HP 2008 Annual Report Download - page 112

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Note 4: Balance Sheet Details (Continued)
Long-term deferred revenue represents service and product deferred revenue to be recognized
after one year from the balance sheet date. Deferred revenue represents amounts received or billed in
advance for fixed-price support or maintenance contracts, software customer support contracts,
outsourcing services start-up or transition work, consulting and integration projects, product sales and
leasing income. The fixed-price support or maintenance contracts include stand-alone product support
packages, routine maintenance service contracts, upgrades or extensions to standard product warranty,
as well as high availability services for complex, global, networked, multi-vendor environments. HP
defers these service amounts at the time HP bills the customer, and HP then recognizes the amounts
ratably over the contract life or as HP renders the services. HP also defers and subsequently amortizes
certain set-up costs related to activities that enable the performance of the customer contract. Deferred
contract costs, including set-up and other unbilled costs, are amortized on a straight-line basis over the
remaining original contract term unless billing patterns indicate a more accelerated method is
appropriate.
Note 5: Supplemental Cash Flow Information
Supplemental cash flow information was as follows for the following fiscal years ended October 31:
2008 2007 2006
In millions
Cash paid for income taxes, net ................................... $1,136 $956 $637
Cash paid for interest ........................................... $ 426 $489 $299
Non-cash investing and financing activities:
Issuance of common stock and stock awards assumed in business acquisitions . $ 316 $ 41 $ 13
Purchase of assets under financing arrangement ...................... $ — $ 57 $ —
Purchase of assets under capital leases ............................. $ 30 $ — $ 19
Note 6: Acquisitions
HP has recorded all acquisitions using the purchase method of accounting and, accordingly, has
included the results of operations of acquired businesses in HP’s consolidated results as of the date of
each acquisition. HP allocates the purchase price of its acquisitions to the tangible assets, liabilities and
intangible assets acquired, including IPR&D charges, based on their estimated fair values. The excess
purchase price over those fair values is recorded as goodwill. The fair value assigned to assets acquired
is based on valuations using management’s estimates and assumptions.
Acquisitions in fiscal 2008
Acquisition of Electronic Data Systems Corporation
On August 26, 2008, HP completed its acquisition of EDS, a leading global technology services
company, delivering a broad portfolio of information technology, applications and business process
outsourcing services to clients in the manufacturing, financial services, healthcare, communications,
energy, transportation, and consumer and retail industries and to governments around the world. The
acquisition of EDS will strengthen HP’s service offerings for information technology outsourcing,
including data center services, workplace services, networking services and managed security; business
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