Intangibles and Goodwill

12 Months Ended

Dec. 31, 2015

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets

Intangible assets, excluding goodwill, as of December 31, 2015 and 2014 consist of (tables in millions):



	December 31, 2015
	Gross Carrying Amount		Accumulated Amortization			Net Book Value
Purchased technology	$	3,272	$	(1,903	)	$	1,369
Patents	225		(132		)	93
Software licenses	112		(94		)	18
Trademarks and tradenames	254		(157		)	97
Customer relationships and customer lists	1,523		(1,087		)	436
Leasehold interest	152		(20		)	132
Other	46		(42		)	4
Total intangible assets, excluding goodwill	$	5,584	$	(3,435	)	$	2,149



	December 31, 2014
	Gross Carrying Amount		Accumulated Amortization			Net Book Value
Purchased technology	$	2,935	$	(1,668	)	$	1,267
Patents	225		(117		)	108
Software licenses	108		(93		)	15
Trademarks and tradenames	226		(136		)	90
Customer relationships and customer lists	1,473		(974		)	499
Leasehold interest	152		(16		)	136
Other	44		(34		)	10
Total intangible assets, excluding goodwill	$	5,163	$	(3,038	)	$	2,125

Amortization expense on intangibles was $395 million, $402 million and $389 million in 2015, 2014 and 2013, respectively. As of December 31, 2015, amortization expense on intangible assets for the next five years is expected to be as follows (table in millions):



2016	$	350
2017	329
2018	317
2019	274
2020	193
Total	$	1,463

Goodwill

Changes in the carrying amount of goodwill, net, on a consolidated basis and by segment, for the years ended December 31, 2015 and 2014 consists of the following (table in millions):



	Information Storage		Enterprise Content Division			RSA Information Security		Pivotal			VMware Virtual Infrastructure			Total
Balance, January 1, 2014	$	7,486	$	1,487		$	2,203	$	177		$	3,071		$	14,424
Goodwill resulting from acquisitions	774		—			—		—			941			1,715
Finalization of purchase price allocations and other, net	—		(1		)	—		—			(4		)	(5		)
Goodwill transferred in formation of Pivotal	6		—			—		(6		)	—			—
Balance, December 31, 2014	$	8,266	$	1,486		$	2,203	$	171		$	4,008		$	16,134
Goodwill resulting from acquisitions	917		—			—		16			29			962
Finalization of purchase price allocations and other, net	2		(8		)	—		—			—			(6		)
Balance, December 31, 2015	$	9,185	$	1,478		$	2,203	$	187		$	4,037		$	17,090

The transfer of goodwill pursuant to the Information Storage segment acquisition of the Data Computing Appliance and implementation services businesses from the Pivotal segment is shown above for the year ended December 31, 2014. The amount of transferred goodwill was determined using the relative fair value method.

Valuation of Goodwill and Intangibles

We perform an assessment of the recoverability of goodwill, at least annually, in the fourth quarter of each year. Our assessment is performed at the reporting unit level which, for certain of our operating segments, is one step below our reporting segment level. We employ both qualitative and quantitative tests of our goodwill. For some of our reporting units, we performed a qualitative assessment on goodwill to determine whether a quantitative assessment was necessary and determined there were no indicators of potential impairment. For other reporting units we evaluated goodwill using a quantitative model. For all of our goodwill assessments, we concluded that there was sufficient market value above the carrying value of those reporting units so that we would not expect any near term changes in the operating results that would trigger an impairment. Accordingly, there was no impairment in 2015, 2014 or 2013.

The determination of relevant comparable industry companies impacts our assessment of fair value. Should the operating performance of our reporting units change in comparison to these companies or should the valuation of these companies change, this could impact our assessment of the fair value of the reporting units. Our discounted cash flow analyses factor in assumptions on revenue and expense growth rates. These estimates are based upon our historical experience and projections of future activity, factoring in customer demand, changes in technology and a cost structure necessary to achieve the related revenues. Additionally, these discounted cash flow analyses factor in expected amounts of working capital and weighted average cost of capital. Changes in judgments on any of these factors could materially impact the value of the reporting unit.

Other intangible assets are evaluated based upon the expected period the asset will be utilized, forecasted cash flows, changes in technology and customer demand. Changes in judgments on any of these factors could materially impact the value of the assets.

- 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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