HP 2009 Annual Report Download - page 117

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Note 7: Goodwill and Purchased Intangible Assets (Continued)
Estimated future amortization expense related to finite lived purchased intangible assets at
October 31, 2009 is as follows:
Fiscal year: In millions
2010 ................................................................ $1,308
2011 ................................................................ 1,053
2012 ................................................................ 855
2013 ................................................................ 717
2014 ................................................................ 464
Thereafter ............................................................ 781
Total ................................................................ $5,178
Note 8: Restructuring Charges
Fiscal 2009 Restructuring Plan
In May 2009, HP’s management approved and initiated a restructuring plan to structurally change
and improve the effectiveness of the Imaging and Printing Group (‘‘IPG’’), the Personal Systems Group
(‘‘PSG’’), and Enterprise Storage and Servers (‘‘ESS’’). In fiscal 2009, HP recorded a net charge of
$297 million in severance-related costs associated with the planned elimination of approximately
5,000 positions. As of October 31, 2009, approximately 2,100 positions have been eliminated. HP
expects the majority of the restructuring costs to be paid out by the fourth quarter of fiscal 2010. In
future quarters, HP expects to record an additional charge of approximately $6 million related to
severance costs associated with this plan.
Fiscal 2008 HP/EDS Restructuring Plan
In connection with the acquisition of EDS on August 26, 2008, HP’s management approved and
initiated a restructuring plan to streamline the combined company’s services business and to better
align the structure and efficiency of that business with HP’s operating model. The restructuring plan is
expected to be implemented over four years from the acquisition date and includes changes to the
combined company’s workforce as well as changes to corporate overhead functions such as real estate
and IT.
In the fourth quarter of fiscal 2008, HP recorded a liability of approximately $1.8 billion related to
this restructuring plan. Approximately $1.5 billion of the liability was associated with pre-acquisition
EDS and was recorded to goodwill, and the remaining approximately $0.3 billion was associated with
HP and was recorded as a restructuring charge. The liability consisted mainly of severance costs to
eliminate approximately 25,000 positions, costs to vacate duplicative facilities and costs associated with
early termination of certain contractual obligations. HP recorded net charges for severance and
facilities costs of $346 million, for the twelve months ended October 31, 2009, along with year-to-date
adjustments to goodwill of $276 million. As of October 31, 2009, over 19,000 positions have been
eliminated.
HP expects the majority of the restructuring costs to be paid out by the second quarter of fiscal
2010. In future quarters, HP expects to record an additional charge of approximately $465 million
related to the cost to vacate duplicative facilities and severance costs.
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