HP Reports Fourth Quarter and Full Year 2012 Results

HP Reports Fourth Quarter and Full Year 2012 Results 
PALO ALTO, CA -- (Marketwire) -- 11/20/12 --  HP (NYSE: HPQ)  


 
--  Full year fiscal 2012 non-GAAP diluted earnings per share of $4.05,
    within the previously provided outlook of $4.05 to $4.07
--  Full year fiscal 2012 GAAP loss per share of $6.41
--  Full year fiscal 2012 net revenue of $120.4 billion, down 5% from the
    prior-year period and down 4% when adjusted for the effects of
    currency
--  Fourth quarter non-GAAP diluted earnings per share of $1.16, down 1%
    from the prior-year period
--  Fourth quarter GAAP loss per share of $3.49
--  Fourth quarter net revenue of $30.0 billion, down 7% from the
    prior-year period and down 4% when adjusted for the effects of
    currency
--  Cash flow from operations of $4.1 billion, up 69% from the prior-year
    period
--  Returned $384 million in cash to shareholders in the form of dividends
    and share repurchases
--  Fourth quarter and full year fiscal 2012 results include a non-cash
    goodwill and intangible asset impairment charge of $8.8 billion
    relating to the Autonomy business within the Software segment

 
                                                                            
HP fourth quarter and full year 2012 financial performance                  
                                                                            
                      Q4FY12  Q4FY11     Y/Y       FY12    FY11      Y/Y    
GAAP net revenue                                                            
 ($B)                   $30.0  $32.1        (7%)  $120.4  $127.2        (5%)
GAAP operating                                                              
 margin               (21.7%)   2.5% (24.2 pts.)  (9.2%)    7.6% (16.8 pts.)
GAAP net (loss)                                                             
 earnings ($B)         ($6.9)   $0.2             ($12.7)    $7.1            
GAAP (loss) diluted                                                         
 EPS                  ($3.49)  $0.12             ($6.41)   $3.32            
Non-GAAP operating                                                          
 margin                 10.4%   9.7%    0.7 pts.    9.3%   10.8%  (1.5 pts.)
Non-GAAP net                                              
                  
 earnings ($B)           $2.3   $2.4        (3%)    $8.0   $10.4       (23%)
Non-GAAP diluted                                                            
 EPS                    $1.16  $1.17        (1%)   $4.05   $4.88       (17%)
                                                                            
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 fourth fiscal quarter and
full fiscal year ended Oct. 31, 2012. 
For the full year fiscal 2012, net revenue of $120.4 billion was down
5% from the prior-year period and down 4% when adjusted for the
effects of currency.  
Full-year GAAP loss per share was $6.41, down from diluted earnings
per share (EPS) of $3.32 in the prior-year period. Full-year non-GAAP
diluted EPS was $4.05, down 17% from the prior-year period. Full year
non-GAAP earnings information excludes after tax costs of $20.7
billion, or $10.46 per diluted share, related to the impairment of
goodwill and purchased intangible assets, restructuring charges,
amortization of purchased intangible assets, charges relating to the
wind down of non-strategic businesses and acquisition-related
charges. 
For the fourth quarter, net revenue of $30.0 billion was down 7% year
over year and down 4% when adjusted for the effects of currency.  
Fourth quarter GAAP loss per share was $3.49, down from diluted EPS
of $0.12 in the prior-year period. Fourth quarter non-GAAP diluted
EPS was $1.16, down 1% from the prior-year period. Fourth quarter
non-GAAP earnings information excludes after-tax costs of $9.1
billion, or $4.65 per diluted share, related to the impairment of
goodwill and purchased intangible assets, restructuring charges,
amortization of purchased intangible assets and acquisition-related
charges.  
"As we discussed during our Securities Analyst Meeting last month,
fiscal 2012 was the first year in a multiyear journey to turn HP
around," said Meg Whitman, HP president and chief executive officer.
"We're starting to see progress in key areas, such as new product
releases and customer wins. We're particularly pleased that in Q4, we
were able to improve our balance sheet, generating $4.1 billion in
operating cash flow, and we returned $384 million to shareholders in
the form of share repurchases and dividends." 
Fourth Fiscal Quarter 2012 Business Group Results 


 
--  Personal Systems revenue was down 14% year over year with a 3.5%
    operating margin. Commercial revenue decreased 13%, and Consumer
    revenue declined 16%. Total units were down 12% with both Desktops and
    Notebooks units down 12%.
    
    
--  Printing revenue declined 5% year over year with a 17.5% operating
    margin. Total hardware units were down 20% year over year. Commercial
    hardware units were down 15% year over year, and Consumer hardware
    units were down 22% year over year.
    
    
--  Services revenue declined 6% year over year with a 14.2% operating
    margin. Technology Services revenue was down 4% year over year,
    Application and Business Services revenue was down 7% year over year,
    and IT Outsourcing revenue declined 6% year over year.
    
    
--  Enterprise Servers, Storage and Networking (ESSN) revenue declined 9%
    year over year with an 8.3% operating margin. Networking revenue was
    up 7%, Industry Standard Servers revenue was down 7%, Business
    Critical Systems revenue was down 25%, and Storage revenue was down
    13% year over year.
    
    
--  Software revenue grew 14% year over year with a 27.2% operating
    margin, including the results of Autonomy. Software revenue was driven
    by 9% license growth, 9% support growth, and 48% growth in services.
    
    
--  HP Financial Services revenue grew 1% year over year as a 3% increase
    in net portfolio assets was offset by an 11% decrease in financing
    volume. The business delivered a 10.8% operating margin.

  
Asset Management
 HP generated $4.1 billion in cash flow from
operations in the fourth quarter. Inventory ended the quarter at $6.3
billion, with days of inventory down 2 days year over year to 25
days. Accounts receivable of $16.4 billion was down 2 days year over
year to 49 days. Accounts payable ended the quarter at $13.4 billion,
up 1 day from the prior-year period to 53 days. HP's dividend payment
of $0.132 per share in the fourth quarter resulted in cash usage of
$260 million. HP also utilized $124 million of cash during the
quarter to repurchase approximately 7.6 million shares of common
stock in the open market. HP exited the quarter with $11.8 billion in
gross cash. 
HP recorded a non-cash charge for the impairment of goodwill and
intangible assets within its Software segment of approximately $8.8
billion in the fourth quarter of its 2012 fiscal year. The majority
of this impairment charge is linked to serious accounting
improprieties, disclosure failures and outright misrepresentations at
Autonomy Corporation plc that occurred prior to HP's acquisition of
Autonomy and the associated impact of those improprieties, failures
and misrepresentations on the expected future financial performance
o
f the Autonomy business over the long-term. The balance of the
impairment charge is linked to the recent trading value of HP stock.
There will be no cash impact associated with the impairment charge. 
Outlook
 For the first quarter of fiscal 2013, HP estimates non-GAAP
diluted EPS to be in the range of $0.68 to $0.71 and GAAP diluted EPS
to be in the range of $0.34 to $0.37.  
First quarter fiscal 2013 non-GAAP diluted EPS estimates exclude
after-tax costs of approximately $0.34 per share, related primarily
to the amortization of purchased intangible assets, restructuring
charges and acquisition-related charges. 
For the full year fiscal 2013, HP estimates a non-GAAP diluted EPS to
be in the range of $3.40 to $3.60 and GAAP diluted EPS to be in the
range of $2.10 to $2.30, in line with HP's previously communicated
outlook. 
Full year fiscal 2013 non-GAAP diluted EPS estimates exclude
after-tax costs of approximately $1.30 per share, related primarily
to the amortization of purchased intangible assets, restructuring
charges and acquisition-related charges.  
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 Q4 FY12 earnings conference call is accessible via an audio
webcast at www.hp.com/investor/2012Q4webcast. 
About HP
 HP creates new possibilities for technology to have a
meaningful impact on people, businesses, governments and society. The
world's largest technology company, HP brings together a portfolio
that spans printing, personal computing, software, services and IT
infrastructure to solve customer problems. More information about HP
is available at http://www.hp.com. 
Use of non-GAAP financial information
 To supplement HP's
consolidated condensed financial statements presented on a GAAP
basis, HP provides non-GAAP net revenue, non-GAAP operating profit,
non-GAAP operating margin, non-GAAP net earnings, non-GAAP diluted
earnings per share, gross cash and free cash flow. 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. 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 revenue, operating profit, operating margin, net
earnings, diluted earnings per share, cash and cash equivalents or
cash flow from operations 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 impact of
macroeconomic and geopolitical trends and events; the competitive
pressures faced by HP's businesses; 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 protection of HP's
intellectual property assets, including intellectual property
licensed from third parties; integration and other risks associated
with business combination and investment transactions; the hiring and
retention of key employees; assumptions related to pension and other
post-retirement costs and retirement programs; 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, 2011
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 July 31, 2012. 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-K for the
fiscal year ended October 31, 2012. In particular, determining HP's
actual tax balances and provisions as of October 31, 2012 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-K. 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            
                                   ---------------------------------------- 
                                    October 31,    July 31,     October 31, 
                               
        2012          2012          2011     
                                   ------------  ------------  ------------ 
                                                                            
Net revenue                        $     29,959  $     29,669  $     32,122 
                                                                            
Costs and expenses:(a)                                                      
  Cost of sales                          22,711        22,820        25,304 
  Research and development                  909           854           829 
  Selling, general and                                                      
   administrative                         3,227         3,366         3,605 
  Amortization of purchased                                                 
   intangible assets                        372           476           411 
  Impairment of goodwill and                                                
   purchased intangible assets            8,847         9,188           885 
  Restructuring charges                     378         1,795           179 
  Acquisition-related charges                 3             3           114 
                                   ------------  ------------  ------------ 
    Total costs and expenses             36,447        38,502        31,327 
                                   ------------  ------------  ------------ 
                                                                            
(Loss) earnings from operations          (6,488)       (8,833)          795 
                                                                            
Interest and other, net                    (188)         (224)         (401)
                                   ------------  ------------  ------------ 
                                                                            
(Loss) earnings before taxes             (6,676)       (9,057)          394 
                                                                            
Provision (benefit) for taxes               178          (200)          155 
                                   ------------  ------------  ------------ 
                                                                            
Net (loss) earnings                $     (6,854) $     (8,857) $        239 
                                   ============  ============  ============ 
                                                                            
Net (loss) earnings per share:                                              
  Basic                            $      (3.49) $      (4.49) $       0.12 
  Diluted                          $      (3.49) $      (4.49) $       0.12 
                                                                            
Cash dividends declared per share  $          -  $       0.26  $          - 
                                                                            
Weighted-average shares used to                                             
 compute net (loss) earnings per                                            
 share:                                                                     
  Basic                                   1,964         1,971         1,989 
  Diluted                                 1,964         1,971         2,005 
                                                                            
(a)  In connection with organizational realignments implemented in the first
     quarter of fiscal year 2012, certain costs previously reported as Cost 
     of sales have been reclassified as Selling, general and administrative 
     expenses to better align those costs with the functional areas that    
     benefit from those expenditures.                                       
                                                                            
                                                                            
                                                                            
                  HEWLETT-PACKARD COMPANY AND SUBSIDIARIES                  
               CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS                
                   (In millions except per share amounts)                   
                                                                            
                                                                            
                                                      Twelve months ended   
                                                          October 31,       
                                                   ------------------------ 
                                                       2012         2011    
                                                   -----------  ----------- 
                                                   (Unaudited)              
                                                                            
Net revenue                                        $   120,357  $   127,245 
                                                                            
Costs and expenses:(a)                                                      
  Cost of sales                                         92,385       97,418 
  Research and development                               3,399        3,254 
  Selling, general and administrative                   13,500       13,577 
  Amortization of purchased intangible assets            1,784        1,607 
  Impairment of goodwill and purchased intangible                           
   assets                                               18,035          885 
  Restructuring charges                                  2,266          645 
  Acquisition-related charges                               45          182 
                                                   -----------  ----------- 
    Total costs and expenses                           131,414      117,568 
                                                   -----------  ----------- 
                                                                            
(Loss) earnings from operations                        (11,057)       9,677 
                                                                            
Interest and other, net                                   (876)        (695)
                                                   -----------  ----------- 
                                                                            
(Loss) earnings before taxes                           (11,933)       8,982 
                                                                            
Provision for taxes                                        717        1,908 
                                                   -----------  ----------- 
                                                                            
Net (loss) earnings                                $   (12,650) $     7,074 
                                                   ===========  =========== 
                                                                            
Net (loss) earnings per share:                                              
  Basic                                            $     (6.41) $      3.38 
  Diluted                                          $     (6.41) $      3.32 
                                                                            
Cash dividends declared per share                  $      0.50  $      0.40 
                                                                            
Weighted-average shares used to compute net (loss)                          
 earnings per share:                                                        
  Basic                                                  1,974        2,094 
  Diluted                                                1,974        2,128 
                                                                            
(a)  In connection with organizational realignments implemented in the first
     quarter of fiscal year 2012,
 certain costs previously reported as Cost 
     of sales have been reclassified as Selling, general and administrative 
     expenses to better align those costs with the functional areas that    
     benefit from those expenditures.                                       
                                                                            
                                                                            
                                                                            
                  HEWLETT-PACKARD COMPANY AND SUBSIDIARIES                  
  ADJUSTMENTS TO GAAP NET REVENUE, NET EARNINGS, EARNINGS FROM OPERATIONS,  
                   OPERATING MARGIN AND EARNINGS PER SHARE                  
                                 (Unaudited)                                
                   (In millions except per share amounts)                   
                                                                            
                                                                            
                         Three                               Three          
                        months             Three            months          
                        ended    Diluted  months   Diluted  ended    Diluted
                        October earnings  ended   earnings  October earnings
                         31,       per   July 31,    per     31,       per  
                         2012     share    2012     share    2011     share 
                       -------- -------- -------- -------- -------- --------
                                                                            
GAAP net revenue       $ 29,959          $ 29,669          $ 32,122         
                                                                            
Non-GAAP adjustments:                                                       
  WebOS device contra                                                       
   revenue, net(a)            -                 -               142         
                       --------          --------          --------         
Non-GAAP net revenue   $ 29,959          $ 29,669          $ 32,264         
                       ========          ========          ========         
                                                                            
                                                                            
GAAP net (loss)                                                             
 earnings              $(6,854) $ (3.49) $(8,857) $ (4.49) $    239 $   0.12
                                                                            
Non-GAAP adjustments:                                                       
  Amortization of                                                           
   purchased intangible                                                     
   assets                   372     0.19      476     0.25      411     0.20
  Impairment of                                                             
   goodwill and                                                             
   purchased intangible                                                     
   assets(b)              8,847     4.51    9,188     4.66      885     0.44
  Restructuring charges     378     0.19    1,795     0.91      179     0.09
  Acquisition-related                                                       
   charges in earnings                                                      
   from operations            3        -        3        -      114     0.06
  Wind down of the                                                          
   webOs device                                                             
   business(c)                -        -        -        -      755     0.38
  Wind down of non-                                                         
   strategic                                                                
   businesses(d)              -        -      108     0.05        -        -
  Acquisition-related                                                       
   charges in interest                                                      
   and other, net(e)          -        -        -        -      276     0.14
  Adjustments for                                                           
   taxes(f)               (465)   (0.24)    (740)   (0.38)    (509)   (0.26)
                       -------- -------- -------- -------- -------- --------
Non-GAAP net earnings  $  2,281 $   1.16 $  1,973 $   1.00 $  2,350 $   1.17
                       ======== ======== ======== ======== ======== ========
                                                                            
                                                                            
GAAP (loss) earnings                                                        
 from operations       $(6,488)          $(8,833)          $    795         
                                                                            
Non-GAAP adjustments:                                                       
  Amortization of                                                           
   purchased intangible                                                     
   assets                   372               476               411         
  Impairment of                                                             
   goodwill and                                                             
   purchased intangible                                                     
   assets(b)              8,847             9,188               885         
  Restructuring charges     378             1,795               179         
  Acquisition-related                                                       
   charges in earnings                                                      
   from operations            3                 3               114         
  Wind down of the                                                          
   webOs device                                                             
   business(c)                -                 -               755         
  Wind down of non-                                                         
   strategic                                                                
   businesses(d)              -               108                 -         
                       --------          --------          --------         
Non-GAAP earnings from                                                      
 operations            $  3,112          $  2,737          $  3,139         
                       ========          ========          ========         
                                                                            
GAAP operating margin     (22%)             (30%)                2%         
Non-GAAP adjustments        32%               39%                8%         
                       --------          --------          --------         
Non-GAAP operating                                                          
 margin                     10%                9%               10%         
                       ========          ========          ========         
                                                                            
(a)  Includes contra revenue primarily associated with sales incentive      
     programs to wind down the webOS device business, net of webOS device   
     revenue.                                                               
                                                                            
(b)  For the period ended October 31, 2012, represents a goodwill and       
     intangible asset impairment charge of $8.8 billion associated with the 
     Autonomy reporting unit within the Software segment. For the period    
     ended July 31, 2012, represents a goodwill impairment charge of $8.0   
     billion associated with the Services segment and an intangible asset   
     impairment charge of $1.2 bill
ion associated with the "Compaq" trade   
     name within the Personal Systems segment (formerly known as the        
     Personal Systems Group segment). For the period ended October 31, 2011,
     includes impairment charges to goodwill and purchased intangible assets
     associated with the acquisition of Palm, Inc. on July 1, 2010 recorded 
     as result of the decision announced on August 18, 2011 to wind down the
     webOS device business.                                                 
                                                                            
(c)  Includes primarily expenses and adjustments for supplier-related       
     obligations and contra revenue associated with sales incentive programs
     related to winding down the webOS device business.                     
                                                                            
(d)  Represents primarily contract-related charges, including inventory     
     write-downs, related to winding down certain retail publishing business
     activities within the Printing segment (formerly known as the Imaging  
     and Printing Group Segment).                                           
                                                                            
(e)  Includes primarily the cost of the British pound options bought to     
     limit foreign exchange rate risk in connection with the Autonomy       
     acquisition.                                                           
                                                                            
(f)  For the periods ended October 31, 2012 and July 31, 2012, adjustments  
     for taxes is net of valuation allowances of $0.5 billion and $0.8      
     billion provided for certain deferred tax assets, respectively.        
                                                                            
                                                                            
                                                                            
                  HEWLETT-PACKARD COMPANY AND SUBSIDIARIES                  
  ADJUSTMENTS TO GAAP NET REVENUE, NET EARNINGS, EARNINGS FROM OPERATIONS,  
                   OPERATING MARGIN AND EARNINGS PER SHARE                  
                                 (Unaudited)                                
                   (In millions except per share amounts)                   
                                                                            
                                                                            
                                   Twelve                Twelve             
                                   months                months             
                                   ended                 ended              
                                   October    Diluted    October    Diluted 
                                    31,      earnings     31,      earnings 
                                    2012     per share    2011     per share
                                 ---------- ---------- ---------- ----------
                                                                            
GAAP net revenue                 $  120,357            $  127,245           
                                                                            
Non-GAAP adjustments:                                                       
  WebOS device contra revenue,                                              
   net(a)                                 -                   142           
                                 ----------            ----------           
Non-GAAP net revenue             $  120,357            $  127,387           
                                 ==========            ==========           
                                                                            
                                                                            
GAAP net (loss) earnings         $ (12,650) $   (6.41) $    7,074 $     3.32
                                                                            
Non-GAAP adjustments:                                                       
  Amortization of purchased                                                 
   intangible assets                  1,784       0.90      1,607       0.75
  Impairment of goodwill and                                                
   purchased intangible                                                     
   assets(b)                         18,035       9.14        885       0.42
  Restructuring charges               2,266       1.15        645       0.30
  Acquisition-related charges in                                            
   earnings from operations              45       0.02        182       0.09
  Wind down of the webOs device                                             
   business(c)                         (36)     (0.02)        755       0.35
  Wind down of non-strategic                                                
   businesses(d)                        108       0.05          -          -
  Acquisition-related charges in                                            
   interest and other, net(e)             -          -        276       0.13
  Adjustments for taxes(f)          (1,517)     (0.78)    (1,045)     (0.48)
                                 ---------- ---------- ---------- ----------
Non-GAAP net earnings            $    8,035 $     4.05 $   10,379 $     4.88
                                 ========== ========== ========== ==========
                                                                            
                                                                            
GAAP (loss) earnings from                                                   
 operations                      $ (11,057)            $    9,677           
                                                                            
Non-GAAP adjustments:                                                       
  Amortization of purchased                                                 
   intangible assets                  1,784                 1,607           
  Impairment of goodwill and                                                
   purchased intangible                                                     
   assets(b)                         18,035                   885           
  Restructuring charges               2,266                   645           
  Acquisition-related charges in                                            
   earnings from operations              45                   182           
  Wind down of the webOs device                                             
   business(c)                         (36)                   755           
  Wind down of non-strategic                                                
   businesses(d)                        108                     -           
                                 ----------            ----------           
Non-GAAP earnings from                                                      
 operations                      $   11,145            $   13,751           
                                 ==========            ==========           
                                                                            
GAAP operating margin                  (9%)                    8%           
Non-GAAP adjustments                    18%                    3%           
                                 ----------            ----------           
Non-GAAP operating margin                9%                   11%           
                                 ==========            ==========           
                                                                            
(a)  Includes contra revenue primarily associated with sales incentive      
     programs to wind down the webOS device business, net of the webOS      
     device revenue.                                                        
                                     
                                       
(b)  For the period ended October 31, 2012, represents a goodwill and       
     intangible asset impairment charge of $8.8 billion associated with the 
     Autonomy reporting unit within the Software segment, a goodwill        
     impairment charge of $8.0 billion associated with the Services segment 
     and an intangible asset impairment charge of $1.2 billion associated   
     with the "Compaq" trade name within the Personal Systems segment. For  
     the period ended October 31, 2011, includes impairment charges to      
     goodwill and purchased intangible assets associated with the           
     acquisition of Palm, Inc. on July 1, 2010 recorded as result of the    
     decision announced on August 18, 2011 to wind down the webOS device    
     business.                                                              
                                                                            
(c)  Includes primarily expenses and adjustments for supplier-related       
     obligations and contra revenue associated with sales incentive programs
     related to winding down the webOS device business.                     
                                                                            
(d)  Represents primarily contract-related charges, including inventory     
     write-downs, related to winding down certain retail publishing business
     activities within the Printing segment.                                
                                                                            
(e)  Includes primarily the cost of the British pound options bought to     
     limit foreign exchange rate risk in connection with the Autonomy       
     acquisition.                                                           
                                                                            
(f)  For the period ended October 31, 2012, adjustments for taxes is net of 
     valuation allowances of $1.3 billion provided for certain deferred tax 
     assets.                                                                
                                                                            
                                                                            
                                                                            
                  HEWLETT-PACKARD COMPANY AND SUBSIDIARIES                  
                    CONSOLIDATED CONDENSED BALANCE SHEETS                   
                                (In millions)                               
                                                                            
                                                                            
                                                    October 31,  October 31,
                                                        2012         2011   
                                                    -----------  -----------
                                                    (Unaudited)             
ASSETS                                                                      
                                                                            
Current assets:                                                             
  Cash and cash equivalents                         $    11,301  $     8,043
  Accounts receivable                                    16,407       18,224
  Financing receivables                                   3,252        3,162
  Inventory                                               6,317        7,490
  Other current assets                                   13,360       14,102
                                                    -----------  -----------
                                                                            
    Total current assets                                 50,637       51,021
                                                    -----------  -----------
                                                                            
Property, plant and equipment                            11,954       12,292
                                                                            
Long-term financing receivables and other assets         10,593       10,755
                                                                            
Goodwill and purchased intangible assets                 35,584       55,449
                                                    -----------  -----------
                                                                            
Total assets                                        $   108,768  $   129,517
                                                    ===========  ===========
                                                                            
                                                                            
LIABILITIES AND STOCKHOLDERS' EQUITY                                        
                                                                            
Current liabilities:                                                        
  Notes payable and short-term borrowings           $     6,647  $     8,083
  Accounts payable                                       13,350       14,750
  Employee compensation and benefits                      4,058        3,999
  Taxes on earnings                                         846        1,048
  Deferred revenue                                        7,494        7,449
  Other accrued liabilities                              14,271       15,113
                                                    -----------  -----------
                                                                            
    Total current liabilities                            46,666       50,442
                                                    -----------  -----------
                                                                            
Long-term debt                                           21,789       22,551
                                                                            
Other liabilities                                        17,480       17,520
                                                                            
Stockholders' equity:                                                       
  HP stockholders' equity                                22,436       38,625
  Non-controlling interests                                 397          379
                                                    -----------  -----------
                                                                            
    Total stockholders' equity                           22,833       39,004
                                                    -----------  -----------
                                                                            
Total liabilities and stockholders' equity          $   108,768  $   129,517
                                                    ===========  ===========
                             
                                               
                                                                            
                                                                            
                  HEWLETT-PACKARD COMPANY AND SUBSIDIARIES                  
              CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS               
                                (Unaudited)                                 
                               (In millions)                                
                                                                            
                                                                            
                                              Three months    Twelve months 
                                                  ended           ended     
                                               October 31,     October 31,  
                                                  2012            2012      
                                             --------------  -------------- 
Cash flows from operating activities:                                       
  Net loss                                   $       (6,854) $      (12,650)
  Adjustments to reconcile net earnings to                                  
   net cash provided by operating                                           
   activities:                                                              
    Depreciation and amortization                     1,201           5,095 
    Impairment of goodwill and purchased                                    
     intangible assets                                8,847          18,035 
    Stock-based compensation expense                    141             635 
    Provision for bad debt and inventory                165             419 
    Restructuring charges                               378           2,266 
    Deferred taxes on earnings                          (21)           (711)
    Excess tax benefit from stock-based                                     
     compensation                                         -             (12)
    Other, net                                          (65)            265 
                                                                            
    Changes in operating assets and                                         
     liabilities:                                                           
      Accounts and financing receivables             (1,166)          1,269 
      Inventory                                         892             890 
      Accounts payable                                  782          (1,414)
      Taxes on earnings                                (280)           (320)
      Restructuring                                    (368)           (840)
      Other assets and liabilities                      407          (2,356)
                                             --------------  -------------- 
        Net cash provided by operating                                      
         activities                                   4,059          10,571 
                                             --------------  -------------- 
                                                                            
Cash flows from investing activities:                                       
    Investment in property, plant and                                       
     equipment                                         (873)         (3,706)
    Proceeds from sale of property, plant                                   
     and equipment                                      296             617 
    Purchases of available-for-sale                                         
     securities and other investments                  (179)           (972)
    Maturities and sales of available-for-                                  
     sale securities and other investments              146             662 
    Payments made in connection with                                        
     business acquisitions, net of cash                                     
     acquired                                             -            (141)
    Proceeds from business divestiture, net               -              87 
                                             --------------  -------------- 
        Net cash used in investing                                          
         activities                                    (610)         (3,453)
                                             --------------  -------------- 
                                                                            
Cash flows from financing activities:                                       
    Repayment of commercial paper and notes                                 
     payable, net                                      (222)         (2,775)
    Issuance of debt                                     54           5,154 
    Payment of debt                                  (1,111)         (4,333)
    Issuance of common stock under employee                                 
     stock plans                                          6             716 
    Repurchase of common stock                         (124)         (1,619)
    Excess tax benefit from stock-based                                     
     compensation                                         -              12 
    Cash dividends paid                                (260)         (1,015)
                                             --------------  -------------- 
        Net cash used in financing                                          
         activities                                  (1,657)         (3,860)
                                             --------------  -------------- 
                                                                            
Increase in cash and cash equivalents                 1,792           3,258 
Cash and cash equivalents at beginning of                                   
 period                                               9,509           8,043 
                                             --------------  -------------- 
Cash and cash equivalents at end of period   $       11,301  $       11,301 
                                             ==============  ============== 
                                                                            
                                                                            
                                                                            

 
                  HEWLETT-PACKARD COMPANY AND SUBSIDIARIES                  
                            SEGMENT INFORMATION                             
                                (Unaudited)                                 
                               (In millions)                                
                                                                            
                                                Three months ended          
                                      ------------------------------------- 
                                      October 31,    July 31,   October 31, 
                                          2012         2012         2011    
                                      -----------  -----------  ----------- 
                                                                            
Net revenue:(a)                                                             
                                                                            
  Personal Systems                    $     8,705  $     8,620  $    10,118 
  Printing                                  6,080        6,017        6,419 
                                      -----------  -----------  ----------- 
    Total Printing and Personal                                             
     Systems Group(b)                      14,785       14,637       16,537 
  Services                                  8,711        8,754        9,227 
  Enterprise Servers, Storage and                                           
   Networking                               5,119        5,143        5,601 
  Software                                  1,171          973        1,023 
  HP Financial Services                       966          935          952 
  Corporate Investments                        13           19         (131)
                                      -----------  -----------  ----------- 
    Total segments                         30,765       30,461       33,209 
  Eliminations of intersegment net                                          
   revenue and other                         (806)        (792)      (1,087)
                                      -----------  -----------  ----------- 
                                                                            
    Total HP consolidated net revenue $    29,959  $    29,669  $    32,122 
                                      ===========  ===========  =========== 
                             
                                               
Earnings before taxes:(a)                                                   
                                                                            
  Personal Systems                    $       309  $       409  $       578 
  Printing                                  1,067          949          793 
                                      -----------  -----------  ----------- 
  Total Printing and Personal Systems                                       
   Group(b)                                 1,376        1,358        1,371 
  Services                                  1,234          959        1,210 
  Enterprise Servers, Storage and                                           
   Networking                                 423          562          717 
  Software                                    318          175          284 
  HP Financial Services                       104           97           98 
  Corporate Investments                       (83)         (58)        (908)
                                      -----------  -----------  ----------- 
    Total segment earnings from                                             
     operations                             3,372        3,093        2,772 
                                                                            
  Corporate and unallocated costs and                                       
   eliminations                              (120)        (314)        (196)
  Unallocated costs related to stock-                                       
   based compensation expense                (140)        (150)        (192)
  Amortization of purchased intangible                                      
   assets                                    (372)        (476)        (411)
  Impairment of goodwill and purchased                                      
   intangible assets                       (8,847)      (9,188)        (885)
  Restructuring charges                      (378)      (1,795)        (179)
  Acquisition-related charges                  (3)          (3)        (114)
  Interest and other, net                    (188)        (224)        (401)
                                      -----------  -----------  ----------- 
                                                                            
    Total HP consolidated (loss)                                            
     earnings before taxes            $    (6,676) $    (9,057) $       394 
                                      ===========  ===========  =========== 
                                                                            
(a)  Certain fiscal 2012 organizational reclassifications have been         
     reflected retroactively to provide improved visibility and             
     comparability. For each of the quarters in fiscal year 2011, the       
     reclassifications resulted in the transfer of revenue and operating    
     profit among the Services, Printing, Enterprise Servers, Storage and   
     Networking, Software and Corporate Investments financial reporting     
     segments. Reclassifications between segments included the transfer of  
     the Indigo Scitex support and the LaserJet and enterprise solutions    
     trade support businesses from Services to Printing, the transfer of the
     business intelligence services business from Corporate Investments to  
     Services, the transfer of the information management services business 
     from Software to Services, and the transfer of the TippingPoint        
     business from Enterprise Servers, Storage and Networking to Software.  
     There was no impact on the previously reported financial results for   
     the Personal Systems and HP Financial Services segments.               
                                                                            
(b)  As part of a realignment of the structure of HP's business in fiscal   
     2012, the Personal Systems segment and the Printing segment have been  
     structured beneath a newly formed Printing and Personal Systems Group. 
     While the Printing and Personal Systems Group 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                             
                               (In millions)                                
                                                                            
                                                      Twelve months ended   
                                                          October 31,       
                                                   ------------------------ 
                                                       2012         2011    
                                                   -----------  ----------- 
                                                   (Unaudited)              
Net revenue:(a)                                                             
                                                                            
  Personal Systems                                 $    35,650  $    39,574 
  Printing                                              24,487       26,176 
                                                   -----------  ----------- 
    Total Printing and Personal Systems Group(b)        60,137       65,750 
  Services                                              34,922       35,702 
  Enterprise Servers, Storage and Networking            20,491       22,064 
  Software                                               4,060        3,367 
  HP Financial Services                                  3,819        3,596 
  Corporate Investments                                    108          208 
                                                   -----------  ----------- 
    Total Segments                                     123,537      130,687 
  Eliminations of intersegment net revenue and                              
   other                                                (3,180)      (3,442)
                                                   -----------  ----------- 
                                                                            
    Total HP consolidated net revenue              $   120,357  $   127,245 
                                                   ===========  =========== 
                                                                            
Earnings before taxes:(a)                                                   
                                                                            
  Personal Systems                                 $     1,706  $     2,350 
  Printing                                               3,585        3,927 
                                                   -----------  ----------- 
    Total Printing and Personal Systems Group(b)         5,291        6,277 
  Services                                               4,095        5,203 
  Enterprise Servers, Storage and Networking             2,132        2,997 
  Software                                                 827          722 
  HP Financial Services                                    388          348 
  Corporate Investments                                   (238)      (1,619)
                                                   -----------  ----------- 
    Total segment earnings from operations              12,495       13,928 
                                                                            
  Corporate and unallocated costs and eliminations        (790)        (314)
  Unallocated costs related to 
stock-based                                  
   compensation expense                                   (632)        (618)
  Amortization of purchased intangible assets           (1,784)      (1,607)
  Impairment of goodwill and purchased intangible                           
   assets                                              (18,035)        (885)
  Restructuring charges                                 (2,266)        (645)
  Acquisition-related charges                              (45)        (182)
  Interest and other, net                                 (876)        (695)
                                                   -----------  ----------- 
                                                                            
    Total HP consolidated (loss) earnings before                            
     taxes                                         $   (11,933) $     8,982 
                                                   ===========  =========== 
                                                                            
(a)  Certain fiscal 2012 organizational reclassifications have been         
     reflected retroactively to provide improved visibility and             
     comparability. For each of the quarters in fiscal year 2011, the       
     reclassifications resulted in the transfer of revenue and operating    
     profit among the Services, Printing, Enterprise Servers, Storage and   
     Networking, Software and Corporate Investments financial reporting     
     segments. Reclassifications between segments included the transfer of  
     the Indigo Scitex support and the LaserJet and enterprise solutions    
     trade support businesses from Services to Printing, the transfer of the
     business intelligence services business from Corporate Investments to  
     Services, the transfer of the information management services business 
     from Software to Services, and the transfer of the TippingPoint        
     business from Enterprise Servers, Storage and Networking to Software.  
     There was no impact on the previously reported financial results for   
     the Personal Systems and HP Financial Services segments.               
                                                                            
(b)  As part of a realignment of the structure of HP's business in fiscal   
     2012, the Personal Systems segment and the Printing segment have been  
     structured beneath a newly formed Printing and Personal Systems Group. 
     While the Printing and Personal Systems Group 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                (%)       
                      -------------------------------------  -------------  
                      October 31,   July 31,    October 31,                 
                          2012         2012         2011      Q/Q     Y/Y   
                      -----------  -----------  -----------  -----   -----  
Net revenue:(a)                                                             
                                                                            
 Printing and Personal                                                      
  Systems Group(b)                                                          
  Personal Systems                                                          
   Notebooks          $     4,572  $     4,416  $     5,390      4%    (15%)
   Desktops                 3,369        3,486        3,946     (3%)   (15%)
   Workstations               550          526          593      5%     (7%)
   Other                      214          192          189     11%     13% 
                      -----------  -----------  -----------                 
    Total Personal                                                          
     Systems                8,705        8,620       10,118      1%    (14%)
                      -----------  -----------  -----------                 
                                                                            
  Printing                                                                  
   Supplies                 4,007        4,005        4,041      0%     (1%)
   Commercial Hardware      1,482        1,445        1,694      3%    (13%)
   Consumer Hardware          591          567          684      4%    (14%)
                      -----------  -----------  -----------                 
    Total Printing          6,080        6,017        6,419      1%     (5%)
                      -----------  -----------  -----------                 
     Total Printing                                                         
      and Personal                                                          
      Systems Group        14,785       14,637       16,537      1%    (11%)
                      -----------  -----------  -----------                 
                                                                            
 Services                                                                   
   Infrastructure                                                           
    Technology                                                              
    Outsourcing             3,657        3,665        3,895      0%     (6%)
   Technology Services      2,629        2,634        2,728      0%     (4%)
   Application and                                                          
    Business                                                                
    Services(c)             2,425        2,455        2,604     (1%)    (7%)
                      -----------  -----------  -----------                 
    Total Services          8,711        8,754        9,227      0%     (6%)
                      -----------  -----------  -----------                 
                                                                            
 Enterprise Servers,                                                        
  Storage and                                                               
  Networking                                                                
   Industry Standard                                                        
    Servers                 3,137        3,187        3,384     (2%)    (7%)
   Storage                    946          924        1,088      2%    (13%)
   Business Critical                                                        
    Systems                   401          385          535      4%    (25%)
   Networking                 635          647          594     (2%)     7% 
                      -----------  -----------  -----------                 
    Total Enterprise                                                        
     Servers, Storage                                                       
     and Networking         5,119        5,143        5,601      0%     (9%)
                      -----------  -----------  -----------                 
                                                                            
 Software                   1,171          973        1,023     20%     14% 
                      -----------  -----------  -----------                 
                                 
                                           
 HP Financial Services        966          935          952      3%      1% 
                      -----------  -----------  -----------                 
                                                                            
 Corporate Investments         13           19         (131)   (32%)  (110%)
                      -----------  -----------  -----------                 
  Total segments           30,765       30,461       33,209      1%     (7%)
                      -----------  -----------  -----------                 
                                                                            
 Elimination of                                                             
  intersegment net                                                          
  revenue and other          (806)        (792)      (1,087)     2%    (26%)
                      -----------  -----------  -----------                 
                                                                            
  Total HP                                                                  
   consolidated net                                                         
   revenue            $    29,959  $    29,669  $    32,122      1%     (7%)
                      ===========  ===========  ===========                 
                                                                            
(a)  Certain fiscal 2012 organizational reclassifications have been         
     reflected retroactively to provide improved visibility and             
     comparability. For each of the quarters in fiscal year 2011, the       
     reclassifications resulted in the transfer of revenue and operating    
     profit among the Services, Printing, Enterprise Servers, Storage and   
     Networking, Software and Corporate Investments financial reporting     
     segments. Reclassifications between segments included the transfer of  
     the Indigo Scitex support and the LaserJet and enterprise solutions    
     trade support businesses from Services to Printing, the transfer of the
     business intelligence services business from Corporate Investments to  
     Services, the transfer of the information management services business 
     from Software to Services, and the transfer of the TippingPoint        
     business from Enterprise Servers, Storage and Networking to Software.  
     There was no impact on the previously reported financial results for   
     the Personal Systems and HP Financial Services segments.               
                                                                            
(b)  As part of a realignment of the structure of HP's business in fiscal   
     2012, the Personal Systems segment and the Printing segment have been  
     structured beneath a newly formed Printing and Personal Systems Group. 
     While the Printing and Personal Systems Group 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.    
                                                                            
(c)  The former Application Services, Business Process Outsourcing and Other
     Services business units were consolidated into a new Application and   
     Business Services business unit in fiscal 2012.                        
                                                                            
                                                                            
                                                                            
                  HEWLETT-PACKARD COMPANY AND SUBSIDIARIES                  
                    SEGMENT / BUSINESS UNIT INFORMATION                     
                               (In millions)                                
                                                                            
                                                      Twelve months ended   
                                                          October 31,       
                                                   ------------------------ 
                                                       2012         2011    
                                                   -----------  ----------- 
                                                   (Unaudited)              
Net revenue:(a)                                                             
                                                                            
  Printing and Personal Systems Group(b)                                    
    Personal Systems                                                        
      Notebooks                                    $    18,830  $    21,319 
      Desktops                                          13,888       15,260 
      Workstations                                       2,148        2,216 
      Other                                                784          779 
                                                   -----------  ----------- 
        Total Personal Systems                          35,650       39,574 
                                                   -----------  ----------- 
                                                                            
    Printing                                                                
      Supplies                                          16,151       17,154 
      Commercial Hardware                                5,895        6,183 
      Consumer Hardware                                  2,441        2,839 
                                                   -----------  ----------- 
        Total Printing                                  24,487       26,176 
                                                   -----------  ----------- 
          Total Printing and Personal Systems Group     60,137       65,750 
                                                   -----------  ----------- 
                                                                            
  Services                                                                  
      Infrastructure Technology Outsourcing             14,692       15,224 
      Technology Services                               10,463       10,542 
      Application and Business Services(c)               9,767        9,936 
                                                   -----------  ----------- 
        Total Services                                  34,922       35,702 
                                                   -----------  ----------- 
                                                                            
  Enterprise Servers, Storage and Networking                                
      Industry Standard Servers                         12,582       13,521 
      Storage                                            3,815        4,056 
      Business Critical Systems                          1,612        2,095 
      Networking                                         2,482        2,392 
                                                   -----------  ----------- 
        Total Enterprise Servers, Storage and                               
         Networking                                     20,491       22,064 
                                                   -----------  ----------- 
                                                                            
  Software                                               4,060        3,367 
                                                   -----------  ----------- 
                                                                            
  HP Financial Services                                  3,819        3,596 
                                                   -----------  ----------- 
                                                                            
  Corporate Investments                                    108          208 
                                   
                -----------  ----------- 
    Total segments                                     123,537      130,687 
                                                   -----------  ----------- 
                                                                            
  Elimination of intersegment net revenue and other     (3,180)      (3,442)
                                                   -----------  ----------- 
                                                                            
    Total HP consolidated net revenue              $   120,357  $   127,245 
                                                   ===========  =========== 
                                                                            
(a)  Certain fiscal 2012 organizational reclassifications have been         
     reflected retroactively to provide improved visibility and             
     comparability. For each of the quarters in fiscal year 2011, the       
     reclassifications resulted in the transfer of revenue and operating    
     profit among the Services, Printing, Enterprise Servers, Storage and   
     Networking, Software and Corporate Investments financial reporting     
     segments. Reclassifications between segments included the transfer of  
     the Indigo Scitex support and the LaserJet and enterprise solutions    
     trade support businesses from Services to Printing, the transfer of the
     business intelligence services business from Corporate Investments to  
     Services, the transfer of the information management services business 
     from Software to Services, and the transfer of the TippingPoint        
     business from Enterprise Servers, Storage and Networking to Software.  
     There was no impact on the previously reported financial results for   
     the Personal Systems and HP Financial Services segments.               
                                                                            
(b)  As part of a realignment of the structure of HP's business in fiscal   
     2012, the Personal Systems segment and the Printing segment have been  
     structured beneath a newly formed Printing and Personal Systems Group. 
     While the Printing and Personal Systems Group 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.    
                                                                            
(c)  The former Application Services, Business Process Outsourcing and Other
     Services business units were consolidated into a new Application and   
     Business Services business unit in fiscal 2012.                        
                                                                            
                                                                            
                                                                            
                  HEWLETT-PACKARD COMPANY AND SUBSIDIARIES                  
               SEGMENT NON-GAAP OPERATING MARGIN SUMMARY DATA               
                                (Unaudited)                                 
                               (In millions)                                
                                                                            
                                                                            
                                          Three                             
                                          months       Change in Operating  
                                          ended           Margin (pts)      
                                       -----------   ---------------------- 
                                       October 31,                          
                                           2012          Q/Q         Y/Y    
                                       -----------   ----------  ---------- 
                                                                            
Non-GAAP operating margin:(a)                                               
  Personal Systems                             3.5%    (1.2 pts)   (2.2 pts)
  Printing                                    17.5%     1.7 pts     5.1 pts 
    Printing and Personal Systems                                           
     Group(b)                                  9.3%           -     1.0 pts 
                                                                            
  Services                                    14.2%     3.2 pts     1.1 pts 
  Enterprise Servers, Storage and                                           
   Networking                                  8.3%    (2.6 pts)   (4.5 pts)
  Software                                    27.2%     9.2 pts    (0.6 pts)
  HP Financial Services                       10.8%     0.4 pts     0.5 pts 
  Corporate Investments                     (638.5%) (280.6 pts)  752.4 pts 
    Total segments                            11.0%     0.9 pts     0.4 pts 
                                                                            
    Total HP consolidated non-GAAP                                          
     operating margin                         10.4%     1.2 pts     0.7 pts 
                                                                            
(a)  Certain fiscal 2012 organizational reclassifications have been         
     reflected retroactively to provide improved visibility and             
     comparability. For each of the quarters in fiscal year 2011, the       
     reclassifications resulted in the transfer of revenue and operating    
     profit among the Services, Printing, Enterprise Servers, Storage and   
     Networking, Software and Corporate Investments financial reporting     
     segments. Reclassifications between segments included the transfer of  
     the Indigo Scitex support and the LaserJet and enterprise solutions    
     trade support businesses from Services to Printing, the transfer of the
     business intelligence services business from Corporate Investments to  
     Services, the transfer of the information management services business 
     from Software to Services, and the transfer of the TippingPoint        
     business from Enterprise Servers, Storage and Networking to Software.  
     There was no impact on the previously reported financial results for   
     the Personal Systems and HP Financial Services segments.               
                                                                            
(b)  As part of a realignment of the structure of HP's business in fiscal   
     2012, the Personal Systems segment and the Printing segment have been  
     structured beneath a newly formed Printing and Personal Systems Group. 
     While the Printing and Personal Systems Group 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         
                                       -------------------------------------
                                       October 31,    July 31,   October 31,
                                           2012         2012         2011   
                                     
  -----------  -----------  -----------
                                                                            
Numerator:                                                                  
  GAAP net (loss) earnings             $    (6,854) $    (8,857) $       239
                                       ===========  ===========  ===========
  Non-GAAP net earnings                $     2,281  $     1,973  $     2,350
                                       ===========  ===========  ===========
                                                                            
Denominator:                                                                
  Weighted-average shares used to                                           
   compute basic net (loss) earnings                                        
   per share and diluted net (loss) per                                     
   share                                     1,964        1,971        1,989
  Dilutive effect of employee stock                                         
   plans                                         3            4           16
                                       -----------  -----------  -----------
    Weighted-average shares used to                                         
     compute diluted net earnings per                                       
     share                                   1,967        1,975        2,005
                                       ===========  ===========  ===========
                                                                            
GAAP net (loss) earnings per share:                                         
  Basic                                $     (3.49) $     (4.49) $      0.12
  Diluted(a)                           $     (3.49) $     (4.49) $      0.12
                                                                            
Non-GAAP net earnings per share:                                            
  Basic                                $      1.16  $      1.00  $      1.18
  Diluted(b)                           $      1.16  $      1.00  $      1.17
                                                                            
                                                                            
                                                                            
(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)                   
                                                                            
                                                                            
                                                       Twelve months ended  
                                                           October 31,      
                                                    ------------------------
                                                        2012         2011   
                                                    -----------  -----------
                                                                            
                                                                            
Numerator:                                                                  
  GAAP net (loss) earnings                          $   (12,650) $     7,074
                                                    ===========  ===========
  Non-GAAP net earnings                             $     8,035  $    10,379
                                                    ===========  ===========
                                                                            
Denominator:                                                                
  Weighted-average shares used to compute basic net                         
   (loss) earnings per share and diluted net (loss)                         
   per share                                              1,974        2,094
  Dilutive effect of employee stock plans                    10           34
                                                    -----------  -----------
    Weighted-average shares used to compute diluted                         
     net earnings per share                               1,984        2,128
                                                    ===========  ===========
                                                                            
GAAP net (loss) earnings per share:                                         
  Basic                                             $     (6.41) $      3.38
  Diluted(a)                                        $     (6.41) $      3.32
                                                                            
Non-GAAP net earnings per share:                                            
  Basic                                             $      4.07  $      4.96
  Diluted(b)                                        $      4.05  $      4.88
                                                                            
                                                                            
                                                                            
(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 net revenue, non-GAAP operating profit, non-GAAP operating
margin, non-GAAP net earnings, non-GAAP diluted earnings per share,
gross cash and free cash flow. 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 net revenue is net revenue. 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 compar
able to gross cash is cash and cash
equivalents. The GAAP measure most directly comparable to free cash
flow is cash flow from operations. Reconciliations of each of these
non-GAAP financial measures to GAAP information are included in the
tables above. 
Use and Economic Substance of Non-GAAP Financial Measures Used by HP 
Non-GAAP net revenue reflects the elimination of contra revenue
associated with sales incentive programs implemented in the fourth
fiscal quarter of 2011 in connection with the wind down of HP's webOS
device business, net of webOS device revenue for the period. Non-GAAP
operating profit and non-GAAP operating margin are defined to exclude
the effects of any restructuring charges, charges relating to the
impairment of goodwill and purchased intangible assets, charges
relating to the amortization of purchased intangible assets, and
acquisition-related charges recorded during the relevant period.
Non-GAAP net earnings and non-GAAP diluted earnings per share consist
of net earnings or diluted net earnings per share excluding those
same charges. In addition, non-GAAP net earnings and non-GAAP diluted
earnings per share are adjusted by the amount of additional taxes or
tax benefit associated with each non-GAAP item. HP's management uses
these non-GAAP financial measures for purposes of evaluating HP's
historical and prospective financial performance, as well as HP's
performance relative to its competitors. HP's management also uses
these non-GAAP measures to further its own understanding of HP's
segment operating performance. HP believes that excluding those items
mentioned above from these non-GAAP financial measures allows HP
management to better understand HP's consolidated financial
performance in relationship to the operating results of HP's
segments, as management does not believe that the excluded items are
reflective of ongoing operating results. More specifically, HP's
management excludes each of those items mentioned above for the
following reasons: 


 
--  In the fourth quarter of fiscal 2011, HP announced that it would wind
    down its webOS device business. Non-GAAP net revenue reported in the
    fourth quarter of fiscal 2011 reflects the elimination of contra
    revenue associated with sales incentive programs implemented in
    connection with the wind down of that business, net of webOS device
    revenue for the period. Because the winding down of HP businesses is
    inconsistent in amount and frequency, HP believes that eliminating
    these amounts for purposes of calculating non-GAAP net revenue
    facilitates a more meaningful evaluation of HP's current operating
    performance and comparisons to HP's past and future operating
    performance.
    
    
--  In the third quarter of fiscal 2012, HP decided to wind down certain
    retail publishing business activities. Non-GAAP operating profit
    reported in the third quarter of fiscal 2012 reflects the elimination
    of certain contract-related charges, including inventory write-downs,
    in connection with the wind down of that business. Because the winding
    down of HP businesses is inconsistent in amount and frequency, HP
    believes that eliminating these amounts for purposes of calculating
    non-GAAP operating profit facilitates a more meaningful evaluation of
    HP's current operating performance and comparisons to HP's past and
    future operating performance.
    
    
--  Goodwill is the excess of the purchase price of acquired companies
    over the estimated fair value of the tangible and intangible assets
    acquired and liabilities assumed. Purchased intangible assets consist
    primarily of customer contracts, customer lists, distribution
    agreements, technology patents, and products, trademarks and trade
    names purchased in connection with acquisitions. In the fourth quarter
    of fiscal 2012, HP recorded a non-cash charge for the impairment of
    goodwill and intangible assets associated with the acquisition of
    Autonomy Corporation plc. The charge relates to serious accounting
    improprieties, disclosure failures and outright misrepresentations at
    Autonomy that occurred prior to HP's acquisition of Autonomy and the
    trading value of HP stock during the period preceding the recording of
    the charge. In the third quarter of fiscal 2012, HP recorded an
    impairment charge for the goodwill associated with its Services
    segment following an impairment review driven by, among other things,
    the trading value of HP stock during the period preceding the
    recording of the charge, market conditions and business trends within
    that segment. In addition, in that same quarter, HP recorded an
    impairment charge related to the intangible asset associated with the
    "Compaq" trade name acquired in 2002 in conjunction with a change in
    branding strategy. In the fourth quarter of fiscal 2011, HP recorded
    impairment charges to goodwill and certain intangible assets
    associated with the acquisition of Palm Inc. The charges relate to
    HP's decision to wind-down the webOS device business. Impairment
    charges are inconsistent in amount and frequency. HP excludes these
    charges for purposes of calculating these non-GAAP measures to
    facilitate a more meaningful evaluation of HP's current operating
    performance and comparisons to HP's past and future operating
    performance.
    
    
--  HP incurs charges relating to the amortization of purchased
    intangibles. HP also incurs charges relating to the amortization of
    amounts assigned to intangible assets to be used in research and
    development projects. All of those charges are included in HP's GAAP
    presentation of earnings from operations, operating margin, net
    earnings and net earnings per share. Such charges are inconsistent in
    amount and frequency and are significantly impacted by the timing and
    magnitude of HP's acquisitions. Consequently, HP excludes these
    charges for purposes of calculating these non-GAAP measures to
    facilitate a more meaningful evaluation of HP's current operating
    performance and comparisons to HP's past and future operating
    performance.
    
    
--  Restructuring charges consist of costs associated with a formal
    restructuring plan and are primarily related to (i) employee
    termination costs and benefits, and (ii) costs to vacate duplicative
    facilities. HP excludes these restructuring costs (and any reversals
    of charges recorded in prior periods) for purposes of calculating
    these non-GAAP measures because it believes that these historical
    costs do not reflect expected future operating expenses and do not
    contribute to a meaningful evaluation of HP's current operating
    performance or comparisons to HP's past and future operating
    performance.
    
    
--  HP incurs costs related to its acquisitions, most of which are treated
    as non-capitalized expenses. Because non-capitalized,
    acquisition-related expenses are inconsistent in amount and frequency
    and are significantly impacted by the timing and nature of HP's
    acquisitions, HP believes that eliminating the non-capitalized
    expenses for purposes of calculating these non-GAAP measures
    facilitates a more meaningful evaluation of HP's current operating
    performance and comparisons to HP's past and future operating
    performance.

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


 
--  Items such as amortization of purchased intangible assets, though not
    directly affecting HP's cash position, represent the loss in value of
    intangible assets over time. The expense associated with this loss in
    value is not included in non-GAAP operating profit, non-GAAP operating
    margin, non-GAAP net earnings and non-GAAP diluted earnings per share
    and therefore does not reflect the full economic effect of the loss in
    value of those intangible assets.
    
    
--  Items such as restructuring charges that are excluded from non-GAAP
    operating profit, non-GAAP operating margin, non-GAAP net earnings and
    non-GAAP diluted earnings per share can have a material impact on cash
    flows and earnings per share.
    
    
--  HP may not be able to liquidate immediately the long-term investments
    included in gross cash, which may limit the usefulness of gross cash
    as a liquidity measure.
    
    
--  Other companies may calculate non-GAAP net revenue, non-GAAP operating
    profit, non-GAAP operating margin, non-GAAP net earnings, non-GAAP
    diluted earnings per share, gross cash and free cash flow differently
    than HP does, limiting the usefulness of those measures for
    comparative purposes.

  
Compensation for Limitations Associated with Use of Non-GAAP Financial
Measures
 HP compensates for the limitations on its use of non-GAAP
net revenue, non-GAAP operating profit, non-GAAP operating margin,
non-GAAP net earnings, non-GAAP diluted earnings per share, gross
cash and free cash flow 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 net revenue, non-GAAP operating profit,
non-GAAP operating margin, non-GAAP net earnings, non-GAAP diluted
earnings per share, gross cash and free cash flow 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. 
Copyright 2012 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. 
Editorial contacts 
Michael Thacker
HP
+1 650 857 2254
corpmediarelations@hp.com  
HP Investor Relations
investor.relations@hp.com  
www.hp.com/go/newsroom  
 
 
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