Goodwill and Intangible Assets

6 Months Ended

Jun. 30, 2024

Goodwill and Intangible Assets Disclosure [Abstract]

Note 5. Goodwill and Intangible Assets

Goodwill

Changes in goodwill consisted of:


	Latin America		AMEA		Europe		North America		Total
	(in millions)
January 1, 2023	$	1,421	$	3,132	$	8,009	$	10,888	$	23,450
Currency	180		(67)		341		19		473
Acquisitions (1)	6		—		—		(33)		(27)


Balance at December 31, 2023	$	1,607	$	3,065	$	8,350	$	10,874	$	23,896
Currency	(132)		(79)		(276)		(23)		(510)



Balance at June 30, 2024	$	1,475	$	2,986	$	8,074	$	10,851	$	23,386

(1)Purchase price allocation adjustments for Ricolino and Clif Bar during 2023.

Intangible Assets

Intangible assets consisted of the following:


	As of June 30, 2024						As of December 31, 2023
	Gross carrying amount		Accumulated amortization		Net carrying amount		Gross carrying amount		Accumulated amortization		Net carrying amount
	(in millions)
Definite-life intangible assets	$	3,267	$	(2,197)	$	1,070	$	3,322	$	(2,155)	$	1,167
Indefinite-life intangible assets (1)	18,327		—		18,327		18,669		—		18,669
Total	$	21,594	$	(2,197)	$	19,397	$	21,991	$	(2,155)	$	19,836

(1)In 2023, we recorded $26 million of intangible asset impairment charges related to a chocolate brand in the North America segment for $20 million and a biscuit brand in the Europe segment for $6 million in the third quarter.

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

Amortization expense for intangible assets was $37 million for the three months and $75 million for the six months ended June 30, 2024 and $37 million for the three months and $76 million for the six months ended June 30, 2023. For the next five years, we currently estimate annual amortization expense of approximately $125 million in 2024-2026 and approximately $90 million in 2027 and 2028 (reflecting June 30, 2024 exchange rates).

Impairment Assessment:

We test our reporting units and brands for impairment annually as of July 1, or more frequently if events or circumstances indicate it is more likely than not that the fair value of a reporting unit or brand is less than its carrying amount. During the second quarter of 2024, we evaluated our goodwill impairment and intangible asset impairment risk through an assessment of potential triggering events. We considered qualitative and quantitative information in our assessment. We concluded there were no impairment indicators.

During our 2023 annual indefinite-life intangible asset testing, we identified thirteen brands that each had a fair value in excess of book value of 10% or less. The aggregate book value of the thirteen brands was $3.5 billion as of June 30, 2024, of which $1.8 billion is related to five recently acquired brands. We believe our current plans for each of these brands will support the current carrying values, but if plans to grow brand earnings and expand margin are not met or specific valuation factors outside of our control, such as discount rates, change then a brand or brands could become impaired in the future.