Goodwill and Purchased Intangible Assets

9 Months Ended

Jul. 31, 2011

Finite-Lived Purchased Intangible Assets

Goodwill and Purchased Intangible Assets

Note 5: Goodwill and Purchased Intangible Assets

Goodwill

Goodwill allocated to HP's business segments as of July 31, 2011 and changes in the carrying amount of goodwill for the nine months ended July 31, 2011 are as follows:

	Services		Enterprise Servers, Storage and Networking		HP Software			Personal Systems Group			Imaging and Printing Group			HP Financial Services		Corporate Investments			Total

	In millions
Balance at October 31, 2010	$	16,967	$	6,610	$	7,545		$	2,500		$	2,456		$	144	$	2,261		$	38,483
Goodwill acquired during the period		—		—		190			—			16			—		—			206
Goodwill adjustments		267		1,504		(261	)		(2	)		(1	)		—		(1,424	)		83

Balance at July 31, 2011	$	17,234	$	8,114	$	7,474		$	2,498		$	2,471		$	144	$	837		$	38,772

During the first nine months of fiscal 2011, HP recorded approximately $206 million of goodwill relating to the acquisition of Vertica Systems, Inc. ("Vertica") and the acquisition of assets of Printelligent Corporation ("Printelligent") based on preliminary allocations of the purchase prices. In connection with organizational realignments implemented in the first quarter of fiscal 2011, HP reclassified goodwill related to HP's networking business from Corporate Investments to Enterprise Servers, Storage and Networking ("ESSN") and goodwill related to the communications and media solutions business from HP Software to Services. Additionally, during the nine months ended July 31, 2011, HP recorded an increase to goodwill as a result of currency translation related to an acquired subsidiary whose functional currency is not the U.S. dollar.

Purchased Intangible Assets

HP's purchased intangible assets associated with completed acquisitions are composed of:

	July 31, 2011							October 31, 2010

	Gross		Accumulated Amortization			Net		Gross		Accumulated Amortization			Net
	In millions
Customer contracts, customer lists and distribution agreements	$	5,242	$	(2,205	)	$	3,037	$	7,075	$	(3,436	)	$	3,639
Developed and core technology and patents		3,929		(1,882	)		2,047		3,797		(1,418	)		2,379
Product trademarks		200		(119	)		81		199		(92	)		107

Total amortizable purchased intangible assets		9,371		(4,206	)		5,165		11,071		(4,946	)		6,125
In-process research and development		142		—			142		301		—			301
Compaq trade name		1,422		—			1,422		1,422		—			1,422

Total purchased intangible assets	$	10,935	$	(4,206	)	$	6,729	$	12,794	$	(4,946	)	$	7,848

During the first nine months of fiscal 2011, HP recorded approximately $58 million of purchased intangible assets related to the Vertica and Printelligent acquisitions based on preliminary allocations of the purchase price. During the nine months ended July 31, 2011 and the fiscal year ended October 31, 2010, $4.5 billion and $2.5 billion, respectively, of intangible assets reached the end of their amortization periods. The tables above reflect the elimination of the cost and accumulated amortization of such assets.

Estimated future amortization expense related to finite-lived purchased intangible assets at July 31, 2011 was as follows:

Fiscal year:	In millions

2011 (remaining three months)	$	355
2012		1,328
2013		1,175
2014		852
2015		715
2016		554
Thereafter		186

Total	$	5,165

- Definition

Discloses the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain or loss on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss. This element may be used as a single block of text to include the entire intangible asset disclosure including data and tables.

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