Sara Lee 2010 Annual Report Download - page 64

Notes to financial statements
Note 3 – Intangible Assets and Goodwill
The primary components of the corporation’s intangible assets
reported in continuing operations and the related amortization
expense are as follows:
Accumulated Net Book
In millions Gross Amortization Value
2010
Intangible assets subject to amortization
Trademarks and brand names $÷«287 $106 $181
Customer relationships 412 249 163
Computer software 367 269 98
Other contractual agreements 19 11 8
$1,085 $635 450
Trademarks and brand names
not subject to amortization 54
Net book value of intangible assets $504
2009
Intangible assets subject to amortization
Trademarks and brand names $÷«295 $÷95 $200
Customer relationships 427 229 198
Computer software 299 177 122
Other contractual agreements 29 17 12
$1,050 $518 532
Trademarks and brand names
not subject to amortization 55
Net book value of intangible assets $587
The year-over-year change in the value of trademarks and brand
names is primarily due to changes in foreign currency exchange rates.
The amortization expense reported in continuing operations for
intangible assets subject to amortization was $83 million in 2010,
$87 million in 2009 and $89 million in 2008. The estimated amor-
tization expense for the next five years, assuming no change in the
estimated useful lives of identifiable intangible assets or changes in
foreign exchange rates, is as follows: $74 million in 2011, $49 million
in 2012, $42 million in 2013, $34 million in 2014 and $20 million
in 2015. At July 3, 2010, the weighted average remaining useful life
for trademarks is 18 years; customer relationships is 17 years; com-
puter software is 3 years; and other contractual agreements is 7 years.
During 2009, the corporation recognized impairment charges
of $79 million related to certain trademarks associated with the
International Bakery segment. These charges are more fully described
in Note 4 to the Consolidated Financial Statements, “Impairment
Charges.” In 2009, trademarks of $8 million and customer relation-
ships and other contractual agreements of $3 million were recognized
with the acquisition of the Café Moka beverage business in Brazil.
During 2008, the corporation recognized impairment charges
of $13 million related to certain trademarks that are related to
the North American Retail segment. These charges are more fully
described in Note 4 to the Consolidated Financial Statements,
“Impairment Charges.”
Goodwill In 2009, the International Beverage segment acquired
Café Moka, a Brazilian based producer and wholesaler of coffee,
and recognized $18 million of goodwill.
In 2009, non-deductible goodwill of $107 million and $124 million
was impaired in the North American foodservice beverage and Spanish
bakery reporting units, respectively. These charges are more fully
described in Note 4 to the Consolidated Financial Statements,
“Impairment Charges.”
In 2008, non-deductible goodwill of $382 million and $400 million
was impaired in the North American foodservice bakery and Spanish
bakery reporting units, respectively. These charges are more fully
described in Note 4 to the Consolidated Financial Statements,
“Impairment Charges.”
The goodwill reported in continuing operations associated with
each business segment and the changes in those amounts during
2010 and 2009 are as follows:
62 Sara Lee Corporation and Subsidiaries
North North North
American American American International International
In millions Retail Fresh Bakery Foodservice Beverage Bakery Total
Balance at June 28, 2008
Gross goodwill $102 $287 $«983 $355 $«744 $«2,471
Accumulated impairment losses – – (382) (92) (400) (874)
Net goodwill 102 287 601 263 344 1,597
Impairments – – (107) – (124) (231)
Acquisition –––18–18
Foreign exchange/other 1 – – (51) (39) (89)
Net book value at June 27, 2009
Gross goodwill 103 287 983 322 705 2,400
Accumulated impairment losses – – (489) (92) (524) (1,105)
Net goodwill 103 287 494 230 181 1,295
Foreign exchange/other – 1 – (16) (19) (34)
Net book value at July 3, 2010
Gross goodwill 103 288 983 306 686 2,366
Accumulated impairment losses – – (489) (92) (524) (1,105)
Net goodwill $103 $288 $«494 $214 $«162 $«1,261