Investment in Unconsolidated Entities

12 Months Ended

Dec. 30, 2017

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 a final net purchase price of $418 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 a call 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 acquisition of the 50% interest is accounted for under the equity method of accounting. The Purchase Option, is recorded at cost and has been monitored for impairment through December 30, 2017 with no impairment being required. In July 2017, the Company received notification that the entity, through June 30, 2017, had achieved the level of earnings as defined in the agreement for the purchase option to become exercisable for a 1 year period. During the exercise period, the Company will validate the information provided in the notification and evaluate whether to exercise its rights to acquire the 24.5% interest. While no decision to exercise the option has been made by the Company, if the option is exercised, the Company would acquire 24.5% of the affiliated food manufacturing entity for approximately $400 million.

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

Statement of Operations
(millions)	2017			2016			2015
Net sales:
Multipro (a)	$	754		$	662		$	240
Others	55			46			49
Total net sales	$	809		$	708		$	289
Gross profit:
Multipro (a)	$	86		$	71		$	32
Others	14			10			12
Total gross profit	$	100		$	81		$	44
Income before income taxes (a)	43			28			12
Net income (a)	25			15			5
Balance sheets	December 30, 2017			December 31, 2016
Current assets	$	155		$	128
Non-current assets	139			67
Current liabilities	(181		)	(103		)
Non-current liabilities	(37		)	(5		)

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