Goodwill and Other Intangible Assets, Net

9 Months Ended

Jan. 29, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Other Intangible Assets, Net

The changes in the carrying amount of goodwill for the nine months ended January 29, 2016 are as follows:



(in millions)	Cardiac and Vascular Group			Minimally Invasive Therapies Group			Restorative Therapies Group			Diabetes Group		Total
Balance as of April 24, 2015	$	5,855		$	23,399		$	9,424		$	1,852	$	40,530
Goodwill as a result of acquisitions	409			196			197			—		802
Purchase accounting adjustments, net	13			346			34			—		393
Currency adjustment, net	(95		)	(1,120		)	(135		)	1		(1,349		)
Balance as of January 29, 2016	$	6,182		$	22,821		$	9,520		$	1,853	$	40,376

During the third quarter of fiscal year 2016, in connection with the finalization of the fair values of the assets acquired and liabilities assumed in connection with the Transactions, the Company recorded $1.3 billion impact from foreign currency translation on Covidien goodwill. During the nine months ended January 29, 2016, the Company recorded $393 million of purchase accounting adjustments, net, primarily related to the Covidien acquisition. See Note 3 to the condensed consolidated financial statements for additional information on purchase accounting adjustments related to the Covidien acquisition.

The gross carrying amount and accumulated amortization of intangible assets at January 29, 2016 and April 24, 2015 are as follows:



	January 29, 2016					April 24, 2015
(in millions)	Gross Carrying Amount		Accumulated Amortization			Gross Carrying Amount		Accumulated Amortization
Amortizable:
Customer-related	$	18,558	$	(1,066	)	$	18,492	$	(273	)
Purchased technology and patents	11,305		(2,722		)	11,118		(2,268		)
Trademarks and tradenames	852		(429		)	640		(363		)
Other	71		(28		)	79		(44		)
Total	$	30,786	$	(4,245	)	$	30,329	$	(2,948	)
Non-Amortizable:
IPR&D	$	775				$	470
Tradenames	—					250
Total	$	775				$	720

Amortization expense for the three and nine months ended January 29, 2016 was $484 million and $1.448 billion, respectively, and for the three and nine months ended January 23, 2015 was $89 million and $265 million, respectively.

Estimated aggregate amortization expense based on the current carrying value of amortizable intangible assets as of January 29, 2016, excluding any possible future amortization associated with acquired IPR&D, which has not met technological feasibility, is as follows:



(in millions) Fiscal Year	Estimated Amortization Expense
Remaining 2016	$	484
2017	1,925
2018	1,893
2019	1,799
2020	1,751
2021	1,734

The Company assesses the impairment of goodwill annually in the third quarter at the reporting unit level and whenever an event occurs or circumstances change that would indicate that the carrying amount may be impaired. The aggregate carrying amount of goodwill was $40.376 billion and $40.530 billion as of January 29, 2016 and April 24, 2015, respectively. The Company included the Minimally Invasive Therapies Group as an additional reporting unit in its annual impairment testing performed in the third quarter of fiscal year 2016. No other changes were made to reporting units during fiscal year 2016. The test for impairment of goodwill requires the Company to make several estimates about fair value, most of which are based on projected future cash flows. The Company did not record any goodwill impairment during the three and nine months ended January 29, 2016 or January 23, 2015.

The Company assesses IPR&D for impairment annually in the third quarter and whenever an event occurs or circumstances change that would indicate that the carrying amount may be impaired. The aggregate carrying amount of IPR&D was $775 million and $470 million as of January 29, 2016 and April 24, 2015, respectively. Similar to the goodwill impairment test, the IPR&D impairment test requires the Company to make several estimates about fair value, most of which are based on projected future cash flows. The Company calculates the excess of IPR&D asset fair values over their carrying values utilizing a discounted future cash flow analysis. During the three and nine months ended January 29, 2016 and January 23, 2015, the Company did not record any significant IPR&D impairments. Due to the nature of IPR&D projects, the Company may experience future delays or failures to obtain regulatory approvals to conduct clinical trials, failures of such clinical trials, delays or failures to obtain required market clearances or other failures to achieve a commercially viable product, and as a result, may record impairment losses in the future.

The Company assesses intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an intangible asset (asset group) may not be recoverable. The aggregate carrying amount of intangible assets, excluding IPR&D and non-amortizable tradenames, was $26.541 billion and $27.381 billion as of January 29, 2016 and April 24, 2015, respectively. When events or changes in circumstances indicate that the carrying amount of an intangible asset may not be recoverable, the Company calculates the excess of an intangible asset's carrying value over its undiscounted future cash flows. If the carrying value is not recoverable, an impairment loss is recorded based on the amount by which the carrying value exceeds the fair value. The inputs used in the fair value analysis fall within Level 3 of the fair value hierarchy due to the use of significant unobservable inputs to determine fair value. The Company did not record any significant intangible asset impairments during the three and nine months ended January 29, 2016 or January 23, 2015.

- 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.

+ References + Details