GOODWILL AND OTHER INTANGIBLE ASSETS

9 Months Ended

Sep. 30, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

The following table shows the carrying amount of goodwill:



Goodwill
In millions
Net goodwill at Dec 31, 2016	$	15,272
Sale of SKC Haas Display Films ¹	(34		)
Divestiture of EAA Copolymers and Ionomers business ²	(23		)
Foreign currency impact	271
Other	(1		)
Net goodwill at Sep 30, 2017	$	15,485


1.	On June 30, 2017, the Company sold its ownership interest in the SKC Haas Display Films group of companies. See Note 15 for additional information.


2.	On September 1, 2017, the Company divested its global EAA copolymers and ionomers business to SK Global Chemical Co., Ltd. See Note 4 for additional information.

Effective with the Merger, the Company updated its reporting units to align with the level at which discrete financial information is available for review by management. A relative fair value method was used to reallocate goodwill for reporting units the composition of which had changed. The new reporting units are: Agriculture, Coatings & Performance Monomers, Construction Chemicals, Consumer Solutions, Electronics & Imaging, Energy Solutions, Hydrocarbons & Energy, Industrial Biosciences, Industrial Solutions, Nutrition & Health, Packaging and Specialty Plastics, Polyurethanes & CAV, Safety & Construction and Transportation & Advanced Polymers. At September 30, 2017, goodwill is carried by all of these reporting units.

As disclosed in Dow's 2016 Form 10-K, as part of its annual goodwill impairment testing the Company performed additional sensitivity analysis, the results of which indicated that the fair value of the Dow Coating Materials reporting unit (now part of Coatings & Performance Monomers) did not significantly exceed its carrying amount. The Company continued to monitor the performance of the Coatings & Performance Monomers reporting unit, as benchmarked against its long-term financial plan, and evaluates industry and company-specific circumstances which affect the financial results of this reporting unit, including customer consolidation, changes in demand growth in certain end-markets, fluctuations in sales growth in emerging geographies and results of new product launches. At September 30, 2017, the Company concluded that no events or changes in circumstances have occurred which would indicate that the fair value of the Coatings & Performance Monomers reporting unit has more likely than not been reduced below its carrying amount.

The long-term financial plan for the Coatings & Performance Monomers reporting unit, which underlies the above conclusion, contains numerous assumptions including, but not limited to: expected market growth rates; success of sales and marketing efforts; commercialization of innovation programs; benefit of cost reduction programs; availability of capital and expense resources to execute growth initiatives; impact of competitor actions; industry supply and demand balances; and, macroeconomic factors such as foreign currency exchange rates and interest rates. If the Coatings & Performance Monomers reporting unit does not achieve the financial performance that the Company expects, it is reasonably possible that an impairment of goodwill may result. An annual goodwill impairment test for the Coatings & Performance Monomers reporting unit will be completed during the fourth quarter of 2017. At September 30, 2017, the Coatings & Performance Monomers reporting unit had goodwill of $2,509 million.

The following table provides information regarding the Company’s other intangible assets:



Other Intangible Assets ¹	Sep 30, 2017							Dec 31, 2016
In millions	Gross Carrying Amount		Accum Amort			Net		Gross Carrying Amount		Accum Amort			Net
Intangible assets with finite lives:
Developed technology	$	3,259	$	(1,594	)	$	1,665	$	3,254	$	(1,383	)	$	1,871
Software	1,398		(759		)	639		1,336		(696		)	640
Trademarks/tradenames	697		(552		)	145		696		(503		)	193
Customer-related	4,995		(1,844		)	3,151		4,806		(1,567		)	3,239
Other	243		(152		)	91		168		(146		)	22
Total other intangible assets with finite lives	$	10,592	$	(4,901	)	$	5,691	$	10,260	$	(4,295	)	$	5,965
In-process research and development ("IPR&D")	61		—			61		61		—			61
Total other intangible assets	$	10,653	$	(4,901	)	$	5,752	$	10,321	$	(4,295	)	$	6,026


1.	Prior year amounts have been updated to conform with the current year presentation.

In the second quarter of 2016, the Company wrote off $11 million of IPR&D as part of the 2016 restructuring charge. See Note 5 for additional information.

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



Amortization Expense	Three Months Ended				Nine Months Ended
In millions	Sep 30, 2017		Sep 30, 2016		Sep 30, 2017		Sep 30, 2016
Other intangible assets, excluding software	$	155	$	162	$	467	$	387
Software, included in “Cost of sales”	$	21	$	18	$	61	$	55

Total estimated amortization expense for 2017 and the five succeeding fiscal years is as follows:



Estimated Amortization Expense
In millions
2017	$	727
2018	$	735
2019	$	659
2020	$	621
2021	$	587
2022	$	516

- 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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