HP Reports Second Quarter 2011 Results

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 Q2 FY11 earnings conference call is accessible via an audio webcast at www.hp.com/investor/2011q2webcast.

About HP

HP creates new possibilities for technology to have a meaningful impact on people, businesses, governments and society. The world’s largest technology company, HP brings together a portfolio that spans printing, personal computing, software, services and IT infrastructure at the convergence of the cloud and connectivity, creating seamless, secure, context-aware experiences for a connected world. More information about HP is available at http://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, currency exchange rates, the impact of acquisitions or other financial items; any statements of the plans, strategies and objectives of management for future operations, including the 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 current or future macroeconomic trends or events and the impact of those trends and events on HP and its financial performance; 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 the impact of macroeconomic and geopolitical trends and events; the competitive pressures faced by HP’s businesses; the development and transition of new products and services and the enhancement of existing products and services to meet customer needs and respond to emerging technological trends; the execution and performance of contracts by HP and its suppliers, customers and partners; the protection of HP’s intellectual property assets, including intellectual property licensed from third parties; integration and other risks associated with business combination and investment transactions; the hiring and retention of key employees; 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 Annual Report on Form 10-K for the fiscal year ended October 31, 2010 and HP’s other filings with the Securities and Exchange Commission, including HP’s Quarterly Report on Form 10-Q for the fiscal quarter ended January 31, 2011. As in prior periods, 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-Q for the quarter ended April 30, 2011. In particular, determining HP’s actual tax balances and provisions as of April 30, 2011 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.

© 2011 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

April 30,
2011

January 31,
2011

April 30,
2010

 
Net revenue $ 31,632 $ 32,302 $ 30,849
 
Costs and Expenses: (a)
Cost of sales 23,860 24,408 23,569
Research and development 815 798 722
Selling, general and administrative 3,397 3,090 3,096
Amortization of purchased intangible assets 413 425 347
Restructuring charges 158 158 180
Acquisition-related charges   21     29     77  
Total costs and expenses   28,664     28,908     27,991  
 
Earnings from operations 2,968 3,394 2,858
 
Interest and other, net   (76 )   (97 )   (91 )
 
Earnings before taxes 2,892 3,297 2,767
 
Provision for taxes   588     692     567  
 
Net earnings $ 2,304   $ 2,605   $ 2,200  
 
Net earnings per share:
Basic $ 1.07 $ 1.19 $ 0.94
Diluted $ 1.05 $ 1.17 $ 0.91
 
 
Cash dividends declared per share $ - $ 0.16 $ -
 
Weighted-average shares used to compute net earnings per share:
Basic 2,150 2,182 2,345
Diluted 2,184 2,226 2,406
 
(a)   In connection with organizational realignments implemented in the first quarter of fiscal 2011, certain costs previously reported as Cost of Sales have been reclassified as Selling, General and Administrative expenses to better align those costs with the functional areas that benefit from those expenditures.
 
 
HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(Unaudited)
(In millions except per share amounts)
   
 
Six months ended
April 30,

2011

2010

 
 
Net revenue $ 63,934 $ 62,026
 
Costs and expenses: (a)
Cost of sales 48,268 47,596
Research and development 1,613 1,403
Selling, general and administrative 6,487 6,063
Amortization of purchased intangible assets 838 677
Restructuring charges 316 311
Acquisition-related charges   50     115  
Total costs and expenses   57,572     56,165  
 
Earnings from operations 6,362 5,861
 
Interest and other, net   (173 )   (290 )
 
Earnings before taxes 6,189 5,571
 
Provision for taxes   1,280     1,121  
 
Net earnings $ 4,909   $ 4,450  
 
Net earnings per share:
Basic $ 2.27 $ 1.89
Diluted $ 2.23 $ 1.84
 
 
Cash dividends declared per share $ 0.16 $ 0.16
 
Weighted-average shares used to compute net earnings per share:
Basic 2,166 2,352
Diluted 2,203 2,412
 

(a)

  In connection with organizational realignments implemented in the first quarter of fiscal 2011, certain costs previously reported as Cost of Sales have been reclassified as Selling, General and Administrative expenses to better align those costs with the functional areas that benefit from those expenditures.
 
           
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
April 30,
2011

 

Diluted
earnings
per share

Three months
ended
January 31,
2011

 

Diluted
earnings
per share

Three months
ended
April 30,
2010

 

Diluted
earnings
per share

 
GAAP net earnings $ 2,304 $ 1.05 $ 2,605 $ 1.17 $ 2,200 $ 0.91
 
Non-GAAP adjustments:
Amortization of purchased

intangible assets

413 0.19 425 0.19 347 0.14
Restructuring charges 158 0.07 158 0.07 180 0.08
Acquisition-related charges 21 0.01 29 0.01 77 0.03
Adjustments for taxes   (179 )   (0.08 )   (187 )   (0.08 )   (171 )   (0.07 )
Non-GAAP net earnings $ 2,717   $ 1.24   $ 3,030   $ 1.36   $ 2,633   $ 1.09  
 
 
GAAP earnings from operations $ 2,968 $ 3,394 $ 2,858
 
Non-GAAP adjustments:
Amortization of purchased

intangible assets

413 425 347
Restructuring charges 158 158 180
Acquisition-related charges   21     29     77  
Non-GAAP earnings
from operations $ 3,560   $ 4,006   $ 3,462  
 
GAAP operating margin 9 % 11 % 9 %
Non-GAAP adjustments   2 %   1 %   2 %
 
Non-GAAP operating margin   11 %   12 %   11 %
 
       
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)
 
 

Six months
ended
April 30,
2011

 

Diluted
earnings
per share

Six months
ended
April 30,
2010

 

Diluted
earnings
per share

 
GAAP net earnings $ 4,909 $ 2.23 $ 4,450 $ 1.84
 
Non-GAAP adjustments:
Amortization of purchased

intangible assets

838 0.39 677 0.28
Restructuring charges 316 0.14 311 0.13
Acquisition-related charges 50 0.02 115 0.05
Adjustments for taxes   (366 )   (0.17 )   (326 )   (0.13 )
Non-GAAP net earnings $ 5,747   $ 2.61   $ 5,227   $ 2.17  
 
 
GAAP earnings from operations $ 6,362 $ 5,861
 
Non-GAAP adjustments:
Amortization of purchased

intangible assets

838 677
Restructuring charges 316 311
Acquisition-related charges   50     115  
Non-GAAP earnings
from operations $ 7,566   $ 6,964  
 
GAAP operating margin 10 % 9 %
Non-GAAP adjustments   2 %   2 %
 
 
Non-GAAP operating margin   12 %   11 %
 
   
HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(In millions)
 
 

April 30,
2011

October 31,
2010

(unaudited)
ASSETS
 
Current assets:
Cash and cash equivalents $ 12,738 $ 10,929
Accounts receivable 18,621 18,481
Financing receivables 3,179 2,986
Inventory 6,778 6,466
Other current assets   14,759   15,322
 
Total current assets   56,075   54,184
 
Property, plant and equipment 11,890 11,763
 
Long-term financing receivables and other assets 11,320 12,225
 
Goodwill and purchased intangible assets   45,842   46,331
 
Total assets $ 125,127 $ 124,503
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
Current liabilities:
Notes payable and short-term borrowings $ 8,406 $ 7,046
Accounts payable 14,222 14,365
Employee compensation and benefits 3,563 4,256
Taxes on earnings 848 802
Deferred revenue 7,397 6,727
Other accrued liabilities   16,934   16,207
 
Total current liabilities   51,370   49,403
 
Long-term debt 14,512 15,258
Other liabilities 17,450 19,061
 
Stockholders' equity:
HP stockholders' equity 41,423 40,449
Non-controlling interests   372   332
 
Total stockholders' equity   41,795   40,781
 
Total liabilities and stockholders' equity $ 125,127 $ 124,503
 
   
HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(In millions)
 
 

Three months
ended
April 30,
2011

Six months
ended
April 30,
2011

 
Cash flows from operating activities:
Net earnings $ 2,304 $ 4,909
Adjustments to reconcile net earnings to

net cash provided by operating activities:

Depreciation and amortization 1,242 2,497
Stock-based compensation expense 147 327
Provision for bad debt and inventory 10 96
Restructuring charges 158 316
Deferred taxes on earnings 9 641
Excess tax benefit from stock-based compensation (90 ) (154 )
Other, net (35 ) (139 )
 
Changes in assets and liabilities:
Accounts and financing receivables (2,360 ) (608 )
Inventory (82 ) (415 )
Accounts payable 769 (143 )
Taxes on earnings 335 93
Restructuring (233 ) (505 )
Other assets and liabilities   1,788     117  
Net cash provided by operating activities   3,962     7,032  
 
Cash flows from investing activities:
Investment in property, plant and equipment (1,100 ) (2,026 )
Proceeds from sale of property, plant and equipment 90 633
Purchases of available-for-sale securities and other investments 19 -
Maturities and sales of available-for-sale securities and

other investments

4 57
Payments made in connection with business acquisitions, net

of cash acquired

  (232 )   (246 )
Net cash used in investing activities   (1,219 )   (1,582 )
 
Cash flows from financing activities:
Issuance (repayment) of commercial paper and notes payable, net 2,712 (998 )
Issuance of debt 99 2,216
Payment of debt (316 ) (454 )
Issuance of common stock under employee stock plans 344 774
Repurchase of common stock (2,686 ) (4,976 )
Excess tax benefit from stock-based compensation 90 154
Dividends   (182 )   (357 )
Net cash provided by (used in) financing activities   61     (3,641 )
 
Increase in cash and cash equivalents 2,804 1,809
Cash and cash equivalents at beginning of period   9,934     10,929  
Cash and cash equivalents at end of period $ 12,738   $ 12,738  
 
       
HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
SEGMENT INFORMATION
(Unaudited)
(In millions)
 
 
Three months ended

 

April 30,
2011

January 31,
2011

April 30,
2010

 
Net revenue: (a)
 
Services $ 8,977 $ 8,607 $ 8,842
Enterprise Servers, Storage and Networking 5,556 5,634 4,837
HP Software   764     697     653  
HP Enterprise Business   15,297     14,938     14,332  
Personal Systems Group 9,415 10,449 9,956
Imaging and Printing Group 6,745 6,630 6,396
HP Financial Services 885 827 755
Corporate Investments   72     78     66  
Total Segments 32,414 32,922 31,505
Eliminations of intersegment net revenue and other   (782 )   (620 )   (656 )
 
Total HP Consolidated Net Revenue $ 31,632   $ 32,302   $ 30,849  
 
Earnings from operations: (a)
 
Services $ 1,361 $ 1,375 $ 1,401
Enterprise Servers, Storage and Networking 766 828 624
HP Software   154     123     167  
HP Enterprise Business   2,281     2,326     2,192  
Personal Systems Group 533 672 465
Imaging and Printing Group 1,144 1,129 1,098
HP Financial Services 83 79 69
Corporate Investments   (198 )   (183 )   (65 )
Total Segments 3,843 4,023 3,759
 
Corporate and unallocated costs and eliminations (153 ) 149 (112 )
Unallocated costs related to stock-based compensation expense (130 ) (166 ) (185 )
Amortization of purchased intangible assets (413 ) (425 ) (347 )
Restructuring charges (158 ) (158 ) (180 )
Acquisition-related charges (21 ) (29 ) (77 )
Interest and other, net   (76 )   (97 )   (91 )
 
Total HP Consolidated Earnings Before Taxes $ 2,892   $ 3,297   $ 2,767  
 
(a)   Certain fiscal 2011 organizational reclassifications have been reflected retroactively to provide improved visibility and comparability. For each of the quarters in fiscal year 2010, the reclassifications resulted in the transfer of revenue and operating profit among the Enterprise Servers, Storage and Networking, Services, HP Software and Corporate Investments financial reporting segments. Reclassifications between segments included the transfer of the networking business from Corporate Investments to Enterprise Servers, Storage and Networking, the transfer of the communications and media solutions business from HP Software to Services, and the transfer of the business intelligence business from HP Software to Corporate Investments. There was no impact on the previously reported financial results for the Personal Systems Group, HP Financial Services and Imaging and Printing Group segments.
 
     
HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
SEGMENT INFORMATION
(Unaudited)
(In millions)
 
 
Six months ended
April 30,

2011

2010

 
Net revenue: (a)
 
Services $ 17,584 $ 17,632
Enterprise Servers, Storage and Networking 11,190 9,447
HP Software   1,461     1,316  
HP Enterprise Business   30,235     28,395  
Personal Systems Group 19,864 20,540
Imaging and Printing Group 13,375 12,602
HP Financial Services 1,712 1,474
Corporate Investments   150     126  
Total Segments 65,336 63,137
Eliminations of intersegment net revenue and other   (1,402 )   (1,111 )
 
Total HP Consolidated Net Revenue $ 63,934   $ 62,026  
 
Earnings from operations: (a)
 
Services $ 2,736 $ 2,780
Enterprise Servers, Storage and Networking 1,594 1,231
HP Software   277     339  
HP Enterprise Business   4,607     4,350  
Personal Systems Group 1,205 995
Imaging and Printing Group 2,273 2,152
HP Financial Services 162 136
Corporate Investments   (381 )   (121 )
Total Segments 7,866 7,512
 
Corporate and unallocated costs and eliminations (4 ) (200 )
Unallocated costs related to stock-based compensation expense (296 ) (348 )
Amortization of purchased intangible assets (838 ) (677 )
Restructuring charges (316 ) (311 )
Acquisition-related charges (50 ) (115 )
Interest and other, net   (173 )   (290 )
 
Total HP Consolidated Earnings Before Taxes $ 6,189   $ 5,571  
 
(a)   Certain fiscal 2011 organizational reclassifications have been reflected retroactively to provide improved visibility and comparability. For each of the quarters in fiscal year 2010, the reclassifications resulted in the transfer of revenue and operating profit among the Enterprise Servers, Storage and Networking, Services, HP Software and Corporate Investments financial reporting segments. Reclassifications between segments included the transfer of the networking business from Corporate Investments to Enterprise Servers, Storage and Networking, the transfer of the communications and media solutions business from HP Software to Services, and the transfer of the business intelligence business from HP Software to Corporate Investments. There was no impact on the previously reported financial results for the Personal Systems Group, HP Financial Services and Imaging and Printing Group segments.
 
         
HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
SEGMENT / BUSINESS UNIT INFORMATION
(Unaudited)
(In millions)
 
 
Three months ended Growth rate (%)

April 30,
2011

January 31,
2011

April 30,
2010

Q/Q Y/Y
 
Net revenue: (a)
 
Infrastructure Technology Outsourcing $ 3,783 $ 3,636 $ 3,724 4 % 2 %
Technology Services 2,713 2,602 2,652 4 % 2 %
Application Services 1,724 1,632 1,684 6 % 2 %
Business Process Outsourcing 673 658 716 2 % (6 %)
Other   84     79     66   6 % 27 %
Services   8,977     8,607  

 

  8,842   4 % 2 %
Industry Standard Servers 3,387 3,448 3,056 (2 %) 11 %
Storage 980 1,012 948 (3 %) 3 %
Business Critical Systems 546 555 538 (2 %) 1 %
HP Networking (b)   643     619     295   4 % 118 %
Enterprise Servers, Storage and Networking   5,556     5,634     4,837   (1 %) 15 %
HP Software (c)   764     697     653   10 % 17 %
HP Enterprise Business   15,297     14,938     14,332   2 % 7 %
Notebooks 5,039 5,808 5,527 (13 %) (9 %)
Desktops 3,641 3,896 3,797 (7 %) (4 %)
Workstations 541 535 423 1 % 28 %
Other   194     210     209   (8 %) (7 %)
Personal Systems Group (d)   9,415     10,449     9,956   (10 %) (5 %)
Supplies 4,612 4,358 4,331 6 % 6 %
Commercial Hardware 1,438 1,464 1,348 (2 %) 7 %
Consumer Hardware   695     808     717   (14 %) (3 %)
Imaging and Printing Group   6,745     6,630     6,396   2 % 5 %
HP Financial Services 885 827 755 7 % 17 %
Corporate Investments   72     78     66   (8 %) 9 %
Total Segments   32,414     32,922     31,505   (2 %) 3 %
Eliminations of intersegment net revenue and other   (782 )   (620 )   (656 ) 26 % 19 %
 
Total HP Consolidated Net Revenue $ 31,632   $ 32,302   $ 30,849   (2 %) 3 %
 
(a)  

Certain fiscal 2011 organizational reclassifications have been reflected retroactively to provide improved visibility and comparability. For each of the quarters in fiscal year 2010, the reclassifications resulted in the transfer of revenue among the Enterprise Servers, Storage and Networking, Services, HP Software and Corporate Investments financial reporting segments. Reclassifications between segments included the transfer of the networking business from Corporate Investments to Enterprise Servers, Storage and Networking, the transfer of the communications and media solutions business from HP Software to Services, and the transfer of the business intelligence business from HP Software to Corporate Investments. In addition, revenue was transferred among the business units within the Services and Personal Systems Group segments. There was no impact on the previously reported financial results for the HP Financial Services and Imaging and Printing Group segments or for the business units within the Imaging and Printing Group segment.

 
(b) The networking business was added to the Enterprise Servers, Storage and Networking segment in fiscal 2011.
 
(c) The Business Technology Optimization and Other Software business units were consolidated into a single business unit within the HP Software segment in fiscal 2011.
 
(d) The Handhelds business unit, which includes devices that run on Windows Mobile software, was reclassified into the Other business unit within the Personal Systems Group in fiscal 2011.
 
   

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES

SEGMENT / BUSINESS UNIT INFORMATION
(Unaudited)
(In millions)
 
 
Six months ended
April 30,

2011

2010

 
Net revenue: (a)
 
Infrastructure Technology Outsourcing $ 7,419 $ 7,399
Technology Services 5,315 5,283
Application Services 3,356 3,365
Business Process Outsourcing 1,331 1,450
Other   163     135  
Services   17,584     17,632  
Industry Standard Servers 6,835 6,002
Storage 1,992 1,837
Business Critical Systems 1,101 1,094
HP Networking (b)   1,262     514  
Enterprise Servers, Storage and Networking   11,190     9,447  
HP Software (c)   1,461     1,316  
HP Enterprise Business   30,235     28,395  
Notebooks 10,847 11,665
Desktops 7,537 7,650
Workstations 1,076 798
Other   404     427  
Personal Systems Group (d)   19,864     20,540  
Supplies 8,970 8,412
Commercial Hardware 2,902 2,639
Consumer Hardware   1,503     1,551  
Imaging and Printing Group   13,375     12,602  
HP Financial Services 1,712 1,474
Corporate Investments   150     126  
Total Segments   65,336     63,137  
Eliminations of intersegment net revenue and other   (1,402 )   (1,111 )
 
Total HP Consolidated Net Revenue $ 63,934   $ 62,026  
 
(a)  

Certain fiscal 2011 organizational reclassifications have been reflected retroactively to provide improved visibility and comparability. For each of the quarters in fiscal year 2010, the reclassifications resulted in the transfer of revenue among the Enterprise Servers, Storage and Networking, Services, HP Software and Corporate Investments financial reporting segments. Reclassifications between segments included the transfer of the networking business from Corporate Investments to Enterprise Servers, Storage and Networking, the transfer of the communications and media solutions business from HP Software to Services, and the transfer of the business intelligence business from HP Software to Corporate Investments. In addition, revenue was transferred among the business units within the Services and Personal Systems Group segments. There was no impact on the previously reported financial results for the HP Financial Services and Imaging and Printing Group segments or for the business units within the Imaging and Printing Group segment.

 
(b) The networking business was added to the Enterprise Servers, Storage and Networking segment in fiscal 2011.
 
(c) The Business Technology Optimization and Other Software business units were consolidated into a single business unit within the HP Software segment in fiscal 2011.
 
(d) The Handhelds business unit, which includes devices that run on Windows Mobile software, was reclassified into the Other business unit within the Personal Systems Group in fiscal 2011.
 
     
HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
SEGMENT NON-GAAP OPERATING MARGIN SUMMARY DATA
(Unaudited)
(In millions)
 
 

Three months
ended

Change in Operating Margin
(pts)

April 30,
2011

Y/Y Q/Q
 
Non-GAAP Operating Margin: (a)
Services 15.2 % (0.6 pts) (0.8 pts)
Enterprise Servers, Storage and Networking 13.8 % 0.9 pts (0.9 pts)
HP Software 20.2 % (5.4 pts) 2.6 pts
HP Enterprise Business 14.9 % (0.4 pts) (0.7 pts)
Personal Systems Group 5.7 % 1.0 pts (0.7 pts)
Imaging and Printing Group 17.0 % (0.2 pts) 0.0 pts
HP Financial Services 9.4 % 0.3 pts (0.2 pts)
Corporate Investments (275.0 %) (176.5 pts) (40.4 pts)
Total Segments 11.9 % 0.0 pts (0.3 pts)
 
Total HP Consolidated Non-GAAP Operating Margin 11.3 % 0.1 pts (1.1 pts)
 
(a)   Certain fiscal 2011 organizational reclassifications have been reflected retroactively to provide improved visibility and comparability. For each of the quarters in fiscal year 2010, the reclassifications resulted in the transfer of revenue and operating profit among the Enterprise Servers, Storage and Networking, Services, HP Software and Corporate Investments financial reporting segments. Reclassifications between segments included the transfer of the networking business from Corporate Investments to Enterprise Servers, Storage and Networking, the transfer of the communications and media solutions business from HP Software to Services, and the transfer of the business intelligence business from HP Software to Corporate Investments. There was no impact on the previously reported financial results for the Personal Systems Group, HP Financial Services and Imaging and Printing Group segments.
 
 
HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
CALCULATION OF NET EARNINGS PER SHARE
(Unaudited)
(In millions except per share amounts)
     
 
Three months ended

April 30,
2011

January 31,
2011

April 30,
2010

 
Numerator:
 
Net earnings $ 2,304 $ 2,605 $ 2,200
 
Denominator:
Weighted-average shares used to compute basic EPS 2,150 2,182 2,345
Dilutive effect of employee stock plans   34   44   61
Weighted-average shares used to compute diluted EPS   2,184   2,226   2,406
 
Net earnings per share:
Basic (a) $ 1.07 $ 1.19 $ 0.94
Diluted (b) $ 1.05 $ 1.17 $ 0.91
 
(a)   Basic earnings per share was calculated based on net earnings and the weighted-average number of shares outstanding during the reporting period.
 
(b) Diluted earnings per share included any dilutive effect of outstanding stock options, performance-based restricted units, restricted stock units and restricted stock.
 
 
HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
CALCULATION OF NET EARNINGS PER SHARE
(Unaudited)
(In millions except per share amounts)
   
 
Six months ended
April 30,

2011

2010

 
 
Numerator:
Net earnings $ 4,909 $ 4,450
 
Denominator:
Weighted-average shares used to compute basic EPS 2,166 2,352
Dilutive effect of employee stock plans   37   60
Weighted-average shares used to compute diluted EPS   2,203   2,412
 
Net earnings per share:
Basic (a) $ 2.27 $ 1.89
Diluted (b) $ 2.23 $ 1.84
 
(a)   Basic earnings per share was calculated based on net earnings and the weighted-average number of shares outstanding during the reporting period.
 
(b) Diluted earnings per share included any dilutive effect of outstanding stock options, performance-based restricted units, restricted stock units and restricted stock.
 
     
HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
CALCULATION OF NON-GAAP NET EARNINGS PER SHARE
(Unaudited)
(In millions except per share amounts)
 
 
Three months ended

April 30,
2011

January 31,
2011

April 30,
2010

 
Numerator:
Non-GAAP net earnings $ 2,717 $ 3,030 $ 2,633
 
Denominator:
Weighted-average shares used to compute basic EPS 2,150 2,182 2,345
Dilutive effect of employee stock plans   34   44   61
Weighted-average shares used to compute diluted EPS   2,184   2,226   2,406
 
Non-GAAP net earnings per share:
Basic (a) $ 1.26 $ 1.39 $ 1.12
Diluted (b) $ 1.24 $ 1.36 $ 1.09
 
(a)   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) Diluted non-GAAP earnings per share included any dilutive effect of outstanding stock options, performance-based restricted units, restricted stock units and restricted stock.
 
   
HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
CALCULATION OF NON-GAAP NET EARNINGS PER SHARE
(Unaudited)
(In millions except per share amounts)
 
 
Six months ended
April 30,

2011

2010

 
Numerator:
Non-GAAP net earnings $ 5,747 $ 5,227
 
Denominator:
Weighted-average shares used to compute basic EPS 2,166 2,352
Dilutive effect of employee stock plans   37   60
Weighted-average shares used to compute diluted EPS   2,203   2,412
 
Non-GAAP net earnings per share:
Basic (a) $ 2.65 $ 2.22
Diluted (b) $ 2.61 $ 2.17
 
(a)   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) Diluted non-GAAP earnings per share included any dilutive effect of outstanding stock options, performance-based restricted units, restricted stock units and restricted stock.
 

Use of Non-GAAP Financial Measures

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