HP 2007 Annual Report Download - page 115

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Note 6: Acquisitions (Continued)
recorded approximately $342 million of goodwill and $162 million of amortizable intangible assets. HP also expensed
$34 million for IPR&D. HP is amortizing the purchased intangibles, principally customer relationships and developed
technology, on a straight-line basis over their estimated useful lives ranging from five to six years.
Other Acquisitions in fiscal 2006
HP also completed seven other acquisitions during fiscal 2006. Total consideration for these acquisitions and the buyout
of a minority interest was approximately $473 million, which included direct transaction costs. The largest of these
transactions was the acquisition of substantially all of the assets of Scitex Vision Ltd (“Scitex”). The Scitex asset acquisition
expanded HP’ s leadership in printing into the industrial wide-format market.
HP recorded approximately $193 million of goodwill and $205 million of purchased intangibles in connection with these
other acquisitions. HP also recorded approximately $18 million of IPR&D related to these acquisitions in fiscal 2006.
In addition, HP paid approximately $17 million for the balance of the outstanding shares of Digital Globalsoft Limited, a
consolidated subsidiary of HP (“DGS”), and as a result increased HP’ s ownership from 98.5% to 100%. This subsidiary has
enhanced HP’ s capability in IT services, including expertise in life cycle services such as migration, technical and application
services.
HP has included the results of operations of these transactions prospectively from the respective date of the transaction.
HP has not presented the pro forma results of operations of the acquired businesses because the results are not material to
HP’ s results of operations on either an individual or an aggregate basis.
Note 7: Goodwill and Purchased Intangible Assets
Goodwill
Goodwill allocated to HP’ s business segments as of October 31, 2007 and 2006 and changes in the carrying amount of
goodwill during the fiscal year ended October 31, 2007 are as follows:
HP
Services
Enterprise
Storage and
Servers
HP
Software
Personal
Systems
Group
Imaging
and
Printing
Group
HP
Financial
Services Total
In millions
Balance at October 31, 2006............... $6,339 $5,091 $1,098 $2,322 $1,853 $150 $16,853
Goodwill acquired during the period .. 93 173 4,868 290 71 — 5,495
Goodwill adjustments ......................... (211) (188) (45) (89) (37) (5) (575)
Balance at October 31, 2007............... $6,221 $5,076 $5,921 $2,523 $1,887 $145 $21,773
The goodwill adjustments relate primarily to the reversal of income tax reserves of Compaq Computer Corporation
(“Compaq”), which HP acquired in 2002, for pre-acquisition tax years. These tax years have been audited and agreed upon
with the Internal Revenue Service and the statute of
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