Cisco 2004 Annual Report Download - page 46

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Goodwill
The following tables present the changes in goodwill allocated to the Company’s reportable segments during fiscal 2004 and 2003
(in millions):
Balance at Balance at
July 26, 2003 Acquired July 31, 2004
Americas $2,642 $ 74 $2,716
EMEA 668 10 678
Asia Pacific 167 4 171
Japan 566 67 633
Total $4,043 $155 $4,198
Balance at Balance at
July 27, 2002 Acquired July 26, 2003
Americas $2,335 $307 $2,642
EMEA 593 75 668
Asia Pacific 140 27 167
Japan 497 69 566
Total $3,565 $478 $4,043
In fiscal 2004, the Company purchased a portion of the minority interest of Cisco Systems, K.K. (Japan). As a result, the Company
increased its ownership from 94.8% to 97.6% of the voting rights of Cisco Systems, K.K. (Japan) and recorded goodwill of $65 million,
which was included in the preceding table.
Acquisition of Andiamo Systems, Inc.
In April 2001, the Company entered into a commitment to provide convertible debt funding of approximately $84 million to Andiamo,
a privately held storage switch developer. This debt was convertible into approximately 44% of the equity of Andiamo. In connection
with this investment, the Company obtained a call option that provided the Company the right to purchase Andiamo. The purchase
price under the call option was based on a valuation of Andiamo using a negotiated formula. On August 19, 2002, the Company entered
into a definitive agreement to acquire Andiamo, which represented the exercise of its rights under the call option. The Company also
entered into a commitment to provide nonconvertible debt funding to Andiamo of approximately $100 million through the close of
the acquisition. Substantially all of the convertible debt funding of $84 million and nonconvertible debt funding of $100 million has
been expensed as research and development costs.
2004 ANNUAL REPORT 49