Cisco 2012 Annual Report Download - page 101

In August 2011, the FASB approved a revised accounting standard update intended to simplify how an entity
tests goodwill for impairment. The amendment will allow an entity to first assess qualitative factors to determine
whether it is necessary to perform the two-step quantitative goodwill impairment test. An entity no longer will be
required to calculate the fair value of a reporting unit unless the entity determines, based on a qualitative
assessment, that it is more likely than not that its fair value is less than its carrying amount. This accounting
standard update will be effective for the Company beginning in the first quarter of fiscal 2013, and the adoption
is not expected to have any impact on the Company’s Consolidated Financial Statements.
In December 2011, the FASB issued an accounting standard update requiring enhanced disclosures about certain
financial instruments and derivative instruments that are offset in the statement of financial position or that are
subject to enforceable master netting arrangements or similar agreements. This accounting standard update will
be effective for the Company beginning in the first quarter of fiscal 2014, at which time the Company will
include the required disclosures.
In July 2012, the FASB issued an accounting standard update intended to simplify how an entity tests indefinite-
lived intangible assets other than goodwill for impairment by providing entities with an option to perform a
qualitative assessment to determine whether further impairment testing is necessary. This accounting standard
update will be effective for the Company beginning in the first quarter of fiscal 2014, and early adoption is
permitted. The Company is currently evaluating the impact of this accounting standard update in its Consolidated
Financial Statements.
3. Business Combinations
(a) Acquisition Summary
The Company completed seven business combinations during fiscal 2012. A summary of the allocation of the
total purchase consideration is presented as follows (in millions):
Fiscal 2012
Purchase
Consideration
Net Tangible
Assets Acquired/
(Liabilities
Assumed)
Purchased
Intangible
Assets Goodwill
Lightwire, Inc. ...................................... $239 $(15) $ 97 $157
All others .......................................... 159 (24) 103 80
Total acquisitions ............................... $398 $(39) $200 $237
The Company acquired Lightwire, Inc. (“Lightwire”) in the third quarter of fiscal 2012. With its acquisition of
Lightwire, a developer of advanced optical interconnect technology for high-speed networking applications, the
Company aims to develop and deliver cost-effective, high-speed networks with the next generation of optical
connectivity.
The total purchase consideration related to the Company’s business combinations completed during fiscal 2012
consisted of either cash consideration or cash consideration along with vested share-based awards assumed. The
total cash and cash equivalents acquired from these business combinations were immaterial. Total transaction
costs related to the Company’s business combination activities during fiscal 2012, 2011, and 2010 were $15
million, $10 million, and $32 million, respectively. These transaction costs were expensed as incurred as general
and administrative (“G&A”) expenses.
The Company continues to evaluate certain assets and liabilities related to business combinations completed
during the recent periods. Additional information, which existed as of the acquisition date but at that time was
unknown to the Company, may become known to the Company during the remainder of the measurement period,
a period not to exceed 12 months from the acquisition date. Changes to amounts recorded as assets or liabilities
may result in a corresponding adjustment to goodwill.
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