GOODWILL AND OTHER INTANGIBLE ASSETS

6 Months Ended

Jun. 30, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND OTHER INTANGIBLE ASSETS

GOODWILL AND OTHER INTANGIBLE ASSETS

The changes in the carrying amounts of goodwill during the six months ended June 30, 2020 were as follows:

	Elect. & Imaging			Nutrition & Biosciences			Transp. & Industrial			Safety & Const.		Non-Core			Total
In millions
Balance at December 31, 2019	$	7,092		$	11,012		$	6,931		$	6,711	$	1,405		$	33,151
Acquisitions	—			—			—			53		—			53
Divestitures	(199		)	—			—			—		—			(199		)
Impairments	—			—			(2,498		)	—		(533		)	(3,031		)
Currency Translation Adjustment	5			(5		)	13			11		—			24
Measurement Period Adjustments	—			—			—			20		—			20
Balance at June 30, 2020	$	6,898		$	11,007		$	4,446		$	6,795	$	872		$	30,018

The Company tests goodwill and indefinite-lived intangible assets for impairment annually during the fourth quarter as of October 1, or more frequently when events or changes in circumstances indicate that fair value is below carrying value. As a result of the related acquisition method of accounting in connection with the Merger, Historical EID’s assets and liabilities were measured at fair value resulting in increases to the Company’s goodwill and other intangible assets. The fair value valuation increased the risk that declines in financial projections, including changes to key assumptions, could have a material, negative impact on the fair value of the Company’s reporting units and assets, and therefore could result in an impairment.

The Company continues to monitor the impact of the COVID-19 pandemic on the broader global economy, including the end markets which the Company serves. In the second quarter of 2020, continued near-term demand weakness in global automotive production resulting from the COVID-19 pandemic, along with revised views of recovery based on third party market information, served as a triggering event requiring the Company to perform an impairment analysis of the goodwill associated with its Transportation & Industrial reporting unit as of June 30, 2020. The carrying value of the Transportation & Industrial reporting unit is comprised substantially of Historical EID’s assets and liabilities which were measured at fair value in connection with the Merger, and thus inherently considered at risk for impairment. The Company performed quantitative testing on its Transportation & Industrial reporting unit, using a combination of the discounted cash flow model (a form of the income approach) utilizing Level 3 unobservable inputs and the Guideline Public Company Method (a form of the market approach), as further described below. Based on the analysis performed, the Company concluded that the carrying amount of the reporting unit exceeded its fair value resulting in a pre-tax, non-cash goodwill impairment charge of $2,498 million, reflected in "Goodwill impairment charges" in the Consolidated Statements of Operations for the three and six months ended June 30, 2020.

The Company's goodwill analysis referenced above used the discounted cash flow model (a form of the income approach) utilizing Level 3 unobservable inputs. The Company’s significant assumptions in this analysis included, but were not limited to, future cash flow projections, the weighted average cost of capital, the terminal growth rate, and the tax rate. The Company’s estimates of future cash flows are based on current regulatory and economic climates, recent operating results, and planned business strategies. These estimates could be negatively affected by changes in federal, state, or local regulations or economic downturns. Future cash flow estimates are, by their nature, subjective and actual results may differ materially from the Company’s estimates. If the Company’s ongoing estimates of future cash flows are not met, the Company may have to record additional impairment charges in future periods.

The Company also used the Guideline Public Company Method (a form of the market approach). The significant assumptions used in this analysis include, but are not limited to, the derived multiples from comparable market transactions and other market data. The selection of comparable businesses is based on the markets in which the reporting unit operates giving consideration to risk profiles, size, geography, and diversity of products and services.

The Company probability-weighted scenarios for both the income and market approaches and also applied an overall probability-weighting to the income and market approaches to determine the concluded fair value of the reporting unit given the uncertainty in the current economic environment to determine the concluded fair value of the reporting unit. The Company believes the current assumptions and estimates utilized in the income and market approaches are both reasonable and appropriate.

In the first quarter of 2020, expectations of proceeds related to certain potential divestitures within the Non-Core segment gave rise to fair value indicators and, thus, served as triggering events requiring the Company to perform impairment analyses related to goodwill as of March 31, 2020. As part of the analysis, the Company determined that the fair value of its Photovoltaic and Advanced Materials (“PVAM”) reporting unit was below its carry value resulting in an impairment charge to goodwill. Valuations of the PVAM reporting unit under a combination of the market approach and income approach reflected softening conditions in photovoltaics markets as compared to prior estimates. In connection with this analysis, the Company recorded a pre-tax, non-cash

goodwill impairment charge of $533 million in the first quarter of 2020 impacting the Non-Core segment. This charge is reflected in "Goodwill impairment charges" in the Consolidated Statements of Operations for the six months ended June 30, 2020. As a result of the impairment, the carrying value of the PVAM reporting unit is indicative of fair value and thus is at risk to have impairment charges in future periods.

In the second quarter of 2019, the Company recorded pre-tax, non-cash goodwill impairment charges of $1,175 million impacting the Nutrition & Biosciences and Non-Core segments which are reflected in "Goodwill impairment charges" in the interim Consolidated Statements of Operations for the three and six months ended June 30, 2019.

COVID-19 continues to adversely impact the broader global economy and has caused significant volatility in financial markets. If there is a of lack of recovery, the time period to recovery is longer than expected or further global softening is experienced in certain markets, such as automotive, aerospace, commercial construction, oil & gas and select industrial end-markets, or a sustained decline in the value of the Company's common stock, the Company may be required to perform additional impairment assessments for its goodwill, other intangibles, and long-lived assets, the results of which could result in material impairment charges.

Other Intangible Assets

The gross carrying amounts and accumulated amortization of other intangible assets by major class are as follows:

	June 30, 2020							December 31, 2019
In millions	Gross Carrying Amount		Accum Amort			Net		Gross Carrying Amount		Accum Amort			Net
Intangible assets with finite lives:
Developed technology	$	4,366	$	(1,616	)	$	2,750	$	4,343	$	(1,361	)	$	2,982
Trademarks/tradenames	2,433		(1,055		)	1,378		2,433		(455		)	1,978
Customer-related	8,994		(2,506		)	6,488		8,986		(2,229		)	6,757
Other	303		(213		)	90		303		(98		)	205
Total other intangible assets with finite lives	$	16,096	$	(5,390	)	$	10,706	$	16,065	$	(4,143	)	$	11,922
Intangible assets with indefinite lives:
Trademarks/tradenames	1,643		—			1,643		1,671		—			1,671
Total other intangible assets	1,643		—			1,643		1,671		—			1,671
Total	$	17,739	$	(5,390	)	$	12,349	$	17,736	$	(4,143	)	$	13,593

In the second quarter of 2020, the Company performed quantitative testing on indefinite-lived intangible assets attributable to the Transportation & Industrial segment, for which the Company determined that the fair value of certain tradenames had declined related to the factors described above. The Company performed an analysis of the fair value using the relief from royalty method (a form of the income approach) using Level 3 inputs within the fair value hierarchy. The key assumptions used in the calculation included projected revenue, royalty rates and discount rates. These key assumptions involve management judgment and estimates relating to future operating performance and economic conditions that may differ from actual cash flows. As a result of the testing, the Company recorded a pre-tax, non-cash indefinite-lived intangible asset impairment charge of $21 million ($16 million after tax), which is reflected in "Restructuring and asset related charges - net," in the Consolidated Statements of Operations for the three and six months ended June 30, 2020. The remaining net book value of the tradenames attributable to the Transportation & Industrial segment at June 30, 2020 was approximately $289 million, which represents fair value.

In the first quarter of 2020, the Company recorded non-cash impairment charges related to definite-lived intangible assets impacting the Non-Core segment reflected within “Restructuring and asset related charges - net” in the interim Consolidated Statements of Operations for the six months ended June 30, 2020. See Note 5 for further discussion.

The following table provides the net carrying value of other intangible assets by segment:

Net Intangibles by Segment	June 30, 2020		December 31, 2019
In millions
Electronics & Imaging	$	1,724	$	1,833
Nutrition & Biosciences	3,662		4,377
Transportation & Industrial	3,460		3,590
Safety & Construction	2,999		3,082
Non-Core	504		711
Total	$	12,349	$	13,593

The following table provides information regarding amortization expense related to other intangible assets:

Amortization Expense	Three Months Ended June 30,				Six Months Ended June 30,
In millions	2020		2019		2020		2019
Other intangible assets	$	528	$	252	$	1,061	$	508

Total estimated amortization expense for the remainder of 2020 and the five succeeding fiscal years is as follows:

Estimated Amortization Expense
In millions
Remainder of 2020	$	1,070
2021	$	1,069
2022	$	985
2023	$	919
2024	$	840
2025	$	755