Microsoft 2012 Annual Report Download - page 60

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NOTE 7 — INVENTORIES
The components of inventories were as follows:
(In millions)
June 30,
2012
2011
Raw materials
$
210
$
232
Work in process
96
56
Finished goods
831
1,084
Total
$
1,137
$
1,372
NOTE 8 — PROPERTY AND EQUIPMENT
The components of property and equipment were as follows:
(In millions)
June 30,
2012
2011
Land
$
528
$
533
Buildings and improvements
6,768
6,521
Leasehold improvements
2,550
2,345
Computer equipment and software
7,298
6,601
Furniture and equipment
2,087
1,991
Total, at cost
19,231
17,991
Accumulated depreciation
(10,962
)
(9,829
)
Total, net
$
8,269
$
8,162
During fiscal years 2012, 2011, and 2010, depreciation expense was $2.2 billion, $2.0 billion, and $1.8 billion,
respectively.
NOTE 9 — BUSINESS COMBINATIONS
Skype
On October 13, 2011, we acquired all of the issued and outstanding shares of Skype Global S.á r.l. (“Skype”), a leading
global provider of software applications and related Internet communications products based in Luxembourg, for $8.6
billion, primarily in cash. The major classes of assets and liabilities to which we allocated the purchase price were goodwill
of $7.1 billion, identifiable intangible assets of $1.6 billion, and unearned revenue of $222 million. The goodwill recognized
in connection with the acquisition is primarily attributable to our expectation of extending Skype’s brand and the reach of
its networked platform, while enhancing Microsoft’s existing portfolio of real-time communications products and services.
We assigned the goodwill to the following segments: $4.2 billion to Entertainment and Devices Division, $2.8 billion to
Microsoft Business Division, and $54 million to Online Services Division. Skype was consolidated into our results of
operations starting October 13, 2011, the acquisition date.
Following are the details of the purchase price allocated to the intangible assets acquired:
(In millions)
Weighted
Average Life
Marketing-related (trade names)
$
1,249
15 years
Technology-based
275
5 years
Customer-related
114
5 years
Contract-based
10
4 years
Total
$
1,648
13 years