Goodwill and Other Intangible Assets (Notes)

9 Months Ended

Jun. 30, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Other Intangible Assets

The changes in the carrying amount of goodwill in each of the Company’s reportable segments for the nine month period ended June 30, 2020 were as follows (in millions):


			Business Acquisitions		Impairments		Currency Translation and Other
	September 30,										June 30,
	2019										2020

Building Solutions North America	$	9,588	$	—	$	(424)	$	(20)	$	9,144
Building Solutions EMEA/LA	1,849		23		—		3		1,875
Building Solutions Asia Pacific	1,194		—		—		10		1,204
Global Products	5,547		19		—		(30)		5,536
Total	$	18,178	$	42	$	(424)	$	(37)	$	17,759

At September 30, 2019, accumulated goodwill impairment charges included $47 million related to the Building Solutions EMEA/LA - Latin America reporting unit.

The Company reviews goodwill for impairment during the fourth fiscal quarter or more frequently if events or changes in circumstances indicate the asset might be impaired. The Company considered the ongoing deterioration in general economic and market conditions due to the COVID-19 pandemic and its impact on each of the Company’s reporting units’ performance. Due to further declines in cash flow projections of North America Retail reporting unit in the third quarter of fiscal 2020 as a result of the COVID-19 pandemic, the Company concluded a triggering event occurred requiring assessment of impairment for its North America Retail reporting unit during the quarter ended June 30, 2020. As a result, the Company recorded a non-cash impairment charge of $424 million within restructuring and impairment costs in the consolidated statements of income in the third quarter of fiscal 2020, which was determined by comparing the carrying amount of a reporting unit to its fair value in accordance with ASU No. 2017-04, "Intangible - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment," which the Company early adopted. The North America Retail reporting unit has a remaining goodwill balance of $228 million at June 30, 2020. The Company used a discounted cash flow model to estimate the fair value of the reporting unit. Other than management's internal projections of future cash flows, the primary assumptions used in the model were the weighted-average cost of capital and long-term growth rates, which are classified as Level 3 inputs within the fair value hierarchy as defined in ASC 80, "Fair Value Measurement." Although the Company's cash flow forecasts are based on assumptions that are considered reasonable by management and consistent with the plans and estimates management is using to operate the underlying business, there is significant judgment in determining the expected future cash flows attributable to the North America Retail reporting unit.

The Company concluded a triggering event did not occur for any other reporting unit in the third quarter of fiscal 2020 based on the Company’s assessment of its market capitalization, forecasts and the amount of excess of fair value over the carrying value of the reporting units in the fiscal 2019 annual test. The Company continuously monitors for events and circumstances that could negatively impact the key assumptions in determining fair value, including long-term revenue growth projections, profitability, discount rates, recent market valuations from transactions by comparable companies,

volatility in the Company's market capitalization, and general industry, market and macro-economic conditions. It is possible that future changes in such circumstances, including a more prolonged and/or severe COVID-19 pandemic, or future changes in the variables associated with the judgments, assumptions and estimates used in assessing the fair value of the reporting unit, would require the Company to record additional non-cash impairment charges.

The Company’s other intangible assets, primarily from business acquisitions valued based on independent appraisals, consisted of (in millions):


	June 30, 2020										September 30, 2019
	Gross Carrying Amount		Accumulated Amortization		Net		Gross Carrying Amount		Accumulated Amortization		Net
Definite-lived intangible assets
Technology	$	1,318	$	(462)	$	856	$	1,307	$	(370)	$	937
Customer relationships	2,732		(906)		1,826		2,722		(759)		1,963
Miscellaneous	636		(255)		381		584		(224)		360
Total definite-lived intangible assets	4,686		(1,623)		3,063		4,613		(1,353)		3,260
Indefinite-lived intangible assets
Trademarks/trade names	2,221		—		2,221		2,282		—		2,282
Miscellaneous	80		—		80		90		—		90
	2,301		—		2,301		2,372		—		2,372
Total intangible assets	$	6,987	$	(1,623)	$	5,364	$	6,985	$	(1,353)	$	5,632

The Company reviews indefinite-lived intangible assets for impairment during the fourth fiscal quarter or more frequently if events or changes in circumstances indicate the asset might be impaired. Indefinite-lived intangible assets primarily consist of trademarks and tradenames and are tested for impairment using a relief-from-royalty method. During the second and third quarters of fiscal 2020, the Company determined that it had a triggering event at each reporting period end requiring assessment of impairment for certain of its indefinite-lived intangible assets due to declines in revenue directly attributable to the COVID-19 pandemic. As a result, the Company recorded an impairment charge of $62 million related primarily to the Company's retail business indefinite-lived intangible assets within restructuring and impairment costs in the consolidated statements of income in the second quarter of fiscal 2020. No further impairment was required to be recorded in the third quarter of fiscal 2020 as a result of the completed impairment assessment. The Company continuously monitors for events and circumstances that could negatively impact the key assumptions in determining fair value, including long-term revenue growth projections, discount rates and general industry, market and macro-economic conditions. It is possible that future changes in such circumstances, including a more prolonged and/or severe COVID-19 pandemic, or future changes in the variables associated with the judgments, assumptions and estimates used in assessing the fair value of the indefinite-lived intangible assets, would require the Company to record an additional non-cash impairment charge.

Amortization of other intangible assets included within continuing operations for the three month periods ended June 30, 2020 and 2019 was $95 million and $93 million, respectively. Amortization of other intangible assets included within continuing operations for the nine month periods ended June 30, 2020 and 2019 was $288 million and $288 million, respectively. Excluding the impact of any future acquisitions, the Company anticipates amortization for fiscal 2021, 2022, 2023, 2024 and 2025 will be approximately $398 million, $394 million, $387 million, $369 million and $352 million per year, respectively.