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HP Annual Report, Year Ended Oct 31, 2006

Filing Date
Filed December 22, 2006
Period End
October 31, 2006
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 December 22, 2006. Cited figures are marked; the original filing is the authoritative source.

Hewlett-Packard Company reported net revenue of $91.66 billiona for fiscal 2006 (ended October 31, 2006), up from $86.70 billion in fiscal 2005, and net earnings of $6.20 billion, or $2.18 per diluted share, compared with $2.40 billion, or $0.82 per diluted share, the prior year.

Earnings from operations rose to $6.56 billionb from $3.47 billion, with the filing noting that fiscal 2005 included $1.68 billion of restructuring charges. Net earnings in fiscal 2006 benefited from $599 million of net income tax benefit tied to items unique to the year, including $565 million of favorable adjustments from the settlement of IRS examinations for fiscal years 1993 to 1998. Cash flow was strong, with net cash provided by operating activities of $11.35 billion, and cash and cash equivalents ended the year at $16.40 billion.

HP used cash for $6.06 billionc of common stock repurchases, $1.72 billion of prepayments under a prepaid variable share purchase program, $0.89 billion of dividends, and $2.54 billion of capital investment in property, plant and equipment. The company had about $5.6 billion of remaining share repurchase authorization at October 31, 2006. Total debt was flat at $5.2 billion.

The filing highlights ongoing risks, including aggressive price competition in PCs and printing, pressure on printer supplies margins from refill and cloned cartridges, and multiple regulatory inquiries and stockholder lawsuits tied to the leak investigation. HP also disclosed pending acquisitions of Mercury Interactive, completed in November 2006 for approximately $4.8 billiond, along with Knightsbridge Solutions and Bitfone. Chief Financial Officer Robert P.

Wayman is retiring effective December 31, 2006, and Catherine A. Lesjak has been elected to succeed him.

02—Key points

Key Highlights

  1. Net revenue rose to $91.66 billion in fiscal 2006 from $86.70 billion in fiscal 2005, an increase of 6%.
  2. Net earnings were $6.20 billion, or $2.18 per diluted share, versus $2.40 billion, or $0.82 per diluted share, in fiscal 2005.
  3. Earnings from operations were $6.56 billion, or 7.2% of net revenue, compared with $3.47 billion, or 4.0% of net revenue, in fiscal 2005.
  4. Net cash provided by operating activities was $11.35 billion, up from $8.03 billion in fiscal 2005.
  5. HP repurchased stock for $6.1 billion in fiscal 2006 and had about $5.6 billion of remaining repurchase authorization at October 31, 2006.
  6. Net earnings included $599 million of net income tax benefit from items unique to fiscal 2006, primarily favorable IRS settlement adjustments of $565 million.
  7. The Mercury Interactive acquisition, completed in November 2006 for about $4.8 billion, expands the HP OpenView software portfolio.

03—Questions

Frequently Asked Questions

  1. How did HP perform financially in fiscal 2006?

    Net revenue grew about 6% to $91.66 billion, and net earnings more than doubled to $6.20 billion from $2.40 billion. Diluted EPS was $2.18, compared with $0.82 in fiscal 2005. Earnings from operations rose to $6.56 billion from $3.47 billion, and the filing attributes the improvement to growth across most segments and lower operating expenses as a percentage of revenue.

  2. What drove the growth in net revenue?

    According to the filing, Personal Systems Group contributed 2.8 percentage points of weighted average growth and Imaging and Printing Group contributed 1.9 points. Notebook PC revenue increased 23%, and printer supplies revenue grew on higher unit volumes. Enterprise Storage and Servers and Software also contributed growth, with Software revenue rising 23% in fiscal 2006 largely due to the Peregrine acquisition.

  3. How much is HP returning to shareholders?

    In fiscal 2006 HP paid $0.9 billion in cash dividends, at $0.08 per share per quarter. It repurchased $6.1 billion of common stock and made a $1.7 billion prepayment under a prepaid variable share purchase program. The board authorized an additional $10.0 billion for repurchases during fiscal 2006, leaving about $5.6 billion available at October 31, 2006.

  4. What are the main risks highlighted in the filing?

    The filing cites aggressive price competition in personal computers and printing, pressure on printer supplies margins from refill and cloned cartridges, and dependence on single-source suppliers such as Intel. It also notes exposure to international operations, where sales made up more than 60% of net revenue. Additional risks include regulatory inquiries and stockholder derivative lawsuits arising from the leak investigation, and copyright levy proceedings in Europe.

  5. Who is leading the company's finances going forward?

    Robert P. Wayman, Executive Vice President and Chief Financial Officer, will retire effective December 31, 2006. In December 2006 Catherine A. Lesjak was elected Executive Vice President and Chief Financial Officer, effective upon Wayman's retirement. Mark V. Hurd serves as Chairman, Chief Executive Officer and President.

04—Continue

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