EX-99.2 3 ex99-2.htm Q409 EXHIBIT 99.2 ex99-2.htm
 
EXHIBIT 99.2
 
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 the 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.

 
 
 

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 the 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.
 
 
 
 
 
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
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 the 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 the 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.
 
 
 
 
 
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 the adoption.