HP 2010 Annual Report Download - page 109

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Note 7: Goodwill and Purchased Intangible Assets (Continued)
goodwill increased approximately $255 million as a result of currency translation related to certain of
EDS’s foreign subsidiaries whose functional currency is not the U.S. dollar. These increases in goodwill
were partially offset by tax adjustments for various previous acquisitions.
Based on the results of its annual impairment tests, HP determined that no impairment of
goodwill existed as of August 1, 2010 or August 1, 2009. 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:
2010 2009
Accumulated Accumulated
Gross Amortization Net Gross Amortization Net
In millions
Customer contracts, customer lists and
distribution agreements .......... $ 7,503 $(3,864) $3,639 $ 6,763 $(3,034) $3,729
Developed and core technology and
patents ...................... 5,763 (3,384) 2,379 4,171 (2,747) 1,424
Product trademarks .............. 346 (239) 107 247 (222) 25
Total amortizable purchased intangible
assets ....................... 13,612 (7,487) 6,125 11,181 (6,003) 5,178
IPR&D ....................... 301 — 301 — — —
Compaq trade name .............. 1,422 — 1,422 1,422 — 1,422
Total purchased intangible assets ..... $15,335 $(7,487) $7,848 $12,603 $(6,003) $6,600
For fiscal 2010, HP recorded approximately $2.7 billion of purchased intangible assets and IPR&D
related to acquisitions based on its preliminary purchase price allocations.
For fiscal 2009, HP recorded an increase of $83 million to purchased intangibles as a result of
currency translation related to certain of EDS’s foreign subsidiaries whose functional currency is not
the U.S. dollar. HP also recorded an increase of $21 million to the estimated fair value of EDS’s
intangible assets acquired.
Based on the results of its annual impairment tests, HP determined that no impairment of the
indefinite-lived Compaq trade name existed as of August 1, 2010 or August 1, 2009. However, future
impairment tests could result in a charge to earnings. HP will continue to evaluate the Compaq trade
name 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 an indicator of potential impairment.
The finite-lived purchased intangible assets consist of customer contracts, customer lists and
distribution agreements, which have weighted-average useful lives of 8 years, and developed and core
technology, patents and product trademarks, which have weighted-average useful lives of 5 years.
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