HP 2013 Annual Report Download - page 119

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Note 7: Restructuring (Continued)
criteria are met. HP expects approximately $3.5 billion to relate to workforce reductions, including the
EER programs, and approximately $0.6 billion to relate to infrastructure, including data center and real
estate consolidation, and other items. HP recorded a charge of approximately $1.2 billion in fiscal 2013
relating to the 2012 Plan, of which $141 million related to data center and real estate consolidations.
As of October 31, 2013, HP had eliminated approximately 24,600 positions for which a severance
payment has been or will be made as part of the 2012 Plan. The cash payments associated with the
2012 Plan are expected to be paid out through fiscal 2017.
Fiscal 2010 Acquisitions
In connection with the acquisitions of Palm, Inc. (‘‘Palm’’) and 3Com Corporation (‘‘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 combined cost of the plans was $91 million. As of
October 31, 2011, HP had recorded all of the costs of the plans based upon the anticipated timing of
planned terminations and facility closure costs. In the second quarter of fiscal 2013, $10 million was
credited to restructuring expense to close the Palm and 3Com plans as no further restructuring costs or
payments are anticipated.
Fiscal 2010 Enterprise Services Business Restructuring Plan
On June 1, 2010, HP’s management announced a plan to restructure its enterprise services
business, which included the ITO and ABS business units. The multi-year restructuring program
included plans to consolidate commercial data centers, tools and applications. The total expected cost
of the plan is approximately $803 million, which includes severance costs to eliminate approximately
8,200 positions and infrastructure charges. As of October 31, 2012 all 8,200 positions under the plan
had been eliminated. For the fiscal year ended October 31, 2013, HP reversed $189 million of the
restructuring accrual to reflect an updated estimate of expected cash payments for severance. The
majority of the infrastructure charges were paid out during fiscal 2012 with the remaining charges
expected to be paid out through the first half of fiscal 2015. This plan is now closed with no further
restructuring charges anticipated. HP expects the majority of the remaining severance for the plan to
be paid out through fiscal 2014.
Fiscal 2008 HP/EDS Restructuring Plan
In connection with the acquisition of Electronic Data Systems Corporation (‘‘EDS’’) in August
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 at a total expected cost of $3.3 billion.
The restructuring plan included severance costs related to eliminating approximately 25,000
positions. As of October 31, 2011, all actions had occurred and the associated severance costs had been
paid out. The infrastructure charges in the restructuring plan included facility closure and consolidation
costs and the costs associated with early termination of certain related contractual obligations. HP has
recorded the majority of these costs based on the anticipated execution of site closure and
consolidation plans. The associated cash payments are expected to be paid out through fiscal 2016.
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