General Dynamics 2014 Annual Report Download - page 44

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, 2012 (a) $ 2,697 $ 2,916 $ 6,100 $ 290 $ 12,003
Acquisitions (b) – 2 1 (1) 2
Other (c) 44 (69) (48) – (73)
December 31, 2013 $ 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
(a) Goodwill on December 31, 2012, in the Information Systems and Technology reporting unit is net of $1,994 of accumulated impairment losses.
(b) Includes adjustments during the purchase price allocation period.
(c) Consists primarily of adjustments for foreign currency translation.
We completed the required annual goodwill impairment test as of
December 31, 2014. The first step of the goodwill impairment test
compares the fair values of our reporting units to their carrying values.
We estimate the fair values of our reporting units primarily based on
the discounted projected cash flows of the underlying operations. The
estimated fair values for each of our reporting units were well in excess
of their respective carrying values as of December 31, 2014. In our
Information Systems and Technology reporting unit (for which we
recorded a $2 billion goodwill impairment in 2012 discussed in the
paragraph below), this excess increased from 2013 as there was an
improvement in the fair value and a decrease in the carrying value of
the reporting unit.
In 2012, we recorded a $2 billion goodwill impairment in the
Information Systems and Technology reporting unit. Revenue pressure
from slowed defense spending and the threat of sequestration and
margin compression due to mix shift impacted operating results and
tempered the projected cash flows of the reporting unit, which
negatively impacted our estimate of its fair value. Prior to
December 31, 2012, we had no accumulated impairment losses.
Intangible Assets
Intangible assets consisted of the following:
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
December 31, 2014 December 31, 2013
Contract and program intangible assets* $ 1,652 $ (1,123) $ 529 $ 1,790 $ (1,189) $ 601
Trade names and trademarks 462 (113) 349 507 (103) 404
Technology and software 130 (97) 33 130 (92) 38
Other intangible assets 154 (153) 1 155 (154) 1
Total intangible assets $ 2,398 $ (1,486) $ 912 $ 2,582 $ (1,538) $ 1,044
* Consists of acquired backlog and probable follow-on work and associated customer relationships.
The decrease in the gross carrying amount and accumulated
amortization of contract and program intangible assets from
December 31, 2013, to December 31, 2014, is primarily due to the
write-off of fully amortized assets in the Information Systems and
Technology group.
We did not recognize any impairments of our intangible assets in
2014 or 2013. In 2012, we recognized impairments in our Aerospace
and Information Systems and Technology groups of $191 and $110,
respectively, on contract and program, and related technology
intangible assets for substantially all of their remaining values. These
42 General Dynamics Annual Report 2014