6. Goodwill and Intangible Assets
On April 24, 2012, Lorillard completed the acquisition of blu eCigs. For additional information, see Note 2, “Acquisitions.” The purchase price allocation includes $64 million of goodwill and $58 million of intangible assets, $57 million of which was an indefinite lived intangible asset consisting of the blu eCigs trademark and trade name.
We evaluated our goodwill and indefinite lived intangible assets recorded as a part of the blu eCigs reporting unit for impairment as of November 1, 2013. Based on the results of our impairment analysis, no impairment of the blu eCigs goodwill or the blu eCigs trademark or trade name was determined to exist.
There were no changes in blu eCigs goodwill during the year ended December 31, 2013
On October 1, 2013, Lorillard completed the acquisition of SKYCIG. For additional information, see Note 2, “Acquisitions.” The preliminary purchase price allocation includes $38 million of goodwill and $35 million of intangible assets, $33 million of which is the fair value ascribed to the SKYCIG trademark and trade name. Lorillard is still in the process of finalizing a working capital adjustment that may increase total consideration transferred by up to $2 million. Therefore, the goodwill amount noted below could increase by up to $2 million as a result of finalizing this working capital adjustment. The fair value ascribed to the SKYCIG trademark and trade name in connection with the acquisition is being amortized over an estimated life of 18 months, beginning October 1, 2013, after which amortization charges related to the trademark and trade name will cease.
All goodwill and intangible assets have been recorded as a part of our blu eCigs and SKYCIG reporting units, both of which are components of our Electronic Cigarettes reporting segment.
Goodwill
Goodwill and the changes in goodwill during the period are as follows:
| (In millions) | Total | |||
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Balance, December 2012 |
$ | 64 | ||
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Purchase of SKYCIG |
38 | |||
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Balance, December 2013 |
$ | 102 | ||
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Intangible Assets
| Weighted Average Amortization Period |
Cost | Accumulated Amortization |
Net Carrying Amount |
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| (Dollars in millions) | ||||||||||||||
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Amortizable intangible assets: |
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blu eCigs Non-compete Agreement and Technology |
5 years | $ | 1 | $ | 1 | $ | — | |||||||
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SKYCIG Non-compete Agreement and Customer List |
5 years | 2 | — | 2 | ||||||||||
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SKYCIG trademark and trade name |
18 months | 34 | 6 | 28 | ||||||||||
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Amortizable intangible assets, net |
30 | |||||||||||||
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Indefinite-lived intangible assets: |
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blu eCigs trademark and trade name |
57 | |||||||||||||
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Intangible assets, net |
$ | 87 | ||||||||||||
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Intangible assets are amortized using the straight-line method.