Goodwill and Identifiable Intangible Assets

6 Months Ended

Jul. 01, 2011

Goodwill and Identifiable Intangible Assets [Abstract]

Goodwill and Identifiable Intangible Assets


7.	Goodwill and Identifiable Intangible Assets

Goodwill. In accordance with the accounting standards for business combinations, the Company records the assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition (commonly referred to as the purchase price allocation). The table below presents the changes in goodwill applicable to the Company’s reporting units in each segment.


				Government					Electronic		Consolidated
	C³ISR			Services			AM&M		Systems		Total
	(in millions)

Balance at December 31, 2010	$	868		$	2,285		$	1,172	$	4,405	$	8,730
Business acquisitions⁽¹⁾		2			—			2		9		13
Foreign currency translation adjustments⁽²⁾		3			1			10		38		52
Segment reclassification⁽³⁾		(5	)		(94	)		—		99		—

Balance at July 1, 2011	$	868		$	2,192		$	1,184	$	4,551	$	8,795


⁽¹⁾		The increase in goodwill for the Electronic Systems segment is due to the acquisition of ComHouse. See Note 4 for further discussion regarding this acquisition.
⁽²⁾		The increase in goodwill presented in each of the segments was due to the weakening of the U.S. dollar against the Euro, Canadian dollar, and British pound during the first half ended July 1, 2011.
⁽³⁾		As a result of re-alignments of business units in the Company’s management and organizational structure as discussed in Note 2, goodwill was reclassified on a relative fair value basis among the C³ISR, Government Services and Electronic Systems segments during the first half ended July 1, 2011.

Identifiable Intangible Assets. Information on the Company’s identifiable intangible assets that are subject to amortization is presented in the table below.


	July 1, 2011								December 31, 2010
	Weighted
	Average		Gross				Net		Gross				Net
	Amortization		Carrying		Accumulated		Carrying		Carrying		Accumulated		Carrying
	Period		Amount		Amortization		Amount		Amount		Amortization		Amount
	(in years)		(in millions)

Customer contractual relationships		23	$	587	$	227	$	360	$	584	$	205	$	379
Technology		11		147		79		68		145		72		73
Other		15		29		12		17		28		10		18

Total		21	$	763	$	318	$	445	$	757	$	287	$	470

Amortization expense recorded by the Company for its identifiable intangible assets is presented in the table below.


	Second Quarter Ended				First Half Ended
	July 1,		June 25,		July 1,		June 25,
	2011		2010		2011		2010
	(in millions)

Amortization expense	$	15	$	14	$	30	$	27

Based on gross carrying amounts at July 1, 2011, the Company’s estimate of amortization expense for identifiable intangible assets for the years ending December 31, 2011 through 2015 are presented in the table below.


	Year Ending December 31,
	2011		2012		2013		2014		2015
	(in millions)

Estimated amortization expense	$	62	$	54	$	44	$	44	$	39

- Definition

Discloses the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain or loss on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss. This element may be used as a single block of text to include the entire intangible asset disclosure including data and tables.

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