Goodwill and Other Intangible Assets

12 Months Ended

Dec. 31, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

8. Goodwill and Other Intangible Assets

Goodwill

The gross carrying amounts and changes in the carrying amount of goodwill for the years ended December 31, 2020 and 2019 are as follows:


	Vinyls Segment		Olefins Segment		Total
Balance at December 31, 2018	$	972	$	30	$	1,002
Goodwill acquired during the year	67		—		67
Effects of changes in foreign exchange rates	5		—		5
Balance at December 31, 2019	1,044		30		1,074

Effects of changes in foreign exchange rates	9		—		9
Balance at December 31, 2020	$	1,053	$	30	$	1,083

Vinyls Segment Goodwill

The Company performed its annual impairment analysis for the Vinyls reporting units during the second quarter of 2020. The fair values of the North America and other reporting units assessed during the April 2020 impairment analysis were determined using both a discounted cash flow methodology and a market value methodology. Based upon this assessment, the Company determined that the fair values of the Vinyls reporting units were greater than their carrying value.

The discounted cash flow projections were based on a long-term forecast to reflect the cyclicality of the housing and construction markets as the Company's Vinyls businesses are significantly influenced by those markets. The forecast was based on prices and spreads projected by IHS Markit ("IHS"), a chemical industry organization offering market and business advisory services for the chemical market, historical results and estimates by management, including its strategic and operational plans. Other significant assumptions used in the discounted cash flow projection included projected sales volumes based on production capacities. The future cash flows were discounted to present value using a discount rate ranging from 7.8% to 10.8%. The significant assumptions used in determining the fair values of the reporting units using the market value methodology include the determination of appropriate market comparables and the estimated multiples of net income before interest expense, income taxes, depreciation and amortization ("EBITDA") a willing buyer is likely to pay.

Olefins Segment Goodwill

The Company performed its annual impairment analysis for the Olefins segment, the reporting unit assessed, during the fourth quarter of 2020. The fair value of the Olefins segment reporting unit assessed during the October 2020 impairment analysis was determined using both a discounted cash flow methodology and a market value methodology. Based upon this assessment, the Company determined that the fair value of the Olefins segment reporting unit was greater than its carrying value.

The discounted cash flow projections were based on a long-term forecast to reflect the cyclicality of the Company's Olefins business. The forecast was based on prices and spreads projected by IHS, historical results and estimates by management, including its strategic and operational plans. Other significant assumptions used in the discounted cash flow projection included projected sales volumes based on production capacities. The future cash flows were discounted to present value using a discount rate of 9.0%. The significant assumptions used in determining the fair values of the reporting unit using the market value methodology included the determination of appropriate market comparables and the estimated multiples of EBITDA a willing buyer was likely to pay.

There were no events or circumstances indicating that the fair value of either of the Vinyls or Olefins reporting units had been reduced below its carrying value during 2020.

Intangible Assets

Intangible assets consisted of the following at December 31:


	2020						2019						Weighted Average Life
	Cost		Accumulated Amortization		Net		Cost		Accumulated Amortization		Net
Customer relationships	$	845	$	(401)	$	444	$	832	$	(309)	$	523	11
Other intangible assets:
Licenses and intellectual property	178		(94)		84		172		(79)		93		13
Trademarks	125		(50)		75		120		(37)		83		13
Other	35		(26)		9		35		(24)		11		11
Total other intangible assets	$	338	$	(170)	$	168	$	327	$	(140)	$	187

Scheduled amortization of intangible assets for the next five years is as follows: $120, $108, $60, $54 and $52 in 2021, 2022, 2023, 2024 and 2025, respectively.