HP 2011 Annual Report Download - page 111

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Note 8: Restructuring Charges (Continued)
multi-year period. HP records the short-term portion of the restructuring liability in Accrued
restructuring and the long-term portion in Other liabilities in the Consolidated Balance Sheets.
Fiscal 2010 Acquisitions
In connection with the acquisitions of Palm and 3Com in fiscal 2010, HP’s management approved
and initiated plans to restructure the operations of the acquired companies, including severance for
employees, contract cancellation costs, costs to vacate duplicative facilities and other items. The total
expected combined cost of the plans is $121 million, which includes $33 million of additional
restructuring costs recorded in the fourth quarter of fiscal 2011 in connection with HP’s decision to
wind down the webOS device business. As of October 31, 2011, HP had recorded the majority of the
costs of the plans based upon the anticipated timing of planned terminations and facility closure costs.
With respect to the Palm plan, no further restructuring charges are anticipated, and the majority of the
remaining costs are expected to be paid out through fiscal 2012. The remaining costs pertaining to the
3Com plan are expected to be paid out through fiscal 2016 as fixed lease payments are made.
Fiscal 2010 ES Restructuring Plan
On June 1, 2010, HP’s management announced a plan to restructure its enterprise services
business, which includes its Infrastructure Technology Outsourcing, Business Process Outsourcing and
Application Services business units. The multi-year restructuring program includes plans to consolidate
commercial data centers, tools and applications. The total expected cost of the plan that will be
recorded as restructuring charges is approximately $1.0 billion, and includes severance costs to
eliminate approximately 9,000 positions and infrastructure charges. As of October 31, 2011, HP had
recorded the majority of the severance costs. HP expects to record 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, 2011, approximately 5,700
positions have been eliminated with the remaining anticipated over the next 12 months.
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 Servers, Storage and Networking (‘‘ESSN’’) businesses. The total expected
cost of the plan was $294 million in severance-related costs associated with the planned elimination of
approximately 4,400 positions. As of October 31, 2011, all planned eliminations had occurred and the
majority of the restructuring costs have been paid out.
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.
Approximately $1.5 billion of the expected costs were associated with pre-acquisition EDS and were
reflected in the fair value of purchase consideration of EDS. These costs are subject to change based
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