EX-99.2 4 ex99-2.htm EXHIBIT 99.2 ex99-2.htm
EXHIBIT 99.2
 
HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(Unaudited)
(In millions except per share amounts)
                   
   
Three months ended
   
Oct 31,
2013
  
July 31,
2013
  
Oct 31,
2012
                   
Net revenue
   $ 29,131     $ 27,226     $ 29,959  
                         
Costs and expenses:
                        
        Cost of sales
     22,437       20,859       22,711  
        Research and development
     729       797       909  
        Selling, general and administrative
     3,351       3,274       3,227  
        Amortization of intangible assets
     317       356       372  
        Impairment of goodwill and intangible assets
     -       -       8,847  
        Restructuring charges
     371       81       378  
        Acquisition-related charges
     3       4       3  
                 Total costs and expenses
     27,208       25,371       36,447  
                         
Earnings (loss) from operations
     1,923       1,855       (6,488 )
                         
Interest and other, net
     (103 )     (146 )     (188 )
                         
Earnings (loss) before taxes
     1,820       1,709       (6,676 )
                         
Provision for taxes
     (406 )     (319 )     (178 )
                         
Net earnings (loss)
   $ 1,414     $ 1,390     $ (6,854 )
                         
Net earnings (loss) per share:
                        
        Basic
   $ 0.74     $ 0.72     $ (3.49 )
        Diluted
   $ 0.73     $ 0.71     $ (3.49 )
                         
Cash dividends declared per share
   $ -     $ 0.29     $ -  
                         
                         
Weighted-average shares used to compute net earnings (loss) per share:
          
        Basic
     1,918       1,929       1,964  
        Diluted
     1,940       1,948       1,964  

 
 
Page 1 of 5
 
 
HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(In millions except per share amounts)
             
   
Twelve months ended
   
Oct 31,
   
2013
  
2012
   
(Unaudited)
      
             
Net revenue
   $ 112,298     $ 120,357  
                 
Costs and expenses:
                
        Cost of sales
     86,380       92,385  
        Research and development
     3,135       3,399  
        Selling, general and administrative
     13,267       13,500  
        Amortization of intangible assets
     1,373       1,784  
        Impairment of goodwill and intangible assets
     -       18,035  
        Restructuring charges
     990       2,266  
        Acquisition-related charges
     22       45  
                 Total costs and expenses
     105,167       131,414  
                 
Earnings (loss) from operations
     7,131       (11,057 )
                 
Interest and other, net
     (621 )     (876 )
                 
Earnings (loss) before taxes
     6,510       (11,933 )
                 
Provision for taxes
     (1,397 )     (717 )
                 
Net earnings (loss)
   $ 5,113     $ (12,650 )
                 
Net earnings (loss) per share:
                
        Basic
   $ 2.64     $ (6.41 )
        Diluted
   $ 2.62     $ (6.41 )
                 
Cash dividends declared per share
   $ 0.55     $ 0.50  
                 
                 
Weighted-average shares used to compute net earnings (loss) per share:
  
        Basic
     1,934       1,974  
        Diluted
     1,950       1,974  
 
 
 
Page 2 of 5
 
HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(In millions)
             
   
October 31,
2013
  
October 31,
2012
   
(Unaudited)
      
ASSETS
            
             
Current assets:
            
        Cash and cash equivalents
   $ 12,163     $ 11,301  
        Accounts receivable
     15,876       16,407  
        Financing receivables
     3,144       3,252  
        Inventory
     6,046       6,317  
        Other current assets
     13,135       13,360  
                 
            Total current assets
     50,364       50,637  
                 
Property, plant and equipment
     11,463       11,954  
                 
Long-term financing receivables and other assets
     9,556       10,593  
                 
Goodwill and intangible assets
     34,293       35,584  
                 
Total assets
   $ 105,676     $ 108,768  
                 
                 
LIABILITIES AND STOCKHOLDERS' EQUITY
                
                 
Current liabilities:
                
        Notes payable and short-term borrowings
   $ 5,979     $ 6,647  
        Accounts payable
     14,019       13,350  
        Employee compensation and benefits
     4,436       4,058  
        Taxes on earnings
     1,203       846  
        Deferred revenue
     6,477       7,494  
        Other accrued liabilities
     13,407       14,271  
                 
            Total current liabilities
     45,521       46,666  
                 
Long-term debt
     16,608       21,789  
                 
Other liabilities
     15,891       17,480  
                 
Stockholders' equity:
                
        HP stockholders' equity
     27,269       22,436  
        Non-controlling interests
     387       397  
                 
            Total stockholders' equity
     27,656       22,833  
                 
Total liabilities and stockholders' equity
   $ 105,676     $ 108,768  
                 

 
Page 3 of 5
 

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
SEGMENT INFORMATION
(Unaudited)
(In millions)
                     
     
Three months ended
     
October 31,
2013
  
July 31,
2013
  
October 31,
2012
Net revenue:(a)
                  
                     
 
Personal Systems
   $ 8,579     $ 7,704     $ 8,727  
 
Printing
     6,044       5,803       6,080  
      Total Printing and Personal Systems Group(b)
14,623
       13,507       14,807  
 
Enterprise Group
     7,594       6,786       7,459  
 
Enterprise Services
     5,759       5,843       6,352  
 
Software
     1,064       982       1,171  
 
HP Financial Services
     912       879       966  
 
Corporate Investments
     5       5       10  
 
     Total segments
     29,957       28,002       30,765  
 
Elimination of intersegment net revenue and other
 (826 )     (776 )     (806 )
                           
 
     Total HP consolidated net revenue
   $ 29,131     $ 27,226     $ 29,959  
                           
Earnings before taxes:(a)
                        
                           
 
Personal Systems
   $ 259     $ 228     $ 309  
 
Printing
     1,071       908       1,067  
       Total Printing and Personal Systems Group(b)   1,330       1,136       1,376  
 
Enterprise Group
     1,102       1,033       1,229  
 
Enterprise Services
     255       192       423  
 
Software
     328       201       318  
 
HP Financial Services
     102       99       104  
 
Corporate Investments
     (57 )     (58 )     (78 )
 
      Total segment earnings from operations
     3,060       2,603       3,372  
                           
 
Corporate and unallocated costs and eliminations
 (344 )     (200 )     (119 )
 
Unallocated costs related to stock-based compensation expense
 (102 )     (107 )     (141 )
 
Amortization of intangible assets
     (317 )     (356 )     (372 )
 
Impairment of goodwill and intangible assets
 -       -       (8,847 )
 
Restructuring charges
     (371 )     (81 )     (378 )
 
Acquisition-related charges
     (3 )     (4 )     (3 )
 
Interest and other, net
     (103 )     (146 )     (188 )
                           
       Total HP consolidated earnings (loss) before taxes $ 1,820     $ 1,709     $ (6,676 )
 
(a)
HP has implemented certain organizational realignments in the first quarter of fiscal 2013. As a result of these realignments, HP has re-evaluated its segment financial reporting structure and, effective in the first quarter of fiscal 2013, created two new financial reporting segments, the Enterprise Group segment and the Enterprise Services segment, and eliminated two other financial reporting segments, the Enterprise Servers, Storage and Networking (“ESSN”) segment and the Services segment. The Enterprise Group segment consists of the business units within the former ESSN segment and most of the services offerings of the Technology Services (“TS”) business unit, which was previously a part of the former Services segment. The Enterprise Services segment consists of the Applications and Business Services (“ABS”) and Infrastructure Technology Outsourcing (“ITO”) business units from the former Services segment, along with the end-user workplace support services business that was previously a part of the TS business unit. Taking into account these changes, HP has the following seven financial reporting segments: Personal Systems, Printing, the Enterprise Group, Enterprise Services, Software, HP Financial Services and Corporate Investments.
 
Also as a result of these realignments, the financial results of the Personal Systems commercial products support business, which were previously reported as part of the TS business unit, will now be reported as part of the Other business unit within the Personal Systems segment, and the financial results of the portion of the business intelligence services business that had continued to be reported as part of the Corporate Investments segment following the implementation of prior realignment actions will now be reported as part of the ABS business unit. In addition, the end-user workplace support services business, which, as noted above, was previously a part of the TS business unit and will now become a part of the Enterprise Services segment, will be reported as part of the ITO business unit within that segment.
 
To provide improved visibility and comparability, HP has reflected these changes to its reporting structure in prior financial reporting periods on an as-if basis, which has resulted in the transfer of revenue and operating profit among the Personal Systems, the Enterprise Group, Enterprise Services and Corporate Investments segments. These changes had no impact on the previously reported financial results for the Printing, Software or HP Financial Services segments. In addition, none of these changes impacted HP’s previously reported consolidated net revenue, earnings from operations, net earnings or net earnings per share.
     
(b)
The Personal Systems segment and the Printing segment are structured beneath a broader Printing and Personal Systems Group (“PPS”). While PPS is not a financial reporting segment, HP provides financial data aggregating the segments within it in order to provide a supplementary view of its business.
 
 
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HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
SEGMENT INFORMATION
(In millions)
               
     
Twelve months ended
     
October 31,
     
2013
  
2012
       (Unaudited)    
Net revenue:(a)
            
               
 
Personal Systems
   $ 32,071     $ 35,725  
 
Printing
     23,854       24,487  
 
    Total Printing and Personal Systems Group(b)
     55,925       60,212  
 
Enterprise Group
     28,183       29,779  
 
Enterprise Services
     23,520       25,609  
 
Software
     3,913       4,060  
 
HP Financial Services
     3,629       3,819  
 
Corporate Investments
     24       58  
 
         Total Segments
     115,194       123,537  
 
Elimination of intersegment net revenue and other
     (2,896 )     (3,180 )
                   
 
         Total HP consolidated net revenue
   $ 112,298     $ 120,357  
                   
Earnings before taxes:(a)
                
                   
 
Personal Systems
   $ 949     $ 1,689  
 
Printing
     3,890       3,585  
 
    Total Printing and Personal Systems Group(b)
     4,839       5,274  
 
Enterprise Group
     4,301       5,194  
 
Enterprise Services
     679       1,045  
 
Software
     866       827  
 
HP Financial Services
     399       388  
 
Corporate Investments
     (236 )     (233 )
 
         Total segment earnings from operations
     10,848       12,495  
                   
 
Corporate and unallocated costs and eliminations
     (832 )     (787 )
 
Unallocated costs related to stock-based compensation expense
     (500 )     (635 )
 
Amortization of intangible assets
     (1,373 )     (1,784 )
 
Impairment of goodwill and intangible assets
     -       (18,035 )
 
Restructuring charges
     (990 )     (2,266 )
 
Acquisition-related charges
     (22 )     (45 )
 
Interest and other, net
     (621 )     (876 )
 
 
                
 
         Total HP consolidated earnings (loss) before taxes
   $ 6,510     $ (11,933 )
 
(a)
HP has implemented certain organizational realignments in the first quarter of fiscal 2013. As a result of these realignments, HP has re-evaluated its segment financial reporting structure and, effective in the first quarter of fiscal 2013, created two new financial reporting segments, the Enterprise Group segment and the Enterprise Services segment, and eliminated two other financial reporting segments, the Enterprise Servers, Storage and Networking (“ESSN”) segment and the Services segment. The Enterprise Group segment consists of the business units within the former ESSN segment and most of the services offerings of the Technology Services (“TS”) business unit, which was previously a part of the former Services segment. The Enterprise Services segment consists of the Applications and Business Services (“ABS”) and Infrastructure Technology Outsourcing (“ITO”) business units from the former Services segment, along with the end-user workplace support services business that was previously a part of the TS business unit. Taking into account these changes, HP has the following seven financial reporting segments: Personal Systems, Printing, the Enterprise Group, Enterprise Services, Software, HP Financial Services and Corporate Investments.
 
Also as a result of these realignments, the financial results of the Personal Systems commercial products support business, which were previously reported as part of the TS business unit, will now be reported as part of the Other business unit within the Personal Systems segment, and the financial results of the portion of the business intelligence services business that had continued to be reported as part of the Corporate Investments segment following the implementation of prior realignment actions will now be reported as part of the ABS business unit. In addition, the end-user workplace support services business, which, as noted above, was previously a part of the TS business unit and will now become a part of the Enterprise Services segment, will be reported as part of the ITO business unit within that segment.
 
To provide improved visibility and comparability, HP has reflected these changes to its reporting structure in prior financial reporting periods on an as-if basis, which has resulted in the transfer of revenue and operating profit among the Personal Systems, the Enterprise Group, Enterprise Services and Corporate Investments segments. These changes had no impact on the previously reported financial results for the Printing, Software or HP Financial Services segments. In addition, none of these changes impacted HP’s previously reported consolidated net revenue, earnings from operations, net earnings or net earnings per share.
     
(b)
The Personal Systems segment and the Printing segment are structured beneath a broader Printing and Personal Systems Group (“PPS”). While PPS is not a financial reporting segment, HP provides financial data aggregating the segments within it in order to provide a supplementary view of its business.
 
 
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