Goodwill and Acquired Intangible Assets
We have reclassified our balance sheets to reflect the net assets of Intuit Financial Services as discontinued operations for all periods presented. Consequently, the goodwill and intangible assets of IFS are not included in the tables below. Because the net assets of our Intuit Websites and Intuit Health discontinued operations were not material for any period presented, we have not reclassified our balance sheets to reflect them as discontinued operations. Consequently, balances and activity relating to the goodwill and intangible assets of those businesses are included in the tables below. See Note 8, “Discontinued Operations,” for more information.
Goodwill
Changes in the carrying value of goodwill by reportable segment during the twelve months ended July 31, 2013 and July 31, 2012 were as shown in the following table. Our reportable segments are described in Note 15, “Segment Information.”
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| | | | | | | | | | | | | | | | | | | | | | | |
(In millions) | Balance July 31, 2011 | | Goodwill Acquired/ Adjusted | | Balance July 31, 2012 | | Goodwill Acquired/ Adjusted | | Goodwill Impairment Charges | | Balance July 31, 2013 |
Financial Management Solutions | $ | 151 |
| | $ | 316 |
| | $ | 467 |
| | $ | (2 | ) | | — |
| | $ | 465 |
|
Employee Management Solutions | 271 |
| | — |
| | 271 |
| | — |
| | — |
| | 271 |
|
Payment Solutions | 182 |
| | 9 |
| | 191 |
| | — |
| | — |
| | 191 |
|
Consumer Tax | 30 |
| | — |
| | 30 |
| | — |
| | — |
| | 30 |
|
Accounting Professionals | 90 |
| | — |
| | 90 |
| | — |
| | — |
| | 90 |
|
Other Businesses | 236 |
| | 1 |
| | 237 |
| | — |
| | (38 | ) | | 199 |
|
Totals | $ | 960 |
| | $ | 326 |
| | $ | 1,286 |
| | $ | (2 | ) | | $ | (38 | ) | | $ | 1,246 |
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We had no accumulated goodwill impairment losses for our continuing operations at July 31, 2011. See Note 2, “Fair Value Measurements – Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis,” for a description of the goodwill impairment charges we recorded in fiscal 2013 and fiscal 2011 for our Intuit Health reporting unit, which was part of our Other Businesses segment before becoming discontinued operations in the fourth quarter of fiscal 2013. The increase in goodwill in our Financial Management Solutions segment during the twelve months ended July 31, 2012 was due to the acquisition of Demandforce, Inc. See Note 7, “Business Combinations,” for more information.
Acquired Intangible Assets
The following table shows the cost, accumulated amortization and weighted average life in years for our acquired intangible assets at the dates indicated.
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| | | | | | | | | | | | | | | | | | | |
(Dollars in millions) | Customer Lists | | Purchased Technology | | Trade Names and Logos | | Covenants Not to Compete or Sue | | Total |
| | | | | | | | | |
At July 31, 2013: | | | | | | | | | |
Cost | $ | 306 |
| | $ | 277 |
| | $ | 32 |
| | $ | 33 |
| | $ | 648 |
|
Accumulated amortization | (249 | ) | | (207 | ) | | (20 | ) | | (23 | ) | | (499 | ) |
Acquired intangible assets, net | $ | 57 |
| | $ | 70 |
| | $ | 12 |
| | $ | 10 |
| | $ | 149 |
|
Weighted average life in years | 7 |
| | 6 |
| | 6 |
| | 9 |
| | 7 |
|
| | | | | | | | | |
At July 31, 2012: | | | | | | | | | |
Cost | $ | 345 |
| | $ | 304 |
| | $ | 33 |
| | $ | 33 |
| | $ | 715 |
|
Accumulated amortization | (255 | ) | | (214 | ) | | (18 | ) | | (21 | ) | | (508 | ) |
Acquired intangible assets, net | $ | 90 |
| | $ | 90 |
| | $ | 15 |
| | $ | 12 |
| | $ | 207 |
|
Weighted average life in years | 6 |
| | 6 |
| | 6 |
| | 8 |
| | 7 |
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The following table shows the expected future amortization expense for our acquired intangible assets at July 31, 2013. Amortization of purchased technology is charged to cost of service and other revenue and to amortization of acquired technology in our statements of operations. Amortization of other acquired intangible assets such as customer lists is charged to amortization of other acquired intangible assets in our statements of operations. If impairment events occur, they could accelerate the timing of acquired intangible asset charges.
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| | | |
(In millions) | Expected Future Amortization Expense |
| |
Twelve months ending July 31, | |
2014 | $ | 43 |
|
2015 | 39 |
|
2016 | 28 |
|
2017 | 19 |
|
2018 | 13 |
|
Thereafter | 7 |
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Total expected future amortization expense | $ | 149 |
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