Goodwill and Identifiable Intangible Assets

9 Months Ended

Sep. 28, 2012

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 by segment.


	Electronic Systems		C³ISR			AM&M		NSS		Consolidated Total
	(in millions)
Balance at December 31, 2011	$	4,471	$	866		$	1,169	$	966	$	7,472
Business acquisitions⁽¹⁾		210		—			—		—		210
Foreign currency translation adjustments⁽²⁾		12		—			10		1		23
Segment reclassification⁽³⁾		69		(69	)		—		—		—

Balance at September 28, 2012	$	4,762	$	797		$	1,179	$	967	$	7,705

⁽¹⁾	The increase in goodwill for the Electronic Systems segment is due to the KEO, MAVCO and Link U.K. business acquisitions. See Note 4 for further discussion regarding these acquisitions.

⁽²⁾	The increases in goodwill presented in the Electronic Systems, AM&M and NSS segments were primarily due to the weakening of the U.S. dollar against the Euro, Canadian dollar and British pound during the year-to-date period ended September 28, 2012.

⁽³⁾	Effective January 1, 2012, the Company re-aligned a business unit’s management and organizational structure, as discussed in Note 2, and made a reclassification of goodwill between the Electronic Systems and C³ISR segments during the quarter ended March 30, 2012.

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


	September 28, 2012								December 31, 2011
	Weighted Average Amortization Period		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
	(in years)						(in millions)
Customer contractual relationships		18	$	457	$	216	$	241	$	422	$	192	$	230
Technology		10		167		95		72		149		87		62
Other		16		27		13		14		27		11		16

Total		16	$	651	$	324	$	327	$	598	$	290	$	308

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


	Third Quarter Ended				Year-to-Date Ended
	September 28, 2012		September 30, 2011		September 28, 2012		September 30, 2011
Amortization Expense	$	13	$	12	$	34	$	37

Based on gross carrying amounts at September 28, 2012, the Company’s estimate of amortization expense for identifiable intangible assets for the years ending December 31, 2012 through 2016 are presented in the table below.


	Year Ending December 31,
	2012		2013		2014		2015		2016
	(in millions)
Estimated amortization expense	$	45	$	40	$	42	$	37	$	31

- Definition

The entire disclosure for 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 (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.

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