Goodwill and Other Intangible Assets

12 Months Ended

Sep. 30, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

6. Goodwill and Other Intangible Assets

The changes in the carrying amount of goodwill are as follows:


(in millions)	Americas		EMEA		Asia		Total
Balance at September 30, 2017	$	731	$	708	$	1,076	$	2,515
Business acquisitions	(18)		—		3		(15)
Impairment	(71)		(228)		—		(299)
Currency translation and other	—		(11)		(8)		(19)
Balance at September 30, 2018	$	642	$	469	$	1,071	$	2,182



Currency translation and other	(4)		(40)		12		(32)
Balance at September 30, 2019	$	638	$	429	$	1,083	$	2,150

During the second quarter of fiscal 2019, Adient began reporting three new segments: 1) Americas, which is inclusive of North America and South America; 2) Europe, Middle East, and Africa ("EMEA") and 3) Asia Pacific/China ("Asia"). Accordingly, goodwill previously reported in the former Seating segment has been reallocated to the three new segments on a relative fair value basis. Refer to Note 18, "Segment Information" for more information on Adient's reportable segments.

Adient evaluates its goodwill for impairment on an annual basis, or as facts and circumstances warrant. As a result of the change in reportable segments during the second quarter of fiscal 2019, Adient conducted goodwill impairment analyses of the newly allocated goodwill balances under the new reportable segment structure and identified no impairment. Adient also performed its annual goodwill impairment test during the fourth quarter of fiscal 2019 resulting in no goodwill impairment. Adient performs impairment reviews for its reporting units, which have been determined to be Adient's reportable segments, using a fair value method based on management's judgments and assumptions or third party valuations. The fair value of a reporting unit refers to the price that would be received to sell the unit as a whole in an orderly transaction between market participants at the measurement date. Adient estimated the fair value of each of its reporting units using an income approach, which utilized Level 3 unobservable inputs. These calculations contain uncertainties as they require management to make assumptions about market comparables, future cash flows, the appropriate discount rates (based on weighted average cost of capital ranging from 14.5% to 16.0% as of September 30, 2019 and from 14.5% to 17.5% as of March 31, 2019) to reflect the risk inherent in the future cash flows and to derive a reasonable enterprise value and related premium. The estimated future cash flows reflect management's latest assumptions of the financial projections based on current and anticipated competitive landscape, including estimates of revenue based on production volumes over the foreseeable future and long-term growth rates, and operating margins based on historical trends and future cost containment activities. A change in any of these estimates and assumptions could produce a different fair value, which could have a material impact on Adient's results of operations.

During fiscal 2018, Adient conducted goodwill impairment analyses of the allocated goodwill balances under the reportable segment structure at that time. Adient performed impairment reviews for its reporting units, which had been determined to be Adient's reportable segments, using a fair value method based on management's judgments and assumptions or third party valuations. The fair value of a reporting unit refers to the price that would be received to sell the unit as a whole in an orderly transaction between market participants at the measurement date. Adient estimated the fair value of its reportable segments using both a multiple of earnings approach and an income approach, both of which utilized Level 3 unobservable inputs. These calculations contained uncertainties as they required management to make assumptions about market comparables, future cash flows, the appropriate discount rate (based on weighted average cost of capital) and growth rate to reflect the risk inherent in the future cash flows. The estimated future cash flows reflected management's latest assumptions of the financial projections based on current and anticipated competitive landscape and product profitability based on historical trends. A change in any of these estimates and assumptions could produce a different fair value, which could have a material impact on Adient's results of operations. As a result of the analyses, Adient determined that goodwill associated with its seat structure and mechanism operations was fully impaired. Consequently, a pre-tax goodwill impairment charge of $299 million was recognized in the second quarter of fiscal 2018 in the consolidated statements of income (loss) within the restructuring and impairment costs line item. The goodwill impairment charge represented a triggering event for additional impairment considerations of other long-lived assets, including an analysis of the recoverability of long-lived assets as of March 31, 2018. No further goodwill or other long-lived asset impairments were identified during the second quarter of fiscal 2018. No goodwill impairments were identified as of September 30, 2018. Refer to Note 16, "Impairment of Long-Lived Assets" for information on long-lived asset impairment charges.

Adient's other intangible assets, primarily from business acquisitions valued based on independent appraisals, consisted of:


	September 30, 2019										September 30, 2018
(in millions)	Gross Carrying Amount		Accumulated Amortization		Net		Gross Carrying Amount		Accumulated Amortization		Net
Intangible assets
Patented technology	$	27	$	(17)	$	10	$	21	$	(14)	$	7
Customer relationships	494		(129)		365		509		(101)		408
Trademarks	51		(32)		19		58		(30)		28
Miscellaneous	21		(10)		11		29		(12)		17
Total intangible assets	$	593	$	(188)	$	405	$	617	$	(157)	$	460

Adient evaluates its other intangible assets for impairment as facts and circumstances warrant. Of the $66 million long-lived asset impairment charge recognized during the second quarter of fiscal 2019, $4 million was attributable to a customer relationship intangible asset. Of the $787 million long-lived asset impairment charge recognized during the fourth quarter of fiscal 2018, $19 million was attributable to a customer relationship intangible asset. Refer to Note 16, "Impairment of Long-Lived Assets" of the notes to the consolidated financial statements for additional information.

Amortization of other intangible assets for the fiscal years ended September 30, 2019, 2018 and 2017 was $40 million, $47 million and $21 million, respectively. Adient anticipates amortization for fiscal 2020, 2021, 2022, 2023 and 2024 will be approximately $38 million, $37 million, $36 million, $35 million and $33 million, respectively.