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Goodwill and Other Intangible Assets

12 Months Ended

Dec. 31, 2011

Goodwill and Other Intangible Assets [Abstract]

Goodwill and Other Intangible Assets [Text Block]

NOTE 2

GOODWILL AND OTHER INTANGIBLE ASSETS

For the periods presented, the Company's intangible assets consisted of the following:

Intangible assets subject to amortization
			Gross carrying amount				Accumulated amortization
(millions)			2011		2010		2011		2010
Trademarks		$	19	$	19	$	17	$	16
Other			41		41		32		31
Total		$	60	$	60	$	49	$	47

							2011		2010
Amortization expense (a)						$	2	$	2

(a)	The currently estimated aggregate amortization expense for each of the next five succeeding fiscal periods is approximately $2 million per year.

Intangible assets not subject to amortization
		Total carrying amount
(millions)		2011		2010
Trademarks	$	1,443	$	1,443

Changes in the carrying amount of goodwill
		U.S.
		Morning						North
		Foods		U.S.		U.S.		America				Latin		Asia		Corp-		Consoli-
(millions)		& Kashi		Snacks		Specialty		Other		Europe		America		Pacific		orate		dated
January 2, 2010	$	80	$	3,257	$	-	$	202	$	62	$	-	$	42	$	-	$	3,643
Impairment charge		-		-		-		-		-		-		(20)		-		(20)
Currency translation adjustment		-		-		-		-		-		-		5		-		5
January 1, 2011	$	80	$	3,257	$	-	$	202	$	62	$	-	$	27	$	-	$	3,628
Currency translation adjustment		-		-		-		-		(5)		-		-		-		(5)
December 31, 2011	$	80	$	3,257	$	-	$	202	$	57	$	-	$	27	$	-	$	3,623

Impairment charges

In 2008, the Company acquired a majority interest in the business of Zhenghang Food Company Ltd. (Navigable Foods), a manufacturer of cookies and crackers in the northern and northeastern regions of China. The Company also obtained the option to purchase the noncontrolling interest of Navigable Foods beginning June 30, 2011 and the noncontrolling interest holder obtained the option to cause the Company to purchase its remaining interest. The options, which had similar terms, included an exercise price that approximated fair value on the date of exercise. During 2011, the Company exercised its option and acquired the noncontrolling interest for no consideration. A portion of the original purchase price aggregating $5 million is payable in 2012 and is recorded on the Company's Consolidated Balance Sheet in other current liabilities.

In 2010, the Company recorded impairment charges totaling $29 million in connection with Navigable Foods, which included $20 million of goodwill. The China business generated operating losses since the acquisition and that trend was expected to continue. As a result, management determined in 2010 the current business has not proven to be the right vehicle for entry into the Chinese marketplace and began exploring various strategic alternatives to reduce operating losses in the future. The impairment charge was recorded in SGA expense in the Asia Pacific operating segment.

Prior to assessing the goodwill for impairment, the Company determined that the long-lived assets of the China reporting unit were impaired and should be written down to their estimated fair value of $10 million. This resulted in a fixed asset impairment charge of $9 million in 2010 that was recorded in the Asia Pacific operating segment, of which $8 million was recorded in COGS, and $1 million was recorded in SGA expense.

Subsequent to December 31, 2011, the Company sold the net assets of Navigable Foods for proceeds of $11 million which approximated carrying value.

- 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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