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Intangible Assets Including Goodwill
 9 Months Ended
Sep. 30, 2018
Intangible Assets Including Goodwill  
Intangible Assets Including Goodwill

 

11. Intangible Assets Including Goodwill:  The following table details the company’s intangible asset balances by major asset class.

 

 

 

At September 30, 2018

 

(Dollars in millions)

 

Gross Carrying

 

Accumulated

 

Net Carrying

 

Intangible asset class

 

Amount

 

Amortization

 

Amount

 

Capitalized software

 

$
1,572

 

$
(784

)

$
788

 

Client relationships

 
2,273

 
(1,247

)
1,026

 

Completed technology

 
2,509

 
(1,560

)
949

 

Patents/trademarks

 
661

 
(324

)
337

 

Other*

 
56

 
(21

)
34

 

 

 

 

 

 

 

 

 

Total

 

$
7,071

 

$
(3,937

)

$
3,134

 

 

 

 

 

 

 

 

 

 

 

 

 

* Other intangibles are primarily acquired proprietary and non-proprietary business processes, methodologies and systems.

 

 

 

At December 31, 2017

 

(Dollars in millions)

 

Gross Carrying

 

Accumulated

 

Net Carrying

 

Intangible asset class

 

Amount

 

Amortization

 

Amount

 

Capitalized software

 

$
1,600

 

$
(790

)

$
810

 

Client relationships

 
2,358

 
(1,080

)
1,278

 

Completed technology

 
2,586

 
(1,376

)
1,210

 

Patents/trademarks

 
668

 
(256

)
413

 

Other*

 
47

 
(16

)
31

 

 

 

 

 

 

 

 

 

Total

 

$
7,260

 

$
(3,518

)

$
3,742

 

 

 

 

 

 

 

 

 

 

 

 

 

* Other intangibles are primarily acquired proprietary and non-proprietary business processes, methodologies and systems.

 

The net carrying amount of intangible assets decreased $608 million during the first nine months of 2018, primarily due to intangible asset amortization, partially offset by additions resulting from capitalized software. The aggregate intangible amortization expense was $348 million and $1,031 million for the third quarter and first nine months of 2018, respectively, versus $383 million and $1,161 million for the third quarter and first nine months of 2017, respectively. In addition, in the first nine months of 2018, the company retired $612 million of fully amortized intangible assets, impacting both the gross carrying amount and accumulated amortization by this amount.

 

The amortization expense for each of the five succeeding years relating to intangible assets currently recorded in the Consolidated Statement of Financial Position is estimated to be the following at September 30, 2018:

 

 

 

Capitalized

 

Acquired

 

 

 

(Dollars in millions)

 

Software

 

Intangibles

 

Total

 

2018 (for Q4)

 

$
140

 

$
198

 

$
338

 

2019

 
393

 
676

 
1,070

 

2020

 
203

 
564

 
768

 

2021

 
51

 
451

 
502

 

2022

 

—

 
382

 
382

 

 

The change in the goodwill balances by reportable segment, for the nine months ended September 30, 2018 and for the year ended December 31, 2017 are as follows:

 

 

 

 

 

 

 

 

 

 

 

Foreign

 

 

 

 

 

 

 

 

 

 

 

 

 

Currency

 

 

 

 

 

 

 

 

 

Purchase

 

 

 

Translation

 

 

 

(Dollars in millions)

 

Balance

 

Goodwill

 

Price

 

 

 

And Other

 

Balance

 

Segment

 

01/01/18

 

Additions

 

Adjustments

 

Divestitures

 

Adjustments*

 

9/30/18

 

Cognitive Solutions

 

$
19,665

 

$
10

 

$
0

 

$
(1

)

$
(148

)

$
19,526

 

Global Business Services

 
4,813

 
24

 
(4

)

—

 
(51

)
4,782

 

Technology Services & Cloud Platforms

 
10,447

 

—

 
0

 

—

 
(86

)
10,361

 

Systems

 
1,862

 

—

 

—

 

—

 
(6

)
1,857

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$
36,788

 

$
34

 

$
(4

)

$
(1

)

$
(291

)

$
36,526

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

* Primarily driven by foreign currency translation.

 

 

 

 

 

 

 

 

 

 

 

Foreign

 

 

 

 

 

 

 

 

 

 

 

 

 

Currency

 

 

 

 

 

 

 

 

 

Purchase

 

 

 

Translation

 

 

 

(Dollars in millions)

 

Balance

 

Goodwill

 

Price

 

 

 

And Other

 

Balance

 

Segment

 

01/01/17

 

Additions

 

Adjustments

 

Divestitures

 

Adjustments*

 

12/31/17

 

Cognitive Solutions

 

$
19,484

 

$
3

 

$
(38

)

$
(20

)

$
235

 

$
19,665

 

Global Business Services

 
4,607

 

—

 
2

 

—

 
204

 
4,813

 

Technology Services & Cloud Platforms

 
10,258

 
13

 
(2

)

—

 
179

 
10,447

 

Systems

 
1,850

 

—

 
0

 

—

 
13

 
1,862

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$
36,199

 

$
16

 

$
(38

)

$
(20

)

$
631

 

$
36,788

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

* Primarily driven by foreign currency translation.

 

There were no goodwill impairment losses recorded during the first nine months of 2018 or the full year of 2017 and the company has no accumulated impairment losses.

 

Purchase price adjustments recorded in the first nine months of 2018 and full year 2017 were related to acquisitions that were still subject to the measurement period that ends at the earlier of 12 months from the acquisition date or when information becomes available. Net purchase price adjustments recorded during the first nine months of 2018 were not material. Net purchase price adjustments of $38 million were recorded during 2017, with the primary drivers being deferred tax assets, other taxes payable and other current liabilities associated with the Truven Health Analytics, Inc. and The Weather Company acquisitions.