HP 2009 Annual Report Download - page 45

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 2009 financial metrics and demonstrates how
our execution of these initiatives has translated into financial performance:
HP Enterprise Business
HP HP
Consolidated Services ESS Software Total PSG IPG HPFS
In millions, except per share amounts
Net revenue .............. $114,552 $34,693 $15,359 $3,572 $53,624 $35,305 $24,011 $2,673
Year-over-year net revenue %
(decrease) increase ....... (3.2)% 65.4% (20.8)% (15.4)% 20.2% (16.5)% (18.9)% (0.9)%
Earnings from operations ..... $10,136 $ 5,044 $ 1,518 $ 684 $ 7,246 $ 1,661 $ 4,310 $ 206
Earnings from operations as a
% of net revenue ........ 8.8% 14.5% 9.9% 19.1% 13.5% 4.7% 18.0% 7.7%
Net earnings ............. $ 7,660
Net earnings per share
Basic ................. $ 3.21
Diluted ............... $ 3.14
Cash and cash equivalents at October 31, 2009 totaled $13.3 billion, an increase of $3.1 billion
from the October 31, 2008 balance of $10.2 billion. The increase for fiscal 2009 was due primarily to
$13.4 billion of cash provided from operations and $1.8 billion of proceeds from the issuance of
common stock under employee stock plans, which were partially offset by $5.1 billion of cash used to
repurchase common stock, $3.2 billion net investment in property, plant and equipment, and
$2.8 billion net payment of our debt.
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
development, selection and disclosure of these estimates with the Audit Committee of HP’s Board of
Directors. Management believes that the accounting estimates employed and the resulting balances are
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