General Dynamics 2015 Annual Report Download - page 47

requires debt issuance costs to be presented on the balance sheet
as a deduction from the carrying amount of the related debt liability,
consistent with the presentation of debt discounts. Previously, debt
issuance costs were presented as a deferred asset, separate from
the related debt liability. ASU 2015-03 does not affect the
recognition and measurement guidance for debt issuance costs.
While ASU 2015-03 was not effective until January 1, 2016, we
elected to early adopt the standard. See Note J for further
discussion of the impact of ASU 2015-03.
•ASU 2015-11, Inventory (Topic 330): Simplifying the Measurement of
Inventory. ASU 2015-11 changes the measurement principle for
certain inventory methods from the lower of cost or market to the lower
of cost and net realizable value (NRV). The ASU also eliminates the
requirement to consider replacement cost or NRV less a normal profit
margin when measuring inventory. We intend to adopt the standard
prospectively after the effective date of January 1, 2017. We do not
expect the adoption of ASU 2015-11 to have a material effect on our
results of operations, financial condition or cash flows.
•ASU 2015-17, Income Taxes (Topic 740): Balance Sheet
Classification of Deferred Taxes. ASU 2015-17 requires that
deferred tax assets and liabilities be classified as noncurrent on the
Consolidated Balance Sheets. ASU 2015-17 is effective on
January 1, 2017, with early adoption permitted, and may be applied
either prospectively or retrospectively. We have not yet selected a
transition date or method nor have we determined the effect of the
ASU on our Consolidated Balance Sheets. See Note E for further
discussion of our net deferred tax assets.
•ASU 2016-01, Financial Instruments – Overall (Subtopic 825-10):
Recognition and Measurement of Financial Assets and Financial
Liabilities. ASU 2016-01 addresses certain aspects of recognition,
measurement, presentation and disclosure of financial instruments.
Specific to our business, ASU 2016-01 requires equity investments
to be measured at fair value with changes in fair value recognized in
net income. The ASU eliminates the available-for-sale classification
for equity investments that recognized changes in the fair value as a
component of other comprehensive income. We intend to adopt the
standard on the effective date with a cumulative-effect adjustment
to the Consolidated Balance Sheets as of January 1, 2018. We do
not expect the adoption of ASU 2016-01 to have a material effect
on our results of operations, financial condition or cash flows.
Other ASUs issued by the FASB but not yet effective are not expected
to have a material effect on our Consolidated Financial Statements.
Subsequent Events. We have evaluated material events and
transactions that have occurred after December 31, 2015, and
concluded that none have occurred that require an adjustment to or
disclosure in the Consolidated Financial Statements.
B. ACQUISITIONS AND DIVESTITURES, GOODWILL, AND
INTANGIBLE ASSETS
Acquisitions and Divestitures
We did not acquire any businesses in 2015. In 2014, our Information
Systems and Technology group acquired a provider of IT support to
U.S. special operations forces. The operating results of this acquisition
have been included with our reported results since the closing date.
The purchase price of this acquisition has 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 acquire
any businesses in 2013.
In 2015, we completed the sale of our axle business in the Combat
Systems group and a commercial cyber security business in our
Information Systems and Technology group.
Goodwill
The changes in the carrying amount of goodwill by reporting unit were as follows:
Aerospace
Combat
Systems
Information
Systems
and
Technology
Marine
Systems
Total
Goodwill
December 31, 2013 (a) $ 2,741 $ 2,849 $ 6,053 $ 289 $ 11,932
Acquisitions (b) – – 127 – 127
Other (c) (186) (99) (43) – (328)
December 31, 2014 2,555 2,750 6,137 289 11,731
Acquisitions/divestitures (b) – – (76) – (76)
Other (c) (13) (159) (40) – (212)
December 31, 2015 $ 2,542 $ 2,591 $ 6,021 $ 289 $ 11,443
(a) Goodwill on December 31, 2013, in the Information Systems and Technology reporting unit is net of a $2 billion of accumulated impairment losses.
(b) Includes adjustments during the purchase price allocation period and an allocation of goodwill associated with the sale of a commercial cyber security business discussed above.
(c) Consists primarily of adjustments for foreign currency translation.
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