GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill

The following table summarizes changes in the carrying amount of goodwill for the year ended December 31, 2018, the period September 1 through December 31, 2017, and the period January 1 through August 31, 2017:



(In millions)
Balance as of December 31, 2016 (Predecessor)	$	4,169
Currency Translation Adjustment	176
Other Goodwill Adjustments and Acquisitions	198
Balance as of August 31, 2017 (Predecessor)	$	4,543

Balance at September 1, 2017 (Successor)	$	45,105
Currency Translation Adjustment	(234		)
Goodwill Recognized for H&N Acquisition	718
Balance as of December 31, 2017 (Successor)	$	45,589
Currency Translation Adjustment	(806		)
Measurement Period Adjustments - Merger	392
Measurement Period Adjustments - H&N Business	14
Goodwill Impairment Loss	(4,503		)
Balance as of December 31, 2018 (Successor)	$	40,686

The company tests goodwill and intangible assets for impairment annually during the fourth quarter or more frequently when events or changes in circumstances indicate that the fair value is below its carrying value. As mentioned in Note 1, in connection with the Merger, the company’s assets and liabilities were measured at fair value as of the date of the Merger. As the carrying value and the fair value of all reporting units and assets were equal at this date, this resulted in little, if any, margin of fair value in excess of carrying value. As a result, the company’s reporting units became susceptible to impairment for any decline in fair value.

In connection with the Merger, the company adopted the policy of DowDuPont and performs its annual goodwill impairment test in the fourth quarter. In the fourth quarter 2017, a qualitative assessment was performed on all reporting units that carry goodwill. Based on the qualitative assessment, management concluded it was not more likely than not that the carrying value of the reporting unit exceeds the fair value of the reporting unit, and therefore no impairment was recorded.

During the third quarter of 2018, and in connection with strategic business reviews, the company assembled updated financial projections. The revised financial projections of the agriculture reporting unit assessed and quantified the impacts of developing market conditions, events and circumstances that have evolved throughout 2018, resulting in a reduction in the forecasts of sales and profitability as compared to prior forecasts. The reduction in financial projections was principally driven by lower growth in sales and margins in North America and Latin America and unfavorable currency impacts related to the Brazilian real. The lower growth expectation is driven by reduced planted area, an expected unfavorable shift to soybeans from corn in Latin America, and delays in expected product registrations. In addition, decreases in commodity prices and higher than anticipated industry grain inventories are expected to impact farmers’ income and buying choices resulting in shifts to lower technologies and pricing pressure. The company considered the combination of these factors and the resulting reduction in its forecasted projections for the agriculture reporting unit and determined it was more likely than not that the fair value of the agriculture reporting unit was less than the carrying value, thus requiring the performance of an updated goodwill and intangible asset impairment analysis for the agriculture reporting unit as of September 30, 2018.

The company performed an interim impairment analysis for the agriculture reporting unit using a discounted cash flow model (a form of the income approach), utilizing Level 3 unobservable inputs. The company’s significant estimates in this analysis include, but are not limited to, future cash flow projections, Merger-related cost and growth synergies, the weighted average cost of capital, the terminal growth rate, and the tax rate. The company believes the current assumptions and estimates utilized are both reasonable and appropriate. The key assumption driving the change in fair value was the lower financial projections discussed above. 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’s estimates of future cash flows are based on current regulatory and economic climates, recent operating results, and planned business strategy. These estimates could be negatively affected by changes in federal, state, or local regulations or economic downturns. Based on the analysis performed, the company determined that the carrying amount of the agriculture reporting unit exceeded its fair value resulting in a pre-tax, non-cash goodwill impairment charge of $4,503 million, reflected in goodwill impairment charge in the company’s Consolidated Statement of Operations for the year ended December 31, 2018. None of the charge was tax-deductible.

In reviewing the indefinite-lived intangible assets, the company also determined that the fair value of certain IPR&D assets had declined as a result of delays in timing of commercialization and increases to expected R&D costs. 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, the company recorded a pre-tax, non-cash intangible asset impairment charge of $85 million ($66 million after tax), which is reflected in restructuring and asset related charges - net, in the company's Consolidated Statement of Operations for the year ended December 31, 2018.

In the fourth quarter of 2018, the company performed quantitative testing on all of its reporting units and determined that no further impairments exist. Due to the carrying value and fair value of the reporting units being equal at the date of the Merger resulting in little, if any, margin of fair value in excess of carrying value, the company believes all reporting units are at risk to have impairment charges in future periods.

Other Intangible Assets

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



(In millions)	December 31, 2018							December 31, 2017
	Gross		Accumulated Amortization			Net		Gross		Accumulated Amortization			Net
Intangible assets subject to amortization (Definite-lived):
Customer-related	$	9,325	$	(744	)	$	8,581	$	9,502	$	(186	)	$	9,316
Developed technology	4,506		(628		)	3,878		4,364		(144		)	4,220
Trademarks/trade names	1,084		(114		)	970		1,117		(26		)	1,091
Favorable supply contracts	475		(111		)	364		495		(17		)	478
Microbial cell factories	386		(22		)	364		397		(6		)	391
Other¹	377		(32		)	345		459		(10		)	449
Total other intangible assets with finite lives	16,153		(1,651		)	14,502		16,334		(389		)	15,945

Intangible assets not subject to amortization (Indefinite-lived):
IPR&D²	545		—			545		660		—			660
Germplasm³	6,265		—			6,265		6,265		—			6,265
Trademarks / trade names	4,741		—			4,741		4,856		—			4,856
Total other intangible assets	11,551		—			11,551		11,781		—			11,781
Total	$	27,704	$	(1,651	)	$	26,053	$	28,115	$	(389	)	$	27,726


^1.	Primarily consists of sales and farmer networks, marketing and manufacturing alliances and noncompetition agreements.


^2.	Refer to discussion of impairment analysis above.


^3.	Germplasm is the pool of genetic source material and body of knowledge gained from the development and delivery stage of plant breeding. This intangible asset is expected to contribute to cash flows beyond the foreseeable future and there are no legal, regulatory, contractual, or other factors which limit its useful life.

In connection with the Merger, the company recorded $27,071 million of intangible assets, as shown in the table below, representing the fair values at the Merger date. See Note 3 for additional information regarding the Merger.



Intangible Assets	Gross Carrying Amount		Weighted-average Amortization Period (years)
(Amounts in millions)	Gross Carrying Amount		Weighted-average Amortization Period (years)
Intangible assets with finite lives:
Customer-related	$	9,215	17
Developed technology	4,239		12
Trademarks/trade names	1,045		16
Microbial cell factories	400		23
Other	461		17
Total other intangible assets with finite lives	$	15,360
Intangible assets with indefinite lives:
IPR&D	$	660
Germplasm	6,263
Trademarks/trade names	4,788
Total intangible assets	$	27,071

The aggregate pre-tax amortization expense from continuing operations for definite-lived intangible assets was $1,281 million for the year ended December 31, 2018, $389 million for the period September 1 through December 31, 2017, $139 million for the period January 1 through August 31, 2017, and $319 million for the year ended December 31, 2016, respectively.

Total estimated amortization expense for the next five fiscal years is as follows:



(In millions)
2019	$	1,228
2020	$	1,211
2021	$	1,199
2022	$	1,182
2023	$	1,078