HP 2005 Annual Report Download - page 94

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HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Note 6: Goodwill and Purchased Intangible Assets
Goodwill
Goodwill allocated to HP’s business segments as of October 31, 2004 and 2005 and changes in the
carrying amount of goodwill during the fiscal year ended October 31, 2005 are as follows:
Enterprise Imaging
Storage Personal and HP
HP and Systems Printing Financial
Services Servers Software Group Group Services Total
In millions
Balance at October 31, 2004 ............ $6,270 $4,810 $759 $2,327 $1,510 $152 $15,828
Goodwill acquired during the period ...... 39 251 — — 254 — 544
Goodwill adjustments ................. 51 16 (11) 8 5 — 69
Balance at October 31, 2005 ............ $6,360 $5,077 $748 $2,335 $1,769 $152 $16,441
The goodwill adjustments for acquisitions made prior to fiscal 2005, as shown above, relate
primarily to revisions of acquisition-related tax estimates that resulted in net additions to goodwill,
which were offset partially by the reduction of a restructuring liability and asset impairments associated
with fiscal 2002 and 2001 restructuring plans of Compaq prior to its acquisition by HP. These
reductions resulted from adjusting original estimates to actual costs incurred at various locations
throughout the world.
Based on the results of its annual impairment tests, HP determined that no impairment of
goodwill existed as of August 1, 2005 or August 1, 2004. 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.
Purchased Intangible Assets
HP’s purchased intangible assets associated with completed acquisitions for each of the following
fiscal years ended October 31 are composed of:
2005 2004
Accumulated Accumulated
Gross Amortization Net Gross Amortization Net
In millions
Customer contracts, customer lists and
distribution agreements .................. $2,401 $ (972) $1,429 $2,340 $ (637) $1,703
Developed and core technology and patents .... 1,750 (1,040) 710 1,704 (775) 929
Product trademarks ...................... 94 (66) 28 93 (44) 49
Total amortizable purchased intangible assets . . . 4,245 (2,078) 2,167 4,137 (1,456) 2,681
Compaq trade name ..................... 1,422 — 1,422 1,422 — 1,422
Total purchased intangible assets ............ $5,667 $(2,078) $3,589 $5,559 $(1,456) $4,103
Amortization expense related to finite-lived purchased intangible assets was approximately
$622 million in fiscal 2005, $603 million in fiscal 2004 and $563 million in fiscal 2003.
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