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HP Reports Fourth Quarter 2006 Results
    --  Net revenue of $24.6 billion, up 7% year-over-year, or 6% when
        adjusted for the effects of currency

    --  Non-GAAP operating profit of $2.2 billion, or $0.68 earnings
        per share, up from $0.51 in the prior year period

    --  Cash flow from operations of $3.2 billion, up $1.4 billion
        year-over-year

    Business Editors/High-Tech Editors

PALO ALTO, Calif.--(BUSINESS WIRE)--Nov. 16, 2006--HP (NYSE:HPQ) (Nasdaq:HPQ) today announced financial results for its fourth fiscal quarter ended Oct. 31, 2006, with net revenue of $24.6 billion, representing growth of 7% year-over-year, or 6% when adjusted for the effects of currency.

GAAP operating profit was $1.9 billion and GAAP diluted earnings per share (EPS) was $0.60 per share, up from $0.14 in the prior year period. Non-GAAP operating profit was $2.2 billion, with non-GAAP diluted EPS of $0.68, up from $0.51 in the prior year period. Non-GAAP financial information excludes $208 million of adjustments on an after-tax basis, or $0.07 per diluted share, related primarily to restructuring-related costs and amortization of purchased intangibles. GAAP and non-GAAP financial information include stock-based compensation expense in the current financial period only.

"We closed a strong year with solid revenue growth, margin expansion across our key businesses and excellent cash flow from operations," said Mark Hurd, HP chairman and chief executive officer. "We are well on our way to building a more competitive HP that creates further value for our shareholders."

                      Q4 FY06 Q4 FY05   Y/Y    FY06    FY05     Y/Y

Net revenue ($B)      $ 24.6  $ 22.9       7% $ 91.7  $ 86.7        6%
GAAP operating margin    7.7%    1.0% 6.7 pts    7.2%    4.0%  3.2 pts
GAAP net income ($B)  $  1.7  $  0.4     308% $  6.2  $  2.4      158%
GAAP diluted EPS      $ 0.60  $ 0.14     329% $ 2.18  $ 0.82      166%
Non-GAAP operating
 margin                  9.0%    7.6% 1.4 pts    8.0%    6.4%  1.6 pts
Non-GAAP net income
 ($B)                 $  1.9  $  1.5      27% $  6.8  $  4.7       44%
Non-GAAP diluted EPS  $ 0.68  $ 0.51      33% $ 2.38  $ 1.62       47%

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

During the quarter, on a year-over-year basis, revenue in the Americas grew 8% to $10.8 billion, revenue in Europe, the Middle East and Africa grew 7% to $9.7 billion, and revenue in Asia Pacific grew 6% to $4.0 billion. When adjusted for the effects of currency, revenue in the Americas grew 7%, revenue in Europe, the Middle East and Africa grew 3%, and revenue in Asia Pacific grew 7%.

Personal Systems Group

Personal Systems Group (PSG) revenue grew 10% year-over-year to $7.8 billion, with unit shipments up 16%. On a year-over-year basis, notebook revenue grew 24% while desktop revenue was flat. Commercial client revenue grew 4% year-over-year, while Consumer client revenue increased 19%. Operating profit was $336 million, or 4.3% of revenue, up from a profit of $200 million, or 2.8% of revenue, in the prior year period.

Imaging and Printing Group

Imaging and Printing Group (IPG) revenue grew 7% year-over-year to $7.3 billion. On a year-over-year basis, supplies revenue grew 9%, commercial hardware revenue grew 8% and consumer hardware revenue grew 2%. Printer unit shipments increased 17% year-over-year, with consumer printer hardware units up 16% and commercial printer hardware units up 20%. Momentum in key growth initiatives continued, with all-in-one unit shipments up 22% year-over-year, appliance photo printers up 70%, color laser printer shipments up 40% and printer-based MFP shipments up 160%. HP Indigo Press printed page volume grew 41% over the prior year period. Operating profit was $1.1 billion, or 14.8% of revenue, up from a profit of $896 million, or 13.2% of revenue, in the prior year period.

Enterprise Storage and Servers

Enterprise Storage and Servers (ESS) reported revenue of $4.7 billion, up 4% over the prior year period. On a year-over-year basis, industry-standard server revenue increased 9%, with blade revenue growth of 38%. Networked storage revenue grew 1%, with revenue growth of 11% in the midrange EVA line offset by declines in the high-end array and tape businesses. Business critical systems revenue declined 4%, as Integrity systems growth of 77% was offset by declines in PA-RISC and Alpha. Operating profit was $502 million, or 10.7% of revenue, up from a profit of $404 million, or 9.0% of revenue, in the prior year period.

HP Services

HP Services (HPS) revenue increased 5% year-over-year to $4.1 billion. Revenue in Technology Services was flat over the prior year period, with Consulting and Integration revenue up 7% and Managed Services revenue up 16%. Operating profit was $505 million, or 12.4% of revenue, up from a profit of $322 million, or 8.3% of revenue, in the prior year period.

Software

Software revenue was $349 million, an increase of 14% year-over-year, with revenue in HP OpenView up 28% and revenue in HP OpenCall down 11%. Operating profit was $60 million, or 17.2% of revenue, up from a profit of $28 million, or 9.2% of revenue, in the prior year period. On Nov. 7, HP announced that it had closed the purchase of Mercury. The deal integrates Mercury's leading application management and delivery and IT governance capabilities with HP's broad portfolio of management solutions to create a new HP Software organization that will lead the industry in business technology optimization.

Financial Services

HP Financial Services (HPFS) reported revenue of $545 million, an increase of 6% year-over-year. Financing volume increased 1% over the prior year period, and net portfolio assets grew 4%. Operating profit was $35 million, or 6.4% of revenue, down from a profit of $52 million, or 10.1% of revenue, in the prior year period.

Asset management

Inventory ended the quarter at $7.8 billion, up $286 million sequentially and $873 million year-over-year. Accounts receivable grew $1.2 billion sequentially and increased $970 million over the prior year period to $10.9 billion. HP's dividend payment of $0.08 per share in the fourth quarter resulted in cash usage of $219 million. HP utilized $1.0 billion of cash during the fourth quarter to repurchase approximately 30 million shares of common stock. In addition, HP received approximately 13 million shares of common stock under the company's prepaid variable share purchase program. HP exited the quarter with $16.4 billion in gross cash, which includes cash and cash equivalents of $16.4 billion, short-term investments of $22 million, and certain long-term investments of $20 million.

Full year fiscal 2006

Net revenue for the full fiscal year 2006 was $91.7 billion, representing growth of 6% over the prior year period, or 7% when adjusted for the effects of currency. GAAP operating profit was $6.6 billion and GAAP diluted earnings per share (EPS) was $2.18 per share, up from $0.82 in the prior year period. Non-GAAP operating profit was $7.4 billion, with non-GAAP diluted EPS of $2.38, up from $1.62 in the prior year period. Non-GAAP financial information excludes $579 million of adjustments on an after-tax basis, or $0.20 per diluted share, related primarily to restructuring-related costs and amortization of purchased intangibles. GAAP and non-GAAP financial information include stock-based compensation expense in the current financial period only. Cash flow from operations for the full fiscal year 2006 was $11.4 billion, up from $8.1 billion in the prior year period.

Outlook

HP estimates Q1 FY07 revenue will be approximately $24.1 billion to $24.3 billion.

First quarter FY07 GAAP diluted EPS is expected to be in the range of $0.55 to $0.57, and non-GAAP diluted EPS is expected to be in the range of $0.60 to $0.62. Non-GAAP diluted EPS estimates exclude after-tax costs of approximately $0.05 per share, related primarily to the amortization of purchased intangible assets. First quarter FY07 GAAP and non-GAAP diluted EPS estimates include approximately $0.04 of stock-based compensation expense.

HP estimates full year FY07 revenue will be approximately $97.0 billion.

FY07 GAAP diluted EPS expected to be in the range of $2.28 to $2.33, and FY07 non-GAAP diluted EPS is expected to be in the range of $2.48 to $2.53. FY07 non-GAAP diluted EPS estimates exclude after-tax costs of approximately $0.20 per share, related primarily to the amortization of purchased intangible assets. Full year FY07 non-GAAP and GAAP diluted EPS estimates include approximately $0.14 of stock-based compensation expense.

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

HP's Q4 FY06 earnings conference call is accessible via an audio webcast at www.hp.com/hpinfo/investor/financials/quarters/2006/q4webcast.html.

About HP

HP is a technology solutions provider to consumers, businesses and institutions globally. The company's offerings span IT infrastructure, global services, business and home computing, and imaging and printing. For the four fiscal quarters ended Oct. 31, 2006, HP revenue totaled $91.7 billion. More information about HP is available at www.hp.com.

Use of non-GAAP financial information

To supplement HP's consolidated condensed financial statements presented on a GAAP basis, HP provides non-GAAP operating profit, non-GAAP operating margin, non-GAAP net income, non-GAAP diluted earnings per share and gross cash. HP also provides forecasts of non-GAAP diluted earnings per share. A reconciliation of the adjustments to GAAP results for this quarter, fiscal year-to-date, and prior periods is included in the tables below. In addition, an explanation of the ways in which HP management uses these non-GAAP measures to evaluate its business, the substance behind HP management's decision to use these non-GAAP measures, the material limitations associated with the use of these non-GAAP measures, the manner in which HP management compensates for those limitations, and the substantive reasons why HP management believes that these non-GAAP measures provide useful information to investors is included under "Use of Non-GAAP Financial Measures" after the tables below. This additional non-GAAP financial information is not meant to be considered in isolation or as a substitute for operating profit, operating margin, net income, diluted earnings per share, or cash and cash equivalents 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, charges, earnings or other financial items; any statements of the plans, strategies, and objectives of management for future operations, including execution of any restructuring plans; any statements concerning the expected development, performance or market share relating to products or services; any statements of expectation or belief; and any statements of assumptions underlying any of the foregoing. Risks, uncertainties and assumptions include macroeconomic and geopolitical trends and events; execution and performance of contracts by suppliers, customers and partners; employee management issues; the challenge of managing asset levels, including inventory; the difficulty of aligning expense levels with revenue changes; assumptions related to pension and other post-retirement costs; and other risks that are described from time to time in HP's Securities and Exchange Commission reports, including but not limited to the risks described in HP's Annual Report on Form 10-K for the fiscal year ended October 31, 2005, HP's Quarterly Report on Form 10-Q for the fiscal quarter ended July 31, 2006 and other reports filed after that report. As in prior years, the financial information set forth in this release, including tax-related items, reflects estimates based on information available at this time. While HP believes these estimates to be meaningful, these amounts could differ materially from actual reported amounts in HP's Form 10-K for the fiscal year ended October 31, 2006. In particular, determining HP's actual tax balances and provisions as of October 31, 2006 and for the fiscal year then ended requires extensive internal and external review of tax data (including consolidating and reviewing the tax provisions of numerous domestic and foreign entities) which is being completed in the ordinary course of preparing HP's Form 10-K. HP assumes no obligation and does not intend to update these forward-looking statements.

Note to editors: HP news releases are available via RSS feed at www.hp.com/hpinfo/rss.html.

(C) 2006 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.

               HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
            CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
                             (Unaudited)
                (In millions except per share amounts)

                                            Three months ended
                                     ---------------------------------
                                     October 31, July 31,  October 31,
                                         2006       2006       2005
                                     ----------- --------- -----------

Net revenue                            $ 24,555  $ 21,890    $ 22,913

Costs and expenses(a):
  Cost of sales                          18,593    16,472      17,532
  Research and development                  870       920         859
  Selling, general and
   administrative                         2,886     2,830       2,786
  Amortization of purchased
   intangible assets                        153       153         136
  Restructuring charges                     152         5       1,565
  In-process research and
   development charges                        -         -           2
  Pension curtailment gain                    -         -        (199)
                                     ----------- --------- -----------
     Total costs and expenses            22,654    20,380      22,681
                                     ----------- --------- -----------

Earnings from operations                  1,901     1,510         232

Interest and other, net                     190       221         132
Gains on investments                         14         7          14
Dispute settlement                            -         -           3
                                     ----------- --------- -----------

Earnings before taxes                     2,105     1,738         381

Provision for (benefit from)
 taxes(b)                                   408       363         (35)
                                     ----------- --------- -----------

Net earnings                           $  1,697  $  1,375    $    416
                                     =========== ========= ===========

Net earnings per share:
   Basic                               $   0.62  $   0.50    $   0.15
   Diluted                             $   0.60  $   0.48    $   0.14


Cash dividends declared per share      $      -  $   0.16    $      -

Weighted-average shares used to compute net earnings per share:
  Basic                                   2,730     2,768       2,850
  Diluted                                 2,816     2,839       2,908

(a) Stock-based compensation expense included under SFAS 123(R) was as
 follows:
   Cost of sales                       $     37  $     35    $      -
   Research and development                  20        17           -
   Selling, general and
    administrative                           84        75           -
                                     ----------- --------- -----------
     Total costs and expenses          $    141  $    127    $      -

(b) Tax benefit from stock-based
 compensation                          $    (40) $    (38)   $      -
               HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
            CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
                (In millions except per share amounts)

                                                  Twelve months ended
                                                      October 31,
                                                 ---------------------
                                                     2006      2005
                                                 ----------- ---------
                                                 (Unaudited)

Net revenue                                        $ 91,658  $ 86,696

Costs and expenses(a):
     Cost of sales                                   69,427    66,440
     Research and development                         3,591     3,490
     Selling, general and administrative             11,266    11,184
     Amortization of purchased intangible
      assets                                            604       622
     Restructuring charges                              158     1,684
     In-process research and development
      charges                                            52         2
     Pension curtailment gain                             -      (199)
                                                 ----------- ---------
          Total costs and expenses                   85,098    83,223
                                                 ----------- ---------

Earnings from operations                              6,560     3,473

Interest and other, net                                 606       189
Gains (losses) on investments                            25       (13)
Dispute settlement                                        -      (106)
                                                 ----------- ---------

Earnings before taxes                                 7,191     3,543

Provision for taxes(b)                                  993     1,145
                                                 ----------- ---------

Net earnings                                       $  6,198  $  2,398
                                                 =========== =========

Net earnings per share:
     Basic                                         $   2.23  $   0.83
     Diluted                                       $   2.18  $   0.82


Cash dividends declared per share                  $   0.32  $   0.32

Weighted-average shares used to compute net
 earnings per share:
     Basic                                            2,782     2,879
     Diluted                                          2,852     2,909

(a) Stock-based compensation expense included under SFAS 123(R) was as
 follows:
     Cost of sales                                 $    144  $      -
     Research and development                            70         -
     Selling, general and administrative                322         -
                                                 ----------- ---------
          Total costs and expenses                 $    536  $      -

(b) Tax benefit from stock-based compensation      $   (160) $      -
               HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
      ADJUSTMENTS TO GAAP NET INCOME, 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
                   October Earnings  July   Earnings  October Earnings
                    31,      Per      31,     Per      31,      Per
                    2006    Share     2006   Share     2005    Share
                  ----------------- ---------------- -----------------

Net income per
 GAAP              $1,697    $0.60  $1,375    $0.48     $416    $0.14

Non-GAAP
 adjustments:
 Amortization of
  purchased
  intangible
  assets              153     0.05     153     0.05      136     0.05
 Restructuring
  charges             152     0.05       5        -    1,565     0.53
 In-process
  research and
  development
  charges               -        -       -        -        2        -
 Pension
  curtailment
  gain                  -        -       -        -     (199)   (0.07)
 Gains on
  investments         (14)       -      (7)       -      (14)       -
 Adjustments for
  taxes               (83)   (0.02)    (43)   (0.01)    (410)   (0.14)
                  ----------------- ---------------- -----------------

Non-GAAP net
 income            $1,905    $0.68  $1,483    $0.52   $1,496    $0.51
                  ================= ================ =================


Earnings from
 operations per
 GAAP              $1,901           $1,510              $232
Non-GAAP
 adjustments:
 Amortization of
  purchased
  intangible
  assets              153              153               136
 Restructuring
  charges             152                5             1,565
 In-process
  research and
  development
  charges               -                -                 2
 Pension
  curtailment
  gain                  -                -              (199)
                  --------          -------          --------

Non-GAAP earnings
 from operations   $2,206           $1,668            $1,736
                  ========          =======          ========

Operating margin
 per GAAP               8%               7%                1%
Non-GAAP
 adjustments            1%               1%                7%
                  --------          -------          --------

Non-GAAP
 operating margin       9%               8%                8%
                  ========          =======          ========
               HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
      ADJUSTMENTS TO GAAP NET INCOME, EARNINGS FROM OPERATIONS,
               OPERATING MARGIN AND EARNINGS PER SHARE
                             (Unaudited)
                (In millions except per share amounts)

                            Twelve                Twelve
                             months    Diluted     months    Diluted
                             ended    Earnings     ended     Earnings
                          October 31,    Per    October 31,    Per
                              2006      Share       2005      Share
                          ----------- --------- ----------- ----------

Net income per GAAP        $   6,198  $   2.18   $   2,398  $    0.82

Non-GAAP adjustments:
  Amortization of
   purchased intangible
   assets                        604      0.21         622       0.22
  Restructuring charges          158      0.06       1,684       0.58
  In-process research and
   development charges            52      0.02           2          -
  Pension curtailment
   gain                            -         -        (199)     (0.07)
  (Gains)losses on
   investments                   (25)    (0.01)         13          -
  Adjustments for taxes         (210)    (0.08)       (600)     (0.20)
  Non-recurring American
   Jobs Creation Act
   income tax expense              -         -         788       0.27
                          ----------- --------- ----------- ----------

Non-GAAP net income        $   6,777  $   2.38   $   4,708  $    1.62
                          =========== ========= =========== ==========


Earnings from operations
 per GAAP                  $   6,560             $   3,473
Non-GAAP adjustments:
  Amortization of
   purchased intangible
   assets                        604                   622
  Restructuring charges          158                 1,684
  In-process research and
   development charges            52                     2
  Pension curtailment
   gain                            -                  (199)
                          -----------           -----------

Non-GAAP earnings from
 operations                $   7,374             $   5,582
                          ===========           ===========

Operating margin per GAAP          7%                    4%
Non-GAAP adjustments               1%                    2%
                          -----------           -----------

Non-GAAP operating margin          8%                    6%
                          ===========           ===========
               HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
                CONSOLIDATED CONDENSED BALANCE SHEETS
                            (In millions)

                                               October 31, October 31,
                                                   2006        2005
                                               ----------- -----------
                                               (unaudited)

ASSETS

Current assets:
     Cash and cash equivalents                  $  16,400   $  13,911
     Short-term investments                            22          18
     Accounts receivable                           10,873       9,903
     Financing receivables                          2,440       2,551
     Inventory                                      7,750       6,877
     Other current assets                          10,681      10,074
                                               ----------- -----------

        Total current assets                       48,166      43,334
                                               ----------- -----------

Property, plant and equipment                       6,863       6,451

Long-term financing receivables and other
 assets                                             7,276       7,502

Goodwill and purchased intangible assets           20,205      20,030
                                               ----------- -----------

Total assets                                    $  82,510   $  77,317
                                               =========== ===========


LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
     Notes payable and short-term borrowings    $   2,705   $   1,831
     Accounts payable                              12,102      10,223
     Employee compensation and benefits             3,148       2,343
     Taxes on earnings                              1,630       2,367
     Deferred revenue                               4,309       3,815
     Accrued restructuring                            547       1,119
     Other accrued liabilities                     11,134       9,762
                                               ----------- -----------

        Total current liabilities                  35,575      31,460
                                               ----------- -----------

Long-term debt                                      2,490       3,392
Other liabilities                                   6,301       5,289

Stockholders' equity                               38,144      37,176
                                               ----------- -----------

Total liabilities and stockholders' equity      $  82,510   $  77,317
                                               =========== ===========
               HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
           CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                             (Unaudited)
                            (In millions)

                                            Three Months Twelve Months
                                                Ended        Ended
                                            October 31,  October 31,
                                                2006          2006
                                            ------------ -------------

Cash flows from operating activities:
   Net earnings                              $    1,697    $    6,198
   Adjustments to reconcile net earnings to
    net cash provided by operating
    activities:
     Depreciation and amortization                  596         2,353
     Stock-based compensation expense               141           536
     Provision for bad debt and inventory            99           271
     Gains on investments                           (14)          (25)
     In-process research and development
      charges                                         -            52
     Restructuring charges                          152           158
     Deferred taxes on earnings                     339           720
     Excess tax benefit from stock-based
      compensation                                  (92)         (251)
     Other, net                                     (11)           18
  Changes in assets and liabilities:
     Accounts and financing receivables          (1,246)         (882)
     Inventory                                     (381)       (1,109)
     Accounts payable                             1,407         1,879
     Taxes on earnings                              (61)         (540)
     Restructuring                                 (324)         (810)
     Other assets and liabilities                   942         2,785
                                            ------------ -------------
        Net cash provided by operating
         activities                               3,244        11,353
                                            ------------ -------------

Cash flows from investing activities:
     Investment in property, plant and
      equipment                                    (965)       (2,536)
     Proceeds from sale of property, plant
      and equipment                                  97           556
     Purchases of available-for-sale
      securities and other investments              (17)          (46)
     Maturities and sales of available-for-
      sale securities and other investments          36            94
     Payments made in connection with
      business acquisitions, net                    (32)         (855)
                                            ------------ -------------
        Net cash used in investing
         activities                                (881)       (2,787)
                                            ------------ -------------

Cash flows from financing activities:
     Repayment of commercial paper and
      notes payable, net                         (1,611)          (55)
     Issuance of debt                                27         1,121
     Payment of debt                                (39)       (1,259)
     Issuance of common stock under employee
      stock plans                                   848         2,538
     Repurchase of common stock                  (1,042)       (6,057)
     Prepayment of common stock repurchases           -        (1,722)
     Excess tax benefit from stock-based
      compensation                                   92           251
     Dividends                                     (219)         (894)
                                            ------------ -------------
        Net cash used in financing
         activities                              (1,944)       (6,077)
                                            ------------ -------------

Increase in cash and cash equivalents               419         2,489
Cash and cash equivalents at beginning of
 period                                          15,981        13,911
                                            ------------ -------------
Cash and cash equivalents at end of period   $   16,400    $   16,400
                                            ============ =============
               HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
                         SEGMENT INFORMATION
                             (Unaudited)
                            (In millions)

                                            Three months ended
                                    ----------------------------------
                                    October 31, July 31,  October 31,
                                        2006       2006      2005(a)
                                    ----------- --------- ------------

Net revenue:

    Enterprise Storage and Servers    $  4,670  $  4,133     $  4,476
    HP Services                          4,080     3,888        3,900
    Software                               349       318          306
                                    ----------- --------- ------------
  Technology Solutions Group             9,099     8,339        8,682
                                    ----------- --------- ------------
  Personal Systems Group                 7,823     6,917        7,113
  Imaging and Printing Group             7,283     6,234        6,785
  HP Financial Services                    545       519          514
  Corporate Investments                    160       155          142
                                    ----------- --------- ------------
    Total Segments                      24,910    22,164       23,236
  Eliminations of intersegment net
   revenue and other                      (355)     (274)        (323)
                                    ----------- --------- ------------

    Total HP Consolidated             $ 24,555  $ 21,890     $ 22,913
                                    =========== ========= ============

Earnings from operations:

    Enterprise Storage and Servers    $    502  $    296     $    404
    HP Services                            505       364          322
    Software                                60        13           28
                                    ----------- --------- ------------
  Technology Solutions Group             1,067       673          754
                                    ----------- --------- ------------
  Personal Systems Group                   336       275          200
  Imaging and Printing Group             1,080       884          896
  HP Financial Services                     35        35           52
  Corporate Investments                    (36)      (33)         (35)
                                    ----------- --------- ------------
     Total Segments                      2,482     1,834        1,867

  Corporate and unallocated costs
   and eliminations, excluding
   stock-based compensation expense       (156)      (53)        (131)
  Unallocated costs related to
   stock-based compensation expense       (120)     (113)           -
  Amortization of purchased
   intangible assets                      (153)     (153)        (136)
  Restructuring charges                   (152)       (5)      (1,565)
  In-process research and
   development charge                        -         -           (2)
  Pension curtailment gain                   -         -          199
  Interest and other, net                  190       221          132
  Gains on investments                      14         7           14
  Dispute settlement                         -         -            3
                                    ----------- --------- ------------

    Total HP Consolidated Earnings
     Before Taxes                     $  2,105  $  1,738     $    381
                                    =========== ========= ============

(a) Reflects certain fiscal 2006 organizational realignments
 retroactively to provide improved visibility and comparability. For
 each of the quarters in fiscal year 2005, the realignments resulted
 primarily in revenue and operating profit movement of $5 million or
 less between ESS and SW segments within TSG. There was no impact to
 the remaining segments.
               HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
                         SEGMENT INFORMATION
                             (Unaudited)
                            (In millions)

                                                   Twelve months ended
                                                       October 31,
                                                   -------------------
                                                     2006     2005(a)
                                                   --------- ---------

Net revenue:

    Enterprise Storage and Servers                 $ 17,308  $ 16,717
    HP Services                                      15,617    15,536
    Software                                          1,301     1,061
                                                   --------- ---------
  Technology Solutions Group                         34,226    33,314
                                                   --------- ---------
  Personal Systems Group                             29,166    26,741
  Imaging and Printing Group                         26,786    25,155
  HP Financial Services                               2,078     2,102
  Corporate Investments                                 566       523
                                                   --------- ---------
    Total Segments                                   92,822    87,835
  Eliminations of intersegment net revenue and
   other                                             (1,164)   (1,139)
                                                   --------- ---------

    Total HP Consolidated                          $ 91,658  $ 86,696
                                                   ========= =========

Earnings from operations:

    Enterprise Storage and Servers                 $  1,446  $    800
    HP Services                                       1,507     1,151
    Software                                             85       (49)
                                                   --------- ---------
  Technology Solutions Group                          3,038     1,902
                                                   --------- ---------
  Personal Systems Group                              1,152       657
  Imaging and Printing Group                          3,978     3,413
  HP Financial Services                                 147       213
  Corporate Investments                                (151)     (174)
                                                   --------- ---------
     Total Segments                                   8,164     6,011

  Corporate and unallocated costs and
   eliminations, excluding stock-based
   compensation expense                                (331)     (429)
  Unallocated costs related to stock-based
   compensation expense                                (459)        -
  Amortization of purchased intangible assets          (604)     (622)
  Restructuring charges                                (158)   (1,684)
  In-process research and development charge            (52)       (2)
  Pension curtailment gain                                -       199
  Interest and other, net                               606       189
  Gains (losses) on investments                          25       (13)
  Dispute settlement                                      -      (106)
                                                   --------- ---------

    Total HP Consolidated Earnings Before Taxes    $  7,191  $  3,543
                                                   ========= =========

(a) Reflects certain fiscal 2006 organizational realignments
 retroactively to provide improved visibility and comparability. For
 fiscal year 2005, the realignments resulted primarily in revenue and
 operating profit movement of $16 million or less between ESS and SW
 segments within TSG. There was no impact to the remaining segments.
               HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
                 SEGMENT / BUSINESS UNIT INFORMATION
                             (Unaudited)
                            (In millions)

                                             Three months ended
                                      --------------------------------
                                      October 31, July 31, October 31,
                                          2006      2006     2005(a)
                                      ----------- -------- -----------

Net revenue:

     Industry Standard Servers           $ 2,731  $ 2,466     $ 2,507
     Business Critical Systems               997      833       1,037
     Storage                                 942      834         932
                                      ----------- -------- -----------
    Enterprise Storage and Servers         4,670    4,133       4,476
                                      ----------- -------- -----------
     Technology Services                   2,430    2,362       2,418
     Managed Services                        872      818         753
     Consulting and Integration              778      708         729
                                      ----------- -------- -----------
    HP Services                            4,080    3,888       3,900
                                      ----------- -------- -----------
     OpenView                                251      215         196
     OpenCall and Other                       98      103         110
                                      ----------- -------- -----------
    Software                                 349      318         306
                                      ----------- -------- -----------
  Technology Solutions Group               9,099    8,339       8,682
                                      ----------- -------- -----------
     Desktops                              3,675    3,515       3,686
     Notebooks                             3,463    2,768       2,795
     Workstations                            362      339         329
     Handhelds                               139      136         186
     Other                                   184      159         117
                                      ----------- -------- -----------
  Personal Systems Group                   7,823    6,917       7,113
                                      ----------- -------- -----------
     Commercial Hardware                   1,873    1,632       1,732
     Consumer Hardware                     1,296      893       1,267
     Supplies                              4,100    3,693       3,771
     Other                                    14       16          15
                                      ----------- -------- -----------
  Imaging and Printing Group               7,283    6,234       6,785
                                      ----------- -------- -----------
  HP Financial Services                      545      519         514
  Corporate Investments                      160      155         142
                                      ----------- -------- -----------
     Total Segments                       24,910   22,164      23,236
                                      ----------- -------- -----------

  Eliminations of intersegment net
   revenue and other                        (355)    (274)       (323)
                                      ----------- -------- -----------

    Total HP Consolidated                $24,555  $21,890     $22,913
                                      =========== ======== ===========

(a) Reflects certain fiscal 2006 organizational realignments
 retroactively to provide improved visibility and comparability. For
 each of the quarters in fiscal year 2005, the realignments resulted
 primarily in revenue movement of $5 million or less between ESS and
 SW segments within TSG. In addition, IPG and PSG revenue was impacted
 at the business unit level but the overall segment revenue remained
 as previously reported. There was no impact to the remaining
 segments.
               HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
                 SEGMENT / BUSINESS UNIT INFORMATION
                             (Unaudited)
                            (In millions)

                                                Twelve months ended
                                                     October 31,
                                               -----------------------
                                                  2006       2005(a)
                                               ----------- -----------

Net revenue:

     Industry Standard Servers                 $   10,133  $    9,530
     Business Critical Systems                      3,656       3,812
     Storage                                        3,519       3,375
                                               ----------- -----------
    Enterprise Storage and Servers                 17,308      16,717
                                               ----------- -----------
     Technology Services                            9,506       9,665
     Managed Services                               3,224       3,031
     Consulting and Integration                     2,887       2,840
                                               ----------- -----------
    HP Services                                    15,617      15,536
                                               ----------- -----------
     OpenView                                         899         691
     OpenCall and Other                               402         370
                                               ----------- -----------
    Software                                        1,301       1,061
                                               ----------- -----------
  Technology Solutions Group                       34,226      33,314
                                               ----------- -----------
     Desktops                                      14,613      14,406
     Notebooks                                     12,000       9,763
     Workstations                                   1,368       1,195
     Handhelds                                        620         836
     Other                                            565         541
                                               ----------- -----------
  Personal Systems Group                           29,166      26,741
                                               ----------- -----------
     Commercial Hardware                            6,899       6,558
     Consumer Hardware                              4,427       4,497
     Supplies                                      15,402      14,045
     Other                                             58          55
                                               ----------- -----------
  Imaging and Printing Group                       26,786      25,155
                                               ----------- -----------
  HP Financial Services                             2,078       2,102
  Corporate Investments                               566         523
                                               ----------- -----------
     Total Segments                                92,822      87,835
                                               ----------- -----------

  Eliminations of intersegment net revenue and
   other                                           (1,164)     (1,139)
                                               ----------- -----------

    Total HP Consolidated                      $   91,658  $   86,696
                                               =========== ===========

(a) Reflects certain fiscal 2006 organizational realignments
 retroactively to provide improved visibility and comparability. For
 fiscal year 2005, the realignments resulted primarily in revenue
 movement of $16 million or less between ESS and SW segments within
 TSG. In addition, IPG and PSG revenue was impacted at the business
 unit level but the overall segment revenue remained as previously
 reported. There was no impact to the remaining segments.
               HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
          COMPARISON OF DILUTED NON-GAAP EARNINGS PER SHARE
      (Including the Effect of Stock-Based Compensation Expense)
                             (Unaudited)

                            Q106      Q206    Q306     Q406     FY06
                          --------- -------- ------- -------- --------
Non-GAAP EPS as
 reported(a)               $0.48     $0.69   $0.52    $0.68    $2.38
Pro forma effect of SFAS
 123 on EPS                  -         -       -        -        -
                          --------- -------- ------- -------- --------
Total diluted non-GAAP EPS
 including the effect of
 stock-based compensation
 expense for all periods   $0.48     $0.69   $0.52    $0.68    $2.38
                          ========= ======== ======= ======== ========

                            Q105      Q205    Q305   Q405(c)  FY05(c)
                          --------- -------- ------- -------- --------
Non-GAAP EPS as
 reported(a)               $0.37     $0.37   $0.36    $0.51    $1.62
Pro forma effect of SFAS
 123 on EPS(b)             (0.05)    (0.04)  (0.04)   (0.04)   (0.16)
                          --------- -------- ------- -------- --------
Total diluted non-GAAP EPS
 including the effect of
 stock-based compensation
 expense for all periods   $0.32     $0.33   $0.32    $0.47    $1.46
                          ========= ======== ======= ======== ========

(a) For each of the quarters in fiscal 2005, non-GAAP EPS includes the
 effect of compensation expense related to discounted options and
 restricted stock recognized under APB 25. Fiscal 2006 EPS includes
 the aforementioned expense plus the impact for stock-based
 compensation recognized under SFAS 123(R).

(b) For each of the quarters in fiscal 2005, non-GAAP EPS as reported
 excludes the effect of compensation expense related to employee stock
 options and employee stock purchase plan under SFAS 123.

(c) In Q405, HP recorded $107 million of stock compensation before tax
 expense or $0.03 per share on an after tax basis within restructuring
 charges. This amount is excluded from the non-GAAP results shown
 above.
               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,
                                          2006      2006       2005
                                      ----------- -------- -----------

Numerator:
  Net earnings                           $ 1,697  $ 1,375      $  416
  Adjustment for interest expense on
   zero coupon subordinated
   convertible notes, net of taxes             2        1           -
                                      ----------- -------- -----------

  Net earnings, adjusted                 $ 1,699  $ 1,376      $  416
                                      =========== ======== ===========

Denominator:
  Weighted-average shares used to
   compute Basic EPS                       2,730    2,768       2,850
  Effect of dilutive securities:
    Dilution from employee stock
     plans                                    78       63          58
    Zero-coupon subordinated
     convertible notes                         8        8           -
                                      ----------- -------- -----------
  Dilutive potential common shares            86       71          58
                                      ----------- -------- -----------

  Weighted-average shares used to
   compute diluted EPS                     2,816    2,839       2,908
                                      =========== ======== ===========

Net earnings per share:
  Basic(a)                               $  0.62  $  0.50      $ 0.15
  Diluted(b)                             $  0.60  $  0.48      $ 0.14


(a) HP's basic earnings per share (EPS) were calculated based on net
 earnings and the weighted-average number of shares outstanding during
 the reporting period.

(b) The diluted earnings per share included additional dilution from
 potential issuance of commonstock, such as stock issuable pursuant to
 exercise of stock options and conversion of debt, except when such
 issuances would be antidilutive.
               HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
                CALCULATION OF NET EARNINGS PER SHARE
                (In millions except per share amounts)

                                                  Twelve months ended
                                                       October 31,
                                                  --------------------
                                                       2006     2005
                                                  ----------- --------
                                                  (Unaudited)

Numerator:
  Net earnings                                       $ 6,198  $ 2,398
  Adjustment for interest expense on zero coupon
   subordinated convertible notes, net of taxes            7        -
                                                  ----------- --------

  Net earnings, adjusted                             $ 6,205  $ 2,398
                                                  =========== ========

Denominator:
  Weighted-average shares used to compute basic
   EPS                                                 2,782    2,879
  Effect of dilutive securities:
    Dilution from employee stock plans                    62       30
    Zero-coupon subordinated convertible notes             8        -
                                                  ----------- --------
  Dilutive potential common shares                        70       30
                                                  ----------- --------

  Weighted-average shares used to compute diluted
   EPS                                                 2,852    2,909
                                                  =========== ========

Net earnings per share:
  Basic(a)                                           $  2.23  $  0.83
  Diluted(b)                                         $  2.18  $  0.82

(a) HP's basic earnings per share were calculated based on net
 earnings and the weighted-average number of shares outstanding during
 the reporting period.

(b) The diluted earnings per share included additional dilution from
 potential issuance of common stock, such as stock issuable pursuant
 to exercise of stock options and conversion of debt, except when such
 issuances would be antidilutive.
               HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
            CALCULATION OF NON-GAAP NET EARNINGS PER SHARE
                             (Unaudited)
                (In millions except per share amounts)

                                             Three months ended
                                      --------------------------------
                                      October 31, July 31, October 31,
                                          2006      2006       2005
                                      ----------- -------- -----------

Numerator:
  Non-GAAP net earnings               $    1,905   $1,483      $1,496
  Adjustment for interest expense on
   zero coupon subordinated
   convertible notes, net of taxes             2        1           2
                                      ----------- -------- -----------

  Non-GAAP net earnings, adjusted     $    1,907   $1,484      $1,498
                                      =========== ======== ===========

Denominator:
  Weighted-average shares used to
   compute basic EPS                       2,730    2,768       2,850
  Effect of dilutive securities:
    Dilution from employee stock
     plans                                    78       63          58
    Zero-coupon subordinated
     convertible notes                         8        8           7
                                      ----------- -------- -----------
  Dilutive potential common shares            86       71          65
                                      ----------- -------- -----------

  Weighted-average shares used to
   compute diluted EPS                     2,816    2,839       2,915
                                      =========== ======== ===========

Non-GAAP net earnings per share:
  Basic(a)                            $     0.70   $ 0.54      $ 0.52
  Diluted(b)                          $     0.68   $ 0.52      $ 0.51

(a) HP's basic non-GAAP earnings per share were calculated based on
 non-GAAP net earnings and the weighted-average number of shares
 outstanding during the reporting period.

(b) HP's diluted non-GAAP EPS included additional dilution from
 potential issuance of common stock, such as stock issuable pursuant
 to exercise of stock options and conversion of debt, except when such
 issuances would be antidilutive.
               HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
            CALCULATION OF NON-GAAP NET EARNINGS PER SHARE
                             (Unaudited)
                (In millions except per share amounts)


                                                   Twelve months ended
                                                       October 31,
                                                   -------------------
                                                     2006      2005
                                                   --------- ---------

Numerator:
  Non-GAAP net earnings                            $  6,777  $  4,708
  Adjustment for interest expense on zero coupon
   subordinated convertible notes, net of taxes           7         7
                                                   --------- ---------

  Non-GAAP net earnings, adjusted                  $  6,784  $  4,715
                                                   ========= =========

Denominator:
  Weighted-average shares used to compute basic
   EPS                                                2,782     2,879
  Effect of dilutive securities:
    Dilution from employee stock plans                   62        30
    Zero-coupon subordinated convertible notes            8         8
                                                   --------- ---------
  Dilutive potential common shares                       70        38
                                                   --------- ---------

  Weighted-average shares used to compute diluted
   EPS                                                2,852     2,917
                                                   ========= =========

Non-GAAP net earnings per share:
  Basic(a)                                         $   2.44  $   1.64
  Diluted(b)                                       $   2.38  $   1.62

(a) HP's basic non-GAAP earnings per share were calculated based on
 non-GAAP net earnings and the weighted-average number of shares
 outstanding during the reporting period.

(b) HP's diluted non-GAAP EPS included additional dilution from
 potential issuance of common stock, such as stock issuable pursuant
 to exercise of stock options and conversion of debt, except when such
 issuances would be antidilutive.

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 income, non-GAAP diluted earnings per share and gross cash. HP also provides forecasts of non-GAAP diluted earnings per share. These non-GAAP financial measures are not in accordance with, or an alternative for, generally accepted accounting principles in the United States. The GAAP measure most directly comparable to non-GAAP operating profit is earnings from operations. The GAAP measure most directly comparable to non-GAAP operating margin is operating margin. The GAAP measure most directly comparable to non-GAAP net income is net earnings. The GAAP measure most directly comparable to non-GAAP diluted earnings per share is diluted net earnings per share. The GAAP measure most directly comparable to gross cash is cash and cash equivalents. Reconciliations of each of these non-GAAP financial measures to GAAP information are included in the tables above.

Use and Economic Substance of Non-GAAP Financial Measures Used by HP

Non-GAAP operating profit and non-GAAP operating margin are defined to exclude the effects of any restructuring charges, charges relating to the amortization of purchased intangible assets, acquisition-related charges, pension curtailment gains and in-process research and development charges recorded during the relevant period. Non-GAAP net income and non-GAAP diluted earnings per share consist of net earnings or diluted net earnings per share excluding those same charges as well as any gains or losses on investments recorded during the relevant period. Non-GAAP net income and non-GAAP diluted earnings per share for HP's fiscal year ended October 31, 2005 also exclude the effects of a non-recurring tax expense associated with the repatriation of $14.5 billion under the provisions of the American Jobs Creation Act of 2004. In addition, non-GAAP net income and non-GAAP diluted earnings per share are adjusted by the amount of additional taxes or tax benefit associated with each non-GAAP item. HP's management uses these non-GAAP financial measures for purposes of evaluating HP's historical and prospective financial performance, as well as HP's performance relative to its competitors. HP's management also uses these non-GAAP measures to further its own understanding of HP's segment operating performance. HP believes that excluding those items mentioned above from these non-GAAP financial measures allows HP management to better understand HP's consolidated financial performance in relationship to the operating results of HP's segments, as management does not believe that the excluded items are reflective of ongoing operating results. More specifically, HP's management excludes each of those items mentioned above for the following reasons:

    --  Restructuring charges consist of costs primarily related to
        severance and benefits for employees terminated pursuant to a
        formal restructuring plan, including strategic reallocations
        or workforce reductions. HP excludes these restructuring costs
        for purposes of calculating these non-GAAP measures because it
        believes that these historical costs do not reflect expected
        future operating expenses and do not contribute to a
        meaningful evaluation of HP's current operating performance or
        comparisons to HP's past operating performance.

    --  Purchased intangible assets consist primarily of customer
        contracts, customer lists, distribution agreements, technology
        patents, and products, trademarks and trade names purchased in
        connection with acquisitions. HP incurs charges relating to
        the amortization of these intangibles, and those charges are
        included in HP's GAAP presentation of earnings from
        operations, operating margin, net earnings and net earnings
        per share. Amortization charges for HP's purchased intangible
        assets are inconsistent in amount and frequency and are
        significantly impacted by the timing and magnitude of HP's
        acquisitions. Consequently, HP excludes these charges for
        purposes of calculating these non-GAAP measures to facilitate
        a more meaningful evaluation of HP's current operating
        performance and comparisons to HP's past operating
        performance.

    --  During its fourth fiscal quarter of 2005, HP ceased pension
        accruals of its U.S. defined benefit plan for employees who
        did not meet defined criteria based on age and years of
        service. As a result, HP recognized a curtailment gain of $199
        million during that quarter relating to the elimination of
        future benefit accruals for the affected employee group.
        HP has not incurred any additional curtailment gains in
        connection with this one-time change to its employee benefit
        program. As such, HP believes that eliminating these gains or
        losses for purposes of calculating these non-GAAP measures
        facilitates a more meaningful evaluation of HP's current
        operating performance and comparisons to HP's past operating
        performance.

    --  HP incurs costs related to acquisitions, some of which are
        treated as non-capitalized expenses. These non-capitalized
        expenses are inconsistent in amount and frequency and are
        significantly impacted by the timing and nature of HP's
        acquisitions. As such, HP believes that eliminating these
        non-capitalized acquisition-related expenses for purposes of
        calculating these non-GAAP measures facilitates a more
        meaningful evaluation of HP's current operating performance
        and comparisons to HP's past operating performance.

    --  In-process research and development charges relate to amounts
        assigned to tangible and intangible assets to be used in
        research and development projects that have no alternative
        future use and therefore are charged to expense at the
        acquisition date. Charges for in-process research and
        development in connection with HP's acquisitions are reflected
        in HP's GAAP presentation of earnings from operations,
        operating margin, net earnings and net earnings per share.
        In-process research and development expenses are not
        indicative of HP's ongoing operating costs and are generally
        unpredictable. Accordingly, HP believes that eliminating these
        expenses for purposes of calculating these non-GAAP measures
        contributes to a meaningful evaluation of HP's current
        operating performance and comparisons to HP's past operating
        performance.

    --  HP's investments consist principally of time deposits, other
        debt securities and equity securities of publicly traded and
        privately held companies. HP sells investments or adjusts the
        value of investments from time to time based on market
        conditions and, in the case of investments in equity
        securities, the strategic value of such investments. HP's
        activities in this regard are included in its GAAP
        presentation of net income and net earnings per share. Because
        the amount and timing of these gains or losses and adjustments
        are unpredictable, HP believes that eliminating these gains or
        losses and adjustments for purposes of calculating non-GAAP
        net income and non-GAAP diluted earnings per share facilitates
        a more meaningful evaluation of HP's current operating
        performance and comparisons to HP's past operating
        performance.

    --  The American Jobs Creation Act of 2004 provided for a
        temporary 85% dividends received deduction on certain foreign
        earnings repatriated during a one-year period. During its
        third fiscal quarter ended July 31, 2005, HP decided to
        repatriate $14.5 billion in its third and fourth fiscal
        quarters of 2005 and recorded an associated tax expense of
        approximately $788 million. Because the benefits provided for
        under the Act were made available only during a one-year
        period that has already expired, HP did not and will not incur
        any additional tax expense associated with the repatriation of
        funds under the Act in any subsequent or future fiscal
        quarter. As such, HP believes that eliminating this one-time
        tax expense for purposes of calculating non-GAAP net income
        and non-GAAP diluted earnings per share facilitates a more
        meaningful evaluation of HP's current operating performance
        and comparisons to HP's past operating performance.

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

Material Limitations Associated with Use of Non-GAAP Financial Measures

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

    --  Items such as amortization of purchased intangible assets and
        acquisition-related charges, though not directly affecting
        HP's cash position, represent the loss in value of intangible
        assets over time. The expense associated with this loss in
        value is not included in non-GAAP operating profit, non-GAAP
        operating margin, non-GAAP net income and non-GAAP diluted
        earnings per share and therefore does not reflect the full
        economic effect of the loss in value of those intangible
        assets.

    --  Items such as restructuring charges that are excluded from
        non-GAAP operating profit, non-GAAP operating margin, non-GAAP
        net income and non-GAAP diluted earnings per share can have a
        material impact on cash flows and earnings per share.

    --  Items such as gains or losses on investments that are excluded
        from non-GAAP net income and non-GAAP diluted earnings per
        share can have a material impact on cash flows and earnings
        per share.

    --  HP may not be able to liquidate immediately the long-term
        investments included in gross cash, which may limit the
        usefulness of gross cash as a liquidity measure.

    --  Other companies may calculate non-GAAP operating profit,
        non-GAAP operating margin, non-GAAP net income, non-GAAP
        diluted earnings per share and gross cash differently than HP
        does, limiting the usefulness of those measures for
        comparative purposes.

Compensation for Limitations Associated with Use of Non-GAAP Financial Measures

HP compensates for the limitations on our use of non-GAAP operating profit, non-GAAP operating margin, non-GAAP net income, non-GAAP diluted earnings per share and gross cash 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 income, non-GAAP diluted earnings per share and gross 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 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.

CONTACT: HP
Robert Sherbin, +1 650 857 2381
robert.sherbin@hp.com
Ryan J. Donovan, +1 650 857 8410
ryan.j.donovan@hp.com
or
HP Media Hotline, +1 866 266 7272
pr@hp.com
www.hp.com/go/newsroom

SOURCE: HP