HP 2012 Annual Report Download - page 117

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Note 7: Goodwill and Purchased Intangible Assets (Continued)
an impairment review of the ‘‘Compaq’’ trade name intangible asset. In conducting an impairment
review of a purchased intangible asset, HP compares the fair value of the asset to its carrying value. If
the fair value of the asset is less than the carrying value, the difference is recorded as an impairment
loss. HP estimated the fair value of the ‘‘Compaq’’ trade name by calculating the present value of the
royalties saved that would have been paid to a third party had HP not owned the trade name.
Following the completion of that analysis, HP determined that the fair value of the trade name asset
was less than the carrying value due primarily to the change in the useful life assumption and a
decrease in expected future revenues related to Compaq-branded products resulting from the more
focused branding strategy. As a result, HP recorded an impairment charge of $1.2 billion in the third
quarter of fiscal 2012, which was included in the Impairment of Goodwill and Purchased Intangible
Assets line item in the Consolidated Statements of Earnings.
The finite-lived purchased intangible assets consist of customer contracts, customer lists and
distribution agreements, which have weighted-average useful lives of eight years, and developed and
core technology, patents, product tradenames and product trademarks, which have weighted-average
useful lives of seven years.
Estimated future amortization expense related to finite-lived purchased intangible assets at
October 31, 2012 is as follows:
Fiscal year: In millions
2013 ................................................................ $1,363
2014 ................................................................ 1,026
2015 ................................................................ 837
2016 ................................................................ 680
2017 ................................................................ 254
Thereafter ............................................................ 348
Total ................................................................ $4,508
Note 8: Restructuring Charges
HP records restructuring charges associated with management-approved restructuring plans to
either reorganize one or more of HP’s business segments, or to remove duplicative headcount and
infrastructure associated with one or more business acquisitions. Restructuring charges can include
severance costs to eliminate a specified number of employees, infrastructure charges to vacate facilities
and consolidate operations, and contract cancellation costs. Restructuring charges are recorded based
upon planned employee termination dates and site closure and consolidation plans. The timing of
associated cash payments is dependent upon the type of restructuring charge and can extend over a
multi-year period. HP records the short-term portion of the restructuring liability in Accrued
restructuring and the long-term portion in Other liabilities in the Consolidated Balance Sheets.
Fiscal 2012 Restructuring Plan
On May 23, 2012, HP adopted a multi-year restructuring plan (the ‘‘2012 Plan’’) designed to
simplify business processes, accelerate innovation and deliver better results for customers, employees
and stockholders. HP estimates that it will eliminate approximately 29,000 positions in connection with
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