To our shareholders, customers, partners and employees

Any change in the goodwill amounts resulting from foreign currency translations are presented as “other” in the above table. Also included within “other” are business dispositions and transfers between business segments due to reorganizations, as applicable. For fiscal year 2012, a $6.2 billion goodwill impairment charge is included in “other,” as discussed further below. This goodwill impairment charge also represents our accumulated goodwill impairment as of June 30, 2012.

We tested goodwill for impairment as of May 1, 2012 at the reporting unit level using a discounted cash flow methodology with a peer-based, risk-adjusted weighted average cost of capital. We believe use of a discounted cash flow approach is the most reliable indicator of the fair values of the businesses.

Upon completion of the annual test, OSD goodwill was determined to be impaired. The impairment was the result of the OSD unit experiencing slower than projected growth in search queries and search advertising revenue per query, slower growth in display revenue, and changes in the timing and implementation of certain initiatives designed to drive search and display revenue growth in the future. Although revenues increased compared to the prior year, the industry is highly competitive and certain operational challenges have affected our expectations such that future growth and profitability are lower than previous estimates. In addition, in the current year, we added a business-specific risk factor to the weighted average cost of capital used to calculate the discounted cash flows of OSD in estimating the fair value of the business. This business-specific risk factor reflects the increased uncertainty in forecasting the future performance of OSD.

Because our annual test indicated that OSD’s carrying value exceeded its estimated fair value, a second phase of the goodwill impairment test (“Step 2”) was performed specific to OSD. Under Step 2, the fair value of all OSD assets and liabilities were estimated, including tangible assets, existing technology, trade names, and partner relationships for the purpose of deriving an estimate of the implied fair value of goodwill. The implied fair value of the goodwill was then compared to the recorded goodwill to determine the amount of the impairment. Assumptions used in measuring the value of these assets and liabilities included the discount rates, royalty rates, and obsolescence rates used in valuing the intangible assets, and pricing of comparable transactions in the market in valuing the tangible assets.

No other instances of impairment were identified in our May 1, 2012 test.

NOTE 11 — INTANGIBLE ASSETS

The components of intangible assets, all of which are finite-lived, were as follows:

We estimate that we have no significant residual value related to our intangible assets. No material impairments of intangible assets were identified during any of the periods presented.

The components of intangible assets acquired during the periods presented were as follows:

(In millions)		Amount				Weighted Average Life				Amount				Weighted Average Life
Year Ended June 30,		2012								2011
Technology-based		$	1,548				7 years			$	119				3 years
Marketing-related			1,249				15 years				1				7 years
Contract-based			115				7 years				0
Customer-related			114				5 years				2				4 years
Total		$	3,026				10 years			$	122				3 years

Directory: investor -> reports
reports -> United States Securities and Exchange Commission Washington, D. C. 20549 form 10-K
reports -> Dear shareholders, customers, partners and colleagues
reports -> United states
investor -> Microsoft Financial Analyst Meeting 2013 Engineer Leader Panel Moderator: Tami Reller Julie Larson-Green, Kirill Tatarinov, Qi Lu, Satya Nadella, Terry Myerson Bellevue, Washington September 19, 2013 chris suh

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