking and entertaining strategic priority. The Company has the ability to exercise significant influence, but not control, over Garudafood; therefore, the investment is accounted for under the equity method.

The Company obtained the Garudafood interest from various minority shareholders for a purchase price of $410.6 million, including associated transaction costs. The transaction was funded using the Company's cash on hand. Based on a preliminary valuation, as of January 29, 2023, the Company estimated the initial basis difference between the fair value of the investment and proportionate share of the carrying value of Garudafood's net assets is approximately $300 million. The basis difference related to inventory, property, plant and equipment and other intangible assets will be amortized over the associated useful lives of the assets. The Company expects to finalize the valuation, allocation, and applicable amortization of basis difference in the second quarter of fiscal 2023 and does not anticipate any material impact to the consolidated financial statements. Based on quoted market prices, the fair value of the common stock held in Garudafood as of January 27, 2023, was $338.7 million.

Equity in Earnings of Affiliates consists of:

			Quarter Ended
in thousands	% Owned	Segment	January 29, 2023		January 30, 2022
MegaMex Foods, LLC	50%	Retail	$	13,681	$	6,995
Other Joint Ventures	Various (20-50%)	International	1,878		(97)
Total			$	15,559	$	6,898

For the quarter ended January 29, 2023, $3.7 million of dividends were received from affiliates, compared to $18.0 million of dividends received for the quarter ended January 30, 2022.

The Company recognized a basis difference of $21.3 million associated with the formation of MegaMex Foods, LLC, of which $9.9 million is remaining as of January 29, 2023. This difference is being amortized through Equity in Earnings of Affiliates.