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HP Annual Report, Year Ended Oct 31, 2002

Filing Date
Filed January 21, 2003
Period End
October 31, 2002
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 21, 2003. Cited figures are marked; the original filing is the authoritative source.

Hewlett-Packard Company's Form 10-K for the fiscal year ended October 31, 2002 reports net revenue of $56.6 billiona, up from $45.2 billion in fiscal 2001, driven primarily by the May 3, 2002 acquisition of Compaq Computer Corporation.

The company reported a loss from operations of $1.01 billionb and a net loss of $903 million, compared with earnings from operations of $1.44 billion and net earnings of $408 million in fiscal 2001. The loss reflects $1.78 billion of restructuring charges, $793 million of in-process research and development charges, and $701 million of acquisition-related charges, largely tied to the Compaq integration. Management stated that Compaq cost savings for the second half of fiscal 2002 were approximately $650 million, against a target of approximately $500 million, and that aggregate annual cost synergies of $3 billion are expected to be fully realized in fiscal 2004.

The balance sheet expanded substantially, with total assets of $70.7 billionc at year-end versus $32.6 billion a year earlier, including goodwill of $15.1 billion and purchased intangible assets of $4.9 billion. Cash and cash equivalents rose to $11.2 billion, and operating cash flow was $5.4 billion. Long-term debt increased to $6.0 billion from $3.7 billion, and the company paid $0.32 per share in dividends.

The filing also describes a broad set of pending litigation, including the Cooper patent case, consumer class actions over inkjet cartridges, and a $200 billiond-plus apartheid-related suit, along with SEC and U.S. Attorney inquiries tied to the Compaq vote. The company's five segments are Imaging and Printing Group, Personal Systems Group, Enterprise Systems Group, HP Services, and HP Financial Services. Imaging and Printing earnings from operations were $3.25 billion on $20.3 billion of revenue.

Personal Systems and Enterprise Systems both reported operating losses in fiscal 2002, at $401 million and $968 million respectively, while HP Services earned $1.02 billion. Management expects approximately $1.4 billion of future cash expenditures for restructuring, and a pension contribution of approximately $800 million in fiscal 2003.

02—Key points

Key Highlights

  1. Net revenue rose to $56.6 billion from $45.2 billion, primarily reflecting the May 3, 2002 Compaq acquisition, which was included from its acquisition date.
  2. Net loss of $903 million in fiscal 2002 versus net earnings of $408 million in fiscal 2001, with $1.78 billion of restructuring charges and $793 million of in-process R&D charges.
  3. Compaq cost savings of approximately $650 million in the second half of fiscal 2002 exceeded the approximately $500 million target; $3 billion of annual cost synergies are expected by fiscal 2004.
  4. Total assets nearly doubled to $70.7 billion, with goodwill of $15.1 billion and purchased intangible assets of $4.9 billion, reflecting the Compaq and Indigo acquisitions.
  5. Operating cash flow was $5.4 billion and year-end cash and cash equivalents were $11.2 billion, while long-term debt rose to $6.0 billion from $3.7 billion.
  6. Imaging and Printing Group earnings from operations were $3.25 billion on $20.3 billion of revenue, while Personal Systems and Enterprise Systems reported operating losses of $401 million and $968 million.
  7. Stockholders' equity increased to $36.3 billion from $14.0 billion, and the quarterly dividend remained at $0.08 per share.

03—Questions

Frequently Asked Questions

  1. Why did HP report a net loss in fiscal 2002 after earning $408 million in fiscal 2001?

    The loss was driven mainly by charges tied to the Compaq acquisition and restructuring. HP recorded $1.78 billion of restructuring charges, $793 million of in-process R&D charges, $701 million of acquisition-related charges, and $402 million of amortization of purchased intangible assets. Net investment losses of $106 million and a $180 million reduction in inventory charges versus the prior year were also factors.

  2. What cost savings has management achieved from the Compaq acquisition?

    Management stated that it achieved cost savings of approximately $650 million in the second half of fiscal 2002, about 30% above its target of approximately $500 million for the period. It expects aggregate annual cost synergies of approximately $3 billion, of which approximately $2 billion results from restructuring plans, to be fully realized in fiscal 2004.

  3. How much restructuring cash is still expected to be spent?

    Management expects future restructuring cash expenditures of approximately $1.4 billion, primarily for employee severance and related benefits, to be funded from existing cash balances and operating cash flows, and substantially complete by the end of fiscal 2003.

  4. What are the most significant legal matters disclosed?

    The filing discloses the HP v. Cooper patent suit over LaserJet printers, consumer class actions over half-full inkjet cartridges, the Digwamaji apartheid-related suit seeking compensatory and punitive damages each in excess of $200 billion, the Intergraph cache-memory patent suit, and SEC and U.S. Attorney's Office inquiries related to the Compaq acquisition vote. HP states that it believes it has valid defenses and adequate provisions for probable and estimable losses.

04—Continue

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