Kraft 2009 Annual Report Download - page 208

• Asset impairments - During our 2009 review of goodwill and non-amortizable intangible assets, we
recorded a $12 million charge for the impairment of intangible assets in the Netherlands.
Changes to goodwill and intangible assets during 2008 were:
• Acquisitions - We decreased goodwill by $1,187 million and increased intangible assets by $1,356 million
primarily due to refinements of preliminary allocations of the purchase price for our acquisition of LU
Biscuit. The allocations were based upon appraisals that were finalized in the third quarter of 2008.
• Divestitures - We reduced goodwill by $1,234 million due to the split-off of our Post cereals business, and
we reduced goodwill by $38 million and intangible assets by $37 million due to the divestiture of an
operation in Spain.
• Asset impairments - We recorded asset impairment charges of $34 million to goodwill and $1 million to
intangible assets in connection with the divestiture of a Nordic and Baltic snacks operation. We also
recorded asset impairment charges of $1 million to goodwill and $8 million to intangible assets in
connection with the anticipated divestiture of a juice operation in Brazil. In addition, during our 2008
review of goodwill and non-amortizable intangible assets, we recorded a $44 million charge for the
impairment of intangible assets in the Netherlands, France and Puerto Rico.
• Other - We reduced goodwill by $56 million primarily related to a reconciliation of our inventory of
deferred tax items that also resulted in a write-down of our net deferred tax liabilities.
Amortization expense for intangible assets was $26 million in 2009, $23 million in 2008 and $13 million in 2007.
We currently estimate amortization expense for each of the next five years to be approximately $15 million or less.
Annual Impairment Review & Asset Impairment Charges:
As a result of our 2009 annual review of goodwill and non-amortizable intangible assets, we recorded a $12 million
charge for the impairment of intangible assets in the Netherlands. In addition, during 2009, we recorded a $9
million asset impairment charge to write off an investment in Norway. We recorded the aggregate charges within
asset impairment and exit costs. During our 2009 impairment review, we also noted that the following three
reporting units were the most sensitive to near-term changes in our discounted cash flow assumptions:
Percentage of
Excess Fair
Value over
Carrying Value
October 1, 2009
Carrying Value
of Goodwill
(in millions)
U.S. Salty Snacks 11% $ 1,186
N.A. Foodservice 22% 861
Europe Biscuits 11% 2,555
During the fourth quarter of 2008, we completed the annual review of goodwill and non-amortizable intangible
assets and recorded a $44 million charge for the impairment of intangible assets in the Netherlands, France and
Puerto Rico. During our 2008 impairment review, we determined that our Europe Biscuits reporting unit was the
most sensitive to near-term changes in our discounted cash flow assumptions, as it contains a significant portion
of the goodwill recorded upon our 2007 acquisition of LU Biscuit. In addition, in December 2008, we reached a
preliminary agreement to divest a juice operation in Brazil and reached an agreement to sell a cheese plant in
Australia. In anticipation of divesting the juice operation in Brazil, we recorded an asset impairment charge of $13
million in the fourth quarter of 2008. The charge primarily included the write-off of associated intangible assets of
$8 million and property, plant and equipment of $4 million. In anticipation of selling the cheese plant in Australia,
we recorded an asset impairment charge of $28 million to property, plant and equipment in the fourth quarter of
2008. Additionally, in 2008, we divested a Nordic and Baltic snacks operation and incurred an asset impairment
charge of $55 million in connection with the divestiture. This charge primarily included the write-off of associated
goodwill of $34 million and property, plant and equipment of $16 million. We recorded the aggregate charges
within asset impairment and exit costs.
In 2007, we divested our flavored water and juice brand assets and related trademarks. In recognition of the
divestiture, we recorded a $120 million asset impairment charge for these assets. The charge primarily included
the write-off of associated intangible assets of $70 million and property, plant and equipment of $47 million and
was recorded within asset impairment and exit costs.
Source: KRAFT FOODS INC, 10-K, February 25, 2010 Powered by Morningstar® Document Research℠