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HP Reports Third Quarter 2013 Results

PALO ALTO, CA -- (Marketwired) -- Aug 21, 2013 -- HP (NYSE: HPQ)

HP third quarter fiscal 2013 financial performance

                                                                            
                                             Q3 FY13   Q3 FY12      Y/Y     
GAAP net revenue ($B)                       $   27.2  $   29.7          (8%)
GAAP operating margin                            6.8%    (29.7%) 36.5 pts.  
GAAP net earnings (loss) ($B)               $    1.4  $   (8.9)             
GAAP diluted earnings (loss) per share      $   0.71  $  (4.49)             
Non-GAAP operating margin                        8.4%      9.2%  (0.8 pts.) 
Non-GAAP net earnings ($B)                  $    1.7  $    2.0         (15%)
Non-GAAP diluted earnings per share         $   0.86  $   1.00         (14%)
Cash flow from operations ($B)              $    2.7  $    2.8          (6%)
                                                                            

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 third fiscal quarter ended July 31, 2013. Third quarter GAAP diluted earnings per share (EPS) was $0.71, up from a GAAP diluted loss per share of $4.49 in the prior-year period and above its previously provided outlook of $0.56 to $0.59 per share. Third quarter non-GAAP diluted EPS was $0.86, down from $1.00 in the prior-year period and within its previously provided outlook of $0.84 to $0.87 per share. Third quarter non-GAAP earnings information excludes after-tax costs of $286 million, or $0.15 per diluted share, related to amortization of purchased intangible assets, restructuring charges and acquisition-related charges.

For the third quarter, net revenue of $27.2 billion was down 8% year over year and down 7% when adjusted for the effects of currency.

"We once again achieved the financial performance we said we would, delivering $0.86 in non-GAAP diluted earnings per share, within our previously provided outlook of $0.84 to $0.87," said Meg Whitman, HP president and chief executive officer. "I remain confident that we are making progress in our turnaround. We are already seeing significant improvement in our operations, we are successfully rebuilding our balance sheet, our cost structure is more closely aligned with our revenue and we have reignited innovation at HP, with a focus on the customer."

Outlook
For the full year fiscal 2013, HP estimates non-GAAP diluted EPS to be in the range of $3.53 to $3.57 and GAAP diluted EPS to be in the range of $2.67 to $2.71, in line with HP's previously communicated outlook. Full year fiscal 2013 non-GAAP diluted EPS estimates exclude after-tax costs of approximately $0.86 per share, related to the amortization of purchased intangible assets, restructuring charges and acquisition-related charges.

Asset management
HP generated $2.7 billion in cash flow from operations in the third quarter, down 6% from the prior-year period. Inventory ended the quarter at $6.5 billion, down 1 day year over year to 28 days. Accounts receivable ended the quarter at $14.3 billion, down 1 day year over year to 47 days. Accounts payable ended the quarter at $13.3 billion, up 7 days year over year to 57 days. HP's dividend payment of $0.1452 per share in the third quarter resulted in cash usage of $280 million. HP also utilized $3 million of cash during the quarter to repurchase approximately 168,000 shares of common stock in the open market. HP exited the quarter with $13.7 billion in gross cash.

Third 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 Q3 FY13 earnings conference call is accessible via an audio webcast at www.hp.com/investor/2013Q3webcast.

About HP
HP creates new possibilities for technology to have a meaningful impact on people, businesses, governments and society. With the broadest technology portfolio spanning printing, personal systems, software, services and IT infrastructure, HP delivers solutions for customers' most complex challenges in every region of the world. 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 April 30, 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 July 31, 2013. In particular, determining HP's actual tax balances and provisions as of July 31, 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         
                                         ---------------------------------- 
                                          July 31,    April 30,   July 31,  
                                            2013        2013        2012    
                                         ----------  ----------  ---------- 
                                                                            
Net revenue                              $   27,226  $   27,582  $   29,669 
                                                                            
Costs and expenses:                                                         
  Cost of sales                              20,859      21,055      22,820 
  Research and development                      797         815         854 
  Selling, general and administrative         3,274       3,342       3,366 
  Amortization of purchased intangible                                      
   assets                                       356         350         476 
  Impairment of goodwill and purchased                                      
   intangible assets                              -           -       9,188 
  Restructuring charges                          81         408       1,795 
  Acquisition-related charges                     4          11           3 
                                         ----------  ----------  ---------- 
    Total costs and expenses                 25,371      25,981      38,502 
                                         ----------  ----------  ---------- 
                                                                            
Earnings (loss) from operations               1,855       1,601      (8,833)
                                                                            
Interest and other, net                        (146)       (193)       (224)
                                         ----------  ----------  ---------- 
                                                                            
Earnings (loss) before taxes                  1,709       1,408      (9,057)
                                                                            
(Provision) benefit for taxes                  (319)       (331)        200 
                                         ----------  ----------  ---------- 
                                                                            
Net earnings (loss)                      $    1,390  $    1,077  $   (8,857)
                                         ==========  ==========  ========== 
                                                                            
Net earnings (loss) per share:                                              
  Basic                                  $     0.72  $     0.56  $    (4.49)
  Diluted                                $     0.71  $     0.55  $    (4.49)
                                                                            
Cash dividends declared per share        $     0.29  $        -  $     0.26 
                                                                            
                                                                            
Weighted-average shares used to compute                                     
 net earnings (loss) per share:                                             
  Basic                                       1,929       1,935       1,971 
  Diluted                                     1,948       1,947       1,971 
                                                                            
                                                                            
                                                                            
                  HEWLETT-PACKARD COMPANY AND SUBSIDIARIES                  
               CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS                
                                (Unaudited)                                 
                   (In millions except per share amounts)                   
                                                                            
                                                                            
                                                                            
                                                       Nine months ended    
                                                           July 31,         
                                                   ------------------------ 
                                                       2013         2012    
                                                   -----------  ----------- 
                                                                            
Net revenue                                        $    83,167  $    90,398 
                                                                            
Costs and expenses:                                                         
  Cost of sales                                         63,943       69,674 
  Research and development                               2,406        2,490 
  Selling, general and administrative                    9,916       10,273 
  Amortization of purchased intangible assets            1,056        1,412 
  Impairment of goodwill and purchased intangible                           
   assets                                                    -        9,188 
  Restructuring charges                                    619        1,888 
  Acquisition-related charges                               19           42 
                                                   -----------  ----------- 
    Total costs and expenses                            77,959       94,967 
                                                   -----------  ----------- 
                                                                            
Earnings (loss) from operations                          5,208       (4,569)
                                                                            
Interest and other, net                                   (518)        (688)
                                                   -----------  ----------- 
                                                                            
Earnings (loss) before taxes                             4,690       (5,257)
                                                                            
Provision for taxes                                       (991)        (539)
                                                   -----------  ----------- 
                                                                            
Net earnings (loss)                                $     3,699  $    (5,796)
                                                   ===========  =========== 
                                                                            
Net earnings (loss) per share:                                              
  Basic                                            $      1.91  $     (2.93)
  Diluted                                          $      1.89  $     (2.93)
                                                                            
Cash dividends declared per share                  $      0.55  $      0.50 
                                                                            
                                                                            
Weighted-average shares used to compute net                                 
 earnings (loss) per share:                                                 
  Basic                                                  1,939        1,977 
  Diluted                                                1,952        1,977 
                                                                            
                                                                            
                                                                            
                                                                            
                  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              months               Three            
                  months    Diluted   ended     Diluted   months    Diluted 
                  ended    earnings    April   earnings   ended    earnings 
                 July 31,     per       30,       per    July 31,     per   
                   2013      share     2013      share     2012      share  
                 --------  --------  --------  --------  --------  -------- 
                                                                            
GAAP net earnings                                                           
 (loss)          $  1,390  $   0.71  $  1,077  $   0.55  $ (8,857) $  (4.49)
                                                                            
Non-GAAP                                                                    
 adjustments:                                                               
  Amortization of                                                           
   purchased                                                                
   intangible                                                               
   assets             356      0.19       350      0.17       476      0.25 
  Impairment of                                                             
   goodwill and                                                             
   purchased                                                                
   intangible                                                               
   assets(a)            -         -         -         -     9,188      4.66 
  Restructuring                                                             
   charges             81      0.04       408      0.21     1,795      0.91 
  Acquisition-                                                              
   related                                                                  
   charges              4         -        11      0.01         3         - 
  Wind down of                                                              
   non-strategic                                                            
   businesses(b)        -         -         -         -       108      0.05 
  Adjustments for                                                           
   taxes(c)          (155)    (0.08)     (148)    (0.07)     (740)    (0.38)
                 --------  --------  --------  --------  --------  -------- 
Non-GAAP net                                                                
 earnings        $  1,676  $   0.86  $  1,698  $   0.87  $  1,973  $   1.00 
                 ========  ========  ========  ========  ========  ======== 
                                                                            
                                                                            
GAAP earnings                                                               
 (loss) from                                                                
 operations      $  1,855            $  1,601            $ (8,833)          
                                                                            
Non-GAAP                                                                    
 adjustments:                                                               
  Amortization of                                                           
   purchased                                                                
   intangible                                                               
   assets             356                 350                 476           
  Impairment of                                                             
   goodwill and                                                             
   purchased                                                                
   intangible                                                               
   assets(a)            -                   -               9,188           
  Restructuring                                                             
   charges             81                 408               1,795           
  Acquisition-                                                              
   related                                                                  
   charges              4                  11                   3           
  Wind down of                                                              
   non-strategic                                                            
   businesses(b)        -                   -                 108           
                 --------            --------            --------           
Non-GAAP earnings                                                           
 from operations $  2,296            $  2,370            $  2,737           
                 ========            ========            ========           
                                                                            
GAAP operating                                                              
 margin                 7%                  6%                (30%)         
Non-GAAP                                                                    
 adjustments            1%                  3%                 39%          
                 --------            --------            --------           
Non-GAAP                                                                    
 operating margin       8%                  9%                  9%          
                 ========            ========            ========           
                                                                            
                                                                            
(a) For the period ended July 31, 2012, represents a goodwill impairment    
    charge of $8 billion associated with the Enterprise Services segment and
    an intangible asset impairment charge of $1.2 billion associated with   
    the "Compaq" trade name.                                                
                                                                            
(b) For the period ended July 31, 2012, represents primarily contract-      
    related charges, including inventory write-downs, related to winding    
    down certain retail publishing business activities within the Printing  
    segment.                                                                
                                                                            
(c) For the period ended July 31, 2012, adjustments for taxes is net of a   
    valuation allowance of $823 million provided for certain deferred tax   
    assets related to the Enterprise Services segment.                      
                                                                            
                                                                            
                                                                            
                  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)                   
                                                                            
                                                                            
                                                                            
                                    Nine                  Nine              
                                   months                months             
                                   ended     Diluted     ended     Diluted  
                                 July 31,    earnings  July 31,    earnings 
                                    2013    per share     2012    per share 
                                 ---------  ---------  ---------  --------- 
                                                                            
GAAP net earnings (loss)         $   3,699  $    1.89  $  (5,796) $   (2.93)
                                                                            
Non-GAAP adjustments:                                                       
  Amortization of purchased                                                 
   intangible assets                 1,056       0.54      1,412       0.71 
  Impairment of goodwill and                                                
   purchased intangible                                                     
   assets(a)                             -          -      9,188       4.65 
  Restructuring charges                619       0.32      1,888       0.95 
  Acquisition-related charges           19       0.01         42       0.02 
  Wind down of non-strategic                                                
   businesses(b)                         -          -         72       0.04 
  Adjustments for taxes(c)            (414)     (0.21)    (1,052)     (0.55)
                                 ---------  ---------  ---------  --------- 
Non-GAAP net earnings            $   4,979  $    2.55  $   5,754  $    2.89 
                                 =========  =========  =========  ========= 
                                                                            
                                                                            
GAAP earnings (loss) from                                                   
 operations                      $   5,208             $  (4,569)           
                                                                            
Non-GAAP adjustments:                                                       
  Amortization of purchased                                                 
   intangible assets                 1,056                 1,412            
  Impairment of goodwill and                                                
   purchased intangible                                                     
   assets(a)                             -                 9,188            
  Restructuring charges                619                 1,888            
  Acquisition-related charges           19                    42            
  Wind down of non-strategic                                                
   businesses(b)                         -                    72            
                                 ---------             ---------            
Non-GAAP earnings from                                                      
 operations                      $   6,902             $   8,033            
                                 =========             =========            
                                                                            
GAAP operating margin                    6%                   (5%)          
Non-GAAP adjustments                     2%                   14%           
                                 ---------             ---------            
Non-GAAP operating margin                8%                    9%           
                                 =========             =========            
                                                                            
                                                                            
(a) For the period ended July 31, 2012, represents a goodwill impairment    
    charge of $8 billion associated with the Enterprise Services segment and
    an intangible asset impairment charge of $1.2 billion associated with   
    the "Compaq" trade name.                                                
                                                                            
(b) For the period ended July 31, 2012, represents primarily contract-      
    related charges, including inventory write-downs, related to winding    
    down certain retail publishing business activities within the Printing  
    segment net of adjustments to expenses for supplier-related obligations 
    related to winding down the webOS device business.                      
                                                                            
(c) For the period ended July 31, 2012, adjustments for taxes is net of a   
    valuation allowance of $823 million provided for certain deferred tax   
    assets related to the Enterprise Services segment.                      
                                                                            
                                                                            
                                                                            
                  HEWLETT-PACKARD COMPANY AND SUBSIDIARIES                  
                    CONSOLIDATED CONDENSED BALANCE SHEETS                   
                                (In millions)                               
                                                                            
                                                                            
                                                                            
                                                      July 31,   October 31,
                                                        2013         2012   
                                                    -----------  -----------
                                                    (Unaudited)             
ASSETS                                                                      
                                                                            
Current assets:                                                             
  Cash and cash equivalents                         $    13,251  $    11,301
  Accounts receivable                                    14,336       16,407
  Financing receivables                                   3,113        3,252
  Inventory                                               6,540        6,317
  Other current assets                                   12,718       13,360
                                                    -----------  -----------
                                                                            
    Total current assets                                 49,958       50,637
                                                    -----------  -----------
                                                                            
Property, plant and equipment                            11,328       11,954
                                                                            
Long-term financing receivables and other assets          9,913       10,593
                                                                            
Goodwill and purchased intangible assets                 34,601       35,584
                                                    -----------  -----------
                                                                            
Total assets                                        $   105,800  $   108,768
                                                    ===========  ===========
                                                                            
                                                                            
LIABILITIES AND STOCKHOLDERS' EQUITY                                        
                                                                            
Current liabilities:                                                        
  Notes payable and short-term borrowings           $     7,624  $     6,647
  Accounts payable                                       13,293       13,350
  Employee compensation and benefits                      4,075        4,058
  Taxes on earnings                                         979          846
  Deferred revenue                                        6,571        7,494
  Other accrued liabilities                              13,470       14,271
                                                    -----------  -----------
                                                                            
    Total current liabilities                            46,012       46,666
                                                    -----------  -----------
                                                                            
Long-term debt                                           17,124       21,789
                                                                            
Other liabilities                                        17,686       17,480
                                                                            
Stockholders' equity:                                                       
  HP stockholders' equity                                24,603       22,436
  Non-controlling interests                                 375          397
                                                    -----------  -----------
                                                                            
    Total stockholders' equity                           24,978       22,833
                                                    -----------  -----------
                                                                            
Total liabilities and stockholders' equity          $   105,800  $   108,768
                                                    ===========  ===========
                                                                            
                                                                            
                                                                            
                  HEWLETT-PACKARD COMPANY AND SUBSIDIARIES                  
              CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS               
                                (Unaudited)                                 
                               (In millions)                                
                                                                            
                                                                            
                                                                            
                                                 Three months   Nine months 
                                                     ended         ended    
                                                   July 31,      July 31,   
                                                     2013          2013     
                                                 ------------  ------------ 
                                                                            
Cash flows from operating activities:                                       
  Net earnings                                   $      1,390  $      3,699 
  Adjustments to reconcile net earnings to net                              
   cash provided by operating activities:                                   
    Depreciation and amortization                       1,158         3,491 
    Stock-based compensation expense                      107           398 
    Provision for bad debt and inventory                   48           265 
    Restructuring charges                                  81           619 
    Deferred taxes on earnings                             70           542 
    Excess tax benefit from stock-based                                     
     compensation                                          (1)           (1)
    Other, net                                            117           343 
                                                                            
    Changes in operating assets and liabilities:                            
      Accounts and financing receivables                  492         2,640 
      Inventory                                          (585)         (445)
      Accounts payable                                    980           (70)
      Taxes on earnings                                   (94)         (520)
      Restructuring                                      (242)         (644)
      Other assets and liabilities                       (847)       (1,525)
                                                 ------------  ------------ 
        Net cash provided by operating                                      
         activities                                     2,674         8,792 
                                                 ------------  ------------ 
                                                                            
Cash flows from investing activities:                                       
    Investment in property, plant and equipment          (880)       (2,280)
    Proceeds from sale of property, plant and                               
     equipment                                            233           507 
    Purchases of available-for-sale securities                              
     and other investments                               (296)         (793)
    Maturities and sales of available-for-sale                              
     securities and other investments                     282           874 
    Payments made in connection with business                               
     acquisitions, net of cash acquired                     -          (167)
                                                 ------------  ------------ 
        Net cash used in investing activities            (661)       (1,859)
                                                 ------------  ------------ 
                                                                            
Cash flows from financing activities:                                       
    Repayment of commercial paper and notes                                 
     payable, net                                         (37)         (170)
    Issuance of debt                                       55           254 
    Payment of debt                                    (1,805)       (3,473)
    Issuance of common stock under employee                                 
     stock plans                                           67           279 
    Repurchase of common stock                             (3)       (1,053)
    Excess tax benefit from stock-based                                     
     compensation                                           1             1 
    Cash dividends paid                                  (280)         (821)
                                                 ------------  ------------ 
        Net cash used in financing activities          (2,002)       (4,983)
                                                 ------------  ------------ 
                                                                            
Increase in cash and cash equivalents                      11         1,950 
Cash and cash equivalents at beginning of period       13,240        11,301 
                                                 ------------  ------------ 
Cash and cash equivalents at end of period       $     13,251  $     13,251 
                                                 ============  ============ 
                                                                            
                                                                            
                                                                            
                  HEWLETT-PACKARD COMPANY AND SUBSIDIARIES                  
                            SEGMENT INFORMATION                             
                                (Unaudited)                                 
                               (In millions)                                
                                                                            
                                                                            
                                                                            
                                                Three months ended          
                                      ------------------------------------- 
                                        July 31,    April 30,     July 31,  
                                          2013         2013         2012    
                                      -----------  -----------  ----------- 
Net revenue:(a)                                                             
                                                                            
  Personal Systems                    $     7,704  $     7,584  $     8,636 
  Printing                                  5,803        6,081        6,017 
                                      -----------  -----------  ----------- 
    Total Printing and Personal                                             
     Systems Group(b)                      13,507       13,665       14,653 
  Enterprise Group                          6,786        6,819        7,492 
  Enterprise Services                       5,843        5,999        6,397 
  Software                                    982          941          973 
  HP Financial Services                       879          881          935 
  Corporate Investments                         5           10           11 
                                      -----------  -----------  ----------- 
  Total segments                           28,002       28,315       30,461 
  Elimination of intersegment net                                           
   revenue and other                         (776)        (733)        (792)
                                      -----------  -----------  ----------- 
                                                                            
    Total HP consolidated net revenue $    27,226  $    27,582  $    29,669 
                                      ===========  ===========  =========== 
                                                                            
Earnings before taxes:(a)                                                   
                                                                            
  Personal Systems                    $       228  $       239  $       405 
  Printing                                    908          958          949 
                                      -----------  -----------  ----------- 
    Total Printing and Personal                                             
     Systems Group(b)                       1,136        1,197        1,354 
  Enterprise Group                          1,033        1,082        1,284 
  Enterprise Services                         192          156          240 
  Software                                    201          180          175 
  HP Financial Services                        99           97           97 
  Corporate Investments                       (58)         (56)         (57)
                                      -----------  -----------  ----------- 
    Total segment earnings from                                             
     operations                             2,603        2,656        3,093 
                                                                            
  Corporate and unallocated costs and                                       
   eliminations                              (200)        (179)        (314)
  Unallocated costs related to stock-                                       
   based compensation expense                (107)        (107)        (150)
  Amortization of purchased                                                 
   intangible assets                         (356)        (350)        (476)
  Impairment of goodwill and                                                
   purchased intangible assets                  -            -       (9,188)
  Restructuring charges                       (81)        (408)      (1,795)
  Acquisition-related charges                  (4)         (11)          (3)
  Interest and other, net                    (146)        (193)        (224)
                                      -----------  -----------  ----------- 
                                                                            
    Total HP consolidated earnings                                          
     (loss) before taxes              $     1,709  $     1,408  $    (9,057)
                                      ===========  ===========  =========== 
                                                                            
(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)                                
                                                                            
                                                                            
                                                       Nine months ended    
                                                           July 31,         
                                                   ------------------------ 
                                                       2013         2012    
                                                   -----------  ----------- 
Net revenue:(a)                                                             
                                                                            
  Personal Systems                                 $    23,492  $    26,998 
  Printing                                              17,810       18,407 
                                                   -----------  ----------- 
    Total Printing and Personal Systems Group(b)        41,302       45,405 
  Enterprise Group                                      20,589       22,320 
  Enterprise Services                                   17,761       19,257 
  Software                                               2,849        2,889 
  HP Financial Services                                  2,717        2,853 
  Corporate Investments                                     19           48 
                                                   -----------  ----------- 
    Total Segments                                      85,237       92,772 
  Elimination of intersegment net revenue and                               
   other                                                (2,070)      (2,374)
                                                   -----------  ----------- 
                                                                            
    Total HP consolidated net revenue              $    83,167  $    90,398 
                                                   ===========  =========== 
                                                                            
Earnings before taxes:(a)                                                   
                                                                            
  Personal Systems                                 $       690  $     1,380 
  Printing                                               2,819        2,518 
                                                   -----------  ----------- 
    Total Printing and Personal Systems Group(b)         3,509        3,898 
  Enterprise Group                                       3,199        3,965 
  Enterprise Services                                      424          622 
  Software                                                 538          509 
  HP Financial Services                                    297          284 
  Corporate Investments                                   (179)        (155)
                                                   -----------  ----------- 
    Total segment earnings from operations               7,788        9,123 
                                                                            
  Corporate and unallocated costs and eliminations        (488)        (670)
  Unallocated costs related to stock-based                                  
   compensation expense                                   (398)        (492)
  Amortization of purchased intangible assets           (1,056)      (1,412)
  Impairment of goodwill and purchased intangible                           
   assets                                                    -       (9,188)
  Restructuring charges                                   (619)      (1,888)
  Acquisition-related charges                              (19)         (42)
  Interest and other, net                                 (518)        (688)
                                                   -----------  ----------- 
                                                                            
    Total HP consolidated earnings (loss) before                            
     taxes                                         $     4,690  $    (5,257)
                                                   ===========  =========== 
                                                                            
(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             (%)       
                            -------------------------------  -------------  
                             July 31,  April 30,   July 31,                 
                               2013       2013       2012     Q/Q     Y/Y   
                            ---------  ---------  ---------  -----   -----  
Net revenue:(a)                                                             
                                                                            
  Printing and Personal                                                     
   Systems Group(b)                                                         
    Personal Systems                                                        
      Notebooks             $   3,722  $   3,718  $   4,416      0%    (16%)
      Desktops                  3,147      3,103      3,486      1%    (10%)
      Workstations                537        521        526      3%      2% 
      Other                       298        242        208     23%     43% 
                            ---------  ---------  ---------                 
        Total Personal                                                      
         Systems                7,704      7,584      8,636      2%    (11%)
                            ---------  ---------  ---------                 
                                                                            
    Printing                                                                
      Supplies                  3,839      4,122      4,005     (7%)    (4%)
      Commercial Hardware       1,399      1,398      1,445      0%     (3%)
      Consumer Hardware           565        561        567      1%      0% 
                            ---------  ---------  ---------                 
        Total Printing          5,803      6,081      6,017     (5%)    (4%)
                            ---------  ---------  ---------                 
          Total Printing                                                    
           and Personal                                                     
           Systems Group       13,507     13,665     14,653     (1%)    (8%)
                            ---------  ---------  ---------                 
                                                                            
    Enterprise Group                                                        
      Industry Standard                                                     
       Servers                  2,851      2,806      3,187      2%    (11%)
      Technology Services       2,174      2,272      2,349     (4%)    (7%)
      Storage                     833        857        924     (3%)   (10%)
      Networking                  644        618        647      4%      0% 
      Business Critical                                                     
       Systems                    284        266        385      7%    (26%)
                            ---------  ---------  ---------                 
        Total Enterprise                                                    
         Group                  6,786      6,819      7,492      0%     (9%)
                            ---------  ---------  ---------                 
                                                                            
    Enterprise Services                                                     
      Infrastructure                                                        
       Technology                                                           
       Outsourcing              3,662      3,721      3,934     (2%)    (7%)
      Application and                                                       
       Business Services        2,181      2,278      2,463     (4%)   (11%)
                            ---------  ---------  ---------                 
        Total Enterprise                                                    
         Services               5,843      5,999      6,397     (3%)    (9%)
                            ---------  ---------  ---------                 
                                                                            
    Software                      982        941        973      4%      1% 
                            ---------  ---------  ---------                 
                                                                            
    HP Financial Services         879        881        935      0%     (6%)
                            ---------  ---------  ---------                 
                                                                            
    Corporate Investments           5         10         11    (50%)   (55%)
                            ---------  ---------  ---------                 
        Total segments         28,002     28,315     30,461     (1%)    (8%)
                            ---------  ---------  ---------                 
                                                                            
    Elimination of                                                          
     intersegment net                                                       
     revenue and other           (776)      (733)      (792)     6%     (2%)
                            ---------  ---------  ---------                 
                                                                            
      Total HP consolidated                                                 
       net revenue          $  27,226  $  27,582  $  29,669     (1%)    (8%)
                            =========  =========  =========  =====   =====  
                                                                            
(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)                                
                                                                            
                                                                            
                                                       Nine months ended    
                                                           July 31,         
                                                   ------------------------ 
                                                       2013         2012    
                                                   -----------  ----------- 
                                                                            
Net revenue:(a)                                                             
                                                                            
  Printing and Personal Systems Group(b)                                    
    Personal Systems                                                        
      Notebooks                                    $    11,568  $    14,258 
      Desktops                                           9,571       10,519 
      Workstations                                       1,593        1,598 
      Other                                                760          623 
                                                   -----------  ----------- 
        Total Personal Systems                          23,492       26,998 
                                                   -----------  ----------- 
                                                                            
    Printing                                                                
      Supplies                                          11,854       12,144 
      Commercial Hardware                                4,151        4,413 
      Consumer Hardware                                  1,805        1,850 
                                                   -----------  ----------- 
        Total Printing                                  17,810       18,407 
                                                   -----------  ----------- 
          Total Printing and Personal Systems                               
           Group                                        41,302       45,405 
                                                   -----------  ----------- 
                                                                            
    Enterprise Group                                                        
      Industry Standard Servers                          8,651        9,445 
      Technology Services                                6,689        6,948 
      Storage                                            2,523        2,869 
      Networking                                         1,870        1,847 
      Business Critical Systems                            856        1,211 
                                                   -----------  ----------- 
        Total Enterprise Group                          20,589       22,320 
                                                   -----------  ----------- 
                                                                            
    Enterprise Services                                                     
    Infrastructure Technology Outsourcing               11,119       11,868 
    Application and Business Services                    6,642        7,389 
                                                   -----------  ----------- 
    Total Enterprise Services                           17,761       19,257 
                                                   -----------  ----------- 
                                                                            
    Software                                             2,849        2,889 
                                                   -----------  ----------- 
                                                                            
    HP Financial Services                                2,717        2,853 
                                                   -----------  ----------- 
                                                                            
    Corporate Investments                                   19           48 
                                                   -----------  ----------- 
        Total segments                                  85,237       92,772 
                                                   -----------  ----------- 
                                                                            
    Elimination of intersegment net revenue and                             
     other                                              (2,070)      (2,374)
                                                   -----------  ----------- 
                                                                            
      Total HP consolidated net revenue            $    83,167  $    90,398 
                                                   ===========  =========== 
                                                                            
(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)      
                                      -------------  ---------------------- 
                                         July 31,                           
                                           2013          Q/Q         Y/Y    
                                      -------------  ----------  ---------- 
                                                                            
Non-GAAP operating margin:(a)                                               
  Personal Systems                             3.0%    (0.2 pts)   (1.7 pts)
  Printing                                    15.6%    (0.2 pts)   (0.2 pts)
    Printing and Personal Systems                                           
     Group(b)                                  8.4%    (0.4 pts)   (0.8 pts)
                                                                            
  Enterprise Group                            15.2%    (0.7 pts)   (1.9 pts)
  Enterprise Services                          3.3%     0.7 pts    (0.5 pts)
  Software                                    20.5%     1.4 pts     2.5 pts 
  HP Financial Services                       11.3%     0.3 pts     0.9 pts 
  Corporate Investments                          NM          NM          NM 
    Total segments                             9.3%    (0.1 pts)   (0.8 pts)
                                                                            
    Total HP consolidated non-GAAP                                          
     operating margin                          8.4%    (0.2 pts)   (0.8 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         
                                         ---------------------------------- 
                                          July 31,    April 30,   July 31,  
                                            2013        2013        2012    
                                         ----------  ----------  ---------- 
                                                                            
Numerator:                                                                  
  GAAP net earnings (loss)               $    1,390  $    1,077  $   (8,857)
                                         ==========  ==========  ========== 
  Non-GAAP net earnings                  $    1,676  $    1,698  $    1,973 
                                         ==========  ==========  ========== 
                                                                            
Denominator:                                                                
  Weighted-average shares used to                                           
   compute basic net earnings (loss) per                                    
   share and diluted net (loss) per                                         
   share                                      1,929       1,935       1,971 
  Dilutive effect of employee stock                                         
   plans                                         19          12           4 
                                         ----------  ----------  ---------- 
    Weighted-average shares used to                                         
     compute diluted net earnings per                                       
     share                                    1,948       1,947       1,975 
                                         ==========  ==========  ========== 
                                                                            
GAAP net earnings (loss) per share:                                         
  Basic                                  $     0.72  $     0.56  $    (4.49)
  Diluted(a)                             $     0.71  $     0.55  $    (4.49)
                                                                            
Non-GAAP net earnings per share:                                            
  Basic                                  $     0.87  $     0.88  $     1.00 
  Diluted(b)                             $     0.86  $     0.87  $     1.00 
                                                                            
                                                                            
                                                                            
(a) GAAP diluted net earnings per share reflects any dilutive effect of     
    outstanding stock options, performance-based restricted units,          
    restricted stock units and restricted stock, but that effect is excluded
    when calculating GAAP diluted net (loss) per share because it would be  
    anti-dilutive.                                                          
                                                                            
(b) Non-GAAP diluted net earnings per share reflects 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)                   
                                                                            
                                                                            
                                                       Nine months ended    
                                                           July 31,         
                                                   ------------------------ 
                                                       2013         2012    
                                                   -----------  ----------- 
                                                                            
Numerator:                                                                  
  GAAP net earnings (loss)                         $     3,699  $    (5,796)
                                                   ===========  =========== 
  Non-GAAP net earnings                            $     4,979  $     5,754 
                                                   ===========  =========== 
                                                                            
Denominator:                                                                
  Weighted-average shares used to compute basic                             
   net earnings (loss) per share and diluted net                            
   (loss) per share                                      1,939        1,977 
  Dilutive effect of employee stock plans                   13           15 
                                                   -----------  ----------- 
    Weighted-average shares used to compute                                 
     diluted net earnings per share                      1,952        1,992 
                                                   ===========  =========== 
                                                                            
GAAP net earnings (loss) per share:                                         
  Basic                                            $      1.91  $     (2.93)
  Diluted(a)                                       $      1.89  $     (2.93)
                                                                            
Non-GAAP net earnings per share:                                            
  Basic                                            $      2.57  $      2.91 
  Diluted(b)                                       $      2.55  $      2.89 
                                                                            
                                                                            
(a) GAAP diluted net earnings per share reflects any dilutive effect of     
    outstanding stock options, performance-based restricted units,          
    restricted stock units and restricted stock, but that effect is excluded
    when calculating GAAP diluted net (loss) per share because it would be  
    anti-dilutive.                                                          
                                                                            
(b) Non-GAAP diluted net earnings per share reflects 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, acquisition-related charges and charges related to the wind-down of HP businesses 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 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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