HPAnnualReport_1984_39pages_OCR

HPAnnualReport_1984_39pages_OCR
Hewlett-Packard Company
1984 Annual Report
I
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To Our Shareholders
we are grateful for his many
firm of Miller, Anderson and
contributions to HP's growth Sherrerd, Philadelphia; and
and success.
Hicks B. Waldron, chairNamed to succeed Mr. van man, president and chief
Bronkhorst as chief financial executive officer of Avon
officer was Robert P. WayProducts, New York. We
man. Mr. Wayman is an H P
are pleased to have these
vice president and corporate distinguished executives
controller. George F. Newserving on the board.
man Jr. was named treasurer.
Outlook
We welcomed two new
directors to the H P board in Our outlook for the coming
1984. They are Paul F. Miller year is quite positive, but we
anticipate some moderation
Jr., senior partner in the
investment management
in our sales growth. The U.S.
economy has begun to slow
and, while the international
Geographic distribution
business climate is quite
of Hewlett-Packard's
strong, we expect a slowing
internationalorders
there as well.
We are doing business in
Latin America 3%
an increasingly competitive
Australasia 4%
environment. The rise in the
value of the dollar has had a
substantial impact on the
Canada 8% competitive pricing of the
I
many products exported
from U.S. manufacturing
divisions. During 1984, we
priced our products more
aggressively in international
markets and periodically
drew on sales and pricing
discounts. In addition, our
growing line of personalcomputation products has
been priced to compete in an
extremely price-sensitive
market. As a result, in the
second half of the year our
gross margins narrowed
somewhat. We expect this
type of competition, especially in personal computers,
to continue during 1985 and
we remain cautious with
regard to margin
Of Hewlett-Packard'stotal 1984
improvement.
orders, 43 percent or $2.7 billion,
We are paying close
came from international customers.
attention to expenses and to
maintaining our productdevelopment schedules.
During the year we expect
to introduce important additions to our product lines,
and to continue to improve
our manufacturing productivity. We have ample financial resources and are
well-positioned to continue to finance our growth
internally.
Perhaps most importantly,
we have more than 82,000
H P people worldwide,
including 56,000 in the U .S.,
who take pride in the company's accomplishments and
who can be counted upon to
contribute to HP's continuing growth and progress.
/
David Packard
Chairman of the Board
William R. Hewlett
Vice Chairman of the Board
President and chief
Executive Officer
December 7,1984
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As competition for world markets becomes more intense and as
greater demands are placed on human and natural resources,
manufacturers face a formidable task-to produce higher-quality,
more cost-competitive products.
All manufacturers today
share an environment where
the demand for higher-quality products at lower cost,
the drive for more flexible
and productive manufacturing processes, and the need
to respond quickly to market
forces present a keen competitive challenge.
Hewlett-Packard provides
products and services that
help companies meet that
challenge.
There are three fundamental steps or processes
that occur in any manufacturing organization, whether
it is making automobiles or
shoes, satellites or integrated
circuits: 1) product and
process design, 2) a planning and control function
and 3) the manufacturing
process itself.
Improving productivity
begins with the awareness
that these functions do not
operate independently.
Rather, the information
gathered and used in one
process is needed and used
in the next. The more closely
the processes are linked, the
more productive the entire
manufacturing cycle
becomes.
In the past, information
was passed among these
functions in writing or by
word of mouth. When the
product designer completed
a task, for example, the plans
went to the purchasing
department where parts had
to be identified and ordered.
Later, manufacturing would
get the information and
determine how to build
the product.
As today's factories grow
more sophisticated and
complex, so too does the information needed to run them.
To bring products to market
quickly and cost-effectively,
manufacturers must gather,
interpret and move information throughout their
organizations -wherever it
is needed -as efficiently as
possible. Microprocessorbased instrumentation and
advanced computer technology help make that happen.
Hewlett-Packard's Manufacturer's Productivity Network, or MPN, is a concept
the company has developed
to explain how linking the
three primary manufacturing functions described
above, as well as an organization's administrative and
sales activities, can improve
productivity.
The MPN concept has as
its goal the use of computers
and instruments, and special
software programs, to integrate the information developed and used in each
process or function.
At the same time, individual design and manufacturing functions are being made
more productive through
computerization.
Computer-aided Engineering
Engineering-or product
design and development-is
the beginning of the productivity, and the information,
chain.
Hewlett-Packard applies
computers and workstations
to engineering functions,
helping designers develop
and test their product ideas
before the product actually
is built.
HP believes that design
automation is most successful when engineers, singly or
in small groups, are provided
with their own powerful
computing environment.
These machines can be
joined in a network to
provide communication,
common data and shared
peripheral devices such as
plotters, printers and discs.
During 1984, the company
continued hardware and
software introductions to
expand its H P 9000 family
Design and Manufacturing
Magnetic Peripherals, Inc.,
a subsidiaryof Control Data
Corp. in Bloomington,
Minnesota, has incorporated
W's Quality Decision
Management/1000
application for statistical
quality control into its
sophisticatedcomputerized
manufacturing of large
disc drives.
8
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1
of computers. It now consists
of 14 workstations, ranging
from the low-priced, 16-bit
Series 200 to the multi-user,
32-bit Series 500 machines.
HP improved the performance of the Series 500
workstation with a new
HP-UX operating system
(derived from the UNIX*
operating system) and an
expanded memory option.
It also introduced two lowpriced Series 200 models that
offer a growth path to larger,
more powerful HP machines.
In addition, the company
began offering mechanical
engineering software products for HP 9000 systems
through agreements with
third parties.
Using an HP 9000 system,
an engineer not only can
design a product, but also can
analyze and test individual
parts. He or she can document the product's operation,
verify compliance with design
rules, and produce the parts
and materials list needed by
the purchasing department.
In the electronic factory of
the future, after an engineer
has produced a design, he
or she will instruct the computer to create a program
that will drive a printedcircuit-board drill or similar
machines that actually make
the product or part.
Today, HP is developing
computer software that will
*UNIX is a trademark of ATBTBelI Laboratones
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Design and Manufacturing
-
all these functions, helping
manufacturers improve
product quality and reduce
praduction casts.
Quality Decision hhnagementt1000, for example, is a
software-applkation package fason-line statistical
quality control. It provides
information that can help
reduce materiab and labor
ewts associated with scrap,
rework and work stoppages
by early detection of manuf8cturing-pmws problems.
In addition, HP offers a
series of applimtioo software
products specifically for the
semimdwacxr industry.
PC-loJXJ,
far a m p l e , is a
p r ~ e s s m n t l l osystem
l
that
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links a ampurer to the sophistiwtd mi~roprocessorbmed qaipment used in
mmfacdxrimg semi~onducton. This means engineers
can monitor their manufacChfia. CaIU-la,
hi&- turing
sr ofrcn as
&equrp, .olUatepom
needed
by
using
the
martst
mmaritb anmILSID
computer terminal. his
w3'ar sY1em*
The HP 8510, with its built-in enables them to quickly
problems
mmputer, e b l e s Avantek
can
lead
to faulty batches.
8 ~ g h a -tos test against
At the bottom of the
8pdB~mDB:md
systems hierarohy are mmpinpoint
myproblems.
puters and microprocessorbased instruments and systems dedicated to a specific
controlling or testing function. HP is a leader in providing computem to control
L uurlng Ira* rIP introaucea
bar-code wands for rough
industrial environments. The
wands have rugged cases and
sapphire tips, which protect
against contamination.
test and measurement
instruments, as well as the
instruments themselves.
For example, during 1984
HP began offering cellular
radio manufacturers a test
system that combines several
micropromssrrr-based HP
instruments into a complete,
fast and accurate measurement system. With it,
companies in the rapidly
expanding mobile-radio
market can significantly
improve workflow and
reduce teHiting time.
The company also has
introduced the HP 8510 network analyzer, which is used
by microwave components
manufacturers to determine
if their products meet design
specifications. As a laboratory system, it is the coreof
HJ"s microwave computeraided-design effort. It is considered the mast a m r a t e
and among the f m s t network-aadysis systems on the
market. The instrument's
'%sainni-s a high-speed
microprocessor -a tiny,
but powerful computer.
The IJS 3M5 printed-cirwit-board test system takes
the concept of amputerized
testing one gtep further. HP
miniaomputer tcxhnabgy
controls the system, while
mieroproceaars in e&h test
station make it pctssibb to
inspeet wmplex malo8 and
digital boards quickiy..HP's
system uses a feature
called "safeguard," which
h e l p protect the product
fiom damage induced by the
testing process. Test information is acquired, analyzed
a
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HP systemsfor chemical
analysis, with their multiwindow images, enable
scientists to access and
display simultaneously
information needed for
identifying and measuring
chemical substances.
Sophisticated instrumentation, combined with computer
technology, speeds the chemical-detection and identification process
and provides more accurate and comprehensive data.
Hewlett-Packard instruments and computer systems
for chemical analysis are
used in laboratories worldwide. They help scientists
monitor and improve the
quality of air, water, foods
and soil, and develop
advanced chemical separation
and identification methods
for research. They also are
used for quality assurance in
chemical manufacturing.
During the 1970s, scientists usually selected an
analytical instrument based
on its performance characteristics or measurement
capabilities.
In the 1980s, automation,
the ability of an instrument
to function in a network, and
reliability are key factors
influencing a buying decision.
In addition, analytical
chemists today want smaller,
more compact instruments at
lower cost than in the past.
However, they do not want
to sacrifice the performance
gains made in the earlier
decade.
HP is responding to these
changing customer needs
with new products that
capitalize on the company's
broad base of proprietary
technology and advanced
manufacturing techniques.
For example, the new
HP 5890 gas chromatograph
(GC) costs about half as
systems and networking
integrators enable chemists
to begin automating with a
minimal investment. These
systems are easily expanded
and upgraded into more
advanced instrument and
computer networks as the
lab workload increases.
This linking or networking
allows the lab to process tremendous quantities of data
and to obtain useful answers
in seconds rather than the
hours previously required.
HP's analytical product
line will continue to benefit
from the company's computer-product developments
by incorporating them into
lab automation systems. Last
year, the Touchscreen personal computer and the HP
1000 minicomputer both
were incorporated into HP
lab systems.
Also during 1984, HP continued to work closely with
Genentech, Inc., through
the joint-venture HP
Genenchem. This company
is developing and will market
instrumentation for the rapAutomation and Networking idly emerging biotechnology
Concerns about productivity industry. It is another examand cost are driving increased ple of HP's commitment to
automation within the
making a positive contribuchemical lab.
tion to the analytical
Today, with products such marketplace.
as the HP 5890 GC and the
HP 5988 GCMS system,
chemists conduct tests to
separate and identify compounds and then easily store
the results in common
databases.
The new HP 3350 series
laboratory automation
much as previous HP GCs,
yet has virtually identical
performance characteristics.
HP backs the unit with a
warranted 99 percent "up
time" offer.
Similarly, HP diode-array
spectrophotometers, benchtop G C M S (mass spectrometer) systems and modular
liquid chromatograph
systems have seen dramatic
drops in the price of entrylevel systems over the past
two years, while performance has improved.
Cost concerns in the
industry also have led HP to
develop instruments that can
be expanded or upgraded by
adding parts or modules that
can be bought separately.
With the modular HP 1090
liquid chromatograph (LC),
for example, customers
can perform routine LC
measurements or the most
advanced low-dispersion,
high efficiency techniques,
all within a compatible,
flexible system that can grow
with their needs.
Through computer technology, people in today's automated
office-from clerk to CEO-have convenient tools to improve their
own productivity and that of their organization.
At Hewlett-Packard, office
automation is considerably
more than word processing.
It means using computers to
enhance the capabilities of
those who manage and use
data, words and graphics in
their work. H P unites its
long-established distributed
data-processing prowess with
a growing line of personal
computers to enable people
to communicate better and
to make more effective
business decisions.
The company's office
products are helping
improve the analysis and flow
of information in many types
of businesses: insurance
companies, banks, retail
stores, manufacturing and
distribution companies, and
medical and legal offices.
An Evolution in Computing
When huge and expensive
mainframes were the only
computers available, information was concentrated in a
central location and processed under the watchful
eyes of technical specialists.
Distributed data processing, driven in part by HP
with its H P 3000 minicomputer systems, brought significant changes. It allowed
computers to be located
close to where information
originated and was used. It
began moving management
of the information that was
stored in the computer-the
database-into the hands of
non-specialists.
This progress paved the
way for two other major
developments: personal
computers and networking.
As non-technical people
were increasingly exposed to
computers, the need grew
for even "friendlier," easyto-use computing. More and
more people began to recognize that their work-writing reports, drawing charts,
analyzing and comparing
data-could be done more
quickly and efficiently with a
computer. Most important,
they could make decisions
more effectively.
Personal computers put
productivity tools, such as
spreadsheets and quick
graphs, in the hands of
individuals.
At the same time, there
was the growing realization
that up-to-date, well-maintained information from one
group within an organization
often was needed by another
group. The solution? Link
one computer and database
to another in a network
so that information and
resources could be shared.
Personal Productivity
Centers
HP's Personal Productivity
Center is the company's solution for automating today's
office. It links the ease of use
of a personal computer with
powerful office-applications
software and distributed data
processing.
The Personal Productivity
Center combines the H P
Touchscreen and The
Portable personal computers, H P workstations, the
proven data-processing capabilities of HP 3000 business
computers and a wide range
of software application
programs. It gbes well beyond
traditional office automation
or isolated, stand-alone
personal computing.
It also offers AdvanceNet
communications network
products to link H P computers with one another and
with computers of other suppliers, such as the IBM PC.
H P AdvanceNet is based on
industry-standard networks,
and offers flexibility for
both local and remote
communications.
The Personal Productivity
Center provides office
t
f
I
I
1
HP's Venezuelan Software
Center has customized HP
Touchscreen programs,
making the Touchscreenthe
first Spanish-language
personal computer available
in the Latin American
market. HP application
centers worldwide provide
consulting, training and postinstallation services, as well
as software adapted to local
languages and customs.
.
.)
,
Office and Information Systems
I
professionals with word processing, graphics, file and
calendar management, b a n cia1spreadsheet analysis and
data proceming. Electronic
mail joins them into a
productive team.
A small hrsonal Productivity Center typically
wnsists d severid HP
Touchscreen persanal w m puters used as managers' and
secretarial warkstatisns, an
HP 3000 bwiness camputer
and a variety of office
software.
Larger Centers can Iink
more than 100personal cornputers or workstations in a
single HP 3000-based
network.
An arganization em begin
with one Center with as few
as four stations and grow as
needed
to more than 100
relies
stations.
In turn, Centam can
terminals,
laser printers and plotters to be linked into a network to
hdp manage dinical research support thousands of people
data. bHB380Q-based
around the eountry or the
system integrates data and
world.
ward processingbcase report
form design and production, HP M 0 Swiw 37
and graphics.
In September 1984, the compmy introduced its I.iB 3fMQ
37, n p m r f u 1 yet extremdy
law+w&,
m u i ~ - &f=--gum
u~
sydxrn.It can suppart as
many a8 28 t e r n & and can
cornrankate with larger
systems or with personal
wmputers.
Market research firms
have predicted that the
market for these types of
multiple-user systems will
I
I
I RP's Thinkletprinter,
introduced in 1984, has been
well received in both retail
and commercial markets. It
is quiet, compact, fast and
low-priced. HP is a lwder in
personal-computer printing
and plotting products.
a!
Office and Information Systems
,
b uelaware must Lompany,
Wilrnington, has a
sophisticated computer
network built around two
HP 3000 systems. It links the
HP 3000s to Touchscreen and
non-HP personal computers.
With the network, Delaware
Bust has automated every
aspect of its daily activities,
and also offers timeshared
services to others.
HP because it recognizes
their role in the continuing
computer evolution. Standing alone, personal computers offer their users a host of
useful functions. As they are
linked through networks and
electronic mail, PCs become
team-building communications systems. When they
function as terminals in a
larger computer system, they
become interactive workstations with substantial
computational power and
flexibility.
The HP Touchscreen personal computer, introduced
in 1983 and upgraded in
1984, anchors the company's
PC product line. The Touchscreen allows business
professionals to run computer programs simply by
touching the display screen.
Within the Personal
Productivity Center, the
Touchscreen serves as a
personal computer yet
has full access to the
HP 3000 or mainframe when
greater data-processing
power is needed.
With local-area networks
and HP AdvanceLink, a person using the Touchscreen
, also can share information
and printers not only with
HP personal computers, but
also with computers from
some other suppliers.
HP PC products bring
computing power directly to
business professionals wherever "offie'%ork needs to
be accomplished-at a desk
or on an airplane.
The Portable, for exarnple, weighs only nine pounds
yet has more than twice the
usable memory provided by
most desktop P a . Introduced last May, it features a
full-sized keyboard and a
flip-up, 16-line screen. It has
built-in software programs
for writing memos and doing
financial analysis.
During 1984 HP also introduced its ThinkJet printer
for the office and home
markets and LaserJet, a
letter-quality laser printer.
ThinkJet puts characters
and graphics on paper by
ejecting ink drops from tiny
holes in a small, replaceable
printhead. It may be used
with desktop or portable
computers from HP or from
many other manufacturers.
LaserJet fits on top of a
desk and uses laser technology to print text. Since, like
ThinkJet, there is no impact,
the printer is quieter than
normal conversation. Also
like ThinkJet, it is compatible not only with HP camputers, but also those made
by many other companies.
HP provides its personalcomputer customers with
two "800" telephone information lines.
Customers can get
response to questions about
HP personal computers and
calculators before they buy
by calling 800-FOR-HPPC.
The fine was set up in late
1983 and provides information about where to see, buy
and service HP personalcomputation products.
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PROC 1 0 A
ID:@2@
Sharply defines, highresolution images are the
trademark of HP9sreal-time
ultrasound imaging systems.
The HP system used by the
University of Kentucky
Hospital in Lexington
provides cardiac images and
can help determine the
directii and rate of blood
Bow through the heart.
A changing U .S. health-care system and a worldwide urgency
to reduce costs mean a premium will be placed on cost-effectiveness
and productivity in health-care delivery.
A growing concern over
spiraling health-care costs
is driving basic changes in
the systems that fund
medical services.
Many insurers are prompting patients to seek less
costly care by modifying coverage and by requiring them
to pay larger portions of
their medical bills. Some
employers, concerned about
escalating medical costs, are
increasing deductibles paid
by their workers.
Most significantly, the
United States Congress has
changed the way government
pays hospitals and doctors
for the services they provide
to elderly people covered by
Medicare.
Previously, payment would
cover the actual cost of the
service plus the physician's
fee. Under the new system, a
fixed payment amount is determined based on the type
of service or care provided.
Payment rates are set in
advance and the hospital
is reimbursed only that
predetermined amount,
regardless of how much
actually was spent.
The implications of these
changes, especially for U.S.
health-care facilities, are
substantial. It will be up to
individual institutions to
deliver their services in a
medically sound, yet costeffective way.
Impact on HP
About 70 percent of HP's total medical products business
is in the United States. As a
result, it is directly and significantly affected by the ongoing changes in the nation's
health-care industry.
While the government was
enacting its new payment
system, hospitals and other
health-care providers were
understandably hesitant to
make capital commitments.
Purchases slowed and, as a
result, HP's medical business
during the past few years
grew less rapidly than in
previous years.
As funding regulations are
defined, however, H P is in a
strong position to offer its
medical customers-both
U.S. and internationalproducts and services that
will help them provide quality care while significantly
improving their productivity.
For example, H P has
responded to hospital costcutting needs by introducing
new patient monitors with
improved features and reliability, but at lower prices. A
typical H P bedside monitor
designed in the 1980s costs
20 percent less to buy and
more than 45 percent less to
operate than one designed
in the 1970s.
H P medical products
today share these essential
elements: improved reliability, functional versatility,
compatibility with existing
and future H P equipment
and with that of other manufacturers, upgradability and
ease of use. In addition,
HP offers comprehensive
training and support for
its products.
Another major H P
strength is the company's
ability to provide useful,
integrated solutions specifically designed to improve
productivity. Just as in manufacturing and the office,
linking functions through
computers in the hospital is
important to overall efficiency and eost wntainment .
Demand is expanding
rapidly for computer-bsed
hospital information sptems
that can t r a k and link medical and finmcial data. Under
the new U.S.
government
reimbursement system, for
example, hospitals must be
able to analyze the costs for
each type of service and
compare their costs to the
fixed payments in order to
make sound business
decisions,
HPSsHealthcare Information System is a set of
software application modules based on an HP 3W0
business computer. It
provides a means for integrating the volumes of bugness and m e d i d information
generated in a hospital's
daily operation. Programs
for financial management,
patient registration and census, medical remrdkeeping,
and patient care are
available.
The system will supgwrt
additional applications
that are oentered on a
departmental workstation
concept. Available through
other companies or under
development at HP are
departmental systems for
the businegs office, nursing
station, medical records,
the pharmacy, clinical lab,
radiology and other ancillary
services. Many of these
departmental programs use
the HP Touchscreen
personal computer.
New Mark*
As cost and competition WK
on new importance in h a l t h
care, alternatives to the
traditional, stand-alone
hospital are emerging.
For-profit multi-hospital
systems, outpatient walk-in
clinics, surgicenters atEd physicians in group practices
offer new market p ~ t e n ~ a l
for W s medical products.
Nan-invasive diagnastic
equipment, such as t~ltrasound scanners md fe-tal
monitors, is a p w t e d to
do especially well in these
markets.
In addition, opportunities
are increasing £or using perm a 1 and portable cornputers-as on-line terminals,
dhtributed workstation8 and
desktop stations running
financial or medical software.
Sales and Support
HP has remained a strong
partner with health-care customers because it has stayed
close to the market's needs
and adapted to change. This
is possible in large part
because the company has a
highly trained and knowledgeable sales and support organization that is backed by
creative HP product
engineers.
Together with medical
customers, these formidable
HP resources will continue
to develop the solutions
that differentiate HP from
its competitors.
I-!4
IiP introduced several new
patient-monitoringproducts
in 1 W , including three
neonatalmonitors. These
compact, microprocessorbased units are used to
measure a baby's heart and
lung functions. At Mount
Zion Hospital and Medical
Center in San Francisco,
neonatologists rely on HP
equipment for accurate,
precise measurements.
M gris2
',
Hewlett-Packard Company's business is the design and manufacture
of measurement and computation products and systems used in
business, industry, engineering, science, health care and education.
Principal products include integrated instrument and computer
systems, test and measurement instruments, computer systems and
peripheral products, medical electronic equipment and systems,
instrumentation and systems for chemical analysis, handheld
calculators, and solid-state components.
I
Hewlett-Packard Company and Subsidiaries
'23
Financial Review (continued)
heavy new-product development and introduction expenses.
All other operating expenses were controlled to well below
sales growth rates.
Medical Electronic Equipment achieved 1984 order
growth of 14 percent in the face of dramatic changes in the
U.S.health-care market and a slowly growing international
market, further aggravated by a very strong U.S. dollar.
Larger discounts and lower international prices limited revenue growth to a modest 7 percent in 1984 and, combined
with continued research and development investments,
contributed to a 32 percent decline in earnings.
A general recovery in the chemical and environmental
fields coupled with new-product introductions in late 1983
led to increases in 1984 Analytical Instrumentation sales of
Business Segments and GeographicAreas
25 percent and earnings of 63 percent. The depressed condiComputer Products 1984 sales growth of 32 percent benetions that persisted in the industry in 1982 and 1983 ended in
fited from new-product introductions, including major addi- 1984, yielding strong growth and a significantimprovement
tions to the company's line of personal-computer products.
in margins.
Earnings growth in 1984 was 12 percent resulting from a
Domestic net sales increased 29 percent in 1984,
shift towards higher volumeAower margin products and
20 percent in 1983 and 24 percent in 1982. Domestic sales
increased investments in marketing. Research and develop- growth rates were aided by the U.S.economic recovery
ment activities remained at a high level in 1984 to support
that began in the second half of fiscal 1983 and remained
major new-product programs. As a percent of sales,
strong throughout the first three quarters of 1984. Sales perresearch and development decreased from 1983 levels
formance in 1982 and early 1983 was adversely affected by
due to the sharp increase in 1984 shipments.
recessionary domestic economic conditions.
The Electronic Test and Measurement segment had a
International net sales increased 27 percent in 1984,
very strong year. Driven by important new products and by
3 percent in 1983 and 13 percent in 1982. International sales
improved market conditions in the company's components
in 1984 benefited from improvement in many international
business, 1984 sales grew 29 percent over the prior year
economies significant to HP's business, aggressive marketand earnings increased 35 percent. Favorable gains in
ing efforts and expanded value-added programs overseas.
manufacturing productivity and quality compensated for
These gains in international sales occurred despite the
continuing strength of the U.S.dollar against other major
currencies. A stronger U.S.dollar adversely impacts the
company's international price competitiveness for U.S.
manufactured products and also results in local currency
sales translating into fewer U.S.dollar sales. The erosion in
value of foreign currencies versus the U.S.dollar was particularly significant between fiscal 1980 and 1984 when
European currencies, weighted based on HP orders by
country, declined in value 40 percent.
Also contributing to the 1984 international sales growth
rate was the consolidation of Yokogawa-Hewlett-Packard
Limited (YHP) for 1984 reporting, resulting from HP's
increased ownership interest in YHP. This change added
approximately seven percentage paints to the international
net sales growth rate and accounted for the majority of the
1984 increase in the Rest of World earnings before taxes.
Ownership Program (PAYSOP) tax credits of $8 million
and $6 million in 1984 and 1983, respectively. Fiscal 1983
was the first year of the company's PAYSOP program.
Orders are a leading indicator of future financial trends.
Total orders increased 29 percent in 1984,lS percent in
1983 and 14 percent in 1982. While order increases for the
first three quarters of 1984 showed consistent growth in the
30 percent range, fourth-quarter domestic orders showed
signs of softening consistent with a general slowdown in the
rate of growth for the U.S.economy.
26 'Hewlett-PackardCompany and Subsidiaries
- -
-
-
--
-
a
Consolidated Statement of Changes in Financial Position
For the years ended October 31 (Millions)
Funds provided by operations:
Net earnings
Expenses not requiring an outlay of funds:
Depreciation and amortization
Deferred taxes on earnings
Other, net
1984
1983
1982
$665
$432
$383
237
(81)
47
868
191
105
45
773
158
84
653
$721
$732
$528
28
Funds used by operations:
Investment in property, plant and equipment
Increase (decrease) in working capital, excluding net cash:
Accounts and notes receivable
Inventories
Other current assets
Accounts payable and accrued liabilities
Accrued taxes on earnings
Other, net
Non-operating funds provided (used):
Employee stock plans:
Shares issued
Shares purchased
Dividends to shareholders
Other
Increase (decrease) in cash and temporary cash investments, net of notes payable
Net cash at beeinnine of veriod
Net cash at end of period
Certain amounts have been reclassified to conform to the 1984 format.
'Ihe accompanying notes are an integral part of these financial statements.
30 'Hewlett-Packard Company and Subsidiaries
Quarterly Summary (Unaudited)
(Millions except per share amounts)
Three months ended
January 31
Domestic orders
International orders
Total orders
Net sales
Cost of goods sold
Earnings before taxes
Net
- - .earninm
- -Net earnings per share
Cash dividends paid per share
Range of stock prices per share
-
$ 818
659
$1,477
$1,278
$ 595
$ 164
$ 217*
$ .85*
$ .045
$45-3434
CI
April 30
July 31
October 31
715
$1,685
$1,559
$ 744
$ 218
$ 134
$ .52
$ .045
$373/$-33
691
$1,579
$1,688
$ 827
$ 242
$ 167
$ .65
$ .055
$4274-3474
no
$ 789
t
656
$1,609
$1,519
$ 699
9 236
$ 147*
$ .57*
$ .045
$40%-31%
1983
D O L U ~ orders
~~C
$ 627
International ordsrs
Total orders
$ 315
$
$l,ln
524
$1,239
N GS5.b
~
$1,055
a,in
Cost of goods sold
J 497
$1,271
$1,153
$ 539
496
$13 5
$1,330
$ 616
9; 157
$ 91
$ .35
$.(M75
$
$
$
$
$4-%-363/a
$453/i-35%
500
$ 543
$ 187
8 85
$ 109
$ 3%
$ -43
$.Om
$.a375
$4o7&Z- $lwih-JSsh
Earning before taxes
$ I%$
Net earnings
Net earnin@per share
Cash dividendspaid per share
Range of stock prices per share
*Restatedto rdcd t a ~ rlew change that ehdmted Ebt taxliability on a % a b
pI!K). 'The eamhgsdthe liYst and m n d q~arteisof firsEal1W
$118 minion af DISC taxes acmmulatedprior to 1% was re~%sarJ
Orders
($ millions)
Net sales
($millions)
-
lm
Total a m D
&
c
Net earnings per share**
(cents per share)
SO1
233
147
.57
,045
kme&c Intesmitional&lea Corpora~on
pzsluae GslChquartcr). In addition,
p46 centsper &an?.
R a n g of common stock prkees
(S per share)
1984
--International
**Based on Supplementary Earnings Information, assuming the reversal of DISC taxes is applied retroactively.See page 25.
Hewktt-Packard Company and Subsidiaries '31
Notes to the Consolidated Financial Statements
October 31,1984,1983 and 1982
Summary of Significant Accounting Policies
Principles of consolidation
I
The consolidated financial statements include the accounts
of Hewlett-Packard Company and its domestic and foreign
subsidiaries, other than Hewlett-Packard Finance Company, which is accounted for by the equity method. All significant intercompany accounts and transactions have been
eliminated.
Revenue recognition
Revenue from equipment sales is recognized at the time the
equipment is shipped.
Inventories
Inventories are valued at standard costs that approximate
costs computed on a first-in, first-out basis, not in excess
of market.
Property, plant and equipment
Property, plant and equipment is 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; and machinery and
equipment, three to 10 years. Amortization of leasehold
improvements is provided using the straight-line method
over the life of the lease or asset, whichever is shorter.
Foreign currency translation
The U.S. dollar is the functional currency. Gains or losses
from foreign currency translation are included in net
earnings.
Research and development costs
Taxes on Earnings
Research and development costs, including software
development costs, are expensed as incurred.
The provision for taxes includes:
Taxes on earnings
(Millions)
U.S. income taxes are provided on foreign earnings that
may be repatriated to the United States and are not provided on foreign earnings that are intended to be indefinitely reinvested abroad. Investment tax credits reduce the
provision for taxes in the year the related assets are placed
in service.
Federal taxes:
Current
Deferred
Reversal of DISC deferred taxes
State taxes
Foreign taxes
Net earnings per share
The difference between taxes computed by applying
the federal income tax rate to earnings before taxes and
the actual provision for taxes is:
Net earnings per share is based on the number of shares
outstanding at the end of each period. The use of weightedaverage shares outstanding during the period would not
have a significant effect on net earnings per share. Outstanding stock options considered to be common stock
equivalents have not been included because the effect
would be immaterial.
(Millions)
Taxes onearnings at the U.S. statutory rate
DISC earnings
State income taxes, net of federal tax benefit
Research and development tax credits
Investment tax credits
Other
1984
1983
1982
$140
37
(118)
37
99
$61
105
35
95
$90
$ 195
$296
$293
1984
$395
(145)
20
(30)
(17)
(28)
$ 195
1983
$335
19
(22)
(16)
(20)
$296
84
30
89
1982
$311
-
16
(15)
(15)
(4)
$293
-
Deferred federal taxes result from differences in the
timing of revenue and expense recognition for tax and
32 'Hewlett-PackardCompany and Subsidiaries
1
F
?
financial reporting purposes. The major sources of these
timing differences are:
Pension and Profit-sharing Retirement Plans
(Millions)
DISC earnings
Deferred payment contracts
Undistributed earningsof certain foreign
subsidiaries
Other timing differences
Adjustmentsfrom prior year estimates:
DISC earnings
Other
Substantiallyall employees worldwide are covered under
various pension and deferred profit-sharing retirement
plans. U.S. employees are provided retirement benefits by
the U.S. Deferred Profit-Sharing Retirement Plan and the
U.S. SupplementalPension Plan. Company contributions to
the U.S. Deferred Profit-Sharing Retirement Plan are in
accordance with a formula set forth in the plan. Contributions to the U.S. SupplementalPension Plan provide for any
excess of defined minimum benefits over the benefits available from the U.S. Deferred Profit-Sharing Retirement
Plan. It is company policy to accrue and fund the current
year's cost for all plans. Worldwide pension and deferred
profit-sharing expense was $107 million in 1984, $82 million
in 1983and $85 million in 1982.
"Net assets" available for benefits in both U.S. plans
were $748 million at October 31,1984, and $652 million at
October 31,1983. These assets have been funded based on
assumptions that project future wage increases and future
return on investments. The actuarial present values of
vested and nonvested "plan benefits" were $447 million and
$156 million, respectively, at October 31,1984, and $379
million and $137 million, respectively, at October 31,1983.
These "plan benefits," computed in accordance with Statement of Financial Accounting StandardsNo. 35, assume no
future wage increases and a future rate of return of 9 percent. The calculation of "plan benefits," unlike the accumulation of "net assets," does not consider future wage
increases, making any comparison of the two amounts
misleading.
At October 31,1984, the assets of the company's
foreign plans exceeded the actuarially computed value
of vested benefits.
1984
1983
1982
-
$36
42
57
$33
5
-
5
7
15
7
-
-
-
6
18
S 37
$105
s 84
S
(5)
After allocating eliminations and corporate items,
earnings before taxes of U.S. and foreign operations are:
(Millions)
U.S. operations
Foreign overations
1984
1983
1982
$584
276
$514
214
$405
271
The company reached final agreement with the
Internal Revenue Service (IRS) regarding certain additional assessments on the company's foreign earnings for
fiscal years 1978and 1979. The IRS has not completed its
examination of returns for years subsequent to 1979. The
company believes that adequate a m a l s have been provided for all years.
The company has not provided for U.S. taxes on $419
million of undistributed earnings of foreign subsidiariesat
October 31,1984. If these earnings were distributed to the
parent company in the U.S., foreign tax credits should
become available under current law to reduce or eliminate
the resulting U.S. income tax liability. These earnings have
been reinvested in subsidiary operations. However, where
excess cash has accumulated and it is advantageousfor tax
or foreign exchange reasons, subsidiary earnings are
remitted.
Hewlett-PackardCompany and Subsidiaries '33
increased ownership in affiliute
Common Stock and Capital in Excess of Par Value
On November 7,1983,842,000 shares of the company's
common stock were issued to Yokogawa Hokushin Electric
Corporation (YEW). The shares were issued in connection
Employees of the company and certain subsidiariesmay
participate in the Employee Stock Purchase Plan and/or the with an agreement whereby Hewlett-Packard Company
Tax Savings Capital Accumulation Plan (TaxCAP). TaxCAP, increased from 49 to 75 percent its ownership interest in
Yokogawa-Hewlett-PackardLimited (YHP), a jointa qualified plan under the Internal Revenue Code, was
venture company established by Hewlett-Packard Company
established by the company during 1984 as a supplemental
retirement program. Under both plans the employee conand YEW in 1963. The transaction was accounted for as a
tributes 75 percent of a formula stock price, which is
purchase. As of the first quarter of fiscal 1984, the accounts
computed based on average market prices. The company
of YHP are included in the consolidated financial statecontributes the remainder. Combined Stock Purchase Plan
ments of the company. Pro forma combined information for
and TaxCAP contributions by the employee cannot exceed
HP and YHP for the year ended October 31,1983, giving
effect to the purchase, would not differ significantly from
12percent of pay. Included as a provision of TaxCAP is a
amounts shown in the Statement of Earnings. Previously,
Payroll-based Stock Ownership Program (PAYSOP).
PAYSOP is a qualified stock bonus plan that provides
YHP had been accounted for by the equity method.
stock on a per capita basis to employees and tax credits to
Shares reserved
the company. PAYSOP resulted in $8 million and $6
At October 31,1984, and 1983,40,215,000 and 34,537,000
million in compensation expense and offsetting tax credits
shares, respectively, were reserved under the provisions of
in 1984and 1983, respectively.
all plans.
Employee stock plans
Stock option plans
The company has two principal stock option plans, adopted
in 1974and 1979. These plans were amended in 1982 to permit options granted to qualify as "Incentive Stock Options"
under the Internal Revenue Code. The option price is equal
to fair market value on the date of grant. Options are vested
at a rate of 25 percent one year after the date of grant; 50
percent two years after the date of grant and in full three
years after the date of grant. The plans permit the granting
of stock appreciation rights (SARs) to officers and certain
key employees.
For the year ended October 31,1984
Outstandingat October 31,1983
Granted
Exercised
Cancelled
Outstandingat October 31,1984
Options and SARs
(Thousands)
7,294
1,152
(750)
(257)
7,439
Shares authorized
At October 31,1984, the company was authorized to issue
320 million shares of $1 par value common stock.
Price
per share
S 9-45
33-44
9-36
9-44
S 9-45
At October 31,1984, options to purchase 4,152,000
shares were exercisable at prices ranging from $9 to $45.
Shares available for option grants at October 31,1984, and
1983, were 1,607,000and 2,4%,000, respectively.
34 'Hewlett-PackardCompany and Subsidiaries
I
:
t
Bushes Segments
Identifiable assets (Millions)
Computer products
Electronictest and measurement
Medical electronicequipment
Analytical instrumentation
Eliminationsand corporate
Capital expenditures(Millions)
Computer products
Electronic test and measurement
Medical electronic equipment
Analytical instrumentation
Corporate
Denreciation and amortization (Millions)
Computer products
Electronictest and measurement
Medical electronic equipment
Analytical instrumentation
Corporate
0
Commitments
1984
1983
1982
$2,182
1,379
$1,673
1,022
268
224
154
1,170
133
1,109
$1,358
903
191
104
914
1984
1983
1982
$330
202
27
14
88
$248
108
37
18
55
$215
104
18
7
18
S661
S466
$362
1984
1983
1982
$128
$86
11
7
23
$105
54
9
6
17
$237
$191
$158
68
Unused foreign lines of credit at October 31 amounted to
$273 million in 1984, $251 million in 1983and $232 million
in 1982.
At October 31,1984, the company was committed for
plant site acquisition, facility construction and related
machinery and equipment purchases aggregating $315
million.
The company leases certain real and personal property.
Minimum commitments under these operating leases are
$57 million for 1985, $46 million for 1986, $35 million for
1987, $25 million for 1988, $19 million for 1989and $85
million for 1990through 2033.
Certain leases require the company to pay property
taxes, insurance and routine maintenance. Some leases
include escalation clauses. Rent expense was $82 million in
1984, $63 million in 1983and $56 million in 1982.
46
8
5
13
Direct and indirect sales to the U.S. Government
amounted to approximately $550 million in 1984, $480 million in 1983and $420 million in 1982. No other customer
accounted for more than 5 percent of net sales.
Geographic Areas
Identifiable assets (Millions)
United States
Europe
Rest of world
Eliminations and cornorate
1984
1983
1982
$3,140
992
546
475
$2,495
$2,042
800
686
307
272
470
559
Identifiable assets, which are based on the location of
company facilities, include corporate assets of $1,209 million in 1984, $1,141 million in 1983and $938 million in 1982.
Hewlett-PackardCompany and Subsidiaries
'35
Sales, earnings and per share information adjusted for changing prices
(Millionsexcept per share and CPI data; stated in average 1984 dollars)
The information that follows is computed in accordance
with the experimental guidelines of Statement of Financial
Accounting Standards No. 33 and represents an attempt to
quantify the impact of inflation on the company.
Current cost data reflects the impact of adjusting
asset values using separate inflation indices for each major
asset category. Depreciation has been computed using the
straight-line method because the accelerated method used
in the historical financial statements already recognizes
some of the effects of inflation. No adjustment has been
made to the provision for income taxes.
Results of operations
The company operates in an environment of rapid technological change accompanied by productivity improvements
and moderate price changes. This has reduced the impact of
inflation on the company's operations.
Net assets
The principal adjustments to historical net assets relate to
inventories and net property, plant and equipment. The current cost of these assets at October 31,1984, was $1,040 million and $2,638 million, respectively. The 1984increase in
value of inventories and net property, plant and equipment
measured in specific prices exceeded general inflation by
$92 million due primarily to appreciation in land values.
Statement of earnings adjusted for changing prices
for the year ended October 31,1984
(Millions)
Historical
Cost
Current
Cost
Net sales
Cost of goods sold, excluding depreciation
Depreciation and amortization
Other operating costs
Provision for taxes
$6.044
2,758
237
2,189
195
2,750
257
2,189
195
Net earnings
$ 665
$ 653
36 'Hewlett-Packard Company and Subsidiaries
$6.044
-
Net sales
Current cost:
Net earnings
Netearningspershare
Cashdividendspershare
Market price per share at
year-end
Average CPI
$6,044
$4,908
34,510
34,063
$3,889
$ 653
$2.55
$ .19
$ 417
$ 1.64
$ .16
$ 371
$ 1.48
$ .13
$ 302
$ 1.23
$ .13
$ 271
$ 1.13
$ .13
$ 35%
309.1
$ 36%
296.6
$ 32%
287.1
$294
268.4
$22%
1983
1982
1981
1980
$3,540
$3,051
$2,648
$2,402
$ 1 9
$ 2 1
$ 2 6
$ 2 6
$
$
91
$ 116
$ 190
78
121
216
243
$ (20)
S (30)
S (loo)
S (53)
242.1
Asset information adjusted for changing prices
(Millions; stated in average 1984 dollars)
1984
Net assets at year-end
34,250
Current cost
Decline in purchasing
power of net monetary
assets
$ 2 8
Increase in value of
inventories, property
plant and equipment
held during the year:
Measured in specific
$ 222
prices
Measured in general
vrices
130
Excess of increase in
specific prices over
increase in general
prices
$ 92
58
Statement of Management Responsibility
We believe the fostering of an environment conducive to
good internal controls is a basic management responsibility.
The control process starts with the hiring and training
of qualified people and then providing them with corporate
objectives and policies that adhere to the highest principles
of business ethics so that they understand how we expect
them to conduct our business. Continuing education
programs made available to all personnel serve to keep
our basic goals and objectives in proper perspective.
Monitoring is an integral part of any control process.
Our control systems are reviewed by Price Waterhouse to
the extent they consider necessary when auditing our financial statements. We continuously monitor our control systems by direct management review with assistance from a
well-established internal audit function that reports directly
to the Chief Executive Officer.
The Audit Committee of the Board of Directors,
which consists of three outside directors, serves in an
oversight role by reviewing the internal control monitoring
process. The committee has direct and private access to
both internal and external auditors.
Management acknowledges its responsibility to provide financial information (both audited and unaudited)
that is representative of the company's operations, reliable
on a consistent basis, and relevant for a meaningful
appraisal of the company. We believe that our control
process meets this responsibility.
In our opinion, the accompanying consolidated balance
sheet and the related consolidated statements of earnings,
shareholders' equity and changes in financial position present fairly the financial position of Hewlett-Packard Company and its subsidiaries at October 31,1984,1983 and 1982,
and the results of their operations and the changes in their
financial position for each of the three years then ended in
conformity with generally accepted accounting principles
consistently applied. Our examinations of these statements
were made in accordance with generally accepted auditing
standards and accordingly included such tests of the accounting records and such other auditing procedures as we
considered necessary in the circumstances.
President and Chief
Executive Officer
555 California Street
San Francisco, CA 94104
November 21,1984
Robert P. Wayman
Vice president,
Chief Financial Officer
and Controller
Report of Independent Accountants
To the Shareholders and Board of
Directors of Hewlett-Packard Company
1
Hewlett-PackardCompany and Subsidiaries '37
Selected Financial Data
(Millions except per share amounts and employees)
For the years ended October 31
D o m t i c orders
International orders
Total orders
Wet sales
Earnings behre taxes
Net earnings
Per share:
Net emings
Cash dividends
At year-end:
Total mets
Employees (Thousands)
Suppkmentary Earnings Information, assuming
the reversal of DISC taxes is applied retro~ctivdy
Net earnings per s h e
$4,710
$ 728
$ W * $432
1982
$2,283
1,897
$4,180
$4,189
$ 676
$ 383
1981
$1,918
1,739
$3,657
$3,528
$ 567
$305
1980
$1,517
1370
$3,087
$3,046
$ 513
$ 263
$ 2.59*
$ .19
$ 1.69
$ .16
$ 1.53
$ .12
$ 1.24
$ .ll
$ 1.09
$ .10
$5,153
82
$4,161
$3,470
68
$2,782
64
$2,350
57
$ 2.13
$ 1.79
S 1.64
*Indudesa 0 n e - k inwewe in net earnings& SUB m i l l h (46 cents pcr share) mmIt@gs%Hna taxlaw change.
$ 1.33
$ 1.15
'F 1
N'ctearningsper &amf
$per share)
*
1984
$3,629
2,721
$5,350
1983
$2,901
2,021
$4,922
&,w
$ 860
72
?
Annual Meeting of
Shareholders
The annual meeting will be
held Tuesday, February 26,
1985, at 2 p.m. at HewlettPackard's Computer Systems
Division facility, 19447
Pruneridge Avenue, Cupertino, California. A formal
notice of the meeting, with a
proxy statement and form of
proxy, will be mailed to each
shareholder on or about
January 18,1985.
Annual ReportllO-K Report
Publications that contain
information of interest to
current and potential HP
investors are available upon
request. These include
annual and quarterly reports
and the Form 10-K filed with
the Securities and Exchange
Commission. In addition, as
a service to those with
impaired vision, the HP 1984
Annual Report is available
on audio tape cassette. This
material may be obtained at
no cost by contacting the
Public Relations
Department, HewlettPackard Company corporate
offices.
Corporate Offices
3000 Hanover Street
Palo Alto, California 94304
Telephone: (415) 857-1501
International Operations
Idaho: Boise
Massachusetts: Andover,
Waltham
New Jersey: Rockaway
Oregon: Corvallis,
McMinnville
Pennsylvania: Avondale
Washington: Mar~sville,
Spokane, Fkncouver
Puerto Rico: Aguadilla
Marketing
Campinas7
Toronto, Canada
Bristol and Pinewood,
Domestic operations
England
Manufacturing
Grenoble, France
California: Cupertino, Palo Boblingen and ~ a l d b r o n n ,
Federal Republic of
Alto, Rohnert Park,
Roseville, San Diego,
Germany
Tokyo, Japan
San Jose, Santa Clara,
Santa Rosa, Sunnyvale
Penang, Malaysia
Colorado: Colorado Springs, Guadalajara, Mexico
South Queensferry, Scotland
Fort Collins, Greeley,
Singapore
Loveland
~
~
~
Regional Headquarters:
North Hollywood,
California; Atlanta,
Georgia; Rolling
Meadows, Illinois;
Rockville, Maryland
HP Sales and Support
Offices: In more than
90 cities throughout the
Ransfer Agent and Registrar
United States*
Harris Trust and
Savings Bank
Corporate Trust
Operations Division
P. 0 . Box 755
Chicago, Illinois 60690
Telephone: (312) 461-6827
Common Stock
The company's stock is
traded on the New York
Stock Exchange and the
Pacific Stock Exchange.
Cash dividends have been
paid each year since 1965.
k t November 30,1984,
there were 73,000 shareholders of record.
Manufacturing
Europe
Operations Headquarters:
Geneva, Switzerland
Regional Headquarters:
Pinewood, England
Evry, France
Bad Homburg, Federal
Republic of Germany
Milan, Italy
k Amstelveen,
~
~
i
The
Netherlands (Northern)
Geneva, Switzerland
(Southeast)
Intercontinental
Operations Headquarters:
Palo Alto, California
Regional Headquarters:
Melbourne, Australia
Toronto, Canada
Hong Kong
Tokyo, Japan
Palo Alto, California
(Latin America)
HP Sales and Support
Offices and Distributorships:
Approximately 240 in 75
countries*
*A directory of sales and
support locations may be
obtained from the Public
Relations Department,
Hewlett-Packard Company
corporate offices.
~
Year in Review
25 Years in Germany
-
With the dedication oftwo
new sales offices and gala
festivities in two cities,
Hewlett-Packard GmbH,
HP's German subsidiary,
celebrated its 25th
anniversary in October.
Begun in a former textile
factory, ~p G ~ is now
~ H
one of Germany's 200 largest
companies. was ~
~
Packard's first operation
outside California and broad
portions of the company~s
instrument and computer
product lines are now
manufactured there.
hi^^^^^ percent of H~~~
total 1984 international
orders were from G~~~~~
customers.
At ceremonies in
Bijblingen, the site of
a new 30,000 square-foot
regional sales center, HP's
top manager in Germany
was recognized. Eberhard
Knoblauch, above left, was
presented the Order of
Merit, one of Germany's
highest honors, by Minister
President Lothar Spath.
Environmental Health
and Safety
New Technology for
Chip-Making
HP Aids Job-'Ikaining
Programs
Each H P manufacturing site
worldwide has primary
responsibility for managing
its activities to ensure
the health and safety of
its people and those in the
community, and for
preserving the integrity of
the physical environment.
The company coordinates
these individual efforts
through a cor~orate-level
Environmental Health and
Safety (EHS) department.
During 1984, H P further
developed its regional EHS
consulting program begun
in 1983-Under the Program,
a limited number of H P
EHS experts serve as consultants~ to sites land divisions
~
~
throughout the company.
This has led to better
communication and the
sharing of "best practices"
among divisions.
The company continued
its internal EHS auditing
system during 1984 and will
expand this self-evaluation
program in 1985 to include
H P sales offices.
Additional resources were
devoted during the year to
developing a centralized
information system for
The days of the computer- .
chip "clean room" may be
numbered.
H P has developed technology that one day may
allow chips to be produced in
a normal room by workers
wearing street clothes.
Currently, chips are made
in so-called "clean rooms,"
which have elaborate airfiltration systems. Workers
must wear gowns, masks
and gloves to keep dust to
an absolute minimum.
Keeping dust from
integrated-circuit (IC) chips
is vital because the circuitry,
or wiring, etched on them is
far finer than a human hair.
~
-
During 1984 HewlettPackard took a strong lead in
helping implement the U.S.
Job Training Partnership Act
(JTPA) .
The act places on the
business community the
major responsibility for
identifying the best types of
local training programs for
those who are unemployed
or who need retraining due
to job displacement.
The company's internal
efforts have centered on
increasing H P participation
in local private industry
councils (PICs) that, with
local government, define and
allocate funds for training
transporting
hazardous material. This
new system will help ensure
that complete and accurate
compliance information is
available to all HP entities.
Also during 1984, H P
installed programs to comply with a number of new
regulations, including
"right to know" legislation,
federal wastewater pretreatment standards and
local hazardous materials
storage ordinances.
In addition, the company
has loaned an executive
for up to 18 months to the
National Alliance of Business (NAB) in Washington,
D.C. The non-profit,
business-led NAB has been
designated by the U.S.
Department of Labor as the
organization that will get
private industry involved
with the government in
practical training programs
to solve unemployment.
I
A single dust particle can
ruin an entire chip.
HP's innovation employs
small, dust-proof boxes to
transport the wafers on
which chips are made as
they move through the fabrication process. A specially
designed trapdoor is used to
transfer the wafers to and
from chip-making machines
without contamination.
Indications are that the
process can improve the
cleanliness of a wafer's
environment 100-fold. H P
hopes to have its technique
adopted as an industry
standard.
I
1
WELCOFiE TO THE DLYnPIC 61
HP Philanthropic Activities
HP expanded its
philanthropic activities
substantially during 1984 and
increased grants by one-third
over 1983to approximately
$40 million.
6
The company made grants
for a variety of c~mmunity g
programs and for national
and international programs
that stress understanding of
science, engineering,
technology and medicine.
The company also put
strong emphasis on new HPequipment granting.
HP's grants efforts involve
hundreds of employee
volunteers in both the
of Clinical Phar
decision-making and
implementation procedures.
HP bases its philanthropy
on a belief that computer
and instrument equipment
granting answers major
societal needs. Severe
cost pressures have led
to outmoded equipment in
athletes.
educational areas crucial to
preparing young people for a
technically sophisticated
world. In addition, the
likelihood of rising beyond
deprived conditions
the intense
increases dramatically for
individuals who acquire
specialized technical skills,
also
HP has seen that both
of these conditions can be
addressed effectively by
The testing-$
a company's willingness
smoothly, and the pm
to learn how to grant
provided a sh
@is
philanthropically suitable
best amateur a t m b@
products of its own
world, who came fmm la
manufacture.
countries to comp&ein rba
largest games ever k l d .
During 1984, HP gave
special attention to
increasing the pool of
qualified minority and
g
I
.
liaison. The pilat program,
based in the Southwestern
U.S., has started mil and
are important HP expects to create
employees
&HP Work Force
positions during lW5.
HP's ongoing commitment
to affirmative adion is
indicated by the work force
4,133
5,719
591
993
2,320
2,914
379
594
9.1
943
19.1
14.3
497
17.4
872
12.0
15.2
E6.3
296
500
12.8
17.2
261.4
&8.1(,5
41.9
Directors
Officers
Ernest C. Arbuckle
Hicks B. Waldron
David Packard
Franco Mariotti
Dean Emeritus
Graduate School of Business
Stanford University
Chairman, President and
Chief Executive Officer
Avon Products, Inc.
(a beauty, fashion and
health-care company)
Chairman of the Board
Vice Prcsident and Director,
European Operations
Shozo Yokogawa
President and
Chief Executive Officer
Robert L. Boniface
Executive Vice President
Hewlett-Packard Company
Paul C. Ely Jr.
Executive Vice President
Hewlett-Packard Company
John B. Fery
Chairman of the Board and
Chief Executive Officer
Boise Cascade Corporation
(a forest products manufacturer
and distributor)
President
Yokogawa Hokushin Electric
Corporation
(a process and factory
automation manufacturer)
John A. Young
President and
Chief Executive Officer
Hewlett-Packard Company
Robert J. Glaser, M.D.
Director for Medical Science
Lucille P. Markey Charitable Trust
Harold J. Haynes
Senior Counselor
Bechtel Group, Inc.;
Retired Chairman of the Board and
Chief Executive Officer
Chevron Corporation
(formerly Standard Oil Company
of California)
William R. Hewlett
Vice Chairman of the Board
Hewlett-Packard Company
James D. Hodgson
International Business Consultant
Shirley M. Hufstedler
Partner in the law firm of
Hufstedler, Miller,
Carlson & Beardsley
Antonie T. Knoppers, M.D.
Business Consultant and Director
of various companies
Paul F. Miller Jr.
Senior Partner
Miller, Anderson and Sherrerd
(an investment management firm)
Dean 0 . Morton
Executive Vice President
and Chief Operating Officer
Hewlett-Packard Company
David Packard
Chairman of the Board
Hewlett-Packard Company
William E. Terry
Executive Vice President
Hewlett-Packard Company
William R. Hewlett
Vice Chairman of the Board
John A. Young
Dean 0.Morton
Executive Vice President
and Chief Operating Officer
Richard C. Alberding
Executive Vice President
Vice President and
General Manager,
Manufacturing Systems Group
Robert P. Wayman
Executive Vice President
John L. Doyle
Cyril J. Yansouni
Robert L. Boniface
Committees of the Board
Paul C. Ely Jr.
Executive Committee
Young (Chairman)
Boniface, Ely, Morton,
Terry
Audit Committee
Haynes (Chairman)
Arbuckle, Fery
Employee Benefits
Committee
Glaser (Chairman)
Hodgson, Hufstedler,
Morton, Terry
Executive Compensation
and Stock Option
Committee
Arbuckle (Chairman)
Glaser, Haynes, Hodgson
Executive Vice President
Nominating Committee
Arbuckle (Chairman)
Fery, Glaser, Haynes,
Hewlett, Hodgson,
Packard, Young
Lewis E. Platt
Vice President,
Chief Financial Officer
and Controller
Executive Vice President
Investment Committee
Fery (Chairman)
Ely, Knoppers, Miller,
Young
William G. Parzybok Jr.
Vice President and
General Manager,
Design Systems Group
William E. Terry
Vice President and
General Manager,
Personal Computer Group
George F. Newman Jr.
Treasurer
Executive Vice President
Alfred P. Oliverio
Senior Vice President,
Major Accounts Marketing
James L. Arthur
Vice President and Director,
U.S. Field Operations
Alan D. Bickell
Vice President and Director,
intercontinental Operations
Joel S. Birnbaum
Vice President and Director,
Hewlett-Packard Laboratories
Johan F. Blokker
Vice President and
General Manager,
Components Group
S.T. Jack Brigham I11
Vice President,
General Counsel and Secretary
Douglas C. Chance
Vice President and
General Manager,
Information Systems Group
Jean C. Chognard
Vice President,
Patents and Licenses
Harold E. Edmondson
Vice President and Director,
Corporate Manufacturing
Richard A. Hackborn
Vice President and
General Manager,
Peripherals Group
New Officers
During 1984, six HP executives were named vice presidents of the company. They
are: Alan D. Bickell, vice
president and director, Pntercontinental Operations; Joel
S. Birnbaum, vice president
and director, Hewlett-Packard Laboratories; Johan F.
Blokker, vice president and
general manager, Components Group; William G.
Parzybok Jr., vice president
and general manager, Design
Systems Group; Robert P.
Wayman, vice president,
chief financial officer and
controller; and Cyril J.
Yansouni, vice president and
general manager, Personal
Computer Group.
Also during the year,
George F. Newman Jr. was
named treasurer.
l
HEWLETT
PACKARD
3000 Hanover Street
Palo Alto, California 94304
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