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Table of Contents
SEAGATE TECHNOLOGY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
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.
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 29, 2007, the composition of the
amounts recorded to goodwill are as follows (in millions):
In accordance with the guidance in SFAS No. 142, goodwill is not amortized. Instead, it is 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 fiscal years 2007 and 2006.
Other Intangible Assets
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 29, 2007 is set forth in the table
below. The net carrying value of intangible assets at June 29, 2007 and June 30, 2006 was $188 million and
$307 million, respectively. Accumulated amortization of intangibles was $185 million and $33 million at June 29,
2007 and June 30, 2006, respectively.
In fiscal years 2007, 2006 and 2005, amortization expense for other intangible assets was $152 million,
$29 million and $2 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. During the year ended June 29, 2007, the Company recorded a write-off of in-process
research and development related to the acquisition of EVault in the amount of $4 million, which is included in
Product development in the Consolidated Statements of Operations. Aggregate annual amortization of other
intangible assets, based on their current estimated lives, is estimated to be $90 million, $58 million, $34 million,
$6 million and less than $1 million for fiscal years 2008, 2009, 2010, 2011 and 2012, respectively.
99
11.
Goodwill and Other Intangible Assets
Balance as of June 30, 2006
$
2,475
Adjustment to goodwill acquired through the Maxtor acquisitions (see Note 10)
(297
)
Goodwill acquired through EVault acquisition (see Note 10)
122
Balance as of June 29, 2007
$
2,300
Gross Carrying
Accumulated
Net Carrying
Weighted Average
Amount
Amortization
Amount
Remaining Useful Life
(In millions)
(In millions)
(In millions)
(In Years)
Existing technology
$
176
$
(121
)
$
55
2.1
Customer relationships
152
(47
)
105
2.6
Trade names
36
(9
)
27
2.9
Patents and licenses
9
(8
)
1
5.7
Total acquired identifiable intangible
assets
$
373
$
(185
)
$
188
2.5