GOODWILL AND OTHER PURCHASED INTANGIBLE ASSETS
Goodwill
Goodwill and other purchased intangible assets are included in the identifiable assets of the segment to which the operations of the acquired entity have been assigned. Impairment tests are performed at least annually and more often as circumstances require. Any goodwill impairment, as well as the amortization of other purchased intangible assets, is charged against the respective segment’s operating income. Historically, our annual goodwill impairment test has been performed as of November 30. As discussed in Note 1, during the fourth quarter of 2013, the company changed the date of its annual goodwill impairment test from November 30 to December 31. As a result of this change, during 2013, we performed an annual goodwill impairment test as of November 30 and as of December 31. In performing the goodwill impairment tests, the company uses a discounted cash flow approach corroborated by comparative market multiples, where appropriate, to determine the fair value of its businesses. Accumulated goodwill impairment losses at December 31, 2013 and 2012, totaled $570 million at the Aerospace Systems segment.
The changes in the carrying amounts of goodwill for the years ended December 31, 2013 and 2012, were as follows:
|
| | | | | | | | | | | | | | | | | | | | |
$ in millions | | Aerospace Systems | | Electronic Systems | | Information Systems | | Technical Services | | Total |
Balance as of December 31, 2011 | |
| $3,801 |
| |
| $2,400 |
| |
| $5,248 |
| |
| $925 |
| |
| $12,374 |
|
Businesses acquired, sold and other | | (43 | ) | | 10 |
| | 39 |
| | 51 |
| | 57 |
|
Balance as of December 31, 2012 | |
| $3,758 |
| |
| $2,410 |
| |
| $5,287 |
| |
| $976 |
| |
| $12,431 |
|
Businesses acquired | | — |
| | — |
| | 7 |
| | — |
| | 7 |
|
Balance as of December 31, 2013 | |
| $3,758 |
| |
| $2,410 |
| |
| $5,294 |
| |
| $976 |
| |
| $12,438 |
|
Purchased Intangible Assets
Net contract, program, and other intangible assets were comprised of the following:
|
| | | | | | | | |
| | December 31 |
$ in millions | | 2013 | | 2012 |
Gross contract, program and other intangible assets | |
| $ 1,812 |
| |
| $ 1,819 |
|
Less accumulated amortization | | (1,708 | ) | | (1,682 | ) |
Net contract, program and other intangible assets | | $ 104 |
| |
| $ 137 |
|
Amortization expense for 2013, 2012 and 2011, was $26 million, $36 million and $37 million, respectively. The company’s purchased intangible assets are being amortized on a straight-line basis over an aggregate weighted-average period of 21 years and are included in other non-current assets in the consolidated statements of financial position. As of December 31, 2013, the expected future amortization of purchased intangibles for each of the next five years is as follows:
|
| | | | |
$ in millions | | |
Year Ending December 31 | | |
2014 | |
| $20 |
|
2015 | | 18 |
|
2016 | | 12 |
|
2017 | | 10 |
|
2018 | | 9 |
|
