HP 2008 Annual Report Download - page 60
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HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
Management’s Discussion and Analysis of
Financial Condition and Results of Operations (Continued)
Workforce Rebalancing
As part of our ongoing business operations, we incurred workforce rebalancing charges for
severance and related costs within certain business segments in fiscal 2008. Workforce rebalancing
activities are considered part of normal operations as we continue to optimize our cost structure.
Workforce rebalancing costs are included in our business segment results, and we expect to incur
additional workforce rebalancing costs in the future.
Acquisition-related Charges
In fiscal 2008, we recorded acquisition-related charges of $41 million for consultant integration
costs and retention bonuses associated with our acquisition of EDS.
Pension Curtailments and Pension Settlements, Net
In fiscal 2007, we recognized a net gain on pension curtailments and settlements of $517 million,
relating primarily to a $542 million curtailment gain associated with a modification to our U.S. defined
benefit pension plan and post-retirement benefit plan. This curtailment gain was offset partially by net
settlement losses related to our other pension plan design changes.
For more information on our retirement and post-retirement benefit plans, see Note 15 to the
Consolidated Financial Statements in Item 8, which is incorporated herein by reference.
Interest and Other, Net
Interest and other, net decreased by $458 million in fiscal 2008 as compared to fiscal 2007. The
decrease resulted primarily from currency losses on balance sheet remeasurement items and lower
interest income as a result of lower interest rates, the effect of which was partially offset by lower
interest expense. Additionally, the prior-year period benefited from higher gains from the sale of real
estate.
Interest and other, net decreased by $173 million in fiscal 2007 from fiscal 2006. The decrease was
due primarily to higher interest expense resulting from higher average debt balances. Net gains on
investment in fiscal 2007 and fiscal 2006 resulted primarily from gains on the sale of equity investments,
which were offset in part by impairment charges on our investment portfolio.
Provision for Taxes
Our effective tax rates were 20.5%, 20.8% and 13.8% in fiscal 2008, 2007 and 2006, respectively.
The decrease in the overall tax rate in fiscal 2008 from fiscal 2007 was related in part to lower tax
rates in other jurisdictions.
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