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HP Annual Report, Year Ended Oct 31, 1996

Filing Date
Filed January 29, 1997
Period End
October 31, 1996
Security
HPQ
In the record · 2016–202610-K1310-Q338-K140

HPQ filed 13 annual reports (10-K), 33 quarterly reports (10-Q) and 140 current reports (8-K) between 2016 and 2026.

  1. Leadership change8-K · Sep ’17Sep ’17
  2. Restructuring8-K · Oct ’19Oct ’19
  3. Leadership change8-K · Nov ’21Nov ’21
  4. FY2025 annual report10-K · Dec ’25Dec ’25

01—Abstract

Summary

Summary of the 10-K filed January 29, 1997. Cited figures are marked; the original filing is the authoritative source.

Hewlett-Packard Company, together with its consolidated subsidiaries, designs, manufactures and services equipment and systems for measurement, computation and communications.

In fiscal 1996 (ended October 31, 1996), net revenue rose to $38.42 billiona from $31.52 billion in 1995, and total orders reached $38.89 billion, up from $32.69 billion. Net earnings were $2.59 billion, compared with $2.43 billion in 1995, and earnings from operations were $3.73 billion. The filing notes that the first half of the year was stronger than the second, with reseller inventory adjustments and the exit from disk-mechanism manufacturing weighing on growth and margins.

Cost of products sold and services rose to 66.4% of net revenue from 63.5% in 1995, and the company attributed this to intense price competition, product mix shifts and roughly $135 millionb of pretax charges tied to the disk-mechanism exit. The balance sheet remained strong, with cash and cash equivalents of $2.89 billion and short-term investments of $442 million at year-end, against total assets of $27.70 billion and shareholders' equity of $13.44 billion. Long-term debt increased to $2.58 billion from $663 million, largely to support the lease portfolio and interest-bearing assets.

Operating activities generated $3.46 billionc in cash, and capital expenditures were $2.2 billion. The company repurchased $1.09 billion of stock in fiscal 1996 and, in November 1996, the Board authorized an additional $1 billion in repurchases. The filing reports no material pending legal proceedings beyond routine matters and states that environmental costs are not material.

02—Key points

Key Highlights

  1. Net revenue of $38.42 billion in fiscal 1996, up from $31.52 billion in fiscal 1995; orders of $38.89 billion, up from $32.69 billion.
  2. Net earnings of $2.59 billion ($2.46 per share), up from $2.43 billion ($2.31 per share) in fiscal 1995; net earnings margin fell to 6.7% from 7.7%.
  3. Cost of products sold and services rose to 66.4% of net revenue from 63.5%, driven by price competition, product mix and about $135 million in pretax charges from exiting disk-mechanism manufacturing.
  4. Research and development spending rose to $2.7 billion, or 7.1% of net revenue, while selling, general and administrative expenses fell to 16.8% of net revenue from 17.9%.
  5. Operating cash flow of $3.46 billion, supported by lower receivables and inventories as a share of net revenue (18.5% and 16.7%, respectively).
  6. Long-term debt rose to $2.58 billion from $663 million; cash and short-term investments totaled $3.3 billion at October 31, 1996.
  7. Stock repurchases of $1.09 billion in fiscal 1996, and an additional $1 billion repurchase authorization in November 1996; a 2-for-1 stock split took effect June 21, 1996.

03—Questions

Frequently Asked Questions

  1. How did revenue and earnings perform in fiscal 1996?

    Net revenue reached $38.42 billion, up from $31.52 billion, and net earnings reached $2.59 billion, up from $2.43 billion. The filing says the first half of the year was stronger than the second, when inventory adjustments in the reseller channel and the exit from disk-mechanism manufacturing reduced order and revenue growth.

  2. Why did profit margins decline?

    Cost of products sold and services rose to 66.4% of net revenue from 63.5%. The company cited intense price competition, a shift toward lower-margin, high-volume product families, costs of new product introductions, and about $135 million in pretax charges from exiting disk-mechanism manufacturing. The filing says these factors are likely to continue to pressure the cost ratio.

  3. What is the company's financial position and capital structure?

    At October 31, 1996, total assets were $27.70 billion and shareholders' equity was $13.44 billion. Cash and cash equivalents were $2.89 billion, and long-term debt rose to $2.58 billion from $663 million, which the company attributed to funding its lease portfolio and interest-bearing assets. The company had $4.6 billion of uncommitted borrowing capacity.

  4. How is the company returning capital to shareholders?

    The company repurchased $1.09 billion of common stock in fiscal 1996 and paid $450 million in dividends. In November 1996, the Board of Directors authorized an additional $1 billion in stock repurchases. Cash dividends per share were $0.44 in 1996, up from $0.35 in 1995, as restated for the 2-for-1 split.

  5. Are there significant legal or environmental liabilities?

    The filing states there are no pending legal proceedings other than routine litigation incidental to the business that are material. It also states that environmental liabilities, including CERCLA-related matters, are not expected to be material to the company's operations or financial position.

04—Continue

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