-- Net revenue of $25.4 billion, up $3.5 billion year over year, or 16% -- GAAP operating profit of $2.1 billion; $0.66 earnings per share, up from $0.48 in the prior-year period -- Non-GAAP operating profit of $2.3 billion; $0.71 earnings per share, up from $0.52 in the prior-year period
PALO ALTO, Calif, Aug 16, 2007 (BUSINESS WIRE) -- HP (NYSE:HPQ) today announced financial results for its third fiscal quarter ended July 31, 2007, with net revenue of $25.4 billion, representing growth of 16% year over year, or 12% when adjusted for the effects of currency.GAAP operating profit was $2.1 billion and GAAP diluted earnings per share (EPS) was $0.66, up from $0.48 in the prior-year period. Non-GAAP operating profit was $2.3 billion, with non-GAAP diluted EPS of $0.71 up from $0.52 in the prior-year period. Non-GAAP financial information excludes $134 million of adjustments on an after-tax basis, or $0.05 per diluted share, related primarily to amortization of purchased intangibles. GAAP and non-GAAP financial information include all stock-based compensation expense in both current and prior-year periods.
"HP's latest results demonstrate continued strength across each of our key businesses and geographies with our best revenue growth since 2000," said Mark Hurd, HP chairman and chief executive officer. "We are executing increasingly well in creating demand for our innovative products and services, and we are continuing to become a more efficient organization."
----------------------------
Q3 FY07 Q3 FY06 Y/Y
---------------------------------------------------------------------
Net revenue ($B) $25.4 $21.9 16%
---------------------------------------------------------------------
GAAP operating margin 8.3% 6.9% 1.4 pts
---------------------------------------------------------------------
GAAP net earnings ($B) $1.8 $1.4 29%
---------------------------------------------------------------------
GAAP diluted EPS $0.66 $0.48 38%
---------------------------------------------------------------------
Non-GAAP operating margin 9.0% 7.6% 1.4 pts
---------------------------------------------------------------------
Non-GAAP net earnings ($B) $1.9 $1.5 29%
---------------------------------------------------------------------
Non-GAAP diluted EPS $0.71 $0.52 37%
---------------------------------------------------------------------
Information about HP's use of non-GAAP financial information is provided under "Use of non-GAAP financial information" below.
During the quarter, on a year-over-year basis, revenue in the Americas grew 14% to $11.1 billion, revenue in Europe, the Middle East and Africa grew 16% to $9.7 billion, and revenue in Asia Pacific grew 22% to $4.6 billion. When adjusted for the effects of currency, revenue in the Americas grew 13%, revenue in Europe, the Middle East and Africa grew 9%, and revenue in Asia Pacific grew 18%. Revenue from outside of the United States was 65%, with revenue in the BRIC countries (Brazil, Russia, India and China) growing 35% over the prior year in the third quarter and now accounting for more than 8% of revenue.
Personal Systems Group
Personal Systems Group (PSG) revenue grew 29% year over year to $8.9 billion, with unit shipments up 33% on a year-over-year basis. These results bring PSG's year-to-date revenue growth to nearly $5 billion. Notebook revenue grew 54% over the prior-year period, while desktop revenue grew 12%. Commercial client revenue grew 19% year-over-year, while Consumer client revenue increased 46%. Operating profit was $519 million, or 5.8% of revenue, up from $275 million, or 4.0% of revenue, in the prior-year period.
Imaging and Printing Group
Imaging and Printing Group (IPG) revenue grew 8% year over year to $6.8 billion. On a year-over-year basis, supplies revenue grew 9%, commercial hardware revenue grew 6% and consumer hardware revenue grew 10%. Printer unit shipments increased 10% year over year, with consumer printer hardware units up 8% and commercial printer hardware units up 17%. Momentum in key growth initiatives continued, with printer-based multi-function devices up 76%. Operating profit was $981 million, or 14.5% of revenue, up from $884 million, or 14.2% of revenue, in the prior-year period.
Enterprise Storage and Servers
Enterprise Storage and Servers (ESS) reported revenue of $4.5 billion, up 10% over the prior-year period. On a year-over-year basis, industry-standard server revenue increased 16%, with x86 blade revenue up 81%. Storage revenue grew 6%, with revenue growth of 7% in external disk storage, including 14% in the midrange EVA line, and partially offset by a decline in the tape business. Business critical systems revenue declined 3%, with Integrity systems growth of 71% offset by declines in PA-RISC and Alpha. Operating profit was $464 million, or 10.2% of revenue, up from $296 million, or 7.2% of revenue, in the prior-year period.
HP Services
HP Services (HPS) revenue increased 8% year over year to $4.2 billion. Revenue in Technology Services grew 5% over the prior-year period, while Consulting and Integration revenue rose 11%, and Outsourcing Services revenue rose 11%. Operating profit was $430 million, or 10.3% of revenue, up from $364 million, or 9.4% of revenue, in the prior-year period.
HP Software
HP Software revenue grew 74% over the prior-year period to $554 million, led by strong growth from the businesses acquired in HP's purchase of Mercury Interactive. On a year-over-year basis, HP OpenView grew 14% excluding Mercury. Operating profit was $81 million, or 14.6% of revenue, up from $13 million, or 4.1% of revenue, in the prior-year period.
Financial Services
HP Financial Services (HPFS) reported revenue of $582 million, an increase of 12% year over year. Financing volume and net portfolio assets increased 7% and 8%, respectively, over the prior-year period. Operating margin was 6.7% of revenue, comparable to the same period last year.
Asset management
HP generated $1.9 billion in cash flow from operations. Inventory ended the quarter at $8.0 billion, up $728 million sequentially and up $542 million year over year. Accounts receivable increased $268 million sequentially and increased $2.2 billion over the prior-year period to $11.8 billion. Accounts payable increased $168 million sequentially and $978 million over the prior-year period to $11.7 billion. HP's dividend payment of $0.08 per share in the second quarter resulted in cash usage of $209 million. HP utilized $2.5 billion of cash during the third quarter to repurchase approximately 55 million shares of common stock from the open market. HP exited the quarter with $12.5 billion in gross cash, which includes cash and cash equivalents of $12.5 billion, short-term investments of $40 million, and certain long-term investments of $23 million.
Outlook
HP estimates Q4 FY07 revenue will be approximately $27.0 billion to $27.2 billion.
Fourth quarter FY07 GAAP diluted EPS is expected to be in the range of $0.75 to $0.76, and non-GAAP diluted EPS is expected to be in the range of $0.80 to $0.81. Non-GAAP diluted EPS estimates exclude after-tax costs of approximately $0.05 per share, related primarily to the amortization of purchased intangible assets.
HP estimates FY07 revenue will be approximately $103.0 billion to $103.2 billion.
FY07 GAAP diluted EPS is expected to be in the range of $2.61 to $2.62, and FY07 non-GAAP diluted EPS is expected to be in the range of $2.86 to $2.87. FY07 non-GAAP diluted EPS estimates exclude after-tax costs of approximately $0.25 per share, related primarily to the amortization of purchased intangible assets, in-process research and development charges, restructuring charges and pension curtailment gains.
More information on HP's quarterly earnings, including additional financial analysis and an earnings overview presentation, is available on HP's Investor Relations website at www.hp.com/investor/home.
HP's Q3 FY07 earnings conference call is accessible via an audio webcast at www.hp.com/investor/q32007webcast.
About HP
HP focuses on simplifying technology experiences for all of its customers - from individual consumers to the largest businesses. With a portfolio that spans printing, personal computing, software, services and IT infrastructure, HP is among the world's largest IT companies, with revenue totaling $100.5 billion for the four fiscal quarters ended July 31, 2007. More information about HP is available at www.hp.com.
Use of non-GAAP financial information
To supplement HP's consolidated condensed financial statements presented on a GAAP basis, HP provides non-GAAP operating profit, non-GAAP operating margin, non-GAAP net earnings, non-GAAP diluted earnings per share and gross cash. HP also provides forecasts of non-GAAP diluted earnings per share. A reconciliation of the adjustments to GAAP results for this quarter and prior periods is included in the tables below. In addition, an explanation of the ways in which HP management uses these non-GAAP measures to evaluate its business, the substance behind HP management's decision to use these non-GAAP measures, the material limitations associated with the use of these non-GAAP measures, the manner in which HP management compensates for those limitations, and the substantive reasons why HP management believes that these non-GAAP measures provide useful information to investors is included under "Use of Non-GAAP Financial Measures" after the tables below. This additional non-GAAP financial information is not meant to be considered in isolation or as a substitute for operating profit, operating margin, net earnings, diluted earnings per share, or cash and cash equivalents prepared in accordance with GAAP.
Forward-looking statements
This news release contains forward-looking statements that involve risks, uncertainties and assumptions. If the risks or uncertainties ever materialize or the assumptions prove incorrect, the results of HP may differ materially from those expressed or implied by such forward-looking statements and assumptions. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including but not limited to any projections of revenue, margins, expenses, earnings, tax provisions, cash flows, benefit obligations, share repurchases or other financial items; any statements of the plans, strategies, and objectives of management for future operations, including execution of cost reduction programs and restructuring plans; any statements concerning the expected development, performance or market share relating to products or services; any statements regarding pending investigations, claims or disputes; any statements of expectation or belief; and any statements of assumptions underlying any of the foregoing. Risks, uncertainties and assumptions include macroeconomic and geopolitical trends and events; execution and performance of contracts by suppliers, customers and partners; the challenge of managing asset levels, including inventory; the difficulty of aligning expense levels with revenue changes; assumptions related to pension and other post-retirement costs; expectations and assumptions relating to the execution and timing of cost reduction programs and restructuring plans; the resolution of pending investigations, claims and disputes; and other risks that are described in HP's Quarterly Report on Form 10-Q for the fiscal quarter ended April 30, 2007 and HP's other filings with the Securities and Exchange Commission, including HP's Annual Report on Form 10-K for the fiscal year ended October 31, 2006. As in prior quarters, the financial information set forth in this release, including tax-related items, reflects estimates based on information available at this time. While HP believes these estimates to be meaningful, these amounts could differ materially from actual reported amounts in HP's Quarterly Report on Form 10-Q for the fiscal quarter ended July 31, 2007. In particular, determining HP's actual tax balances and provisions as of July 31, 2007 and for the fiscal quarter then ended requires extensive internal and external review of tax data (including consolidating and reviewing the tax provisions of numerous domestic and foreign entities), which is being completed in the ordinary course of preparing HP's Form 10-Q. HP assumes no obligation and does not intend to update these forward-looking statements.
Note to editors: More news from HP, including links to RSS feeds, is available at www.hp.com/hpinfo/newsroom/.
(C) 2007 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. SOURCE: HP HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(Unaudited)
(In millions except per share amounts)
Three months ended
----------------------------
July 31, April 30, July 31,
2007 2007 2006
--------- --------- --------
Net revenue $25,377 $25,534 $21,890
Costs and expenses(a):
Cost of sales 19,164 19,283 16,472
Research and development 917 903 920
Selling, general and administrative 3,002 3,044 2,830
Amortization of purchased intangible
assets 183 212 153
In-process research and development
charges - 19 -
Restructuring (5) 453 5
Pension curtailments and pension
settlements, net - (508) -
--------- --------- --------
Total costs and expenses 23,261 23,406 20,380
--------- --------- --------
Earnings from operations 2,116 2,128 1,510
Interest and other, net 165 87 221
Gains on investments 5 13 7
--------- --------- --------
Earnings before taxes 2,286 2,228 1,738
Provision for taxes(b) 508 453 363
--------- --------- --------
Net earnings $ 1,778 $ 1,775 $ 1,375
========= ========= ========
Net earnings per share:
Basic $ 0.68 $ 0.67 $ 0.50
Diluted $ 0.66 $ 0.65 $ 0.48
Cash dividends declared per share $ 0.16 - $ 0.16
Weighted-average shares used to compute
net earnings per share:
Basic 2,600 2,638 2,768
Diluted 2,697 2,731 2,839
(a) Stock-based compensation expense
included under SFAS 123(R) was as
follows:
Cost of sales $ 34 $ 42 $ 35
Research and development 19 18 17
Selling, general and administrative 91 94 75
--------- --------- --------
Total costs and expenses $ 144 $ 154 $ 127
(b) Tax benefit from stock-based
compensation $ (36) $ (44) $ (38) HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(Unaudited)
(In millions except per share amounts)
Nine months ended
------------------
July 31, July 31,
2007 2006
-------- --------
Net revenue $75,993 $67,103
Costs and expenses(a):
Cost of sales 57,583 50,834
Research and development 2,697 2,721
Selling, general and administrative 8,954 8,380
Amortization of purchased intangible assets 596 451
In-process research and development charges 186 52
Restructuring 407 6
Pension curtailments and pension settlements,
net (517) -
-------- --------
Total costs and expenses 69,906 62,444
-------- --------
Earnings from operations 6,087 4,659
Interest and other, net 363 416
Gains on investments 28 11
-------- --------
Earnings before taxes 6,478 5,086
Provision for taxes(b) 1,378 585
-------- --------
Net earnings $ 5,100 $ 4,501
======== ========
Net earnings per share:
Basic $ 1.93 $ 1.61
Diluted $ 1.87 $ 1.57
Cash dividends declared per share $ 0.32 $ 0.32
Weighted-average shares used to compute net
earnings per share:
Basic 2,648 2,799
Diluted 2,734 2,870
(a) Stock-based compensation expense included under
SFAS 123(R) was as follows:
Cost of sales $ 121 $ 107
Research and development 56 50
Selling, general and administrative 284 238
-------- --------
Total costs and expenses $ 461 $ 395
(b) Tax benefit from stock-based compensation $ (128) $ (120) 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 Three Three
Months months months
Ended Diluted ended Diluted ended Diluted
July Earnings April Earnings July Earnings
31, Per 30, Per 31, Per
2007 Share 2007 Share 2006 Share
------- --------- ------- --------- ------- ---------
GAAP net
earnings $1,778 $ 0.66 $1,775 $ 0.65 $1,375 $ 0.48
Non-GAAP
adjustments:
Amortization of
purchased
intangible
assets 183 0.07 212 0.08 153 0.05
In-process
research and
development
charges - - 19 0.01 - -
Restructuring (5) - 453 0.16 5 -
Pension
curtailments
and pension
settlements,
net - - (508) (0.19) - -
Gains on
investments(a) - - - - (7) -
Adjustments for
taxes (44) (0.02) (31) (0.01) (43) (0.01)
------- --------- ------- --------- ------- ---------
Non-GAAP net
earnings $1,912 $ 0.71 $1,920 $ 0.70 $1,483 $ 0.52
======= ========= ======= ========= ======= =========
GAAP earnings
from operations $2,116 $2,128 $1,510
Non-GAAP
adjustments:
Amortization of
purchased
intangible
assets 183 212 153
In-process
research and
development
charges - 19 -
Restructuring (5) 453 5
Pension
curtailments
and pension
settlements,
net - (508) -
------- ------- -------
Non-GAAP
earnings from
operations $2,294 $2,304 $1,668
======= ======= =======
GAAP operating
margin 8% 8% 7%
Non-GAAP
adjustments 1% 1% 1%
------- ------- -------
Non-GAAP
operating
margin 9% 9% 8%
======= ======= =======
(a) Beginning in fiscal 2007, HP no longer excludes gains or losses on
investments when calculating financial measures presented on a non-
GAAP basis. 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)
Nine Nine
months Diluted months Diluted
ended Earnings ended Earnings
July 31, Per July 31, Per
2007 Share 2006 Share
--------- --------- --------- ---------
GAAP net earnings $ 5,100 $ 1.87 $ 4,501 $ 1.57
Non-GAAP adjustments:
Amortization of purchased
intangible assets 596 0.22 451 0.16
In-process research and
development charges 186 0.07 52 0.02
Restructuring 407 0.15 6 -
Pension curtailments and
pension settlements, net (517) (0.19) - -
Gains on investments(a) - - (11) -
Adjustments for taxes (114) (0.05) (127) (0.05)
--------- --------- --------- ---------
Non-GAAP net earnings $ 5,658 $ 2.07 $ 4,872 $ 1.70
========= ========= ========= =========
GAAP earnings from operations $ 6,087 $ 4,659
Non-GAAP adjustments:
Amortization of purchased
intangible assets 596 451
In-process research and
development charges 186 52
Restructuring 407 6
Pension curtailments and
pension settlements, net (517) -
--------- ---------
Non-GAAP earnings from
operations $ 6,759 $ 5,168
========= =========
GAAP operating margin 8% 7%
Non-GAAP adjustments 1% 1%
--------- ---------
Non-GAAP operating margin 9% 8%
========= =========
(a) Beginning in fiscal 2007, HP no longer excludes gains or losses on
investments when calculating financial measures presented on a non-
GAAP basis. HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(In millions)
July 31, October 31,
2007 2006
----------- -----------
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 12,450 $ 16,400
Short-term investments 40 22
Accounts receivable 11,845 10,873
Financing receivables 2,476 2,440
Inventory 8,006 7,750
Other current assets 10,544 10,779
----------- -----------
Total current assets 45,361 48,264
----------- -----------
Property, plant and equipment 7,479 6,863
Long-term financing receivables and other
assets 7,992 6,649
Goodwill and purchased intangible assets 24,309 20,205
----------- -----------
Total assets $ 85,141 $ 81,981
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable and short-term borrowings $ 3,667 $ 2,705
Accounts payable 11,673 12,102
Employee compensation and benefits 2,819 3,148
Taxes on earnings 1,816 1,905
Deferred revenue 4,983 4,309
Accrued restructuring 168 547
Other accrued liabilities 12,179 11,134
----------- -----------
Total current liabilities 37,305 35,850
----------- -----------
Long-term debt 4,945 2,490
Other liabilities 5,954 5,497
Stockholders' equity 36,937 38,144
----------- -----------
Total liabilities and stockholders' equity $ 85,141 $ 81,981
=========== =========== HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(In millions)
Three months Nine months
ended ended
July 31, July 31,
2007 2007
------------ -----------
Cash flows from operating activities:
Net earnings $ 1,778 $ 5,100
Adjustments to reconcile net earnings to
net cash provided by operating
activities:
Depreciation and amortization 685 2,006
Stock-based compensation expense 144 461
Provision for bad debt and inventory 85 272
Gains on investments (5) (28)
In-process research and development
charges - 186
Restructuring (5) 407
Pension curtailments and pension
settlements, net - (517)
Deferred taxes on earnings 59 299
Excess tax benefit from stock-based
compensation (165) (340)
Other, net (80) (124)
Changes in assets and liabilities:
Accounts and financing receivables (310) (965)
Inventory (800) (503)
Accounts payable 168 (446)
Taxes on earnings 30 181
Restructuring (97) (539)
Other assets and liabilities 380 556
------------ -----------
Net cash provided by operating
activities 1,867 6,006
------------ -----------
Cash flows from investing activities:
Investment in property, plant and
equipment (751) (2,227)
Proceeds from sale of property, plant
and equipment 203 503
Purchases of available-for-sale
securities and other investments (20) (36)
Maturities and sales of available-for-
sale securities and other investments 58 403
Payments made in connection with
business acquisitions, net (57) (4,893)
------------ -----------
Net cash used in investing activities (567) (6,250)
------------ -----------
Cash flows from financing activities:
Issuance of commercial paper and notes
payable, net 278 2,324
Issuance of debt 2,035 4,106
Payment of debt (2,021) (3,382)
Issuance of common stock under employee
stock plans 1,177 2,393
Repurchase of common stock (2,511) (8,847)
Excess tax benefit from stock-based
compensation 165 340
Dividends (209) (640)
------------ -----------
Net cash used in financing activities (1,086) (3,706)
------------ -----------
Increase (decrease) in cash and cash
equivalents 214 (3,950)
Cash and cash equivalents at beginning of
period 12,236 16,400
------------ -----------
Cash and cash equivalents at end of period $ 12,450 $ 12,450
============ =========== HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
SEGMENT INFORMATION
(Unaudited)
(In millions)
Three months ended
--------------------------
April
July 31, 30, July 31,
2007 2007 2006(a)
-------- -------- --------
Net revenue:
Enterprise Storage and Servers $ 4,547 $ 4,619 $ 4,133
HP Services 4,186 4,145 3,888
HP Software 554 523 318
-------- -------- --------
Technology Solutions Group 9,287 9,287 8,339
-------- -------- --------
Personal Systems Group 8,894 8,663 6,917
Imaging and Printing Group 6,751 7,161 6,234
HP Financial Services 582 550 519
Corporate Investments 220 175 155
-------- -------- --------
Total Segments 25,734 25,836 22,164
Eliminations of intersegment net revenue
and other (357) (302) (274)
-------- -------- --------
Total HP Consolidated $25,377 $25,534 $21,890
======== ======== ========
Earnings from operations:
Enterprise Storage and Servers $ 464 $ 407 $ 296
HP Services 430 459 364
HP Software 81 42 13
-------- -------- --------
Technology Solutions Group 975 908 673
-------- -------- --------
Personal Systems Group 519 417 275
Imaging and Printing Group 981 1,167 884
HP Financial Services 39 36 35
Corporate Investments (5) (18) (33)
-------- -------- --------
Total Segments 2,509 2,510 1,834
Corporate and unallocated costs and
eliminations (101) (75) (53)
Unallocated costs related to stock-
based compensation expense (114) (131) (113)
Amortization of purchased intangible
assets (183) (212) (153)
In-process research and development
charges - (19) -
Restructuring 5 (453) (5)
Pension curtailments and pension
settlements, net - 508 -
Interest and other, net 165 87 221
Gains on investments 5 13 7
-------- -------- --------
Total HP Consolidated Earnings Before
Taxes $ 2,286 $ 2,228 $ 1,738
======== ======== ========
(a) Certain fiscal 2007 organizational realignments have been
reflected retroactively to provide improved visibility and
comparability. For each of the quarters in fiscal year 2006, the
realignments primarily resulted in revenue movement within business
units within the ESS and HPS segments. There was no impact to total
segment revenue. HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
SEGMENT INFORMATION
(Unaudited)
(In millions)
Nine months ended
July 31
-----------------
2007 2006(a)
-------- --------
Net revenue:
Enterprise Storage and Servers $13,619 $12,638
HP Services 12,279 11,537
HP Software 1,627 952
-------- --------
Technology Solutions Group 27,525 25,127
-------- --------
Personal Systems Group 26,276 21,343
Imaging and Printing Group 20,911 19,503
HP Financial Services 1,679 1,533
Corporate Investments 552 406
-------- --------
Total Segments 76,943 67,912
Eliminations of intersegment net revenue and other (950) (809)
-------- --------
Total HP Consolidated $75,993 $67,103
======== ========
Earnings from operations:
Enterprise Storage and Servers $ 1,287 $ 944
HP Services 1,303 1,002
HP Software 170 25
-------- --------
Technology Solutions Group 2,760 1,971
-------- --------
Personal Systems Group 1,350 816
Imaging and Printing Group 3,221 2,898
HP Financial Services 107 112
Corporate Investments (52) (115)
-------- --------
Total Segments 7,386 5,682
Corporate and unallocated costs and
eliminations (242) (175)
Unallocated costs related to stock-based
compensation expense (385) (339)
Amortization of purchased intangible assets (596) (451)
In-process research and development charges (186) (52)
Restructuring (407) (6)
Pension curtailments and pension settlements,
net 517 -
Interest and other, net 363 416
Gains on investments 28 11
-------- --------
Total HP Consolidated Earnings Before Taxes $ 6,478 $ 5,086
======== ========
(a) Certain fiscal 2007 organizational realignments have been
reflected retroactively to provide improved visibility and
comparability. For fiscal year 2006, the realignments primarily
resulted in revenue movement within business units within the ESS and
HPS segments. There was no impact to total segment revenue. HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
SEGMENT / BUSINESS UNIT INFORMATION
(Unaudited)
(In millions)
Three months ended
--------------------------
April
July 31, 30, July 31,
2007 2007 2006(a)
-------- -------- --------
Net revenue:
Industry Standard Servers $ 2,814 $ 2,818 $ 2,427
Business Critical Systems 811 862 833
Storage 922 939 873
-------- -------- --------
Enterprise Storage and Servers 4,547 4,619 4,133
-------- -------- --------
Technology Services 2,164 2,155 2,064
Outsourcing Services(b) 1,234 1,195 1,116
Consulting and Integration 788 795 708
-------- -------- --------
HP Services 4,186 4,145 3,888
-------- -------- --------
OpenView 481 434 215
OpenCall and Other 73 89 103
-------- -------- --------
HP Software 554 523 318
-------- -------- --------
Technology Solutions Group 9,287 9,287 8,339
-------- -------- --------
Desktops 3,924 3,904 3,515
Notebooks 4,253 4,084 2,768
Workstations 441 402 339
Handhelds 105 105 136
Other 171 168 159
-------- -------- --------
Personal Systems Group 8,894 8,663 6,917
-------- -------- --------
Commercial Hardware 1,738 1,786 1,632
Consumer Hardware 982 996 893
Supplies 4,017 4,367 3,693
Other 14 12 16
-------- -------- --------
Imaging and Printing Group 6,751 7,161 6,234
-------- -------- --------
HP Financial Services 582 550 519
Corporate Investments 220 175 155
-------- -------- --------
Total Segments 25,734 25,836 22,164
-------- -------- --------
Eliminations of intersegment net revenue
and other (357) (302) (274)
-------- -------- --------
Total HP Consolidated $25,377 $25,534 $21,890
======== ======== ========
(a) Certain fiscal 2007 organizational realignments have been
reflected retroactively to provide improved visibility and
comparability. For each of the quarters in fiscal year 2006, the
realignments primarily resulted in revenue movement within business
units within the ESS and HPS segments. There was no impact to total
segment revenue.
(b) Reflects name change from Managed Services to Outsourcing Services
effective in fiscal 2007. HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
SEGMENT / BUSINESS UNIT INFORMATION
(Unaudited)
(In millions)
Nine months ended
July 31
-----------------
2007 2006(a)
-------- --------
Net revenue:
Industry Standard Servers $ 8,321 $ 7,288
Business Critical Systems 2,521 2,659
Storage 2,777 2,691
-------- --------
Enterprise Storage and Servers 13,619 12,638
-------- --------
Technology Services 6,412 6,231
Outsourcing Services(b) 3,554 3,197
Consulting and Integration 2,313 2,109
-------- --------
HP Services 12,279 11,537
-------- --------
OpenView 1,372 648
OpenCall and Other 255 304
-------- --------
HP Software 1,627 952
-------- --------
Technology Solutions Group 27,525 25,127
-------- --------
Desktops 11,640 10,938
Notebooks 12,481 8,537
Workstations 1,248 1,006
Handhelds 393 481
Other 514 381
-------- --------
Personal Systems Group 26,276 21,343
-------- --------
Commercial Hardware 5,213 5,026
Consumer Hardware 3,205 3,131
Supplies 12,453 11,302
Other 40 44
-------- --------
Imaging and Printing Group 20,911 19,503
-------- --------
HP Financial Services 1,679 1,533
Corporate Investments 552 406
-------- --------
Total Segments 76,943 67,912
-------- --------
Eliminations of intersegment net revenue and other (950) (809)
-------- --------
Total HP Consolidated $75,993 $67,103
======== ========
(a) Certain fiscal 2007 organizational realignments have been
reflected retroactively to provide improved visibility and
comparability. For fiscal year 2006, the realignments primarily
resulted in revenue movement within business units within the ESS and
HPS segments. There was no impact to total segment revenue.
(b) Reflects name change from Managed Services to Outsourcing Services
effective in fiscal 2007. HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
CALCULATION OF NET EARNINGS PER SHARE
(Unaudited)
(In millions except per share amounts)
Three months ended
--------------------
July April July
31, 30, 31,
2007 2007 2006
------ ------ ------
Numerator:
Net earnings $1,778 $1,775 $1,375
Adjustment for interest expense on zero-coupon
subordinated convertible notes, net of taxes 1 2 1
------ ------ ------
Net earnings, adjusted $1,779 $1,777 $1,376
====== ====== ======
Denominator:
Weighted-average shares used to compute basic
EPS 2,600 2,638 2,768
Effect of dilutive securities:
Dilution from employee stock plans 89 85 63
Zero-coupon subordinated convertible notes 8 8 8
------ ------ ------
Dilutive potential common shares 97 93 71
------ ------ ------
Weighted-average shares used to compute diluted
EPS 2,697 2,731 2,839
====== ====== ======
Net earnings per share:
Basic(a) $ 0.68 $ 0.67 $ 0.50
Diluted(b) $ 0.66 $ 0.65 $ 0.48
(a) HP's basic earnings per share was calculated based on net earnings
and the weighted-averagenumber 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 conversion of debt, except when such
issuances would be antidilutive. HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
CALCULATION OF NET EARNINGS PER SHARE
(Unaudited)
(In millions except per share amounts)
Nine months
ended
July 31
-------------
2007 2006
------ ------
Numerator:
Net earnings $5,100 $4,501
Adjustment for interest expense on zero coupon
subordinated convertible notes, net of taxes 5 5
------ ------
Net earnings, adjusted $5,105 $4,506
====== ======
Denominator:
Weighted-average shares used to compute
basic EPS 2,648 2,799
Effect of dilutive securities:
Dilution from employee stock plans 78 63
Zero-coupon subordinated convertible notes 8 8
------ ------
Dilutive potential common shares 86 71
------ ------
Weighted-average shares used to compute diluted EPS 2,734 2,870
====== ======
Net earnings per share:
Basic(a) $ 1.93 $ 1.61
Diluted(b) $ 1.87 $ 1.57
(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 conversion of debt, except when such
issuances would be antidilutive. HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
CALCULATION OF NON-GAAP NET EARNINGS PER SHARE
(Unaudited)
(In millions except per share amounts)
Three months ended
--------------------
July April July
31, 30, 31,
2007 2007 2006
------ ------ ------
Numerator:
Non-GAAP net earnings $1,912 $1,920 $1,483
Adjustment for interest expense on zero-coupon
subordinated convertible notes, net of taxes 1 2 1
------ ------ ------
Non-GAAP net earnings, adjusted $1,913 $1,922 $1,484
====== ====== ======
Denominator:
Weighted-average shares used to compute basic
EPS 2,600 2,638 2,768
Effect of dilutive securities:
Dilution from employee stock plans 89 85 63
Zero-coupon subordinated convertible notes 8 8 8
------ ------ ------
Dilutive potential common shares 97 93 71
------ ------ ------
Weighted-average shares used to compute diluted
EPS 2,697 2,731 2,839
====== ====== ======
Non-GAAP net earnings per share:
Basic(a) $0.74 $0.73 $0.54
Diluted(b) $0.71 $0.70 $0.52
(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 conversion of
debt, except when such issuances would be antidilutive. HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
CALCULATION OF NON-GAAP NET EARNINGS PER SHARE
(Unaudited)
(In millions except per share amounts)
Nine months
ended
July 31
-------------
2007 2006
------ ------
Numerator:
Non-GAAP net earnings $5,658 $4,872
Adjustment for interest expense on zero-coupon
subordinated convertible notes, net of taxes 5 5
------ ------
Non-GAAP net earnings, adjusted $5,663 $4,877
====== ======
Denominator:
Weighted-average shares used to compute basic EPS 2,648 2,799
Effect of dilutive securities:
Dilution from employee stock plans 78 63
Zero-coupon subordinated convertible notes 8 8
------ ------
Dilutive potential common shares 86 71
------ ------
Weighted-average shares used to compute diluted EPS 2,734 2,870
====== ======
Non-GAAP net earnings per share:
Basic(a) $ 2.14 $ 1.74
Diluted(b) $ 2.07 $ 1.70
(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 EPS included additional dilution from
potential issuance of common stock, such as stock issuable pursuant
to exercise of stock options and conversion of debt, except when such
issuances would be antidilutive.
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