Microsoft 2005 Annual Report Download - page 50

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PAGE 49
NOTE 9 INTANGIBLE ASSETS
The components of finite-lived intangible assets are as follows:
(In millions)
June 30 2004
2005
Gross
carryin
g
amount
Accumulated
amortization
Net carryin
g
amount
Gross
carryin
g
amoun
t
Accumulated
amortization
Net carryin
g
amount
Contract-based $ 908 $(476) $432
$
957
$(606) $351
Technolog
y
-based 278 (183)
95
309
(200
)
109
Marketing-related 35 (19)
16
35
(25
)
10
Customer-related 30 (4)
26
40
(11
)
29
Total $1,251 $(682) $569
$
1,341
$(842) $499
During fiscal year 2004, we recorded additions to intangible assets of $355 million, of which $266 million was related to a
comprehensive intellectual property license that we received in conjunction with the settlement of InterTrust v. Microsoft. During
fiscal year 2005, we recorded additions to finite-lived intangible assets of approximately $90 million. No other material
intangibles were acquired in fiscal year 2004. We estimate that we have no significant residual value related to our finite-lived
intangible assets. The components of finite-lived intangible assets acquired during fiscal years 2004 and 2005 are as follows:
(In millions)
Y
ear Ended June 30 2004
2005
Amount
Weighted
average life Amoun
t
Weighted
average life
Contract-based $324 9
years $16 6
years
Technolog
y
-based 28 4 years 64 5 years
Customer-related 3 3 years 10 5 years
Marketing-related – – ––
Total $355 $90
Acquired finite-lived intangibles are generally amortized on a straight-line basis over weighted average periods. Intangible assets
amortization expense was $170 million for fiscal year 2004 and $161 million for fiscal year 2005. The estimated future
amortization expense related to intangible assets as of June 30, 2005 is as follows:
(In millions)
Y
ear Ended June 30
Amount
2006 $123
2007 99
2008 81
2009 50
2010 39
Total $392
NOTE 10 INCOME TAXES
The components of the provision for income taxes are as follows:
(In millions)
Y
ear Ended June 30
2003 2004 2005
Current taxes:
U.S. federal
$
3,708
$3,766
$3,401
U.S. state and local
153
174
152
International
808
1,056
911
Current taxes
4,669
4,996
4,464
Deferred taxes
(1,146)
(968)
(90
)
Provision for income taxes $
3,523 $4,028
$4,374