HP 2006 Annual Report Download - page 157
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Exhibit 12
HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
Statements of Computation of Ratio of Earnings to Fixed Charges(1)
Fiscal Years Ended October 31,
2006 2005 2004 2003 2002
In millions, except ratios
Earnings (loss):
Earnings (loss) before cumulative effect of change in
accounting principle and taxes(2) ................ $7,191 $3,543 $4,196 $2,888 $(1,021)
Adjustments:
Minority interest in the income of subsidiaries with
fixed charges ............................ 8 4 12 15 7
Undistributed (earnings) loss of equity method
investees ............................... (8) (2) (2) 22 46
Fixed charges ............................. 746 809 687 710 439
$7,937 $4,354 $4,893 $3,635 $ (529)
Fixed charges:
Total interest expense, including interest expense on
borrowings, amortization of debt discount and
premium on all indebtedness and other .......... $ 336 $ 377 $ 257 $ 304 $ 255
Interest included in rent ....................... 410 432 430 406 184
Total fixed charges ............................. $ 746 $ 809 $ 687 $ 710 $ 439
Ratio of earnings to fixed charges (excess of fixed charges
over earnings) .............................. 10.6x 5.4x 7.1x 5.1x $ (968)
(1) HP computed the ratio of earnings to fixed charges by dividing earnings (earnings before
cumulative effect of change in accounting principle and taxes, adjusted for fixed charges, minority
interest in the income of subsidiaries with fixed charges and undistributed earnings or loss of
equity method investees) by fixed charges for the periods indicated. Fixed charges include
(i) interest expense on borrowings and amortization of debt discount or premium on all
indebtedness and other, and (ii) a reasonable approximation of the interest factor deemed to be
included in rental expense.
(2) HP restated earnings (loss) before cumulative effect of change in accounting principle and taxes
for the effects of adopting SFAS No. 145 ‘‘Rescission of FASB Statements No. 4, 44, and 64,
Amendment of FASB Statement No. 13, and Technical Corrections.’’ HP adopted SFAS No. 145
effective November 1, 2002.