Goodwill and Intangible Assets

9 Months Ended

Sep. 30, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

The change in the carrying amount of goodwill for the Americas segment is presented in the table below.


	Americas
	(In millions)
Balance as of December 31, 2021	$	6,152.6

Foreign currency translation	(19.3)
Balance as of September 30, 2022	$	6,133.3

The gross amount of goodwill totaled approximately $8.0 billion as of September 30, 2022 and $8.4 billion as of December 31, 2021. Accumulated impairment losses totaled approximately $1.9 billion as of September 30, 2022 and $2.2 billion as of December 31, 2021. Accumulated impairment losses are comprised of impairments taken on both the EMEA&APAC and Americas reporting units.

As of the date of our annual impairment test, performed as of October 1, 2021, the Americas reporting unit goodwill balance was considered at risk of future impairment in the event of significant unfavorable changes in assumptions including the forecasted cash flows (including company-specific risks like the performance of our above premium transformation efforts and overall market performance of new innovations, along with macro-economic risks such as the continued prolonged weakening of economic conditions and increased cost inflation, or significant unfavorable changes in tax rates, environmental or other regulations, including interpretations thereof), terminal growth rates, market multiples and/or weighted-average cost of capital utilized in the discounted cash flows analyses. For testing purposes of our reporting unit, management's best estimates of the expected future results are the primary driver in determining the fair value. The fair value is largely impacted by the continued perceived risk of realizing management's revitalization efforts, cost inflation and the ongoing impacts from the coronavirus pandemic. We continue to build on the strength of our iconic core brands, grow our above premium portfolio and expand beyond the beer aisle in the Americas segment. While the preliminary results of executing on these strategies are promising, including the increasing proportion of our above premium portfolio, the growth targets included in the forecasted future cash flows are inherently at risk given that the strategies are still in progress. In addition, our forecasted future cash flows continue to be at risk due to the inherent uncertainty of future coronavirus variant outbreaks and the governmental and societal responses to those outbreaks. Lastly, cost inflation for certain inputs could continue to put pressure on achieving our margins and cash flow projections into the future.

We determined that there was no triggering event that occurred during the nine months ended September 30, 2022, that would indicate the carrying value of our goodwill was greater than its fair value. Our annual impairment test as of October 1, 2022 is currently in progress, but we have not yet finalized our results. For all of the reasons described in the preceding paragraph, our goodwill balance continues to be at risk of future impairment.

Intangible Assets, Other than Goodwill

The following table presents details of our intangible assets, other than goodwill, as of September 30, 2022:


	Useful life	Gross		Accumulated amortization		Net
	(Years)	(In millions)
Intangible assets subject to amortization
Brands	10 - 50	$	4,737.9	$	(1,341.1)	$	3,396.8
License agreements and distribution rights	15 - 20	196.3		(103.9)		92.4
Other	5 - 40	91.8		(29.2)		62.6
Intangible assets not subject to amortization
Brands	Indefinite	8,072.3		—		8,072.3
Distribution networks	Indefinite	731.5		—		731.5
Other	Indefinite	307.6		—		307.6
Total		$	14,137.4	$	(1,474.2)	$	12,663.2

The following table presents details of our intangible assets, other than goodwill, as of December 31, 2021:


	Useful life	Gross		Accumulated amortization		Net
	(Years)	(In millions)
Intangible assets subject to amortization:
Brands	10 - 50	$	5,081.8	$	(1,267.1)	$	3,814.7
License agreements and distribution rights	15 - 20	206.8		(107.2)		99.6
Other	3 - 40	98.5		(32.0)		66.5
Intangible assets not subject to amortization:
Brands	Indefinite	8,197.9		—		8,197.9
Distribution networks	Indefinite	800.5		—		800.5
Other	Indefinite	307.6		—		307.6
Total		$	14,693.1	$	(1,406.3)	$	13,286.8

The changes in the gross carrying amounts of intangible assets from December 31, 2021 to September 30, 2022 are primarily driven by the impact of foreign exchange rates, as a significant amount of intangible assets are denominated in foreign currencies.

Based on foreign exchange rates as of September 30, 2022, the estimated future amortization expense of intangible assets is as follows:


Fiscal year	Amount
	(In millions)
2022 - remaining	$	50.4
2023	$	201.4
2024	$	200.0
2025	$	200.0
2026	$	181.5

Amortization expense of intangible assets was $51.8 million and $54.0 million for the three months ended September 30, 2022 and September 30, 2021, respectively, and $157.3 million and $163.3 million for the nine months ended September 30, 2022 and September 30, 2021, respectively. This expense is primarily presented within marketing, general and administrative expenses in our unaudited condensed consolidated statements of operations.

As of the date of our annual impairment test of indefinite-lived intangible assets, performed as of October 1, 2021, the fair value of all indefinite-lived brands were all sufficiently in excess of their respective carrying values.

No triggering events occurred during the first three quarters of 2022 that would indicate the carrying value of our indefinite-lived or definite-lived intangible assets were greater than their fair value.

Fair Value Assumptions

Fair value determinations require considerable judgment and are sensitive to changes in underlying assumptions and factors. The key assumptions used to derive the estimated fair values of our reporting units and indefinite-lived intangible assets are discussed in Part II—Item 8 Financial Statements, Note 10, "Goodwill and Intangible Assets" in our Annual Report, and represent Level 3 measurements.

Overall Considerations

While historical performance and current expectations have resulted in fair values of our Americas reporting unit and indefinite-lived intangible assets equal to or in excess of carrying values, if our assumptions are not realized, it is possible that an impairment charge may need to be recorded in the future.