Notes to the Consolidated Financial Statements
(Dollars in millions, except per-share data and unless otherwise indicated)
Note 8 – Goodwill and Intangible Assets, Net
Goodwill:
The following table presents the changes in the carrying amount of goodwill, by operating segment, for the three years ended December 31, 2007 (in millions):
| Production | Office | DMO | Other | Total | ||||||||||||||
|
Balance at January 1, 2005 |
$ | 848 | $ | 881 | $ | – | $ | 119 | $ | 1,848 | ||||||||
|
Foreign currency translation adjustment |
(103 | ) | (74 | ) | – | – | (177 | ) | ||||||||||
|
Balance at December 31, 2005 |
$ | 745 | $ | 807 | $ | – | $ | 119 | $ | 1,671 | ||||||||
|
Foreign currency translation adjustment |
99 | 69 | – | 1 | 169 | |||||||||||||
|
Acquisition of Amici LLC |
– | – | – | 136 | 136 | |||||||||||||
|
Acquisition of XMPie, Inc. |
48 | – | – | – | 48 | |||||||||||||
|
Balance at December 31, 2006 |
$ | 892 | $ | 876 | $ | – | $ | 256 | $ | 2,024 | ||||||||
|
Foreign currency translation adjustment |
21 | 17 | – | – | 38 | |||||||||||||
|
Acquisition of GIS |
– | 1,218 | – | 105 | 1,323 | |||||||||||||
|
Acquisition of Advectis, Inc. |
– | – | – | 26 | 26 | |||||||||||||
|
GIS Acquisitions |
– | 30 | – | 3 | 33 | |||||||||||||
|
Other |
– | – | – | 4 | 4 | |||||||||||||
|
Balance at December 31, 2007 |
$ | 913 | $ | 2,141 | $ | – | $ | 394 | $ | 3,448 | ||||||||
Intangible Assets, Net:
Intangible assets primarily relate to the Office operating segment. Intangible assets were comprised of the following as of December 31, 2007 and 2006 (in millions):
| December 31, 2007 | December 31, 2006 | |||||||||||||||||||
|
Weighted
Average Amortization Period |
Gross
Carrying Amount |
Accumulated
Amortization |
Net
Amount |
Gross
Carrying Amount |
Accumulated
Amortization |
Net
Amount |
||||||||||||||
|
Customer base |
14 years | $ | 462 | $ | 118 | $ | 344 | $ | 258 | $ | 89 | $ | 169 | |||||||
|
Distribution network |
25 years | 123 | 39 | 84 | 123 | 35 | 88 | |||||||||||||
|
GIS Trademarks |
20 years | 174 | 6 | 168 | – | – | – | |||||||||||||
|
Technology, trademarks and non-compete |
6 years | 40 | 15 | 25 | 165 | 136 | 29 | |||||||||||||
| $ | 799 | $ | 178 | $ | 621 | $ | 546 | $ | 260 | $ | 286 | |||||||||
Amortization expense related to intangible assets was $46, $45, and $42 for the years ended December 31, 2007, 2006 and 2005, respectively, and is expected to approximate $46 in 2008 and approximate $45 annually from 2009 through 2012. Amortization expense is primarily recorded in Other expenses, net, with the exception of amortization expense associated with licensed technology, which is recorded in Cost of sales and Cost of service, outsourcing and rentals, as appropriate.
