Goodwill and Intangible Assets

9 Months Ended

Sep. 30, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

The changes in the carrying amount of goodwill for the North America segment are presented in the table below.


	North America
Changes in Goodwill	(In millions)
Balance as of December 31, 2020	$	6,151.0

Foreign currency translation	0.8
Balance as of September 30, 2021	$	6,151.8

As of December 31, 2020 and September 30, 2021, due to the goodwill impairment recorded in the fourth quarter of 2020, the Europe segment had no goodwill. The North America segment had goodwill as of September 30, 2021 and December 31, 2020 as presented in the table above.

The gross amount of goodwill totaled approximately $8.4 billion as of both September 30, 2021 and December 31, 2020. Accumulated impairment losses as of September 30, 2021 and December 31, 2020 totaled $2,222.4 million and $2,264.5 million, respectively, and are comprised of a full impairment taken on the Europe reporting unit and a partial impairment taken on the North America reporting unit as well as our historic India reporting unit, which was fully impaired in 2019.

As of the date of our annual impairment test, performed as of October 1, 2020, the North America reporting unit goodwill balance was 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 like hard seltzers, along with macro-economic risks such as the continued prolonged weakening of economic conditions, 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 flow analyses. For testing purposes of our reporting units, management's best estimates of the expected future results are the primary driver in determining the fair value. Current projections used for our North America reporting unit testing reflect growth assumptions associated with our revitalization plan to build on the strength of our iconic core brands, aggressively grow our above premium portfolio, expand beyond the beer aisle, invest in our capabilities and support our people and our communities, all of which are intended to benefit the projected cash flows of the business. The cash flow assumptions were tempered somewhat by the impacts the coronavirus has had on our overall business and specifically our more profitable on-premise business.

We determined that there was no triggering event that occurred during the first three quarters of 2021 that would indicate the carrying value of our goodwill was greater than its fair value.

Intangible Assets, Other than Goodwill

The following table presents details of our intangible assets, other than goodwill, as of September 30, 2021:


	Useful life	Gross		Accumulated amortization		Net
	(Years)	(In millions)
Intangible assets subject to amortization:
Brands	10 - 50	$	5,089.6	$	(1,216.5)	$	3,873.1
License agreements and distribution rights	15 - 20	206.4		(105.0)		101.4
Other	3 - 40	98.6		(30.8)		67.8
Intangible assets not subject to amortization:
Brands	Indefinite	8,197.9		—		8,197.9
Distribution networks	Indefinite	797.8		—		797.8
Other	Indefinite	307.6		—		307.6
Total		$	14,697.9	$	(1,352.3)	$	13,345.6

The following table presents details of our intangible assets, other than goodwill, as of December 31, 2020:


	Useful life	Gross		Accumulated amortization		Net
	(Years)	(In millions)
Intangible assets subject to amortization:
Brands	10 - 50	$	5,128.4	$	(1,070.6)	$	4,057.8
License agreements and distribution rights	15 - 20	206.8		(99.5)		107.3
Other	3 - 40	109.1		(36.4)		72.7
Intangible assets not subject to amortization:
Brands	Indefinite	8,215.7		—		8,215.7
Distribution networks	Indefinite	795.0		—		795.0
Other	Indefinite	307.6		—		307.6
Total		$	14,762.6	$	(1,206.5)	$	13,556.1

The changes in the gross carrying amounts of intangible assets from December 31, 2020 to September 30, 2021 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, 2021, the estimated future amortization expense of intangible assets is as follows:


Fiscal year	Amount
	(In millions)
2021 - remaining	$	54.0
2022	$	212.2
2023	$	211.2
2024	$	209.6
2025	$	209.4

Amortization expense of intangible assets was $54.0 million and $55.4 million for the three months ended September 30, 2021 and September 30, 2020, respectively, and $163.3 million and $164.9 million for the nine months ended September 30, 2021 and September 30, 2020, respectively. This expense is primarily presented within marketing, general and administrative expenses on the 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, 2020, the fair value of the indefinite-lived Miller, Coors and Carling brands and distribution networks were sufficiently in excess of their carrying values. We determined at the annual impairment testing date that the Staropramen indefinite-lived brand intangible asset in Europe was considered to be at risk of future impairment as a result of the coronavirus' impact on the on-premise business throughout Europe that commenced in 2020 and is continuing in 2021. No triggering events occurred during the first three quarters of 2021 that would indicate the carrying value of these indefinite-lived assets was greater than their fair value.

We continuously monitor the performance of the underlying definite-lived intangible assets for potential triggering events suggesting an impairment review should be performed. While no triggering events have occurred in the first three quarters of 2021, we continue to monitor the impacts of the coronavirus in our key markets and the potential implications that may have on the values of definite-lived intangible assets.

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

Based on known facts and circumstances, we evaluate and consider recent events and uncertain items, as well as the related potential implications, as part of our annual and interim assessments and incorporate into the analyses as appropriate. These facts and circumstances are subject to change and may impact future analyses. For example, we continue to monitor the

progress we are making against our revitalization plan, challenges within the beer industry for further weakening or additional systemic structural declines, as well as for adverse changes in macroeconomic conditions such as the coronavirus pandemic that could significantly impact our immediate and long-range results. Additionally, we are monitoring the impacts the coronavirus pandemic has on the market inputs used in calculating our discount rates, including risk-free rates, equity premiums and our cost of debt, which could result in a meaningful change to our weighted-average cost of capital calculation, as well as the market multiples used in our impairment assessment. Furthermore, increased volatility in the equity and debt markets or other country specific factors, including, but not limited to, extended or future government intervention in response to the coronavirus pandemic, could also result in a meaningful change to our weighted-average cost of capital calculation and other inputs used in our impairment assessment. Separately, the Ontario government in Canada adopted a bill that, if enacted, could adversely impact the existing terms of the beer distribution and retail systems in the province, as further described in Note 12, "Commitments and Contingencies."While historical performance and current expectations have resulted in fair values of our reporting units 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 loss may need to be recorded in the future.