Cisco 2012 Annual Report Download - page 104

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The following tables present details of the Company’s purchased intangible assets (in millions):
July 28, 2012 Gross
Accumulated
Amortization Net
Purchased intangible assets with finite lives:
Technology ........................................ $2,267 $ (908) $1,359
Customer relationships .............................. 2,261 (1,669) 592
Other ............................................. 49 (41) 8
Total .................................................. $4,577 $(2,618) $1,959
July 30, 2011 Gross
Accumulated
Amortization Net
Purchased intangible assets with finite lives:
Technology ......................................... $1,961 $ (561) $1,400
Customer relationships ................................ 2,277 (1,346) 931
Other .............................................. 123 (91) 32
Total purchased intangible assets with finite lives ....... 4,361 (1,998) 2,363
IPR&D, with indefinite lives ............................... 178 — 178
Total .................................................. $4,539 $(1,998) $2,541
Purchased intangible assets include intangible assets acquired through business combinations as well as through
direct purchases or licenses. All IPR&D projects outstanding at the end of fiscal 2011 were completed during
fiscal 2012 and reclassified to technology purchased intangible assets with finite lives.
The following table presents the amortization of purchased intangible assets (in millions):
Years Ended July 28, 2012 July 30, 2011 July 31, 2010
Amortization of purchased intangible assets:
Cost of sales ................................. $424 $ 492 $277
Operating expenses:
Amortization of purchased intangible assets . .
383 520 491
Restructuring and other charges .......... —8—
Total ................................... $807 $1,020 $768
Amortization of purchased intangible assets for fiscal 2012, 2011, and 2010 included impairment charges of
approximately $12 million, $164 million, and $28 million, respectively. The impairment charges of $12 million
for fiscal 2012 were due to declines in estimated fair value resulting from reductions in expected future cash
flows associated with certain of the Company’s technology assets. For fiscal 2011, the $164 million in
impairment charges consisted of $64 million of charges to product cost of sales, $92 million of charges to
amortization of purchased intangibles, and $8 million of charges to restructuring and other charges. These
impairment charges were primarily due to declines in estimated fair value resulting from reductions in expected
future cash flows associated with certain of the Company’s consumer products and were categorized as follows:
$97 million in technology assets, $40 million in customer relationships, and $27 million in other purchased
intangible assets. For fiscal 2010, the impairment charges were due to reductions in expected future cash flows
related to certain of the Company’s technologies and customer relationships and were recorded as amortization
of purchased intangible assets.
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