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2006 Annual Report 55
In-Process Research and Development
The Company’s methodology for allocating the purchase price for purchase acquisitions to in-process research and development (“in-process
R&D”) is determined through established valuation techniques in the high-technology communications industry. In-process R&D is expensed
upon acquisition because technological feasibility has not been established and no future alternative uses exist. Total in-process R&D expense
in scal 2006, 2005, and 2004 was $91 million, $26 million, and $3 million, respectively. The acquisition of Scientic-Atlanta accounted for
$88 million of the in-process R&D during scal 2006, which related primarily to projects associated with Scientic-Atlanta’s advanced models
of digital set-top boxes, network software enhancements and upgrades, and data products and transmission products.
Purchased Intangible Assets
The following table presents details of the purchased intangible assets acquired during scal 2006 and 2005 (in millions, except years):
TECHNOLOGY CUSTOMER RELATIONSHIPS OTHER
Weighted-
Average
Useful Life
(in Years) Amount
Weighted-
Average
Useful Life
(in Years) Amount
Weighted-
Average
Useful Life
(in Years) Amount Total
FISCAL 2006
KiSS Technology A/S 4.5 $ 11 5.5 $ 6 5.0 $ 2 $ 19
Metreos Corporation 4.5 1 — — 2.0 1 2
Scientific-Atlanta, Inc. 3.5 546 7.0 1,346 2.0 57 1,949
Sheer Networks, Inc. 4.5 16 6.0 11 4.5 2 29
SyPixx Networks, Inc. 5.0 7 5.0 5 — — 12
Other 5.0 35 6.5 6 — — 41
Total $ 616 $ 1,374 $ 62 $ 2,052
FISCAL 2005
Actona Technologies, Inc. 4.5 $ 21 — $ — — $ — $ 21
Airespace, Inc. 4.5 78 3.5 17 — — 95
NetSolve, Incorporated 3.5 24 5.5 7 — — 31
P–Cube Inc. 4.5 39 2.5 17 — — 56
Procket Networks, Inc. 7.5 22 2.5 3 1.0 1 26
Topspin Communications, Inc. 4.5 39 6.0 28 — — 67
Other 5.5 125 3.0 28 2.0 2 155
Total $ 348 $ 100 $ 3 $ 451
The following tables present details of the Company’s total purchased intangible assets (in millions):
Gross
Accumulated
Amortization NetJuly 29, 2006
Technology $ 1,052 $ (302) $ 750
Customer relationships 1,535 (175) 1,360
Other 164 (113) 51
Total $ 2,751 $ (590) $ 2,161
July 30, 2005 Gross
Accumulated
Amortization Net
Technology $ 880 $ (501) $ 379
Customer relationships 188 (53) 135
Other 130 (95) 35
Total $ 1,198 $ (649) $ 549
Notes to Consolidated Financial Statements