Goodwill and Other Purchased Intangible Assets

12 Months Ended

Dec. 31, 2011

GOODWILL AND OTHER PURCHASED INTANGIBLE ASSETS [Abstract]

11. GOODWILL AND OTHER PURCHASED INTANGIBLE ASSETS

11. GOODWILL AND OTHER PURCHASED INTANGIBLE ASSETS

Goodwill

Goodwill and other purchased intangible assets are included in the identifiable assets of the segment to which they 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. Our annual impairment test was performed as of November 30, 2011 for all segments. 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, 2011, and 2010, totaled $570 million at the Aerospace Systems segment.

The changes in the carrying amounts of goodwill for the years ended December 2011 and 2010, were as follows:

$ in millions	Aerospace Systems			Electronic Systems				Information Systems			Technical Services			Total
Balance as of December 31, 2009 and 2010		$	3,801		$	2,402			$	5,248		$	925		$	12,376
Goodwill related to businesses sold						(2	)									(2	)
Balance as of December 31, 2011		$	3,801		$	2,400			$	5,248		$	925		$	12,374

Segment Realignments – In January 2009, the company realigned certain logistics, services, and technical support programs and transferred assets from the Information Systems and Electronic Systems segments to the Technical Services segment. As a result of this realignment, goodwill of approximately $123 million was reallocated among these segments. Additionally during the first quarter of 2009, the company transferred certain optics and laser programs from the Information Systems segment to the Aerospace Systems segment, resulting in the reallocation of goodwill of approximately $41 million.

Purchased Intangible Assets

The table below summarizes the company’s aggregate purchased intangible assets:

	December 31, 2011										December 31, 2010
	Gross							Net			Gross							Net
	Carrying			Accumulated				Carrying			Carrying			Accumulated				Carrying
$ in millions	Amount			Amortization				Amount			Amount			Amortization				Amount
Contract and program intangibles		$	1,705		$	(1,567	)		$	138		$	1,705		$	(1,531	)		$	174
Other purchased intangibles			100			(83	)			17			100			(82	)			18
Total		$	1,805		$	(1,650	)		$	155		$	1,805		$	(1,613	)		$	192

The company’s purchased intangible assets are subject to amortization and are being amortized on a straight-line basis over an aggregate weighted-average period of 17 years. Aggregate amortization expense for 2011, 2010, and 2009, was $37 million, $71 million, and $74 million, respectively.

As of December 31, 2011, the expected future amortization of purchased intangibles for each of the next five years is $36 million in 2012, $29 million in 2013, $16 million in 2014, $15 million in 2015, and $11 million in 2016.