http://www.hp.com/pressrel/16feb96.htm (PC Press Internet CD, 03/1996)
Palo Alto, California. February 16, 1996
Hewlett-Packard Company (NYSE: HWP) today reported a 31 percent increase in net earnings for the 1996 fiscal year's first quarter, which ended Jan. 31. Orders rose 29 percent, and net revenue increased 27 percent over the year-ago quarter.
Net earnings for the quarter were $790 million, or $1.50 per share on approximately 526 million shares of common stock and common-stock equivalents. This compares with earnings of $1.15 per share on approximately 524 million shares in the year-ago quarter.
Orders for the quarter were $10.1 billion, compared with $7.8 billion in the first quarter of 1995. U.S. orders totaled $3.9 billion, up 24 percent over the year-ago period, while orders from outside the United States grew 32 percent to $6.2 billion, or 61 percent of the total.
Net revenue for the quarter was $9.3 billion, compared with $7.3 billion in the same period last year. Net revenue in the United States was $3.8 billion, up 20 percent compared with the year-ago period, while net revenue from outside the United States increased 33 percent to $5.5 billion.
"We're extremely pleased to start the year with these results," said Lewis E. Platt, HP chairman, president and chief executive officer. "Very strong acceptance of our products, as well as outstanding growth in international markets, drove order and revenue increases that were ahead of our plan. This growth -- combined with effective management of operating expenses -- produced excellent profitability. Our businesses executed very well, and we strengthened our competitive position in key markets."
Platt noted that the company's order growth was strong and broad-based again this quarter. "We're encouraged by outstanding demand in many of our businesses, especially in light of some slowing in major economies around the world," he said. "This quarter, we kept pace with the 20-plus percent order growth we achieved in each of the last three years. Outstanding products and services, as well as increased penetration in retail markets, were key drivers of our continued growth."
Orders in the computer business totaled $8.3 billion, an increase of 32 percent over the year-ago period. PC servers and desktop PCs, printers and supplies, professional services and UNIX (R) systems were strong this quarter.
Growth in the company's PC business was outstanding again this quarter. Very good market acceptance of the HP NetServer LS series of high-end servers, introduced in the fourth quarter of fiscal 1995, helped drive superb order growth in PC servers. Orders for the HP Vectra family of desktop PCs increased sharply. Demand for the HP Pavilion series of home PCs also was very good.
HP DeskJet printers posted excellent order growth, with the DeskJet 850C and DeskJet 400 printers, as well as the recently introduced DesignJet 750C and 755CM wide-format plotters, doing especially well. Demand for inkjet supplies increased very strongly, and orders for the HP OfficeJet printer/fax/copier were outstanding. HP LaserJet printers achieved very good growth, fueled by strong acceptance of the LaserJet 5Si network printer and the LaserJet 5L personal printer.
The UNIX system business achieved a very good order increase, and the service and support business also posted excellent growth. Within service and support, professional services, which includes a wide variety of consulting and training services, had a very strong increase in orders.
Orders in the test-and-measurement business increased 32 percent. Demand for semiconductor-test equipment increased sharply, while services and consulting achieved very strong growth. Digital-design and test equipment also attained an outstanding order increase.
Orders in the electronic-components business increased 10 percent, with very good growth in LEDs and fiber-optic components. The growth rate in components was reduced by 7 percentage points as a result of the company's ongoing exit from the external ASIC business. Orders in the chemical-analysis business rose 6 percent, with liquid-chromatography products achieving a very healthy increase. Medical-product orders declined 2 percent compared with a strong year-ago quarter.
Cost of goods sold for the quarter was 64.5 percent of net revenue, compared with 62.3 percent in the same period last year, and 65.3 percent in the fourth quarter of fiscal 1995.
Operating expenses rose 15 percent over the year-ago quarter and were 22.6 percent of net revenue, compared with 24.9 percent a year ago and 24.3 percent in the fourth quarter of 1995.
"This quarter, we continued to make appropriate investments to support our growth and to develop the products and technologies that are vital to our future," said Platt. "At the same time, we made substantial progress in improving our competitiveness by reducing our overall operating-expense ratios."
As a percentage of net revenue, accounts receivable was 19.3 percent, compared with 18.8 percent in the year-ago quarter. Net property, plant and equipment was 14.3 percent, compared with 16.5 percent in the year-ago period. Inventory was 20.3 percent of net revenue, up from 16.5 percent in the same quarter last year.
"This quarter's results in asset management were mixed," said Platt. "We're pleased with our overall improvement in return on assets. Accounts receivable tracked revenue growth quite closely, and we continued to make good progress on property, plant and equipment as a percent of net revenue.
"However, we didn't do as well at managing inventory as we need to. While some inventory growth was planned in the quarter, actual growth was greater than expected, outpacing revenue growth. We're working to find the right balance between meeting the needs of our customers and making the right level of asset commitments."
"Our first-quarter results are a terrific start to the year," said Platt. "HP's people once again did an outstanding job in a highly competitive environment.
"We're starting the second quarter in an excellent competitive position, but there are many challenges in the markets we serve. Competition remains intense; pricing pressures are persistent, and customer expectations continue to rise. In addition, there are signs of slowing in some major economies, including the United States and Western Europe.
"We have ambitious product programs in place across the company, and we'll maintain our focus on bringing compelling products and services to market quickly and effectively," said Platt. "In addition, we'll continue to emphasize the effective management of expenses and assets. There won't be any letup in our efforts to build on what we accomplished this quarter."
Hewlett-Packard Company is a leading global manufacturer of computing, communications and measurement products and services recognized for excellence in quality and support. HP has
105,200 employees and had revenue of $31.5 billion in its 1995 fiscal year.
The average number of shares and equivalents used in computing net earnings per share has been restated to reflect the retroactive effect of the March 1995 2-for-1 stock split.
In FY96, the company changed its order-reporting policies for its support businesses. Orders now are reported as they are received rather than when services are provided. FY95 orders have been restated to reflect this change, which did not have a material impact on order growth rates.
UNIX is a registered trademark in the United States and other countries, licensed exclusively through X/Open (TM) Company Limited.
X/Open is a trademark of X/Open (TM) Company Limited in the UK and other countries.
Pentium is a U.S. trademark of Intel Corp.
Current and historical financial information now is available at HP's Financial Online site on the World Wide Web. The address is: http://www.hp.com/go/financials
Three months
(In millions except ended Jan. 31 Percent
per share amounts) 1996 1995 Increase
______ ______ __________
Net revenue:
Products $ 8,040 $ 6,285
Services 1,248 1,019
------- -------
Total 9,288 7,304 27
Costs and expenses:
Cost of products sold
and services 5,988 4,547
Research and development 612 535
Selling, general and
administrative 1,493 1,290
------- -------
Total 8,093 6,372 27
Earnings from operations 1,195 932 28
Interest income & other, net 37 33
Interest expense 70 46
------- -------
Earnings before taxes 1,162 919 26
Provision for taxes 372 317
------- -------
Net earnings $ 790 $ 602 31
======= =======
Net earnings per share (B) $ 1.50 $ 1.15 30
======= =======
Average shares and equivalents 526 524
used in computing net ======= =======
earnings per share (B)
Orders:
United States (A) $ 3,923 $ 3,167 24
International (A) 6,179 4,668 32
------- -------
Total $10,102 $ 7,835 29
======= =======
(A) In fiscal 1996, the company changed its order-reporting policies for its support businesses to report orders when received instead of as services are provided. Fiscal 1995 orders have been restated to reflect this change, which did not have a material impact on order growth rates.
(B) The average number of shares and equivalents used in computing net earnings per share has been restated to reflect the retroactive effect of the March 1995 two-for-one stock split.
Hewlett-Packard Company, operating in a single industry segment,
designs, manufactures and services products and systems for measurement, computation and communications. The table below provides supplemental information showing orders and net revenue by groupings of similar products and services.
(In millions)
Three months
For the periods ended Jan. 31 1996 1995
_______ _______
ORDERS (A)
Computer products, service and support $ 8,251 $ 6,261
Electronic test and measurement
instrumentation, systems and service 1,029 782
Medical electronic equipment and service 318 326
Chemical analysis and service 218 206
Electronic components 286 260
------- -------
Total $10,102 $ 7,835
======= =======
NET REVENUE
Computer products, service and support $ 7,650 $ 5,884
Electronic test and measurement
instrumentation, systems and service 886 729
Medical electronic equipment and service 322 306
Chemical analysis and service 206 187
Electronic components 224 198
------- -------
Total $ 9,288 $ 7,304
======= =======
(A) In fiscal 1996, the company changed its order-reporting policies for its support
businesses to report orders when received instead of as services are provided. Fiscal
1995 orders have been restated to reflect this change, which did not have a material
impact on order growth rates.
HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEET
(Unaudited)
(In millions except par value)
ASSETS Jan. 31 Oct. 31
1996 1995
________ ________
Current assets:
Cash and cash equivalents $ 2,458 $ 1,973
Short-term investments 838 643
Accounts and notes receivable 6,479 6,735
Inventories 6,788 6,013
Other current assets 933 875
-------- --------
Total current assets 17,496 16,239
-------- --------
Property, plant and equipment, net 4,791 4,711
Long-term investments and other assets 3,466 3,477
-------- --------
$ 25,753 $ 24,427
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable and short-term borrowings $ 3,437 $ 3,214
Accounts payable and accruals 4,848 4,668
Employee compensation and benefits 1,468 1,568
Taxes on earnings 1,671 1,494
-------- --------
Total current liabilities 11,424 10,944
-------- --------
Long-term debt 1,094 663
-------- --------
Other liabilities 993 981
-------- --------
Shareholders' equity:
Common stock and capital in excess
of $1 par value 850 871
Retained earnings 11,392 10,968
-------- --------
Total shareholders' equity 12,242 11,839
-------- --------
$ 25,753 $ 24,427
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