Goodwill and Other Intangible Assets

9 Months Ended

Dec. 28, 2012

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

The following table summarizes the changes in the carrying amount of goodwill by segment for the nine months ended December 28, 2012:



(Amounts in millions)	NPS		MSS			BSS			Total
Goodwill, gross	$	768	$	2,221		$	1,527		$	4,516
Accumulated impairment losses	—		(2,074		)	(690		)	(2,764		)
Balance as of March 30, 2012, net	768		147			837			1,752

Additions	25		—			—			25
Deductions	—		—			(241		)	(241		)
Foreign currency translation	—		(10		)	(3		)	(13		)
Other reclassifications	—		(11		)	11			—

Goodwill, gross	793		2,200			1,294			4,287
Accumulated impairment losses	—		(2,074		)	(690		)	(2,764		)
Balance as of December 28, 2012, net	$	793	$	126		$	604		$	1,523

The addition to goodwill relates to an acquisition in the NPS segment (see Note 3). The deduction relates to the divestiture of a business in the BSS segment (see Note 3). The foreign currency translation amount relates to the impact of currency movements on non-U.S. dollar denominated goodwill balances.

The Company had a change in reporting units within its BSS segment at the beginning of fiscal 2013 as it combined the previously separate iSOFT and BSS-Health reporting units, along with the NHS contract, into one BSS-Global Health reporting unit. The change reflects the integration of all aspects of the Company's healthcare business and the resulting management and monitoring of all healthcare operating results within the healthcare business. As a result of this change in reporting units, $11 million of MSS' goodwill has been reclassified to BSS.

The Company tests goodwill for impairment on an annual basis, as of the first day of the second fiscal quarter, and between annual tests if an event occurs, or circumstances change, that would more likely than not reduce the fair value of a reporting unit below its carrying amount. A significant amount of judgment is involved in determining if an indicator of impairment has occurred between annual testing dates. Such indicators may include a significant decline in expected future cash flows; a significant adverse change in legal factors or in the business climate; unanticipated competition; and the testing for recoverability of a significant asset group within a reporting unit.

On September 15, 2011, the FASB issued ASU 2011-08, “Testing Goodwill for Impairment,” which revises guidance on testing goodwill for impairment. The amendments in this ASU allow an entity the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If an entity determines that it is not more likely than not, then performing the two-step impairment test is unnecessary. However, if the entity concludes that fair value is more likely than not less than carrying value, then it is required to perform the first step of the two-step impairment test and calculate the fair value of the reporting unit to compare with the carrying value of the reporting unit as described in ASC 350-20-35-4. The entity may bypass the initial qualitative assessment for any reporting unit and proceed directly to the first step of the two-step impairment test. During the second quarter of fiscal 2013, the Company performed its annual impairment test of goodwill, choosing to bypass the initial qualitative assessment and proceeding directly to the first step of the impairment test for all reporting units, and concluded that no impairment had occurred.

Due to the divestiture of two businesses in the third quarter of fiscal 2013, and specifically due to the allocation of $241 million of goodwill from one of our reporting units to the disposed credit services business, we assessed the goodwill remaining on that reporting unit's balance sheet for potential impairment. We performed the first step of the two-step of the goodwill impairment test and concluded that the goodwill remaining on the reporting unit, after allocation of goodwill to the divested credit services business, was not impaired. For the other reporting units with goodwill, we evaluated whether there were factors which would indicate a potential impairment of goodwill as of December 28, 2012. The Company considered, among other factors, any significant changes in the Company's fiscal 2013 forecast since the annual impairment test was performed, the outlook for the Company's business and industry, the Company's market capitalization, and the current economic environment and outlook. Based on that evaluation, the Company determined that there have been no events or changes in circumstances that would more likely than not reduce the fair value of any of its reporting units below their carrying amounts, and, as a result, it was unnecessary to perform the first step of the two-step impairment testing process as of December 28, 2012.

Other Intangible Assets

A summary of amortizable intangible assets is as follows:



	As of
	December 28, 2012
(Amounts in millions)	Gross Carrying Value		Accumulated Amortization		Net Carrying Value
Outsourcing contract costs	$	1,490	$	958	$	532
Software	2,171		1,543		628
Customer and other intangible assets	514		266		248
Total intangible assets	$	4,175	$	2,767	$	1,408



	As of
	March 30, 2012
(Amounts in millions)	Gross Carrying Value		Accumulated Amortization		Net Carrying Value
Outsourcing contract costs	$	1,802	$	1,240	$	562
Software	2,130		1,481		649
Customer and other intangible assets	599		306		293
Total intangible assets	$	4,531	$	3,027	$	1,504

Amortization related to intangible assets was $106 million and $112 million for the quarters ended December 28, 2012, and December 30, 2011, respectively, including reductions of revenue for amortization of outsourcing contract cost premiums of $9 million and $12 million in each of the respective quarters. Amortization expense related to capitalized software was $52 million and $42 million for the quarters ended December 28, 2012, and December 30, 2011, respectively.

Amortization related to intangible assets was $308 million and $334 million for the nine months ended December 28, 2012, and December 30, 2011, respectively, including reductions of revenue for amortization of outsourcing contract cost premiums of $31 million and $37 million in each of the respective nine month periods. Amortization expense related to capitalized software was $148 million and $149 million for the nine months ended December 28, 2012, and December 30, 2011, respectively.

Estimated amortization expense related to intangible assets as of December 28, 2012, for the remainder of fiscal 2013 is $105 million, and for each of the fiscal years 2014, 2015, 2016, and 2017, is as follows: $316 million, $253 million, $171 million and $128 million, respectively.

- 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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