Consolidated Statements of Earn
Consolidated Statements of Earnings (USD $) | |||
In Millions, except Per Share data | 12 Months Ended
Oct. 31, 2009 | 12 Months Ended
Oct. 31, 2008 | 12 Months Ended
Oct. 31, 2007 |
Net revenue: | |||
Products | $74,051 | $91,697 | $84,229 |
Services | 40,124 | 26,297 | 19,699 |
Financing income | 377 | 370 | 358 |
Total net revenue | 114,552 | 118,364 | 104,286 |
Costs and expenses: | |||
Cost of products | 56,503 | 69,342 | 63,435 |
Cost of services | 30,695 | 20,028 | 14,959 |
Financing interest | 326 | 329 | 289 |
Research and development | 2,819 | 3,543 | 3,611 |
Selling, general and administrative | 11,613 | 13,326 | 12,430 |
Amortization of purchased intangible assets | 1,571 | 967 | 783 |
In-process research and development charges | 7 | 45 | 190 |
Restructuring charges | 640 | 270 | 387 |
Acquisition-related charges | 242 | 41 | |
Pension curtailments and pension settlements, net | (517) | ||
Total operating expenses | 104,416 | 107,891 | 95,567 |
Earnings from operations | 10,136 | 10,473 | 8,719 |
Interest and other, net | (721) | 458 | |
Earnings before taxes | 9,415 | 10,473 | 9,177 |
Provision for taxes | 1,755 | 2,144 | 1,913 |
Net earnings | $7,660 | $8,329 | $7,264 |
Net earnings per share: | |||
Basic (in dollars per share) | 3.21 | 3.35 | 2.76 |
Diluted (in dollars per share) | 3.14 | 3.25 | 2.68 |
Weighted-average shares used to compute net earnings per share: | |||
Basic (in shares) | 2,388 | 2,483 | 2,630 |
Diluted (in shares) | 2,437 | 2,567 | 2,716 |
Consolidated Balance Sheets
Consolidated Balance Sheets (USD $) | ||
In Millions | Oct. 31, 2009
| Oct. 31, 2008
|
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 | 33,109 | 32,335 |
Purchased intangible assets | 6,600 | 7,962 |
Total assets | 114,799 | 113,331 |
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 |
Accrued restructuring | 1,109 | 1,099 |
Other accrued liabilities | 14,072 | 15,432 |
Total current liabilities | 43,003 | 52,939 |
Long-term debt | 13,980 | 7,676 |
Other liabilities | 17,299 | 13,774 |
Stockholders' equity: | ||
Preferred stock, $0.01 par value ( 300 shares authorized; none issued) | 0 | 0 |
Common stock, $0.01 par value ( 9,600 shares authorized; 2,365 and 2,415 shares issued and outstanding, respectively) | 24 | 24 |
Additional paid-in capital | 13,804 | 14,012 |
Retained earnings | 29,936 | 24,971 |
Accumulated other comprehensive loss | (3,247) | (65) |
Total stockholders' equity | 40,517 | 38,942 |
Total liabilities and stockholders' equity | $114,799 | $113,331 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) (USD $) | ||
Oct. 31, 2009
| Oct. 31, 2008
| |
Consolidated Balance Sheets | ||
Preferred stock, par value (in dollars per share) | 0.01 | 0.01 |
Preferred stock, shares authorized (in shares) | 300,000,000 | 300,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | 0.01 | 0.01 |
Common stock, shares authorized (in shares) | 9,600,000,000 | 9,600,000,000 |
Common stock, shares issued (in shares) | 2,365,000,000 | 2,415,000,000 |
Common stock, shares outstanding (in shares) | 2,364,809,000 | 2,415,303,000 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (USD $) | |||
In Millions | 12 Months Ended
Oct. 31, 2009 | 12 Months Ended
Oct. 31, 2008 | 12 Months Ended
Oct. 31, 2007 |
Cash flows from operating activities: | |||
Net earnings | $7,660 | $8,329 | $7,264 |
Adjustments to reconcile net earnings to net cash provided by operating activities: | |||
Depreciation and amortization | 4,773 | 3,356 | 2,705 |
Stock-based compensation expense | 635 | 606 | 629 |
Provision for doubtful accounts - accounts and financing receivables | 345 | 275 | 47 |
Provision for inventory | 221 | 214 | 362 |
Restructuring charges | 640 | 270 | 387 |
Pension curtailments and pension settlements, net | (517) | ||
In-process research and development charges | 7 | 45 | 190 |
Deferred taxes on earnings | 379 | 773 | (74) |
Excess tax benefit from stock-based compensation | (162) | (293) | (481) |
Other, net | (54) | (61) | (138) |
Changes in assets and liabilities: | |||
Accounts and financing receivables | (549) | (264) | (2,808) |
Inventory | 1,532 | 89 | (633) |
Accounts payable | (153) | 1,749 | (346) |
Taxes on earnings | 733 | 235 | 1,031 |
Restructuring | (1,237) | (165) | (606) |
Other assets and liabilities | (1,391) | (567) | 2,603 |
Net cash provided by operating activities | 13,379 | 14,591 | 9,615 |
Cash flows from investing activities: | |||
Investment in property, plant and equipment | (3,695) | (2,990) | (3,040) |
Proceeds from sale of property, plant, and equipment | 495 | 425 | 568 |
Purchases of available-for-sale securities and other investments | (160) | (178) | (283) |
Maturities and sales of available-for-sale securities and other investments | 171 | 280 | 425 |
Payments made in connection with business acquisitions, net | (391) | (11,248) | (6,793) |
Net cash used in investing activities | (3,580) | (13,711) | (9,123) |
Cash flows from financing activities: | |||
(Repayment) issuance of commercial paper and notes payable, net | (6,856) | 5,015 | 1,863 |
Issuance of debt | 6,800 | 3,121 | 4,106 |
Payment of debt | (2,710) | (1,843) | (3,419) |
Issuance of common stock under employee stock plans | 1,837 | 1,810 | 3,103 |
Repurchase of common stock | (5,140) | (9,620) | (10,887) |
Excess tax benefit from stock-based compensation | 162 | 293 | 481 |
Dividends | (766) | (796) | (846) |
Net cash used in financing activities | (6,673) | (2,020) | (5,599) |
Increase (decrease) in cash and cash equivalents | 3,126 | (1,140) | (5,107) |
Cash and cash equivalents at beginning of period | 10,153 | 11,293 | 16,400 |
Cash and cash equivalents at end of period | $13,279 | $10,153 | $11,293 |
Consolidated Statements of Shar
Consolidated Statements of Shareholders Equity (USD $) | ||||||
In Millions, except Share data in Thousands | Common Stock
| Additional Paid-in Capital
| Prepaid stock repurchase
| Retained Earnings
| Accumulated Other Comprehensive (Loss) income
| Total
|
Balance, shares, beginning of year (in shares) at Oct. 31, 2006 | 2,732,034 | |||||
Balance, beginning of year at Oct. 31, 2006 | $27 | $17,966 | ($596) | $20,729 | $18 | $38,144 |
Net earnings | 7,264 | 7,264 | ||||
Net unrealized gain (loss) on available-for-sale securities | (12) | (12) | ||||
Net unrealized gain (loss) on cash flow hedges | (18) | (18) | ||||
Minimum pension liability | (3) | (3) | ||||
Cumulative translation adjustment | 106 | 106 | ||||
Comprehensive income | 7,337 | |||||
Issuance of common stock in connection with employee stock plans and other | 1 | 3,134 | 3,135 | |||
Issuance of common stock in connection with employee stock plans and other (in shares) | 116,661 | |||||
Repurchases of common stock | (2) | (5,878) | 596 | (5,587) | (10,871) | |
Repurchases of common stock (in shares) | (268,981) | |||||
Net excess tax benefits from employee stock plans | 530 | 530 | ||||
Dividends | (846) | (846) | ||||
Stock-based compensation expense | 629 | 629 | ||||
Cumulative effect of change in accounting principle | 468 | 468 | ||||
Balance, end of year at Oct. 31, 2007 | 26 | 16,381 | 21,560 | 559 | 38,526 | |
Balance, shares, end of year (in shares) at Oct. 31, 2007 | 2,579,714 | |||||
Net earnings | 8,329 | 8,329 | ||||
Net unrealized gain (loss) on available-for-sale securities | (16) | (16) | ||||
Net unrealized gain (loss) on cash flow hedges | 866 | 866 | ||||
Unrealized components of defined benefit pension plans | (538) | (538) | ||||
Cumulative translation adjustment | (936) | (936) | ||||
Comprehensive income | 7,705 | |||||
Issuance of common stock in connection with employee stock plans and other | 2,034 | 2,034 | ||||
Issuance of common stock in connection with employee stock plans and other (in shares) | 65,235 | |||||
Repurchases of common stock | (2) | (5,325) | (4,809) | (10,136) | ||
Repurchases of common stock (in shares) | (229,646) | |||||
Net excess tax benefits from employee stock plans | 316 | 316 | ||||
Dividends | (796) | (796) | ||||
Stock-based compensation expense | 606 | 606 | ||||
Cumulative effect of change in accounting principle | 687 | 687 | ||||
Balance, end of year at Oct. 31, 2008 | 24 | 14,012 | 24,971 | (65) | 38,942 | |
Balance, shares, end of year (in shares) at Oct. 31, 2008 | 2,415,303 | 2,415,303 | ||||
Net earnings | 7,660 | 7,660 | ||||
Net unrealized gain (loss) on available-for-sale securities | 16 | 16 | ||||
Net unrealized gain (loss) on cash flow hedges | (971) | (971) | ||||
Unrealized components of defined benefit pension plans | (2,531) | (2,531) | ||||
Cumulative translation adjustment | 304 | 304 | ||||
Comprehensive income | 4,478 | |||||
Issuance of common stock in connection with employee stock plans and other | 1 | 1,783 | 1,784 | |||
Issuance of common stock in connection with employee stock plans and other (in shares) | 69,157 | |||||
Repurchases of common stock | (1) | (2,789) | (1,922) | (4,712) | ||
Repurchases of common stock (in shares) | (119,651) | |||||
Net excess tax benefits from employee stock plans | 163 | 163 | ||||
Dividends | (766) | (766) | ||||
Stock-based compensation expense | 635 | 635 | ||||
Cumulative effect of change in accounting principle | (7) | (7) | ||||
Balance, end of year at Oct. 31, 2009 | $24 | $13,804 | $29,936 | ($3,247) | $40,517 | |
Balance, shares, end of year (in shares) at Oct. 31, 2009 | 2,364,809 | 2,364,809 |
Significant Accounting Policies
Significant Accounting Policies | |
12 Months Ended
Oct. 31, 2009 USD / shares | |
Notes to Consolidated Financial Statements | |
Summary of Significant Accounting Policies | Note1: Summary of Significant Accounting Policies Principles of Consolidation The Consolidated Financial Statements include the accounts of Hewlett-Packard Company, its wholly-owned subsidiaries and its controlled majority-owned subsidiaries (collectively, "HP"). HP accounts for equity investments in companies over which HP has the ability to exercise significant influence, but does not hold a controlling interest, under the equity method, and HP records its proportionate share of income or losses in interest and other, net in the Consolidated Statements of Earnings. HP has eliminated all significant intercompany accounts and transactions. Business Combinations HP has recorded all acquisitions using the purchase method of accounting and, accordingly, has included the results of operations of acquired businesses in HP's consolidated results from the date of each acquisition. HP allocates the purchase price of its acquisitions to the tangible assets, liabilities and intangible assets acquired, including in-process research and development ("IPRD") charges, based on their estimated fair values. The excess purchase price over those fair values is recorded as goodwill. The fair value assigned to assets acquired is based on valuations using management's estimates and assumptions. HP will adopt new accounting standards issued by the Financial Accounting Standards Board ("FASB") for business combinations in the first quarter of fiscal 2010. Changes to the purchase method of accounting for business combinations are discussed further in Accounting Pronouncements in this Note. Reclassifications and Segment Reorganization Certain reclassifications have been made to prior-year amounts in order to conform to current year presentation. HP has made certain organizational realignments in order to optimize its operating structure. Reclassifications of prior year financial information have been made to conform to the current year presentation. None of the changes impacts HP's previously reported consolidated net revenue, earnings from operations, net earnings or net earnings per share. See Note 19 for a further discussion of HP's segment reorganization, which is incorporated herein by reference. HP has made certain reclassifications of its Consolidated Statements of Earnings for the fiscal years ended October31, 2008 and October31, 2007 to provide improved visibility and comparability with the current year presentation. This change does not affect previously reported results of operations for any period presented. Certain pursuit-related costs previously reported as cost of services have been realigned retroactively to selling, general and administrative expenses due to organizational realignments. HP has revised the presentation of its Consolidated Statements of Cash Flows for the fiscal years ended October31, 2008 and October31, 2007 to reflect revisions to the current and deferred tax provisions in those years related to the presentation of tax benefits of stock option plans, as described in Note14. The revisions result in an increase in the change in taxes on earnings and a decrease in the adjustment to deferred taxes on |
Stock-Based Compensation
Stock-Based Compensation | |
12 Months Ended
Oct. 31, 2009 USD / shares | |
Notes to Consolidated Financial Statements | |
Stock-Based Compensation | Note2: Stock-Based Compensation HP's stock-based compensation plans include incentive compensation plans and an employee stock purchase plan ("ESPP"). Stock-based Compensation Expense and the Related Income Tax Benefits Total stock-based compensation expense before income taxes for fiscal 2009, 2008 and 2007 was $635million, $606million and $629million, respectively. The resulting income tax benefit for fiscal 2009, 2008 and 2007 was $199million, $178million and $182million, respectively. Cash received from option exercises and purchases under the ESPP in fiscal 2009 was $1.8billion. The actual tax benefit realized for the tax deduction from option exercises of the share-based payment awards in fiscal 2009 totaled $252million. Cash received from option exercises and purchases under the ESPP in fiscal 2008 was $1.8billion. The actual tax benefit realized for the tax deduction from option exercises of the share-based payment awards in fiscal 2008 totaled $412million. Incentive Compensation Plans HP's incentive compensation plans include principal option plans adopted in 2004, 2000, 1995 and 1990 ("principal option plans"), as well as various stock option plans assumed through acquisitions under which stock-based awards are outstanding. Stock-based awards granted from the principal option plans include performance-based restricted units ("PRUs"), stock options and restricted stock awards. Employees meeting certain employment qualifications were eligible to receive stock-based awards in fiscal 2009. There were approximately 91,000 employees holding stock-based awards under one or more of the option plans as of October31, 2009. In fiscal 2008, HP implemented a program that provides for the issuance of PRUs representing hypothetical shares of HP common stock that may be issued under the Hewlett-Packard Company 2004 Stock Incentive Plan. PRU awards may be granted to eligible employees, including HP's principal executive officer, principal financial officer and other executive officers. Each PRU award reflects a target number of shares that may be issued to the award recipient. The actual number of shares the recipient receives is determined at the end of a three-year performance period based on results achieved versus company performance goals. Those goals are based on HP's annual cash flow from operations as a percentage of revenue and average total shareholder return ("TSR") relative to the SP500 over the performance period. Depending on HP's results during the three-year performance period, the actual number of shares that a grant recipient receives at the end of the period may range from 0% to 200% of the targeted shares granted, based on the calculations described below. Cash flow performance goals are established at the beginning of each year. At the end of each year, a portion of the target number of shares may be credited in the award recipient's name depending on the achievement of the cash flow performance goal for that year. The number of shares credited varies between 0% if performance is below the minimum level and 150% if performance is at or above the maximum level. For performance between the minimum level a |
Net Earnings Per Share
Net Earnings Per Share | |
12 Months Ended
Oct. 31, 2009 USD / shares | |
Notes to Consolidated Financial Statements | |
Net Earnings Per Share | Note3: Net Earnings Per Share HP calculates basic earnings per share using net earnings and the weighted-average number of shares outstanding during the reporting period. Diluted EPS includes any dilutive effect of outstanding stock options, PRUs, restricted stock units, restricted stock and convertible debt. The reconciliation of the numerators and denominators of the basic and diluted EPS calculations was as follows for the following fiscal years ended October31: 2009 2008 2007 In millions, except per share amounts Numerator: Net earnings $ 7,660 $ 8,329 $ 7,264 Adjustment for interest expense on zero-coupon subordinated convertible notes, net of taxes 3 7 Net earnings, adjusted $ 7,660 $ 8,332 $ 7,271 Denominator: Weighted-average shares used to compute basic EPS 2,388 2,483 2,630 Effect of dilutive securities: Dilution from employee stock plans 49 81 78 Zero-coupon subordinated convertible notes 3 8 Dilutive potential common shares 49 84 86 Weighted-average shares used to compute diluted EPS 2,437 2,567 2,716 Net earnings per share: Basic $ 3.21 $ 3.35 $ 2.76 Diluted $ 3.14 $ 3.25 $ 2.68 HP excludes options with exercise prices that are greater than the average market price from the calculation of diluted EPS because their effect would be anti-dilutive. In fiscal 2009, 2008 and 2007, HP excluded from the calculation of diluted EPS options to purchase 85million shares, 54million shares and 60million shares, respectively. HP also excluded from the calculation of diluted EPS options to purchase an additional 2million shares, 28million shares and 33million shares in fiscal 2009, 2008 and 2007, respectively, whose combined exercise price, unamortized fair value and excess tax benefits were greater in each of those periods than the average market price for HP's common stock because their effect would be anti-dilutive. As disclosed in Note2, during fiscal 2009 and 2008, HP granted PRU awards representing at target approximately 14million shares and 9million shares, respectively. HP includes the shares underlying PRU awards in the calculation of diluted EPS when they become contingently issuable and excludes such shares when they are not contingently issuable. Accordingly, for fiscal 2009, HP has included 6million shares underlying the PRU awards granted in fiscal 2009 and 2008 when calculating diluted EPS as those shares became contingently issuable upon the satisfaction of the cash flow from operations condition with respect to the first year of the three-year performance period applicable to the fiscal 2009 awards and the first and second years of the three-year performance period applicable to the fiscal 2008 awards. HP has excluded all other shares underlying the fiscal 2009 and 2008 PRU awards when calculating diluted EPS as thos |
Balance Sheet Details
Balance Sheet Details | |
12 Months Ended
Oct. 31, 2009 USD / shares | |
Notes to Consolidated Financial Statements | |
Balance Sheet Details | Note4: Balance Sheet Details Balance sheet details were as follows for the following fiscal years ended October31: Accounts and Financing Receivables 2009 2008 In millions Accounts receivable $ 17,166 $ 17,481 Allowance for doubtful accounts (629 ) (553 ) $ 16,537 $ 16,928 Financing receivables $ 2,723 $ 2,355 Allowance for doubtful accounts (48 ) (41 ) $ 2,675 $ 2,314 HP has revolving trade receivables-based facilities permitting it to sell certain trade receivables to third parties on a non-recourse basis. The aggregate maximum capacity under these programs was $568million as of October31, 2009. HP sold $1,667million of trade receivables during fiscal 2009. As of October31, 2009, HP had $269million available under these programs. Inventory 2009 2008 In millions Finished goods $ 4,092 $ 5,219 Purchased parts and fabricated assemblies 2,036 2,660 $ 6,128 $ 7,879 Other Current Assets 2009 2008 In millions Deferred tax assetsshort-term $ 4,979 $ 3,920 Value added taxes receivable from the government 2,650 3,115 Supplier and other receivables 3,439 3,082 Prepaid and other current assets 2,797 4,244 $ 13,865 $ 14,361 Property, Plant and Equipment 2009 2008 In millions Land $ 513 $ 526 Buildings and leasehold improvements 7,472 7,238 Machinery and equipment 12,959 11,121 20,944 18,885 Accumulated depreciation (9,682 ) (8,047 ) $ 11,262 $ 10,838 Depreciation expense was approximately $3.2billion in fiscal 2009, $2.4billion in fiscal 2008 and $1.9billion in fiscal 2007. Long-Term Financing Receivables and Other Assets 2009 2008 In millions Financing receivables $ 3,303 $ 2,722 Deferred tax assetslong-term 1,750 792 Other 6,236 6,954 $ 11,289 $ 10,468 Other Accrued Liabilities 2009 2008 In millions Other accrued taxes $ 2,784 $ 3,258 Warranty 1,777 1,973 Sales and marketing programs 2,724 2,958 Other 6,787 7,243 $ 14,072 $ 15,432 Other Liabilities 2009 2008 In millions Pension, post-retirement, and post-employment liabilities $ 6,427 $ 3,712 Deferred tax liabilitylong-term 4,230 3,162 Long-term deferred revenue 3,249 3,152 Other long-term liabilities 3,393 3,748 $ 17,299 $ 13,774 Long-term deferred revenue represents service and product deferred revenue to be recognized after one year from the balance sheet date. Defe |
Supplemental Cash Flow Informat
Supplemental Cash Flow Information | |
12 Months Ended
Oct. 31, 2009 USD / shares | |
Notes to Consolidated Financial Statements | |
Supplemental Cash Flow Information | Note5: Supplemental Cash Flow Information Supplemental cash flow information to the Consolidated Statements of Cash Flows for the fiscal years ended October31 2009, October31, 2008 and October31, 2007 was as follows: 2009 2008 2007 In millions Cash paid for income taxes, net $ 643 $ 1,136 $ 956 Cash paid for interest $ 572 $ 426 $ 489 Non-cash investing and financing activities: Issuance of common stock and stock awards assumed in business acquisitions $ $ 316 $ 41 Purchase of assets under financing arrangements $ 283 $ $ 57 Purchase of assets under capital leases $ 131 $ 30 $ |
Acquisitions
Acquisitions | |
12 Months Ended
Oct. 31, 2009 USD / shares | |
Notes to Consolidated Financial Statements | |
Acquisitions | Note6: Acquisitions Acquisitions in fiscal 2009 In fiscal 2009, HP completed two acquisitions. Total consideration for the acquisitions was $390million, which includes direct transaction costs and the assumption of certain liabilities in connection with the transactions. HP recorded $315million of goodwill, $105million of purchased intangibles and $7million of in-process research and development charges ("IPRD") related to these transactions. Projects that qualify for treatment as IPRD have not yet reached technical feasibility and have no alternative use. HP does not expect goodwill recorded with these acquisitions to be deductible for tax purposes. HP has not presented pro forma results of operations because the acquisitions are not material to HP's consolidated financial statements. The largest of the two acquisitions is the acquisition of Lefthand Networks,Inc., a leading provider of storage virtualization and solutions, which has been integrated into HP's Enterprise Storage and Servers segment. The total purchase price paid was $347million in cash including direct transaction costs and the assumption of certain liabilities in connection with the transaction. HP recorded $273million to goodwill, $95million to purchased intangibles and $6million to IPRD charges related to this acquisition. HP is amortizing the purchased intangibles on a straight-line basis over a weighted-average estimated life of 6.3years. Pending Acquisition In November 2009, HP entered into a definitive agreement to acquire 3Com Corporation ("3Com"), a global enterprise provider of networking switching, routing and security solutions, at a price of $7.90 per share in cash or an enterprise value of approximately $2.7billion. The acquisition is subject to customary closing conditions, including the receipt of domestic and foreign regulatory approvals and the approval of 3Com's stockholders. The transaction is expected to close in HP's second fiscal quarter of 2010. Acquisitions in fiscal 2008 Acquisition of Electronic Data Systems Corporation On August26, 2008, HP completed its acquisition of EDS, a leading global technology services company, delivering a broad portfolio of information technology, applications and business process outsourcing services to clients in the manufacturing, financial services, healthcare, communications, energy, transportation, and consumer and retail industries and to governments around the world. The purchase price for EDS was $13.0billion, comprised of $12.7billion cash paid for outstanding common stock, $328million for the fair value of stock options and restricted stock units assumed, and $36million for direct transaction costs. Of the total purchase price, $10.4billion has been allocated to goodwill, $4.6billion has been allocated to amortizable intangible assets acquired and $2.0billion has been allocated to net tangible liabilities assumed in connection with the acquisition. HP also expensed $30million for IPRD charges. Pro forma results for EDS acquisition The following table presents the unaudited pro forma results for the year ended October31, 2008. The unaudited pro forma financial information |
Goodwill and Purchased Intangib
Goodwill and Purchased Intangible Assets | |
12 Months Ended
Oct. 31, 2009 USD / shares | |
Notes to Consolidated Financial Statements | |
Goodwill and Purchased Intangible Assets | Note7: Goodwill and Purchased Intangible Assets Goodwill Goodwill allocated to HP's business segments as of October31, 2009 and 2008 and changes in the carrying amount of goodwill during the fiscal year ended October31, 2009 are as follows: Services Enterprise Storage and Servers HP Software Personal Systems Group Imaging and Printing Group HP Financial Services Corporate Investments Total In millions Balance at October31, 2008 $ 16,284 $ 4,745 $ 6,162 $ 2,493 $ 2,463 $ 144 $ 44 $ 32,335 Goodwill acquired during the period 315 315 Goodwill adjustments 545 (55 ) (22 ) (6 ) (3 ) 459 Balance at October31, 2009 $ 16,829 $ 5,005 $ 6,140 $ 2,487 $ 2,460 $ 144 $ 44 $ 33,109 During fiscal 2009, HP recorded adjustments of approximately $306million to the estimated fair values of EDS's intangible assets and net liabilities acquired resulting in an increase to EDS's goodwill, which is allocated to the Services segment. These changes in the estimated fair values relate primarily to restructuring liabilities, fixed assets, net deferred tax liabilities and intangible assets. In addition, goodwill increased approximately $255million as a result of currency translation related to certain of EDS's foreign subsidiaries whose functional currency is not the U.S. dollar. These increases in goodwill were partially offset by tax adjustments for various previous acquisitions. Based on the results of its annual impairment tests, HP determined that no impairment of goodwill existed as of August1, 2009 or August1, 2008. However, future goodwill impairment tests could result in a charge to earnings. HP will continue to evaluate goodwill on an annual basis as of the beginning of its fourth fiscal quarter and whenever events and changes in circumstances indicate that there may be a potential impairment. Purchased Intangible Assets HP's purchased intangible assets associated with completed acquisitions for each of the following fiscal years ended October31 are composed of: 2009 2008 Gross Accumulated Amortization Net Gross Accumulated Amortization Net In millions Customer contracts, customer lists and distribution agreements $ 6,763 $ (3,034 ) $ 3,729 $ 6,530 $ (2,176 ) $ 4,354 Developed and core technology and patents 4,171 (2,747 ) 1,424 4,189 (2,147 ) 2,042 Product trademarks 247 (222 ) 25 253 (109 ) 144 Total amortizable purchased intangible assets 11,181 (6,003 ) 5,178 10,972 (4,432 ) 6,540 Compaq trade name 1,422 1,422 1,422 1,422 Total purchased intangible assets $ 12,603 $ (6,003 ) $ 6,600 $ 12,394 $ (4,432 ) $ 7,962 For fiscal |
Restructuring Charges
Restructuring Charges | |
12 Months Ended
Oct. 31, 2009 USD / shares | |
Notes to Consolidated Financial Statements | |
Restructuring Charges | Note8: Restructuring Charges Fiscal 2009 Restructuring Plan In May 2009, HP's management approved and initiated a restructuring plan to structurally change and improve the effectiveness of the Imaging and Printing Group ("IPG"), the Personal Systems Group ("PSG"), and Enterprise Storage and Servers ("ESS"). In fiscal 2009, HP recorded a net charge of $297million in severance-related costs associated with the planned elimination of approximately 5,000positions. As of October31, 2009, approximately 2,100 positions have been eliminated. HP expects the majority of the restructuring costs to be paid out by the fourth quarter of fiscal 2010. In future quarters, HP expects to record an additional charge of approximately $6million related to severance costs associated with this plan. Fiscal 2008 HP/EDS Restructuring Plan In connection with the acquisition of EDS on August26, 2008, HP's management approved and initiated a restructuring plan to streamline the combined company's services business and to better align the structure and efficiency of that business with HP's operating model. The restructuring plan is expected to be implemented over four years from the acquisition date and includes changes to the combined company's workforce as well as changes to corporate overhead functions such as real estate and IT. In the fourth quarter of fiscal 2008, HP recorded a liability of approximately $1.8billion related to this restructuring plan. Approximately $1.5billion of the liability was associated with pre-acquisition EDS and was recorded to goodwill, and the remaining approximately $0.3billion was associated with HP and was recorded as a restructuring charge. The liability consisted mainly of severance costs to eliminate approximately 25,000 positions, costs to vacate duplicative facilities and costs associated with early termination of certain contractual obligations. HP recorded net charges for severance and facilities costs of $346million, for the twelve months ended October31, 2009, along with year-to-date adjustments to goodwill of $276million. As of October31, 2009, over 19,000 positions have been eliminated. HP expects the majority of the restructuring costs to be paid out by the second quarter of fiscal 2010. In future quarters, HP expects to record an additional charge of approximately $465million related to the cost to vacate duplicative facilities and severance costs. All restructuring costs associated with pre-acquisition EDS are reflected in the purchase price of EDS. These costs are subject to change based on the actual costs incurred. Changes to these estimates could decrease the amount of the purchase price allocated to goodwill. Prior Fiscal Year Plans Restructuring plans initiated prior to 2008 are substantially complete and HP expects to record only minor revisions to these plans as necessary. Summary of Restructuring Plans The adjustments to the accrued restructuring expenses related to all of HP's restructuring plans described above for the twelve months ended October31, 2009 were as follows: As of October31, 2009 Balan |
Fair Value
Fair Value | |
12 Months Ended
Oct. 31, 2009 USD / shares | |
Notes to Consolidated Financial Statements | |
Fair Value | Note9: Fair Value HP adopted certain provisions of the new accounting standard related to fair value in the first and fourth quarters of fiscal 2009. The adoption did not have a material impact on HP's financial statements and did not result in any changes to the opening balance of retained earnings as of November1, 2008. HP will adopt the remaining provisions related to the fair value of nonfinancial assets and nonfinancial liabilities in the first quarter of fiscal 2010 for the following major categories of nonfinancial assets and liabilities from the Consolidated Balance Sheet: Property, plant and equipment, Goodwill, Purchased intangible assets, and the asset retirement obligations within Other accrued liabilities and Other liabilities. The new standard codifies a new framework for measuring fair value and expands related disclosures. The framework requires fair value to be determined based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. The valuation techniques required by the new provisions are based upon observable and unobservable inputs. Observable or market inputs reflect market data obtained from independent sources, while unobservable inputs reflect HP's assumptions about market participant assumptions based on best information available. Observable inputs are the preferred source of values. These two types of inputs create the following fair value hierarchy: Level1Quoted prices (unadjusted) for identical instruments in active markets. Level2Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level3Prices or valuations that require management inputs that are both significant to the fair value measurement and unobservable. The following section describes the valuation methodologies HP uses to measure its financial assets and liabilities at fair value. Cash Equivalents and Investments: HP holds time deposits, money market funds, commercial paper, other debt securities primarily consisting of corporate and foreign government notes and bonds, and common stock and equivalents. In general, and where applicable, HP uses quoted prices in active markets for identical assets to determine fair value. If quoted prices in active markets for identical assets are not available to determine fair value, HP uses quoted prices for similar assets and liabilities or inputs that are observable either directly or indirectly. If quoted prices for identical or similar assets are not available, HP uses internally developed valuation models, whose inputs include bid prices, and third party valuations utilizing underlying assets assumptions. Derivative Instruments: As discussed in Note10, HP mainly holds non-speculative forwards, swaps and options t |
Financial Instruments
Financial Instruments | |
12 Months Ended
Oct. 31, 2009 USD / shares | |
Notes to Consolidated Financial Statements | |
Financial Instruments | Note10: Financial Instruments Available-for-Sale Investments Cash equivalents and investments at fair value for the following fiscal years ended October31 were as follows: 2009 2008 Cost Gross Unrealized Gain Gross Unrealized Loss Estimated Fair Value Cost Gross Unrealized Gain Gross Unrealized Loss Estimated Fair Value In millions Cash Equivalents Time deposits $ 8,870 $ $ $ 8,870 $ 5,397 $ $ $ 5,397 Commercial paper 1,388 1,388 1,306 1,306 Money market funds 262 262 919 919 Total cash equivalents $ 10,520 $ $ $ 10,520 $ 7,622 $ $ $ 7,622 Investments Debt securities: Time deposits $ 55 $ $ $ 55 $ 103 $ $ $ 103 Other debt securities 419 49 (45 ) 423 104 1 (20 ) 85 Total debt securities $ 474 $ 49 $ (45 ) $ 478 $ 207 $ 1 $ (20 ) $ 188 Equity securities in public companies $ 3 $ 2 $ $ 5 $ 3 $ 2 $ $ 5 Total cash equivalents and investments $ 10,997 $ 51 $ (45 ) $ 11,003 $ 7,832 $ 3 $ (20 ) $ 7,815 Cash equivalents consist of investments with original maturities of ninety days or less. Available-for-sale securities consist of short-term investments which mature within twelve months or less and long-term investments with maturities longer than twelve months. Investments include time deposits consisting of certificate of deposits, corporate commercial paper and other debt securities consisting primarily of fixed-interest securities and institutional bonds. As discussed in Note9, HP estimated the fair values of its investments based on quoted market prices or pricing models using current market rates. These estimated fair values may not be representative of actual values that will be realized in the future. The gross unrealized loss as of October31, 2009 was due primarily to declines in certain debt securities. The gross unrealized loss includes $20million that has been in a continuous loss position for more than twelve months. The gross unrealized loss as of October31, 2008 had been in a continuous loss position for less than twelve months. HP does not intend to sell these debt securities and it is not likely that HP will be required to sell these debt securities prior to the recovery of the amortized cost. Contractual maturities of short-term and long-term investments in available-for-sale securities at October31, 2009 were as follows: Available-for-Sale Securities Cost Estimated Fair Value In millions Due in less than one year $ |
Financing Receivables and Opera
Financing Receivables and Operating Leases | |
12 Months Ended
Oct. 31, 2009 USD / shares | |
Notes to Consolidated Financial Statements | |
Financing Receivables and Operating Leases | Note11: Financing Receivables and Operating Leases Financing receivables represent sales-type and direct-financing leases resulting from the marketing of HP's and third-party products. These receivables typically have terms from two to five years and are usually collateralized by a security interest in the underlying assets. Financing receivables also include billed receivables from operating leases. The components of net financing receivables, which are included in financing receivables and long-term financing receivables and other assets, were as follows for the following fiscal years ended October31: 2009 2008 In millions Minimum lease payments receivable $ 6,413 $ 5,338 Allowance for doubtful accounts (108 ) (90 ) Unguaranteed residual value 244 254 Unearned income (571 ) (466 ) Financing receivables, net 5,978 5,036 Less current portion (2,675 ) (2,314 ) Amounts due after one year, net $ 3,303 $ 2,722 As of October31, 2009, scheduled maturities of HP's minimum lease payments receivable were as follows for the following fiscal years ended October31: 2010 2011 2012 2013 Thereafter Total Scheduled maturities of minimum lease payments receivable $ 2,956 $ 1,816 $ 1,007 $ 427 $ 207 $ 6,413 Equipment leased to customers under operating leases was $3.0billion at October31, 2009 and $2.3billion at October31, 2008 and is included in machinery and equipment. Accumulated depreciation on equipment under lease was $0.9billion at October31, 2009 and $0.5billion at October31, 2008. As of October31, 2009, minimum future rentals on non-cancelable operating leases related to leased equipment were as follows for the following fiscal years ended October31: 2010 2011 2012 2013 Thereafter Total Minimum future rentals on non-cancelable operating leases $ 976 $ 647 $ 336 $ 114 $ 49 $ 2,122 |
Guarantees
Guarantees | |
12 Months Ended
Oct. 31, 2009 USD / shares | |
Notes to Consolidated Financial Statements | |
Guarantees | Note12: Guarantees Guarantees and Indemnifications In the ordinary course of business, HP may provide certain clients with subsidiary performance guarantees and/or financial performance guarantees, which may be backed by standby letters of credit or surety bonds. In general, HP would be liable for the amounts of these guarantees in the event HP or HP's subsidiaries' nonperformance permits termination of the related contract by the client, the likelihood of which HP believes is remote. HP believes that the company is in compliance with the performance obligations under all material service contracts for which there is a performance guarantee. As a result of the acquisition of EDS, HP acquired certain service contracts supported by client financing or securitization arrangements. Under specific circumstances involving nonperformance resulting in service contract termination or failure to comply with terms under the financing arrangement, HP would be required to acquire certain assets. HP considers the possibility of its failure to comply to be remote and the asset amounts involved to be immaterial. In the ordinary course of business, HP enters into contractual arrangements under which HP may agree to indemnify the third party to such arrangement from any losses incurred relating to the services they perform on behalf of HP or for losses arising from certain events as defined within the particular contract, which may include, for example, litigation or claims relating to past performance. Such indemnification obligations may not be subject to maximum loss clauses. Historically, payments made related to these indemnifications have been immaterial. Warranty HP provides for the estimated cost of product warranties at the time it recognizes revenue. HP engages in extensive product quality programs and processes, including actively monitoring and evaluating the quality of its component suppliers; however, product warranty terms offered to customers, ongoing product failure rates, material usage and service delivery costs incurred in correcting a product failure, as well as specific product class failures outside of HP's baseline experience, affect the estimated warranty obligation. If actual product failure rates, repair rates or any other post sales support costs differ from these estimates, revisions to the estimated warranty liability would be required. The changes in HP's aggregate product warranty liabilities were as follows for the following fiscal years ended October31: 2009 2008 In millions Product warranty liability at beginning of year $ 2,614 $ 2,376 Accruals for warranties issued 2,701 3,351 Adjustments related to pre-existing warranties (including changes in estimates) (223 ) (107 ) Settlements made (in cash or in kind) (2,683 ) (3,006 ) Product warranty liability at end of year $ 2,409 $ 2,614 |
Borrowings
Borrowings | |
12 Months Ended
Oct. 31, 2009 USD / shares | |
Notes to Consolidated Financial Statements | |
Borrowings | Note13: Borrowings Notes Payable and Short-Term Borrowings Notes payable and short-term borrowings, including the current portion of long-term debt, were as follows for the following fiscal years ended October31: 2009 2008 Amount Outstanding Weighted- Average Interest Rate Amount Outstanding Weighted- Average Interest Rate In millions Current portion of long-term debt $ 1,143 1.0 % $ 2,674 4.3 % Commercial paper 294 1.2 % 7,146 2.7 % Notes payable to banks, lines of credit and other 413 2.0 % 356 5.3 % $ 1,850 $ 10,176 Notes payable to banks, lines of credit and other includes deposits associated with HP's banking-related activities of approximately $326million and $262million at October31, 2009 and 2008, respectively. Long-Term Debt Long-term debt was as follows for the following fiscal years ended October31: 2009 2008 In millions U.S. Dollar Global Notes 2002 Shelf Registration Statement: $500 issued at discount to par of 99.505% in June 2002 at 6.5%, due July 2012 $ 499 $ 499 2006 Shelf Registration Statement: $600 issued at par in February 2007 at three-month USD LIBOR plus 0.11%, due March 2012 600 600 $900 issued at discount to par of 99.938% in February 2007 at 5.25%, due March 2012 900 900 $500 issued at discount to par of 99.694% in February 2007 at 5.4%, due March 2017 499 499 $1,000 issued at par in June 2007 at three-month USD LIBOR plus 0.01%, due June 2009 1,000 $1,000 issued at par in June 2007 at three-month USD LIBOR plus 0.06%, due June 2010 1,000 1,000 $750 issued at par in March 2008 at three-month USD LIBOR plus 0.40%, due September 2009 750 $1,500 issued at discount to par of 99.921% in March 2008 at 4.5%, due March 2013 1,499 1,499 $750 issued at discount to par of 99.932% in March 2008 at 5.5%, due March 2018 750 750 $2,000 issued at discount to par of 99.561% in December 2008 at 6.125%, due March 2014 1,992 $275 issued at par in February 2009 at three-month USD LIBOR plus 1.75%, due February 2011 275 $1,000 issued at discount to par of 99.956% in February 2009 at 4.25%, due February 2012 1,000 $1,500 issued at discount to par of 99.993% in February 2009 at 4.75%, due June 2014 1,500 2009 Shelf Registration Statement: $750 issued at par in May 2009 at three-month USD LIBOR plus 1.05%, due May 2011 750 $1,000 issued at discount to par of 99.967% in May 2009 at 2.25%, due May 2011 1,000 $250 issued at discount to par of 99.984% in May 2009 at 2.95%, due August 2012 250 12,514 7,497 EDS Senior Notes $700 issued October 1999 at 7.125%, due October 2009 712 $1,100 |
Income Taxes
Income Taxes | |
12 Months Ended
Oct. 31, 2009 USD / shares | |
Notes to Consolidated Financial Statements | |
Income Taxes | Note14: Taxes on Earnings The domestic and foreign components of earnings were as follows for the following fiscal years ended October31: 2009 2008 2007 In millions U.S. $ 2,569 $ 2,232 $ 3,577 Non-U.S. $ 6,846 $ 8,241 $ 5,600 $ 9,415 $ 10,473 $ 9,177 The provision for (benefit from) taxes on earnings was as follows for the following fiscal years ended October31: 2009 2008 2007(1) In millions U.S. federal taxes: Current $ 47 $ 405 $ 639 Deferred 956 686 229 Non-U.S. taxes: Current 1,156 922 1,281 Deferred (356 ) (85 ) (125 ) State taxes: Current 173 44 67 Deferred (221 ) 172 (178 ) $ 1,755 $ 2,144 $ 1,913 (1) HP has revised the presentation for the fiscal years ended October31, 2007 regarding the tax benefit of stock option plans for comparability purposes. The largest impacts of the revision was an increase in the current U.S. federal tax provision of $428million and a decrease in the deferred U.S. federal tax provision of $428million. This change does not affect previously reported results of operations or financial position for any periods presented, or previously reported totals for the provision for (benefit from) taxes on earnings. The significant components of deferred tax assets and deferred tax liabilities were as follows for the following fiscal years ended October31: 2009 2008 Deferred Tax Assets Deferred Tax Liabilities Deferred Tax Assets Deferred Tax Liabilities In millions Loss carryforwards $ 9,191 $ 1,753 $ Credit carryforwards 1,444 1,549 Unremitted earnings of foreign subsidiaries 7,555 5,683 Inventory valuation 111 6 169 6 Intercompany transactions profit in inventory 534 16 553 Intercompany transactions excluding inventory 1,328 324 Fixed assets 119 9 152 8 Warranty 794 38 793 Employee and retiree benefits 2,692 80 1,955 123 Accounts receivable allowance 300 4 299 3 Capitalized research and development 879 1,192 Purchased intangible assets 28 1,594 30 1,961 Restructuring 459 17 596 Equity investments 81 70 Deferred revenue 949 12 918 Other 1,599 82 768 83 Gross deferred tax assets and liabilities 20,508 9,413 11,121 7,867 Valuation allowance (8,678 ) (1,801 ) Total deferred tax assets and liabilities $ 11,830 $ 9,413 |
Shareholders Equity
Shareholders Equity | |
12 Months Ended
Oct. 31, 2009 USD / shares | |
Notes to Consolidated Financial Statements | |
Stockholders' Equity | Note15: Stockholders' Equity Dividends The stockholders of HP common stock are entitled to receive dividends when and as declared by HP's Board of Directors. Dividends are paid quarterly. Dividends were $0.32 per common share in each of fiscal 2009, 2008 and 2007. Stock Repurchase Program HP's share repurchase program authorizes both open market and private repurchase transactions. In fiscal 2009, HP executed share repurchases of 120million shares. Repurchases of 132million shares were settled for $5.1billion, which included 14million shares repurchased in transactions that were executed in fiscal 2008 but settled in fiscal 2009. HP had approximately 2million shares repurchased in the fourth quarter of fiscal 2009 that will be settled in the next fiscal year. In fiscal 2008, HP completed share repurchases of approximately 230million shares. Repurchases of approximately 216million shares were settled for $9.6billion, which included approximately 1million shares repurchased in transactions that were executed in fiscal 2007 but settled in fiscal 2008. In fiscal 2007, HP completed share repurchases of approximately 209million shares. Repurchases of approximately 210million shares were settled for $9.1billion, which included approximately 1million shares repurchased in transactions that were executed in fiscal 2006 but settled in fiscal 2007. The foregoing shares repurchased and settled in fiscal 2009, fiscal 2008 and fiscal 2007 were all open market repurchase transactions. In addition to the above transactions, HP entered into an Accelerated Share Repurchase (the "ASR Program") with a third-party investment bank during the second quarter of fiscal 2007. Pursuant to the terms of the ASR Program, HP purchased 40million shares of its common stock from the investment bank for $1.8billion (the "Purchase Price") on March30, 2007 (the "Purchase Date"). HP decreased its shares outstanding and reduced the outstanding shares used to calculate the weighted-average common shares outstanding for both basic and diluted EPS on the Purchase Date. The shares delivered to HP included shares that the investment bank borrowed from third parties. The investment bank purchased an equivalent number of shares in the open market to cover its position with respect to the borrowed shares during a contractually specified averaging period that began on the Purchase Date and ended on June6, 2007. At the end of the averaging period, the investment bank's total purchase cost based on the volume weighted-average purchase price of HP shares during the averaging period was approximately $90million less than the Purchase Price. Accordingly, HP had the option to either receive additional shares of HP's common stock or a cash payment in the amount of the difference from the investment bank. In June 2007, HP received approximately 2million additional shares purchased by the investment bank in the open market with a value approximately equal to that amount. HP reduced its shares outstanding upon receipt of those shares. Also, HP entered into a prepaid variable share purchase program ("PVSPP") with a third-party investment bank during the first quarter of 2006 |
Retirement and Post-Retirement
Retirement and Post-Retirement Benefit Plans | |
12 Months Ended
Oct. 31, 2009 USD / shares | |
Notes to Consolidated Financial Statements | |
Retirement and Post-Retirement Benefit Plans | Note16: Retirement and Post-Retirement Benefit Plans Acquisition of EDS On August26, 2008, EDS became a wholly owned subsidiary of HP. EDS sponsors qualified and non-qualified defined benefit pension plans covering substantially all of its employees. The majority of the EDS defined benefit pension plans are noncontributory. In most plans, employees become fully vested upon attaining two to five years of service, and benefits are based on many factors, which differ by country, but the most significant is years of service and earnings. The projected unit credit cost method is used for actuarial purposes. Plan assets and plan obligations associated with the EDS defined benefit pension plans were included as of the acquisition date and through October31, 2008. On a global basis, EDS plan assets totaled $7.8billion and plan obligations totaled $10.1billion as of August26, 2008. The U.S. portion of global assets and obligations totaled $4.1billion and $5.0billion respectively. Defined Benefit Plans HP sponsors a number of defined benefit pension plans worldwide, of which the most significant are in the United States. Both the HP Retirement Plan (the "Retirement Plan"), a traditional defined benefit pension plan based on pay and years of service, and the HP Company Cash Account Pension Plan (the "Cash Account Pension Plan"), under which benefits are accrued pursuant to a cash accumulation account formula based upon a percentage of pay plus interest, were frozen effective January1, 2008. The Cash Account Pension Plan and the Retirement Plan were merged in 2005 for certain funding and investment purposes. The merged plan is referred to as the HP Pension Plan. Following the acquisition of EDS, HP announced that it was modifying the EDS U.S. qualified and non-qualified plans for employees accruing benefits under the programs. Effective January1, 2009, EDS employees in the U.S. ceased accruing pension benefits. The final pension benefit amount was calculated based on pay and service through December31, 2008. Effective October30, 2009, the EDS U.S. qualified pension plan was also merged into the HP Pension Plan. The EDS U.S. qualified pension plan, like the Cash Account Pension Plan and the Retirement Plan, remains a separate sub-plan within the HP Pension Plan for purposes of determining benefit amounts. As a result, the merger had no impact on the separate benefit structures of the plans. HP reduces the benefit payable to a U.S. employee under the Pension Plan for service before 1993, if any, by any amounts due to the employee under HP's frozen defined contribution Deferred Profit-Sharing Plan (the "DPSP"). HP closed the DPSP to new participants in 1993. The DPSP plan obligations are equal to the plan assets and are recognized as an offset to the Pension Plan when HP calculates its defined benefit pension cost and obligations. The fair value of plan assets and projected benefit obligations for the U.S. defined benefit plans combined with the DPSP is as follows for the following fiscal years ended October31: 2009(1) 2008(1) Plan Assets Projected Benefit Obligation Plan Assets Project |
Commitments
Commitments | |
12 Months Ended
Oct. 31, 2009 USD / shares | |
Notes to Consolidated Financial Statements | |
Commitments | Note17: Commitments HP leases certain real and personal property under non-cancelable operating leases. Certain leases require HP to pay property taxes, insurance and routine maintenance and include renewal options and escalation clauses. Rent expense was approximately $1,112million in fiscal 2009, $935million in fiscal 2008 and $767million in fiscal 2007. The increase in fiscal 2009 rent expense was primarily a result of the EDS acquisition in August 2008. Sublease rental income was approximately $53million in fiscal 2009, $37million in fiscal 2008 and $44million in fiscal 2007. At October31, 2009, property under capital lease which was comprised primarily of equipment and furniture was approximately $723million and was included in property, plant and equipment in the accompanying Consolidated Balance Sheet. Accumulated depreciation on the property under capital lease was approximately $406million at October31, 2009. The related depreciation is included in depreciation expense. Future annual minimum lease payments, sublease rental income commitments and capital lease commitments at October31, 2009 were as follows: 2010 2011 2012 2013 2014 Thereafter Total In millions Minimum lease payments $ 988 $ 779 $ 519 $ 365 $ 265 $ 637 $ 3,553 Less: Sublease rental income (39 ) (29 ) (25 ) (20 ) (13 ) (15 ) (141 ) $ 949 $ 750 $ 494 $ 345 $ 252 $ 622 $ 3,412 Capital lease commitments $ 134 $ 82 $ 60 $ 39 $ 23 $ 230 $ 568 Less: Interest payments (18 ) (11 ) (7 ) (4 ) (3 ) (2 ) (45 ) $ 116 $ 71 $ 53 $ 35 $ 20 $ 228 $ 523 At October31, 2009, HP had unconditional purchase obligations of approximately $2.0billion. These unconditional purchase obligations include agreements to purchase goods or services that are enforceable and legally binding on HP and that specify all significant terms, including fixed or minimum quantities to be purchased, fixed, minimum or variable price provisions and the approximate timing of the transaction. Unconditional purchase obligations exclude agreements that are cancelable without penalty. These unconditional purchase obligations are related principally to inventory and other items. Future unconditional purchase obligations at October31, 2009 were as follows: 2010 2011 2012 2013 2014 Thereafter In millions Unconditional purchase obligations $ 1,775 $ 118 $ 106 $ 15 $ 16 $ 3 |
Litigation and Contingencies
Litigation and Contingencies | |
12 Months Ended
Oct. 31, 2009 USD / shares | |
Notes to Consolidated Financial Statements | |
Litigation and Contingencies | Note18: Litigation and Contingencies HP is involved in lawsuits, claims, investigations and proceedings, including those identified below, consisting of intellectual property, commercial, securities, employment, employee benefits and environmental matters that arise in the ordinary course of business. HP records a provision for a liability when management believes that it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. HP believes it has adequate provisions for any such matters. HP reviews these provisions at least quarterly and adjusts these provisions to reflect the impact of negotiations, settlements, rulings, advice of legal counsel, and other information and events pertaining to a particular case. Based on its experience, HP believes that any damage amounts claimed in the specific matters discussed below are not a meaningful indicator of HP's potential liability. Litigation is inherently unpredictable. However, HP believes that it has valid defenses with respect to legal matters pending against it. Nevertheless, it is possible that cash flows or results of operations could be materially affected in any particular period by the unfavorable resolution of one or more of these contingencies or because of the diversion of management's attention and the creation of significant expenses. Litigation, Proceedings and Investigations Copyright levies.As described below, proceedings are ongoing against HP in certain European Union ("EU") member countries, including litigation in Germany, seeking to impose levies upon equipment (such as multifunction devices ("MFDs"), personal computers ("PCs") and printers) and alleging that these devices enable producing private copies of copyrighted materials. The total levies due, if imposed, would be based upon the number of products sold and the per-product amounts of the levies, which vary. Some EU member countries that do not yet have levies on digital devices are expected to implement similar legislation to enable them to extend existing levy schemes, while some other EU member countries are expected to limit the scope of levy schemes and applicability in the digital hardware environment. HP, other companies and various industry associations are opposing the extension of levies to the digital environment and advocating alternative models of compensation to rights holders. VerwertungsGesellschaft Wort ("VG Wort"), a collection agency representing certain copyright holders, instituted non-binding arbitration proceedings against HP in June 2001 in Germany before the arbitration board of the Patent and Trademark Office. The proceedings relate to whether and to what extent copyright levies for photocopiers should be imposed in accordance with copyright laws implemented in Germany on MFDs that allegedly enable the production of copies by private persons. Following unsuccessful arbitration, VG Wort filed a lawsuit against HP in May 2004 in the Stuttgart Civil Court in Stuttgart, Germany seeking levies on certain MFDs sold from 1997 to 2001. On December22, 2004, the court held that HP is liable for payments regarding MFDs sold in Germany, an |
Segment Information
Segment Information | |
12 Months Ended
Oct. 31, 2009 USD / shares | |
Notes to Consolidated Financial Statements | |
Segment Information | Note19: Segment Information Description of Segments HP is a leading global provider of products, technologies, software, solutions and services to individual consumers, small and medium sized businesses ("SMBs"), and large enterprises including customers in the government, health and education sectors. HP's offerings span personal computing and other access devices; imaging and printing-related products and services; enterprise information technology ("IT") infrastructure, including enterprise storage and server technology and networking products; software that optimizes business technology investments; financial services including leasing; and multi-vendor customer services, including technology support and maintenance, consulting and integration, information technology and business process outsourcing services and application services. HP and its operations are organized into seven business segments for financial reporting purposes: Services, ESS, HP Software, PSG, IPG, HP Financial Services ("HPFS"), and Corporate Investments. HP's organizational structure is based on a number of factors that management uses to evaluate, view and run its business operations, which include, but are not limited to, customer base, homogeneity of products and technology. The business segments disclosed in the accompanying Consolidated Financial Statements are based on this organizational structure and information reviewed by HP's management to evaluate the business segment results. Services, ESS and HP Software are reported collectively as a broader HP Enterprise Business. In order to provide a supplementary view of HP's business, aggregated financial data for the HP Enterprise Business is presented herein. HP has reclassified segment operating results for fiscal 2008 and fiscal 2007 to conform to certain fiscal 2009 organizational realignments. None of the changes impacts HP's previously reported consolidated net revenue, earnings from operations, net earnings or net earnings per share. Future changes to this organizational structure may result in changes to the business segments disclosed. A description of the types of products and services provided by each business segment follows. HP Enterprise Business. Each of the business segments within the HP Enterprise Business is described in detail below. Services, formerly HP Services, was renamed after the reorganization of the business units subsequent to the acquisition of EDS in August 2008. Services provides consulting, outsourcing and technology services across infrastructure, applications and business process domains. Services is divided into four main business units: infrastructure technology outsourcing, applications services, business process outsourcing and technology services. Infrastructure technology outsourcing delivers comprehensive services that encompass the data center and the workplace (desktop); network and communications; and security, compliance and business continuity. HP also offers a set of managed services, providing a cross-section of its broader infrastructure services for smaller discrete engagements. Applications services help clients revitalize and mana |
Document And Entity Information
Document And Entity Information (USD $) | |||
In Thousands, except Share data | 12 Months Ended
Oct. 31, 2009 | Nov. 30, 2009
| Apr. 30, 2009
|
Document and Entity Information | |||
Entity Registrant Name | HEWLETT PACKARD CO | ||
Entity Central Index Key | 0000047217 | ||
Document Type | 10-K | ||
Document Period End Date | 2009-10-31 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --10-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $85,982,273 | ||
Entity Common Stock, Shares Outstanding | 2,364,168,918 |