Goodwill and Intangible Assets

12 Months Ended

Dec. 31, 2016

5. Goodwill and Intangible Assets

Goodwill

The changes in the carrying amount of goodwill for the years ended December 31, 2016, 2015 and 2014 are as follows:


			North		Latin
	Europe		America		America		Other		Total
Balance as of January 1, 2014	$	1,044	$	734	$	276	$	5	$	2,059
Translation effects		(118)		(11)		(37)				(166)
Balance as of December 31, 2014		926		723		239		5		1,893
Acquisition related adjustments				316		480				796
Translation effects		(86)		(19)		(95)				(200)
Balance as of December 31, 2015		840		1,020		624		5		2,489
Acquisition related adjustments				15		26				41
Translation effects		(32)		3		(39)				(68)
Balance as of December 31, 2016	$	808	$	1,038	$	611	$	5	$	2,462

The acquisition related adjustments in 2016 and 2015 primarily relate to the Vitro Acquisition (see Note 19).

Goodwill for the Asia Pacific segment is $0 and net of accumulated impairment losses of $1,135 million as of December 31, 2016, 2015 and 2014.

Goodwill is tested for impairment annually as of October 1 (or more frequently if impairment indicators arise) using a two-step process. Step 1 compares the business enterprise value (“BEV”) of each reporting unit with its carrying value. The BEV is computed based on estimated future cash flows, discounted at the weighted average cost of capital of a hypothetical third-party buyer. If the BEV is less than the carrying value for any reporting unit, then Step 2 must be performed. Step 2 compares the implied fair value of goodwill with the carrying amount of goodwill. Any excess of the carrying value of the goodwill over the implied fair value will be recorded as an impairment loss. The calculations of the BEV in Step 1 and the implied fair value of goodwill in Step 2 are based on significant unobservable inputs, such as price trends, customer demand, material costs, discount rates and asset replacement costs, and are classified as Level 3 in the fair value hierarchy.

During the fourth quarter of 2016, the Company completed its annual impairment testing and determined that no impairment existed.

Intangible assets

On September 1, 2015, the Company acquired customer list intangibles as part of the Vitro Acquisition (see Note 19).

Customer list intangible assets are amortized using the accelerated amortization method over their 20 year lives. Net intangible asset values were $464 million and $597 million for the years ended December 31, 2016 and 2015, respectively. Amortization expense for intangible assets was $39 million, $21 million and $1 million for the years ended December 31, 2016, 2015 and 2014, respectively. Estimated amortization related to intangible assets through 2021 is as follows: 2017, $44 million; 2018, $44 million; 2019, $42 million; 2020, $41 million; and 2021, $39 million. No impairment existed on these assets at December 31, 2016.

The Company has determined that the fair value measurements related to the customer list intangibles are based on significant unobservable inputs and are classified as Level 3 in the fair value hierarchy.

- 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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