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Intangible Assets | 12 Months Ended
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Dec. 30, 2023
Goodwill and Intangible Assets Disclosure [Abstract] |
Intangible Assets Disclosure [Text Block] | Intangible Assets A summary of our amortizable intangible assets is as follows:
|  |  | 2023 |  | 2022 |  | 2021
| Average Useful Life (Years) |  | Gross |  | Accumulated Amortization |  | Net |  | Gross |  | Accumulated Amortization |  | Net |  |
Acquired franchise rights | 56 – 60 |  | $ | 840 |  |  | $ | (214) |  |  | $ | 626 |  |  | $ | 837 |  |  | $ | (200) |  |  | $ | 637 |  |  |
Customer relationships | 10 – 24 |  | 560 |  |  | (265) |  |  | 295 |  |  | 571 |  |  | (237) |  |  | 334 |  |  |
Brands | 20 – 40 |  | 1,093 |  |  | (989) |  |  | 104 |  |  | 1,097 |  |  | (973) |  |  | 124 |  |  |
Other identifiable intangibles | 10 – 24 |  | 449 |  |  | (275) |  |  | 174 |  |  | 447 |  |  | (265) |  |  | 182 |  |  |
Total |  |  | $ | 2,942 |  |  | $ | (1,743) |  |  | $ | 1,199 |  |  | $ | 2,952 |  |  | $ | (1,675) |  |  | $ | 1,277 |  |  |
Amortization expense |  |  |  |  |  |  | $ | 75 |  |  |  |  |  |  | $ | 78 |  |  | $ | 91 |
Amortization is recognized on a straight-line basis over an intangible asset’s estimated useful life. Amortization of intangible assets for each of the next five years, based on existing intangible assets as of December 30, 2023 and using average 2023 foreign exchange rates, is expected to be as follows:
| 2024 |  | 2025 |  | 2026 |  | 2027 |  | 2028
Five-year projected amortization | $ | 72 |  |  | $ | 70 |  |  | $ | 62 |  |  | $ | 60 |  |  | $ | 59 |
Depreciable and amortizable assets are evaluated for impairment upon a significant change in the operating or macroeconomic environment. In these circumstances, if an evaluation of the undiscounted cash flows indicates impairment, the asset is written down to its estimated fair value, which is based on discounted future cash flows. Useful lives are periodically evaluated to determine whether events or circumstances have occurred which indicate the need for revision. Indefinite-Lived Intangible Assets As discussed in Note 2, we perform our annual impairment assessment on indefinite-lived intangible assets during our third quarter. The annual impairment assessment on indefinite-lived intangible assets performed in the third quarter of 2023, based on best available market information and our internal forecasts and operating plans at the time, did not result in any material impairment charges. In the fourth quarter of 2023, macroeconomic conditions, including higher interest rates, inflationary costs, and the ongoing conflict in the Middle East, and recent business performance indicated a deterioration of the significant inputs used to determine the fair value of our indefinite-lived intangible assets in various markets, primarily assumptions underlying the weighted-average cost of capital and the impact of economic uncertainty on current and future financial performance, and required us to perform a quantitative assessment on certain assets. The fair value of our indefinite-lived intangible assets was estimated using discounted cash flows under the income approach, which we consider to be a Level 3 measurement. We determined that the carrying value exceeded the fair value, which reflects the increase in the weighted-average cost of capital as well as our most current estimates of future sales and their contributions to operating profit and expected future cash flows (including perpetuity growth assumptions). As a result of the quantitative assessment, we recorded pre-tax impairment charges of $0.6 billion ($0.5 billion after-tax or $0.35 per share) for brands and $0.3 billion ($0.3 billion after-tax or $0.22 per share) for goodwill, both in impairment of intangible assets, primarily related to the SodaStream brand and reporting unit in our Europe division, in the year ended December 30, 2023. See Note 1 for further information. In the first quarter of 2022, we discontinued or repositioned certain juice and dairy brands in Russia in our Europe division. As a result, we recognized pre-tax impairment charges (included in brand portfolio impairment charges) of $241 million ($193 million after-tax or $0.14 per share) in impairment of intangible assets, primarily related to indefinite-lived intangible assets in the year ended December 31, 2022. See Note 1 for further information. In the second quarter of 2022, macroeconomic factors, sanctions and other regulations as a result of the Russia-Ukraine conflict indicated a material deterioration of the significant inputs used to determine the fair value of our indefinite-lived intangible assets in Russia, primarily assumptions underlying the weighted-average cost of capital. These factors required us to perform a quantitative assessment, despite the absence of a material adverse impact on these assets’ financial performance (e.g., sales, operating profit, cash flows). The fair value of our indefinite-lived intangible assets in Russia was estimated using discounted cash flows under the income approach, which we consider to be a Level 3 measurement. We determined that the carrying value exceeded the fair value, with the decrease in the fair value primarily attributable to a significant increase in the weighted-average cost of capital, which reflected the macroeconomic uncertainty in Russia. As a result of the quantitative assessment, we recorded pre-tax impairment charges of $1.2 billion ($958 million after-tax or $0.69 per share) in impairment of intangible assets, related to our juice and dairy brands in Russia in our Europe division, in the year ended December 31, 2022. See Note 1 for further information. In the fourth quarter of 2022, macroeconomic conditions including a high interest rate and inflationary cost environment, coupled with recent business performance, indicated a deterioration of the significant inputs used to determine the fair value of our indefinite-lived intangible assets in various markets, primarily assumptions underlying the weighted-average cost of capital and the impact of economic uncertainty on current and future financial performance, and required us to perform a quantitative assessment on certain assets. The fair value of our indefinite-lived intangible assets was estimated using discounted cash flows under the income approach, which we consider to be a Level 3 measurement. We determined that the carrying value exceeded the fair value, which reflected the increase in the weighted-average cost of capital as well as our most current estimates of future sales and their contributions to operating profit and expected future cash flows (including perpetuity growth assumptions). As a result of the quantitative assessment, we recognized pre-tax impairment charges of $1.6 billion ($1.3 billion after-tax or $0.94 per share) in impairment of intangible assets, primarily related to the SodaStream brand in our Europe division, in the year ended December 31, 2022. See Note 1 for further information. We did not recognize any impairment charges for goodwill in each of the years ended December 31, 2022 and December 25, 2021. We did not recognize any impairment charges for indefinite-lived intangible assets in the year ended December 25, 2021. As of December 30, 2023, the estimated fair values of our indefinite-lived reacquired and acquired franchise rights recorded at PBNA exceeded their carrying values. However, there could be an impairment of the carrying value of PBNA’s reacquired and acquired franchise rights, as well as further impairment to the carrying value of the SodaStream reporting unit goodwill, if future sales and their contributions to operating profit do not achieve our expected future cash flows (including perpetuity growth assumptions) or if macroeconomic conditions result in a future increase in the weighted-average cost of capital used to estimate fair value. For further information on our policies for indefinite-lived intangible assets, see Note 2. The change in the book value of indefinite-lived intangible assets is as follows:
| Balance, Beginning 2022 |  | Acquisitions |  | Impairment |  | Translation and Other |  | Balance, End of 2022 |  | Acquisitions |  | Impairment |  | Translation and Other |  | Balance, End of 2023
FLNA |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Goodwill | $ | 458 |  |  | $ | — |  |  | $ | — |  |  | $ | (7) |  |  | $ | 451 |  |  | $ | — |  |  | $ | — |  |  | $ | 2 |  |  | $ | 453 |
Brands (a) | 340 |  |  | — |  |  | (88) |  |  | (1) |  |  | 251 |  |  | — |  |  | — |  |  | — |  |  | 251 |
Total | 798 |  |  | — |  |  | (88) |  |  | (8) |  |  | 702 |  |  | — |  |  | — |  |  | 2 |  |  | 704 |
QFNA |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Goodwill | 189 |  |  | — |  |  | — |  |  | — |  |  | 189 |  |  | — |  |  | — |  |  | — |  |  | 189 |
Total | 189 |  |  | — |  |  | — |  |  | — |  |  | 189 |  |  | — |  |  | — |  |  | — |  |  | 189 |
PBNA |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Goodwill | 11,974 |  |  | — |  |  | — |  |  | (27) |  |  | 11,947 |  |  | 4 |  |  | — |  |  | 10 |  |  | 11,961 |
Reacquired franchise rights | 7,107 |  |  | — |  |  | — |  |  | (46) |  |  | 7,061 |  |  | 36 |  |  | — |  |  | 17 |  |  | 7,114 |
Acquired franchise rights (b) | 1,538 |  |  | 230 |  |  | — |  |  | (10) |  |  | 1,758 |  |  | 14 |  |  | — |  |  | (35) |  |  | 1,737 |
Brands | 2,508 |  |  | — |  |  | — |  |  | — |  |  | 2,508 |  |  | — |  |  | — |  |  | — |  |  | 2,508 |
Total | 23,127 |  |  | 230 |  |  | — |  |  | (83) |  |  | 23,274 |  |  | 54 |  |  | — |  |  | (8) |  |  | 23,320 |
LatAm |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Goodwill | 433 |  |  | — |  |  | — |  |  | 3 |  |  | 436 |  |  | — |  |  | — |  |  | 24 |  |  | 460 |
Brands (c) | 100 |  |  | — |  |  | (29) |  |  | 4 |  |  | 75 |  |  | — |  |  | — |  |  | 7 |  |  | 82 |
Total | 533 |  |  | — |  |  | (29) |  |  | 7 |  |  | 511 |  |  | — |  |  | — |  |  | 31 |  |  | 542 |
Europe |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Goodwill (d)(e) | 3,700 |  |  | — |  |  | — |  |  | (54) |  |  | 3,646 |  |  | — |  |  | (290) |  |  | (190) |  |  | 3,166 |
Reacquired franchise rights | 441 |  |  | — |  |  | — |  |  | (20) |  |  | 421 |  |  | — |  |  | — |  |  | (2) |  |  | 419 |
Acquired franchise rights | 158 |  |  | — |  |  | (1) |  |  | (9) |  |  | 148 |  |  | — |  |  | — |  |  | 6 |  |  | 154 |
Brands (e) | 4,254 |  |  | — |  |  | (2,684) |  |  | 94 |  |  | 1,664 |  |  | — |  |  | (572) |  |  | 32 |  |  | 1,124 |
Total | 8,553 |  |  | — |  |  | (2,685) |  |  | 11 |  |  | 5,879 |  |  | — |  |  | (862) |  |  | (154) |  |  | 4,863 |
AMESA |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Goodwill | 1,063 |  |  | 14 |  |  | — |  |  | (62) |  |  | 1,015 |  |  | 34 |  |  | — |  |  | (58) |  |  | 991 |
Brands (f) | 205 |  |  | — |  |  | (36) |  |  | (13) |  |  | 156 |  |  | — |  |  | (6) |  |  | (13) |  |  | 137 |
Total | 1,268 |  |  | 14 |  |  | (36) |  |  | (75) |  |  | 1,171 |  |  | 34 |  |  | (6) |  |  | (71) |  |  | 1,128 |
APAC |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Goodwill | 564 |  |  | — |  |  | — |  |  | (46) |  |  | 518 |  |  | — |  |  | — |  |  | (10) |  |  | 508 |
Brands (g) | 476 |  |  | — |  |  | (172) |  |  | (37) |  |  | 267 |  |  | — |  |  | (59) |  |  | (4) |  |  | 204 |
Total | 1,040 |  |  | — |  |  | (172) |  |  | (83) |  |  | 785 |  |  | — |  |  | (59) |  |  | (14) |  |  | 712 |
Total goodwill | 18,381 |  |  | 14 |  |  | — |  |  | (193) |  |  | 18,202 |  |  | 38 |  |  | (290) |  |  | (222) |  |  | 17,728 |
Total reacquired franchise rights | 7,548 |  |  | — |  |  | — |  |  | (66) |  |  | 7,482 |  |  | 36 |  |  | — |  |  | 15 |  |  | 7,533 |
Total acquired franchise rights | 1,696 |  |  | 230 |  |  | (1) |  |  | (19) |  |  | 1,906 |  |  | 14 |  |  | — |  |  | (29) |  |  | 1,891 |
Total brands | 7,883 |  |  | — |  |  | (3,009) |  |  | 47 |  |  | 4,921 |  |  | — |  |  | (637) |  |  | 22 |  |  | 4,306 |
Total | $ | 35,508 |  |  | $ | 244 |  |  | $ | (3,010) |  |  | $ | (231) |  |  | $ | 32,511 |  |  | $ | 88 |  |  | $ | (927) |  |  | $ | (214) |  |  | $ | 31,458 |
(a)Impairment in 2022 is related to a baked fruit convenient food brand. (b)Acquisitions in 2022 primarily reflect our agreement with Celsius to distribute Celsius energy drinks in the United States. Translation and other in 2023 primarily reflects adjustments to previously recorded amounts related to our agreement with Celsius. See Note 9 for further information. (c)Impairment in 2022 is related to the sale of certain non-strategic brands. See Note 1 for further information. (d)Translation and other in 2023 primarily reflects the depreciation of the Russian ruble, partially offset by appreciation of the euro and British pound. (e)Impairment in 2022 is related to the SodaStream brand, the decrease in fair value as a result of the Russia-Ukraine conflict and the discontinuation or repositioning of certain juice and dairy brands in Russia. Impairments in 2023 are related to SodaStream goodwill and brand. (f)Impairment is related to brands from the Pioneer Foods acquisition. (g)Impairment in 2022 and 2023 is related to the Be & Cheery brand.

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