HP 2010 Annual Report Download - page 94

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Note 1: Summary of Significant Accounting Policies (Continued)
Accounting Pronouncements
In December 2007, the FASB issued a new accounting standard related to non-controlling
interests. The standard establishes accounting and reporting standards for ownership interests in
subsidiaries held by parties other than the parent, the amount of consolidated net income attributable
to the parent and to the non-controlling interests, changes in a parent’s ownership interest, and the
valuation of retained non-controlling equity investments when a subsidiary is deconsolidated. The
standard also establishes disclosure requirements that clearly identify and distinguish between the
interests of the parent and the interests of the non-controlling owners. In January 2010, the FASB
issued Accounting Standards Update No. 2010-02, ‘‘Consolidation: Accounting and Reporting for
Decreases in Ownership of a Subsidiary—a Scope Clarification.’’ This update clarifies the scope of the
decrease in ownership provisions and also requires expanded disclosures. HP adopted these standards
in the first quarter of fiscal 2010 with retrospective application of the presentation and disclosure
requirements. Non-controlling interests of $247 million at October 31, 2009 were reclassified from
Other liabilities to Stockholders’ equity in the Consolidated Condensed Balance Sheet as of
October 31, 2009. Elimination of the income attributable to non-controlling interests, recorded in
Interest and other, net, was not material for fiscal years 2010, 2009 and 2008 and is disclosed in the
Consolidated Statements of Stockholders’ Equity.
Note 2: Stock-Based Compensation
HP’s stock-based compensation plans include incentive compensation plans and an employee stock
purchase plan (‘‘ESPP’’).
Stock-based Compensation Expense and the Related Income Tax Benefits
Total stock-based compensation expense before income taxes for fiscal 2010, 2009 and 2008 was
$668 million, $635 million and $606 million, respectively. The resulting income tax benefit for fiscal
2010, 2009 and 2008 was $216 million, $199 million and $178 million, respectively.
Cash received from option exercises and purchases under the ESPP was $2.6 billion in fiscal 2010
and $1.8 billion for both fiscal 2009 and 2008. The actual tax benefit realized for the tax deduction
from option exercises of the share-based payment awards in fiscal 2010, 2009 and 2008 was
$414 million, $252 million and $412 million, respectively.
Incentive Compensation Plans
HP’s incentive compensation plans include principal equity plans adopted in 2004 (as amended in
2010), 2000, 1995 and 1990 (‘‘principal equity plans’’), as well as various equity plans assumed through
acquisitions under which stock-based awards are outstanding. Stock-based awards granted from the
principal equity plans include performance-based restricted units (‘‘PRUs’’), stock options and
restricted stock awards. Employees meeting certain employment qualifications are eligible to receive
stock-based awards.
In fiscal 2008, HP implemented a program that provides for the issuance of PRUs representing
hypothetical shares of HP common stock. PRU awards may be granted to eligible employees, including
HP’s principal executive officer, principal financial officer and other executive officers. Each PRU
award reflects a target number of shares (‘‘Target Shares’’) that may be issued to the award recipient
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