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Table of Contents
SEAGATE TECHNOLOGY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
—
(
Continued)
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 27, 2008 and June 29, 2007, the Company’s goodwill totaled approximately $2.35
billion and $2.30 billion, respectively, of which approximately $2.2 billion relates to the Maxtor acquisition. During fiscal year 2008, goodwill
increased by approximately $52 million, primarily due to goodwill acquired in the MetaLINCS acquisition (see Note 10) and the net effect of the
adoption of and current year activity due to FIN 48 (see Note 4). During fiscal year 2007, goodwill decreased by approximately $175 million,
due primarily to a $297 million decrease for adjustments, primarily tax, related to the Maxtor acquisition and an increase of $122 million for
goodwill acquired in the EVault acquisition (see Note 10).
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. 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. In fiscal years 2008, 2007 and 2006, amortization expense for other intangible assets was $94 million,
$152 million and $29 million, respectively. Aggregate annual amortization of other intangible assets, based on their current estimated lives, is
estimated to be $62 million, $38 million, $9 million and $2 million for fiscal years 2009, 2010, 2011 and 2012, respectively.
The net carrying value of intangible assets at June 27, 2008 was $111 million and accumulated amortization of intangibles was $273
million. In fiscal year 2008, the Company recorded a write-off of in-process research and development related to the acquisition of MetaLINCS
in the amount of $4 million, which is included in Product development in the Consolidated Statements of Operations. The carrying value of
intangible assets at June 27, 2008 is set forth in the table below.
115
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
Weighted
Average
Remaining
Useful
Life
(In millions)
(In millions)
(In millions)
(In Years)
Existing technology
$
181
$
(155
)
$
26
2.7
Customer relationships
156
(90
)
66
1.8
Trade names
37
(19
)
18
2.0
Patents and licenses
9
(9
)
—
—
Other
1
—
1
1.7
Total acquired identifiable intangible assets
$
384
$
(273
)
$
111
2.1