Intel 2012 Annual Report Download - page 75

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Other 2011 Acquisitions
During 2011, in addition to the McAfee acquisition, we completed 13 acquisitions qualifying as business combinations in
exchange for total consideration of $2.1 billion, substantially all cash consideration. Total net cash consideration to
acquire the Wireless Solutions (WLS) business of Infineon Technologies AG, which operates as Intel Mobile
Communications, was $1.4 billion. The WLS business offers mobile phone components such as baseband processors,
radio frequency transceivers, and power management integrated circuits. In addition to managing the existing WLS
business, the objective of the acquisition was to provide solutions that enable wireless connectivity for a broad range of
computing applications.
The fair value of the assets acquired and liabilities assumed by major class in the acquisitions completed during 2011,
excluding McAfee, was allocated as follows:
(In Millions)
Fair value of net tangible assets acquired..................................................................................
$ 206
Goodwill......................................................................................................................................
517
Identified intangible assets .........................................................................................................
1,409
Total...........................................................................................................................................
$ 2,132
For information on the assignment of goodwill to our operating segments for the acquisitions, see “Note 15: Goodwill.”
The identified intangible assets assumed in the acquisitions completed during 2011, excluding McAfee, were recognized
as follows:
Fair Value
(In Millions)
Estimated
Useful Life
(In Years)
Developed technology...................................................................................................
$ 1,102
3–9
Customer relationships..................................................................................................
144
5–8
Other intangible assets..................................................................................................
44
2–7
Total identified intangible assets subject to amortization ..................................
$ 1,290
In-process research and development ..........................................................................
119
Total identified intangible assets...............................................................................
$ 1,409
Acquired developed technology represents the fair value of the acquirees’ products that have reached technological
feasibility and are a part of the acquirees’ product lines at the time acquired. Customer relationships represent the fair
value of the underlying relationships and agreements with the acquirees’ customers. In-process research and
development represents the fair value of incomplete research and development projects that had not reached
technological feasibility as of the date of acquisition. In the future, the fair value of each project at the acquisition date will
be either amortized or impaired, depending on whether the project is completed or abandoned. During the fourth quarter
of 2012, we performed an impairment analysis that determined that the carrying value of certain acquired in-process
research and development was fully impaired, resulting in a non-cash impairment charge of $21 million.
Actual and Pro Forma Results of Acquirees
Net revenue and net income attributable to acquisitions completed during 2011 have been included in our consolidated
statements of income from their respective acquisition dates. The acquisitions completed during 2011 were not
individually significant to our consolidated results of operations; however, they were significant in the aggregate. During
2011, the results of the businesses acquired in 2011 contributed approximately $3.6 billion to our net revenue and
reduced our net income by approximately $275 million; substantially all of these impacts were attributable to McAfee and
Intel Mobile Communications (IMC) and include the impacts of the amortization of acquired identified intangible assets.
McAfee is a non-reportable operating segment and is aggregated with similar non-reportable operating segments within
the software and services operating segments category for segment reporting purposes. IMC is a non-reportable
operating segment and is aggregated with similar non-reportable operating segments within the other Intel architecture
operating segments category for segment reporting purposes. For further information, see “Note 28: Operating Segment
and Geographic Information.”