Goodwill and Purchased Intangible Assets

9 Months Ended

Apr. 30, 2011

Goodwill and Purchased Intangible Assets

Goodwill and Purchased Intangible Assets

4.	Goodwill and Purchased Intangible Assets

(a) Goodwill

In the first quarter of fiscal 2011, in order to achieve operational efficiencies, the Company combined its Asia Pacific and Japan operations. Following this change, the Company is organized into the following four geographic segments: United States and Canada, European Markets, Emerging Markets, and Asia Pacific Markets. The goodwill of the former Asia Pacific and Japan geographic segments as of July 31, 2010 was allocated to the combined segment Asia Pacific Markets.

The following table presents the goodwill allocated to the Company's reportable segments as of and during the nine months ended April 30, 2011 (in millions):


	Balance at July 31, 2010		Acquisitions		Other			Balance at April 30, 2011
United States and Canada	$	11,289	$	121	$	(14	)	$	11,396
European Markets		2,729		35		35			2,799
Emerging Markets		762		4		1			767
Asia Pacific Markets		1,894		24		—			1,918

Total	$	16,674	$	184	$	22		$	16,880

In the preceding table, "Other" includes foreign currency translation, purchase accounting adjustments, and an adjustment related to a divestiture.

(b) Purchased Intangible Assets

The following table presents details of the Company's intangible assets acquired through business combinations completed during the nine months ended April 30, 2011 (in millions, except years):


	FINITE LIVES												INDEFINITE LIVES
	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
Total		4.8	$	92		6.4	$	16		2.5	$	1	$	5	$	114

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


April 30, 2011	Gross		Accumulated Amortization			Net
Purchased intangible assets with finite lives:
Technology	$	2,365	$	(902	)	$	1,463
Customer relationships		2,278		(1,263	)		1,015
Other		124		(86	)		38

Total purchased intangible assets with finite lives		4,767		(2,251	)		2,516
IPR&D, with indefinite lives		186		—			186

Total	$	4,953	$	(2,251	)	$	2,702


July 31, 2010	Gross		Accumulated Amortization			Net
Purchased intangible assets with finite lives:
Technology	$	2,396	$	(686	)	$	1,710
Customer relationships		2,326		(1,045	)		1,281
Other		172		(85	)		87

Total purchased intangible assets with finite lives		4,894		(1,816	)		3,078
IPR&D, with indefinite lives		196		—			196

Total	$	5,090	$	(1,816	)	$	3,274

Purchased intangible assets include intangible assets acquired through business combinations as well as through direct purchases or licenses.

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


	Three Months Ended				Nine Months Ended
	April 30, 2011		May 1, 2010		April 30, 2011		May 1, 2010
Amortization of purchased intangible assets:
Cost of sales	$	110	$	69	$	387	$	178
Operating expenses:
Amortization of purchased intangible assets		103		117		419		360
Restructuring and other charges		8		—		8		—

Total	$	221	$	186	$	814	$	538

Amortization of purchased intangible assets for the three months ended April 30, 2011 included impairment charges of approximately $9 million primarily recorded under restructuring and other charges (see Note 5). Amortization of purchased intangible assets for the nine months ended April 30, 2011 included impairment charges of approximately $164 million, $64 million of which was recorded under product cost of sales, $92 million of which was recorded under amortization of purchased intangible assets, and $8 million of which was recorded under restructuring and other charges. These charges were categorized as $97 million impairment in technology assets, $40 million impairment in customer relationships, and $27 million impairment in other. These impairment charges were primarily due to the declines in the second quarter of fiscal 2011 of the estimated fair value of intangible assets associated with the Company's certain consumer products as a result of reductions in expected future cash flows associated with such consumer products and the Company's decision in the third quarter of fiscal 2011 to exit its Flip Video cameras product line. The fair value for purchased intangible assets for which the carrying amount was not deemed to be recoverable was determined using the future discounted cash flows that the assets were expected to generate. For the three and nine months ended May 1, 2010, the amortization of purchased intangible assets under operating expenses included impairment charges of $5 million and $13 million, respectively, primarily related to technology assets.

The estimated future amortization expense of purchased intangible assets with finite lives as of April 30, 2011 is as follows (in millions):


Fiscal Year	Amount
2011 (remaining three months)	$	202
2012		725
2013		610
2014		423
2015		355
Thereafter		201

Total	$	2,516

- Definition

Discloses 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 or 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. This element may be used as a single block of text to include the entire intangible asset disclosure including data and tables.

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