Goodwill and Intangible Assets

3 Months Ended

May 03, 2013

Note 4—Goodwill and Intangible Assets:

Effective February 1, 2013 in preparation for the planned separation transaction, the Company realigned certain business operations among three of its reportable segments and renamed these reportable segments as follows: Health and Engineering (HE); National Security Solutions (NSS); and Technical Services and Information Technology (TSIT) (see Note 8). The reassignment of goodwill associated with the realignment is reflected in the table below.

The carrying value of goodwill by segment was as follows:


	HE			NSS		TSIT		Total
	(in millions)
Goodwill at January 31, 2013	$	1,144		$	641	$	410	$	2,195
Corporate reorganizations		(228	)		147		81		—
Goodwill at May 3, 2013	$	916		$	788	$	491	$	2,195

In fiscal 2013, the Company acquired 100% of maxIT Healthcare Holdings, Inc. (maxIT). The estimated fair values of maxIT assets acquired and liabilities assumed are preliminary for income tax related matters and may result in an adjustment to goodwill. There were no goodwill impairments during the three months ended May 3, 2013 and April 30, 2012.

Intangible assets consisted of the following:


	May 3, 2013							January 31, 2013
	Gross carrying value		Accumulated amortization			Net carrying value		Gross carrying value		Accumulated amortization			Net carrying value
	(in millions)
Finite-lived intangible assets:
Customer relationships	$	170	$	(80	)	$	90	$	175	$	(73	)	$	102
Software and technology		122		(57	)		65		127		(57	)		70
Other		2		(1	)		1		2		(1	)		1
Total finite-lived intangible assets		294		(138	)		156		304		(131	)		173
Indefinite-lived intangible assets:
In-process research and development		13		—			13		13		—			13
Trade names		4		—			4		4		—			4
Total indefinite-lived intangible assets		17		—			17		17		—			17
Total intangible assets	$	311	$	(138	)	$	173	$	321	$	(131	)	$	190

Amortization expense related to amortizable intangible assets was $13 million and $10 million for the three months ended May 3, 2013 and April 30, 2012, respectively.

During the three months ended May 3, 2013, the Company recognized impairment losses for intangible assets of $4 million reported within selling, general, and administrative expenses. There were no impairment losses for intangible assets during the three months ended April 30, 2012.

The estimated annual amortization expense related to finite-lived intangible assets as of May 3, 2013 was as follows:


Fiscal Year Ending January 31
	(in millions)
2014 (remainder of the fiscal year)	$	31
2015		33
2016		31
2017		27
2018		18
2019 and thereafter		16
	$	156

Actual amortization expense in future periods could differ from these estimates as a result of future acquisitions, divestitures, impairments, the outcome and timing of completion of in-process research and development projects (the assets of which will become amortizable upon completion and placement into service, or will be impaired if abandoned), adjustments to preliminary valuations of intangible assets and other factors.

Science Applications International Corporation

Goodwill and Intangible Assets

Note 4—Goodwill and Intangible Assets:

The carrying value of goodwill by segment was as follows:


	HE			NSS		TSIT		Total
	(in millions)
Goodwill at January 31, 2013	$	1,144		$	641	$	410	$	2,195
Corporate reorganizations		(228	)		147		81		—
Goodwill at May 3, 2013	$	916		$	788	$	491	$	2,195

Intangible assets consisted of the following:


	May 3, 2013							January 31, 2013
	Gross carrying value		Accumulated amortization			Net carrying value		Gross carrying value		Accumulated amortization			Net carrying value
	(in millions)
Finite-lived intangible assets:
Customer relationships	$	170	$	(80	)	$	90	$	175	$	(73	)	$	102
Software and technology		122		(57	)		65		127		(57	)		70
Other		2		(1	)		1		2		(1	)		1
Total finite-lived intangible assets		294		(138	)		156		304		(131	)		173
Indefinite-lived intangible assets:
In-process research and development		13		—			13		13		—			13
Trade names		4		—			4		4		—			4
Total indefinite-lived intangible assets		17		—			17		17		—			17
Total intangible assets	$	311	$	(138	)	$	173	$	321	$	(131	)	$	190

Amortization expense related to amortizable intangible assets was $13 million and $10 million for the three months ended May 3, 2013 and April 30, 2012, respectively.

The estimated annual amortization expense related to finite-lived intangible assets as of May 3, 2013 was as follows:


Fiscal Year Ending January 31
	(in millions)
2014 (remainder of the fiscal year)	$	31
2015		33
2016		31
2017		27
2018		18
2019 and thereafter		16
	$	156

- 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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