HP 2008 Annual Report Download - page 117

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Note 6: Acquisitions (Continued)
Other acquisitions in fiscal 2007
HP also completed eight other acquisitions during fiscal 2007. Total consideration for these
acquisitions was approximately $1.0 billion, which included direct transaction costs, the estimated fair
value of earned unvested stock options and certain liabilities recorded in connection with these
acquisitions. The largest of these transactions was the acquisition of Neoware, Inc., which has been
integrated into HP’s Personal Systems Group.
HP recorded approximately $700 million of goodwill and $182 million of purchased intangibles in
connection with these other acquisitions. HP also recorded approximately $9 million of IPR&D related
to these acquisitions in fiscal 2007.
Note 7: Goodwill and Purchased Intangible Assets
Goodwill
Goodwill allocated to HP’s business segments as of October 31, 2008 and 2007 and changes in the
carrying amount of goodwill during the fiscal year ended October 31, 2008 are as follows:
Enterprise Imaging
Storage Personal and HP
HP and HP Systems Printing Financial Corporate
Services Servers Software Group Group Services Investments Total
In millions
Balance at October 31, 2007 ..... $ 6,221 $5,076 $5,921 $2,523 $1,887 $145 — $21,773
Goodwill acquired during the
period .................. 10,072 — 51 3 582 — $44 $10,752
Goodwill adjustments ......... (9) (331) 190 (33) (6) (1) — (190)
Balance at October 31, 2008 ..... $16,284 $4,745 $6,162 $2,493 $2,463 $144 $44 $32,335
During the year, HP recorded approximately $10.4 billion of goodwill for EDS at the date of the
acquisition and approximately $1.0 billion of goodwill related to other acquisitions. HP also recorded a
reduction of approximately $600 million to goodwill as a result of currency translation for the period
August 26, 2008 through October 31, 2008 in respect of EDS’s foreign subsidiaries whose functional
currency is not the U.S. dollar.
The goodwill adjustments relate primarily to the reversal of income tax reserves for HP’s
acquisitions associated with their pre-acquisition tax years. These reserves have been reclassified as a
reduction of goodwill. In addition, the goodwill adjustments for fiscal 2008 include the transfer of
goodwill associated with certain acquisitions from Enterprise Storage and Servers to HP Software in
line with the organizational reclassifications to our software business.
Based on the results of its annual impairment tests, HP determined that no impairment of
goodwill existed as of August 1, 2008 or August 1, 2007. However, future goodwill impairment tests
could result in a charge to earnings. HP will continue to evaluate goodwill on an annual basis as of the
beginning of its fourth fiscal quarter and whenever events and changes in circumstances indicate that
there may be a potential impairment.
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