Goodwill and Intangible Assets |
Goodwill and intangible assets
Impairment testing
Goodwill impairment testing is performed at least annually at the reporting unit level. Intangible assets not subject to amortization are tested annually for impairment or more often if events or circumstances indicate they may be impaired.
BNY Mellon’s three business segments include seven reporting units for which goodwill impairment testing is performed on an annual basis. In the second quarter of 2014, BNY Mellon conducted an annual goodwill impairment test on all seven reporting units. The estimated fair value of the seven reporting units exceeded the carrying value and no goodwill impairment was recognized. Goodwill
The tables below provide a breakdown of goodwill by business.
| | | | | | | | | | | | | | | | | Goodwill by business (in millions) | Investment Management |
| | Investment Services |
| | Other |
| | Consolidated |
| Balance at Dec. 31, 2013 | $ | 9,473 |
| | $ | 8,550 |
| | $ | 50 |
| | $ | 18,073 |
| Acquisitions/dispositions | — |
| | 39 |
| | — |
| | 39 |
| Foreign currency translation | 67 |
| | 17 |
| | — |
| | 84 |
| Balance at June 30, 2014 | $ | 9,540 |
| | $ | 8,606 |
| | $ | 50 |
| | $ | 18,196 |
|
| | | | | | | | | | | | | | | | | Goodwill by business (in millions) | Investment Management |
| (a) | Investment Services |
| | Other |
| (a) | Consolidated |
| Balance at Dec. 31, 2012 | $ | 9,440 |
| | $ | 8,517 |
| | $ | 118 |
| | $ | 18,075 |
| Foreign currency translation | (120 | ) | | (49 | ) | | (4 | ) | | (173 | ) | Other (b) | 17 |
| | — |
| | — |
| | 17 |
| Balance at June 30, 2013 | $ | 9,337 |
| | $ | 8,468 |
| | $ | 114 |
| | $ | 17,919 |
|
| | (a) | Includes the reclassification of goodwill associated with the Newton Private Clients business from Investment Management to the Other segment. |
| | (b) | Other changes in goodwill include purchase price adjustments and certain other reclassifications. |
Intangible assets
The tables below provide a breakdown of intangible assets by business.
| | | | | | | | | | | | | | | | | Intangible assets – net carrying amount by business (in millions) | Investment Management |
| | Investment Services |
| | Other |
| | Consolidated |
| Balance at Dec. 31, 2013 | $ | 2,065 |
| | $ | 1,538 |
| | $ | 849 |
| | $ | 4,452 |
| Amortization | (62 | ) | | (88 | ) | | — |
| | (150 | ) | Foreign currency translation | 12 |
| | — |
| | — |
| | 12 |
| Balance at June 30, 2014 | $ | 2,015 |
| | $ | 1,450 |
| | $ | 849 |
| | $ | 4,314 |
|
| | | | | | | | | | | | | | | | | Intangible assets – net carrying amount by business (in millions) | Investment Management |
| (a) | Investment Services |
| | Other |
| (a) | Consolidated |
| Balance at Dec. 31, 2012 | $ | 2,220 |
| | $ | 1,732 |
| | $ | 857 |
| | $ | 4,809 |
| Disposition | — |
| | (1 | ) | | — |
| | (1 | ) | Amortization | (77 | ) | | (102 | ) | (b) | — |
| | (179 | ) | Foreign currency translation | (24 | ) | | (3 | ) | | — |
| | (27 | ) | Other (c) | (14 | ) | | — |
| | — |
| | (14 | ) | Balance at June 30, 2013 | $ | 2,105 |
| | $ | 1,626 |
| | $ | 857 |
| | $ | 4,588 |
|
| | (a) | Includes the reclassification of intangible assets associated with the Newton Private Clients business from Investment Management to the Other segment. |
| | (b) | Includes an $8 million intangible asset impairment recorded in the second quarter of 2013. |
| | (c) | Other changes in intangible assets include purchase price adjustments and certain other reclassifications. |
The table below provides a breakdown of intangible assets by type.
| | | | | | | | | | | | | | | | Intangible assets | June 30, 2014 | | Dec. 31, 2013 |
| (in millions) | Gross carrying amount |
| Accumulated amortization |
| Net carrying amount |
| Remaining weighted- average amortization period | | Net carrying amount |
| Subject to amortization: | | | | | | | Customer relationships—Investment Management | $ | 2,069 |
| $ | (1,532 | ) | $ | 537 |
| 11 years | | $ | 594 |
| Customer contracts—Investment Services | 2,347 |
| (1,281 | ) | 1,066 |
| 11 years | | 1,150 |
| Other | 84 |
| (66 | ) | 18 |
| 4 years | | 16 |
| Total subject to amortization | 4,500 |
| (2,879 | ) | 1,621 |
| 11 years | | 1,760 |
| Not subject to amortization: (a) | | | | | | | Trade name | 1,364 |
| N/A |
| 1,364 |
| N/A | | 1,369 |
| Customer relationships | 1,329 |
| N/A |
| 1,329 |
| N/A | | 1,323 |
| Total not subject to amortization | 2,693 |
| N/A |
| 2,693 |
| N/A | | 2,692 |
| Total intangible assets | $ | 7,193 |
| $ | (2,879 | ) | $ | 4,314 |
| N/A | | $ | 4,452 |
|
| | (a) | Intangible assets not subject to amortization have an indefinite life. |
N/A - Not applicable.
Estimated annual amortization expense for current intangibles for the next five years is as follows:
| | | | | | For the year ended Dec. 31, | Estimated amortization expense (in millions) | | 2014 | | $ | 302 |
| 2015 | | 271 |
| 2016 | | 242 |
| 2017 | | 218 |
| 2018 | | 182 |
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