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/hpinfo/investor/.
HP's Q4 FY06 earnings conference call is accessible via an audio webcast at www.hp.com/hpinfo/investor/financials/quarters/2006/q4webcast.html.
HP is a technology solutions provider to consumers, businesses and institutions globally. The company's offerings span IT infrastructure, global services, business and home computing, and imaging and printing. For the four fiscal quarters ended Oct. 31, 2006, HP revenue totaled $91.7 billion. 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 income, 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, fiscal year-to-date, 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 income, diluted earnings per share, or cash and cash equivalents prepared in accordance with GAAP.
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, charges, earnings or other financial items; any statements of the plans, strategies, and objectives of management for future operations, including execution of any restructuring plans; any statements concerning the expected development, performance or market share relating to products or services; 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; employee management issues; 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; and other risks that are described from time to time in HP's Securities and Exchange Commission reports, including but not limited to the risks described in HP's Annual Report on Form 10-K for the fiscal year ended October 31, 2005, HP's Quarterly Report on Form 10-Q for the fiscal quarter ended July 31, 2006 and other reports filed after that report. As in prior years, 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 Form 10-K for the fiscal year ended October 31, 2006. In particular, determining HP's actual tax balances and provisions as of October 31, 2006 and for the fiscal year 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-K. HP assumes no obligation and does not intend to update these forward-looking statements.
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(C) 2006 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, July 31, October 31, 2006 2006 2005 ----------- --------- ----------- Net revenue $ 24,555 $ 21,890 $ 22,913 Costs and expenses(a): Cost of sales 18,593 16,472 17,532 Research and development 870 920 859 Selling, general and administrative 2,886 2,830 2,786 Amortization of purchased intangible assets 153 153 136 Restructuring charges 152 5 1,565 In-process research and development charges - - 2 Pension curtailment gain - - (199) ----------- --------- ----------- Total costs and expenses 22,654 20,380 22,681 ----------- --------- ----------- Earnings from operations 1,901 1,510 232 Interest and other, net 190 221 132 Gains on investments 14 7 14 Dispute settlement - - 3 ----------- --------- ----------- Earnings before taxes 2,105 1,738 381 Provision for (benefit from) taxes(b) 408 363 (35) ----------- --------- ----------- Net earnings $ 1,697 $ 1,375 $ 416 =========== ========= =========== Net earnings per share: Basic $ 0.62 $ 0.50 $ 0.15 Diluted $ 0.60 $ 0.48 $ 0.14 Cash dividends declared per share $ - $ 0.16 $ - Weighted-average shares used to compute net earnings per share: Basic 2,730 2,768 2,850 Diluted 2,816 2,839 2,908 (a) Stock-based compensation expense included under SFAS 123(R) was as follows: Cost of sales $ 37 $ 35 $ - Research and development 20 17 - Selling, general and administrative 84 75 - ----------- --------- ----------- Total costs and expenses $ 141 $ 127 $ - (b) Tax benefit from stock-based compensation $ (40) $ (38) $ -