Intangible Assets and Goodwill

9 Months Ended

Oct. 02, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

INTANGIBLE ASSETS AND GOODWILL

Intangible assets that have finite useful lives are amortized over their estimated useful lives. The latest annual impairment assessment of goodwill and indefinite lived intangible assets was completed in the fiscal fourth quarter of 2015. Future impairment tests for goodwill and indefinite lived intangible assets will be performed annually in the fiscal fourth quarter, or sooner, if warranted.



(Dollars in Millions)	October 2, 2016		January 3, 2016
Intangible assets with definite lives:
Patents and trademarks — gross	$	10,815	8,299
Less accumulated amortization	5,017		4,745
Patents and trademarks — net	5,798		3,554
Customer relationships and other intangibles — gross	17,830		17,583
Less accumulated amortization	6,411		5,816
Customer relationships and other intangibles — net	11,419		11,767
Intangible assets with indefinite lives:
Trademarks	7,042		7,023
Purchased in-process research and development	3,383		3,420
Total intangible assets with indefinite lives	10,425		10,443
Total intangible assets — net	$	27,642	25,764

Goodwill as of October 2, 2016 was allocated by segment of business as follows:



(Dollars in Millions)	Consumer			Pharm		Med Devices	Total
Goodwill, net at January 3, 2016	$	7,240		2,889		11,500	21,629
Goodwill, related to acquisitions	1,332			—		180	1,512
Goodwill, related to divestitures	(24		)	(10	)	—	(34	)
Currency translation/Other	27			15		22	64
Goodwill, net at October 2, 2016	$	8,575		2,894		11,702	23,171

The weighted average amortization periods for patents and trademarks and customer relationships and other intangible assets are 19 years and 24 years, respectively. The amortization expense of amortizable intangible assets included in cost of products sold was $895 million and $912 million for the fiscal nine months ended October 2, 2016 and September 27, 2015, respectively. The estimated amortization expense for the five succeeding years approximates $1.3 billion, before tax, per year. Intangible asset write-downs are included in Other (income) expense, net.

The primary driver of the increase to intangible assets and goodwill is the Vogue International LLC acquisition in the fiscal third quarter of 2016, which resulted in the recording of $2.3 billion to intangible assets and $1.1 billion to goodwill. The intangible assets and goodwill amounts related to the Vogue acquisition are based on the preliminary purchase price allocation. See Note 10 to the Consolidated Financial Statements for additional details on the Vogue acquisition.

- 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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