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On January 31, 2013, the Company had previously acquired the United States based SKIPPY ®  peanut butter business from Unilever United States Inc. for a purchase price of $665.4 million in cash. This acquisition included the Little Rock, Arkansas manufacturing facility and all sales worldwide, except sales in Mainland China. The purchase price was funded by the Company with cash on hand generated from operations and liquidating marketable securities. 

The acquisition was accounted for as a business combina- tion using the acquisition method. The Company estimated the acquisition date fair values of the assets acquired and liabilities assumed, using independent appraisals and other analyses, and determined final working capital adjustments. Therefore, an allocation of the final purchase price to the acquired assets, liabilities, and goodwill is presented in the table below. 

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Goodwill is calculated as the excess of the purchase price over the fair value of the net assets recognized. The goodwill recorded as part of the acquisition primarily reflects the value of the assembled workforce, cost synergies, and the potential to integrate and expand existing product lines. The goodwill balance is expected to be deductible for income tax purposes. The goodwill and intangible assets have been allocated to the Grocery Products and International & Other reporting segments. 

## Note F 

## Goodwill and Intangible Assets 

The Company recognized approximately $7.7 million of trans- action costs in fiscal year 2013 (excluding transitional service expenses) related to the acquisition and the charges were reported in selling, general and administrative expense in the Consolidated Statement of Operations. 

Operating results for both of these SKIPPY ®  acquisitions have been included in the Company’s Consolidated Statements of Operations from the date of acquisition and are primarily reflected in the Grocery Products and International & Other reporting segments. The China based business contributed an incremental $28.9 million of net sales for fiscal year 2014. The United States based business contributed an incremental $86.5 million of net sales for the first quarter of fiscal year 2014, and an incremental $272.8 million of net sales for fiscal year 2013. 

SKIPPY ®  is a well-established brand that allows the Company to expand its presence in the center of the store with a non- meat protein product and reinforces the Company’s balanced product portfolio. The acquisition also provides the opportunity to strengthen the Company’s global presence and complements the international sales strategy for the SPAM ®  family of products. 

Pro forma results of operations are not presented, as no acquisi- tions in fiscal years 2014, 2013, or 2012 were considered material, individually or in the aggregate, to the consolidated Company. 

## Note E 

## Inventories 

Principal components of inventories are: 

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The changes in the carrying amount of goodwill for the fiscal years ended October 26, 2014, and October 27, 2013, are presented in the table below. The additions during the fiscal year ended October 26, 2014, are due to the acquisitions of CytoSport on August 11, 2014, and the China based SKIPPY ®  peanut butter business on November 26, 2013. The additions during the prior fiscal year ended October 27, 2013, are entirely due to the acquisition of the United States based SKIPPY ®  peanut butter business on January 31, 2013. 

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