Microsoft 2008 Annual Report Download - page 50

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PAGE 49
NOTE 6 INVENTORIES
(In millions)
June 30, 2008 2007
Raw materials $417 $435
Work in process 31 148
Finished goods 537 544
Inventories $985 $1,127
NOTE 7 PROPERTY AND EQUIPMENT
(In millions)
June 30, 2008 2007
Land $ 518 $428
Buildings and improvements 4,302 3,170
Leasehold improvements 1,728 1,077
Computer equipment and software 4,475 3,458
Furniture and equipment 1,521 1,233
Property and equipment, at cost 12,544 9,366
Accumulated depreciation (6,302) (5,016)
Property and equipment, net $ 6,242 $4,350
Property and equipment are stated at cost. Depreciation is computed principally on the straight-line method over
the estimated useful lives of the assets. The useful lives for buildings range from five to 15 years, leasehold
improvements generally range from two to ten years – representing the applicable lease terms plus reasonably
assured extensions, computer equipment and software range from two to three years, and furniture and
equipment range from one to five years. Land is not depreciated.
During fiscal years 2008, 2007, and 2006, depreciation expense was $1.4 billion, $1.2 billion, and $863 million,
respectively. The majority of depreciation expense in all years related to computer equipment.
NOTE 8 ACQUISITIONS
On August 10, 2007, we acquired all the outstanding shares of aQuantive, Inc. (“aQuantive”) for $5.9 billion,
which was paid primarily in cash. Headquartered in Seattle, Washington, aQuantive is a digital marketing
business that we expect will play a key role in the future development of our Online Services Business. We also
believe the acquisition will help us build and support next-generation advertiser and publisher solutions in
environments such as cross media planning, video-on-demand, and Internet protocol television. aQuantive was
consolidated into our results of operations starting August 10, 2007, the acquisition date.
As a result of the aQuantive acquisition, we recorded $5.2 billion of goodwill in our Online Services Business.
Of the $939 million of acquired intangible assets, $24 million was assigned to in-process research and
development assets and was expensed. The remaining acquired intangible assets include $476 million of
customer relationships with a weighted average life of six years, $327 million of technology-based intangible
assets with a weighted average life of four years, and $112 million of other intangible assets with a weighted
average life of five years.
On April 24, 2008, we acquired all the outstanding shares of Fast Search & Transfer ASA (“FAST”) for $1.3
billion, which was paid primarily in cash. Headquartered in Oslo, Norway, FAST is an enterprise search company
that we expect will broaden our enterprise search technology product offerings to businesses and will enable
innovation in related areas such as our portal and content management. FAST was consolidated into our results
of operations starting April 24, 2008, the acquisition date.