Goodwill and Other Intangible Assets

6 Months Ended

Jul. 03, 2016

Goodwill and Intangible Assets Disclosure [Abstract]


A.	Goodwill

The components of, and changes in, the carrying amount of goodwill are as follows:



(MILLIONS OF DOLLARS)	U.S.		International			Total
Balance, December 31, 2015	$	665	$	790		$	1,455
Additions / Adjustments^(a)	—		(1		)	(1		)
Other^(b)	—		21			21
Balance, July 3, 2016	$	665	$	810		$	1,475

^(a)Primarily includes a $12 million purchase price allocation associated with the acquisition of a livestock business in South America, offset by a $13 million reduction in the acquisition date fair value of goodwill associated with the acquisition of Abbott. See Note 4A. Acquisitions and Divestitures: Acquisitions.

^(b)Includes adjustments for foreign currency translation.

The gross goodwill balance was $2,011 million and $1,991 million as of July 3, 2016, and December 31, 2015, respectively. Accumulated goodwill impairment losses (generated entirely in fiscal 2002) were $536 million as of July 3, 2016, and December 31, 2015.


B.	Other Intangible Assets

The components of identifiable intangible assets are as follows:



	As of July 3, 2016							As of December 31, 2015
						Identifiable							Identifiable
	Gross					Intangible Assets		Gross					Intangible Assets
	Carrying		Accumulated			Less Accumulated		Carrying		Accumulated			Less Accumulated
(MILLIONS OF DOLLARS)	Amount		Amortization			Amortization		Amount		Amortization			Amortization
Finite-lived intangible assets:
Developed technology rights^(a)	$	1,064	$	(310	)	$	754	$	1,010	$	(274	)	$	736
Brands	212		(126		)	86		212		(121		)	91
Trademarks and trade names	65		(45		)	20		63		(44		)	19
Other^(a)	228		(125		)	103		214		(118		)	96
Total finite-lived intangible assets	1,569		(606		)	963		1,499		(557		)	942
Indefinite-lived intangible assets:
Brands	36		—			36		36		—			36
Trademarks and trade names	67		—			67		66		—			66
In-process research and development	143		—			143		138		—			138
Product rights	8		—			8		8		—			8
Total indefinite-lived intangible assets	254		—			254		248		—			248
Identifiable intangible assets	$	1,823	$	(606	)	$	1,217	$	1,747	$	(557	)	$	1,190


^(a)	Includes the acquisition of intangible assets associated with the purchase of a livestock business in South America in the first quarter of 2016 and an increase in the acquisition date fair value of intangible assets associated with the acquisition of Abbott, as well as the impact of foreign exchange. See Note 4A. Acquisitions and Divestitures: Acquisitions.


C.	Amortization

Amortization expense related to finite-lived acquired intangible assets that contribute to our ability to sell, manufacture, research, market and distribute products, compounds and intellectual property is included in Amortization of intangible assets as it benefits multiple business functions. Amortization expense related to finite-lived acquired intangible assets that are associated with a single function is included in Cost of sales, Selling, general and administrative expenses or Research and development expenses, as appropriate. Total amortization expense for finite-lived intangible assets was $24 million and $48 million for the three and six months ended July 3, 2016, respectively, and $16 million and $31 million for the three and six months ended June 28, 2015, respectively.

- 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.

+ References + Details