HP Reports Fiscal 2014 Full-Year and Fourth Quarter Results

Fiscal 2014 fourth quarter segment results

  • Personal Systems revenue was up 4% year over year with a 4.0% operating margin. Commercial revenue increased 7% and Consumer revenue decreased 2%. Total units were up 5% with Desktops units down 2% and Notebooks units up 8%.
  • Printing revenue was down 5% year over year with an 18.1% operating margin. Total hardware units were down 1% with Commercial hardware units up 5% and Consumer hardware units down 4%. Supplies revenue was down 7%.
  • Enterprise Group revenue was down 4% year over year with a 14.8% operating margin. Industry Standard Servers revenue was down 2%, Storage revenue was down 8%, Business Critical Systems revenue was down 29%, Networking revenue was up 2% and Technology Services revenue was down 3%.
  • Enterprise Services revenue was down 7% year over year with a 6.8% operating margin. Application and Business Services revenue was down 6% and Infrastructure Technology Outsourcing revenue declined 7%.
  • Software revenue was down 1% year over year with a 31.1% operating margin. License revenue was up 2%, support revenue was down 1%, professional services revenue was down 5% and software-as-a-service (SaaS) revenue was flat.
  • HP Financial Services revenue was down 1% year over year with a 1% decrease in net portfolio assets and a 15% increase in financing volume. The business delivered an operating margin of 12.1%.

More information on HP's earnings, including additional financial analysis and an earnings overview presentation, is available on HP's Investor Relations website at www.hp.com/investor/home.

HP's Q4 FY14 earnings conference call is accessible via an audio webcast at www.hp.com/investor/2014Q4webcast.

About HP
HP creates new possibilities for technology to have a meaningful impact on people, businesses, governments and society. With the broadest technology portfolio spanning printing, personal systems, software, services and IT infrastructure, HP delivers solutions for customers' most complex challenges in every region of the world. More information about HP is available at http://www.hp.com.

Use of non-GAAP financial information
To supplement HP's consolidated condensed financial statements presented on a generally accepted accounting principles (GAAP) basis, HP provides revenue on a constant currency basis, non-GAAP operating profit, non-GAAP operating margin, non-GAAP net earnings, non-GAAP diluted net earnings per share, gross cash, free cash flow, net capital expenditures, net debt, net cash, operating company net debt and operating company net cash. HP also provides forecasts of non-GAAP diluted net earnings per share. A reconciliation of the adjustments to GAAP results for this quarter and full year and prior periods is included in the tables below or elsewhere in the materials accompanying this news release. In addition, an explanation of the ways in which HP's management uses these non-GAAP measures to evaluate its business, the substance behind HP's decision to use these non-GAAP measures, the material limitations associated with the use of these non-GAAP measures, the manner in which HP's management compensates for those limitations, and the substantive reasons why HP's management believes that these non-GAAP measures provide useful information to investors is included under "Use of non-GAAP financial measures" after the tables below. This additional non-GAAP financial information is not meant to be considered in isolation or as a substitute for revenue, operating profit, operating margin, net earnings, diluted net earnings per share, cash and cash equivalents, cash flow from operations, capital expenditures, or total company debt prepared in accordance with GAAP.

Forward-looking statements
This news release contains forward-looking statements that involve risks, uncertainties and assumptions. If the risks or uncertainties ever materialize or the assumptions prove incorrect, the results of HP may differ materially from those expressed or implied by such forward-looking statements and assumptions. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including but not limited to any projections of revenue, margins, expenses, effective tax rates, net earnings, net earnings per share, cash flows, benefit plan funding, share repurchases, currency exchange rates or other financial items; any projections of the amount, timing or impact of cost savings or restructuring charges; any statements of the plans, strategies and objectives of management for future operations, including the previously announced separation transaction and the future performances of the post-separation companies if the separation is completed, as well as the execution of restructuring plans and any resulting cost savings or revenue or profitability improvements; any statements concerning the expected development, performance, market share or competitive performance relating to products or services; any statements regarding current or future macroeconomic trends or events and the impact of those trends and events on HP and its financial performance; any statements regarding pending investigations, claims or disputes; any statements of expectation or belief; and any statements of assumptions underlying any of the foregoing. Risks, uncertainties and assumptions include the need to address the many challenges facing HP's businesses; the competitive pressures faced by HP's businesses; risks associated with executing HP's strategy, including the planned separation transaction; the impact of macroeconomic and geopolitical trends and events; the need to manage third-party suppliers and the distribution of HP's products and the delivery of HP's services effectively; the protection of HP's intellectual property assets, including intellectual property licensed from third parties; risks associated with HP's international operations; the development and transition of new products and services and the enhancement of existing products and services to meet customer needs and respond to emerging technological trends; the execution and performance of contracts by HP and its suppliers, customers and partners; the hiring and retention of key employees; integration and other risks associated with business combination and investment transactions; the execution, timing and results of the separation transaction or restructuring plans, including estimates and assumptions related to the cost (including any possible disruption of HP's business) and the anticipated benefits of implementing the separation transaction and restructuring plans; the resolution of pending investigations, claims and disputes; and other risks that are described in HP's Annual Report on Form 10-K for the fiscal year ended October 31, 2013, and HP's other filings with the Securities and Exchange Commission, including HP's Quarterly Report on Form 10-Q for the fiscal quarter ended July 31, 2014. As in prior periods, the financial information set forth in this release, including tax-related items, reflects estimates based on information available at this time. While HP believes these estimates to be reasonable, these amounts could differ materially from reported amounts in HP's Annual Report on Form 10-K for the fiscal year ended October 31, 2014. In particular, determining HP's tax balances and provisions as of October 31, 2014 requires extensive internal and external review of tax data (including consolidating and reviewing the tax provisions of numerous domestic and foreign entities), which is being completed in the ordinary course of preparing HP's Annual Report on Form 10-K. HP assumes no obligation and does not intend to update these forward-looking statements.

                                                                            
                  HEWLETT-PACKARD COMPANY AND SUBSIDIARIES                  
               CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS                
                                (Unaudited)                                 
                  (In millions, except per share amounts)                   
                                                                                                                         
                                                                                            Three  months  ended                        
                                                                      ----------------------------------------  
                                                                        October  31,        July  31,          October  31,  
                                                                              2014                    2014                    2013          
                                                                      ------------    ------------    ------------  
                                                                                                                                                        
Net  revenue                                                $          28,406    $          27,585    $          29,131  
                                                                                                                                                        
Costs  and  expenses:                                                                                                                  
    Cost  of  sales                                                    21,425                20,974                22,437  
    Research  and  development                                    876                      887                      729  
    Selling,  general  and                                                                                                            
      administrative                                                  3,364                  3,388                  3,351  
    Amortization  of  intangible                                                                                                
      assets                                                                      226                      227                      317  
    Restructuring  charges                                          604                      649                      371  
    Acquisition-related  charges                                  3                          2                          3  
                                                                      ------------    ------------    ------------  
        Total  costs  and  expenses                          26,498                26,127                27,208  
                                                                      ------------    ------------    ------------  
                                                                                                                                                        
Earnings  from  operations                                    1,908                  1,458                  1,923  
                                                                                                                                                        
Interest  and  other,  net                                        (146)                  (145)                  (103)
                                                                      ------------    ------------    ------------  
                                                                                                                                                        
Earnings  before  taxes                                          1,762                  1,313                  1,820  
                                                                                                                                                        
Provision  for  taxes                                                (432)                  (328)                  (406)
                                                                      ------------    ------------    ------------  
                                                                                                                                                        
Net  earnings                                              $            1,330    $                985    $            1,414  
                                                                      ============    ============    ============  
                                                                                                                                                        
Net  earnings  per  share:                                                                                                          
    Basic                                                        $              0.71    $              0.53    $              0.74  
    Diluted                                                    $              0.70    $              0.52    $              0.73  
                                                                                                                                                        
Cash  dividends  declared  per  share    $                    -    $              0.32    $                    -  
                                                                                                                                                        
                                                                                                                                                        
Weighted-average  shares  used  to                                                                                          
  compute  net  earnings  per  share:                                                                                        
    Basic                                                                      1,862                  1,870                  1,918  
    Diluted                                                                  1,896                  1,899                  1,940  
                                                                                                                                                        
                                                                                                                                                        
                                                                                                                                                        
                                    HEWLETT-PACKARD  COMPANY  AND  SUBSIDIARIES                                    
                              CONSOLIDATED  CONDENSED  STATEMENTS  OF  EARNINGS                                
                                    (In  millions,  except  per  share  amounts)                                      
                                                                                                                                                        
                                                                                        Twelve  months  ended  October  31,  
                                                                                      --------------------------------  
                                                                                                  2014                          2013            
                                                                                      ---------------    ---------------  
                                                                                          (Unaudited)                                        
                                                                                                                                                        
Net  revenue                                                                $              111,454    $              112,298  
                                                                                                                                                        
Costs  and  expenses:                                                                                                                  
    Cost  of  sales                                                                          84,839                      86,380  
    Research  and  development                                                      3,447                        3,135  
    Selling,  general  and  administrative                              13,353                      13,267  
    Amortization  of  intangible  assets                                    1,000                        1,373  
    Restructuring  charges                                                            1,619                            990  
    Acquisition-related  charges                                                      11                              22  
                                                                                      ---------------    ---------------  
        Total  costs  and  expenses                                              104,269                    105,167  
                                                                                      ---------------    ---------------  
                                                                                                                                                        
Earnings  from  operations                                                          7,185                        7,131  
                                                                                                                                                        
Interest  and  other,  net                                                              (628)                        (621)
                                                                                      ---------------    ---------------  
                                                                                                                                                        
Earnings  before  taxes                                                                6,557                        6,510  
                                                                                                                                                        
Provision  for  taxes                                                                  (1,544)                    (1,397)
                                                                                      ---------------    ---------------  
                                                                                                                                                        
Net  earnings                                                              $                  5,013    $                  5,113  
                                                                                      ===============    ===============  
                                                                                                                                                        
Net  earnings  per  share:                                                                                                          
    Basic                                                                        $                    2.66    $                    2.64  
    Diluted                                                                    $                    2.62    $                    2.62  
                                                                                                                                                        
Cash  dividends  declared  per  share                    $                    0.61    $                    0.55  
                                                                                                                                                        
                                                                                                                                                        
Weighted-average  shares  used  to  compute                                                                          
  net  earnings  per  share:                                                                                                        
    Basic                                                                                            1,882                        1,934  
    Diluted                                                                                        1,912                        1,950  
                                                                                                                                                        
 

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