HP Reports Second Quarter 2009 Results

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HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(Unaudited)
(In millions except per share amounts)
                   
                   
    Three months ended
   

April 30,
2009

  January 31,
2009
  April 30,
2008
                   
Net revenue     $ 27,351       $ 28,800       $ 28,262  
                   
Costs and expenses(a):                  
Cost of sales       20,919         22,069        

21,205

(c)

Research and development       716         732         908  
Selling, general and administrative       2,880         2,893        

3,331

(c)

Amortization of purchased intangible assets       380         412         211  
In-process research and development charges       -         6         13  
Restructuring charges       94         146         4  
Acquisition-related charges       75         48         -  
Total costs and expenses       25,064         26,306         25,672  
                   
Earnings from operations       2,287         2,494         2,590  
                   
Interest and other, net      

(180

)

     

(232

)

      3  
                   
Earnings before taxes       2,107         2,262         2,593  
                   

Provision for taxes (b)

      391         408         536  
                   
Net earnings     $ 1,716       $ 1,854       $ 2,057  
                   
Net earnings per share:                  
Basic     $ 0.72       $ 0.77       $ 0.83  
Diluted     $ 0.70       $ 0.75       $ 0.80  
                   
                   
Cash dividends declared per share     $ -       $ 0.16       $ -  
                   
Weighted-average shares used to compute net earnings per share:
Basic       2,394         2,410         2,473  
Diluted       2,438         2,464         2,557  
                   
(a) Stock-based compensation expense included under SFAS 123(R) was as follows:
Cost of sales     $ 48       $ 52       $ 36  
Research and development       18         17         19  
Selling, general and administrative       109         85         97  
Acquisition-related charges       16         6         -  
Total costs and expenses     $ 191       $ 160       $ 152  
                   
(b) Tax benefit from stock-based compensation     $ (59 )    

$

(48

)

   

$

(45

)

                   
(c) Certain pursuit-related costs previously reported as Cost of sales have been realigned retroactively to Selling, general and administrative expenses due to the organizational realignments occurring within HP’s service offerings portfolio.
 
HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(Unaudited)
(In millions except per share amounts)
             
             
             
    Six months ended
    April 30,
2009
  April 30,
2008
             
Net revenue     $ 56,151       $ 56,729  
             
Costs and expenses (a) :            
Cost of sales       42,988        

42,649

(c)

Research and development       1,448         1,806  
Selling, general and administrative       5,773        

6,627

(c)

Amortization of purchased intangible assets       792         417  
In-process research and development charges       6         13  
Restructuring charges       240         14  
Acquisition-related charges       123         -  
Total costs and expenses       51,370         51,526  
             
Earnings from operations       4,781         5,203  
             
Interest and other, net       (412 )       75  
             
Earnings before taxes       4,369         5,278  
             
Provision for taxes (b)       799         1,088  
             
Net earnings     $ 3,570       $ 4,190  
             
Net earnings per share:            
Basic     $ 1.49       $ 1.67  
Diluted     $ 1.46       $ 1.61  
             
             
Cash dividends declared per share     $ 0.16       $ 0.16  
             
Weighted-average shares used to compute net earnings per share:
Basic       2,402         2,516  
Diluted       2,448         2,603  
             
(a) Stock-based compensation expense included under SFAS 123(R) was as follows:
Cost of sales     $ 100       $ 72  
Research and development       35         39  
Selling, general and administrative       194         198  
Acquisition-related charges       22         -  
Total costs and expenses     $ 351       $ 309  
             
(b) Tax benefit from stock-based compensation    

$

(107

)

   

$

(92

)

             
(c) Certain pursuit-related costs previously reported as Cost of sales have been realigned retroactively to Selling, general and administrative expenses due to the organizational realignments occurring within HP’s service offerings portfolio.
 
HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
ADJUSTMENTS TO GAAP NET EARNINGS, EARNINGS FROM OPERATIONS,
OPERATING MARGIN AND EARNINGS PER SHARE
(Unaudited)
(In millions except per share amounts)
                                     
                                     
   

Three
months
ended
April 30,
2009

 

Diluted
earnings
per
share

 

Three
months
ended
January 31,
2009

 

Diluted
earnings
per
share

 

Three
months
ended
April 30,
2008

 

Diluted
earnings
per
share

                                     
GAAP net earnings     $ 1,716       $ 0.70       $ 1,854       $ 0.75       $ 2,057       $ 0.80  
                                     
Non-GAAP adjustments:                                    

Amortization of purchased intangible assets

      380         0.16         412         0.17         211         0.08  

In-process research and development charges

      -        

-

        6        

-

        13         0.01  
Restructuring charges       94         0.04         146         0.06         4         -  
Acquisition-related charges       75         0.03         48         0.02         -         -  
Adjustments for taxes       (167 )       (0.07 )       (181 )       (0.07 )       (56 )       (0.02 )
                                     
Non-GAAP net earnings     $ 2,098       $ 0.86       $ 2,285       $ 0.93       $ 2,229       $ 0.87  
                                     
                                     
GAAP earnings from operations     $ 2,287             $ 2,494             $ 2,590        
                                     
Non-GAAP adjustments:                                    

Amortization of purchased intangible assets

      380               412               211        

In-process research and development charges

      -               6               13        
Restructuring charges       94               146               4        
Acquisition-related charges       75               48               -        

Non-GAAP earnings from operations

    $ 2,836             $ 3,106             $ 2,818        
                                     
GAAP operating margin       8 %             9 %             9 %      
Non-GAAP adjustments       2 %             2 %             1 %      
                                     
Non-GAAP operating margin       10 %             11 %             10 %      
                                                 
HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
ADJUSTMENTS TO GAAP NET EARNINGS, EARNINGS FROM OPERATIONS,
OPERATING MARGIN AND EARNINGS PER SHARE
(Unaudited)
(In millions except per share amounts)
                         
                         
   

Six months
ended
April 30,
2009

 

Diluted
earnings
per share

 

Six months
ended
April 30,
2008

 

Diluted
earnings
per share

                         
GAAP net earnings     $ 3,570       $ 1.46       $ 4,190       $ 1.61  
                         
Non-GAAP adjustments:                        

Amortization of purchased intangible assets

      792         0.32         417         0.16  

In-process research and development charges

      6         -         13         -  
Restructuring charges       240         0.10         14         0.01  
Acquisition-related charges       123         0.05         -         -  
Adjustments for taxes       (348 )       (0.14 )       (114 )       (0.04 )
                         
Non-GAAP net earnings     $ 4,383       $ 1.79       $ 4,520       $ 1.74  
                         
                         
GAAP earnings from operations     $ 4,781             $ 5,203        
                         
Non-GAAP adjustments:                        

Amortization of purchased intangible assets

      792               417        

In-process research and development charges

      6               13        
Restructuring charges       240               14        
Acquisition-related charges       123               -        

Non-GAAP earnings from operations

    $ 5,942             $ 5,647        
                         
GAAP operating margin       9 %             9 %      
Non-GAAP adjustments       2 %             1 %      
                         
Non-GAAP operating margin       11 %             10 %      
                                 
HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(In millions)
               
               
   

April 30,
2009

 

October 31,
2008

    (unaudited)        
ASSETS              
               
Current assets:              
Cash and cash equivalents     $

12,851

 

    $

10,153

 

Short-term investments       65         93  
Accounts receivable       14,666         16,928  
Financing receivables       2,352         2,314  
Inventory       5,746         7,879  
Other current assets       11,506         14,361  
               
Total current assets       47,186         51,728  
               
Property, plant and equipment       10,807         10,838  
               
Long-term financing receivables and other assets      

10,410

        10,468  
               
Goodwill and purchased intangible assets       40,112         40,297  
               
Total assets     $

108,515

      $ 113,331  
               
               
LIABILITIES AND STOCKHOLDERS' EQUITY              
               
Current liabilities:              
Notes payable and short-term borrowings     $ 5,702       $ 10,176  
Accounts payable       11,421        

14,917

(a)

Employee compensation and benefits       3,233         4,159  
Taxes on earnings       546         869  
Deferred revenue       6,342         6,287  
Other accrued liabilities       14,339        

16,531

(a)

               
Total current liabilities       41,583         52,939  
               
Long-term debt       12,978         7,676  
Other liabilities      

13,412

        13,774  
               
Stockholders' equity       40,542         38,942  
               
Total liabilities and stockholders' equity     $

108,515

      $ 113,331  
               
   

(a) In the second quarter of fiscal 2009, HP reclassified certain activity from Other accrued liabilities to Accounts payable as this better represents the nature of the activity. All prior periods have been revised to conform to current presentation.

 
HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(In millions)
             
   

Three months
ended
April 30,
2009

 

Six months
ended
April 30,
2009

             
Cash flows from operating activities:            
Net earnings     $ 1,716       $ 3,570  

Adjustments to reconcile net earnings to net cash provided by operating activities:

           
Depreciation and amortization       1,153         2,367  
Stock-based compensation expense       191        

351

(a)

Provision for bad debt and inventory       180         348  
In-process research and development charges       -         6  
Restructuring charges       94         240  
Deferred taxes on earnings       115         52  
Excess tax benefit from stock-based compensation       (15 )       (28 )
Other, net       14         (3 )
             
Changes in assets and liabilities:            
Accounts and financing receivables       (4 )       1,776  
Inventory       1,831         1,987  
Accounts payable       (417 )      

(3,506

) (a)

Taxes on earnings       680         980  
Restructuring       (339 )       (548 )
Other assets and liabilities       (235 )      

(1,502

) (a)

Net cash provided by operating activities       4,964         6,090  
             
Cash flows from investing activities:            
Investment in property, plant and equipment       (842 )      

(1,658

) (a)

Proceeds from sale of property, plant and equipment       98         250  

Purchases of available-for-sale securities and other investments

      (55 )       (55 )

Maturities and sales of available-for-sale securities and other investments

      57         103  

Payments made in connection with business acquisitions, net

     

(3

)

      (348 )
Net cash used in investing activities       (745 )       (1,708 )
             
Cash flows from financing activities:            
Repayment of commercial paper and notes payable, net       (4,506 )       (4,449 )
Issuance of debt       2,774        

4,778

(a)

Payment of debt       (41 )       (110 )
Issuance of common stock under employee stock plans       194         493  
Repurchase of common stock       (801 )       (2,039 )
Excess tax benefit from stock-based compensation       15         28  
Dividends       (192 )       (385 )
Net cash used in financing activities       (2,557 )       (1,684 )
             
Increase in cash and cash equivalents       1,662         2,698  
Cash and cash equivalents at beginning of period       11,189         10,153  
Cash and cash equivalents at end of period     $ 12,851       $ 12,851  
             
(a) Certain adjustments have been made to prior quarter amounts in order to conform to the current quarter presentation.
 
HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
SEGMENT INFORMATION
(Unaudited)
(In millions)
                   
    Three months ended
    April 30,
2009
  January 31,
2009
  April 30,
2008 (a)
                   
Net revenue:                  
                   
Services     $ 8,488       $ 8,746       $ 4,262  
Enterprise Storage and Servers       3,456         3,948         4,780  
HP Software       880         878         1,039  
Technology Solutions Group       12,824         13,572         10,081  
Personal Systems Group       8,191         8,787         10,071  
Imaging and Printing Group       5,916         5,981         7,644  
HP Financial Services       641         636         685  
Corporate Investments       188         196         230  
Total Segments       27,760         29,172         28,711  

Eliminations of intersegment net revenue and other

      (409 )       (372 )       (449 )
                   
Total HP Consolidated     $ 27,351       $ 28,800       $ 28,262  
                   
Earnings from operations:                  
                   
Services     $ 1,172       $ 1,123       $ 507  
Enterprise Storage and Servers       250         405         655  
HP Software       157         140         104  
Technology Solutions Group       1,579         1,668         1,266  
Personal Systems Group       374         435         544  
Imaging and Printing Group       1,074         1,105         1,220  
HP Financial Services       46         41         47  
Corporate Investments       (19 )       (19 )       6  
Total Segments       3,054         3,230         3,083  
                   

Corporate and unallocated costs and eliminations

      (62 )       24        

(134

)

Unallocated costs related to stock-based compensation expense

      (156 )       (148 )      

(131

)

Amortization of purchased intangible assets

      (380 )       (412 )       (211 )

In-process research and development charges

      -         (6 )       (13 )
Restructuring charges       (94 )       (146 )       (4 )
Acquisition-related charges       (75 )       (48 )       -  
Interest and other, net       (180 )       (232 )       3  
                   
Total HP Consolidated Earnings Before Taxes     $ 2,107       $ 2,262       $ 2,593  
                   
                   
(a) Certain fiscal 2009 organizational reclassifications have been reflected retroactively to provide improved visibility and comparability. For each of the quarters in fiscal year 2008, the reclassifications resulted in the transfer of revenue and operating profit among the Services, HP Software and Imaging and Printing Group financial reporting segments. In addition, certain previously allocated costs were reclassified to unallocated costs related to stock-based compensation expense. There was no impact on the previously reported financial results for the Enterprise Storage and Servers, Personal Systems Group, HP Financial Services and Corporate Investments segments.
 
HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
SEGMENT INFORMATION
(Unaudited)
(In millions)
             
    Six months ended
    April 30,
2009
  April 30,
2008 (a)
             
Net revenue:            
             
Services     $ 17,234       $ 8,314  
Enterprise Storage and Servers       7,404         9,600  
HP Software       1,758         1,986  
Technology Solutions Group       26,396         19,900  
Personal Systems Group       16,978         20,862  
Imaging and Printing Group       11,897         15,001  
HP Financial Services       1,277         1,327  
Corporate Investments       384         448  
Total Segments       56,932         57,538  

Eliminations of intersegment net revenue and other

      (781 )       (809 )
             
Total HP Consolidated     $ 56,151       $ 56,729  
             
Earnings from operations:            
             
Services     $ 2,295       $ 1,006  
Enterprise Storage and Servers       655         1,328  
HP Software       297         153  
Technology Solutions Group       3,247         2,487  
Personal Systems Group       809         1,172  
Imaging and Printing Group       2,179         2,362  
HP Financial Services       87         90  
Corporate Investments       (38 )       14  
Total Segments       6,284         6,125  
             

Corporate and unallocated costs and eliminations

      (38 )      

(223

)

Unallocated costs related to stock-based compensation expense

      (304 )      

(255

)

Amortization of purchased intangible assets

      (792 )       (417 )

In-process research and development charges

      (6 )       (13 )
Restructuring charges       (240 )       (14 )
Acquisition-related charges       (123 )       -  
Interest and other, net       (412 )       75  
             
Total HP Consolidated Earnings Before Taxes     $ 4,369       $ 5,278  
             
             
(a) Certain fiscal 2009 organizational reclassifications have been reflected retroactively to provide improved visibility and comparability. For each of the quarters in fiscal year 2008, the reclassifications resulted in the transfer of revenue and operating profit among the Services, HP Software and Imaging and Printing Group financial reporting segments. In addition, certain previously allocated costs were reclassified to unallocated costs related to stock-based compensation expense. There was no impact on the previously reported financial results for the Enterprise Storage and Servers, Personal Systems Group, HP Financial Services and Corporate Investments segments.
 
HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
SEGMENT / BUSINESS UNIT INFORMATION
(Unaudited)
(In millions)
 
    Three months ended
    April 30,
2009
  January 31,
2009
  April 30,
2008 (a)
                   
Net revenue:                  
                   
Infrastructure technology outsourcing     $ 3,836       $ 3,960       $ 1,312  
Technology services       2,441         2,451         2,568  
Application services       1,502         1,592         342  
Business process outsourcing       709         743         40  
Services (b)       8,488         8,746         4,262  
Industry standard servers       1,988         2,322         2,818  
Storage       818         913         1,043  
Business critical systems       650         713         919  
Enterprise Storage and Servers       3,456         3,948         4,780  
Business technology optimization       568         594         670  
Other       312         284         369  
HP Software       880         878         1,039  
Technology Solutions Group       12,824         13,572         10,081  
Notebooks       4,697         4,907         5,373  
Desktops       2,967         3,303         3,925  
Workstations       287         333         490  
Handhelds       47         57         102  
Other       193         187         181  
Personal Systems Group       8,191         8,787         10,071  
Supplies       4,103         4,050         4,768  
Commercial hardware       1,193         1,239         1,975  
Consumer hardware       620         692         901  
Imaging and Printing Group       5,916         5,981         7,644  
HP Financial Services       641         636         685  
Corporate Investments       188         196         230  
Total Segments       27,760         29,172         28,711  
                   

Eliminations of intersegment net revenue and other

     

(409

)

     

(372

)

     

(449

)

                   
Total HP Consolidated     $ 27,351       $ 28,800       $ 28,262  
                   
                   
(a) Certain fiscal 2009 organizational reclassifications have been reflected retroactively to provide improved visibility and comparability. For each of the quarters in fiscal year 2008, the reclassifications resulted in the transfer of revenue among the Services, HP Software and Imaging and Printing Group financial reporting segments. In addition, revenue was transferred among the business units within the Services, HP Software, Imaging and Printing Group, and Personal Systems Group segments. There was no impact on the previously reported financial results for the Enterprise Storage and Servers, HP Financial Services and Corporate Investments segments.
                   
(b) Infrastructure technology outsourcing, Application services, Business process outsourcing and Other business units were added to the Services business segment. In addition, Outsourcing services, Consulting and integration and EDS business units within Services were disintegrated in fiscal 2009.
 

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES

SEGMENT / BUSINESS UNIT INFORMATION
(Unaudited)
(In millions)
 
    Six months ended
    April 30,
2009
  April 30,
2008 (a)
             
Net revenue:            
             
Infrastructure technology outsourcing     $ 7,796       $ 2,564  
Technology services       4,892         5,026  
Application services       3,094         648  
Business process outsourcing       1,452         76  
Services (b)       17,234         8,314  
Industry standard servers       4,310         5,806  
Storage       1,731         2,020  
Business critical systems       1,363         1,774  
Enterprise Storage and Servers       7,404         9,600  
Business technology optimization       1,162         1,288  
Other       596         698  
HP Software       1,758         1,986  
Technology Solutions Group       26,396         19,900  
Notebooks       9,604         11,037  
Desktops       6,270         8,331  
Workstations       620         952  
Handhelds       104         191  
Other       380         351  
Personal Systems Group       16,978         20,862  
Supplies       8,153         9,137  
Commercial hardware       2,432         3,858  
Consumer hardware       1,312         2,006  
Imaging and Printing Group       11,897         15,001  
HP Financial Services       1,277         1,327  
Corporate Investments       384         448  
Total Segments       56,932         57,538  
             

Eliminations of intersegment net revenue and other

     

(781

)

     

(809

)

             
Total HP Consolidated     $ 56,151       $ 56,729  
             
             
(a) Certain fiscal 2009 organizational reclassifications have been reflected retroactively to provide improved visibility and comparability. For each of the quarters in fiscal year 2008, the reclassifications resulted in the transfer of revenue among the Services, HP Software and Imaging and Printing Group financial reporting segments. In addition, revenue was transferred among the business units within the Services, HP Software, Imaging and Printing Group, and Personal Systems Group segments. There was no impact on the previously reported financial results for the Enterprise Storage and Servers, HP Financial Services and Corporate Investments segments.
             
(b) Infrastructure technology outsourcing, Application services, Business process outsourcing and Other business units were added to the Services business segment. In addition, Outsourcing services, Consulting and integration and EDS business units within Services were disintegrated in fiscal 2009.
 
HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
CALCULATION OF NET EARNINGS PER SHARE
(Unaudited)
(In millions except per share amounts)
                   
                   
    Three months ended
    April 30,
2009
  January 31,
2009
  April 30,
2008
                   
Numerator:                  
Net earnings     $

1,716

 

    $

1,854

 

    $

2,057

 

                               

Adjustment for interest expense on zero-coupon subordinated convertible notes, net of taxes

      -         -         1  
                   
Net earnings, adjusted     $ 1,716       $ 1,854       $ 2,058  
                   
Denominator:                  

Weighted-average shares used to compute basic EPS

      2,394         2,410         2,473  
Effect of dilutive securities:                  
Dilution from employee stock plans       44         54         79  
Zero-coupon subordinated convertible notes       -         -         5  
Dilutive potential common shares       44         54         84  
                   

Weighted-average shares used to compute diluted EPS

      2,438         2,464         2,557  
                   
Net earnings per share:                  
Basic (a)     $ 0.72       $ 0.77       $ 0.83  
Diluted (b)     $ 0.70       $ 0.75       $ 0.80  
                   
                   
(a) HP's basic earnings per share was calculated based on net earnings and the weighted-average number of shares outstanding during the reporting period.
                   
(b) The diluted earnings per share included additional dilution from potential issuance of common stock, such as stock issuable pursuant to exercise of stock options, vesting of restricted stock units and conversion of debt, except when such issuances would be anti-dilutive.
 
HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
CALCULATION OF NET EARNINGS PER SHARE
(Unaudited)
(In millions except per share amounts)
             
             
    Six months ended
    April 30,
2009
  April 30,
2008
             
Numerator:            
Net earnings    

$

3,570

 

   

$

4,190

 

                     

Adjustment for interest expense on zero-coupon subordinated convertible notes, net of taxes

      -         3  
             
Net earnings, adjusted     $ 3,570       $ 4,193  
             
Denominator:            

Weighted-average shares used to compute basic EPS

      2,402         2,516  
Effect of dilutive securities:            
Dilution from employee stock plans       46         81  
Zero-coupon subordinated convertible notes       -         6  
Dilutive potential common shares       46         87  
             

Weighted-average shares used to compute diluted EPS

      2,448         2,603  
             
Net earnings per share:            
Basic (a)     $ 1.49       $ 1.67  
Diluted (b)     $ 1.46       $ 1.61  
             
             
(a) HP's basic earnings per share was calculated based on net earnings and the weighted-average number of shares outstanding during the reporting period.
             
(b) The diluted earnings per share included additional dilution from potential issuance of common stock, such as stock issuable pursuant to exercise of stock options, vesting of restricted stock units and conversion of debt, except when such issuances would be anti-dilutive.
 
HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
CALCULATION OF NON-GAAP NET EARNINGS PER SHARE
(Unaudited)
(In millions except per share amounts)
                   
                   
    Three months ended
    April 30,
2009
  January 31,
2009
  April 30,
2008
                   
Numerator:        
Non-GAAP net earnings    

$

2,098

 

   

$

2,285

 

   

$

2,229

 

                               

Adjustment for interest expense on zero-coupon subordinated convertible notes, net of taxes

      -         -         1  
                   
Non-GAAP net earnings, adjusted     $ 2,098       $ 2,285       $ 2,230  
                   
Denominator:                  

Weighted-average shares used to compute basic EPS

      2,394         2,410         2,473  
Effect of dilutive securities:                  
Dilution from employee stock plans       44         54         79  
Zero-coupon subordinated convertible notes       -         -         5  
Dilutive potential common shares       44         54         84  
                   

Weighted-average shares used to compute diluted EPS

      2,438         2,464         2,557  
                   
Non-GAAP net earnings per share:                  
Basic (a)     $ 0.88       $ 0.95       $ 0.90  
Diluted (b)     $ 0.86       $ 0.93       $ 0.87  
                   
   
(a) HP's basic earnings per share was calculated based on net earnings and the weighted-average number of shares outstanding during the reporting period.
                   
(b) The diluted earnings per share included additional dilution from potential issuance of common stock, such as stock issuable pursuant to exercise of stock options, vesting of restricted stock units and conversion of debt, except when such issuances would be anti-dilutive.
 
HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
CALCULATION OF NON-GAAP NET EARNINGS PER SHARE
(Unaudited)
(In millions except per share amounts)
             
             
    Six months ended
    April 30,
2009
  April 30,
2008
             
Numerator:  
Non-GAAP net earnings    

$

4,383

 

   

$

4,520

 

                     

Adjustment for interest expense on zero-coupon subordinated convertible notes, net of taxes

      -         3  
             
Non-GAAP net earnings, adjusted     $ 4,383       $ 4,523  
             
Denominator:            

Weighted-average shares used to compute basic EPS

      2,402         2,516  
Effect of dilutive securities:            
Dilution from employee stock plans       46         81  
Zero-coupon subordinated convertible notes       -         6  
Dilutive potential common shares       46         87  
             

Weighted-average shares used to compute diluted EPS

      2,448         2,603  
             
Non-GAAP net earnings per share:            
Basic (a)     $ 1.82       $ 1.80  
Diluted (b)     $ 1.79       $ 1.74  
             
   
(a) HP's basic earnings per share was calculated based on net earnings and the weighted-average number of shares outstanding during the reporting period.
             
(b) The diluted earnings per share included additional dilution from potential issuance of common stock, such as stock issuable pursuant to exercise of stock options, vesting of restricted stock units and conversion of debt, except when such issuances would be anti-dilutive.
 

Use of Non-GAAP Financial Measures

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