Note 6: Restructuring Charges

HP records restructuring charges associated with management-approved restructuring plans to reorganize one or more of HP's business segments, to remove duplicative headcount and infrastructure associated with one or more business acquisitions or to simplify business processes and accelerate innovation. Restructuring charges can include severance costs to eliminate a specified number of employees, infrastructure charges to vacate facilities and consolidate operations, and contract cancellation costs. Restructuring charges are recorded based on estimated employee terminations and site closure and consolidation plans. The timing of associated cash payments is dependent upon the type of restructuring charge and can extend over a 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 Condensed Balance Sheets.

Fiscal 2012 Restructuring Plan

On May 23, 2012, HP adopted a multi-year restructuring plan (the "2012 Plan") designed to simplify business processes, accelerate innovation and deliver better results for customers, employees and stockholders. HP estimates that it will eliminate approximately 29,000 positions in connection with the 2012 Plan through fiscal year 2014, with a portion of those employees exiting the company as part of voluntary enhanced early retirement ("EER") programs in the United States and in certain other countries. The majority of the U.S. EER program was funded through HP's U.S. pension plan. In connection with the 2012 Plan, HP expects to record aggregate charges of approximately $3.6 billion through the end of HP's 2014 fiscal year as accounting recognition criteria are met. Of that amount, HP expects approximately $3.0 billion to relate to the workforce reductions and the EER programs and approximately $0.6 billion to relate to infrastructure, including data center and real estate consolidation and other items. Due to uncertainties associated with attrition and the acceptance rates of future international EER programs, the total expected headcount reductions could vary as much as 15% from HP's original estimates. HP could also experience similar variations in the total expense of the 2012 Plan.

HP recorded a charge of approximately $813 million for the nine months ended July 31, 2013 relating to the 2012 Plan, of which $103 million related to data center and real estate consolidations. As of July 31, 2013, HP had eliminated approximately 22,700 positions 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 $813 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. As the restructuring plan was implemented, certain components and their related cost estimates were revised. For the nine months ended July 31, 2013, HP reversed $179 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 year 2013.

Fiscal 2008 HP/EDS Restructuring Plan

In connection with the acquisition of Electronic Data Systems Corporation ("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 at a total expected cost of $3.3 billion. Approximately $1.5 billion of the expected costs were associated with pre-acquisition EDS and were reflected in the purchase price of EDS. The remaining costs were primarily associated with HP and were recorded as a restructuring charge.

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.

Summary of Restructuring Plans

The adjustments to the accrued restructuring expenses related to all of HP's restructuring plans described above for the nine months ended July 31, 2013 were as follows:

			Three months ended July 31, 2013 charges			Nine months ended July 31, 2013 charges											As of July 31, 2013

	Balance, October 31, 2012		Three months ended July 31, 2013 charges			Nine months ended July 31, 2013 charges			Cash payments			Other adjustments and non-cash settlements			Balance, July 31, 2013		Total costs incurred to date		Total expected costs to be incurred
	In millions
Fiscal 2012 Plan
Severance and EER	$	597	$	45		$	710		$	(500	)	$	(14	)	$	793	$	2,694	$	3,000
Infrastructure and other		11		45			103			(72	)		(1	)		41		208		600

Total 2012 Plan		608		90			813			(572	)		(15	)		834		2,902		3,600
Fiscal 2010 acquisitions		10		—			(10	)		—			—			—		91		91
Fiscal 2010 ES Plan:
Severance		227		(8	)		(179	)		(33	)		2			17		444		444
Infrastructure		1		—			—			—			—			1		369		369

Total ES Plan		228		(8	)		(179	)		(33	)		2			18		813		813
Fiscal 2008 HP/EDS Plan:
Severance		—		—			—			—			—			—		2,195		2,195
Infrastructure		181		(1	)		(5	)		(39	)		(2	)		135		1,070		1,073

Total HP/EDS Plan		181		(1	)		(5	)		(39	)		(2	)		135		3,265		3,268

Total restructuring plans	$	1,027	$	81		$	619		$	(644	)	$	(15	)	$	987	$	7,071	$	7,772

At July 31, 2013 and October 31, 2012, HP included the short-term portion of the restructuring liability of $841 million and $771 million, respectively, in Accrued restructuring, and the long-term portion of $146 million and $256 million, respectively, in Other liabilities in the accompanying Consolidated Condensed Balance Sheets.