01—Abstract
Summary
Summary of the 10-K filed December 15, 2010. Cited figures are marked; the original filing is the authoritative source.
Hewlett-Packard Company's annual report for fiscal 2010 (year ended October 31, 2010) shows net revenue of $126.03 billiona, up 10.0% from $114.55 billion in fiscal 2009, with net earnings of $8.76 billion, up from $7.66 billion, and diluted EPS of $3.69 versus $3.14.
Earnings from operations rose to $11.48 billionb (9.1% of net revenue) from $10.14 billion. The growth was led by Personal Systems Group, which posted revenue of $40.74 billion, up 15.4%, and Enterprise Storage and Servers, up 21.4% to $18.65 billion. Services revenue was broadly flat at $34.94 billion, up 0.7%, while Services operating margin improved to 16.1%.
Cash and cash equivalents fell to $10.93 billionc from $13.28 billion, as HP spent $11.04 billion repurchasing common stock and $8.10 billion on net business acquisitions, including 3Com, Palm, 3PAR and ArcSight. Operating cash flow was $11.92 billion. Total debt rose to $22.3 billion from $15.8 billion, and short-term debt was $7.05 billion.
Restructuring charges increased to $1.14 billiond, driven by a $650 million enterprise services plan. The filing also discloses ongoing investigations by the U.S. Department of Justice and the SEC into the Russia GPO transaction and potential Foreign Corrupt Practices Act violations, as well as customs proceedings in India and copyright levy litigation in Europe. Approximately 65% of net revenue came from outside the United States.
02—Key points
Key Highlights
- Net revenue rose 10.0% to $126.03 billion, and net earnings rose to $8.76 billion from $7.66 billion.
- Diluted EPS was $3.69, up from $3.14 in fiscal 2009.
- Personal Systems Group revenue grew 15.4% to $40.74 billion, the largest contributor to total revenue growth.
- Enterprise Storage and Servers revenue grew 21.4% to $18.65 billion, with industry standard server revenue up 35%.
- HP repurchased $11.04 billion of common stock and completed $8.10 billion in net acquisition payments, including 3Com, Palm, 3PAR and ArcSight.
- Total debt increased to $22.3 billion from $15.8 billion, while cash and cash equivalents declined to $10.93 billion.
- Pending investigations by the U.S. Department of Justice and the SEC relate to the Russia GPO transaction and potential Foreign Corrupt Practices Act violations.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2010, HP kept $0.07.
- Revenue$126.03B100.0%
- Cost of revenue−$65.06B51.6%
- Gross profit$60.97B48.4%
- Operating costs−$49.49B39.3%
- Operating income$11.48B9.1%
- Interest, other & tax−$2.72B2.2%
- Net income$8.76B7.0%
Where FY2010 revenue went
$126.03B- Cost of revenue: $65.06B, 52% of revenue
- Other operating costs: $33.71B, 27% of revenue
- Net income: $8.76B, 7.0% of revenue
- R&D: $2.96B, 2.3% of revenue
- SG&A: $12.82B, 10% of revenue
- Interest, other & tax: $2.72B, 2.2% of revenue
Kept 7.0% as net incomeNet income $8.76B · 7.0%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2010filed December 15, 2010Financial Statements
FY2010 against FY2009
| Line item | FY2010FY2009 | Change |
|---|---|---|
| Revenue | $126.03B$114.55B | +10.0% |
| Cost of Revenue | $65.06B$56.50B | +15.2% |
| Gross Profit | $60.97B$58.05B | +5.0% |
| R&D Expenses | $2.96B$2.82B | +5.0% |
| SG&A Expenses | $12.82B$11.65B | +10.1% |
| Operating Expenses | $114.55B$104.42B | +9.7% |
| Operating Income | $11.48B$10.14B | +13.2% |
| Interest Expense | $417.00M$597.00M | −30.2% |
| Net Income | $8.76B$7.66B | +14.4% |
| EPS (Basic) | $3.78$3.21 | +17.8% |
| EPS (Diluted) | $3.69$3.14 | +17.5% |
| Shares Outstanding (Basic) | 2.32B2.39B | −2.9% |
| Shares Outstanding (Diluted) | 2.37B2.44B | −2.7% |
05—Questions
Frequently Asked Questions
How did HP perform financially in fiscal 2010?
Net revenue was $126.03 billion, up 10.0% from $114.55 billion. Earnings from operations were $11.48 billion, or 9.1% of net revenue, and net earnings were $8.76 billion, or $3.69 per diluted share.
Which segments drove growth?
Personal Systems Group revenue rose 15.4% to $40.74 billion, and Enterprise Storage and Servers rose 21.4% to $18.65 billion. Imaging and Printing Group revenue rose 7.3% to $25.76 billion, and Services revenue rose 0.7% to $34.94 billion.
How did HP use its cash in fiscal 2010?
Operating activities provided $11.92 billion. HP used $11.04 billion to repurchase common stock, $8.10 billion for net business acquisitions and $4.13 billion for property, plant and equipment, and it paid $771 million in dividends. Cash and cash equivalents decreased to $10.93 billion.
What is HP's debt position?
Total debt was $22.3 billion at October 31, 2010, including $7.05 billion of short-term debt and $15.26 billion of long-term debt, compared with $15.8 billion a year earlier. The debt-equity ratio was 0.55x.
What legal and regulatory matters are disclosed?
The filing discloses DOJ and SEC investigations into the Russia GPO transaction and potential FCPA violations, Indian customs duty show cause notices totaling approximately $370 million plus penalties, European copyright levy proceedings, and consumer class actions over inkjet printers and LaserJet color printers.
06—Continue