GOODWILL AND OTHER INTANGIBLE ASSETS

12 Months Ended

May 29, 2016

GOODWILL AND OTHER INTANGIBLE ASSETS [Abstract]

NOTE 6. GOODWILL AND OTHER INTANGIBLE ASSETS

The components of goodwill and other intangible assets are as follows:

In Millions		May 29, 2016		May 31, 2015
Goodwill	$	8,741.2	$	8,874.9
Other intangible assets:
Intangible assets not subject to amortization:
Brands and other indefinite-lived intangibles		4,147.5		4,262.1
Intangible assets subject to amortization:
Franchise agreements, customer relationships, and other finite-lived intangibles		536.9		544.0
Less accumulated amortization		(145.8)		(129.1)
Intangible assets subject to amortization		391.1		414.9
Other intangible assets		4,538.6		4,677.0
Total	$	13,279.8	$	13,551.9

Based on the carrying value of finite-lived intangible assets as of May 29, 2016, amortization expense for each of the next five fiscal years is estimated to be approximately $28 million.

The changes in the carrying amount of goodwill for fiscal 2014, 2015, and 2016 are as follows:

In Millions		U.S. Retail		International		Convenience Stores and Foodservice		Joint Ventures		Total
Balance as of May 26, 2013	$	5,841.4	$	1,387.0	$	921.1	$	472.7	$	8,622.2
Divestiture		(12.2)		-		-		-		(12.2)
Other activity, primarily foreign
currency translation		-		15.0		-		25.5		40.5
Balance as of May 25, 2014		5,829.2		1,402.0		921.1		498.2		8,650.5
Acquisition		589.8		-		-		-		589.8
Other activity, primarily foreign
currency translation		-		(268.7)		-		(96.7)		(365.4)
Balance as of May 31, 2015		6,419.0		1,133.3		921.1		401.5		8,874.9
Acquisitions		54.1		29.4		-		-		83.5
Divestitures		(180.2)		(6.2)		-		-		(186.4)
Other activity, primarily foreign
currency translation		-		(35.5)		-		4.7		(30.8)
Balance as of May 29, 2016	$	6,292.9	$	1,121.0	$	921.1	$	406.2	$	8,741.2

In fiscal 2015, we reorganized certain reporting units within our U.S. Retail operating segment. Our chief operating decision maker continues to assess performance and make decisions about resources to be allocated to our segments at the U.S. Retail, International, and Convenience Stores and Foodservice operating segment level.

We performed our fiscal 2016 impairment assessment as of the first day of the second quarter of fiscal 2016, and determined there was no impairment of goodwill for any of our reporting units as their related fair values were substantially in excess of their carrying values.

The changes in the carrying amount of other intangible assets for fiscal 2014, 2015, and 2016 are as follows:

In Millions		U.S. Retail		International		Joint Ventures		Total
Balance as of May 26, 2013	$	3,312.4	$	1,638.2	$	64.5	$	5,015.1
Other activity, primarily
foreign currency translation		(4.9)		3.6		0.5		(0.8)
Balance as of May 25, 2014		3,307.5		1,641.8		65.0		5,014.3
Acquisition		268.4		-		-		268.4
Impairment charge		(260.0)		-		-		(260.0)
Other activity, primarily
foreign currency translation		(4.0)		(340.3)		(1.4)		(345.7)
Balance as of May 31, 2015		3,311.9		1,301.5		63.6		4,677.0
Acquisitions		23.1		7.0		-		30.1
Divestiture		(119.6)		-		-		(119.6)
Other activity, primarily amortization
and foreign currency translation		(3.7)		(44.6)		(0.6)		(48.9)
Balance as of May 29, 2016	$	3,211.7	$	1,263.9	$	63.0	$	4,538.6

As of our fiscal 2016 assessment date, there was no impairment of any of our indefinite-lived intangible assets as their related fair values were substantially in excess of the carrying values, except for the Mountain High and Uncle Toby’s brand assets. The excess fair value above the carrying value of these brand assets is as follows:

		Excess Fair Value
	Carrying	Above Carrying
In Millions	Value	Value
Mountain High	$35.4	20%
Uncle Toby's	$52.2	11%

Our strategies for fiscal 2017 and fiscal 2018 will focus on growth investments on our brands and platforms with the strongest profitable growth potential. As a result, select brands in our U.S. Retail segment could experience reduced future sales projections for these brands. We performed a sensitivity analysis for certain brand intangible assets and determined that, while not impaired as of May 29, 2016, the Progresso and Food Should Taste Good brands had risk of decreasing coverage if we proceed with these strategies. We will continue to monitor these businesses.

In fiscal 2015, we made a strategic decision to redirect certain resources supporting our Green Giant business in our U.S. Retail segment to other businesses within the segment. Therefore, future sales and profitability projections in our long-range plan for this business declined. As a result of this triggering event, we performed an interim impairment assessment of the Green Giant brand intangible asset as of May 31, 2015, and determined that the fair value of the brand asset no longer exceeded the carrying value of the asset. Significant assumptions used in that assessment included our updated long-range cash flow projections for the Green Giant business, an updated royalty rate, a weighted-average cost of capital, and a tax rate. We recorded a $260.0 million impairment charge in restructuring, impairment, and other exit costs in fiscal 2015 related to this asset.

- 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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