Business Combinations, Intangibles and Goodwill

6 Months Ended

Jun. 30, 2013

Business Combination, Goodwill and Intangible Assets Disclosure [Abstract]

Business Combinations, Intangibles and Goodwill

Business Combinations, Intangibles and Goodwill

During the three and six months ended June 30, 2013, EMC acquired two companies. We acquired substantially all of the outstanding capital stock of Adaptivity, Inc., a provider of software solutions that automate and accelerate enterprise IT migration to the Cloud which complements and expands our Information Storage segment. We also acquired all of the outstanding capital stock of Sitrof Technologies, a document management consultancy provider which complements and expands our Information Intelligence Group segment. Additionally, during the six months ended June 30, 2013, VMware acquired Virsto Software, a provider of software that optimizes storage performance and utilization in virtual environments.

The aggregate consideration for these three acquisitions was $207 million, net of cash acquired. The consideration paid was allocated to the fair value of the assets acquired and liabilities assumed based on estimated fair values as of the respective acquisition dates. The aggregate allocation to goodwill, intangibles and net liabilities was approximately $172 million, $43 million and $8 million, respectively. The intangible assets are being amortized based upon the pattern in which the economic benefits of the intangible assets are being utilized. The results of these acquisitions have been included in the consolidated financial statements from the date of purchase. Pro forma results of operations have not been presented as the results of the acquired companies were not material to our consolidated results of operations for the three and six months ended June 30, 2013 or 2012.

Intangible Assets

Intangible assets, excluding goodwill, as of June 30, 2013 and December 31, 2012 consist of (tables in millions):

	June 30, 2013
	Gross Carrying Amount		Accumulated Amortization			Net Book Value
Purchased technology	$	2,236	$	(1,318	)	$	918
Patents	225		(94		)	131
Software licenses	99		(90		)	9
Trademarks and tradenames	171		(110		)	61
Customer relationships and customer lists	1,359		(790		)	569
In-process research and development	9		—			9
Leasehold interest	145		(9		)	136
Other	26		(26		)	—
Total intangible assets, excluding goodwill	$	4,270	$	(2,437	)	$	1,833

	December 31, 2012
	Gross Carrying Amount		Accumulated Amortization			Net Book Value
Purchased technology	$	2,233	$	(1,207	)	$	1,026
Patents	225		(87		)	138
Software licenses	96		(88		)	8
Trademarks and tradenames	173		(102		)	71
Customer relationships and customer lists	1,378		(724		)	654
Leasehold interest	145		(7		)	138
Other	26		(26		)	—
Total intangible assets, excluding goodwill	$	4,276	$	(2,241	)	$	2,035

Goodwill

Changes in the carrying amount of goodwill, net, on a consolidated basis and by segment, for the six months ended June 30, 2013 and the year ended December 31, 2012 consist of (tables in millions):

	Six Months Ended June 30, 2013
	Information Storage			Information Intelligence Group		RSA Information Security			Pivotal		VMware Virtual Infrastructure			Total
Balance, beginning of the period	$	7,442		$	1,484	$	2,022		$	—	$	2,892		$	13,840
Goodwill resulting from acquisitions	9			1		—			—		162			172
Finalization of purchase price allocations and other, net	(1		)	—		(1		)	—		(16		)	(18		)
Goodwill transferred in formation of Pivotal	(112		)	—		—			140		(28		)	—
Balance, end of the period	$	7,338		$	1,485	$	2,021		$	140	$	3,010		$	13,994

	Year Ended December 31, 2012
	Information Storage			Information Intelligence Group		RSA Information Security			Pivotal		VMware Virtual Infrastructure			Total
Balance, beginning of the year	$	7,034		$	1,469	$	1,849		$	—	$	1,803		$	12,155
Goodwill resulting from acquisitions	438			15		179			—		1,092			1,724
Finalization of purchase price allocations	(1		)	—		(6		)	—		(3		)	(10		)
Goodwill de-recognized in divestiture of business	(29		)	—		—			—		—			(29		)
Balance, end of the year	$	7,442		$	1,484	$	2,022		$	—	$	2,892		$	13,840

During the second quarter of 2013, EMC and VMware formed Pivotal, with an investment from GE. As Pivotal is considered a separate reportable segment, the transfer of goodwill from the Information Storage and VMware Virtual Infrastructure segments to the newly formed Pivotal segment is shown in the current period rollforward. The amount of transferred goodwill was determined using the relative fair value method. See Note 15 for further discussion of the segment reclassifications.