-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Oq5VSOjjqD/PDOypuaTzTyJAkQoY/scYB5d6WqgUL0XvKcdw7PtXSJmxvL7tQw47 kYGq45cMtIJNPSZHeuuqOA== 0000898430-96-000245.txt : 19960131 0000898430-96-000245.hdr.sgml : 19960131 ACCESSION NUMBER: 0000898430-96-000245 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 19951031 FILED AS OF DATE: 19960129 SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: HEWLETT PACKARD CO CENTRAL INDEX KEY: 0000047217 STANDARD INDUSTRIAL CLASSIFICATION: COMPUTER & OFFICE EQUIPMENT [3570] IRS NUMBER: 941081436 STATE OF INCORPORATION: CA FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-20593 FILM NUMBER: 96508290 BUSINESS ADDRESS: STREET 1: 3000 HANOVER ST CITY: PALO ALTO STATE: CA ZIP: 94304 BUSINESS PHONE: 4158571501 10-K 1 FORM 10-K - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------- (MARK FORM 10-K ONE) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED] For the fiscal year ended October 31, 1995 OR [_]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the transition period from to Commission File Number: 1-4423 Exact name of registrant as specified in its charter: HEWLETT-PACKARD COMPANY
STATE OR OTHER JURISDICTION OF I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION: IDENTIFICATION NO.: ------------------------------ ------------------- California 94-1081436
ADDRESS OF PRINCIPAL EXECUTIVE OFFICES: 3000 Hanover Street, Palo Alto, California 94304 REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (415) 857-1501 SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NAME OF EACH EXCHANGE TITLE OF EACH CLASS ON WHICH REGISTERED ------------------- --------------------- Common Stock New York Stock Exchange, Inc. par value $1 Pacific Stock Exchange, Inc. per share
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: None Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13or 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 by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [_] The aggregate market value of the registrant's Common Stock held by non- affiliates as of December 29, 1995 was $33,803,783,360. Indicate the number of shares outstanding of each of the registrant's classes of Common Stock as of December 29, 1995: 512,675,574 shares of $1 par value Common Stock. DOCUMENTS INCORPORATED BY REFERENCE
DOCUMENT DESCRIPTION 10-K PART -------------------- --------- Pages 25-47 (excluding order data and "Statement of Management Responsibility") and 50 and the inside back cover of the registrant's 1995 Annual Report to Shareholders I, II, IV Pages 2-19 and 26 of the registrant's Notice of Annual Meeting of Shareholders and Proxy Statement dated January 15, 1996 III
- ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- PART I ITEM 1. BUSINESS. PRODUCTS AND SERVICES Hewlett-Packard Company was incorporated in 1947 under the laws of the State of California as the successor to a partnership founded in 1939 by William R. Hewlett and David Packard. On a worldwide basis, Hewlett-Packard Company, together with its consolidated subsidiaries (the "Company"), designs, manufactures and services equipment and systems for measurement, computation and communications. The Company offers a wide variety of systems and standalone products, including computer systems, personal computers ("PCs"), printers and other peripheral products, electronic test equipment and systems, medical electronic equipment, calculators and other personal information products, solid state components and instrumentation for chemical analysis. Services such as systems integration, selective-outsourcing management, consulting, education, product financing and rentals, as well as customer support and maintenance, are also an integral part of the Company's offerings. These products and services are used in industry, business, engineering, science, medicine and education. A summary of the Company's net revenue as contributed by its major groupings of similar products and services is found on page 46 of the Company's 1995 Annual Report to Shareholders, which page (excluding order data) is incorporated herein by reference. The Company's computers, computer systems, personal information products, personal peripheral products and other peripherals are used in a variety of applications, including scientific and engineering computation and analysis, instrument control and business information management. The Company's core computing products and technologies include its PA-RISC architecture for systems and workstations, and software infrastructure for open systems. The Company's general-purpose computers and computer systems include scalable families of systems, servers and PCs for use in homes, small workgroups, larger departments and entire enterprises. Key products include the HP 9000 series, which runs HP-UX, the Company's implementation of the UNIX(R)(/1/) operating system, and comprises both workstations with powerful computational and graphics capabilities as well as multiuser computers for both technical and commercial applications; and the HP Vectra series of IBM-compatible PCs for use in business, engineering, manufacturing and chemical analysis. The Company offers software programming services, network services, distributed system services and data management services. Customers of the Company's computers, computer systems and software infrastructure products include original equipment manufacturers, dealers, value-added resellers and retailers, as well as end users for a variety of applications. In the field of computing during fiscal 1995, the Company introduced the HP 9000 K-class midrange server, which incorporates the HP-UX 10.0 operating system, also introduced this year. In addition, the Company brought out the HP 9000 J-class workstations, which feature VISUALIZE graphics and are intended for use in mechanical- and electronic-design automation. Other new products included the HP 9000 Model 715/100 XC midrange workstation and the HP 9000 Model 712/100 at the low end. The Company also announced its next-generation PA-RISC microprocessor, the PA-8000. This year the Company introduced its first line of PCs specifically intended for home users, the HP Pavilion PC. The Company continued to enhance its HP Vectra PC series, the HP NetServer family of PC servers and the HP OmniBook line of mobile PCs. In the information-storage business, the Company introduced the HP SureStore CD-Writer 4020i, a compact disc ("CD") player/recorder system that enables PC users to play from and record information to CDs; and the industry's first 3.5-inch disk drives with 8.7 gigabytes of storage capacity. Key software introductions in fiscal 1995 included the next generation of HP JetAdmin network-printer management software, which helps users track and manage individual print jobs; HP MeasureWare, which allows information technology managers to understand and monitor the performance of distributed computing - -------- (/1/) UNIX is a registered trademark in the United States and other countries, licensed exclusively through X/Open(TM) Company Limited. X/Open is a trademark of X/Open Company Limited in the UK and other countries. environments; and the HP OpenView Solution Framework program, which addresses customer needs for network, system, application and database management. The Company's peripheral products include a variety of system and desktop printers, such as the HP LaserJet family; the HP DeskJet family, which is based on the Company's thermal inkjet technology; a family of graphic plotters and page scanners; video display terminals; disk (magnetic and optical) and tape drives and related autochangers. In fiscal 1995, the Company introduced the HP LaserJet 5L printer, which is designed for the home or small office and which incorporates a suite of enabling technologies designed to optimize printer performance regardless of the type of PC, operating system or application being used. The Company also brought out the HP LaserJet 5Si MX printer, a network printer that operates at 24 pages per minute and is more than 40 percent faster than its HP predecessor. Other key new products were the HP DeskJet 660C printer, which replaced the HP DeskJet 560C and which uses newly designed printheads and ink formulas that yield superior print quality for black text and color images; the HP DeskJet 1600C printer, which prints color output at four pages per minute; and the HP DeskJet 850C printer, designed for the home or small office and able to produce near-photographic-quality color output on plain paper. Other significant new products introduced this year include the HP CopyJet color printer-copier, which combines inkjet printing with digital imaging; the HP DesignJet 750C large-format color plotter; and the HP ScanJet 4Si scanner, the industry's first network scanner. The Company also produces measurement systems for use in electronics, medicine and analytical chemistry. Test and measurement instruments include voltmeters and multimeters that measure voltage, current and resistance; counters that measure the frequency of an electrical signal; oscilloscopes and logic analyzers that measure electrical changes in relation to time; signal generators that provide the electrical stimulus for the testing of systems and components; specialized communications and semiconductor test equipment; and atomic frequency standards, which are used in accurate time-interval and timekeeping applications. Instruments for medical applications include continuous monitoring systems for critical-care patients, medical data- management systems, fetal monitors, electrocardiographs, cardiac catheterization laboratory systems, blood gas measuring instruments, diagnostic ultrasonic imaging systems and cardiac defibrillators. Instruments for analytical applications include gas and liquid chromatographs, mass spectrometers, laboratory data systems and spectrophotometers. Key introductions for measurement systems in fiscal 1995 included the announcement of technologies designed to synchronize better the timing of digital communications networks; test sets for Groupe Speciale Mobile ("GSM"), a global standard for cellular phones; the HP PalmVue system, which links physicians outside a hospital to data on critical-care patients; and the HP 6890 Series of gas chromatographs, the Company's next-generation systems that offer an extended range of automation features and built-in diagnostics. The Company continues to demonstrate its ability to combine measurement and computation. The Company's Unified Laboratory strategy is designed to improve a user's productivity by allowing computers in the analytical laboratory to serve as adjuncts to analytical instrumentation while broadening the user's ability to communicate with other parts of the organization. The Office of the Chemist is a subset of the Unified Laboratory strategy in which an office- based workstation or PC, with business software such as spreadsheets, is combined with analytical equipment and data to allow a chemist to work more efficiently. The Company's Clinical Information System combines patient data from monitoring instruments with other information to assist nurses in providing health care. The Company also manufactures electronic component products consisting principally of microwave semiconductor, fiber-optic and optoelectronic devices, including light-emitting diodes. The products are sold primarily to other manufacturers for incorporation into their electronic products but also are used in many of the Company's products. In fiscal 1995, the Company introduced the industry's first low-cost serial infrared transceiver, which makes possible "point and shoot" communication among devices such as laptop computers and mobile phones. The Company also brought out second-generation products for GSM. The Company provides service for its equipment, systems and peripherals, including support and maintenance services, parts and supplies for design and manufacturing systems, office and information systems, 2 general-purpose instruments, computers and computer systems, peripherals and network products. During fiscal 1995, the Company derived 16 percent of its net revenue from such services. This figure reflects a fiscal 1995 reclassification of revenue from consumable supplies, consisting primarily of supplies for the Company's printer products, from the service to the product category. The Company strives, in all its businesses, to promote industry standards that recognize customer preferences for open systems in which different vendors' products can work together. The Company often bases its product innovations on such standards and seeks to make its technology innovations into industry standards through licensing to other companies and standards- setting groups. For example, during fiscal 1995 the Company's Standard Template Library was accepted by a key standards committee as part of the emerging standard for the C++ programming language. MARKETING Customers. The Company has approximately 600 sales and support offices and distributorships in more than 120 countries. Sales are made to industrial and commercial customers, educational and scientific institutions, health care providers (including individual doctors, hospitals, clinics and research laboratories) and, in the case of its calculators and other personal information products, computer peripherals and PCs, to individuals for personal use. Sales Organization. More than half of the Company's orders are derived through reseller channels, including dealers and original equipment manufacturers. The remaining product orders result from the efforts of its own sales organization selling to end users. Sales operations are supported by approximately 35,000 individuals, including field service engineers, sales representatives, service personnel and administrative support staff. In fiscal 1995, a higher proportion of the Company's net revenue than in fiscal 1994 was generated from products such as personal peripherals, which are primarily sold through resellers. As more of the Company's products are distributed through resellers, these resellers become more important to the Company's success. Some of these companies are thinly capitalized and may be unable to withstand changes in business conditions. The Company's financial results could be adversely affected if the financial condition of these resellers substantially weakens. International. The Company's total orders originating outside the United States, as a percentage of total company orders, were approximately 55 percent in fiscal 1995 and 54 percent in fiscal 1994 and fiscal 1993. The majority of these international orders were from customers other than foreign governments. Approximately two-thirds of the Company's international orders in each of the last three fiscal years were derived from Europe, with most of the balance coming from Japan, other countries in Asia Pacific, Latin America and Canada. Most of the Company's sales in international markets are made by foreign sales subsidiaries. In countries with low sales volume, sales are made through various representative and distributorship arrangements. Certain sales in international markets, however, are made directly by the Company from the United States. The Company's international business is subject to risks customarily encountered in foreign operations, including fluctuations in monetary exchange rates, import and export controls and the economic, political and regulatory policies of foreign governments. The Company believes that its international diversification provides stability to its worldwide operations and reduces the impact on the Company of adverse economic changes in any single country. A summary of the Company's net revenue, earnings from operations and identifiable assets by geographic area is found on page 44 of the Company's 1995 Annual Report to Shareholders, which page is incorporated herein by reference. COMPETITION The Company encounters aggressive competition in all areas of its business activity. Its competitors are numerous, ranging from some of the world's largest corporations to many relatively small and highly specialized 3 firms. The Company competes primarily on the basis of technology, performance, price, quality, reliability, distribution and customer service and support. The Company's reputation, the ease of use of its products and the ready availability of customer training are also important competitive factors. The computer market is characterized by vigorous competition among major corporations with long-established positions and a large number of new and rapidly growing firms. To remain competitive, the Company will be required to continue to develop new products, periodically enhance its existing products and compete effectively in the manner described above. In particular, the Company anticipates that it will have to continue to adjust prices to stay competitive and effectively manage growth with correspondingly reduced gross margins. While the absence of reliable statistics makes it difficult to state the Company's relative position, the Company believes that it is the second- largest U.S.-based manufacturer of general-purpose computers, personal peripherals such as desktop printers, and calculators and other personal information products, all for industrial, scientific and business applications. The markets for test-and-measurement instruments are influenced by specialized manufacturers that often have great strength in narrow market segments. In general, however, the Company believes that it is one of the principal suppliers in these markets. BACKLOG The Company believes that backlog is not a meaningful indicator of future business prospects due to the volume of products delivered from shelf inventories, the shortening of product delivery schedules and the portion of revenue related to its service and support business. Therefore, the Company believes that backlog information is not material to an understanding of its business. PATENTS The Company's general policy has been to seek patent protection for those inventions and improvements likely to be incorporated into its products or to give the Company a competitive advantage. While the Company believes that its patents and applications have value, in general no single patent is in itself essential. The Company believes that its technological position depends primarily on the technical competence and creative ability of its research and development personnel. MATERIALS The Company's manufacturing operations employ a wide variety of semiconductors, electromechanical components and assemblies, and raw materials such as plastic resins and sheet metal. The Company believes that the materials and supplies necessary for its manufacturing operations are presently available in the quantities required. The Company purchases materials, supplies and product subassemblies from a substantial number of vendors. For many of its products, the Company has existing alternate sources of supply, or such sources are readily available. Portions of the Company's manufacturing operations are dependent on the ability of significant suppliers to deliver completed products, integral subassemblies and components in time to meet critical distribution and manufacturing schedules. The failure of suppliers to deliver these products, subassemblies and components in a timely manner may adversely affect the Company's operating results until alternate sourcing could be developed. In addition, the Company periodically experiences constrained supply of certain component parts in some product lines as a result of strong demand in those product lines as well as strong demand in the industry. Continued supply constraints may adversely affect the Company's operating results until alternate sourcing could be developed. The Company believes that alternate suppliers or design solutions could be arranged within a reasonable time so that material long-term adverse impacts would be minimized. RESEARCH AND DEVELOPMENT The process of developing new high technology products is complex and uncertain and requires innovative designs that anticipate customer needs and technological trends. Without the introduction of new products and product enhancements, the Company's products are likely to become technologically obsolete, in which case 4 revenues would be materially and adversely affected. There can be no assurance that such new products, if and when introduced, will receive market acceptance. After the products are developed, the Company must quickly manufacture products in sufficient volumes at acceptable costs to meet demand. Expenditures for research and development increased 14 percent in fiscal 1995 to $2.3 billion compared to $2.0 billion and 15 percent growth in fiscal 1994 and $1.8 billion and 9 percent growth in fiscal 1993. In fiscal 1995, research and development expenditures were 7.3 percent of net revenue, compared to 8.1 percent in fiscal 1994 and 8.7 percent in fiscal 1993. The Company anticipates that it will continue to have significant research and development expenditures in order to maintain its competitive position with a continuing flow of innovative, high-quality products. ENVIRONMENT The operations of the Company involve the use of substances regulated under various federal, state and international laws governing the environment. It is the Company's policy to apply strict standards for environmental protection to sites inside and outside the U.S., even if not subject to regulations imposed by local governments. The liability for environmental remediation and related costs is accrued when it is considered probable and the costs can be estimated. Environmental costs are presently not material to the Company's operations or financial position. EMPLOYEES The Company had approximately 102,300 employees worldwide at October 31, 1995. EXECUTIVE OFFICERS OF THE REGISTRANT Information regarding the executive officers of the Company is set forth in Part III below. ITEM 2. PROPERTIES. The principal executive offices of the Company are located at 3000 Hanover Street, Palo Alto, California 94304. As of October 31, 1995, the Company owned or leased a total of approximately 43.9 million square feet of space worldwide. The Company believes that its existing properties are in good condition and suitable for the conduct of its business. The Company's plants are equipped with machinery, most of which is owned by the Company and is in part developed by it to meet the special requirements for manufacturing precision electronic instruments and systems. At the end of fiscal year 1995 the Company was productively utilizing the vast majority of the space in its facilities, while actively disposing of space determined to be excess. The Company anticipates that most of the capital necessary for expansion will continue to be obtained from internally generated funds. Investment in new property, plant and equipment amounted to $1.6 billion in fiscal 1995, $1.3 billion in fiscal 1994 and $1.4 billion in fiscal 1993. As of October 31, 1995, the Company's marketing operations occupied approximately 11.4 million square feet, of which 3.9 million square feet are located within the United States. The Company owns 55% of the space used for marketing activities and leases the remaining 45%. The Company's manufacturing plants, research and development facilities and warehouse and administrative facilities occupied 32.5 million square feet, of which 23.9 million square feet are located within the United States. The Company owns 80% of its manufacturing, research and development, warehouse and administrative space and leases the remaining 20%. None of the property owned by the Company is held subject to any major encumbrances. The locations of the Company's geographic operations are listed on the inside back cover of the Company's 1995 Annual Report to Shareholders, which page is incorporated herein by reference. The locations of the 5 Company's major product development and manufacturing facilities and the Hewlett-Packard Laboratories are listed below: PRODUCT DEVELOPMENT Aguadilla, Puerto Rico Asia Pacific AND MANUFACTURING Richardson, Texas Melbourne, Americas Australia Cupertino, Folsom, Mountain Everett, Spokane and View, Newark, Palo Alto, Vancouver, Washington Beijing, Qingdao Rohnert Park, Roseville, San and Shenzhen, Diego, San Jose, Santa Clara, Brasilia, Brazil China Santa Rosa, Sunnyvale and Westlake Village, California Edmonton, Calgary, Montreal Bangalore, India and Waterloo, Canada Colorado Springs, Fort Collins, Hachioji and Greeley and Loveland, Guadalajara, Mexico Kobe, Japan Colorado Europe Seoul, Korea Wilmington, Delaware Grenoble and L'Isle d'Abeau, France Penang, Malaysia Boise, Idaho Boeblingen and Waldbronn, Singapore Andover and Chelmsford, Germany Massachusetts HEWLETT-PACKARD Bergamo, Italy LABORATORIES Exeter, New Hampshire Amersfoort, The Netherlands Palo Alto, Rockaway, New Jersey California Barcelona, Spain Corvallis and Tokyo, Japan McMinnville, Oregon Bristol, Ipswich and South Queensferry, United Kingdom Bristol, United Kingdom ITEM 3. LEGAL PROCEEDINGS. There are presently pending no legal proceedings, other than routine litigation incidental to the Company's business, to which the Company is a party or to which any of its property is subject. The Company is a party to, or otherwise involved in, proceedings brought by federal or state environmental agencies under the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), known as "superfund," or state laws similar to CERCLA. The Company is also conducting environmental investigation or remediation at several of its current or former operating sites pursuant to administrative orders or consent agreements with state environmental agencies. Any future liability from such proceedings, in the aggregate, is not expected to be material to the operations or financial position of the Company. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. Not applicable. 6 PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS. Information regarding the market prices of the Company's Common Stock and the markets for that stock may be found on pages 47 and 50, respectively, of the Company's 1995 Annual Report to Shareholders. The number of shareholders and information concerning the Company's current dividend rate are set forth in the section entitled "Common Stock, Dividend Policy" found on page 50 of that report. Additional information concerning dividends may be found on pages 25, 32, 33 and 47 of the Company's 1995 Annual Report to Shareholders. Such pages (excluding order data) are incorporated herein by reference. ITEM 6. SELECTED FINANCIAL DATA. Selected financial data for the Company is set forth on page 25 of the Company's 1995 Annual Report to Shareholders, which page (excluding order data) is incorporated herein by reference. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. A discussion of the Company's financial condition, changes in financial condition and results of operations appears in the "Financial Review" found on pages 27-29 and 31 of the Company's 1995 Annual Report to Shareholders. Such pages (excluding order data) are incorporated herein by reference. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. The consolidated financial statements of the Company, together with the report thereon of Price Waterhouse LLP, independent accountants, and the unaudited "Quarterly Summary" are set forth on pages 26, 30, 32-45 and 47 of the Company's 1995 Annual Report to Shareholders, which pages (excluding order data and "Statement of Management Responsibility") are incorporated herein by reference. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. Not applicable. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT. Information regarding directors of the Company who are standing for reelection is set forth under "Election of Directors" on pages 4-8 of the Company's Notice of Annual Meeting of Shareholders and Proxy Statement, dated January 15, 1996 (the "Notice and Proxy Statement"), which pages are incorporated herein by reference. Information regarding directors of the Company who are retiring on February 27, 1996 is set forth below: DIRECTORS WHO ARE RETIRING: HAROLD J. HAYNES; AGE 70; RETIRED CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER,CHEVRON CORPORATION Mr. Haynes was elected a director of the Company in 1981. He was Chairman of the Board and Chief Executive Officer of Chevron Corporation from 1974 until his retirement in 1981. Mr. Haynes is a director of PACCAR, Inc., Bechtel Group, Inc., Citicorp, Citibank, N.A., Fremont Group, Inc., Saudi Arabian Oil Company and The Boeing Company. 7 SHIRLEY M. HUFSTEDLER; AGE 70; SENIOR OF COUNSEL, MORRISON & FOERSTER (ATTORNEYS) Ms. Hufstedler became a director of the Company in 1982. She served as U.S. Secretary of Education from 1979 to 1981 and was a judge on the U.S. Court of Appeals, 9th Circuit, from 1968 to 1979. Ms. Hufstedler is a trustee of the California Institute of Technology and the Lucille Simon Foundation. She is a trustee emeritus of the 9th Circuit Historical Society, Occidental College, the Colonial Williamsburg Foundation, the Carnegie Foundation for International Peace and the Institute for Court Management. She is a director of the MacArthur Foundation, Lawyers Alliance for World Security, Salzburg Seminar, U S WEST, Inc. and Harman International Industries, Inc. The names of the executive officers of the Company, their ages, titles and biographies as of December 29, 1995, are set forth below. All officers are elected for one-year terms. EXECUTIVE OFFICERS: JAMES L. ARTHUR; AGE 61; SENIOR VICE PRESIDENT AND GENERAL MANAGER, WORLDWIDE CUSTOMER SUPPORT OPERATIONS. Mr. Arthur assumed his current position as General Manager of the Company's Worldwide Customer Support Operations in 1989. He became a Vice President of the Company in 1982 and a Senior Vice President in 1987. EDWARD W. BARNHOLT; AGE 52; SENIOR VICE PRESIDENT AND GENERAL MANAGER, TEST AND MEASUREMENT ORGANIZATION. Mr. Barnholt was elected a Senior Vice President in 1993. He became Vice President and General Manager, Test and Measurement Organization, with responsibility for the Company's Electronic Instrument, Automatic Test, Microwave and Communications and Communications Solutions Groups in 1990. Mr. Barnholt was elected a Vice President of the Company in 1988. He is a director of KLA Instruments Corporation. RICHARD E. BELLUZZO; AGE 42; EXECUTIVE VICE PRESIDENT AND GENERAL MANAGER, COMPUTER ORGANIZATION. Mr. Belluzzo was elected a Senior Vice President in January 1995. In August 1995, he assumed management responsibility for the newly formed Computer Organization and was elected an Executive Vice President. He was General Manager of the Computer Products Organization from 1993 to August 1995. He served as General Manager of the InkJet Products Group from 1991 to 1993 and as General Manager of the Boise Printer Division from 1988 to 1991. He was elected a Vice President in 1992. He is a director of Proxima Corporation. ALAN D. BICKELL; AGE 59; SENIOR VICE PRESIDENT AND MANAGING DIRECTOR, GEOGRAPHIC OPERATIONS. Mr. Bickell was elected a Vice President in 1984. He was Managing Director of Intercontinental Operations from 1974 until 1992, when he was elected to his current position. He is a director of Junior Achievement International. JOEL S. BIRNBAUM; AGE 58; SENIOR VICE PRESIDENT, RESEARCH AND DEVELOPMENT. Mr. Birnbaum was elected a Senior Vice President in 1993. He became Vice President, Research and Development and Director, HP Laboratories in September 1991. Additionally, he served as General Manager, Information Architecture Group from 1988 until 1991. He was elected a Vice President in 1984. He is a director of Corporation for National Research Infrastructure. S.T. JACK BRIGHAM III; AGE 56; SENIOR VICE PRESIDENT, CORPORATE AFFAIRS AND GENERAL COUNSEL. Mr. Brigham was elected a Senior Vice President in 1995 and a Vice President in 1982. He became Vice President, Corporate Affairs in 1992. He has served as General Counsel since 1976. 8 DOUGLAS K. CARNAHAN; AGE 54; SENIOR VICE PRESIDENT AND GENERAL MANAGER, MEASUREMENT SYSTEMS ORGANIZATION. Mr. Carnahan was elected a Senior Vice President in 1995 and has been in his current position since October 1993. He was General Manager of the Publishing Products Business Unit from 1988 to 1991 and was General Manager of the Printing Systems Group from 1991 to 1993. He was elected a Vice President in 1992. RAYMOND W. COOKINGHAM; AGE 52; VICE PRESIDENT AND CONTROLLER. Mr. Cookingham was elected a Vice President in 1993. He has served as Controller since 1986. F. E. (PETE) PETERSON; AGE 54; SENIOR VICE PRESIDENT, PERSONNEL. Mr. Peterson was elected to his current position in 1995. He was elected a Vice President in 1992. He has served as Director of Corporate Personnel since 1990. LEWIS E. PLATT; AGE 54; CHAIRMAN OF THE BOARD, PRESIDENT AND CHIEF EXECUTIVE OFFICER, AND CHAIRMAN OF THE EXECUTIVE COMMITTEE. Mr. Platt has served as a director of the Company, President and Chief Executive Officer since November 1992 and has served as Chairman since 1993. He was an Executive Vice President from 1987 to 1992. Mr. Platt held a number of management positions in the Company prior to becoming its President, including managing the Computer Systems Organization from 1990 to 1992. He is a director of Molex Inc. and Pacific Telesis. He also serves on the Wharton School Board of Overseers. WILLEM P. ROELANDTS; AGE 50; SENIOR VICE PRESIDENT AND GENERAL MANAGER, COMPUTER SYSTEMS ORGANIZATION. Mr. Roelandts resigned from the Company on January 10, 1996. Prior to his resignation, he had been a Senior Vice President since 1993. He served as General Manager of the Networked Systems Group in the Computer Systems Organization from 1990 until he was elected a Vice President and General Manager, Computer Systems Organization in 1992. ROBERT P. WAYMAN; AGE 50; EXECUTIVE VICE PRESIDENT, FINANCE AND ADMINISTRATION AND CHIEF FINANCIAL OFFICER. Mr. Wayman has served as a director of the Company since December 1993. He has been an Executive Vice President responsible for finance and administration since 1992. He has held a number of financial management positions in the Company and was elected a Vice President and Chief Financial Officer in 1984. He is a director of Consolidated Freightways, Inc. and Sybase Inc. He also serves as a member of the Board of the Private Sector Council and of the Kellogg Advisory Board, Northwestern University. Information regarding compliance with Section 16(a) of the Securities Exchange Act of 1934 is set forth on page 11 of the Notice and Proxy Statement, which page is incorporated herein by reference. ITEM 11. EXECUTIVE COMPENSATION. Information regarding the Company's compensation of its named executive officers is set forth on pages 12-19 of the Notice and Proxy Statement, which pages are incorporated herein by reference. Information regarding the Company's compensation of its directors is set forth on pages 2-4 and 26 of the Notice and Proxy Statement, which pages are incorporated herein by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. Information regarding security ownership of certain beneficial owners and management is set forth on pages 8-11 of the Notice and Proxy Statement, which pages are incorporated herein by reference. 9 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. Information regarding transactions with the Company's executive officers and directors is set forth on page 26 of the Notice and Proxy Statement, which page is incorporated herein by reference. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K. (a)The following documents are filed as part of this report: 1.Financial Statements:
PAGE IN ANNUAL REPORT TO SHAREHOLDERS* ------------- Report of Independent Accountants.......................... 45 Consolidated Statement of Earnings for the three years ended October 31, 1995.................................... 26 Consolidated Balance Sheet at October 31, 1995 and 1994.... 30 Consolidated Statement of Cash Flows for the three years ended October 31, 1995.................................... 32 Consolidated Statement of Shareholders' Equity for the three years ended October 31, 1995........................ 33 Notes to Consolidated Financial Statements................. 34-44
- -------- * Incorporated by reference from the indicated pages of the Company's 1995 Annual Report to Shareholders. 2.Financial Statement Schedules: None. 10 3.Exhibits: 1. Not applicable. 2. None. 3(a). Registrant's Amended Articles of Incorporation, which appear as Exhibit 3(i) to Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended April 30, 1995, which Exhibit is incorporated herein by reference. 3(b). Registrant's Amended By-Laws, which appear as Exhibit 3(ii) to Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended April 30, 1995, which Exhibit is incorporated herein by reference. 4. None. 5-8. Not applicable. 9. None. 10(a). Registrant's 1979 Incentive Stock Option Plan, which appears as Exhibit 10(a) to Registrant's Annual Report on Form 10-K for the fiscal year ended October 31, 1983, which Exhibit is incorporated herein by reference.* 10(b). Registrant's 1979 Incentive Stock Option Plan Agreements, which appear as Exhibit 10(b) to Registrant's Annual Report on Form 10-K for the fiscal year ended October 31, 1983, which Exhibit is incorporated herein by reference.* 10(c). Letter dated September 24, 1984 to optionees advising them of amendment to 1979 Incentive Stock Option Plan Agreements (Exhibit 10(b) above), which appears as Exhibit 10(c) to Registrant's Annual Report on Form 10-K for the fiscal year ended October 31, 1984, which Exhibit is incorporated herein by reference.* 10(d). Registrant's 1983 Officers Early Retirement Plan, amended and restated as of January 1, 1990, which appears as Exhibit 10(d) to Registrant's Annual Report on Form 10-K for the fiscal year ended October 31, 1990, which Exhibit is incorporated herein by reference.* 10(e). Registrant's 1985 Incentive Compensation Plan, which appears as Exhibit 10(e) to Registrant's Annual Report on Form 10-K for the fiscal year ended October 31, 1984, which Exhibit is incorporated herein by reference.* 10(f). Registrant's 1985 Incentive Compensation Plan Stock Option Agreements, which appear as Exhibit 10(f) to Registrant's Annual Report on Form 10-K for the fiscal year ended October 31, 1984, which Exhibit is incorporated herein by reference.* 10(g). Registrant's Excess Benefit Retirement Plan, amended and restated as of November 1, 1989, which appears as Exhibit 10(g) to Registrant's Annual Report on Form 10-K for the fiscal year ended October 31, 1990, which Exhibit is incorporated herein by reference.* 10(h). Registrant's 1985 Incentive Compensation Plan restricted stock agreements, which appear as Exhibit 10(h) to Registrant's Annual Report on Form 10-K for the fiscal year ended October 31, 1985, which Exhibit is incorporated herein by reference.* 10(i). Registrant's 1987 Director Option Plan, which appears as Appendix A to Registrant's Proxy Statement dated January 16, 1987, which Appendix is incorporated herein by reference.* 10(j). Registrant's 1989 Independent Director Deferred Compensation Program, which appears as Exhibit 10(j) to Registrant's Annual Report on Form 10-K for the fiscal year ended October 31, 1989, which Exhibit is incorporated herein by reference.* 10(k). Registrant's 1990 Incentive Stock Plan, which appears as Appendix A to Registrant's Proxy Statement dated January 11, 1990, which Appendix is incorporated herein by reference.*
11 10(l). Registrant's 1990 Incentive Stock Plan stock option and restricted stock agreements, which appear as Exhibit 10(l) to Registrant's Annual Report on Form 10-K for the fiscal year ended October 31, 1990, which Exhibit is incorporated herein by reference.* 10(m). Resolution dated July 17, 1991 adopting amendment to Registrant's 1979 Incentive Stock Option Plan, which appears as Exhibit 10(m) to Registrant's Annual Report on Form 10-K for the fiscal year ended October 31, 1991, which Exhibit is incorporated herein by reference.* 10(n). Resolution dated July 17, 1991 adopting amendment to Registrant's 1985 Incentive Compensation Plan, which appears as Exhibit 10(n) to Registrant's Annual Report on Form 10-K for the fiscal year ended October 31, 1991, which Exhibit is incorporated herein by reference.* 10(o). Resolution dated July 17, 1991 adopting amendment to Registrant's 1987 Director Option Plan, which appears as Exhibit 10(o) to Registrant's Annual Report on Form 10-K for the fiscal year ended October 31, 1991, which Exhibit is incorporated herein by reference.* 10(p). Resolution dated July 17, 1991 adopting amendment to Registrant's 1990 Incentive Stock Plan, which appears as Exhibit 10(p) to Registrant's Annual Report on Form 10-K for the fiscal year ended October 31, 1991, which Exhibit is incorporated herein by reference.* 10(q). Registrant's 1995 Incentive Stock Plan, which appears as Appendix A to Registrant's Proxy Statement dated January 13, 1995, which Appendix is incorporated herein by reference.* 10(r). Executive Severance Package dated January 10, 1996 between the Registrant and Willem P. Roelandts.* 11-12. None. 13. Pages 25-47 (excluding order data and "Statement of Management Responsibility") and 50 and the inside back cover of Registrant's 1995 Annual Report to Shareholders. 14-17. Not applicable. 18. None. 19-20. Not applicable. 21. Subsidiaries of Registrant as of January 17, 1996. 22. None. 23. Consent of Independent Accountants. 24. Powers of Attorney. Contained in page 13 of this Annual Report on Form 10-K and incorporated herein by reference. 25-26. Not applicable. 27. Financial Data Schedule. 28. None. 99. 1995 Employee Stock Purchase Plan Annual Report on Form 11-K.
- -------- * Indicates management contract or compensatory plan, contract or arrangement. Exhibit numbers may not correspond in all cases to those numbers in Item 601 of Regulation S-K because of special requirements applicable to EDGAR filers. (b) Reports on Form 8-K None. 12 SIGNATURES PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) 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 Date: January 19, 1996 By: D. Craig Nordlund ___________________________________ D. CRAIG NORDLUND ASSOCIATE GENERAL COUNSEL AND SECRETARY POWER OF ATTORNEY Know All Persons By These Presents, that each person whose signature appears below constitutes and appoints D. Craig Nordlund and Ann O. Baskins, or either of them, his or her attorneys-in-fact, for such person in any and all capacities, to sign any amendments to this report and to file the same, with exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that either of said attorneys-in-fact, or substitute or substitutes, may do or cause to be done by virtue hereof. PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE TITLE DATE --------- ----- ---- Raymond W. Cookingham Vice President and January 19, 1996 ____________________________________ Controller RAYMOND W. COOKINGHAM (Principal Accounting Officer) Thomas E. Everhart Director January 19, 1996 ____________________________________ THOMAS E. EVERHART John B. Fery Director January 19, 1996 ____________________________________ JOHN B. FERY Jean-Paul G. Gimon Director January 19, 1996 ____________________________________ JEAN-PAUL G. GIMON Richard A. Hackborn Director January 19, 1996 ____________________________________ RICHARD A. HACKBORN Harold J. Haynes Director January 19, 1996 ____________________________________ HAROLD J. HAYNES Walter B. Hewlett Director January 19, 1996 ____________________________________ WALTER B. HEWLETT
13
SIGNATURE TITLE DATE --------- ----- ---- Shirley M. Hufstedler Director January 19, 1996 ____________________________________ SHIRLEY M. HUFSTEDLER George A. Keyworth II Director January 19, 1996 ____________________________________ GEORGE A. KEYWORTH II David M. Lawrence, M.D. Director January 19, 1996 ____________________________________ DAVID M. LAWRENCE, M.D. Paul F. Miller, Jr. Director January 19, 1996 ____________________________________ PAUL F. MILLER, JR. Susan P. Orr Director January 19, 1996 ____________________________________ SUSAN P. ORR Director January , 1996 ____________________________________ DAVID W. PACKARD Donald E. Petersen Director January 19, 1996 ____________________________________ DONALD E. PETERSEN Lewis E. Platt Chairman, President and January 19, 1996 ____________________________________ Chief Executive Officer LEWIS E. PLATT (Principal Executive Officer) Robert P. Wayman Executive Vice President, January 19, 1996 ____________________________________ Finance and Administration, ROBERT P. WAYMAN Chief Financial Officer and Director (Principal Financial Officer)
14 EXHIBIT INDEX EXHIBIT DESCRIPTION NUMBER ----------- ------- 1. Not applicable. 2. None. 3(a). Registrant's Amended Articles of Incorporation, which appear as Exhibit 3(i) to Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended April 30, 1995, which Exhibit is incorporated herein by reference. 3(b). Registrant's Amended By-Laws, which appear as Exhibit 3(ii) to Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended April 30, 1995, which Exhibit is incorporated herein by reference. 4. None. 5-8. Not applicable. 9. None. 10(a). Registrant's 1979 Incentive Stock Option Plan, which appears as Exhibit 10(a) to Registrant's Annual Report on Form 10-K for the fiscal year ended October 31, 1983, which Exhibit is incorporated herein by reference.* 10(b). Registrant's 1979 Incentive Stock Option Plan Agreements, which appear as Exhibit 10(b) to Registrant's Annual Report on Form 10-K for the fiscal year ended October 31, 1983, which Exhibit is incorporated herein by reference.* 10(c). Letter dated September 24, 1984 to optionees advising them of amendment to 1979 Incentive Stock Option Plan Agreements (Exhibit 10(b) above), which appears as Exhibit 10(c) to Registrant's Annual Report on Form 10-K for the fiscal year ended October 31, 1984, which Exhibit is incorporated herein by reference.* 10(d). Registrant's 1983 Officers Early Retirement Plan, amended and restated as of January 1, 1990, which appears as Exhibit 10(d) to Registrant's Annual Report on Form 10-K for the fiscal year ended October 31, 1990, which Exhibit is incorporated herein by reference.* 10(e). Registrant's 1985 Incentive Compensation Plan, which appears as Exhibit 10(e) to Registrant's Annual Report on Form 10-K for the fiscal year ended October 31, 1984, which Exhibit is incorporated herein by reference.* 10(f). Registrant's 1985 Incentive Compensation Plan Stock Option Agreements, which appear as Exhibit 10(f) to Registrant's Annual Report on Form 10-K for the fiscal year ended October 31, 1984, which Exhibit is incorporated herein by reference.* 10(g). Registrant's Excess Benefit Retirement Plan, amended and restated as of November 1, 1989, which appears as Exhibit 10(g) to Registrant's Annual Report on Form 10-K for the fiscal year ended October 31, 1990, which Exhibit is incorporated herein by reference.* 10(h). Registrant's 1985 Incentive Compensation Plan restricted stock agreements, which appear as Exhibit 10(h) to Registrant's Annual Report on Form 10-K for the fiscal year ended October 31, 1985, which Exhibit is incorporated herein by reference.* 10(i). Registrant's 1987 Director Option Plan, which appears as Appendix A to Registrant's Proxy Statement dated January 16, 1987, which Appendix is incorporated herein by reference.* 10(j). Registrant's 1989 Independent Director Deferred Compensation Program, which appears as Exhibit 10(j) to Registrant's Annual Report on Form 10-K for the fiscal year ended October 31, 1989, which Exhibit is incorporated herein by reference.* 10(k). Registrant's 1990 Incentive Stock Plan, which appears as Appendix A to Registrant's Proxy Statement dated January 11, 1990, which Appendix is incorporated herein by reference.*
EXHIBIT DESCRIPTION NUMBER ----------- ------- 10(l). Registrant's 1990 Incentive Stock Plan stock option and restricted stock agreements, which appear as Exhibit 10(l) to Registrant's Annual Report on Form 10-K for the fiscal year ended October 31, 1990, which Exhibit is incorporated herein by reference.* 10(m). Resolution dated July 17, 1991 adopting amendment to Registrant's 1979 Incentive Stock Option Plan, which appears as Exhibit 10(m) to Registrant's Annual Report on Form 10-K for the fiscal year ended October 31, 1991, which Exhibit is incorporated herein by reference.* 10(n). Resolution dated July 17, 1991 adopting amendment to Registrant's 1985 Incentive Compensation Plan, which appears as Exhibit 10(n) to Registrant's Annual Report on Form 10-K for the fiscal year ended October 31, 1991, which Exhibit is incorporated herein by reference.* 10(o). Resolution dated July 17, 1991 adopting amendment to Registrant's 1987 Director Option Plan, which appears as Exhibit 10(o) to Registrant's Annual Report on Form 10-K for the fiscal year ended October 31, 1991, which Exhibit is incorporated herein by reference.* 10(p). Resolution dated July 17, 1991 adopting amendment to Registrant's 1990 Incentive Stock Plan, which appears as Exhibit 10(p) to Registrant's Annual Report on Form 10-K for the fiscal year ended October 31, 1991, which Exhibit is incorporated herein by reference.* 10(q). Registrant's 1995 Incentive Stock Plan, which appears as Appendix A to Registrant's Proxy Statement dated January 13, 1995, which Appendix is incorporated herein by reference.* 10(r). Executive Severance Package dated January 10, 1996 between the Registrant and Willem P. Roelandts.* 11-12. None. 13. Pages 25-47 (excluding order data and "Statement of Management Responsibility") and 50 and the inside back cover of Registrant's 1995 Annual Report to Shareholders. 14-17. Not applicable. 18. None. 19-20. Not applicable. 21. Subsidiaries of Registrant as of January 17, 1996. 22. None. 23. Consent of Independent Accountants. 24. Powers of Attorney. Contained in page 13 of this Annual Report on Form 10-K and incorporated herein by reference. 25-26. Not applicable. 27. Financial Data Schedule. 28. None. 99. 1995 Employee Stock Purchase Plan Annual Report on Form 11-K.
- -------- * Indicates management contract or compensatory plan, contract or arrangement. GRAPHICS APPENDIX LIST* * In this Appendix, the following descriptions of certain bar charts and graphs in the Company's 1995 Annual Report to Shareholders that are omitted from the EDGAR version are more specific with respect to the actual numbers, amounts and percentages than is determinable from the bar charts and graphs themselves. The Company submits such more specific descriptions only for the purpose of complying with the requirements for transmitting this Annual Report on Form 10-K electronically via EDGAR; such more specific descriptions are not intended in any way to provide information that is additional to the information otherwise provided in the Annual Report. EDGAR version - Page 25 A bar chart entitled "Total Orders (In millions)" at the bottom left of page 25 of the 1995 Annual Report to Shareholders shows that for the fiscal years 1991, 1992, 1993, 1994 and 1995 (shown on the x-axis) the Company had total orders (shown on the y-axis) in the respective amounts provided in the table entitled "Selected Financial Data (Unaudited)" on page 25 of the Annual Report. A bar chart entitled "Earnings from Operations (In millions)" at the bottom center of page 25 of the 1995 Annual Report to Shareholders shows that for the fiscal years 1991, 1992, 1993, 1994 and 1995 (shown on the x-axis) the Company had earnings from operations (shown on the y-axis) in the respective amounts provided in the table entitled "Selected Financial Data (Unaudited)" on page 25 of the Annual Report. A bar chart entitled "Employees and Net Revenue Per Employee (In thousands)" at the bottom right of page 25 of the 1995 Annual Report to Shareholders shows that for the fiscal years 1991, 1992, 1993, 1994 and 1995 (shown on the x-axis) the Company had employees in the respective amounts (shown on the y-axis) provided in the table entitled "Selected Financial Data (Unaudited)" on page 25 of the Annual Report. In addition, the graph shows that for the fiscal years 1991, 1992, 1993, 1994 and 1995 (shown on the x-axis) the Company had net revenue per employee (shown on the y-axis) of $160,000, $180,800, $215,200, $256,900 and $314,100, respectively. EDGAR version - Page 27 A graph entitled "Net Revenue (In millions)" at the top right of page 27 of the 1995 Annual Report to Shareholders shows that for the fiscal years 1991, 1992, 1993, 1994 and 1995 (shown on the x-axis) the Company had total net revenue (shown on the y-axis) in the respective amounts provided in the table entitled "Selected Financial Data (Unaudited)" on page 25 of the Annual Report; and international net revenue of $8,104 million, $9,198 million, $10,971 million, $13,522 million and $17,556 million, respectively. In addition, the graph shows that for the fiscal years 1991 and 1992 (shown on the x-axis) the company had U.S. net revenue (shown on the y-axis) of $6,390 million and $7,212 million, respectively; and U.S. net revenue for the fiscal years 1993, 1994 and 1995 (shown on the x-axis) in the respective amounts (shown on the y-axis) provided in the section entitled "Geographic Area Information" under the caption "United States: Unaffiliated customer sales" in the table on page 44 of the Annual Report. A graph entitled "U.S. Dollar Relative to Major Foreign Currencies (Fiscal 1980 equals 1.00)" at the bottom right of page 27 of the 1995 Annual Report to Shareholders shows that in the months running consecutively from November 1990 through October 1995 (shown on the x-axis) the U.S. Dollar was equal to (shown on the y-axis) .98, 1.00, 1.00, .96, 1.05, 1.10, 1.11, 1.15, 1.15,1.13,1.10, 1.10, 1.06, 1.04, 1.04, 1.07, 1.09, 1.09,1.06, 1.04, .99, .98, .99, 1.04, 1.11, 1.12, 1.14, 1.17, 1.17, 1.13, 1.13, 1.15, 1.19, 1.20, 1.16, 1.18, 1.21, 1.21, 1.22, 1.21, 1.19, 1.19, 1.18, 1.16, 1.13, 1.13, 1.12, 1.09, 1.11, 1.13, 1.12, 1.11, 1.07, 1.06, 1.06, 1.06, 1.05, 1.07, 1.08, and 1.06 respectively, multiplied by the currencies of the following foreign countries, with varying weights assigned to each of such currencies: Austria, Belgium, Canada, Denmark, Finland, France, Germany, Italy, Japan, Netherlands, Norway, Spain, Sweden, Switzerland and United Kingdom. EDGAR version - Page 28 A graph entitled "Costs and Expenses (As a percentage of net revenue)" at the top left of page 28 of the 1995 Annual Report to Shareholders shows that for the fiscal years 1991 and 1992 (shown on the x-axis) the Company had (shown on the y-axis) cost of equipment sold and services of 54.2% and 55.8%, respectively, of net revenue; selling, general and administrative expenses of 27.4% and 25.7%, respectively, of net revenue; and research and development expenses of 10.1% and 9.9%, respectively, of net revenue. In addition, the graph shows that for the fiscal years 1993, 1994 and 1995 (shown on the x-axis) the Company had, as a percentage of net revenue (shown on the y-axis), cost of equipment sold and services, selling, general and administrative expenses and research and development expenses in the respective amounts provided in the table at the top of page 28 of the Annual Report. A bar chart entitled "Net Earnings (In millions)" at the bottom left of page 28 of the 1995 Annual Report to Shareholders shows that for the fiscal years 1991, 1992, 1993, 1994 and 1995 (shown on the x-axis) the Company had net earnings (shown on the y-axis) in the respective amounts provided in the table entitled "Selected Financial Data (Unaudited)" on page 25 of the Annual Report. EDGAR Version - Page 29 A bar chart entitled "Selected Cash Flows (In millions)" at the top right of page 29 of the 1995 Annual Report to Shareholders shows that for the fiscal years 1991 and 1992 (shown on the x-axis) the Company had cash flows from operating activities (shown on the y-axis) of $1,552 million and $1,288 million, respectively; capital expenditures of $862 million and $1,032 million, respectively; and dividends paid of $120 million and $183 million, respectively. In addition, the bar chart shows that for the fiscal years 1993, 1994 and 1995 (shown on the x-axis) the Company had cash flows from operating activities and dividends paid (shown on the y-axis) in the respective amounts provided in the table entitled "Consolidated Statement of Cash Flows" on page 32 of the Annual Report. Finally, the bar chart shows that for the fiscal years 1993, 1994 and 1995 (shown on the x-axis) the Company had capital expenditures (shown on the y-axis) in the respective amounts shown as "Investment in property, plant and equipment" provided in the table entitled "Consolidated Statement of Cash Flows" on page 32 of the Annual Report. A graph entitled "Asset Management (As a percentage of net revenue)" at the bottom right of page 29 of the 1995 Annual Report to Shareholders shows that for the fiscal years 1991, 1992, 1993, 1994 and 1995 (shown on the x-axis) the Company had (shown on the y-axis) net property, plant and equipment of 23.1%, 22.2%, 20.6%, 17.3%, and 14.9% respectively, of net revenue; accounts and notes receivable of 20.5%, 21.3%, 20.7%, 20.1% and 21.4%, respectively, of net revenue; and inventories of 15.7%, 15.9%, 18.2%, 17.1% and 19.1%, respectively, of net revenue. EDGAR Version - Page 47 A bar chart entitled "Net Earnings Per Share (In dollars)" at the top right of page 47 of the 1995 Annual Report to Shareholders shows that for the fiscal quarters in the years of 1994 and 1995 (shown on the x-axis) the Company had net earnings per share (shown on the y-axis) in the respective amounts provided in the table entitled "Quarterly Summary (Unaudited)" on page 47 of the Annual Report. In addition, a note to the bar chart states that these amounts have been restated for the effect of a 2 for 1 stock split in 1995. A bar chart entitled "Range of Common Stock Prices (In dollars per share)" at the bottom right of page 47 of the 1995 Annual Report to Shareholders shows that for the fiscal quarters in the years 1994 and 1995 (shown on the x-axis) the range of stock prices (shown on the y-axis) was in the respective amounts provided in the tables entitled "Quarterly Summary (Unaudited)" on page 47 of the Annual Report. In addition, a note to the bar chart states that these amounts have been restated for the effect of a 2 for 1 stock split in 1995. EX-10.R 2 EXECUTIVE SERVERANCE PACKAGE DTD 1/10/1996 ---------------------------------------- [LOGO OF HEWLETT PACKARD APPEARS HERE] - -------- HEWLETT-PACKARD COMPANY 3000 Hanover Street Palo Alto, California 94304 -------------------------- LEWIS E. PLATT Chairman, President and Chief Executive Officer January 10, 1996 Willem P. Roelandts Hewlett-Packard Company 3000 Hanover Street Palo Alto, California 94034 Re: Executive Severance Package Dear Wim: This letter will confirm our discussions regarding your decision to resign your present position with HP effective January 10, 1995 and to commence employment with Xilinx on January 11th. In view of your many years of service to the company and your significant past contributions, HP is prepared to offer you a severance payment of one million ten thousand seven hundred and eighty-nine dollars ($1,010,789.00), less applicable withholding taxes. In return for making this severance package available to you, we ask that you agree to do the following: 1. Reaffirm your existing obligation as a fiduciary and recipient of confidential and proprietary information that you will not use or disclose such information except as may be permitted by HP or by law, and 2. Execute the attached standard release form which was prepared by the Legal Department. This severance proposal is subject to two contingencies. First, because you are an executive officer of HP, payment of the severance amount requires the approval of the Compensation Committee of the Board of Directors. I will ask the Committee for such approval on January 18th, 1996. Should approval not be granted, your resignation will remain in effect as will your obligations concerning confidential and proprietary information, however, the remainder of this agreement will be null and void. Secondly, in accordance with the provisions of federal law relating to age discrimination, you have up to twenty-one days from the date of this letter in which to accept the terms of this agreement. You may, however, accept it any time within those twenty- one days. Once you have accepted this agreement, you will still have an additional seven days in which to revoke your acceptance. To revoke, you must send me a written statement of revocation. If you do not revoke, the agreement will become effective upon the last to occur of approval by the Compensation Committee and the expiration of seven calendar days following your acceptance. Assuming these contingencies are satisfied, payment will be made not later than January 31, 1996. I encourage you to take some time to review this severance offer and to consult with counsel or advisers of your choice. If this proposal is acceptable, please indicate your acceptance by signing and returning the duplicate copy of this letter and the accompanying legal release. Wim, I sincerely appreciate the enormous contributions you have made over your twenty-nine years here at HP. I wish you the very best as you take on your new responsibilities, and I look forward to working with you as a fellow CEO here in the valley. Sincerely, HEWLETT-PACKARD COMPANY /s/ Lewis E. Platt Lewis E. Platt Chairman, President, and Chief Executive Officer Agreed: /s/ Willem P. Roelandts Willem P. Roelandts Date: January 16, 1996 GENERAL RELEASE This General Release (Agreement) is made and entered into between WILLEM P. ROELANDTS and HEWLETT-PACKARD COMPANY (HP), pursuant to his voluntary resignation and as a condition of his Executive Severance Package. The parties expressly agree that the making of this Agreement or the offer of a severance package does not in any way constitute an admission of wrongdoing on the part of any of them. 1. In exchange for HP's providing the severance benefits described in Lewis E. Platt's letter attached to this document, Mr. Roelandts, on behalf of himself, his heirs, estate, executors, administrators, successors and assigns does fully release, discharge, and agree to hold harmless HP, its officers, agents, employees, attorneys, subsidiaries, affiliated companies, successors and assigns from all actions, causes of action, claims, judgments, obligations, damages, liabilities, costs, or expense of whatsoever kind and character, including, but not limited to: 1) any claims relating to employment discrimination on account of race, sex, age, national origin, disability, or other basis whether or not arising under the Federal Civil Rights Acts, the Age Discrimination in Employment Act, the Americans With Disabilities Act, the California Fair Employment and Housing Act, the Rehabilitation Act of 1973, any amendments to the foregoing laws, or any other federal, state, county or municipal law, statute, regulation or order relating to employment discrimination; 2) any claims relating to, arising out of, or connected with his employment with HP whether based on contract, tort, or any other legal theory; and 3) any claims relating to, arising out of, or connected with any other matter or event occurring prior to the date this Agreement is delivered to HP. 2. As a voluntarily terminating employee, Mr. Roelandts shall be entitled to exercise conversion privileges, stock options, and the like to the same extent as would any other employee who voluntarily terminates employment. Subject to the terms and conditions of the applicable plans, Mr. Roelandts shall also retain all pension rights which are vested as of the date of his resignation. Mr. Roelandts understands and agrees that there shall be no accelerated vesting of any stock or stock options, and he expressly waives any claim he may have to performance based restricted stock and any claim to any bonus which may subsequently be paid for exceeding performance metrics. 3. In entering into this Agreement, the parties have intended that this Agreement be a full and final settlement of all matters, whether or not presently disputed, that could have arisen between them. Mr. Roelandts understands and expressly agrees that this Agreement extends to all claims of every nature and kind whatsoever, known or unknown, suspected or unsuspected, past or present and all rights under Section 1542 of the California Civil Code and/or any similar statute or law of any other jurisdiction are hereby expressly waived. Such section reads as follows: Section 1542. A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor. 4. Notwithstanding the foregoing, Mr. Roelandts shall retain any right to indemnity he may otherwise have in any action brought by a third party against him as an individual arising out of actions undertaken by him in good faith and within the course and scope of his employment as an officer of HP. 5. Mr. Roelandts acknowledges and reaffirms that as a fiduciary and company executive, he became privy to confidential and proprietary information which includes, but is not limited to, business strategies; marketing plans and customer lists; new product R & D and introduction plans; potential acquisitions and investments in third parties; process yields, manufacturing strategies, and costs; patent applications and disclosures; nonpublic financial data; and other similar information. With respect to all such information, Mr. Roelandts agrees to retain it in confidence until it becomes public knowledge or he is given advance written permission by HP to disclose or use it. 6. The terms of this Agreement together with the letter referred to above are intended by the parties as a final expression of their agreement with respect to such terms as are included therein and may not be contradicted by evidence of any prior or contemporaneous agreement. The parties further intend that this Agreement together with the letter referred to above constitutes the complete and exclusive statement of the terms of their agreement and that no extrinsic evidence whatsoever may be introduced in any judicial or other proceeding, if any, involving them. No modification shall be effective unless in writing and signed by both parties hereto. 7. MR. ROELANDTS FURTHER STATES THAT HE HAS READ THIS AGREEMENT, THAT HE HAS HAD THE OPPORTUNITY TO CONSULT COUNSEL OF HIS CHOICE, THAT HE UNDERSTANDS ITS FINAL AND BINDING EFFECT, THAT THE ONLY PROMISES MADE TO HIM TO SIGN THIS AGREEMENT ARE THOSE STATED ABOVE AND THAT HE IS SIGNING THIS AGREEMENT VOLUNTARILY. IN WITNESS WHEREOF, this Agreement has been executed in duplicate originals on the dates indicated below, and shall, unless revoked by Mr. Roelandts as provided in Mr. Platt's letter, become effective upon approval of the Compensation Committee of the Board of Directors. HEWLETT-PACKARD COMPANY By: /s/ Lewis E. Platt -------------------------------- Lewis E. Platt Chairman, President, and Chief Executive Officer Date: January 10, 1996 ------------------------------ WILLEM P. ROELANDTS Signature: /s/ Willem P. Roelandts ------------------------- Date: January 16, 1996 ------------------------------ EX-13 3 EXCERPTS FROM ANNUAL REPORT Hewlett-Packard Company and Subsidiaries Selected Financial Data Unaudited
For the years ended October 31 In millions except per share amounts and employees 1995 1994 1993 1992 1991 - --------------------------------------------------------------------------------------------------------------- U.S. orders $ 14,609 $ 11,692 $ 9,462 $ 7,569 $ 6,484 International orders 17,901 13,658 11,310 9,192 8,192 - --------------------------------------------------------------------------------------------------------------- Total orders $ 32,510 $ 25,350 $ 20,772 $ 16,761 $ 14,676 - --------------------------------------------------------------------------------------------------------------- Net revenue $ 31,519 $ 24,991 $ 20,317 $ 16,410 $ 14,494 Earnings from operations $ 3,568 $ 2,549 $ 1,879 $ 1,404 $ 1,210 Earnings before effect of 1992 accounting change $ 2,433 $ 1,599 $ 1,177 $ 881 $ 755 Net earnings $ 2,433 $ 1,599 $ 1,177 $ 549 $ 755 Per share amounts, restated for 1995 stock split: Earnings before effect of 1992 accounting change $ 4.63 $ 3.07 $ 2.33 $ 1.74 $ 1.51 Net earnings $ 4.63 $ 3.07 $ 2.33 $ 1.09 $ 1.51 Cash dividends $ .70 $ .55 $ .45 $ .36 $ .24 At year-end: Total assets $ 24,427 $ 19,567 $ 16,736 $ 13,700 $ 11,973 Employees 102,300 98,400 96,200 92,600 89,000 - ---------------------------------------------------------------------------------------------------------------
1992 results include an after-tax charge of $.65 per share for the cumulative effect of a change in accounting for retiree medical benefits. Employees and Net Total Orders Earnings from Operations Revenues Per Employee In millions In millions In thousands [GRAPH APPEARS HERE] [GRAPH APPEARS HERE] [GRAPH APPEARS HERE] . Number of employees . Net revenue per employee Hewlett-Packard Company and Subsidiaries Consolidated Statement of Earnings
For the years ended October 31 In millions except per share amounts 1995 1994 1993 - ---------------------------------------------------------------------------------------------------- Net revenue: Products $27,125 $21,380 $17,122 Services 4,394 3,611 3,195 - ---------------------------------------------------------------------------------------------------- Total net revenue 31,519 24,991 20,317 - ---------------------------------------------------------------------------------------------------- Costs and expenses: Cost of products sold 17,069 13,012 10,021 Cost of services 2,945 2,478 2,102 Research and development 2,302 2,027 1,761 Selling, general and administrative 5,635 4,925 4,554 - ---------------------------------------------------------------------------------------------------- Total costs and expenses 27,951 22,442 18,438 - ---------------------------------------------------------------------------------------------------- Earnings from operations 3,568 2,549 1,879 Interest income and other, net 270 29 25 Interest expense 206 155 121 - ---------------------------------------------------------------------------------------------------- Earnings before taxes 3,632 2,423 1,783 Provision for taxes 1,199 824 606 - ---------------------------------------------------------------------------------------------------- Net earnings $ 2,433 $ 1,599 $ 1,177 ==================================================================================================== Net earnings per share $ 4.63 $ 3.07 $ 2.33 ==================================================================================================== Weighted average shares and equivalents outstanding 526 521 506 ====================================================================================================
The accompanying notes are an integral part of these financial statements. 26 Hewlett-Packard Company and Subsidiaries Financial Review Unaudited Results of Operations In 1995, strong demand for HP's products and services generated a 26 percent increase in net revenue, marking the third consecutive year of growth exceeding 23 percent. Net earnings at $2.4 billion have grown at a compounded annual growth rate of 40 percent over the last three years. Return on assets of 10.0 percent and return on average shareholders' equity of 22.3 percent achieved near record levels. HP's orders increased 28 percent over 1994 to $32.5 billion, compared with a 22 percent increase in 1994. Domestic and international orders grew 25 and 31 percent, respectively, reflecting HP's well-balanced position across a variety of geographic markets. Net revenue grew 22 percent in the U.S. and 30 percent internationally in 1995 to $14.0 billion and $17.6 billion, respectively, following increases of 23 percent in both the U.S. and international markets in 1994. The geographic differential in growth rates reflects expanding market opportunities in the international arena as well as the continuing weakness of the U.S. dollar for most of 1995. Net revenue from product sales increased 27 percent compared to 25 percent in 1994. The sustained increases in net revenue primarily reflect the company's continued success in technological innovation and rapid time to market with its new products, as well as a healthy global economic environment for the computer and electronics industries. Shipments of the company's computer and peripheral products, such as the HP LaserJet and HP DeskJet families of printers, multiuser computer systems based on the UNIX operating system, and HP Vectra PCs were all strong in 1995 and 1994. New products drove revenue growth across many businesses. In 1995, the company successfully replaced the entire family of inkjet printers and continued to expand its LaserJet printer offerings. HP 9000 K-class midrange servers and J-class workstations and the Pentium-based HP Vectras introduced in 1995 had excellent market acceptance. Sales of consumable supplies for the company's printer products were also strong. Additionally, electronic test and measurement products have had great success, particularly in the semiconductor test and telecommunications markets. Detailed information on orders and net revenue by groupings of similar products and services is presented on page 46 of this report. Services such as systems integration, selective-outsourcing management, consulting, education, product financing and rentals, as well as customer support and maintenance, are an integral part of the company's offerings. Net revenue from services grew 22 percent compared to 13 percent in 1994. During 1995, service and support revenues continued to climb with the increase in the installed base and the continued success of the professional services businesses in providing enterprise-wide solutions for our customers. The 1995 growth in net revenue from services was further aided by the weaker U.S. dollar for most of the year. Net Revenue In millions [GRAPH APPEARS HERE] . Total . International . U.S. U.S. Dollar Relative to Major Foreign Currencies Fiscal 1980 equals 1.00 [GRAPH APPEARS HERE] 27 Hewlett-Packard Company and Subsidiaries Financial Review Unaudited In 1995, consumable supplies revenue and related costs were reclassified from the service to the product category. Prior year amounts have been restated to reflect this change. Costs, expenses and earnings as a percentage of net revenue were as follows:
For the years ended October 31 1995 1994 1993 - ----------------------------------------------------------------------------------- Cost of products sold and services 63.5% 62.0% 59.7% Research and development 7.3% 8.1% 8.7% Selling, general and administrative 17.9% 19.7% 22.4% Earnings from operations 11.3% 10.2% 9.2% Net earnings 7.7% 6.4% 5.8% - -----------------------------------------------------------------------------------
During 1995, cost of products sold and services as a percentage of net revenue increased 1.5 percentage points, following a 2.3 percentage point increase in 1994. Price competition continues to impact product revenues resulting in reduced gross profit margins. During 1995, the strength of the Yen also resulted in higher prices on certain components purchased from Japanese suppliers. Additionally, the continued shift in the mix of products sold towards lower- margin, high-volume product families, and ramp-up costs for continued introductions of new products, helped drive both the 1995 and 1994 increases. These factors are likely to continue to put some upward pressure on the cost of sales ratio. Maximizing efficiencies, including procurement, production and logistics processes, continues to be a focus in light of these trends. Research and development expenditures increased 14 percent in 1995 to $2.3 billion, versus $2.0 billion and 15 percent growth in 1994. The ongoing increase in spending on research and development reflects the company's belief that success in a global marketplace requires a continuing flow of innovative, high- quality products. Selling, general and administrative expense grew 14 percent in 1995 compared to 8 percent in 1994. This growth was a result of the strong order and revenue growth experienced during the year, as well as the weaker dollar in 1995. Both research and development and selling, general and administrative expenses decreased as a percentage of net revenue in 1995 and 1994, which reflects the rapid expansion of the net revenue base in both years. Interest income and other, net was $270 million in 1995 compared to $29 million in 1994 and $25 million in 1993. The increase in 1995 is primarily due to increased earnings on cash and other investments, increased income from equity investees, and gains on sales of real estate and other assets. Interest expense was $206 million in 1995 compared with $155 million in 1994 and $121 million in 1993, reflecting changes in the level of debt outstanding, as well as interest rate changes during the respective periods. The company's effective tax rate was 33 percent in 1995, as compared with 34 percent in 1994 and 1993. A combination of factors led to the decrease from 1994 to 1995, including continuing shifts in the geographical composition of earnings and resolution of certain issues related to tax returns filed in previous years. Costs and Expenses As a percentage of net revenue [GRAPH APPEARS HERE] . Cost of products sold and services . Selling, general and administrative . Research and development Net Earnings In millions [GRAPH APPEARS HERE] . Net earnings . Net earnings including effect of accounting change 28 Hewlett-Packard Company and Subsidiaries Financial Review Unaudited Net earnings increased 52 percent to $2.4 billion in 1995. This compares with a 36 percent increase in 1994 and a 34 percent increase in 1993. As a percentage of net revenue, net earnings were 7.7 percent in 1995, the highest since 1988, compared with 6.4 percent in 1994 and 5.8 percent in 1993. Financial Condition and Liquidity HP's financial position remains strong, with cash and cash equivalents and short-term investments of $2.6 billion at October 31, 1995, compared to $2.5 billion at October 31, 1994, and $1.6 billion at October 31, 1993. Operating activities generated $1.6 billion in cash in 1995, compared with $2.2 billion and $1.1 billion in 1994 and 1993, respectively. Despite higher net earnings, cash generated from operations declined in 1995 primarily as a result of significant growth in receivables and inventories. Receivables as a percentage of net revenue increased to 21.4 percent at October 31, 1995, from 20.1 percent a year ago, driven by receivable growth of 34 percent on revenue growth of 26 percent for the year. Inventories as a percentage of net revenue grew to 19.1 percent from 17.1 percent in the prior year, resulting from a 41 percent increase in inventory levels. The growth during 1995 in receivables and inventories is a result of the substantial increase in net revenues and orders, and the continuing need to maintain higher inventory levels to meet increased demand and customer delivery expectations. Capital expenditures in 1995 were $1.6 billion compared with $1.3 billion and $1.4 billion in 1994 and 1993, respectively. The increase in capital expenditures in 1995 relates mainly to expansion of production capacity to accommodate higher volumes and the introduction of new products. The company invests excess cash in short-term and long-term investments depending on its projected cash needs for operations, capital expenditures and other business purposes. The company from time to time supplements its internally generated cash flow with a combination of short-term and long-term borrowings based on various business and financial market factors. Cash flow from changes in debt structure resulted in net borrowings of $857 million in 1995 compared with $155 million and $966 million in 1994 and 1993, respectively. At October 31, 1995, the company had various borrowing arrangements in place with unused borrowing capacity totaling $3.7 billion. The company split its stock on a 2-for-1 basis effective March 24, 1995. All prior share and per share amounts have been restated to reflect the retroactive effect of this split. Shares are repurchased primarily to manage the dilution created by shares issued under employee stock plans. In 1995, 10.4 million shares were purchased at an aggregate price of $686 million. In 1994, 8.1 million shares were purchased for $325 million and in 1993, 8.7 million shares were purchased for $314 million. Additional stock repurchases, based on certain price and volume criteria, are periodically authorized by the Board of Directors. Selected Cash Flows In millions [GRAPH APPEARS HERE] . Cash flows from operating activities . Capital expenditures . Dividends paid Asset Management As a percentage of net revenue [GRAPH APPEARS HERE] . Net property, plant and equipment . Accounts and notes receivable . Inventories 29 Hewlett-Packard Company and Subsidiaries Consolidated Balance Sheet
October 31 In millions except par value and number of shares 1995 1994 - ------------------------------------------------------------------------------------------------------- Assets Current assets: Cash and cash equivalents $ 1,973 $ 1,357 Short-term investments 643 1,121 Accounts and notes receivable 6,735 5,028 Inventories: Finished goods 3,368 2,466 Purchased parts and fabricated assemblies 2,645 1,807 Other current assets 875 730 - ------------------------------------------------------------------------------------------------------- Total current assets 16,239 12,509 - ------------------------------------------------------------------------------------------------------- Property, plant and equipment: Land 485 508 Buildings and leasehold improvements 3,810 3,472 Machinery and equipment 4,452 3,958 - ------------------------------------------------------------------------------------------------------- 8,747 7,938 Accumulated depreciation (4,036) (3,610) - ------------------------------------------------------------------------------------------------------- 4,711 4,328 Long-term investments and other assets 3,477 2,730 - ------------------------------------------------------------------------------------------------------- Total assets $24,427 $19,567 ======================================================================================================= Liabilities and shareholders' equity Current liabilities: Notes payable and short-term borrowings $ 3,214 $ 2,469 Accounts payable 2,422 1,466 Employee compensation and benefits 1,568 1,256 Taxes on earnings 1,494 1,245 Deferred revenues 782 598 Other accrued liabilities 1,464 1,196 - ------------------------------------------------------------------------------------------------------- Total current liabilities 10,944 8,230 - ------------------------------------------------------------------------------------------------------- Long-term debt 663 547 Other liabilities 981 864 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: 1,200,000,000 shares; issued and outstanding: 509,955,000 in 1995 and 509,654,000 in 1994) 871 1,033 Retained earnings 10,968 8,893 - ------------------------------------------------------------------------------------------------------- Total shareholders' equity 11,839 9,926 - ------------------------------------------------------------------------------------------------------- Total liabilities and shareholders' equity $24,427 $19,567 =======================================================================================================
The accompanying notes are an integral part of these financial statements. 30 Hewlett-Packard Company and Subsidiaries Financial Review Unaudited Factors That May Affect Future Results HP's future operating results are dependent on its ability to develop, manufacture and market rapidly innovative products that meet customers' needs. Inherent in this process are a number of risks that the company must successfully manage in order to achieve favorable operating results. The process of developing new high technology products is complex and uncertain and requires innovative designs that anticipate customer needs and technological trends. After the products are developed, the company must quickly manufacture them in sufficient volumes at acceptable costs to meet demand. In addition, portions of the company's manufacturing operations are dependent on the ability of significant suppliers to deliver completed products, integral subassemblies and components in time to meet critical distribution and manufacturing schedules. The company periodically experiences constrained supply of certain component parts in some product lines, as a result of strong demand in those product lines as well as strong demand in the industry. Continued constraints may adversely affect HP's operating results until alternate sourcing can be developed. The company continues to expand into third-party distribution channels to accommodate changing industry practices and customer preferences. As more of HP's products are distributed through resellers, these resellers become more important to the company's success. Some of these companies are thinly capitalized and may be unable to withstand changes in business conditions. HP's financial results could be adversely affected if the financial condition of these resellers substantially weakens. The operations of the company involve the use of substances regulated under various federal, state and international laws governing the environment. It is the company's policy to apply strict standards for environmental protection to sites inside and outside the U.S., even if not subject to regulations imposed by local governments. The liability for environmental remediation and related costs is accrued when it is considered probable and the costs can be estimated. Environmental costs are presently not material to HP's operations or financial position. A portion of the company's research and development activities, its corporate headquarters and other critical business operations are located near major earthquake faults. The ultimate impact on the company, significant suppliers and the general infrastructure is unknown, but operating results could be materially affected in the event of a major earthquake. The company is predominantly self- insured for losses and interruptions caused by earthquakes. Although HP believes that it has the product offerings and resources needed for continuing success, future revenue and margin trends cannot be reliably predicted and may cause the company to adjust its operations. Factors external to the company can result in volatility of the company's common stock price. Because of the foregoing factors, recent trends should not be considered reliable indicators of future stock prices or financial results. 31 Hewlett-Packard Company and Subsidiaries Consolidated Statement of Cash Flows
For the years ended October 31 In millions 1995 1994 1993 - ------------------------------------------------------------------------------------------------------------------- Cash flows from operating activities: Net earnings $ 2,433 $ 1,599 $ 1,177 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 1,139 1,006 846 Deferred taxes on earnings (102) (156) (137) Changes in assets and liabilities: Accounts and notes receivable (1,696) (848) (709) Inventories (1,740) (582) (1,056) Accounts payable 956 243 283 Taxes on earnings 180 320 452 Other current assets and liabilities 663 585 200 Other, net (220) 57 86 - ------------------------------------------------------------------------------------------------------------------- Net cash provided by operating activities 1,613 2,224 1,142 - ------------------------------------------------------------------------------------------------------------------- Cash flows from investing activities: Investment in property, plant and equipment (1,601) (1,257) (1,405) Disposition of property, plant and equipment 294 291 215 Purchase of short-term investments (3,191) (2,758) (1,634) Maturities of short-term investments 3,669 2,392 1,283 Purchase of long-term investments (308) (332) (22) Maturities of long-term investments -- 47 22 Acquisitions, net of cash acquired -- (62) (86) Other, net (38) 69 23 - ------------------------------------------------------------------------------------------------------------------- Net cash used in investing activities (1,175) (1,610) (1,604) - ------------------------------------------------------------------------------------------------------------------- Cash flows from financing activities: Change in notes payable and short-term borrowings 755 250 807 Issuance of long-term debt 434 64 387 Payment of current maturities of long-term debt (332) (159) (228) Issuance of common stock under employee stock plans 361 300 308 Repurchase of common stock (686) (325) (314) Dividends (358) (280) (228) Other, net 4 4 (22) - ------------------------------------------------------------------------------------------------------------------- Net cash provided by (used in) financing activities 178 (146) 710 - ------------------------------------------------------------------------------------------------------------------- Increase in cash and cash equivalents 616 468 248 Cash and cash equivalents at beginning of year 1,357 889 641 - ------------------------------------------------------------------------------------------------------------------- Cash and cash equivalents at end of year $ 1,973 $ 1,357 $ 889 =================================================================================================================== Supplemental cash flow disclosures: Income taxes paid, net $ 1,058 $ 626 $ 293 Interest paid $ 187 $ 143 $ 109 ===================================================================================================================
The accompanying notes are an integral part of these financial statements. 32 Hewlett-Packard Company and Subsidiaries Consolidated Statement of Shareholders' Equity
Common stock ---------------------------- Par value Number of and capital in Retained In millions except number of shares in thousands shares excess of par earnings Total - -------------------------------------------------------------------------------------------------------------------- Balance October 31, 1992 501,648 $ 874 $ 6,625 $ 7,499 Employee stock plans: Shares issued 12,468 377 -- 377 Shares repurchased (8,690) (314) -- (314) Dividends -- -- (228) (228) Net earnings -- -- 1,177 1,177 - -------------------------------------------------------------------------------------------------------------------- Balance October 31, 1993 505,426 937 7,574 8,511 Employee stock plans: Shares issued 12,284 421 -- 421 Shares repurchased (8,056) (325) -- (325) Dividends -- -- (280) (280) Net earnings -- -- 1,599 1,599 - -------------------------------------------------------------------------------------------------------------------- Balance October 31, 1994 509,654 1,033 8,893 9,926 Employee stock plans: Shares issued 10,696 524 -- 524 Shares repurchased (10,395) (686) -- (686) Dividends -- -- (358) (358) Net earnings -- -- 2,433 2,433 - -------------------------------------------------------------------------------------------------------------------- Balance October 31, 1995 509,955 $ 871 $10,968 $11,839 ====================================================================================================================
The accompanying notes are an integral part of these financial statements. 33 Hewlett-Packard Company and Subsidiaries Notes to Consolidated Financial Statements Summary of Significant Accounting Policies Principles of consolidation The consolidated financial statements include the accounts of Hewlett-Packard Company and its subsidiaries. All significant intercompany accounts and transactions have been eliminated. Revenue recognition Revenue from product sales is generally recognized at the time the product is shipped. Service revenue is recognized over the contractual period or as services are performed. Taxes on earnings Income tax expense is based on pretax financial accounting income. Deferred tax assets and liabilities are recognized for the expected tax consequences of temporary differences between the tax bases of assets and liabilities and their reported amounts. Net earnings per share Since fiscal 1994, net earnings per share have been computed using the 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. Cash equivalents and short-term investments The company has classified investments as cash equivalents if the original maturity of such investments is three months or less. Short-term investments are principally comprised of certificates of deposit, temporary money-market instruments and repurchase agreements and are stated at cost, which approximates market. Inventories Inventories are valued at standard costs that approximate actual costs computed on a first-in, first-out basis, not in excess of market values. Property, plant and equipment Property, plant and equipment are stated at cost. Additions, improvements and major renewals are capitalized. Maintenance, repairs and minor renewals are expensed as incurred. Depreciation is provided using accelerated methods, principally over the following useful lives: buildings and improvements, 15 to 40 years; machinery and equipment, 3 to 10 years. Depreciation of leasehold improvements is provided using the straight-line method over the life of the lease or the asset, whichever is shorter. Long-term investments At the beginning of fiscal 1995, the company adopted Statement of Financial Accounting Standards (SFAS) No. 115, "Accounting for Certain Investments in Debt and Equity Securities." SFAS No. 115 requires certain investments in debt and equity securities to be classified into one of three categories: held-to-maturity, available-for-sale, or trading. The company's investments are primarily comprised of debt securities which are held- to-maturity. Adoption of this statement did not have a material effect on the company's financial position or results of operations. Foreign currency translation The company uses the U.S. dollar as its functional currency. Foreign currency assets and liabilities are translated into U.S. dollars at end-of-period exchange rates except for inventories, property, plant and equipment, other assets and deferred revenue, which are translated at historical exchange rates. Revenues and 34 Hewlett-Packard Company and Subsidiaries expenses are translated at average exchange rates in effect during each period, except for those expenses related to balance sheet amounts which are translated at historical exchange rates. Gains or losses from foreign currency translation are included in net earnings. The effect of foreign currency exchange rate fluctuations on cash and cash equivalents denominated in foreign currencies was not material. Reclassifications In fiscal 1995, sales of consumable supplies, consisting primarily of supplies for the company's printer products, are reported in the consolidated statement of earnings as product revenue. In previous years, consumable supplies were reported as service revenue. Prior year revenue and cost of sales amounts have been reclassified to reflect this change. Acquisitions The company acquired several companies during 1994 and 1993, which were not significant to the financial position or results of operations of the company. All of these acquisitions were accounted for using the purchase method. Under the purchase method, the results of operations of acquired companies are included prospectively from the date of acquisition, and the acquisition cost is allocated to the acquirees' assets and liabilities based upon their fair market values at the date of the acquisition. At October 31, 1995, the net book value of goodwill associated with acquisitions was $398 million and is being amortized on a straight-line basis over 3 to 10 years. Financial Instruments Off-balance-sheet risk The company enters into foreign exchange contracts to hedge against possible exposure from changes in foreign currency exchange rates. Such exposure arises from assets and liabilities that are denominated in currencies other than the U.S. dollar as well as firm foreign currency commitments. When foreign exchange contracts hedge balance sheet exposure, such effects are recognized when the exchange rate changes. When the company's foreign exchange contracts hedge operational exposure, the effects of movements in exchange rates on these instruments are recognized when the related revenues and expenses are recognized. Because the impact of movements in exchange rates on foreign exchange contracts offsets the related impact on the underlying items being hedged, these instruments do not subject the company to risk that would otherwise result from such changes. Foreign exchange contracts require the company to exchange foreign currencies for U.S. dollars and generally mature within six months. The company had foreign exchange contracts of $5.4 billion and $2.5 billion at October 31, 1995 and 1994, respectively. At October 31, 1995, deferred gains and deferred losses on these contracts amounted to $126 million and $82 million, respectively. The company enters into interest rate swap agreements to manage its exposure to interest rate changes. The transactions generally involve the exchange of fixed and floating interest payment obligations without the exchange of the underlying principal amounts. Interest rate differentials under interest rate swap agreements are recognized over the 35 Hewlett-Packard Company and Subsidiaries Notes to Consolidated Financial Statements life of the contracts as interest expense. The maturities of interest rate swap agreements match the maturities of the underlying debt. At October 31, 1995 and 1994, off-balance-sheet exposures under interest rate swap agreements were not material. Concentrations of credit risk Financial instruments that potentially subject the company to significant concentrations of credit risk consist principally of cash, investments, trade accounts receivable and certain other off-balance-sheet financial instruments. The company maintains cash and cash equivalents, short- and long-term investments and certain other off-balance-sheet financial instruments with various financial institutions. These financial institutions are located in many different geographies, and company policy is designed to limit exposure with any one institution. As part of its cash and risk management processes, the company performs periodic evaluations of the relative credit standing of the financial institutions. The company has not sustained material credit losses from these instruments. The company sells a significant portion of its products through third-party resellers and, as a result, maintains individually significant receivable balances with major distributors. If the financial condition and operations of these distributors deteriorate substantially, the company's operating results could be adversely affected. The ten largest distributor receivable balances collectively represent 13 percent and 10 percent of total accounts and notes receivable at October 31, 1995 and 1994, respectively. Credit risk with respect to other trade accounts receivable is generally diversified due to the large number of entities comprising the company's customer base and their dispersion across many different industries and geographies. The company performs ongoing credit evaluations of its customers' financial condition, utilizes flooring arrangements with third-party financing companies and requires collateral, such as letters of credit and bank guarantees, in certain circumstances. Fair value of financial instruments For certain of the company's financial instruments, including cash and cash equivalents, short-term investments, accounts and notes receivable, notes payable and short-term borrowings, accounts payable, and other accrued liabilities, the carrying amounts approximate fair value due to their short maturities. Long-term floating rate notes, long-term stock investments and certificates of deposit are carried at amounts that approximate fair value. The estimated fair value of long-term debt is primarily based on quoted market prices, as well as borrowing rates currently available to the company for bank loans with similar terms and maturities. This fair value, when adjusted for unrealized gains and losses on related interest rate swap agreements, approximates the carrying amount of long-term debt. The estimated fair value for foreign exchange contracts is primarily based on quoted market prices for the same or similar instruments, adjusted where necessary for maturity differences. At October 31, 1995 and 1994, the estimated fair value of foreign exchange contracts with carrying values of $(15) million and $(24) million, respectively, amounted to $44 million and $(108) million, respectively. 36 Hewlett-Packard Company and Subsidiaries The estimated fair values may not be representative of actual values of the financial instruments that could have been realized as of year-end or that will be realized in the future. Taxes on Earnings The provision for income taxes is comprised of:
In millions 1995 1994 1993 - -------------------------------------------------------------------------------- U.S. federal taxes: Current $ 642 $ 511 $330 Deferred (87) (156) (46) Non-U.S. taxes: Current 609 441 381 Deferred (15) -- (91) State taxes 50 28 32 - -------------------------------------------------------------------------------- $1,199 $ 824 $606 ================================================================================
The significant components of deferred tax assets, which required no valuation allowance, and deferred tax liabilities included on the balance sheet at October 31 are:
1995 1994 ----------------------------------------------------- Deferred Deferred Deferred Deferred tax tax tax tax In millions assets liabilities assets liabilities - --------------------------------------------------------------------------------------------------- Inventory $ 381 $ 50 $329 $ 28 Fixed assets 110 10 61 12 Retiree medical benefits 248 -- 243 -- Other retirement benefits -- 111 -- 113 Employee benefits, other than retirement 130 42 90 20 Leasing activities -- 86 -- 79 Other 325 228 254 198 - --------------------------------------------------------------------------------------------------- $1,194 $527 $977 $450 ===================================================================================================
Tax benefits of $91 million, $41 million and $35 million associated with the exercise of employee stock options were allocated to equity in 1995, 1994 and 1993, respectively. The company's average U.S. statutory tax rate was 35 percent in 1995 and 1994 and 34.8 percent in 1993. These rates reflect the increase resulting from legislation enacted in August 1993, which was effective January 1, 1993. The effect of this increase on the company's deferred tax assets and liabilities was not material. 37 Hewlett-Packard Company and Subsidiaries Notes to Consolidated Financial Statements The differences between the U.S. federal statutory income tax rate and the company's effective rate are:
1995 1994 1993 - ----------------------------------------------------------------------------------------------- U.S. federal statutory income tax rate 35.0% 35.0% 34.8% State income taxes, net of federal tax benefit 0.9 0.8 1.1 Lower rates in other jurisdictions, net (5.0) (4.8) (3.1) Other, net 2.1 3.0 1.2 - ----------------------------------------------------------------------------------------------- 33.0% 34.0% 34.0% ===============================================================================================
After allocating eliminations and corporate items, earnings before taxes are:
In millions 1995 1994 1993 - ----------------------------------------------------------------------------------------------- U.S. operations including Puerto Rico $1,548 $ 915 $ 818 Non-U.S. 2,084 1,508 965 - ----------------------------------------------------------------------------------------------- $3,632 $2,423 $1,783 ===============================================================================================
The company has not provided for U.S. federal income and foreign withholding taxes on $3.0 billion of non-U.S. subsidiaries' undistributed earnings as of October 31, 1995, because such earnings are intended to be reinvested indefinitely. If these earnings were distributed, foreign tax credits should become available under current law to reduce or eliminate the resulting U.S. income tax liability. Where excess cash has accumulated in the company's non- U.S. subsidiaries and it is advantageous for tax or foreign exchange reasons, subsidiary earnings are remitted. As a result of certain employment and capital investment actions undertaken by the company, income from manufacturing activities in certain countries is subject to reduced tax rates, and in some cases is wholly exempt from taxes, for years through 2010. The income tax benefits attributable to the tax status of these subsidiaries are estimated to be $168 million, $163 million and $128 million for 1995, 1994 and 1993, respectively. The Internal Revenue Service (IRS) has completed its examination of the company's federal income tax returns filed through 1983. The IRS has not commenced its examination of returns for years subsequent to 1992. The company believes that adequate accruals have been provided for all years. Borrowings Notes payable and short-term borrowings and the related average interest rates at October 31 are:
1995 1994 --------------------------------------------- Interest Interest In millions rate rate - ------------------------------------------------------------------------------------ Commercial paper $2,785 5.8% $1,155 5.1% Notes payable to banks 315 6.6% 1,090 5.1% Other short-term borrowings 114 3.5% 224 3.7% - ------------------------------------------------------------------------------------ $3,214 $2,469 ====================================================================================
38 Hewlett-Packard Company and Subsidiaries Long-term debt consists of bonds placed with various financial institutions with interest rates ranging from 7.1 percent to 7.9 percent at October 31, 1995. The aggregate payments for the next five years of long-term debt outstanding at October 31, 1995 are $274 million in 1998, $156 million in 1999 and $233 million in 2001 and thereafter. At October 31, 1995, the Company had various borrowing arrangements in place with unused borrowing capacity totaling $3.7 billion. These credit arrangements are generally uncommitted and do not require commitment fees. Shareholders' Equity Stock split The company made a 2-for-1 split of its $1 par value common stock in the form of a 100 percent distribution to shareholders of record as of March 24, 1995. As a result of the stock split, authorized, outstanding, and reserved common shares doubled and capital in excess of par value was reduced by the par value of the additional common shares issued. The rights of the holders of these securities were not otherwise modified. All references in the financial statements to number of shares, per share amounts, stock option data and market prices of the company's common stock have been restated. Employee Stock Purchase Plan Eligible company employees may generally contribute up to 10 percent of their base compensation to the quarterly purchase of company stock under the Employee Stock Purchase Plan. Under this plan, employee contributions are partially matched with company contributions to purchase HP stock. At October 31, 1995, approximately 86,000 employees were eligible to participate and approximately 46,000 employees were participants in the plan. Incentive compensation plans The company has four principal stock option plans, adopted in 1979, 1985, 1990 and 1995. All plans permit options granted to qualify as ``Incentive Stock Options'' under the Internal Revenue Code. The exercise price of a stock option is generally equal to the fair market value of the company's common stock on the date the option is granted. Under the 1990 and 1995 Incentive Stock Plans, however, the Executive Compensation and Stock Option Committee, in certain cases, may choose to establish a discounted exercise price at no less than 75 percent of fair market value on the grant date. In 1995 and 1994, discounted options totaling 768,000 shares and 432,000 shares, respectively, were granted. Stock compensation expense related to the discounted options was not material. Options generally vest at a rate of 25 percent per year over a period of four years from the date of grant except for discounted options, which may not be exercised before the fifth anniversary of the option grant date, at which time such options become 100 percent vested. The plans also provide for the granting of stock appreciation rights with respect to options granted to officers. The company has not included stock appreciation rights with options granted to officers since October 31, 1991. 39 Hewlett-Packard Company and Subsidiaries Notes to Consolidated Financial Statements The following table summarizes option activity during 1995:
Price In thousands except price per share amounts Options per share - -------------------------------------------------------------------------------- Outstanding at October 31, 1994 25,672 $14-44 Granted 4,899 36-95 Exercised (5,302) 14-53 Cancelled (461) 14-76 - -------------------------------------------------------------------------------- Outstanding at October 31, 1995 24,808 $14-95 ================================================================================
At October 31, 1995, options to purchase 12,340,000 shares were exercisable at prices ranging from $14 to $44 per share. Shares available for option grants at October 31, 1995 and 1994 were 37,244,000 and 10,322,000, respectively. Approximately 49,000 employees were considered eligible to receive stock options in fiscal 1995. There were approximately 26,000 employees holding options under one or more of the option plans as of October 31, 1995. Under the 1985 Incentive Compensation Plan and the 1990 and 1995 Incentive Stock Plans, certain key employees may be granted cash or restricted stock awards. Cash and restricted stock awards are independent of option grants and are subject to restrictions considered appropriate by the company's Executive Compensation and Stock Option Committee. The majority of the shares of restricted stock outstanding at October 31, 1995 are subject to forfeiture if employment terminates prior to five years from the date of grant. During that period, ownership of the shares cannot be transferred. Restricted stock has the same dividend and voting rights as other common stock and is considered to be currently issued and outstanding. The cost of the awards, determined to be the fair market value of the shares at the date of grant, is expensed ratably over the period the restrictions lapse. Such expense was not material in 1995, 1994 or 1993. At October 31, 1995 and 1994, the company had 1,531,000 and 964,000 shares, respectively, of restricted stock outstanding. Shares reserved The company has reserved shares for future issuance under the employee stock plans. At October 31, 1995 and 1994, 80,234,000 and 59,418,000 shares, respectively, were reserved. Stock repurchase program Under the company's stock repurchase program, shares of HP common stock are purchased primarily to manage the dilution created by shares issued under the employee stock plans. In 1995, 1994 and 1993, 10,395,000, 8,056,000 and 8,690,000 shares were repurchased for an aggregate purchase price of $686 million, $325 million and $314 million, respectively. At October 31, 1995, HP had authorization for an aggregate of $319 million in future repurchases under this program based on certain price and volume criteria. On November 17, 1995, the Board of Directors authorized an additional $1 billion in stock repurchases. Retirement Plans and Retiree Medical Benefits Pension and deferred profit-sharing plans Substantially all of the company's employees are covered under various pension and deferred profit-sharing retirement plans. Worldwide pension and deferred profit-sharing costs were $233 million in 1995, $196 million in 1994, and $159 million in 1993. 40 Hewlett-Packard Company and Subsidiaries U.S. employees who meet certain minimum eligibility criteria are provided retirement benefits under the Hewlett-Packard Company Retirement Plan (Retirement Plan). Defined benefits are based upon an employee's highest aver- age pay rate and length of service. For eligible service through October 31, 1993, the benefit payable under the Retirement Plan is reduced by any amounts due to the employee under the company's frozen defined contribution Deferred Profit-Sharing Plan (DPS). Up through that date, the DPS was funded solely by the company through an annual contribution based upon the company's adjusted U.S. net income, as defined in the plan agreement. Amendments made in October 1993 to close the DPS to new participants and discontinue the coordination of benefits between the two plans for service after October 31, 1993 provided for immediate 100% vesting of all participant balances in both plans. Additionally, the amendments resulted in an increase of $69 million in both prior service cost and the projected benefit obligation for the Retirement Plan in 1993. Higher Retirement Plan service costs after the amendments are largely offset by the DPS contributions that are no longer required. The combined status of the Retirement Plan and DPS follows:
In millions 1995 1994 - ------------------------------------------------------------------------- Fair value of plan assets $2,400 $2,093 Retirement benefit obligation $2,413 $1,977 - -------------------------------------------------------------------------
Employees outside the U.S. generally receive retirement benefits under various defined benefit and defined contribution plans based upon factors such as years of service and employee compensation levels. Eligibility is generally determined in accordance with local statutory requirements. Retiree medical plan In addition to providing pension benefits, the company also sponsors a medical plan that provides defined benefits to U.S. retired employees. Substantially all of the company's current U.S. employees could become eligible for these benefits and the existing benefit obligation relates primarily to those employees. Once participating in the plan, retirees may choose from managed-care and indemnity options, with their contributions dependent on options chosen and length of service. 401(k) plan U.S. employees of the company may participate in the Tax Saving Capital Accumulation Plan (TAXCAP), which was established as a supplemental retirement program. Under the TAXCAP program, the company matches contributions by employees up to a maximum of 4 percent of an employee's annual compensation. The maximum combined contribution to the Employee Stock Purchase Plan and TAXCAP is 17 percent of an employee's annual base compensation subject to certain regulatory and plan limitations. At October 31, 1995, 48,000 employees were participating in TAXCAP out of 56,000 who were eligible. 41 Hewlett-Packard Company and Subsidiaries Notes to Consolidated Financial Statements Funded status The funded status of the defined benefit and retiree medical plans is:
U.S. defined benefit plan Non-U.S. defined benefit plans U.S. retiree medical plan ------------------------- ------------------------------ -------------------------- In millions 1995 1994 1995 1994 1995 1994 - --------------------------------------------------------------------------------------------------------------------------------- Fair value of plan assets $ 358 $ 310 $ 1,116 $ 933 $ 310 $ 258 Benefit obligation (371) (194) (1,182) (1,015) (412) (328) - --------------------------------------------------------------------------------------------------------------------------------- Plan assets in excess of (less than) benefit obligation (13) 116 (66) (82) (102) (70) Unrecognized net experience (gain) loss (8) (52) 95 85 (176) (203) Unrecognized prior service cost (benefit) related to plan changes 52 63 32 33 (173) (183) Unrecognized net transition asset* (39) (47) -- (6) -- -- - --------------------------------------------------------------------------------------------------------------------------------- Prepaid (accrued) costs $ (8) $ 80 $ 61 $ 30 $ (451) $ (456) ================================================================================================================================= Vested benefit obligation $ (157) $ (47) $ (812) $ (656) Accumulated benefit obligation $ (157) $ (47) $ (859) $ (706) ======================================================================================================
*Amortized over 15 years for the U.S. plan and over periods ranging from 12 to 20 years for non-U.S. plans. Plan assets consist primarily of listed stocks and bonds for the U.S. plans and listed stocks, bonds and cash surrender value of life insurance policies for the non-U.S. plans. It is the company's practice to fund these costs to the extent they are tax-deductible. Net periodic cost The company's net pension, deferred profit-sharing and retiree medical costs are comprised of:
Pension and deferred profit-sharing ----------------------------------------------------------- U.S. plans Non-U.S. plans U.S. retiree medical plan ----------------------------------------------------------- ------------------------- In millions 1995 1994 1993 1995 1994 1993 1995 1994 1993 - ------------------------------------------------------------------------------------------------------------------------------- Service cost--benefits earned $108 $112 $ 4 $ 88 $ 73 $ 61 $ 21 $ 27 $ 28 during the period Interest cost on benefit obligation 15 6 3 72 58 49 28 33 35 Actual return on plan assets (59) (7) (45) (26) (44) (107) (52) (7) (40) Net amortization and deferral 25 (29) 11 (52) (16) 59 18 (27) 10 - ------------------------------------------------------------------------------------------------------------------------------- Net plan cost (credit) 89 82 (27) 82 71 62 15 26 33 Pension and deferred profit- sharing costs for other plans -- -- 88 62 43 36 -- -- -- - ------------------------------------------------------------------------------------------------------------------------------- $ 89 $ 82 $ 61 $ 144 $ 114 $ 98 $ 15 $ 26 $ 33 ===============================================================================================================================
42 Hewlett-Packard Company and Subsidiaries Assumptions The assumptions used to measure the benefit obligations and to compute the expected long-term return on assets for the company's defined benefit and retiree medical plans are:
1995 1994 1993 - -------------------------------------------------------------------------------------------------------------- U.S. defined benefit plan: Discount rate 7.5% 8.0% 7.0% Average increase in compensation levels 5.5% 5.5% 5.5% Expected long-term return on assets 9.0% 9.0% 9.0% Non-U.S. defined benefit plans: Discount rate 4.0 to 8.5% 5.0 to 8.8% 5.0 to 9.0% Average increase in compensation levels 3.5 to 6.5% 4.1 to 7.0% 4.5 to 6.3% Expected long-term return on assets 5.8 to 10.0% 7.0 to 9.5% 7.0 to 10.0% U.S. retiree medical plan: Discount rate 7.5% 8.0% 7.0% Expected long-term return on assets 9.0% 9.0% 9.0% Current medical cost trend rate 10.4% 10.8% 11.2% Ultimate medical cost trend rate 6.0% 6.0% 6.0% Medical cost trend rate decreases to ultimate rate in year 2007 2007 2007 Effect of a 1% increase in the medical cost trend rate (millions): Increase in benefit obligation $87 $66 $97 Increase in the annual retiree medical cost $12 $13 $18 - --------------------------------------------------------------------------------------------------------------
Commitments The company leases certain real and personal property under non-cancelable operating leases. Minimum lease payments are $162 million for 1996, $136 million for 1997, $110 million for 1998, $91 million for 1999, $61 million for 2000 and $211 million for 2001 and thereafter. Certain leases require the company to pay property taxes, insurance and routine maintenance and include escalation clauses. Rent expense was $302 million in 1995, $274 million in 1994 and $269 million in 1993. 43 Hewlett-Packard Company and Subsidiaries Notes to Consolidated Financial Statements Geographic Area Information The company, operating in a single industry segment, designs, manufactures and services products and systems for measurement, computation and communications. Net revenue, earnings from operations and identifiable assets, classified by the major geographic areas in which the company operates, are:
In millions 1995 1994 1993 - ---------------------------------------------------------------------------------------------------------------------- Net revenue United States: Unaffiliated customer sales $ 13,963 $ 11,469 $ 9,346 Interarea transfers 5,728 4,653 4,249 - ---------------------------------------------------------------------------------------------------------------------- 19,691 16,122 13,595 - ---------------------------------------------------------------------------------------------------------------------- Europe: Unaffiliated customer sales 11,142 8,423 7,177 Interarea transfers 1,432 1,058 899 - ---------------------------------------------------------------------------------------------------------------------- 12,574 9,481 8,076 - ---------------------------------------------------------------------------------------------------------------------- Japan, Other Asia Pacific, Canada, Latin America: Unaffiliated customer sales 6,414 5,099 3,794 Interarea transfers 3,783 2,765 2,165 - ---------------------------------------------------------------------------------------------------------------------- 10,197 7,864 5,959 - ---------------------------------------------------------------------------------------------------------------------- Eliminations (10,943) (8,476) (7,313) - ---------------------------------------------------------------------------------------------------------------------- $ 31,519 $ 24,991 $ 20,317 ====================================================================================================================== Earnings from operations United States $ 2,259 $ 1,472 $ 1,485 Europe 930 660 447 Japan, Other Asia Pacific, Canada, Latin America 1,240 824 630 Eliminations and corporate (861) (407) (683) - ---------------------------------------------------------------------------------------------------------------------- $ 3,568 $ 2,549 $ 1,879 ====================================================================================================================== Identifiable assets United States $ 12,347 $ 9,848 $ 8,984 Europe 7,168 4,991 4,452 Japan, Other Asia Pacific, Canada, Latin America 5,854 4,052 3,056 Eliminations and corporate (942) 676 244 - ---------------------------------------------------------------------------------------------------------------------- $ 24,427 $ 19,567 $ 16,736 ======================================================================================================================
Net revenue from sales to unaffiliated customers is based on the location of the customer. Interarea transfers are sales among HP affiliates principally made at market price, less an allowance primarily for subsequent manufacturing and/or marketing costs. Earnings from operations and identifiable assets are classified based on the location of the company's facilities. Identifiable corporate assets, which are net of eliminations, comprise primarily cash and cash equivalents, property, plant and equipment, and other assets, and aggregate $4,343 million in 1995, $4,594 million in 1994 and $3,148 million in 1993. 44 Hewlett-Packard Company and Subsidiaries Statement of Management Responsibility The company's management is responsible for the preparation, integrity and objectivity of the consolidated financial statements and other financial information presented in this report. The accompanying financial statements have been prepared in conformity with generally accepted accounting principles and reflect the effects of certain estimates and judgments made by management. The company's management maintains an effective system of internal control that is designed to provide reasonable assurance that assets are safeguarded and transactions are properly recorded and executed in accordance with management's authorization. The system is continuously monitored by direct management review and by internal auditors who conduct an extensive program of audits throughout the company. The company selects and trains qualified people who are provided with and expected to adhere to the company's standards of business conduct. These standards, which set forth the highest principles of business ethics and conduct, are a key element of the company's control system. The company's consolidated financial statements have been audited by Price Waterhouse LLP, independent accountants. Their audits were conducted in accordance with generally accepted auditing standards, and included a review of financial controls and tests of accounting records and procedures as they considered necessary in the circumstances. The Audit Committee of the Board of Directors, which consists of outside directors, meets regularly with management, the internal auditors and the independent accountants to review accounting, reporting, auditing and internal control matters. The committee has direct and private access to both internal and external auditors. /s/ Lew Platt /s/ Robert Wayman Lew Platt Robert Wayman Chairman of the Board, President and Executive Vice President, Finance Chief Executive Officer and Administration Chief Financial Officer Report of Independent Accountants To the Shareholders and Board of Directors of Hewlett-Packard Company In our opinion, the accompanying consolidated balance sheet and the related consolidated statements of earnings, of cash flows and of shareholders' equity present fairly, in all material respects, the financial position of Hewlett- Packard Company and its subsidiaries at October 31, 1995 and 1994, and the results of their operations and their cash flows for each of the three years in the period ended October 31, 1995, in conformity with generally accepted accounting principles. These financial statements are the responsibility of the company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. /s/ Price Waterhouse LLP San Jose, California November 17, 1995 45 Hewlett-Packard Company and Subsidiaries Orders and Net Revenue by Groupings of Similar Products and Services Unaudited
For the years ended October 31 In millions 1995 1994 1993 - --------------------------------------------------------------------------------------------------- Orders Computer products, service and support $25,815 $19,882 $15,903 Electronic test and measurement instrumentation, systems and service 3,488 2,759 2,335 Medical electronic equipment and service 1,399 1,170 1,196 Chemical analysis and service 844 777 721 Electronic components 964 762 617 - --------------------------------------------------------------------------------------------------- $32,510 $25,350 $20,772 =================================================================================================== Net revenue Computer products, service and support $25,269 $19,632 $15,572 Electronic test and measurement instrumentation, systems and service 3,288 2,722 2,318 Medical electronic equipment and service 1,300 1,141 1,149 Chemical analysis and service 806 754 704 Electronic components 856 742 574 - --------------------------------------------------------------------------------------------------- $31,519 $24,991 $20,317 ===================================================================================================
The table above provides supplemental information showing orders and net revenue by groupings of similar products and services. The groupings are as follows: Computer products, service and support Computer equipment and systems (hardware and software), networking products, printers, scanners, disk and tape drives, terminals and handheld calculators; support and maintenance services, parts and supplies. Electronic test and measurement instrumentation, systems and service Instruments and measurement systems used for design, production and maintenance of electronic equipment; support and maintenance services. Medical electronic equipment and service Patient monitoring, cardiology and ultrasound imaging equipment used for clinical diagnosis and care; hospital and healthcare information systems, systems integration and application software; support and maintenance services; medical supplies. Chemical analysis and service Gas and liquid chromatographs, mass spectrometers and spectrophotometers used to analyze chemical compounds; laboratory data and information management systems; support, supplies and maintenance services. Electronic components Microwave semiconductor and optoelectronic devices that are sold primarily to manufacturers for incorporation into electronic products. 46 Hewlett-Packard Company and Subsidiaries Quarterly Summary Unaudited
For the three months ended In millions except per share amounts January 31 April 30 July 31 October 31 - ------------------------------------------------------------------------------------------------------------------- 1995 U.S. orders $ 3,126 $ 3,488 $ 3,719 $ 4,276 International orders 4,567 4,570 4,288 4,476 - ------------------------------------------------------------------------------------------------------------------- Total orders $ 7,693 $ 8,058 $ 8,007 $ 8,752 - ------------------------------------------------------------------------------------------------------------------- Net revenue $ 7,304 $ 7,428 $ 7,739 $ 9,048 Cost of products sold and services $ 4,547 $ 4,654 $ 4,907 $ 5,906 Earnings from operations $ 932 $ 875 $ 824 $ 937 Net earnings $ 602 $ 577 $ 576 $ 678 Per share amounts, restated for 1995 stock split: Net earnings $ 1.15 $ 1.10 $ 1.09 $ 1.29 Cash dividends $.15 $ .15 $ .20 $ .20 Range of stock prices $46-53 3/8 $50 1/2-66 1/8 $64 1/4-83 5/8 $72 1/2-96 =================================================================================================================== 1994 U.S. orders $ 2,572 $ 2,937 $ 2,776 $ 3,407 International orders 3,570 3,431 3,185 3,472 - ------------------------------------------------------------------------------------------------------------------- Total orders $ 6,142 $ 6,368 $ 5,961 $ 6,879 - ------------------------------------------------------------------------------------------------------------------- Net revenue $ 5,682 $ 6,254 $ 6,053 $ 7,002 Cost of products sold and services $ 3,470 $ 3,890 $ 3,774 $ 4,356 Earnings from operations $ 598 $ 638 $ 543 $ 770 Net earnings $ 368 $ 408 $ 347 $ 476 Per share amounts, restated for 1995 stock split: Net earnings $ .71 $ .78 $ .66 $ .92 Cash dividends $ .125 $ .125 $ .15 $ .15 Range of stock prices $35 3/4-43 3/4 $ 38-46 $ 36-41 $ 39-49 ===================================================================================================================
Net Earnings Per Share* In dollars [GRAPH APPEARS HERE] * Restated for 1995 stock split Range of Common Stock Prices* In dollars per share [GRAPH APPEARS HERE] * Restated for 1995 stock split 47 Hewlett-Packard Company and Subsidiaries Shareholder Information Annual Meeting of Shareholders The annual meeting will be held Tuesday, February 27, 1996, at 2 p.m. at HP's Cupertino site located at 19447 Pruneridge Avenue, Cupertino, California. Annual Report/Form 10-K Publications of interest to current and potential HP investors are available upon request. These include the annual report and the Form 10-K filed with the Securities and Exchange Commission. As a service to those with impaired vision, the HP 1995 annual report is available on audio cassette. This material can be obtained at no cost by contacting the Corporate Communications Department at HP's corporate offices. Interested parties can also request financial information by calling 800-TALK- HWP (825-5497). HP's 1995 annual report and related financial information are also available on the World Wide Web. The Web address is http://www.hp.com/go/financials Transfer Agent and Registrar Harris Trust and Savings Bank Corporate Trust Operations Division P.O. Box 755 Chicago, Illinois 60690 Telephone: (312) 461-4061 Common Stock, Dividend Policy The company's stock is listed on the New York and the Pacific stock exchanges. Cash dividends have been paid each year since 1965. The current rate is $0.20 per share per quarter. At Nov. 30, 1995, there were 73,057 shareholders of record. UNIX is a registered trademark in the United States and other countries, licensed exclusively through X/Open(TM) Company Limited. X/Open is a trademark of X/Open Company Limited in the UK and other countries. Microsoft is a U.S. registered trademark of Microsoft Corp. Windows is a U.S. trademark of Microsoft Corp. Intel is a U.S. trademark of Intel Corp. Pentium is a U.S. trademark of Intel Corp. Corporate Information Headquarters 3000 Hanover Street Palo Alto, California 94394 Telephone: (415) 857-1501 Geographic Operations Americas 19420 Homestead Road Cupertino, California 95014-0610 Telephone: (408) 725-8900 Europe, Africa, Middle East Route du Nant-d'Avril 150 CH-1217 Meyrin 2 Geneva, Switzerland Telephone: (41/22) 780-8111 Asia Pacific 17-21/F Shell Tower Times Square, 1 Matheson Street Cuaseway Bay, Hong Kong Telephone: (852) 2 599-7777 A directory of sales and support locations can be obtained from the Corporate Communications Department at HP's offices in Palo Alto. [RECYCLING LOGO APPEARS HERE] Printed on recycled paper EX-21 4 SUBSIDIARIES OF REGISTRANT AS OF JAN 17,1996 EXHIBIT 21 SUBSIDIARIES AND AFFILIATES OF HEWLETT-PACKARD COMPANY
ORGANIZED UNDER LAWS OF --------------- DOMESTIC SUBSIDIARIES OF HEWLETT-PACKARD COMPANY Hewlett-Packard Delaware, Inc. ................................ Delaware Hewlett-Packard Delaware Capital, Inc. ........................ Delaware Hewlett-Packard Delaware Funding, Inc. ........................ Delaware Hewlett-Packard Delaware Holding, Inc. ........................ Delaware Hewlett-Packard Delaware Investment, Inc. ..................... Delaware Hewlett-Packard European Distribution Operations Netherlands, Inc. ......................................................... Delaware Hewlett-Packard Finance Company................................ California Hewlett-Packard Global Trading, Inc. .......................... California Hewlett-Packard Hellas......................................... California Hewlett-Packard Inter-Americas................................. California Hewlett-Packard Laboratories Japan, Inc. ...................... Delaware Hewlett-Packard Little Falls, Inc. ............................ Delaware Hewlett-Packard Pipeline Company............................... Colorado Hewlett-Packard Puerto Rico.................................... California Hewlett-Packard World Trade, Inc. ............................. Delaware Apollo World Trade, Inc. ...................................... Delaware Convex Computer Corporation.................................... Delaware ElseWare Corporation........................................... Washington HiNoon Project Corporation..................................... Delaware The Tall Tree Insurance Company................................ Vermont Versatest, Inc. ............................................... California DOMESTIC SUBSIDIARY OF HEWLETT-PACKARD LITTLE FALLS, INC. Fleet Systems, Inc. ........................................... California DOMESTIC SUBSIDIARY OF HEWLETT-PACKARD WORLD TRADE, INC. Hewlett-Packard Export Trade Co. .............................. California DOMESTIC SUBSIDIARY OF HINOON PROJECT CORPORATION Video Products Group Inc. ..................................... Delaware DOMESTIC SUBSIDIARIES OF CONVEX COMPUTER CORPORATION Convex Computer (China) Inc. .................................. Delaware Convex International, Inc. .................................... Delaware FOREIGN SUBSIDIARIES OF HEWLETT-PACKARD COMPANY China Hewlett-Packard Company, Ltd. ........................... PRC Grupo Hewlett-Packard Latin America S.A. de C.V. .............. Mexico Hewlett-Packard Asia Pacific Ltd. ............................. Hong Kong Hewlett-Packard Australia Ltd. ................................ Australia Hewlett-Packard Bilgisayar Ve Olcum Sistemleri Anonim Sirketi.. Turkey Hewlett-Packard Hong Kong Ltd. ................................ Hong Kong Hewlett-Packard Ireland Ltd. .................................. Ireland Hewlett-Packard Korea Ltd. .................................... Korea Hewlett-Packard Medical Products (Qingdao) Ltd. ............... PRC Hewlett-Packard Penang Sdn. Bhd. .............................. Malaysia Hewlett-Packard Portugal-Sistemas De Informatica E De Medida S.A. ......................................................... Portugal Hewlett-Packard Sales (Malaysia) Sdn. Bhd. .................... Malaysia Hewlett-Packard Taiwan, Ltd. .................................. ROC
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ORGANIZED UNDER LAWS OF --------------- FOREIGN SUBSIDIARIES OF HEWLETT-PACKARD COMPANY (continued) EEsof GmbH.................................................... Germany EEsof K.K. ................................................... Japan EEsof Pte. Ltd. .............................................. Singapore Hua Pu Information Technology Co. Ltd. ....................... PRC P.T. Hewlett-Packard Berca Servisindo......................... Indonesia FOREIGN SUBSIDIARIES OF CONVEX COMPUTER CORPORATION Convex Computer Australia Pty. Ltd. .......................... Australia Convex Computer Barbados Ltd. ................................ Barbados Convex Computer Canada Ltd. .................................. Canada Convex S.A. .................................................. France Convex Computer GmbH.......................................... Germany Convex S.p.A. ................................................ Italy Convex Computer Japan K.K. ................................... Japan Convex Computer Pte. Ltd. .................................... Singapore Convex Computer AG............................................ Switzerland Convex Computer B.V. ......................................... The Netherlands Convex Computer Ltd. ......................................... UK FOREIGN SUBSIDIARY OF CHINA HEWLETT-PACKARD COMPANY, LTD. China Hewlett-Packard (Shenzhen) Company, Ltd. ............... PRC FOREIGN SUBSIDIARIES OF GRUPO HEWLETT-PACKARD LATIN AMERICA S.A. DE C.V. Arrendadora Hewlett-Packard S.A. de C.V. ..................... Mexico Hewlett-Packard de Mexico S.A. de C.V. ....................... Mexico FOREIGN SUBSIDIARY OF HEWLETT-PACKARD ASIA PACIFIC LTD. Hewlett-Packard Australia Finance Ltd. ....................... Australia FOREIGN SUBSIDIARIES OF HEWLETT-PACKARD AUSTRALIA LTD. Hewlett-Packard New Zealand Ltd. ............................. New Zealand Telstra Hewlett-Packard (R&D) Pty. Inc. ...................... Australia FOREIGN SUBSIDIARIES OF HEWLETT-PACKARD DELAWARE, INC. Hewlett-Packard Chile, S.A. .................................. Chile Hewlett-Packard de Venezuela, C.A. ........................... Venezuela Hewlett-Packard do Brasil, S.A. .............................. Brazil Hewlett-Packard Malaysia Technology, Sdn. Bhd. ............... Malaysia Hewlett-Packard (Thailand) Ltd. .............................. Thailand FOREIGN SUBSIDIARY OF HEWLETT-PACKARD DELAWARE CAPITAL, INC. HCL Hewlett-Packard Ltd. ..................................... India FOREIGN SUBSIDIARY OF HEWLETT-PACKARD DELAWARE HOLDING, INC. Hewlett-Packard (India) Software Operation Pte. Ltd. ......... India FOREIGN SUBSIDIARY OF HEWLETT-PACKARD DELAWARE INVESTMENT, INC. Hewlett-Packard India Ltd. ................................... India FOREIGN SUBSIDIARY OF HEWLETT-PACKARD DO BRASIL, S.A. Edisa Hewlett-Packard S.A. ................................... Brazil FOREIGN SUBSIDIARIES OF HEWLETT-PACKARD GMBH Hewlett-Packard Inter-Services GmbH........................... Germany IDACOM Electronics GmbH....................................... Germany debis Systemhaus sfi GmbH..................................... Germany LGI Logistics Group International............................. Germany
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ORGANIZED UNDER LAWS OF --------------- FOREIGN SUBSIDIARIES OF HEWLETT-PACKARD EUROPE B.V. Hewlett-Packard Belgium S.A./N.V. ............................ Belgium Hewlett-Packard (Canada) Ltd. ................................ Canada Hewlett-Packard (China) Investment Co., Ltd. ................. PRC Hewlett-Packard Colombia Limitada............................. Columbia Hewlett-Packard Coordination Center SC........................ Belgium Hewlett-Packard Far East Pte. Ltd. ........................... Singapore Hewlett-Packard GmbH.......................................... Germany Hewlett-Packard Holding B.V. ................................. The Netherlands Hewlett-Packard Holdings (M) Sdn. Bhd. ....................... Malaysia Hewlett-Packard Ireland (Holdings) Ltd. ...................... Ireland Hewlett-Packard Israel Science Center Ltd. ................... Israel Hewlett-Packard Italiana S.p.A. .............................. Italy Hewlett-Packard Japan, Ltd. .................................. Japan Hewlett-Packard Ltd. ......................................... U.K. Hewlett-Packard Netherland B.V. .............................. The Netherlands Hewlett-Packard Philippines................................... Philippines Hewlett-Packard S.A. ......................................... Switzerland Hewlett-Packard Shanghai Analytical Products Co. Ltd. ........ PRC Hewlett-Packard Singapore (Sales) Pte. Ltd. .................. Singapore Technologies et Participations S.A............................ France FOREIGN SUBSIDIARIES OF HEWLETT-PACKARD (CANADA) LTD. IDACOM Electronics............................................ Canada Hewlett-Packard Canada (Realty)............................... Canada Apollo Computer (Canada) Ltd.................................. Canada FOREIGN SUBSIDIARY OF HEWLETT-PACKARD (CHINA) INVESTMENT CO., LTD. Hewlett-Packard Computer Products (Shanghai) Co., Ltd......... PRC FOREIGN SUBSIDIARY OF HEWLETT-PACKARD HOLDINGS (M) SDN. BHD. Hewlett-Packard Storage Products (M) Sdn. Bhd................. Malaysia FOREIGN SUBSIDIARIES OF HEWLETT-PACKARD IRELAND (HOLDINGS) LTD. Hewlett-Packard (Manufacturing) Ltd........................... Ireland Hewlett-Packard Finance (Europe) Ltd.......................... Ireland FOREIGN SUBSIDIARIES OF HEWLETT-PACKARD ITALIANA S.P.A. Hewlett-Packard Servizi Finanziari S.p.A...................... Italy NECSY Network Control Systems S.p.A........................... Italy FOREIGN SUBSIDIARY OF HEWLETT-PACKARD JAPAN, LTD. Shinkawa YHP Corporation...................................... Japan FOREIGN SUBSIDIARIES OF HEWLETT-PACKARD LTD. Hewlett-Packard Avantek Ltd. ................................. U.K. Hewlett-Packard Equipment Leasing Ltd. ....................... U.K. Hewlett-Packard Finance Ltd. ................................. U.K. Hewlett-Packard Leasing Ltd. ................................. U.K. Hewlett-Packard Product Leasing Ltd. ......................... U.K. Apollo Computer (UK) Ltd. .................................... U.K. BT&D Technologies Ltd. ....................................... U.K. Colorado Memory Systems Europe Ltd. .......................... U.K.
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ORGANIZED UNDER LAWS OF -------------------- FOREIGN SUBSIDIARIES OF HEWLETT-PACKARD S.A. Hewlett-Packard Argentina S.A. .......................... Argentina Hewlett-Packard A/S...................................... Denmark Hewlett-Packard Ges.m.b.H................................ Austria Hewlett-Packard Espanola, S.A. .......................... Spain Hewlett-Packard (Malaysia) Sdn. Bhd. .................... Malaysia Hewlett-Packard Norge AS................................. Norway Hewlett-Packard OY....................................... Finland Hewlett-Packard (Schweiz) AG............................. Switzerland Hewlett-Packard Singapore Pte. Ltd. ..................... Singapore Hewlett-Packard Sverige AB............................... Sweden Hewlett-Packard Technical B.V. .......................... The Netherlands Hewlett-Packard Trading S.A. ............................ Switzerland FOREIGN SUBSIDIARIES OF HEWLETT-PACKARD SINGAPORE PTE. LTD. Hewlett-Packard Investment Ltd. ......................... Liberia Geneva Investments N.V. ................................. Netherlands Antilles W.W. Investment Holding Pte. Ltd. ....................... Singapore TECH Semiconductor Singapore Pte. Ltd. .................. Singapore FOREIGN SUBSIDIARY OF HEWLETT-PACKARD INVESTMENT LTD. Banque de Savoie S.A. ................................... France FOREIGN SUBSIDIARY OF W.W. INVESTMENT HOLDING PTE. LTD. W.W. Real Estate and Development Pte. Ltd. .............. Singapore FOREIGN SUBSIDIARIES OF W.W. REAL ESTATE AND DEVELOPMENT PTE. LTD. W-Wide Offshore Ventures Pte. Ltd. ...................... Singapore CP Pierre................................................ France FOREIGN SUBSIDIARIES OF HEWLETT-PACKARD WORLD TRADE, INC. Hewlett-Packard AO....................................... Russia Hewlett-Packard Europe B.V. ............................. The Netherlands Hewlett-Packard International Sales Corporation B.V. .... The Netherlands Hewlett-Packard Magyarorszag Kft. ....................... Hungary Hewlett-Packard Polska spol.z.o.o. ...................... Poland Hewlett-Packard RE Ltd. ................................. Ireland Hewlett-Packard s.r.o. .................................. Czech Republic Ericsson Hewlett-Packard Telecommunications AB........... Sweden Leasametric GmbH......................................... Germany Yokogawa Analytical Systems, Inc. ....................... Japan FOREIGN SUBSIDIARY OF ERICSSON HEWLETT-PACKARD TELECOMMUNICATIONS AB Ericsson Hewlett-Packard S.A.R.L. ....................... France FOREIGN SUBSIDIARY OF LEASAMETRIC GMBH Leasametric S.A. ........................................ France FOREIGN SUBSIDIARIES OF TECHNOLOGIES ET PARTICIPATIONS S.A. Hewlett-Packard France................................... France Technologies et Participations Immobilieres.............. France FOREIGN SUBSIDIARY OF HEWLETT-PACKARD FRANCE Hewlett-Packard France Finance........................... France
4 EX-23.1 5 CONSENT OF INDEPENDENT ACCOUNTANTS EXHIBIT 23 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the following Registration Statements on Form S-8 of our report dated November 17, 1995 which appears on page 45 of the 1995 Annual Report to Shareholders of Hewlett- Packard Company which is incorporated in this Annual Report on Form 10-K. Registration No. 2-66780 through Post-Effective Amendment No. 6 Registration No. 2-90239 Registration No. 2-92331 through Post-Effective Amendment No. 3 Registration No. 2-96361 through Post-Effective Amendment No. 1 Registration No. 33-30769 Registration No. 33-31496 Registration No. 33-31500 Registration No. 33-38579 Registration No. 33-50699 Registration No. 33-52291 Registration No. 33-58447 Registration No. 33-65179 /s/ PRICE WATERHOUSE LLP PRICE WATERHOUSE LLP San Jose, California January 25, 1996 EX-27 6 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEET AND THE CONSOLIDATED STATEMENT OF EARNINGS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000,000 12-MOS OCT-31-1995 NOV-01-1994 OCT-31-1995 1,973 643 6,735 0 6,013 16,239 8,747 4,036 24,427 10,944 663 871 0 0 10,968 24,427 27,125 31,519 17,069 20,014 7,937 0 206 3,632 1,199 2,433 0 0 0 2,433 4.63 0
EX-99 7 FORM 11-K EXHIBIT 99 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------- FORM 11-K (MARK ONE) [X] ANNUAL REPORT PURSUANT TO SECTION 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED] For the fiscal year ended October 31, 1995 OR [_] TRANSITION REPORT PURSUANT TO SECTION 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the transition period from to Commission File Number: 1-4423 A. Full title of the plan and address of the plan, if different from that of the issuer named below: HEWLETT-PACKARD COMPANY EMPLOYEE STOCK PURCHASE PLAN B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office: HEWLETT-PACKARD COMPANY 3000 HANOVER STREET PALO ALTO, CALIFORNIA 94304 REQUIRED INFORMATION Not applicable. SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE ADMINISTRATOR OF THE PLAN HAS DULY CAUSED THIS ANNUAL REPORT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED THEREUNTO DULY AUTHORIZED. HEWLETT-PACKARD COMPANY EMPLOYEE STOCK PURCHASE PLAN Date: January 29, 1996 By: D. CRAIG NORDLUND ---------------------------------- D. Craig Nordlund Associate General Counsel and Secretary - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- -----END PRIVACY-ENHANCED MESSAGE-----