Microsoft 2004 Annual Report Download - page 54

Download and view the complete annual report

Please find page 54 of the 2004 Microsoft annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 65

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65

PAGE 54
period before and after terms of the acquisition were agreed to and approved. Rare is a video game developer located
outside Leicestershire, England, that has broaden the portfolio of games available for the Xbox video game system. Rare
was acquired on September 24, 2002 for $377 million consisting primarily of $375 million in cash and is included in the
Home and Entertainment segment. Placeware, located in Mountain View, California, facilitates secure, highly reliable,
cross-firewall Web conferencing experiences allowing users to conduct business meetings online from a PC, and is part of
our Real Time Collaboration business unit in the Information Worker segment. Placeware was acquired on April 30, 2003
for $202 million, consisting primarily of $189 million in cash. Navision, Rare, and Placeware have been consolidated into
our financial statements since their respective acquisition dates. None of the acquisitions, individually or in the aggregate,
are material to our consolidated results of operations. Accordingly, pro forma financial information is not included in this
note.
The estimated fair values of the assets acquired and liabilities assumed at the date of the acquisitions for fiscal 2003
are as follows:
(In millions)
Navision a/s at
July 12, 2002
Rare Ltd. at
September 24,
2002
Placeware, Inc. at
April 30, 2003
Current assets $ 240 $ 25 $ 30
Property, plant and equipment 8 8 7
Intangible assets 169 75 30
Goodwill 1,197 281 180
Total assets acquired 1,614 389 247
Current liabilities (148) (12) (32)
Long-term liabilities (1) – (13)
Total liabilities assumed (149) (12) (45)
Net assets acquired $1,465 $377 $202
The $1.20 billion of goodwill resulting from the Navision acquisition was assigned to the Microsoft Business Solutions
segment. Of that total amount, approximately $900 million is expected to be deductible for tax purposes. The $281 million
of goodwill in the Rare acquisition was assigned to the Home and Entertainment segment. Of that total amount,
approximately $270 million is expected to be deductible for tax purposes. The $180 million of goodwill in the Placeware
acquisition was assigned to the Information Worker segment. None of the goodwill is expected to be deductible for tax
purposes.
The components of intangible assets acquired in the acquisitions above are as follows (no significant residual value is
estimated for these assets):
(In millions)
Navision a/s
Weighted
average
life Rare Ltd.
Weighted
average
life
Placeware,
Inc.
Weighted
average
life
Contract-based $115 6 years $16 5 years $ 1 6 years
Technology-based 48 4 years 36 5 years 4 4 years
Marketing-related 4 3 years 10 5 years 2 1 year
Customer-related – – – – 23 10 years
Research and Development 2
(1)
– 13
(1)
– – –
Total $169 5 years $75 5 years $30 8 years
(1) Amounts assigned to research and development assets were written off in accordance with FIN 4. Those write-offs
were included in Research and Development expenses.