Goodwill and Other Intangible Assets

12 Months Ended

Jan. 01, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets [Text Block]

GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill and Intangible Assets

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

Carrying amount of goodwill

(millions)	North America		Europe		Latin America		AMEA		Consolidated
December 28, 2019	$	4,422	$	347	$	213	$	879	$	5,861
Currency translation adjustment	1		20		(33)		(50)		(62)
January 2, 2021	$	4,423	$	367	$	180	$	829	$	5,799
Acquisition	—		—		—		33		33
Currency translation adjustment	—		(17)		(9)		(35)		(61)
January 1, 2022	$	4,423	$	350	$	171	$	827	$	5,771

Intangible assets

	2021						2020
(millions)	Gross Amount		Accumulated Amortization		Net Amount		Gross Amount		Accumulated Amortization		Net Amount
Intangibles subject to amortization (a)	$	521	$	(143)	$	378	$	544	$	(121)	$	423
Intangibles not subject to amortization	$	2,031	$	—	$	2,031	$	2,068	$	—	$	2,068

(a) The currently estimated aggregate amortization expense for each of the next five succeeding fiscal periods is approximately $26 million per year through 2026.

The change in intangible asset values presented in the table above include the impact of foreign currency translation adjustments.

Annual impairment testing

At January 1, 2022, goodwill and other intangible assets amounted to $8.2 billion, consisting primarily of goodwill and brands. Within this total, approximately $2.0 billion of non-goodwill intangible assets were classified as indefinite-lived, including $1.7 billion related to trademarks, comprised principally of Pringles and cracker-related trademarks. The majority of all goodwill and other intangible assets are recorded in our North America reporting unit. The Company currently believes the fair value of goodwill and other intangible assets exceeds their carrying value and that those intangibles so classified will contribute indefinitely to cash flows. The Company's impairment testing performed through the fourth quarter of 2021 consisted of qualitative testing for all reporting unit goodwill and all indefinite-lived intangible assets, except for one brand, for which quantitative testing was performed. No heightened risk of impairment of individual intangible assets or reporting units was identified.

The Company has $184 million at January 1, 2022 related to one brand in the North America operating segment that primarily relates to snack category products. In performing the quantitative test of this brand, fair value was determined using a relief from royalty valuation method that includes estimates, and significant assumptions, of future cash flows to be generated from that asset based on estimates of future sales, royalty rate and discount rate consistent with rates used by market participants. The Company determined the fair value of this brand exceeds its carrying value and no heightened risk of impairment exists for the asset.

In the fourth quarter of 2020 management finalized a decision to reorganize part of its North America operating segment, including the RX reporting unit, effective at the beginning of fiscal 2021. The reorganization further integrated the RX business with the rest of the North American business and changed internal reporting provided to the segment manager. As a result of these changes, the Company re-evaluated its North American reporting units and determined that effective at the beginning of fiscal 2021, the RX reporting unit was combined with the North America reporting unit. The Company evaluated the related impacted reporting units for impairment on a before and after basis and concluded that the fair values of each reporting unit exceeded their carrying values.