Microsoft 2006 Annual Report Download - page 54

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PAGE 53
• Lionhead Studios Ltd., a Guildford, England-based software studio specializing in PC game development;
• Vexcel Corporation, a Colorado-based imagery technology and systems provider;
• Massive Corporation, a New York-based developer of video game advertising;
• ProClarity Corporation, an Idaho-based developer of advanced analysis and visualization technologies for business
platforms; and
• 14 various other entities specializing in areas such as application security, digital access management, and networking
solutions.
As a result of these acquisitions, we recorded $592 million of goodwill. None of that amount is expected to be deductible for
tax purposes. Goodwill was assigned to our operating segments as follows: $29 million to Server & Tools, $263 million to MSN,
$31 million to Client, $246 million to Information Worker, and $23 million to Home and Entertainment. We also recorded $125
million of technology-based intangible assets with a weighted-average amortization period of 3.25 years, and $26 million of
other intangible assets with a weighted-average amortization period of 4.5 years. All of the entities 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 information has not been included.
NOTE 9 INTANGIBLE ASSETS
The components of finite-lived intangible assets were as follows:
(In millions)
June 30
2006
2005
Gross
carrying
amount
Accumulated
amortization
Net carrying
amount
Gross
carrying
amount
Accumulated
amortization
Net carrying
amount
Contract-based $ 954
$(661
)
$292
$
957 $(606)
$351
Technolog
y
-based 458
(255
)
203
309 (200)
109
Marketin
g
-related 42
(32
)
10
35 (25)
10
Customer-related 54
(21
)
33
40 (11)
29
Total $1,508
$(969
)
$539
$1,341 $(842)
$499
During fiscal year 2006 and 2005, we recorded additions to intangible assets of $189 million and $90 million, respectively. We
estimate that we have no significant residual value related to our intangible assets. The components of finite-lived intangible
assets acquired during fiscal years 2006 and 2005 were as follows:
(In millions)
Year Ended June 30
2006
2005
Amount
Weighted
average life
Amount
Weighted
average life
Contract-based
$
36
4
years $16
6
years
Technolog
y
-based
140
4 years 64
5 years
Marketin
g
-related
5
3 years –
–
Customer-related
8
4 years 10
5 years
Total
$189
$90