Goodwill and Purchased Intangible Assets

6 Months Ended

Jan. 23, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Purchased Intangible Assets


4.	Goodwill and Purchased Intangible Assets


(a)	Goodwill

The following table presents the goodwill allocated to the Company’s reportable segments as of and during the six months ended January 23, 2016 (in millions):



	Balance at										Balance at
	July 25, 2015		Acquisitions		Divestiture			Other			January 23, 2016
Americas	$	15,212	$	672	$	(126	)	$	(194	)	$	15,564
EMEA	5,791		195		(12		)	(73		)	5,901
APJC	3,466		73		(3		)	(43		)	3,493
Total	$	24,469	$	940	$	(141	)	$	(310	)	$	24,958

“Other” in the table above primarily consists of foreign currency translation, as well as immaterial purchase accounting adjustments.


(b)	Purchased Intangible Assets

The following table presents details of the Company’s intangible assets acquired through acquisitions completed during the six months ended January 23, 2016 (in millions, except years):



	FINITE LIVES									INDEFINITE LIVES		TOTAL
	TECHNOLOGY			CUSTOMER RELATIONSHIPS			OTHER			IPR&D		TOTAL
	Weighted- Average Useful Life (in Years)	Amount		Weighted- Average Useful Life (in Years)	Amount		Weighted- Average Useful Life (in Years)	Amount		Amount		Amount
MaintenanceNet	5.0	$	50	5.0	$	2	2.0	$	2	$	11	$	65
OpenDNS	5.0	43		7.0	15		1.0	2		1		61
Lancope	5.0	79		6.0	29		3.0	3		10		121
Others (four in total)	4.2	56		6.3	6		0.0	—		—		62
Total		$	228		$	52		$	7	$	22	$	309

The following tables present details of the Company’s purchased intangible assets (in millions):



January 23, 2016	Gross		Accumulated Amortization			Net
Purchased intangible assets with finite lives:
Technology	$	2,842	$	(1,232	)	$	1,610
Customer relationships	1,740		(1,093		)	647
Other	61		(31		)	30
Total purchased intangible assets with finite lives	4,643		(2,356		)	2,287
In-process research and development, with indefinite lives	35		—			35
Total	$	4,678	$	(2,356	)	$	2,322



July 25, 2015	Gross		Accumulated Amortization			Net
Purchased intangible assets with finite lives:
Technology	$	3,418	$	(1,818	)	$	1,600
Customer relationships	1,699		(971		)	728
Other	55		(24		)	31
Total purchased intangible assets with finite lives	5,172		(2,813		)	2,359
In-process research and development, with indefinite lives	17		—			17
Total	$	5,189	$	(2,813	)	$	2,376

Purchased intangible assets include intangible assets acquired through acquisitions as well as through direct purchases or licenses. In fiscal 2015, the Company, along with a number of other companies, entered into an agreement to obtain a license to the patents owned by the Rockstar Consortium, and the Company paid approximately $300 million, of which $188 million was expensed to product cost of sales in the first quarter of fiscal 2015 related to the settlement of patent infringement claims, and the remainder was capitalized as an intangible asset to be amortized over its estimated useful life.

Impairment charges related to purchased intangible assets for the three and six months ended January 23, 2016 and January 24, 2015 were approximately $37 million and $56 million, respectively.

The following table presents the amortization of purchased intangible assets (in millions):



	Three Months Ended				Six Months Ended
	January 23, 2016		January 24, 2015		January 23, 2016		January 24, 2015
Amortization of purchased intangible assets:
Cost of sales	$	139	$	242	$	285	$	431
Operating expenses	71		72		140		143
Total	$	210	$	314	$	425	$	574

The estimated future amortization expense of purchased intangible assets with finite lives as of January 23, 2016 is as follows (in millions):



Fiscal Year	Amount
2016 (remaining six months)	$	386
2017	663
2018	519
2019	435
2020	209
Thereafter	75
Total	$	2,287

- 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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