CONAGRA BRANDS INC. Goodwill & Intangibles Disclosure

9. GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS

The change in the carrying amount of goodwill for fiscal 2025 and 2024, excluding amounts classified as held for sale (see Note 7), was as follows:

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Other identifiable intangible assets, excluding amounts classified as held for sale, were as follows:

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2025 Goodwill and Indefinite-Lived Intangible Asset Impairment Testing

During the second quarter of fiscal 2025, we reorganized our reporting units in the Refrigerated & Frozen and Grocery & Snacks segments. This required us to reassign assets and liabilities between the reporting units, assess whether there were indicators of impairment for the impacted reporting units, and evaluate other assets in the reporting units for impairment, including indefinite-lived intangibles (brand names and trademarks).

The fair value of our reporting units is typically estimated using a discounted cash flow method. The fair value of our indefinite-lived intangibles is determined using the “relief from royalty” methodology. Both the “relief from royalty” methodology and the discounted cash flow method require us to estimate the future cash flows as well as to select a risk-adjusted discount rate to measure the present value of the anticipated cash flows. When determining future cash flow estimates, we consider historical results adjusted to reflect current and anticipated operating conditions. We estimate cash flows for a reporting unit over a discrete period (typically five years) and a terminal period (considering expected long-term growth rates and trends). We used a discount rate of 7.50% and a terminal growth rate that ranged between 1% to 1.5% in estimating the fair value of our reporting units. Estimating the fair value of individual reporting units and our indefinite-lived intangible assets requires us to make assumptions and estimates in areas such as future economic conditions, industry-specific conditions, product pricing, and necessary capital expenditures. The use of different assumptions or estimates for future cash flows, discount rates, or terminal growth rates could produce substantially different estimates of the fair value.

As a result of our impairment tests, in the second quarter of fiscal 2025, we recognized impairment charges of $18.9 million for certain brands with continued lower than expected sales and profit margins. These charges were recorded within other intangible asset impairment charges in our Grocery & Snacks and Refrigerated & Frozen segments. There were no impairments to goodwill.

In the fourth quarter of fiscal 2025, we performed our annual goodwill impairment assessment on all of our reporting units and found no indicators of impairment. We completed a qualitative assessment which primarily considered our previous cushion from our last quantitative test in addition to market comparable transactions. We will continue to evaluate the impact of any significant changes in consumer purchasing behaviors, government restrictions, input cost inflation, or other macroeconomic conditions that could change certain assumptions and result in future impairments.

For our non-amortizing intangible assets, which are comprised of brands and trademarks, we use a “relief from royalty” methodology in estimating fair value. In the fourth quarter of fiscal 2025, as a result of our annual impairment test for indefinite lived intangibles, we recognized impairment charges within other intangible asset impairment charges of $53.2 million in our Grocery & Snacks and Refrigerated & Frozen segments. Our largest impairments were related to our spreads businesses (Earth Balance^® and Smart Balance^®). Both of these brands were negatively impacted by volume declines in the current fiscal year, which also resulted in revised sales growth expectations. Including the impairments of certain brands recognized in the second quarter of fiscal 2025, discussed above, our total brand impairment charges recognized in fiscal 2025 were $72.1 million.

2024 Goodwill and Indefinite-Lived Intangible Asset Impairment Testing

In the fourth quarter of fiscal 2024, we performed our annual goodwill impairment assessment on all of our reporting units. We completed a qualitative assessment on all of our reporting units with the exception of our Sides, Components, Enhancers reporting unit. We completed a quantitative impairment test for our Sides, Components, Enhancers reporting unit with the assistance of a third-party valuation specialist using both a discounted cash flow method and guideline public company method as a result of lower market multiples in our industry as of our testing date. In estimating the fair value of this reporting unit, we selected a market multiple of 9.0- 9.5x using actual and estimated EBITDA for our guideline public company method. We used a discount rate of 8.50% and a terminal growth rate that approximated 1% for our discounted cash flow approach. As a result of our impairment tests, we recognized goodwill impairment charges of $526.5 million within goodwill impairment charges. The impairment was largely due to the 75-basis point increase in the discount rate as a result of economic conditions (higher interest rates and a slightly higher company specific risk premium), a decline in market capitalization, lower market multiples in our industry as of our testing date, as well as a downward revision to our sales forecasts for this specific reporting unit. After the impairment, the goodwill carrying amount of our Sides, Components, Enhancers reporting unit was approximately $1.4 billion and accumulated impairment losses to goodwill associated with this reporting unit were $668.2 million as of May 26, 2024 and $141.7 million as of May 28, 2023.

As a result of our fiscal 2024 annual impairment test for indefinite lived intangibles, we recognized impairment charges within other intangible asset impairment charges of $430.2 million within our Grocery & Snacks and Refrigerated & Frozen segments. All brands were negatively impacted by an increase in our discount rate in response to the economic environment (higher interest rates including an increase in certain brand specific risk premiums) since our last annual impairment test. Our two largest impairments were related to Birds Eye^® and Earth Balance^® in the amount of $255.4 million and $72.1 million, respectively. Both of these brands were negatively impacted by volume declines in fiscal 2024 driven by lower consumption trends, which also resulted in revised sales growth expectations. Birds Eye^® was also negatively impacted by lower than expected profit margins which resulted in a slight reduction to our assumed royalty rate.

2023 Goodwill and Indefinite-Lived Intangible Asset Impairment Testing

During the first quarter of fiscal 2023, management reorganized its reporting structure for certain brands within two reporting units in our Refrigerated & Frozen segment. The change in management reporting required us to reassign assets and liabilities, including goodwill, between the reporting units, complete a goodwill impairment test both prior to and subsequent to the change, and evaluate other assets in the reporting units for impairment, including indefinite-lived intangibles (brand names and trademarks). The fair value of our indefinite-lived intangibles was determined using the “relief from royalty” methodology. As a result of our impairment tests, we recognized goodwill impairment charges of $141.7 million within our Sides, Components, Enhancers reporting unit in the first quarter of fiscal 2023 within goodwill impairment charges. In addition, we recognized an impairment charge within other intangible asset impairment charges of $244.0 million related to our Birds Eye^® brand name in the first quarter of fiscal 2023.

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As a result of our fiscal 2023 annual impairment test for indefinite lived intangibles, we recognized impairment charges within other intangible asset impairment charges of $345.2 million, primarily within our Grocery & Snacks and Refrigerated & Frozen segments. The most notable brands with impairments included Gardein^®, Birds Eye^®, Hungry Man^®, Vlasic^®, Van De Kamps^®, Earth Balance^®, and Comstock^®. These brands were negatively impacted by an increase in our discount rate in response to the economic environment (including an increase in interest rates) since our last annual impairment test. Our two largest impairments were related to Gardein^® and Birds Eye^® in the amount of $91.5 million and $78.3 million, respectively. Both of these brands were negatively impacted by lower than expected profit margins which resulted in a reduction to our assumed royalty rates in addition to revised sales growth expectations to be consistent with industry trends. Including the Birds Eye^® brand impairment recognized in the first quarter of fiscal 2023, discussed above, our total brand impairment charges recognized in fiscal 2023 were $589.2 million.

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Definite-Lived Intangible Assets

Amortizing intangible assets, carrying a remaining weighted-average life of approximately 16 years, are principally composed of customer relationships and acquired intellectual property. For fiscal 2025, 2024, and 2023, we recognized amortization expense of $53.7 million, $53.6 million, and $56.8 million, respectively. Based on amortizing assets recognized in our Consolidated Balance Sheet as of May 25, 2025, amortization expense for the next five years is estimated to be as follows:

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