Goodwill and Other Intangible Assets

12 Months Ended

Apr. 30, 2018

Goodwill and Intangible Assets Disclosure [Abstract]



NOTE 7		GOODWILL AND OTHER INTANGIBLE ASSETS

A summary of changes in goodwill by reportable segment is as follows:



	U.S. Retail Coffee			U.S. Retail Consumer Foods				U.S. Retail Pet Foods				International and Away From Home				Total
Balance at May 1, 2016		$	2,090.9		$	1,600.9			$	1,969.5			$	429.8		$	6,091.1
Other ^(A)		—			(1.9		)		—				(12.1		)	(14.0		)
Balance at April 30, 2017		$	2,090.9		$	1,599.0			$	1,969.5			$	417.7		$	6,077.1
Impairment charges ^(B)		—			—				(145.0		)		—			(145.0		)
Other ^(A)		—			1.4				—				8.7			10.1
Balance at April 30, 2018		$	2,090.9		$	1,600.4			$	1,824.5			$	426.4		$	5,942.2


(A)	The amounts classified as other represent foreign currency exchange adjustments.


(B)	There have been no goodwill impairment charges recognized in prior periods.

The following table summarizes our other intangible assets and related accumulated amortization and impairment charges, including foreign currency exchange adjustments.



		April 30, 2018								April 30, 2017
	Acquisition Cost			Accumulated Amortization/ Impairment Charges/ Foreign Currency Exchange			Net		Acquisition Cost			Accumulated Amortization/ Impairment Charges/ Foreign Currency Exchange			Net
Finite-lived intangible assets subject to amortization:
Customer and contractual relationships		$	3,520.1		$	959.3	$	2,560.8		$	3,520.1		$	802.1	$	2,718.0
Patents and technology		168.5			114.4		54.1			168.5			101.4		67.1
Trademarks		556.4			145.0		411.4			556.4			112.7		443.7
Total intangible assets subject to amortization		$	4,245.0		$	1,218.7	$	3,026.3		$	4,245.0		$	1,016.2	$	3,228.8
Indefinite-lived intangible assets not subject to amortization:
Trademarks		$	3,078.1		$	187.9	$	2,890.2		$	3,078.1		$	157.0	$	2,921.1
Total other intangible assets		$	7,323.1		$	1,406.6	$	5,916.5		$	7,323.1		$	1,173.2	$	6,149.9

Amortization expense for finite-lived intangible assets was $204.8, $205.9, and $204.7 in 2018, 2017, and 2016, respectively. The weighted-average useful lives of the customer and contractual relationships, patents and technology, and trademarks are 23 years, 14 years, and 16 years, respectively. The weighted-average useful life of total finite-lived intangible assets is 22 years. Based on the carrying amount of intangible assets subject to amortization at April 30, 2018, the estimated amortization expense is $205.1 for 2019, $200.4 for 2020, $198.8 for 2021, $193.4 for 2022, and $186.0 for 2023.

We review goodwill and other indefinite-lived intangible assets at least annually on February 1 for impairment and more often if indicators of impairment exist.

During the third quarter of 2018, we completed our annual long-range planning process, which resulted in a decline in forecasted net sales for the U.S. Retail Pet Foods segment. As a result of the decreased projections, as well as the narrow differences between estimated fair value and carrying value, we performed an interim impairment analysis on the goodwill of the Pet Foods reporting unit and the indefinite-lived trademarks included within the U.S. Retail Pet Foods segment, which was prior to the annual impairment review performed as of February 1, 2018. We recognized total impairment charges of $176.9, of which $145.0 and $31.9 related to the goodwill of the Pet Foods reporting unit and certain indefinite-lived trademarks within the U.S. Retail Pet Foods segment, respectively, to the extent the carrying values exceeded the estimated fair values. These charges were included as a noncash charge in our Statement of Consolidated Income. Furthermore, we early adopted ASU 2017-04, Intangibles – Goodwill and Other (Topic 350) Simplifying the Test for Goodwill Impairment, in connection with the interim impairment analysis. As a result, we did not perform Step 2 of the goodwill impairment test for the goodwill of the Pet Foods reporting unit and recorded the impairment charge based on the excess of the reporting unit’s carrying value over its fair value. For further details, refer to Note 1: Accounting Policies.

As of February 1, 2018, we completed the annual impairment review, in which goodwill impairment was tested at the reporting unit level for our seven reporting units. As part of our annual evaluation, we did not recognize any other impairment charges related to our goodwill and indefinite-lived trademarks. The estimated fair value of each reporting unit and material indefinite-lived intangible asset was substantially in excess of its carrying value as of the annual test date, with the exception of the Pet Foods reporting unit and all indefinite-lived trademarks within the U.S. Retail Pet Foods segment. Additional sensitivity analyses were performed for the Pet Foods reporting unit, assuming a hypothetical 50-basis-point decrease in the expected long-term growth rate or a hypothetical 50-basis-point increase in the weighted-average cost of capital. Both scenarios independently yielded an estimated fair value for the Pet Foods reporting unit below carrying value.

During 2017, we recognized total impairment charges of $133.2 primarily related to certain indefinite-lived trademarks within the U.S. Retail Pet Foods segment and did not recognize any impairment charges related to goodwill.

The goodwill and indefinite-lived trademarks within the U.S. Retail Pet Foods segment remain susceptible to future impairment charges, as the carrying values approximate estimated fair values at April 30, 2018. In addition, any meaningful adverse change to our near or long-term projections or macro-economic conditions could result in future impairment charges.

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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