Intangible Assets and Goodwill

9 Months Ended

Sep. 30, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible assets and goodwill

A. Intangible assets

Intangible assets are comprised of the following:




		September 30, 2016
(Millions of dollars)	Weighted Amortizable Life (Years)	Gross Carrying Amount		Accumulated Amortization			Net
Customer relationships	15	$	2,424	$	(915	)	$	1,509
Intellectual property	11	1,515		(681		)	834
Other	14	184		(74		)	110
Total finite-lived intangible assets	14	$	4,123	$	(1,670	)	$	2,453



		December 31, 2015
	Weighted Amortizable Life (Years)	Gross Carrying Amount		Accumulated Amortization			Net
Customer relationships	15	$	2,489	$	(809	)	$	1,680
Intellectual property	11	1,660		(626		)	1,034
Other	12	174		(67		)	107
Total finite-lived intangible assets	14	$	4,323	$	(1,502	)	$	2,821

Gross customer relationship intangibles of $96 million and related accumulated amortization of $27 million as well as gross intellectual property intangibles of $111 million and related accumulated amortization of $48 million from the Resource Industries segment were impaired during the three months ended September 30, 2016. The fair value of these intangibles was determined to be insignificant based on an income approach using expected cash flows. The fair value determination is categorized as Level 3 in the fair value hierarchy due to its use of internal projections and unobservable measurement inputs. The total impairment of $132 million was a result of restructuring activities and is included in Other operating (income) expense in Statement 1. See Note 18 for information on restructuring costs.

Amortization expense for the three and nine months ended September 30, 2016 was $82 million and $246 million, respectively. Amortization expense for the three and nine months ended September 30, 2015 was $81 million and $255 million, respectively. Amortization expense related to intangible assets is expected to be:



(Millions of dollars)
Remaining Three Months of 2016	2017	2018	2019	2020	Thereafter
$79	$316	$308	$306	$295	$1,149

B. Goodwill

No goodwill was impaired during the three and nine months ended September 30, 2016 or 2015.

As discussed in Note 15, effective January 1, 2016, we revised our reportable segments in line with the changes to our organization structure. As a result of these changes, $118 million of goodwill was reassigned to Energy & Transportation from All Other segments.

The changes in carrying amount of goodwill by reportable segment for the nine months ended September 30, 2016 were as follows:




(Millions of dollars)	December 31, 2015			Acquisitions		Other Adjustments ¹		September 30, 2016
Construction Industries
Goodwill	$	285		$	—	$	30	$	315
Impairments	(22		)	—		—		(22		)
Net goodwill	263			—		30		293
Resource Industries
Goodwill	4,145			—		36		4,181
Impairments	(580		)	—		—		(580		)
Net goodwill	3,565			—		36		3,601
Energy & Transportation
Goodwill	2,738			26		8		2,772
All Other ²
Goodwill	49			—		10		59
Consolidated total
Goodwill	7,217			26		84		7,327
Impairments	(602		)	—		—		(602		)
Net goodwill	$	6,615		$	26	$	84	$	6,725

¹ Other adjustments are comprised primarily of foreign currency translation.

²Includes All Other operating segments (See Note 15).

- 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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