GOODWILL AND OTHER INTANGIBLE ASSETS

12 Months Ended

Oct. 31, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

The goodwill balances as of October 31, 2019, 2018 and 2017 and the movements in 2019 and 2018 for each of our reportable segments were as follows:



	Communications Solutions Group			Electronic Industrial Solutions Group			Ixia Solutions Group			Total
	(in millions)
Goodwill at October 31, 2017	$	497		$	268		$	1,117		$	1,882
Foreign currency translation impact	(2		)	(2		)	(1		)	(5		)
Goodwill arising from acquisitions	4			2			—			6
Impairment losses	—			—			(709		)	(709		)
Divestitures	(2		)	(1		)	—			(3		)
Goodwill at October 31, 2018	497			267			407			1,171
Foreign currency translation impact	8			—			—			8
Goodwill arising from acquisitions	30			—			—			30
Goodwill at October 31, 2019	$	535		$	267		$	407		$	1,209

Goodwill	$	535		$	267		$	1,116		$	1,918
Accumulated impairment losses	—			—			(709		)	(709		)
Goodwill at October 31, 2019	$	535		$	267		$	407		$	1,209

Other intangible assets as of October 31, 2019 and 2018 consisted of the following:



	Other Intangible Assets as of October 31, 2019						Other Intangible Assets as of October 31, 2018
	Gross Carrying Amount		Accumulated Amortization		Net Book Value		Gross Carrying Amount		Accumulated Amortization		Net Book Value
	(in millions)
Developed technology	$	876	$	578	$	298	$	835	$	415	$	420
Backlog	13		13		—		13		13		—
Trademark/Tradename	34		21		13		33		14		19
Customer relationships	316		139		177		304		100		204
Non-compete agreements	1		1		—		1		—		1
Total amortizable intangible assets	1,240		752		488		1,186		542		644
In-Process R&D	2		—		2		1		—		1
Total	$	1,242	$	752	$	490	$	1,187	$	542	$	645

In 2019 we recorded additions to goodwill and other intangible assets of $30 million and $56 million, respectively, due to the acquisition of Prisma. For additional information on the acquisition of Prisma, see Note 3, "Acquisitions."

In 2018 we recorded additions to goodwill of $6 million due to an acquisition and a $3 million reduction due to divestiture-related activity. In 2018 we transferred $23 million from in-process R&D to developed technology as projects were successfully completed. In 2018 we recorded an impairment charge of $5 million related to the cancellation of an in-process R&D project.

There was a $1 million foreign exchange translation impact to other intangible assets in 2019 and 2018.

Amortization of other intangible assets was $210 million in 2019, $204 million in 2018 and $131 million in 2017. Estimated intangible assets amortization expense for each of the five succeeding fiscal years is as follows:



	Amortization expense
	(in millions)
2020	$	211
2021	143
2022	67
2023	49
2024	17
Thereafter	1

We test goodwill for impairment annually in the fourth quarter of each year, after the annual update to our long-term financial forecasts during our strategic planning cycle, using data as of September 30 of that year. The impairment test compares the fair value of a reporting unit with its carrying amount, with an impairment charge recorded for the amount by which the carrying amount exceeds the reporting unit’s fair value up to a maximum amount of the goodwill balance for the reporting unit. We determine fair values for each of the reporting units using the market approach, when available and appropriate, or the income approach, or a combination of both. If multiple valuation methodologies are used, the results are weighted accordingly.

Valuations using the market approach are derived from metrics of publicly traded comparable companies. The selections of comparable businesses are based on the markets in which our reporting units operate, giving consideration to risk profiles, size, geography, and diversity of products and services.

Under the income approach, fair value is determined based on the present value of estimated future cash flows, discounted at an appropriate risk-adjusted rate. We use our internal forecasts to estimate future cash flows and include an estimate of long-term future growth rates based on our most recent views of the long-term outlook for each business.

In 2018 we performed our annual impairment test of goodwill for all our reporting units using a qualitative approach, except for our Ixia Solutions Group ("ISG") reporting unit, which is the only reporting unit in the ISG reportable segment, for which the test was performed using a quantitative approach since their revenue and earnings had not been consistent with originally projected results, thus requiring a reduction of our long-term financial forecasts included in our revised strategic plan. The income and market approaches were used to determine the fair value of the ISG reporting unit. With respect to the income approach, the discounted cash flow method was used, which included an eight-year future cash flow projection and an estimated terminal value. The market approach used revenue and EBITDA multiples to develop an estimate of fair value. A weighting of 60 percent and 40 percent was applied to the income and market approaches, respectively, to determine the fair value of the ISG reporting unit. The income approach was given a larger weighting based on the underlying detailed financial projections prepared during the strategic planning cycle which reflect the financial and operational facts and circumstances specific to ISG as of the valuation date. Based on the results of our testing, the fair value of our ISG reporting unit did not exceed the carrying value. The primary factors contributing to a reduction in fair value of ISG were weaker-than-expected market growth rates since acquisition and significant integration efforts in 2018 resulting in lower revenue and profitability trends included in our long-term financial forecasts. As a result, we recorded an impairment loss of $709 million for ISG in 2018.

During the fourth quarter of 2019, we performed our annual impairment test of goodwill for all our reporting units using a qualitative approach, except for our ISG reporting unit, which is the only reporting unit in the ISG reportable segment, for which the test was performed using a quantitative approach. The income and market approaches were used to determine the fair value of the ISG reporting unit. With respect to the income approach, the discounted cash flow method was used, which included an eight-year future cash flow projection and an estimated terminal value. The market approach used revenue and EBITDA multiples to develop an estimate of fair value. A weighting of 60 percent and 40 percent was applied to the income and market approaches, respectively, to determine the fair value of the ISG reporting unit. The income approach was given a larger weighting based on the underlying detailed financial projections prepared during the strategic planning cycle that reflect the financial and operational facts and circumstances specific to ISG as of the valuation date. Based on the results of our annual impairment tests, the fair value of each of our reporting units exceeded the carrying value.

As of October 31, 2019, we determined that no goodwill impairment exists, and that the remaining goodwill is recoverable for all of our reporting units; however, there can be no assurance that additional goodwill will not be impaired in future periods. Estimating the fair value of reporting units requires the use of estimates and significant judgments that are based on a number of factors including actual operating results. It is possible that the judgments and estimates described above could change in future periods.

We review long-lived assets for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable or that the useful lives of these assets are no longer appropriate. We performed an impairment test of ISG's intangible assets in 2019 and 2018 and concluded that no impairment charge was required.