HP 2006 Annual Report Download - page 102
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HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Note 7: Goodwill and Purchased Intangible Assets
Goodwill
Goodwill allocated to HP’s business segments as of October 31, 2006 and 2005 and changes in the
carrying amount of goodwill during the fiscal year ended October 31, 2006 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, 2005 ............ $6,360 $5,077 $ 748 $2,335 $1,769 $152 $16,441
Goodwill acquired during the period ...... 16 65 354 7 93 — 535
Goodwill adjustments ................. (37) (51) (4) (20) (9) (2) (123)
Balance at October 31, 2006 ............ $6,339 $5,091 $1,098 $2,322 $1,853 $150 $16,853
The goodwill adjustments for acquisitions made prior to fiscal 2006, as shown above, related
primarily to revisions of acquisition-related tax and other estimates for all acquisitions and the
reduction of a restructuring liability associated with restructuring plans of Compaq Computer
Corporation (‘‘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, 2006 or August 1, 2005. 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:
2006 2005
Accumulated Accumulated
Gross Amortization Net Gross Amortization Net
In millions
Customer contracts, customer lists and
distribution agreements .................. $2,586 $(1,293) $1,293 $2,401 $ (972) $1,429
Developed and core technology and patents .... 1,923 (1,307) 616 1,750 (1,040) 710
Product trademarks ...................... 103 (82) 21 94 (66) 28
Total amortizable purchased intangible assets . . . 4,612 (2,682) 1,930 4,245 (2,078) 2,167
Compaq trade name ..................... 1,422 — 1,422 1,422 — 1,422
Total purchased intangible assets ............ $6,034 $(2,682) $3,352 $5,667 $(2,078) $3,589
Amortization expense related to finite-lived purchased intangible assets was approximately
$604 million in fiscal 2006, $622 million in fiscal 2005 and $603 million in fiscal 2004.
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