Xylem Inc.XYL
Xylem Inc. Goodwill & Intangibles Disclosure
Goodwill and Other Intangible Assets
As a result of the change in reportable segments disclosed in Note 1, "Summary of Significant Accounting Policies," goodwill was reallocated amongst segments. This reallocation and changes in the carrying value of goodwill by reportable segment during the years ended December 31, 2025 and 2024 are as follows:
| (in millions) | Water Infrastructure | Applied Water | Measurement and Control Solutions | Water Solutions and Services | Total | ||||||||||||||||||||||||
| Balance as of December 31, 2023 | $ | 2,434 | $ | 895 | $ | 1,739 | $ | 2,519 | $ | 7,587 | |||||||||||||||||||
| Reallocation | (287) | — | (64) | 351 | — | ||||||||||||||||||||||||
| Balance as of January 1, 2024 | 2,147 | 895 | 1,675 | 2,870 | 7,587 | ||||||||||||||||||||||||
| Activity in 2024 | |||||||||||||||||||||||||||||
| Acquisitions (a) | 15 | — | 521 | 1 | 537 | ||||||||||||||||||||||||
| Foreign currency and other | (64) | (11) | (33) | (36) | (144) | ||||||||||||||||||||||||
| Balance as of December 31, 2024 | $ | 2,098 | $ | 884 | $ | 2,163 | $ | 2,835 | $ | 7,980 | |||||||||||||||||||
| Activity in 2025 | |||||||||||||||||||||||||||||
| Acquisitions (a) | 76 | — | — | 38 | 114 | ||||||||||||||||||||||||
| Reclassification to assets held for sale (b) | — | — | (20) | — | (20) | ||||||||||||||||||||||||
| Foreign currency and other | 90 | 21 | 127 | 20 | 258 | ||||||||||||||||||||||||
| Balance as of December 31, 2025 | $ | 2,264 | $ | 905 | $ | 2,270 | $ | 2,893 | $ | 8,332 | |||||||||||||||||||
(a) See Note 3, "Acquisitions and Divestitures," for additional information.
(b) Relates to reclassification of goodwill allocated for the International Metering Business divestiture. See Note 3, "Acquisitions and Divestitures," for additional information.
As of December 31, 2025 and 2024, goodwill included accumulated impairment losses of $206 million, within the Water Solutions and Services segment.
The Company has applied the acquisition method of accounting in accordance with ASC 805 and recognized assets acquired and liabilities assumed at their fair value as of the date of acquisition, with the excess purchase consideration recorded to goodwill. We have allocated goodwill to segments of the Company that are expected to benefit from the synergies of the acquisitions.
During the fourth quarter of 2025, we performed our annual impairment assessment and determined that the estimated fair values of our goodwill reporting units were in excess of each of their carrying values. However, future goodwill impairment tests could result in a charge to earnings. We will continue to evaluate goodwill on an annual basis as of the beginning of our fourth quarter and whenever events and changes in circumstances indicate there may be a potential impairment.
During the second quarter of 2025, the Company modified its reporting unit structure in connection with changes in how management monitors and evaluates the business. Prior to this change, the Water Infrastructure segment consisted of a single reporting unit, and the Water Solutions and Services segment consisted of three reporting units: Integrated Solutions and Services, Dewatering, and Assessment Services. Following the reorganization, the Water Infrastructure segment is comprised of two reporting units—Transport and Treatment—and the Water Solutions and Services segment is comprised of two reporting units—Water Solutions and Services excluding Dewatering and Dewatering.
As a result of the change in reporting units, the Company reassigned goodwill to the affected reporting units using a relative fair value allocation methodology. The change in reporting units constituted a triggering event under ASC 350, "Intangibles—Goodwill and Other," requiring the Company to perform an interim goodwill impairment test for the impacted reporting units prior to the reassignment. No impairment was identified as a result of this testing.
Other Intangible Assets
Information regarding our other intangible assets is as follows:
| December 31, 2025 | December 31, 2024 | ||||||||||||||||||||||||||||||||||
| (in millions) | Carrying Amount | Accumulated Amortization | Net Intangibles | Carrying Amount | Accumulated Amortization | Net Intangibles | |||||||||||||||||||||||||||||
| Customer and distributor relationships | $ | 2,180 | $ | (688) | $ | 1,492 | $ | 2,151 | $ | (576) | $ | 1,575 | |||||||||||||||||||||||
| Proprietary technology and patents | 430 | (185) | 245 | 360 | (138) | 222 | |||||||||||||||||||||||||||||
| Trademarks | 183 | (126) | 57 | 182 | (107) | 75 | |||||||||||||||||||||||||||||
| Software (a) | 644 | (431) | 213 | 595 | (367) | 228 | |||||||||||||||||||||||||||||
| Other | 153 | (56) | 97 | 194 | (79) | 115 | |||||||||||||||||||||||||||||
| Indefinite-lived intangibles | 168 | — | 168 | 164 | — | 164 | |||||||||||||||||||||||||||||
| Other intangibles | $ | 3,758 | $ | (1,486) | $ | 2,272 | $ | 3,646 | $ | (1,267) | $ | 2,379 | |||||||||||||||||||||||
(a)Includes capitalized software developed as a product or service offered directly to external customers. As of December 31, 2025 and 2024, we had net capitalized software used in sales and services to external customers of $175 million and $185 million, respectively.
We determined that no impairment of the indefinite-lived intangibles existed as of the measurement date of our impairment assessment in 2025. Future impairment tests could result in a charge to earnings. We will continue to evaluate the indefinite-lived intangible assets on an annual basis as of the beginning of our fourth quarter and whenever events and changes in circumstances indicate there may be a potential impairment.
During 2025, we recognized $1 million in impairment charges for internally developed software within our Water Infrastructure segment, $2 million within our Measurement and Control Solutions segment and $3 million within our Water Solutions and Services segment. We also recognized a $2 million impairment charge for software within Corporate and other.
During 2024, we recognized $13 million in impairment charges primarily related to customer relationships and trademarks due to restructuring actions within our Water Solutions and Services segment. We also recognized a $1 million impairment charge for internally developed software within Corporate and other.
During 2023, we recognized $3 million in impairment charges, primarily related to software within our Measurement and Control Solutions segment.
The asset impairment charges above were calculated using an income approach, which is considered a Level 3 input for fair value measurement.
Customer and distributor relationships, proprietary technology and patents, trademarks, software and other are amortized over weighted average lives of approximately 16 years, 8 years, 11 years, 10 years and 8 years, respectively.
Total amortization expense for intangible assets was $308 million, $304 million, and $243 million for 2025, 2024 and 2023, respectively.
Estimated amortization expense for each of the five succeeding years is as follows:
| (in millions) | |||||
| 2026 | $ | 293 | |||
| 2027 | 260 | ||||
| 2028 | 241 | ||||
| 2029 | 216 | ||||
| 2030 | 195 | ||||
| Thereafter | 899 | ||||
Free Sentinel
Track for freeWant the next Xylem Inc. goodwill & intangibles disclosure the moment it drops?
Set a Sentinel and we'll alert you the moment Xylem Inc.'s next filing hits EDGAR. No credit card, your email never gets sold.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 25, 2026 | Showing above |
| 2024 | Mar 3, 2025 | |
| 2023 | Feb 28, 2024 | |
| 2022 | Feb 24, 2023 | |
| 2021 | Feb 25, 2022 | |
| 2020 | Feb 26, 2021 | |
| 2019 | Feb 28, 2020 | |
| 2018 | Feb 22, 2019 | |
| 2017 | Feb 23, 2018 | |
| 2016 | Feb 23, 2017 | |
| 2015 | Feb 26, 2016 | |
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.