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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 25, 2022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from  _______ to _______            
Commission File number 1-9273
 ppc-20220925_g1.jpg

PILGRIM’S PRIDE CORPORATION
(Exact name of registrant as specified in its charter)
Delaware75-1285071
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
1770 Promontory Circle80634-9038
GreeleyCO
(Address of principal executive offices)(Zip code)
Registrant’s telephone number, including area code: (970506-8000
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of Exchange on which Registered
Common Stock, Par Value $0.01PPCThe Nasdaq Stock Market LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ý    No  ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ý    No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated FilerýAccelerated Filer 
Non-accelerated FilerSmaller reporting company 
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  ý
Number of shares outstanding of the issuer’s common stock, $0.01 par value per share, as of October 26, 2022, was 236,469,365.





INDEX
PILGRIM’S PRIDE CORPORATION
Item 1.
Item 2.
Item 3.
Item 4.
Item 1.
Item 1A.
Item 2.
Item 6.



1


PART I.     FINANCIAL INFORMATION
ITEM 1.     CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
PILGRIM’S PRIDE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 25, 2022December 26, 2021
 (In thousands)
Cash and cash equivalents$654,213 $427,661 
Restricted cash and restricted cash equivalents29,880 22,460 
Trade accounts and other receivables, less allowance for credit losses1,115,156 1,013,437 
Accounts receivable from related parties9,855 1,345 
Inventories1,934,698 1,575,658 
Income taxes receivable61,684 27,828 
Prepaid expenses and other current assets227,434 237,565 
Total current assets4,032,920 3,305,954 
Deferred tax assets4,637 5,314 
Other long-lived assets31,935 32,410 
Operating lease assets, net293,564 351,226 
Intangible assets, net779,621 963,243 
Goodwill1,124,286 1,337,252 
Property, plant and equipment, net2,812,049 2,917,806 
Total assets$9,079,012 $8,913,205 
Accounts payable$1,539,752 $1,378,077 
Accounts payable to related parties17,055 22,317 
Revenue contract liabilities35,734 22,321 
Accrued expenses and other current liabilities857,189 859,885 
Income taxes payable131,816 81,977 
Current maturities of long-term debt26,269 26,246 
Total current liabilities2,607,815 2,390,823 
Noncurrent operating lease liabilities, less current maturities221,514 271,366 
Long-term debt, less current maturities3,183,951 3,191,161 
Deferred tax liabilities278,143 369,185 
Other long-term liabilities47,340 101,736 
Total liabilities6,338,763 6,324,271 
Common stock2,617 2,614 
Treasury stock(544,687)(345,134)
Additional paid-in capital1,970,310 1,964,028 
Retained earnings1,904,475 1,003,569 
Accumulated other comprehensive loss(604,994)(47,997)
Total Pilgrim’s Pride Corporation stockholders’ equity2,727,721 2,577,080 
Noncontrolling interest12,528 11,854 
Total stockholders’ equity2,740,249 2,588,934 
Total liabilities and stockholders’ equity$9,079,012 $8,913,205 
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.


2


PILGRIM’S PRIDE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
 Three Months EndedNine Months Ended
 September 25, 2022September 26, 2021September 25, 2022September 26, 2021
 (in thousands, except per share data)
Net sales$4,468,969 $3,827,566 $13,341,012 $10,738,689 
Cost of sales3,971,699 3,455,723 11,624,991 9,725,362 
Gross profit497,270 371,843 1,716,021 1,013,327 
Selling, general and administrative expense158,068 251,066 461,902 857,217 
Operating income339,202 120,777 1,254,119 156,110 
Interest expense, net of capitalized interest36,895 29,833 111,303 110,818 
Interest income(2,673)(1,244)(4,957)(4,452)
Foreign currency transaction losses54 2,359 14,348 9,018 
Miscellaneous, net(19,822)(1,391)(21,834)(10,005)
Income before income taxes324,748 91,220 1,155,259 50,731 
Income tax expense65,749 30,385 253,679 55,931 
Net income (loss)258,999 60,835 901,580 (5,200)
Less: Net income attributable to noncontrolling interests647 110 674 554 
Net income (loss) attributable to Pilgrim’s Pride Corporation$258,352 $60,725 $900,906 $(5,754)
Weighted average shares of Pilgrim’s Pride Corporation common stock outstanding:
Basic238,559 243,675 240,865 243,643 
Effect of dilutive common stock equivalents649 520 629  
Diluted239,208 244,195 241,494 243,643 
Net income (loss) attributable to Pilgrim’s Pride Corporation per share of common stock outstanding:
Basic$1.08 $0.25 $3.74 $(0.02)
Diluted$1.08 $0.25 $3.73 $(0.02)
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.



3


PILGRIM’S PRIDE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
Three Months EndedNine Months Ended
September 25, 2022September 26, 2021September 25, 2022September 26, 2021
(In thousands)
Net income (loss)$258,999 $60,835 $901,580 $(5,200)
Other comprehensive income (loss):
Foreign currency translation adjustment:
Gains (losses) arising during the period(314,600)(36,003)(572,130)13,135 
Derivative financial instruments designated as cash flow hedges:
Gains (losses) arising during the period(1,919)(1,030)(2,242)1,179 
Income tax effect 9  41 
Reclassification to net earnings for losses (gains) realized1,342 102 2,661 (1,146)
Income tax effect (43)(24)(115)
Available-for-sale securities:
Losses arising during the period(28) (28) 
Income tax effect7  7  
Reclassification to net earnings for gains realized    
Income tax effect    
Defined benefit plans:
Gains (losses) arising during the period2,472 (7,073)18,625 32,030 
Income tax effect(555)1,412 (4,564)(8,506)
Reclassification to net earnings of losses realized346 613 923 1,568 
Income tax effect(84)(143)(225)(368)
Total other comprehensive income (loss), net of tax(313,019)(42,156)(556,997)37,818 
Comprehensive income (loss)(54,020)18,679 344,583 32,618 
Less: Comprehensive income attributable to noncontrolling interests647 110 674 554 
Comprehensive income (loss) attributable to Pilgrim’s Pride Corporation$(54,667)$18,569 $343,909 $32,064 
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.


4


PILGRIM’S PRIDE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited)
Nine Months Ended September 25, 2022Common StockTreasury StockAdditional
Paid-in
Capital
Retained EarningsAccumulated
Other
Comprehensive
Loss
Noncontrolling
Interest
Total
SharesAmountSharesAmount
(In thousands)
Balance at December 26, 2021261,347 $2,614 (17,673)$(345,134)$1,964,028 $1,003,569 $(47,997)$11,854 $2,588,934 
Net income— — — — — 900,906 — 674 901,580 
Other comprehensive loss, net of tax— — — — — — (556,997)— (556,997)
Stock-based compensation plans:
Common stock issued under compensation plans262 3 — — (3)— — —  
Requisite service period recognition— — — — 6,285 — — — 6,285 
Common stock purchased under share repurchase program— — (7,469)(199,553)— — — — (199,553)
Balance at September 25, 2022261,609 $2,617 (25,142)$(544,687)$1,970,310 $1,904,475 $(604,994)$12,528 $2,740,249 
Three Months Ended September 25, 2022Common StockTreasury StockAdditional
Paid-in
Capital
Retained EarningsAccumulated
Other
Comprehensive
Loss
Noncontrolling
Interests
Total
SharesAmountSharesAmount
(In thousands)
Balance at June 26, 2022261,578 $2,616 (22,305)$(465,123)$1,968,562 $1,646,123 $(291,975)$11,881 $2,872,084 
Net income— — — — — 258,352 — 647 258,999 
Other comprehensive loss, net of tax— — — — — — (313,019)— (313,019)
Stock-based compensation plans:
Common stock issued under compensation plans31 1 — — (1)— — —  
Requisite service period recognition— — — — 1,749 — — — 1,749 
Common stock purchased under share repurchase program— — (2,837)(79,564)— — — — (79,564)
Balance at September 25, 2022261,609 $2,617 (25,142)$(544,687)$1,970,310 $1,904,475 $(604,994)$12,528 $2,740,249 


5


Nine Months Ended September 26, 2021Common StockTreasury StockAdditional
Paid-in
Capital
Retained EarningsAccumulated
Other
Comprehensive
Income (Loss)
Noncontrolling
Interest
Total
SharesAmountSharesAmount
(In thousands)
Balance at December 27, 2020261,185 $2,612 (17,673)$(345,134)$1,954,334 $972,569 $(20,620)$11,586 $2,575,347 
Net loss— — — — — (5,754)— 554 (5,200)
Other comprehensive income, net of tax— — — — — — 37,818 — 37,818 
Stock-based compensation plans:
Common stock issued under compensation plans162 2 — — (2)— — —  
Requisite service period recognition— — — — 8,418 — — — 8,418 
Balance at September 26, 2021261,347 $2,614 (17,673)$(345,134)$1,962,750 $966,815 $17,198 $12,140 $2,616,383 
Three Months Ended September 26, 2021Common StockTreasury StockAdditional
Paid-in
Capital
Retained EarningsAccumulated
Other
Comprehensive
Income
Noncontrolling
Interests
Total
SharesAmountSharesAmount
(In thousands)
Balance at June 27, 2021261,347 $2,614 (17,673)$(345,134)$1,959,558 $906,090 $59,354 $12,030 $2,594,512 
Net income— — — — — 60,725 — 110 60,835 
Other comprehensive loss, net of tax— — — — — — (42,156)— (42,156)
Stock-based compensation plans:
Requisite service period recognition— — — — 3,192 — — — 3,192 
Balance at September 26, 2021261,347 $2,614 (17,673)$(345,134)$1,962,750 $966,815 $17,198 $12,140 $2,616,383 
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.


6


PILGRIM’S PRIDE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
 September 25, 2022September 26, 2021
 (In thousands)
Cash flows from operating activities:
Net income (loss)$901,580 $(5,200)
Adjustments to reconcile net income (loss) to cash provided by operating activities:
Depreciation and amortization300,962 274,336 
Deferred income tax benefit(48,611)(26,436)
Stock-based compensation5,982 8,418 
Gain on property disposals(5,620)(3,605)
Loan cost amortization4,311 3,762 
Accretion of discount related to Senior Notes1,288 1,104 
Loss (gain) on equity-method investments1 (12)
Loss on early extinguishment of debt recognized as a component of interest expense 24,654 
Amortization of premium related to Senior Notes (167)
Changes in operating assets and liabilities:
Trade accounts and other receivables(211,827)(138,948)
Inventories(455,465)(149,653)
Prepaid expenses and other current assets(3,525)13,718 
Accounts payable, accrued expenses and other current liabilities297,271 274,932 
Income taxes10,241 66,413 
Long-term pension and other postretirement obligations(3,128)(13,491)
Other operating assets and liabilities(2,847)(2,330)
Cash provided by operating activities790,613 327,495 
Cash flows from investing activities:
Acquisitions of property, plant and equipment(342,588)(280,820)
Proceeds from property disposals14,607 22,896 
Purchase of acquired business, net of cash acquired(9,692)(953,947)
Proceeds from insurance recoveries7,339  
Cash used in investing activities(330,334)(1,211,871)
Cash flows from financing activities:
Payments on revolving line of credit, long-term borrowings and finance lease obligations(370,332)(2,005,960)
Proceeds from revolving line of credit and long-term borrowings362,541 2,951,707 
Purchase of common stock under share repurchase program(199,553) 
Payments of capitalized loan costs(3,070)(22,293)
Payment of equity distribution under Tax Sharing Agreement between JBS USA Holdings and Pilgrim’s Pride Corporation(1,961)(650)
Payments on early extinguishment of debt (21,258)
Cash provided by (used in) financing activities(212,375)901,546 
Effect of exchange rate changes on cash and cash equivalents(13,932)(381)
Increase in cash, cash equivalents, restricted cash and restricted cash equivalents233,972 16,789 
Cash, cash equivalents, restricted cash and restricted cash equivalents, beginning of period450,121 548,406 
Cash, cash equivalents, restricted cash and restricted cash equivalents, end of period$684,093 $565,195 
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.


7


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 
1.    BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business
Pilgrim’s Pride Corporation (referred to herein as “Pilgrim’s,” “PPC,” “the Company,” “we,” “us,” “our,” or similar terms) is one of the largest chicken producers in the world, with operations in the United States (“U.S.”), the United Kingdom (“U.K.”), Mexico, France, Puerto Rico, the Netherlands and the Republic of Ireland. Pilgrim’s products are sold to foodservice, retail and frozen entrée customers. The Company’s primary distribution is through retailers, foodservice distributors and restaurants throughout the countries listed above. Additionally, the Company exports chicken and pork products to approximately 120 countries. Our fresh products consist of refrigerated (nonfrozen) whole or cut-up chicken, selected chicken parts that are either marinated or non-marinated, primary pork cuts, added value pork and pork ribs. The Company’s prepared products include fully cooked, ready-to-cook and individually frozen chicken parts, strips, nuggets and patties, processed sausages, bacon, smoked meat, gammon joints, pre-packed meats, sandwich and deli counter meats and meat balls. The Company’s other products include plant-based protein offerings, ready-to-eat meals, multi-protein frozen foods, vegetarian foods and desserts. The Company also provides direct-to-consumer meals and hot food-to-go solutions in the U.K. and the Republic of Ireland. We operate feed mills, hatcheries, processing plants and distribution centers in 14 U.S. states, the U.K., Mexico, France, Puerto Rico, the Netherlands and the Republic of Ireland. As of September 25, 2022, Pilgrim’s had over 61,800 employees and had the capacity to process approximately 43.1 million birds per 5-day work week. Approximately 4,750 contract growers supply chicken for the Company’s operations. As of September 25, 2022, PPC had the capacity to process approximately 49,500 pigs per 5-day work week and approximately 260 contract growers supply pigs for the Company’s operations. As of September 25, 2022, JBS S.A., through its indirect wholly-owned subsidiaries (together, “JBS”), beneficially owned 82.7% of the Company’s outstanding common stock.
Condensed Consolidated Financial Statements
The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the U.S. (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the U.S. Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal and recurring adjustments unless otherwise disclosed) considered necessary for a fair presentation have been included. Operating results for the nine months ended September 25, 2022 are not necessarily indicative of the results that may be expected for the year ending December 25, 2022. For further information, refer to the consolidated financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended December 26, 2021.
The Company operates on the basis of a 52/53 week fiscal year ending on the Sunday falling on or before December 31. Any reference we make to a particular year (for example, 2022) in the notes to these Condensed Consolidated Financial Statements applies to our fiscal year and not the calendar year. The three months ended September 25, 2022 represents the period from June 27, 2022 through September 25, 2022. The three months ended September 26, 2021 represents the period from June 28, 2021 through September 26, 2021. The nine months ended September 25, 2022 represents the period from December 27, 2021 through September 25, 2022. The nine months ended September 26, 2021 represents the period from December 28, 2020 through September 26, 2021.
The Condensed Consolidated Financial Statements include the accounts of the Company and its majority-owned subsidiaries. We eliminate all significant affiliate accounts and transactions upon consolidation.
The Condensed Consolidated Financial Statements have been prepared in conformity with U.S. GAAP using management’s best estimates and judgments. These estimates and judgments affect the reported amounts of assets and liabilities and disclosure of the contingent assets and liabilities at the date of the financial statements. The estimates and judgments will also affect the reported amounts for certain revenues and expenses during the reporting period. Actual results could differ materially from these estimates and judgments. Significant estimates made by the Company include the allowance for credit losses, reserves related to inventory obsolescence or valuation, useful lives of long-lived assets, goodwill, valuation of deferred tax assets, insurance accruals, valuation of pension and other postretirement benefits obligations, income tax accruals, certain derivative positions, certain litigation reserves and valuations of acquired businesses.
The functional currency of the Company’s U.S. and Mexico operations and certain holding-company subsidiaries in Luxembourg, the U.K., Malta and the Republic of Ireland is the U.S. dollar. The functional currency of its U.K. operations is


8


the British pound. The functional currency of the Company’s operations in France, the Netherlands and the Republic of Ireland is the euro. For foreign currency-denominated entities other than the Company’s Mexico operations, translation from local currencies into U.S. dollars is performed for most assets and liabilities using the exchange rates in effect as of the balance sheet date. Income and expense accounts are remeasured using average exchange rates for the period. Adjustments resulting from translation of these financial records are reflected as a separate component of Accumulated other comprehensive loss in the Condensed Consolidated Balance Sheets. For the Company’s Mexico operations, remeasurement from the Mexican peso to U.S. dollars is performed for monetary assets and liabilities using the exchange rate in effect as of the balance sheet date. Remeasurement is performed for non-monetary assets using the historical exchange rate in effect on the date of each asset’s acquisition. Income and expense accounts are remeasured using average exchange rates for the period. Net adjustments resulting from remeasurement of these financial records, as well as foreign currency transaction gains and losses, are reflected in Foreign currency transaction losses in the Condensed Consolidated Statements of Income.
Restricted Cash and Restricted Cash Equivalents
The Company is required to maintain cash balances with a broker as collateral for exchange-traded futures contracts. These balances are classified as restricted cash as they are not available for use by the Company to fund daily operations. The balance of restricted cash and restricted cash equivalents may also include investments in U.S. Treasury Bills that qualify as restricted cash equivalents, as required by the broker, to offset the obligation to return cash collateral.
The following table reconciles cash, cash equivalents, restricted cash and restricted cash equivalents as reported in the Condensed Consolidated Balance Sheets to the total of the same amounts shown in the Condensed Consolidated Statements of Cash Flows:
September 25, 2022December 26, 2021
(In thousands)
Cash and cash equivalents$654,213 $427,661 
Restricted cash and restricted cash equivalents29,880 22,460 
Total cash, cash equivalents, restricted cash and restricted cash equivalents shown in the Condensed Consolidated Statements of Cash Flows$684,093 $450,121 
Accounting Pronouncements Adopted in 2022
In November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance, which requires annual disclosures for transactions with a government authority that are accounted for by a grant or contribution model. The guidance requires disclosure about the nature of certain government assistance received, the accounting treatment for the transactions and the effect of the transactions on the financial statements. The guidance is effective for annual periods beginning after December 15, 2021, with early adoption permitted. The adoption of this guidance did not have a material impact on our Condensed Consolidated Financial Statements.
Accounting Pronouncements Not Yet Adopted as of September 25, 2022
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional expedients and exceptions to the application of current GAAP to existing contracts, hedging relationships and other transactions affected by reference rate reform. The new guidance will ease the transition to new reference rates by allowing entities to update contracts and hedging relationships without applying many of the contract modification requirements specific to those contracts. The provisions of the new guidance are effective beginning March 12, 2020, extending through December 31, 2022 with the option to apply the guidance at any point during that time period. In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848), which provides further clarification on the scope of Topic 848 so that derivatives affected by the discounting transition are explicitly eligible for certain optional expedients and exceptions in Topic 848. Once an entity elects an expedient or exception it must be applied to all eligible contracts or transactions. We currently have hedging transactions and debt agreements that reference LIBOR and will apply the new guidance as these contracts are modified to reference other rates. The Company plans to adopt this guidance effective December 26, 2022 and does not expect implementation to have a material impact on our Condensed Consolidated Financial Statements.
In September 2022, the FASB issued ASU 2022-04, Liabilities - Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations, which requires disclosure of the existence of supplier financing programs. The guidance requires disclosure about the nature of the supplier financing agreements, including key terms and payment timing and determination of amounts, the accounting treatment for the transactions and the effect of the transactions on the financial statements, as well as any assets pledged or guarantees provided to the providers of the financing programs. The provisions of the new guidance will be effective for years beginning after December 15, 2022 with the requirement to add


9


rollforward disclosures for years beginning after December 15, 2023. The Company plans to adopt this guidance effective December 26, 2022 and is assessing the impacts on our Condensed Consolidated Financial Statements.
2.    BUSINESS ACQUISITION
On September 24, 2021, the Company acquired 100% of the equity of the Kerry Consumer Foods’ meats and meals businesses, collectively known as Pilgrim’s Food Masters (“PFM”), for cash of £695.3 million, or $954.1 million, subject to working capital adjustments. The acquisition was funded with the Company’s recent senior notes offering and borrowings under the credit facility. During the first quarter of 2022, a payment of $4.8 million for working capital and net debt adjustments was paid to the sellers bringing the total cash paid to $958.9 million. The acquisition solidifies Pilgrim’s as a leading European food company. The specialty meats business is a leading manufacturer of branded and private label meats, meat snacks and food-to-go products in the U.K. and the Republic of Ireland. The ready meals business is a leading ethnic chilled and frozen ready meals business in the U.K. The acquired operations are included in the Company’s U.K. and Europe reportable segment.
To date, transaction costs incurred in conjunction with this acquisition were approximately $19.3 million. These costs were expensed as incurred and are reflected within Selling, general and administrative expense in the Company’s Consolidated Statements of Income.
The results of operations of the acquired business since September 24, 2021 are included in the Company’s Condensed Consolidated Statements of Income. Net sales and net income generated by the acquired business during the three months ended September 25, 2022 totaled $247.6 million and $4.9 million, respectively. Net sales and net income generated by the acquired business during the nine months ended September 25, 2022 totaled $774.1 million and $10.3 million, respectively.
The assets acquired and liabilities assumed in the acquisition were measured at their fair values as of September 24, 2021 as set forth below. The excess of the purchase price over the fair value of the identified net assets was recorded as goodwill in the Company’s U.K. and Europe reportable segment. The factors contributing to the amount of goodwill are based on several strategic and synergistic benefits that are expected to be realized from the acquisition as well as the assembled workforce. Benefits include (1) complementary product offerings, (2) an enhanced footprint in the U.K. and the Republic of Ireland and (3) an enhanced position in the fast-growing plant-based protein, direct-to-consumer and hot food-to-go markets. The goodwill is not expected to be tax deductible.
The fair values recorded for the assets acquired and liabilities assumed for the acquisition are as follows (in thousands):
Cash and cash equivalents$113 
Trade accounts and other receivables7,387 
Inventories60,341 
Prepaid expenses and other current assets1,727 
Operating lease assets14,648 
Property, plant and equipment247,133 
Intangible assets415,157 
Other assets335 
Total assets acquired746,841 
Accounts payable4,615 
Other current liabilities407 
Operating lease liabilities18,996 
Deferred tax liabilities114,701 
Other long-term liabilities2,612 
Total liabilities assumed141,331 
Total identifiable net assets605,510 
Goodwill353,397 
Total consideration transferred$958,907 
The valuation of intangible assets of $415.2 million consisted of: (1) trade names with indefinite lives of $214.0 million; (2) trade names of $36.8 million with useful lives ranging from 15 years to 20 years; and (3) customer and distributor relationships of $164.3 million with useful lives ranging from 15 years to 18 years.
The following unaudited pro forma information presents the combined financial results for the Company and PFM for 2021 as if the acquisition had been completed at the beginning of 2021:
Nine Months Ended
September 25, 2022September 26, 2021
(In thousands, except per share amounts)
Net sales$13,341,012 $11,403,955 
Net income attributable to Pilgrim's Pride Corporation901,575 (43,684)
Net income attributable to Pilgrim's Pride Corporation
     per common share - diluted
$3.73 (0.18)
The above unaudited pro forma financial information is presented for informational purposes only and does not purport to represent what the Company’s results of operations would have been had it completed the acquisition on the date assumed, nor is it necessarily indicative of the results that may be expected in future periods. Pro forma adjustments include depreciation on the values of acquired property, plant and equipment, amortization on the values of acquired intangible assets, interest expense on debt issued to finance the acquisition, acquisition-related costs incurred by Pilgrim’s and its subsidiaries and the related income tax effect of these adjustments. Pro forma adjustments exclude cost savings from any synergies resulting from the acquisition.
3.    REVENUE RECOGNITION
The vast majority of the Company’s revenue is derived from contracts which are based upon a customer ordering our products. While there may be master agreements, the contract is only established when the customer’s order is accepted by the Company. The Company accounts for a contract, which may be verbal or written, when it is approved and committed by both parties, the rights of the parties are identified along with payment terms, the contract has commercial substance and collectability is probable.
The Company evaluates the transaction for distinct performance obligations, which are the sale of its products to customers. Since its products are commodity market-priced, the sales price is representative of the observable, standalone selling price. Each performance obligation is recognized based upon a pattern of recognition that reflects the transfer of control to the customer at a point in time, which is upon destination (customer location or port of destination), which faithfully depicts the transfer of control and recognition of revenue. There are instances of customer pick-up at the Company’s facility, in which case control transfers to the customer at that point and the Company recognizes revenue. The Company’s performance obligations are typically fulfilled within days to weeks of the acceptance of the order.
The Company makes judgments regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from revenue and cash flows with customers. Determination of a contract requires evaluation and judgment along with the estimation of the total contract value and if any of the contract value is constrained. Due to the nature of our business, there is minimal variable consideration, as the contract is established at the acceptance of the order from the customer. When applicable, variable consideration is estimated at contract inception and updated on a regular basis until the contract is completed. Allocating the transaction price to a specific performance obligation based upon the relative standalone selling prices includes estimating the standalone selling prices including discounts and variable consideration.


10


Disaggregated Revenue
Revenue has been disaggregated into the categories below to show how economic factors affect the nature, amount, timing and uncertainty of revenue and cash flows:
Three Months Ended September 25, 2022
(In thousands)
FreshPreparedExportOtherTotal
U.S.$2,309,402 $280,114 $146,704 $100,700 $2,836,920 
U.K. and Europe205,403 783,048 180,605 34,039 1,203,095 
Mexico364,060 40,785  24,109 428,954 
Total net sales$2,878,865 $1,103,947 $327,309 $158,848 $4,468,969 
Three Months Ended September 26, 2021
(In thousands)
FreshPreparedExportOtherTotal
U.S.$1,931,953 $235,763 $117,454 $181,680 $2,466,850 
U.K. and Europe248,232 543,838 104,442 33,928 930,440 
Mexico375,470 31,209  23,597