XML 26 R13.htm IDEA: XBRL DOCUMENT

Goodwill and Intangible Assets

3 Months Ended

Mar. 31, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

Note 5. Goodwill and Intangible Assets

Goodwill by segment was:


	As of March 31, 2022		As of December 31, 2021
	(in millions)
Latin America	$	738	$	674
AMEA	3,371		3,365
Europe	8,355		7,830
North America	10,154		10,109
Goodwill	$	22,618	$	21,978

Intangible assets consisted of the following:


	As of March 31, 2022		As of December 31, 2021
	(in millions)
Indefinite-life intangible assets	$	17,827	$	17,299
Definite-life intangible assets	3,025		2,991
	20,852		20,290
Accumulated amortization	(2,023)		(1,999)
Intangible assets, net	$	18,829	$	18,291

Indefinite-life intangible assets consist principally of brand names purchased through our acquisitions of Nabisco Holdings Corp., the Spanish and Portuguese operations of United Biscuits, the global LU biscuit business of Groupe Danone S.A. and Cadbury Limited. Definite-life intangible assets consist primarily of brands, customer-related intangibles, process technology, licenses and non-compete agreements.

Amortization expense for intangible assets was $32 million for the three months ended March 31, 2022 and $38 million for the three months ended March 31, 2021. For the next five years, we currently estimate annual amortization expense of approximately $130 million in 2022-2024, approximately $105 million in 2025 and approximately $65 million in 2026 (reflecting March 31, 2022 exchange rates).

Changes in goodwill and intangible assets consisted of:


	Goodwill		Intangible Assets, at cost
	(in millions)
Balance at January 1, 2022	$	21,978	$	20,290
Currency	(134)		(94)

Acquisitions	774		734
Asset impairments	—		(78)
Balance at March 31, 2022	$	22,618	$	20,852

Changes to goodwill and intangibles were:

•Acquisitions - In connection with our acquisition of Chipita during the first three months of 2022, we recorded a preliminary purchase price allocation of $774 million to goodwill and $734 million to intangible assets. See Note 2, Acquisitions and Divestitures, for additional information.

•Asset impairment - As further described below, during the first quarter of 2022, we recorded a $78 million intangible asset impairment in AMEA due to lower than expected growth and profitability of a local biscuit brand sold in select markets in AMEA and Europe.

During the first quarter of 2022, we evaluated our goodwill and intangible asset impairment risk through an assessment of potential triggering events. In light of the war in Ukraine and the overall global economic environment, we considered qualitative and quantitative information in our assessment of goodwill and indefinite-life intangible assets. Based on the financial performance of our goodwill reporting units, we concluded there were no impairment indicators for goodwill. Based on further quantitative analysis of our indefinite-life intangible assets, we concluded that a biscuit brand was impaired. During the first quarter of 2022, we recorded a $78 million impairment charge for the brand within asset impairment and exit costs and based on the excess carrying value over its estimated fair value. During our indefinite-life impairment testing, we use several accepted valuation methods, including relief of royalty, excess earnings and excess margin, that utilize estimates of future sales, earnings growth rates, royalty rates and discount rates in determining a brand's global fair value. During the first quarter of 2021, there were no impairments of goodwill or intangible assets. During our 2021 annual indefinite-life intangible asset testing in the third quarter of 2021, we identified eight brands, including the one brand impaired during the first quarter of 2022, that each had a fair value in excess of book value of 10% or less. The aggregate book value of the eight brands was $1,045 million as of March 31, 2022. We continue to monitor our brand performance, particularly in light of the significant global economic uncertainties and related impacts to our business. If a brand's earnings expectations, including the timing of the expected recovery from the war and the pandemic, are not met or specific valuation factors outside of our control, such as discount rates, change significantly, then a brand or brands could become impaired in the future.