HP 2005 Annual Report Download - page 49

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
Management’s Discussion and Analysis of
Financial Condition and Results of Operations (Continued)
The following table summarizes the major restructuring activities in aggregate and during each of
fiscal years 2005, 2004 and 2003.
For the fiscal years ended October 31
Aggregate
Total 2005 2004 2003
In millions, except employee data
Restructuring headcount reductions:
2005 plans—estimate ................................. 16,750 16,750
2005 plans—exits ................................... (6,150) (6,150)
Remaining to exit ................................. 10,600 10,600
2003 plans—estimate and estimate revisions .................. 8,400 (200) (400) 9,000
2003 plans—exits ................................... (8,400) (100) (1,300) (7,000)
Remaining to exit ................................. —
Restructuring program charges:
2005 restructuring charges:
Severance and other benefits .......................... $1,674 $ 1,674
Asset impairments ................................. — —
Other infrastructure costs ............................ — —
Sub-total ..................................... 1,674 1,674
2003 cost structure realignment charges:
Severance and other benefits .......................... $ 636 $ (9) $ 6 $ 639
Asset impairments ................................. 74 (3) 6 71
Other infrastructure costs ............................ 69 2 25 42
Sub-total ..................................... 779 (10) 37 752
2002 and 2001 restructuring charges ....................... $ 145 $ 20 $ 77 $ 48
Total restructuring charges .......................... $2,598 $ 1,684 $ 114 $ 800
Goodwill adjustments relating to restructuring plans ............. $ (237) $ (44) $ (73) $ (120)
Fiscal 2005 Workforce Rebalancing
In addition to the restructuring activities described above, in fiscal 2005 we incurred approximately
$236 million in workforce rebalancing charges resulting from actions taken by certain business segments
for severance and related costs. Workforce rebalancing costs are included in the segment results. We
recorded these costs during the six months ended April 30, 2005. As a result of these workforce
rebalancing actions, approximately 3,000 employees left HP as of October 31, 2005. Of the workforce
rebalancing charges, we had paid $209 million as of October 31, 2005, and we expect to pay the
remainder by the end of fiscal 2006.
Amortization of Purchased Intangible Assets
The increase in amortization expense for fiscal 2005 as compared to fiscal 2004 was due primarily
to the amortization of intangible assets related to the acquisitions of Triaton in April 2004, Synstar PLC
(‘‘Synstar’’) in October 2004 and SAC, LLC (‘‘Snapfish’’) in April 2005, as well as accelerated
amortization related to the early termination of certain acquired customer contracts. The increase in
amortization expense in fiscal 2004 as compared to fiscal 2003 was due primarily to the amortization of
intangible assets related to the acquisition of Triaton in April 2004.
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