Apple 2004 Annual Report Download - page 85

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Note 4
—
Acquisitions
Goodwill and Other Intangible Assets
The Company is currently amortizing its acquired intangible assets with definite lives over periods ranging from 3 to 10 years. The Company
ceased amortization of goodwill at the beginning of fiscal 2002 when it adopted SFAS No. 142.
The following table summarizes the components of gross and net intangible asset balances (in millions):
(a)
September 25, 2004
September 27, 2003
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
Goodwill (a)
$
80
—
$
80
$
85
—
$
85
Other acquired intangible assets
5
(5
)
—
5
(5
)
—
Acquired technology
42
(25
)
17
42
(18
)
24
Total acquired intangible assets
$
127
$
(30
)
$
97
$
132
$
(23
)
$
109
Accumulated amortization related to goodwill of $55 million arising prior to the adoption of SFAS No. 142 has been reflected in the
gross carrying amount of goodwill as of September 25, 2004 and September 27, 2003.
During the third quarter of 2004, the Company recorded an adjustment of approximately $5 million to goodwill related to the acquisition of
PowerSchool, Inc (PowerSchool) in fiscal 2001. This reduction of goodwill included the cancellation of 79,167 shares of Apple common stock,
valued at approximately $2 million, that were previously held in escrow and were refunded upon resolution of certain matters arising out of the
acquisition of PowerSchool. This adjustment also included approximately $3 million to adjust the original estimates of the pre-acquisition
PowerSchool restructuring liability to actual costs incurred.
Expected annual amortization expense related to acquired technology is as follows (in millions):
Amortization expense related to acquired intangible assets is as follows (in millions):
81
Fiscal Years:
2005
$
6
2006
3
2007
2
2008
1
2009
1
Thereafter
4
Total expected annual amortization expense
$
17
2004
2003
2002
Other acquired intangible assets amortization
$
—
$
—
$
1
Acquired technology amortization
7
10
5
Total amortization
$
7
$
10
$
6