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This excerpt taken from the CVS 10-K filed Feb 27, 2007. 3 Goodwill and Other Intangibles Goodwill represents the excess of the purchase price over the fair value of net assets acquired. The Company accounts for goodwill and intangibles under SFAS No. 142, “Goodwill and Other Intangible Assets.” As such, goodwill and other indefinite-lived assets are not amortized, but are subject to annual impairment reviews, or more frequent reviews if events or circumstances indicate there may be an impairment. When evaluating goodwill for potential impairment, the Company first compares the fair value of the reporting unit, based on estimated future discounted cash flows, with its carrying amount. If the estimated fair value of the reporting unit is less than its carrying amount, an impairment loss calculation is prepared. The impairment loss calculation compares the implied fair value of reporting unit goodwill with the carrying amount of that goodwill. If the carrying amount of reporting unit goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to that excess. During the third quarter of 2006, the Company performed its required annual goodwill impairment test, which concluded there was no impairment of goodwill. 38 The carrying amount of goodwill was $3,195.2 million and $1,789.9 million as of December 30, 2006 and December 31, 2005, respectively. During 2006, gross goodwill increased primarily due to the acquisition of the Standalone Drug Business. There was no impairment of goodwill during 2006. Intangible assets other than goodwill are required to be separated into two categories: finite-lived and indefinite-lived. Intangible assets with finite useful lives are amortized over their estimated useful lives, while intangible assets with indefinite useful lives are not amortized. The Company currently has no intangible assets with indefinite lives. The increase in the gross carrying amount of the Company’s amortizable intangible assets during 2006 was primarily due to the acquisition of the Standalone Drug Business. The amortization expense for intangible assets totaled $161.2 million in 2006, $128.6 million in 2005 and $95.9 million in 2004. The anticipated annual amortization expense for these intangible assets is $186.2 million in 2007, $176.7 million in 2008, $167.0 million in 2009, $157.0 million in 2010 and $148.6 million in 2011. Following is a summary of the Company’s amortizable intangible assets as of the respective balance sheet dates:
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