HP 2010 Annual Report Download - page 107

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Note 6: Acquisitions (Continued)
Acquisition of ArcSight Inc. (‘‘ArcSight’’)
On October 22, 2010, HP completed the acquisition of ArcSight, a security and compliance
management company. HP reports the financial results of the ArcSight business in the HP Software
segment. The aggregate purchase price was $1.7 billion, which included cash paid for common stock,
vested-in-the-money stock awards and the estimated fair value of earned unvested stock awards
assumed at the acquisition date. In connection with this acquisition, HP recorded approximately
$1.2 billion of goodwill, amortizable purchased intangible assets of $393 million and IPR&D assets of
$41 million. HP is amortizing the purchased intangible assets on a straight-line basis over an estimated
weighted-average life of 6.8 years.
Acquisitions in prior years
In fiscal 2009, HP completed two acquisitions. Total consideration for the acquisitions was
$390 million, which includes direct transaction costs and the assumption of certain liabilities in
connection with the transactions. The largest of the two acquisitions was the acquisition of Lefthand
Networks, Inc., a leading provider of storage virtualization and solutions, which has been integrated
into ESS, at a purchase price of $347 million. In fiscal 2009, HP recorded $315 million of goodwill,
$105 million of purchased intangibles and $7 million of IPR&D related to these transactions.
In fiscal 2008, HP completed nine acquisitions and a minority interest purchase for a total
consideration of $14.6 billion. The largest acquisition was the acquisition of EDS for a purchase price
of $13.0 billion. The purchase price comprised of $12.7 billion cash paid for outstanding common stock,
$328 million for the fair value of stock options and restricted stock units assumed, and $36 million for
direct transaction costs. Of the total purchase price, $10.4 billion has been allocated to goodwill,
$4.6 billion has been allocated to amortizable intangible assets acquired and $2.0 billion has been
allocated to net tangible liabilities assumed in connection with the acquisition. HP also expensed $30
million for IPR&D charges. HP included the results of EDS in its consolidated results of operations
starting on August 26, 2008, the closing date of the acquisition.
Pro forma results for EDS acquisition
The following table presents the unaudited pro forma results for the year ended October 31, 2008.
The unaudited pro forma financial information for the year ended October 31, 2008 combines the
results of operations of HP and EDS as though the companies had been combined as of the beginning
of fiscal 2008. The pro forma financial information is presented for informational purposes only and is
not indicative of the results of operations that would have been achieved if the acquisition and related
borrowings had taken place at the beginning of fiscal 2008. The unaudited pro forma results presented
include amortization charges for acquired intangible assets, eliminations of intercompany transactions,
restructuring charges, IPR&D charges, adjustments for incremental stock-based compensation expense
related to the unearned portion of EDS stock options and restricted stock units assumed, adjustments
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