HP 2012 Annual Report Download - page 40

veracity and completeness of statements and disclosures made or actions taken by third parties
or their representatives.
• Our due diligence process may fail to identify significant issues with the acquired company’s
product quality, financial disclosures, accounting practices or internal control deficiencies.
• The pricing and other terms of our contracts for business combination and investment
transactions require us to make estimates and assumptions at the time we enter into these
contracts, and, during the course of our due diligence, we may not identify all of the factors
necessary to estimate accurately our costs, timing and other matters.
• In order to complete a business combination and investment transaction, we may issue common
stock, potentially creating dilution for existing stockholders.
• We may borrow to finance business combination and investment transactions, and the amount
and terms of any potential future acquisition-related or other borrowings, as well as other
factors, could affect our liquidity and financial condition.
• HP’s effective tax rate on an ongoing basis is uncertain, and business combination and
investment transactions could adversely impact our effective tax rate.
• An announced business combination and investment transaction may not close timely or at all,
which may cause our financial results to differ from expectations in a given quarter.
• Business combination and investment transactions may lead to litigation.
• If we fail to identify and successfully complete and integrate business combination and
investment transactions that further our strategic objectives, we may be required to expend
resources to develop products, services and technology internally, which may put us at a
competitive disadvantage.
HP has incurred and will incur additional depreciation and amortization expense over the useful
lives of certain assets acquired in connection with business combination and investment transactions,
and, to the extent that the value of goodwill or intangible assets with indefinite lives acquired in
connection with a business combination and investment transaction becomes impaired, we may be
required to incur additional material charges relating to the impairment of those assets. For example,
as discussed in Note 7 to the Consolidated Financial Statements, in our third fiscal quarter of 2012, we
recorded an $8.0 billion impairment charge relating to the goodwill associated with our enterprise
services reporting unit within our Services segment and a $1.2 billion impairment charge as a result of
an asset impairment analysis of the ‘‘Compaq’’ trade name acquired in 2002. In addition, in our fourth
fiscal quarter of 2012, we recorded an $8.8 billion impairment charge relating to the goodwill and
intangible assets associated with our Autonomy Corporation plc (‘‘Autonomy’’) reporting unit within our
Software segment. If there are future changes in our stock price or significant changes in the business
climate or operating results of our reporting units, we may incur additional goodwill impairment
charges.
Integration issues are often complex, time-consuming and expensive and, without proper planning
and implementation, could significantly disrupt our business, including the business acquired as a result
of any business combination and investment transaction. The challenges involved in integration include:
• combining product and service offerings and entering or expanding into markets in which we are
not experienced or are developing expertise;
• convincing customers and distributors that the transaction will not diminish client service
standards or business focus, persuading customers and distributors to not defer purchasing
decisions or switch to other suppliers (which could result in our incurring additional obligations
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