INTANGIBLE ASSETS AND GOODWILL

12 Months Ended

May 31, 2011

Notes to Condensed Consolidated Financial Statements

7. INTANGIBLE ASSETS AND GOODWILL

The changes in intangible assets for fiscal 2011 and the net book value of intangible assets at May 31, 2011 and 2010 were as follows:


	Intangible Assets, Gross							Accumulated Amortization									Intangible Assets, Net				Weighted Average Useful Life
	May 31,					May 31,		May 31,						May 31,			May 31,		May 31,
(Dollars in millions)	2010		Additions			2011		2010			Expense			2011			2010		2011
Software support agreements and related relationships	$	5,078	$	99		$	5,177	$	(2,175	)	$	(570	)	$	(2,745	)	$	2,903	$	2,432		9 years
Hardware systems support agreements and related relationships		759		1			760		(29	)		(118	)		(147	)		730		613		7 years
Developed technology		5,338		696			6,034		(2,736	)		(992	)		(3,728	)		2,602		2,306		5 years
Core technology		2,111		184			2,295		(964	)		(308	)		(1,272	)		1,147		1,023		5 years
Customer relationships		1,765		298			2,063		(554	)		(372	)		(926	)		1,211		1,137		7 years
Trademarks		504		24			528		(161	)		(68	)		(229	)		343		299		7 years

Total intangible assets subject to amortization		15,555		1,302			16,857		(6,619	)		(2,428	)		(9,047	)		8,936		7,810
In-process research and development		385		(335	)		50		—			—			—			385		50		N.A.

Total intangible assets, net	$	15,940	$	967		$	16,907	$	(6,619	)	$	(2,428	)	$	(9,047	)	$	9,321	$	7,860

Total amortization expense related to our intangible assets was $2.4 billion, $2.0 billion and $1.7 billion in fiscal 2011, 2010 and 2009, respectively. As of May 31, 2011, estimated future amortization expenses related to our intangible assets were as follows (in millions):


Fiscal 2012	$	2,275
Fiscal 2013		1,902
Fiscal 2014		1,554
Fiscal 2015		1,155
Fiscal 2016		657
Thereafter		267

Total intangible assets subject to amortization		7,810
In-process research and development		50

Total intangible assets, net	$	7,860

The changes in the carrying amounts of goodwill, which is generally not deductible for tax purposes, for our software business operating segments, our hardware systems support operating segment and our services business for fiscal 2011 and 2010 were as follows:


(in millions)	New Software Licenses			Software License Updates and Product Support			Hardware Systems Support		Services			Total
Balances as of May 31, 2009	$	5,716		$	11,334		$	—	$	1,792		$	18,842
Goodwill from acquisitions		217			490			891		2			1,600
Goodwill adjustments(1)		62			(22	)		32		(89	)		(17	)

Balances as of May 31, 2010		5,995			11,802			923		1,705			20,425
Goodwill from acquisitions		797			240			23		2			1,062
Goodwill adjustments(1)		(7	)		10			63		—			66

Balances as of May 31, 2011	$	6,785		$	12,052		$	1,009	$	1,707		$	21,553

(1)

Pursuant to our business combinations accounting policy, we record 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 for our services business in fiscal 2010 include $82 million that primarily relates to the reclassification of goodwill associated with certain acquired product offerings to our new software licenses operating segment. The other goodwill adjustments presented in the table above were not significant to our previously reported operating results or financial position.

- Definition

Discloses 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 or 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. This element may be used as a single block of text to include the entire intangible asset disclosure including data and tables.

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