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Intangible Assets Including Goodwill
6 Months Ended
Jun. 30, 2018
Intangible Assets Including Goodwill  
Intangible Assets Including Goodwill

 

11. Intangible Assets Including Goodwill:  The following table details the company’s intangible asset balances by major asset class.

 

 

 

At June 30, 2018

 

(Dollars in millions)

 

Gross Carrying

 

Accumulated

 

Net Carrying

 

Intangible asset class

 

Amount

 

Amortization

 

Amount

 

Capitalized software

 

$

1,563

 

$

(767

)

$

796

 

Client relationships

 

2,331

 

(1,219

)

1,113

 

Completed technology

 

2,585

 

(1,548

)

1,037

 

Patents/trademarks

 

662

 

(300

)

363

 

Other*

 

56

 

(19

)

36

 

 

 

 

 

 

 

 

 

Total

 

$

7,197

 

$

(3,853

)

$

3,344

 

 

 

 

 

 

 

 

 

 

 

 

 

 

* Other intangibles are primarily acquired proprietary and non-proprietary business processes, methodologies and systems.

 

 

 

At December 31, 2017

 

(Dollars in millions)

 

Gross Carrying

 

Accumulated

 

Net Carrying

 

Intangible asset class

 

Amount

 

Amortization

 

Amount

 

Capitalized software

 

$

1,600

 

$

(790

)

$

810

 

Client relationships

 

2,358

 

(1,080

)

1,278

 

Completed technology

 

2,586

 

(1,376

)

1,210

 

Patents/trademarks

 

668

 

(256

)

413

 

Other*

 

47

 

(16

)

31

 

 

 

 

 

 

 

 

 

Total

 

$

7,260

 

$

(3,518

)

$

3,742

 

 

 

 

 

 

 

 

 

 

 

 

 

 

* Other intangibles are primarily acquired proprietary and non-proprietary business processes, methodologies and systems.

 

The net carrying amount of intangible assets decreased $398 million during the first six months of 2018, primarily due to intangible asset amortization, partially offset by additions resulting from capitalized software. The aggregate intangible amortization expense was $342 million and $683 million for the second quarter and first six months of 2018, respectively, versus $388 million and $777 million for the second quarter and first six months of 2017, respectively. In addition, in the first six months of 2018, the company retired $348 million of fully amortized intangible assets, impacting both the gross carrying amount and accumulated amortization by this amount.

 

The amortization expense for each of the five succeeding years relating to intangible assets currently recorded in the Consolidated Statement of Financial Position is estimated to be the following at June 30, 2018:

 

 

 

Capitalized

 

Acquired

 

 

 

(Dollars in millions)

 

Software

 

Intangibles

 

Total

 

2018 (for Q3 - Q4)

 

$

268

 

$

405

 

$

673

 

2019

 

344

 

676

 

1,020

 

2020

 

159

 

564

 

722

 

2021

 

26

 

450

 

476

 

2022

 

 

381

 

381

 

 

The change in the goodwill balances by reportable segment, for the six months ended June 30, 2018 and for the year ended December 31, 2017 are as follows:

 

 

 

 

 

 

 

 

 

 

 

Foreign

 

 

 

 

 

 

 

 

 

 

 

 

 

Currency

 

 

 

 

 

 

 

 

 

Purchase

 

 

 

Translation

 

 

 

(Dollars in millions)

 

Balance

 

Goodwill

 

Price

 

 

 

And Other

 

Balance

 

Segment

 

01/01/18

 

Additions

 

Adjustments

 

Divestitures

 

Adjustments*

 

6/30/18

 

Cognitive Solutions

 

$

19,665

 

$

10

 

$

0

 

$

(1

)

$

(165

)

$

19,509

 

Global Business Services

 

4,813

 

24

 

0

 

 

(71

)

4,766

 

Technology Services & Cloud Platforms

 

10,447

 

 

0

 

 

(94

)

10,353

 

Systems

 

1,862

 

 

 

 

(9

)

1,854

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

36,788

 

$

34

 

$

0

 

$

(1

)

$

(340

)

$

36,482

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

* Primarily driven by foreign currency translation.

 

 

 

 

 

 

 

 

 

 

 

Foreign

 

 

 

 

 

 

 

 

 

 

 

 

 

Currency

 

 

 

 

 

 

 

 

 

Purchase

 

 

 

Translation

 

 

 

(Dollars in millions)

 

Balance

 

Goodwill

 

Price

 

 

 

And Other

 

Balance

 

Segment

 

01/01/17

 

Additions

 

Adjustments

 

Divestitures

 

Adjustments*

 

12/31/17

 

Cognitive Solutions

 

$

19,484

 

$

3

 

$

(38

)

$

(20

)

$

235

 

$

19,665

 

Global Business Services

 

4,607

 

 

2

 

 

204

 

4,813

 

Technology Services & Cloud Platforms

 

10,258

 

13

 

(2

)

 

179

 

10,447

 

Systems

 

1,850

 

 

0

 

 

13

 

1,862

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

36,199

 

$

16

 

$

(38

)

$

(20

)

$

631

 

$

36,788

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

* Primarily driven by foreign currency translation.

 

There were no goodwill impairment losses recorded during the first six months of 2018 or the full year of 2017 and the company has no accumulated impairment losses.

 

Purchase price adjustments recorded in the first six months of 2018 and full year 2017 were related to acquisitions that were completed on or prior to March 31, 2018 or September 30, 2017, respectively, and were still subject to the measurement period that ends at the earlier of 12 months from the acquisition date or when information becomes available. Net purchase price adjustments recorded during the first six months of 2018 were not material. Net purchase price adjustments of $38 million were recorded during 2017, with the primary drivers being deferred tax assets, other taxes payable and other current liabilities associated with the Truven Health Analytics, Inc. and The Weather Company acquisitions.