Notes to Consolidated Financial Statements
Notes to Consolidated Financial Statements
Note 14: Identified Intangible Assets |
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We classify identified intangible assets within other long-term assets. Identified intangible assets consisted of the following as of December 27, 2008:
| (In Millions) | Gross Assets | Accumulated Amortization | Net | ||||||
|---|---|---|---|---|---|---|---|---|---|
| Intellectual property assets | $ | 1,206 | $ | (582) | $ | 624 | |||
| Acquisition-related developed technology | 22 | (8) | 14 | ||||||
| Other intangible assets | 340 | (203) | 137 | ||||||
| Total identified intangible assets | $ | 1,568 | $ | (793) | $ | 775 | |||
During 2008, we acquired intellectual property assets for $68 million with a weighted average life of 10 years.
Identified intangible assets consisted of the following as of December 29, 2007:
| (In Millions) | Gross Assets | Accumulated Amortization | Net | ||||||
|---|---|---|---|---|---|---|---|---|---|
| Intellectual property assets | $ | 1,158 | $ | (438) | $ | 720 | |||
| Acquisition-related developed technology | 19 | (3) | 16 | ||||||
| Other intangible assets | 360 | (136) | 224 | ||||||
| Total identified intangible assets | $ | 1,537 | $ | (577) | $ | 960 | |||
During 2007, we acquired intellectual property assets for $170 million with a weighted average life of 11 years. The majority of the intellectual property assets acquired represented the fair value of assets capitalized as a result of a settlement agreement with Transmeta Corporation. Pursuant to the agreement, we agreed to pay Transmeta a total of $250 million in exchange for a technology license and other consideration. The present value of the settlement was $236 million of which $113 million was charged to cost of sales. The charge to cost of sales related to the portion of the license attributable to certain product sales through the third quarter of 2007. The remaining $123 million represented the value of the intellectual property assets capitalized and is being amortized to cost of sales over the assets' remaining useful lives.
During 2007, we acquired acquisition-related developed technology for $15 million with a weighted average life of four years, and recorded other intangible assets of $40 million with a weighted average life of four years.
All of our identified intangible assets are subject to amortization. We recorded the amortization of identified intangible assets on the consolidated statements of income as follows: intellectual property assets generally in cost of sales; acquisition-related developed technology in marketing, general and administrative; and other intangible assets as either a reduction of revenue or marketing, general and administrative.
Amortization expenses for the three years ended December 27, 2008 were as follows:
| (In Millions) | 2008 | 2007 | 2006 | ||||||
|---|---|---|---|---|---|---|---|---|---|
| Intellectual property assets | $ | 164 | $ | 159 | $ | 178 | |||
| Acquisition-related developed technology | $ | 5 | $ | 1 | $ | 20 | |||
| Other intangible assets | $ | 87 | $ | 92 | $ | 59 | |||
Based on identified intangible assets recorded as of December 27, 2008, and assuming that the underlying assets will not be impaired in the future, we expect amortization expenses for each period to be as follows:
| (In Millions) | 2009 | 2010 | 2011 | 2012 | 2013 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Intellectual property assets | $ | 142 | $ | 132 | $ | 79 | $ | 68 | $ | 51 | |||||
| Acquisition-related developed technology | $ | 5 | $ | 5 | $ | 4 | $ | — | $ | — | |||||
| Other intangible assets | $ | 124 | $ | 13 | $ | — | $ | — | $ | — | |||||