HP 2007 Annual Report Download - page 116
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HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Note 7: Goodwill and Purchased Intangible Assets (Continued)
limitations for them has expired. Accordingly, the reserves have been reclassified as a reduction of goodwill.
Based on the results of its annual impairment tests, HP determined that no impairment of goodwill existed as of
August 1, 2007 or August 1, 2006. 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:
2007 2006
Gross
Accumulated
Amortization Net Gross
Accumulated
Amortization Net
In millions
Customer contracts, customer lists and
distribution agreements................................ $3,239 $(1,679) $1,560 $2,586 $(1,293) $1,293
Developed and core technology and patents.... 2,768 (1,694) 1,074 1,923 (1,307) 616
Product trademarks .......................................... 115 (92) 23 103 (82) 21
Total amortizable purchased intangible assets. 6,122 (3,465) 2,657 4,612 (2,682) 1,930
Compaq trade name ......................................... 1,422 —1,422 1,422 —1,422
Total purchased intangible assets..................... $7,544 $(3,465) $4,079 $6,034 $(2,682) $3,352
Amortization expense related to finite-lived purchased intangible assets was approximately $783 million in fiscal 2007,
$604 million in fiscal 2006 and $622 million in fiscal 2005.
Based on the results of its annual impairment tests, HP determined that no impairment of the Compaq trade name existed
as of August 1, 2007 or August 1, 2006. However, future impairment tests could result in a charge to earnings. HP will
continue to evaluate the purchased intangible asset with an indefinite life 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.
The finite-lived purchased intangible assets consist of customer contracts, customer lists and distribution agreements,
which have weighted-average useful lives of approximately eight years, and developed and core technology, patents and
product trademarks, which have weighted-average useful lives of approximately six years.
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