GOODWILL AND INTANGIBLE ASSETS

3 Months Ended

Mar. 31, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND INTANGIBLE ASSETSThe Company assesses both goodwill and indefinite-lived intangible assets for impairment annually during the second quarter, or from time to time when warranted by facts and circumstances. In conjunction with the most recent annual test of goodwill at April 30, 2020, the Company applied a hypothetical sensitivity analysis to its reporting units. If the discount rate of these reporting units had been hypothetically increased by 100 basis points, or, in a separate test, each reporting unit were subject to a 10% hypothetical reduction in fair value, it is noted that the Implants reporting unit would have had a fair value approximating book value. For the Equipment & Instruments reporting unit which recorded an impairment during the first quarter of 2020, the implied fair value was found to approximate net book value at April 30, 2020, and therefore this reporting unit is noted to be sensitive to any unfavorable change in assumptions. Goodwill associated with the Implants and Equipment & Instruments reporting units was $1,222 million and $292 million respectively as of March 31, 2021.

The Company also previously applied a hypothetical sensitivity analysis as part of the April 30, 2020 annual impairment test of indefinite-lived intangibles. It was noted that if the fair value of each of these indefinite-lived intangibles assets had been hypothetically reduced by 10% or the discount rate had been hypothetically increased by 100 basis points at April 30, 2020, the fair value of these assets would still exceed their book value, with the exception of certain assets including tradenames and trademarks related to the Equipment & Instruments reporting unit for which an impairment was previously recorded in March 2020. For these assets, the implied fair values continued to approximate net book values at April 30, 2020 and are therefore noted to be sensitive to any unfavorable changes in assumptions. At March 31, 2021, the remaining indefinite-lived tradenames and trademarks related to the Equipment & Instruments reporting unit was $79 million.

During the time subsequent to the annual evaluation, and at March 31, 2021, the Company considered whether any events or changes in circumstances had resulted in the likelihood that the goodwill or indefinite-lived intangible assets may have been impaired. It is management's assessment that no such events have occurred. A change in any of the estimates and assumptions used in the annual test, a decline in the overall markets or in the use of intangible assets among other factors, could have a negative material impact to the fair value of either the reporting units or intangible assets and could result in a future impairment charge. There can be no assurance that the Company’s future asset impairment testing will not result in a material charge to earnings.

A reconciliation of changes in the Company’s goodwill by reportable segment were as follows:


(in millions)	Technologies & Equipment		Consumables		Total

Balance at December 31, 2020	$	3,092	$	894	$	3,986

Acquisition related additions	33		—		33
Divestiture of a business	—		(3)		(3)
Measurement period adjustments on prior acquisitions	(3)		—		(3)

Effects of exchange rate changes	(47)		(14)		(61)
Balance at March 31, 2021	$	3,075	$	877	$	3,952

The gross carrying amount of goodwill and the cumulative goodwill impairment were as follows:


	March 31, 2021						December 31, 2020
(in millions)	Gross Carrying Amount		Cumulative Impairment		Net Carrying Amount		Gross Carrying Amount		Cumulative Impairment		Net Carrying Amount

Technologies & Equipment	$	5,968	$	(2,893)	$	3,075	$	5,985	$	(2,893)	$	3,092
Consumables	877		—		877		894		—		894
Total effect of cumulative impairment	$	6,845	$	(2,893)	$	3,952	$	6,879	$	(2,893)	$	3,986

Identifiable definite-lived and indefinite-lived intangible assets were as follows:


	March 31, 2021						December 31, 2020
(in millions)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount

Developed technology and patents	$	1,702	$	(685)	$	1,017	$	1,681	$	(677)	$	1,004
Tradenames and trademarks	269		(70)		199		273		(70)		203
Licensing agreements	36		(30)		6		37		(30)		7
Customer relationships	1,112		(500)		612		1,142		(494)		648
Total definite-lived	$	3,119	$	(1,285)	$	1,834	$	3,133	$	(1,271)	$	1,862

Indefinite-lived tradenames and trademarks	$	616	$	—	$	616	$	642	$	—	$	642
In-process R&D (a)	11		—		11		—		—		—
Total indefinite-lived	$	627	$	—	$	627	$	642	$	—	$	642

Total identifiable intangible assets	$	3,746	$	(1,285)	$	2,461	$	3,775	$	(1,271)	$	2,504

(a) Intangible assets acquired in a business combination that are in-process and used in research and development ("R&D") activities are considered indefinite-lived until the completion or abandonment of the R&D efforts. The useful life and amortization of those assets will be determined once the R&D efforts are completed.

During the three months ended March 31, 2020, as a result of updating the estimates and assumptions pertaining to the impact of the ongoing COVID-19 pandemic the Company determined that the goodwill associated with the Equipment & Instruments reporting unit within the Technologies & Equipment segment was impaired. As a result, the Company recorded a goodwill impairment charge of $157 million. During the same period, the Company also recorded impairment charges of $39 million related to indefinite-lived intangible assets within the Technologies & Equipment segment driven by a decline in forecasted sales as a result of the COVID-19 pandemic as well as an unfavorable change in the discount rate.