Goodwill and Intangible Assets

3 Months Ended

Apr. 03, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

Note 5–Goodwill and Intangible Assets

Goodwill

The following table presents changes in the carrying amount of goodwill by reportable segment:

	Defense Solutions		Civil		Health		Total
	(in millions)
Goodwill at December 28, 2018	$	2,015	$	1,924	$	921	$	4,860
Goodwill re-allocation	25		(25)		—		—
Acquisition of IMX Medical Management Services, Inc.	—		—		50		50
Divestiture of health staff augmentation business	—		—		(5)		(5)
Foreign currency translation adjustments	(4)		8		—		4
Adjustment to goodwill	3		—		—		3
Goodwill at January 3, 2020	2,039		1,907		966		4,912
Goodwill re-allocation	429		(429)		—		—
Acquisition of Dynetics	863		—		—		863
Foreign currency translation adjustments	(56)		—		—		(56)
Goodwill at April 3, 2020	$	3,275	$	1,478	$	966	$	5,719

Effective the beginning of fiscal 2020, certain contracts were reassigned from the Civil reportable segment to the Defense Solutions reportable segment. This change resulted in the reallocation of $429 million of goodwill between the reporting units within the two reportable segments. We evaluated goodwill for impairment for certain of our reporting units using either a quantitative step one analysis or qualitative analysis, both before and after the changes were made, and determined that goodwill was not impaired.

Intangible Assets

Intangible assets consisted of the following:

	April 3, 2020						January 3, 2020
	Gross carrying value		Accumulated amortization		Net carrying value		Gross carrying value		Accumulated amortization		Net carrying value
	(in millions)
Finite-lived intangible assets:
Program intangibles	$	1,427	$	(566)	$	861	$	1,003	$	(536)	$	467
Software and technology	102		(84)		18		102		(83)		19
Customer relationships	45		(7)		38		45		(6)		39
Backlog	34		(6)		28		—		—		—
Trade names	1		—		1		1		—		1
Total finite-lived intangible assets	1,609		(663)		946		1,151		(625)		526
Indefinite-lived intangible assets:
Trade names	4		—		4		4		—		4
Total intangible assets	$	1,613	$	(663)	$	950	$	1,155	$	(625)	$	530

Amortization expense was $43 million for both the three months ended April 3, 2020 and March 29, 2019.

Program intangibles and backlog intangible assets are amortized over their respective estimated useful lives in proportion to the pattern of economic benefit based on expected future discounted cash flows. Customer relationships and trade name intangible assets are amortized on a straight-line basis over their estimated useful lives. Software and technology intangible assets are amortized either on a straight-line basis over their estimated useful lives or over their respective estimated useful lives in proportion to the pattern of economic benefit based on expected future discounted cash flows, as deemed appropriate.

The estimated annual amortization expense as of April 3, 2020, was as follows:

Fiscal year ending
	(in millions)
2020 (remainder of year)	$	142
2021	171
2022	166
2023	144
2024	100
2025 and thereafter	223
	$	946

We are monitoring the impacts of the coronavirus outbreak ("COVID-19") on the fair value of our intangible assets and goodwill. While we currently do not anticipate any impairments to intangible assets and goodwill as a result of COVID-19, future changes in the expectations of the impact on our operations, financial performance and cash flows related to the intangible assets and goodwill could cause these assets to be impaired.