Dell 2010 Annual Report Download - page 89

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Table of Contents
DELL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The goodwill of $2.3 billion represents the value from combining Perot Systems with Dell to provide customers with a broader range of
IT services and solutions as well as optimizing how these solutions are delivered. The acquisition has enabled Dell to supply even more
Perot Systems customers with Dell products and extended the reach of Perot Systems' capabilities to Dell customers around the world.
Goodwill of $679 million, $1,613 million, and $35 million was assigned to the Large Enterprise, Public, and SMB segments,
respectively.
Identifiable intangible assets included customer relationships, internally developed software, non-compete agreements, and trade names
and other assets. These intangible assets are being amortized over their estimated useful lives based on the pattern of expected future
economic benefit, which is generally on a non-straight-line basis based upon their expected future cash flows.
The following table summarizes the cost of amortizable intangible assets related to the acquisition of Perot Systems:
Weighted-
Estimated Average
Cost Useful Life
(in millions) (years)
Customer relationships $ 1,081 11.0
Technology 44 3.0
Non-compete agreements 39 5.2
Tradenames 10 1.5
Total amortizable intangible assets $ 1,174 10.4
Accounts receivable was comprised primarily of customer trade receivables. As such, the fair value of accounts receivable approximates
its carrying value of $410 million. The gross amount due is $423 million, of which $13 million was expected to be uncollectible.
In conjunction with the acquisition, Dell incurred $93 million in cash compensation payments made to former Perot Systems employees
who accepted positions with Dell related to the acceleration of Perot Systems unvested stock options and other cash compensation
payments. These cash compensation payments were expensed as incurred and are recorded in selling, general, and administrative
expenses in the Consolidated Statements of Income for Fiscal 2010. During Fiscal 2010, Dell incurred $116 million in acquisition-related
costs for Perot Systems, including the payments above, and an additional $23 million in other acquisition-related costs such as bankers'
fees, consulting fees, other employee-related charges, and integration costs.
There was no contingent consideration related to the acquisition.
The following table provides unaudited pro forma results of operations for the fiscal years ended January 29, 2010, and January 30, 2009,
as if Perot Systems had been acquired at the beginning of the fiscal year ended January 30, 2009. Due to the different fiscal period ends,
the pro forma results for the fiscal years ended January 29, 2010, and January 30, 2009, are combined with the results of Perot Systems
for the twelve months ended January 29, 2010, and December 31, 2008, respectively. The pro forma results are adjusted for intercompany
charges, but do not include any anticipated cost synergies or other effects of the planned integration of Perot Systems. Accordingly, such
pro forma results are not necessarily indicative of the results that actually would have occurred had the
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