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INTANGIBLE ASSETS AND GOODWILL

12 Months Ended

May. 31, 2015

Intangible Assets and Goodwill [Abstract]

INTANGIBLE ASSETS AND GOODWILL

7. INTANGIBLE ASSETS AND GOODWILL

The changes in intangible assets for fiscal 2015 and the net book value of intangible assets at May 31, 2015 and 2014 were as follows:

		Intangible Assets, Gross												Accumulated Amortization												Intangible Assets, Net						Weighted
(Dollars in millions)		May 31, 2014			Additions(1)			Retirements			May 31, 2015			May 31, 2014			Expense			Retirements			May 31, 2015			May 31, 2014			May 31, 2015			Average Useful Life(2)
Software support agreements and related relationships		$	5,218		$	1,206		$	(2,234)		$	4,190		$	(4,403)		$	(531)		$	2,234		$	(2,700)		$	815		$	1,490		13 years
Hardware systems support agreements and related relationships			969			63			(20)			1,012			(530)			(144)			20			(654)			439			358		10 years
Developed technology			4,387			736			(521)			4,602			(2,176)			(700)			521			(2,355)			2,211			2,247		7 years
Core technology			1,617			—			(1,065)			552			(1,294)			(182)			1,065			(411)			323			141		N.A.
Customer relationships and contract backlog			2,054			204			(61)			2,197			(1,459)			(312)			61			(1,710)			595			487		6 years
SaaS, PaaS and IaaS agreements and related relationships and other			1,789			204			—			1,993			(305)			(203)			—			(508)			1,484			1,485		10 years
Trademarks			516			35			(50)			501			(276)			(77)			50			(303)			240			198		10 years
Total intangible assets subject to amortization			16,550			2,448			(3,951)			15,047			(10,443)			(2,149)			3,951			(8,641)			6,107			6,406		10 years
In-process research and development			30			(30)			—			—			—			—			—			—			30			—		N.A.
Total intangible assets, net		$	16,580		$	2,418		$	(3,951)		$	15,047		$	(10,443)		$	(2,149)		$	3,951		$	(8,641)		$	6,137		$	6,406

__________

(1)	The substantial majority of intangible assets acquired during fiscal 2015 related to our acquisition of MICROS.
(2)	Represents weighted average useful lives of intangible assets acquired during fiscal 2015.

Total amortization expense related to our intangible assets was $2.1 billion, $2.3 billion and $2.4 billion in fiscal 2015, 2014 and 2013, respectively. As of May 31, 2015, estimated future amortization expenses related to intangible assets were as follows (in millions):

Fiscal 2016	$	1,624
Fiscal 2017		995
Fiscal 2018		848
Fiscal 2019		742
Fiscal 2020		598
Thereafter		1,599
Total intangible assets, net	$	6,406

The changes in the carrying amounts of goodwill, net, which is generally not deductible for tax purposes, for our operating segments for fiscal 2015 and 2014 were as follows:

(in millions)		New Software			Software						Consulting			Other, net(4)			Total Goodwill,  net
		Licenses and			License
		Cloud			Updates and			Hardware
		Software			Product			Systems
		Subscriptions			Support			Support
Balances as of May 31, 2013		$	10,533		$	12,474		$	1,259		$	1,584		$	1,493		$	27,343
Allocation of goodwill(1)			875			—			380			13			(1,268)			—
Goodwill from acquisitions			1,721			4			436			134			—			2,295
Goodwill adjustments, net(2)			10			(6)			7			2			1			14
Balances as of May 31, 2014			13,139			12,472			2,082			1,733			226			29,652
Goodwill from acquisitions			2,086			1,991			269			27			240			4,613
Goodwill adjustments, net(2)			(8)			(2)			19			(1)			—			8
Goodwill impairment(3)			—			—			—			—			(186)			(186)
Balances as of May 31, 2015		$	15,217		$	14,461		$	2,370		$	1,759		$	280		$	34,087

__________

(1)	Represents the allocation of goodwill to our operating segments upon completion of our intangible asset valuations.
(2)	Pursuant to our business combinations accounting policy, we recorded goodwill adjustments for the effect on goodwill of changes to net assets acquired during the measurement period (up to one year from the date of an acquisition). Goodwill adjustments were not significant to our previously reported operating results or financial position.
(3)	During fiscal 2015, we recorded a $186 million goodwill impairment loss to our hardware systems products reporting unit. We considered several approaches to determine the fair value of our hardware systems reporting unit as of March 1, 2015 and concluded the most appropriate to be the income approach. The fair value of our hardware systems products reporting unit pursuant to the income approach was impacted by lower forecasted operating results for this reporting unit, primarily caused by lower forecasted revenues and our continued investment in hardware products research and development activities. We compared the implied fair value of goodwill in our hardware systems products reporting unit to its carrying value, which resulted in the $186 million goodwill impairment loss and represented the aggregate amount of goodwill for our hardware systems products reporting unit. The aggregate hardware systems reporting unit goodwill that was impaired in fiscal 2015 resulted from our acquisitions of Pillar Data Systems, Inc., Xsigo Systems, Inc., GreenBytes, Inc. and MICROS Systems, Inc. Such impairment loss was recorded to acquisition related and other expenses in our fiscal 2015 consolidated statement of operations. We did not recognize any goodwill impairment losses in fiscal 2014 or 2013.
(4)	Represents goodwill allocated to our other operating segments. The balance as of May 31, 2013 included unallocated goodwill for certain of our acquisitions that was subsequently allocated based upon the finalization of valuations during fiscal 2014.

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- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef



-Publisher FASB



-Name Accounting Standards Codification



-Topic 350



-SubTopic 30



-Section 50



-Paragraph 3



-URI http://asc.fasb.org/extlink&oid=26713463&loc=d3e16373-109275



Reference 2: http://www.xbrl.org/2003/role/presentationRef



-Publisher FASB



-Name Accounting Standards Codification



-Topic 350



-SubTopic 30



-Section 50



-Paragraph 1



-URI http://asc.fasb.org/extlink&oid=26713463&loc=d3e16265-109275



Reference 3: http://www.xbrl.org/2003/role/presentationRef



-Publisher FASB



-Name Accounting Standards Codification



-Topic 350



-SubTopic 30



-Section 50



-Paragraph 2



-URI http://asc.fasb.org/extlink&oid=26713463&loc=d3e16323-109275



Reference 4: http://www.xbrl.org/2003/role/presentationRef



-Publisher FASB



-Name Accounting Standards Codification



-Topic 350



-SubTopic 20



-Section 50



-Paragraph 1



-URI http://asc.fasb.org/extlink&oid=35741047&loc=d3e13816-109267



Reference 5: http://www.xbrl.org/2003/role/presentationRef



-Publisher FASB



-Name Accounting Standards Codification



-Topic 350



-SubTopic 20



-Section 50



-Paragraph 2



-URI http://asc.fasb.org/extlink&oid=35741047&loc=d3e13854-109267

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