ORACLE CORP | 2013 | FY | 3


7. INTANGIBLE ASSETS AND GOODWILL

 

The changes in intangible assets for fiscal 2013 and the net book value of intangible assets at May 31, 2013 and 2012 were as follows:

 

 

Intangible Assets, Gross

 

Accumulated Amortization

 

Intangible Assets, Net

 

Weighted

(Dollars in millions)

 

May 31,
2012

 

 

Additions

 

May 31,
2013

 

May 31,
2012

 

Expense

 

May 31,
2013

 

May 31,
2012

 

May 31,
2013

 

Average
Useful Life
(1)

Software support agreements and related relationships

 

$

5,294

 

$

4

 

$

5,298

 

$

(3,330)

 

$

(582)

 

$

(3,912)

 

$

1,964

 

$

1,386

 

5 years

Hardware systems support agreements and related relationships

 

 

768

 

 

49

 

 

817

 

 

(266)

 

 

(121)

 

 

(387)

 

 

502

 

 

430

 

7 years

Developed technology

 

 

6,908

 

 

558

 

 

7,466

 

 

(4,651)

 

 

(826)

 

 

(5,477)

 

 

2,257

 

 

1,989

 

7 years

Core technology

 

 

2,549

 

 

30

 

 

2,579

 

 

(1,609)

 

 

(329)

 

 

(1,938)

 

 

940

 

 

641

 

3 years

Customer relationships and contract backlog

 

 

2,260

 

 

175

 

 

2,435

 

 

(1,287)

 

 

(350)

 

 

(1,637)

 

 

973

 

 

798

 

6 years

Cloud software subscriptions and related relationships

 

 

989

 

 

238

 

 

1,227

 

 

(42)

 

 

(113)

 

 

(155)

 

 

947

 

 

1,072

 

8 years

Trademarks

 

 

597

 

 

38

 

 

635

 

 

(292)

 

 

(64)

 

 

(356)

 

 

305

 

 

279

 

8 years

Total intangible assets subject to amortization

 

 

19,365

 

 

1,092

 

 

20,457

 

 

(11,477)

 

 

(2,385)

 

 

(13,862)

 

 

7,888

 

 

6,595

 

7 years

In-process research and development

 

 

11

 

 

34

 

 

 45

 

 

 —

 

 

 —

 

 

 —

 

 

11

 

 

 45

 

N.A.

Total intangible assets, net

 

$

19,376

 

$

1,126

 

$

20,502

 

$

(11,477)

 

$

(2,385)

 

$

(13,862)

 

$

7,899

 

$

6,640

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

__________

(1)

Represents weighted average useful lives of intangible assets acquired during fiscal 2013.

 

Total amortization expense related to our intangible assets was $2.4 billion in each of fiscal 2013, 2012 and 2011. As of May 31, 2013, estimated future amortization expenses related to intangible assets were as follows (in millions):

 

Fiscal 2014

 $

2,123

Fiscal 2015

 

1,656

Fiscal 2016

 

1,094

Fiscal 2017

 

523

Fiscal 2018

 

397

Thereafter

 

802

Total intangible assets subject to amortization

 $

6,595

 In-process research and development

 

45

Total intangible assets, net

 $

6,640

 

 

 

 

 

 

The changes in the carrying amounts of goodwill, which is generally not deductible for tax purposes, for our operating segments for fiscal 2013 and 2012 were as follows:

(Dollars in millions)

 

New Software Licenses and Cloud Software Subscriptions

 

Software License Updates and Product Support

 

Hardware Systems Support

 

Other(3)

 

Total

Balances as of May 31, 2011

 

 $

           6,785

 

 $

      12,052

 

 $

      1,009

 

 $

     1,707

 

 $

  21,553

         Goodwill from acquisitions

 

 

658

 

 

461

 

 

184

 

 

2,378

 

 

3,681

         Goodwill adjustments(1)

 

 

(76)

 

 

(34)

 

 

 —

 

 

(5)

 

 

(115)

Balances as of May 31, 2012

 

 

           7,367

 

 

      12,479

 

 

      1,193

 

 

     4,080

 

 

  25,119

         Allocation of goodwill(2)

 

 

           2,346

 

 

 —

 

 

 —

 

 

   (2,346)

 

 

 —

         Goodwill from acquisitions

 

 

933

 

 

 27

 

 

 62

 

 

 1,341

 

 

2,363

         Goodwill adjustments(1)

 

 

 (113)

 

 

 (32)

 

 

4

 

 

 2

 

 

 (139)

Balances as of May 31, 2013

 

 $

 10,533

 

 $

 12,474

 

 $

 1,259

 

 $

 3,077

 

 $

27,343

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

__________

(1)

Pursuant to our business combinations accounting policy, we recorded goodwill adjustments for the effect on goodwill of changes to net assets acquired during the measurement period (up to one year from the date of an acquisition). Goodwill adjustments were not significant to our previously reported operating results or financial position.

(2)

Represents the allocation of goodwill to our operating segments upon completion of our intangible asset valuations.

(3)

Represents goodwill allocated to our other operating segments and approximately $1.3 billion of goodwill for certain of our acquisitions that will be allocated based upon the finalization of valuations.

.


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