HP 2008 Annual Report Download - page 115

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Note 6: Acquisitions (Continued)
the period November 1, 2007 to August 25, 2008. Due to different fiscal period ends, the unaudited pro
forma financial information for the fiscal year ended October 31, 2007 combines the historical results
of HP for the fiscal year ended October 31, 2007 with the historical results of EDS for the twelve
months ended September 30, 2007. The unaudited pro forma results for all periods presented include
amortization charges for acquired intangible assets, eliminations of intercompany transactions,
restructuring charges, IPR&D charges, adjustments for incremental stock-based compensation expense
related to the unearned portion of EDS stock options and restricted stock units assumed, adjustments
for depreciation expense for property, plant and equipment, adjustments to interest expense and related
tax effects. The unaudited pro forma results were as follows for the fiscal years ended October 31, 2008
and 2007:
In millions, except per share data 2008 2007
Revenue ..................................................... $136,022 $126,178
Net income ................................................... $ 7,828 $ 7,090
Basic net income per share ....................................... $ 3.15 $ 2.70
Diluted net income per share ...................................... $ 3.05 $ 2.60
Other acquisitions in fiscal 2008
HP also completed eight other acquisitions and a minority interest purchase during fiscal 2008.
Total consideration for the acquisitions and the minority interest purchase was approximately
$1.6 billion, which includes direct transaction costs, the estimated fair value of stock options assumed
and certain liabilities recorded in connection with these transactions. HP recorded approximately
$1.0 billion of goodwill, approximately $600 million of purchased intangibles and approximately
$15 million of IPR&D related to these transactions.
The largest of these transactions was the acquisition of Exstream Software, LLC, which has been
integrated into HP’s Imaging and Printing Group. The total purchase price paid was approximately
$720 million, which included direct transaction costs as well as certain debt that was repaid at the
acquisition date. In connection with this acquisition, HP recorded approximately $434 million of
goodwill, $235 million of purchased intangibles and expensed $11 million for IPR&D. HP is amortizing
the purchased intangibles on a straight-line basis over a weighted-average estimated life of 6.8 years.
Subsequent Acquisitions
On November 13, 2008, HP completed its acquisition of Lefthand Networks, Inc., a leading
provider of storage virtualization and solutions for approximately $347 million. Lefthand Networks is
being integrated into HP’s Enterprise Storage and Servers segment within the Technology Solutions
Group.
Acquisitions in fiscal 2007
Mercury Acquisition
On November 2, 2006, HP completed its tender offer for Mercury Interactive Corporation
(‘‘Mercury’’), a leading IT management software and services company, and acquired approximately
96% of Mercury common shares for cash consideration of $52 per share. On November 6, 2006, HP
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