Microsoft 2011 Annual Report Download - page 60

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60
NOTE 9 — BUSINESS COMBINATIONS
During fiscal year 2011, we acquired three entities for total consideration of $75 million, substantially all of which
was paid in cash. During fiscal year 2010, we acquired five entities for total consideration of $267 million,
substantially all of which was paid in cash. During fiscal year 2010, we also sold three entities for total
consideration of $600 million, including Razorfish in the second quarter of fiscal year 2010. During fiscal year
2009, we acquired nine entities for total consideration of $925 million, substantially all of which was paid in cash.
These entities have been included in or removed from our consolidated results of operations since their
acquisition or sale dates, respectively. Pro forma results of operations have not been presented because the
effects of these business combinations, individually and in the aggregate, were not material to our consolidated
results of operations.
Definitive Agreement with Skype
On May 10, 2011, we announced that we had entered into a definitive agreement with Skype Global S.à.r.l.
(“Skype”) under which we would acquire Skype, a leading internet communications company, for $8.5 billion in
cash. The acquisition will extend Skype’s brand and reach of its network platform, while enhancing our existing
portfolio of real-time communications products and services. The acquisition is subject to regulatory approvals
and other customary closing conditions. We obtained regulatory approval in the U.S. and expect to obtain all
remaining required regulatory approvals during calendar year 2011.
NOTE 10 — GOODWILL
Changes in the carrying amount of goodwill for fiscal years 2011 and 2010 by segment were as follows:
Balance as
of June 30,
2009 Acquisitions
Purchase
Accounting
Adjustments
and Other
Balance as
of June 30,
2010 Acquisitions
Purchase
Accounting
Adjustments
and Other
Balance as
of June 30,
2011
(In millions)
Windows &
Windows Live
Division $ 77 $ 0 $ 0 $ 77
$ 0 $ 12 $ 89
Server and Tools 1,038 82 (2 ) 1,118
13 8 1,139
Online Services
Division 6,657 0 (284 ) 6,373
0 0 6,373
Microsoft Business
Division 3,927 116 (19 ) 4,024
4 139 4,167
Entertainment and
Devices Division 804 0 (2 ) 802
30 (19) 813
Total $ 12,503 $ 198 $ (307 ) $ 12,394 $ 47 $ 140 $ 12,581
None of the amounts recorded as goodwill are expected to be deductible for tax purposes. The measurement
period for purchase price allocations ends as soon as information on the facts and circumstances becomes
available, but will not exceed 12 months. Adjustments in the purchase price allocation may require a recasting of
the amounts allocated to goodwill retroactive to the period in which the acquisition occurred. Any change in the
goodwill amounts resulting from foreign currency translations are presented as “other” in the above table. Also
included within “other” for fiscal year 2010 is $285 million of goodwill associated with business dispositions. See
also Note 9 – Business Combinations.
We test goodwill for impairment annually on May 1 at the reporting unit level using a fair value approach. No
impairment of goodwill was identified as of May 1, 2011.