Goodwill and other intangible assets, net

12 Months Ended

Oct. 31, 2011

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and other intangible assets, net

For reporting units with goodwill, we perform an annual goodwill impairment test. In 2011, the Company changed the date of our annual goodwill impairment test from October 31^st to August 1^st. As part of our impairment analysis for these reporting units, we determined the fair value of each of the reporting units based on estimates of their respective future cash flows. The first step of our annual impairment test, which compared the fair value of each of our reporting units to their respective carrying values, indicated no impairment of goodwill. Changes in the carrying amount of goodwill for each operating segment are as follows:



	Truck			Engine			Parts		Total
(in millions)
As of October 31, 2008	$	84		$	175		$	38	$	297
Impairments	(2		)	—			—		(2		)
Currency translation	—			36			—		36
Adjustments^(A)	(7		)	(5		)	—		(12		)
Dispositions	(1		)	—			—		(1		)
As of October 31, 2009	$	74		$	206		$	38	$	318
Currency translation	—			5			—		5
Adjustments^(A)	—			(6		)	—		(6		)
Acquisitions	7			—			—		7
As of October 31, 2010	$	81		$	205		$	38	$	324
Impairments	—			—			—		—
Currency translation	—			2			—		2
Adjustments^(A)	—			(7		)	—		(7		)
Acquisitions	—			—			—		—
As of October 31, 2011	$	81		$	200		$	38	$	319

_________________

(A)

Adjustments to goodwill primarily result from the tax benefit attributable to the amortization of tax deductible goodwill in excess of goodwill recorded for financial statement purposes as measured in the MWM International (“MWM”) balance sheet immediately after its acquisition in 2005. Goodwill was also reduced in 2008 due to the favorable tax settlement of a Brazilian court case. Goodwill in the Truck segment was reduced in 2009 as a result of an adjustment to our purchase price for WCC as a result of receipt of escrow payments for settlement of a dispute.

Information regarding our intangible assets that are not subject to amortization as of October 31 is as follows:



	2011		2010
(in millions)
Dealer franchise rights	$	7	$	10
Trademarks	60		59
Intangible assets not subject to amortization	$	67	$	69

We have an agreement with a third-party engine manufacturer to acquire the rights to certain intellectual property utilized in the production of our MaxxForce 11 and 13L engines for €30 million. The agreement requires us to pay a royalty fee for each engine produced by us utilizing this technology until the €30 million is paid in full, but no later than December 31, 2011. As of October 31, 2011, we owed a remaining balance of approximately €9 million (the equivalent of US$13 million at October 31, 2011).

Information regarding our intangible assets that are subject to amortization at October 31, 2011 and 2010 is as follows:



As of October 31, 2011	Customer Base and Relationships			Trademarks			Supply Agreements			Other			Total
(in millions)
Gross carrying value	$	135		$	17		$	27		$	87		$	266
Accumulated amortization	(52		)	(1		)	(27		)	(19		)	(99		)
Net of amortization	$	83		$	16		$	—		$	68		$	167



As of October 31, 2010	Customer Base and Relationships			Trademarks			Supply Agreements			Other			Total
(in millions)
Gross carrying value	$	194		$	59		$	27		$	37		$	317
Accumulated amortization	(69		)	(15		)	(27		)	(13		)	(124		)
Net of amortization	$	125		$	44		$	—		$	24		$	193

We recorded amortization expense for our finite-lived intangible assets of $29 million, $27 million, and $27 million for the years ended October 31, 2011, 2010, and 2009, respectively. Total estimated amortization expense for our finite-lived intangible assets for the next five years is as follows:



	Estimated Amortization
(in millions)
2012	$	26
2013	25
2014	24
2015	19
2016	18

- 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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