HP 2008 Annual Report Download - page 45

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
Management’s Discussion and Analysis of
Financial Condition and Results of Operations (Continued)
In terms of how our execution has translated into financial performance, the following provides an
overview of our key fiscal 2008 financial metrics:
TSG
HP HP
Consolidated ESS HPS(1) Software Total PSG IPG HPFS
In millions, except per share amounts
Net revenue ........... $118,364 $19,400 $22,397 $3,029 $44,826 $42,295 $29,385 $2,698
Year-over-year net
revenue % increase .... 13.5% 4.1% 35.2% 19.7% 18.8% 16.2% 3.2% 15.5%
Earnings from operations . $ 10,473 $ 2,577 $ 2,491 $ 461 $ 5,529 $ 2,375 $ 4,590 $ 192
Earnings from operations
as a % of net revenue . . 8.8% 13.3% 11.1% 15.2% 12.3% 5.6% 15.6% 7.1%
Net earnings .......... $ 8,329
Net earnings per share
Basic .............. $ 3.35
Diluted ............ $ 3.25
(1) Includes the results of the business operations acquired from EDS beginning on August 26, 2008.
Cash and cash equivalents at October 31, 2008 totaled $10.2 billion, a decrease of $1.1 billion from
the October 31, 2007 balance of $11.3 billion. The decrease for fiscal 2008 was related primarily to
$11.2 billion of net cash paid for business acquisitions, $9.6 billion paid to repurchase our common
stock, and $2.6 billion net investments in property, plant and equipment, all of which were partially
offset by $14.6 billion in cash provided from operations, a $6.3 billion net increase in our outstanding
debt and commercial paper and $1.8 billion in proceeds from the issuance of our common stock under
employee stock plans.
We intend the discussion of our financial condition and results of operations that follows to
provide information that will assist in understanding our Consolidated Financial Statements, the
changes in certain key items in those financial statements from year to year, and the primary factors
that accounted for those changes, as well as how certain accounting principles, policies and estimates
affect our Consolidated Financial Statements.
The discussion of results of operations at the consolidated level is followed by a more detailed
discussion of results of operations by segment.
For a further discussion of trends, uncertainties and other factors that could impact our operating
results, see the section entitled ‘‘Risk Factors’’ in Item 1A, which is incorporated herein by reference.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
General
The Consolidated Financial Statements of HP are prepared in accordance with U.S. generally
accepted accounting principles, which require management to make estimates, judgments and
assumptions that affect the reported amounts of assets, liabilities, net revenue and expenses, and the
disclosure of contingent assets and liabilities. Management bases its estimates on historical experience
and on various other assumptions that it believes to be reasonable under the circumstances, the results
of which form the basis for making judgments about the carrying values of assets and liabilities that are
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