Intangible Assets and Goodwill Intangible Assets and Goodwill (Notes)

12 Months Ended

Dec. 31, 2012

Goodwill and Intangible Assets Disclosure [Abstract]

The Company accounts for acquisitions using purchase accounting with the results of operations for each acquiree included in the Company’s consolidated financial statements for the period subsequent to the date of acquisition. The pro forma effects of the acquisitions completed in 2012, 2011, and 2010 were not significant individually or in the aggregate. The Company did not have any significant acquisitions during the years ended December 31, 2012, 2011 and 2010.

Intangible Assets

Amortized intangible assets were comprised of the following:



	2012				2011
December 31,	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Intangible assets:
Completed technology	$	657	$	632	$	635	$	627
Patents	276		276		276		276
Customer-related	201		125		137		103
Licensed technology	23		19		23		18
Other intangibles	94		90		91		90
	$	1,251	$	1,142	$	1,162	$	1,114

Amortization expense on intangible assets, which is included within Other charges in the consolidated statements of operations, was $29 million, $200 million and $203 million for the years ended December 31, 2012, 2011 and 2010, respectively. The reduction in intangible amortization in 2012 is due to certain intangible assets that have fully amortized. As of December 31, 2012, future amortization expense is estimated to be $25 million in 2013, $23 million in 2014, $18 million in 2015, $18 million in 2016 and $15 million in 2017.

Amortized intangible assets, excluding goodwill, by segment are as follows:



	2012				2011
December 31,	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Government	$	53	$	48	$	53	$	48
Enterprise	1,198		1,094		1,109		1,066
	$	1,251	$	1,142	$	1,162	$	1,114

Goodwill

The following table displays a rollforward of the carrying amount of goodwill by segment from January 1, 2010 to December 31, 2012:



	Government			Enterprise			Total Company
Balances as of January 1, 2010:
Aggregate goodwill acquired	$	350		$	2,643		$	2,993
Accumulated impairment losses	—			(1,564		)	(1,564		)
Goodwill, net of impairment losses	350			1,079			1,429

Balance as of December 31, 2010:
Aggregate goodwill acquired	350			2,643			2,993
Accumulated impairment losses	—			(1,564		)	(1,564		)
Goodwill, net of impairment losses	350			1,079			1,429
Goodwill acquired	—			20			20
Goodwill divested	—			(21		)	(21		)

Balance as of December 31, 2011:
Aggregate goodwill acquired/divested	350			2,642			2,992
Accumulated impairment losses	—			(1,564		)	(1,564		)
Goodwill, net of impairment losses	350			1,078			1,428
Goodwill acquired	—			83			83
Goodwill divested	(1		)	—			(1		)
Balance as of December 31, 2012:
Aggregate goodwill acquired/divested	349			2,725			3,074
Accumulated impairment losses	—			(1,564		)	(1,564		)
Goodwill, net of impairment losses	$	349		$	1,161		$	1,510

The Company conducts its annual assessment of goodwill for impairment in the fourth quarter of each year. The goodwill impairment assessment is performed at the reporting unit level. A reporting unit is an operating segment or one level below an operating segment. The Company has determined that the Government segment and Enterprise segment each meet the definition of a reporting unit.

The Company performed a qualitative assessment to determine whether it was more-likely-than-not that the fair value of each reporting unit was less than its carrying amount for fiscal year 2012 and fiscal year 2011. In performing this qualitative assessment the Company assessed relevant events and circumstances including macroeconomic conditions, industry and market conditions, cost factors, overall financial performance, changes in share price, and entity-specific events. In addition, the Company considered the fair value derived for each reporting unit in conjunction with the 2010 goodwill impairment test. The Company compared this prior fair value against the current carrying value of each reporting unit noting fair value significantly exceeded carrying value for both reporting units. The Company performed a sensitivity analysis on the fair value determined for each reporting unit in conjunction with the 2010 goodwill impairment test for changes in significant assumptions including the weighted average cost of capital used in the income approach and changes in expected cash flows. For fiscal 2012, these changes in assumptions and estimated cash flows resulted in an increase in fair value for the Government reporting unit and a slight decrease in fair value for the Enterprise reporting unit. In spite of this small decrease in estimated fair value of the Enterprise reporting unit, the reporting unit's fair value significantly exceeds its carrying value. For fiscal year 2011, these changes in assumptions and estimated cash flows resulted in an increase in fair value for each reporting unit from the 2010 fair values. As such, the Company concluded it is more-likely-than-not that the fair value of each reporting unit exceeds its carrying value. Therefore, the two-step goodwill impairment test was not required for fiscal 2012 or fiscal 2011.

2010

The goodwill impairment test for fiscal 2010 was performed using the two step goodwill impairment analysis. In step one, the fair value of each reporting unit is compared to its book value. Management must apply judgment in determining the estimated fair value of these reporting units. Fair value is determined using a combination of present value techniques and quoted market prices of comparable businesses. If the fair value of the reporting unit exceeds its book value, goodwill is not deemed to be impaired for that reporting unit, and no further testing would be necessary. If the fair value of the reporting unit is less than its book value, the Company performs step two. Step two uses the calculated fair value of the reporting unit to perform a hypothetical purchase price allocation to the fair value of the assets and liabilities of the reporting unit. The difference between the fair value of the reporting unit calculated in Step One and the fair value of the underlying assets and liabilities of the reporting unit is the implied fair value of the reporting unit's goodwill. A charge is recorded in the financial statements if the carrying value of the reporting unit's goodwill is greater than its implied fair value.

The Company weighted the valuation of its reporting units at 75% based on the income approach and 25% based on the market-based approach consistent with prior periods. The Company believes that this weighting is appropriate because it is often difficult to find other appropriate market participants that are similar to its reporting units, and it is the Company's view that future discounted cash flows are more reflective of the value of the reporting units.

Based on the results of the 2010 annual assessment of the recoverability of goodwill, the fair values of both reporting units exceeded their book values, indicating that there was no impairment of goodwill.

- 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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