Intangible Assets

8 Months Ended

Sep. 09, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

During the 36 weeks ended September 3, 2022, macroeconomic factors, sanctions and other regulations as a result of the Russia-Ukraine conflict indicated a material deterioration of the significant inputs used to determine the fair value of our indefinite-lived intangible assets in Russia, primarily assumptions underlying the weighted-average cost of capital. These factors required us to perform a quantitative assessment, despite the absence of a material adverse impact on these assets’ financial performance (e.g., sales, operating profit, cash flows).

The fair value of our indefinite-lived intangible assets in Russia was estimated using discounted cash flows under the income approach, which we consider to be a Level 3 measurement. We determined that the carrying value exceeded the fair value, with the decrease in the fair value primarily attributable to a significant increase in the weighted-average cost of capital, which reflects the macroeconomic uncertainty in Russia. As a result of the quantitative assessment, in the 36 weeks ended September 3, 2022, we recorded pre-tax impairment charges of $1.2 billion ($958 million after-tax or $0.69 per share) in impairment of intangible assets, related to our juice and dairy brands in Russia in our Europe division. See Note 1 for further information.

During the 36 weeks ended September 3, 2022, we repositioned or discontinued certain juice and dairy brands in Russia in our Europe division. As a result, we recognized pre-tax impairment charges (included in brand portfolio impairment charges) of $241 million ($193 million after-tax or $0.14 per share) in impairment of intangible assets, primarily related to indefinite-lived intangible assets. See Note 1 for further information.

For further information on indefinite-lived intangible assets, see Notes 2 and 4 to our consolidated financial statements in our 2022 Form 10-K.

A summary of our amortizable intangible assets is as follows:


	9/9/2023						12/31/2022
	Gross		Accumulated Amortization		Net		Gross		Accumulated Amortization		Net
Acquired franchise rights	$	833	$	(207)	$	626	$	837	$	(200)	$	637
Customer relationships	550		(249)		301		571		(237)		334
Brands	1,084		(978)		106		1,097		(973)		124
Other identifiable intangibles	444		(269)		175		447		(265)		182
Total	$	2,911	$	(1,703)	$	1,208	$	2,952	$	(1,675)	$	1,277

The change in the book value of indefinite-lived intangible assets is as follows:


	Balance 12/31/2022		Acquisitions		Translation and Other		Balance 9/9/2023

FLNA
Goodwill	$	451	$	—	$	(1)	$	450
Brands	251		—		—		251
Total	702		—		(1)		701
QFNA
Goodwill	189		—		—		189
Total	189		—		—		189
PBNA
Goodwill	11,947		4		(4)		11,947
Reacquired franchise rights	7,061		36		(8)		7,089
Acquired franchise rights (a)	1,758		12		(40)		1,730
Brands	2,508		—		—		2,508
Total	23,274		52		(52)		23,274
LatAm
Goodwill	436		—		23		459
Brands	75		—		7		82
Total	511		—		30		541
Europe
Goodwill (b)	3,646		—		(277)		3,369
Reacquired franchise rights	421		—		(16)		405
Acquired franchise rights	148		—		3		151
Brands	1,664		—		23		1,687
Total	5,879		—		(267)		5,612
AMESA
Goodwill	1,015		34		(63)		986
Brands	156		—		(21)		135
Total	1,171		34		(84)		1,121
APAC
Goodwill	518		—		(26)		492
Brands	267		—		(12)		255
Total	785		—		(38)		747

Total goodwill	18,202		38		(348)		17,892
Total reacquired franchise rights	7,482		36		(24)		7,494
Total acquired franchise rights	1,906		12		(37)		1,881
Total brands	4,921		—		(3)		4,918
Total	$	32,511	$	86	$	(412)	$	32,185

(a)Translation and other primarily reflects adjustments to previously recorded amounts related to our agreement with Celsius Holdings, Inc. (Celsius) to distribute Celsius energy drinks in the United States.

(b)Translation and other primarily reflects the depreciation of the Russian ruble.