Mondelez 2012 Annual Report Download - page 73

Table of Contents
Changes in goodwill and intangible assets consisted of:
Changes to goodwill and intangible assets during 2012 were:
In 2011, except for changes due to foreign currency translation, there were no significant changes to goodwill and intangible assets.
In 2012, 2011 and 2010, there were no impairments of goodwill. In connection with our 2012 annual impairment testing, we noted
two reporting units which were more sensitive to near-term changes in discounted cash flow assumptions: U.S. Confections with
$2,177 million of goodwill as of December 31, 2012 and fair value in excess of its carrying value of net assets of 9% and Europe
Biscuits with $2,569 million of goodwill as of December 31, 2012 and fair value in excess of its carrying value of net assets of 16%.
While the reporting units passed the first step of the impairment test, if the segment operating income or another valuation
assumption for either reporting unit were to deteriorate significantly in the future, it could adversely affect the estimated fair value. If
we are unsuccessful in our plans to increase the profitability of these businesses, the estimated fair values could fall further and
lead to a potential goodwill impairment in the future.
Note 6. 2012-2014 Restructuring Program
On March 14, 2012, our Board of Directors approved $1.1 billion of restructuring and related implementation costs (“2012-2014
Restructuring Program”) reflecting primarily severance, asset disposals and other manufacturing-related one-time costs. The
primary objective of the restructuring and implementation activities was to ensure that both Kraft Foods Group and Mondelēz
International were each set up to operate efficiently and execute on our respective business strategies upon separation and in the
future. On October 23, 2012, our Board of Directors approved $400 million of additional restructuring and related implementation
programs, totaling $1.5 billion of expected 2012-2014 Restructuring Program costs.
Of the $1.5 billion of anticipated 2012-2014 Restructuring Program costs, Kraft Foods Group has or expects to incur approximately
$575 million. As such, we will retain approximately $925 million of the 2012-2014 Restructuring Program.
Restructuring Costs:
Within our continuing results of operations, to date, we have recorded restructuring charges of $102 million in 2012 within asset
impairment and exit costs. We spent $33 million in 2012 in cash severance and related costs, and we also recognized non-cash
pension plan settlement losses (See Note 10, Benefit Plans) and non-cash asset write-downs (including accelerated depreciation
and asset impairments) totaling $33 million in 2012. At December 31, 2012, our net restructuring liability was $36 million recorded
within other current liabilities.
70
2012
2011
Goodwill
Intangible
Assets, at cost
Goodwill
Intangible
Assets, at cost
(in millions)
Balance at January 1
$
37,297
$
25,712
$
37,856
$
26,279
Changes due to:
Foreign currency
436
262
(559
)
(567
)
Divestitures
(11,932
)
(2,669
)
– –
Asset impairments – (
52
)
– –
Acquisitions –
14
Other –
2
– –
Balance at December 31
$
25,801
$
23,269
$
37,297
$
25,712
• Divestitures-In 2012, we reduced goodwill by $11,911 million and reduced intangible assets by $2,666 million due to the
divestiture of Kraft Foods Group. We also reduced goodwill by $21 million primarily related to the divestitures in
Germany, Belgium and Italy.
• Asset Impairments-We recorded $52 million of charges related to a trademark on a Japanese chewing gum product
within our Developing Markets segment which had significantly lower revenue. The fair value of the intangible asset was
determined under a relief of royalty valuation, which models the cash flows from the trademark assuming royalties were
received under a licensing arrangement. The charge was calculated as the excess of the carrying value of the intangible
asset over its estimated fair value and was recorded within asset impairment and exit costs.
• Acquisitions-We increased intangible assets by $14 million related to an acquisition of a license in Pakistan and an
acquisition of a trademark in Europe.