Goodwill and Purchased Intangible Assets

4. Goodwill and Purchased Intangible Assets

(a) Goodwill

Beginning in fiscal 2012, the Company’s reportable segments were changed to the following segments: the Americas, EMEA, and APJC. As a result, the Company reallocated the goodwill at July 30, 2011 to these reportable segments. The following table presents the goodwill allocated to the Company’s reportable segments as of July 28, 2012 and July 30, 2011, as well as the changes to goodwill during fiscal 2012 and 2011 (in millions):


	Balance at July 30, 2011		Acquisitions		Other			Balance at July 28, 2012
Americas	$	11,627	$	136	$	(8	)	$	11,755
EMEA		3,272		64		(49	)		3,287
APJC		1,919		37		—			1,956

Total	$	16,818	$	237	$	(57	)	$	16,998


	Balance at July 31, 2010		Acquisitions		Other			Balance at July 30, 2011
Americas	$	11,571	$	122	$	(66	)	$	11,627
EMEA		3,209		38		25			3,272
APJC		1,894		24		1			1,919

Total	$	16,674	$	184	$	(40	)	$	16,818

In the preceding table, the column entitled “Other” primarily includes foreign currency translation and purchase accounting adjustments. In fiscal 2011, “Other” also includes a goodwill reduction of $63 million related to the sale of the Company’s manufacturing operations in Juarez, Mexico and an adjustment related to a divestiture. The goodwill reductions were included in restructuring and other charges. See Note 5.

(b) Purchased Intangible Assets

The following tables present details of the Company’s intangible assets acquired through business combinations completed during fiscal 2012 and 2011 (in millions, except years):


	FINITE LIVES												INDEFINITE LIVES		TOTAL
	TECHNOLOGY				CUSTOMER RELATIONSHIPS				OTHER				IPR&D		TOTAL
Fiscal 2012	Weighted- Average Useful Life (in Years)		Amount		Weighted- Average Useful Life (in Years)		Amount		Weighted- Average Useful Life (in Years)		Amount		Amount		Amount
Lightwire, Inc.		5.0	$	97		—	$	—		—	$	—	$	—	$	97
All others		3.5		102		3.0		1		—		—		—		103

Total			$	199			$	1			$	—	$	—	$	200


	FINITE LIVES												INDEFINITE LIVES		TOTAL
	TECHNOLOGY				CUSTOMER RELATIONSHIPS				OTHER				IPR&D		TOTAL
Fiscal 2011	Weighted- Average Useful Life (in Years)		Amount		Weighted- Average Useful Life (in Years)		Amount		Weighted- Average Useful Life (in Years)		Amount		Amount		Amount
Total		4.8	$	92		6.4	$	16		2.5	$	1	$	5	$	114

The following tables present details of the Company’s purchased intangible assets (in millions):

July 28, 2012

Gross

Accumulated
Amortization

Net

Purchased intangible assets with finite lives:

Technology

2,267

(908

)

1,359

Customer relationships

2,261

(1,669

)

592

Other

(41

)

Total

4,577

(2,618

)

1,959


July 30, 2011	Gross		Accumulated Amortization			Net
Purchased intangible assets with finite lives:
Technology	$	1,961	$	(561	)	$	1,400
Customer relationships		2,277		(1,346	)		931
Other		123		(91	)		32

Total purchased intangible assets with finite lives		4,361		(1,998	)		2,363
IPR&D, with indefinite lives		178		—			178

Total	$	4,539	$	(1,998	)	$	2,541

Purchased intangible assets include intangible assets acquired through business combinations as well as through direct purchases or licenses. All IPR&D projects outstanding at the end of fiscal 2011 were completed during fiscal 2012 and reclassified to technology purchased intangible assets with finite lives.

The following table presents the amortization of purchased intangible assets (in millions):


Years Ended	July 28, 2012		July 30, 2011		July 31, 2010
Amortization of purchased intangible assets:
Cost of sales	$	424	$	492	$	277
Operating expenses:
Amortization of purchased intangible assets		383		520		491
Restructuring and other charges		—		8		—

Total	$	807	$	1,020	$	768

Amortization of purchased intangible assets for fiscal 2012, 2011, and 2010 included impairment charges of approximately $12 million, $164 million, and $28 million, respectively. The impairment charges of $12 million for fiscal 2012 were due to declines in estimated fair value resulting from reductions in expected future cash flows associated with certain of the Company’s technology assets. For fiscal 2011, the $164 million in impairment charges consisted of $64 million of charges to product cost of sales, $92 million of charges to amortization of purchased intangibles, and $8 million of charges to restructuring and other charges. These impairment charges were primarily due to declines in estimated fair value resulting from reductions in expected future cash flows associated with certain of the Company’s consumer products and were categorized as follows: $97 million in technology assets, $40 million in customer relationships, and $27 million in other purchased intangible assets. For fiscal 2010, the impairment charges were due to reductions in expected future cash flows related to certain of the Company’s technologies and customer relationships and were recorded as amortization of purchased intangible assets.

The estimated future amortization expense of purchased intangible assets with finite lives as of July 28, 2012 is as follows (in millions):


Fiscal Year	Amount
2013	$	706
2014		523
2015		444
2016		217
2017		69

Total	$	1,959

- 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+ Details