Acquisitions and Divestitures, Goodwill, and Intangible Assets

6 Months Ended

Jul. 02, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

Acquisitions and Divestitures, Goodwill, and Intangible Assets

ACQUISITIONS AND DIVESTITURES, GOODWILL, AND INTANGIBLE ASSETS

Acquisitions and Divestitures

In 2017, we acquired a fixed-base-operations (FBO) facility in our Aerospace group and a manufacturer of electronics and communications products in our Information Systems and Technology group. In 2016, we acquired an aircraft management and charter services provider in our Aerospace group and a manufacturer of unmanned underwater vehicles (UUVs) in our Information Systems and Technology group. As the purchase prices of these acquisitions are not material, they are included in other investing activities in the unaudited Consolidated Statement of Cash Flows.

The operating results of these acquisitions have been included with our reported results since the respective closing dates. The purchase prices of the acquisitions have been allocated to the estimated fair value of net tangible and intangible assets acquired, with any excess purchase price recorded as goodwill.

We did not have any divestitures in 2017 or 2016. In 2015, we completed the sale of our axle business in our Combat Systems group. In the first six months of 2016, we recognized in discontinued operations a final adjustment of $13 to the loss on the sale of this business.

Goodwill

The changes in the carrying amount of goodwill by reporting unit for the six-month period ended July 2, 2017, were as follows:



	Aerospace		Combat Systems		Information Systems and Technology		Marine Systems		Total Goodwill
December 31, 2016 (a)	$	2,537	$	2,598	$	6,013	$	297	$	11,445
Acquisitions (b)	32		—		29		—		61
Other (c)	113		47		13		—		173
July 2, 2017 (a)	$	2,682	$	2,645	$	6,055	$	297	$	11,679

(a)Goodwill on December 31, 2016, and July 2, 2017, in the Information Systems and Technology reporting unit is net of $2 billion of accumulated impairment losses.

(b)Includes adjustments during the purchase price allocation period.

(c)Consists primarily of adjustments for foreign currency translation.

Intangible Assets

Intangible assets consisted of the following:



	Gross Carrying Amount (a)		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount (a)		Accumulated Amortization			Net Carrying Amount
	July 2, 2017							December 31, 2016
Contract and program intangible assets (b)	$	1,628	$	(1,287	)	$	341	$	1,633	$	(1,281	)	$	352
Trade names and trademarks	475		(157		)	318		446		(139		)	307
Technology and software	129		(104		)	25		121		(102		)	19
Other intangible assets	155		(154		)	1		154		(154		)	—
Total intangible assets	$	2,387	$	(1,702	)	$	685	$	2,354	$	(1,676	)	$	678


(a)	Change in gross carrying amounts consists primarily of adjustments for foreign currency translation and acquired intangible assets.


(b)	Consists of acquired backlog and probable follow-on work and associated customer relationships.

Amortization expense was $19 and $38 for the three- and six-month periods ended July 2, 2017, and $23 and $50 for the three- and six-month periods ended July 3, 2016.

- 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