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© 2009 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice. HP shall not be liable for technical or editorial errors or omissions contained herein.
| HEWLETT-PACKARD COMPANY AND SUBSIDIARIES | ||||||
| CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS | ||||||
| (Unaudited) | ||||||
| (In millions except per share amounts) | ||||||
| Three months ended | ||||||
|
October 31,
2009(c) |
July 31,
2009(c) |
October 31,
2008 |
||||
| Net revenue | $ 30,777 | $ 27,585 | $ 33,603 | |||
| Costs and expenses(a): | ||||||
| Cost of sales | 23,475 | 21,031 | 25,853 | (d) | ||
| Research and development | 704 | 667 | 842 | |||
| Selling, general and administrative | 2,966 | 2,874 | 3,506 | (d) | ||
| Amortization of purchased intangible assets | 400 | 379 | 337 | |||
| In-process research and development charges | 1 | - | 32 | |||
| Restructuring charges | 38 | 362 | 251 | |||
| Acquisition-related charges | 60 | 59 | 41 | |||
| Total costs and expenses | 27,644 | 25,372 | 30,862 | |||
| Earnings from operations | 3,133 | 2,213 | 2,741 | |||
| Interest and other, net | (132 ) | (177 ) | (98 ) | |||
| Earnings before taxes | 3,001 | 2,036 | 2,643 | |||
| Provision for taxes (b) | 589 | 365 | 531 | |||
| Net earnings | $ 2,412 | $ 1,671 | $ 2,112 | |||
| Net earnings per share: | ||||||
| Basic | $ 1.02 | $ 0.70 | $ 0.87 | |||
| Diluted | $ 0.99 | $ 0.69 | $ 0.84 | |||
| Cash dividends declared per share | $ - | $ 0.16 | $ - | |||
| Weighted-average shares used to compute net earnings per share: | ||||||
| Basic | 2,366 | 2,382 | 2,440 | |||
| Diluted | 2,433 | 2,436 | 2,516 | |||
| (a) Stock-based compensation expense included under SFAS 123(R) was as follows: | ||||||
| Cost of sales | $ 37 | $ 41 | $ 46 | |||
| Research and development | 10 | 12 | 17 | |||
| Selling, general and administrative | 86 | 94 | 94 | |||
| Acquisition-related charges | 1 | 3 | - | |||
| Total costs and expenses | $ 134 | $ 150 | $ 157 | |||
| (b) Tax benefit from stock-based compensation | $ (41) | $ (51) | $ (37) | |||
| (c) In the fourth quarter of fiscal 2009, HP early adopted Accounting Standards Update ("ASU") No. 2009-13, "Multiple-Deliverable Revenue Arrangements" and ASU No. 2009-14, "Certain Revenue Arrangements That Include Software Elements." As a result, fiscal 2009 net revenues and net earnings were higher by $255 million and $55 million, respectively. Fourth quarter fiscal 2009 net revenues and net earnings were higher by $82 million and $19 million, respectively. HP adopted these standards as of the beginning of fiscal 2009; therefore the previously reported quarterly results have been restated to reflect the impact of adoption. | ||||||
| (d) For the prior year reporting period presented, certain pursuit-related costs previously reported as Cost of sales have been realigned retroactively to Selling, general and administrative expenses due to organizational realignments. | ||||||
| HEWLETT-PACKARD COMPANY AND SUBSIDIARIES | ||||||
| CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS | ||||||
| (In millions except per share amounts) | ||||||
| Twelve months ended | ||||||
| October 31, | ||||||
| 2009 (c) | 2008 | |||||
| (unaudited) | ||||||
| Net revenue | $ 114,552 | $ 118,364 | ||||
| Costs and expenses (a) : | ||||||
| Cost of sales | 87,524 | 89,699 | (d) | |||
| Research and development | 2,819 | 3,543 | ||||
| Selling, general and administrative | 11,613 | 13,326 | (d) | |||
| Amortization of purchased intangible assets | 1,571 | 967 | ||||
| In-process research and development charges | 7 | 45 | ||||
| Restructuring charges | 640 | 270 | ||||
| Acquisition-related charges | 242 | 41 | ||||
| Total costs and expenses | 104,416 | 107,891 | ||||
| Earnings from operations | 10,136 | 10,473 | ||||
| Interest and other, net | (721 ) | - | ||||
| Earnings before taxes | 9,415 | 10,473 | ||||
| Provision for taxes (b) | 1,755 | 2,144 | ||||
| Net earnings | $ 7,660 | $ 8,329 | ||||
| Net earnings per share: | ||||||
| Basic | $ 3.21 | $ 3.35 | ||||
| Diluted | $ 3.14 | $ 3.25 | ||||
| Cash dividends declared per share | $ 0.32 | $ 0.32 | ||||
| Weighted-average shares used to compute net earnings per share: | ||||||
| Basic | 2,388 | 2,483 | ||||
| Diluted | 2,437 | 2,567 | ||||
| (a) Stock-based compensation expense included under SFAS 123(R) was as follows: | ||||||
| Cost of sales | $ 178 | $ 152 | ||||
| Research and development | 57 | 72 | ||||
| Selling, general and administrative | 374 | 382 | ||||
| Acquisition-related charges | 26 | - | ||||
| Total costs and expenses | $ 635 | $ 606 | ||||
| (b) Tax benefit from stock-based compensation | $ (199) | $ (167) | ||||
| (c) In the fourth quarter of fiscal 2009, HP early adopted Accounting Standards Update ("ASU") No. 2009-13, "Multiple-Deliverable Revenue Arrangements" and ASU No. 2009-14, "Certain Revenue Arrangements That Include Software Elements." As a result, fiscal 2009 net revenues and net earnings were higher by $255 million and $55 million, respectively. Fourth quarter fiscal 2009 net revenues and net earnings were higher by $82 million and $19 million, respectively. HP adopted these standards as of the beginning of fiscal 2009; therefore the previously reported quarterly results have been restated to reflect the impact of adoption. | ||||||
| (d) For the prior year reporting period presented, certain pursuit-related costs previously reported as Cost of sales have been realigned retroactively to Selling, general and administrative expenses due to organizational realignments. | ||||||
| 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
October 31, 2009 (a) |
Diluted earnings per share |
Three months ended
July 31, 2009 (a) |
Diluted earnings per share |
Three months ended
October 31, 2008 |
Diluted earnings per share | ||||
| GAAP net earnings | $ 2,412 | $ 0.99 | $ 1,671 | $ 0.69 | $ 2,112 | $ 0.84 | |||
| Non-GAAP adjustments: | |||||||||
|
Amortization of purchased
intangible assets |
400 | 0.16 | 379 | 0.16 | 337 | 0.13 | |||
|
In-process research and
development charges |
1 | - | - | - | 32 | 0.01 | |||
| Restructuring charges | 38 | 0.02 | 362 | 0.15 | 251 | 0.10 | |||
| Acquisition-related charges | 60 | 0.03 | 59 | 0.02 | 41 | 0.02 | |||
| Adjustments for taxes | (147 ) | (0.06 ) | (232 ) | (0.10 ) | (179 ) | (0.07 ) | |||
| Non-GAAP net earnings | $ 2,764 | $ 1.14 | $ 2,239 | $ 0.92 | $ 2,594 | $ 1.03 | |||
| GAAP earnings from operations | $ 3,133 | $ 2,213 | $ 2,741 | ||||||
| Non-GAAP adjustments: | |||||||||
|
Amortization of purchased
intangible assets |
400 | 379 | 337 | ||||||
|
In-process research and
development charges |
1 | - | 32 | ||||||
| Restructuring charges | 38 | 362 | 251 | ||||||
| Acquisition-related charges | 60 | 59 | 41 | ||||||
| Non-GAAP earnings from operations | $ 3,632 | $ 3,013 | $ 3,402 | ||||||
| GAAP operating margin | 10% | 8% | 8% | ||||||
| Non-GAAP adjustments | 2% | 3% | 2% | ||||||
| Non-GAAP operating margin | 12% | 11% | 10% | ||||||
| (a) In the fourth quarter of fiscal 2009, HP early adopted Accounting Standards Update ("ASU") No. 2009-13, "Multiple-Deliverable Revenue Arrangements" and ASU No. 2009-14, "Certain Revenue Arrangements That Include Software Elements." As a result, fiscal 2009 net revenues and GAAP net earnings were higher by $255 million and $55 million, respectively. Fourth quarter fiscal 2009 net revenues and GAAP net earnings were higher by $82 million and $19 million, respectively. HP adopted these standards as of the beginning of fiscal 2009; therefore the previously reported quarterly results have been restated to reflect the impact of adoption. | |||||||||
| 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) | ||||||
|
Twelve months ended
October 31, 2009 (a) |
Diluted earnings
per share |
Twelve months ended
October 31, 2008 |
Diluted earnings
per share |
|||
| GAAP net earnings | $ 7,660 | $ 3.14 | $ 8,329 | $ 3.25 | ||
| Non-GAAP adjustments: | ||||||
|
Amortization of purchased
intangible assets |
1,571 | 0.65 | 967 | 0.38 | ||
|
In-process research and
development charges |
7 | - | 45 | 0.02 | ||
| Restructuring charges | 640 | 0.26 | 270 | 0.10 | ||
| Acquisition-related charges | 242 | 0.10 | 41 | 0.01 | ||
| Adjustments for taxes | (727 ) | (0.30 ) | (350 ) | (0.14 ) | ||
| Non-GAAP net earnings | $ 9,393 | $ 3.85 | $ 9,302 | $ 3.62 | ||
| GAAP earnings from operations | $ 10,136 | $ 10,473 | ||||
| Non-GAAP adjustments: | ||||||
|
Amortization of purchased
intangible assets |
1,571 | 967 | ||||
|
In-process research and
development charges |
7 | 45 | ||||
| Restructuring charges | 640 | 270 | ||||
| Acquisition-related charges | 242 | 41 | ||||
| Non-GAAP earnings from operations | $ 12,596 | $ 11,796 | ||||
| GAAP operating margin | 9% | 9% | ||||
| Non-GAAP adjustments | 2% | 1% | ||||
| Non-GAAP operating margin | 11% | 10% | ||||
| (a) In the fourth quarter of fiscal 2009, HP early adopted Accounting Standards Update ("ASU") No. 2009-13, "Multiple-Deliverable Revenue Arrangements" and ASU No. 2009-14, "Certain Revenue Arrangements That Include Software Elements." As a result, fiscal 2009 net revenues and GAAP net earnings were higher by $255 million and $55 million, respectively. Fourth quarter fiscal 2009 net revenues and GAAP net earnings were higher by $82 million and $19 million, respectively. HP adopted these standards as of the beginning of fiscal 2009; therefore the previously reported quarterly results have been restated to reflect the impact of adoption. | ||||||
| HEWLETT-PACKARD COMPANY AND SUBSIDIARIES | |||
| CONSOLIDATED CONDENSED BALANCE SHEETS | |||
| (In millions) | |||
|
October 31,
2009 |
October 31,
2008 |
||
| (unaudited) | |||
| ASSETS | |||
| Current assets: | |||
| Cash and cash equivalents | $ 13,279 | $ 10,153 | |
| Short-term investments | 55 | 93 | |
| Accounts receivable | 16,537 | 16,928 | |
| Financing receivables | 2,675 | 2,314 | |
| Inventory | 6,128 | 7,879 | |
| Other current assets | 13,865 | 14,361 | |
| Total current assets | 52,539 | 51,728 | |
| Property, plant and equipment | 11,262 | 10,838 | |
| Long-term financing receivables and other assets | 11,289 | 10,468 | |
| Goodwill and purchased intangible assets | 39,709 | 40,297 | |
| Total assets | $ 114,799 | $ 113,331 | |
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||
| Current liabilities: | |||
| Notes payable and short-term borrowings | $ 1,850 | $ 10,176 | |
| Accounts payable | 14,809 | 14,917 | |
| Employee compensation and benefits | 4,071 | 4,159 | |
| Taxes on earnings | 910 | 869 | |
| Deferred revenue | 6,182 | 6,287 | |
| Other accrued liabilities | 15,181 | 16,531 | |
| Total current liabilities | 43,003 | 52,939 | |
| Long-term debt | 13,980 | 7,676 | |
| Other liabilities | 17,299 | 13,774 | |
| Stockholders' equity | 40,517 | 38,942 | |
| Total liabilities and stockholders' equity | $ 114,799 | $ 113,331 | |
|
HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) (In millions) |
|||
|
Three months ended
October 31, 2009 |
Twelve months ended
October 31, 2009 |
||
| Cash flows from operating activities: | |||
| Net earnings (a) | $ 2,412 | $ 7,660 | |
|
Adjustments to reconcile net earnings to
net cash provided by operating activities: |
|||
| Depreciation and amortization | 1,227 | 4,773 | |
| Stock-based compensation expense | 134 | 635 | |
| Provision for bad debt and inventory | 104 | 566 | |
| In-process research and development charges | 1 | 7 | |
| Restructuring charges | 38 | 640 | |
| Deferred taxes on earnings | 107 | 379 | |
| Excess tax benefit from stock-based compensation | (95) | (162) | |
| Other, net | (19) | (20) | |
| Changes in assets and liabilities: | |||
| Accounts and financing receivables | (2,184) | (549) | |
| Inventory | (311) | 1,532 | |
| Accounts payable | 2,075 | (153) | |
| Taxes on earnings | (146) | 557 | |
| Restructuring | (393) | (1,237) | |
| Other assets and liabilities | 483 | (1,249 ) | |
| Net cash provided by operating activities | 3,433 | 13,379 | |
| Cash flows from investing activities: | |||
| Investment in property, plant and equipment | (946) | (3,695) | |
| Proceeds from sale of property, plant and equipment | 94 | 495 | |
|
Purchases of available-for-sale securities
and other investments |
(55) | (160) | |
|
Maturities and sales of available-for-sale
securities and other investments |
68 | 171 | |
|
Payments made in connection with business
acquisitions, net |
(43 ) | (391 ) | |
| Net cash used in investing activities | (882 ) | (3,580 ) | |
| Cash flows from financing activities: | |||
| Issuance (repayment) of commercial paper and notes payable, net | 10 | (6,856) | |
| Issuance of debt | 22 | 6,800 | |
| Payment of debt | (1,529) | (2,710) | |
| Issuance of common stock under employee stock plans | 901 | 1,837 | |
| Repurchase of common stock | (2,102) | (5,140) | |
| Excess tax benefit from stock-based compensation | 95 | 162 | |
| Dividends | (190 ) | (766 ) | |
| Net cash used in financing activities | (2,793 ) | (6,673 ) | |
| (Decrease) increase in cash and cash equivalents | (242) | 3,126 | |
| Cash and cash equivalents at beginning of period | 13,521 | 10,153 | |
| Cash and cash equivalents at end of period | $ 13,279 | $ 13,279 | |
| (a) In the fourth quarter of fiscal 2009, HP early adopted Accounting Standards Update ("ASU") No. 2009-13, "Multiple-Deliverable Revenue Arrangements" and ASU No. 2009-14, "Certain Revenue Arrangements That Include Software Elements." As a result, fiscal 2009 net earnings were higher by $55 million. Fourth quarter fiscal 2009 net earnings were higher by $19 million. HP adopted these standards as of the beginning of fiscal 2009; therefore the previously reported quarterly results have been restated to reflect the impact of adoption. | |||
| HEWLETT-PACKARD COMPANY AND SUBSIDIARIES | |||||||
| SEGMENT INFORMATION | |||||||
| (Unaudited) | |||||||
| (In millions) | |||||||
| Three months ended | |||||||
|
October 31,
2009 (b) |
July 31,
2009 (b) |
October 31,
2008 (c) |
|||||
| Net revenue: | |||||||
| Services (a) | $ 8,926 | $ 8,520 | $ 8,277 | ||||
| Enterprise Storage and Servers | 4,218 | 3,735 | 5,059 | ||||
| HP Software | 967 | 847 | 1,148 | ||||
| Technology Solutions Group | 14,111 | 13,102 | 14,484 | ||||
| Personal Systems Group | 9,862 | 8,441 | 11,179 | ||||
| Imaging and Printing Group | 6,454 | 5,660 | 7,572 | ||||
| HP Financial Services | 726 | 670 | 691 | ||||
| Corporate Investments | 191 | 193 | 246 | ||||
| Total Segments | 31,344 | 28,066 | 34,172 | ||||
| Eliminations of intersegment net revenue and other | (567 ) | (481 ) | (569 ) | ||||
| Total HP Consolidated | $ 30,777 | $ 27,585 | $ 33,603 | ||||
| Earnings (Loss) from operations: | |||||||
| Services (a) | $ 1,444 | $ 1,302 | $ 945 | ||||
| Enterprise Storage and Servers | 481 | 381 | 705 | ||||
| HP Software | 234 | 153 | 211 | ||||
| Technology Solutions Group | 2,159 | 1,836 | 1,861 | ||||
| Personal Systems Group | 460 | 387 | 616 | ||||
| Imaging and Printing Group | 1,171 | 960 | 1,155 | ||||
| HP Financial Services | 66 | 53 | 51 | ||||
| Corporate Investments | (8 ) | (10 ) | 9 | ||||
| Total Segments | 3,848 | 3,226 | 3,692 | ||||
| Corporate and unallocated costs and eliminations | (100) | (81) | (153) | ||||
|
Unallocated costs related to stock-based compensation
expense |
(116) | (132) | (137) | ||||
| Amortization of purchased intangible assets | (400) | (379) | (337) | ||||
| In-process research and development charges | (1) | - | (32) | ||||
| Restructuring charges | (38) | (362) | (251) | ||||
| Acquisition-related charges | (60) | (59) | (41) | ||||
| Interest and other, net | (132 ) | (177 ) | (98 ) | ||||
| Total HP Consolidated Earnings Before Taxes | $ 3,001 | $ 2,036 | $ 2,643 | ||||
| (a) Includes the results of EDS which was acquired on August 26, 2008. | |||||||
| (b) In the fourth quarter of fiscal 2009, HP early adopted Accounting Standards Update ("ASU") No. 2009-13, "Multiple-Deliverable Revenue Arrangements" and ASU No. 2009-14, "Certain Revenue Arrangements That Include Software Elements." HP adopted these standards as of the beginning of fiscal 2009; therefore the previously reported quarterly segment results have been restated to reflect the impact of adoption. The adoption primarily impacted the Services and Enterprise Storage and Servers financial reporting segments. | |||||||
| (c) 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) | |||||
|
Twelve months ended
October 31, |
|||||
| 2009 (b) | 2008 (c) | ||||
| Net revenue: | |||||
| Services (a) | $ 34,693 | $ 20,977 | |||
| Enterprise Storage and Servers | 15,359 | 19,400 | |||
| HP Software | 3,572 | 4,220 | |||
| Technology Solutions Group | 53,624 | 44,597 | |||
| Personal Systems Group | 35,305 | 42,295 | |||
| Imaging and Printing Group | 24,011 | 29,614 | |||
| HP Financial Services | 2,673 | 2,698 | |||
| Corporate Investments | 768 | 965 | |||
| Total Segments | 116,381 | 120,169 | |||
| Eliminations of intersegment net revenue and other | (1,829 ) | (1,805 ) | |||
| Total HP Consolidated | $ 114,552 | $ 118,364 | |||
| Earnings (Loss) from operations: | |||||
| Services (a) | $ 5,044 | $ 2,518 | |||
| Enterprise Storage and Servers | 1,518 | 2,577 | |||
| HP Software | 684 | 499 | |||
| Technology Solutions Group | 7,246 | 5,594 | |||
| Personal Systems Group | 1,661 | 2,375 | |||
| Imaging and Printing Group | 4,310 | 4,559 | |||
| HP Financial Services | 206 | 192 | |||
| Corporate Investments | (56 ) | 49 | |||
| Total Segments | 13,367 | 12,769 | |||
| Corporate and unallocated costs and eliminations | (219) | (461) | |||
|
Unallocated costs related to stock-based compensation
expense |
(552) | (512) | |||
| Amortization of purchased intangible assets | (1,571) | (967) | |||
| In-process research and development charges | (7) | (45) | |||
| Restructuring charges | (640) | (270) | |||
| Acquisition-related charges | (242) | (41) | |||
| Interest and other, net | (721 ) | - | |||
| Total HP Consolidated Earnings Before Taxes | $ 9,415 | $ 10,473 | |||
| (a) Includes the results of EDS which was acquired on August 26, 2008. | |||||
| (b) In the fourth quarter of fiscal 2009, HP early adopted Accounting Standards Update ("ASU") No. 2009-13, "Multiple-Deliverable Revenue Arrangements" and ASU No. 2009-14, "Certain Revenue Arrangements That Include Software Elements." HP adopted these standards as of the beginning of fiscal 2009; therefore the previously reported quarterly segment results have been restated to reflect the impact of adoption. The adoption primarily impacted the Services and Enterprise Storage and Servers financial reporting segments. | |||||
| (c) 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 | ||||||
|
October 31,
2009 (b) |
July 31,
2009 (b) |
October 31,
2008 (c) |
||||
| Net revenue: | ||||||
| Infrastructure technology outsourcing | $ 4,084 | $ 3,967 | $ 3,531 | |||
| Technology services | 2,493 | 2,404 | 2,657 | |||
| Application services | 1,538 | 1,399 | 1,427 | |||
| Business process outsourcing | 778 | 711 | 604 | |||
| Other | 33 | 39 | 58 | |||
| Services (a) | 8,926 | 8,520 | 8,277 | |||
| Industry standard servers | 2,669 | 2,316 | 2,977 | |||
| Storage | 918 | 824 | 1,147 | |||
| Business critical systems | 631 | 595 | 935 | |||
| Enterprise Storage and Servers | 4,218 | 3,735 | 5,059 | |||
| Business technology optimization | 660 | 563 | 786 | |||
| Other software | 307 | 284 | 362 | |||
| HP Software | 967 | 847 | 1,148 | |||
| Technology Solutions Group | 14,111 | 13,102 | 14,484 | |||
| Notebooks | 5,794 | 4,803 | 6,270 | |||
| Desktops | 3,481 | 3,098 | 4,149 | |||
| Workstations | 342 | 299 | 470 | |||
| Handhelds | 36 | 32 | 79 | |||
| Other | 209 | 209 | 211 | |||
| Personal Systems Group | 9,862 | 8,441 | 11,179 | |||
| Supplies | 4,430 | 3,949 | 4,808 | |||
| Commercial Hardware | 1,261 | 1,085 | 1,846 | |||
| Consumer Hardware | 763 | 626 | 918 | |||
| Imaging and Printing Group | 6,454 | 5,660 | 7,572 | |||
| HP Financial Services | 726 | 670 | 691 | |||
| Corporate Investments | 191 | 193 | 246 | |||
| Total Segments | 31,344 | 28,066 | 34,172 | |||
| Eliminations of intersegment net revenue and other | (567 ) | (481 ) | (569 ) | |||
| Total HP Consolidated | $ 30,777 | $ 27,585 | $ 33,603 | |||
| (a) Includes the results of EDS, which was acquired on August 26, 2008. The businesses included in the former consulting and integration business unit were divided among the application services and technology services business units and the HP software segment. The businesses included in the former outsourcing services business unit were divided among the infrastructure technology outsourcing and business process outsourcing business units. The infrastructure technology outsourcing, application services and business process outsourcing business units were added with the technology services business unit, and these four business units now comprise the Services segment. | ||||||
| (b) In the fourth quarter of fiscal 2009, HP early adopted Accounting Standards Update ("ASU") No. 2009-13, "Multiple-Deliverable Revenue Arrangements" and ASU No. 2009-14, "Certain Revenue Arrangements That Include Software Elements." HP adopted these standards as of the beginning of fiscal 2009; therefore the previously reported quarterly segment results have been restated to reflect the impact of adoption. The adoption primarily impacted the Services and Enterprise Storage and Servers financial reporting segments. | ||||||
| (c) 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. | ||||||
| HEWLETT-PACKARD COMPANY AND SUBSIDIARIES | ||||
| SEGMENT / BUSINESS UNIT INFORMATION | ||||
| (Unaudited) | ||||
| (In millions) | ||||
|
Twelve months ended
October 31, |
||||
| 2009 (b) | 2008 (c) | |||
| Net revenue: | ||||
| Infrastructure technology outsourcing | $ 15,751 | $ 7,488 | ||
| Technology services | 9,789 | 10,297 | ||
| Application services | 6,032 | 2,411 | ||
| Business process outsourcing | 2,941 | 723 | ||
| Other | 180 | 58 | ||
| Services (a) | 34,693 | 20,977 | ||
| Industry standard servers | 9,296 | 11,657 | ||
| Storage | 3,473 | 4,205 | ||
| Business critical systems | 2,590 | 3,538 | ||
| Enterprise Storage and Servers | 15,359 | 19,400 | ||
| Business technology optimization | 2,385 | 2,792 | ||
| Other software | 1,187 | 1,428 | ||
| HP Software | 3,572 | 4,220 | ||
| Technology Solutions Group | 53,624 | 44,597 | ||
| Notebooks | 20,210 | 22,657 | ||
| Desktops | 12,864 | 16,643 | ||
| Workstations | 1,261 | 1,885 | ||
| Handhelds | 172 | 360 | ||
| Other | 798 | 750 | ||
| Personal Systems Group | 35,305 | 42,295 | ||
| Supplies | 16,532 | 18,472 | ||
| Commercial Hardware | 4,778 | 7,422 | ||
| Consumer Hardware | 2,701 | 3,720 | ||
| Imaging and Printing Group | 24,011 | 29,614 | ||
| HP Financial Services | 2,673 | 2,698 | ||
| Corporate Investments | 768 | 965 | ||
| Total Segments | 116,381 | 120,169 | ||
| Eliminations of intersegment net revenue and other | (1,829 ) | (1,805 ) | ||
| Total HP Consolidated | $ 114,552 | $ 118,364 | ||
| (a) Includes the results of EDS, which was acquired on August 26, 2008. The businesses included in the former consulting and integration business unit were divided among the application services and technology services business units and the HP software segment. The businesses included in the former outsourcing services business unit were divided among the infrastructure technology outsourcing and business process outsourcing business units. The infrastructure technology outsourcing, application services and business process outsourcing business units were added with the technology services business unit,and these four business units now comprise the Services segment. | ||||
| (b) In the fourth quarter of fiscal 2009, HP early adopted Accounting Standards Update ("ASU") No. 2009-13, "Multiple-Deliverable Revenue Arrangements" and ASU No. 2009-14, "Certain Revenue Arrangements That Include Software Elements." HP adopted these standards as of the beginning of fiscal 2009; therefore the previously reported quarterly segment results have been restated to reflect the impact of adoption. The adoption primarily impacted the Services and Enterprise Storage and Servers financial reporting segments. | ||||
| (c) 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. | ||||
| HEWLETT-PACKARD COMPANY AND SUBSIDIARIES | ||||||
| CALCULATION OF NET EARNINGS PER SHARE | ||||||
| (Unaudited) | ||||||
| (In millions except per share amounts) | ||||||
| Three months ended | ||||||
|
October 31,
2009 (c) |
July 31,
2009 (c) |
October 31,
2008 |
||||
| Numerator: | ||||||
| Net earnings | $ 2,412 | $ 1,671 | $ 2,112 | |||
|
Adjustment for interest expense on zero-coupon
subordinated convertible notes, net of taxes |
- | - | - | |||
| Net earnings, adjusted | $ 2,412 | $ 1,671 | $ 2,112 | |||
| Denominator: | ||||||
| Weighted-average shares used to compute | ||||||
| basic EPS | 2,366 | 2,382 | 2,440 | |||
| Effect of dilutive securities: | ||||||
| Dilution from employee stock plans | 67 | 54 | 76 | |||
| Zero-coupon subordinated convertible notes | - | - | - | |||
| Dilutive potential common shares | 67 | 54 | 76 | |||
|
Weighted-average shares used to compute
diluted EPS |
2,433 | 2,436 | 2,516 | |||
| Net earnings per share: | ||||||
| Basic (a) | $ 1.02 | $ 0.70 | $ 0.87 | |||
| Diluted (b) | $ 0.99 | $ 0.69 | $ 0.84 | |||
| (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 and vesting of restricted stock units, except when such issuances would be anti-dilutive. | ||||||
| (c) In the fourth quarter of fiscal 2009, HP early adopted Accounting Standards Update ("ASU") No. 2009-13, "Multiple-Deliverable Revenue Arrangements" and ASU No. 2009-14, "Certain Revenue Arrangements That Include Software Elements." As a result, fiscal 2009 net revenues and net earnings were higher by $255 million and $55 million, respectively. Fourth quarter fiscal 2009 net revenues and net earnings were higher by $82 million and $19 million, respectively. HP adopted these standards as of the beginning of fiscal 2009; therefore the previously reported quarterly results have been restated to reflect the impact of adoption. | ||||||
| HEWLETT-PACKARD COMPANY AND SUBSIDIARIES | ||||
| CALCULATION OF NET EARNINGS PER SHARE | ||||
| (In millions except per share amounts) | ||||
|
Twelve months ended
October 31, |
||||
| 2009 (c) | 2008 | |||
| (unaudited) | ||||
| Numerator: | ||||
| Net earnings | $ 7,660 | $ 8,329 | ||
|
Adjustment for interest expense on zero-coupon
subordinated convertible notes, net of taxes |
- | 3 | ||
| Net earnings, adjusted | $ 7,660 | $ 8,332 | ||
| Denominator: | ||||
| Weighted-average shares used to compute | ||||
| basic EPS | 2,388 | 2,483 | ||
| Effect of dilutive securities: | ||||
| Dilution from employee stock plans | 49 | 81 | ||
| Zero-coupon subordinated convertible notes | - | 3 | ||
| Dilutive potential common shares | 49 | 84 | ||
|
Weighted-average shares used to compute
diluted EPS |
2,437 | 2,567 | ||
| Net earnings per share: | ||||
| Basic (a) | $ 3.21 | $ 3.35 | ||
| Diluted (b) | $ 3.14 | $ 3.25 | ||
| (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. | ||||
| (c) In the fourth quarter of fiscal 2009, HP early adopted Accounting Standards Update ("ASU") No. 2009-13, "Multiple-Deliverable Revenue Arrangements" and ASU No. 2009-14, "Certain Revenue Arrangements That Include Software Elements." As a result, fiscal 2009 net revenues and net earnings were higher by $255 million and $55 million, respectively. Fourth quarter fiscal 2009 net revenues and net earnings were higher by $82 million and $19 million, respectively. HP adopted these standards as of the beginning of fiscal 2009; therefore the previously reported quarterly results have been restated to reflect the impact of adoption. | ||||
| HEWLETT-PACKARD COMPANY AND SUBSIDIARIES | ||||||
| CALCULATION OF NON-GAAP NET EARNINGS PER SHARE | ||||||
| (Unaudited) | ||||||
| (In millions except per share amounts) | ||||||
| Three months ended | ||||||
|
October 31,
2009 (c) |
July 31,
2009 (c) |
October 31,
2008 |
||||
| Numerator: | ||||||
| Non-GAAP net earnings | $ 2,764 | $ 2,239 | $ 2,594 | |||
|
Adjustment for interest expense on zero-
coupon subordinated convertible notes, net of taxes |
- | - | - | |||
| Non-GAAP net earnings, adjusted | $ 2,764 | $ 2,239 | $ 2,594 | |||
| Denominator: | ||||||
|
Weighted-average shares used to compute
basic EPS |
2,366 | 2,382 | 2,440 | |||
| Effect of dilutive securities: | ||||||
| Dilution from employee stock plans | 67 | 54 | 76 | |||
| Zero-coupon subordinated convertible notes | - | - | - | |||
| Dilutive potential common shares | 67 | 54 | 76 | |||
|
Weighted-average shares used to compute
diluted EPS |
2,433 | 2,436 | 2,516 | |||
| Non-GAAP net earnings per share: | ||||||
| Basic (a) | $ 1.17 | $ 0.94 | $ 1.06 | |||
| Diluted (b) | $ 1.14 | $ 0.92 | $ 1.03 | |||
| (a) HP's basic non-GAAP earnings per share was calculated based on non-GAAP net earnings and the weighted-average number of shares outstanding during the reporting period. | ||||||
| (b) HP’s diluted non-GAAP earnings per share included additional dilution from potential issuance of common stock, such as stock issuable pursuant to exercise of stock options and vesting of restricted stock units, except when such issuances would be anti-dilutive. | ||||||
| (c) In the fourth quarter of fiscal 2009, HP early adopted Accounting Standards Update ("ASU") No. 2009-13, "Multiple-Deliverable Revenue Arrangements" and ASU No. 2009-14, "Certain Revenue Arrangements That Include Software Elements." As a result, fiscal 2009 net revenues and Non-GAAP net earnings were higher by $255 million and $55 million, respectively. Fourth quarter fiscal 2009 net revenues and Non-GAAP net earnings were higher by $82 million and $19 million, respectively. HP adopted these standards as of the beginning of fiscal 2009; therefore the previously reported quarterly results have been restated to reflect the impact of adoption. | ||||||
| HEWLETT-PACKARD COMPANY AND SUBSIDIARIES | ||||
| CALCULATION OF NON-GAAP NET EARNINGS PER SHARE | ||||
| (Unaudited) | ||||
| (In millions except per share amounts) | ||||
|
Twelve months ended
October 31, |
||||
| 2009 (c) | 2008 | |||
| Numerator: | ||||
| Non-GAAP net earnings | $ 9,393 | $ 9,302 | ||
|
Adjustment for interest expense on zero-
coupon subordinated convertible notes, net of taxes |
- | 3 | ||
| Non-GAAP net earnings, adjusted | $ 9,393 | $ 9,305 | ||
| Denominator: | ||||
|
Weighted-average shares used to compute
basic EPS |
2,388 | 2,483 | ||
| Effect of dilutive securities: | ||||
| Dilution from employee stock plans | 49 | 81 | ||
| Zero-coupon subordinated convertible notes | - | 3 | ||
| Dilutive potential common shares | 49 | 84 | ||
|
Weighted-average shares used to compute
diluted EPS |
2,437 | 2,567 | ||
| Non-GAAP net earnings per share: | ||||
| Basic (a) | $ 3.93 | $ 3.75 | ||
| Diluted (b) | $ 3.85 | $ 3.62 | ||
| (a) HP's basic non-GAAP earnings per share was calculated based on non-GAAP net earnings and the weighted-average number of shares outstanding during the reporting period. | ||||
| (b) HP’s diluted non-GAAP 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. | ||||
| (c) In the fourth quarter of fiscal 2009, HP early adopted Accounting Standards Update ("ASU") No. 2009-13, "Multiple-Deliverable Revenue Arrangements" and ASU No. 2009-14, "Certain Revenue Arrangements That Include Software Elements." As a result, fiscal 2009 net revenues and Non-GAAP net earnings were higher by $255 million and $55 million, respectively. Fourth quarter fiscal 2009 net revenues and Non-GAAP net earnings were higher by $82 million and $19 million, respectively. HP adopted these standards as of the beginning of fiscal 2009; therefore the previously reported quarterly results have been restated to reflect the impact of adoption. | ||||
| HEWLETT-PACKARD COMPANY AND SUBSIDIARIES | |||||
| RESTATED CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS | |||||
| (Unaudited) | |||||
| (In millions except per share amounts) | |||||
| Three months ended | |||||
|
July 31,
2009 (a) |
April 30,
2009 (a) |
January 31,
2009 (a) |
|||
| (Restated) | (Restated) | (Restated) | |||
| Net revenue | $ 27,585 | $ 27,383 | $ 28,807 | ||
| Costs and expenses: | |||||
| Cost of sales | 21,031 | 20,945 | 22,073 | ||
| Research and development | 667 | 716 | 732 | ||
| Selling, general and administrative | 2,874 | 2,880 | 2,893 | ||
| Amortization of purchased intangible assets | 379 | 380 | 412 | ||
| In-process research and development charges | - | - | 6 | ||
| Restructuring charges | 362 | 94 | 146 | ||
| Acquisition-related charges | 59 | 75 | 48 | ||
| Total costs and expenses | 25,372 | 25,090 | 26,310 | ||
| Earnings from operations | 2,213 | 2,293 | 2,497 | ||
| Interest and other, net | (177 ) | (180 ) | (232 ) | ||
| Earnings before taxes | 2,036 | 2,113 | 2,265 | ||
| Provision for taxes | 365 | 392 | 409 | ||
| Net earnings | $ 1,671 | $ 1,721 | $ 1,856 | ||
| Net earnings per share: | |||||
| Basic | $ 0.70 | $ 0.72 | $ 0.77 | ||
| Diluted | $ 0.69 | $ 0.71 | $ 0.75 | ||
| Cash dividends declared per share | $ 0.16 | $ - | $ 0.16 | ||
| Weighted-average shares used to compute net earnings per share: | |||||
| Basic | 2,382 | 2,394 | 2,410 | ||
| Diluted | 2,436 | 2,438 | 2,464 | ||
| Impact from adoption of ASU No. 2009-13 and ASU No. 2009-14 was as follows: | |||||
| Net Revenue | $ 134 | $ 32 | $ 7 | ||
| Cost of Sales | 95 | 26 | 4 | ||
| Earnings before taxes | 39 | 6 | 3 | ||
| Net earnings | $ 29 | $ 5 | $ 2 | ||
| Net earnings per share | $ 0.02 | $ 0.01 | $ - | ||
| (a) In the fourth quarter of fiscal 2009, HP early adopted Accounting Standards Update ("ASU") No. 2009-13, "Multiple-Deliverable Revenue Arrangements" and ASU No. 2009-14, "Certain Revenue Arrangements That Include Software Elements." As a result, fiscal 2009 net revenues and net earnings were higher by $255 million and $55 million, respectively. Fourth quarter fiscal 2009 net revenues and net earnings were higher by $82 million and $19 million, respectively. HP adopted these standards as of the beginning of fiscal 2009; therefore the previously reported quarterly results have been restated to reflect the impact of adoption. | |||||
Use of Non-GAAP Financial Measures
