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GOODWILL AND OTHER INTANGIBLE ASSETS

6 Months Ended

Jun. 30, 2019

Goodwill And Intangible Assets Disclosure [Abstract]

NOTE 9—GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill

Our goodwill balance is attributable to the excess of the purchase price over the fair value of net assets acquired in connection with the Combination. The changes in the carrying amount of goodwill during the six months ended June 30, 2019 are as follows:


	(In millions)
Balance as of December 31, 2018	$	2,654
Adjustments to finalize purchase accounting estimates ⁽¹⁾		168
Allocated to APP for disposal		(90	)
Currency translation adjustments		(28	)
Balance as of June 30, 2019 ⁽²⁾	$	2,704

⁽¹⁾	^{Includes adjustments of $61 million and $107 million identified in the first and second quarters of 2019, respectively. See Note 3, Business Combination for further discussion.}

⁽²⁾	^{At June 30, 2019, we had approximately $2.2 billion of cumulative impairment charges recorded in conjunction with our impairment analysis performed during the fourth quarter of 2018, as further described in the 2018 Form 10-K.}

During the first quarter of 2019 no indicators of goodwill impairment were identified.

In the second quarter of 2019, goodwill was allocated to the APP business. Following its disposal, a goodwill impairment test was performed on the retained portion of goodwill within the NCSA reporting unit. We utilized an income approach (discounted cash flow method), as we believe this is the most direct approach to incorporate the specific economic attributes and risk profiles of our reporting units into our valuation model. We generally do not utilize a market approach, given the lack of relevant information generated by market transactions involving comparable businesses. However, to the extent market indicators of fair value become available, we consider such market indicators as well as market participant assumptions in our discounted cash flow analysis and determination of fair value. The discounted cash flow methodology is based, to a large extent, on assumptions about future events, which may or may not occur as anticipated, and such deviations could have a significant impact on the calculated estimated fair values of our reporting units. These assumptions included the use of significant unobservable inputs, representative of a Level 3 fair value measurement, and included, but were not limited to, estimates of discount rates, future growth rates and terminal values for each reporting unit.

The discounted cash flow analysis for the NCSA reporting unit included forecasted cash flows over a five-year forecast period (2019 through 2023), with our 2019 management budget used as the basis for our projections. These forecasted cash flows took into consideration historical and recent results, the reporting unit’s backlog and near-term prospects and management’s outlook for the future. A terminal value was also calculated using a terminal value growth assumption to derive the annual cash flows after the discrete forecast period. A reporting unit specific discount rate was applied to the forecasted cash flows and terminal cash flows to determine the discounted future cash flows, or fair value, of each reporting unit. Our assessment took into consideration the incremental changes in project estimates discussed above and reflected the increased market risk surrounding the award and execution of future projects and adjusted our cost of capital assumptions to be in-line with recent market indicators for our company and industry. These increases in cost of capital and risk premium assumptions resulted in a significant increase in our discount rates utilized for purposes of determining our discounted cash flows and reduced the estimated fair values of our reporting units.

No impairment of the retained portion of goodwill within the NCSA reporting unit was identified as a result of the assessment.

Project-Related Intangibles

Our project-related intangibles at June 30, 2019 and December 31, 2018, including the June 30, 2019 weighted-average useful lives, were as follows:

			June 30, 2019									December 31, 2018
	Weighted Average Useful Life		Gross Carrying Amount			Accumulated Amortization			Net Carrying Amount			Gross Carrying Amount			Accumulated Amortization			Net Carrying Amount
	(In years)		(In millions)
Project-related intangible assets		4	$	259		$	(165	)	$	94		$	259		$	(122	)	$	137
Project-related intangible liabilities		2		(109	)		71			(38	)		(109	)		43			(66	)
Total ⁽¹⁾			$	150		$	(94	)	$	56		$	150		$	(79	)	$	71

⁽¹⁾	^{The decrease in project-related intangible assets during the six months ended June 30, 2019 primarily related to amortization expense of $16 million and the impact of foreign currency translation.}

Other Intangible Assets

Our other intangible assets at June 30, 2019 and December 31, 2018, including the June 30, 2019 weighted-average useful lives, were as follows:

			June 30, 2019							December 31, 2018
	Weighted Average Useful Life		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
	(In years)		(In millions)
Process technologies		27	$	507	$	(26	)	$	481	$	514	$	(14	)	$	500
Trade names		12		396		(41	)		355		401		(23	)		378
Customer relationships		10		124		(35	)		89		129		(23	)		106
Trademarks		10		26		(3	)		23		27		(2	)		25
Total⁽¹⁾			$	1,053	$	(105	)	$	948	$	1,071	$	(62	)	$	1,009

⁽¹⁾	^{The decrease in other intangible assets during the six months ended June 30, 2019 primarily related to amortization expense of $43 million, intangible assets allocated to the disposal of APP and the impact of foreign currency translation.}