Goodwill and Other Long-lived Assets
Goodwill
The changes in the carrying amount of goodwill are as follows:
|
| | | | |
(Dollars in millions) | | |
Balance as of July 1, 2011 | | $ | 31 |
|
Goodwill acquired | | 432 |
|
Balance as of June 29, 2012 | | 463 |
|
Goodwill acquired | | 13 |
|
Balance as of June 28, 2013 | | $ | 476 |
|
Other Intangible Assets
Other intangible assets consist primarily of existing technology, customer relationships and in-process research and development acquired in business combinations. With the exception of in-process research and development, acquired intangibles are amortized on a straight-line basis over the respective estimated useful lives of the assets. Amortization of the existing technology intangible asset is charged to Cost of revenue while the amortization of the other intangible assets is included in Operating expenses in the Consolidated Statements of Operations. In-process research and development has been determined to have an indefinite useful life and is not amortized, but instead tested for impairment annually or more frequently if events or changes in circumstance indicate that the asset might be impaired. If the carrying amount of in-process research and development exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. There were no impairment charges recognized for in-process research and development. Upon completion of the in-process research and development, the related assets will be accounted for as a finite-lived intangible asset, and will be amortized over its useful life.
In fiscal years 2013, 2012 and 2011, amortization expense for other intangible assets was $147 million, $75 million and $6 million, respectively.
The carrying value of other intangible assets subject to amortization as of June 28, 2013, is set forth in the following table:
|
| | | | | | | | | | | | | | |
(Dollars in millions) | | Gross Carrying Amount | | Accumulated Amortization | | Net Carrying Amount | | Weighted Average Remaining Useful Life |
| | | | | | | | |
Existing technology | | $ | 138 |
| | $ | (105 | ) | | $ | 33 |
| | 0.5 years |
Customer relationships | | 431 |
| | (114 | ) | | 317 |
| | 4.3 years |
Trade name | | 14 |
| | (3 | ) | | 11 |
| | 4.1 years |
Total amortizable other intangible assets | | $ | 583 |
| | $ | (222 | ) | | $ | 361 |
| | 3.9 years |
The carrying value of other intangible assets subject to amortization as of June 29, 2012 is set forth in the following table:
|
| | | | | | | | | | | | | | |
(Dollars in millions) | | Gross Carrying Amount | | Accumulated Amortization | | Net Carrying Amount | | Weighted Average Remaining Useful Life |
| | | | | | | | |
Existing technology | | $ | 137 |
| | $ | (37 | ) | | $ | 100 |
| | 1.5 years |
Customer relationships | | 399 |
| | (37 | ) | | 362 |
| | 5.2 years |
Total amortizable other intangible assets | | $ | 536 |
| | $ | (74 | ) | | $ | 462 |
| | 4.4 years |
The carrying value of In-process research and development was $44 million and $44 million as of June 28, 2013 and June 29, 2012, respectively.
As of June 28, 2013, expected amortization expense for other intangible assets for each of the next five years and thereafter is as follows: |
| | | | |
(Dollars in millions) | | |
| | |
2014 | | $ | 112 |
|
2015 | | 80 |
|
2016 | | 73 |
|
2017 | | 68 |
|
2018 | | 28 |
|
Thereafter | | — |
|
| | $ | 361 |
|
