HP Reports Fourth Quarter and Fiscal 2013 Results
[ Back ]   [ More News ]   [ Home ]
HP Reports Fourth Quarter and Fiscal 2013 Results

PALO ALTO, CA -- (Marketwired) -- Nov 26, 2013 -- HP (NYSE: HPQ)

HP fourth quarter and fiscal 2013 financial performance

                                                                            
                     Q4      Q4                                             
                    FY13    FY12       Y/Y       FY13    FY12       Y/Y     
GAAP net revenue                                                            
 ($B)              $ 29.1  $ 30.0          (3%) $112.3  $120.4          (7%)
GAAP operating                                                              
 margin               6.6%  (21.7%) 28.3 pts.      6.4%   (9.2%) 15.6 pts.  
GAAP net earnings                                                           
 (loss) ($B)       $  1.4  $ (6.9)              $  5.1  $(12.7)             
GAAP diluted net                                                            
 earnings (loss)                                                            
 per share         $ 0.73  $(3.49)              $ 2.62  $(6.41)             
Non-GAAP operating                                                          
 margin               9.0%   10.4%  (1.4 pts.)     8.5%    9.3%  (0.8 pts.) 
Non-GAAP net                                                                
 earnings ($B)     $  2.0  $  2.3         (14%) $  6.9  $  8.0         (14%)
Non-GAAP diluted                                                            
 net earnings per                                                           
 share             $ 1.01  $ 1.16         (13%) $ 3.56  $ 4.05         (12%)
Cash flow from                                                              
 operations ($B)   $  2.8  $  4.1         (31%) $ 11.6  $ 10.6          10% 
                                                                            
                                                                            

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 fiscal fourth quarter and fiscal year ended Oct. 31, 2013.

Fourth quarter GAAP diluted net earnings per share (EPS) was $0.73, up from a GAAP diluted net loss per share of $3.49 in the prior-year period. Fourth quarter non-GAAP diluted net EPS was $1.01, down from $1.16 in the prior-year period. Fourth quarter non-GAAP net earnings and non-GAAP diluted net EPS exclude after-tax costs of $545 million and $0.28 per diluted share, respectively, related to restructuring charges, the amortization of intangible assets and acquisition-related charges.

Fourth quarter net revenue of $29.1 billion was down 3% from the prior-year period and down 1% when adjusted for the effects of currency.

Fiscal 2013 GAAP diluted net EPS was $2.62, up from a GAAP diluted net loss per share of $6.41 in the prior-year period and below the previously provided outlook of $2.67 to $2.71 per share. Fiscal 2013 non-GAAP diluted net EPS was $3.56, down from $4.05 in the prior-year period and within the previously provided outlook of $3.53 to $3.57 per share. Fiscal 2013 non-GAAP net earnings and non-GAAP diluted net EPS exclude after-tax costs of $1.8 billion and $0.94 per diluted share, respectively, related to the amortization of intangible assets, restructuring charges and acquisition-related charges.

Fiscal 2013 net revenue of $112.3 billion was down 7% from the prior year and down 5% when adjusted for the effects of currency.

"Through improved execution, strong cost management, and with the support of our customers and partners, HP ended fiscal 2013 on a high note," said Meg Whitman, HP president and chief executive officer. "Our Q4 results demonstrate that HP's turnaround remains on track heading into fiscal 2014. While we still have much more work to do, our business units and their core assets are delivering on HP's strategy to help customers thrive by providing solutions for the New Style of IT."

Outlook
For the first quarter of fiscal 2014, HP estimates non-GAAP diluted net EPS to be in the range of $0.82 to $0.86 and GAAP diluted net EPS to be in the range of $0.60 to $0.64. First quarter fiscal 2014 non-GAAP diluted net EPS estimates exclude after-tax costs of approximately $0.22 per share, related primarily to the amortization of intangible assets and restructuring charges.

For fiscal 2014, HP estimates non-GAAP diluted net EPS to be in the range of $3.55 to $3.75 and GAAP diluted net EPS to be in the range of $2.85 to $3.05, in line with the outlook HP previously communicated at its Oct. 9 Securities Analyst Meeting. Fiscal 2014 non-GAAP diluted net EPS estimates exclude after-tax costs of approximately $0.70 per share, related primarily to the amortization of intangible assets and restructuring charges.

Asset management
HP generated $2.8 billion in cash flow from operations in the fourth quarter, down 31% from the prior-year period. Inventory ended the quarter at $6.0 billion, down 1 day year over year to 24 days. Accounts receivable ended the quarter at $15.9 billion, flat year over year at 49 days. Accounts payable ended the quarter at $14.0 billion, up 3 days year over year to 56 days. HP's dividend payment of $0.1452 per share in the fourth quarter resulted in cash usage of $284 million. HP also utilized $479 million of cash during the quarter to repurchase approximately 21.5 million shares of common stock in the open market. HP exited the quarter with $12.5 billion in gross cash.

Fourth quarter fiscal 2013 segment results

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

HP's Q4 FY13 earnings conference call is accessible via an audio webcast at www.hp.com/investor/2013Q4earnings.

About HP
HP creates new possibilities for technology to have a meaningful impact on people, businesses, governments and society. With the broadest technology portfolio spanning printing, personal systems, software, services and IT infrastructure, HP delivers solutions for customers' most complex challenges in every region of the world. More information about HP is available at http://www.hp.com.

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

Forward-looking statements
This news release contains forward-looking statements that involve risks, uncertainties and assumptions. If the risks or uncertainties ever materialize or the assumptions prove incorrect, the results of HP may differ materially from those expressed or implied by such forward-looking statements and assumptions. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including but not limited to any projections of revenue, margins, expenses, HP's effective tax rate, earnings, earnings per share, cash flows, benefit plan funding, share repurchases, currency exchange rates or other financial items; any projections of the amount, timing or impact of cost savings or restructuring charges; any statements of the plans, strategies and objectives of management for future operations, including the execution of restructuring plans and any resulting cost savings or revenue or profitability improvements; any statements concerning the expected development, performance, market share or competitive performance relating to products or services; any statements regarding current or future macroeconomic trends or events and the impact of those trends and events on HP and its financial performance; any statements regarding pending investigations, claims or disputes; any statements of expectation or belief; and any statements of assumptions underlying any of the foregoing. Risks, uncertainties and assumptions include the need to address the many challenges facing HP's businesses; the competitive pressures faced by HP's businesses; risks associated with executing HP's strategy; the impact of macroeconomic and geopolitical trends and events; the need to manage third-party suppliers and the distribution of HP's products and services effectively; the protection of HP's intellectual property assets, including intellectual property licensed from third parties; risks associated with HP's international operations; the development and transition of new products and services and the enhancement of existing products and services to meet customer needs and respond to emerging technological trends; the execution and performance of contracts by HP and its suppliers, customers and partners; the hiring and retention of key employees; integration and other risks associated with business combination and investment transactions; the execution, timing and results of restructuring plans, including estimates and assumptions related to the cost and the anticipated benefits of implementing those plans; the resolution of pending investigations, claims and disputes; and other risks that are described in HP's Annual Report on Form 10-K for the fiscal year ended October 31, 2012 and HP's other filings with the Securities and Exchange Commission, including HP's Quarterly Report on Form 10-Q for the fiscal quarter ended July 31, 2013. As in prior periods, the financial information set forth in this release, including tax-related items, reflects estimates based on information available at this time. While HP believes these estimates to be meaningful, these amounts could differ materially from actual reported amounts in HP's Annual Report on Form 10-K for the fiscal year ended October 31, 2013. In particular, determining HP's actual tax balances and provisions as of October 31, 2013 requires extensive internal and external review of tax data (including consolidating and reviewing the tax provisions of numerous domestic and foreign entities), which is being completed in the ordinary course of preparing HP's Annual Report on 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         
                                         ---------------------------------- 
                                           Oct 31,    July 31,     Oct 31,  
                                            2013        2013        2012    
                                         ----------  ----------  ---------- 
                                                                            
Net revenue                              $   29,131  $   27,226  $   29,959 
                                                                            
Costs and expenses:                                                         
  Cost of sales                              22,437      20,859      22,711 
  Research and development                      729         797         909 
  Selling, general and administrative         3,351       3,274       3,227 
  Amortization of intangible assets             317         356         372 
  Impairment of goodwill and intangible                                     
   assets                                         -           -       8,847 
  Restructuring charges                         371          81         378 
  Acquisition-related charges                     3           4           3 
                                         ----------  ----------  ---------- 
    Total costs and expenses                 27,208      25,371      36,447 
                                         ----------  ----------  ---------- 
                                                                            
Earnings (loss) from operations               1,923       1,855      (6,488)
                                                                            
Interest and other, net                        (103)       (146)       (188)
                                         ----------  ----------  ---------- 
                                                                            
Earnings (loss) before taxes                  1,820       1,709      (6,676)
                                                                            
Provision for taxes                            (406)       (319)       (178)
                                         ----------  ----------  ---------- 
                                                                            
Net earnings (loss)                      $    1,414  $    1,390  $   (6,854)
                                         ==========  ==========  ========== 
                                                                            
Net earnings (loss) per share:                                              
  Basic                                  $     0.74  $     0.72  $    (3.49)
  Diluted                                $     0.73  $     0.71  $    (3.49)
                                                                            
Cash dividends declared per share        $        -  $     0.29  $        - 
                                                                            
                                                                            
Weighted-average shares used to compute                                     
 net earnings (loss) per share:                                             
  Basic                                       1,918       1,929       1,964 
  Diluted                                     1,940       1,948       1,964 
                                                                            
                                                                            
                                                                            
                  HEWLETT-PACKARD COMPANY AND SUBSIDIARIES                  
                CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS               
                   (In millions except per share amounts)                   
                                                                            
                                                     Twelve months ended    
                                                           Oct 31,          
                                                  ------------------------- 
                                                      2013          2012    
                                                  -----------   ----------- 
                                                  (Unaudited)               
                                                                            
Net revenue                                       $   112,298   $   120,357 
                                                                            
Costs and expenses:                                                         
  Cost of sales                                        86,380        92,385 
  Research and development                              3,135         3,399 
  Selling, general and administrative                  13,267        13,500 
  Amortization of intangible assets                     1,373         1,784 
  Impairment of goodwill and intangible assets              -        18,035 
  Restructuring charges                                   990         2,266 
  Acquisition-related charges                              22            45 
                                                  -----------   ----------- 
    Total costs and expenses                          105,167       131,414 
                                                  -----------   ----------- 
                                                                            
Earnings (loss) from operations                         7,131       (11,057)
                                                                            
Interest and other, net                                  (621)         (876)
                                                  -----------   ----------- 
                                                                            
Earnings (loss) before taxes                            6,510       (11,933)
                                                                            
Provision for taxes                                    (1,397)         (717)
                                                  -----------   ----------- 
                                                                            
Net earnings (loss)                               $     5,113   $   (12,650)
                                                  ===========   =========== 
                                                                            
Net earnings (loss) per share:                                              
  Basic                                           $      2.64   $     (6.41)
  Diluted                                         $      2.62   $     (6.41)
                                                                            
Cash dividends declared per share                 $      0.55   $      0.50 
                                                                            
                                                                            
Weighted-average shares used to compute net                                 
 earnings (loss) per share:                                                 
  Basic                                                 1,934         1,974 
  Diluted                                               1,950         1,974 
                                                                            
                                                                            
                                                                            
                  HEWLETT-PACKARD COMPANY AND SUBSIDIARIES                  
        ADJUSTMENTS TO GAAP NET EARNINGS, EARNINGS FROM OPERATIONS,         
                  OPERATING MARGIN AND EARNINGS PER SHARE                   
                                (Unaudited)                                 
                   (In millions except per share amounts)                   
                                                                            
                    Three              Three              Three             
                   months             months             months             
                   ended    Diluted   ended    Diluted   ended     Diluted  
                  Oct 31,   earnings July 31,  earnings Oct 31,    earnings 
                    2013   per share   2013   per share   2012    per share 
                  -------- --------- -------- --------- --------  --------- 
                                                                            
GAAP net earnings                                                           
 (loss)           $  1,414 $    0.73 $  1,390 $    0.71 $ (6,854) $   (3.49)
                                                                            
Non-GAAP                                                                    
 adjustments:                                                               
  Amortization of                                                           
   intangible                                                               
   assets              317      0.16      356      0.19      372       0.19 
  Impairment of                                                             
   goodwill and                                                             
   intangible                                                               
   assets(a)             -         -        -         -    8,847       4.51 
  Restructuring                                                             
   charges             371      0.19       81      0.04      378       0.19 
  Acquisition-                                                              
   related                                                                  
   charges               3         -        4         -        3          - 
  Adjustments for                                                           
   taxes(b)           (146)    (0.07)    (155)    (0.08)    (465)     (0.24)
                  -------- --------- -------- --------- --------  --------- 
Non-GAAP net                                                                
 earnings         $  1,959 $    1.01 $  1,676 $    0.86 $  2,281  $    1.16 
                  ======== ========= ======== ========= ========  ========= 
                                                                            
                                                                            
GAAP earnings                                                               
 (loss) from                                                                
 operations       $  1,923           $  1,855           $ (6,488)           
                                                                            
Non-GAAP                                                                    
 adjustments:                                                               
  Amortization of                                                           
   intangible                                                               
   assets              317                356                372            
  Impairment of                                                             
   goodwill and                                                             
   intangible                                                               
   assets(a)             -                  -              8,847            
  Restructuring                                                             
   charges             371                 81                378            
  Acquisition-                                                              
   related                                                                  
   charges               3                  4                  3            
                  --------           --------           --------            
Non-GAAP earnings                                                           
 from operations  $  2,614           $  2,296           $  3,112            
                  ========           ========           ========            
                                                                            
GAAP operating                                                              
 margin                  7%                 7%               (22%)          
Non-GAAP                                                                    
 adjustments             2%                 1%                32%           
                  --------           --------           --------            
Non-GAAP                                                                    
 operating margin        9%                 8%                10%           
                  ========           ========           ========            
                                                                            
(a) 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.                    
                                                                            
(b) For the period ended October 31, 2012, adjustments for taxes is net of a
    valuation allowance of $0.5 billion provided for certain deferred tax   
    assets.                                                                 
                                                                            
                                                                            
                                                                            
                  HEWLETT-PACKARD COMPANY AND SUBSIDIARIES                  
        ADJUSTMENTS TO GAAP NET EARNINGS, EARNINGS FROM OPERATIONS,         
                  OPERATING MARGIN AND EARNINGS PER SHARE                   
                                (Unaudited)                                 
                   (In millions except per share amounts)                   
                                                                            
                           Twelve                    Twelve                 
                        months ended    Diluted   months ended     Diluted  
                        October 31,    earnings   October 31,     earnings  
                            2013       per share      2012        per share 
                        ------------  ----------  ------------   ---------- 
                                                                            
GAAP net earnings                                                           
 (loss)                 $      5,113  $     2.62  $    (12,650)  $    (6.41)
                                                                            
Non-GAAP adjustments:                                                       
  Amortization of                                                           
   intangible assets           1,373        0.70         1,784         0.90 
  Impairment of                                                             
   goodwill and                                                             
   intangible assets(a)            -           -        18,035         9.14 
  Restructuring charges          990        0.51         2,266         1.15 
  Acquisition-related                                                       
   charges                        22        0.01            45         0.02 
  Wind down of non-                                                         
   strategic                                                                
   businesses(b)                   -           -            72         0.03 
  Adjustments for                                                           
   taxes(c)                     (560)      (0.28)       (1,517)       (0.78)
                        ------------  ----------  ------------   ---------- 
Non-GAAP net earnings   $      6,938  $     3.56  $      8,035   $     4.05 
                        ============  ==========  ============   ========== 
                                                                            
                                                                            
GAAP earnings (loss)                                                        
 from operations        $      7,131              $    (11,057)             
                                                                            
Non-GAAP adjustments:                                                       
  Amortization of                                                           
   intangible assets           1,373                     1,784              
  Impairment of                                                             
   goodwill and                                                             
   intangible assets(a)            -                    18,035              
  Restructuring charges          990                     2,266              
  Acquisition-related                                                       
   charges                        22                        45              
  Wind down of non-                                                         
   strategic                                                                
   businesses(b)                   -                        72              
                        ------------              ------------              
Non-GAAP earnings from                                                      
 operations             $      9,516              $     11,145              
                        ============              ============              
                                                                            
GAAP operating margin              6%                       (9%)            
Non-GAAP adjustments               2%                       18%             
                        ------------              ------------              
Non-GAAP operating                                                          
 margin                            8%                        9%             
                        ============              ============              
                                                                            
(a) 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 Enterprise        
    Services segment and an intangible asset impairment charge of $1.2      
    billion associated with the "Compaq" trade name within the Personal     
    Systems segment.                                                        
                                                                            
(b) For the period ended October 31, 2012, represents primarily contract-   
    related charges, including inventory write-downs, related to winding    
    down certain retail publishing business activities within the Printing  
    segment, net of adjustments to expenses for supplier-related obligations
    related to winding down the webOS device business.                      
                                                                            
(c) For the period ended 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,
                                                        2013         2012   
                                                    -----------  -----------
                                                    (Unaudited)             
ASSETS                                                                      
                                                                            
Current assets:                                                             
  Cash and cash equivalents                         $    12,163  $    11,301
  Accounts receivable                                    15,876       16,407
  Financing receivables                                   3,144        3,252
  Inventory                                               6,046        6,317
  Other current assets                                   13,135       13,360
                                                    -----------  -----------
                                                                            
    Total current assets                                 50,364       50,637
                                                    -----------  -----------
                                                                            
Property, plant and equipment                            11,463       11,954
                                                                            
Long-term financing receivables and other assets          9,556       10,593
                                                                            
Goodwill and intangible assets                           34,293       35,584
                                                    -----------  -----------
                                                                            
Total assets                                        $   105,676  $   108,768
                                                    ===========  ===========
                                                                            
                                                                            
LIABILITIES AND STOCKHOLDERS' EQUITY                                        
                                                                            
Current liabilities:                                                        
  Notes payable and short-term borrowings           $     5,979  $     6,647
  Accounts payable                                       14,019       13,350
  Employee compensation and benefits                      4,436        4,058
  Taxes on earnings                                       1,203          846
  Deferred revenue                                        6,477        7,494
  Other accrued liabilities                              13,407       14,271
                                                    -----------  -----------
                                                                            
    Total current liabilities                            45,521       46,666
                                                    -----------  -----------
                                                                            
Long-term debt                                           16,608       21,789
                                                                            
Other liabilities                                        15,891       17,480
                                                                            
Stockholders' equity:                                                       
  HP stockholders' equity                                27,269       22,436
  Non-controlling interests                                 387          397
                                                    -----------  -----------
                                                                            
    Total stockholders' equity                           27,656       22,833
                                                    -----------  -----------
                                                                            
Total liabilities and stockholders' equity          $   105,676  $   108,768
                                                    ===========  ===========
                                                                            
                                                                            
                                                                            
                  HEWLETT-PACKARD COMPANY AND SUBSIDIARIES                  
                   CONSOLIDATED STATEMENTS OF CASH FLOWS                    
                                (Unaudited)                                 
                               (In millions)                                
                                                                            
                                               Three months   Twelve months 
                                                  ended           ended     
                                               October 31,     October 31,  
                                                   2013            2013     
                                              -------------   ------------- 
                                                                            
Cash flows from operating activities:                                       
  Net earnings                                $       1,414   $       5,113 
  Adjustments to reconcile net earnings to                                  
   net cash provided by operating                                           
   activities:                                                              
    Depreciation and amortization                     1,120           4,611 
    Stock-based compensation expense                    102             500 
    Provision for doubtful accounts and                                     
     inventory                                           71             336 
    Restructuring charges                               371             990 
    Deferred taxes on earnings                         (952)           (410)
    Excess tax benefit from stock-based                                     
     compensation                                        (1)             (2)
    Other, net                                          100             443 
                                                                            
    Changes in operating assets and                                         
     liabilities:                                                           
      Accounts receivables                           (1,542)            530 
      Financing receivables                             (84)            484 
      Inventory                                         441              (4)
      Accounts payable                                  611             541 
      Taxes on earnings                                 937             417 
      Restructuring                                    (260)           (904)
      Other assets and liabilities                      488          (1,037)
                                              -------------   ------------- 
        Net cash provided by operating                                      
         activities                                   2,816          11,608 
                                              -------------   ------------- 
                                                                            
Cash flows from investing activities:                                       
    Investment in property, plant and                                       
     equipment                                         (919)         (3,199)
    Proceeds from sale of property, plant                                   
     and equipment                                      146             653 
    Purchases of available-for-sale                                         
     securities and other investments                  (450)         (1,243)
    Maturities and sales of available-for-                                  
     sale securities and other investments              279           1,153 
    Payments made in connection with                                        
     business acquisitions, net of cash                                     
     acquired                                             -            (167)
                                              -------------   ------------- 
        Net cash used in investing                                          
         activities                                    (944)         (2,803)
                                              -------------   ------------- 
                                                                            
Cash flows from financing activities:                                       
    Issuance (repayment) of commercial paper                                
     and notes payable, net                              16            (154)
    Issuance of debt                                     25             279 
    Payment of debt                                  (2,248)         (5,721)
    Issuance of common stock under employee                                 
     stock plans                                          9             288 
    Repurchase of common stock                         (479)         (1,532)
    Excess tax benefit from stock-based                                     
     compensation                                         1               2 
    Cash dividends paid                                (284)         (1,105)
                                              -------------   ------------- 
        Net cash used in financing                                          
         activities                                  (2,960)         (7,943)
                                              -------------   ------------- 
                                                                            
(Decrease) increase in cash and cash                                        
 equivalents                                         (1,088)            862 
Cash and cash equivalents at beginning of                                   
 period                                              13,251          11,301 
                                              -------------   ------------- 
Cash and cash equivalents at end of period    $      12,163   $      12,163 
                                              =============   ============= 
                                                                            
                                                                            
                                                                            
                  HEWLETT-PACKARD COMPANY AND SUBSIDIARIES                  
                            SEGMENT INFORMATION                             
                                (Unaudited)                                 
                               (In millions)                                
                                                                            
                                              Three months ended            
                                   ---------------------------------------- 
                                    October 31,    July 31,     October 31, 
                                       2013          2013          2012     
                                   ------------  ------------  ------------ 
Net revenue:(a)                                                             
                                                                            
  Personal Systems                 $      8,579  $      7,704  $      8,727 
  Printing                                6,044         5,803         6,080 
                                   ------------  ------------  ------------ 
    Total Printing and Personal                                             
     Systems Group(b)                    14,623        13,507        14,807 
  Enterprise Group                        7,594         6,786         7,459 
  Enterprise Services                     5,759         5,843         6,352 
  Software                                1,064           982         1,171 
  HP Financial Services                     912           879           966 
  Corporate Investments                       5             5            10 
                                   ------------  ------------  ------------ 
    Total segments                       29,957        28,002        30,765 
  Elimination of intersegment net                                           
   revenue and other                       (826)         (776)         (806)
                                   ------------  ------------  ------------ 
                                                                            
    Total HP consolidated net                                               
     revenue                       $     29,131  $     27,226  $     29,959 
                                   ============  ============  ============ 
                                                                            
Earnings before taxes:(a)                                                   
                                                                            
  Personal Systems                 $        259  $        228  $        309 
  Printing                                1,071           908         1,067 
                                   ------------  ------------  ------------ 
    Total Printing and Personal                                             
     Systems Group(b)                     1,330         1,136         1,376 
  Enterprise Group                        1,102         1,033         1,229 
  Enterprise Services                       255           192           423 
  Software                                  328           201           318 
  HP Financial Services                     102            99           104 
  Corporate Investments                     (57)          (58)          (78)
                                   ------------  ------------  ------------ 
    Total segment earnings from                                             
     operations                           3,060         2,603         3,372 
                                                                            
  Corporate and unallocated costs                                           
   and eliminations                        (344)         (200)         (119)
  Unallocated costs related to                                              
   stock-based compensation                                                 
   expense                                 (102)         (107)         (141)
  Amortization of intangible                                                
   assets                                  (317)         (356)         (372)
  Impairment of goodwill and                                                
   intangible assets                          -             -        (8,847)
  Restructuring charges                    (371)          (81)         (378)
  Acquisition-related charges                (3)           (4)           (3)
  Interest and other, net                  (103)         (146)         (188)
                                   ------------  ------------  ------------ 
                                                                            
    Total HP consolidated earnings                                          
     (loss) before taxes           $      1,820  $      1,709  $     (6,676)
                                   ============  ============  ============ 
                                                                            
(a) HP has implemented certain organizational realignments in the first     
    quarter of fiscal 2013. As a result of these realignments, HP has re-   
    evaluated its segment financial reporting structure and, effective in   
    the first quarter of fiscal 2013, created two new financial reporting   
    segments, the Enterprise Group segment and the Enterprise Services      
    segment, and eliminated two other financial reporting segments, the     
    Enterprise Servers, Storage and Networking ("ESSN") segment and the     
    Services segment. The Enterprise Group segment consists of the business 
    units within the former ESSN segment and most of the services offerings 
    of the Technology Services ("TS") business unit, which was previously a 
    part of the former Services segment. The Enterprise Services segment    
    consists of the Applications and Business Services ("ABS") and          
    Infrastructure Technology Outsourcing ("ITO") business units from the   
    former Services segment, along with the end-user workplace support      
    services business that was previously a part of the TS business unit.   
    Taking into account these changes, HP has the following seven financial 
    reporting segments: Personal Systems, Printing, the Enterprise Group,   
    Enterprise Services, Software, HP Financial Services and Corporate      
    Investments.                                                            
                                                                            
    Also as a result of these realignments, the financial results of the    
    Personal Systems commercial products support business, which were       
    previously reported as part of the TS business unit, will now be        
    reported as part of the Other business unit within the Personal Systems 
    segment, and the financial results of the portion of the business       
    intelligence services business that had continued to be reported as part
    of the Corporate Investments segment following the implementation of    
    prior realignment actions will now be reported as part of the ABS       
    business unit. In addition, the end-user workplace support services     
    business, which, as noted above, was previously a part of the TS        
    business unit and will now become a part of the Enterprise Services     
    segment, will be reported as part of the ITO business unit within that  
    segment.                                                                
                                                                            
    To provide improved visibility and comparability, HP has reflected these
    changes to its reporting structure in prior financial reporting periods 
    on an as-if basis, which has resulted in the transfer of revenue and    
    operating profit among the Personal Systems, the Enterprise Group,      
    Enterprise Services and Corporate Investments segments. These changes   
    had no impact on the previously reported financial results for the      
    Printing, Software or HP Financial Services segments. In addition, none 
    of these changes impacted HP's previously reported consolidated net     
    revenue, earnings from operations, net earnings or net earnings per     
    share.                                                                  
                                                                            
(b) The Personal Systems segment and the Printing segment are structured    
    beneath a broader Printing and Personal Systems Group ("PPS"). While PPS
    is not a financial reporting segment, HP provides financial data        
    aggregating the segments within it in order to provide a supplementary  
    view of its business.                                                   
                                                                            
                                                                            
                                                                            
                  HEWLETT-PACKARD COMPANY AND SUBSIDIARIES                  
                            SEGMENT INFORMATION                             
                                (In millions)                               
                                                                            
                                                    Twelve months ended     
                                                        October 31,         
                                                --------------------------- 
                                                    2013           2012     
                                                ------------   ------------ 
                                                 (Unaudited)                
Net revenue:(a)                                                             
                                                                            
  Personal Systems                              $     32,071   $     35,725 
  Printing                                            23,854         24,487 
                                                ------------   ------------ 
    Total Printing and Personal Systems                                     
     Group(b)                                         55,925         60,212 
  Enterprise Group                                    28,183         29,779 
  Enterprise Services                                 23,520         25,609 
  Software                                             3,913          4,060 
  HP Financial Services                                3,629          3,819 
  Corporate Investments                                   24             58 
                                                ------------   ------------ 
    Total Segments                                   115,194        123,537 
  Elimination of intersegment net revenue and                               
   other                                              (2,896)        (3,180)
                                                ------------   ------------ 
                                                                            
    Total HP consolidated net revenue           $    112,298   $    120,357 
                                                ============   ============ 
                                                                            
Earnings before taxes:(a)                                                   
                                                                            
  Personal Systems                              $        949   $      1,689 
  Printing                                             3,890          3,585 
                                                ------------   ------------ 
    Total Printing and Personal Systems                                     
     Group(b)                                          4,839          5,274 
  Enterprise Group                                     4,301          5,194 
  Enterprise Services                                    679          1,045 
  Software                                               866            827 
  HP Financial Services                                  399            388 
  Corporate Investments                                 (236)          (233)
                                                ------------   ------------ 
    Total segment earnings from operations            10,848         12,495 
                                                                            
  Corporate and unallocated costs and                                       
   eliminations                                         (832)          (787)
  Unallocated costs related to stock-based                                  
   compensation expense                                 (500)          (635)
  Amortization of intangible assets                   (1,373)        (1,784)
  Impairment of goodwill and intangible assets             -        (18,035)
  Restructuring charges                                 (990)        (2,266)
  Acquisition-related charges                            (22)           (45)
  Interest and other, net                               (621)          (876)
                                                ------------   ------------ 
                                                                            
    Total HP consolidated earnings (loss)                                   
     before taxes                               $      6,510   $    (11,933)
                                                ============   ============ 
                                                                            
(a) HP has implemented certain organizational realignments in the first     
    quarter of fiscal 2013. As a result of these realignments, HP has re-   
    evaluated its segment financial reporting structure and, effective in   
    the first quarter of fiscal 2013, created two new financial reporting   
    segments, the Enterprise Group segment and the Enterprise Services      
    segment, and eliminated two other financial reporting segments, the     
    Enterprise Servers, Storage and Networking ("ESSN") segment and the     
    Services segment. The Enterprise Group segment consists of the business 
    units within the former ESSN segment and most of the services offerings 
    of the Technology Services ("TS") business unit, which was previously a 
    part of the former Services segment. The Enterprise Services segment    
    consists of the Applications and Business Services ("ABS") and          
    Infrastructure Technology Outsourcing ("ITO") business units from the   
    former Services segment, along with the end-user workplace support      
    services business that was previously a part of the TS business unit.   
    Taking into account these changes, HP has the following seven financial 
    reporting segments: Personal Systems, Printing, the Enterprise Group,   
    Enterprise Services, Software, HP Financial Services and Corporate      
    Investments.                                                            
                                                                            
    Also as a result of these realignments, the financial results of the    
    Personal Systems commercial products support business, which were       
    previously reported as part of the TS business unit, will now be        
    reported as part of the Other business unit within the Personal Systems 
    segment, and the financial results of the portion of the business       
    intelligence services business that had continued to be reported as part
    of the Corporate Investments segment following the implementation of    
    prior realignment actions will now be reported as part of the ABS       
    business unit. In addition, the end-user workplace support services     
    business, which, as noted above, was previously a part of the TS        
    business unit and will now become a part of the Enterprise Services     
    segment, will be reported as part of the ITO business unit within that  
    segment.                                                                
                                                                            
    To provide improved visibility and comparability, HP has reflected these
    changes to its reporting structure in prior financial reporting periods 
    on an as-if basis, which has resulted in the transfer of revenue and    
    operating profit among the Personal Systems, the Enterprise Group,      
    Enterprise Services and Corporate Investments segments. These changes   
    had no impact on the previously reported financial results for the      
    Printing, Software or HP Financial Services segments. In addition, none 
    of these changes impacted HP's previously reported consolidated net     
    revenue, earnings from operations, net earnings or net earnings per     
    share.                                                                  
                                                                            
(b) The Personal Systems segment and the Printing segment are structured    
    beneath a broader Printing and Personal Systems Group ("PPS"). While PPS
    is not a financial reporting segment, HP provides financial data        
    aggregating the segments within it in order to provide a supplementary  
    view of its business.                                                   
                                                                            
                                                                            
                                                                            
                 HEWLETT-PACKARD COMPANY AND SUBSIDIARIES                   
                    SEGMENT / BUSINESS UNIT INFORMATION                     
                                (Unaudited)                                 
                               (In millions)                                
                                                                            
                                                              Growth rate   
                                     Three months ended           (%)       
                                ---------------------------  -------------  
                                 October    July    October                 
                                   31,      31,       31,                   
                                  2013      2013     2012     Q/Q     Y/Y   
                                --------  -------  --------  -----   -----  
Net revenue:(a)                                                             
                                                                            
  Printing and Personal Systems                                             
   Group(b)                                                                 
    Personal Systems                                                        
      Notebooks                 $  4,461  $ 3,722  $  4,572     20%     (2%)
      Desktops                     3,273    3,147     3,369      4%     (3%)
      Workstations                   554      537       550      3%      1% 
      Other                          291      298       236     (2%)    23% 
                                --------  -------  --------                 
        Total Personal Systems     8,579    7,704     8,727     11%     (2%)
                                --------  -------  --------                 
                                                                            
    Printing                                                                
      Supplies                     3,862    3,839     4,007      1%     (4%)
      Commercial Hardware          1,551    1,399     1,482     11%      5% 
      Consumer Hardware              631      565       591     12%      7% 
                                --------  -------  --------                 
        Total Printing             6,044    5,803     6,080      4%     (1%)
                                --------  -------  --------                 
          Total Printing and                                                
           Personal Systems                                                 
           Group                  14,623   13,507    14,807      8%     (1%)
                                --------  -------  --------                 
                                                                            
    Enterprise Group                                                        
      Industry Standard Servers    3,451    2,851     3,137     21%     10% 
      Technology Services          2,201    2,174     2,340      1%     (6%)
      Storage                        952      833       946     14%      1% 
      Networking                     656      644       635      2%      3% 
      Business Critical Systems      334      284       401     18%    (17%)
                                --------  -------  --------                 
        Total Enterprise Group     7,594    6,786     7,459     12%      2% 
                                --------  -------  --------                 
                                                                            
    Enterprise Services                                                     
      Infrastructure Technology                                             
       Outsourcing                 3,563    3,662     3,924     (3%)    (9%)
      Application and Business                                              
       Services                    2,196    2,181     2,428      1%    (10%)
                                --------  -------  --------                 
        Total Enterprise                                                    
         Services                  5,759    5,843     6,352     (1%)    (9%)
                                --------  -------  --------                 
                                                                            
    Software                       1,064      982     1,171      8%     (9%)
                                --------  -------  --------                 
                                                                            
    HP Financial Services            912      879       966      4%     (6%)
                                --------  -------  --------                 
                                                                            
    Corporate Investments              5        5        10      0%    (50%)
                                --------  -------  --------                 
      Total segments              29,957   28,002    30,765      7%     (3%)
                                --------  -------  --------                 
                                                                            
    Elimination of intersegment                                             
     net revenue and other          (826)    (776)     (806)     6%      2% 
                                --------  -------  --------                 
                                                                            
    Total HP consolidated net                                               
     revenue                    $ 29,131  $27,226  $ 29,959      7%     (3%)
                                ========  =======  ========                 
                                                                            
(a) HP has implemented certain organizational realignments in the first     
    quarter of fiscal 2013. As a result of these realignments, HP has re-   
    evaluated its segment financial reporting structure and, effective in   
    the first quarter of fiscal 2013, created two new financial reporting   
    segments, the Enterprise Group segment and the Enterprise Services      
    segment, and eliminated two other financial reporting segments, the     
    Enterprise Servers, Storage and Networking ("ESSN") segment and the     
    Services segment. The Enterprise Group segment consists of the business 
    units within the former ESSN segment and most of the services offerings 
    of the Technology Services ("TS") business unit, which was previously a 
    part of the former Services segment. The Enterprise Services segment    
    consists of the Applications and Business Services ("ABS") and          
    Infrastructure Technology Outsourcing ("ITO") business units from the   
    former Services segment, along with the end-user workplace support      
    services business that was previously a part of the TS business unit.   
    Taking into account these changes, HP has the following seven financial 
    reporting segments: Personal Systems, Printing, the Enterprise Group,   
    Enterprise Services, Software, HP Financial Services and Corporate      
    Investments.                                                            
                                                                            
    Also as a result of these realignments, the financial results of the    
    Personal Systems commercial products support business, which were       
    previously reported as part of the TS business unit, will now be        
    reported as part of the Other business unit within the Personal Systems 
    segment, and the financial results of the portion of the business       
    intelligence services business that had continued to be reported as part
    of the Corporate Investments segment following the implementation of    
    prior realignment actions will now be reported as part of the ABS       
    business unit. In addition, the end-user workplace support services     
    business, which, as noted above, was previously a part of the TS        
    business unit and will now become a part of the Enterprise Services     
    segment, will be reported as part of the ITO business unit within that  
    segment.                                                                
                                                                            
    To provide improved visibility and comparability, HP has reflected these
    changes to its reporting structure in prior financial reporting periods 
    on an as-if basis, which has resulted in the transfer of revenue and    
    operating profit among the Personal Systems, the Enterprise Group,      
    Enterprise Services and Corporate Investments segments. These changes   
    had no impact on the previously reported financial results for the      
    Printing, Software or HP Financial Services segments. In addition, none 
    of these changes impacted HP's previously reported consolidated net     
    revenue, earnings from operations, net earnings or net earnings per     
    share.                                                                  
                                                                            
(b) The Personal Systems segment and the Printing segment are structured    
    beneath a broader Printing and Personal Systems Group ("PPS"). While PPS
    is not a financial reporting segment, HP provides financial data        
    aggregating the segments within it in order to provide a supplementary  
    view of its business.                                                   
                                                                            
                                                                            
                                                                            
                  HEWLETT-PACKARD COMPANY AND SUBSIDIARIES                  
                    SEGMENT / BUSINESS UNIT INFORMATION                     
                               (In millions)                                
                                                                            
                                                     Twelve months ended    
                                                         October 31,        
                                                  ------------------------- 
                                                      2013          2012    
                                                  -----------   ----------- 
                                                  (Unaudited)               
Net revenue:(a)                                                             
                                                                            
  Printing and Personal Systems Group(b)                                    
    Personal Systems                                                        
      Notebooks                                   $    16,029   $    18,830 
      Desktops                                         12,844        13,888 
      Workstations                                      2,147         2,148 
      Other                                             1,051           859 
                                                  -----------   ----------- 
        Total Personal Systems                         32,071        35,725 
                                                  -----------   ----------- 
                                                                            
    Printing                                                                
      Supplies                                         15,716        16,151 
      Commercial Hardware                               5,702         5,895 
      Consumer Hardware                                 2,436         2,441 
                                                  -----------   ----------- 
        Total Printing                                 23,854        24,487 
                                                  -----------   ----------- 
          Total Printing and Personal Systems                               
           Group                                       55,925        60,212 
                                                  -----------   ----------- 
                                                                            
    Enterprise Group                                                        
      Industry Standard Servers                        12,102        12,582 
      Technology Services                               8,890         9,288 
      Storage                                           3,475         3,815 
      Networking                                        2,526         2,482 
      Business Critical Systems                         1,190         1,612 
                                                  -----------   ----------- 
        Total Enterprise Group                         28,183        29,779 
                                                  -----------   ----------- 
                                                                            
    Enterprise Services                                                     
      Infrastructure Technology Outsourcing            14,682        15,792 
      Application and Business Services                 8,838         9,817 
                                                  -----------   ----------- 
        Total Enterprise Services                      23,520        25,609 
                                                  -----------   ----------- 
                                                                            
    Software                                            3,913         4,060 
                                                  -----------   ----------- 
                                                                            
    HP Financial Services                               3,629         3,819 
                                                  -----------   ----------- 
                                                                            
    Corporate Investments                                  24            58 
                                                  -----------   ----------- 
        Total segments                                115,194       123,537 
                                                  -----------   ----------- 
                                                                            
  Elimination of intersegment net revenue and                               
   other                                               (2,896)       (3,180)
                                                  -----------   ----------- 
                                                                            
    Total HP consolidated net revenue             $   112,298   $   120,357 
                                                  ===========   =========== 
                                                                            
(a) HP has implemented certain organizational realignments in the first     
    quarter of fiscal 2013. As a result of these realignments, HP has re-   
    evaluated its segment financial reporting structure and, effective in   
    the first quarter of fiscal 2013, created two new financial reporting   
    segments, the Enterprise Group segment and the Enterprise Services      
    segment, and eliminated two other financial reporting segments, the     
    Enterprise Servers, Storage and Networking ("ESSN") segment and the     
    Services segment. The Enterprise Group segment consists of the business 
    units within the former ESSN segment and most of the services offerings 
    of the Technology Services ("TS") business unit, which was previously a 
    part of the former Services segment. The Enterprise Services segment    
    consists of the Applications and Business Services ("ABS") and          
    Infrastructure Technology Outsourcing ("ITO") business units from the   
    former Services segment, along with the end-user workplace support      
    services business that was previously a part of the TS business unit.   
    Taking into account these changes, HP has the following seven financial 
    reporting segments: Personal Systems, Printing, the Enterprise Group,   
    Enterprise Services, Software, HP Financial Services and Corporate      
    Investments.                                                            
                                                                            
    Also as a result of these realignments, the financial results of the    
    Personal Systems commercial products support business, which were       
    previously reported as part of the TS business unit, will now be        
    reported as part of the Other business unit within the Personal Systems 
    segment, and the financial results of the portion of the business       
    intelligence services business that had continued to be reported as part
    of the Corporate Investments segment following the implementation of    
    prior realignment actions will now be reported as part of the ABS       
    business unit. In addition, the end-user workplace support services     
    business, which, as noted above, was previously a part of the TS        
    business unit and will now become a part of the Enterprise Services     
    segment, will be reported as part of the ITO business unit within that  
    segment.                                                                
                                                                            
    To provide improved visibility and comparability, HP has reflected these
    changes to its reporting structure in prior financial reporting periods 
    on an as-if basis, which has resulted in the transfer of revenue and    
    operating profit among the Personal Systems, the Enterprise Group,      
    Enterprise Services and Corporate Investments segments. These changes   
    had no impact on the previously reported financial results for the      
    Printing, Software or HP Financial Services segments. In addition, none 
    of these changes impacted HP's previously reported consolidated net     
    revenue, earnings from operations, net earnings or net earnings per     
    share.                                                                  
                                                                            
(b) The Personal Systems segment and the Printing segment are structured    
    beneath a broader Printing and Personal Systems Group ("PPS"). While PPS
    is not a financial reporting segment, HP provides financial data        
    aggregating the segments within it in order to provide a supplementary  
    view of its business.                                                   
                                                                            
                                                                            
                                                                            
                  HEWLETT-PACKARD COMPANY AND SUBSIDIARIES                  
               SEGMENT NON-GAAP OPERATING MARGIN SUMMARY DATA               
                                (Unaudited)                                 
                                                                            
                                   Three months      Change in Operating    
                                       ended             Margin (pts)       
                                   ------------   ------------------------- 
                                   October 31,                              
                                       2013           Q/Q           Y/Y     
                                   ------------   -----------   ----------- 
                                                                            
Non-GAAP operating margin:(a)                                               
  Personal Systems                          3.0%            -      (0.5 pts)
  Printing                                 17.7%      2.1 pts       0.2 pts 
    Printing and Personal Systems                                           
     Group(b)                               9.1%      0.7 pts      (0.2 pts)
                                                                            
  Enterprise Group                         14.5%     (0.7 pts)     (2.0 pts)
  Enterprise Services                       4.4%      1.1 pts      (2.3 pts)
  Software                                 30.8%     10.3 pts       3.6 pts 
  HP Financial Services                    11.2%     (0.1 pts)      0.4 pts 
  Corporate Investments                      NM            NM            NM 
      Total segments                       10.2%      0.9 pts      (0.8 pts)
                                                                            
      Total HP consolidated non-                                            
       GAAP operating margin                9.0%      0.6 pts      (1.4 pts)
                                                                            
(a) HP has implemented certain organizational realignments in the first     
    quarter of fiscal 2013. As a result of these realignments, HP has re-   
    evaluated its segment financial reporting structure and, effective in   
    the first quarter of fiscal 2013, created two new financial reporting   
    segments, the Enterprise Group segment and the Enterprise Services      
    segment, and eliminated two other financial reporting segments, the     
    Enterprise Servers, Storage and Networking ("ESSN") segment and the     
    Services segment. The Enterprise Group segment consists of the business 
    units within the former ESSN segment and most of the services offerings 
    of the Technology Services ("TS") business unit, which was previously a 
    part of the former Services segment. The Enterprise Services segment    
    consists of the Applications and Business Services ("ABS") and          
    Infrastructure Technology Outsourcing ("ITO") business units from the   
    former Services segment, along with the end-user workplace support      
    services business that was previously a part of the TS business unit.   
    Taking into account these changes, HP has the following seven financial 
    reporting segments: Personal Systems, Printing, the Enterprise Group,   
    Enterprise Services, Software, HP Financial Services and Corporate      
    Investments.                                                            
                                                                            
    Also as a result of these realignments, the financial results of the    
    Personal Systems commercial products support business, which were       
    previously reported as part of the TS business unit, will now be        
    reported as part of the Other business unit within the Personal Systems 
    segment, and the financial results of the portion of the business       
    intelligence services business that had continued to be reported as part
    of the Corporate Investments segment following the implementation of    
    prior realignment actions will now be reported as part of the ABS       
    business unit. In addition, the end-user workplace support services     
    business, which, as noted above, was previously a part of the TS        
    business unit and will now become a part of the Enterprise Services     
    segment, will be reported as part of the ITO business unit within that  
    segment.                                                                
                                                                            
    To provide improved visibility and comparability, HP has reflected these
    changes to its reporting structure in prior financial reporting periods 
    on an as-if basis, which has resulted in the transfer of revenue and    
    operating profit among the Personal Systems, the Enterprise Group,      
    Enterprise Services and Corporate Investments segments. These changes   
    had no impact on the previously reported financial results for the      
    Printing, Software or HP Financial Services segments. In addition, none 
    of these changes impacted HP's previously reported consolidated net     
    revenue, earnings from operations, net earnings or net earnings per     
    share.                                                                  
                                                                            
(b) The Personal Systems segment and the Printing segment are structured    
    beneath a broader Printing and Personal Systems Group ("PPS"). While PPS
    is not a financial reporting segment, HP provides financial data        
    aggregating the segments within it in order to provide a supplementary  
    view of its business.                                                   
                                                                            
                                                                            
                                                                            
                  HEWLETT-PACKARD COMPANY AND SUBSIDIARIES                  
                   CALCULATION OF NET EARNINGS PER SHARE                    
                                (Unaudited)                                 
                   (In millions except per share amounts)                   
                                                                            
                                               Three months ended           
                                     -------------------------------------- 
                                      October 31,   July 31,    October 31, 
                                         2013         2013         2012     
                                     ------------  ----------  ------------ 
                                                                            
Numerator:                                                                  
  GAAP net earnings (loss)           $      1,414  $    1,390  $     (6,854)
                                     ============  ==========  ============ 
  Non-GAAP net earnings              $      1,959  $    1,676  $      2,281 
                                     ============  ==========  ============ 
                                                                            
Denominator:                                                                
  Weighted-average shares used to                                           
   compute basic net earnings                                               
   (loss) per share and diluted net                                         
   (loss) per share                         1,918       1,929         1,964 
  Dilutive effect of employee stock                                         
   plans                                       22          19             3 
                                     ------------  ----------  ------------ 
    Weighted-average shares used to                                         
     compute diluted net earnings                                           
     per share                              1,940       1,948         1,967 
                                     ============  ==========  ============ 
                                                                            
GAAP net earnings (loss) per share:                                         
  Basic                              $       0.74  $     0.72  $      (3.49)
  Diluted(a)                         $       0.73  $     0.71  $      (3.49)
                                                                            
Non-GAAP net earnings per share:                                            
  Basic                              $       1.02  $     0.87  $       1.16 
  Diluted(b)                         $       1.01  $     0.86  $       1.16 
                                                                            
(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,       
                                                   ------------------------ 
                                                                            
                                                       2013         2012    
                                                   -----------  ----------- 
                                                                            
Numerator:                                                                  
  GAAP net earnings (loss)                         $     5,113  $   (12,650)
                                                   ===========  =========== 
  Non-GAAP net earnings                            $     6,938  $     8,035 
                                                   ===========  =========== 
                                                                            
Denominator:                                                                
  Weighted-average shares used to compute basic                             
   net earnings (loss) per share and diluted net                            
   (loss) per share                                      1,934        1,974 
                                                                            
  Dilutive effect of employee stock plans                   16           10 
                                                   -----------  ----------- 
    Weighted-average shares used to compute                                 
     diluted net earnings per share                      1,950        1,984 
                                                   ===========  =========== 
                                                                            
GAAP net earnings (loss) per share:                                         
  Basic                                            $      2.64  $     (6.41)
  Diluted(a)                                       $      2.62  $     (6.41)
                                                                            
Non-GAAP net earnings per share:                                            
  Basic                                            $      3.59  $      4.07 
  Diluted(b)                                       $      3.56  $      4.05 
                                                                            
                                                                            
(a) GAAP diluted net earnings per share reflects any dilutive effect of     
    outstanding stock options, performance-based restricted units,          
    restricted stock units and restricted stock, but that effect is excluded
    when calculating GAAP diluted net (loss) per share because it would be  
    anti-dilutive.                                                          
                                                                            
(b) Non-GAAP diluted net earnings per share reflects any dilutive effect of 
    outstanding stock options, performance-based restricted units,          
    restricted stock units and restricted stock.                            

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

Use and economic substance of non-GAAP financial measures used by HP
Non-GAAP operating profit and non-GAAP operating margin are defined to exclude the effects of any restructuring charges, charges relating to the impairment of goodwill and intangible assets, charges relating to the amortization of intangible assets, acquisition-related charges and charges related to the wind-down of HP businesses recorded during the relevant period. Non-GAAP net earnings and non-GAAP diluted net 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 net 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's management to better understand HP's consolidated financial performance in relation to the operating results of HP's segments, as HP's management does not believe that the excluded items are reflective of ongoing operating results. More specifically, HP's management excludes each of those items mentioned above for the following reasons:

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

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

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

Compensation for limitations associated with use of non-GAAP financial measures
HP compensates for the limitations on its use of non-GAAP financial measures by relying primarily on its GAAP results and using non-GAAP financial measures only supplementally. HP also provides robust and detailed reconciliations of each non-GAAP financial measure to its most directly comparable GAAP measure within this press release and in other written materials that include these non-GAAP financial measures, and HP encourages investors to review carefully those reconciliations.

Usefulness of non-GAAP financial measures to investors
HP believes that providing non-GAAP operating profit, non-GAAP operating margin, non-GAAP net earnings, non-GAAP diluted net earnings per share, gross cash, free cash flow, net debt, net cash, operating company net debt and operating company net cash 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 HP's management to evaluate and measure such performance. Disclosure of these non-GAAP financial measures also facilitates comparisons of HP's operating performance with the performance of other companies in HP's industry that supplement their GAAP results with non-GAAP financial measures that are calculated in a similar manner.

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

Add to Digg Bookmark with del.icio.us Add to Newsvine