On February 1, 2022, the Company completed two business combinations. Our financial statements for the three months ended March 31, 2022 reflect the assets, liabilities, operating results and cash flows of both business combinations commencing from the acquisition date. These transactions consisted of an immaterial acquisition in our Strategic Markets segment and a transfer of a majority interest (51%) of a managed infrastructure services joint venture in Japan (the “Exa transaction”) from our former Parent that could not be completed prior to the Separation due to local regulatory approvals. The Company completed the Exa transaction for consideration of $48 million, net of cash acquired of $59 million. The non-controlling interest associated with the Exa transaction represents the fair value of the joint venture pro-rated by the non-controlling shareholder’s percentage of ownership (49%). The Exa transaction enabled us to seamlessly continue our relationships with certain key customers in Japan. Acquisition costs associated with these two acquisitions were immaterial and expensed as incurred.

The following table summarizes total consideration transferred, fair value of net assets acquired, net liabilities assumed and goodwill for the Exa transaction:

* Intangible assets acquired consists of $16 million of patents and trademarks and $91 million of customer relationships.

Intangible Assets

The following tables present the Company’s intangible asset balances by major asset class.


	At March 31, 2023
	Gross Carrying		Accumulated		Net Carrying
(Dollars in millions)	Amount		Amortization		Amount
Capitalized software	$	83	$	(15)	$	68
Customer relationships*		232		(141)		91
Completed technology		20		(20)		—
Patents and trademarks*		18		(6)		13
Total	$	353	$	(182)	$	171


	At March 31, 2022
	Gross Carrying		Accumulated		Net Carrying
(Dollars in millions)	Amount		Amortization		Amount
Capitalized software	$	16	$	(16)	$	1
Customer relationships*		229		(100)		129
Completed technology		20		(20)		—
Patents and trademarks*		18		(2)		16
Total	$	283	$	(138)	$	145


	At December 31, 2021
	Gross Carrying		Accumulated		Net Carrying
(Dollars in millions)	Amount		Amortization		Amount
Capitalized software	$	16	$	(13)	$	3
Customer relationships		130		(97)		33
Completed technology		20		(20)		—
Patents and trademarks		2		(2)		—
Total	$	169	$	(132)	$	36

* Amounts include effects from foreign currency translation.

There was no impairment of identifiable intangible assets recorded in the periods reported. The net carrying amount of intangible assets increased $26 million during the year ended March 31, 2023, primarily due to additions of capitalized software, partially offset by amortization and retirement of internal use software inherited from our former

Parent. The aggregate intangible asset amortization expense was $46 million, $7 million and $37 million for the year ended March 31, 2023, three months ended March 31, 2022 and year ended December 31, 2021, respectively.

The future amortization expense relating to intangible assets currently recorded in the Consolidated Balance Sheet was estimated to be the following at March 31, 2023:


	Capitalized		Customer		Patents and
(Dollars in millions)	Software		Relationships		Trademarks		Total
Year ending March 31:
2024	$	18	$	27	$	3	$	49
2025		19		24		3		46
2026		17		20		3		41
2027		14		17		3		34
2028		—		1		—		1
Thereafter		—		1		—		1

Goodwill

The following table presents a roll-forward of goodwill balances by segment for the year ended March 31, 2023, the three months ended March 31, 2022 (transition period), and the year ended December 31, 2021:


			Foreign
			Currency								Additions				Additions
(Dollars in	Balance at		Translation						Balance at		and		Balance at		and		Balance at
millions)	January 1,		and Other		Re-allocation				December 31,		Other		March 31,		Other		March 31,
Segment	2021		Adjustments*		of Goodwill		Impairment		2021		Adjustments		2022		Adjustments*		2023
Americas	$	440	$	(10)	$	(431)	$	—	$	—	$	—	$	—	$	—	$	—
EMEA		288		5		—		(293)		—		—		—		—		—
Asia Pacific		78		(16)		(62)		—		—		—		—		—		—
Japan		424		(9)		—		—		415		91		506		(11)		495
United States		—		—		176		(176)		—		—		—		—		—
Principal Markets		—		1		141		—		142		—		142		—		142
Strategic Markets		—		—		176		—		176		—		176		—		176
Total	$	1,230	$	(29)		—	$	(469)	$	732	$	91	$	823	$	(11)	$	812

*	Primarily driven by foreign currency translation.

Management reviews goodwill for impairment annually and whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable by first assessing qualitative factors to determine if it is more likely than not that fair value is less than carrying value. As a result of the change in our fiscal year-end, the annual goodwill impairment assessment date was changed from October 1 to January 1. The change was made to better align the annual goodwill impairment test with the change in our annual planning and budgeting process for the new fiscal year-end. In the year ended March 31, 2023, the Company performed the goodwill impairment test at both October 1, 2022 and January 1, 2023. The change in annual impairment testing did not delay, accelerate or avoid an impairment charge. The Company has determined this change in the method of applying an accounting principle is preferable.

We use an income-based approach where fair value is determined using a discounted cash flow model that requires significant judgment with respect to revenue growth rates, based upon annual budgets and long-term strategic plans. Fair value estimates employed in our annual impairment review of goodwill involve using various assumptions. Assumptions critical to our fair value estimates were discount rates, expected revenue growth and projected EBITDA margins used in determining the fair value of the reporting units. These and other assumptions are impacted by economic conditions and expectations of management and may change based on different facts and circumstances. We believe the assumptions used to estimate future cash flows are reasonable, but there can be no assurance that the expected cash

flows will be realized. The use of different assumptions would increase or decrease discounted cash flows or earnings projections and therefore could change impairment determinations.

There were no goodwill impairment losses recorded for the year ended March 31, 2023. We prepared our impairment test as of January 1, 2023 and determined that the fair values of each of our reporting units exceeded net book value by more than 90%. Among our reporting units, the narrowest difference between the calculated fair value and net book value was in our Principal Markets segment’s Canada reporting unit, whose calculated fair value exceeded its net book value by 93%. Future developments related to macroeconomic factors, including increases to the discount rate used, or changes to other inputs and assumptions, including revenue growth, could reduce the fair value of this and/or other reporting units and lead to impairment.

As a result of our impairment test performed as of October 1, 2022, the Company determined that the fair values of each of our reporting units exceeded net book value by more than 50%. Among our reporting units, the narrowest difference between the calculated fair value and net book value was in our Principal Markets segment’s Canada reporting unit, whose calculated fair value exceeded its net book value by 53%.

Cumulatively, the Company has recorded $469 million in goodwill impairment charges within its former EMEA ($293 million) and current United States ($176 million) reporting units.