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Transcript of HP Q1 FY11 Earnings Announcement
HP Q1 FY1 Earnings 1 AnnouncementFebruary 22,
2011http://www.hp.com/investor/home February 22, 2011
http://www.hp.com/investor/home
FORWARD LOOKING STATEMENTSThis presentation may contain
forward-looking statements that involve risks, uncertainties and
assumptions. If the risks oruncertainties ever materialize or the
assumptions prove incorrect, the financial results of HP may differ
materially from thoseexpressed or implied by such forward-looking
statements and assumptions. All statements other than statements of
historicalfact are statements that could be deemed forward-looking
statements, including but not limited to any projections of
revenue,margins, expenses, earnings, earnings per share, tax
provisions, cash flows, benefit obligations, share repurchases,
currencyexchange rates, the impact of acquisitions or other
financial items; any statements of the plans, strategies and
objectives ofmanagement for future operations, including execution
of cost reduction programs and restructuring plans; any
statementsconcerning the expected development, performance or
market share relating to products or services; any
statementsregarding current or future macroeconomic trends or
events and the impact of those trends and events on HP and its
financialperformance; 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
impactof macroeconomic and geopolitical trends and events; the
competitive pressures faced by HPs businesses; the developmentand
transition of new products and services and the enhancement of
existing products and services to meet customer needsand respond to
emerging technological trends; the execution and performance of
contracts by HP and its suppliers,customers and partners; the
protection of HPs intellectual property assets, including
intellectual property licensed from thirdparties; integration and
other risks associated with business combination and investment
transactions; the hiring and retentionof key employees; assumptions
related to pension and other post-retirement costs; expectations
and assumptions relating tothe execution and timing of cost
reduction programs and restructuring plans; the resolution of
pending investigations, claimsand disputes; and other risks that
are described in HPs Annual Report on Form 10-K for the fiscal year
ended October 31,2010 and HPs other filings with the Securities and
Exchange Commission. As in prior periods, the financial information
setforth in this presentation, including tax-related items,
reflects estimates based on information available at this time.
While HPbelieves these estimates to be meaningful, these amounts
could differ materially from actual reported amounts in HPs
Form10-Q for the fiscal quarter ended January 31, 201 In
particular, determining HPs actual tax balances and provisions as
of 1.January 31, 201 requires extensive internal and external
review of tax data (including consolidating and reviewing the tax
1provisions of numerous domestic and foreign entities), which is
being completed in the ordinary course of preparing HPsForm 10-Q.
HP assumes no obligation and does not intend to update these
forward-looking statements.2 February 22, 2011
http://www.hp.com/investor/home
USE OF NON-GAAP FINANCIALINFORMATIONHP has included non-GAAP
financial measures in this presentation to supplement HPs
consolidated condensed financial statementspresented on a GAAP
basis. Definitions of these non-GAAP financial measures and
reconciliations of these non-GAAP financialmeasures to the most
directly comparable GAAP financial measures are included elsewhere
in this presentation.HPs management uses non-GAAP operating
expense, non-GAAP OI&E, non-GAAP operating profit, non-GAAP net
earnings, non-GAAP diluted earnings per share, and HPs non-GAAP tax
rate to evaluate and forecast HPs performance before gains, losses
or othercharges that are considered by HPs management to be outside
of HPs core business segment operating results. Gross cash, net
cashand free cash flow are liquidity measures that provide useful
information to management about the amount of cash available
forinvestment in HPs businesses, funding strategic acquisitions,
repurchasing stock and other purposes.These non-GAAP financial
measures may have limitations as analytical tools, and these
measures should not be considered in isolationor as a substitute
for analysis of HPs results as reported under GAAP. Items such as
amortization of purchased intangible assets,though not directly
affecting HPs cash position, represent the loss in value of
intangible assets over time. The expense associated withthis loss
in value is not included in non-GAAP operating profit, non-GAAP net
earnings, non-GAAP diluted earnings per share and HPsnon-GAAP tax
rate and therefore does not reflect the full economic effect of the
loss in value of those intangible assets. In addition,items such as
restructuring charges that are excluded from non-GAAP operating
expense, non-GAAP operating profit, non-GAAP netearnings, non-GAAP
diluted earnings per share and HPs non-GAAP tax rate can have a
material impact on cash flows and earningsper share. HP may not be
able to liquidate the long-term investments included in gross cash
immediately, which may limit theusefulness of gross cash as a
liquidity measure. In addition, free cash flow does not represent
the total increase or decrease in the cashbalance for the period.
The non-GAAP financial information that we provide also may differ
from the non-GAAP information providedby other companies.We
compensate for the limitations on our use of these non-GAAP
financial measures by relying primarily on our GAAP
financialstatements and using non-GAAP financial measures only
supplementally. We also provide robust and detailed reconciliations
of eachnon-GAAP financial measure to the most directly comparable
GAAP measure, and we encourage investors to review carefully
thosereconciliations.We believe that providing these non-GAAP
financial measures in addition to the related GAAP measures
provides investors withgreater transparency to the information used
by HPs management in its financial and operational decision-making
and allows investorsto see HPs results through the eyes of
management. We further believe that providing this information
better enables investors tounderstand HPs operating performance and
to evaluate the efficacy of the methodology and information used by
management toevaluate and measure such performance.3 February 22,
2011 http://www.hp.com/investor/home
KEY MESSAGES Strong margins, earnings, and cash flow
performance with 4% year over year revenue growth Expanded non-GAAP
operating margins by 40 basis points year over year, excluding net
impact from one-time gains primarily related to real estate, driven
by gross margin expansion of 150 basis points Continued to invest
in growth in higher margin categories, while maintaining
operational efficiency Non-GAAP diluted earnings per share grew 27%
year over year Cash flow from operations of $3.1 billion, up 28%
year over year Continued strength in commercial hardware across HP
ESSN continued to win in the datacenter with Industry Standard
Servers revenue up 17%, Storage up 14%, and Networkings switching
and routing revenue up over 30% year over year IPG delivered
another strong quarter with commercial printer units up 33% and
commercial revenue up 13% year over year. Expanded market
leadership in both laser and ink, with solid momentum in our new
e-Print platform and commercial print solutions PSG commercial PC
client revenue up 11% year over year Executed well in a challenging
consumer PC market with margin expansion and share gains Gained
worldwide market share sequentially across all PC categories
consumer, commercial, notebook and desktop Increased PSG operating
profit 27% year over year, delivering a 6.4% operating margin in Q1
Opportunity in Services to drive growth with more higher
value-added solutions Solid long term signings and operating margin
expansion Opportunity to improve short-term signings with more
higher value services and add-on projects Investing to lead in
cloud and connectivity Launched several new Cloud solutions,
leveraging HPs converged infrastructure, enterprise-class security,
and unique ability to manage hybrid IT environments Generated
excitement with WebOS product announcements, including HPs new
Touchpad tablet 4 February 22, 2011
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Q1 FY11 RESULTS OVERVIEW Financial Net revenue of $32.3B, up 4%
Y/Y in reported and constant currency Non-GAAP(1) diluted EPS of
$1.36, up 27% Y/Y Summary GAAP diluted EPS of $1.17, up 26% Y/Y
Cash flow from operations of $3.1B $2.3B in share repurchases and
$175M in dividends OP OP $ OP % $ in millions Q1 Revenue Growth
Y/Y% OP $ % of rev Y/Y Y/Y Services $8,607 (2%) $1,375 16.0% ($4)
0.3 pts Enterprise Servers, Storage and Networking $5,634 22% $828
14.7% $221 1.5 pts HP Software $697 5% $123 17.6% ($49) (8.3) pts
Enterprise Business $14,938 6% $2,326 15.6% $168 0.3 pts Personal
Systems Group $10,449 (1%) $672 6.4% $142 1.4 pts Imaging and
Printing Group $6,630 7% $1,129 17.0% $75 0.0 pts HP Financial
Services $827 15% $79 9.6% $12 0.3 pts (1) (1) (1) Total HP (2)
$32,302 4% $4,006 12.4% $504 1.2 pts (1)1. All non-GAAP numbers
have been adjusted to exclude certain items. A reconciliation of
specific adjustments to GAAP results for this quarter and prior
periods is included on slide 17 and in the GAAP to non-GAAP slides
that appear as part of the supplemental slides of this
presentation. A description of HPs use of non-GAAP information is
provided on slide 3 under Use of non-GAAP Financial Information.2.
Includes Corporate Investments & Eliminations5 February 22,
2011 http://www.hp.com/investor/home
Q1 FY11 REVENUE By Segment By Region U.S. Imaging & 35%
Printing Group Services 21% 27% EMEA Americas 38%, 44%, up 6% Y/Y
FLAT Y/Y Enterprise Canada/ Personal Servers, Latin America Systems
Group Storage & 9% 32% Networking Asia Pacific 17% 18%, up 7%
Y/Y HP Financial Services & Other HP Software 1% 2%6 February
22, 2011 http://www.hp.com/investor/home
SERVICES In billions Revenue In millions Operating profit $10.0
$1,600 18% $1,400 16% $8.0 $1,200 14% OP % revenue $6.0 $1,000 12%
$800 10% $4.0 $600 8% $400 6% $2.0 $200 4% $0.0 $0 2% 1Q09 2Q09
3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10
3Q10 4Q10 1Q11 Q1 FY1 revenue by business 1 Services revenue of
$8.6B, down 2% Y/Y (down 8% 1% Y/Y excluding ExcellerateHRO
divestiture) ITO Technology Services Operating profit of $1.4B,
16.0% of revenue 19% Application Services ITO revenue down 1% Y/Y
BPO Technology Services revenue down 1% Y/Y Application Services
revenue down 3% Y/Y 43% BPO revenue down 10% Y/Y (down 2% Y/Y, 30%
excluding the ExcellerateHRO divestiture)10 February 22, 2011
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ENTERPRISE SERVERS,STORAGE ANDNETWORKING (ESSN) In billions
Revenue In millions Operating profit $6.0 $1,000 16% $900 14% $5.0
$800 12% $700 $4.0 OP % revenue $600 10% $3.0 $500 8% $400 6% $2.0
$300 4% $200 $1.0 2% $100 $0 0% $0.0 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10
3Q10 4Q10 1Q11 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 Q1 FY1
revenue by business 1 ESSN revenue of $5.6B, up 22% Y/Y 11%
Operating profit of $828M, 14.7% of revenue Industry Standard
Servers (ISS) ISS revenue up 17% Y/Y 18% Business Critical BCS
revenue flat Y/Y Systems (BCS) Storage Works Storage revenue up 14%
Y/Y Division (SWD) Networking revenue up 183% Y/Y HP Networking
(HPN) ESS Blades revenue up 23% Y/Y 10% 61%11 February 22, 2011
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HP SOFTWARE In millions Revenue In millions Operating profit
$800 $300 35% $250 30% $600 $200 25% OP %revenue $400 $150 20% $100
15% $200 $50 10% $0 $0 5% 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10
1Q11 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 Q1 FY1 revenue by
type 1 Software revenue of $697M, up 5% Y/Y 16% 34% Operating
profit of $123M, 17.6% of revenue Licenses Support Licenses revenue
up 3% Y/Y Services Support revenue up 5% Y/Y Services revenue up 9%
Y/Y 50%12 February 22, 2011 http://www.hp.com/investor/home
PERSONAL SYSTEMS GROUP (PSG) In billions Revenue In millions
Operating profit$12.0 $700 7%$10.0 $600 6% $500 5% $8.0 OP %
revenue $400 4% $6.0 $300 3% $4.0 $200 2% $2.0 $100 1% $0.0 $0 0%
1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 1Q09 2Q09 3Q09 4Q09
1Q10 2Q10 3Q10 4Q10 1Q11 Q1 FY1 revenue by business 1 PSG revenue
of $10.4B, down 1% Y/Y 2% Notebooks Operating profit of $672M, 6.4%
of revenue Desktops Total units up 5% Y/Y 5% Workstations Other
Notebook revenue down 5%, units up 4% Y/Y Desktop & Workstation
combined revenue up 5%, units up 7% Y/Y 56% Consumer client revenue
down 12% Y/Y, 37% Commercial client revenue up 1 Y/Y 1%13 February
22, 2011 http://www.hp.com/investor/home
IMAGING & PRINTING GROUP (IPG) In billions Revenue In
millions Operating profit$8.0 $1,300 22%$6.0 $1,100 18% OP % of
revenue$4.0 $900 14%$2.0 $700 10%$0.0 $500 6% 1Q09 2Q09 3Q09 4Q09
1Q10 2Q10 3Q10 4Q10 1Q11 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10
1Q11 Q1 FY1 revenue by business 1 IPG revenue of $6.6B, up 7% Y/Y
12% Operating profit of $1.1B, 17.0% of revenue Supplies Commercial
Supplies revenue up 7% Y/Y Consumer Total printer hardware units up
13% Y/Y, 22% Consumer printer hardware units up 7% Y/Y, Commercial
printer hardware units up 33% Y/Y Color LaserJet units up 20% Y/Y
Printer-based MFP units up 63% Y/Y 66% Indigo digital press page
volume up 26% Y/Y14 February 22, 2011
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HP FINANCIAL SERVICES (HPFS) In millions Revenue In millions
Operating profit $1,000 $90 12% $75 10% $800 $60 8% OP %revenue
$600 $45 6% $400 $30 4% $200 $15 2% $0 $0 0% 1Q09 2Q09 3Q09 4Q09
1Q10 2Q10 3Q10 4Q10 1Q11 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10
1Q11 Q1 FY1 revenue by region 1 HPFS revenue of $827M, up 15% Y/Y
13% Americas Operating profit of $79M, 9.6% of revenue EMEA
Financing volume up 10% Y/Y Asia Pacific Net portfolio assets of
$11.4B, up 14% Y/Y 29% 58%15 February 22, 2011
http://www.hp.com/investor/home
Non-GAAP FINANCIAL INFORMATION (1) In millions except per share
amounts Q1 FY11 Q4 FY10 Q1FY10 Revenue $32,302 100% $33,278 100%
$31,177 100% Cost of sales 24,408 75.6% 24,995 75.1% 24,027 77.1%
Total OpEx 3,888(2) 12.0%(2) 4,278 12.9% 3,648 11.7% Operating
profit 4,006(2) 12.4%(2) 4,005 12.0% 3,502 11.2% Interest &
other, net (97)(2) (81) (199) Pre-tax earnings 3,909(2) 12.1% 3,924
11.8% 3,303 10.6% Income tax 879(2) 860 709 Net earnings 3,030(2)
9.4% 3,064 9.2% 2,594 8.3% EPS $1.36(2) $1.33 $1.07 1. All non-GAAP
numbers have been adjusted to exclude certain items. A
reconciliation of specific adjustments to GAAP results for this
quarter and prior periods is included on slide 17 and in the GAAP
to non-GAAP slides that appear as part of the supplemental slides
of this presentation. A description of HPs use of non-GAAP
information is provided on slide 3 under Use of non-GAAP Financial
Information. 2 At the time of HPs Q4 FY10 earnings announcement, HP
disclosed that in Q1 FY11 it expected to realize a one-time gain of
approximately 4 cents per share primarily related to the
disposition of real estate. Included in HPs Q1 FY11 results is a
net one-time gain of 5 cents per share primarily related to the
disposition of real estate, reflected as a onetime credit of $250
million or 80 basis points to operating expense offset by an $80
million charge to OI&E and a higher effective tax rate.16
February 22, 2011 http://www.hp.com/investor/home
Q1 FY11 GAAP to non-GAAP BRIDGE Amort. of In millions except
Purchased Acquisition related per share amounts GAAP Intangibles
Restructuring charges Non-GAAPRevenue $32,302 $32,302Cost of sales
24,408 24,408Total OpEx 4,500 (425) (158) (29) 3,888Operating
profit 3,394 425 158 29 4,006Interest & other, net (97)
(97)Pre-tax earnings 3,297 425 158 29 3,909Income tax 692 129 48 10
879Tax rate 21.0% 22.5%Net earnings 2,605 3,030EPS $1.17 $1.3617
February 22, 2011 http://www.hp.com/investor/home
GROSS CASH & NET CASH In billions $15.0 $10.0 $5.0 $0.0
($5.0) ($10.0) ($15.0) 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11
(1) Gross cash $11.3 $13.0 $13.7 $13.4 $13.7 $14.3 $14.8 $11.0
$10.0 Net cash (2) ($8.7) ($5.3) ($3.2) ($2.1) ($1.8) ($3.0) ($4.7)
($10.6) ($9.9) (3) Net cash excl. HPFS Debt ($1.8) $1.8 $4.3 $6.0
$6.6 $5.6 $4.0 ($1.5) ($0.4) 1. Includes cash and cash equivalents,
short-term investments, and certain liquid long-term investments 2.
Net cash is defined as gross cash less total company debt including
the effect of hedging 3. Net cash excl HPFS debt = HP net cash plus
HPFS net debt18 February 22, 2011
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CASH FLOW In billions $16.0 $14.6 $14.0 $13.4 $11.9 $12.0 $12.0
$10.2 $9.6 $10.0 $8.4 $8.0 $7.1 $6.0 $4.0 $3.1 $2.7 $2.0 $0.0 FY07
FY08 FY09 FY10 FY11 YTD (1) Cash flow from operations Free cash
flow 1. Free cash flow = cash flow from operations less net capital
expenditures19 February 22, 2011
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STOCK REPURCHASE Quarterly trends FY07 FY11 In billions In
billions In millions $4.0 $12 300 $8.6B remaining in stock
repurchase authorization $3.5 at the end of Q1 FY11 $10 250 $3.0 $8
200 $2.5 $6 150 $2.0 $4 100 $1.5 $1.0 $2 50 $0.5 $0 0 (1) FY11 FY07
FY08 FY09 FY10 YTD $0.0 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10
1Q11 Stock repurchase $11.5 $9.6 $5.1 $11.0 $2.3 Stock repurchase
$1.2 $0.8 $1.0 $2.1 $2.7 $1.8 $2.6 $4.0 $2.3 Shares received 271
216 132 240 54 1. In Q1 FY06, HP entered into a prepaid variable
share purchase program. $1.7 billion in cash was used in Q1 FY06 to
fully fund this plan. See our Form 10-Q for the period ended
January 31, 2006 for more information. HP completed all repurchases
under this plan in March 2007 and received a total of 53M shares.20
February 22, 2011 http://www.hp.com/investor/home
FY09 & FY10 reclassification FY09 FY10 Revised Previously
Revised Previously In millions Amount Reported Variance Amount
Reported Variance Revenue $114,552 $114,552 $- $126,033 $126,033 $-
Cost of Sales 87,489 87,524 (35) 95,956 96,089 (133) R&D 2,819
2,819 - 2,959 2,959 - SG&A 11,648 11,613 35 12,718 12,585 133
Amortization of purchased 1,578 1,578 - 1,484 1,484 - intangibles
Restructuring 640 640 - 1,144 1,144 - charges Acquisition 242 242 -
293 293 - related charges Total cost 104,416 104,416 - 114,554
114,554 - Earnings from 10,136 10,136 - 11,479 11,479 - operations
Interest and other, (721) (721) - (505) (505) - net Earnings before
9,415 9,415 - 10,974 10,974 - tax Provision for taxes 1,755 1,755 -
2,213 2,213 - Net earnings $7,660 $7,660 $- $8,761 $8,761 $- In
connection with organizational realignments implemented in the
first quarter of fiscal 2011, certain costs previously reported as
Cost of Sales have been reclassified as Selling, General and
Administrative expenses to better align those costs with the
functional areas that benefit from those expenditures.21 February
22, 2011 http://www.hp.com/investor/home
FY11 Inter-segment reclassification FY09 FY10 Revised
Previously Revised PreviouslyIn millions Segment Amount Reported
Variance Segment Amount Reported Variance Net Revenue Services
$35,380 $34,693 $687 Services $35,529 $34,935 $594 ESSN 16,121
15,359 762 ESSN 20,356 18,651 1,705 HP HP 2,655 3,572 (917) 2,729
3,586 (857) Software Software Corporate Corporate 191 768 (577) 346
1,863 (1,517) Investments Investments Eliminations Eliminations
(1,784) (1,829) 45 (2,479) (2,554) 75 & other & other Total
52,563 52,563 - Total 56,481 56,481 -Operating Services 5,102 5,044
58 Services 5,661 5,609 52Profit ESSN 1,657 1,518 139 ESSN 2,825
2,402 423 HP HP 731 684 47 782 759 23 Software Software Corporate
Corporate (300) (56) (244) (366) 132 (498) Investments Investments
Total $7,190 $7,190 $- Total $8,902 $8,902 $- HP has reflected
fiscal 2011 organizational realignments on a backward-looking basis
to provide improved visibility and comparability.22 February 22,
2011 http://www.hp.com/investor/home
FY11 Intra-segment reclassification FY09 FY10 Revised
Previously Revised Previously In millions Segment Amount Reported
Variance Segment Amount Reported Variance Net Revenue ITO $14,563
$15,554 ($991) ITO $14,942 $15,963 ($1,021) TS 10,665 9,719 946 TS
10,627 9,681 946 Application Application 6,926 6,194 732 6,792
6,123 669 Services Services HP HP 762 - 762 1,705 - 1,705
Networking Networking BTO - 2,385 (2,385) BTO - 2,440 (2,440) Other
Other - 1,187 (1,187) - 1,146 (1,146) Software Software HP Software
2,655 - 2,655 HP Software 2,729 - 2,729 Notebooks 20,223 20,210 13
Notebooks 22,602 22,545 57 Desktops 12,892 12,864 28 Desktops
15,519 15,478 41 Handhelds - 172 (172) Handhelds - 87 (87) Other
PSG 929 798 131 Other PSG 834 845 (11) Corp Corp 191 768 (577) 346
1,863 (1,517) Investments Investments Eliminations Eliminations
(1,784) (1,829) 45 (2,479) (2,554) 75 & other & other Total
$68,022 $68,022 $- Total $73,617 $73,617 $- HP has reflected fiscal
2011 organizational realignments on a backward-looking basis to
provide improved visibility and comparability.23 February 22, 2011
http://www.hp.com/investor/home
OUTLOOK Q2 FY1 guidance 1 Revenue $31.4B $31.6B GAAP EPS $0.99
- $1.01 Non-GAAP EPS(1) $1.19 $1.21 Full year FY1 guidance 1
Revenue $130.0B - $131.5B GAAP EPS $4.46 $4.54 Non-GAAP EPS(2)
$5.20 $5.281. Q2 FY11 non-GAAP diluted earnings per share estimates
exclude after-tax costs of approximately $0.20 per share, related
primarily to the amortization of purchased intangible assets,
restructuring charges and acquisition-related charges.2. Full year
FY11 non-GAAP diluted earnings per share estimates exclude
after-tax costs of approximately $0.74 per share, related primarily
to the amortization of purchased intangible assets, restructuring
charges and acquisition-related charges. 24 February 22, 2011
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SUPPLEMENTALSLIDES February 22, 2011
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WORKING CAPITAL METRICS Days 60 50 40 30 20 1Q09 2Q09 3Q09 4Q09
1Q10 2Q10 3Q10 4Q10 1Q11 Days receivables 46 48 48 48 42 43 46 50
46 Days inventory 31 25 25 23 25 25 28 23 25 Days payable 48 49 55
57 51 51 57 52 5028 February 22, 2011
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HPFS SUPPLEMENTAL DATA In millions Q1 FY11 Q1 FY10 Q4 FY10
Depreciation (1) $404 $330 $376 Net capital expenditures (1) $465
$409 $539 Sequential increase (decrease) in net financing
receivables $145 $129 $433 1. Depreciation and net capital
expenditures are shown net of inter-company eliminations.29
February 22, 2011 http://www.hp.com/investor/home
FY10 GAAP to non-GAAP BRIDGE Amort. of Acquisition In millions
except Purchased related per share amounts GAAP Intangibles
Restructuring charges Non-GAAPRevenue $126,033 $126,033Cost of
sales 95,956 95,956Total OpEx 18,598 (1,484) (1,144) (293)
15,677Operating profit 11,479 1,484 1,144 293 14,400Interest &
other, net (505) (505)Pre-tax earnings 10,974 1,484 1,144 293
13,895Income tax 2,213 391 342 83 3,029Tax rate 20.2% 21.8%Net
earnings 8,761 10,866EPS $3.69 $4.5830 February 22, 2011
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Q4 FY10 GAAP to non-GAAP BRIDGE Amort. of In millions except
Purchased Acquisition related per share amounts GAAP Intangibles
Restructuring charges Non-GAAPRevenue $33,278 $33,278Cost of sales
24,995 24,995Total OpEx 4,988 (424) (235) (51) 4,278Operating
profit 3,295 424 235 51 4,005Interest & other, net (81)
(81)Pre-tax earnings 3,214 424 235 51 3,924Income tax 676 98 68 18
860Tax rate 21.0% 21.9%Net earnings 2,538 3,064EPS $1.10 $1.3331
February 22, 2011 http://www.hp.com/investor/home
Q3 FY10 GAAP to non-GAAP BRIDGE Amort. of In millions except
Purchased Acquisition related per share amounts GAAP Intangibles
Restructuring charges Non-GAAPRevenue $30,729 $30,729Cost of sales
23,365 23,365Total OpEx 5,041 (383) (598) (127) 3,933Operating
profit 2,323 383 598 127 3,431Interest & other, net (134)
(134)Pre-tax earnings 2,189 383 598 127 3,297Income tax 416 100 175
31 722Tax rate 19.0% 21.9%Net earnings 1,773 2,575EPS $0.75 $1.0832
February 22, 2011 http://www.hp.com/investor/home
Q2 FY10 GAAP to non-GAAP BRIDGE Amort. of In millions except
Purchased Acquisition related per share amounts GAAP Intangibles
Restructuring charges Non-GAAPRevenue $30,849 $30,849Cost of sales
23,569 23,569Total OpEx 4,422 (347) (180) (77) 3,818Operating
profit 2,858 347 180 77 3,462Interest & other, net (91)
(91)Pre-tax earnings 2,767 347 180 77 3,371Income tax 567 92 57 22
738Tax rate 20.5% 21.9%Net earnings 2,200 2,633EPS $0.91 $1.0933
February 22, 2011 http://www.hp.com/investor/home
Q1 FY10 GAAP to non-GAAP BRIDGE Amort. of In millions except
Purchased Acquisition related per share amounts GAAP Intangibles
Restructuring charges Non-GAAPRevenue $31,177 $31,177Cost of sales
24,027 24,027Total OpEx 4,147 (330) (131) (38) 3,648Operating
profit 3,003 330 131 38 3,502Interest & other, net (199)
(199)Pre-tax earnings 2,804 330 131 38 3,303Income tax 554 101 42
12 709Tax rate 19.8% 21.5%Net earnings 2,250 2,594EPS $0.93 $1.0734
February 22, 2011 http://www.hp.com/investor/home
FY09 GAAP to non-GAAP BRIDGE Amort. of In millions except
Purchased Acquisition related per share amounts GAAP Intangibles
Restructuring charges Non-GAAPRevenue $114,552 $114,552Cost of
sales 87,489 87,489Total OpEx 16,927 (1,578) (640) (242)
14,467Operating profit 10,136 1,578 640 242 12,596Interest &
other, net (721) (721)Pre-tax earnings 9,415 1,578 640 242
11,875Income tax 1,755 451 197 79 2,482Tax rate 18.6% 20.9%Net
earnings 7,660 9,393EPS $3.14 $3.8535 February 22, 2011
http://www.hp.com/investor/home
Q4 FY09 GAAP to non-GAAP BRIDGE Amort. of In millions except
Purchased Acquisition related per share amounts GAAP Intangibles
Restructuring charges Non-GAAPRevenue $30,777 $30,777Cost of sales
23,466 23,466Total OpEx 4,178 (401) (38) (60) 3,679Operating profit
3,133 401 38 60 3,632Interest & other, net (132) (132)Pre-tax
earnings 3,001 401 38 60 3,500Income tax 589 117 11 19 736Tax rate
19.6% 21.0%Net earnings 2,412 2,764EPS $0.99 $1.1436 February 22,
2010 http://www.hp.com/investor/home
Q3 FY09 GAAP to non-GAAP BRIDGE Amort. of In millions except
Purchased Acquisition related per share amounts GAAP Intangibles
Restructuring charges Non-GAAPRevenue $27,585 $27,585Cost of sales
21,022 21,022Total OpEx 4,350 (379) (362) (59) 3,550Operating
profit 2,213 379 362 59 3,013Interest & other, net (177)
(177)Pre-tax earnings 2,036 379 362 59 2,836Income tax 365 105 108
19 597Tax rate 17.9% 21.1%Net earnings 1,671 2,239EPS $0.69 $0.9237
February 22, 2011 http://www.hp.com/investor/home
Q2 FY09 GAAP to non-GAAP BRIDGE Amort. of In millions except
Purchased Acquisition related per share amounts GAAP Intangibles
Restructuring charges Non-GAAPRevenue $27,383 $27,383Cost of sales
20,937 20,937Total OpEx 4,153 (380) (94) (75) 3,604Operating profit
2,293 380 94 75 2,842Interest & other, net (180) (180)Pre-tax
earnings 2,113 380 94 75 2,662Income tax 392 112 31 24 559Tax rate
18.6% 21.0%Net earnings 1,721 2,103EPS $0.71 $0.8638 February 22,
2011 http://www.hp.com/investor/home
Q1 FY09 GAAP to non-GAAP BRIDGE In millions except Amort. of
Acquisition related per share amounts GAAP Purchased Intangibles
Restructuring charges Non-GAAPRevenue $28,807 $28,807Cost of sales
22,064 22,064Total OpEx 4,246 (418) (146) (48) 3,634Operating
profit 2,497 418 146 48 3,109Interest & other, net (232)
(232)Pre-tax earnings 2,265 418 146 48 2,877Income tax 409 117 47
17 590Tax rate 18.1% 20.5%Net earnings 1,856 2,287EPS $0.75 $0.9339
February 22, 2011 http://www.hp.com/investor/home
FY08 GAAP to non-GAAP BRIDGE In millions except Amort. of
Acquisition related per share amounts GAAP Purchased Intangibles
Restructuring charges Non-GAAPRevenue $118,364