GOODWILL AND INTANGIBLE ASSETS

3 Months Ended

Apr. 29, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

The Infrastructure Solutions Group and Client Solutions Group reporting units are consistent with the reportable segments identified in Note 17 of the Notes to the Condensed Consolidated Financial Statements. Other businesses consists of VMware Resale, Secureworks, and Virtustream, which each represent separate reporting units.

The following table presents goodwill allocated to the Company’s reportable segments and changes in the carrying amount of goodwill as of the dates indicated:


	Infrastructure Solutions Group		Client Solutions Group		Other Businesses		Total
	(in millions)





Balances as of January 28, 2022	$	15,106	$	4,237	$	427	$	19,770

Impact of foreign currency translation	(172)		—		—		(172)



Balances as of April 29, 2022	$	14,934	$	4,237	$	427	$	19,598

Intangible Assets

The following table presents the Company’s intangible assets as of the dates indicated:


	April 29, 2022						January 28, 2022
	Gross		Accumulated Amortization		Net		Gross		Accumulated Amortization		Net
	(in millions)
Customer relationships	$	16,956	$	(14,071)	$	2,885	$	16,956	$	(13,938)	$	3,018
Developed technology	9,634		(8,507)		1,127		9,635		(8,405)		1,230
Trade names	885		(765)		120		885		(757)		128

Definite-lived intangible assets	27,475		(23,343)		4,132		27,476		(23,100)		4,376
Indefinite-lived trade names	3,085		—		3,085		3,085		—		3,085
Total intangible assets	$	30,560	$	(23,343)	$	7,217	$	30,561	$	(23,100)	$	7,461

Amortization expense related to definite-lived intangible assets was $243 million and $445 million for the three months ended April 29, 2022 and April 30, 2021, respectively. There were no material impairment charges related to intangible assets during the three months ended April 29, 2022 and April 30, 2021.

The following table presents the estimated future annual pre-tax amortization expense of definite-lived intangible assets as of the date indicated:


	April 29, 2022
	(in millions)
Fiscal 2023 (remaining nine months)	$	732
Fiscal 2024	776
Fiscal 2025	607
Fiscal 2026	474
Fiscal 2027	361
Thereafter	1,182
Total	$	4,132

Goodwill and Intangible Assets Impairment Testing

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.

For the annual impairment review in the third quarter of Fiscal 2022, the Company elected to bypass the assessment of qualitative factors to determine whether it was more likely than not that the fair value of a reporting unit was less than its carrying amount, including goodwill. In electing to bypass the qualitative assessment, the Company proceeded directly to perform a quantitative goodwill impairment test to measure the fair value of each goodwill reporting unit relative to its carrying amount, and to determine the amount of goodwill impairment loss to be recognized, if any.

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 combination of public company multiples and discounted cash flow methodologies, except with respect to Secureworks, which is a publicly-traded entity, in which case the fair value is determined based primarily on the public company market valuation. The discounted cash flow and public company multiples methodologies require significant judgment, including estimation of future revenues, gross margins, and operating expenses, which are dependent on internal forecasts, current and anticipated economic conditions and trends, selection of market multiples through assessment of the reporting unit’s performance relative to peer competitors, the estimation of the long-term revenue growth rate and discount 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.

The fair value of the indefinite-lived trade names is generally estimated using discounted cash flow methodologies. The discounted cash flow methodology requires significant judgment, including estimation of future revenue, the estimation of the long-term revenue growth rate of the Company’s business and the determination of the Company’s weighted average cost of capital and royalty rates. Changes in these estimates and assumptions could materially affect the fair value of the indefinite-lived intangible assets, potentially resulting in a non-cash impairment charge.

Based on the results of the annual impairment test performed during the fiscal year ended January 28, 2022, the fair values of each of the reporting units exceeded their carrying values. No impairment test was performed during the three months ended April 29, 2022.