Investment in Unconsolidated Entities

12 Months Ended

Dec. 31, 2016

Equity Method Investments and Joint Ventures [Abstract]

Investments in unconsolidated entities [Text Block]

INVESTMENTS IN UNCONSOLIDATED ENTITIES

In January 2016, the Company formed a Joint Venture with Tolaram Africa to develop snacks and breakfast foods for the West African market. In connection with the formation, the Company contributed rights to indefinitely use the Company's brands for this market and these categories, including the Pringles brand. Accordingly, the Company recorded a contribution of $5 million of intangible assets not subject to amortization with a corresponding increase in Investments in unconsolidated entities during 2016, which represents the value attributed to the Pringles brand for this market.

In September 2015, the Company acquired, for $445 million, a 50% interest in Multipro Singapore Pte. Ltd. (Multipro), a leading distributor of a variety of food products in Nigeria and Ghana and also obtained an option to acquire 24.5% of an affiliated food manufacturing entity under common ownership based on a fixed multiple of future earnings as defined in the agreement (Purchase Option). The purchase price was subject to final adjustments based on Multipro's 2015 earnings, as defined in the agreement, which was finalized during the quarter ended July 2, 2016. The final purchase price adjustment resulted in a $27 million reduction in the purchase price, which reduced the carrying amount of the investment. The acquisition of the 50% interest is accounted for under the equity method of accounting. The Purchase Option, which was recorded at cost and will be monitored for impairment through the exercise period, which is upon the earlier of the entity achieving a minimum level of earnings as defined in the agreement, in which case the Company has a 1 year exercise period, or 2020.

The difference between the amount paid for Multipro and the underlying equity in net assets is primarily attributable to intangible assets, a portion of which is being amortized over future periods, and goodwill.

Summarized unaudited combined financial information for the Company’s investments in unconsolidated entities is as follows (on a 100% basis, excluding amortization):

Statement of Operations
(millions)	2016			2015
Net sales:
Multipro (a)	$	662		$	240
Others	46			49
Total net sales	$	708		$	289
Gross profit:
Muiltipro (a)	$	71		$	32
Others	10			12
Total gross profit	$	81		$	44
Income before income taxes (a)	28			12
Net income (a)	15			5
Balance sheets	December 31, 2016			January 2, 2016
Current assets	$	128		$	78
Non-current assets	67			57
Current liabilities	(103		)	(81		)
Non-current liabilities	(5		)	(25		)

(a) 2015 includes three months of results for Multipro.