Intel 2012 Annual Report Download - page 74

68
2011 Acquisitions
McAfee, Inc.
On February 28, 2011, we completed the acquisition of McAfee by acquiring all issued and outstanding common shares in
exchange for cash. The acquired company continues to operate as McAfee and offers products for endpoint security,
network and content security, risk and compliance, and consumer and mobile security. In addition to managing the
existing McAfee business, the objective of the acquisition was to accelerate and enhance Intel’s combination of hardware
and software security solutions, thereby improving the overall security of our platforms.
Total consideration to acquire McAfee was $6.7 billion (net of $943 million of cash and cash equivalents acquired) and
comprised the following:
(In Millions)
Cash ...........................................................................................................................................
$ 6,652
Share-based awards assumed...................................................................................................
48
Total...........................................................................................................................................
$ 6,700
The fair value of the assets acquired and liabilities assumed by major class in the acquisition of McAfee was recognized
as follows:
(In Millions)
Marketable debt securities .........................................................................................................
$ 329
Goodwill......................................................................................................................................
4,299
Identified intangible assets .........................................................................................................
3,552
Deferred tax assets ....................................................................................................................
738
Other assets ...............................................................................................................................
417
Deferred income.........................................................................................................................
(1,049)
Deferred tax liabilities .................................................................................................................
(1,191)
Other liabilities............................................................................................................................
(395)
Total...........................................................................................................................................
$ 6,700
The goodwill of $4.3 billion arising from the acquisition is primarily attributed to synergies to enable a single company to
combine security and hardware for the protection of online devices, as well as the assembled workforce of McAfee.
Substantially all of the goodwill recognized is not deductible for tax purposes. For information on the assignment of
goodwill to our operating segments for the acquisition, see “Note 15: Goodwill.”
The identified intangible assets assumed in the acquisition of McAfee were recognized as follows based upon their fair
value as of February 28, 2011:
Fair Value
(In Millions)
Estimated
Useful Life
(In Years)
Developed technology.....................................................................................................
$ 1,221
4
Customer relationships....................................................................................................
1,418
2–7
Total identified intangible assets subject to amortization ........................................
$ 2,639
In-process research and development ............................................................................
92
Trade names ...................................................................................................................
821
Total identified intangible assets.................................................................................
$ 3,552
Acquired developed technology represents the fair value of McAfee products that have reached technological feasibility
and were part of McAfee’s product offerings at the date of acquisition. Customer relationships represent the fair value of
the underlying relationships and agreements with McAfee’s customers. In-process research and development represents
the fair value of incomplete McAfee research and development projects that had not reached technological feasibility as of
the date of acquisition. Incremental costs incurred for those projects are expensed as incurred in research and
development. Since the acquisition was completed, most of the projects have been completed and the associated costs
are being amortized. Trade names are indefinite-lived intangible assets and represent the fair value of brand and name
recognition associated with the marketing of McAfee’s products and services.