HP 2009 Annual Report Download - page 61

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
Management’s Discussion and Analysis of
Financial Condition and Results of Operations (Continued)
Selling, General and Administrative
Selling, general and administrative (‘‘SG&A’’) expense decreased in fiscal 2009 from fiscal 2008
due primarily to favorable currency impacts related to the movement of the dollar against the euro,
lower compensation expense as well as effective cost management, the impact of which was partially
offset by additional expenses related to the EDS acquisition. In fiscal 2009, SG&A expense as a
percentage of net revenue decreased for each of our segments, except for Corporate Investments.
Total SG&A expense increased in fiscal 2008 due primarily to higher field selling costs as a result
of our investments in sales resources, unfavorable currency impacts related to the movement of the
dollar against the euro, and additional expenses related to the EDS acquisition. Each of our major
segments experienced a year-over-year decrease in SG&A expense as a percentage of net revenue
during fiscal 2008.
Amortization of Purchased Intangible Assets
The increase in amortization expense in fiscal 2009 from fiscal 2008 was due primarily to
amortization expenses related to the intangible assets purchased as part of the EDS acquisition.
The increase in amortization expense during fiscal 2008 as compared to fiscal 2007 was due
primarily to amortization expenses related to the intangible assets purchased as part of the EDS
acquisition as well as other acquisitions made in fiscal 2008.
For more information on our amortization of purchased intangibles assets, see Note 7 to the
Consolidated Financial Statements in Item 8, which is incorporated herein by reference.
In-Process Research and Development Charges
We record IPR&D charges in connection with acquisitions accounted for as business combinations
as more fully described in Note 6 to the Consolidated Financial Statements in Item 8. In fiscal 2009,
fiscal 2008 and fiscal 2007, we recorded IPR&D charges of $7 million, $45 million and $190 million,
respectively, related to acquisitions. The decrease in IPR&D in fiscal 2009 from fiscal 2008 was due
primarily to higher IPR&D expenses in the prior year as a result of our EDS acquisition in the fourth
quarter of fiscal 2008.
Restructuring
Restructuring charges for fiscal 2009 were $640 million. These charges included $346 million of
severance and facility costs related to our fiscal 2008 restructuring plan, $297 million of severance costs
associated with our fiscal 2009 restructuring plan, and a reduction of $3 million related to adjustments
to other restructuring plans.
Restructuring charges for fiscal 2008 were $270 million, which included $246 million of charges due
primarily to severance and facility costs related to the EDS acquisition and a net charge of $24 million
relating to adjustments for existing restructuring programs.
Restructuring charges for fiscal 2007 were $387 million, which included $354 million of expenses
related to severance and other benefit costs associated with those employees who elected to participate
in the early retirement program implemented in fiscal 2007 and a net charge of $33 million relating to
adjustments to our previous restructuring programs.
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