GOODWILL AND INTANGIBLE ASSETS

12 Months Ended

Jan. 29, 2017

NOTE 4—GOODWILL AND INTANGIBLE ASSETS

Goodwill

The carrying amount of goodwill by reporting unit is as follows (amounts in millions):

	As of January 29, 2017							As of January 31, 2016
	Gross Goodwill		Accumulated Impairments			Net Goodwill		Gross Goodwill		Accumulated Impairments			Net Goodwill
Facilities Maintenance	$	1,603	$	—		$	1,603	$	1,603	$	—		$	1,603
Waterworks		1,877		(815	)		1,062		1,877		(815	)		1,062
Construction & Industrial		183		(74	)		109		183		(74	)		109
Home Improvement Solutions		125		(30	)		95		125		(30	)		95

Total goodwill	$	3,788	$	(919	)	$	2,869	$	3,788	$	(919	)	$	2,869

Goodwill represents the excess of purchase price over fair value of net assets acquired. HD Supply does not amortize goodwill, but does assess the recoverability of goodwill on an annual basis, in the fourth quarter of each fiscal year. If an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value, an interim impairment test would be performed between annual tests.

HD Supply performed the annual goodwill impairment testing during the fourth quarter of fiscal 2016 (as of October 30, 2016). There was no indication of impairment in any of the Company's reporting units in the fiscal 2016 annual test or in the fiscal 2015 and fiscal 2014 annual tests. The Company's analysis was based, in part, on HD Supply's expectation of future market conditions for each of the reporting units, as well as, discount rates that would be used by market participants in an arms-length transaction. Future events could cause the Company to conclude that market conditions have declined to the extent that the Company's goodwill could be impaired.

Intangible Assets

HD Supply's intangible assets as of January 29, 2017 and January 31, 2016 consisted of the following (amounts in millions):

	As of January 29, 2017							As of January 31, 2016
	Gross Intangible		Accumulated Amortization			Net Intangible		Gross Intangible		Accumulated Amortization			Net Intangible
Customer relationships	$	67	$	(28	)	$	39	$	69	$	(24	)	$	45
Trade names		141		(68	)		73		142		(60	)		82
Other		1		(1	)		—		2		(2	)		—

Total	$	209	$	(97	)	$	112	$	213	$	(86	)	$	127

During fiscal 2016, the Company wrote-off approximately $3 million of gross, fully amortized intangible assets.

Amortization expense for continuing operations related to intangible assets was $14 million, $15 million, and $80 million, in fiscal 2016, fiscal 2015, and fiscal 2014, respectively. Estimated future amortization expense for continuing operations for intangible assets recorded as of January 29, 2017 is $13 million each year for fiscal years 2017 through 2021.

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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