Goodwill and Other Intangible Assets

12 Months Ended

Apr. 30, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

Note 7: Goodwill and Other Intangible Assets

The following table summarizes the changes in our goodwill.


	U.S. Retail Pet Foods		U.S. Retail Coffee		U.S. Retail Consumer Foods		International and Away From Home		Total
Balance at May 1, 2019	$	2,442.3	$	2,090.9	$	1,358.2	$	419.5	$	6,310.9



Other (A)	—		—		—		(6.4)		(6.4)
Balance at April 30, 2020	$	2,442.3	$	2,090.9	$	1,358.2	$	413.1	$	6,304.5
Divestitures	(74.1)		—		(210.7)		(16.9)		(301.7)
Other (A)	—		—		—		20.8		20.8
Balance at April 30, 2021(B)	$	2,368.2	$	2,090.9	$	1,147.5	$	417.0	$	6,023.6

(A)The amounts classified as other represent foreign currency exchange adjustments.

(B)Included in goodwill as of April 30, 2021, are accumulated goodwill impairment charges of $242.9.

The following table summarizes our other intangible assets and related accumulated amortization and impairment charges, including foreign currency exchange adjustments.


	April 30, 2021						April 30, 2020
	Acquisition Cost		Accumulated Amortization/ Impairment Charges/ Foreign Currency Exchange		Net		Acquisition Cost		Accumulated Amortization/ Impairment Charges/ Foreign Currency Exchange		Net
Finite-lived intangible assets subject to amortization:
Customer and contractual relationships	$	4,471.1	$	1,545.0	$	2,926.1	$	4,471.1	$	1,353.0	$	3,118.1
Patents and technology	168.5		147.3		21.2		168.5		138.4		30.1
Trademarks	364.5		186.7		177.8		662.0		311.0		351.0
Total intangible assets subject to amortization	$	5,004.1	$	1,879.0	$	3,125.1	$	5,301.6	$	1,802.4	$	3,499.2
Indefinite-lived intangible assets not subject to amortization:
Trademarks	$	3,141.1	$	225.0	$	2,916.1	$	3,158.1	$	228.3	$	2,929.8
Total other intangible assets	$	8,145.2	$	2,104.0	$	6,041.2	$	8,459.7	$	2,030.7	$	6,429.0

The decrease in finite-lived intangible assets from April 30, 2020, includes the divestitures of the Crisco and Natural Balance trademarks during the third quarter of 2021. For additional information, see Note 4: Divestitures.

Amortization expense for finite-lived intangible assets was $232.0, $235.3, and $239.1 in 2021, 2020, and 2019, respectively. The weighted-average useful lives of the customer and contractual relationships, patents and technology, and trademarks are 24 years, 15 years, and 15 years, respectively. The weighted-average useful life of total finite-lived intangible assets is

24 years. Based on the carrying value of intangible assets subject to amortization at April 30, 2021, the estimated amortization expense is $221.6 for 2022, $214.2 for 2023, $209.6 for 2024, $206.0 for 2025, and $205.0 for 2026.

We review goodwill and other indefinite-lived intangible assets for impairment at least annually on February 1 and more often if indicators of impairment exist. As of February 1, 2021, we completed the annual impairment review, in which goodwill impairment was tested at the reporting unit level for our six reporting units with goodwill. As part of our annual evaluation, we did not recognize any impairment charges related to goodwill or any of our material indefinite-lived trademarks. However, we did recognize an impairment charge of $3.8 related to an immaterial trademark within the U.S. Retail Consumer Foods segment. For the majority of the reporting units and indefinite-lived intangible assets, the estimated fair value was substantially in excess of the carrying value, and in all instances, the estimated fair value exceeded the carrying value by greater than 10 percent, with the exception of the Pet Foods reporting unit and the Rachael Ray Nutrish brand within the U.S. Retail Pet Foods segment. The carrying values of the goodwill and indefinite-lived intangible assets within the U.S. Retail Pet Foods segment were $2.4 billion and $1.4 billion, respectively, as of April 30, 2021. These intangible assets remain susceptible to future impairment charges due to narrow differences between fair value and carrying value. Additional sensitivity analyses were performed for the Pet Foods reporting unit, assuming a hypothetical 50-basis-point decrease in the expected long-term growth rate or a hypothetical 50-basis-point increase in the weighted-average cost of capital. Both scenarios independently yielded an estimated fair value for the Pet Foods reporting unit below carrying value. Therefore, any significant adverse change in our near or long-term projections or macroeconomic conditions could result in future impairment charges, which could be material.

In addition, we continue to evaluate the nature and extent to which COVID-19 could impact our business, specifically as it relates to the fair value of our goodwill and indefinite-lived intangible assets. While we have concluded there were no indicators of impairment as of April 30, 2021, any significant sustained adverse change in consumer purchasing behaviors, government restrictions, financial results, or macroeconomic conditions could result in future impairment, specifically as it relates to the Away From Home reporting unit, which has experienced a decline in demand as a result of COVID-19. As of April 30, 2021, the goodwill related to the Away From Home reporting unit represented approximately 60 percent of the goodwill within the combined International and Away From Home operating segments.

During 2020, we recognized an impairment charge of $52.4 related to the recently divested Natural Balance brand within the U.S. Retail Pet Foods segment due to a decline in the 2020 and long-term net sales expectations and the royalty rate used in the interim analysis, primarily driven by the market environment and re-positioning of this brand within the Pet Foods brand portfolio. This charge was included as a noncash charge in our Statement of Consolidated Income. As a result of a change in our long-term strategic expectations for the brand, we reclassified the Natural Balance brand as a finite-lived intangible asset as of February 1, 2020.