Goodwill and Intangible Assets

12 Months Ended

Dec. 31, 2015

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets—Goodwill represents the excess cost over fair value of the net assets of purchased businesses. The Company does not amortize goodwill and intangible assets that have indefinite lives. The Company performs an impairment assessment of goodwill and intangible assets with indefinite lives annually, or more frequently if triggering events occur, based on the estimated fair value of the related reporting unit or intangible asset. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.

When performing its annual impairment assessment, the Company evaluates the goodwill assigned to each of its reporting units for potential impairment by comparing the estimated fair value of the relevant reporting unit to the carrying value. The Company uses various Level 2 and Level 3 valuation techniques to determine the fair value of its reporting units, including discounting estimated future cash flows based on a detailed cash flow forecast prepared by the relevant reporting unit and market multiples of relevant public companies. If the fair value of a reporting unit is less than its carrying value, an impairment loss, if any, is recorded for the difference between the implied fair value and the carrying value of the reporting unit's goodwill.

The Company's indefinite-lived intangible assets consist of trademarks and brands. The estimated fair values of these intangible assets are determined based on a Level 3 valuation method using a relief-of-royalty income approach derived from internally forecasted revenues of the related products. If the fair value of the trademark or brand is less than its carrying value, an impairment loss is recorded for the difference between the estimated fair value and carrying value of the intangible asset.

Amortization and impairment of goodwill and other intangible assets for the years ended December 31, 2015, 2014 and 2013 were as follows:



In millions	2015		2014		2013
Goodwill:
Impairment	$	—	$	—	$	—
Intangible Assets:
Amortization	231		242		250
Impairment	2		3		2
	$	233	$	245	$	252

Income from discontinued operations included intangible asset amortization of $20 million in 2013.

The Company performed its annual impairment assessment of goodwill and indefinite-lived intangible assets in the third quarter of 2015, 2014 and 2013. In the third quarter of 2015, these assessments resulted in no goodwill impairment charges and an indefinite-lived intangible asset charge of $2 million related to a brand in the Polymers & Fluids segment. In the third quarter of 2014, these assessments resulted in no goodwill impairment charges and indefinite-lived intangible asset charges of $3 million related to certain brands in the Polymers & Fluids and Test & Measurement and Electronics segments. In 2013, these assessments resulted in no goodwill impairment charges and an indefinite-lived intangible asset impairment charge of $2 million related to a brand in the Test & Measurement and Electronics segment.

A summary of indefinite-lived intangible assets that were adjusted to fair value and the related impairment charges for the years ended December 31, 2015, 2014, and 2013 is as follows:



	2015						2014						2013
In millions	Carrying Value		Fair Value		Total Impairment Charges		Carrying Value		Fair Value		Total Impairment Charges		Carrying Value		Fair Value		Total Impairment Charges
Indefinite-lived intangible assets	$	26	$	24	$	2	$	11	$	8	$	3	$	42	$	40	$	2

The changes in the carrying amount of goodwill for the years ended December 31, 2015 and 2014 were as follows:



In millions	Automotive OEM			Test & Measurement and Electronics			Food Equipment			Polymers & Fluids			Welding			Construction Products			Specialty Products			Total
Balance, December 31, 2013	$	320		$	1,426		$	294		$	1,021		$	294		$	561		$	970		$	4,886
2014 activity:
Acquisitions & divestitures	(3		)	—			—			3			—			8			—			8
Impairment charges	—			—			—			—			—			—			—			—
Foreign currency translation	(23		)	(36		)	(18		)	(60		)	(17		)	(27		)	(46		)	(227		)
Balance, December 31, 2014	294			1,390			276			964			277			542			924			4,667
2015 activity:
Acquisitions & divestitures	—			—			—			(6		)	1			—			—			(5		)
Impairment charges	—			—			—			—			—			—			—			—
Foreign currency translation	(17		)	(35		)	(17		)	(64		)	(17		)	(26		)	(47		)	(223		)
Balance, December 31, 2015	$	277		$	1,355		$	259		$	894		$	261		$	516		$	877		$	4,439
Cumulative goodwill impairment charges, December 31, 2015	$	24		$	83		$	60		$	15		$	5		$	7		$	46		$	240

Income from discontinued operations included a goodwill impairment of $42 million in 2013.

Intangible assets as of December 31, 2015 and 2014 were as follows:



	2015							2014
In millions	Cost		Accumulated Amortization			Net		Cost		Accumulated Amortization			Net
Amortizable intangible assets:
Customer lists and relationships	$	1,630	$	(943	)	$	687	$	1,638	$	(820	)	$	818
Trademarks and brands	724		(298		)	426		707		(249		)	458
Patents and proprietary technology	618		(397		)	221		622		(354		)	268
Other	475		(446		)	29		471		(430		)	41
Total amortizable intangible assets	3,447		(2,084		)	1,363		3,438		(1,853		)	1,585
Indefinite-lived intangible assets:
Trademarks and brands	197		—			197		214		—			214
Total intangible assets	$	3,644	$	(2,084	)	$	1,560	$	3,652	$	(1,853	)	$	1,799

Amortizable intangible assets are being amortized on a straight-line basis over their estimated useful lives of 3 to 20 years.

The estimated amortization expense of intangible assets for the future years ending December 31 is as follows:



In millions
2016	$	217
2017	196
2018	175
2019	153
2020	134

- 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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