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HP Annual Report, Year Ended Oct 31, 1998

Filing Date
Filed January 15, 1999
Period End
October 31, 1998
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 15, 1999. Cited figures are marked; the original filing is the authoritative source.

Hewlett-Packard Company's fiscal 1998 Form 10-K (year ended October 31, 1998) shows net revenue of $47.06 billiona, up from $42.90 billion in 1997, with earnings from operations of $3.84 billion versus $4.34 billion and net earnings of $2.95 billion versus $3.12 billion.

The filing states that net earnings declined 6 percent, compared with a 21 percent increase in 1997, and that full-year operating and net-profit margins were lower than in 1997. Management attributes the slowdown to continued pricing pressure in personal computers and printers and to economic weakness in Asia, which cut revenue growth from 16 percent in the first half of 1998 to 4 percent in the second half. The company also recorded $260 millionb of charges in cost of products sold and services, primarily for voluntary employee severance programs and fixed-asset writedowns tied to outsourcing of certain production operations.

Balance sheet and cash flow were strong. Operating activities generated $5.44 billionc in cash, which funded $2.42 billion of common stock repurchases and $1.3 billion of debt reductions, and cash and short-term investments totaled $4.1 billion at year end. Total assets were $33.67 billion and long-term debt fell to $2.06 billion from $3.16 billion.

Management expects full-year 1999 net revenue growth similar to 1998, with slower growth in the first half of 1999 reflecting the Asian economic weakness. The filing also covers the Year 2000 program, with implementation of internal IT applications about 40 percent complete as of November 30, 1998 and a target compliance date of July 31, 1999, and it reports research and development spending of $3.4 billiond, or 7.1 percent of net revenue. The company had approximately 124,600 employees at October 31, 1998.

02—Key points

Key Highlights

  1. Net revenue rose to $47.06 billion in 1998 from $42.90 billion in 1997, but growth slowed to 4 percent in the second half after 16 percent in the first half.
  2. Net earnings declined 6 percent to $2.95 billion, compared with a 21 percent increase in 1997; diluted EPS was $2.77 versus $2.95.
  3. Earnings from operations fell to $3.84 billion from $4.34 billion, and cost of products sold and services rose to 68.1 percent of net revenue from 66.0 percent.
  4. Cost of products sold and services included $260 million of charges for voluntary employee severance and fixed-asset writedowns tied to outsourcing of production.
  5. Operating cash flow was $5.44 billion, and the company repurchased $2.42 billion of common stock and repaid about $1.3 billion of borrowings.
  6. Long-term debt declined to $2.06 billion from $3.16 billion, and cash and short-term investments were $4.1 billion at October 31, 1998.
  7. Management expects 1999 net revenue growth similar to 1998, with slower growth in the first half of 1999 due to economic weakness in Asia.

03—Questions

Frequently Asked Questions

  1. Why did net earnings decline in fiscal 1998?

    The filing says full-year operating and net-profit margins were lower than in 1997 because continued pricing pressure in personal computers and printers, together with economic weakness in Asia that became significant in mid-1998, slowed revenue growth. Cost controls implemented in the second half of 1998 helped but did not fully offset the slowdown. Net earnings fell 6 percent to $2.95 billion.

  2. How much cash did the company return to shareholders and reduce debt with in 1998?

    Cash from operations funded $2.4 billion in repurchases of common stock and $1.3 billion in reductions of total borrowings. Dividends paid were $625 million, up from $532 million in 1997. The company also had about $2.1 billion of remaining repurchase authorization at October 31, 1998.

  3. What does management expect for 1999?

    The company anticipates net revenue growth for full-year 1999 similar to the 1998 rate. It expects slower growth in the first half of 1999, reflecting economic weakness in Asia and other regions, with growth increasing later in the year. Ongoing competitive pricing pressure in PCs and printers is also cited as a risk.

  4. Is the company's Year 2000 issue expected to be material?

    Based on current estimates, the company does not believe the costs of its Year 2000 internal readiness actions will have a material effect on results or financial condition. Implementation of internal IT applications was about 40 percent complete as of November 30, 1998, with a targeted compliance date of July 31, 1999. The filing notes there can be no assurance of no delays or increased costs.

04—Continue

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