Goodwill and Other Intangible Assets

3 Months Ended

Mar. 31, 2018

Acquisitions, Goodwill and Other Intangible Assets [Abstract]

Goodwill and other intangible assets

RXBAR acquisition

In October 2017, the Company completed its acquisition of Chicago Bar Co., LLC, the manufacturer of RXBAR, for $600 million, or $596 million net of cash and cash equivalents. The purchase price was subject to certain working capital adjustments based on the actual working capital on the acquisition date compared to targeted amounts. These adjustments were finalized during the quarter ended March 31, 2018 and resulted in a purchase price reduction of $1 million. The acquisition was accounted for under the purchase price method and was financed with short-term borrowings.

For the quarter ended March 31, 2018, the acquisition added $51 million in net sales in the Company's North America Other reporting segment.

The assets and liabilities are included in the Consolidated Balance Sheet as of March 31, 2018 within the North America Other reporting segment. The acquired assets and assumed liabilities include the following:



(millions)	October 27, 2017
Current assets	$	42
Goodwill	373
Intangible assets, primarily indefinite-lived brands	203
Current liabilities	(23		)
	$	595

The amounts in the above table represent the allocation of purchase price as of March 31, 2018 and represent the finalization of the valuations for intangible assets, which resulted in a $2 million increase in amortizable intangible assets with a corresponding reduction of goodwill.

Goodwill and Intangible Assets

Changes in the carrying amount of goodwill, intangible assets subject to amortization, consisting primarily of customer lists, and indefinite-lived intangible assets, consisting of brands, are presented in the following tables:

Carrying amount of goodwill



(millions)	U.S. Snacks		U.S. Morning Foods		U.S. Specialty		North America Other			Europe		Latin America		Asia Pacific		Consoli- dated
December 30, 2017	$	3,568	$	131	$	82	$	836		$	414	$	244	$	229	$	5,504
Purchase price allocation adjustment	—		—		—		(1		)	—		—		—		(1		)
Purchase price adjustment	—		—		—		(1		)	—		—		—		(1		)
Currency translation adjustment	—		—		—		(1		)	10		3		—		12
March 31, 2018	$	3,568	$	131	$	82	$	833		$	424	$	247	$	229	$	5,514

Intangible assets subject to amortization



Gross carrying amount
(millions)	U.S. Snacks			U.S. Morning Foods		U.S. Specialty		North America Other		Europe			Latin America			Asia Pacific		Consoli- dated
December 30, 2017	$	42		$	8	$	—	$	22	$	45		$	74		$	10	$	201
Purchase price allocation adjustment	—			—		—		2		—			—			—		2
Currency translation adjustment	—			—		—		—		1			—			—		1
March 31, 2018	$	42		$	8	$	—	$	24	$	46		$	74		$	10	$	204

Accumulated Amortization
December 30, 2017	$	22		$	8	$	—	$	5	$	18		$	10		$	4	$	67
Amortization	1			—		—		—		1			1			—		3
Currency translation adjustment	—			—		—		—		—			—			—		—
March 31, 2018	$	23		$	8	$	—	$	5	$	19		$	11		$	4	$	70

Intangible assets subject to amortization, net
December 30, 2017	$	20		$	—	$	—	$	17	$	27		$	64		$	6	$	134
Purchase price allocation adjustment	—			—		—		2		—			—			—		2
Amortization	(1		)	—		—		—		(1		)	(1		)	—		(3		)
Currency translation adjustment	—			—		—		—		1			—			—		1
March 31, 2018	$	19		$	—	$	—	$	19	$	27		$	63		$	6	$	134

For intangible assets in the preceding table, amortization was $3 million and $2 million for the quarters ended March 31, 2018 and April 1, 2017, respectively. The currently estimated aggregate annual amortization expense for full-year 2018 is approximately $12 million.

Intangible assets not subject to amortization



(millions)	U.S. Snacks		U.S. Morning Foods		U.S. Specialty		North America Other		Europe		Latin America		Asia Pacific		Consoli- dated
December 30, 2017	$	1,625	$	—	$	—	$	360	$	434	$	86	$	—	$	2,505
Purchase price allocation adjustment	—		—		—		—		—		—		—		—
Currency translation adjustment	—		—		—		—		11		—		—		11
March 31, 2018	$	1,625	$	—	$	—	$	360	$	445	$	86	$	—	$	2,516

- Definition

The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities.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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