Goodwill and Purchased Intangible Assets

Goodwill and Purchased Intangible Assets


(a)	Goodwill

The following table presents the goodwill allocated to the Company’s reportable segments as of and during the three months ended October 29, 2016 (in millions):



	Balance at							Balance at
	July 30, 2016		Acquisitions		Other			October 29, 2016
Americas	$	16,529	$	132	$	(13	)	$	16,648
EMEA	6,269		62		(4		)	6,327
APJC	3,827		23		(2		)	3,848
Total	$	26,625	$	217	$	(19	)	$	26,823

“Other” in the table above primarily consists of foreign currency translation, as well as immaterial purchase accounting adjustments.


(b)	Purchased Intangible Assets

The following table presents details of the Company’s intangible assets acquired through acquisitions completed during the three months ended October 29, 2016 (in millions, except years):



	FINITE LIVES									INDEFINITE LIVES		TOTAL
	TECHNOLOGY			CUSTOMER RELATIONSHIPS			OTHER			IPR&D		TOTAL
	Weighted- Average Useful Life (in Years)	Amount		Weighted- Average Useful Life (in Years)	Amount		Weighted- Average Useful Life (in Years)	Amount		Amount		Amount
CloudLock	6.0	$	32	4.0	$	3	1.5	$	1	$	—	$	36
Others (two in total)	3.0	5		0.0	—		0.0	—		—		5
Total		$	37		$	3		$	1	$	—	$	41

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



October 29, 2016	Gross		Accumulated Amortization			Net
Purchased intangible assets with finite lives:
Technology	$	2,861	$	(1,334	)	$	1,527
Customer relationships	1,737		(1,220		)	517
Other	58		(21		)	37
Total purchased intangible assets with finite lives	4,656		(2,575		)	2,081
In-process research and development, with indefinite lives	216		—			216
Total	$	4,872	$	(2,575	)	$	2,297



July 30, 2016	Gross		Accumulated Amortization			Net
Purchased intangible assets with finite lives:
Technology	$	3,038	$	(1,391	)	$	1,647
Customer relationships	1,793		(1,203		)	590
Other	85		(43		)	42
Total purchased intangible assets with finite lives	4,916		(2,637		)	2,279
In-process research and development, with indefinite lives	222		—			222
Total	$	5,138	$	(2,637	)	$	2,501

Purchased intangible assets include intangible assets acquired through acquisitions as well as through direct purchases or licenses.

Impairment charges related to purchased intangible assets for the three months ended October 29, 2016 were $42 million. Impairment charges were primarily as a result of declines in estimated fair values of certain purchased intangible assets resulting from the reduction or elimination of expected future cash flows associated with certain of the Company’s technology and IPR&D intangible assets. Of these impairment charges, $38 million was recorded to restructuring and other charges upon the Company's decision to exit certain product lines, and the corresponding elimination of future associated cash flows. There were no impairment charges related to purchased intangible assets for the corresponding period in fiscal 2016.

The following table presents the amortization of purchased intangible assets including impairment charges related to purchased intangible assets (in millions):



	Three Months Ended
	October 29, 2016		October 24, 2015
Amortization of purchased intangible assets:
Cost of sales	$	129	$	146
Operating expenses
Amortization of purchased intangible assets	78		69
Restructuring and other charges	38		—
Total	$	245	$	215

The estimated future amortization expense of purchased intangible assets with finite lives as of October 29, 2016 is as follows (in millions):



Fiscal Year	Amount
2017 (remaining nine months)	$	524
2018	579
2019	493
2020	281
2021	137
Thereafter	67
Total	$	2,081

- 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