Cisco 2002 Annual Report Download - page 36

Notes to Consolidated Financial Statements
34 Cisco Systems, Inc. 2002 Annual Report
The estimated future amortization expense of purchased intangible assets as of July 27, 2002 was as follows (in millions):
Fiscal Year Amount
2003 $ 359
2004 234
2005 154
2006 49
2007 1
Total $ 797
The following table presents the changes in goodwill allocated to the Company’s reportable segments during fiscal 2002 (in millions):
Balance at Balance at
July 28, 2001 Acquired Adjustments July 27, 2002
Americas $ 2,177 $120 $ 38 $ 2,335
EMEA 531 50 12 593
Asia Pacific 110 26 4 140
Japan 371 125 1 497
Total $ 3,189 $321 $ 55 $ 3,565
In fiscal 2002, the Company purchased a portion of the minority interest of Cisco Systems, K.K. (Japan). As a result, the Company
increased its ownership to 92.4% of the voting rights of Cisco Systems, K.K. (Japan) and recorded goodwill of $108 million. The
adjustments during fiscal 2002 were due to the reclassification of acquired workforce intangible and the related deferred tax liabilities
to goodwill as a result of the adoption of SFAS 142.
Pooling of Interests Combinations
There were no transactions accounted for as pooling of interests in fiscal 2001. In fiscal 2000, the Company acquired StratumOne
Communications, Inc.; TransMedia Communications, Inc.; Cerent Corporation; WebLine Communications Corporation; SightPath, Inc.;
InfoGear Technology Corporation; and ArrowPoint Communications, Inc. These transactions were accounted for as pooling of
interests and the historical financial information for all periods presented prior to fiscal 2000 was restated. In addition, the historical
financial information for all periods presented prior to fiscal 2000 was restated to reflect the acquisition of Fibex Systems, which
was completed in the fourth quarter of fiscal 1999 and accounted for as a pooling of interests. As a result of these transactions,
354 million shares of common stock were exchanged and stock options were assumed for a fair value of $15.2 billion.
In fiscal 2000, the Company also acquired Cocom A/S; V-Bits, Inc.; Growth Networks, Inc.; Altiga Networks, Inc.; and
Compatible Systems Corporation. As a result of these transactions, 20 million shares of common stock were exchanged and stock
options were assumed for a fair value of $1.1 billion. These transactions were accounted for as pooling of interests. The historical
operations of these entities were not material to the Company’s consolidated operations on either an individual or aggregate basis;
therefore, prior period financial statements were not restated for these acquisitions.
4. Restructuring Costs and Other Special Charges and Provision for Inventory
On April 16, 2001, due to macroeconomic and capital spending issues affecting the networking industry, the Company announced
a restructuring program to prioritize its initiatives around a focus on profit contribution, high-growth areas of its business, reduction
of expenses, and improved efficiency. This restructuring program included a worldwide workforce reduction, consolidation of excess
facilities, and restructuring of certain business functions.
As a result of the restructuring program and decline in forecasted revenue in the third quarter of fiscal 2001, the Company
recorded restructuring costs and other special charges of $1.2 billion and an additional excess inventory charge of $2.2 billion.
The following discussion provides detailed information relating to the status of the restructuring liabilities and additional excess
inventory reserve as of July 27, 2002.