HP 2009 Annual Report Download - page 91

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Note 1: Summary of Significant Accounting Policies
Principles of Consolidation
The Consolidated Financial Statements include the accounts of Hewlett-Packard Company, its
wholly-owned subsidiaries and its controlled majority-owned subsidiaries (collectively, ‘‘HP’’). HP
accounts for equity investments in companies over which HP has the ability to exercise significant
influence, but does not hold a controlling interest, under the equity method, and HP records its
proportionate share of income or losses in interest and other, net in the Consolidated Statements of
Earnings. HP has eliminated all significant intercompany accounts and transactions.
Business Combinations
HP has recorded all acquisitions using the purchase method of accounting and, accordingly, has
included the results of operations of acquired businesses in HP’s consolidated results from the date of
each acquisition. HP allocates the purchase price of its acquisitions to the tangible assets, liabilities and
intangible assets acquired, including in-process research and development (‘‘IPR&D’’) charges, based
on their estimated fair values. The excess purchase price over those fair values is recorded as goodwill.
The fair value assigned to assets acquired is based on valuations using management’s estimates and
assumptions.
HP will adopt new accounting standards issued by the Financial Accounting Standards Board
(‘‘FASB’’) for business combinations in the first quarter of fiscal 2010. Changes to the purchase method
of accounting for business combinations are discussed further in Accounting Pronouncements in this
Note.
Reclassifications and Segment Reorganization
Certain reclassifications have been made to prior-year amounts in order to conform to current year
presentation.
HP has made certain organizational realignments in order to optimize its operating structure.
Reclassifications of prior year financial information have been made to conform to the current year
presentation. None of the changes impacts HP’s previously reported consolidated net revenue, earnings
from operations, net earnings or net earnings per share. See Note 19 for a further discussion of HP’s
segment reorganization, which is incorporated herein by reference.
HP has made certain reclassifications of its Consolidated Statements of Earnings for the fiscal
years ended October 31, 2008 and October 31, 2007 to provide improved visibility and comparability
with the current year presentation. This change does not affect previously reported results of operations
for any period presented. Certain pursuit-related costs previously reported as cost of services have been
realigned retroactively to selling, general and administrative expenses due to organizational
realignments.
HP has revised the presentation of its Consolidated Statements of Cash Flows for the fiscal years
ended October 31, 2008 and October 31, 2007 to reflect revisions to the current and deferred tax
provisions in those years related to the presentation of tax benefits of stock option plans, as described
in Note 14. The revisions result in an increase in the change in taxes on earnings and a decrease in the
adjustment to deferred taxes on earnings within cash flows from operating activities on the
Consolidated Statements of Cash Flows. These revisions do not affect previously reported results of
operations, financial position or net cash provided by operating activities for any period presented.
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