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2007 Annual Report 57
Notes to Consolidated Financial Statements
Purchased Intangible Assets and In-Process Research and Development
The following table presents the amortization of purchased intangible assets and in-process research and development (in millions):
Years Ended July 28, 2007 July 29, 2006 July 30, 2005
Amortization of purchased intangible assets
Cost of sales $ 156 $ 60 $ —
Operating expenses 407 393 227
Total $ 563 $ 453 $ 227
In-process research and development $ 81 $ 91 $ 26
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-process R&D is expensed upon acquisition because
technological feasibility has not been established and no future alternative uses exist.
The following table presents details of the purchased intangible assets acquired during fiscal 2007 and 2006 (in millions, except years):
TECHNOLOGY CUSTOMER RELATIONSHIPS OTHER TO TAL
Weighted-
Average Useful
Life (in Years) Amount
Weighted-
Average Useful
Life (in Years) Amount
Weighted-
Average Useful
Life (in Years) Amount Amount
FISCAL 2007
Arroyo Video Solutions, Inc. 5.0 $ 14 7.0 $ 11 — $ — $ 25
IronPort Systems, Inc. 4.0 127 6.0 101 3.1 3 231
Reactivity, Inc. 6.0 36 5.0 3 — — 39
WebEx Communications, Inc. 4.0 310 6.0 152 4.8 79 541
Other 4.7 76 4.7 13 2.4 1 90
Total $ 563 $ 280 $ 83 $ 926
FISCAL 2006
KiSS Technology A/S 4.5 $ 11 5.5 $ 6 5.0 $ 2 $ 19
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
Other 5.0 43 5.8 11 2.0 1 55
Total $ 616 $ 1,374 $ 62 $ 2,052
The following tables present details of the Company’s purchased intangible assets (in millions):
Gross
Accumulated
Amortization NetJuly 28, 2007
Technology $ 1,546 $ (505) $ 1,041
Customer relationships 1,812 (421) 1,391
Other 238 (130) 108
Total $ 3,596 $ (1,056) $ 2,540
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