Goodwill and Identifiable Intangible Assets

9 Months Ended

Sep. 26, 2014

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Identifiable Intangible Assets

8. 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 for the year-to-date period ended September 26, 2014.


	Electronic Systems			Aerospace Systems			Communication Systems		NSS		Consolidated Total
	(in millions)
Balance at December 31, 2013	$	4,085		$	1,751		$	992	$	968	$	7,796
Business acquisition⁽¹⁾		(3	)		—			—		39		36
Foreign currency translation adjustments⁽²⁾		(39	)		(9	)		—		—		(48	)

Balance at September 26, 2014	$	4,043		$	1,742		$	992	$	1,007	$	7,784

⁽¹⁾	The decrease in goodwill for the Electronic Systems segment was due to the final purchase price allocation for the Mustang business acquisition. The increase in goodwill for the NSS segment was due to the L-3 Data Tactics business acquisition.

⁽²⁾

The decrease in goodwill presented in the Electronic Systems segment was primarily due to the strengthening of the U.S. dollar against the Euro, the Canadian dollar and the British pound during the year-to-date period ended September 26, 2014. The decrease in goodwill presented in the Aerospace Systems segment was due to the strengthening of the U.S. dollar against the Canadian dollar during the year-to-date period ended September 26, 2014.

The Company’s accumulated goodwill impairment losses were $58 million at September 26, 2014 and December 31, 2013, of which $43 million and $15 million were recorded in the Electronic Systems and Communication Systems segments, respectively.

Identifiable Intangible Assets. The table below presents information for the Company’s identifiable intangible assets that are subject to amortization.


			September 26, 2014						December 31, 2013
	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		19	$	474	$	275	$	199	$	466	$	253	$	213
Technology		11		168		115		53		168		108		60
Other		18		27		16		11		27		15		12

Total		17	$	669	$	406	$	263	$	661	$	376	$	285

The table below presents amortization expense recorded by the Company for its identifiable intangible assets.


	Third Quarter Ended				Year-to-Date Ended
	(in millions)
	September 26, 2014		September 27, 2013		September 26, 2014		September 27, 2013
Amortization Expense	$	11	$	10	$	32	$	29

Based on gross carrying amounts at September 26, 2014, the Company’s estimate of amortization expense for identifiable intangible assets for the years ending December 31, 2014 through 2018 is presented in the table below.


	Year Ending December 31,
	2014		2015		2016		2017		2018
	(in millions)
Estimated amortization expense	$	42	$	41	$	34	$	32	$	26

- 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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