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Table of Contents
EMC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
completion of each in-process project was estimated to determine the discount rate to be applied to the valuation of the in-process technology. Based upon the
level of completion and the risk associated with in-process technology, we deemed a discount rate of 50% as appropriate for valuing IPR&D.
Pro forma Effect of the Acquisitions
The following pro forma information gives effect to all the acquisitions set forth in the sections entitled RSA Security Inc., Other 2006 Acquisitions,
Captiva and System Management Arts, Inc. above as if the acquisitions occurred on January 1, 2005. The pro forma results are not necessarily indicative of
what actually would have occurred had the acquisitions been in effect for the periods presented (table in thousands, except per share data):
(unaudited)
Year Ended December 31,
2006
2005
Revenue $ 11,452,189 $ 10,112,926
Net income 1,087,513 1,010,428
Net income per weighted average share, basic $ 0.48 $ 0.43
Net income per weighted average share, diluted $ 0.48 $ 0.42
The pro forma impact on reported net income per weighted average share was primarily attributable to amortization of acquired intangible assets and
interest expense associated with the acquisition of RSA.
Intangible Assets
Intangible assets, excluding goodwill, as of December 31, 2006 and 2005, consist of (tables in thousands):
2006
Category
Gross Carrying
Amount
Accumulated
Amortization
Net Book Value
Purchased technology $ 817,066 $ (338,493) $ 478,573
Patents 61,857 (61,130) 727
Software licenses 56,698 (19,999) 36,699
Trademarks and tradenames 108,409 (20,465) 87,944
Customer relationships and customer lists 481,985 (89,168) 392,817
Other 13,130 (6,341) 6,789
Total intangible assets, excluding goodwill $ 1,539,145 $ (535,596) $ 1,003,549
2005
Category
Gross Carrying
Amount
Accumulated
Amortization
Net Book Value
Purchased technology $ 489,953 $ (241,011) $ 248,942
Patents 61,857 (60,191) 1,666
Software licenses 49,788 (12,141) 37,647
Trademarks and tradenames 30,883 (15,304) 15,579
Customer relationships and customer lists 301,586 (50,373) 251,213
Other 11,530 (3,553) 7,977
Total intangible assets, excluding goodwill $ 945,597 $ (382,573) $ 563,024
Amortization expense on intangibles was $153.0 million, $112.8 million and $109.3 million in 2006, 2005 and 2004, respectively. As of December 31,
2006, amortization expense on intangible assets for the next five years is expected to be as follows (table in thousands):
2007 $191,015
2008 226,915
2009 175,829
2010 135,339
2011 93,111
Total $822,209