HP 2010 Annual Report Download - page 46

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
Management’s Discussion and Analysis of
Financial Condition and Results of Operations (Continued)
The following provides an overview of our key fiscal 2010 financial metrics and demonstrates how
our execution has translated into financial performance:
HP Enterprise Business
HP(1) HP
Consolidated Services ESS Software Total PSG IPG HPFS
In millions, except per share amounts
Net revenue .............. $126,033 $34,935 $18,651 $3,586 $57,172 $40,741 $25,764 $3,047
Year-over-year net revenue %
increase ............... 10.0% 0.7% 21.4% 0.4% 6.6% 15.4% 7.3% 14.0%
Earnings from operations ..... $11,479 $ 5,609 $ 2,402 $ 759 $ 8,770 $ 2,032 $ 4,412 $ 281
Earnings from operations as a
% of net revenue ........ 9.1% 16.1% 12.9% 21.2% 15.3% 5.0% 17.1% 9.2%
Net earnings ............. $ 8,761
Net earnings per share
Basic ................. $ 3.78
Diluted ............... $ 3.69
(1) Includes Corporate Investments and eliminations.
Cash and cash equivalents at October 31, 2010 totaled $10.9 billion, a decrease of $2.4 billion from
the October 31, 2009 balance of $13.3 billion. The decrease for fiscal 2010 was due primarily to
$11.0 billion of cash used to repurchase common stock, $8.1 billion of net cash paid for business
acquisitions, and $3.5 billion net investment in property, plant and equipment, all of which were
partially offset by $11.9 billion of cash provided from operations, $6.0 billion of increased net
borrowings, and $2.6 billion of proceeds related to issuance of 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 (‘‘GAAP’’), 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 not readily apparent from other sources. Senior management has discussed the
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