HP 2006 Annual Report Download - page 101

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HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Note 6: Acquisitions (Continued)
goodwill. In addition, HP will incur charges related to payments to Mercury executive officers and key
employees under a retention plan adopted in connection with the acquisition, as well as costs related to
integration efforts.
Pending Acquisitions
In December 2006, HP agreed to acquire Knightsbridge Solutions Holdings Corporation, a
privately held services company specializing in the information management areas of business
intelligence, data warehousing, data integration and information quality. The transaction is subject to
certain closing conditions and is expected to be completed during the first quarter of fiscal 2007. Upon
completion, the business is expected to be fully integrated into HP Services.
Also in December 2006, HP agreed to acquire Bitfone Corporation, a privately held global
software and services company that develops software solutions for mobile device management for the
wireless industry. The transaction is subject to certain closing conditions and is expected to be
completed by February 2007. Following the close of the acquisition, the business is expected to be fully
integrated into the Handheld Business Unit of HP’s Personal Systems Group.
Acquisitions in fiscal 2005
In fiscal 2005, HP acquired five companies for an aggregate purchase price of approximately
$648 million, which includes direct transaction costs and certain liabilities recorded in connection with
these acquisitions. The largest of these transactions were the acquisitions of SAC, LLC, doing business
as ‘‘Snapfish,’’ and AppIQ, Inc. (‘‘AppIQ’’), which HP completed on April 15, 2005 and October 24,
2005, respectively.
Snapfish is a leading online photo service. The acquisition of Snapfish enables HP to capitalize on
the growing market for online photo printing, with customers benefiting from a more affordable,
simpler and more comprehensive digital photography experience.
AppIQ is a leading provider of open storage area network management and storage resource
management solutions. The acquisition of AppIQ strengthens HP’s ability to give customers a single
integrated console that controls and better manages their storage and server infrastructure.
HP recorded approximately $537 million of goodwill and $108 million of amortizable purchased
intangible assets in connection with these five acquisitions. HP also recorded approximately $2 million
of IPR&D charges related to these five acquisitions.
In fiscal 2005, HP paid approximately $8 million in cash for additional shares of DGS, a
consolidated subsidiary of HP, to increase HP’s ownership from approximately 97.2% to approximately
98.5%. HP recorded approximately $7 million and $281 million of goodwill in connection with the
share purchases in fiscal 2005 and 2004, respectively.
97