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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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(MARK FORM 10-K
ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended October 31, 1995
OR
[_]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
Commission File Number: 1-4423
Exact name of registrant as specified in its charter:
HEWLETT-PACKARD COMPANY
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STATE OR OTHER JURISDICTION OF I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION: IDENTIFICATION NO.:
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California 94-1081436
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ADDRESS OF PRINCIPAL EXECUTIVE OFFICES:
3000 Hanover Street, Palo Alto, California 94304
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
(415) 857-1501
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
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NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
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Common Stock New York Stock Exchange, Inc.
par value $1 Pacific Stock Exchange, Inc.
per share
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SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [X] No [_]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [_]
The aggregate market value of the registrant's Common Stock held by non-
affiliates as of December 29, 1995 was $33,803,783,360.
Indicate the number of shares outstanding of each of the registrant's
classes of Common Stock as of December 29, 1995: 512,675,574 shares of $1 par
value Common Stock.
DOCUMENTS INCORPORATED BY REFERENCE
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DOCUMENT DESCRIPTION 10-K PART
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Pages 25-47 (excluding order data and "Statement of Management
Responsibility") and 50 and the inside back cover of the
registrant's 1995 Annual Report to Shareholders I, II, IV
Pages 2-19 and 26 of the registrant's Notice of Annual Meeting
of Shareholders and Proxy Statement dated January 15, 1996 III
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PART I
ITEM 1. BUSINESS.
PRODUCTS AND SERVICES
Hewlett-Packard Company was incorporated in 1947 under the laws of the State
of California as the successor to a partnership founded in 1939 by William R.
Hewlett and David Packard.
On a worldwide basis, Hewlett-Packard Company, together with its
consolidated subsidiaries (the "Company"), designs, manufactures and services
equipment and systems for measurement, computation and communications. The
Company offers a wide variety of systems and standalone products, including
computer systems, personal computers ("PCs"), printers and other peripheral
products, electronic test equipment and systems, medical electronic equipment,
calculators and other personal information products, solid state components
and instrumentation for chemical analysis. Services such as systems
integration, selective-outsourcing management, consulting, education, product
financing and rentals, as well as customer support and maintenance, are also
an integral part of the Company's offerings. These products and services are
used in industry, business, engineering, science, medicine and education. A
summary of the Company's net revenue as contributed by its major groupings of
similar products and services is found on page 46 of the Company's 1995 Annual
Report to Shareholders, which page (excluding order data) is incorporated
herein by reference.
The Company's computers, computer systems, personal information products,
personal peripheral products and other peripherals are used in a variety of
applications, including scientific and engineering computation and analysis,
instrument control and business information management. The Company's core
computing products and technologies include its PA-RISC architecture for
systems and workstations, and software infrastructure for open systems. The
Company's general-purpose computers and computer systems include scalable
families of systems, servers and PCs for use in homes, small workgroups,
larger departments and entire enterprises. Key products include the HP 9000
series, which runs HP-UX, the Company's implementation of the UNIX(R)(/1/)
operating system, and comprises both workstations with powerful computational
and graphics capabilities as well as multiuser computers for both technical
and commercial applications; and the HP Vectra series of IBM-compatible PCs
for use in business, engineering, manufacturing and chemical analysis. The
Company offers software programming services, network services, distributed
system services and data management services. Customers of the Company's
computers, computer systems and software infrastructure products include
original equipment manufacturers, dealers, value-added resellers and
retailers, as well as end users for a variety of applications.
In the field of computing during fiscal 1995, the Company introduced the HP
9000 K-class midrange server, which incorporates the HP-UX 10.0 operating
system, also introduced this year. In addition, the Company brought out the HP
9000 J-class workstations, which feature VISUALIZE graphics and are intended
for use in mechanical- and electronic-design automation. Other new products
included the HP 9000 Model 715/100 XC midrange workstation and the HP 9000
Model 712/100 at the low end. The Company also announced its next-generation
PA-RISC microprocessor, the PA-8000. This year the Company introduced its
first line of PCs specifically intended for home users, the HP Pavilion PC.
The Company continued to enhance its HP Vectra PC series, the HP NetServer
family of PC servers and the HP OmniBook line of mobile PCs.
In the information-storage business, the Company introduced the HP SureStore
CD-Writer 4020i, a compact disc ("CD") player/recorder system that enables PC
users to play from and record information to CDs; and the industry's first
3.5-inch disk drives with 8.7 gigabytes of storage capacity.
Key software introductions in fiscal 1995 included the next generation of HP
JetAdmin network-printer management software, which helps users track and
manage individual print jobs; HP MeasureWare, which allows information
technology managers to understand and monitor the performance of distributed
computing
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(/1/) 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 Company Limited in the UK and other
countries.
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environments; and the HP OpenView Solution Framework program, which addresses
customer needs for network, system, application and database management.
The Company's peripheral products include a variety of system and desktop
printers, such as the HP LaserJet family; the HP DeskJet family, which is based
on the Company's thermal inkjet technology; a family of graphic plotters and
page scanners; video display terminals; disk (magnetic and optical) and tape
drives and related autochangers. In fiscal 1995, the Company introduced the HP
LaserJet 5L printer, which is designed for the home or small office and which
incorporates a suite of enabling technologies designed to optimize printer
performance regardless of the type of PC, operating system or application
being used. The Company also brought out the HP LaserJet 5Si MX printer, a
network printer that operates at 24 pages per minute and is more than 40
percent faster than its HP predecessor. Other key new products were the HP
DeskJet 660C printer, which replaced the HP DeskJet 560C and which uses newly
designed printheads and ink formulas that yield superior print quality for
black text and color images; the HP DeskJet 1600C printer, which prints color
output at four pages per minute; and the HP DeskJet 850C printer, designed for
the home or small office and able to produce near-photographic-quality color
output on plain paper. Other significant new products introduced this year
include the HP CopyJet color printer-copier, which combines inkjet printing
with digital imaging; the HP DesignJet 750C large-format color plotter; and the
HP ScanJet 4Si scanner, the industry's first network scanner.
The Company also produces measurement systems for use in electronics,
medicine and analytical chemistry. Test and measurement instruments include
voltmeters and multimeters that measure voltage, current and resistance;
counters that measure the frequency of an electrical signal; oscilloscopes and
logic analyzers that measure electrical changes in relation to time; signal
generators that provide the electrical stimulus for the testing of systems and
components; specialized communications and semiconductor test equipment; and
atomic frequency standards, which are used in accurate time-interval and
timekeeping applications. Instruments for medical applications include
continuous monitoring systems for critical-care patients, medical data-
management systems, fetal monitors, electrocardiographs, cardiac
catheterization laboratory systems, blood gas measuring instruments,
diagnostic ultrasonic imaging systems and cardiac defibrillators. Instruments
for analytical applications include gas and liquid chromatographs, mass
spectrometers, laboratory data systems and spectrophotometers. Key
introductions for measurement systems in fiscal 1995 included the announcement
of technologies designed to synchronize better the timing of digital
communications networks; test sets for Groupe Speciale Mobile ("GSM"), a
global standard for cellular phones; the HP PalmVue system, which links
physicians outside a hospital to data on critical-care patients; and the HP
6890 Series of gas chromatographs, the Company's next-generation systems that
offer an extended range of automation features and built-in diagnostics.
The Company continues to demonstrate its ability to combine measurement and
computation. The Company's Unified Laboratory strategy is designed to improve
a user's productivity by allowing computers in the analytical laboratory to
serve as adjuncts to analytical instrumentation while broadening the user's
ability to communicate with other parts of the organization. The Office of the
Chemist is a subset of the Unified Laboratory strategy in which an office-
based workstation or PC, with business software such as spreadsheets, is
combined with analytical equipment and data to allow a chemist to work more
efficiently. The Company's Clinical Information System combines patient data
from monitoring instruments with other information to assist nurses in
providing health care.
The Company also manufactures electronic component products consisting
principally of microwave semiconductor, fiber-optic and optoelectronic
devices, including light-emitting diodes. The products are sold primarily to
other manufacturers for incorporation into their electronic products but also
are used in many of the Company's products. In fiscal 1995, the Company
introduced the industry's first low-cost serial infrared transceiver, which
makes possible "point and shoot" communication among devices such as laptop
computers and mobile phones. The Company also brought out second-generation
products for GSM.
The Company provides service for its equipment, systems and peripherals,
including support and maintenance services, parts and supplies for design and
manufacturing systems, office and information systems,
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general-purpose instruments, computers and computer systems, peripherals and
network products. During fiscal 1995, the Company derived 16 percent of its
net revenue from such services. This figure reflects a fiscal 1995
reclassification of revenue from consumable supplies, consisting primarily of
supplies for the Company's printer products, from the service to the product
category.
The Company strives, in all its businesses, to promote industry standards
that recognize customer preferences for open systems in which different
vendors' products can work together. The Company often bases its product
innovations on such standards and seeks to make its technology innovations
into industry standards through licensing to other companies and standards-
setting groups. For example, during fiscal 1995 the Company's Standard
Template Library was accepted by a key standards committee as part of the
emerging standard for the C++ programming language.
MARKETING
Customers. The Company has approximately 600 sales and support offices and
distributorships in more than 120 countries. Sales are made to industrial and
commercial customers, educational and scientific institutions, health care
providers (including individual doctors, hospitals, clinics and research
laboratories) and, in the case of its calculators and other personal
information products, computer peripherals and PCs, to individuals for
personal use.
Sales Organization. More than half of the Company's orders are derived
through reseller channels, including dealers and original equipment
manufacturers. The remaining product orders result from the efforts of its own
sales organization selling to end users. Sales operations are supported by
approximately 35,000 individuals, including field service engineers, sales
representatives, service personnel and administrative support staff. In fiscal
1995, a higher proportion of the Company's net revenue than in fiscal 1994 was
generated from products such as personal peripherals, which are primarily sold
through resellers. As more of the Company's products are distributed through
resellers, these resellers become more important to the Company's success.
Some of these companies are thinly capitalized and may be unable to withstand
changes in business conditions. The Company's financial results could be
adversely affected if the financial condition of these resellers substantially
weakens.
International. The Company's total orders originating outside the United
States, as a percentage of total company orders, were approximately 55 percent
in fiscal 1995 and 54 percent in fiscal 1994 and fiscal 1993. The majority of
these international orders were from customers other than foreign governments.
Approximately two-thirds of the Company's international orders in each of the
last three fiscal years were derived from Europe, with most of the balance
coming from Japan, other countries in Asia Pacific, Latin America and Canada.
Most of the Company's sales in international markets are made by foreign
sales subsidiaries. In countries with low sales volume, sales are made through
various representative and distributorship arrangements. Certain sales in
international markets, however, are made directly by the Company from the
United States.
The Company's international business is subject to risks customarily
encountered in foreign operations, including fluctuations in monetary exchange
rates, import and export controls and the economic, political and regulatory
policies of foreign governments. The Company believes that its international
diversification provides stability to its worldwide operations and reduces the
impact on the Company of adverse economic changes in any single country. A
summary of the Company's net revenue, earnings from operations and
identifiable assets by geographic area is found on page 44 of the Company's
1995 Annual Report to Shareholders, which page is incorporated herein by
reference.
COMPETITION
The Company encounters aggressive competition in all areas of its business
activity. Its competitors are numerous, ranging from some of the world's
largest corporations to many relatively small and highly specialized
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firms. The Company competes primarily on the basis of technology, performance,
price, quality, reliability, distribution and customer service and support.
The Company's reputation, the ease of use of its products and the ready
availability of customer training are also important competitive factors.
The computer market is characterized by vigorous competition among major
corporations with long-established positions and a large number of new and
rapidly growing firms. To remain competitive, the Company will be required to
continue to develop new products, periodically enhance its existing products
and compete effectively in the manner described above. In particular, the
Company anticipates that it will have to continue to adjust prices to stay
competitive and effectively manage growth with correspondingly reduced gross
margins.
While the absence of reliable statistics makes it difficult to state the
Company's relative position, the Company believes that it is the second-
largest U.S.-based manufacturer of general-purpose computers, personal
peripherals such as desktop printers, and calculators and other personal
information products, all for industrial, scientific and business
applications. The markets for test-and-measurement instruments are influenced
by specialized manufacturers that often have great strength in narrow market
segments. In general, however, the Company believes that it is one of the
principal suppliers in these markets.
BACKLOG
The Company believes that backlog is not a meaningful indicator of future
business prospects due to the volume of products delivered from shelf
inventories, the shortening of product delivery schedules and the portion of
revenue related to its service and support business. Therefore, the Company
believes that backlog information is not material to an understanding of its
business.
PATENTS
The Company's general policy has been to seek patent protection for those
inventions and improvements likely to be incorporated into its products or to
give the Company a competitive advantage. While the Company believes that its
patents and applications have value, in general no single patent is in itself
essential. The Company believes that its technological position depends
primarily on the technical competence and creative ability of its research and
development personnel.
MATERIALS
The Company's manufacturing operations employ a wide variety of
semiconductors, electromechanical components and assemblies, and raw materials
such as plastic resins and sheet metal. The Company believes that the
materials and supplies necessary for its manufacturing operations are
presently available in the quantities required. The Company purchases
materials, supplies and product subassemblies from a substantial number of
vendors. For many of its products, the Company has existing alternate sources
of supply, or such sources are readily available. Portions of the Company's
manufacturing operations are dependent on the ability of significant suppliers
to deliver completed products, integral subassemblies and components in time
to meet critical distribution and manufacturing schedules. The failure of
suppliers to deliver these products, subassemblies and components in a timely
manner may adversely affect the Company's operating results until alternate
sourcing could be developed. In addition, the Company periodically experiences
constrained supply of certain component parts in some product lines as a
result of strong demand in those product lines as well as strong demand in the
industry. Continued supply constraints may adversely affect the Company's
operating results until alternate sourcing could be developed. The Company
believes that alternate suppliers or design solutions could be arranged within
a reasonable time so that material long-term adverse impacts would be
minimized.
RESEARCH AND DEVELOPMENT
The process of developing new high technology products is complex and
uncertain and requires innovative designs that anticipate customer needs and
technological trends. Without the introduction of new products and product
enhancements, the Company's products are likely to become technologically
obsolete, in which case
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revenues would be materially and adversely affected. There can be no assurance
that such new products, if and when introduced, will receive market
acceptance. After the products are developed, the Company must quickly
manufacture products in sufficient volumes at acceptable costs to meet demand.
Expenditures for research and development increased 14 percent in fiscal
1995 to $2.3 billion compared to $2.0 billion and 15 percent growth in fiscal
1994 and $1.8 billion and 9 percent growth in fiscal 1993. In fiscal 1995,
research and development expenditures were 7.3 percent of net revenue,
compared to 8.1 percent in fiscal 1994 and 8.7 percent in fiscal 1993. The
Company anticipates that it will continue to have significant research and
development expenditures in order to maintain its competitive position with a
continuing flow of innovative, high-quality products.
ENVIRONMENT
The operations of the Company involve the use of substances regulated under
various federal, state and international laws governing the environment. It is
the Company's policy to apply strict standards for environmental protection to
sites inside and outside the U.S., even if not subject to regulations imposed
by local governments. The liability for environmental remediation and related
costs is accrued when it is considered probable and the costs can be
estimated. Environmental costs are presently not material to the Company's
operations or financial position.
EMPLOYEES
The Company had approximately 102,300 employees worldwide at October 31,
1995.
EXECUTIVE OFFICERS OF THE REGISTRANT
Information regarding the executive officers of the Company is set forth in
Part III below.
ITEM 2. PROPERTIES.
The principal executive offices of the Company are located at 3000 Hanover
Street, Palo Alto, California 94304. As of October 31, 1995, the Company owned
or leased a total of approximately 43.9 million square feet of space
worldwide. The Company believes that its existing properties are in good
condition and suitable for the conduct of its business.
The Company's plants are equipped with machinery, most of which is owned by
the Company and is in part developed by it to meet the special requirements
for manufacturing precision electronic instruments and systems. At the end of
fiscal year 1995 the Company was productively utilizing the vast majority of
the space in its facilities, while actively disposing of space determined to
be excess.
The Company anticipates that most of the capital necessary for expansion
will continue to be obtained from internally generated funds. Investment in
new property, plant and equipment amounted to $1.6 billion in fiscal 1995,
$1.3 billion in fiscal 1994 and $1.4 billion in fiscal 1993.
As of October 31, 1995, the Company's marketing operations occupied
approximately 11.4 million square feet, of which 3.9 million square feet are
located within the United States. The Company owns 55% of the space used for
marketing activities and leases the remaining 45%.
The Company's manufacturing plants, research and development facilities and
warehouse and administrative facilities occupied 32.5 million square feet, of
which 23.9 million square feet are located within the United States. The
Company owns 80% of its manufacturing, research and development, warehouse and
administrative space and leases the remaining 20%. None of the property owned
by the Company is held subject to any major encumbrances.
The locations of the Company's geographic operations are listed on the
inside back cover of the Company's 1995 Annual Report to Shareholders, which
page is incorporated herein by reference. The locations of the
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Company's major product development and manufacturing facilities and the
Hewlett-Packard Laboratories are listed below:
PRODUCT DEVELOPMENT Aguadilla, Puerto Rico Asia Pacific
AND MANUFACTURING
Richardson, Texas Melbourne,
Americas Australia
Cupertino, Folsom, Mountain Everett, Spokane and
View, Newark, Palo Alto, Vancouver, Washington Beijing, Qingdao
Rohnert Park, Roseville, San and Shenzhen,
Diego, San Jose, Santa Clara, Brasilia, Brazil China
Santa Rosa, Sunnyvale and
Westlake Village, California Edmonton, Calgary, Montreal Bangalore, India
and Waterloo, Canada
Colorado Springs, Fort Collins, Hachioji and
Greeley and Loveland, Guadalajara, Mexico Kobe, Japan
Colorado
Europe Seoul, Korea
Wilmington, Delaware Grenoble and L'Isle d'Abeau,
France Penang, Malaysia
Boise, Idaho
Boeblingen and Waldbronn, Singapore
Andover and Chelmsford, Germany
Massachusetts HEWLETT-PACKARD
Bergamo, Italy LABORATORIES
Exeter, New Hampshire
Amersfoort, The Netherlands Palo Alto,
Rockaway, New Jersey California
Barcelona, Spain
Corvallis and Tokyo, Japan
McMinnville, Oregon Bristol, Ipswich and South
Queensferry, United Kingdom Bristol, United
Kingdom
ITEM 3. LEGAL PROCEEDINGS.
There are presently pending no legal proceedings, other than routine
litigation incidental to the Company's business, to which the Company is a
party or to which any of its property is subject.
The Company is a party to, or otherwise involved in, proceedings brought by
federal or state environmental agencies under the Comprehensive Environmental
Response, Compensation and Liability Act ("CERCLA"), known as "superfund," or
state laws similar to CERCLA. The Company is also conducting environmental
investigation or remediation at several of its current or former operating
sites pursuant to administrative orders or consent agreements with state
environmental agencies. Any future liability from such proceedings, in the
aggregate, is not expected to be material to the operations or financial
position of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
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PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS.
Information regarding the market prices of the Company's Common Stock and
the markets for that stock may be found on pages 47 and 50, respectively, of
the Company's 1995 Annual Report to Shareholders. The number of shareholders
and information concerning the Company's current dividend rate are set forth
in the section entitled "Common Stock, Dividend Policy" found on page 50 of
that report. Additional information concerning dividends may be found on pages
25, 32, 33 and 47 of the Company's 1995 Annual Report to Shareholders. Such
pages (excluding order data) are incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA.
Selected financial data for the Company is set forth on page 25 of the
Company's 1995 Annual Report to Shareholders, which page (excluding order
data) is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
A discussion of the Company's financial condition, changes in financial
condition and results of operations appears in the "Financial Review" found on
pages 27-29 and 31 of the Company's 1995 Annual Report to Shareholders. Such
pages (excluding order data) are incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The consolidated financial statements of the Company, together with the
report thereon of Price Waterhouse LLP, independent accountants, and the
unaudited "Quarterly Summary" are set forth on pages 26, 30, 32-45 and 47 of
the Company's 1995 Annual Report to Shareholders, which pages (excluding order
data and "Statement of Management Responsibility") are incorporated herein by
reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Information regarding directors of the Company who are standing for
reelection is set forth under "Election of Directors" on pages 4-8 of the
Company's Notice of Annual Meeting of Shareholders and Proxy Statement, dated
January 15, 1996 (the "Notice and Proxy Statement"), which pages are
incorporated herein by reference.
Information regarding directors of the Company who are retiring on February
27, 1996 is set forth below:
DIRECTORS WHO ARE RETIRING:
HAROLD J. HAYNES; AGE 70; RETIRED CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE
OFFICER,CHEVRON CORPORATION
Mr. Haynes was elected a director of the Company in 1981. He was Chairman of
the Board and Chief Executive Officer of Chevron Corporation from 1974 until
his retirement in 1981. Mr. Haynes is a director of PACCAR, Inc., Bechtel
Group, Inc., Citicorp, Citibank, N.A., Fremont Group, Inc., Saudi Arabian Oil
Company and The Boeing Company.
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SHIRLEY M. HUFSTEDLER; AGE 70; SENIOR OF COUNSEL, MORRISON & FOERSTER
(ATTORNEYS)
Ms. Hufstedler became a director of the Company in 1982. She served as U.S.
Secretary of Education from 1979 to 1981 and was a judge on the U.S. Court of
Appeals, 9th Circuit, from 1968 to 1979. Ms. Hufstedler is a trustee of the
California Institute of Technology and the Lucille Simon Foundation. She is a
trustee emeritus of the 9th Circuit Historical Society, Occidental College,
the Colonial Williamsburg Foundation, the Carnegie Foundation for
International Peace and the Institute for Court Management. She is a director
of the MacArthur Foundation, Lawyers Alliance for World Security, Salzburg
Seminar, U S WEST, Inc. and Harman International Industries, Inc.
The names of the executive officers of the Company, their ages, titles and
biographies as of December 29, 1995, are set forth below. All officers are
elected for one-year terms.
EXECUTIVE OFFICERS:
JAMES L. ARTHUR; AGE 61; SENIOR VICE PRESIDENT AND GENERAL MANAGER, WORLDWIDE
CUSTOMER SUPPORT OPERATIONS.
Mr. Arthur assumed his current position as General Manager of the Company's
Worldwide Customer Support Operations in 1989. He became a Vice President of
the Company in 1982 and a Senior Vice President in 1987.
EDWARD W. BARNHOLT; AGE 52; SENIOR VICE PRESIDENT AND GENERAL MANAGER, TEST
AND MEASUREMENT ORGANIZATION.
Mr. Barnholt was elected a Senior Vice President in 1993. He became Vice
President and General Manager, Test and Measurement Organization, with
responsibility for the Company's Electronic Instrument, Automatic Test,
Microwave and Communications and Communications Solutions Groups in 1990. Mr.
Barnholt was elected a Vice President of the Company in 1988. He is a director
of KLA Instruments Corporation.
RICHARD E. BELLUZZO; AGE 42; EXECUTIVE VICE PRESIDENT AND GENERAL MANAGER,
COMPUTER ORGANIZATION.
Mr. Belluzzo was elected a Senior Vice President in January 1995. In August
1995, he assumed management responsibility for the newly formed Computer
Organization and was elected an Executive Vice President. He was General
Manager of the Computer Products Organization from 1993 to August 1995. He
served as General Manager of the InkJet Products Group from 1991 to 1993 and
as General Manager of the Boise Printer Division from 1988 to 1991. He was
elected a Vice President in 1992. He is a director of Proxima Corporation.
ALAN D. BICKELL; AGE 59; SENIOR VICE PRESIDENT AND MANAGING DIRECTOR,
GEOGRAPHIC OPERATIONS.
Mr. Bickell was elected a Vice President in 1984. He was Managing Director
of Intercontinental Operations from 1974 until 1992, when he was elected to
his current position. He is a director of Junior Achievement International.
JOEL S. BIRNBAUM; AGE 58; SENIOR VICE PRESIDENT, RESEARCH AND DEVELOPMENT.
Mr. Birnbaum was elected a Senior Vice President in 1993. He became Vice
President, Research and Development and Director, HP Laboratories in September
1991. Additionally, he served as General Manager, Information Architecture
Group from 1988 until 1991. He was elected a Vice President in 1984. He is a
director of Corporation for National Research Infrastructure.
S.T. JACK BRIGHAM III; AGE 56; SENIOR VICE PRESIDENT, CORPORATE AFFAIRS AND
GENERAL COUNSEL.
Mr. Brigham was elected a Senior Vice President in 1995 and a Vice President
in 1982. He became Vice President, Corporate Affairs in 1992. He has served as
General Counsel since 1976.
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DOUGLAS K. CARNAHAN; AGE 54; SENIOR VICE PRESIDENT AND GENERAL MANAGER,
MEASUREMENT SYSTEMS ORGANIZATION.
Mr. Carnahan was elected a Senior Vice President in 1995 and has been in his
current position since October 1993. He was General Manager of the Publishing
Products Business Unit from 1988 to 1991 and was General Manager of the
Printing Systems Group from 1991 to 1993. He was elected a Vice President in
1992.
RAYMOND W. COOKINGHAM; AGE 52; VICE PRESIDENT AND CONTROLLER.
Mr. Cookingham was elected a Vice President in 1993. He has served as
Controller since 1986.
F. E. (PETE) PETERSON; AGE 54; SENIOR VICE PRESIDENT, PERSONNEL.
Mr. Peterson was elected to his current position in 1995. He was elected a
Vice President in 1992. He has served as Director of Corporate Personnel since
1990.
LEWIS E. PLATT; AGE 54; CHAIRMAN OF THE BOARD, PRESIDENT AND CHIEF EXECUTIVE
OFFICER, AND CHAIRMAN OF THE EXECUTIVE COMMITTEE.
Mr. Platt has served as a director of the Company, President and Chief
Executive Officer since November 1992 and has served as Chairman since 1993.
He was an Executive Vice President from 1987 to 1992. Mr. Platt held a number
of management positions in the Company prior to becoming its President,
including managing the Computer Systems Organization from 1990 to 1992. He is
a director of Molex Inc. and Pacific Telesis. He also serves on the Wharton
School Board of Overseers.
WILLEM P. ROELANDTS; AGE 50; SENIOR VICE PRESIDENT AND GENERAL MANAGER,
COMPUTER SYSTEMS ORGANIZATION.
Mr. Roelandts resigned from the Company on January 10, 1996. Prior to his
resignation, he had been a Senior Vice President since 1993. He served as
General Manager of the Networked Systems Group in the Computer Systems
Organization from 1990 until he was elected a Vice President and General
Manager, Computer Systems Organization in 1992.
ROBERT P. WAYMAN; AGE 50; EXECUTIVE VICE PRESIDENT, FINANCE AND ADMINISTRATION
AND CHIEF FINANCIAL OFFICER.
Mr. Wayman has served as a director of the Company since December 1993. He
has been an Executive Vice President responsible for finance and
administration since 1992. He has held a number of financial management
positions in the Company and was elected a Vice President and Chief Financial
Officer in 1984. He is a director of Consolidated Freightways, Inc. and Sybase
Inc. He also serves as a member of the Board of the Private Sector Council and
of the Kellogg Advisory Board, Northwestern University.
Information regarding compliance with Section 16(a) of the Securities
Exchange Act of 1934 is set forth on page 11 of the Notice and Proxy
Statement, which page is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION.
Information regarding the Company's compensation of its named executive
officers is set forth on pages 12-19 of the Notice and Proxy Statement, which
pages are incorporated herein by reference. Information regarding the
Company's compensation of its directors is set forth on pages 2-4 and 26 of
the Notice and Proxy Statement, which pages are incorporated herein by
reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Information regarding security ownership of certain beneficial owners and
management is set forth on pages 8-11 of the Notice and Proxy Statement, which
pages are incorporated herein by reference.
9
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Information regarding transactions with the Company's executive officers and
directors is set forth on page 26 of the Notice and Proxy Statement, which
page is incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a)The following documents are filed as part of this report:
1.Financial Statements:
<TABLE>
<CAPTION>
PAGE IN
ANNUAL
REPORT TO
SHAREHOLDERS*
-------------
<S> <C>
Report of Independent Accountants.......................... 45
Consolidated Statement of Earnings for the three years
ended October 31, 1995.................................... 26
Consolidated Balance Sheet at October 31, 1995 and 1994.... 30
Consolidated Statement of Cash Flows for the three years
ended October 31, 1995.................................... 32
Consolidated Statement of Shareholders' Equity for the
three years ended October 31, 1995........................ 33
Notes to Consolidated Financial Statements................. 34-44
</TABLE>
- --------
* Incorporated by reference from the indicated pages of the Company's 1995
Annual Report to Shareholders.
2.Financial Statement Schedules:
None.
10
<PAGE>
3.Exhibits:
<TABLE>
<C> <S>
1. Not applicable.
2. None.
3(a). Registrant's Amended Articles of Incorporation, which
appear as Exhibit 3(i) to Registrant's Quarterly Report
on Form 10-Q for the fiscal quarter ended April 30,
1995, which Exhibit is incorporated herein by reference.
3(b). Registrant's Amended By-Laws, which appear as Exhibit
3(ii) to Registrant's Quarterly Report on Form 10-Q for
the fiscal quarter ended April 30, 1995, which Exhibit
is incorporated herein by reference.
4. None.
5-8. Not applicable.
9. None.
10(a). Registrant's 1979 Incentive Stock Option Plan, which
appears as Exhibit 10(a) to Registrant's Annual Report
on Form 10-K for the fiscal year ended October 31, 1983,
which Exhibit is incorporated herein by reference.*
10(b). Registrant's 1979 Incentive Stock Option Plan
Agreements, which appear as Exhibit 10(b) to
Registrant's Annual Report on Form 10-K for the fiscal
year ended October 31, 1983, which Exhibit is
incorporated herein by reference.*
10(c). Letter dated September 24, 1984 to optionees advising
them of amendment to 1979 Incentive Stock Option Plan
Agreements (Exhibit 10(b) above), which appears as
Exhibit 10(c) to Registrant's Annual Report on Form 10-K
for the fiscal year ended October 31, 1984, which
Exhibit is incorporated herein by reference.*
10(d). Registrant's 1983 Officers Early Retirement Plan,
amended and restated as of January 1, 1990, which
appears as Exhibit 10(d) to Registrant's Annual Report
on Form 10-K for the fiscal year ended October 31, 1990,
which Exhibit is incorporated herein by reference.*
10(e). Registrant's 1985 Incentive Compensation Plan, which
appears as Exhibit 10(e) to Registrant's Annual Report
on Form 10-K for the fiscal year ended October 31, 1984,
which Exhibit is incorporated herein by reference.*
10(f). Registrant's 1985 Incentive Compensation Plan Stock
Option Agreements, which appear as Exhibit 10(f) to
Registrant's Annual Report on Form 10-K for the fiscal
year ended October 31, 1984, which Exhibit is
incorporated herein by reference.*
10(g). Registrant's Excess Benefit Retirement Plan, amended and
restated as of November 1, 1989, which appears as
Exhibit 10(g) to Registrant's Annual Report on Form 10-K
for the fiscal year ended October 31, 1990, which
Exhibit is incorporated herein by reference.*
10(h). Registrant's 1985 Incentive Compensation Plan restricted
stock agreements, which appear as Exhibit 10(h) to
Registrant's Annual Report on Form 10-K for the fiscal
year ended October 31, 1985, which Exhibit is
incorporated herein by reference.*
10(i). Registrant's 1987 Director Option Plan, which appears as
Appendix A to Registrant's Proxy Statement dated January
16, 1987, which Appendix is incorporated herein by
reference.*
10(j). Registrant's 1989 Independent Director Deferred
Compensation Program, which appears as Exhibit 10(j) to
Registrant's Annual Report on Form 10-K for the fiscal
year ended October 31, 1989, which Exhibit is
incorporated herein by reference.*
10(k). Registrant's 1990 Incentive Stock Plan, which appears as
Appendix A to Registrant's Proxy Statement dated January
11, 1990, which Appendix is incorporated herein by
reference.*
</TABLE>
11
<PAGE>
<TABLE>
<C> <S>
10(l). Registrant's 1990 Incentive Stock Plan stock option and
restricted stock agreements, which appear as Exhibit
10(l) to Registrant's Annual Report on Form 10-K for the
fiscal year ended October 31, 1990, which Exhibit is
incorporated herein by reference.*
10(m). Resolution dated July 17, 1991 adopting amendment to
Registrant's 1979 Incentive Stock Option Plan, which
appears as Exhibit 10(m) to Registrant's Annual Report
on Form 10-K for the fiscal year ended October 31, 1991,
which Exhibit is incorporated herein by reference.*
10(n). Resolution dated July 17, 1991 adopting amendment to
Registrant's 1985 Incentive Compensation Plan, which
appears as Exhibit 10(n) to Registrant's Annual Report
on Form 10-K for the fiscal year ended October 31, 1991,
which Exhibit is incorporated herein by reference.*
10(o). Resolution dated July 17, 1991 adopting amendment to
Registrant's 1987 Director Option Plan, which appears as
Exhibit 10(o) to Registrant's Annual Report on Form 10-K
for the fiscal year ended October 31, 1991, which
Exhibit is incorporated herein by reference.*
10(p). Resolution dated July 17, 1991 adopting amendment to
Registrant's 1990 Incentive Stock Plan, which appears as
Exhibit 10(p) to Registrant's Annual Report on Form 10-K
for the fiscal year ended October 31, 1991, which
Exhibit is incorporated herein by reference.*
10(q). Registrant's 1995 Incentive Stock Plan, which appears as
Appendix A to Registrant's Proxy Statement dated January
13, 1995, which Appendix is incorporated herein by
reference.*
10(r). Executive Severance Package dated January 10, 1996
between the Registrant and Willem P. Roelandts.*
11-12. None.
13. Pages 25-47 (excluding order data and "Statement of
Management Responsibility") and 50 and the inside back
cover of Registrant's 1995 Annual Report to
Shareholders.
14-17. Not applicable.
18. None.
19-20. Not applicable.
21. Subsidiaries of Registrant as of January 17, 1996.
22. None.
23. Consent of Independent Accountants.
24. Powers of Attorney. Contained in page 13 of this Annual
Report on Form 10-K and incorporated herein by
reference.
25-26. Not applicable.
27. Financial Data Schedule.
28. None.
99. 1995 Employee Stock Purchase Plan Annual Report on Form
11-K.
</TABLE>
- --------
* Indicates management contract or compensatory plan, contract or arrangement.
Exhibit numbers may not correspond in all cases to those numbers in Item 601
of Regulation S-K because of special requirements applicable to EDGAR filers.
(b) Reports on Form 8-K
None.
12
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED
ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.
HEWLETT-PACKARD COMPANY
Date: January 19, 1996 By: D. Craig Nordlund
___________________________________
D. CRAIG NORDLUND
ASSOCIATE GENERAL COUNSEL AND
SECRETARY
POWER OF ATTORNEY
Know All Persons By These Presents, that each person whose signature appears
below constitutes and appoints D. Craig Nordlund and Ann O. Baskins, or either
of them, his or her attorneys-in-fact, for such person in any and all
capacities, to sign any amendments to this report and to file the same, with
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
either of said attorneys-in-fact, or substitute or substitutes, may do or
cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
Raymond W. Cookingham Vice President and January 19, 1996
____________________________________ Controller
RAYMOND W. COOKINGHAM (Principal Accounting
Officer)
Thomas E. Everhart Director January 19, 1996
____________________________________
THOMAS E. EVERHART
John B. Fery Director January 19, 1996
____________________________________
JOHN B. FERY
Jean-Paul G. Gimon Director January 19, 1996
____________________________________
JEAN-PAUL G. GIMON
Richard A. Hackborn Director January 19, 1996
____________________________________
RICHARD A. HACKBORN
Harold J. Haynes Director January 19, 1996
____________________________________
HAROLD J. HAYNES
Walter B. Hewlett Director January 19, 1996
____________________________________
WALTER B. HEWLETT
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
Shirley M. Hufstedler Director January 19, 1996
____________________________________
SHIRLEY M. HUFSTEDLER
George A. Keyworth II Director January 19, 1996
____________________________________
GEORGE A. KEYWORTH II
David M. Lawrence, M.D. Director January 19, 1996
____________________________________
DAVID M. LAWRENCE, M.D.
Paul F. Miller, Jr. Director January 19, 1996
____________________________________
PAUL F. MILLER, JR.
Susan P. Orr Director January 19, 1996
____________________________________
SUSAN P. ORR
Director January , 1996
____________________________________
DAVID W. PACKARD
Donald E. Petersen Director January 19, 1996
____________________________________
DONALD E. PETERSEN
Lewis E. Platt Chairman, President and January 19, 1996
____________________________________ Chief Executive Officer
LEWIS E. PLATT (Principal Executive
Officer)
Robert P. Wayman Executive Vice President, January 19, 1996
____________________________________ Finance and Administration,
ROBERT P. WAYMAN Chief Financial Officer and
Director (Principal
Financial Officer)
</TABLE>
14
<PAGE>
EXHIBIT INDEX
<TABLE>
<C> <S> <C>
EXHIBIT DESCRIPTION
NUMBER -----------
-------
1. Not applicable.
2. None.
3(a). Registrant's Amended Articles of Incorporation, which appear
as Exhibit 3(i) to Registrant's Quarterly Report on Form 10-Q
for the fiscal quarter ended April 30, 1995, which Exhibit is
incorporated herein by reference.
3(b). Registrant's Amended By-Laws, which appear as Exhibit 3(ii)
to Registrant's Quarterly Report on Form 10-Q for the fiscal
quarter ended April 30, 1995, which Exhibit is incorporated
herein by reference.
4. None.
5-8. Not applicable.
9. None.
10(a). Registrant's 1979 Incentive Stock Option Plan, which appears
as Exhibit 10(a) to Registrant's Annual Report on Form 10-K
for the fiscal year ended October 31, 1983, which Exhibit is
incorporated herein by reference.*
10(b). Registrant's 1979 Incentive Stock Option Plan Agreements,
which appear as Exhibit 10(b) to Registrant's Annual Report
on Form 10-K for the fiscal year ended October 31, 1983,
which Exhibit is incorporated herein by reference.*
10(c). Letter dated September 24, 1984 to optionees advising them of
amendment to 1979 Incentive Stock Option Plan Agreements
(Exhibit 10(b) above), which appears as Exhibit 10(c) to
Registrant's Annual Report on Form 10-K for the fiscal year
ended October 31, 1984, which Exhibit is incorporated herein
by reference.*
10(d). Registrant's 1983 Officers Early Retirement Plan, amended and
restated as of January 1, 1990, which appears as Exhibit
10(d) to Registrant's Annual Report on Form 10-K for the
fiscal year ended October 31, 1990, which Exhibit is
incorporated herein by reference.*
10(e). Registrant's 1985 Incentive Compensation Plan, which appears
as Exhibit 10(e) to Registrant's Annual Report on Form 10-K
for the fiscal year ended October 31, 1984, which Exhibit is
incorporated herein by reference.*
10(f). Registrant's 1985 Incentive Compensation Plan Stock Option
Agreements, which appear as Exhibit 10(f) to Registrant's
Annual Report on Form 10-K for the fiscal year ended October
31, 1984, which Exhibit is incorporated herein by reference.*
10(g). Registrant's Excess Benefit Retirement Plan, amended and
restated as of November 1, 1989, which appears as Exhibit
10(g) to Registrant's Annual Report on Form 10-K for the
fiscal year ended October 31, 1990, which Exhibit is
incorporated herein by reference.*
10(h). Registrant's 1985 Incentive Compensation Plan restricted
stock agreements, which appear as Exhibit 10(h) to
Registrant's Annual Report on Form 10-K for the fiscal year
ended October 31, 1985, which Exhibit is incorporated herein
by reference.*
10(i). Registrant's 1987 Director Option Plan, which appears as
Appendix A to Registrant's Proxy Statement dated January 16,
1987, which Appendix is incorporated herein by reference.*
10(j). Registrant's 1989 Independent Director Deferred Compensation
Program, which appears as Exhibit 10(j) to Registrant's
Annual Report on Form 10-K for the fiscal year ended October
31, 1989, which Exhibit is incorporated herein by reference.*
10(k). Registrant's 1990 Incentive Stock Plan, which appears as
Appendix A to Registrant's Proxy Statement dated January 11,
1990, which Appendix is incorporated herein by reference.*
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
NUMBER -----------
-------
<C> <S> <C>
10(l). Registrant's 1990 Incentive Stock Plan stock option and
restricted stock agreements, which appear as Exhibit 10(l) to
Registrant's Annual Report on Form 10-K for the fiscal year
ended October 31, 1990, which Exhibit is incorporated herein
by reference.*
10(m). Resolution dated July 17, 1991 adopting amendment to
Registrant's 1979 Incentive Stock Option Plan, which appears
as Exhibit 10(m) to Registrant's Annual Report on Form 10-K
for the fiscal year ended October 31, 1991, which Exhibit is
incorporated herein by reference.*
10(n). Resolution dated July 17, 1991 adopting amendment to
Registrant's 1985 Incentive Compensation Plan, which appears
as Exhibit 10(n) to Registrant's Annual Report on Form 10-K
for the fiscal year ended October 31, 1991, which Exhibit is
incorporated herein by reference.*
10(o). Resolution dated July 17, 1991 adopting amendment to
Registrant's 1987 Director Option Plan, which appears as
Exhibit 10(o) to Registrant's Annual Report on Form 10-K for
the fiscal year ended October 31, 1991, which Exhibit is
incorporated herein by reference.*
10(p). Resolution dated July 17, 1991 adopting amendment to
Registrant's 1990 Incentive Stock Plan, which appears as
Exhibit 10(p) to Registrant's Annual Report on Form 10-K for
the fiscal year ended October 31, 1991, which Exhibit is
incorporated herein by reference.*
10(q). Registrant's 1995 Incentive Stock Plan, which appears as
Appendix A to Registrant's Proxy Statement dated January 13,
1995, which Appendix is incorporated herein by reference.*
10(r). Executive Severance Package dated January 10, 1996 between
the Registrant and Willem P. Roelandts.*
11-12. None.
13. Pages 25-47 (excluding order data and "Statement of
Management Responsibility") and 50 and the inside back cover
of Registrant's 1995 Annual Report to Shareholders.
14-17. Not applicable.
18. None.
19-20. Not applicable.
21. Subsidiaries of Registrant as of January 17, 1996.
22. None.
23. Consent of Independent Accountants.
24. Powers of Attorney. Contained in page 13 of this Annual
Report on Form 10-K and incorporated herein by reference.
25-26. Not applicable.
27. Financial Data Schedule.
28. None.
99. 1995 Employee Stock Purchase Plan Annual Report on Form 11-K.
</TABLE>
- --------
* Indicates management contract or compensatory plan, contract or arrangement.
<PAGE>
GRAPHICS APPENDIX LIST*
* In this Appendix, the following descriptions of certain bar charts and graphs
in the Company's 1995 Annual Report to Shareholders that are omitted from the
EDGAR version are more specific with respect to the actual numbers, amounts and
percentages than is determinable from the bar charts and graphs themselves. The
Company submits such more specific descriptions only for the purpose of
complying with the requirements for transmitting this Annual Report on Form 10-K
electronically via EDGAR; such more specific descriptions are not intended in
any way to provide information that is additional to the information otherwise
provided in the Annual Report.
EDGAR version - Page 25
A bar chart entitled "Total Orders (In millions)" at the bottom left of page 25
of the 1995 Annual Report to Shareholders shows that for the fiscal years 1991,
1992, 1993, 1994 and 1995 (shown on the x-axis) the Company had total orders
(shown on the y-axis) in the respective amounts provided in the table entitled
"Selected Financial Data (Unaudited)" on page 25 of the Annual Report.
A bar chart entitled "Earnings from Operations (In millions)" at the bottom
center of page 25 of the 1995 Annual Report to Shareholders shows that for the
fiscal years 1991, 1992, 1993, 1994 and 1995 (shown on the x-axis) the Company
had earnings from operations (shown on the y-axis) in the respective amounts
provided in the table entitled "Selected Financial Data (Unaudited)" on page 25
of the Annual Report.
A bar chart entitled "Employees and Net Revenue Per Employee (In thousands)" at
the bottom right of page 25 of the 1995 Annual Report to Shareholders shows that
for the fiscal years 1991, 1992, 1993, 1994 and 1995 (shown on the x-axis) the
Company had employees in the respective amounts (shown on the y-axis) provided
in the table entitled "Selected Financial Data (Unaudited)" on page 25 of the
Annual Report. In addition, the graph shows that for the fiscal years 1991,
1992, 1993, 1994 and 1995 (shown on the x-axis) the Company had net revenue per
employee (shown on the y-axis) of $160,000, $180,800, $215,200, $256,900 and
$314,100, respectively.
EDGAR version - Page 27
A graph entitled "Net Revenue (In millions)" at the top right of page 27 of the
1995 Annual Report to Shareholders shows that for the fiscal years 1991, 1992,
1993, 1994 and 1995 (shown on the x-axis) the Company had total net revenue
(shown on the y-axis) in the respective amounts provided in the table entitled
"Selected Financial Data (Unaudited)" on page 25 of the Annual Report; and
international net revenue of $8,104 million, $9,198 million, $10,971 million,
$13,522 million and $17,556 million, respectively. In addition, the graph shows
that for the fiscal years 1991 and 1992 (shown on the x-axis) the company had
U.S. net revenue (shown on the y-axis) of
<PAGE>
$6,390 million and $7,212 million, respectively; and U.S. net revenue for the
fiscal years 1993, 1994 and 1995 (shown on the x-axis) in the respective amounts
(shown on the y-axis) provided in the section entitled "Geographic Area
Information" under the caption "United States: Unaffiliated customer sales" in
the table on page 44 of the Annual Report.
A graph entitled "U.S. Dollar Relative to Major Foreign Currencies (Fiscal 1980
equals 1.00)" at the bottom right of page 27 of the 1995 Annual Report to
Shareholders shows that in the months running consecutively from November 1990
through October 1995 (shown on the x-axis) the U.S. Dollar was equal to (shown
on the y-axis) .98, 1.00, 1.00, .96, 1.05, 1.10, 1.11, 1.15, 1.15,1.13,1.10,
1.10, 1.06, 1.04, 1.04, 1.07, 1.09, 1.09,1.06, 1.04, .99, .98, .99, 1.04, 1.11,
1.12, 1.14, 1.17, 1.17, 1.13, 1.13, 1.15, 1.19, 1.20, 1.16, 1.18, 1.21, 1.21,
1.22, 1.21, 1.19, 1.19, 1.18, 1.16, 1.13, 1.13, 1.12, 1.09, 1.11, 1.13, 1.12,
1.11, 1.07, 1.06, 1.06, 1.06, 1.05, 1.07, 1.08, and 1.06 respectively,
multiplied by the currencies of the following foreign countries, with varying
weights assigned to each of such currencies: Austria, Belgium, Canada, Denmark,
Finland, France, Germany, Italy, Japan, Netherlands, Norway, Spain, Sweden,
Switzerland and United Kingdom.
EDGAR version - Page 28
A graph entitled "Costs and Expenses (As a percentage of net revenue)" at the
top left of page 28 of the 1995 Annual Report to Shareholders shows that for the
fiscal years 1991 and 1992 (shown on the x-axis) the Company had (shown on the
y-axis) cost of equipment sold and services of 54.2% and 55.8%, respectively, of
net revenue; selling, general and administrative expenses of 27.4% and 25.7%,
respectively, of net revenue; and research and development expenses of 10.1% and
9.9%, respectively, of net revenue. In addition, the graph shows that for the
fiscal years 1993, 1994 and 1995 (shown on the x-axis) the Company had, as a
percentage of net revenue (shown on the y-axis), cost of equipment sold and
services, selling, general and administrative expenses and research and
development expenses in the respective amounts provided in the table at the top
of page 28 of the Annual Report.
A bar chart entitled "Net Earnings (In millions)" at the bottom left of page 28
of the 1995 Annual Report to Shareholders shows that for the fiscal years 1991,
1992, 1993, 1994 and 1995 (shown on the x-axis) the Company had net earnings
(shown on the y-axis) in the respective amounts provided in the table entitled
"Selected Financial Data (Unaudited)" on page 25 of the Annual Report.
EDGAR Version - Page 29
A bar chart entitled "Selected Cash Flows (In millions)" at the top right of
page 29 of the 1995 Annual Report to Shareholders shows that for the fiscal
years 1991 and 1992 (shown on the x-axis) the Company had cash flows from
operating activities (shown on the y-axis) of $1,552 million and $1,288 million,
respectively; capital expenditures of
<PAGE>
$862 million and $1,032 million, respectively; and dividends paid of $120
million and $183 million, respectively. In addition, the bar chart shows that
for the fiscal years 1993, 1994 and 1995 (shown on the x-axis) the Company had
cash flows from operating activities and dividends paid (shown on the y-axis) in
the respective amounts provided in the table entitled "Consolidated Statement of
Cash Flows" on page 32 of the Annual Report. Finally, the bar chart shows that
for the fiscal years 1993, 1994 and 1995 (shown on the x-axis) the Company had
capital expenditures (shown on the y-axis) in the respective amounts shown as
"Investment in property, plant and equipment" provided in the table entitled
"Consolidated Statement of Cash Flows" on page 32 of the Annual Report.
A graph entitled "Asset Management (As a percentage of net revenue)" at the
bottom right of page 29 of the 1995 Annual Report to Shareholders shows that for
the fiscal years 1991, 1992, 1993, 1994 and 1995 (shown on the x-axis) the
Company had (shown on the y-axis) net property, plant and equipment of 23.1%,
22.2%, 20.6%, 17.3%, and 14.9% respectively, of net revenue; accounts and notes
receivable of 20.5%, 21.3%, 20.7%, 20.1% and 21.4%, respectively, of net
revenue; and inventories of 15.7%, 15.9%, 18.2%, 17.1% and 19.1%, respectively,
of net revenue.
EDGAR Version - Page 47
A bar chart entitled "Net Earnings Per Share (In dollars)" at the top right of
page 47 of the 1995 Annual Report to Shareholders shows that for the fiscal
quarters in the years of 1994 and 1995 (shown on the x-axis) the Company had net
earnings per share (shown on the y-axis) in the respective amounts provided in
the table entitled "Quarterly Summary (Unaudited)" on page 47 of the Annual
Report. In addition, a note to the bar chart states that these amounts have
been restated for the effect of a 2 for 1 stock split in 1995.
A bar chart entitled "Range of Common Stock Prices (In dollars per share)" at
the bottom right of page 47 of the 1995 Annual Report to Shareholders shows that
for the fiscal quarters in the years 1994 and 1995 (shown on the x-axis) the
range of stock prices (shown on the y-axis) was in the respective amounts
provided in the tables entitled "Quarterly Summary (Unaudited)" on page 47 of
the Annual Report. In addition, a note to the bar chart states that these
amounts have been restated for the effect of a 2 for 1 stock split in 1995.
<PAGE>
----------------------------------------
[LOGO OF HEWLETT PACKARD APPEARS HERE]
- -------- HEWLETT-PACKARD COMPANY
3000 Hanover Street
Palo Alto, California 94304
--------------------------
LEWIS E. PLATT
Chairman, President and
Chief Executive Officer
January 10, 1996
Willem P. Roelandts
Hewlett-Packard Company
3000 Hanover Street
Palo Alto, California 94034
Re: Executive Severance Package
Dear Wim:
This letter will confirm our discussions regarding your
decision to resign your present position with HP effective
January 10, 1995 and to commence employment with Xilinx on
January 11th. In view of your many years of service to the
company and your significant past contributions, HP is
prepared to offer you a severance payment of one million ten
thousand seven hundred and eighty-nine dollars
($1,010,789.00), less applicable withholding taxes.
In return for making this severance package available to
you, we ask that you agree to do the following:
1. Reaffirm your existing obligation as a fiduciary and
recipient of confidential and proprietary information
that you will not use or disclose such information
except as may be permitted by HP or by law, and
2. Execute the attached standard release form which was prepared by
the Legal Department.
This severance proposal is subject to two contingencies.
First, because you are an executive officer of HP, payment of
the severance amount requires the approval of the
Compensation Committee of the Board of Directors. I will ask
the Committee for such approval on January 18th, 1996. Should
approval not be granted, your resignation will remain in
effect as will your obligations concerning confidential and
proprietary information, however, the remainder of this
agreement will be null and void. Secondly, in accordance with
the provisions of federal law relating to age discrimination,
you have up to twenty-one days from the date of this letter
in which to accept the terms of this agreement.
You may, however, accept it any time within those twenty-
one days. Once you have accepted this agreement, you will
still have an additional seven days in which to revoke your
acceptance. To revoke, you must send me a written statement
of revocation. If you do not revoke, the agreement will
become effective upon the last to occur of approval by the
Compensation Committee and the expiration of seven calendar
days following your acceptance. Assuming these contingencies
are satisfied, payment will be made not later than January
31, 1996.
I encourage you to take some time to review this severance
offer and to consult with counsel or advisers of your choice.
If this proposal is acceptable, please indicate your
acceptance by signing and returning the duplicate copy of
this letter and the accompanying legal release.
<PAGE>
Wim, I sincerely appreciate the enormous contributions you
have made over your twenty-nine years here at HP. I wish you
the very best as you take on your new responsibilities, and I
look forward to working with you as a fellow CEO here in the
valley.
Sincerely,
HEWLETT-PACKARD COMPANY
/s/ Lewis E. Platt
Lewis E. Platt
Chairman, President, and Chief Executive Officer
Agreed:
/s/ Willem P. Roelandts
Willem P. Roelandts
Date: January 16, 1996
<PAGE>
GENERAL RELEASE
This General Release (Agreement) is made and entered into between WILLEM P.
ROELANDTS and HEWLETT-PACKARD COMPANY (HP), pursuant to his voluntary
resignation and as a condition of his Executive Severance Package. The parties
expressly agree that the making of this Agreement or the offer of a severance
package does not in any way constitute an admission of wrongdoing on the part
of any of them.
1. In exchange for HP's providing the severance benefits described in Lewis
E. Platt's letter attached to this document, Mr. Roelandts, on behalf of
himself, his heirs, estate, executors, administrators, successors and assigns
does fully release, discharge, and agree to hold harmless HP, its officers,
agents, employees, attorneys, subsidiaries, affiliated companies, successors
and assigns from all actions, causes of action, claims, judgments,
obligations, damages, liabilities, costs, or expense of whatsoever kind and
character, including, but not limited to: 1) any claims relating to employment
discrimination on account of race, sex, age, national origin, disability, or
other basis whether or not arising under the Federal Civil Rights Acts, the
Age Discrimination in Employment Act, the Americans With Disabilities Act, the
California Fair Employment and Housing Act, the Rehabilitation Act of 1973,
any amendments to the foregoing laws, or any other federal, state, county or
municipal law, statute, regulation or order relating to employment
discrimination; 2) any claims relating to, arising out of, or connected with
his employment with HP whether based on contract, tort, or any other legal
theory; and 3) any claims relating to, arising out of, or connected with any
other matter or event occurring prior to the date this Agreement is delivered
to HP.
2. As a voluntarily terminating employee, Mr. Roelandts shall be entitled to
exercise conversion privileges, stock options, and the like to the same extent
as would any other employee who voluntarily terminates employment. Subject to
the terms and conditions of the applicable plans, Mr. Roelandts shall also
retain all pension rights which are vested as of the date of his resignation.
Mr. Roelandts understands and agrees that there shall be no accelerated
vesting of any stock or stock options, and he expressly waives any claim he
may have to performance based restricted stock and any claim to any bonus
which may subsequently be paid for exceeding performance metrics.
3. In entering into this Agreement, the parties have intended that this
Agreement be a full and final settlement of all matters, whether or not
presently disputed, that could have arisen between them. Mr. Roelandts
understands and expressly agrees that this Agreement extends to all claims of
every nature and kind whatsoever, known or unknown, suspected or unsuspected,
past or present and all rights under Section 1542 of the California Civil Code
and/or any similar statute or law of any other jurisdiction are hereby
expressly waived. Such section reads as follows:
Section 1542. A general release does not extend to claims
which the creditor does not know or suspect to exist in his
favor at the time of executing the release, which if known by
him must have materially affected his settlement with the
debtor.
4. Notwithstanding the foregoing, Mr. Roelandts shall retain any right to
indemnity he may otherwise have in any action brought by a third party against
him as an individual arising out of actions undertaken by him in good faith
and within the course and scope of his employment as an officer of HP.
5. Mr. Roelandts acknowledges and reaffirms that as a fiduciary and company
executive, he became privy to confidential and proprietary information which
includes, but is not limited to, business strategies; marketing plans and
customer lists; new product R & D and introduction plans; potential
acquisitions and investments in third parties; process yields, manufacturing
strategies, and costs; patent applications and disclosures; nonpublic
financial data; and other similar information. With respect to all such
information, Mr. Roelandts agrees to retain it in confidence until it becomes
public knowledge or he is given advance written permission by HP to disclose
or use it.
6. The terms of this Agreement together with the letter referred to above
are intended by the parties as a final expression of their agreement with
respect to such terms as are included therein and may not be contradicted by
evidence of any prior or contemporaneous agreement. The parties further intend
that this Agreement together
<PAGE>
with the letter referred to above constitutes the complete and exclusive
statement of the terms of their agreement and that no extrinsic evidence
whatsoever may be introduced in any judicial or other proceeding, if any,
involving them. No modification shall be effective unless in writing and
signed by both parties hereto.
7. MR. ROELANDTS FURTHER STATES THAT HE HAS READ THIS AGREEMENT, THAT HE HAS
HAD THE OPPORTUNITY TO CONSULT COUNSEL OF HIS CHOICE, THAT HE UNDERSTANDS ITS
FINAL AND BINDING EFFECT, THAT THE ONLY PROMISES MADE TO HIM TO SIGN THIS
AGREEMENT ARE THOSE STATED ABOVE AND THAT HE IS SIGNING THIS AGREEMENT
VOLUNTARILY.
IN WITNESS WHEREOF, this Agreement has been executed in duplicate originals
on the dates indicated below, and shall, unless revoked by Mr. Roelandts as
provided in Mr. Platt's letter, become effective upon approval of the
Compensation Committee of the Board of Directors.
HEWLETT-PACKARD COMPANY
By: /s/ Lewis E. Platt
--------------------------------
Lewis E. Platt
Chairman, President, and Chief Executive Officer
Date: January 10, 1996
------------------------------
WILLEM P. ROELANDTS
Signature: /s/ Willem P. Roelandts
-------------------------
Date: January 16, 1996
------------------------------
<PAGE>
Hewlett-Packard Company and Subsidiaries
Selected Financial Data
Unaudited
<TABLE>
<CAPTION>
For the years ended October 31
In millions except per share amounts
and employees 1995 1994 1993 1992 1991
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
U.S. orders $ 14,609 $ 11,692 $ 9,462 $ 7,569 $ 6,484
International orders 17,901 13,658 11,310 9,192 8,192
- ---------------------------------------------------------------------------------------------------------------
Total orders $ 32,510 $ 25,350 $ 20,772 $ 16,761 $ 14,676
- ---------------------------------------------------------------------------------------------------------------
Net revenue $ 31,519 $ 24,991 $ 20,317 $ 16,410 $ 14,494
Earnings from operations $ 3,568 $ 2,549 $ 1,879 $ 1,404 $ 1,210
Earnings before effect of 1992
accounting change $ 2,433 $ 1,599 $ 1,177 $ 881 $ 755
Net earnings $ 2,433 $ 1,599 $ 1,177 $ 549 $ 755
Per share amounts, restated for
1995 stock split:
Earnings before effect of 1992
accounting change $ 4.63 $ 3.07 $ 2.33 $ 1.74 $ 1.51
Net earnings $ 4.63 $ 3.07 $ 2.33 $ 1.09 $ 1.51
Cash dividends $ .70 $ .55 $ .45 $ .36 $ .24
At year-end:
Total assets $ 24,427 $ 19,567 $ 16,736 $ 13,700 $ 11,973
Employees 102,300 98,400 96,200 92,600 89,000
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
1992 results include an after-tax charge of $.65 per share for the cumulative
effect of a change in accounting for retiree medical benefits.
Employees and Net
Total Orders Earnings from Operations Revenues Per Employee
In millions In millions In thousands
[GRAPH APPEARS HERE] [GRAPH APPEARS HERE] [GRAPH APPEARS HERE]
. Number of employees
. Net revenue per employee
<PAGE>
Hewlett-Packard Company and Subsidiaries
Consolidated Statement of Earnings
<TABLE>
<CAPTION>
For the years ended October 31
In millions except per share amounts 1995 1994 1993
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net revenue:
Products $27,125 $21,380 $17,122
Services 4,394 3,611 3,195
- ----------------------------------------------------------------------------------------------------
Total net revenue 31,519 24,991 20,317
- ----------------------------------------------------------------------------------------------------
Costs and expenses:
Cost of products sold 17,069 13,012 10,021
Cost of services 2,945 2,478 2,102
Research and development 2,302 2,027 1,761
Selling, general and administrative 5,635 4,925 4,554
- ----------------------------------------------------------------------------------------------------
Total costs and expenses 27,951 22,442 18,438
- ----------------------------------------------------------------------------------------------------
Earnings from operations 3,568 2,549 1,879
Interest income and other, net 270 29 25
Interest expense 206 155 121
- ----------------------------------------------------------------------------------------------------
Earnings before taxes 3,632 2,423 1,783
Provision for taxes 1,199 824 606
- ----------------------------------------------------------------------------------------------------
Net earnings $ 2,433 $ 1,599 $ 1,177
====================================================================================================
Net earnings per share $ 4.63 $ 3.07 $ 2.33
====================================================================================================
Weighted average shares and equivalents outstanding 526 521 506
====================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
26
<PAGE>
Hewlett-Packard Company and Subsidiaries
Financial Review
Unaudited
Results of Operations
In 1995, strong demand for HP's products and services generated a 26 percent
increase in net revenue, marking the third consecutive year of growth exceeding
23 percent. Net earnings at $2.4 billion have grown at a compounded annual
growth rate of 40 percent over the last three years. Return on assets of 10.0
percent and return on average shareholders' equity of 22.3 percent achieved near
record levels.
HP's orders increased 28 percent over 1994 to $32.5 billion, compared with a 22
percent increase in 1994. Domestic and international orders grew 25 and 31
percent, respectively, reflecting HP's well-balanced position across a variety
of geographic markets. Net revenue grew 22 percent in the U.S. and 30 percent
internationally in 1995 to $14.0 billion and $17.6 billion, respectively,
following increases of 23 percent in both the U.S. and international markets in
1994. The geographic differential in growth rates reflects expanding market
opportunities in the international arena as well as the continuing weakness of
the U.S. dollar for most of 1995.
Net revenue from product sales increased 27 percent compared to 25 percent in
1994. The sustained increases in net revenue primarily reflect the company's
continued success in technological innovation and rapid time to market with its
new products, as well as a healthy global economic environment for the computer
and electronics industries.
Shipments of the company's computer and peripheral products, such as the HP
LaserJet and HP DeskJet families of printers, multiuser computer systems based
on the UNIX operating system, and HP Vectra PCs were all strong in 1995 and
1994. New products drove revenue growth across many businesses. In 1995, the
company successfully replaced the entire family of inkjet printers and continued
to expand its LaserJet printer offerings. HP 9000 K-class midrange servers and
J-class workstations and the Pentium-based HP Vectras introduced in 1995 had
excellent market acceptance. Sales of consumable supplies for the company's
printer products were also strong. Additionally, electronic test and measurement
products have had great success, particularly in the semiconductor test and
telecommunications markets. Detailed information on orders and net revenue by
groupings of similar products and services is presented on page 46 of this
report.
Services such as systems integration, selective-outsourcing management,
consulting, education, product financing and rentals, as well as customer
support and maintenance, are an integral part of the company's offerings. Net
revenue from services grew 22 percent compared to 13 percent in 1994. During
1995, service and support revenues continued to climb with the increase in the
installed base and the continued success of the professional services businesses
in providing enterprise-wide solutions for our customers. The 1995 growth in net
revenue from services was further aided by the weaker U.S. dollar for most of
the year.
Net Revenue
In millions
[GRAPH APPEARS HERE]
. Total
. International
. U.S.
U.S. Dollar Relative to
Major Foreign Currencies
Fiscal 1980 equals 1.00
[GRAPH APPEARS HERE]
27
<PAGE>
Hewlett-Packard Company and Subsidiaries
Financial Review
Unaudited
In 1995, consumable supplies revenue and related costs were reclassified from
the service to the product category. Prior year amounts have been restated to
reflect this change.
Costs, expenses and earnings as a percentage of net revenue were as follows:
<TABLE>
<CAPTION>
For the years ended October 31 1995 1994 1993
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
Cost of products sold and services 63.5% 62.0% 59.7%
Research and development 7.3% 8.1% 8.7%
Selling, general and administrative 17.9% 19.7% 22.4%
Earnings from operations 11.3% 10.2% 9.2%
Net earnings 7.7% 6.4% 5.8%
- -----------------------------------------------------------------------------------
</TABLE>
During 1995, cost of products sold and services as a percentage of net revenue
increased 1.5 percentage points, following a 2.3 percentage point increase in
1994. Price competition continues to impact product revenues resulting in
reduced gross profit margins. During 1995, the strength of the Yen also resulted
in higher prices on certain components purchased from Japanese suppliers.
Additionally, the continued shift in the mix of products sold towards lower-
margin, high-volume product families, and ramp-up costs for continued
introductions of new products, helped drive both the 1995 and 1994 increases.
These factors are likely to continue to put some upward pressure on the cost of
sales ratio. Maximizing efficiencies, including procurement, production and
logistics processes, continues to be a focus in light of these trends.
Research and development expenditures increased 14 percent in 1995 to $2.3
billion, versus $2.0 billion and 15 percent growth in 1994. The ongoing increase
in spending on research and development reflects the company's belief that
success in a global marketplace requires a continuing flow of innovative, high-
quality products. Selling, general and administrative expense grew 14 percent in
1995 compared to 8 percent in 1994. This growth was a result of the strong order
and revenue growth experienced during the year, as well as the weaker dollar in
1995. Both research and development and selling, general and administrative
expenses decreased as a percentage of net revenue in 1995 and 1994, which
reflects the rapid expansion of the net revenue base in both years.
Interest income and other, net was $270 million in 1995 compared to $29 million
in 1994 and $25 million in 1993. The increase in 1995 is primarily due to
increased earnings on cash and other investments, increased income from equity
investees, and gains on sales of real estate and other assets. Interest expense
was $206 million in 1995 compared with $155 million in 1994 and $121 million in
1993, reflecting changes in the level of debt outstanding, as well as interest
rate changes during the respective periods.
The company's effective tax rate was 33 percent in 1995, as compared with 34
percent in 1994 and 1993. A combination of factors led to the decrease from 1994
to 1995, including continuing shifts in the geographical composition of earnings
and resolution of certain issues related to tax returns filed in previous years.
Costs and Expenses
As a percentage of net revenue
[GRAPH APPEARS HERE]
. Cost of products sold and services
. Selling, general and administrative
. Research and development
Net Earnings
In millions
[GRAPH APPEARS HERE]
. Net earnings
. Net earnings including effect
of accounting change
28
<PAGE>
Hewlett-Packard Company and Subsidiaries
Financial Review
Unaudited
Net earnings increased 52 percent to $2.4 billion in 1995. This compares with a
36 percent increase in 1994 and a 34 percent increase in 1993. As a percentage
of net revenue, net earnings were 7.7 percent in 1995, the highest since 1988,
compared with 6.4 percent in 1994 and 5.8 percent in 1993.
Financial Condition and Liquidity
HP's financial position remains strong, with cash and cash equivalents and
short-term investments of $2.6 billion at October 31, 1995, compared to $2.5
billion at October 31, 1994, and $1.6 billion at October 31, 1993.
Operating activities generated $1.6 billion in cash in 1995, compared with $2.2
billion and $1.1 billion in 1994 and 1993, respectively. Despite higher net
earnings, cash generated from operations declined in 1995 primarily as a result
of significant growth in receivables and inventories. Receivables as a
percentage of net revenue increased to 21.4 percent at October 31, 1995, from
20.1 percent a year ago, driven by receivable growth of 34 percent on revenue
growth of 26 percent for the year. Inventories as a percentage of net revenue
grew to 19.1 percent from 17.1 percent in the prior year, resulting from a 41
percent increase in inventory levels. The growth during 1995 in receivables and
inventories is a result of the substantial increase in net revenues and orders,
and the continuing need to maintain higher inventory levels to meet increased
demand and customer delivery expectations.
Capital expenditures in 1995 were $1.6 billion compared with $1.3 billion and
$1.4 billion in 1994 and 1993, respectively. The increase in capital
expenditures in 1995 relates mainly to expansion of production capacity to
accommodate higher volumes and the introduction of new products.
The company invests excess cash in short-term and long-term investments
depending on its projected cash needs for operations, capital expenditures and
other business purposes. The company from time to time supplements its
internally generated cash flow with a combination of short-term and long-term
borrowings based on various business and financial market factors. Cash flow
from changes in debt structure resulted in net borrowings of $857 million in
1995 compared with $155 million and $966 million in 1994 and 1993, respectively.
At October 31, 1995, the company had various borrowing arrangements in place
with unused borrowing capacity totaling $3.7 billion.
The company split its stock on a 2-for-1 basis effective March 24, 1995. All
prior share and per share amounts have been restated to reflect the retroactive
effect of this split. Shares are repurchased primarily to manage the dilution
created by shares issued under employee stock plans. In 1995, 10.4 million
shares were purchased at an aggregate price of $686 million. In 1994, 8.1
million shares were purchased for $325 million and in 1993, 8.7 million shares
were purchased for $314 million. Additional stock repurchases, based on certain
price and volume criteria, are periodically authorized by the Board of
Directors.
Selected Cash Flows
In millions
[GRAPH APPEARS HERE]
. Cash flows from operating activities
. Capital expenditures
. Dividends paid
Asset Management
As a percentage of net revenue
[GRAPH APPEARS HERE]
. Net property, plant and equipment
. Accounts and notes receivable
. Inventories
29
<PAGE>
Hewlett-Packard Company and Subsidiaries
Consolidated Balance Sheet
<TABLE>
<CAPTION>
October 31
In millions except par value and number of shares 1995 1994
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 1,973 $ 1,357
Short-term investments 643 1,121
Accounts and notes receivable 6,735 5,028
Inventories:
Finished goods 3,368 2,466
Purchased parts and fabricated assemblies 2,645 1,807
Other current assets 875 730
- -------------------------------------------------------------------------------------------------------
Total current assets 16,239 12,509
- -------------------------------------------------------------------------------------------------------
Property, plant and equipment:
Land 485 508
Buildings and leasehold improvements 3,810 3,472
Machinery and equipment 4,452 3,958
- -------------------------------------------------------------------------------------------------------
8,747 7,938
Accumulated depreciation (4,036) (3,610)
- -------------------------------------------------------------------------------------------------------
4,711 4,328
Long-term investments and other assets 3,477 2,730
- -------------------------------------------------------------------------------------------------------
Total assets $24,427 $19,567
=======================================================================================================
Liabilities and shareholders' equity
Current liabilities:
Notes payable and short-term borrowings $ 3,214 $ 2,469
Accounts payable 2,422 1,466
Employee compensation and benefits 1,568 1,256
Taxes on earnings 1,494 1,245
Deferred revenues 782 598
Other accrued liabilities 1,464 1,196
- -------------------------------------------------------------------------------------------------------
Total current liabilities 10,944 8,230
- -------------------------------------------------------------------------------------------------------
Long-term debt 663 547
Other liabilities 981 864
Shareholders' equity:
Preferred stock, $1 par value
(authorized: 300,000,000 shares; issued: none) -- --
Common stock and capital in excess of $1 par value
(authorized: 1,200,000,000 shares; issued and outstanding:
509,955,000 in 1995 and 509,654,000 in 1994) 871 1,033
Retained earnings 10,968 8,893
- -------------------------------------------------------------------------------------------------------
Total shareholders' equity 11,839 9,926
- -------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $24,427 $19,567
=======================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
30
<PAGE>
Hewlett-Packard Company and Subsidiaries
Financial Review
Unaudited
Factors That May Affect Future Results
HP's future operating results are dependent on its ability to develop,
manufacture and market rapidly innovative products that meet customers' needs.
Inherent in this process are a number of risks that the company must
successfully manage in order to achieve favorable operating results. The process
of developing new high technology products is complex and uncertain and requires
innovative designs that anticipate customer needs and technological trends.
After the products are developed, the company must quickly manufacture them in
sufficient volumes at acceptable costs to meet demand.
In addition, portions of the company's manufacturing operations are dependent on
the ability of significant suppliers to deliver completed products, integral
subassemblies and components in time to meet critical distribution and
manufacturing schedules. The company periodically experiences constrained supply
of certain component parts in some product lines, as a result of strong demand
in those product lines as well as strong demand in the industry. Continued
constraints may adversely affect HP's operating results until alternate sourcing
can be developed.
The company continues to expand into third-party distribution channels to
accommodate changing industry practices and customer preferences. As more of
HP's products are distributed through resellers, these resellers become more
important to the company's success. Some of these companies are thinly
capitalized and may be unable to withstand changes in business conditions. HP's
financial results could be adversely affected if the financial condition of
these resellers substantially weakens.
The operations of the company involve the use of substances regulated under
various federal, state and international laws governing the environment. It is
the company's policy to apply strict standards for environmental protection to
sites inside and outside the U.S., even if not subject to regulations imposed by
local governments. The liability for environmental remediation and related costs
is accrued when it is considered probable and the costs can be estimated.
Environmental costs are presently not material to HP's operations or financial
position.
A portion of the company's research and development activities, its corporate
headquarters and other critical business operations are located near major
earthquake faults. The ultimate impact on the company, significant suppliers and
the general infrastructure is unknown, but operating results could be materially
affected in the event of a major earthquake. The company is predominantly self-
insured for losses and interruptions caused by earthquakes.
Although HP believes that it has the product offerings and resources needed for
continuing success, future revenue and margin trends cannot be reliably
predicted and may cause the company to adjust its operations. Factors external
to the company can result in volatility of the company's common stock price.
Because of the foregoing factors, recent trends should not be considered
reliable indicators of future stock prices or financial results.
31
<PAGE>
Hewlett-Packard Company and Subsidiaries
Consolidated Statement of Cash Flows
<TABLE>
<CAPTION>
For the years ended October 31
In millions 1995 1994 1993
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings $ 2,433 $ 1,599 $ 1,177
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization 1,139 1,006 846
Deferred taxes on earnings (102) (156) (137)
Changes in assets and liabilities:
Accounts and notes receivable (1,696) (848) (709)
Inventories (1,740) (582) (1,056)
Accounts payable 956 243 283
Taxes on earnings 180 320 452
Other current assets and liabilities 663 585 200
Other, net (220) 57 86
- -------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 1,613 2,224 1,142
- -------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Investment in property, plant and equipment (1,601) (1,257) (1,405)
Disposition of property, plant and equipment 294 291 215
Purchase of short-term investments (3,191) (2,758) (1,634)
Maturities of short-term investments 3,669 2,392 1,283
Purchase of long-term investments (308) (332) (22)
Maturities of long-term investments -- 47 22
Acquisitions, net of cash acquired -- (62) (86)
Other, net (38) 69 23
- -------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (1,175) (1,610) (1,604)
- -------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Change in notes payable and short-term borrowings 755 250 807
Issuance of long-term debt 434 64 387
Payment of current maturities of long-term debt (332) (159) (228)
Issuance of common stock under employee stock plans 361 300 308
Repurchase of common stock (686) (325) (314)
Dividends (358) (280) (228)
Other, net 4 4 (22)
- -------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities 178 (146) 710
- -------------------------------------------------------------------------------------------------------------------
Increase in cash and cash equivalents 616 468 248
Cash and cash equivalents at beginning of year 1,357 889 641
- -------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year $ 1,973 $ 1,357 $ 889
===================================================================================================================
Supplemental cash flow disclosures:
Income taxes paid, net $ 1,058 $ 626 $ 293
Interest paid $ 187 $ 143 $ 109
===================================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
32
<PAGE>
Hewlett-Packard Company and Subsidiaries
Consolidated Statement of Shareholders' Equity
<TABLE>
<CAPTION>
Common stock
----------------------------
Par value
Number of and capital in Retained
In millions except number of shares in thousands shares excess of par earnings Total
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance October 31, 1992 501,648 $ 874 $ 6,625 $ 7,499
Employee stock plans:
Shares issued 12,468 377 -- 377
Shares repurchased (8,690) (314) -- (314)
Dividends -- -- (228) (228)
Net earnings -- -- 1,177 1,177
- --------------------------------------------------------------------------------------------------------------------
Balance October 31, 1993 505,426 937 7,574 8,511
Employee stock plans:
Shares issued 12,284 421 -- 421
Shares repurchased (8,056) (325) -- (325)
Dividends -- -- (280) (280)
Net earnings -- -- 1,599 1,599
- --------------------------------------------------------------------------------------------------------------------
Balance October 31, 1994 509,654 1,033 8,893 9,926
Employee stock plans:
Shares issued 10,696 524 -- 524
Shares repurchased (10,395) (686) -- (686)
Dividends -- -- (358) (358)
Net earnings -- -- 2,433 2,433
- --------------------------------------------------------------------------------------------------------------------
Balance October 31, 1995 509,955 $ 871 $10,968 $11,839
====================================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
33
<PAGE>
Hewlett-Packard Company and Subsidiaries
Notes to Consolidated Financial Statements
Summary of Significant Accounting Policies
Principles of consolidation The consolidated financial statements include the
accounts of Hewlett-Packard Company and its subsidiaries. All significant
intercompany accounts and transactions have been eliminated.
Revenue recognition Revenue from product sales is generally recognized at the
time the product is shipped. Service revenue is recognized over the contractual
period or as services are performed.
Taxes on earnings Income tax expense is based on pretax financial accounting
income. Deferred tax assets and liabilities are recognized for the expected tax
consequences of temporary differences between the tax bases of assets and
liabilities and their reported amounts.
Net earnings per share Since fiscal 1994, net earnings per share have been
computed using the weighted-average number of common shares and common share
equivalents outstanding during each period. Common share equivalents represent
the dilutive effect of outstanding stock options. In previous periods, common
share equivalents were not included as their effect was considered immaterial.
Cash equivalents and short-term investments The company has classified
investments as cash equivalents if the original maturity of such investments is
three months or less. Short-term investments are principally comprised of
certificates of deposit, temporary money-market instruments and repurchase
agreements and are stated at cost, which approximates market.
Inventories Inventories are valued at standard costs that approximate actual
costs computed on a first-in, first-out basis, not in excess of market values.
Property, plant and equipment Property, plant and equipment are stated at cost.
Additions, improvements and major renewals are capitalized. Maintenance, repairs
and minor renewals are expensed as incurred. Depreciation is provided using
accelerated methods, principally over the following useful lives: buildings and
improvements, 15 to 40 years; machinery and equipment, 3 to 10 years.
Depreciation of leasehold improvements is provided using the straight-line
method over the life of the lease or the asset, whichever is shorter.
Long-term investments At the beginning of fiscal 1995, the company adopted
Statement of Financial Accounting Standards (SFAS) No. 115, "Accounting for
Certain Investments in Debt and Equity Securities." SFAS No. 115 requires
certain investments in debt and equity securities to be classified into one of
three categories: held-to-maturity, available-for-sale, or trading. The
company's investments are primarily comprised of debt securities which are held-
to-maturity. Adoption of this statement did not have a material effect on the
company's financial position or results of operations.
Foreign currency translation The company uses the U.S. dollar as its functional
currency. Foreign currency assets and liabilities are translated into U.S.
dollars at end-of-period exchange rates except for inventories, property, plant
and equipment, other assets and deferred revenue, which are translated at
historical exchange rates. Revenues and
34
<PAGE>
Hewlett-Packard Company and Subsidiaries
expenses are translated at average exchange rates in effect during each period,
except for those expenses related to balance sheet amounts which are translated
at historical exchange rates. Gains or losses from foreign currency translation
are included in net earnings. The effect of foreign currency exchange rate
fluctuations on cash and cash equivalents denominated in foreign currencies was
not material.
Reclassifications In fiscal 1995, sales of consumable supplies, consisting
primarily of supplies for the company's printer products, are reported in the
consolidated statement of earnings as product revenue. In previous years,
consumable supplies were reported as service revenue. Prior year revenue and
cost of sales amounts have been reclassified to reflect this change.
Acquisitions
The company acquired several companies during 1994 and 1993, which were not
significant to the financial position or results of operations of the company.
All of these acquisitions were accounted for using the purchase method. Under
the purchase method, the results of operations of acquired companies are
included prospectively from the date of acquisition, and the acquisition cost is
allocated to the acquirees' assets and liabilities based upon their fair market
values at the date of the acquisition. At October 31, 1995, the net book value
of goodwill associated with acquisitions was $398 million and is being amortized
on a straight-line basis over 3 to 10 years.
Financial Instruments
Off-balance-sheet risk The company enters into foreign exchange contracts to
hedge against possible exposure from changes in foreign currency exchange rates.
Such exposure arises from assets and liabilities that are denominated in
currencies other than the U.S. dollar as well as firm foreign currency
commitments. When foreign exchange contracts hedge balance sheet exposure, such
effects are recognized when the exchange rate changes. When the company's
foreign exchange contracts hedge operational exposure, the effects of movements
in exchange rates on these instruments are recognized when the related revenues
and expenses are recognized. Because the impact of movements in exchange rates
on foreign exchange contracts offsets the related impact on the underlying items
being hedged, these instruments do not subject the company to risk that would
otherwise result from such changes. Foreign exchange contracts require the
company to exchange foreign currencies for U.S. dollars and generally mature
within six months. The company had foreign exchange contracts of $5.4 billion
and $2.5 billion at October 31, 1995 and 1994, respectively. At October 31,
1995, deferred gains and deferred losses on these contracts amounted to $126
million and $82 million, respectively.
The company enters into interest rate swap agreements to manage its exposure to
interest rate changes. The transactions generally involve the exchange of fixed
and floating interest payment obligations without the exchange of the underlying
principal amounts. Interest rate differentials under interest rate swap
agreements are recognized over the
35
<PAGE>
Hewlett-Packard Company and Subsidiaries
Notes to Consolidated Financial Statements
life of the contracts as interest expense. The maturities of interest rate swap
agreements match the maturities of the underlying debt. At October 31, 1995 and
1994, off-balance-sheet exposures under interest rate swap agreements were not
material.
Concentrations of credit risk Financial instruments that potentially subject the
company to significant concentrations of credit risk consist principally of
cash, investments, trade accounts receivable and certain other off-balance-sheet
financial instruments.
The company maintains cash and cash equivalents, short- and long-term
investments and certain other off-balance-sheet financial instruments with
various financial institutions. These financial institutions are located in many
different geographies, and company policy is designed to limit exposure with any
one institution. As part of its cash and risk management processes, the company
performs periodic evaluations of the relative credit standing of the financial
institutions. The company has not sustained material credit losses from these
instruments.
The company sells a significant portion of its products through third-party
resellers and, as a result, maintains individually significant receivable
balances with major distributors. If the financial condition and operations of
these distributors deteriorate substantially, the company's operating results
could be adversely affected. The ten largest distributor receivable balances
collectively represent 13 percent and 10 percent of total accounts and notes
receivable at October 31, 1995 and 1994, respectively.
Credit risk with respect to other trade accounts receivable is generally
diversified due to the large number of entities comprising the company's
customer base and their dispersion across many different industries and
geographies. The company performs ongoing credit evaluations of its customers'
financial condition, utilizes flooring arrangements with third-party financing
companies and requires collateral, such as letters of credit and bank
guarantees, in certain circumstances.
Fair value of financial instruments For certain of the company's financial
instruments, including cash and cash equivalents, short-term investments,
accounts and notes receivable, notes payable and short-term borrowings, accounts
payable, and other accrued liabilities, the carrying amounts approximate fair
value due to their short maturities. Long-term floating rate notes, long-term
stock investments and certificates of deposit are carried at amounts that
approximate fair value. The estimated fair value of long-term debt is primarily
based on quoted market prices, as well as borrowing rates currently available to
the company for bank loans with similar terms and maturities. This fair value,
when adjusted for unrealized gains and losses on related interest rate swap
agreements, approximates the carrying amount of long-term debt.
The estimated fair value for foreign exchange contracts is primarily based on
quoted market prices for the same or similar instruments, adjusted where
necessary for maturity differences. At October 31, 1995 and 1994, the estimated
fair value of foreign exchange contracts with carrying values of $(15) million
and $(24) million, respectively, amounted to $44 million and $(108) million,
respectively.
36
<PAGE>
Hewlett-Packard Company and Subsidiaries
The estimated fair values may not be representative of actual values of the
financial instruments that could have been realized as of year-end or that will
be realized in the future.
Taxes on Earnings
The provision for income taxes is comprised of:
<TABLE>
<CAPTION>
In millions 1995 1994 1993
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. federal taxes:
Current $ 642 $ 511 $330
Deferred (87) (156) (46)
Non-U.S. taxes:
Current 609 441 381
Deferred (15) -- (91)
State taxes 50 28 32
- --------------------------------------------------------------------------------
$1,199 $ 824 $606
================================================================================
</TABLE>
The significant components of deferred tax assets, which required no valuation
allowance, and deferred tax liabilities included on the balance sheet at
October 31 are:
<TABLE>
<CAPTION>
1995 1994
-----------------------------------------------------
Deferred Deferred Deferred Deferred
tax tax tax tax
In millions assets liabilities assets liabilities
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Inventory $ 381 $ 50 $329 $ 28
Fixed assets 110 10 61 12
Retiree medical benefits 248 -- 243 --
Other retirement benefits -- 111 -- 113
Employee benefits, other than retirement 130 42 90 20
Leasing activities -- 86 -- 79
Other 325 228 254 198
- ---------------------------------------------------------------------------------------------------
$1,194 $527 $977 $450
===================================================================================================
</TABLE>
Tax benefits of $91 million, $41 million and $35 million associated with the
exercise of employee stock options were allocated to equity in 1995, 1994 and
1993, respectively.
The company's average U.S. statutory tax rate was 35 percent in 1995 and 1994
and 34.8 percent in 1993. These rates reflect the increase resulting from
legislation enacted in August 1993, which was effective January 1, 1993. The
effect of this increase on the company's deferred tax assets and liabilities was
not material.
37
<PAGE>
Hewlett-Packard Company and Subsidiaries
Notes to Consolidated Financial Statements
The differences between the U.S. federal statutory income tax rate and the
company's effective rate are:
<TABLE>
<CAPTION>
1995 1994 1993
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. federal statutory income tax rate 35.0% 35.0% 34.8%
State income taxes, net of federal tax benefit 0.9 0.8 1.1
Lower rates in other jurisdictions, net (5.0) (4.8) (3.1)
Other, net 2.1 3.0 1.2
- -----------------------------------------------------------------------------------------------
33.0% 34.0% 34.0%
===============================================================================================
</TABLE>
After allocating eliminations and corporate items, earnings before taxes are:
<TABLE>
<CAPTION>
In millions 1995 1994 1993
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. operations including Puerto Rico $1,548 $ 915 $ 818
Non-U.S. 2,084 1,508 965
- -----------------------------------------------------------------------------------------------
$3,632 $2,423 $1,783
===============================================================================================
</TABLE>
The company has not provided for U.S. federal income and foreign withholding
taxes on $3.0 billion of non-U.S. subsidiaries' undistributed earnings as of
October 31, 1995, because such earnings are intended to be reinvested
indefinitely. If these earnings were distributed, foreign tax credits should
become available under current law to reduce or eliminate the resulting U.S.
income tax liability. Where excess cash has accumulated in the company's non-
U.S. subsidiaries and it is advantageous for tax or foreign exchange reasons,
subsidiary earnings are remitted.
As a result of certain employment and capital investment actions undertaken by
the company, income from manufacturing activities in certain countries is
subject to reduced tax rates, and in some cases is wholly exempt from taxes, for
years through 2010. The income tax benefits attributable to the tax status of
these subsidiaries are estimated to be $168 million, $163 million and $128
million for 1995, 1994 and 1993, respectively.
The Internal Revenue Service (IRS) has completed its examination of the
company's federal income tax returns filed through 1983. The IRS has not
commenced its examination of returns for years subsequent to 1992. The company
believes that adequate accruals have been provided for all years.
Borrowings
Notes payable and short-term borrowings and the related average interest rates
at October 31 are:
<TABLE>
<CAPTION>
1995 1994
---------------------------------------------
Interest Interest
In millions rate rate
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Commercial paper $2,785 5.8% $1,155 5.1%
Notes payable to banks 315 6.6% 1,090 5.1%
Other short-term borrowings 114 3.5% 224 3.7%
- ------------------------------------------------------------------------------------
$3,214 $2,469
====================================================================================
</TABLE>
38
<PAGE>
Hewlett-Packard Company and Subsidiaries
Long-term debt consists of bonds placed with various financial institutions with
interest rates ranging from 7.1 percent to 7.9 percent at October 31, 1995. The
aggregate payments for the next five years of long-term debt outstanding at
October 31, 1995 are $274 million in 1998, $156 million in 1999 and $233 million
in 2001 and thereafter.
At October 31, 1995, the Company had various borrowing arrangements in place
with unused borrowing capacity totaling $3.7 billion. These credit arrangements
are generally uncommitted and do not require commitment fees.
Shareholders' Equity
Stock split The company made a 2-for-1 split of its $1 par value common stock
in the form of a 100 percent distribution to shareholders of record as of March
24, 1995. As a result of the stock split, authorized, outstanding, and reserved
common shares doubled and capital in excess of par value was reduced by the par
value of the additional common shares issued. The rights of the holders of these
securities were not otherwise modified. All references in the financial
statements to number of shares, per share amounts, stock option data and market
prices of the company's common stock have been restated.
Employee Stock Purchase Plan Eligible company employees may generally
contribute up to 10 percent of their base compensation to the quarterly purchase
of company stock under the Employee Stock Purchase Plan. Under this plan,
employee contributions are partially matched with company contributions to
purchase HP stock. At October 31, 1995, approximately 86,000 employees were
eligible to participate and approximately 46,000 employees were participants in
the plan.
Incentive compensation plans The company has four principal stock option plans,
adopted in 1979, 1985, 1990 and 1995. All plans permit options granted to
qualify as ``Incentive Stock Options'' under the Internal Revenue Code. The
exercise price of a stock option is generally equal to the fair market value of
the company's common stock on the date the option is granted. Under the 1990 and
1995 Incentive Stock Plans, however, the Executive Compensation and Stock Option
Committee, in certain cases, may choose to establish a discounted exercise price
at no less than 75 percent of fair market value on the grant date. In 1995 and
1994, discounted options totaling 768,000 shares and 432,000 shares,
respectively, were granted. Stock compensation expense related to the discounted
options was not material. Options generally vest at a rate of 25 percent per
year over a period of four years from the date of grant except for discounted
options, which may not be exercised before the fifth anniversary of the option
grant date, at which time such options become 100 percent vested. The plans also
provide for the granting of stock appreciation rights with respect to options
granted to officers. The company has not included stock appreciation rights with
options granted to officers since October 31, 1991.
39
<PAGE>
Hewlett-Packard Company and Subsidiaries
Notes to Consolidated Financial Statements
The following table summarizes option activity during 1995:
<TABLE>
<CAPTION>
Price
In thousands except price per share amounts Options per share
- --------------------------------------------------------------------------------
<S> <C> <C>
Outstanding at October 31, 1994 25,672 $14-44
Granted 4,899 36-95
Exercised (5,302) 14-53
Cancelled (461) 14-76
- --------------------------------------------------------------------------------
Outstanding at October 31, 1995 24,808 $14-95
================================================================================
</TABLE>
At October 31, 1995, options to purchase 12,340,000 shares were exercisable at
prices ranging from $14 to $44 per share. Shares available for option grants at
October 31, 1995 and 1994 were 37,244,000 and 10,322,000, respectively.
Approximately 49,000 employees were considered eligible to receive stock options
in fiscal 1995. There were approximately 26,000 employees holding options under
one or more of the option plans as of October 31, 1995.
Under the 1985 Incentive Compensation Plan and the 1990 and 1995 Incentive Stock
Plans, certain key employees may be granted cash or restricted stock awards.
Cash and restricted stock awards are independent of option grants and are
subject to restrictions considered appropriate by the company's Executive
Compensation and Stock Option Committee. The majority of the shares of
restricted stock outstanding at October 31, 1995 are subject to forfeiture if
employment terminates prior to five years from the date of grant. During that
period, ownership of the shares cannot be transferred. Restricted stock has the
same dividend and voting rights as other common stock and is considered to be
currently issued and outstanding. The cost of the awards, determined to be the
fair market value of the shares at the date of grant, is expensed ratably over
the period the restrictions lapse. Such expense was not material in 1995, 1994
or 1993. At October 31, 1995 and 1994, the company had 1,531,000 and 964,000
shares, respectively, of restricted stock outstanding.
Shares reserved The company has reserved shares for future issuance under the
employee stock plans. At October 31, 1995 and 1994, 80,234,000 and 59,418,000
shares, respectively, were reserved.
Stock repurchase program Under the company's stock repurchase program, shares of
HP common stock are purchased primarily to manage the dilution created by shares
issued under the employee stock plans. In 1995, 1994 and 1993, 10,395,000,
8,056,000 and 8,690,000 shares were repurchased for an aggregate purchase price
of $686 million, $325 million and $314 million, respectively. At October 31,
1995, HP had authorization for an aggregate of $319 million in future
repurchases under this program based on certain price and volume criteria. On
November 17, 1995, the Board of Directors authorized an additional $1 billion in
stock repurchases.
Retirement Plans and Retiree Medical Benefits
Pension and deferred profit-sharing plans Substantially all of the company's
employees are covered under various pension and deferred profit-sharing
retirement plans. Worldwide pension and deferred profit-sharing costs were $233
million in 1995, $196 million in 1994, and $159 million in 1993.
40
<PAGE>
Hewlett-Packard Company and Subsidiaries
U.S. employees who meet certain minimum eligibility criteria are provided
retirement benefits under the Hewlett-Packard Company Retirement Plan
(Retirement Plan). Defined benefits are based upon an employee's highest aver-
age pay rate and length of service. For eligible service through October 31,
1993, the benefit payable under the Retirement Plan is reduced by any amounts
due to the employee under the company's frozen defined contribution Deferred
Profit-Sharing Plan (DPS). Up through that date, the DPS was funded solely by
the company through an annual contribution based upon the company's adjusted
U.S. net income, as defined in the plan agreement. Amendments made in October
1993 to close the DPS to new participants and discontinue the coordination of
benefits between the two plans for service after October 31, 1993 provided for
immediate 100% vesting of all participant balances in both plans. Additionally,
the amendments resulted in an increase of $69 million in both prior service cost
and the projected benefit obligation for the Retirement Plan in 1993. Higher
Retirement Plan service costs after the amendments are largely offset by the DPS
contributions that are no longer required.
The combined status of the Retirement Plan and DPS follows:
<TABLE>
<CAPTION>
In millions 1995 1994
- -------------------------------------------------------------------------
<S> <C> <C>
Fair value of plan assets $2,400 $2,093
Retirement benefit obligation $2,413 $1,977
- -------------------------------------------------------------------------
</TABLE>
Employees outside the U.S. generally receive retirement benefits under various
defined benefit and defined contribution plans based upon factors such as years
of service and employee compensation levels. Eligibility is generally determined
in accordance with local statutory requirements.
Retiree medical plan In addition to providing pension benefits, the company also
sponsors a medical plan that provides defined benefits to U.S. retired
employees. Substantially all of the company's current U.S. employees could
become eligible for these benefits and the existing benefit obligation relates
primarily to those employees. Once participating in the plan, retirees may
choose from managed-care and indemnity options, with their contributions
dependent on options chosen and length of service.
401(k) plan U.S. employees of the company may participate in the Tax Saving
Capital Accumulation Plan (TAXCAP), which was established as a supplemental
retirement program. Under the TAXCAP program, the company matches contributions
by employees up to a maximum of 4 percent of an employee's annual compensation.
The maximum combined contribution to the Employee Stock Purchase Plan and TAXCAP
is 17 percent of an employee's annual base compensation subject to certain
regulatory and plan limitations. At October 31, 1995, 48,000 employees were
participating in TAXCAP out of 56,000 who were eligible.
41
<PAGE>
Hewlett-Packard Company and Subsidiaries
Notes to Consolidated Financial Statements
Funded status The funded status of the defined benefit and retiree medical plans
is:
<TABLE>
<CAPTION>
U.S. defined benefit plan Non-U.S. defined benefit plans U.S. retiree medical plan
------------------------- ------------------------------ --------------------------
In millions 1995 1994 1995 1994 1995 1994
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Fair value of plan assets $ 358 $ 310 $ 1,116 $ 933 $ 310 $ 258
Benefit obligation (371) (194) (1,182) (1,015) (412) (328)
- ---------------------------------------------------------------------------------------------------------------------------------
Plan assets in excess of
(less than) benefit obligation (13) 116 (66) (82) (102) (70)
Unrecognized net experience
(gain) loss (8) (52) 95 85 (176) (203)
Unrecognized prior service cost
(benefit) related to plan changes 52 63 32 33 (173) (183)
Unrecognized net transition asset* (39) (47) -- (6) -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Prepaid (accrued) costs $ (8) $ 80 $ 61 $ 30 $ (451) $ (456)
=================================================================================================================================
Vested benefit obligation $ (157) $ (47) $ (812) $ (656)
Accumulated benefit obligation $ (157) $ (47) $ (859) $ (706)
======================================================================================================
</TABLE>
*Amortized over 15 years for the U.S. plan and over periods ranging from 12 to
20 years for non-U.S. plans.
Plan assets consist primarily of listed stocks and bonds for the U.S. plans and
listed stocks, bonds and cash surrender value of life insurance policies for the
non-U.S. plans. It is the company's practice to fund these costs to the extent
they are tax-deductible.
Net periodic cost The company's net pension, deferred profit-sharing and
retiree medical costs are comprised of:
<TABLE>
<CAPTION>
Pension and deferred profit-sharing
-----------------------------------------------------------
U.S. plans Non-U.S. plans U.S. retiree medical plan
----------------------------------------------------------- -------------------------
In millions 1995 1994 1993 1995 1994 1993 1995 1994 1993
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Service cost--benefits earned $108 $112 $ 4 $ 88 $ 73 $ 61 $ 21 $ 27 $ 28
during the period
Interest cost on benefit obligation 15 6 3 72 58 49 28 33 35
Actual return on plan assets (59) (7) (45) (26) (44) (107) (52) (7) (40)
Net amortization and deferral 25 (29) 11 (52) (16) 59 18 (27) 10
- -------------------------------------------------------------------------------------------------------------------------------
Net plan cost (credit) 89 82 (27) 82 71 62 15 26 33
Pension and deferred profit-
sharing costs for other plans -- -- 88 62 43 36 -- -- --
- -------------------------------------------------------------------------------------------------------------------------------
$ 89 $ 82 $ 61 $ 144 $ 114 $ 98 $ 15 $ 26 $ 33
===============================================================================================================================
</TABLE>
42
<PAGE>
Hewlett-Packard Company and Subsidiaries
Assumptions The assumptions used to measure the benefit obligations and to
compute the expected long-term return on assets for the company's defined
benefit and retiree medical plans are:
<TABLE>
<CAPTION>
1995 1994 1993
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. defined benefit plan:
Discount rate 7.5% 8.0% 7.0%
Average increase in compensation levels 5.5% 5.5% 5.5%
Expected long-term return on assets 9.0% 9.0% 9.0%
Non-U.S. defined benefit plans:
Discount rate 4.0 to 8.5% 5.0 to 8.8% 5.0 to 9.0%
Average increase in compensation levels 3.5 to 6.5% 4.1 to 7.0% 4.5 to 6.3%
Expected long-term return on assets 5.8 to 10.0% 7.0 to 9.5% 7.0 to 10.0%
U.S. retiree medical plan:
Discount rate 7.5% 8.0% 7.0%
Expected long-term return on assets 9.0% 9.0% 9.0%
Current medical cost trend rate 10.4% 10.8% 11.2%
Ultimate medical cost trend rate 6.0% 6.0% 6.0%
Medical cost trend rate decreases to ultimate
rate in year 2007 2007 2007
Effect of a 1% increase in the medical cost trend
rate (millions):
Increase in benefit obligation $87 $66 $97
Increase in the annual retiree medical cost $12 $13 $18
- --------------------------------------------------------------------------------------------------------------
</TABLE>
Commitments
The company leases certain real and personal property under non-cancelable
operating leases. Minimum lease payments are $162 million for 1996, $136 million
for 1997, $110 million for 1998, $91 million for 1999, $61 million for 2000 and
$211 million for 2001 and thereafter. Certain leases require the company to pay
property taxes, insurance and routine maintenance and include escalation
clauses. Rent expense was $302 million in 1995, $274 million in 1994 and $269
million in 1993.
43
<PAGE>
Hewlett-Packard Company and Subsidiaries
Notes to Consolidated Financial Statements
Geographic Area Information
The company, operating in a single industry segment, designs, manufactures and
services products and systems for measurement, computation and communications.
Net revenue, earnings from operations and identifiable assets, classified by the
major geographic areas in which the company operates, are:
<TABLE>
<CAPTION>
In millions 1995 1994 1993
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net revenue
United States:
Unaffiliated customer sales $ 13,963 $ 11,469 $ 9,346
Interarea transfers 5,728 4,653 4,249
- ----------------------------------------------------------------------------------------------------------------------
19,691 16,122 13,595
- ----------------------------------------------------------------------------------------------------------------------
Europe:
Unaffiliated customer sales 11,142 8,423 7,177
Interarea transfers 1,432 1,058 899
- ----------------------------------------------------------------------------------------------------------------------
12,574 9,481 8,076
- ----------------------------------------------------------------------------------------------------------------------
Japan, Other Asia Pacific, Canada, Latin America:
Unaffiliated customer sales 6,414 5,099 3,794
Interarea transfers 3,783 2,765 2,165
- ----------------------------------------------------------------------------------------------------------------------
10,197 7,864 5,959
- ----------------------------------------------------------------------------------------------------------------------
Eliminations (10,943) (8,476) (7,313)
- ----------------------------------------------------------------------------------------------------------------------
$ 31,519 $ 24,991 $ 20,317
======================================================================================================================
Earnings from operations
United States $ 2,259 $ 1,472 $ 1,485
Europe 930 660 447
Japan, Other Asia Pacific, Canada, Latin America 1,240 824 630
Eliminations and corporate (861) (407) (683)
- ----------------------------------------------------------------------------------------------------------------------
$ 3,568 $ 2,549 $ 1,879
======================================================================================================================
Identifiable assets
United States $ 12,347 $ 9,848 $ 8,984
Europe 7,168 4,991 4,452
Japan, Other Asia Pacific, Canada, Latin America 5,854 4,052 3,056
Eliminations and corporate (942) 676 244
- ----------------------------------------------------------------------------------------------------------------------
$ 24,427 $ 19,567 $ 16,736
======================================================================================================================
</TABLE>
Net revenue from sales to unaffiliated customers is based on the location of the
customer. Interarea transfers are sales among HP affiliates principally made at
market price, less an allowance primarily for subsequent manufacturing and/or
marketing costs. Earnings from operations and identifiable assets are classified
based on the location of the company's facilities.
Identifiable corporate assets, which are net of eliminations, comprise primarily
cash and cash equivalents, property, plant and equipment, and other assets, and
aggregate $4,343 million in 1995, $4,594 million in 1994 and $3,148 million in
1993.
44
<PAGE>
Hewlett-Packard Company and Subsidiaries
Statement of Management Responsibility
The company's management is responsible for the preparation, integrity and
objectivity of the consolidated financial statements and other financial
information presented in this report. The accompanying financial statements have
been prepared in conformity with generally accepted accounting principles and
reflect the effects of certain estimates and judgments made by management.
The company's management maintains an effective system of internal control that
is designed to provide reasonable assurance that assets are safeguarded and
transactions are properly recorded and executed in accordance with management's
authorization. The system is continuously monitored by direct management review
and by internal auditors who conduct an extensive program of audits throughout
the company. The company selects and trains qualified people who are provided
with and expected to adhere to the company's standards of business conduct.
These standards, which set forth the highest principles of business ethics and
conduct, are a key element of the company's control system.
The company's consolidated financial statements have been audited by Price
Waterhouse LLP, independent accountants. Their audits were conducted in
accordance with generally accepted auditing standards, and included a review of
financial controls and tests of accounting records and procedures as they
considered necessary in the circumstances.
The Audit Committee of the Board of Directors, which consists of outside
directors, meets regularly with management, the internal auditors and the
independent accountants to review accounting, reporting, auditing and internal
control matters. The committee has direct and private access to both internal
and external auditors.
/s/ Lew Platt /s/ Robert Wayman
Lew Platt Robert Wayman
Chairman of the Board, President and Executive Vice President, Finance
Chief Executive Officer and Administration
Chief Financial Officer
Report of Independent Accountants
To the Shareholders and Board of Directors of Hewlett-Packard Company
In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of earnings, of cash flows and of shareholders' equity
present fairly, in all material respects, the financial position of Hewlett-
Packard Company and its subsidiaries at October 31, 1995 and 1994, and the
results of their operations and their cash flows for each of the three years in
the period ended October 31, 1995, in conformity with generally accepted
accounting principles. These financial statements are the responsibility of the
company's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with generally accepted auditing standards, which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
/s/ Price Waterhouse LLP
San Jose, California
November 17, 1995
45
<PAGE>
Hewlett-Packard Company and Subsidiaries
Orders and Net Revenue by Groupings of Similar Products and Services
Unaudited
<TABLE>
<CAPTION>
For the years ended October 31
In millions 1995 1994 1993
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Orders
Computer products, service and support $25,815 $19,882 $15,903
Electronic test and measurement
instrumentation, systems and service 3,488 2,759 2,335
Medical electronic equipment and service 1,399 1,170 1,196
Chemical analysis and service 844 777 721
Electronic components 964 762 617
- ---------------------------------------------------------------------------------------------------
$32,510 $25,350 $20,772
===================================================================================================
Net revenue
Computer products, service and support $25,269 $19,632 $15,572
Electronic test and measurement
instrumentation, systems and service 3,288 2,722 2,318
Medical electronic equipment and service 1,300 1,141 1,149
Chemical analysis and service 806 754 704
Electronic components 856 742 574
- ---------------------------------------------------------------------------------------------------
$31,519 $24,991 $20,317
===================================================================================================
</TABLE>
The table above provides supplemental information showing orders and net revenue
by groupings of similar products and services. The groupings are as follows:
Computer products, service and support Computer equipment and systems (hardware
and software), networking products, printers, scanners, disk and tape drives,
terminals and handheld calculators; support and maintenance services, parts and
supplies.
Electronic test and measurement instrumentation, systems and service Instruments
and measurement systems used for design, production and maintenance of
electronic equipment; support and maintenance services.
Medical electronic equipment and service Patient monitoring, cardiology and
ultrasound imaging equipment used for clinical diagnosis and care; hospital and
healthcare information systems, systems integration and application software;
support and maintenance services; medical supplies.
Chemical analysis and service Gas and liquid chromatographs, mass spectrometers
and spectrophotometers used to analyze chemical compounds; laboratory data and
information management systems; support, supplies and maintenance services.
Electronic components Microwave semiconductor and optoelectronic devices that
are sold primarily to manufacturers for incorporation into electronic products.
46
<PAGE>
Hewlett-Packard Company and Subsidiaries
Quarterly Summary
Unaudited
<TABLE>
<CAPTION>
For the three months ended
In millions except per share amounts January 31 April 30 July 31 October 31
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1995
U.S. orders $ 3,126 $ 3,488 $ 3,719 $ 4,276
International orders 4,567 4,570 4,288 4,476
- -------------------------------------------------------------------------------------------------------------------
Total orders $ 7,693 $ 8,058 $ 8,007 $ 8,752
- -------------------------------------------------------------------------------------------------------------------
Net revenue $ 7,304 $ 7,428 $ 7,739 $ 9,048
Cost of products sold
and services $ 4,547 $ 4,654 $ 4,907 $ 5,906
Earnings from operations $ 932 $ 875 $ 824 $ 937
Net earnings $ 602 $ 577 $ 576 $ 678
Per share amounts, restated for
1995 stock split:
Net earnings $ 1.15 $ 1.10 $ 1.09 $ 1.29
Cash dividends $.15 $ .15 $ .20 $ .20
Range of stock prices $46-53 3/8 $50 1/2-66 1/8 $64 1/4-83 5/8 $72 1/2-96
===================================================================================================================
1994
U.S. orders $ 2,572 $ 2,937 $ 2,776 $ 3,407
International orders 3,570 3,431 3,185 3,472
- -------------------------------------------------------------------------------------------------------------------
Total orders $ 6,142 $ 6,368 $ 5,961 $ 6,879
- -------------------------------------------------------------------------------------------------------------------
Net revenue $ 5,682 $ 6,254 $ 6,053 $ 7,002
Cost of products sold
and services $ 3,470 $ 3,890 $ 3,774 $ 4,356
Earnings from operations $ 598 $ 638 $ 543 $ 770
Net earnings $ 368 $ 408 $ 347 $ 476
Per share amounts, restated for
1995 stock split:
Net earnings $ .71 $ .78 $ .66 $ .92
Cash dividends $ .125 $ .125 $ .15 $ .15
Range of stock prices $35 3/4-43 3/4 $ 38-46 $ 36-41 $ 39-49
===================================================================================================================
</TABLE>
Net Earnings Per Share*
In dollars
[GRAPH APPEARS HERE]
* Restated for 1995 stock split
Range of Common
Stock Prices*
In dollars per share
[GRAPH APPEARS HERE]
* Restated for 1995 stock split
47
<PAGE>
Hewlett-Packard Company and Subsidiaries
Shareholder Information
Annual Meeting of Shareholders
The annual meeting will be held Tuesday, February 27, 1996, at 2 p.m. at HP's
Cupertino site located at 19447 Pruneridge Avenue, Cupertino, California.
Annual Report/Form 10-K
Publications of interest to current and potential HP investors are available
upon request. These include the annual report and the Form 10-K filed with the
Securities and Exchange Commission. As a service to those with impaired vision,
the HP 1995 annual report is available on audio cassette. This material can be
obtained at no cost by contacting the Corporate Communications Department at
HP's corporate offices.
Interested parties can also request financial information by calling 800-TALK-
HWP (825-5497).
HP's 1995 annual report and related financial information are also available on
the World Wide Web. The Web address is http://www.hp.com/go/financials
Transfer Agent and Registrar
Harris Trust and Savings Bank
Corporate Trust Operations Division
P.O. Box 755
Chicago, Illinois 60690
Telephone: (312) 461-4061
Common Stock, Dividend Policy
The company's stock is listed on the New York and the Pacific stock exchanges.
Cash dividends have been paid each year since 1965. The current rate is $0.20
per share per quarter. At Nov. 30, 1995, there were 73,057 shareholders of
record.
<PAGE>
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 Company Limited
in the UK and other countries.
Microsoft is a U.S. registered trademark of Microsoft Corp.
Windows is a U.S. trademark of Microsoft Corp.
Intel is a U.S. trademark of Intel Corp.
Pentium is a U.S. trademark of Intel Corp.
Corporate Information
Headquarters
3000 Hanover Street
Palo Alto, California 94394
Telephone: (415) 857-1501
Geographic Operations
Americas
19420 Homestead Road
Cupertino, California 95014-0610
Telephone: (408) 725-8900
Europe, Africa, Middle East
Route du Nant-d'Avril 150
CH-1217 Meyrin 2
Geneva, Switzerland
Telephone: (41/22) 780-8111
Asia Pacific
17-21/F Shell Tower
Times Square, 1 Matheson Street
Cuaseway Bay, Hong Kong
Telephone: (852) 2 599-7777
A directory of sales and support
locations can be obtained from the
Corporate Communications Department
at HP's offices in Palo Alto.
[RECYCLING LOGO APPEARS HERE] Printed on recycled paper
<PAGE>
EXHIBIT 21
SUBSIDIARIES AND AFFILIATES
OF HEWLETT-PACKARD COMPANY
<TABLE>
<CAPTION>
ORGANIZED UNDER
LAWS OF
---------------
<S> <C>
DOMESTIC SUBSIDIARIES OF HEWLETT-PACKARD COMPANY
Hewlett-Packard Delaware, Inc. ................................ Delaware
Hewlett-Packard Delaware Capital, Inc. ........................ Delaware
Hewlett-Packard Delaware Funding, Inc. ........................ Delaware
Hewlett-Packard Delaware Holding, Inc. ........................ Delaware
Hewlett-Packard Delaware Investment, Inc. ..................... Delaware
Hewlett-Packard European Distribution Operations Netherlands,
Inc. ......................................................... Delaware
Hewlett-Packard Finance Company................................ California
Hewlett-Packard Global Trading, Inc. .......................... California
Hewlett-Packard Hellas......................................... California
Hewlett-Packard Inter-Americas................................. California
Hewlett-Packard Laboratories Japan, Inc. ...................... Delaware
Hewlett-Packard Little Falls, Inc. ............................ Delaware
Hewlett-Packard Pipeline Company............................... Colorado
Hewlett-Packard Puerto Rico.................................... California
Hewlett-Packard World Trade, Inc. ............................. Delaware
Apollo World Trade, Inc. ...................................... Delaware
Convex Computer Corporation.................................... Delaware
ElseWare Corporation........................................... Washington
HiNoon Project Corporation..................................... Delaware
The Tall Tree Insurance Company................................ Vermont
Versatest, Inc. ............................................... California
DOMESTIC SUBSIDIARY OF HEWLETT-PACKARD LITTLE FALLS, INC.
Fleet Systems, Inc. ........................................... California
DOMESTIC SUBSIDIARY OF HEWLETT-PACKARD WORLD TRADE, INC.
Hewlett-Packard Export Trade Co. .............................. California
DOMESTIC SUBSIDIARY OF HINOON PROJECT CORPORATION
Video Products Group Inc. ..................................... Delaware
DOMESTIC SUBSIDIARIES OF CONVEX COMPUTER CORPORATION
Convex Computer (China) Inc. .................................. Delaware
Convex International, Inc. .................................... Delaware
FOREIGN SUBSIDIARIES OF HEWLETT-PACKARD COMPANY
China Hewlett-Packard Company, Ltd. ........................... PRC
Grupo Hewlett-Packard Latin America S.A. de C.V. .............. Mexico
Hewlett-Packard Asia Pacific Ltd. ............................. Hong Kong
Hewlett-Packard Australia Ltd. ................................ Australia
Hewlett-Packard Bilgisayar Ve Olcum Sistemleri Anonim Sirketi.. Turkey
Hewlett-Packard Hong Kong Ltd. ................................ Hong Kong
Hewlett-Packard Ireland Ltd. .................................. Ireland
Hewlett-Packard Korea Ltd. .................................... Korea
Hewlett-Packard Medical Products (Qingdao) Ltd. ............... PRC
Hewlett-Packard Penang Sdn. Bhd. .............................. Malaysia
Hewlett-Packard Portugal-Sistemas De Informatica E De Medida
S.A. ......................................................... Portugal
Hewlett-Packard Sales (Malaysia) Sdn. Bhd. .................... Malaysia
Hewlett-Packard Taiwan, Ltd. .................................. ROC
</TABLE>
1
<PAGE>
<TABLE>
<CAPTION>
ORGANIZED UNDER
LAWS OF
---------------
<S> <C>
FOREIGN SUBSIDIARIES OF HEWLETT-PACKARD COMPANY (continued)
EEsof GmbH.................................................... Germany
EEsof K.K. ................................................... Japan
EEsof Pte. Ltd. .............................................. Singapore
Hua Pu Information Technology Co. Ltd. ....................... PRC
P.T. Hewlett-Packard Berca Servisindo......................... Indonesia
FOREIGN SUBSIDIARIES OF CONVEX COMPUTER CORPORATION
Convex Computer Australia Pty. Ltd. .......................... Australia
Convex Computer Barbados Ltd. ................................ Barbados
Convex Computer Canada Ltd. .................................. Canada
Convex S.A. .................................................. France
Convex Computer GmbH.......................................... Germany
Convex S.p.A. ................................................ Italy
Convex Computer Japan K.K. ................................... Japan
Convex Computer Pte. Ltd. .................................... Singapore
Convex Computer AG............................................ Switzerland
Convex Computer B.V. ......................................... The Netherlands
Convex Computer Ltd. ......................................... UK
FOREIGN SUBSIDIARY OF CHINA HEWLETT-PACKARD COMPANY, LTD.
China Hewlett-Packard (Shenzhen) Company, Ltd. ............... PRC
FOREIGN SUBSIDIARIES OF GRUPO HEWLETT-PACKARD LATIN AMERICA
S.A. DE C.V.
Arrendadora Hewlett-Packard S.A. de C.V. ..................... Mexico
Hewlett-Packard de Mexico S.A. de C.V. ....................... Mexico
FOREIGN SUBSIDIARY OF HEWLETT-PACKARD ASIA PACIFIC LTD.
Hewlett-Packard Australia Finance Ltd. ....................... Australia
FOREIGN SUBSIDIARIES OF HEWLETT-PACKARD AUSTRALIA LTD.
Hewlett-Packard New Zealand Ltd. ............................. New Zealand
Telstra Hewlett-Packard (R&D) Pty. Inc. ...................... Australia
FOREIGN SUBSIDIARIES OF HEWLETT-PACKARD DELAWARE, INC.
Hewlett-Packard Chile, S.A. .................................. Chile
Hewlett-Packard de Venezuela, C.A. ........................... Venezuela
Hewlett-Packard do Brasil, S.A. .............................. Brazil
Hewlett-Packard Malaysia Technology, Sdn. Bhd. ............... Malaysia
Hewlett-Packard (Thailand) Ltd. .............................. Thailand
FOREIGN SUBSIDIARY OF HEWLETT-PACKARD DELAWARE CAPITAL, INC.
HCL Hewlett-Packard Ltd. ..................................... India
FOREIGN SUBSIDIARY OF HEWLETT-PACKARD DELAWARE HOLDING, INC.
Hewlett-Packard (India) Software Operation Pte. Ltd. ......... India
FOREIGN SUBSIDIARY OF HEWLETT-PACKARD DELAWARE INVESTMENT,
INC.
Hewlett-Packard India Ltd. ................................... India
FOREIGN SUBSIDIARY OF HEWLETT-PACKARD DO BRASIL, S.A.
Edisa Hewlett-Packard S.A. ................................... Brazil
FOREIGN SUBSIDIARIES OF HEWLETT-PACKARD GMBH
Hewlett-Packard Inter-Services GmbH........................... Germany
IDACOM Electronics GmbH....................................... Germany
debis Systemhaus sfi GmbH..................................... Germany
LGI Logistics Group International............................. Germany
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
ORGANIZED UNDER
LAWS OF
---------------
<S> <C>
FOREIGN SUBSIDIARIES OF HEWLETT-PACKARD EUROPE B.V.
Hewlett-Packard Belgium S.A./N.V. ............................ Belgium
Hewlett-Packard (Canada) Ltd. ................................ Canada
Hewlett-Packard (China) Investment Co., Ltd. ................. PRC
Hewlett-Packard Colombia Limitada............................. Columbia
Hewlett-Packard Coordination Center SC........................ Belgium
Hewlett-Packard Far East Pte. Ltd. ........................... Singapore
Hewlett-Packard GmbH.......................................... Germany
Hewlett-Packard Holding B.V. ................................. The Netherlands
Hewlett-Packard Holdings (M) Sdn. Bhd. ....................... Malaysia
Hewlett-Packard Ireland (Holdings) Ltd. ...................... Ireland
Hewlett-Packard Israel Science Center Ltd. ................... Israel
Hewlett-Packard Italiana S.p.A. .............................. Italy
Hewlett-Packard Japan, Ltd. .................................. Japan
Hewlett-Packard Ltd. ......................................... U.K.
Hewlett-Packard Netherland B.V. .............................. The Netherlands
Hewlett-Packard Philippines................................... Philippines
Hewlett-Packard S.A. ......................................... Switzerland
Hewlett-Packard Shanghai Analytical Products Co. Ltd. ........ PRC
Hewlett-Packard Singapore (Sales) Pte. Ltd. .................. Singapore
Technologies et Participations S.A............................ France
FOREIGN SUBSIDIARIES OF HEWLETT-PACKARD (CANADA) LTD.
IDACOM Electronics............................................ Canada
Hewlett-Packard Canada (Realty)............................... Canada
Apollo Computer (Canada) Ltd.................................. Canada
FOREIGN SUBSIDIARY OF HEWLETT-PACKARD (CHINA) INVESTMENT CO.,
LTD.
Hewlett-Packard Computer Products (Shanghai) Co., Ltd......... PRC
FOREIGN SUBSIDIARY OF HEWLETT-PACKARD HOLDINGS (M) SDN. BHD.
Hewlett-Packard Storage Products (M) Sdn. Bhd................. Malaysia
FOREIGN SUBSIDIARIES OF HEWLETT-PACKARD IRELAND (HOLDINGS)
LTD.
Hewlett-Packard (Manufacturing) Ltd........................... Ireland
Hewlett-Packard Finance (Europe) Ltd.......................... Ireland
FOREIGN SUBSIDIARIES OF HEWLETT-PACKARD ITALIANA S.P.A.
Hewlett-Packard Servizi Finanziari S.p.A...................... Italy
NECSY Network Control Systems S.p.A........................... Italy
FOREIGN SUBSIDIARY OF HEWLETT-PACKARD JAPAN, LTD.
Shinkawa YHP Corporation...................................... Japan
FOREIGN SUBSIDIARIES OF HEWLETT-PACKARD LTD.
Hewlett-Packard Avantek Ltd. ................................. U.K.
Hewlett-Packard Equipment Leasing Ltd. ....................... U.K.
Hewlett-Packard Finance Ltd. ................................. U.K.
Hewlett-Packard Leasing Ltd. ................................. U.K.
Hewlett-Packard Product Leasing Ltd. ......................... U.K.
Apollo Computer (UK) Ltd. .................................... U.K.
BT&D Technologies Ltd. ....................................... U.K.
Colorado Memory Systems Europe Ltd. .......................... U.K.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
ORGANIZED UNDER
LAWS OF
--------------------
<S> <C>
FOREIGN SUBSIDIARIES OF HEWLETT-PACKARD S.A.
Hewlett-Packard Argentina S.A. .......................... Argentina
Hewlett-Packard A/S...................................... Denmark
Hewlett-Packard Ges.m.b.H................................ Austria
Hewlett-Packard Espanola, S.A. .......................... Spain
Hewlett-Packard (Malaysia) Sdn. Bhd. .................... Malaysia
Hewlett-Packard Norge AS................................. Norway
Hewlett-Packard OY....................................... Finland
Hewlett-Packard (Schweiz) AG............................. Switzerland
Hewlett-Packard Singapore Pte. Ltd. ..................... Singapore
Hewlett-Packard Sverige AB............................... Sweden
Hewlett-Packard Technical B.V. .......................... The Netherlands
Hewlett-Packard Trading S.A. ............................ Switzerland
FOREIGN SUBSIDIARIES OF HEWLETT-PACKARD SINGAPORE PTE.
LTD.
Hewlett-Packard Investment Ltd. ......................... Liberia
Geneva Investments N.V. ................................. Netherlands Antilles
W.W. Investment Holding Pte. Ltd. ....................... Singapore
TECH Semiconductor Singapore Pte. Ltd. .................. Singapore
FOREIGN SUBSIDIARY OF HEWLETT-PACKARD INVESTMENT LTD.
Banque de Savoie S.A. ................................... France
FOREIGN SUBSIDIARY OF W.W. INVESTMENT HOLDING PTE. LTD.
W.W. Real Estate and Development Pte. Ltd. .............. Singapore
FOREIGN SUBSIDIARIES OF W.W. REAL ESTATE AND DEVELOPMENT
PTE. LTD.
W-Wide Offshore Ventures Pte. Ltd. ...................... Singapore
CP Pierre................................................ France
FOREIGN SUBSIDIARIES OF HEWLETT-PACKARD WORLD TRADE, INC.
Hewlett-Packard AO....................................... Russia
Hewlett-Packard Europe B.V. ............................. The Netherlands
Hewlett-Packard International Sales Corporation B.V. .... The Netherlands
Hewlett-Packard Magyarorszag Kft. ....................... Hungary
Hewlett-Packard Polska spol.z.o.o. ...................... Poland
Hewlett-Packard RE Ltd. ................................. Ireland
Hewlett-Packard s.r.o. .................................. Czech Republic
Ericsson Hewlett-Packard Telecommunications AB........... Sweden
Leasametric GmbH......................................... Germany
Yokogawa Analytical Systems, Inc. ....................... Japan
FOREIGN SUBSIDIARY OF ERICSSON HEWLETT-PACKARD
TELECOMMUNICATIONS AB
Ericsson Hewlett-Packard S.A.R.L. ....................... France
FOREIGN SUBSIDIARY OF LEASAMETRIC GMBH
Leasametric S.A. ........................................ France
FOREIGN SUBSIDIARIES OF TECHNOLOGIES ET PARTICIPATIONS
S.A.
Hewlett-Packard France................................... France
Technologies et Participations Immobilieres.............. France
FOREIGN SUBSIDIARY OF HEWLETT-PACKARD FRANCE
Hewlett-Packard France Finance........................... France
</TABLE>
4
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the following
Registration Statements on Form S-8 of our report dated November 17, 1995
which appears on page 45 of the 1995 Annual Report to Shareholders of Hewlett-
Packard Company which is incorporated in this Annual Report on Form 10-K.
Registration No. 2-66780 through Post-Effective Amendment No. 6
Registration No. 2-90239
Registration No. 2-92331 through Post-Effective Amendment No. 3
Registration No. 2-96361 through Post-Effective Amendment No. 1
Registration No. 33-30769
Registration No. 33-31496
Registration No. 33-31500
Registration No. 33-38579
Registration No. 33-50699
Registration No. 33-52291
Registration No. 33-58447
Registration No. 33-65179
/s/ PRICE WATERHOUSE LLP
PRICE WATERHOUSE LLP
San Jose, California
January 25, 1996
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AND THE CONSOLIDATED STATEMENT OF EARNINGS AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-01-1994
<PERIOD-END> OCT-31-1995
<CASH> 1,973
<SECURITIES> 643
<RECEIVABLES> 6,735
<ALLOWANCES> 0
<INVENTORY> 6,013
<CURRENT-ASSETS> 16,239
<PP&E> 8,747
<DEPRECIATION> 4,036
<TOTAL-ASSETS> 24,427
<CURRENT-LIABILITIES> 10,944
<BONDS> 663
<COMMON> 871
0
0
<OTHER-SE> 10,968
<TOTAL-LIABILITY-AND-EQUITY> 24,427
<SALES> 27,125
<TOTAL-REVENUES> 31,519
<CGS> 17,069
<TOTAL-COSTS> 20,014
<OTHER-EXPENSES> 7,937
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 206
<INCOME-PRETAX> 3,632
<INCOME-TAX> 1,199
<INCOME-CONTINUING> 2,433
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,433
<EPS-PRIMARY> 4.63
<EPS-DILUTED> 0
</TABLE>
<PAGE>
EXHIBIT 99
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM 11-K
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended October 31, 1995
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
Commission File Number: 1-4423
A. Full title of the plan and address of the plan, if different from that of
the issuer named below:
HEWLETT-PACKARD COMPANY
EMPLOYEE STOCK PURCHASE PLAN
B. Name of issuer of the securities held pursuant to the plan and the address
of its principal executive office:
HEWLETT-PACKARD COMPANY
3000 HANOVER STREET
PALO ALTO, CALIFORNIA 94304
REQUIRED INFORMATION
Not applicable.
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE
ADMINISTRATOR OF THE PLAN HAS DULY CAUSED THIS ANNUAL REPORT TO BE SIGNED ON
ITS BEHALF BY THE UNDERSIGNED THEREUNTO DULY AUTHORIZED.
HEWLETT-PACKARD COMPANY EMPLOYEE
STOCK PURCHASE PLAN
Date: January 29, 1996 By: D. CRAIG NORDLUND
----------------------------------
D. Craig Nordlund Associate
General Counsel and Secretary
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
