Composition of Certain Financial Statement Captions
|12 Months Ended|
Sep. 25, 2011
|Notes to Financial Statements [Abstract]|
|Note 4 - Composition of Certain Financial Statement Items||
Note 4. Composition of Certain Financial Statement Items
Property, Plant and Equipment.
Depreciation and amortization expense related to property, plant and equipment for fiscal 2011, 2010 and 2009 was $704 million, $437 million and $428 million, respectively. The gross book values of property under capital leases included in buildings and improvements were $175 million and $227 million at September 25, 2011 and September 26, 2010, respectively. These capital leases principally related to base station towers and buildings. Amortization of assets recorded under capital leases is included in depreciation expense. Capital lease additions during fiscal 2011, 2010 and 2009 were $1 million, $40 million and $50 million, respectively.
At September 25, 2011 and September 26, 2010, buildings and improvements and leasehold improvements with aggregate net book value of $19 million and $38 million, respectively, including accumulated depreciation and amortization of $8 million and $8 million, respectively, were leased to third parties or held for lease to third parties. Future minimum rental income on facilities leased to others in fiscal 2012 to 2015 is expected to be $5 million, $3 million, $2 million and $1 million, respectively, and zero thereafter.
Goodwill and Other Intangible Assets. The Company’s reportable segment assets do not include goodwill. The Company allocates goodwill to its reporting units for annual impairment testing purposes. Goodwill was allocable to reporting units included in the Company’s reportable segments and to its QMT division, a nonreportable segment, as described in Note 10 as follows (in millions):
During fiscal 2011, the Firethorn division in the QWI segment introduced a new product application trademarked as SWAGG. The initial consumer adoption rate of SWAGG had fallen significantly short of the Company’s expectations, and as a result, the Company revised its internal forecasts to reflect lower than expected demand and reduced the Firethorn cost structure. Based on these adverse changes, the Company performed a goodwill impairment test for the Firethorn division, which was determined to be a reporting unit for purposes of the goodwill impairment test. The goodwill impairment test is a two-step process. First, the Company estimated the fair value of the Firethorn reporting unit by considering both discounted future projected cash flows and prices of comparable businesses. The results of this analysis indicated that the carrying value of the reporting unit exceeded its fair value. Therefore, the Company measured the amount of impairment charge by determining the implied fair value of the goodwill as if the Firethorn reporting unit were being acquired in a business combination. The Company determined the fair value of the assets and the liabilities, primarily using a cost approach. Based on the results of the goodwill impairment test, the Company recorded a pre-tax goodwill impairment charge of $114 million in other operating expenses in fiscal 2011. Subsequent to the impairment, $40 million of goodwill remained for the Firethorn reporting unit.
The components of other intangible assets were as follows (in millions):
Certain spectrum licenses with a carrying value of $746 million that the Company has agreed to sell were classified as held for sale at September 25, 2011 (Note 11). All of the Company’s intangible assets, other than goodwill, certain spectrum licenses in the amount of $16 million and acquired in-process research and development, are subject to amortization. Amortization expense related to these intangible assets for fiscal 2011, 2010 and 2009 was $357 million, $227 million and $207 million, respectively, and amortization expense is expected to be $457 million, $438 million, $426 million, $385 million and $277 million for fiscal 2012 to 2016, respectively, and $1.1 billion thereafter.
Other Current Liabilities.
This item represents the disclosure of the components of certain financial statement captions, including but not limited to, accounts receivable, inventories, property, plant, and equipment, goodwill and other intangible assets, and other current liabilities.