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HP Reports Second Quarter 2013 Results

PALO ALTO, CA -- (Marketwired) -- May 22, 2013 -- HP (NYSE: HPQ)

                                                                            
                                                                            
HP second quarter fiscal 2013 financial performance                         
                                                                            
                                       Q2 FY13       Q2 FY12         Y/Y    
  GAAP net revenue ($B)             $       27.6  $       30.7         (10%)
  GAAP operating margin                     5.8%          7.2%    (1.4 pts.)
  GAAP net earnings ($B)            $        1.1  $        1.6         (32%)
  GAAP diluted EPS                  $       0.55  $       0.80         (31%)
  Non-GAAP operating margin                 8.6%          8.9%    (0.3 pts.)
  Non-GAAP net earnings ($B)        $        1.7  $        1.9         (13%)
  Non-GAAP diluted EPS              $       0.87  $       0.98         (11%)
  Cash flow from operations ($B)    $        3.6  $        2.5           44%
                                                                            

Information about HP's use of non-GAAP financial information is provided under "Use of non-GAAP financial information" below.

HP today announced financial results for its second fiscal quarter ended April 30, 2013. Second quarter GAAP diluted earnings per share (EPS) was $0.55, down from $0.80 in the prior-year period and above its previously provided outlook of $0.38 to $0.40 per share. Second quarter non-GAAP diluted EPS was $0.87, down from $0.98 in the prior-year period and above its previously provided outlook of $0.80 to $0.82 per share. Second quarter non-GAAP earnings information excludes after-tax costs of $621 million, or $0.32 per diluted share, related to restructuring charges, amortization of purchased intangible assets and acquisition-related charges.

For the second quarter, net revenue of $27.6 billion was down 10% year over year and down 9% when adjusted for the effects of currency.

"We beat the upper end of our non-GAAP diluted EPS outlook for the quarter by $0.05 per share, driven by better than expected performance in Enterprise Services and Printing, coupled with the accelerated capture of restructuring savings and improvement in our operations," said Meg Whitman, HP president and chief executive officer.

Outlook
For the third quarter of fiscal 2013, HP estimates non-GAAP diluted EPS to be in the range of $0.84 to $0.87 and GAAP diluted EPS to be in the range of $0.56 to $0.59. Third quarter fiscal 2013 non-GAAP diluted EPS estimates exclude after-tax costs of approximately $0.28 per share, related primarily to the amortization of purchased intangible assets, restructuring charges and acquisition-related charges.

For the full year fiscal 2013, HP estimates non-GAAP diluted EPS to be in the range of $3.50 to $3.60 and GAAP diluted EPS to be in the range of $2.50 to $2.60, in line with HP's previously communicated outlook. Full year fiscal 2013 non-GAAP diluted EPS estimates exclude after-tax costs of approximately $1.00 per share, related primarily to the amortization of purchased intangible assets, restructuring charges and acquisition-related charges.

"I am encouraged by our performance in the second quarter, and I feel good about the rest of the year," added Whitman. "As I have said many times before, this is a multi-year journey. We have a long way to go, but we are on track to deliver on our fiscal 2013 non-GAAP diluted earnings per share outlook."

Asset Management
HP generated $3.6 billion in cash flow from operations in the second quarter, up 44% from the prior-year period. Inventory ended the quarter at $6.0 billion, down 2 days year over year to 26 days. Accounts receivable of $14.6 billion, down 1 day year over year to 48 days. Accounts payable ended the quarter at $12.3 billion, up 4 days year over year to 53 days. HP's dividend payment of $0.132 per share in the second quarter resulted in cash usage of $283 million. HP also utilized $797 million of cash during the quarter to repurchase approximately 36.3 million shares of common stock in the open market. HP exited the quarter with $13.6 billion in gross cash.

"After returning more than a billion dollars to shareholders through share repurchases and dividends in the quarter, we improved our operating company net debt position for the fifth successive quarter," said Whitman. "By the end of fiscal 2013, we expect our operating company net debt to be below pre-Autonomy levels and approaching our goal of approximately zero."

Declaration of Dividend
HP also today announced that the HP board of directors has declared a regular cash dividend of 14.52 cents per share on the company's common stock, which, as previously announced, reflects a 10% increase in amount compared to the previous quarterly dividend amount. The dividend, the third in HP's fiscal year 2013, is payable on July 3, 2013, to stockholders of record as of the close of business on June 12, 2013.

Second Quarter Fiscal 2013 Segment Results

More information on HP's earnings, including additional financial analysis and an earnings overview presentation, is available on HP's Investor Relations website at www.hp.com/investor/home.

HP's Q2 FY13 earnings conference call is accessible via an audio webcast at www.hp.com/investor/2013Q2webcast.

About HP
HP creates new possibilities for technology to have a meaningful impact on people, businesses, governments and society. The world's largest technology company, HP brings together a portfolio that spans printing, personal computing, software, services and IT infrastructure to solve customer problems. More information about HP is available at http://www.hp.com.

Use of non-GAAP financial information
To supplement HP's consolidated condensed financial statements presented on a GAAP basis, HP provides non-GAAP operating profit, non-GAAP operating margin, non-GAAP net earnings, non-GAAP diluted earnings per share, gross cash, free cash flow, net debt and operating company net debt. HP also provides forecasts of non-GAAP diluted earnings per share. A reconciliation of the adjustments to GAAP results for this quarter and prior periods is included in the tables below or elsewhere in the materials accompanying this news release. In addition, an explanation of the ways in which HP management uses these non-GAAP measures to evaluate its business, the substance behind HP management's decision to use these non-GAAP measures, the material limitations associated with the use of these non-GAAP measures, the manner in which HP management compensates for those limitations, and the substantive reasons why HP management believes that these non-GAAP measures provide useful information to investors is included under "Use of Non-GAAP Financial Measures" after the tables below. This additional non-GAAP financial information is not meant to be considered in isolation or as a substitute for operating profit, operating margin, net earnings, diluted earnings per share, cash and cash equivalents, cash flow from operations or total company debt prepared in accordance with GAAP.

Forward-looking statements
This news release contains forward-looking statements that involve risks, uncertainties and assumptions. If the risks or uncertainties ever materialize or the assumptions prove incorrect, the results of HP may differ materially from those expressed or implied by such forward-looking statements and assumptions. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including but not limited to any projections of revenue, margins, expenses, earnings, earnings per share, tax provisions, cash flows, benefit obligations, share repurchases, currency exchange rates or other financial items; any projections of the amount, timing or impact of cost savings or restructuring charges; any statements of the plans, strategies and objectives of management for future operations, including the execution of restructuring plans and any resulting cost savings or revenue or profitability improvements; any statements concerning the expected development, performance, market share or competitive performance relating to products or services; any statements regarding current or future macroeconomic trends or events and the impact of those trends and events on HP and its financial performance; any statements regarding pending investigations, claims or disputes; any statements of expectation or belief; and any statements of assumptions underlying any of the foregoing. Risks, uncertainties and assumptions include the need to address the many challenges facing HP's businesses; the competitive pressures faced by HP's businesses; risks associated with executing HP's strategy; the impact of macroeconomic and geopolitical trends and events; the need to manage third-party suppliers and the distribution of HP's products and services effectively; the protection of HP's intellectual property assets, including intellectual property licensed from third parties; risks associated with HP's international operations; the development and transition of new products and services and the enhancement of existing products and services to meet customer needs and respond to emerging technological trends; the execution and performance of contracts by HP and its suppliers, customers and partners; the hiring and retention of key employees; integration and other risks associated with business combination and investment transactions; the execution, timing and results of restructuring plans, including estimates and assumptions related to the cost and the anticipated benefits of implementing those plans; the resolution of pending investigations, claims and disputes; and other risks that are described in HP's Annual Report on Form 10-K for the fiscal year ended October 31, 2012 and HP's other filings with the Securities and Exchange Commission, including HP's Quarterly Report on Form 10-Q for the fiscal quarter ended January 31, 2013. As in prior periods, the financial information set forth in this release, including tax-related items, reflects estimates based on information available at this time. While HP believes these estimates to be meaningful, these amounts could differ materially from actual reported amounts in HP's Form 10-Q for the fiscal quarter ended April 30, 2013. In particular, determining HP's actual tax balances and provisions as of April 30, 2013 requires extensive internal and external review of tax data (including consolidating and reviewing the tax provisions of numerous domestic and foreign entities), which is being completed in the ordinary course of preparing HP's Form 10-Q. HP assumes no obligation and does not intend to update these forward-looking statements.

                                                                            
                                                                            
                  HEWLETT-PACKARD COMPANY AND SUBSIDIARIES                  
               CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS                
                                (Unaudited)                                 
                   (In millions except per share amounts)                   
                                                                            
                                                 Three months ended         
                                        ----------------------------------- 
                                         April 30,  January 31,   April 30, 
                                           2013         2013        2012    
                                        ----------  -----------  ---------- 
                                                                            
Net revenue                             $   27,582  $    28,359  $   30,693 
                                                                            
Costs and expenses:                                                         
  Cost of sales                             21,055       22,029      23,541 
  Research and development                     815          794         850 
  Selling, general and administrative        3,342        3,300       3,540 
  Amortization of purchased intangible                                      
   assets                                      350          350         470 
  Restructuring charges                        408          130          53 
  Acquisition-related charges                   11            4          17 
                                        ----------  -----------  ---------- 
    Total costs and expenses                25,981       26,607      28,471 
                                        ----------  -----------  ---------- 
                                                                            
Earnings from operations                     1,601        1,752       2,222 
                                                                            
Interest and other, net                       (193)        (179)       (243)
                                        ----------  -----------  ---------- 
                                                                            
Earnings before taxes                        1,408        1,573       1,979 
                                                                            
Provision for taxes                           (331)        (341)       (386)
                                        ----------  -----------  ---------- 
                                                                            
Net earnings                            $    1,077  $     1,232  $    1,593 
                                        ==========  ===========  ========== 
                                                                            
Net earnings per share:                                                     
  Basic                                 $     0.56  $      0.63  $     0.80 
  Diluted                               $     0.55  $      0.63  $     0.80 
                                                                            
Cash dividends declared per share       $        -  $      0.26  $        - 
                                                                            
                                                                            
Weighted-average shares used to compute                                     
 net earnings per share:                                                    
  Basic                                      1,935        1,953       1,979 
  Diluted                                    1,947        1,956       1,987 
                                                                            
                                                                            
                                                                            
                  HEWLETT-PACKARD COMPANY AND SUBSIDIARIES                  
               CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS                
                                (Unaudited)                                 
                   (In millions except per share amounts)                   
                                                                            
                                                      Six months ended      
                                                          April 30,         
                                                 -------------------------- 
                                                     2013          2012     
                                                 ------------  ------------ 
                                                                            
Net revenue                                      $     55,941  $     60,729 
                                                                            
Costs and expenses:                                                         
  Cost of sales                                        43,084        46,854 
  Research and development                              1,609         1,636 
  Selling, general and administrative                   6,642         6,907 
  Amortization of purchased intangible assets             700           936 
  Restructuring charges                                   538            93 
  Acquisition-related charges                              15            39 
                                                 ------------  ------------ 
    Total costs and expenses                           52,588        56,465 
                                                 ------------  ------------ 
                                                                            
Earnings from operations                                3,353         4,264 
                                                                            
Interest and other, net                                  (372)         (464)
                                                 ------------  ------------ 
                                                                            
Earnings before taxes                                   2,981         3,800 
                                                                            
Provision for taxes                                      (672)         (739)
                                                 ------------  ------------ 
                                                                            
Net earnings                                     $      2,309  $      3,061 
                                                 ============  ============ 
                                                                            
Net earnings per share:                                                     
  Basic                                          $       1.19  $       1.55 
  Diluted                                        $       1.18  $       1.53 
                                                                            
Cash dividends declared per share                $       0.26  $       0.24 
                                                                            
                                                                            
Weighted-average shares used to compute net                                 
 earnings per share:                                                        
  Basic                                                 1,944         1,980 
  Diluted                                               1,952         1,995 
                                                                            
                                                                            
                                                                            
                                                                            
                  HEWLETT-PACKARD COMPANY AND SUBSIDIARIES                  
        ADJUSTMENTS TO GAAP NET EARNINGS, EARNINGS FROM OPERATIONS,         
                  OPERATING MARGIN AND EARNINGS PER SHARE                   
                                (Unaudited)                                 
                   (In millions except per share amounts)                   
                                                                            
                   Three               Three               Three            
                  months    Diluted   months    Diluted   months    Diluted 
                  ended    earnings   ended    earnings   ended    earnings 
                  April       per    January      per     April       per   
                 30, 2013    share   31, 2013    share   30, 2012    share  
                 --------  --------  --------  --------  --------  -------- 
                                                                            
GAAP net                                                                    
 earnings        $  1,077  $   0.55  $  1,232  $   0.63  $  1,593  $   0.80 
                                                                            
Non-GAAP                                                                    
 adjustments:                                                               
  Amortization                                                              
   of purchased                                                             
   intangible                                                               
   assets             350      0.17       350      0.18       470      0.23 
  Restructuring                                                             
   charges            408      0.21       130      0.07        53      0.03 
  Acquisition-                                                              
   related                                                                  
   charges             11      0.01         4         -        17      0.01 
  Wind down of                                                              
   the webOS                                                                
   device                                                                   
   business(a)          -         -         -         -       (36)    (0.02)
  Adjustments                                                               
   for taxes         (148)    (0.07)     (111)    (0.06)     (148)    (0.07)
                 --------  --------  --------  --------  --------  -------- 
Non-GAAP net                                                                
 earnings        $  1,698  $   0.87  $  1,605  $   0.82  $  1,949  $   0.98 
                 ========  ========  ========  ========  ========  ======== 
                                                                            
                                                                            
GAAP earnings                                                               
 from operations $  1,601            $  1,752            $  2,222           
                                                                            
Non-GAAP                                                                    
 adjustments:                                                               
  Amortization                                                              
   of purchased                                                             
   intangible                                                               
   assets             350                 350                 470           
  Restructuring                                                             
   charges            408                 130                  53           
  Acquisition-                                                              
   related                                                                  
   charges             11                   4                  17           
  Wind down of                                                              
   the webOS                                                                
   device                                                                   
   business(a)          -                   -                 (36)          
                 --------            --------            --------           
Non-GAAP                                                                    
 earnings from                                                              
 operations      $  2,370            $  2,236            $  2,726           
                 ========            ========            ========           
                                                                            
GAAP operating                                                              
 margin                 6%                  6%                  7%          
Non-GAAP                                                                    
 adjustments            3%                  2%                  2%          
                 --------            --------            --------           
Non-GAAP                                                                    
 operating                                                                  
 margin                 9%                  8%                  9%          
                 ========            ========            ========           
                                                                            
(a) For the period ended April 30, 2012, primarily includes adjustments to  
    expenses for supplier-related obligations related to winding down the   
    webOS device business.                                                  
                                                                            
                                                                            
                                                                            
                                                                            
                  HEWLETT-PACKARD COMPANY AND SUBSIDIARIES                  
        ADJUSTMENTS TO GAAP NET EARNINGS, EARNINGS FROM OPERATIONS,         
                  OPERATING MARGIN AND EARNINGS PER SHARE                   
                                (Unaudited)                                 
                   (In millions except per share amounts)                   
                                                                            
                                    Six                   Six               
                                   months                months             
                                   ended     Diluted     ended     Diluted  
                                 April 30,   earnings  April 30,   earnings 
                                    2013    per share     2012    per share 
                                 ---------  ---------  ---------  --------- 
                                                                            
GAAP net earnings                $   2,309  $    1.18  $   3,061  $    1.53 
                                                                            
Non-GAAP adjustments:                                                       
  Amortization of purchased                                                 
   intangible assets                   700       0.35        936       0.47 
  Restructuring charges                538       0.28         93       0.05 
  Acquisition-related charges           15       0.01         39       0.02 
  Wind down of the webOS device                                             
   business(a)                           -          -        (36)     (0.02)
  Adjustments for taxes               (259)     (0.13)      (312)     (0.15)
                                 ---------  ---------  ---------  --------- 
Non-GAAP net earnings            $   3,303  $    1.69  $   3,781  $    1.90 
                                 =========  =========  =========  ========= 
                                                                            
                                                                            
GAAP earnings from operations    $   3,353             $   4,264            
                                                                            
Non-GAAP adjustments:                                                       
  Amortization of purchased                                                 
   intangible assets                   700                   936            
  Restructuring charges                538                    93            
  Acquisition-related charges           15                    39            
  Wind down of the webOS device                                             
   business(a)                           -                   (36)           
                                 ---------             ---------            
Non-GAAP earnings from                                                      
 operations                      $   4,606             $   5,296            
                                 =========             =========            
                                                                            
GAAP operating margin                    6%                    7%           
Non-GAAP adjustments                     2%                    2%           
                                 ---------             ---------            
Non-GAAP operating margin                8%                    9%           
                                 =========             =========            
                                                                            
(a) For the period ended April 30, 2012, primarily includes adjustments to  
    expenses for supplier-related obligations related to winding down the   
    webOS device business.                                                  
                                                                            
                                                                            
                                                                            
                                                                            
                  HEWLETT-PACKARD COMPANY AND SUBSIDIARIES                  
                    CONSOLIDATED CONDENSED BALANCE SHEETS                   
                                (In millions)                               
                                                                            
                                                   April 30,    October 31, 
                                                      2013          2012    
                                                 ------------- -------------
                                                  (Unaudited)               
ASSETS                                                                      
                                                                            
Current assets:                                                             
  Cash and cash equivalents                      $      13,240 $      11,301
  Accounts receivable                                   14,606        16,407
  Financing receivables                                  3,212         3,252
  Inventory                                              5,999         6,317
  Other current assets                                  12,514        13,360
                                                 ------------- -------------
                                                                            
    Total current assets                                49,571        50,637
                                                 ------------- -------------
                                                                            
Property, plant and equipment                           11,476        11,954
                                                                            
Long-term financing receivables and other assets        10,205        10,593
                                                                            
Goodwill and purchased intangible assets                35,002        35,584
                                                 ------------- -------------
                                                                            
Total assets                                     $     106,254 $     108,768
                                                 ============= =============
                                                                            
                                                                            
LIABILITIES AND STOCKHOLDERS' EQUITY                                        
                                                                            
Current liabilities:                                                        
  Notes payable and short-term borrowings        $       6,928 $       6,647
  Accounts payable                                      12,313        13,350
  Employee compensation and benefits                     3,836         4,058
  Taxes on earnings                                      1,015           846
  Deferred revenue                                       6,757         7,494
  Other accrued liabilities                             13,809        14,271
                                                 ------------- -------------
                                                                            
    Total current liabilities                           44,658        46,666
                                                 ------------- -------------
                                                                            
Long-term debt                                          19,863        21,789
                                                                            
Other liabilities                                       17,801        17,480
                                                                            
Stockholders' equity:                                                       
  HP stockholders' equity                               23,533        22,436
  Non-controlling interests                                399           397
                                                 ------------- -------------
                                                                            
    Total stockholders' equity                          23,932        22,833
                                                 ------------- -------------
                                                                            
Total liabilities and stockholders' equity       $     106,254 $     108,768
                                                 ============= =============
                                                                            
                                                                            
                                                                            
                  HEWLETT-PACKARD COMPANY AND SUBSIDIARIES                  
              CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS               
                                (Unaudited)                                 
                               (In millions)                                
                                                                            
                                                 Three months   Six months  
                                                     ended         ended    
                                                   April 30,     April 30,  
                                                     2013          2013     
                                                 ------------  ------------ 
                                                                            
Cash flows from operating activities:                                       
  Net earnings                                   $      1,077  $      2,309 
  Adjustments to reconcile net earnings to net                              
   cash provided by operating activities:                                   
    Depreciation and amortization                       1,170         2,333 
    Impairment of goodwill and purchased                                    
     intangible assets                                                      
    Stock-based compensation expense                      107           291 
    Provision for bad debt and inventory                   93           217 
    Restructuring charges                                 408           538 
    Deferred taxes on earnings                            (28)          472 
    Excess tax benefit from stock-based                                     
     compensation                                           -             - 
    Other, net                                             59           226 
                                                                            
    Changes in operating assets and liabilities:                            
      Accounts and financing receivables                  (98)        2,148 
      Inventory                                           289           140 
      Accounts payable                                    640        (1,050)
      Taxes on earnings                                    (3)         (426)
      Restructuring                                      (165)         (402)
      Other assets and liabilities                          7          (678)
                                                 ------------  ------------ 
        Net cash provided by operating                                      
         activities                                     3,556         6,118 
                                                 ------------  ------------ 
                                                                            
Cash flows from investing activities:                                       
    Investment in property, plant and equipment          (767)       (1,400)
    Proceeds from sale of property, plant and                               
     equipment                                            147           274 
    Purchases of available-for-sale securities                              
     and other investments                               (198)         (497)
    Maturities and sales of available-for-sale                              
     securities and other investments                     431           592 
    Payments made in connection with business                               
     acquisitions, net of cash acquired                  (167)         (167)
                                                 ------------  ------------ 
        Net cash used in investing activities            (554)       (1,198)
                                                 ------------  ------------ 
                                                                            
Cash flows from financing activities:                                       
    Repayment of commercial paper and notes                                 
     payable, net                                         (28)         (133)
    Issuance of debt                                      154           199 
    Payment of debt                                    (1,554)       (1,668)
    Issuance of common stock under employee                                 
     stock plans                                          157           212 
    Repurchase of common stock                           (797)       (1,050)
    Excess tax benefit from stock-based                                     
     compensation                                           -             - 
    Cash dividends paid                                  (283)         (541)
                                                 ------------  ------------ 
        Net cash used in financing activities          (2,351)       (2,981)
                                                 ------------  ------------ 
                                                                            
Increase in cash and cash equivalents                     651         1,939 
Cash and cash equivalents at beginning of period       12,589        11,301 
                                                 ------------  ------------ 
Cash and cash equivalents at end of period       $     13,240  $     13,240 
                                                 ============  ============ 
                                                                            
                                                                            
                                                                            
                  HEWLETT-PACKARD COMPANY AND SUBSIDIARIES                  
                            SEGMENT INFORMATION                             
                                (Unaudited)                                 
                               (In millions)                                
                                                                            
                                                 Three months ended         
                                        ----------------------------------- 
                                         April 30,  January 31,   April 30, 
                                           2013         2013        2012    
                                        ----------  -----------  ---------- 
Net revenue:(a)                                                             
                                                                            
  Personal Systems                      $    7,584  $     8,204  $    9,470 
  Printing                                   6,081        5,926       6,132 
                                        ----------  -----------  ---------- 
    Total Printing and Personal Systems                                     
     Group(b)                               13,665       14,130      15,602 
  Enterprise Group                           6,819        6,984       7,546 
  Enterprise Services                        5,999        5,919       6,489 
  Software                                     941          926         970 
  HP Financial Services                        881          957         968 
  Corporate Investments                         10            4           7 
                                        ----------  -----------  ---------- 
      Total segments                        28,315       28,920      31,582 
  Elimination of intersegment net                                           
   revenue and other                          (733)        (561)       (889)
                                        ----------  -----------  ---------- 
                                                                            
      Total HP consolidated net revenue $   27,582  $    28,359  $   30,693 
                                        ==========  ===========  ========== 
                                                                            
Earnings before taxes:(a)                                                   
                                                                            
  Personal Systems                      $      239  $       223  $      516 
  Printing                                     958          953         808 
                                        ----------  -----------  ---------- 
    Total Printing and Personal Systems                                     
     Group(b)                                1,197        1,176       1,324 
  Enterprise Group                           1,082        1,084       1,352 
  Enterprise Services                          156           76         237 
  Software                                     180          157         172 
  HP Financial Services                         97          101          96 
  Corporate Investments                        (56)         (65)        (48)
                                        ----------  -----------  ---------- 
      Total segment earnings from                                           
       operations                            2,656        2,529       3,133 
                                                                            
  Corporate and unallocated costs and                                       
   eliminations                               (179)        (109)       (203)
  Unallocated costs related to stock-                                       
   based compensation expense                 (107)        (184)       (168)
  Amortization of purchased intangible                                      
   assets                                     (350)        (350)       (470)
  Restructuring charges                       (408)        (130)        (53)
  Acquisition-related charges                  (11)          (4)        (17)
  Interest and other, net                     (193)        (179)       (243)
                                        ----------  -----------  ---------- 
                                                                            
      Total HP consolidated earnings                                        
       before taxes                     $    1,408  $     1,573  $    1,979 
                                        ==========  ===========  ========== 
                                                                            
(a) HP has implemented certain organizational realignments in the first     
    quarter of fiscal 2013. As a result of these realignments, HP has re-   
    evaluated its segment financial reporting structure and, effective in   
    the first quarter of fiscal 2013, created two new financial reporting   
    segments, the Enterprise Group segment and the Enterprise Services      
    segment, and eliminated two other financial reporting segments, the     
    Enterprise Servers, Storage and Networking ("ESSN") segment and the     
    Services segment. The Enterprise Group segment consists of the business 
    units within the former ESSN segment and most of the services offerings 
    of the Technology Services ("TS") business unit, which was previously a 
    part of the former Services segment. The Enterprise Services segment    
    consists of the Applications and Business Services ("ABS") and          
    Infrastructure Technology Outsourcing ("ITO") business units from the   
    former Services segment, along with the end-user workplace support      
    services business that was previously a part of the TS business unit.   
    Taking into account these changes, HP has the following seven financial 
    reporting segments: Personal Systems, Printing, the Enterprise Group,   
    Enterprise Services, Software, HP Financial Services and Corporate      
    Investments.                                                            
                                                                            
    Also as a result of these realignments, the financial results of the    
    Personal Systems commercial products support business, which were       
    previously reported as part of the TS business unit, will now be        
    reported as part of the Other business unit within the Personal Systems 
    segment, and the financial results of the portion of the business       
    intelligence services business that had continued to be reported as part
    of the Corporate Investments segment following the implementation of    
    prior realignment actions will now be reported as part of the ABS       
    business unit. In addition, the end-user workplace support services     
    business, which, as noted above, was previously a part of the TS        
    business unit and will now become a part of the Enterprise Services     
    segment, will be reported as part of the ITO business unit within that  
    segment.                                                                
                                                                            
    To provide improved visibility and comparability, HP has reflected these
    changes to its reporting structure in prior financial reporting periods 
    on an as-if basis, which has resulted in the transfer of revenue and    
    operating profit among the Personal Systems, the Enterprise Group,      
    Enterprise Services and Corporate Investments segments. These changes   
    had no impact on the previously reported financial results for the      
    Printing, Software or HP Financial Services segments. In addition, none 
    of these changes impacted HP's previously reported consolidated net     
    revenue, earnings from operations, net earnings or net earnings per     
    share.                                                                  
                                                                            
(b) The Personal Systems segment and the Printing segment are structured    
    beneath a broader Printing and Personal Systems Group ("PPS"). While PPS
    is not a financial reporting segment, HP provides financial data        
    aggregating the segments within it in order to provide a supplementary  
    view of its business.                                                   
                                                                            
                                                                            
                                                                            
                  HEWLETT-PACKARD COMPANY AND SUBSIDIARIES                  
                            SEGMENT INFORMATION                             
                                (Unaudited)                                 
                               (In millions)                                
                                                                            
                                                      Six months ended      
                                                          April 30,         
                                                 -------------------------- 
                                                     2013          2012     
                                                 ------------  ------------ 
Net revenue:(a)                                                             
                                                                            
  Personal Systems                               $     15,788  $     18,362 
  Printing                                             12,007        12,390 
                                                 ------------  ------------ 
    Total Printing and Personal Systems Group(b)       27,795        30,752 
  Enterprise Group                                     13,803        14,828 
  Enterprise Services                                  11,918        12,860 
  Software                                              1,867         1,916 
  HP Financial Services                                 1,838         1,918 
  Corporate Investments                                    14            37 
                                                 ------------  ------------ 
      Total Segments                                   57,235        62,311 
  Elimination of intersegment net revenue and                               
   other                                               (1,294)       (1,582)
                                                 ------------  ------------ 
                                                                            
      Total HP consolidated net revenue          $     55,941  $     60,729 
                                                 ============  ============ 
                                                                            
Earnings before taxes:(a)                                                   
                                                                            
  Personal Systems                               $        462  $        975 
  Printing                                              1,911         1,569 
                                                 ------------  ------------ 
    Total Printing and Personal Systems Group(b)        2,373         2,544 
  Enterprise Group                                      2,166         2,681 
  Enterprise Services                                     232           382 
  Software                                                337           334 
  HP Financial Services                                   198           187 
  Corporate Investments                                  (121)          (98)
                                                 ------------  ------------ 
      Total segment earnings from operations            5,185         6,030 
                                                                            
  Corporate and unallocated costs and                                       
   eliminations                                          (288)         (356)
  Unallocated costs related to stock-based                                  
   compensation expense                                  (291)         (342)
  Amortization of purchased intangible assets            (700)         (936)
  Restructuring charges                                  (538)          (93)
  Acquisition-related charges                             (15)          (39)
  Interest and other, net                                (372)         (464)
                                                 ------------  ------------ 
                                                                            
      Total HP consolidated earnings before                                 
       taxes                                     $      2,981  $      3,800 
                                                 ============  ============ 
                                                                            
(a) HP has implemented certain organizational realignments in the first     
    quarter of fiscal 2013. As a result of these realignments, HP has re-   
    evaluated its segment financial reporting structure and, effective in   
    the first quarter of fiscal 2013, created two new financial reporting   
    segments, the Enterprise Group segment and the Enterprise Services      
    segment, and eliminated two other financial reporting segments, the     
    Enterprise Servers, Storage and Networking ("ESSN") segment and the     
    Services segment. The Enterprise Group segment consists of the business 
    units within the former ESSN segment and most of the services offerings 
    of the Technology Services ("TS") business unit, which was previously a 
    part of the former Services segment. The Enterprise Services segment    
    consists of the Applications and Business Services ("ABS") and          
    Infrastructure Technology Outsourcing ("ITO") business units from the   
    former Services segment, along with the end-user workplace support      
    services business that was previously a part of the TS business unit.   
    Taking into account these changes, HP has the following seven financial 
    reporting segments: Personal Systems, Printing, the Enterprise Group,   
    Enterprise Services, Software, HP Financial Services and Corporate      
    Investments.                                                            
                                                                            
    Also as a result of these realignments, the financial results of the    
    Personal Systems commercial products support business, which were       
    previously reported as part of the TS business unit, will now be        
    reported as part of the Other business unit within the Personal Systems 
    segment, and the financial results of the portion of the business       
    intelligence services business that had continued to be reported as part
    of the Corporate Investments segment following the implementation of    
    prior realignment actions will now be reported as part of the ABS       
    business unit. In addition, the end-user workplace support services     
    business, which, as noted above, was previously a part of the TS        
    business unit and will now become a part of the Enterprise Services     
    segment, will be reported as part of the ITO business unit within that  
    segment.                                                                
                                                                            
    To provide improved visibility and comparability, HP has reflected these
    changes to its reporting structure in prior financial reporting periods 
    on an as-if basis, which has resulted in the transfer of revenue and    
    operating profit among the Personal Systems, the Enterprise Group,      
    Enterprise Services and Corporate Investments segments. These changes   
    had no impact on the previously reported financial results for the      
    Printing, Software or HP Financial Services segments. In addition, none 
    of these changes impacted HP's previously reported consolidated net     
    revenue, earnings from operations, net earnings or net earnings per     
    share.                                                                  
                                                                            
                                                                            
(b) The Personal Systems segment and the Printing segment are structured    
    beneath a broader Printing and Personal Systems Group ("PPS"). While PPS
    is not a financial reporting segment, HP provides financial data        
    aggregating the segments within it in order to provide a supplementary  
    view of its business.                                                   
                                                                            
                                                                            
                                                                            
                  HEWLETT-PACKARD COMPANY AND SUBSIDIARIES                  
                    SEGMENT / BUSINESS UNIT INFORMATION                     
                                (Unaudited)                                 
                               (In millions)                                
                                                                            
                                                                Growth rate 
                                     Three months ended             (%)     
                              -------------------------------  ------------ 
                              April 30,   January   April 30,               
                                 2013     31, 2013     2012     Q/Q    Y/Y  
                              ---------  ---------  ---------  -----  ----- 
Net revenue:(a)                                                             
                                                                            
 Printing and Personal                                                      
  Systems Group(b)                                                          
  Personal Systems                                                          
     Notebooks                $   3,718  $   4,128  $   4,900   (10%)  (24%)
     Desktops                     3,103      3,321      3,827    (7%)  (19%)
     Workstations                   521        535        537    (3%)   (3%)
     Other                          242        220        206    10%    17% 
                              ---------  ---------  ---------               
      Total Personal Systems      7,584      8,204      9,470    (8%)  (20%)
                              ---------  ---------  ---------               
                                                                            
  Printing                                                                  
     Supplies                     4,122      3,893      4,060     6%     2% 
     Commercial Hardware          1,398      1,354      1,479     3%    (5%)
     Consumer Hardware              561        679        593   (17%)   (5%)
                              ---------  ---------  ---------               
      Total Printing              6,081      5,926      6,132     3%    (1%)
                              ---------  ---------  ---------               
       Total Printing and                                                   
        Personal Systems                                                    
        Group                    13,665     14,130     15,602    (3%)  (12%)
                              ---------  ---------  ---------               
                                                                            
  Enterprise Group                                                          
    Industry Standard Servers     2,806      2,994      3,186    (6%)  (12%)
    Technology Services           2,272      2,243      2,335     1%    (3%)
    Storage                         857        833        990     3%   (13%)
    Networking                      618        608        614     2%     1% 
    Business Critical Systems       266        306        421   (13%)  (37%)
                              ---------  ---------  ---------               
      Total Enterprise Group      6,819      6,984      7,546    (2%)  (10%)
                              ---------  ---------  ---------               
                                                                            
 Enterprise Services                                                        
  Infrastructure Technology                                                 
   Outsourcing                    3,721      3,736      3,954     0%    (6%)
  Application and Business                                                  
   Services                       2,278      2,183      2,535     4%   (10%)
                              ---------  ---------  ---------               
      Total Enterprise                                                      
       Services                   5,999      5,919      6,489     1%    (8%)
                              ---------  ---------  ---------               
                                                                            
 Software                           941        926        970     2%    (3%)
                              ---------  ---------  ---------               
                                                                            
 HP Financial Services              881        957        968    (8%)   (9%)
                              ---------  ---------  ---------               
                                                                            
 Corporate Investments               10          4          7   150%    43% 
                              ---------  ---------  ---------               
      Total Segments             28,315     28,920     31,582    (2%)  (10%)
                              ---------  ---------  ---------               
                                                                            
 Elimination of intersegment                                                
  net revenue and other            (733)      (561)      (889)   31%   (18%)
                              ---------  ---------  ---------               
                                                                            
  Total HP consolidated net                                                 
   revenue                    $  27,582  $  28,359  $  30,693    (3%)  (10%)
                              =========  =========  =========               
                                                                            
(a) HP has implemented certain organizational realignments in the first     
    quarter of fiscal 2013. As a result of these realignments, HP has re-   
    evaluated its segment financial reporting structure and, effective in   
    the first quarter of fiscal 2013, created two new financial reporting   
    segments, the Enterprise Group segment and the Enterprise Services      
    segment, and eliminated two other financial reporting segments, the     
    Enterprise Servers, Storage and Networking ("ESSN") segment and the     
    Services segment. The Enterprise Group segment consists of the business 
    units within the former ESSN segment and most of the services offerings 
    of the Technology Services ("TS") business unit, which was previously a 
    part of the former Services segment. The Enterprise Services segment    
    consists of the Applications and Business Services ("ABS") and          
    Infrastructure Technology Outsourcing ("ITO") business units from the   
    former Services segment, along with the end-user workplace support      
    services business that was previously a part of the TS business unit.   
    Taking into account these changes, HP has the following seven financial 
    reporting segments: Personal Systems, Printing, the Enterprise Group,   
    Enterprise Services, Software, HP Financial Services and Corporate      
    Investments.                                                            
                                                                            
    Also as a result of these realignments, the financial results of the    
    Personal Systems commercial products support business, which were       
    previously reported as part of the TS business unit, will now be        
    reported as part of the Other business unit within the Personal Systems 
    segment, and the financial results of the portion of the business       
    intelligence services business that had continued to be reported as part
    of the Corporate Investments segment following the implementation of    
    prior realignment actions will now be reported as part of the ABS       
    business unit. In addition, the end-user workplace support services     
    business, which, as noted above, was previously a part of the TS        
    business unit and will now become a part of the Enterprise Services     
    segment, will be reported as part of the ITO business unit within that  
    segment.                                                                
                                                                            
    To provide improved visibility and comparability, HP has reflected these
    changes to its reporting structure in prior financial reporting periods 
    on an as-if basis, which has resulted in the transfer of revenue and    
    operating profit among the Personal Systems, the Enterprise Group,      
    Enterprise Services and Corporate Investments segments. These changes   
    had no impact on the previously reported financial results for the      
    Printing, Software or HP Financial Services segments. In addition, none 
    of these changes impacted HP's previously reported consolidated net     
    revenue, earnings from operations, net earnings or net earnings per     
    share.                                                                  
                                                                            
(b) The Personal Systems segment and the Printing segment are structured    
    beneath a broader Printing and Personal Systems Group ("PPS"). While PPS
    is not a financial reporting segment, HP provides financial data        
    aggregating the segments within it in order to provide a supplementary  
    view of its business.                                                   
                                                                            
                                                                            
                                                                            
                  HEWLETT-PACKARD COMPANY AND SUBSIDIARIES                  
                    SEGMENT / BUSINESS UNIT INFORMATION                     
                                (Unaudited)                                 
                               (In millions)                                
                                                                            
                                                      Six months ended      
                                                          April 30,         
                                                 -------------------------- 
                                                                            
                                                     2013          2012     
                                                 ------------  ------------ 
                                                                            
Net revenue:(a)                                                             
                                                                            
 Printing and Personal Systems Group(b)                                     
  Personal Systems                                                          
    Notebooks                                    $      7,846  $      9,842 
    Desktops                                            6,424         7,033 
    Workstations                                        1,056         1,072 
    Other                                                 462           415 
                                                 ------------  ------------ 
     Total Personal Systems                            15,788        18,362 
                                                 ------------  ------------ 
                                                                            
  Printing                                                                  
    Supplies                                            8,015         8,139 
    Commercial Hardware                                 2,752         2,968 
    Consumer Hardware                                   1,240         1,283 
                                                 ------------  ------------ 
     Total Printing                                    12,007        12,390 
                                                 ------------  ------------ 
      Total Printing and Personal Systems Group        27,795        30,752 
                                                 ------------  ------------ 
                                                                            
  Enterprise Group                                                          
    Industry Standard Servers                           5,800         6,258 
    Technology Services                                 4,515         4,599 
    Storage                                             1,690         1,945 
    Networking                                          1,226         1,200 
    Business Critical Systems                             572           826 
                                                 ------------  ------------ 
     Total Enterprise Group                            13,803        14,828 
                                                 ------------  ------------ 
                                                                            
  Enterprise Services                                                       
   Infrastructure Technology Outsourcing                7,457         7,934 
   Application and Business Services                    4,461         4,926 
                                                 ------------  ------------ 
     Total Enterprise Services                         11,918        12,860 
                                                 ------------  ------------ 
                                                                            
 Software                                               1,867         1,916 
                                                 ------------  ------------ 
                                                                            
 HP Financial Services                                  1,838         1,918 
                                                 ------------  ------------ 
                                                                            
 Corporate Investments                                     14            37 
                                                 ------------  ------------ 
     Total segments                                    57,235        62,311 
                                                 ------------  ------------ 
                                                                            
 Elimination of intersegment net revenue and                                
  other                                                (1,294)       (1,582)
                                                 ------------  ------------ 
                                                                            
  Total HP consolidated net revenue              $     55,941  $     60,729 
                                                 ============  ============ 
                                                                            
(a) HP has implemented certain organizational realignments in the first     
    quarter of fiscal 2013. As a result of these realignments, HP has re-   
    evaluated its segment financial reporting structure and, effective in   
    the first quarter of fiscal 2013, created two new financial reporting   
    segments, the Enterprise Group segment and the Enterprise Services      
    segment, and eliminated two other financial reporting segments, the     
    Enterprise Servers, Storage and Networking ("ESSN") segment and the     
    Services segment. The Enterprise Group segment consists of the business 
    units within the former ESSN segment and most of the services offerings 
    of the Technology Services ("TS") business unit, which was previously a 
    part of the former Services segment. The Enterprise Services segment    
    consists of the Applications and Business Services ("ABS") and          
    Infrastructure Technology Outsourcing ("ITO") business units from the   
    former Services segment, along with the end-user workplace support      
    services business that was previously a part of the TS business unit.   
    Taking into account these changes, HP has the following seven financial 
    reporting segments: Personal Systems, Printing, the Enterprise Group,   
    Enterprise Services, Software, HP Financial Services and Corporate      
    Investments.                                                            
                                                                            
    Also as a result of these realignments, the financial results of the    
    Personal Systems commercial products support business, which were       
    previously reported as part of the TS business unit, will now be        
    reported as part of the Other business unit within the Personal Systems 
    segment, and the financial results of the portion of the business       
    intelligence services business that had continued to be reported as part
    of the Corporate Investments segment following the implementation of    
    prior realignment actions will now be reported as part of the ABS       
    business unit. In addition, the end-user workplace support services     
    business, which, as noted above, was previously a part of the TS        
    business unit and will now become a part of the Enterprise Services     
    segment, will be reported as part of the ITO business unit within that  
    segment.                                                                
                                                                            
    To provide improved visibility and comparability, HP has reflected these
    changes to its reporting structure in prior financial reporting periods 
    on an as-if basis, which has resulted in the transfer of revenue and    
    operating profit among the Personal Systems, the Enterprise Group,      
    Enterprise Services and Corporate Investments segments. These changes   
    had no impact on the previously reported financial results for the      
    Printing, Software or HP Financial Services segments. In addition, none 
    of these changes impacted HP's previously reported consolidated net     
    revenue, earnings from operations, net earnings or net earnings per     
    share.                                                                  
                                                                            
(b) The Personal Systems segment and the Printing segment are structured    
    beneath a broader Printing and Personal Systems Group ("PPS"). While PPS
    is not a financial reporting segment, HP provides financial data        
    aggregating the segments within it in order to provide a supplementary  
    view of its business.                                                   
                                                                            
                                                                            
                                                                            
                  HEWLETT-PACKARD COMPANY AND SUBSIDIARIES                  
               SEGMENT NON-GAAP OPERATING MARGIN SUMMARY DATA               
                                (Unaudited)                                 
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            
                                           Three                            
                                           months      Change in Operating  
                                           ended          Margin (pts)      
                                         ---------   ---------------------- 
                                         April 30,                          
                                            2013         Q/Q         Y/Y    
                                         ---------   ----------  ---------- 
                                                                            
Non-GAAP operating margin:(a)                                               
  Personal Systems                             3.2%     0.5 pts    (2.2 pts)
  Printing                                    15.8%    (0.3 pts)    2.6 pts 
    Printing and Personal Systems                                           
     Group(b)                                  8.8%     0.5 pts     0.3 pts 
                                                                            
  Enterprise Group                            15.9%     0.4 pts    (2.0 pts)
  Enterprise Services                          2.6%     1.3 pts    (1.1 pts)
  Software                                    19.1%     2.1 pts     1.4 pts 
  HP Financial Services                       11.0%     0.4 pts     1.1 pts 
  Corporate Investments                     (560.0%)         NM          NM 
    Total segments                             9.4%     0.7 pts    (0.4 pts)
                                                                            
    Total HP consolidated non-GAAP                                          
     operating margin                          8.6%     0.7 pts    (0.3 pts)
                                                                            
(a) HP has implemented certain organizational realignments in the first     
    quarter of fiscal 2013. As a result of these realignments, HP has re-   
    evaluated its segment financial reporting structure and, effective in   
    the first quarter of fiscal 2013, created two new financial reporting   
    segments, the Enterprise Group segment and the Enterprise Services      
    segment, and eliminated two other financial reporting segments, the     
    Enterprise Servers, Storage and Networking ("ESSN") segment and the     
    Services segment. The Enterprise Group segment consists of the business 
    units within the former ESSN segment and most of the services offerings 
    of the Technology Services ("TS") business unit, which was previously a 
    part of the former Services segment. The Enterprise Services segment    
    consists of the Applications and Business Services ("ABS") and          
    Infrastructure Technology Outsourcing ("ITO") business units from the   
    former Services segment, along with the end-user workplace support      
    services business that was previously a part of the TS business unit.   
    Taking into account these changes, HP has the following seven financial 
    reporting segments: Personal Systems, Printing, the Enterprise Group,   
    Enterprise Services, Software, HP Financial Services and Corporate      
    Investments.                                                            
                                                                            
    Also as a result of these realignments, the financial results of the    
    Personal Systems commercial products support business, which were       
    previously reported as part of the TS business unit, will now be        
    reported as part of the Other business unit within the Personal Systems 
    segment, and the financial results of the portion of the business       
    intelligence services business that had continued to be reported as part
    of the Corporate Investments segment following the implementation of    
    prior realignment actions will now be reported as part of the ABS       
    business unit. In addition, the end-user workplace support services     
    business, which, as noted above, was previously a part of the TS        
    business unit and will now become a part of the Enterprise Services     
    segment, will be reported as part of the ITO business unit within that  
    segment.                                                                
                                                                            
    To provide improved visibility and comparability, HP has reflected these
    changes to its reporting structure in prior financial reporting periods 
    on an as-if basis, which has resulted in the transfer of revenue and    
    operating profit among the Personal Systems, the Enterprise Group,      
    Enterprise Services and Corporate Investments segments. These changes   
    had no impact on the previously reported financial results for the      
    Printing, Software or HP Financial Services segments. In addition, none 
    of these changes impacted HP's previously reported consolidated net     
    revenue, earnings from operations, net earnings or net earnings per     
    share.                                                                  
                                                                            
(b) The Personal Systems segment and the Printing segment are structured    
    beneath a broader Printing and Personal Systems Group ("PPS"). While PPS
    is not a financial reporting segment, HP provides financial data        
    aggregating the segments within it in order to provide a supplementary  
    view of its business.                                                   
                                                                            
                                                                            
                                                                            
                  HEWLETT-PACKARD COMPANY AND SUBSIDIARIES                  
                    CALCULATION OF NET EARNINGS PER SHARE                   
                                 (Unaudited)                                
                   (In millions except per share amounts)                   
                                                                            
                                                                            
                                                  Three months ended        
                                         -----------------------------------
                                          April 30,  January 31,  April 30, 
                                             2013        2013        2012   
                                         ----------- ----------- -----------
                                                                            
Numerator:                                                                  
  GAAP net earnings                      $     1,077 $     1,232 $     1,593
                                         =========== =========== ===========
  Non-GAAP net earnings                  $     1,698 $     1,605 $     1,949
                                         =========== =========== ===========
                                                                            
Denominator:                                                                
  Weighted-average shares used to                                           
   compute basic net earnings per share        1,935       1,953       1,979
  Dilutive effect of employee stock                                         
   plans                                          12           3           8
                                         ----------- ----------- -----------
    Weighted-average shares used to                                         
     compute diluted net earnings per                                       
     share                                     1,947       1,956       1,987
                                         =========== =========== ===========
                                                                            
GAAP net earnings per share:                                                
  Basic(a)                               $      0.56 $      0.63 $      0.80
  Diluted(c)                             $      0.55 $      0.63 $      0.80
                                                                            
Non-GAAP net earnings per share:                                            
  Basic(b)                               $      0.88 $      0.82 $      0.98
  Diluted(c)                             $      0.87 $      0.82 $      0.98
                                                                            
(a) GAAP basic earnings per share were calculated based on GAAP net earnings
    and the weighted-average number of shares outstanding during the        
    reporting period.                                                       
                                                                            
(b) Non-GAAP basic earnings per share were calculated based on non-GAAP net 
    earnings and the weighted-average number of shares  outstanding during  
    the reporting period.                                                   
                                                                            
(c) Diluted net earnings per share includes any dilutive effect of          
    outstanding stock options, performance-based restricted units,          
    restricted stock units and restricted stock.                            
                                                                            
                                                                            
                                                                            
                  HEWLETT-PACKARD COMPANY AND SUBSIDIARIES                  
                    CALCULATION OF NET EARNINGS PER SHARE                   
                                 (Unaudited)                                
                   (In millions except per share amounts)                   
                                                                            
                                                                            
                                                       Six months ended     
                                                          April 30,         
                                                 ---------------------------
                                                                            
                                                      2013          2012    
                                                 ------------- -------------
                                                                            
Numerator:                                                                  
  GAAP net earnings                              $       2,309 $       3,061
                                                 ============= =============
  Non-GAAP net earnings                          $       3,303 $       3,781
                                                 ============= =============
                                                                            
Denominator:                                                                
  Weighted-average shares used to compute basic                             
   net earnings per share and                            1,944         1,980
  Dilutive effect of employee stock plans                    8            15
                                                 ------------- -------------
    Weighted-average shares used to compute                                 
     diluted net earnings per share                      1,952         1,995
                                                 ============= =============
                                                                            
GAAP net earnings per share:                                                
  Basic(a)                                       $        1.19 $        1.55
  Diluted(c)                                     $        1.18 $        1.53
                                                                            
Non-GAAP net earnings per share:                                            
  Basic(b)                                       $        1.70 $        1.91
  Diluted(c)                                     $        1.69 $        1.90
                                                                            
(a) GAAP basic earnings per share were calculated based on GAAP net earnings
    and the weighted-average number of shares outstanding during the        
    reporting period.                                                       
                                                                            
(b) Non-GAAP basic earnings per share were calculated based on non-GAAP net 
    earnings and the weighted-average number of shares outstanding during   
    the reporting period.                                                   
                                                                            
(c) Diluted net earnings per share includes any dilutive effect of          
    outstanding stock options, performance-based restricted units,          
    restricted stock units and restricted stock.                            

Use of Non-GAAP Financial Measures
To supplement HP's consolidated condensed financial statements presented on a GAAP basis, HP provides non-GAAP operating profit, non-GAAP operating margin, non-GAAP net earnings, non-GAAP diluted earnings per share, gross cash, free cash flow, net debt and operating company net debt. HP also provides forecasts of non-GAAP diluted earnings per share. These non-GAAP financial measures are not in accordance with, or an alternative for, generally accepted accounting principles in the United States. The GAAP measure most directly comparable to non-GAAP operating profit is earnings from operations. The GAAP measure most directly comparable to non-GAAP operating margin is operating margin. The GAAP measure most directly comparable to non-GAAP net earnings is net earnings. The GAAP measure most directly comparable to non-GAAP diluted earnings per share is diluted net earnings per share. The GAAP measure most directly comparable to gross cash is cash and cash equivalents. The GAAP measure most directly comparable to free cash flow is cash flow from operations. The GAAP measure most directly comparable to net debt and operating company net debt is total company debt. Reconciliations of each of these non-GAAP financial measures to GAAP information are included in the tables above or elsewhere in the materials accompanying this news release.

Use and Economic Substance of Non-GAAP Financial Measures Used by HP
Non-GAAP operating profit and non-GAAP operating margin are defined to exclude the effects of any restructuring charges, charges relating to the impairment of goodwill and purchased intangible assets, charges relating to the amortization of purchased intangible assets, and acquisition-related charges recorded during the relevant period. Non-GAAP net earnings and non-GAAP diluted earnings per share consist of net earnings or diluted net earnings per share excluding those same charges. In addition, non-GAAP net earnings and non-GAAP diluted earnings per share are adjusted by the amount of additional taxes or tax benefit associated with each non-GAAP item. HP's management uses these non-GAAP financial measures for purposes of evaluating HP's historical and prospective financial performance, as well as HP's performance relative to its competitors. HP's management also uses these non-GAAP measures to further its own understanding of HP's segment operating performance. HP believes that excluding those items mentioned above from these non-GAAP financial measures allows HP management to better understand HP's consolidated financial performance in relationship to the operating results of HP's segments, as management does not believe that the excluded items are reflective of ongoing operating results. More specifically, HP's management excludes each of those items mentioned above for the following reasons:

Gross cash is a non-GAAP measure that is defined as cash and cash equivalents plus short-term investments and certain long-term investments that may be liquidated within 90 days pursuant to the terms of existing put options or similar rights. Free cash flow is defined as cash flow from operations less net capital expenditures. HP's management uses gross cash and free cash flow for the purpose of determining the amount of cash available for investment in HP's businesses, funding strategic acquisitions, repurchasing stock and other purposes. HP's management also uses gross cash and free cash flow for the purposes of evaluating HP's historical and prospective liquidity, as well as to further its own understanding of HP's segment operating results. Because gross cash includes liquid assets that are not included in GAAP cash and cash equivalents, HP believes that gross cash provides a more accurate and complete assessment of HP's liquidity and segment operating results. Because free cash flow includes the effect of capital expenditures that are not reflected in GAAP cash flow from operations, HP believes that free cash flow provides a more accurate and complete assessment of HP's liquidity and capital resources.

Operating company net debt is a non-GAAP measure that is defined as total company net debt less HP Financial Services ("HPFS") net debt. Total company net debt consists of total debt (including the effect of hedging) less gross cash, which includes cash and cash equivalents, short-term investments, and certain liquid long-term investments. HPFS net debt consists of HPFS debt, which includes primarily intercompany equity that is treated as debt for segment reporting purposes, intercompany debt and debt issued directly by HPFS, less HPFS cash. Total company net debt provides useful information to management about the state of HP's consolidated balance sheet. Operating company net debt provides additional useful information to management about the state of HP's consolidated balance sheet by providing more transparency into the financial components of the operating company separate from HP's financing business, which has different capital structure requirements and requires much greater leverage to run effectively.

Material Limitations Associated with Use of Non-GAAP Financial Measures
These non-GAAP financial measures may have limitations as analytical tools, and these measures should not be considered in isolation or as a substitute for analysis of HP's results as reported under GAAP. Some of the limitations in relying on these non-GAAP financial measures are:

Compensation for Limitations Associated with Use of Non-GAAP Financial Measures
HP compensates for the limitations on its use of non-GAAP operating profit, non-GAAP operating margin, non-GAAP net earnings, non-GAAP diluted earnings per share, gross cash, free cash flow, net debt and operating company net debt by relying primarily on its GAAP results and using non-GAAP financial measures only supplementally. HP also provides robust and detailed reconciliations of each non-GAAP financial measure to its most directly comparable GAAP measure within this press release and in other written materials that include these non-GAAP financial measures, and HP encourages investors to review carefully those reconciliations.

Usefulness of Non-GAAP Financial Measures to Investors
HP believes that providing non-GAAP operating profit, non-GAAP operating margin, non-GAAP net earnings, non-GAAP diluted earnings per share, gross cash, free cash flow, net debt and operating company net debt to investors in addition to the related GAAP measures provides investors with greater transparency to the information used by HP's management in its financial and operational decision-making and allows investors to see HP's results "through the eyes" of management. HP further believes that providing this information better enables HP's investors to understand HP's operating performance and to evaluate the efficacy of the methodology and information used by management to evaluate and measure such performance. Disclosure of these non-GAAP financial measures also facilitates comparisons of HP's operating performance with the performance of other companies in HP's industry that supplement their GAAP results with non-GAAP financial measures that are calculated in a similar manner.

© 2013 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice. HP shall not be liable for technical or editorial errors or omissions contained herein.

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