GOODWILL AND INTANGIBLE ASSETS

12 Months Ended

Feb. 03, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

The Infrastructure Solutions Group and Client Solutions Group reporting units are consistent with the reportable segments identified in Note 19 of the Notes to the Consolidated Financial Statements. Other businesses consists of VMware Resale, Secureworks, and Virtustream, which each represent separate reporting units.

The following table presents goodwill allocated to the Company’s reportable segments and changes in the carrying amount of goodwill as of the dates indicated:


	Infrastructure Solutions Group		Client Solutions Group		Other Businesses		Total

	(in millions)
Balances as of January 29, 2021	$	15,325	$	4,237	$	466	$	20,028

Impact of foreign currency translation	(219)		—		—		(219)
Goodwill divested	—		—		(39)		(39)

Balances as of January 28, 2022	$	15,106	$	4,237	$	427	$	19,770
Goodwill acquired	48		—		—		48
Impact of foreign currency translation and other	(137)		(5)		—		(142)



Balances as of February 3, 2023	$	15,017	$	4,232	$	427	$	19,676

Intangible Assets

The following table presents the Company’s intangible assets as of the dates indicated:


	February 3, 2023						January 28, 2022
	Gross		Accumulated Amortization		Net		Gross		Accumulated Amortization		Net

	(in millions)
Customer relationships	$	16,956	$	(14,474)	$	2,482	$	16,956	$	(13,938)	$	3,018
Developed technology	9,466		(8,660)		806		9,635		(8,405)		1,230
Trade names	875		(780)		95		885		(757)		128

Definite-lived intangible assets	27,297		(23,914)		3,383		27,476		(23,100)		4,376
Indefinite-lived trade names	3,085		—		3,085		3,085		—		3,085
Total intangible assets	$	30,382	$	(23,914)	$	6,468	$	30,561	$	(23,100)	$	7,461

Amortization expense related to definite-lived intangible assets was $1.0 billion, $1.6 billion, and $2.1 billion for the fiscal years ended February 3, 2023, January 28, 2022, and January 29, 2021, respectively. There were no material impairment charges related to intangible assets during the fiscal years ended February 3, 2023, January 28, 2022, and January 29, 2021.

The following table presents the estimated future annual pre-tax amortization expense of definite-lived intangible assets as of the date indicated:


	February 3, 2023
	(in millions)
Fiscal 2024	$	764
Fiscal 2025	599
Fiscal 2026	472
Fiscal 2027	364
Fiscal 2028	268
Thereafter	916
Total	$	3,383

Goodwill and Indefinite-Lived Intangible Assets Impairment Testing

Goodwill and indefinite-lived intangible assets are tested for impairment annually during the third fiscal quarter and whenever events or circumstances may indicate that an impairment has occurred.

For the annual impairment review during the third quarter of Fiscal 2023, the Company elected to bypass the assessment of qualitative factors to determine whether it was more likely than not that the fair value of a reporting unit was less than its carrying amount, including goodwill. In electing to bypass the qualitative assessment, the Company proceeded directly to perform a quantitative goodwill impairment test to measure the fair value of each goodwill reporting unit relative to its carrying amount, and to determine the amount of goodwill impairment loss to be recognized, if any.

Management exercised significant judgment related to the above assessment, including the identification of goodwill reporting units, assignment of assets and liabilities to goodwill reporting units, assignment of goodwill to reporting units, and determination of the fair value of each goodwill reporting unit. The fair value of each goodwill reporting unit is generally estimated using a combination of public company multiples and discounted cash flow methodologies. The discounted cash flow and public company multiples methodologies require significant judgment, including estimation of future revenues, gross margins, and operating expenses, which are dependent on internal forecasts, current and anticipated economic conditions and trends, selection of market multiples through assessment of the reporting unit’s performance relative to peer competitors, the estimation of the long-term revenue growth rate and discount rate of the Company’s business, and the determination of the Company’s weighted average cost of capital. Changes in these estimates and assumptions could materially affect the fair value of the goodwill reporting unit, potentially resulting in a non-cash impairment charge.

The fair value of the indefinite-lived trade names is generally estimated using discounted cash flow methodologies. These methodologies require significant judgment, including estimation of future revenue, the estimation of the long-term revenue growth rate of the Company’s business and the determination of the Company’s weighted average cost of capital and royalty rates. Changes in these estimates and assumptions could materially affect the fair value of the indefinite-lived intangible assets, potentially resulting in a non-cash impairment charge.

Based on the results of the annual impairment test performed during the fiscal year ended February 3, 2023, the fair values of each of the reporting units exceeded their carrying values. No goodwill impairment test was performed during the fiscal year ended February 3, 2023 other than the Company’s annual impairment review.