Goodwill and Intangible Assets

12 Months Ended

Oct. 31, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

Goodwill and related changes in the carrying amount by reportable segment were as follows:



	Hybrid IT			Intelligent Edge		Financial Services		Total
	In millions
Balance at October 31, 2016	$	14,045		$	1,901	$	144	$	16,090
Goodwill acquired during the period	1,410			17		—		1,427
Changes due to foreign currency	1			—		—		1
Goodwill adjustments	(2		)	—		—		(2		)
Balance at October 31, 2017	15,454			1,918		144		17,516
Goodwill acquired during the period	101			3		—		104
Impairment of goodwill	(88		)	—		—		(88		)
Changes due to foreign currency	6			—		—		6
Goodwill adjustments	(1		)	—		—		(1		)
Balance at October 31, 2018	$	15,472		$	1,921	$	144	$	17,537

Goodwill Impairments

Goodwill is tested for impairment at the reporting unit level. On November 1, 2017, the Company's former EG segment was realigned into two new reportable segments, Hybrid IT and Intelligent Edge. Further, following certain executive leadership changes in fiscal 2018, near the end of the fourth quarter, Hybrid IT segment management changed its evaluation of Hybrid IT to evaluate the previously integrated Communications and Media Services ("CMS") business separately from the remainder of Hybrid IT, resulting in a reassessment of the reporting units. As of October 31, 2018, the Company's reporting units within Hybrid IT include CMS and Hybrid IT excluding CMS. The Company expects to move CMS to the Corporate Investments segment under new management effective November 1, 2018. The Company's reporting units other than Hybrid IT are consistent with the reportable segments identified in Note 3, "Segment Information".

Based on the results of the Company's annual impairment tests in fiscal 2018, 2017 and 2016, the Company determined that no impairment of goodwill existed.

Based on the results of the Company's interim impairment tests in fiscal 2018 it was concluded that the fair value of CMS was less than its carrying amount. Prior to calculating the goodwill impairment loss, the Company analyzed the recoverability of CMS long-lived assets other than goodwill and concluded that those assets were not impaired. As a result, the Company recorded a goodwill impairment charge of $88 million. There is no remaining goodwill in the CMS reporting unit as of October 31, 2018.

Intangible Assets

Intangible assets comprise:



	As of October 31, 2018							As of October 31, 2017
	Gross		Accumulated Amortization			Net		Gross		Accumulated Amortization			Net
	In millions
Customer contracts, customer lists and distribution agreements	$	272	$	(142	)	$	130	$	268	$	(71	)	$	197
Developed and core technology and patents	1,121		(525		)	596		1,133		(427		)	706
Trade name and trade marks	87		(42		)	45		87		(23		)	64
In-process research and development	18		—			18		75		—			75
Total intangible assets	$	1,498	$	(709	)	$	789	$	1,563	$	(521	)	$	1,042

For fiscal 2018, the decrease in gross intangible assets was due primarily to $106 million of intangible assets which became fully amortized and were eliminated from gross intangible assets and accumulated amortization, partially offset by $41 million of purchases related to acquisitions.

For fiscal 2017, the increase in gross intangible assets was due primarily to $688 million of purchases related to acquisitions, partially offset by $384 million of intangible assets which became fully amortized and were eliminated from gross intangible assets and accumulated amortization.

The Company reclassified in-process research and development assets acquired of $57 million and $10 million to developed and core technology and patents as the projects were completed, and began amortization during fiscal 2018 and fiscal 2017, respectively.

As of October 31, 2018, the weighted-average remaining useful lives of the Company's finite-lived intangible assets were as follows:



Finite-Lived Intangible Assets	Weighted-Average Remaining Useful Lives
	In years
Customer contracts, customer lists and distribution agreements	4
Developed and core technology and patents	4
Trade name and trade marks	4

As of October 31, 2018, estimated future amortization expense related to finite-lived intangible assets was as follows:



Fiscal year	In millions
2019	$	248
2020	197
2021	126
2022	92
2023	68
Thereafter	40
Total	$	771

- 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.

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