Dow Chemical 2014 Annual Report Download - page 111

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87
2013 Goodwill Impairment Testing
In 2013, the Company assessed qualitative factors for 14 of the 19 reporting units carrying goodwill. The qualitative assessment
indicated that it was more likely than not that the fair value exceeded carrying value for those reporting units included in the
qualitative test. The Company performed the first step of the quantitative testing for the remaining five reporting units. The
Company utilized a discounted cash flow methodology to calculate the fair value of the reporting units. Based on the fair value
analysis, management concluded that fair value exceeded carrying value for all reporting units. As a result, no additional
quantitative testing was required for the reporting units.
2012 Goodwill Impairment Testing
In 2012, the Company assessed qualitative factors for 11 of the 20 reporting units carrying goodwill. The qualitative assessment
indicated that it was more likely than not that the fair value exceeded carrying value for those reporting units included in the
qualitative test. The Company performed the first step of the quantitative testing for the remaining nine reporting units. The
Company utilized a discounted cash flow methodology to calculate the fair value of the reporting units. Based on the fair value
analysis, management concluded that fair value exceeded carrying value for all reporting units except Dow Formulated
Systems. Management completed the second step of the quantitative test for Dow Formulated Systems which compared the
implied fair value of the reporting unit's goodwill to the carrying value. As a result, the Company recorded an impairment loss
of $220 million in the fourth quarter of 2012, which is included in "Goodwill and other intangible asset impairment losses" in
the consolidated statements of income and reflected in the Performance Materials & Chemicals segment. The goodwill
impairment loss represented the total amount of goodwill that was carried by the Dow Formulated Systems reporting unit.
Other Intangible Assets
The following table provides information regarding the Company’s other intangible assets:
Other Intangible Assets at December 31 2014 2013
In millions
Gross
Carrying
Amount
Accumulated
Amortization Net
Gross
Carrying
Amount
Accumulated
Amortization Net
Intangible assets with finite lives:
Licenses and intellectual property $ 1,777 $ (1,060) $ 717 $ 1,774 $ (908) $ 866
Patents 122 (108) 14 125 (109) 16
Software 1,287 (648) 639 1,186 (591) 595
Trademarks 685 (409) 276 686 (345) 341
Customer-related 3,443 (1,366) 2,077 3,622 (1,181) 2,441
Other 158 (146) 12 154 (136) 18
Total other intangible assets, finite lives $ 7,472 $ (3,737) $ 3,735 $ 7,547 $ (3,270) $ 4,277
IPR&D (1), indefinite lives 33 — 33 37 — 37
Total other intangible assets $ 7,505 $ (3,737) $ 3,768 $ 7,584 $ (3,270) $ 4,314
(1) In-process research and development ("IPR&D") purchased in a business combination.
The following table provides information regarding amortization expense related to intangible assets:
Amortization Expense
In millions 2014 2013 2012
Other intangible assets, excluding software (1) $ 436 $ 461 $ 478
Software, included in “Cost of sales” $ 70 $ 67 $ 63
(1) Includes a $3 million asset impairment charge related to intangible assets in 2013.
During 2014, the Company recognized a $50 million asset impairment charge related to customer-related, trademarks and
intellectual property intangible assets in the Dow Electronic Materials business, which is recorded in "Goodwill and other
intangible asset impairment losses" in the consolidated statements of income and reflected in Consumer Solutions. During
2013, the Company recognized a $3 million asset impairment charge related to software, which is recorded in "Cost of sales"
and reflected in Corporate.