Goodwill And Intangible Assets

12 Months Ended

Dec. 31, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill—We record goodwill as the excess of the purchase price over the fair value of the net assets acquired in acquisitions accounted for under the purchase method of accounting. We test goodwill for impairment annually, or more frequently if circumstances indicate possible impairment. We identify a potential impairment by comparing the fair value of the applicable reporting unit to its net book value, including goodwill. If the net book value exceeds the fair value of the reporting unit, we measure the impairment by comparing the carrying value of the reporting unit to its fair value.

We test our goodwill for impairment by comparing the fair value of each of our reporting units to their net carrying value as of October 31 of each year. Our impairment analysis is quantitative; however, it includes subjective estimates based on assumptions regarding future growth rates, interest rates and operating expenses.

A lower fair value estimate in the future for any of our reporting units could result in goodwill impairments. Factors that could trigger a lower fair value estimate include sustained price declines of the reporting unit’s products and services, cost increases, regulatory or political environment changes, changes in customer demand, and other changes in market conditions, which may affect certain market participant assumptions used in the discounted future cash flow model based on internal forecasts of revenues and expenses over a specified period plus a terminal value (the income approach).

The income approach estimates fair value by discounting each reporting unit’s estimated future cash flows using a weighted-average cost of capital that reflects current market conditions and the risk profile of the reporting unit. To arrive at our future cash flows, we use estimates of economic and market assumptions, including growth rates in revenues, costs, estimates of future expected changes in operating margins, tax rates and cash expenditures. Future revenues are also adjusted to match changes in our business strategy. We believe this approach is an appropriate valuation method. The risk-adjusted discount rate applied to our future cash flows was 10.8%. The excess of fair value over carrying amount for our reporting units ranged from approximately 15% to in excess of 200% of the respective carrying amounts.

The carrying amount of goodwill by reporting segment was as follows:



(In millions)	Subsea			Onshore/Offshore			Surface Technologies		Total
December 31, 2014	$	3,232.0		$	882.2		$	—	$	4,114.2
Additions due to business combinations	41.9			—			—		41.9
Impairment	—			—			—		—
Translation	(296.5		)	(73.1		)	—		(369.6		)
December 31, 2015	2,977.4			809.1			—		3,786.5
Additions due to business combinations	—			—			—		—
Impairment	—			—			—		—
Translation	(46.3		)	(21.9		)	—		(68.2		)
December 31, 2016	2,931.1			787.2			—		3,718.3
Additions due to business combinations	2,532.6			1,635.5			997.8		5,165.9
Impairment	—			—			—		—
Translation	6.7			38.9			—		45.6
December 31, 2017	$	5,470.4		$	2,461.6		$	997.8	$	8,929.8

Intangible assets—The components of intangible assets were as follows:



	December 31,
	2017				2016
(In millions)	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Acquired technology	$	240.0	$	25.0	$	—	$	—
Backlog	175.0		118.0		—		—
Customer relationships	285.0		29.0		—		—
Licenses, patents and trademarks	810.1		157.7		167.3		120.9
Software	237.9		145.5		154.7		107.4
Other	72.7		11.7		97.6		17.6
Total intangible assets	$	1,820.7	$	486.9	$	419.6	$	245.9

In connection with the Merger, we recorded identifiable intangible assets acquired. Refer to Note 2 to these consolidated financial statements for additional information regarding the Merger. All of our acquired identifiable intangible assets are subject to amortization and, where applicable, foreign currency translation adjustments.

We recorded $244.5 million, $17.5 million and $23.4 million in amortization expense related to intangible assets during the years ended December 31, 2017, 2016 and 2015, respectively. During the years 2018 through 2022, annual amortization expense is expected to be as follows: $173.5 million in 2018, $124.1 million in 2019, $114.8 million in 2020, $109.1 million in 2021, $106.6 million in 2022 and $705.7 million thereafter.

- 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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