Note 15: Goodwill and Other Intangible Assets
| December 31 (In millions) | 2007 | 2006 |
|---|---|---|
| GOODWILL | ||
| GE | $ 55,689 | $ 48,645 |
| GECS | 25,427 | 22,754 |
| Total | $ 81,116 | $ 71,399 |
| December 31 (In millions) | 2007 | 2006 |
|---|---|---|
|
(a) Indefinite-lived intangible assets principally comprised trademarks, tradenames and U.S. Federal Communications Commission licenses. |
||
| OTHER INTANGIBLE ASSETS | ||
| GE | ||
| Intangible assets subject to amortization | $ 9,278 | $ 7,461 |
| Indefinite-lived intangible assets(a) | 2,355 | 2,278 |
| 11,633 | 9,739 | |
| GECS | ||
| Intangible assets subject to amortization | 4,545 | 3,176 |
| Total | $ 16,178 | $ 12,915 |
Changes in goodwill balances follow.
| 2007 | 2006 | |||||||
|---|---|---|---|---|---|---|---|---|
| (In millions) | Balance January 1(a) | Acquisitions/ purchase accounting adjustments | Dispositions, currency exchange and other | Balance December 31 | Balance January 1 | Acquisitions/ purchase accounting adjustments | Dispositions, currency exchange and other | Balance December 31 |
|
(a) January 1, 2007, balance decreased by $89 million related to new accounting standards. See note 1. |
||||||||
| Infrastructure | $ 10,931 | $ 6,069 | $ 117 | $ 17,117 | $ 10,166 | $ 590 | $ 175 | $ 10,931 |
| Commercial Finance | 12,745 | 1,568 | 308 | 14,621 | 12,027 | 566 | 152 | 12,745 |
| GE Money | 9,845 | 2 | 426 | 10,273 | 9,184 | 309 | 352 | 9,845 |
| Healthcare | 14,759 | 26 | 42 | 14,827 | 13,404 | 1,396 | 48 | 14,848 |
| NBC Universal | 18,000 | 733 | — | 18,733 | 17,534 | 838 | (372) | 18,000 |
| Industrial | 5,030 | 361 | 154 | 5,545 | 4,505 | 537 | (12) | 5,030 |
| Total | $ 71,310 | $ 8,759 | $ 1,047 | $ 81,116 | $ 66,820 | $ 4,236 | $ 343 | $ 71,399 |
Goodwill balances increased $9,028 million in 2007 as a result of new acquisitions. The largest goodwill balance increases arose from acquisitions of Smiths Aerospace Group Ltd. ($3,877 million) and Vetco Gray ($1,379 million) by Infrastructure; Diskont und Kredit AG and Disko Leasing GmbH (DISKO) and ASL Auto Service-Leasing GmbH (ASL), the leasing businesses of KG Allgemeine Leasing GmbH & Co. ($694 million) by Commercial Finance; Oxygen Media ($604 million) by NBC Universal; and Sanyo Electric Credit Co., Ltd. ($548 million) by Commercial Finance. The goodwill balance declined by $269 million related to purchase accounting adjustments to prior-year acquisitions during 2007.
Goodwill balances increased $4,430 million in 2006 as a result of new acquisitions. The largest goodwill balance increases arose from acquisitions of IDX Systems Corporation ($1,133 million) and Biacore International AB ($308 million) by Healthcare; iVillage Inc. ($521 million) by NBC Universal; ZENON Environmental Inc. ($506 million) by Infrastructure; and Banque Artesia Nederland N.V., a subsidiary of Dexia Group ($340 million) and the custom fleet business of National Australia Bank Ltd. ($306 million) by Commercial Finance. Goodwill declined in 2006 as a result of the sale of television stations ($304 million) by NBC Universal. The goodwill balance also declined by $194 million related to purchase accounting adjustments to prior-year acquisitions during 2006.
Upon closing an acquisition, we estimate the fair values of assets and liabilities acquired and consolidate the acquisition as quickly as possible. Given the time it takes to obtain pertinent information to finalize the acquired company’s balance sheet, then to adjust the acquired company’s accounting policies, procedures, books and records to our standards, it is often several quarters before we are able to finalize those initial fair value estimates. Accordingly, it is not uncommon for our initial estimates to be subsequently revised.
Intangible assets Subject to Amortization
| December 31 (In millions) | Gross carrying amount | Accumulated amortization | Net |
|---|---|---|---|
| GE | |||
| 2007 | |||
| Customer-related | $ 4,526 | $ (698) | $ 3,828 |
| Patents, licenses and trademarks | 4,561 | (1,369) | 3,192 |
| Capitalized software | 4,573 | (2,589) | 1,984 |
| All other | 436 | (162) | 274 |
| Total | $ 14,096 | $ (4,818) | $ 9,278 |
| 2006 | |||
| Customer-related | $ 2,853 | $ (484) | $ 2,369 |
| Patents, licenses and trademarks | 4,242 | (1,071) | 3,171 |
| Capitalized software | 4,184 | (2,467) | 1,717 |
| All other | 313 | (109) | 204 |
| Total | $ 11,592 | $ (4,131) | $ 7,461 |
| GECS | |||
| 2007 | |||
| Customer-related | $ 2,185 | $ (867) | $ 1,318 |
| Patents, licenses and trademarks | 602 | (315) | 287 |
| Capitalized software | 1,857 | (1,105) | 752 |
| Lease valuations | 1,909 | (376) | 1,533 |
| Present value of future profits | 818 | (364) | 454 |
| All other | 350 | (149) | 201 |
| Total | $ 7,721 | $ (3,176) | $ 4,545 |
| 2006 | |||
| Customer-related | $ 1,410 | $ (654) | $ 756 |
| Patents, licenses and trademarks | 413 | (265) | 148 |
| Capitalized software | 1,645 | (965) | 680 |
| Lease valuations | 851 | (132) | 719 |
| Present value of future profits | 829 | (297) | 532 |
| All other | 500 | (159) | 341 |
| Total | $ 5,648 | $ (2,472) | $ 3,176 |
During 2007, we recorded additions to intangible assets subject to amortization of $4,286 million. The components of finite-lived intangible assets acquired during 2007 and their respective weighted-average useful lives are: $2,277 million — Customer-related (17.5 years); $299 million — Patents, licenses and trademarks (20.2 years); $590 million — Capitalized software (4.2 years); $992 million — Lease valuations (7.6 years); and $128 million — All other (9.9 years).
Consolidated amortization related to intangible assets subject to amortization was $2,080 million and $1,744 million for 2007 and 2006, respectively. We estimate that annual pre-tax amortization for intangible assets subject to amortization over the next five calendar years to be as follows: 2008 — $1,969 million; 2009 — $1,804 million; 2010 — $1,635 million; 2011 — $1,470 million; 2012 — $1,320 million.