Bank of New York Mellon Corp | 2013 | FY | 3

Goodwill and intangible assets

Impairment testing

BNY Mellon’s three business segments include seven reporting units for which goodwill impairment testing is performed on an annual basis. The Investment Management segment is comprised of two reporting units. The Investment Services segment is comprised of four reporting units. One reporting unit is included in the Other segment.

The goodwill impairment test is performed in two steps. The first step compares the estimated fair value of the reporting unit with its carrying amount, including goodwill. If the estimated fair value of the reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not impaired. However, if the carrying amount of the reporting unit were to exceed its estimated fair value, a second step would be performed that would compare the implied fair value of the reporting unit’s goodwill with the carrying amount of that goodwill. An impairment loss would be recorded to the extent that the carrying amount of goodwill exceeds its implied fair value.

BNY Mellon conducted its annual goodwill impairment test on a quantitative basis on all seven reporting units in the second quarter of 2013. The estimated fair value of the Company’s seven reporting units exceeded the carrying value and no goodwill impairment was recognized.

Intangible assets not subject to amortization are tested annually for impairment or more often if events or circumstances indicate they may be impaired.

Goodwill

Total goodwill decreased in 2013 compared with 2012 resulting from the sale of Newton’s private client business primarily offset by the impact of foreign exchange translation on non-U.S. dollar denominated goodwill. The table below provides a breakdown of goodwill by business.

Goodwill by business
(in millions)
Investment
Management

 
Investment
Services

 
Other

 
Consolidated

Balance at Dec. 31, 2011
$
9,373

 
$
8,491

 
$
40

 
$
17,904

Acquisition
70

 
—

 
—

 
70

Foreign exchange translation
63

 
38

 
—

 
101

Other (a)
2

 
(12
)
 
10

 
—

Balance at Dec. 31, 2012
$
9,508

 
$
8,517

 
$
50

 
$
18,075

Disposition
(69
)
 
—

 
—

 
(69
)
Foreign exchange translation
17

 
33

 
—

 
50

Other (a)
17

 
—

 
—

 
17

Balance at Dec. 31, 2013
$
9,473

 
$
8,550

 
$
50

 
$
18,073


(a)
Other changes in goodwill include purchase price adjustments and certain other reclassifications.


Intangible assets

The decrease in intangible assets in 2013 compared with 2012 primarily resulted from amortization of intangible assets. Amortization of intangible assets was $342 million in 2013, $384 million in 2012 and $428 million in 2011. In 2013, we recorded an $8 million impairment charge related to the write-down of the value of a customer contract intangible in the Investment Services business to its fair value. The table below provide a breakdown of intangible assets by business.
Intangible assets – net carrying amount by business
(in millions)
Investment
Management

 
Investment
Services

 
Other

 
Consolidated

Balance at Dec. 31, 2011
$
2,382

 
$
1,922

 
$
848

 
$
5,152

Acquisition
23

 
—

 
—

 
23

Amortization
(192
)
 
(192
)
 
—

 
(384
)
Foreign exchange translation
15

 
3

 
—

 
18

Other (a)
—

 
(1
)
 
1

 
—

Balance at Dec. 31, 2012
$
2,228

 
$
1,732

 
$
849

 
$
4,809

Disposition
(7
)
 
(1
)
 
—

 
(8
)
Amortization
(148
)
 
(194
)
(b)
—

 
(342
)
Foreign exchange translation
6

 
2

 
—

 
8

Other (a)
(14
)
 
(1
)
 
—

 
(15
)
Balance at Dec. 31, 2013
$
2,065

 
$
1,538

 
$
849

 
$
4,452


(a)
Other changes in intangible assets include purchase price adjustments and certain other reclassifications.
(b)
Includes an $8 million intangible asset impairment recorded in 2013.


The table below provides a breakdown of intangible assets by type.

Intangible assets
Dec. 31, 2013
 
Dec. 31, 2012
(in millions)
Gross
carrying
amount

Accumulated
amortization

Net
carrying
amount

Remaining
weighted-
average
amortization
period
 
Gross
carrying
amount

Accumulated
amortization

Net
carrying
amount

Subject to amortization:
 
 
 
 
 
 
 
 
Customer relationships—Investment Management
$
2,043

$
(1,449
)
$
594

12 years
 
$
2,114

$
(1,353
)
$
761

Customer contracts—Investment Services
2,352

(1,202
)
1,150

12 years
 
2,353

(1,018
)
1,335

Other
76

(60
)
16

5 years
 
125

(100
)
25

Total subject to amortization
4,471

(2,711
)
1,760

12 years
 
4,592

(2,471
)
2,121

Not subject to amortization: (a)
 
 
 
 
 
 
 
 
Trade name
1,369

N/A

1,369

N/A
 
1,368

N/A

1,368

Customer relationships
1,323

N/A

1,323

N/A
 
1,320

N/A

1,320

Total not subject to amortization
2,692

N/A

2,692

N/A
 
2,688

N/A

2,688

Total intangible assets
$
7,163

$
(2,711
)
$
4,452

N/A
 
$
7,280

$
(2,471
)
$
4,809


(a)
Intangible assets not subject to amortization have an indefinite life.


Estimated annual amortization expense for current intangibles for the next five years is as follows:

For the year ended
Dec. 31,
Estimated amortization expense
(in millions)
 
2014
 
$
302

2015
 
269

2016
 
240

2017
 
215

2018
 
180

us-gaap:GoodwillAndIntangibleAssetsDisclosureTextBlock