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Table of Contents
SEAGATE TECHNOLOGY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Other Acquisitions
The Company acquired two other companies for cash in fiscal year 2006 for purchase prices of $15 million and $14 million, respectively,
which resulted in residual values of approximately $12 million and $5 million, respectively, being recorded to goodwill after the allocation of
fair value to tangible and intangible assets acquired and liabilities assumed. These acquisitions did not have a material impact on the
Company’s results of operations.
11. Goodwill and Other Intangible Assets
Goodwill
In accordance with SFAS No. 141, the Company allocated the excess of the cost of the acquired entities over the net amounts of assets
acquired and liabilities assumed to goodwill. As at June 30, 2006, the composition of the amounts recorded to goodwill are as follows (in
millions):
In accordance with the guidance in SFAS 142, goodwill will not be amortized. Instead, it will be tested for impairment on an annual basis or
more frequently upon the occurrence of circumstances that indicate that goodwill may be impaired. The Company did not record any
impairment of goodwill during the fiscal year ended June 30, 2006.
Other Intangible Assets
Balance as of July 1, 2005
$
—
Goodwill acquired through the Maxtor acquisition
2,458
Goodwill acquired through other acquisitions
17
Balance as of June 30, 2006
$
2,475
Other intangible assets consist primarily of existing technology, customer relationships and trade names acquired in business
combinations. Acquired intangibles are amortized on a straight-line basis over the respective estimated useful lives of the assets. The carrying
value of intangible assets at June 30, 2006 is set forth in the table below. The carrying value of intangible assets at July 1, 2005 was immaterial.
Accumulated amortization of intangibles was $33 million and $6 million at June 30, 2006 and July 1, 2005, respectively.
In fiscal years 2006, 2005, and 2004, amortization expense for other intangible assets was $29 million, $2 million, and $1 million,
respectively. Amortization of the existing technology intangible is charged to Cost of revenue while the amortization of the other intangible
assets is included in Operating expenses in the Consolidated Statements of Operations. Aggregate annual amortization of other intangible
assets, based on their current estimated lives, is estimated to be $148 million, $84 million, $51 million and $24 million for fiscal years 2007,
2008, 2009 and 2010, respectively.
99
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
(in millions)
Existing technology
$
150
$
(18
)
$
132
Customer relationships
140
(5
)
135
Trade names
33
(2
)
31
Patents and licenses
17
(8
)
9
Total acquired identifiable intangible assets
$
340
$
(33
)
$
307