Goodwill and Intangible Assets
Goodwill
The changes in the carrying amount of goodwill in each of our reportable segments for the years ended January 2, 2026 and January 3, 2025 were as follows:
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| Dollars in millions | MTS | | STS | | | | Total |
| Balance as of December 29, 2023 | $ | 1,921 | | | $ | 188 | | | | | $ | 2,109 | |
| Goodwill acquired during the period (Note 4) | 531 | | | — | | | | | 531 | |
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| Foreign currency translation | (9) | | | (1) | | | | | (10) | |
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| Balance as of January 3, 2025 | $ | 2,443 | | | $ | 187 | | | | | $ | 2,630 | |
| Goodwill acquired and adjusted during the period (Note 4) | 14 | | | — | | | | | 14 | |
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| Foreign currency translation | 30 | | | 3 | | | | | 33 | |
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| Balance as of January 2, 2026 | $ | 2,487 | | | $ | 190 | | | | | $ | 2,677 | |
Intangible Assets
Intangible assets are comprised of customer relationships, trade names, licensing agreements and other. The cost and accumulated amortization of our intangible assets were as follows:
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| January 2, 2026 |
| Dollars in millions | Weighted Average Remaining Useful Lives | | Intangible Assets, Gross | | Accumulated Amortization | | Intangible Assets, Net |
| Trademarks/trade names | Indefinite | | $ | 50 | | | $ | — | | | $ | 50 | |
| Customer relationships | 11 | | 758 | | | (266) | | | 492 | |
| Developed technologies | 15 | | 83 | | | (48) | | | 35 | |
| Contract backlog | 15 | | 314 | | | (173) | | | 141 | |
| Other | 10 | | 23 | | | (14) | | | 9 | |
| Total intangible assets | | | $ | 1,228 | | | $ | (501) | | | $ | 727 | |
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| January 3, 2025 |
| Dollars in millions | Weighted Average Remaining Useful Lives | | Intangible Assets, Gross | | Accumulated Amortization | | Intangible Assets, Net |
| Trademarks/trade names | Indefinite | | $ | 50 | | | $ | — | | | $ | 50 | |
| Customer relationships | 13 | | 740 | | | (219) | | | 521 | |
| Developed technologies | 16 | | 82 | | | (45) | | | 37 | |
| Contract backlog | 15 | | 297 | | | (151) | | | 146 | |
| Other | 10 | | 21 | | | (12) | | | 9 | |
| Total intangible assets | | | $ | 1,190 | | | $ | (427) | | | $ | 763 | |
Intangibles subject to amortization are impaired if the carrying value of the intangible is not recoverable and exceeds its fair value. Intangibles that are not subject to amortization are reviewed annually for impairment or more often if events or circumstances change that would create a triggering event. During the years ended January 2, 2026, January 3, 2025 and December 29, 2023, no impairments related to our intangible assets were recorded.
Our intangibles amortization expense is presented below:
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| Year ended |
| Dollars in millions | January 2, 2026 | | January 3, 2025 | | December 29, 2023 |
| Intangibles amortization expense | $ | 64 | | | $ | 52 | | | $ | 45 | |
Our expected intangibles amortization expense for the next five fiscal years is presented below:
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| Dollars in millions | Expected future intangibles amortization expense |
| 2026 | $ | 58 | |
| 2027 | $ | 57 | |
| 2028 | $ | 57 | |
| 2029 | $ | 57 | |
| 2030 | $ | 57 | |
| Beyond 2030 | $ | 391 | |
About Goodwill & Intangibles Disclosures
Goodwill and intangible asset disclosures reveal the premium paid in acquisitions and how management assesses whether that premium retains its value. Since goodwill is no longer amortized under US GAAP, the annual impairment test is the only mechanism that adjusts carrying values downward — making the assumptions behind that test critically important for investors.
Key signals: a history of goodwill impairments suggests management consistently overpays for acquisitions. Watch the gap between reporting unit fair value and carrying amount — when fair value exceeds carrying amount by less than 10-20%, a small decline in business performance could trigger a write-down. For finite-lived intangibles, examine useful life assumptions across customer relationships, technology, and trade names; aggressive estimates inflate near-term earnings. Compare total intangibles-to-total-assets ratios against peers to assess acquisition dependency. Rising goodwill as a percentage of equity can signal balance sheet fragility.