GOODWILL AND INTANGIBLE ASSETS

9 Months Ended

Oct. 28, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

The following table presents goodwill allocated to the Company's business segments as of October 28, 2016 and January 29, 2016, and changes in the carrying amount of goodwill for the respective periods:



	Client Solutions Group			Infrastructure Solutions Group			VMware		Other Businesses (a)			Total
	(in millions)
Balances at January 29, 2016	$	4,428		$	3,907		$	—	$	71		$	8,406
Goodwill acquired (b)	—			12,561			15,117		3,597			31,275
Impact of foreign currency translation	—			(137		)	—		(43		)	(180		)
Goodwill reclassified as held for sale (c)	—			(661		)	—		—			(661		)
Other adjustments (d)	(191		)	(169		)	—		360			—
Balances at October 28, 2016	$	4,237		$	15,501		$	15,117	$	3,985		$	38,840

____________________


(a)	Other Businesses, previously referred to as Corporate, consists of offerings by RSA Information Security, SecureWorks, Pivotal, and Boomi, Inc. ("Boomi").

(b)

In connection with the EMC merger transaction on September 7, 2016, the Company recorded approximately $31.3 billion in goodwill, which has been preliminarily allocated to ISG, VMware, and Other Businesses. This amount represents the excess of the purchase price over the fair value of the assets acquired and liabilities assumed with this transaction. See Note 3 of the Notes to the Unaudited Condensed Consolidated Financial Statements for additional information on the EMC merger transaction.


(c)	Goodwill reclassified as held for sale represents goodwill attributable to ECD, which was acquired as a part of the EMC merger transaction and subsequently classified as held for sale. See Note 4 of the Notes to the Unaudited Condensed Consolidated Financial Statements for additional information on the ECD divestiture.


(d)	Following the completion of the SecureWorks IPO during the nine months ended October 28, 2016, goodwill attributable to the SecureWorks business was re-allocated in a manner consistent with goodwill recognized by SecureWorks on a stand-alone basis.

Goodwill and indefinite-lived intangible assets are tested for impairment annually during the third fiscal quarter and whenever events or circumstances may indicate that an impairment has occurred. Based on the results of the annual impairment test, which was a qualitative test, no impairment of goodwill or indefinite-lived intangible assets existed for any reporting unit as of October 28, 2016. Further, the Company did not have any accumulated goodwill impairment charges as of October 28, 2016.

Management exercised significant judgment related to the above assessment, including the identification of goodwill reporting units, assignment of assets and liabilities to goodwill reporting units, assignment of goodwill to reporting units, and determination of the fair value of each goodwill reporting unit. The fair value of each goodwill reporting unit is generally estimated using a discounted cash flow methodology. This analysis requires significant judgments, including estimation of future cash flows, which is dependent on internal forecasts, the estimation of the long-term growth rate of the Company's business, and the determination of the Company's weighted average cost of capital. Changes in these estimates and assumptions could materially affect the fair value of the goodwill reporting unit, potentially resulting in a non-cash impairment charge.

Intangible Assets

The Company's intangible assets as of October 28, 2016 and January 29, 2016 were as follows:



	October 28, 2016							January 29, 2016
	Gross		Accumulated Amortization			Net		Gross		Accumulated Amortization			Net
	(in millions)
Customer relationships	$	22,706	$	(4,895	)	$	17,811	$	9,869	$	(3,600	)	$	6,269
Developed technology	14,552		(1,667		)	12,885		1,536		(871		)	665
Trade names	1,268		(164		)	1,104		318		(110		)	208
Leasehold assets (liabilities)	128		(1		)	127		—		—			—
Finite-lived intangible assets	38,654		(6,727		)	31,927		11,723		(4,581		)	7,142
In-process research and development	890		—			890		—		—			—
Indefinite-lived trade names	3,754		—			3,754		1,435		—			1,435
Total intangible assets	$	43,298	$	(6,727	)	$	36,571	$	13,158	$	(4,581	)	$	8,577

In connection with the EMC merger transaction on September 7, 2016, the Company recorded approximately $31.2 billion of identifiable intangible assets, which represents the respective fair values as of the transaction date. Of that amount, approximately $1.1 billion is related to the ECD divestiture, which is classified as held for sale and is not included in the above table. See Note 3 and Note 4 of the Notes to the Unaudited Condensed Consolidated Financial Statements for additional information on the EMC merger transaction and the ECD divestiture, respectively.

Amortization expense related to finite-lived intangible assets was approximately $1,164 million and $492 million during the three months ended October 28, 2016 and October 30, 2015, respectively, and $2,146 million and $1,478 million during the nine months ended October 28, 2016 and October 30, 2015, respectively. There were no material impairment charges related to intangible assets during the three and nine months ended October 28, 2016 and October 30, 2015.

Estimated future annual pre-tax amortization expense of finite-lived intangible assets as of October 28, 2016 over the next five fiscal years and thereafter is as follows:



Fiscal Years	(in millions)
2017 (remaining three months)	$	1,492
2018	6,787
2019	5,899
2020	4,107
2021	3,214
Thereafter	10,428
Total	$	31,927

- 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