-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, FMNCDDuJRXEJpTcCS0EKGvqs+3C+04dnmvZFj7QtVSZ7TQqLun6h5T0Q64vi8LGp K+pX+V56y/f+qNNITzdElg== 0000047217-94-000011.txt : 19940617 0000047217-94-000011.hdr.sgml : 19940617 ACCESSION NUMBER: 0000047217-94-000011 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19940430 FILED AS OF DATE: 19940614 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HEWLETT PACKARD CO CENTRAL INDEX KEY: 0000047217 STANDARD INDUSTRIAL CLASSIFICATION: 3570 IRS NUMBER: 941081436 STATE OF INCORPORATION: CA FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-04423 FILM NUMBER: 94534189 BUSINESS ADDRESS: STREET 1: 3000 HANOVER ST CITY: PALO ALTO STATE: CA ZIP: 94304 BUSINESS PHONE: 4158571501 10-Q 1 10-Q FILING FOR QUARTER ENDING APRIL 30, 1994 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark one) ___ | X | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) --- OF THE SECURITIES EXCHANGE ACT OF 1934. For the quarterly period ended April 30, 1994 OR ___ | | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) --- OF THE SECURITIES EXCHANGE ACT OF 1934. For the transition period from ___________ to __________ Commission file number: 1-4423 HEWLETT-PACKARD COMPANY ---------------------------------------------------- (Exact name of registrant as specified in its charter) California 94-1081436 - - ------------------------------- ------------------ (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 3000 Hanover Street, Palo Alto, California 94304 - - ------------------------------------------ ---------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (415) 857-1501 -------------- ______________________________________________________ Former name, former address and former fiscal year, if changed since last report Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- ----- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Outstanding at April 30, 1994 - - ------------------- ----------------------------- Common Stock, $1 par value 254.6 million shares HEWLETT-PACKARD COMPANY AND SUBSIDIARIES INDEX ----- Page No. -------- Part I. Financial Information Item 1. Financial Statements Consolidated Condensed Balance Sheet April 30, 1994 and October 31, 1993 2 Consolidated Condensed Statement of Earnings Three months and six months ended April 30, 1994 and 1993 3 Consolidated Condensed Statement of Cash Flows Six months ended April 30, 1994 and 1993 4 Notes to Consolidated Condensed Financial Statements 5 Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition 6-7 Part II. Other Information Item 6. Exhibits and Reports on Form 8-K 8 Signature 9 Exhibit Index 10 1 Item 1. Financial Statements. HEWLETT-PACKARD COMPANY AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEET ------------------------------------ (Millions except par value and number of shares)
April 30 October 31 1994 1993 ----------- ---------- Assets (Unaudited) Current assets: Cash and cash equivalents $ 1,551 $ 889 Short-term investments 863 755 Accounts and notes receivable 4,295 4,208 Inventories: Finished goods 2,334 2,121 Purchased parts and fabricated assemblies 1,688 1,570 Other current assets 702 693 ------- ------- Total current assets 11,433 10,236 ------- ------- Property, plant and equipment (less accumulated depreciation: April 30, 1994 - $3,400; October 31, 1993 - $3,347) 4,168 4,180 Long-term receivables and other assets 2,349 2,320 ------- ------- $17,950 $16,736 ======= ======= Liabilities and Shareholders' Equity ------------------------------------ Current liabilities: Notes payable and short-term borrowings $ 2,234 $ 2,190 Accounts payable and accruals 2,902 2,708 Employee compensation and benefits 1,107 1,048 Taxes on earnings 1,007 922 ------- ------- Total current liabilities 7,250 6,868 ------- ------- Long-term debt 661 667 Other liabilities 782 690 Shareholders' equity: Preferred stock, $1 par value (authorized: 300,000,000 shares; issued: none) Common stock and capital in excess of $1 par value (authorized: 600,000,000 shares; issued and outstanding: 254,612,000 at April 30, 1994 and 252,713,000 at October 31, 1993) 1,034 937 Retained earnings 8,223 7,574 ------- ------- Total shareholders' equity 9,257 8,511 ------- ------- $17,950 $16,736 ======= ======= The accompanying notes are an integral part of these consolidated condensed financial statements. Certain amounts have been reclassified to conform to the 1994 presentation. 2
HEWLETT-PACKARD COMPANY AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENT OF EARNINGS -------------------------------------------- (Unaudited) (Millions except per share amounts)
Three months ended Six months ended April 30 April 30 ------------------ ---------------- 1994 1993 1994 1993 ---- ---- ---- ---- Net revenue: Equipment $4,858 $3,875 $ 9,231 $7,337 Services 1,396 1,221 2,705 2,332 ------ ------ ------- ------ 6,254 5,096 11,936 9,669 ------ ------ ------- ------ Costs and expenses: Cost of equipment sold and services 3,890 2,997 7,360 5,661 Research and development 502 431 968 830 Selling, general and administrative 1,224 1,114 2,372 2,203 ------ ------ ------- ------ 5,616 4,542 10,700 8,694 ------ ------ ------- ------ Earnings from operations 638 554 1,236 975 Interest income and other income (expense) 6 8 9 20 Interest expense 35 28 69 60 ------ ------ ------- ------ Earnings before taxes 609 534 1,176 935 Provision for taxes 201 187 400 327 ------ ------ ------- ------ Net earnings $ 408 $ 347 $ 776 $ 608 ====== ====== ======= ====== Net earnings per share $ 1.56 $ 1.38 $ 2.98 $ 2.41 ====== ====== ======= ====== Cash dividends declared per share --- --- $ .50 $ .40 ====== ====== ======= ====== Average shares used in computing net earnings per share 261 253 260 252 ====== ====== ======= ====== The accompanying notes are an integral part of these consolidated condensed financial statements. 3
HEWLETT-PACKARD COMPANY AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS ---------------------------------------------- (Unaudited) (Millions)
Six months ended April 30 ------------------ 1994 1993 ---- ---- Cash flows from operating activities: Net earnings $ 776 $ 608 Adjustments to reconcile net earnings to cash provided by operating activities: Depreciation and amortization 466 386 Deferred taxes on earnings (83) (118) Change in assets and liabilities: Accounts and notes receivable (101) 12 Inventories (331) (395) Accounts payable 25 1 Taxes on earnings 84 267 Other current assets and liabilities 264 99 Other, net 52 (3) ------ ------ 1,152 857 ------ ------ Cash flows from investing activities: Investment in property, plant and equipment (550) (567) Disposition of property, plant and equipment 189 145 Purchase of short-term investments (1,058) (667) Maturities of short-term investments 950 593 Purchase of long-term investments (15) (16) Other, net 39 15 ------ ------ (445) (497) ------ ------ Cash flows from financing activities: Increase in notes payable and short-term borrowings 34 221 Issuance of long-term debt 31 39 Payment of current maturities of long-term debt (27) (116) Issuance of common stock under employee stock plans 170 144 Repurchase of common stock (126) (75) Dividends (127) (101) Other, net --- (9) ------ ------ (45) 103 ------ ------ Increase in cash and cash equivalents 662 463 Cash and cash equivalents at beginning of period 889 641 ------ ------ Cash and cash equivalents at end of period $1,551 $1,104 ====== ====== The accompanying notes are an integral part of these consolidated condensed financial statements. 4
HEWLETT-PACKARD COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS ---------------------------------------------------- (Unaudited) 1. In the opinion of the Company's management, the accompanying consolidated condensed financial statements contain all adjustments (which comprise on normal and recurring accruals) necessary to present fairly the financial position as of April 30, 1994 and October 31, 1993, the results of operations for the three months and six months ended April 30, 1994 and 1993, and the cash flows for the six months ended April 30, 1994 and 1993. The results of operations for the three month and six month periods ended April 30, 1994 are not necessarily indicative of the results to be expected for the full year. 2. In fiscal 1994, net earnings per share are computed based on a method which approximates the use of a weighted-average number of common shares and common share equivalents outstanding during each period. Common share equivalents represent the dilutive effect of outstanding stock options. In previous periods, common share equivalents were not included as their effect was considered immaterial. 3. Income tax provisions for interim periods are based on estimated effective annual income tax rates. The effective income tax rate varies from the U.S. federal statutory income tax rate primarily because of tax credits and variations in the tax rates on foreign income. 4. In accordance with Statement of Financial Accounting Standards No. 95, "Statement of Cash Flows," the Company has classified investments as cash equivalents if the original maturity of such investments is three months or less. The Company paid interest of $65 million and $57 million for the six months ended April 30, 1994 and 1993, respectively. For the same periods, the Company paid income taxes of $398 million and $180 million, respectively. The effect of foreign currency exchange rate fluctuations on cash balances held in foreign currencies was not material. 5 Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition (Unaudited). HEWLETT-PACKARD COMPANY AND SUBSIDIARIES RESULTS OF OPERATIONS - - --------------------- Net Revenue - Net revenue for the first six months of fiscal 1994 was $11.9 billion, an increase of 23 percent from the same period of fiscal 1993. Equipment sales increased 26 percent, and service revenue grew 16 percent over the corresponding period of fiscal 1993. International net revenue grew 22 percent to $6.6 billion, while U.S. net revenue grew 26 percent to $5.3 billion. Net revenue for the second quarter ended April 30, 1994 was $6.2 billion, an increase of 23 percent from the same period of fiscal 1993. Equipment sales increased 25 percent, and service revenue grew 14 percent over the corresponding period of fiscal 1993. International net revenue grew 20 percent to $3.5 billion, while U.S. net revenue increased by 26 percent to $2.7 billion. The second quarter growth in net revenue was principally due to strong demand for the Company's personal computer and PC networking products, printer products and related supplies, scanner and fax products, UNIX servers and the related solutions integration consulting and professional services business, and test and measurement products. Costs and Expenses - Cost of equipment sold and services as a percentage of net revenue was 62.2 percent for the second quarter and 61.7 percent for the first half of fiscal 1994, compared to 58.8 percent for the second quarter and 58.5 percent for the first half of fiscal 1993. These increases over fiscal 1993 were the result of continued competitive pricing pressures, an ongoing shift in revenue mix to products with higher cost of sales as a percentage of revenue and growth in the proportion of sales made through indirect channels. The Company believes that competitive pricing pressures and the shift in revenue mix as well as smaller shifts in distribution channels are likely to continue to put upward pressure on cost of sales. Operating expenses as a percentage of net revenue was 27.6 percent for the second quarter and 27.9 percent for the first half of fiscal 1994, compared to 30.3 percent of net revenue for the second quarter and 31.4 percent for the first half of fiscal 1993. These decreases reflect ongoing efforts to adjust expense structures and the effects of the change in the mix of products sold, as mentioned above. Operating expenses increased 12 percent for the second quarter and 10 percent for the first half of 1994 over the corresponding year-ago periods. These increases resulted primarily from increased investment in research and development, which reflects the Company's belief that success in a global marketplace requires a continuing flow of innovative, high-quality products, and from marketing activities related to the introduction of new products. Provision for Taxes - The provision for taxes as a percentage of earnings before taxes was 33 percent for the second quarter and 34 percent for the first half of fiscal 1994, compared to 35 percent for both the second quarter and the first half of fiscal 1993. The rate was reduced in the second quarter bringing the percentage to 34 percent for the year-to-date, down from 35 percent for the first quarter of fiscal 1994. A combination of factors led to this adjustment, including increased levels of profitability in jurisdictions with lower tax rates and more favorable resolution of certain issues relating to U.S. tax returns filed in previous years. Net Earnings - Net earnings for the second quarter of fiscal 1994 were $408 million, or $1.56 per share on an average of 261 million shares, compared to net earnings of $347 million, or $1.38 per share on an average of 253 million shares for the second quarter of fiscal 1993. For the six months 6 ended April 30, 1994, net earnings were $776 million, or $2.98 per share on an average of 260 million shares, compared to net earnings of $608 million, or $2.41 per share on an average of 252 million shares for the first half of fiscal 1993. Beginning in fiscal 1994, net earnings per share are computed based on a method which approximates the use of a weighted-average number of common shares and common share equivalents outstanding during each period. Common share equivalents represent the dilutive effect of outstanding stock options. In previous periods, common share equivalents were not included as their effect was considered immaterial. The inclusion of these equivalents in fiscal 1994 reduced earnings per share for the three months and six months ended April 30, 1994 by 4 cents and 8 cents, respectively. FINANCIAL CONDITION - - ------------------- Liquidity and Capital Resources - The Company's financial position remains strong, with cash and cash equivalents and short-term investments of $2.4 billion at April 30, 1994. Cash flows from operations were $1.2 billion during the first six months of fiscal 1994 compared to $857 million for the corresponding period of fiscal 1993. The increase in cash flows from operations for fiscal 1994 was primarily attributable to higher net earnings, lower inventory growth and changes in miscellaneous other current assets and liabilities. These factors were partially offset by increases in accounts and notes receivable and taxes paid. While the Company experienced slower inventory growth for the first six months of fiscal 1994, inventory management remains an area of focus. Capital expenditures for the first six months of fiscal 1994 were $552 million, compared to $567 million for the corresponding period in the previous year. The changes in investment and borrowing activities during the first six months of fiscal 1994, when compared to the same period in 1993, resulted from changes in the Company's liquidity requirements to meet short-term working capital needs. Under the Company's ongoing stock repurchase program, shares have been purchased periodically to meet employee stock plan requirements. During the six months ended April 30, 1994, the Company purchased and retired approximately 1.6 million shares for an aggregate price of $126 million. During the six months ended April 30, 1993, the Company repurchased and retired 1.0 million shares for an aggregate price of $75 million. 7 PART II. OTHER INFORMATION --------------------------- Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits: A list of exhibits is set forth in the Exhibit Index found on page 10 of this report. (b) Reports on Form 8-K: There were no reports on Form 8-K filed during the six months ended April 30, 1994. 8 HEWLETT-PACKARD COMPANY AND SUBSIDIARIES SIGNATURE --------- Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. HEWLETT-PACKARD COMPANY (Registrant) Dated: June 14, 1994 By: /s/ Robert P. Wayman ------------------------ Robert P. Wayman Executive Vice President Finance and Administration (Chief Financial Officer) 9 EX-1 2 EXHIBIT INDEX HEWLETT-PACKARD COMPANY AND SUBSIDIARIES EXHIBIT INDEX ------------- Exhibits: 1. Not applicable. 2. None. 3. Not applicable. 4. None. 5-10. Not applicable. 11. None. 12-14. Not applicable. 15. None. 16-17. Not applicable. 18-20. None. 21-22. Not applicable. 23-25. None. 26-27. Not applicable. 28. None. 29. Not applicable. 10 -----END PRIVACY-ENHANCED MESSAGE-----