Kraft 2008 Annual Report Download - page 60

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The movements in goodwill and intangible assets were:
2007 2006
Goodwill
Intangible
Assets, at cost Goodwill
Intangible
Assets, at cost
(in millions)
Balance at January 1 $ 25,553 $ 10,244 $ 24,648 $ 10,577
Changes due to:
Currency 536 43 454 1
Acquisitions 5,239 2,196 734 217
Divestitures (45) (134) (196) (356)
Asset Impairments (3) (70) (40) (131)
Other (87) (17) (47) (64)
Balance at December 31 $ 31,193 $ 12,262 $ 25,553 $ 10,244
Significant changes to goodwill and intangible assets during 2007 were:
• Acquisitions - We increased goodwill by $5,239 million and intangible assets by $2,196 million related to preliminary allocations of purchase price
for our acquisition of Danone Biscuit. The allocations are based upon preliminary estimates and assumptions and are subject to revision when
appraisals are finalized, which will occur during 2008.
• Divestitures - We reduced goodwill by $45 million and intangible assets by $134 million primarily due to the divestiture of our hot cereal assets and
trademarks.
• Asset Impairments - We recorded an asset impairment charge of $70 million to intangible assets in conjunction with our flavored water and juice
brand assets and related trademarks sale.
• Other - We reduced goodwill by $87 million primarily due to the adoption of FIN 48 (see Note 5, Income Taxes, for further details), and reduced
intangible assets by $17 million primarily due to the removal of a fully amortized intangible asset.
Significant changes to goodwill and intangible assets during 2006 were:
• Acquisitions - We increased goodwill by $734 million and intangible assets by $217 million related to preliminary allocations of purchase price for
our acquisition of certain United Biscuits operations. These allocations were based upon preliminary estimates and assumptions and were revised
when appraisals were finalized in 2007.
• Divestitures - We reduced goodwill by $196 million and intangible assets by $356 million primarily due to the divestitures of our pet snacks brand
and assets, our rice brand and assets and our industrial coconut assets.
• Asset Impairments - We recorded an asset impairment charge of $24 million to intangible assets for the impairment of biscuits assets in Egypt and
hot cereal assets in the U.S. in conjunction with our annual review of goodwill and intangible assets in the first quarter of 2006. Additionally, we
recorded asset impairment charges of $40 million to goodwill and $107 million to intangible assets related to the anticipated sale of our hot cereal
assets and trademarks and the sale of our pet snacks brand and assets.
• Other - We reduced goodwill by $47 million and intangible assets by $64 million primarily relating to a deferred tax purchase price allocation
adjustment from our Nabisco acquisition.
Amortization expense for intangible assets was $13 million in 2007, $7 million in 2006 and $10 million in 2005. We currently estimate amortization expense for
each of the next five years to be approximately $13 million or less. Our estimated amortization for each of the next five years is subject to revision when
appraisals are finalized for our Danone Biscuit acquisition.
58
Source: KRAFT FOODS INC, 10-K, February 25, 2008 Powered by Morningstar® Document Research℠