HP 2008 Annual Report Download - page 55
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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:
2008 2007(2) 2006(2)
In millions
Net revenue .......................... $118,364 100.0% $104,286 100.0% $91,658 100.0%
Cost of sales(1) ........................ 89,921 76.0% 78,887 75.6% 69,427 75.7%
Gross profit .......................... 28,443 24.0% 25,399 24.4% 22,231 24.3%
Research and development ............... 3,543 3.0% 3,611 3.5% 3,591 3.9%
Selling, general and administrative .......... 13,104 11.1% 12,226 11.7% 11,266 12.3%
Amortization of purchased intangible assets . . . 967 0.9% 783 0.7% 604 0.7%
In-process research and development charges . . 45 — 190 0.2% 52 —
Restructuring charges ................... 270 0.2% 387 0.4% 158 0.2%
Acquisition-related charges ............... 41 — — — — —
Pension curtailments and pension settlements,
net............................... — — (517) (0.5)% — —
Earnings from operations ................ 10,473 8.8% 8,719 8.4% 6,560 7.2%
Interest and other, net .................. — — 458 0.4% 631 0.6%
Earnings before taxes ................... 10,473 8.8% 9,177 8.8% 7,191 7.8%
Provision for taxes ..................... 2,144 1.8% 1,913 1.8% 993 1.0%
Net earnings ......................... $ 8,329 7.0% $ 7,264 7.0% $ 6,198 6.8%
(1) Cost of products, cost of services and financing interest.
(2) Certain reclassifications have been made to prior year amounts in order to conform to the current
year presentation.
Net Revenue
The components of weighted-average net revenue growth as compared to prior-year periods were
as follows for the following fiscal years ended October 31:
2008 2007
Percentage points
Personal Systems Group .............................................. 5.6 7.9
HP Services ....................................................... 5.6 1.1
Imaging and Printing Group ........................................... 0.9 1.8
Enterprise Storage and Servers ......................................... 0.7 1.5
HP Software ...................................................... 0.5 1.2
HP Financial Services ................................................ 0.4 0.3
Corporate Investments/Other .......................................... (0.2) —
Total HP ......................................................... 13.5 13.8
In fiscal 2008, HP net revenue increased approximately 13% from the prior-year period (8% on a
constant currency basis). The favorable currency impact for fiscal 2008 was due primarily to the
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