HP 2010 Annual Report Download - page 111

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HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Note 8: Restructuring Charges (Continued)
recorded as restructuring charges is approximately $1.0 billion, including severance costs to eliminate
approximately 9,000 positions and infrastructure charges. For fiscal 2010, a restructuring charge of
$650 million was recorded primarily related to severance costs. HP expects to record the majority of
the remaining severance costs by the second quarter of fiscal 2011 and the majority of the
infrastructure charges through fiscal 2012. The timing of the charges is based upon planned termination
dates and site closure and consolidation plans. The majority of the associated cash payments are
expected to be paid out through the fourth quarter of fiscal 2012. As of October 31, 2010,
approximately 2,100 positions have been eliminated.
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’’) businesses. The total expected cost of the plan is
$292 million in severance-related costs associated with the planned elimination of approximately 5,000
positions. As of October 31, 2010, approximately 4,200 positions had been eliminated. HP expects the
remaining positions to be eliminated and a majority of the restructuring costs to be paid out through
the first quarter of fiscal 2011.
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 combine and align HP’s services businesses, eliminate duplicative
overhead functions and consolidate and vacate duplicative facilities. The restructuring plan is expected
to be implemented over four years from the acquisition date at a total expected cost of $3.4 billion.
The restructuring plan includes severance cost to eliminate approximately 25,000 positions. As of
October 31, 2010, the vast majority of the positions had been eliminated, and the associated severance
costs had been paid out. The infrastructure charges in the restructuring plan include facility closure and
consolidation costs and the costs associated with early termination of certain contractual obligations.
HP expects to record the majority of these costs through fiscal 2011 based upon the execution of site
closure and consolidation plans. The associated cash payments are expected to be paid out through
fiscal 2016.
Approximately $1.5 billion of the expected costs were associated with pre-acquisition EDS and
were reflected in the purchase price of EDS. These costs are subject to change based on the actual
costs incurred. The remaining costs are primarily associated with HP and will be recorded as a
restructuring charge.
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