HP 2011 Annual Report Download - page 56

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HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
Management’s Discussion and Analysis of
Financial Condition and Results of Operations (Continued)
Results of operations in dollars and as a percentage of net revenue were as follows for the
following fiscal years ended October 31:
2011(1) 2010(2) 2009(2)
In millions
Net revenue ......................... $127,245 100.0% $126,033 100.0% $114,552 100.0%
Cost of sales(3) ....................... 97,529 76.6% 95,956 76.1% 87,489 76.4%
Gross profit ......................... 29,716 23.4% 30,077 23.9% 27,063 23.6%
Research and development .............. 3,254 2.6% 2,959 2.3% 2,819 2.5%
Selling, general and administrative ......... 13,466 10.6% 12,718 10.2% 11,648 10.2%
Amortization of purchased intangible assets . . 1,607 1.3% 1,484 1.2% 1,578 1.3%
Impairment of goodwill and purchased
intangibles assets .................... 885 0.7% — — — —
Restructuring charges .................. 645 0.5% 1,144 0.9% 640 0.6%
Acquisition-related charges .............. 182 0.1% 293 0.2% 242 0.2%
Earnings from operations ............... 9,677 7.6% 11,479 9.1% 10,136 8.8%
Interest and other, net(4) ................ (695) (0.5)% (505) (0.4)% (721) (0.6)%
Earnings before taxes .................. 8,982 7.1% 10,974 8.7% 9,415 8.2%
Provision for taxes .................... 1,908 1.5% 2,213 1.7% 1,755 1.5%
Net earnings ......................... $ 7,074 5.6% $ 8,761 7.0% $ 7,660 6.7%
(1) In August 2011, we announced that we would wind down the webOS device business. The table
below sets forth the impact of these webOS-related actions on the specific line items in the table
above:
Impact of webOS
related actions in
fiscal 2011
Net revenue ................................................ $ (142)
Cost of sales ................................................ $ 548
Gross profit ................................................ $ (690)
Research and development ..................................... $ 23
Selling, general and administrative ................................ $ 42
Impairment of goodwill and purchased intangible assets ................ $ 885
Restructuring charges ......................................... $ 33
Earnings from operations ...................................... $(1,673)
(2) In connection with organizational realignments implemented in the first quarter of fiscal 2011,
certain costs previously reported as Cost of sales have been reclassified as Selling, general and
administrative expenses to better align those costs with the functional areas that benefit from those
expenditures.
(3) Cost of products, cost of services and financing interest.
(4) For fiscal 2011, Interest and other, net includes $276 million of charges in connection with the
acquisition of Autonomy Corporation plc (‘‘Autonomy’’), which is primarily comprised of the
$265 million net cost of British pound options bought to limit foreign exchange rate risk.
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