10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)
ý	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: April 30, 2012
Or
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                        to
Commission file number 1-4423

HEWLETT-PACKARD COMPANY
(Exact name of registrant as specified in its charter)

Delaware	94-1081436
(State or other jurisdiction of incorporation or organization)	(I.R.S. employer identification no.)
3000 Hanover Street, Palo Alto, California	94304
(Address of principal executive offices)	(Zip code)
(650) 857-1501 (Registrant's telephone number, including area code)

        Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 (the "Exchange Act") during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes ý    No o

        Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes ý    No o

        Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ý Accelerated filer o Non-accelerated filer o
(Do not check if a smaller
reporting company) Smaller reporting company o

        Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act).    Yes o    No ý

        The number of shares of HP common stock outstanding as of May 31, 2012 was 1,971,832,590 shares.

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
INDEX

			Page No.
Part I.	Financial Information
	Item 1.	Financial Statements		4
		Consolidated Condensed Statements of Earnings for the three and six months ended April 30, 2012 and 2011 (Unaudited)		4
		Consolidated Condensed Balance Sheets as of April 30, 2012 (Unaudited) and as of October 31, 2011 (Audited)		5
		Consolidated Condensed Statements of Cash Flows for the six months ended April 30, 2012 and 2011 (Unaudited)		6
		Notes to Consolidated Condensed Financial Statements (Unaudited)		7
	Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations		55
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk		90
	Item 4.	Controls and Procedures		90
Part II.	Other Information
	Item 1.	Legal Proceedings		91
	Item 1A.	Risk Factors		91
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		91
	Item 6.	Exhibits		91
Signature				92
Exhibit Index				93

Forward-Looking Statements

This Quarterly Report on Form 10-Q, including "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Item 2 of Part I of this report, 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 Hewlett-Packard Company and its consolidated subsidiaries ("HP") may differ materially from those expressed or implied by such forward-looking statements and assumptions. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including but not limited to any projections of revenue, margins, expenses, earnings, earnings per share, tax provisions, cash flows, benefit obligations, share repurchases, currency exchange rates, the impact of acquisitions or other financial items; any projections of the amount, timing or impact of cost savings, restructuring charges, early retirement programs, workforce reductions or impairment charges; any statements of the plans, strategies and objectives of management for future operations, including the execution of restructuring plans and any resulting cost savings or revenue or profitability improvements; any statements concerning the expected development, performance, market share or competitive performance relating to products or services; any statements regarding current or future macroeconomic trends or events and the impact of those trends and events on HP and its financial performance; any statements regarding pending investigations, claims or disputes; any statements of expectation or belief; and any statements of assumptions underlying any of the foregoing. Risks, uncertainties and assumptions include the impact of macroeconomic and geopolitical trends and events; the competitive pressures faced by HP's businesses; the development and transition of new products and services and the enhancement of existing products and services to meet customer needs and respond to emerging technological trends; the execution and performance of contracts by HP and its suppliers, customers and partners; the protection of HP's intellectual property assets, including intellectual property licensed from third parties; integration and other risks associated with business combination and investment transactions; the hiring and retention of key employees; assumptions related to pension and other post-retirement costs and

2

retirement programs; the execution, timing and results of restructuring plans, including estimates and assumptions related to the cost and the anticipated benefits of implementing those plans; the resolution of pending investigations, claims and disputes; and other risks that are described herein, including but not limited to the items discussed in "Factors that Could Affect Future Results" set forth in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Item 2 of Part I of this report, and that are otherwise described from time to time in HP's Securities and Exchange Commission ("SEC") reports, including HP's Annual Report on Form 10-K for the fiscal year ended October 31, 2011. HP assumes no obligation and does not intend to update these forward-looking statements.

3

PART I. FINANCIAL INFORMATION

Item 1.    Financial Statements.

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES

Consolidated Condensed Statements of Earnings

(Unaudited)

	Three months ended April 30						Six months ended April 30
	2012			2011			2012			2011
	In millions, except per share amounts
Net revenue:
Products	$	19,962		$	21,055		$	39,473		$	43,249
Services		10,614			10,466			21,023			20,468
Financing income		117			111			233			217
Total net revenue		30,693			31,632			60,729			63,934
Costs and expenses:
Cost of products		15,181			15,819			30,230			32,617
Cost of services		8,280			7,939			16,466			15,447
Financing interest		80			74			158			149
Research and development		850			815			1,636			1,613
Selling, general and administrative		3,540			3,425			6,907			6,542
Amortization of purchased intangible assets		470			413			936			838
Restructuring charges		53			158			93			316
Acquisition-related charges		17			21			39			50
Total operating expenses		28,471			28,664			56,465			57,572
Earnings from operations		2,222			2,968			4,264			6,362
Interest and other, net		(243	)		(76	)		(464	)		(173	)
Earnings before taxes		1,979			2,892			3,800			6,189
Provision for taxes		386			588			739			1,280
Net earnings	$	1,593		$	2,304		$	3,061		$	4,909
Net earnings per share:
Basic	$	0.80		$	1.07		$	1.55		$	2.27
Diluted	$	0.80		$	1.05		$	1.53		$	2.23
Cash dividends declared per share	$	—		$	—		$	0.24		$	0.16
Weighted-average shares used to compute net earnings per share:
Basic		1,979			2,150			1,980			2,166
Diluted		1,987			2,184			1,995			2,203

The accompanying notes are an integral part of these Consolidated Condensed Financial Statements.

4

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES

Consolidated Condensed Balance Sheets

	April 30, 2012			October 31, 2011
	In millions, except par value
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	8,311		$	8,043
Accounts receivable		16,609			18,224
Financing receivables		3,139			3,162
Inventory		7,306			7,490
Other current assets		14,324			14,102
Total current assets		49,689			51,021
Property, plant and equipment		12,236			12,292
Long-term financing receivables and other assets		11,018			10,755
Goodwill		44,938			44,551
Purchased intangible assets		9,808			10,898
Total assets	$	127,689		$	129,517
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable and short-term borrowings	$	4,252		$	8,083
Accounts payable		12,900			14,750
Employee compensation and benefits		3,609			3,999
Taxes on earnings		871			1,048
Deferred revenue		7,582			7,449
Accrued restructuring		273			654
Other accrued liabilities		13,312			14,459
Total current liabilities		42,799			50,442
Long-term debt		25,825			22,551
Other liabilities		17,368			17,520
Commitments and contingencies
Stockholders' equity:
HP stockholders' equity
Preferred stock, $0.01 par value (300 shares authorized; none issued)		—			—
Common stock, $0.01 par value (9,600 shares authorized; 1,978 and 1,991 shares issued and outstanding, respectively)		20			20
Additional paid-in capital		6,576			6,837
Retained earnings		37,758			35,266
Accumulated other comprehensive loss		(3,066	)		(3,498	)
Total HP stockholders' equity		41,288			38,625
Non-controlling interests		409			379
Total stockholders' equity		41,697			39,004
Total liabilities and stockholders' equity	$	127,689		$	129,517

The accompanying notes are an integral part of these Consolidated Condensed Financial Statements.

5

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES

Consolidated Condensed Statements of Cash Flows

(Unaudited)

	Six months ended April 30
	2012			2011
	In millions
Cash flows from operating activities:
Net earnings	$	3,061		$	4,909
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization		2,588			2,497
Stock-based compensation expense		344			327
Provision for doubtful accounts—accounts and financing receivables		57			(7	)
Provision for inventory		90			103
Restructuring charges		93			316
Deferred taxes on earnings		(155	)		641
Excess tax benefit from stock-based compensation		(12	)		(154	)
Other, net		240			(139	)
Changes in operating assets and liabilities:
Accounts and financing receivables		1,479			(608	)
Inventory		89			(415	)
Accounts payable		(1,851	)		(143	)
Taxes on earnings		(54	)		93
Restructuring		(274	)		(505	)
Other assets and liabilities		(2,029	)		117
Net cash provided by operating activities		3,666			7,032
Cash flows from investing activities:
Investment in property, plant and equipment		(1,963	)		(2,026	)
Proceeds from sale of property, plant and equipment		224			633
Purchases of available-for-sale securities and other investments		(565	)		—
Maturities and sales of available-for-sale securities and other investments		346			57
Payments in connection with business acquisitions, net of cash acquired		(141	)		(246	)
Proceeds from business divestiture, net		81			—
Net cash used in investing activities		(2,018	)		(1,582	)
Cash flows from financing activities:
Repayment of commercial paper and notes payable, net		(2,792	)		(998	)
Issuance of debt		5,052			2,216
Payment of debt		(2,661	)		(454	)
Issuance of common stock under employee stock plans		634			774
Repurchase of common stock		(1,130	)		(4,976	)
Excess tax benefit from stock-based compensation		12			154
Cash dividends paid		(495	)		(357	)
Net cash used in financing activities		(1,380	)		(3,641	)
Increase in cash and cash equivalents		268			1,809
Cash and cash equivalents at beginning of period		8,043			10,929
Cash and cash equivalents at end of period	$	8,311		$	12,738
Supplemental schedule of non-cash investing and financing activities:
Issuance of common stock and stock awards assumed in business acquisitions	$	—		$	2
Purchase of assets under capital lease	$	12		$	3

The accompanying notes are an integral part of these Consolidated Condensed Financial Statements.

6

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements

(Unaudited)

Note 1: Basis of Presentation

        In the opinion of management, the accompanying Consolidated Condensed Financial Statements of Hewlett-Packard Company and its consolidated subsidiaries ("HP") contain all adjustments, including normal recurring adjustments, necessary to present fairly HP's financial position as of April 30, 2012, its results of operations for the three and six months ended April 30, 2012 and 2011 and its cash flows for the six months ended April 30, 2012 and 2011. The Consolidated Condensed Balance Sheet as of October 31, 2011 is derived from the October 31, 2011 audited consolidated financial statements.

        The results of operations for the three and six months ended April 30, 2012 are not necessarily indicative of the results to be expected for the full year. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with "Risk Factors," "Legal Proceedings," "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Quantitative and Qualitative Disclosures About Market Risk" and the Consolidated Financial Statements and notes thereto included in Items 1A, 3, 7, 7A and 8, respectively, of the Hewlett-Packard Company Annual Report on Form 10-K for the fiscal year ended October 31, 2011.

        The preparation of financial statements in accordance with U.S. generally accepted accounting principles ("GAAP") requires management to make estimates and assumptions that affect the amounts reported in HP's Consolidated Condensed Financial Statements and accompanying notes. Actual results could differ materially from those estimates.

Reclassifications and Segment Reorganization

        In connection with organizational realignments implemented in the first quarter of fiscal 2012, certain costs previously reported as cost of sales have been reclassified as selling, general and administrative expenses to better align those costs with the functional areas that benefit from those expenditures. HP has made certain segment and business unit realignments in order to optimize its operating structure. Reclassifications of prior year financial information have been made to conform to the current year presentation. None of the changes impacts HP's previously reported consolidated net revenue, earnings from operations, net earnings or net earnings per share. See Note 16 for a further discussion of HP's segment reorganization.

Note 2: Stock-Based Compensation

        HP's stock-based compensation plans include HP's principal equity plans as well as various equity plans assumed through acquisitions. HP's principal equity plans include restricted stock awards, stock options and performance-based restricted units ("PRUs").

        Total stock-based compensation expense before income taxes for the three and six months ended April 30, 2012 was $169 million and $344 million, respectively. The resulting income tax benefit for the three and six months ended April 30, 2012 was $54 million and $111 million, respectively. Total stock-based compensation expense before income taxes for the three and six months ended April 30, 2011 was $147 million and $327 million, respectively. The resulting income tax benefit for the three and six months ended April 30, 2011 was $61 million and $104 million, respectively.

7

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements (Continued)

(Unaudited)

Note 2: Stock-Based Compensation (Continued)

Restricted Stock Awards

        Restricted stock awards are non-vested stock awards that include grants of restricted stock and grants of restricted stock units.

        Non-vested restricted stock awards as of April 30, 2012 and changes during the six months ended April 30, 2012 were as follows:

	Shares			Weighted- Average Grant Date Fair Value Per Share
	In thousands
Outstanding at October 31, 2011		16,813		$	39
Granted		17,791		$	28
Vested		(3,027	)	$	43
Forfeited		(1,250	)	$	36
Outstanding at April 30, 2012		30,327		$	33

        At April 30, 2012, there was $758 million of unrecognized pre-tax stock-based compensation expense related to non-vested restricted stock awards, which HP expects to recognize over the remaining weighted-average vesting period of 1.4 years.

Stock Options

        HP utilized the Black-Scholes option pricing model to value the service-based stock options granted under its principal equity plans. HP estimates the fair value of the performance-contingent stock options using a combination of the Monte Carlo simulation model and lattice model, as these awards contain market conditions.

        HP estimated the weighted-average fair value of stock options using the following weighted-average assumptions:

	Three months ended April 30						Six months ended April 30
	2012			2011			2012			2011
Weighted-average fair value of grants per share(1)	$	5.82		$	10.73		$	9.46		$	11.06
Implied volatility		32	%		27	%		43	%		28	%
Risk-free interest rate		0.91	%		2.16	%		1.20	%		1.97	%
Dividend yield		2.14	%		0.77	%		1.73	%		0.76	%
Expected life in months		61			60			67			60

⁽¹⁾

The fair value calculation was based on stock options granted during the period.

8

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements (Continued)

(Unaudited)

Note 2: Stock-Based Compensation (Continued)

        Option activity as of April 30, 2012 and changes during the six months ended April 30, 2012 were as follows:

	Shares			Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Term		Aggregate Intrinsic Value
	In thousands					In years		In millions
Outstanding at October 31, 2011		120,243		$	28
Granted		6,761		$	28
Exercised		(27,967	)	$	21
Forfeited/cancelled/expired		(5,122	)	$	35
Outstanding at April 30, 2012		93,915		$	29		3.5	$	201
Vested and expected to vest at April 30, 2012		91,972		$	29		3.5	$	195
Exercisable at April 30, 2012		68,259		$	31		2.2	$	122

        The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value that option holders would have received had all option holders exercised their options on April 30, 2012. The aggregate intrinsic value is the difference between HP's closing stock price on the last trading day of the second quarter of fiscal 2012 and the exercise price, multiplied by the number of in-the-money options. Total intrinsic value of options exercised for the three and six months ended April 30, 2012 was $55 million and $164 million, respectively.

        At April 30, 2012, there was $227 million of unrecognized pre-tax stock-based compensation expense related to stock options, which HP expects to recognize over the remaining weighted-average vesting period of 2.1 years.

Performance-based Restricted Units

        HP's PRU program provides for the issuance of PRUs representing hypothetical shares of HP common stock. Each PRU award reflects a target number of shares ("Target Shares") that may be issued to the award recipient before adjusting for performance and market conditions. The actual number of shares the recipient receives is determined at the end of a three-year performance period based on results achieved versus company performance goals and may range from 0% to 200% of the Target Shares granted. The performance goals for PRUs granted in fiscal year 2012 are based on HP's annual cash flow from operations as a percentage of revenue and on HP's annual revenue growth. The performance goals for PRUs granted in previous years are based on HP's annual cash flow from operations as a percentage of revenue and on a market condition based on total shareholder return ("TSR") relative to the S&P 500 over the three-year performance period.

        For PRU awards granted in fiscal year 2012, HP estimates the fair value of the Target Shares using HP's closing stock price on the measurement date. The weighted-average fair value per share for the first year of the three-year performance period applicable to PRUs granted in the six months ended April 30, 2012 was $27.00. The estimated fair value of the Target Shares for the second and third years for PRUs granted in the six months ended April 30, 2012 will be determined on the measurement date

9

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements (Continued)

(Unaudited)

Note 2: Stock-Based Compensation (Continued)

applicable to those PRUs, which will occur during the period that the annual performance goals are approved for those PRUs, and the expense will be amortized over the remainder of the applicable three-year performance period.

        For PRU awards granted prior to fiscal year 2012, HP estimates the fair value of the Target Shares subject to those awards using the Monte Carlo simulation model, as the TSR modifier represents a market condition. The following weighted-average assumptions, in addition to projections of market conditions, were used to determine the weighted-average fair values of these PRU awards:

	Six months ended April 30
	2012			2011
Weighted-average fair value of grants per share	$	3.35	(1)	$	27.59	(2)
Expected volatility(3)		41	%		30	%
Risk-free interest rate		0.14	%		0.38	%
Dividend yield		1.78	%		0.75	%
Expected life in months		15			19

⁽¹⁾

Reflects the weighted-average fair value for the third year of the three-year performance period applicable to PRUs granted in fiscal 2010 and for the second year of the three-year performance period applicable to PRUs granted in fiscal 2011. The estimated fair value of the Target Shares for the third year for PRUs granted in fiscal 2011 will be determined on the measurement date applicable to those PRUs, which will occur during the period that the annual performance goals are approved for those PRUs, and the expense will be amortized over the remainder of the applicable three-year performance period.

⁽²⁾

Reflects the weighted-average fair value for the third year of the three-year performance period applicable to PRUs granted in fiscal 2009, for the second year of the three-year performance period applicable to PRUs granted in fiscal 2010 and for the first year of the three-year performance period applicable to PRUs granted in the six months ended April 30, 2011.

⁽³⁾

HP uses historic volatility for PRU awards as implied volatility cannot be used when simulating multivariate prices for companies in the S&P 500.

10

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements (Continued)

(Unaudited)

Note 2: Stock-Based Compensation (Continued)

        Non-vested PRUs as of April 30, 2012 and changes during the six months ended April 30, 2012 were as follows:

	Shares
	In thousands
Outstanding Target Shares at October 31, 2011		11,382
Granted		1,157
Vested		—
Change in units due to performance and market conditions achievement for PRUs vested in the period		—
Forfeited		(843	)
Outstanding Target Shares at April 30, 2012		11,696
Outstanding Target Shares assigned a fair value at April 30, 2012		9,434	(1)

⁽¹⁾

Excludes Target Shares for the third year for PRUs granted in fiscal 2011 and for the second and third years for PRUs granted in the six months ended April 30, 2012 as the measurement date has not yet been established. The measurement date and related fair value for the excluded PRUs will be established when the annual performance goals are approved.

        At April 30, 2012, there was $48 million of unrecognized pre-tax stock-based compensation expense related to PRUs with an assigned fair value, which HP expects to recognize over the remaining weighted-average vesting period of 1.1 years.

Note 3: Net Earnings Per Share

        HP calculates basic earnings per share ("EPS") using net earnings and the weighted-average number of shares outstanding during the reporting period. Diluted EPS includes any dilutive effect of outstanding stock options, PRUs, restricted stock units and restricted stock.

11

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements (Continued)

(Unaudited)

Note 3: Net Earnings Per Share (Continued)

        The reconciliation of the numerators and denominators of the basic and diluted EPS calculations was as follows:

	Three months ended April 30				Six months ended April 30
	2012		2011		2012		2011
	In millions, except per share amounts
Numerator:
Net earnings(1)	$	1,593	$	2,304	$	3,061	$	4,909
Denominator:
Weighted-average shares used to compute basic EPS		1,979		2,150		1,980		2,166
Dilutive effect of employee stock plans		8		34		15		37
Weighted-average shares used to compute diluted EPS		1,987		2,184		1,995		2,203
Net earnings per share:
Basic	$	0.80	$	1.07	$	1.55	$	2.27
Diluted	$	0.80	$	1.05	$	1.53	$	2.23

⁽¹⁾

Net earnings available to participating securities were not significant for the three and six months ended April 30, 2012 and 2011. HP considers restricted stock that provides the holder with a non-forfeitable right to receive dividends to be a participating security.

        HP excludes options with exercise prices that are greater than the average market price from the calculation of diluted EPS because their effect would be anti-dilutive. For both the three and six months ended April 30, 2012, HP excluded from the calculation of diluted EPS options to purchase 50 million shares, compared to 6 million shares for both the three and six months ended April 30, 2011. In addition, HP also excluded from the calculation of diluted EPS options to purchase an additional 10 million shares for both the three and six months ended April 30, 2012, compared to an additional 1 million shares for both the three and six months ended April 30, 2011, whose combined exercise price, unamortized fair value and excess tax benefits were greater in each of those periods than the average market price for HP's common stock because their effect would be anti-dilutive.

Note 4: Balance Sheet Details

        Balance sheet details were as follows:

Accounts Receivable

	April 30, 2012			October 31, 2011
	In millions
Accounts receivable	$	17,064		$	18,694
Allowance for doubtful accounts		(455	)		(470	)
	$	16,609		$	18,224

12

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements (Continued)

(Unaudited)

Note 4: Balance Sheet Details (Continued)

        HP has revolving trade receivables-based facilities permitting it to sell certain trade receivables to third parties. In accordance with the accounting requirements under the Accounting Standards Codification relating to "Transfers and Servicing," trade receivables are derecognized from the Consolidated Condensed Balance Sheets when sold to third parties. The total aggregate capacity of the facilities was $1.4 billion as of April 30, 2012, including a $0.9 billion partial recourse facility entered into in May 2011 and an aggregate capacity of $0.5 billion in non-recourse facilities. The recourse obligation is measured using market data from similar transactions and reported as a current liability in the Consolidated Condensed Balance Sheets. The recourse obligation as of April 30, 2012 was not material.

        For the first six months of fiscal 2012 and 2011, trade receivables sold under these facilities were $2.1 billion and $897 million, respectively, which approximates the amount of cash received. The resulting loss on the sales of trade accounts receivable for the three months and six months ended April 30, 2012 was not material. HP had $725 million as of April 30, 2012 and $701 million as of October 31, 2011 of available capacity under these programs.

Inventory

	April 30, 2012		October 31, 2011
	In millions
Finished goods	$	4,518	$	4,869
Purchased parts and fabricated assemblies		2,788		2,621
	$	7,306	$	7,490

Property, Plant and Equipment

	April 30, 2012			October 31, 2011
	In millions
Land	$	652		$	687
Buildings and leasehold improvements		8,804			8,620
Machinery and equipment		16,622			16,155
		26,078			25,462
Accumulated depreciation		(13,842	)		(13,170	)
	$	12,236		$	12,292

13

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements (Continued)

(Unaudited)

Note 5: Goodwill and Purchased Intangible Assets

Goodwill

        Goodwill allocated to HP's business segments as of April 30, 2012 and changes in the carrying amount of goodwill for the six months ended April 30, 2012 are as follows:

	Personal Systems Group		Services			Imaging and Printing Group		Enterprise Servers, Storage and Networking			Software		HP Financial Services		Corporate Investments			Total
	In millions
Balance at October 31, 2011	$	2,498	$	17,280		$	2,471	$	8,070		$	14,063	$	144	$	25		$	44,551
Goodwill acquired during the period		—		—			12		—			—		—		—			12
Goodwill adjustments/reclassifications		—		(20	)		—		(302	)		712		—		(15	)		375
Balance at April 30, 2012	$	2,498	$	17,260		$	2,483	$	7,768		$	14,775	$	144	$	10		$	44,938

        In connection with certain fiscal 2012 organizational realignments, HP reclassified $280 million of goodwill related to the TippingPoint network security solutions business from the Enterprise Servers, Storage and Networking segment to the Software segment. During the six months ended April 30, 2012, HP recorded additional goodwill of $224 million in the Software segment due to a change in the estimated fair values of purchased intangible assets and net tangible assets associated with the acquisition of Autonomy Corporation plc ("Autonomy"). HP also recorded a net increase to goodwill of $213 million as a result of a currency translation adjustment on goodwill related to Autonomy subsidiaries whose functional currency is not the U.S. dollar.

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HEWLETT-PACKARD COMPANY AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements (Continued)

(Unaudited)

Note 5: Goodwill and Purchased Intangible Assets (Continued)

Purchased Intangible Assets

        HP's purchased intangible assets associated with completed acquisitions are composed of:

	April 30, 2012							October 31, 2011
	Gross		Accumulated Amortization			Net		Gross		Accumulated Amortization			Net
	In millions
Customer contracts, customer lists and distribution agreements	$	6,073	$	(2,503	)	$	3,570	$	6,346	$	(2,376	)	$	3,970
Developed and core technology and patents		6,934		(2,319	)		4,615		7,226		(1,944	)		5,282
Product trademarks		321		(127	)		194		336		(121	)		215
Total amortizable purchased intangible assets		13,328		(4,949	)		8,379		13,908		(4,441	)		9,467
In-process research and development ("IPR&D")		7		—			7		9		—			9
Compaq trade name		1,422		—			1,422		1,422		—			1,422
Total purchased intangible assets	$	14,757	$	(4,949	)	$	9,808	$	15,339	$	(4,441	)	$	10,898

        For the first six months of fiscal 2012, the majority of the decrease in gross intangibles was related to $428 million of fully amortized intangible assets which have been eliminated from both the gross and accumulated amortization amounts and a $293 million change in the estimated fair value of Autonomy's purchased intangible assets acquired. The decrease to intangibles was partially offset by a net currency translation adjustment of $165 million on intangibles related to Autonomy subsidiaries whose functional currency is not the U.S. dollar.

        Estimated future amortization expense related to finite-lived purchased intangible assets at April 30, 2012 was as follows:

Fiscal year:	In millions
2012 (remaining six months)	$	937
2013		1,751
2014		1,363
2015		1,201
2016		1,041
2017		609
Thereafter		1,477
Total	$	8,379

Note 6: Restructuring Charges

        HP records restructuring charges associated with management approved restructuring plans to either reorganize one or more of HP's business segments, or to remove duplicative headcount and

15

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements (Continued)

(Unaudited)

Note 6: Restructuring Charges (Continued)

infrastructure associated with one or more business acquisitions. Restructuring charges can include severance costs to eliminate a specified number of employees, infrastructure charges to vacate facilities and consolidate operations, and contract cancellation costs. Restructuring charges are recorded based upon planned employee termination dates and site closure and consolidation plans. The timing of associated cash payments is dependent upon the type of restructuring charge and can extend over a multi-year period. HP records the short-term portion of the restructuring liability in Accrued restructuring and the long-term portion in Other liabilities in the Consolidated Condensed Balance Sheets.

Fiscal 2010 Acquisitions

        In connection with the acquisitions of Palm, Inc. ("Palm") and 3Com Corporation ("3Com") in fiscal 2010, HP's management approved and initiated plans to restructure the operations of the acquired companies, including severance for employees, contract cancellation costs, costs to vacate duplicative facilities and other items. The total expected combined cost of the plans is $121 million, which includes $33 million of additional restructuring costs recorded in the fourth quarter of fiscal 2011 in connection with HP's decision to wind down the webOS device business. As of October 31, 2011, HP had recorded the majority of the costs of the plans based upon the anticipated timing of planned terminations and facility closure costs. With respect to the Palm plan, no further restructuring charges are anticipated, and the majority of the remaining costs are expected to be paid out through fiscal 2012. The remaining costs pertaining to the 3Com plan are expected to be paid out through fiscal 2016 as fixed lease payments are made.

Fiscal 2010 Enterprise Services Business Restructuring Plan

        On June 1, 2010, HP's management announced a plan to restructure its enterprise services business ("ES"), which includes its Infrastructure Technology Outsourcing and Application and Business Services business units. The multi-year restructuring program includes plans to consolidate commercial data centers, tools and applications. The total expected cost of the plan that will be recorded as restructuring charges is approximately $1.0 billion, and includes severance costs to eliminate approximately 8,000 positions and infrastructure charges. As the execution of the restructuring activities has evolved, certain components and their related cost estimates have been revised. While the total cost of the plan remains consistent, during the first quarter of fiscal 2012, HP reduced the severance accrual by $100 million and recognized additional infrastructure related charges of $104 million. HP expects to record the majority of the infrastructure charges through fiscal 2012. The timing of the charges is based upon planned termination dates and site closure and consolidation plans. The majority of the associated cash payments are expected to be paid out through the first quarter of fiscal 2013. As of April 30, 2012, approximately 7,000 positions had been eliminated.

Fiscal 2009 Restructuring Plan

        In May 2009, HP's management approved and initiated a restructuring plan to structurally change and improve the effectiveness of the Imaging and Printing Group ("IPG"), the Personal Systems Group ("PSG"), and Enterprise Servers, Storage and Networking ("ESSN") businesses. The total expected cost of the plan was $301 million in severance-related costs associated with the planned elimination of

16

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements (Continued)

(Unaudited)

Note 6: Restructuring Charges (Continued)

approximately 4,400 positions. All planned eliminations had occurred and the vast majority of the restructuring costs had been paid out as of October 31, 2011.

Fiscal 2008 HP/EDS Restructuring Plan

        In connection with the acquisition of Electronic Data Systems Corporation ("EDS") on August 26, 2008, HP's management approved and initiated a restructuring plan to combine and align HP's services businesses, eliminate duplicative overhead functions and consolidate and vacate duplicative facilities. The restructuring plan is expected to be implemented over four years from the acquisition date at a total expected cost of $3.3 billion. Approximately $1.5 billion of the expected costs were associated with pre-acquisition EDS and were reflected in the fair value of purchase consideration of EDS. These costs are subject to change based on the actual costs incurred. The remaining costs are primarily associated with HP and will be recorded as a restructuring charge.

        The restructuring plan includes severance costs related to eliminating approximately 25,000 positions. As of October 31, 2011, all planned eliminations had occurred and the vast majority of the associated severance costs had been paid out. The infrastructure charges in the restructuring plan include facility closure and consolidation costs and the costs associated with early termination of certain contractual obligations. HP has recorded the majority of these costs based upon the execution of site closure and consolidation plans. The associated cash payments are expected to be paid out through fiscal 2016.

Summary of Restructuring Plans

        The adjustments to the accrued restructuring expenses related to all of HP's restructuring plans described above for the six months ended April 30, 2012 were as follows:

			Three months ended April 30, 2012 charges		Six months ended April 30, 2012 charges											As of April 30, 2012
	Balance, October 31, 2011							Cash payments			Non-cash settlements and other adjustments			Balance, April 30, 2012		Total costs and adjustments to date		Total expected costs and adjustments
	In millions
Fiscal 2010 acquisitions	$	59	$	—	$	—		$	(18	)	$	—		$	41	$	114	$	121
Fiscal 2010 ES Plan:
Severance		493		—		(100	)		(72	)		(16	)		305		623		623
Infrastructure		3		35		139			(104	)		(37	)		1		332		369
Total ES Plan		496		35		39			(176	)		(53	)		306		955		992
Fiscal 2009 Plan		—		—		7			(8	)		1			—		301		301
Fiscal 2008 HP/EDS Plan:
Severance		—		—		5			(6	)		1			—		2,195		2,195
Infrastructure		258		18		42			(66	)		(7	)		227		1,016		1,085
Total HP/EDS Plan		258		18		47			(72	)		(6	)		227		3,211		3,280
Total restructuring plans	$	813	$	53	$	93		$	(274	)	$	(58	)	$	574	$	4,581	$	4,694

17

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements (Continued)

(Unaudited)

Note 6: Restructuring Charges (Continued)

        At April 30, 2012 and October 31, 2011, HP included the long-term portion of the restructuring liability of $301 million and $159 million, respectively, in Other liabilities, and the short-term portion of $273 million and $654 million, respectively, in Accrued restructuring in the accompanying Consolidated Condensed Balance Sheets.

Note 7: Fair Value

        HP determines fair value based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants.

        Valuation techniques used by HP are based upon observable and unobservable inputs. Observable or market inputs reflect market data obtained from independent sources, while unobservable inputs reflect HP's assumptions about market participant assumptions based on the best information available. Observable inputs are the preferred basis of valuation. These two types of inputs create the following fair value hierarchy:

        Level 1—Quoted prices (unadjusted) for identical instruments in active markets.

        Level 2—Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

        Level 3—Prices or valuations that require management inputs that are both significant to the fair value measurement and unobservable.

        The following section describes the valuation methodologies HP uses to measure its financial assets and liabilities at fair value.

        Cash Equivalents and Investments: HP holds time deposits, money market funds, mutual funds, other debt securities primarily consisting of corporate and foreign government notes and bonds, and common stock and equivalents. Where applicable, HP uses quoted prices in active markets for identical assets to determine fair value. If quoted prices in active markets for identical assets are not available to determine fair value, HP uses quoted prices for similar assets and liabilities or inputs that are observable either directly or indirectly. If quoted prices for identical or similar assets are not available, HP uses internally developed valuation models, whose inputs include bid prices, and third-party valuations utilizing underlying assets assumptions.

        Derivative Instruments: As discussed in Note 8, HP mainly holds non-speculative forwards, swaps and options to hedge certain foreign currency and interest rate exposures. When active market quotes are not available, HP uses industry standard valuation models. Where applicable, these models project future cash flows and discount the future amounts to a present value using market-based observable inputs including interest rate curves, credit risk, foreign exchange rates, and forward and spot prices for currencies. In certain cases, market-based observable inputs are not available and, in those cases, HP uses management judgment to develop assumptions which are used to determine fair value.

18

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements (Continued)

(Unaudited)

Note 7: Fair Value (Continued)

        Short- and Long-Term Debt: The estimated fair value of publicly-traded debt is based on quoted market prices for the identical liability when traded as an asset in an active market. For other debt for which a quoted market price is not available, an expected present value method that uses rates currently available to HP for debt with similar terms and remaining maturities is used to estimate fair value. The portion of the company's fixed-rate debt obligations that is hedged is reflected in the Consolidated Condensed Balance Sheets as an amount equal to the debt's carrying value, including a fair value adjustment representing changes in the fair value of the hedged debt obligations arising from movements in benchmark interest rates. The estimated fair value of HP's short- and long-term debt was approximately $30.6 billion at April 30, 2012, compared to a carrying value of $30.1 billion at that date. The estimated fair value of HP's short- and long-term debt was approximately $31.1 billion at October 31, 2011, compared to a carrying value of $30.6 billion at that date. If measured at fair value in the Consolidated Condensed Financial Statements, short- and long-term debt would be classified as Level 2 in the fair value hierarchy.

        The following table presents HP's assets and liabilities that are measured at fair value on a recurring basis:

	As of April 30, 2012								As of October 31, 2011
	Fair Value Measured Using								Fair Value Measured Using
							Total Balance								Total Balance
	Level 1		Level 2		Level 3				Level 1		Level 2		Level 3
	In millions
Assets
Time deposits	$	—	$	2,796	$	—	$	2,796	$	—	$	5,120	$	—	$	5,120
Money market funds		1,985		—		—		1,985		236		—		—		236
Mutual funds		—		380		—		380		—		—		—		—
Marketable equity securities		45		5		—		50		120		2		—		122
Foreign bonds		7		365		—		372		7		376		—		383
Corporate bonds and other debt securities		3		2		48		53		3		2		48		53
Derivatives:
Interest rate contracts		—		411		—		411		—		593		—		593
Foreign exchange contracts		—		437		1		438		—		269		35		304
Other derivatives		—		2		12		14		—		25		6		31
Total Assets	$	2,040	$	4,398	$	61	$	6,499	$	366	$	6,387	$	89	$	6,842
Liabilities
Derivatives:
Interest rate contracts	$	—	$	44	$	—	$	44	$	—	$	71	$	—	$	71
Foreign exchange contracts		—		468		9		477		—		823		9		832
Other derivatives		—		—		—		—		—		1		—		1
Total Liabilities	$	—	$	512	$	9	$	521	$	—	$	895	$	9	$	904

19

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements (Continued)

(Unaudited)

Note 8: Financial Instruments

Cash Equivalents and Available-for-Sale Investments

        Cash equivalents and available-for-sale investments at fair value as of April 30, 2012 and October 31, 2011 were as follows:

	April 30, 2012									October 31, 2011
	Cost		Gross Unrealized Gain		Gross Unrealized Loss			Estimated Fair Value		Cost		Gross Unrealized Gain		Gross Unrealized Loss			Estimated Fair Value
	In millions
Cash Equivalents
Time deposits	$	2,788	$	—	$	—		$	2,788	$	5,112	$	—	$	—		$	5,112
Money market funds		1,985		—		—			1,985		236		—		—			236
Mutual funds		71		—		—			71		—		—		—			—
Total cash equivalents		4,844		—		—			4,844		5,348		—		—			5,348
Available-for-Sale Investments
Debt securities:
Time deposits		8		—		—			8		8		—		—			8
Foreign bonds		309		63		—			372		317		66		—			383
Mutual funds		309		—		—			309		—		—		—			—
Corporate bonds and other debt securities		70		—		(17	)		53		74		—		(21	)		53
Total debt securities		696		63		(17	)		742		399		66		(21	)		444
Equity securities in public companies		62		3		(19	)		46		114		4		—			118
Total cash equivalents and available-for-sale investments	$	5,602	$	66	$	(36	)	$	5,632	$	5,861	$	70	$	(21	)	$	5,910

        Cash equivalents consist of investments in time deposits, money market funds and mutual funds with original maturities of three months or less. Time deposits were primarily issued by institutions outside the U.S. as of April 30, 2012 and October 31, 2011. Available-for-sale securities consist of short-term investments which mature within twelve months or less and long-term investments with maturities greater than twelve months. Investments primarily include institutional bonds, mutual funds, equity securities in public companies, fixed-interest securities and time deposits. HP estimates the fair values of its investments based on quoted market prices or pricing models using current market rates. These estimated fair values may not be representative of actual values that will be realized in the future.

        As of April 30, 2012, $17 million of the total gross unrealized losses were related to certain debt securities that had been in a continuous loss position for more than twelve months. The gross unrealized loss as of October 31, 2011 was due primarily to declines in certain debt securities of $21 million that had been in a continuous loss position for more than twelve months. HP does not intend to sell these debt securities, and it is not likely that HP will be required to sell these debt securities prior to the recovery of the amortized cost.

20

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements (Continued)

(Unaudited)

Note 8: Financial Instruments (Continued)

        Contractual maturities of short-term and long-term investments in available-for-sale debt securities at April 30, 2012 were as follows:

	April 30, 2012
	Cost		Estimated Fair Value
	In millions
Due in less than one year	$	314	$	314
Due in one to five years		71		54
Due in more than five years		311		374
	$	696	$	742

        For the three and six months ended April 30, 2012, HP recognized an insignificant impairment charge associated with debt securities. For the three and six months ended April 30, 2011, HP did not recognize any impairment charge associated with debt securities.

        During the quarter ended April 30, 2012, HP recognized a $50.7 million impairment charge related to a public equity investment as HP determined that such impairment was other than temporary. HP made its determination based on an average of closing prices for the six months ended April 30, 2012. HP has evaluated the near-term prospects of its remaining equity investments in a gross unrealized loss position in relation to the severity and duration of the impairment and considers the decline in market value of the equity investments to be temporary in nature.

        Equity securities in privately held companies include cost basis and equity method investments. These amounted to $51 million and $48 million for the periods ended April 30, 2012 and October 31, 2011, respectively, and are included in long-term financing receivables and other assets.

Derivative Financial Instruments

        HP is a global company that is exposed to foreign currency exchange rate fluctuations and interest rate changes in the normal course of its business. As part of its risk management strategy, HP uses derivative instruments, primarily forward contracts, option contracts, interest rate swaps, and total return swaps, to hedge certain foreign currency, interest rate and, to a lesser extent, equity exposures. HP's objective is to offset gains and losses resulting from these exposures with losses and gains on the derivative contracts used to hedge them, thereby reducing volatility of earnings or protecting fair values of assets and liabilities. HP does not have any leveraged derivatives and does not use derivative contracts for speculative purposes. HP designates its derivatives as fair value hedges, cash flow hedges or hedges of the foreign currency exposure of a net investment in a foreign operation ("net investment hedges"). Additionally, for derivatives not designated as hedging instruments, HP categorizes those economic hedges as other derivatives. HP recognizes all derivatives, on a gross basis, in the Consolidated Condensed Balance Sheets at fair value and reports them in Other current assets, Long-term financing receivables and other assets, Other accrued liabilities, or Other liabilities. HP classifies cash flows from the derivative programs as operating activities in the Consolidated Condensed Statements of Cash Flows.

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HEWLETT-PACKARD COMPANY AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements (Continued)

(Unaudited)

Note 8: Financial Instruments (Continued)

        As a result of the use of derivative instruments, HP is exposed to the risk that counterparties to derivative contracts will fail to meet their contractual obligations. To mitigate the counterparty credit risk, HP has a policy of only entering into contracts with carefully selected major financial institutions based upon their credit ratings and other factors, and HP maintains dollar risk limits that correspond to each institution's credit rating and other factors. HP's established policies and procedures for mitigating credit risk on principal transactions and short-term cash include reviewing and establishing limits for credit exposure and continually assessing the creditworthiness of counterparties. Master agreements with counterparties include master netting arrangements as further mitigation of credit exposure to counterparties. These arrangements permit HP to net amounts due from HP to a counterparty with amounts due to HP from the same counterparty.

        To further mitigate credit exposure to counterparties, HP may enter into collateral security arrangements with its counterparties. These arrangements require HP to post collateral or to hold collateral from counterparties when the derivative fair values exceed contractually established thresholds which are generally based on the credit ratings of HP and its counterparties. Such funds are generally transferred within two business days of the due date. As of April 30, 2012, HP held $195 million of collateral and posted $40 million through re-hypothecation in association with the counterparties under these collateralized arrangements. As of April 30, 2011, HP held $30 million of treasury securities under those collateralized arrangements. As of April 30, 2012 and 2011, HP did not have any derivative instruments under these collateralized arrangements that were in a significant net liability position.

Fair Value Hedges

        HP enters into fair value hedges to reduce the exposure of its debt portfolio to interest rate risk. HP issues long-term debt in U.S. dollars based on market conditions at the time of financing. HP uses interest rate swaps to mitigate the market risk exposures in connection with the debt to achieve primarily U.S. dollar LIBOR-based floating interest expense. The swap transactions generally involve principal and interest obligations for U.S. dollar-denominated amounts. Alternatively, HP may choose not to swap fixed for floating interest payments or may terminate a previously executed swap if it believes a larger proportion of fixed-rate debt would be beneficial. When investing in fixed-rate instruments, HP may enter into interest rate swaps that convert the fixed interest payments into variable interest payments and would classify these swaps as fair value hedges. For derivative instruments that are designated and qualify as fair value hedges, HP recognizes the gain or loss on the derivative instrument, as well as the offsetting loss or gain on the hedged item, in Interest and other, net in the Consolidated Condensed Statements of Earnings in the current period.

Cash Flow Hedges

        HP uses a combination of forward contracts and options designated as cash flow hedges to protect against the foreign currency exchange rate risks inherent in its forecasted net revenue and, to a lesser extent, cost of sales, operating expense, and intercompany lease loan denominated in currencies other than the U.S. dollar. HP's foreign currency cash flow hedges mature generally within twelve months. However, certain leasing revenue-related forward contracts and intercompany lease loan forward contracts extend for the duration of the lease term, which can be up to five years. For derivative

22

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements (Continued)

(Unaudited)

Note 8: Financial Instruments (Continued)

instruments that are designated and qualify as cash flow hedges, HP initially records the effective portion of the gain or loss on the derivative instrument in accumulated other comprehensive income or loss as a separate component of stockholders' equity and subsequently reclassifies these amounts into earnings in the period during which the hedged transaction is recognized in earnings. HP reports the effective portion of cash flow hedges in the same financial statement line item as the changes in value of the hedged item. During the three and six months ended April 30, 2012 and 2011, HP did not discontinue any cash flow hedge for which it was probable that a forecasted transaction would not occur.

Net Investment Hedges

        HP uses forward contracts designated as net investment hedges to hedge net investments in certain foreign subsidiaries whose functional currency is the local currency. These derivative instruments are designated as net investment hedges and, as such, HP records the effective portion of the gain or loss on the derivative instrument together with changes in the hedged items in cumulative translation adjustment as a separate component of stockholders' equity.

Other Derivatives

        Other derivatives not designated as hedging instruments consist primarily of forward contracts HP uses to hedge foreign currency balance sheet exposures. HP also uses total return swaps and, to a lesser extent, interest rate swaps, based on the equity and fixed income indices, to hedge its executive deferred compensation plan liability. For derivative instruments not designated as hedging instruments, HP recognizes changes in the fair values in earnings in the period of change. HP recognizes the gain or loss on foreign currency forward contracts used to hedge balance sheet exposures in Interest and other, net in the same period as the remeasurement gain and loss of the related foreign currency denominated assets and liabilities. HP recognizes the gain or loss on the total return swaps and interest rate swaps in Interest and other, net in the same period as the gain or loss from the change in market value of the executive deferred compensation plan liability.

Hedge Effectiveness

        For interest rate swaps designated as fair value hedges, HP measures effectiveness by offsetting the change in fair value of the hedged debt with the change in fair value of the derivative. For foreign currency options and forward contracts designated as cash flow or net investment hedges, HP measures effectiveness by comparing the cumulative change in the hedge contract with the cumulative change in the hedged item, both of which are based on forward rates. HP recognizes any ineffective portion of the hedge, as well as amounts not included in the assessment of effectiveness, in the Consolidated Condensed Statements of Earnings. As of April 30, 2012 and 2011, the portion of hedging instruments' gain or loss excluded from the assessment of effectiveness was not material for fair value, cash flow or net investment hedges. Hedge ineffectiveness for fair value, cash flow and net investment hedges was not material in the three and six months ended April 30, 2012 and 2011.

23

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements (Continued)

(Unaudited)

Note 8: Financial Instruments (Continued)

Fair Value of Derivative Instruments in the Consolidated Condensed Balance Sheets

        As discussed in Note 7, HP estimates the fair values of derivatives primarily based on pricing models using current market rates and records all derivatives on the balance sheet at fair value. The gross notional and fair value of derivative financial instruments in the Consolidated Condensed Balance Sheets was recorded as follows:

	As of April 30, 2012										As of October 31, 2011
	Gross Notional(1)		Other Current Assets		Long-term Financing Receivables and Other Assets		Other Accrued Liabilities		Other Liabilities		Gross Notional(1)		Other Current Assets		Long-term Financing Receivables and Other Assets		Other Accrued Liabilities		Other Liabilities
	In millions
Derivatives designated as hedging instruments
Fair value hedges:
Interest rate contracts	$	8,350	$	34	$	338	$	—	$	—	$	10,075	$	30	$	508	$	—	$	—
Cash flow hedges:
Foreign exchange contracts		19,336		321		26		246		92		21,666		192		30		324		126
Net investment hedges:
Foreign exchange contracts		1,686		15		8		36		15		1,556		7		4		44		56
Total derivatives designated as hedging instruments		29,372		370		372		282		107		33,297		229		542		368		182
Derivatives not designated as hedging instruments
Foreign exchange contracts		12,919		57		11		73		15		13,994		66		5		244		38
Interest rate contracts(2)		2,200		—		39		—		44		2,200		—		55		—		71
Other derivatives		414		2		12		—		—		410		25		6		—		1
Total derivatives not designated as hedging instruments		15,533		59		62		73		59		16,604		91		66		244		110
Total derivatives	$	44,905	$	429	$	434	$	355	$	166	$	49,901	$	320	$	608	$	612	$	292

⁽¹⁾

Represents the face amounts of contracts that were outstanding as of April 30, 2012 and October 31, 2011, respectively.

⁽²⁾

Represents offsetting swaps acquired through previous business combinations that were not designated as hedging instruments.

Effect of Derivative Instruments on the Consolidated Condensed Statements of Earnings

        The before-tax effect of a derivative instrument and related hedged item in a fair value hedging relationship for the three and six months ended April 30, 2012 and 2011 were as follows:

	Gain (Loss) Recognized in Income on Derivative and Related Hedged Item
Derivative Instrument	Location	Three months ended April 30, 2012			Six months ended April 30, 2012			Hedged Item	Location	Three months ended April 30, 2012		Six months ended April 30, 2012
		In millions								In millions
Interest rate contracts	Interest and other, net	$	(80	)	$	(76	)	Fixed-rate debt	Interest and other, net	$	80	$	80

24

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements (Continued)

(Unaudited)

Note 8: Financial Instruments (Continued)

	Gain (Loss) Recognized in Income on Derivative and Related Hedged Item
Derivative Instrument	Location	Three months ended April 30, 2011			Six months ended April 30, 2011			Hedged Item	Location	Three months ended April 30, 2011		Six months ended April 30, 2011
		In millions								In millions
Interest rate contracts	Interest and other, net	$	(25	)	$	(203	)	Fixed-rate debt	Interest and other, net	$	27	$	201

        The before-tax effect of derivative instruments in cash flow and net investment hedging relationships for the three and six months ended April 30, 2012 was as follows:

	Gain (Loss) Recognized in Other Comprehensive Income ("OCI") on Derivative (Effective Portion)						Gain (Loss) Reclassified from Accumulated OCI Into Income (Effective Portion)							Gain Recognized in Income on Derivative (Ineffective portion and Amount Excluded from Effectiveness Testing)
	Three months ended April 30, 2012			Six months ended April 30, 2012			Location	Three months ended April 30, 2012			Six months ended April 30, 2012			Location	Three months ended April 30, 2012		Six months ended April 30, 2012
	In millions							In millions							In millions
Cash flow hedges:
Foreign exchange contracts	$	(110	)	$	317		Net revenue	$	(2	)	$	86		Net revenue	$	—	$	—
Foreign exchange contracts		(53	)		(61	)	Cost of products		2			18		Cost of products		—		—
Foreign exchange contracts		(1	)		(4	)	Other operating expenses		(1	)		(2	)	Other operating expenses		—		—
Foreign exchange contracts		(17	)		(17	)	Interest and other, net		(15	)		(15	)	Interest and other, net		—		—
Foreign exchange contracts		(10	)		(19	)	Net revenue		5			—		Interest and other, net		—		—
Total cash flow hedges	$	(191	)	$	216			$	(11	)	$	87			$	—	$	—
Net investment hedges:
Foreign exchange contracts	$	13		$	38		Interest and other, net	$	—		$	—		Interest and other, net	$	—	$	—

25

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements (Continued)

(Unaudited)

Note 8: Financial Instruments (Continued)

        The before-tax effect of derivative instruments in cash flow and net investment hedging relationships for the three and six months ended April 30, 2011 was as follows:

	Gain (Loss) Recognized in OCI on Derivative (Effective Portion)						Gain (Loss) Reclassified from Accumulated OCI Into Income (Effective Portion)							Gain Recognized in Income on Derivative (Ineffective portion and Amount Excluded from Effectiveness Testing)
	Three months ended April 30, 2011			Six months ended April 30, 2011			Location	Three months ended April 30, 2011			Six months ended April 30, 2011			Location	Three months ended April 30, 2011		Six months ended April 30, 2011
	In millions							In millions							In millions
Cash flow hedges:
Foreign exchange contracts	$	(780	)	$	(680	)	Net revenue	$	(296	)	$	(320	)	Net revenue	$	—	$	—
Foreign exchange contracts		27			18		Cost of products		(4	)		22		Cost of products		—		—
Foreign exchange contracts		7			5		Other operating expenses		1			2		Other operating expenses		—		—
Foreign exchange contracts		(36	)		(20	)	Interest and other, net		(39	)		(32	)	Interest and other, net		—		—
Foreign exchange contracts		11			(2	)	Net revenue		2			6		Interest and other, net		1		3
Total cash flow hedges	$	(771	)	$	(679	)		$	(336	)	$	(322	)		$	1	$	3
Net investment hedges:
Foreign exchange contracts	$	(92	)	$	(97	)	Interest and other, net	$	—		$	—		Interest and other, net	$	—	$	—

        As of April 30, 2012, HP expects to reclassify an estimated net accumulated other comprehensive gain of approximately $47 million, net of taxes, to earnings in the next twelve months along with the earnings effects of the related forecasted transactions in association with cash flow hedges.

        The before-tax effect of derivative instruments not designated as hedging instruments on the Consolidated Condensed Statements of Earnings for the three and six months ended April 30, 2012 and 2011 was as follows:

	Gain (Loss) Recognized in Income on Derivative
	Location	Three months ended April 30, 2012			Six months ended April 30, 2012
		In millions
Foreign exchange contracts	Interest and other, net	$	(74	)	$	(156	)
Other derivatives	Interest and other, net		(6	)		(16	)
Interest rate contracts	Interest and other, net		1			11
Total		$	(79	)	$	(161	)

26

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements (Continued)

(Unaudited)

Note 8: Financial Instruments (Continued)

	Gain (Loss) Recognized in Income on Derivative
	Location	Three months ended April 30, 2011			Six months ended April 30, 2011
		In millions
Foreign exchange contracts	Interest and other, net	$	(621	)	$	(698	)
Other derivatives	Interest and other, net		12			10
Interest rate contracts	Interest and other, net		1			3
Total		$	(608	)	$	(685	)

Other Financial Instruments

        For the balance of HP's financial instruments, accounts receivable, financing receivables, accounts payable and other accrued liabilities, the carrying amounts approximate fair value due to their short maturities.

Note 9: Financing Receivables and Operating Leases

        Financing receivables represent sales-type and direct-financing leases resulting from the placement of HP and third-party products. These receivables typically have terms from two to five years and are usually collateralized by a security interest in the underlying assets. Financing receivables also include billed receivables from operating leases. The components of financing receivables, which are included in Financing receivables and Long-term financing receivables and other assets in the accompanying Consolidated Condensed Balance Sheets, were as follows:

	April 30, 2012			October 31, 2011
	In millions
Minimum lease payments receivable	$	7,828		$	7,721
Unguaranteed residual value		231			233
Unearned income		(654	)		(647	)
Financing receivables, gross		7,405			7,307
Allowance for doubtful accounts		(146	)		(130	)
Financing receivables, net		7,259			7,177
Less current portion		(3,139	)		(3,162	)
Amounts due after one year, net	$	4,120		$	4,015

        Equipment leased to customers under operating leases was $4.0 billion at April 30, 2012 and October 31, 2011, and is included in machinery and equipment. Accumulated depreciation on equipment under lease was $1.5 billion at April 30, 2012 and $1.3 billion at October 31, 2011.

        Due to the homogenous nature of the leasing transactions, HP manages its financing receivables on an aggregate basis when assessing and monitoring credit risk. Credit risk is generally diversified due to the large number of entities comprising HP's customer base and their dispersion across many

27

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements (Continued)

(Unaudited)

Note 9: Financing Receivables and Operating Leases (Continued)

different industries and geographical regions. The credit quality of an obligor is evaluated at lease inception and monitored over the term of a transaction. Risk ratings are assigned to each lease based on the creditworthiness of the obligor and other variables that augment or diminish the inherent credit risk of a particular transaction. Such variables include the underlying value and liquidity of the collateral, the essential use of the equipment, the term of the lease, and the inclusion of guarantees, letters of credit, security deposits or other credit enhancements.

        The credit risk profile of the gross financing receivables, based on internally assigned ratings, was as follows:

	April 30, 2012		October 31, 2011
	In millions
Risk Rating
Low	$	4,414	$	4,261
Moderate		2,913		2,989
High		78		57
Total	$	7,405	$	7,307

        Accounts rated low risk typically have the equivalent of a Standard & Poor's rating of BBB- or higher, while accounts rated moderate risk would generally be the equivalent of BB+ or lower. HP closely monitors accounts rated high risk and, based upon an impairment analysis, may establish specific reserves against a portion of these leases.

        The allowance for doubtful accounts balance is comprised of a general reserve, which is determined based on a percentage of the financing receivables balance, and a specific reserve, which is established for certain leases with identified exposures, such as customer default, bankruptcy or other events, that make it unlikely that HP will recover its investment in the lease. The general reserve percentages are maintained on a regional basis and are based on several factors, which include consideration of historical credit losses and portfolio delinquencies, trends in the overall weighted-average risk rating of the portfolio, and information derived from competitive benchmarking.

        The allowance for doubtful accounts and the related financing receivables were as follows:

	Six months ended April 30, 2012
	In millions
Allowance for doubtful accounts
Balance, beginning of period	$	130
Additions to allowance		22
Deductions, net of recoveries		(6	)
Balance, end of period	$	146

28

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements (Continued)

(Unaudited)

Note 9: Financing Receivables and Operating Leases (Continued)

	April 30, 2012		October 31, 2011
	In millions
Allowance for financing receivables individually evaluated for loss	$	48	$	35
Allowance for financing receivables collectively evaluated for loss		98		95
Total	$	146	$	130
Gross financing receivables individually evaluated for loss	$	313	$	228
Gross financing receivables collectively evaluated for loss		7,092		7,079
Total	$	7,405	$	7,307

        Accounts are generally put on non-accrual status (cessation of interest accrual) when they reach 90 days past due. The non-accrual status may not impact a customer's risk rating. In certain circumstances, such as when the delinquency is deemed to be of an administrative nature, accounts may still accrue interest when they reach 90 days past due. A write-off or specific reserve is generally recorded when an account reaches 180 days past due. Total financing receivables on non-accrual status were $197 million and $157 million at April 30, 2012 and October 31, 2011, respectively. Total financing receivables greater than 90 days past due and still accruing interest were $116 million and $71 million at April 30, 2012 and October 31, 2011, respectively.

Note 10: Guarantees

Guarantees and Indemnifications

        In the ordinary course of business, HP may provide certain clients with subsidiary performance guarantees and/or financial performance guarantees, which may be backed by standby letters of credit or surety bonds. In general, HP would be liable for the amounts of these guarantees in the event HP or HP's subsidiaries' nonperformance permits termination of the related contract by the client, the likelihood of which HP believes is remote. HP believes that the company is in compliance with the performance obligations under all material service contracts for which there is a performance guarantee.

        HP has certain service contracts supported by client financing or securitization arrangements. Under specific circumstances involving nonperformance resulting in service contract termination or failure to comply with terms under the financing arrangement, HP would be required to acquire certain assets. HP considers the possibility of its failure to comply to be remote and the asset amounts involved to be immaterial.

        In the ordinary course of business, HP enters into contractual arrangements under which HP may agree to indemnify the third party to such arrangement from any losses incurred relating to the services they perform on behalf of HP or for losses arising from certain events as defined within the particular contract, which may include, for example, litigation or claims relating to past performance. Such indemnification obligations may not be subject to maximum loss clauses. Historically, payments made related to these indemnifications have been immaterial.

29

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements (Continued)

(Unaudited)

Note 10: Guarantees (Continued)

Warranty

        HP provides for the estimated cost of product warranties at the time it recognizes revenue. HP engages in extensive product quality programs and processes, including actively monitoring and evaluating the quality of its component suppliers; however, product warranty terms offered to customers, ongoing product failure rates, material usage and service delivery costs incurred in correcting a product failure, as well as specific product class failures outside of HP's baseline experience, affect the estimated warranty obligation. If actual product failure rates, repair rates or any other post sales support costs differ from these estimates, revisions to the estimated warranty liability would be required.

        The changes in HP's aggregate product warranty liabilities for the six months ended April 30, 2012 were as follows:

	In millions
Product warranty liability at October 31, 2011	$	2,451
Accruals for warranties issued		1,158
Adjustments related to pre-existing warranties (including changes in estimates)		(62	)
Settlements made (in cash or in kind)		(1,242	)
Product warranty liability at April 30, 2012	$	2,305

Note 11: Borrowings

Notes Payable and Short-Term Borrowings

        Notes payable and short-term borrowings, including the current portion of long-term debt, were as follows:

	April 30, 2012					October 31, 2011
	Amount Outstanding		Weighted- Average Interest Rate			Amount Outstanding		Weighted- Average Interest Rate
	In millions					In millions
Commercial paper	$	345		1.5	%	$	3,215		0.4	%
Current portion of long-term debt		3,346		1.8	%		4,345		2.4	%
Notes payable to banks, lines of credit and other		561		3.4	%		523		2.9	%
	$	4,252				$	8,083

        Notes payable to banks, lines of credit and other includes deposits associated with HP's banking-related activities of approximately $343 million and $355 million at April 30, 2012 and October 31, 2011, respectively.

30

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements (Continued)

(Unaudited)

Note 11: Borrowings (Continued)

Long-Term Debt

        Long-term debt was as follows:

	April 30, 2012		October 31, 2011
	In millions
U.S. Dollar Global Notes
2002 Shelf Registration Statement:
$500 issued at discount to par at a price of 99.505% in June 2002 at 6.5%, due July 2012	$	500	$	500
2006 Shelf Registration Statement:
$600 issued at par in February 2007 at three-month USD LIBOR plus 0.11%, paid March 2012		—		600
$900 issued at discount to par at a price of 99.938% in February 2007 at 5.25%, paid March 2012		—		900
$500 issued at discount to par at a price of 99.694% in February 2007 at 5.4%, due March 2017		499		499
$1,500 issued at discount to par at a price of 99.921% in March 2008 at 4.5%, due March 2013		1,500		1,500
$750 issued at discount to par at a price of 99.932% in March 2008 at 5.5%, due March 2018		750		750
$2,000 issued at discount to par at a price of 99.561% in December 2008 at 6.125%, due March 2014		1,997		1,996
$1,000 issued at discount to par at a price of 99.956% in February 2009 at 4.25%, paid February 2012		—		1,000
$1,500 issued at discount to par at a price of 99.993% in February 2009 at 4.75%, due June 2014		1,500		1,500

31

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements (Continued)

(Unaudited)

Note 11: Borrowings (Continued)

	April 30, 2012		October 31, 2011
	In millions
2009 Shelf Registration Statement:
$250 issued at discount to par at a price of 99.984% in May 2009 at 2.95%, due August 2012		250		250
$800 issued at par in September 2010 at three-month USD LIBOR plus 0.125%, due September 2012		800		800
$1,100 issued at discount to par at a price of 99.921% in September 2010 at 1.25%, due September 2013		1,100		1,099
$1,100 issued at discount to par at a price of 99.887% in September 2010 at 2.125%, due September 2015		1,099		1,099
$650 issued at discount to par at a price of 99.911% in December 2010 at 2.2%, due December 2015		650		650
$1,350 issued at discount to par at a price of 99.827% in December 2010 at 3.75%, due December 2020		1,348		1,348
$1,750 issued at par in May 2011 at three month USD LIBOR plus 0.28%, due May 2013		1,750		1,750
$500 issued at par in May 2011 at three month USD LIBOR plus 0.4%, due May 2014		500		500
$500 issued at discount to par at a price of 99.971% in May 2011 at 1.55%, due May 2014		500		500
$1,000 issued at discount to par at a price of 99.958% in May 2011 at 2.65%, due June 2016		1,000		1,000
$1,250 issued at discount to par at a price of 99.799% in May 2011 at 4.3%, due June 2021		1,248		1,248
$750 issued at discount to par at a price of 99.977% in September 2011 at 2.35%, due March 2015		750		750
$1,300 issued at discount to par at a price of 99.784% in September 2011 at 3.0%, due September 2016		1,298		1,297
$1,000 issued at discount to par at a price of 99.816% in September 2011 at 4.375%, due September 2021		998		998
$1,200 issued at discount to par at a price of 99.863% in September 2011 at 6.0%, due September 2041		1,198		1,198
$350 issued at par in September 2011 at three-month USD LIBOR plus 1.55%, due September 2014		350		350
$650 issued at discount to par at a price of 99.946% in December 2011 at 2.625%, due December 2014		650		—
$850 issued at discount to par at a price of 99.790% in December 2011 at 3.3%, due December 2016		848		—
$1,500 issued at discount to par at a price of 99.707% in December 2011 at 4.65%, due December 2021		1,496		—
$1,500 issued at discount to par at a price of 99.985% in March 2012 at 2.6%, due September 2017		1,500		—
$500 issued at discount to par at a price of 99.771% in March 2012 at 4.05%, due September 2022		499		—
		26,578		24,082

32

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements (Continued)

(Unaudited)

Note 11: Borrowings (Continued)

	April 30, 2012			October 31, 2011
	In millions
EDS Senior Notes
$1,100 issued June 2003 at 6.0%, due August 2013		1,114			1,120
$300 issued October 1999 at 7.45%, due October 2029		314			315
		1,428			1,435
Other, including capital lease obligations, at 0.60%-8.63%, due in calendar years 2012-2024		702			836
Fair value adjustment related to hedged debt		463			543
Less: current portion		(3,346	)		(4,345	)
Total long-term debt	$	25,825		$	22,551

        As disclosed in Note 8 to the Consolidated Condensed Financial Statements, HP uses interest rate swaps to mitigate the market risk exposures in connection with certain fixed interest global notes to achieve primarily U.S. dollar LIBOR-based floating interest expense. The interest rates in the table above have not been adjusted to reflect the impact of any interest rate swaps.

        HP may redeem some or all of the Global Notes set forth in the above table at any time at the redemption prices described in the prospectus supplements relating thereto. The Global Notes are senior unsecured debt.

        In May 2009, HP filed a shelf registration statement (the "2009 Shelf Registration Statement") with the SEC to enable the company to offer for sale, from time to time, in one or more offerings, an unspecified amount of debt securities, common stock, preferred stock, depositary shares and warrants. The 2009 Shelf Registration Statement replaced other registration statements filed in March 2002 and May 2006.

        HP's Board of Directors has approved a $16.0 billion U.S. commercial paper program. HP's subsidiaries are authorized to issue up to an additional $1.0 billion of commercial paper, of which $500 million of capacity was available as of April 30, 2012 to be used by Hewlett-Packard International Bank PLC, a wholly-owned subsidiary of HP, for its Euro Commercial Paper/Certificate of Deposit Programme.

        HP has a $3.0 billion five-year credit facility that expires in March 2017 and a $4.5 billion four-year credit facility that expires in February 2015. Commitment fees, interest rates and other terms of borrowing under the credit facilities vary based on HP's external credit ratings. The credit facilities are senior unsecured committed borrowing arrangements primarily to support the issuance of U.S. commercial paper. HP's ability to have a U.S. commercial paper outstanding balance that exceeds the $7.5 billion supported by these credit facilities is subject to a number of factors, including liquidity conditions and business performance.

        Within Other, including capital lease obligations, are borrowings that are collateralized by certain financing receivable assets. As of April 30, 2012, the carrying value of the assets approximated the carrying value of the borrowings of $215 million.

33

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements (Continued)

(Unaudited)

Note 11: Borrowings (Continued)

        As of April 30, 2012, HP had the capacity to issue an unspecified amount of additional debt securities, common stock, preferred stock, depositary shares and warrants under the 2009 Shelf Registration Statement. As of that date, HP also had up to approximately $17.5 billion of available borrowing resources, including $16.2 billion under its commercial paper programs and approximately $1.3 billion relating to uncommitted lines of credit.

Note 12: Income Taxes

        HP's effective tax rate was 19.5% and 20.3% for the three months ended April 30, 2012 and April 30, 2011, respectively, and 19.5% and 20.7% for the six months ended April 30, 2012 and April 30, 2011, respectively. HP's effective tax rate decreased due to an increase in the percentage of total earnings earned in lower-tax jurisdictions. HP's effective tax rate generally differs from the U.S. federal statutory rate of 35% due to favorable tax rates associated with certain earnings from HP's operations in lower-tax jurisdictions throughout the world. HP has not provided U.S. taxes for all of such earnings because HP plans to reinvest some of those earnings indefinitely outside the United States.

        In the three and six months ended April 30, 2012, HP recorded discrete items with a net tax benefit of $25 million and $74 million, respectively, decreasing the effective tax rate. These amounts included net tax benefits of $22 million and $50 million, respectively, from restructuring and acquisition charges, and other miscellaneous tax benefits of $3 million and $24 million, respectively.

        In the three and six months ended April 30, 2011, HP recorded discrete items with a net tax benefit of $56 million and $157 million, respectively. These amounts included net tax benefits of $53 million and $112 million, respectively, from restructuring and acquisition charges. In addition, in December 2010, the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 was signed into law. HP recorded a tax benefit of $43 million arising from the retroactive research and development credit provided by that legislation in the first quarter of fiscal 2011.

        As of April 30, 2012, the amount of gross unrecognized tax benefits was $2.4 billion, of which up to $1.1 billion would affect HP's effective tax rate if realized. HP recognizes interest income from favorable settlements and income tax receivables and interest expense and penalties accrued on unrecognized tax benefits within income tax expense. As of April 30, 2012, HP had accrued a net payable of $186 million for interest and penalties. In the three and six months ended April 30, 2012, HP recognized $4 million of net interest expense on net tax underpayments, net of tax, and $19 million of net interest income on tax overpayments, net of tax, respectively.

        HP engages in continuous discussion and negotiation with taxing authorities regarding tax matters in various jurisdictions. HP does not expect complete resolution of any Internal Revenue Service ("IRS") audit cycle within the next 12 months. However, it is reasonably possible that certain federal, foreign and state tax issues may be concluded in the next 12 months, including issues involving transfer pricing and other matters. Accordingly, HP believes it is reasonably possible that its existing unrecognized tax benefits may be reduced by an amount up to $297 million within the next 12 months.

        HP is subject to income tax in the United States and approximately 80 foreign countries and is subject to routine corporate income tax audits in many of these jurisdictions. In addition, HP is subject to numerous ongoing audits by state and foreign tax authorities. The IRS began an audit of HP's 2008

34

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements (Continued)

(Unaudited)

Note 12: Income Taxes (Continued)

income tax returns in 2010 and began its audit of HP's 2009 income tax returns during 2011. HP has received from the IRS Notices of Deficiency for its fiscal 1999, 2000, 2003, 2004 and 2005 tax years, and Revenue Agent's Reports ("RAR") for its fiscal 2001, 2002, 2006, 2007 and 2008 tax years. The proposed IRS adjustments for these tax years would, if sustained, reduce the benefits of tax refund claims HP has filed for net operating loss carrybacks to earlier fiscal years and tax credit carryforwards to subsequent years by approximately $626 million. HP has filed petitions with the United States Tax Court regarding certain proposed IRS adjustments regarding tax years 1999 through 2003 and is continuing to contest additional adjustments proposed by the IRS for other tax years. The United States Tax Court has recently ruled against HP regarding one of the IRS adjustments. HP currently intends to appeal the decision. HP believes that it has provided adequate reserves for any tax deficiencies or reductions in tax benefits that could result from the IRS actions. With respect to major foreign and state tax jurisdictions, HP is no longer subject to tax authority examinations for years prior to 1999. HP believes that adequate accruals have been provided for all open tax years.

        Tax years of EDS through 2002 have been audited by the IRS, and all proposed adjustments have been resolved. EDS has received RAR's for exam years 2003, 2004, 2005, 2006, 2007 and the short period ended August 26, 2008, proposing total tax deficiencies of $320 million. HP is contesting certain issues and believes it has provided adequate reserves for any tax deficiencies or reductions in tax benefits that could result from the IRS actions.

        The IRS began an audit of HP's U.S. group of subsidiaries providing enterprise services, for its 2008 and 2009 income tax return in 2010 and 2011, respectively. That group of subsidiaries has received an RAR for the short period ended October 31, 2008 proposing a total tax deficiency of $17 million. HP is contesting certain issues and believes it has provided adequate reserves for any tax deficiencies or reductions in tax benefits that could result from the IRS actions.

        The breakdown between current and long-term deferred tax assets and deferred tax liabilities was as follows:

	April 30, 2012			October 31, 2011
	In millions
Current deferred tax assets	$	5,042		$	5,374
Current deferred tax liabilities		(71	)		(41	)
Long-term deferred tax assets		1,590			1,283
Long-term deferred tax liabilities		(5,241	)		(5,163	)
Total deferred tax assets net of deferred tax liabilities	$	1,320		$	1,453

Note 13: Stockholders' Equity

Share Repurchase Program

        HP's share repurchase program authorizes both open market and private repurchase transactions. In the three and six months ended April 30, 2012, HP executed share repurchases of 13 million shares and 43 million shares, respectively. For the three months ended April 30, 2012, repurchases of 13 million shares were settled for $350 million. For the six months ended April 30, 2012, repurchases of

35

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements (Continued)

(Unaudited)

Note 13: Stockholders' Equity (Continued)

43 million shares were settled for $1.1 billion. HP had approximately 1 million shares repurchased in the second quarter of fiscal 2012 that will be settled in the third quarter of fiscal 2012. HP paid approximately $2.7 billion in connection with repurchases of approximately 63 million shares during the three months ended April 30, 2011 and paid approximately $5.0 billion in connection with repurchases of approximately 117 million shares in the first six months of fiscal 2011. As of April 30, 2012, HP had remaining authorization of $9.7 billion for future share repurchases.

Comprehensive Income

        The changes in the components of other comprehensive income ("OCI"), net of taxes, were as follows:

	Three months ended April 30
	2012			2011
	In millions
Net earnings	$	1,593		$	2,304
Net change in unrealized gains on available-for-sale securities, with no tax effect in 2012 and net of tax benefit of $7 million in 2011		43			—
Net change in unrealized gains/losses on cash flow hedges:
Unrealized losses recognized in OCI, net of tax benefit of $60 million in 2012 and $273 million in 2011		(131	)		(498	)
Losses reclassified into income, with no tax effect in 2012 and net of tax benefit of $110 million in 2011		11			226
		(120	)		(272	)
Net change in cumulative translation adjustment, net of tax of $52 million in 2012 and $1 million in 2011		471			81
Net change in unrealized components of defined benefit plans, net of tax benefit of $14 million in 2012 and $108 million in 2011		47			297
Comprehensive income	$	2,034		$	2,410

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Notes to Consolidated Condensed Financial Statements (Continued)

(Unaudited)

Note 13: Stockholders' Equity (Continued)

	Six months ended April 30
	2012			2011
	In millions
Net earnings	$	3,061		$	4,909
Net change in unrealized (losses) gains on available-for-sale securities, net of tax benefit of $5 million in 2012 and $2 million in 2011		(14	)		10
Net change in unrealized gains/losses on cash flow hedges:
Unrealized gains (losses) recognized in OCI, net of tax of $92 million in 2012 and net of tax benefit of $241 million in 2011		124			(438	)
(Gains) losses reclassified into income, net of tax of $37 million in 2012 and net of tax benefit of $109 million in 2011		(50	)		213
		74			(225	)
Net change in cumulative translation adjustment, net of tax of $38 million in 2012 and $18 million in 2011		238			132
Net change in unrealized components of defined benefit plans, net of tax of $56 million in 2012 and net of tax benefit of $98 million in 2011		134			328
Comprehensive income	$	3,493		$	5,154

        The components of accumulated other comprehensive loss, net of taxes, were as follows:

	April 30, 2012			October 31, 2011
	In millions
Net unrealized gain on available-for-sale securities	$	23		$	37
Net unrealized gain (loss) on cash flow hedges		33			(41	)
Cumulative translation adjustment		(147	)		(385	)
Unrealized components of defined benefit plans		(2,975	)		(3,109	)
Accumulated other comprehensive loss	$	(3,066	)	$	(3,498	)

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Notes to Consolidated Condensed Financial Statements (Continued)

(Unaudited)

Note 14: Retirement and Post-Retirement Benefit Plans

        HP's net pension and post-retirement benefit costs were as follows:

	Three months ended April 30
	U.S. Defined Benefit Plans						Non-U.S. Defined Benefit Plans						Post- Retirement Benefit Plans
	2012			2011			2012			2011			2012			2011
	In millions
Service cost	$	—		$	—		$	74		$	89		$	2		$	2
Interest cost		141			149			174			177			8			9
Expected return on plan assets		(198	)		(186	)		(206	)		(225	)		(9	)		(9	)
Amortization and deferrals:
Actuarial loss		11			8			59			60			(1	)		—
Prior service benefit		—			—			(6	)		(4	)		(22	)		(20	)
Net periodic benefit (gain) cost		(46	)		(29	)		95			97			(22	)		(18	)
Settlement loss		—			—			8			2			—			—
Special termination benefits		—			—			1			6			—			—
Net benefit (gain) cost	$	(46	)	$	(29	)	$	104		$	105		$	(22	)	$	(18	)

	Six months ended April 30
	U.S. Defined Benefit Plans						Non-U.S. Defined Benefit Plans						Post- Retirement Benefit Plans
	2012			2011			2012			2011			2012			2011
	In millions
Service cost	$	—		$	—		$	148		$	174		$	4		$	4
Interest cost		283			297			349			346			17			17
Expected return on plan assets		(396	)		(372	)		(413	)		(438	)		(18	)		(18	)
Amortization and deferrals:
Actuarial loss		21			17			119			122			(2	)		1
Prior service benefit		—			—			(12	)		(7	)		(44	)		(41	)
Net periodic benefit (gain) cost		(92	)		(58	)		191			197			(43	)		(37	)
Settlement (gain) loss		—			—			(20	)		2			—			—
Special termination benefits		—			—			2			8			—			—
Net benefit (gain) cost	$	(92	)	$	(58	)	$	173		$	207		$	(43	)	$	(37	)

        During the first quarter of fiscal 2012, HP completed the transfer of the substitutional portion of its Japan pension liability and obligation to the Japanese government. This transfer resulted in recognizing a net gain of $28 million, which is comprised of a net settlement loss of $150 million and a gain on government subsidy of $178 million. The government subsidy consisted of the elimination of $344 million of pension obligations and the transfer of $166 million of pension assets to the Japanese government.

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Notes to Consolidated Condensed Financial Statements (Continued)

(Unaudited)

Note 14: Retirement and Post-Retirement Benefit Plans (Continued)

Employer Contributions and Funding Policy

        HP previously disclosed in its Consolidated Financial Statements for the fiscal year ended October 31, 2011 that it expected to contribute approximately $597 million to its pension plans and approximately $31 million to cover benefit payments to U.S. non-qualified plan participants. HP expects to pay approximately $30 million to cover benefit claims for HP's post-retirement benefit plans. HP's funding policy is to contribute cash to its pension plans so that it makes at least the minimum contribution required by local government, funding and taxing authorities.

        During the six months ended April 30, 2012, HP made $345 million of contributions to its pension plans, paid $15 million to cover benefit payments to U.S. non-qualified plan participants, and paid $14 million to cover benefit claims under post-retirement benefit plans. During the remainder of fiscal 2012, HP anticipates making additional contributions of approximately $252 million to its pension plans and approximately $16 million to its U.S. non-qualified plan participants and expects to pay up to $16 million to cover benefit claims under post-retirement benefit plans. HP's pension and other post-retirement benefit costs and obligations are dependent on various assumptions. Differences between expected and actual returns on investments will be reflected as unrecognized gains or losses, and such gains or losses will be amortized and recorded in future periods. Poor financial performance of invested assets in any year could lead to increased contributions in certain countries and increased future pension plan expense. Asset gains or losses are determined at the measurement date and amortized over the remaining service life or life expectancy of plan participants. HP's next measurement date is October 31, 2012.

Note 15: Litigation and Contingencies

        HP is involved in lawsuits, claims, investigations and proceedings, including those identified below, consisting of intellectual property, commercial, securities, employment, employee benefits and environmental matters that arise in the ordinary course of business. HP records a provision for a liability when management believes that it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. HP believes it has adequate provisions for any such matters, and, as of April 30, 2012, it was not reasonably possible that an additional material loss had been incurred in an amount in excess of the amounts already recognized on HP's financial statements. HP reviews these provisions at least quarterly and adjusts these provisions to reflect the impact of negotiations, settlements, rulings, advice of legal counsel, and other information and events pertaining to a particular case. Based on its experience, HP believes that any damage amounts claimed in the specific matters discussed below are not a meaningful indicator of HP's potential liability. Litigation is inherently unpredictable. However, HP believes that it has valid defenses with respect to legal matters pending against it. Nevertheless, cash flows or results of operations could be materially affected in any particular period by the unfavorable resolution of one or more of these contingencies.

Litigation, Proceedings and Investigations

        Copyright Levies.    As described below, proceedings are ongoing or have been concluded involving HP in certain European Union ("EU") member countries, including litigation in Germany, Belgium and Austria, seeking to impose or modify levies upon equipment (such as multifunction devices ("MFDs"), personal computers ("PCs") and printers) and alleging that these devices enable producing

39

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Notes to Consolidated Condensed Financial Statements (Continued)

(Unaudited)

Note 15: Litigation and Contingencies (Continued)

private copies of copyrighted materials. Descriptions of some of the ongoing proceedings are included below. The levies are generally based upon the number of products sold and the per-product amounts of the levies, which vary. Some EU member countries that do not yet have levies on digital devices are expected to implement similar legislation to enable them to extend existing levy schemes, while some other EU member countries are expected to limit the scope of levy schemes and applicability in the digital hardware environment. HP, other companies and various industry associations have opposed the extension of levies to the digital environment and have advocated alternative models of compensation to rights holders.

        VerwertungsGesellschaft Wort ("VG Wort"), a collection agency representing certain copyright holders, instituted legal proceedings against HP in the Stuttgart Civil Court seeking levies on printers. On December 22, 2004, the court held that HP is liable for payments regarding all printers using ASCII code sold in Germany but did not determine the amount payable per unit. HP appealed this decision in January 2005 to the Stuttgart Court of Appeals. On May 11, 2005, the Stuttgart Court of Appeals issued a decision confirming that levies are due. On June 6, 2005, HP filed an appeal to the German Federal Supreme Court in Karlsruhe. On December 6, 2007, the German Federal Supreme Court issued a judgment that printers are not subject to levies under the existing law. The court issued a written decision on January 25, 2008, and VG Wort subsequently filed an application with the German Federal Supreme Court under Section 321a of the German Code of Civil Procedure contending that the court did not consider their arguments. On May 9, 2008, the German Federal Supreme Court denied VG Wort's application. VG Wort appealed the decision by filing a claim with the German Federal Constitutional Court challenging the ruling that printers are not subject to levies. On September 21, 2010, the Constitutional Court published a decision holding that the German Federal Supreme Court erred by not referring questions on interpretation of German copyright law to the Court of Justice of the European Union ("CJEU") and therefore revoked the German Federal Supreme Court decision and remitted the matter to it. On July 21, 2011, the German Federal Supreme Court stayed the proceedings and referred several questions to the CJEU with regard to the interpretation of the European Copyright Directive.

        In September 2003, VG Wort filed a lawsuit against Fujitsu Siemens Computer GmbH ("FSC") in the Munich Civil Court in Munich, Germany seeking levies on PCs. This is an industry test case in Germany, and HP has agreed not to object to the delay if VG Wort sues HP for such levies on PCs following a final decision against FSC. On December 23, 2004, the Munich Civil Court held that PCs are subject to a levy and that FSC must pay €12 plus compound interest for each PC sold in Germany since March 2001. FSC appealed this decision in January 2005 to the Munich Court of Appeals. On December 15, 2005, the Munich Court of Appeals affirmed the Munich Civil Court decision. FSC filed an appeal with the German Federal Supreme Court in February 2006. On October 2, 2008, the German Federal Supreme Court issued a judgment that PCs were not photocopiers within the meaning of the German copyright law that was in effect until December 31, 2007 and, therefore, not subject to the levies on photocopiers established by that law. VG Wort subsequently filed a claim with the German Federal Constitutional Court challenging that ruling. In January 2011, the Constitutional Court published a decision holding that the German Federal Supreme Court decision was inconsistent with the German Constitution and revoking the German Federal Supreme Court decision. The Constitutional Court remitted the matter to the German Federal Supreme Court for further action. On

40

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Notes to Consolidated Condensed Financial Statements (Continued)

(Unaudited)

Note 15: Litigation and Contingencies (Continued)

July 21, 2011, the German Federal Supreme Court stayed the proceedings and referred several questions to the CJEU with regard to the interpretation of the European Copyright Directive.

        Reprobel, a cooperative society with the authority to collect and distribute the remuneration for reprography to Belgian copyright holders, requested HP by extra-judicial means to amend certain copyright levy declarations submitted for inkjet MFDs sold in Belgium from January 2005 to December 2009 to enable it to collect copyright levies calculated based on the generally higher copying speed when the MFDs are operated in draft print mode rather than when operated in normal print mode. In March 2010, HP filed a lawsuit against Reprobel in the French-speaking chambers of the Court of First Instance of Brussels seeking a declaratory judgment that no copyright levies are payable on sales of MFDs in Belgium or, alternatively, that copyright levies payable on such MFDs must be assessed based on the copying speed when operated in the normal print mode set by default in the device. The schedule for the court proceedings has been determined, and no decision from the court is expected before September 2012.

        Based on industry opposition to the extension of levies to digital products, HP's assessments of the merits of various proceedings and HP's estimates of the number of units impacted and amounts of levies, HP has accrued amounts that it believes are adequate to address the matters described above. However, the ultimate resolution of these matters and the associated financial impact on HP, including the number of units impacted, the amount of levies imposed and the ability of HP to recover such amounts through increased prices, remains uncertain.

Skold, et al. v. Intel Corporation and Hewlett-Packard Company is a lawsuit in which HP was joined on June 14, 2004 that is pending in state court in Santa Clara County, California. The lawsuit alleges that Intel Corporation ("Intel") misled the public by suppressing and concealing the alleged material fact that systems that use the Intel Pentium 4 processor are less powerful and slower than systems using the Intel Pentium III processor. The lawsuit alleges that HP aided and abetted Intel's allegedly unlawful conduct. The plaintiffs seek unspecified damages, restitution, attorneys' fees and costs, and certification of a nationwide class. On November 23, 2011, plaintiffs filed a motion seeking to certify a nationwide class asserting claims under the California Unfair Competition Law. On April 19, 2012, the court issued an order granting in part and denying in part the plaintiffs' motion. As to Intel, the court certified a nationwide class excluding residents of Illinois. As to HP, the court certified a class limited to California residents. As required by the same order, the plaintiffs filed their Fifth Amended Complaint on April 30, 2012, pursuant to which the plaintiffs have limited their claims against HP to a California class while reserving the right to seek additional state-specific subclasses as to HP. On May 31, 2012, the plaintiffs filed their Sixth Amended Complaint eliminating one claim against Intel but not affecting the claims against HP.

        Inkjet Printer Litigation.    As described below, HP is involved in several lawsuits claiming breach of express and implied warranty, unjust enrichment, deceptive advertising and unfair business practices where the plaintiffs have alleged, among other things, that HP employed a "smart chip" in certain inkjet printing products in order to register ink depletion prematurely and to render the cartridge unusable through a built-in expiration date that is hidden, not documented in marketing materials to consumers, or both. The plaintiffs have also contended that consumers received false ink depletion warnings and that the smart chip limits the ability of consumers to use the cartridge to its full capacity or to choose competitive products.

41

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Notes to Consolidated Condensed Financial Statements (Continued)

(Unaudited)

Note 15: Litigation and Contingencies (Continued)

•

A consolidated lawsuit captioned In re HP Inkjet Printer Litigation is pending in the United States District Court for the Northern District of California where the plaintiffs are seeking class certification, restitution, damages (including enhanced damages), injunctive relief, interest, costs, and attorneys' fees. On January 4, 2008, the court heard plaintiffs' motions for class certification and to add a class representative and HP's motion for summary judgment. On July 25, 2008, the court denied all three motions. On March 30, 2009, the plaintiffs filed a renewed motion for class certification. A hearing on the plaintiffs' motion for class certification scheduled for April 9, 2010 was postponed.

•

A lawsuit captioned Blennis v. HP was filed on January 17, 2007 in the United States District Court for the Northern District of California where the plaintiffs are seeking class certification, restitution, damages (including enhanced damages), injunctive relief, interest, costs, and attorneys' fees. A class certification hearing was scheduled for May 21, 2010 but was taken off the calendar.

•

A lawsuit captioned Rich v. HP was filed against HP on May 22, 2006 in the United States District Court for the Northern District of California. The suit alleges that HP designed its color inkjet printers to unnecessarily use color ink in addition to black ink when printing black and white images and text. The plaintiffs are seeking to certify a nationwide injunctive class and a California-only damages class. A class certification hearing was scheduled for May 7, 2010 but was taken off the calendar.

•

Two class actions against HP and its subsidiary, Hewlett-Packard (Canada) Co., are pending in Canada, one commenced in British Columbia in February 2006 and one commenced in Ontario in June 2006, where the plaintiffs are seeking class certification, restitution, declaratory relief, injunctive relief and unspecified statutory, compensatory and punitive damages.

        On August 25, 2010, HP and the plaintiffs in In re HP Inkjet Printer Litigation, Blennis v. HP and Rich v. HP entered into an agreement to settle those lawsuits on behalf of the proposed classes, which agreement is subject to approval of the court before it becomes final. Under the terms of the proposed settlement, the lawsuits will be consolidated, and eligible class members will each have the right to obtain e-credits not to exceed $5 million in the aggregate for use in purchasing printers or printer supplies through HP's website. As part of the proposed settlement, HP also agreed to provide class members with additional information regarding HP inkjet printer functionality and to change the content of certain software and user guide messaging provided to users regarding the life of inkjet printer cartridges. In addition, class counsel and the class representatives will be paid attorneys' fees and expenses and stipends. On March 29, 2011, the court granted final approval of the settlement. On April 27, 2011, certain class members who objected to the settlement filed an appeal of the court's order granting final approval of the settlement.

Sinacori v. HP is a consumer class action originally filed against HP on December 1, 2011 in the United States District Court for the Northern District of California alleging that HP printers have a design defect in the software installed on the printers which could allow hackers and unauthorized users to gain access to the printers, steal personal and confidential information from consumers and otherwise control and cause physical damage to the printers. The original complaint also alleged that HP was aware of this security vulnerability and failed to disclose it to consumers. The original complaint sought certification of a nationwide class of purchasers of all HP printers and unspecified

42

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Notes to Consolidated Condensed Financial Statements (Continued)

(Unaudited)

Note 15: Litigation and Contingencies (Continued)

damages, restitution, punitive damages, injunctive relief, attorneys' fees and costs. On February 3, 2012, an amended complaint was filed substituting a new plaintiff from the state of New York in place of the original plaintiff. The amended complaint asserts only a single claim under the New York consumer protection statute, and the amended complaint now seeks to certify a class of consumers in the state of New York who purchased an HP printer that lacks a "digital signature" or "code signing" security feature. Like the original complaint, the amended complaint seeks unspecified damages, restitution, punitive damages, injunctive relief, attorneys' fees and costs. HP has filed a motion to dismiss the amended complaint, and a hearing on HP's motion is scheduled to be held on September 6, 2012.

        Fair Labor Standards Act Litigation.    HP is involved in several lawsuits in which the plaintiffs are seeking unpaid overtime compensation and other damages based on allegations that various employees of EDS or HP have been misclassified as exempt employees under the Fair Labor Standards Act and/or in violation of the California Labor Code or other state laws. Those matters include the following:

•

Cunningham and Cunningham, et al. v. Electronic Data Systems Corporation is a purported collective action filed on May 10, 2006 in the U.S. District Court for the Southern District of New York claiming that current and former EDS employees allegedly involved in installing and/or maintaining computer software and hardware were misclassified as exempt employees. Another purported collective action, Steavens, et al. v. Electronic Data Systems Corporation, which was filed on October 23, 2007, is also now pending in the same court alleging similar facts. The Steavens case has been consolidated for pretrial purposes with the Cunningham case. On December 14, 2010, the court granted conditional certification of a class consisting of employees in 20 legacy EDS job codes in the consolidated Cunningham and Steavens matter. Approximately 2,600 current and former EDS employees have filed consents to opt-in to the litigation. Plaintiffs have also alleged separate "opt out" classes based on the overtime laws of the states of California, Washington, Massachusetts, and New York, but plaintiffs have not yet sought class certification for those classes.

•

Heffelfinger, et al. v. Electronic Data Systems Corporation is a class action filed in November 2006 in California Superior Court claiming that certain EDS information technology workers in California were misclassified as exempt employees. The case was subsequently transferred to the U.S. District Court for the Central District of California, which, on January 7, 2008, certified a class of information technology workers in California. On June 6, 2008, the court granted the defendant's motion for summary judgment. The plaintiffs subsequently filed an appeal with the U.S. Court of Appeals for the Ninth Circuit. A hearing on the appeal was held in August 2011, and the decision is pending. Two other purported class actions originally filed in California Superior Court, Karlbom,  et al. v. Electronic Data Systems Corporation, which was filed on March 16, 2009, and George, et al. v. Electronic Data Systems Corporation, which was filed on April 2, 2009, allege similar facts. The Karlbom case is pending in San Diego County Superior Court but has been temporarily stayed based on the pending Steavens consolidated matter. The George case was pending in the U.S. District Court for the Southern District of New York and had been consolidated for pretrial purposes with the Cunningham and Steavens cases. On September 9, 2011, the court granted a request by the plaintiffs' counsel in the George matter to amend the plaintiffs' complaint and sever the case from the Steavens consolidated matter. The plaintiff thereafter filed his first amended complaint on October 21, 2011. On November 23,

43

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements (Continued)

(Unaudited)

Note 15: Litigation and Contingencies (Continued)

2011, the court transferred the George matter back to the U.S. District Court for the Central District of California.

•

Blake, et al. v. Hewlett-Packard Company is a purported nationwide collective action filed on February 17, 2011 in the U.S. District Court for the Southern District of Texas claiming that a class of information technology support personnel were misclassified as exempt employees under the Fair Labor Standards Act. On February 10, 2012, plaintiffs filed a motion requesting that the court conditionally certify the case as a collective action. Only one opt-in plaintiff had joined the named plaintiff in the lawsuit at the time that the motion was filed. HP has opposed plaintiffs' motion for conditional certification.

•

Fenn, et al. v. Hewlett-Packard Company is a purported collective action filed on May 24, 2011 in the United States District Court for the District of Idaho alleging that customer service representatives working in HP's U.S. call centers are not paid for time spent on start-up and shut-down tasks (such as booting up and shutting down their computers) in violation of the Fair Labor Standards Act. On December 12, 2011, the court denied the plaintiff's motion for conditional class certification but allowed the plaintiff to re-file that motion following limited discovery on the issue of conditional certification. On March 12, 2012, the plaintiff filed an amended motion for conditional certification seeking to certify a class of all HP customer service representatives located in Boise, Idaho. On May 17, 2012, the court granted in part and denied in part plaintiff's motion. The court authorized plaintiff to notify certain HP employees of the collective action, but narrowed the scope of the proposed class and shortened the length of the proposed class period.

        India Directorate of Revenue Intelligence Proceedings.    As described below, Hewlett-Packard India Sales Private Ltd ("HPI"), a subsidiary of HP, and certain current and former HP employees have received show cause notices from the India Directorate of Revenue Intelligence (the "DRI") alleging underpayment of certain customs duties:

•

On April 30 and May 10, 2010, the DRI issued show cause notices to HPI, seven current HP employees and one former HP employee alleging that HP underpaid customs duties while importing products and spare parts into India and seeking to recover an aggregate of approximately $370 million, plus penalties. On June 2, 2010, the DRI issued an additional show cause notice to HPI and three current HPI employees alleging that HP failed to pay customs duties on the appropriate value of recovery CDs containing Microsoft operating systems and seeking to recover approximately $5.3 million, plus penalties. HP has deposited a total of approximately $16.7 million with the DRI and agreed to post a provisional bond in exchange for the DRI's agreement not to seize HP products and spare parts and not to interrupt the transaction of business by HP in India.

•

On June 17, 2010, the DRI issued show cause notices to HPI and two current HPI employees regarding non-inclusion of the value of software contained in the products imported from third-party original design manufacturers. The total amount of the alleged unpaid customs duties relating to such software, including the interest proposed to be demanded under these notices, is approximately $130,000, which amount HPI has deposited with the DRI. The DRI is also seeking to impose penalties.

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HEWLETT-PACKARD COMPANY AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements (Continued)

(Unaudited)

Note 15: Litigation and Contingencies (Continued)

•

On October 1, 2010, in connection with an existing DRI investigation commenced against SAP AG, the DRI issued a show cause notice to HPI alleging underpayment of customs duties related to the importation of certain SAP software. The amount of the alleged duty differential is approximately $38,000, which amount has been deposited with the DRI. The DRI is also seeking to impose interest and penalties.

HPI has responded to the show cause notices, and the Bangalore Commissioner of Customs has concluded hearings into, and issued orders under, the products and the parts show cause notices. The Commissioner issued an order on the products show cause notice on April 11, 2012, affirming certain duties and penalties against HPI and the named individuals of approximately $386.25 million. The Commissioner issued an order on the parts show cause notice on April 20, 2012, affirming certain duties and penalties against HPI and certain of the named individuals of approximately $17.32 million. HPI subsequently deposited an additional $3.64 million against the parts show cause notice. On March 12, 2012, the Chennai Commissioner of Customs issued an order affirming penalties of approximately $254,000 on one of the two June 17, 2010 software show cause notices. HPI will appeal the orders to the Customs Tribunal and, if necessary, to the India courts, but such appeals could require HP or HPI to deposit additional monies with the applicable Commissioner of Customs.

        Russia GPO and Related Investigations.    The German Public Prosecutor's Office ("German PPO") has been conducting an investigation into allegations that current and former employees of HP engaged in bribery, embezzlement and tax evasion relating to a transaction between Hewlett-Packard ISE GmbH in Germany, a former subsidiary of HP, and the General Prosecutor's Office of the Russian Federation. The approximately €35 million transaction, which was referred to as the Russia GPO deal, spanned the years 2001 to 2006 and was for the delivery and installation of an information technology network.

        The U.S. Department of Justice and the SEC have also been conducting an investigation into the Russia GPO deal and potential violations of the Foreign Corrupt Practices Act ("FCPA"). Under the FCPA, a person or an entity could be subject to fines, civil penalties of up to $500,000 per violation and equitable remedies, including disgorgement and other injunctive relief. In addition, criminal penalties could range from the greater of $2 million per violation or twice the gross pecuniary gain or loss from the violation.

        In addition to information about the Russia GPO deal, the U.S. enforcement authorities have requested (i) information related to certain other transactions, including transactions in Russia, Serbia and in the Commonwealth of Independent States (CIS) subregion dating back to 2000, and (ii) information related to two former HP executives seconded to Russia and to whether HP personnel in Russia, Germany, Austria, Serbia, the Netherlands or CIS were involved in kickbacks or other improper payments to channel partners or state-owned or private entities.

        HP is cooperating with these investigating agencies.

        ECT Proceedings.    In January 2011, the postal service of Brazil, Empresa Brasileira de Correios e Telégrafos ("ECT"), notified HP that it had initiated administrative proceedings against an HP subsidiary in Brazil ("HP Brazil") to consider whether to suspend HP Brazil's right to bid and contract with ECT related to alleged improprieties in the bidding and contracting processes whereby employees

45

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements (Continued)

(Unaudited)

Note 15: Litigation and Contingencies (Continued)

of HP Brazil and employees of several other companies coordinated their bids for three ECT contracts in 2007 and 2008. In late July 2011, ECT notified HP it had decided to apply the penalties against HP Brazil, suspending HP Brazil's right to bid and contract with ECT for five years, based upon the evidence before it. In August 2011, HP filed petitions with ECT requesting that the decision be revoked and seeking injunctive relief to have the application of the penalties suspended until a final, non-appealable decision is made on the merits of the case. HP is currently awaiting a response from ECT on both petitions. Because ECT did not rule on the substance of HP's petitions in a timely manner, HP filed a lawsuit seeking similar relief from the court. The court of first instance has not decided the merits of HP's lawsuit, but has denied HP's request for injunctive relief suspending application of the penalties pending a final, non-appealable decision on the merits of the case. HP appealed the denial of its request for injunctive relief to the intermediate appellate court, which issued a preliminary ruling denying the request for injunctive relief but reducing the length of the sanctions from five to two years. HP appealed that decision and, in December 2011, obtained a ruling staying enforcement of ECT's sanctions until HP can be heard on the full merits of the case. HP expects the appeal on the merits to last several years.

        Stockholder Litigation.    As described below, HP is involved in stockholder litigation commenced against certain current and former HP executive officers and certain current and former members of the HP Board of Directors in which the plaintiffs are seeking to recover certain compensation paid by HP to the defendants and other damages:

•

Heather M. Bendit, et al. v. Mark V. Hurd, et al. (formerly Henrietta Klein v. Mark V. Hurd, et al.), is a lawsuit filed on September 24, 2010 in California Superior Court alleging the individual defendants wasted corporate assets and breached their fiduciary duties by failing to implement and oversee HP's compliance with the FCPA.

•

Saginaw Police & Fire Pension Fund v. Marc L. Andreessen, et al. is a lawsuit filed on October 19, 2010 in the United States District Court for the Northern District of California alleging, among other things, that the defendants breached their fiduciary duties and were unjustly enriched by consciously disregarding HP's alleged violations of the FCPA. On August 15, 2011, the defendants filed a motion to dismiss the lawsuit. On March 21, 2012, the court granted the defendants' motion to dismiss, and the court entered judgment in the defendants' favor and closed the case on May 29, 2012.

•

A.J. Copeland v. Raymond J. Lane, et al. is a lawsuit filed on March 7, 2011 in the United States District Court for the Northern District of California alleging, among other things, that the defendants breached their fiduciary duties and wasted corporate assets in connection with HP's alleged violations of the FCPA, severance payments made to former Chairman and Chief Executive Officer Mark Hurd, and HP's acquisition of 3PAR Inc. The lawsuit also alleges violations of Section 14(a) of the Exchange Act in connection with HP's 2010 and 2011 proxy statements. On February 8, 2012, the defendants filed a motion to dismiss the lawsuit. The court has not yet ruled on that motion.

•

Richard Gammel v. Hewlett-Packard Company, et al. is a putative securities class action filed on September 13, 2011 in the United States District Court for the Central District of California alleging, among other things, that from November 22, 2010 to August 18, 2011, the defendants

46

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements (Continued)

(Unaudited)

Note 15: Litigation and Contingencies (Continued)

violated Section 10(b) and 20(a) of the Exchange Act by concealing material information and making false statements about HP's business model, the future of the webOS operating system, and HP's commitment to developing and integrating webOS products, including the TouchPad tablet PC. On April 11, 2012, the defendants filed a motion to dismiss the lawsuit. The court has not yet ruled on that motion.

•

Ernesto Espinoza v. Léo Apotheker, et al. and Larry Salat v. Léo Apotheker, et al. are consolidated lawsuits filed on September 21, 2011 in the United States District Court for the Central District of California alleging, among other things, that the defendants violated Sections 10(b) and 20(a) of the Exchange Act by concealing material information and making false statements about HP's business model and the future of webOS, the TouchPad and HP's PC business. The lawsuits also allege that the defendants breached their fiduciary duties, wasted corporate assets and were unjustly enriched when they authorized HP's repurchase of its own stock on August 29, 2010 and July 21, 2011. The consolidated lawsuits are currently stayed pending resolution of the defendants' motion to dismiss the Gammel lawsuit.

•

Luis Gonzalez v. Léo Apotheker, et al. and Richard Tyner v. Léo Apotheker, et al. are consolidated lawsuits filed on September 29, 2011 and October 5, 2011, respectively, in California Superior Court alleging, among other things, that the defendants breached their fiduciary duties, wasted corporate assets and were unjustly enriched by concealing material information and making false statements about HP's business model and the future of webOS, the TouchPad and HP's PC business and by authorizing HP's repurchase of its own stock on August 29, 2010 and July 21, 2011. The lawsuits are currently stayed pending resolution of the Espinoza/Salat consolidated action in federal court.

Environmental

        HP's operations and products are subject to various federal, state, local and foreign laws and regulations concerning environmental protection, including laws addressing the discharge of pollutants into the air and water, the management and disposal of hazardous substances and wastes, the cleanup of contaminated sites, the content of HP's products and the recycling, treatment and disposal of those products. In particular, HP faces increasing complexity in its product design and procurement operations as it adjusts to new and future requirements relating to the chemical and materials composition of its products, their safe use, and the energy consumption associated with those products, including requirements relating to climate change. HP is also subject to legislation in an increasing number of jurisdictions that makes producers of electrical goods, including computers and printers, financially responsible for specified collection, recycling, treatment and disposal of past and future covered products (sometimes referred to as "product take-back legislation"). HP could incur substantial costs, its products could be restricted from entering certain jurisdictions, and it could face other sanctions, if it were to violate or become liable under environmental laws or if its products become non-compliant with environmental laws. HP's potential exposure includes fines and civil or criminal sanctions, third-party property damage or personal injury claims and clean up costs. The amount and timing of costs under environmental laws are difficult to predict.

        HP is party to, or otherwise involved in, proceedings brought by U.S. or state environmental agencies under the Comprehensive Environmental Response, Compensation and Liability Act

47

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements (Continued)

(Unaudited)

Note 15: Litigation and Contingencies (Continued)

("CERCLA"), known as "Superfund," or state laws similar to CERCLA. HP is also conducting environmental investigations or remediations at several current or former operating sites pursuant to administrative orders or consent agreements with state environmental agencies.

Note 16: Segment Information

Description of Segments

        HP is a leading global provider of products, technologies, software, solutions and services to individual consumers, small- and medium-sized businesses ("SMBs"), and large enterprises, including customers in the government, health and education sectors. HP's offerings span personal computing and other access devices; multi-vendor customer services, including infrastructure technology and business process outsourcing, technology support and maintenance, application development and support services and consulting and integration services; imaging and printing-related products and services; and enterprise information technology ("IT") infrastructure, including enterprise storage and server technology, networking products and solutions, IT management software, information management solutions and security intelligence/risk management solutions.

        HP and its operations are organized into seven reportable business segments for financial reporting purposes: PSG, Services, IPG, ESSN, Software, HP Financial Services ("HPFS") and Corporate Investments. HP's organizational structure is based on a number of factors that management uses to evaluate, view and run its business operations, which include, but are not limited to, customer base, homogeneity of products and technology. The reportable business segments are based on this organizational structure and information reviewed by HP's management to evaluate the business segment results.

        In March 2012, HP announced that it will realign the organizational structure of its business. As part of that realignment, HP will consolidate PSG and IPG into a newly formed Printing and Personal Systems Group. HP continues to report the results of IPG and PSG separately.

        A description of the types of products and services provided by each reportable business segment follows.

•

Personal Systems Group provides commercial PCs, consumer PCs, workstations, calculators and other related accessories, software and services for the commercial and consumer markets. Commercial PCs are optimized for commercial uses, including enterprise and SMB customers, and for connectivity and manageability in networked environments. Commercial PCs include the HP ProBook and HP EliteBook lines of notebooks and the Compaq Pro, Compaq Elite, HP Pro and HP Elite lines of business desktops, as well as the All-in-One Touchsmart and Omni PCs, HP Mini-Note PCs, retail POS systems, HP Thin Clients, and HP Slate Tablet PCs. Consumer PCs include the HP Pavilion, HP Elite, Envy and Compaq Presario series of multi-media consumer notebooks, desktops and mini notebooks, including the TouchSmart line of touch-enabled all-in-one notebooks and desktops. HP's workstations are designed for users demanding enhanced performance, such as computer animation, engineering design and other programs requiring high-resolution graphics, and run on both Windows and Linux-based operating systems.

48

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements (Continued)

(Unaudited)

Note 16: Segment Information (Continued)

•

Services provides technology consulting, outsourcing and support services across infrastructure, applications and business process domains. Services is divided into three main areas: Infrastructure Technology Outsourcing ("ITO"), Technology Services, and Application and Business Services ("ABS"). ITO delivers comprehensive services that encompass the data center, IT security, Cloud-based computing, workplace technology, network, unified communications, and enterprise service management. Technology Services provides technology consulting and support services for transforming IT, and converging and supporting IT infrastructure. The technology consulting portfolio includes strategic IT advisory services, cloud consulting services, unified communications solutions, data center transformation services and education consulting services. In addition to warranty support across HP's product lines, support services includes HP Foundation Care, the portfolio of reactive hardware and software support services; HP Proactive Care, which includes advanced remote system-monitoring tools, continuous onsite rapid response and direct access to HP's technical experts and resources; HP Datacenter Care for flexible customer support for HP and multivendor systems; and Lifecycle Event services, which are event-based services offering HP's technology expertise and consulting for each phase of the technology lifecycle. ABS helps clients develop, revitalize and manage their applications and information assets. The full applications lifecycle approach encompasses application development, testing, modernization, system integration, maintenance and management for both packaged and custom built applications. The ABS portfolio also offers IP-based industry solutions, services and technologies to help clients better manage critical business processes. HP also offers services for customer relationship management, finance and administration, human resources, payroll and document processing.

•

Imaging and Printing Group provides consumer and commercial printer hardware, supplies, media and scanning devices. IPG is also focused on imaging solutions in the commercial markets. These solutions range from managed print services to capturing high-value pages in areas such as industrial applications, outdoor signage, and the graphic arts business. Inkjet and Web Solutions delivers HP's consumer and SMB inkjet solutions (hardware, supplies, media, web-connected hardware and services) and develops HP's retail publishing and web businesses. It includes single function and all-in-one inkjet printers targeted toward consumers and SMBs, as well as retail publishing solutions, Snapfish and ePrintCenter. LaserJet and Enterprise Solutions delivers products, services and solutions to the medium-sized business and enterprise segments, including LaserJet printers and supplies, multi-function devices, scanners, web-connected hardware and services and enterprise software solutions, such as Exstream Software and Web Jetadmin. Managed Enterprise Solutions include managed print service products, support and solutions delivered to enterprise customers partnering with third-party software providers to offer workflow solutions in the enterprise environment. Graphics Solutions include large format printing (Designjet and Scitex), large format supplies, WebPress supplies, Indigo printing, specialty printing systems and inkjet high-speed production solutions. HP's printer supplies offerings include LaserJet toner and inkjet printer cartridges, graphic solutions ink products and other printing-related media.

•

Enterprise Servers, Storage and Networking provides server, storage, networking and, when combined with HP Software's Cloud Service Automation software suite, HP's CloudSystem. The CloudSystem enables infrastructure, platform and software as a service in private, public or

49

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements (Continued)

(Unaudited)

Note 16: Segment Information (Continued)

hybrid environments. Industry Standard Servers offers ProLiant servers, running primarily Windows, Linux and virtualization platforms from Microsoft, VMware and other major vendors and leveraging Intel and Advanced Micro Devices, Inc. x86 processors. The business spans a range of server product lines, including pedestal tower, traditional rack, density optimized rack and HP's BladeSystem family of server blades. Business Critical Systems offers HP Integrity servers based on the Intel Itanium-based processor, HP Integrity NonStop solutions and scale-up x86 ProLiant Servers for scalability of systems with more than four industry standard processors. HP's storage offerings include storage area networks, network attached storage, storage management software and virtualization technologies, StoreOnce data deduplication solutions, tape drives and tape libraries. HP's networking portfolio spans routers and switches for the data center, branch or campus delivering network management and unified communications. HP's wireless networking offerings include WLAN access points and controllers/switches.

•

Software provides enterprise information management solutions for both structured and unstructured data, IT management software and security intelligence/risk management solutions. Solutions are delivered in the form of traditional software licenses, software-as-a-service, hybrid or appliance deployment models. Augmented by support and professional services, HP's software solutions allow IT organizations to gain customer insight and optimize infrastructure, operations, application life cycles, application quality, security, IT services and business processes. In addition, these solutions help businesses proactively safeguard digital assets, comply with corporate and regulatory policies, and control internal and external security risks. For segment reporting purposes, our Software reportable segment aggregates two operating units within our software business.

•

HP Financial Services supports and enhances HP's global product and services solutions, providing a broad range of value-added financial life cycle management services. HPFS enables HP's worldwide customers to acquire complete IT solutions, including hardware, software and services. HPFS offers leasing, financing, utility programs, and asset recovery services, as well as financial asset management services, for large global and enterprise customers. HPFS also provides an array of specialized financial services to SMBs and educational and governmental entities. HPFS offers innovative, customized and flexible alternatives to balance unique customer cash flow, technology obsolescence and capacity needs.

•

Corporate Investments includes business intelligence solutions, HP Labs and certain business incubation projects. Business intelligence solutions enable business to standardize on consistent data management schemes, connect and share data across the enterprise and apply analytics. This segment also derives revenue from licensing specific HP technology to third parties.

Segment Data

        HP derives the results of the business segments directly from its internal management reporting system. The accounting policies HP uses to derive business segment results are substantially the same as those the consolidated company uses. Management measures the performance of each business segment based on several metrics, including earnings from operations. Management uses these results, in part, to evaluate the performance of, and to assign resources to, each of the business segments. HP does not allocate to its business segments certain operating expenses, which it manages separately at

50

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements (Continued)

(Unaudited)

Note 16: Segment Information (Continued)

the corporate level. These unallocated costs include primarily restructuring charges and any associated adjustments related to restructuring actions, amortization of purchased intangible assets, stock-based compensation expense related to HP-granted employee stock options, PRUs, restricted stock awards and the employee stock purchase plan, certain acquisition-related charges and charges for purchased IPR&D, as well as certain corporate governance costs.

        To provide improved visibility and comparability, HP has reclassified segment operating results for fiscal 2011 to conform to certain fiscal 2012 organizational realignments. The realignment resulted in transfer of revenue and operating profit among Services, IPG, ESSN, Software and Corporate Investments. In addition, revenue was transferred among the business units within Services. These realignments include:

•

The transfer of Indigo Scitex support and the LaserJet and enterprise solutions trade support business from the Technology Services business unit within Services to the Commercial Hardware business unit within IPG;

•

The transfer of the TippingPoint business from the Networking business unit within ESSN to Software;

•

The transfer of the business intelligence services business from Corporate Investments to a newly formed ABS business unit within Services;

•

The consolidation of the Application Services, Business Process Outsourcing and Other Services business units within Services into the new ABS business unit; and

•

The transfer of the information management services business from Software to the new ABS business unit within Services.

        These changes had no impact on the previously reported financial results for PSG or HPFS. In addition, none of these changes impacted HP's previously reported consolidated net revenue, earnings from operations, net earnings or net earnings per share.

        Selected operating results information for each business segment was as follows:

	Three months ended April 30
	Net Revenue				Earnings (Loss) from Operations
	2012		2011		2012			2011
	In millions
Personal Systems Group	$	9,452	$	9,415	$	524		$	533
Services		8,831		8,916		997			1,372
Imaging and Printing Group		6,132		6,843		808			1,136
Enterprise Servers, Storage and Networking		5,211		5,516		585			760
Software(1)		970		797		172			158
HP Financial Services		968		885		96			83
Corporate Investments		18		42		(49	)		(199	)
Total segments	$	31,582	$	32,414	$	3,133		$	3,843

51

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements (Continued)

(Unaudited)

Note 16: Segment Information (Continued)

	Six months ended April 30
	Net Revenue				Earnings (Loss) from Operations
	2012		2011		2012			2011
	In millions
Personal Systems Group	$	18,325	$	19,864	$	988		$	1,205
Services		17,457		17,445		1,902			2,753
Imaging and Printing Group		12,390		13,574		1,569			2,255
Enterprise Servers, Storage and Networking		10,229		11,115		1,147			1,590
Software(1)		1,916		1,522		334			278
HP Financial Services		1,918		1,712		187			162
Corporate Investments		76		104		(97	)		(377	)
Total segments	$	62,311	$	65,336	$	6,030		$	7,866

⁽¹⁾

Includes results of Autonomy from the date of acquisition in October 2011.

        The reconciliation of segment operating results information to HP consolidated totals was as follows:

	Three months ended April 30						Six months ended April 30
	2012			2011			2012			2011
	In millions
Net revenue:
Segment total	$	31,582		$	32,414		$	62,311		$	65,336
Elimination of intersegment net revenue and other		(889	)		(782	)		(1,582	)		(1,402	)
Total HP consolidated net revenue	$	30,693		$	31,632		$	60,729		$	63,934
Earnings before taxes:
Total segment earnings from operations	$	3,133		$	3,843		$	6,030		$	7,866
Corporate and unallocated costs and eliminations		(203	)		(153	)		(356	)		(4	)
Unallocated costs related to stock-based compensation expense		(168	)		(130	)		(342	)		(296	)
Amortization of purchased intangible assets		(470	)		(413	)		(936	)		(838	)
Restructuring charges		(53	)		(158	)		(93	)		(316	)
Acquisition-related charges		(17	)		(21	)		(39	)		(50	)
Interest and other, net		(243	)		(76	)		(464	)		(173	)
Total HP consolidated earnings before taxes	$	1,979		$	2,892		$	3,800		$	6,189

        In connection with certain fiscal 2012 organizational realignments, HP reclassified total assets between its Services, IPG, ESSN, Software and Corporate Investments financial reporting segments. There have been no material changes to the total assets of HP's individual segments since October 31, 2011.

52

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements (Continued)

(Unaudited)

Note 16: Segment Information (Continued)

Net revenue by segment and business unit

	Three months ended April 30						Six months ended April 30
	2012			2011			2012			2011
	In millions
Net revenue:
Notebooks	$	4,900		$	5,039		$	9,842		$	10,847
Desktops		3,827			3,641			7,033			7,537
Workstations		537			541			1,072			1,076
Other		188			194			378			404
Personal Systems Group		9,452			9,415			18,325			19,864
Infrastructure Technology Outsourcing		3,669			3,786			7,370			7,430
Technology Services		2,638			2,629			5,200			5,143
Application and Business Services		2,524			2,501			4,887			4,872
Services		8,831			8,916			17,457			17,445
Supplies		4,060			4,612			8,139			8,970
Commercial Hardware		1,479			1,536			2,968			3,101
Consumer Hardware		593			695			1,283			1,503
Imaging and Printing Group		6,132			6,843			12,390			13,574
Industry Standard Servers		3,186			3,387			6,258			6,835
Storage		990			980			1,945			1,992
Business Critical Systems		421			546			826			1,101
Networking		614			603			1,200			1,187
Enterprise Servers, Storage and Networking		5,211			5,516			10,229			11,115
Software(1)		970			797			1,916			1,522
HP Financial Services		968			885			1,918			1,712
Corporate Investments		18			42			76			104
Total segments		31,582			32,414			62,311			65,336
Eliminations of intersegment net revenue and other		(889	)		(782	)		(1,582	)		(1,402	)
Total HP consolidated net revenue	$	30,693		$	31,632		$	60,729		$	63,934

⁽¹⁾

Includes results of Autonomy from the date of acquisition in October 2011.

Note 17: Subsequent Events

Restructuring Plan

        On May 23, 2012, HP adopted a restructuring plan designed to simplify business processes, accelerate innovation and deliver better results for customers, employees and stockholders. HP expects that the restructuring plan will be implemented through the end of HP's 2014 fiscal year. In connection

53

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements (Continued)

(Unaudited)

Note 17: Subsequent Events (Continued)

with the restructuring plan, HP expects approximately 27,000 employees to exit the company by the end of fiscal 2014, with a portion of those employees exiting the company as part of a voluntary early retirement program for U.S. employees whose combined age and years of service exceed certain levels.

        In connection with the restructuring plan, HP expects to record aggregate pre-tax charges of approximately $3.5 billion through the end of HP's 2014 fiscal year beginning in the third quarter of HP's 2012 fiscal year. Of that amount, HP expects approximately $3.0 billion to relate to the workforce reductions and approximately $0.5 billion to relate to other items, including data center and real estate consolidation. HP expects approximately $2.7 billion of those aggregate pre-tax charges to result in cash expenditures during the term of the plan. HP expects to amend its U.S. pension plans to facilitate the funding of a portion of the voluntary early retirement program using available U.S. pension plan assets. These restructuring actions could result in curtailments or potential settlements with HP's various pension and post-retirement plans.

        HP is also evaluating the impact, if any, on the carrying value of its long-lived assets within the Services segment as a result of the restructuring plan and other related initiatives, market conditions and the long-term profitability outlook for the Services business subsequent to the execution of the restructuring plan.

Compaq Trade Name Impairment

        On May 23, 2012, HP approved a change to its branding strategy for personal computers, which is expected to result in a more limited and focused use of the "Compaq" trade name acquired in 2002. In conjunction with the change in branding strategy, HP also revised its assumption as to the useful life of that intangible asset, which resulted in a reclassification of that asset from indefinite-lived to an asset with a remaining useful life of approximately five years. As a result of these changes, HP has commenced an asset impairment analysis to determine the impact of this change on the fair value of the intangible asset associated with that trade name. Based on the preliminary results of this analysis, HP expects to record an impairment charge of approximately $1.2 billion in its third fiscal quarter of 2012. HP does not expect the impairment charge to result in any future cash expenditures.

Shelf Registration Statement

        On May 24, 2012, HP filed a shelf registration statement (the "2012 Shelf Registration Statement") with the SEC to enable the company to offer for sale, from time to time, in one or more offerings, an unspecified amount of debt securities, common stock, preferred stock, depositary shares and warrants. The 2012 Shelf Registration Statement replaced the 2009 Shelf Registration Statement, which expired in May 2012.

54

Item 2.    Management's Discussion and Analysis of Financial Condition and Results of Operations.

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES

Management's Discussion and Analysis of
Financial Condition and Results of Operations

The following discussion should be read in conjunction with the Consolidated Condensed Financial Statements and the related notes that appear elsewhere in this document.

OVERVIEW

        We are a leading global provider of products, technologies, software, solutions and services to individual consumers, small- and medium-sized businesses, and large enterprises, including customers in the government, health and education sectors. Our offerings span:

•

personal computing and other access devices;

•

multi-vendor customer services, including infrastructure technology and business process outsourcing, technology support and maintenance, application development and support services and consulting and integration services;

•

imaging and printing-related products and services; and

•

enterprise information technology infrastructure, including enterprise server and storage technology, networking products and solutions, IT management software, information management solutions and security intelligence/risk management solutions.

        We have seven business segments for financial reporting purposes: the Personal Systems Group ("PSG"), Services, the Imaging and Printing Group ("IPG"), Enterprise Servers, Storage and Networking ("ESSN"), Software, HP Financial Services ("HPFS") and Corporate Investments.

        Our strategy and operations are currently focused on the following initiatives:

Strategic Focus

        The core of our business is our hardware products, which include our PC, server, storage, networking, and imaging and printing products. Our software business provides enterprise IT management software, information management solutions and security intelligence/risk management solutions delivered in the form of traditional software licenses or as software-as-a-service that allow us to differentiate our hardware products and deploy them in a manner that helps our customers solve problems and meets our customers' needs to manage their infrastructure, operations, application life cycles, application quality and security, business processes, and structured and unstructured data. Our Converged Infrastructure portfolio of servers, storage and networking combined with our Cloud Service Automation software suite enables enterprise and service provider clients to deliver infrastructure, platform and software-as-a-service in a private, public or hybrid cloud environment. Layered on top of our hardware and software businesses is our services business, which provides opportunities to drive usage of HP products and solutions, enables us to implement and manage all the technologies upon which our customers rely, and gives us a platform to be more solution-oriented, particularly in our focus areas of cloud, security and analytics, and to be a better strategic partner with our customers.

Leveraging our Portfolio and Scale

        We offer one of the IT industry's broadest portfolios of products and services, and we leverage that portfolio to our strategic advantage. For example, we are able to provide servers, storage and networking products packaged with services that can be delivered to customers in the manner of their

55

choosing, be it in-house, outsourced as a service via the Internet or via a hybrid environment. Our portfolio of management software completes the package by allowing our customers to manage their IT operations in an efficient and cost-effective manner. In addition, we are working to optimize our supply chain by eliminating complexity, reducing fixed costs, and leveraging our scale to ensure the availability of components at favorable prices even during shortages. We are also expanding our use of industry standard components in our enterprise products to further leverage our scale.

Realigning our Business and Cost Structure

        We are addressing trends in our businesses and the market by reducing our cost structure and realigning our workforce to create investment capacity, support growth initiatives and innovation, and facilitate more effective operations. As part of those efforts, in March 2012, we announced that we were realigning the organizational structure of our business. As part of that realignment, we consolidated our personal computer and printing businesses under the same senior executive leadership. We also consolidated our global accounts sales organization into ESSN and centralized all of our marketing and communications activities. Subsequently, in May 2012, we announced a company-wide restructuring plan that includes both a voluntary early retirement program for eligible U.S. employees and non-voluntary workforce reductions. We expect the restructuring plan to be implemented through the end of fiscal 2014. We are also continuing to implement the multi-year restructuring plan announced in June 2010 relating to our enterprise services business ("ES"). See Note 6 and Note 17 to the Consolidated Condensed Financial Statements in Item 1 for further discussion of these restructuring plans and the associated restructuring charges.

Investing in our Business

        The realignment and restructuring discussed above are two components of an ongoing initiative designed to improve our execution and financial performance and align our cost structure to facilitate increased investment in our business. These efforts will include optimizing our supply chain, reducing the number of stock keeping units (SKUs) and platforms, continuing to refine our real estate strategy, simplifying our go-to-market, improving business processes and implementing consistent pricing and promotions. We expect to invest the majority of the savings from these efforts across our businesses, including investing to respond to market trends and customer expectations, strengthen our position in our core markets, accelerate growth in adjacent markets, and drive leadership in the three strategic areas of cloud computing, security and information management. We expect these investments to allow us to expand in higher margin and higher growth industry segments and further strengthen our portfolio of hardware, software and services to solve customer problems.

56

        The following provides an overview of our key second quarter and first half of fiscal 2012 financial metrics:

	HP(1) Consolidated			PSG			Services			IPG			ESSN			Software			HPFS
	In millions, except per share amounts
Three Months Ended April 30
Net revenue	$	30,693		$	9,452		$	8,831		$	6,132		$	5,211		$	970		$	968
Year-over-year net revenue % (decrease) increase		(3.0	)%		0.4	%		(1.0	)%		(10.4	)%		(5.5	)%		21.7	%		9.4	%
Earnings from operations	$	2,222		$	524		$	997		$	808		$	585		$	172		$	96
Earnings from operations as a % of net revenue		7.2	%		5.5	%		11.3	%		13.2	%		11.2	%		17.7	%		9.9	%
Net earnings	$	1,593
Net earnings per share
Basic	$	0.80
Diluted	$	0.80
Six Months Ended April 30
Net revenue	$	60,729		$	18,325		$	17,457		$	12,390		$	10,229		$	1,916		$	1,918
Year-over-year net revenue % (decrease) increase		(5.0	)%		(7.7	)%		0.1	%		(8.7	)%		(8.0	)%		25.9	%		12.0	%
Earnings from operations	$	4,264		$	988		$	1,902		$	1,569		$	1,147		$	334		$	187
Earnings from operations as a % of net revenue		7.0	%		5.4	%		10.9	%		12.7	%		11.2	%		17.4	%		9.7	%
Net earnings	$	3,061
Net earnings per share
Basic	$	1.55
Diluted	$	1.53

⁽¹⁾

Includes Corporate Investments and eliminations.

        Cash and cash equivalents at April 30, 2012 totaled $8.3 billion, an increase of $0.3 billion from the October 31, 2011 balance of $8.0 billion. The increase for the first six months of fiscal 2012 was due primarily to $3.7 billion of cash provided from operations, the effect of which was partially offset by $1.7 billion net investment in property, plant and equipment and $1.6 billion of cash used to repurchase common stock and payment of dividends.

        We intend the discussion of our financial condition and results of operations that follows to provide information that will assist in understanding our Consolidated Condensed Financial Statements, the changes in certain key items in those financial statements from year to year, and the primary factors that accounted for those changes, as well as how certain accounting principles, policies and estimates affect our Consolidated Condensed Financial Statements.

        The discussion of results of operations at the consolidated level is followed by a more detailed discussion of results of operations by segment.

        For a further discussion of trends, uncertainties and other factors that could impact our operating results, see the section entitled "Factors That Could Affect Future Results."

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

        Management's Discussion and Analysis of Financial Condition and Results of Operations is based upon our Consolidated Condensed Financial Statements, which we have prepared in accordance with U.S. generally accepted accounting principles ("GAAP"). The preparation of these financial statements requires management to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, net revenue and expenses, and disclosure of contingent assets and liabilities. Management bases its estimates on historical experience and on various other assumptions that it

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believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Senior management has discussed the development, selection and disclosure of these estimates with the Audit Committee of our Board of Directors. Management believes that the accounting estimates employed and the resulting balances are reasonable; however, actual results may differ from these estimates under different assumptions or conditions.

        An accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, if different estimates reasonably could have been used, or if changes in the estimate that are reasonably possible could materially impact the financial statements. Management believes that there have been no significant changes during the six months ended April 30, 2012 to the items that we disclosed as our critical accounting policies and estimates in Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended October 31, 2011.

CONSTANT CURRENCY PRESENTATION

        Revenue from our international operations has historically represented, and we expect will continue to represent, a majority of our overall net revenue. As a result, our revenue growth has been impacted, and we expect will continue to be impacted, by fluctuations in foreign currency exchange rates. In order to provide a framework for assessing how each of our business segments performed excluding the impact of foreign currency fluctuations, we present the year-over-year percentage change in revenue performance on a constant currency basis, which assumes no change in the exchange rate from the prior-year period. This constant currency disclosure is provided in addition to, and not as a substitute for, the year-over-year percentage change in revenue on an as-reported basis.

RESULTS OF OPERATIONS

        Set forth below is an analysis of our financial results comparing the three and six months ended April 30, 2012 to the three and six months ended April 30, 2011. Unless otherwise noted, all comparative performance data included in the results of operations section reflect year-over-year comparisons.

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        Results of operations in dollars and as a percentage of net revenue were as follows:

	Three months ended April 30												Six months ended April 30
	2012						2011(1)						2012						2011(1)
	Dollars			% of Revenue			Dollars			% of Revenue			Dollars			% of Revenue			Dollars			% of Revenue
	In millions
Net revenue	$	30,693			100.0	%	$	31,632			100.0	%	$	60,729			100.0	%	$	63,934			100.0	%
Cost of sales(2)		23,541			76.7	%		23,832			75.3	%		46,854			77.2	%		48,213			75.4	%
Gross profit		7,152			23.3	%		7,800			24.7	%		13,875			22.8	%		15,721			24.6	%
Research and development		850			2.8	%		815			2.6	%		1,636			2.7	%		1,613			2.5	%
Selling, general and administrative		3,540			11.5	%		3,425			10.8	%		6,907			11.4	%		6,542			10.3	%
Amortization of purchased intangible assets		470			1.5	%		413			1.3	%		936			1.4	%		838			1.2	%
Restructuring charges		53			0.2	%		158			0.5	%		93			0.2	%		316			0.5	%
Acquisition-related charges		17			0.1	%		21			0.1	%		39			0.1	%		50			0.1	%
Earnings from operations		2,222			7.2	%		2,968			9.4	%		4,264			7.0	%		6,362			10.0	%
Interest and other, net		(243	)		(0.8	)%		(76	)		(0.3	)%		(464	)		(0.7	)%		(173	)		(0.3	)%
Earnings before taxes		1,979			6.4	%		2,892			9.1	%		3,800			6.3	%		6,189			9.7	%
Provision for taxes		386			1.2	%		588			1.8	%		739			1.3	%		1,280			2.0	%
Net earnings	$	1,593			5.2	%	$	2,304			7.3	%	$	3,061			5.0	%	$	4,909			7.7	%

⁽¹⁾

In connection with organizational realignments implemented in the first quarter of fiscal 2012, certain costs previously reported as Cost of sales have been reclassified as Selling, general and administrative expenses to better align those costs with the functional areas that benefit from those expenditures.

⁽²⁾

Cost of products, cost of services and financing interest.

Net Revenue

        The components of the weighted net revenue change were as follows:

	Three months ended April 30, 2012			Six months ended April 30, 2012
	Percentage Points
Software		0.5			0.6
HP Financial Services		0.3			0.3
Personal Systems Group		0.1			(2.4	)
Services		(0.3	)		—
Corporate Investments/Other		(0.4	)		(0.3	)
Enterprise Servers, Storage and Networking		(1.0	)		(1.4	)
Imaging and Printing Group		(2.2	)		(1.8	)
Total HP		(3.0	)		(5.0	)

        For the three and six months ended April 30, 2012, total HP net revenue decreased 3.0% and 5.0%, respectively (2.9% and 5.4%, respectively, on a constant currency basis). U.S. net revenue increased 0.5% to $10.7 billion for the three months ended April 30, 2012, while net revenue from outside of the United States decreased 4.7% to $20.0 billion. For the six months ended April 30, 2012, U.S. net revenue decreased 5.0% to $20.9 billion, while net revenue from outside of the United States decreased 5.0% to $39.8 billion. Thailand experienced severe flooding in July 2011 that impacted the manufacturing of hard disk drive ("HDD") components used in PCs, servers and storage devices, resulting in supply constraints in the first half of fiscal year 2012. For the three and six months ended April 30, 2012, HP's revenue decreased due primarily to volume declines in IPG supplies and our hardware businesses as a result of a soft demand environment, HDD supply constraints impacting

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ESSN, and lower rates associated with renewed contracts in Services. The Software segment contributed favorably to the total HP net revenue change primarily as a result of the acquisition of Autonomy Corporation plc ("Autonomy"). An analysis of the change in net revenue for each business segment is included under "Segment Information" below.

Gross Margin

        Total HP gross margin decreased by 1.4 and 1.7 percentage points for the three and six months ended April 30, 2012. Gross margins were impacted by continued margin pressure in Services, a lower mix of high-margin supplies revenue, an unfavorable impact from the strength of the Japanese yen and competitive pricing in our hardware businesses.

        PSG gross margin increased for the three months and decreased for the six months ended April 30, 2012. The margin increase for the three months ended April 30, 2012 was primarily a result of favorable warranty and logistics costs, the effect of which was partially offset by higher component costs. The decrease in margin for the six months ended April 30, 2012 was driven by HDD supply constraints and higher logistics costs, the effect of which was partially offset by a favorable commodity pricing environment, along with lower warranty costs.

        Services gross margin decreased for the three and six months ended April 30, 2012 due primarily to lower rates associated with renewed contracts, additional costs associated with certain contract deliverable delays and investments in service delivery headcount.

        IPG gross margin declined for the three and six months ended April 30, 2012 due primarily to a lower mix of high-margin supplies revenue and an unfavorable impact from the strength of the Japanese yen.

        ESSN gross margin decreased for the three and six months ended April 30, 2012 due primarily to lower selling prices as a result of competitive pressures and an unfavorable product mix, the effect of which was partially offset by lower component costs.

        Software gross margin decreased for the three and six months ended April 30, 2012 due primarily to a lower mix of license revenue and higher acquisition-related deferred revenue write-downs, the effect of which was partially offset by rate increases in hosted license services associated with the Autonomy acquisition.

        HPFS gross margin decreased for the three and six months ended April 30, 2012 due primarily to lower portfolio margins and lower margins on end-of-term activities, including remarketing sales, lease extensions and buyouts.

        Corporate Investments gross margin increased for the three and six months ended April 30, 2012 due primarily to a lower gross margin impact from the winding down of the webOS device business.

Operating Expenses

        Research and Development

        Total research and development ("R&D") expense increased in the three and six months ended April 30, 2012 due primarily to additional R&D expense resulting from the acquisition of Autonomy and additional innovation-focused spending for Internet-based printing, web services, storage and networking products. These effects were partially offset by the elimination of R&D expense associated with the webOS device business. In addition, for the three months ended April 30, 2012, salary increases contributed to the higher R&D expense. For the three and six months ended April 30, 2012, R&D expense increased for Software, IPG, PSG, ESSN and Services and decreased for Corporate Investments.

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        Selling, General and Administrative

        Selling, general and administrative ("SG&A") expense increased in the three and six months ended April 30, 2012 due primarily to higher field selling costs as a result of our investments in sales resources to grow revenue. In addition, for the three months ended April 30, 2012, salary increases contributed to the higher SG&A expense. For the three and six months ended April 30, 2012, SG&A expense as a percentage of net revenue increased for each of our segments except for Corporate Investments, Software and HPFS, which each experienced a decrease.

        Amortization of Purchased Intangible Assets

        The increase in amortization expense for the three and six months ended April 30, 2012 was due primarily to amortization expenses related to the intangible assets purchased as part of the Autonomy acquisition. This increase was partially offset by decreased amortization expenses related to certain intangible assets associated with prior acquisitions reaching the end of their amortization periods.

        Restructuring Charges

        The decrease in restructuring costs for the three and six months ended April 30, 2012 was due primarily to lower severance accrual costs for the fiscal 2010 ES restructuring plan coupled with the $100 million reversal of severance charges on the same plan in the first three months of fiscal 2012. The decrease in severance costs during both periods was partially offset by an increase in infrastructure costs. Restructuring charges for the three months ended April 30, 2012 were $53 million. These charges included $18 million of infrastructure costs related to our fiscal 2008 restructuring plan and $35 million of infrastructure costs related to our fiscal 2010 ES restructuring plan. Restructuring charges for the six months ended April 30, 2012 were $93 million. These charges included $47 million severance and infrastructure costs related to our fiscal 2008 restructuring plan, $7 million of severance costs related to our fiscal 2009 restructuring plan and $39 million of severance and infrastructure costs related to our fiscal 2010 ES restructuring plan.

        As part of our ongoing business operations, we incurred workforce rebalancing charges for severance and related costs within certain business segments during the first six months of fiscal 2012. Workforce rebalancing activities are considered part of normal operations as we continue to optimize our cost structure. Workforce rebalancing costs are included in our business segment results, and we expect to incur additional workforce rebalancing costs in the future.

        Acquisition-related Charges

        The decrease in acquisitions-related charges for the three and six months ended April 30, 2012 was due primarily to lower retention bonuses associated with acquisitions completed in fiscal 2010 and 2011. For the three and six months ended April 30, 2012, we recorded acquisition-related charges of $17 million and $39 million, respectively.

Interest and Other, Net

        For the three and six months ended April 30, 2012, interest and other, net expense increased by $167 million and $291 million, respectively. The increase was driven primarily by higher average debt balances and higher currency transaction losses.

Provision for Taxes

        Our effective tax rate was 19.5% and 20.3% for the three months ended April 30, 2012 and April 30, 2011, respectively, and 19.5% and 20.7% for the six months ended April 30, 2012 and April 30, 2011, respectively. Our effective tax rate decreased due to an increase in the percentage of

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total earnings earned in lower-tax jurisdictions. Our effective tax rate generally differs from the U.S. federal statutory rate of 35% due to favorable tax rates associated with certain earnings from our operations in lower-tax jurisdictions throughout the world. We have not provided U.S. taxes for all of such earnings because we plan to reinvest some of those earnings indefinitely outside the United States.

        In the three and six months ended April 30, 2012, we recorded discrete items with a net tax benefit of $25 million and $74 million, respectively, decreasing the effective tax rate. These amounts included net tax benefits of $22 million and $50 million, respectively, from restructuring and acquisition charges, and other miscellaneous tax benefits of $3 million and $24 million, respectively.

        In the three and six months ended April 30, 2011, we recorded discrete items with a net tax benefit of $56 million and $157 million, respectively. These amounts included net tax benefits of $53 million and $112 million, respectively, from restructuring and acquisition charges. In addition, in December 2010, the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 was signed into law. We recorded a tax benefit of $43 million arising from the retroactive research and development credit provided by that legislation in the first quarter of fiscal 2011.

Segment Information

        A description of the products and services for each segment can be found in Note 16 to the Consolidated Condensed Financial Statements. Future changes to this organizational structure may result in changes to the business segments disclosed.

Personal Systems Group

	Three months ended April 30
	2012			2011			% Increase (Decrease)
	In millions
Net revenue	$	9,452		$	9,415			0.4	%
Earnings from operations	$	524		$	533			(1.7	)%
Earnings from operations as a % of net revenue		5.5	%		5.7	%

	Six months ended April 30
	2012			2011			% Decrease
	In millions
Net revenue	$	18,325		$	19,864			(7.7	)%
Earnings from operations	$	988		$	1,205			(18.0	)%
Earnings from operations as a % of net revenue		5.4	%		6.1	%

        The components of the weighted net revenue change by business unit were as follows:

	Three months ended April 30, 2012			Six months ended April 30, 2012
	Percentage Points
Desktop PC's		2.0			(2.5	)
Workstations		—			—
Notebook PCs		(1.5	)		(5.1	)
Other		(0.1	)		(0.1	)
Total PSG		0.4			(7.7	)

        PSG revenue increased 0.4% both as reported and in constant currency and decreased 7.7% (8.3% when adjusted for currency) for the three and six months ended April 30, 2012, respectively. The

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revenue increase for the three months ended April 30, 2012 was due primarily to a 2% increase in average selling prices ("ASPs"), the effect of which was partially offset by lower volume. The revenue decline for the six months ended April 30, 2012 was due primarily to a 10% decline in unit volumes, the effect of which was partially offset by a 3% increase in ASPs. The increases in ASPs were due primarily to a product mix shift towards higher-end models. The volume declines were the result of continued softness in the consumer PC market and HDD supply constraints during the first quarter of fiscal year 2012. Net revenue for Desktop PCs increased 5% and decreased 7% for the three and six months ended April 30, 2012, respectively. Workstations revenue decreased 1% and remained flat while Notebook PCs decreased 3% and 9% for the three and six months ended April 30, 2012, respectively. Consumer revenue decreased 4% and 16% while commercial revenue increased 3% and decreased 2% for the three and six months ended April 30, 2012, respectively.

        PSG earnings from operations as a percentage of net revenue decreased 0.2 and 0.7 percentage points for the three and six months ended April 30, 2012, respectively. The decrease for both periods was driven by higher component costs combined with an unfavorable currency impact, the effect of which was partially offset by favorable warranty costs. In addition, operating expenses as a percentage of net revenue increased due primarily to the revenue decline and increased selling costs.

Services

	Three months ended April 30
	2012			2011			% Decrease
	In millions
Net revenue	$	8,831		$	8,916			(1.0	)%
Earnings from operations	$	997		$	1,372			(27.3	)%
Earnings from operations as a % of net revenue		11.3	%		15.4	%

	Six months ended April 30
	2012			2011			% Increase (Decrease)
	In millions
Net revenue	$	17,457		$	17,445			0.1	%
Earnings from operations	$	1,902		$	2,753			(30.9	)%
Earnings from operations as a % of net revenue		10.9	%		15.8	%

        The components of the weighted net revenue increase by business unit were as follows:

	Three months ended April 30, 2012			Six months ended April 30, 2012
	Percentage Points
Application and Business Services		0.2			0.1
Technology Services		0.1			0.3
Infrastructure Technology Outsourcing		(1.3	)		(0.3	)
Total Services		(1.0	)		0.1

        Services net revenue decreased 1% (0.3% when adjusted for currency) for the three months ended April 30, 2012 and was flat both as reported and in constant currency for the six months ended April 30, 2012, respectively. Application and Business Services net revenue increased by 1% and remained flat for the three and six months ended April 30, 2012, respectively. The revenue increase was due primarily to an increase in short-term project work as well as an increase in sales of cloud offerings, the effect of which was offset by a reduction in contract renewals. Technology Services net revenue remained flat for the three months ended April 30, 2012. Technology Services net revenue

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increased by 1% for the six months ended April 30, 2012, due primarily to growth in our consulting and support businesses. Infrastructure Technology Outsourcing net revenue decreased by 3% and 1% for the three and six months ended April 30, 2012, respectively. Lower rates on contract renewals for both periods, along with increased deal selectivity designed to meet threshold margins for new contracts, contributed to the decrease in revenues.

        Services earnings from operations as a percentage of net revenue for the three and six months ended April 30, 2012 decreased by 4.1 percentage points and 4.9 percentage points, respectively. Operating margin decreased for both periods due primarily to lower rates associated with renewed contracts, additional costs associated with certain contract deliverable delays and investments in service delivery and sales headcount. The decrease in operating margins was partially offset by savings resulting from improvements in service delivery.

Imaging and Printing Group

	Three months ended April 30
	2012			2011			% Decrease
	In millions
Net revenue	$	6,132		$	6,843			(10.4	)%
Earnings from operations	$	808		$	1,136			(28.9	)%
Earnings from operations as a % of net revenue		13.2	%		16.6	%

	Six months ended April 30
	2012			2011			% Decrease
	In millions
Net revenue	$	12,390		$	13,574			(8.7	)%
Earnings from operations	$	1,569		$	2,255			(30.4	)%
Earnings from operations as a % of net revenue		12.7	%		16.6	%

        The components of the weighted net revenue change by business unit were as follows:

	Three months ended April 30, 2012			Six months ended April 30, 2012
	Percentage Points
Supplies		(8.1	)		(6.1	)
Consumer Hardware		(1.5	)		(1.6	)
Commercial Hardware		(0.8	)		(1.0	)
Total IPG		(10.4	)		(8.7	)

        IPG net revenue decreased 10.4% (10.5% when adjusted for currency) and 8.7% (8.9% when adjusted for currency) for the three and six months ended April 30, 2012, respectively, due to decreases across all business units. Net revenue for Supplies decreased 12% and 9% in the three and six months ended April 30, 2012, respectively, due to soft demand in all regions. These effects were partially offset by growth in large format printing supplies. Net revenue for Consumer Hardware decreased 15% for both the three and six months ended April 30, 2012, driven primarily by a continued softness in consumer spending and a focus on sales of higher usage units. Net revenue for Commercial Hardware decreased 4% for both the three and six months ended April 30, 2012, due primarily to volume declines in LaserJet printers as a result of soft demand and a focus on sales of products in higher usage categories. These effects were partially offset by net revenue growth in the graphics and managed print services businesses.

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        IPG earnings from operations as a percentage of net revenue decreased by 3.4 percentage points and 3.9 percentage points for the three and six months ended April 30, 2012, respectively, due primarily to a decline in gross margin, coupled with higher operating expenses as a percentage of net revenue. The gross margin decline for both periods was due primarily to a lower mix of high-margin supplies revenue and an unfavorable impact from the strength of the Japanese yen. The increases in operating expenses as a percentage of net revenue for both periods were due primarily to the revenue decline and investments in research and development, the effect of which was partially offset by lower marketing and field selling costs.

Enterprise Servers, Storage and Networking

	Three months ended April 30
	2012			2011			% Decrease
	In millions
Net revenue	$	5,211		$	5,516			(5.5	)%
Earnings from operations	$	585		$	760			(23.0	)%
Earnings from operations as a % of net revenue		11.2	%		13.8	%

	Six months ended April 30
	2012			2011			% Decrease
	In millions
Net revenue	$	10,229		$	11,115			(8.0	)%
Earnings from operations	$	1,147		$	1,590			(27.9	)%
Earnings from operations as a % of net revenue		11.2	%		14.3	%

        The components of the weighted net revenue change by business unit were as follows:

	Three months ended April 30, 2012			Six months ended April 30, 2012
	Percentage Points
Industry Standard Servers ("ISS")		(3.6	)		(5.2	)
Business Critical Systems ("BCS")		(2.3	)		(2.5	)
Storage		0.2			(0.4	)
Networking		0.2			0.1
Total ESSN		(5.5	)		(8.0	)

        ESSN net revenue decreased 5.5% (5.6% when adjusted for currency) and 8.0% (8.8% when adjusted for currency) for the three and six months ended April 30, 2012, respectively, due primarily to revenue decreases in ISS and BCS. ISS net revenue decreased by 6% and 8% in the three and six months ended April 30, 2012, respectively, driven primarily by HDD supply constraints as a result of flooding in Thailand and along with competitive pricing pressure in a weak demand market environment. BCS net revenue decreased by 23% and 25% in the three and six months ended April 30, 2012, respectively, mainly as a result of slower demand following an announcement by an alliance partner that has ceased software support for our Itanium-based servers. The impact from reduced sales of Itanium-based servers was partially offset by higher demand for the latest generation of BCS scale-up x86 products. Storage net revenue increased by 1% and declined by 2% in the three and six months ended April 30, 2012, respectively. The revenue increase for the three months ended April 30, 2012 was driven by strong performance in 3PAR products and StoreOnce data deduplication solutions. The revenue decline for the six months ended April 30, 2012 was due to declines in storage networking and tape products, the effect of which was partially offset by strong growth in 3PAR products and StoreOnce solutions. Networking net revenue increased by 2% and 1% for the three and six months ended April 30, 2012, respectively, due to higher market demand for our core data center products, the

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effect of which was partially offset by competitive pricing pressures and the divestiture of our video surveillance business.

        ESSN earnings from operations as a percentage of net revenue decreased by 2.6 percentage points and 3.1 percentage points for the three and six months ended April 30, 2012, respectively. The decrease in earnings from operations as a percentage of net revenue for both periods was driven by a decrease in gross margin coupled with an increase in operating expenses as a percentage of net revenue. The gross margin decrease was driven by lower selling prices as a result of competitive pressures and an unfavorable product mix, the effect of which was partially offset by lower component costs. The increase in operating expenses as a percentage of net revenue for both periods was driven by a decline in revenue, the effect of which was partially offset by benefits from certain government incentive programs in Asia.

Software

	Three months ended April 30
	2012			2011			% Increase
	In millions
Net revenue	$	970		$	797			21.7	%
Earnings from operations	$	172		$	158			8.9	%
Earnings from operations as a % of net revenue		17.7	%		19.8	%

	Six months ended April 30
	2012			2011			% Increase
	In millions
Net revenue	$	1,916		$	1,522			25.9	%
Earnings from operations	$	334		$	278			20.1	%
Earnings from operations as a % of net revenue		17.4	%		18.3	%

        Software net revenue increased 21.7% (21.4% when adjusted for currency) and 25.9% (25.1% when adjusted for currency) for the three and six months ended April 30, 2012, respectively. The net revenue increase for both periods was due to revenues from acquired companies, primarily Autonomy, as well as modest growth in the organic business, including solid growth in our security support offerings. For the three months ended April 30, 2012, net revenue from services, support and licenses increased by 72%, 17% and 7%, respectively. For the six months ended April 30, 2012, net revenue from services, support and licenses increased by 89%, 19% and 10%, respectively.

        For the three and six months ended April 30, 2012, Software earnings from operations as a percentage of net revenue decreased by 2.1 percentage points and 0.9 percentage points, respectively. The operating margin decrease for both periods was due primarily to a lower mix of license revenue, higher deferred revenue write-downs and integration costs associated with the Autonomy acquisition, the effect of which was partially offset by rate increases in hosted license services and lower integration costs associated with our fiscal 2010 acquisitions.

HP Financial Services

	Three months ended April 30
	2012			2011			% Increase
	In millions
Net revenue	$	968		$	885			9.4	%
Earnings from operations	$	96		$	83			15.7	%
Earnings from operations as a % of net revenue		9.9	%		9.4	%

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	Six months ended April 30
	2012			2011			% Increase
	In millions
Net revenue	$	1,918		$	1,712			12.0	%
Earnings from operations	$	187		$	162			15.4	%
Earnings from operations as a % of net revenue		9.7	%		9.5	%

        For the three and six months ended April 30, 2012, HPFS net revenue increased by 9.4% and 12.0%, respectively. The net revenue increase for both periods was due primarily to portfolio growth as a result of higher customer demand, along with higher buyout and end-of-lease revenue from residual expirations in line with portfolio growth, the effect of which was partially offset by unfavorable currency movements.

        For the three and six months ended April 30, 2012, earnings from operations as a percentage of net revenue increased 0.5 percentage points and 0.2 percentage points, respectively. The increases were due primarily to a decrease in operating expenses, resulting from continued improvement in cost efficiencies, the effect of which was partially offset by a decrease in gross margin. The decrease in gross margin for both periods was due primarily to lower portfolio margins and lower margins on end-of-term activities, including remarketing sales, lease extensions and buyouts.

Financing Originations

	Three months ended April 30				Six months ended April 30
	2012		2011		2012		2011
	In millions
Total financing originations	$	1,721	$	1,646	$	3,264	$	3,189

        New financing originations, which represent the amount of financing provided to customers for equipment and related software and services and include intercompany activity, increased 4.6% and 2.4% in the three and six months ended April 30, 2012, respectively. The increases were driven by higher financing associated with HP product sales and services offerings resulting from improved integration and engagement with HP's sales efforts, the effect of which was partially offset by an unfavorable currency impact.

Portfolio Assets and Ratios

        HPFS maintains a strategy to generate a competitive return on equity by effectively leveraging its portfolio against the risks associated with interest rates and credit. The HPFS business model is asset intensive and uses certain internal metrics to measure its performance against other financial services companies, including a segment balance sheet that is derived from our internal management reporting system. The accounting policies used to derive these amounts are substantially the same as those used by the consolidated company. However, certain intercompany loans and accounts that are reflected in the segment balances are eliminated in our Consolidated Condensed Financial Statements.

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        The portfolio assets and ratios derived from the segment balance sheet for HPFS were as follows:

	April 30, 2012			October 31, 2011
	In millions
Portfolio assets(1)	$	12,846		$	12,699
Allowance for doubtful accounts(2)		146			130
Operating lease equipment reserve		88			84
Total reserves		234			214
Net portfolio assets	$	12,612		$	12,485
Reserve coverage		1.8	%		1.7	%
Debt to equity ratio(3)		7.0x			7.0x

⁽¹⁾

Portfolio assets include gross financing receivables of approximately $7.4 billion at April 30, 2012 and $7.3 billion at October 31, 2011 and net equipment under operating leases of $2.5 billion and $2.7 billion at April 30, 2012 and October 31, 2011, respectively, as disclosed in Note 9 to the Consolidated Condensed Financial Statements in Item 1, which is incorporated herein by reference. Portfolio assets also include capitalized profit on intercompany equipment transactions of approximately $0.9 billion at April 30, 2012 and $1.0 billion at October 31, 2011, and intercompany leases of approximately $2.0 billion at April 30, 2012 and $1.7 billion at October 31, 2011, both of which are eliminated in consolidation.

⁽²⁾

Allowance for doubtful accounts includes both the short-term and the long-term portions of the allowance on financing receivables.

⁽³⁾

HPFS debt consists of intercompany equity that is treated as debt for segment reporting purposes, intercompany debt and debt issued directly by HPFS.

        Net portfolio assets at April 30, 2012 increased 1.0% from October 31, 2011. The increase resulted from higher levels of new financing originations during the first six months of fiscal 2012, the effect of which was partially offset by an unfavorable currency impact. The overall percentage of portfolio asset reserves increased as a percentage of the portfolio assets.

        For the three and six months ended April 30, 2012, HPFS recorded net bad debt expenses of $13 million and $32 million, respectively. For the comparable periods of fiscal 2011, net bad debt expenses were $12 million and $30 million, respectively.

Corporate Investments

	Three months ended April 30
	2012			2011			% Increase (Decrease)
	In millions
Net revenue	$	18		$	42			(57.1	)%
Loss from operations	$	(49	)	$	(199	)		75.4	%
Loss from operations as a % of net revenue		(272.2	)%		(473.8	)%

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	Six months ended April 30
	2012			2011			% Increase (Decrease)
	In millions
Net revenue	$	76		$	104			(26.9	)%
Loss from operations	$	(97	)	$	(377	)		74.3	%
Loss from operations as a % of net revenue		(127.6	)%		(362.5	)%

        Net revenue in Corporate Investments relates primarily to business intelligence solutions, webOS devices associated with the Palm acquisition and licensing of HP technology to third parties. The revenue decrease in Corporate Investments for the three and six months ended April 30, 2012 was due primarily to the divestiture of HP's Halo video collaboration products business in July 2011, the effect of which was partially offset by higher revenue from business intelligence solutions.

        Corporate Investments reported a lower loss from operations for the three and six months ended April 30, 2012 due primarily to a lower impact from the former webOS device business and a $36 million favorable adjustment to supplier related liabilities recorded in the fourth quarter of fiscal 2011. The loss from operations in Corporate Investments was also due to expenses carried in the segment associated with corporate development, global alliances and HP Labs, which expenses decreased for the three and six months ended April 30, 2012.

LIQUIDITY AND CAPITAL RESOURCES

        Our cash balances are held in numerous locations throughout the world, with substantially all of those amounts held outside of the United States. A majority of the amounts held outside of the United States are generally utilized to support non-U.S. liquidity needs. Most of the amounts held outside of the United States could be repatriated to the United States but, under current law, would be subject to United States federal income taxes, less applicable foreign tax credits. Repatriation of some foreign balances is restricted by local laws. We have provided for the U.S. federal tax liability on these amounts for financial statement purposes, except for foreign earnings that are considered indefinitely reinvested outside of the United States. Repatriation could result in additional U.S. federal income tax payments in future years. Where local restrictions prevent an efficient intercompany transfer of funds, our intent is that cash balances would remain outside of the United States and we would meet U.S. liquidity needs through ongoing cash flows, external borrowings, or both. We utilize a variety of tax planning and financing strategies in an effort to ensure that our worldwide cash is available in the locations in which it is needed. We do not expect restrictions or potential taxes on repatriation of amounts held outside of the United States to have a material effect on HP's overall liquidity, financial condition or results of operations.

FINANCIAL CONDITION (Sources and Uses of Cash)

	Six months ended April 30
	2012			2011
	In millions
Net cash provided by operating activities	$	3,666		$	7,032
Net cash used in investing activities		(2,018	)		(1,582	)
Net cash used in financing activities		(1,380	)		(3,641	)
Net increase in cash and cash equivalents	$	268		$	1,809

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Operating Activities

        Compared to the corresponding period in 2011, net cash provided by operating activities decreased by approximately $3.4 billion for the six months ended April 30, 2012. The decrease was due primarily to lower net earnings and higher utilization of cash resources for payment of operating liabilities such as accounts payable and other current liabilities, the impact of which was partially offset by cash generated from a decrease in accounts and financing receivables and inventory.

        Our key working capital metrics are as follows:

	Three months ended April 30
	2012			2011
Days of sales outstanding in accounts receivable		49			53
Days of supply in inventory		28			26
Days of purchases outstanding in accounts payable.		(49	)		(54	)
Cash conversion cycle		28			25

        Days of sales outstanding in accounts receivable ("DSO") is calculated by dividing ending accounts receivable, net of allowance for doubtful accounts, by a 90-day average net revenue.

        Days of supply in inventory ("DOS") measures the average number of days from procurement to sale of our product. DOS is calculated by dividing ending inventory by a 90-day average cost of goods sold.

        Days of purchases outstanding in accounts payable ("DPO") is calculated by dividing ending accounts payable by a 90-day average cost of goods sold.

        Our working capital requirements depend upon our effective management of the cash conversion cycle, which represents effectively the number of days that elapse from the day we pay for the purchase of raw materials to the collection of cash from our customers. The cash conversion cycle is the sum of DSO and DOS less DPO.

        The decrease in DSO was due primarily to revenue linearity, strengthening of the U.S. dollar and a higher customer usage of cash discounts. The increase in DOS was a result of higher inventory levels at April 30, 2012 due primarily to strategic purchases of certain components and macroeconomic softness unfavorably impacting our consumer businesses and commercial hardware businesses. The decrease in DPO was due primarily to purchasing linearity during the quarter. These changes contributed to the increase in the cash conversion cycle for the three months ended April 30, 2012.

Investing Activities

        Compared to the corresponding period in fiscal 2011, net cash used in investing activities increased by approximately $0.4 billion for the six months ended April 30, 2012 due primarily to lower proceeds from the sale of property, plant and equipment and higher net investments in available-for-sale securities.

Financing Activities

        Compared to the corresponding period in fiscal 2011, net cash used in financing activities decreased by approximately $2.3 billion for the six months ended April 30, 2012. The decrease was due primarily to a reduction in payments made for the repurchases of common stock combined with higher net proceeds from issuance of U.S. Dollar Global Notes, the impact of which was partially offset by higher net repayments of commercial paper.

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        For more information on our share repurchase programs, see Note 13 to the Consolidated Condensed Financial Statements in Item 1, which is incorporated herein by reference.

CAPITAL RESOURCES

Debt Levels

        We maintain debt levels that we establish through consideration of a number of factors, including cash flow expectations, cash requirements for operations, investment plans (including acquisitions), share repurchase activities, overall cost of capital, and targeted capital structure. Outstanding borrowings decreased to $30.1 billion as of April 30, 2012 as compared to $30.6 billion at October 31, 2011, bearing weighted average interest rates of 2.9% and 2.4%, respectively. During the first six months of fiscal 2012, we issued $6.8 billion and repaid $9.7 billion of commercial paper. We also issued $5.0 billion in U.S. Dollar Global Notes under the 2009 Shelf Registration Statement and repaid $2.5 billion U.S Dollar Global Notes.

        We have $1.6 billion in U.S. Dollar Global Notes that will mature during the remainder of fiscal 2012. We expect to use a combination of cash from operations and our available borrowing resources to repay those maturing Global Notes.

        Our weighted-average interest rate reflects the average effective rate on our borrowings prevailing during the period; it factors in the impact of swapping some of our Global Notes with fixed interest rates for global notes with floating interest rates. For more information on our interest rate swaps, see Note 8 to the Consolidated Condensed Financial Statements in Item 1, which is incorporated herein by reference.

        For more information on our borrowings, see Note 11 to the Consolidated Condensed Financial Statements in Item 1, which is incorporated herein by reference.

Available Borrowing Resources

        At April 30, 2012, we had the following resources available to obtain short-term or long-term financings if we need additional liquidity:

	At April 30, 2012
	In millions
2009 Shelf Registration Statement(1)		Unspecified
Commercial paper programs(1)	$	16,155
Uncommitted lines of credit(1)	$	1,300
Revolving trade receivables-based facilities(2)	$	725

⁽¹⁾

In May 2012, we filed a shelf registration statement (the "2012 Shelf Registration Statement") with the SEC to enable us to offer for sale, from time to time, in one or more offerings, an unspecified amount of debt securities, common stock, preferred stock, depositary shares and warrants. The 2012 Shelf Registration Statement replaced the 2009 Shelf Registration Statement, which expired in May 2012. For more information on our available borrowings resources, see Note 11 to the Consolidated Condensed Financial Statements in Item 1, which is incorporated herein by reference.

⁽²⁾

For more information on our revolving trade receivables-based facilities, see Note 4 to the Consolidated Condensed Financial Statements in Item 1, which is incorporated herein by reference.

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Credit Ratings

        Our credit risk is evaluated by three independent rating agencies based upon publicly available information as well as information obtained in our ongoing discussions with them. Standard & Poor's Ratings Services downgraded our short-term and long-term ratings on November 30, 2011, Fitch Ratings Services downgraded our long-term ratings on December 2, 2011 and Moody's Investors Service downgraded our short-term and long-term ratings on January 20, 2012. Accordingly, our ratings as of April 30, 2012 were:

	Standard & Poor's Ratings Services		Moody's Investors Service		Fitch Ratings Services
Short-term debt ratings		A-2		Prime-2		F1
Long-term debt ratings		BBB+		A3		A

        Our credit ratings remain under negative outlook by Fitch Ratings Services. While we do not have any rating downgrade triggers that would accelerate the maturity of a material amount of our debt, these downgrades have increased the cost of borrowing under our credit facilities, have reduced market capacity for our commercial paper, and may require the posting of additional collateral under some of our derivative contracts. In addition, any further downgrade in our credit ratings by any of the three rating agencies may further impact us in a similar manner, and, depending on the extent of the downgrade, could have a negative impact on our liquidity and capital position. We will rely on alternative sources of funding, including drawdowns under our credit facilities or the issuance of debt or other securities under our existing shelf registration statement, if necessary, to offset reductions in the market capacity for our commercial paper.

CONTRACTUAL AND OTHER OBLIGATIONS

Income Tax Obligations

        At April 30, 2012, we had approximately $2.2 billion of recorded liabilities and related interest and penalties pertaining to uncertainty in income tax positions, which will be partially offset by $279 million of deferred tax assets and interest receivable. These liabilities and related interest and penalties include $71 million expected to be paid within one year. For the remaining amount, we are unable to make a reasonable estimate as to when cash settlement with the tax authorities might occur due to the uncertainties related to these tax matters. See Note 12 to the Consolidated Condensed Financial Statements in Item 1, which is incorporated herein by reference, for additional information on taxes.

Restructuring Funding Commitments

        As a result of our approved restructuring plans, including the restructuring plan announced on May 23, 2012, we expect future cash expenditures of approximately $3.4 billion. We expect to make cash payments of approximately $0.7 billion in fiscal 2012 with remaining cash payments through fiscal 2016. See Note 6 and Note 17 to the Consolidated Condensed Financial Statements in Item 1, which are incorporated herein by reference, for additional information on restructuring activities.

Guarantees and Indemnifications

        For more information on liabilities that may arise from guarantees and indemnification, see Note 10 to the Consolidated Condensed Financial Statements in Item 1, which is incorporated herein by reference.

Litigation and Contingencies

        For more information on liabilities that may arise from litigation and contingencies, see Note 15 to the Consolidated Condensed Financial Statements in Item 1, which is incorporated herein by reference.

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Off-Balance Sheet Arrangements

        As part of our ongoing business, we have not participated in transactions that generate material relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities ("SPEs"), which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. As of April 30, 2012, we are not involved in any material unconsolidated SPEs.

        We have revolving trade receivables-based facilities permitting us to sell certain trade receivables to third parties on both a non-recourse and partial-recourse basis. The total aggregate capacity of the facilities was $1.4 billion as of April 30, 2012. For more information on our revolving trade receivables based facilities, see Note 4 to the Consolidated Condensed Financial Statements in Item 1, which is incorporated herein by reference.

FACTORS THAT COULD AFFECT FUTURE RESULTS

        Because of the following factors, as well as other variables affecting our operating results, past financial performance may not be a reliable indicator of future performance, and historical trends should not be used to anticipate results or trends in future periods.

If we are unsuccessful at improving our business execution and financial performance, aligning our cost structure and timely and effectively implementing business realignment and restructuring plans, our business and results of operations may be adversely affected, and our total costs and expenses could be greater than expected.

        We are working to improve our execution and financial performance and to align our cost structure with our revenue and margin profile. These efforts are designed to enable us to invest in our business to respond to industry shifts and capitalize on emerging opportunities in areas like cloud computing, security, and information management, and to better serve our customers and partners in both the short- and long-term. As part of these efforts, we are evaluating all of our businesses and looking for specific areas in which to improve our performance and effectiveness and to rationalize costs. For example, we are streamlining operations, optimizing and reducing complexity in our supply chain, removing unnecessary complexity from the way we design, manufacture, and deliver products, and upgrading, standardizing and automating our sales tools and other key systems and processes. We have also undertaken a multi-year initiative to turn around our services business, including expanding into higher margin enterprise services and improving resource utilization. In addition, we are realigning the organizational structure of our business, including consolidating our personal computer and printing businesses under the same senior executive leadership, consolidating our global accounts sales organization into ESSN and centralizing our marketing and communications activities. We may experience delays in the anticipated timing of activities related to these efforts and higher than expected or unanticipated costs in implementing them. In addition, we are vulnerable to increased risks associated with implementing these changes given our large portfolio of businesses, the broad range of geographic regions in which we and our customers and partners operate, and the number of acquisitions that we have completed in recent years. If we do not succeed in these efforts, or if these efforts are more costly or time-consuming than expected, our business and results of operations may be adversely affected, which could limit our ability to invest in and grow our business.

        In May 2012, we announced a company-wide restructuring expected to be implemented through the end of fiscal 2014. The restructuring plan includes both a voluntary early retirement program for eligible U.S. employees and non-voluntary workforce reductions and is expected to result in 27,000 employees exiting the company by the end of that period. We also implemented a multi-year restructuring plan in the third quarter of fiscal 2010 relating to our enterprise services business. Significant risks associated with these actions and other workforce management issues that may impair our ability to achieve anticipated cost reductions or that may otherwise harm our business include

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delays in implementation of anticipated workforce reductions in highly regulated locations outside of the United States, particularly in Europe and Asia, decreases in employee morale and the failure to meet operational targets due to the loss of employees. In addition, our ability to achieve the anticipated cost savings and other benefits from these actions within the expected time frame is subject to many estimates and assumptions. These estimates and assumptions are subject to significant economic, competitive and other uncertainties, some of which are beyond our control. If these estimates and assumptions are incorrect, if we experience delays, or if other unforeseen events occur, our business and results of operations could be adversely affected.

Competitive pressures could harm our revenue, gross margin and prospects.

        We encounter aggressive competition from numerous and varied competitors in all areas of our business, and our competitors may target our key market segments. We compete primarily on the basis of technology, performance, price, quality, reliability, brand, reputation, distribution, range of products and services, ease of use of our products, account relationships, customer training, service and support, security, availability of application software, and Internet infrastructure offerings. If our products, services, support and cost structure do not enable us to compete successfully based on any of those criteria, our operations, results and prospects could be harmed.

        Unlike many of our competitors, we have a portfolio of businesses and must allocate resources across these businesses while competing with companies that specialize in one or more of these product lines. As a result, we may invest less in certain areas of our businesses than our competitors do, and these competitors may have greater financial, technical and marketing resources available to them than our businesses that compete against them. Industry consolidation also may affect competition by creating larger, more homogeneous and potentially stronger competitors in the markets in which we compete, and our competitors also may affect our business by entering into exclusive arrangements with existing or potential customers or suppliers.

        Companies with whom we have alliances in some areas may be competitors in other areas. For example, in the second quarter of fiscal 2011, an alliance partner that also markets a line of competing servers announced that it intends to cease software development for our Itanium-based servers, which has resulted in orders for our servers being canceled or delayed. If that decision is not reversed or if another solution is not successfully implemented, there would be reduced demand for our Itanium-based servers over the longer term. In addition, companies with whom we have alliances also may acquire or form alliances with our competitors, thereby reducing their business with us. Any inability to effectively manage these complicated relationships with alliance partners could have an adverse effect on our results of operations.

        We may have to continue lowering the prices of many of our products and services to stay competitive, while at the same time trying to maintain or improve revenue and gross margin. The markets in which we do business, particularly the personal computer and printing markets, are highly competitive, and we encounter aggressive price competition for all of our products and services from numerous companies globally. Over the past several years, price competition in the market for personal computers, printers and related products has been particularly intense as competitors have aggressively cut prices and lowered their product margins for these products. In addition, competitors in some of the markets in which we compete with a greater presence in lower-cost jurisdictions may be able to offer lower prices than we are able to offer. Our results of operations and financial condition may be adversely affected by these and other industry-wide pricing pressures.

        Because our business model is based on providing innovative and high quality products, we may spend a proportionately greater amount on research and development than some of our competitors. If we cannot proportionately decrease our cost structure on a timely basis in response to competitive price pressures, our gross margin and, therefore, our profitability could be adversely affected. In addition, if our pricing and other factors are not sufficiently competitive, or if there is an adverse reaction to our

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product decisions, we may lose market share in certain areas, which could adversely affect our revenue and prospects.

        Even if we are able to maintain or increase market share for a particular product, revenue could decline because the product is in a maturing industry. Revenue and margins also could decline due to increased competition from other types of products. For example, growing demand for an increasing array of mobile computing devices and the development of cloud-based solutions may reduce demand for some of our existing hardware products. In addition, refill and remanufactured alternatives for some of HP's LaserJet toner and inkjet cartridges compete with HP's supplies business. Other companies have also developed and marketed new compatible cartridges for HP's LaserJet and inkjet products, particularly in jurisdictions outside of the United States where adequate intellectual property protection may not exist.

If we cannot successfully execute on our strategy and continue to develop, manufacture and market products, services and solutions that meet customer requirements for innovation and quality, our revenue and gross margin may suffer.

        Our long-term strategy is focused on leveraging our portfolio of hardware, software and services as we adapt to a changing/hybrid model of IT delivery and consumption driven by the growing adoption of cloud computing and increased demand for integrated IT solutions. To successfully execute on this strategy, we need to continue to evolve our historically hardware-centric business model towards a model that includes more software and higher value services offerings. In addition, we need to continue to further evolve the focus of our organization towards the delivery of integrated IT solutions for our customers. Any failure to successfully execute this strategy could adversely affect our operating results.

        The process of developing new high technology products, services and solutions and enhancing existing products, services and solutions is complex, costly and uncertain, and any failure by us to anticipate customers' changing needs and emerging technological trends accurately could significantly harm our market share and results of operations. For example, as we transition to an environment characterized by cloud-based computing and software being delivered as a service, we must continue to successfully develop and deploy cloud-based solutions for our customers. We must make long-term investments, develop or obtain appropriate intellectual property and commit significant resources before knowing whether our predictions will accurately reflect customer demand for our products, services and solutions. In addition, after we develop a product, we must be able to manufacture appropriate volumes quickly and at low costs. To accomplish this, we must accurately forecast volumes, mixes of products and configurations that meet customer requirements, and we may not succeed at doing so within a given product's life cycle or at all. Any delay in the development, production or marketing of a new product, service or solution could result in us not being among the first to market, which could further harm our competitive position.

        In the course of conducting our business, we must adequately address quality issues associated with our products, services and solutions, including defects in our engineering, design and manufacturing processes and unsatisfactory performance under service contracts, as well as defects in third party components included in our products and unsatisfactory performance by third-party contractors. In order to address quality issues, we work extensively with our customers and suppliers and engage in product testing to determine the causes of problems and to determine appropriate solutions. However, the products, and services and solutions that we offer are complex, and our regular testing and quality control efforts may not be effective in controlling or detecting all quality issues or errata, particularly with respect to faulty components manufactured by third parties. If we are unable to determine the cause, find an appropriate solution or offer a temporary fix (or "patch") to address quality issues with our products, we may delay shipment to customers, which would delay revenue recognition and could adversely affect our revenue and reported results. Addressing quality issues can be expensive and may result in additional warranty, replacement and other costs, adversely affecting our profits. If new or

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existing customers have difficulty operating our products or are dissatisfied with our services or solutions, our operating margins could be adversely affected, and we could face possible claims if we fail to meet our customers' expectations. In addition, quality issues can impair our relationships with new or existing customers and adversely affect our brand and reputation, which could adversely affect our operating results.

Economic weakness and uncertainty could adversely affect our revenue, gross margin and expenses.

        Our revenue and gross margin depend significantly on worldwide economic conditions and the demand for technology hardware, software and services in the markets in which we compete. Economic weakness and uncertainty, including the ongoing macroeconomic challenges in the United States and the debt crisis in certain countries in the European Union, have resulted, and may result in the future, in decreased revenue, gross margin, earnings or growth rates and in difficulty managing inventory levels. In addition, sustained uncertainty about current global economic conditions may adversely affect demand for our products and services. Economic weakness and uncertainty also make it more difficult for us to make accurate forecasts of revenue, gross margin and expenses.

        We also have experienced, and may experience in the future, gross margin declines in certain businesses, reflecting the effect of items such as competitive pricing pressures, inventory write-downs and increases in component and manufacturing costs resulting from higher labor and material costs borne by our manufacturers and suppliers that, as a result of competitive pricing pressures or other factors, we are unable to pass on to our customers. In addition, our business may be disrupted if we are unable to obtain equipment, parts or components from our suppliers—and our suppliers from their suppliers—due to the insolvency of key suppliers or the inability of key suppliers to obtain credit.

        Economic weakness and uncertainty could cause our expenses to vary materially from our expectations. Any financial turmoil affecting the banking system and financial markets or any significant financial services institution failures could negatively impact our treasury operations, as the financial condition of such parties may deteriorate rapidly and without notice in times of market volatility and disruption. Poor financial performance of asset markets could lead to increased pension and post-retirement benefit expenses. Other income and expense could vary materially from expectations depending on changes in interest rates, borrowing costs, currency exchange rates, hedging expenses and the fair value of derivative instruments. Economic downturns also may lead to restructuring actions and associated expenses.

We depend on third-party suppliers, and our revenue and gross margin could suffer if we fail to manage suppliers properly.

        Our operations depend on our ability to anticipate our needs for components, products and services and our suppliers' ability to deliver sufficient quantities of quality components, products and services at reasonable prices in time for us to meet critical schedules. Given the wide variety of systems, products and services that we offer, the large number of our suppliers and contract manufacturers that are dispersed across the globe, and the long lead times that are required to manufacture, assemble and deliver certain components and products, problems could arise in planning production and managing inventory levels that could seriously harm us. In addition, our ongoing efforts to optimize the efficiency of our supply chain could cause supply disruptions and be more expensive, time-consuming and resource intensive than expected. Other supplier problems that we could face include component shortages, excess supply, risks related to the terms of our contracts with suppliers, risks associated with contingent workers, and risks related to our relationships with single source suppliers, as described below.

•

Shortages.  Occasionally we may experience a shortage of, or a delay in receiving, certain components as a result of strong demand, capacity constraints, supplier financial weaknesses, inability of suppliers to borrow funds in the credit markets, disputes with suppliers (some of

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whom are also customers), disruptions in the operations of component suppliers, other problems experienced by suppliers or problems faced during the transition to new suppliers. For example, as discussed under "Business disruptions could seriously harm our future revenue and financial condition and increase our costs and expenses" below, we obtain disk drive components from suppliers with operations in Thailand that have been severely impacted by the recent floods in that region, which caused a short-term reduction in the supply of those components in the first half of our 2012 fiscal year. In addition, our PC business relies heavily upon Outsourced Manufacturers ("OMs") to manufacture its products and is therefore dependent upon the continuing operations of those OMs to fulfill demand for our PC products. HP represents a substantial portion of the business of some of these OMs, and any changes to the nature or volume of business transacted by HP with a particular OM could adversely affect the operations and financial condition of the OM and lead to shortages or delays in receiving products from that OM. If shortages or delays persist, the price of these components may increase, and we may be exposed to quality issues or the components may not be available at all. We may not be able to secure enough components at reasonable prices or of acceptable quality to build products or provide services in a timely manner in the quantities or according to the specifications needed. Accordingly, our revenue and gross margin could suffer as we could lose time-sensitive sales, incur additional freight costs or be unable to pass on price increases to our customers. If we cannot adequately address supply issues, we might have to reengineer some products or service offerings, resulting in further costs and delays.

•

Oversupply.  In order to secure components for the provision of products or services, at times we may make advance payments to suppliers or enter into non-cancelable commitments with vendors. In addition, we may purchase components strategically in advance of demand to take advantage of favorable pricing or to address concerns about the availability of future components. If we fail to anticipate customer demand properly, a temporary oversupply could result in excess or obsolete components, which could adversely affect our gross margin.

•

Contractual terms.  As a result of binding price or purchase commitments with vendors, we may be obligated to purchase components or services at prices that are higher than those available in the current market and be limited in our ability to respond to changing market conditions. In the event that we become committed to purchase components or services for prices in excess of the current market price, we may be at a disadvantage to competitors who have access to components or services at lower prices, and our gross margin could suffer. In addition, many of our competitors obtain products or components from the same OMs and suppliers that we utilize. Our competitors may obtain better pricing and other terms and more favorable allocations of products and components during periods of limited supply, and our ability to engage in relationships with certain OMs and suppliers could be limited. The practice employed by our PC business of purchasing product components and transferring those components to its OMs may create large supplier receivables with the OMs that, depending on the financial condition of the OMs, may have risk of uncollectability. In addition, certain of our OMs and suppliers may decide in the future to discontinue conducting business with us. Any of these actions by our competitors, OMs or suppliers could adversely affect our future operating results and financial condition.

•

Contingent workers.  We also rely on third-party suppliers for the provision of contingent workers, and our failure to manage our use of such workers effectively could adversely affect our results of operations. We have been exposed to various legal claims relating to the status of contingent workers in the past and could face similar claims in the future. We may be subject to shortages, oversupply or fixed contractual terms relating to contingent workers, as described above. Our ability to manage the size of, and costs associated with, the contingent workforce may be subject to additional constraints imposed by local laws.

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•

Single source suppliers.  Our use of single source suppliers for certain components could exacerbate our supplier issues. We obtain a significant number of components from single sources due to technology, availability, price, quality or other considerations. For example, we rely on Intel to provide us with a sufficient supply of processors for many of our PCs, workstations and servers, and some of those processors are customized for our products. New products that we introduce may utilize custom components obtained from only one source initially until we have evaluated whether there is a need for additional suppliers. Replacing a single source supplier could delay production of some products as replacement suppliers initially may be subject to capacity constraints or other output limitations. For some components, such as customized components and some of the processors that we obtain from Intel, alternative sources may not exist or those alternative sources may be unable to produce the quantities of those components necessary to satisfy our production requirements. In addition, we sometimes purchase components from single source suppliers under short-term agreements that contain favorable pricing and other terms but that may be unilaterally modified or terminated by the supplier with limited notice and with little or no penalty. The performance of such single source suppliers under those agreements (and the renewal or extension of those agreements upon similar terms) may affect the quality, quantity or price of components to HP. The loss of a single source supplier, the deterioration of our relationship with a single source supplier, or any unilateral modification to the contractual terms under which we are supplied components by a single source supplier could adversely affect our revenue and gross margins.

Business disruptions could seriously harm our future revenue and financial condition and increase our costs and expenses.

        Our worldwide operations could be disrupted by earthquakes, telecommunications failures, power or water shortages, tsunamis, floods, hurricanes, typhoons, fires, extreme weather conditions, medical epidemics or pandemics and other natural or manmade disasters or catastrophic events, for which we are predominantly self-insured. The occurrence of any of these business disruptions could result in significant losses, seriously harm our revenue and financial condition, adversely affect our competitive position, increase our costs and expenses, and require substantial expenditures and recovery time in order to fully resume operations. Our corporate headquarters and a portion of our research and development activities are located in California, and other critical business operations and some of our suppliers are located in California and Asia, near major earthquake faults known for seismic activity. In addition, all six of our principal worldwide IT data centers are located in the southern United States, making our operations more vulnerable to natural disasters or other business disruptions occurring in that geographical area. The manufacture of product components, the final assembly of our products and other critical operations are concentrated in certain geographic locations, including Shanghai, Singapore and India. We also rely on major logistics hubs primarily in Asia to manufacture and distribute our products and in the southwestern United States to import products into the Americas region. Our operations could be adversely affected if manufacturing, logistics or other operations in these locations are disrupted for any reason, including natural disasters, information technology system failures, military actions or economic, business, labor, environmental, public health, regulatory or political issues. The ultimate impact on us, our significant suppliers and our general infrastructure of being located near major earthquake faults and being consolidated in certain geographical areas is unknown. However in the event of a major earthquake or other natural disaster or catastrophic event, our revenue, profitability and financial condition could suffer.

        Thailand has recently experienced severe flooding that has caused widespread damage to the local manufacturing industry. We obtain disk drive components used in our PCs, servers and storage devices from suppliers with operations in Thailand that have been severely impacted by the flooding. We have experienced short-term shortages in the supply of these disk drive components, which adversely affected our revenue, gross margins and results of operations in the first half of fiscal 2012. While we currently

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expect to experience minimal shortages during the remainder of fiscal 2012, those shortages could be more significant than expected. If we are unable to support our ongoing demand for disk drive components, our revenue, gross margins and results of operations may continue to be adversely affected.

System security risks, data protection breaches, cyber attacks and systems integration issues could disrupt our internal operations or information technology services provided to customers, and any such disruption could reduce our expected revenue, increase our expenses, damage our reputation and adversely affect our stock price.

        Experienced computer programmers and hackers may be able to penetrate our network security and misappropriate or compromise our confidential information or that of third parties, create system disruptions or cause shutdowns. Computer programmers and hackers also may be able to develop and deploy viruses, worms, and other malicious software programs that attack our products or otherwise exploit any security vulnerabilities of our products. In addition, sophisticated hardware and operating system software and applications that we produce or procure from third parties may contain defects in design or manufacture, including "bugs" and other problems that could unexpectedly interfere with the operation of the system. The costs to us to eliminate or alleviate cyber or other security problems, bugs, viruses, worms, malicious software programs and security vulnerabilities could be significant, and our efforts to address these problems may not be successful and could result in interruptions, delays, cessation of service and loss of existing or potential customers that may impede our sales, manufacturing, distribution or other critical functions.

        We manage and store various proprietary information and sensitive or confidential data relating to our business. In addition, our outsourcing services business routinely processes, stores and transmits large amounts of data for our clients, including sensitive and personally identifiable information. Breaches of our security measures or the accidental loss, inadvertent disclosure or unapproved dissemination of proprietary information or sensitive or confidential data about us or our clients, including the potential loss or disclosure of such information or data as a result of fraud, trickery or other forms of deception, could expose us, our customers or the individuals affected to a risk of loss or misuse of this information, result in litigation and potential liability for us, damage our brand and reputation or otherwise harm our business. We also could lose existing or potential customers for outsourcing services or other IT solutions or incur significant expenses in connection with our customers' system failures or any actual or perceived security vulnerabilities in our products. In addition, the cost and operational consequences of implementing further data protection measures could be significant.

        Portions of our IT infrastructure also may experience interruptions, delays or cessations of service or produce errors in connection with systems integration or migration work that takes place from time to time. We may not be successful in implementing new systems and transitioning data, which could cause business disruptions and be more expensive, time-consuming, disruptive and resource intensive. Such disruptions could adversely impact our ability to fulfill orders and interrupt other processes. Delayed sales, lower margins or lost customers resulting from these disruptions have adversely affected in the past, and in the future could adversely affect, our financial results, stock price and reputation.

The revenue and profitability of our operations have historically varied, which makes our future financial results less predictable.

        Our revenue, gross margin and profit vary among our products and services, customer groups and geographic markets and therefore will likely be different in future periods than our current results. Our revenue depends on the overall demand for our products and services. Delays or reductions in IT spending could materially adversely affect demand for our products and services, which could result in a significant decline in revenues. Overall gross margins and profitability in any given period are

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dependent partially on the product, service, customer and geographic mix reflected in that period's net revenue. Competition, lawsuits, investigations and other risks affecting those businesses therefore may have a significant impact on our overall gross margin and profitability. Certain segments have a higher fixed cost structure and more variation in gross margins across their business units and product portfolios than others and may therefore experience significant operating profit volatility on a quarterly basis. In addition, newer geographic markets may be relatively less profitable due to investments associated with entering those markets and local pricing pressures, and we may have difficulty establishing and maintaining the operating infrastructure necessary to support the high growth rate associated with some of those markets. Market trends, industry shifts, competitive pressures, commoditization of products, seasonal rebates, increased component or shipping costs, regulatory impacts and other factors may result in reductions in revenue or pressure on gross margins of certain segments in a given period, which may necessitate adjustments to our operations. Moreover, the implementation of the company-wide restructuring announced in May 2012 and our other efforts to improve our business execution and financial performance could increase the level of variability in our financial results, as the rate at which we are able to realize savings and the degree of progress that we are able to achieve in improving our execution will vary from period to period.

HP's stock price has historically fluctuated and may continue to fluctuate, which may make future prices of HP's stock difficult to predict.

        HP's stock price, like that of other technology companies, can be volatile. Some of the factors that could affect our stock price are:

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speculation in the media or investment community about, or actual changes in, our business, strategic position, market share, organizational structure, operations, financial condition, financial reporting and results, effectiveness of cost-cutting efforts, value or liquidity of our investments, exposure to market volatility, prospects, business combination or investment transactions, stock price performance or executive team;

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the announcement of new or planned products, services, technological innovations, acquisitions, divestitures or other significant transactions by HP or its competitors;

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quarterly increases or decreases in revenue, gross margin, earnings or cash flow from operations, changes in estimates by the investment community or guidance provided by HP, and variations between actual and estimated financial results;

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announcements of actual and anticipated financial results by HP's competitors and other companies in the IT industry; and

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the timing and amount of share repurchases by HP.

        General or industry specific market conditions or stock market performance or domestic or international macroeconomic and geopolitical factors unrelated to HP's performance also may affect the price of HP stock. For these reasons, investors should not rely on recent or historical trends to predict future stock prices, financial condition, results of operations or cash flows. In addition, following periods of volatility in a company's securities, securities class action litigation against a company is sometimes instituted. If instituted against HP, this type of litigation could result in substantial costs and the diversion of management time and resources.

Our revenue, cost of sales, and expenses may suffer if we cannot continue to license or enforce the intellectual property rights on which our businesses depend or if third parties assert that we violate their intellectual property rights.

        We rely upon patent, copyright, trademark and trade secret laws in the United States, similar laws in other countries, and agreements with our employees, customers, suppliers and other parties, to

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establish and maintain intellectual property rights in the products and services we sell, provide or otherwise use in our operations. However, any of our intellectual property rights could be challenged, invalidated, infringed or circumvented, or such intellectual property rights may not be sufficient to permit us to take advantage of current market trends or otherwise to provide competitive advantages, either of which could result in costly product redesign efforts, discontinuance of certain product offerings or other competitive harm. Further, the laws of certain countries do not protect proprietary rights to the same extent as the laws of the United States. Therefore, in certain jurisdictions we may be unable to protect our proprietary technology adequately against unauthorized third-party copying or use; this, too, could adversely affect our competitive position.

        Because of the rapid pace of technological change in the information technology industry, much of our business and many of our products rely on key technologies developed or licensed by third parties. We may not be able to obtain or continue to obtain licenses and technologies from these third parties at all or on reasonable terms, or such third parties may demand cross licenses to our intellectual property. In addition, it is possible that as a consequence of a merger or acquisition, third parties may obtain licenses to some of our intellectual property rights or our business may be subject to certain restrictions that were not in place prior to the transaction. Consequently, we may lose a competitive advantage with respect to these intellectual property rights or we may be required to enter into costly arrangements in order to terminate or limit these rights.

        Third parties also may claim that we or customers indemnified by us are infringing upon their intellectual property rights. For example, individuals and groups frequently purchase intellectual property assets for the purpose of asserting claims of infringement and attempting to extract settlements from companies such as HP and their customers. The number of these claims has increased significantly in recent periods and may continue to increase in the future. If we cannot or do not license infringed intellectual property at all or on reasonable terms, or if we are required to substitute similar technology from another source, our operations could be adversely affected. Even if we believe that intellectual property claims are without merit, they can be time-consuming and costly to defend and may divert management's attention and resources away from our business. Claims of intellectual property infringement also might require us to redesign affected products, enter into costly settlement or license agreements, pay costly damage awards, or face a temporary or permanent injunction prohibiting us from importing, marketing or selling certain of our products. Even if we have an agreement to indemnify us against such costs, the indemnifying party may be unable or unwilling to uphold its contractual obligations to us.

        Finally, our results of operations and cash flows have been and could continue to be affected in certain periods and on an ongoing basis by the imposition, accrual and payment of copyright levies or similar fees. In certain countries (primarily in Europe), proceedings are ongoing or have been concluded involving HP in which groups representing copyright owners have sought to impose upon and collect from HP levies upon equipment (such as PCs, MFDs and printers) alleged to be copying devices under applicable laws. Other such groups have also sought to modify existing levy schemes to increase the amount of the levies that can be collected from HP. Other countries that have not imposed levies on these types of devices are expected to extend existing levy schemes, and countries that do not currently have levy schemes may decide to impose copyright levies on these types of devices. The total amount of the copyright levies will depend on the types of products determined to be subject to the levy, the number of units of those products sold during the period covered by the levy, and the per unit fee for each type of product, all of which are affected by several factors, including the outcome of ongoing litigation involving HP and other industry participants and possible action by the legislative bodies in the applicable countries, and could be substantial. Consequently, the ultimate impact of these copyright levies or similar fees, and the ability of HP to recover such amounts through increased prices, remains uncertain.

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Due to the international nature of our business, political or economic changes or other factors could harm our future revenue, costs and expenses and financial condition.

        Sales outside the United States make up approximately 65% of our net revenue. In addition, an increasing portion of our business activity is being conducted in emerging markets, including Brazil, Russia, India and China. Our future revenue, gross margin, expenses and financial condition could suffer due to a variety of international factors, including:

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ongoing instability or changes in a country's or region's economic or political conditions, including inflation, recession, interest rate fluctuations and actual or anticipated military or political conflicts;

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longer collection cycles and financial instability among customers;

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trade regulations and procedures and actions affecting production, pricing and marketing of products;

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local labor conditions and regulations, including local labor issues faced by specific HP suppliers and OMs;

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managing a geographically dispersed workforce;

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changes in the regulatory or legal environment;

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differing technology standards or customer requirements;

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import, export or other business licensing requirements or requirements relating to making foreign direct investments, which could increase our cost of doing business in certain jurisdictions, prevent us from shipping products to particular countries or markets, affect our ability to obtain favorable terms for components, increase our operating costs or lead to penalties or restrictions;

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difficulties associated with repatriating cash generated or held abroad in a tax-efficient manner and changes in tax laws; and

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fluctuations in freight costs, limitations on shipping and receiving capacity, and other disruptions in the transportation and shipping infrastructure at important geographic points of exit and entry for our products and shipments.

        The factors described above also could disrupt our product and component manufacturing and key suppliers located outside of the United States. For example, we rely on manufacturers in Taiwan for the production of notebook computers and other suppliers in Asia for product assembly and manufacture.

        As approximately 65% of our sales are from countries outside of the United States, other currencies, including the euro, the British pound, Chinese yuan renminbi and the Japanese yen, can have an impact on HP's results (expressed in U.S. dollars). In particular, the uncertainty with respect to the ability of certain European countries to continue to service their sovereign debt obligations and the related European financial restructuring efforts may cause the value of the euro to fluctuate. Currency variations also contribute to variations in sales of products and services in impacted jurisdictions. For example, in the event that one or more European countries were to replace the euro with another currency, HP sales into such countries, or into Europe generally, would likely be adversely affected until stable exchange rates are established. Accordingly, fluctuations in foreign currency rates, most notably the strengthening of the dollar against the euro, could adversely affect our revenue growth in future periods. In addition, currency variations can adversely affect margins on sales of our products in countries outside of the United States and margins on sales of products that include components obtained from suppliers located outside of the United States. We use a combination of forward contracts and options designated as cash flow hedges to protect against foreign currency exchange rate risks. The effectiveness of our hedges depends on our ability to accurately forecast future cash flows,

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which is particularly difficult during periods of uncertain demand for our products and services and highly volatile exchange rates. As a result, we could incur significant losses from our hedging activities if our forecasts are incorrect. In addition, our hedging activities may be ineffective or may not offset any or more than a portion of the adverse financial impact resulting from currency variations. Gains or losses associated with hedging activities also may impact our revenue and to a lesser extent our cost of sales and financial condition.

        In many foreign countries, particularly in those with developing economies, it is common to engage in business practices that are prohibited by laws and regulations applicable to us, such as the Foreign Corrupt Practices Act. For example, as discussed in Note 15 to the Consolidated Condensed Financial Statements, the German Public Prosecutor's Office, the U.S. Department of Justice and the SEC have been investigating allegations that certain current and former employees of HP engaged in bribery, embezzlement and tax evasion or were involved in kickbacks or other improper payments. Although we implement policies and procedures designed to facilitate compliance with these laws, our employees, contractors and agents, as well as those companies to which we outsource certain of our business operations, may take actions in violation of our policies. Any such violation could have an adverse effect on our business and reputation.

If we fail to manage the distribution of our products and services properly, our revenue, gross margin and profitability could suffer.

        We use a variety of distribution methods to sell our products and services, including third-party resellers and distributors and both direct and indirect sales to both enterprise accounts and consumers. Successfully managing the interaction of our direct and indirect channel efforts to reach various potential customer segments for our products and services is a complex process. Moreover, since each distribution method has distinct risks and gross margins, our failure to implement the most advantageous balance in the delivery model for our products and services could adversely affect our revenue and gross margins and therefore our profitability. Other distribution risks are described below.

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Our financial results could be materially adversely affected due to channel conflicts or if the financial conditions of our channel partners were to weaken.

Our future operating results may be adversely affected by any conflicts that might arise between our various sales channels, the loss or deterioration of any alliance or distribution arrangement or the loss of retail shelf space. Moreover, some of our wholesale and retail distributors may have insufficient financial resources and may not be able to withstand changes in business conditions, including economic weakness and industry consolidation. Many of our significant distributors operate on narrow product margins and have been negatively affected by business pressures. Considerable trade receivables that are not covered by collateral or credit insurance are outstanding with our distribution and retail channel partners. Revenue from indirect sales could suffer, and we could experience disruptions in distribution if our distributors' financial conditions, abilities to borrow funds in the credit markets or operations weaken.

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Our inventory management is complex as we continue to sell a significant mix of products through distributors.

We must manage inventory effectively, particularly with respect to sales to distributors, which involves forecasting demand and pricing issues. Distributors may increase orders during periods of product shortages, cancel orders if their inventory is too high or delay orders in anticipation of new products. Distributors also may adjust their orders in response to the supply of our products and the products of our competitors and seasonal fluctuations in end-user demand. Our reliance upon indirect distribution methods may reduce visibility to demand and pricing issues, and therefore make forecasting more difficult. If we have excess or obsolete inventory, we may have to reduce our prices and write down inventory. Moreover, our use of indirect distribution

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channels may limit our willingness or ability to adjust prices quickly and otherwise to respond to pricing changes by competitors. We also may have limited ability to estimate future product rebate redemptions in order to price our products effectively.

If we do not effectively manage our product and services transitions, our revenue may suffer.

        Many of the markets in which we compete are characterized by rapid technological advances in hardware performance and software features and functionality, frequent introduction of new products, short product life cycles, and continual improvement in product price characteristics relative to product performance. To maintain our competitive position in these markets, we must successfully develop and introduce new products and services. Among the risks associated with the introduction of new products and services are delays in development or manufacturing, variations in costs, delays in customer purchases or reductions in price of existing products in anticipation of new introductions, difficulty in predicting customer demand for the new offerings and effectively managing inventory levels so that they are in line with anticipated demand, risks associated with customer qualification and evaluation of new products and the risk that new products may have quality or other defects or may not be supported adequately by application software. If we do not make an effective transition from existing products and services to future offerings, our revenue may decline.

        Our revenue and gross margin also may suffer due to the timing of product or service introductions by our suppliers and competitors. This is especially challenging when a product has a short life cycle or a competitor introduces a new product just before our own product introduction. Furthermore, sales of our new products and services may replace sales, or result in discounting of some of our current offerings, offsetting the benefit of even a successful introduction. There also may be overlaps in the current products and services of HP and portfolios acquired through mergers and acquisitions that we must manage. In addition, it may be difficult to ensure performance of new customer contracts in accordance with our revenue, margin and cost estimates and to achieve operational efficiencies embedded in our estimates. Given the competitive nature of our industry, if any of these risks materializes, future demand for our products and services and our results of operations may suffer.

Our revenue and profitability could suffer if we do not manage the risks associated with our services business properly.

        The risks that accompany our services business differ from those of our other businesses and include the following:

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The pricing and other terms of some of our IT services agreements, particularly our long-term IT outsourcing services agreements, require us to make estimates and assumptions at the time we enter into these contracts that could differ from actual results. Any increased or unexpected costs or unanticipated delays in connection with the performance of these engagements, including delays caused by factors outside our control, could make these agreements less profitable or unprofitable, which would have an adverse affect on the profit margin of our IT services business.

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Some of our IT services agreements require significant investment in the early stages that is expected to be recovered through billings over the life of the agreement. These agreements often involve the construction of new IT systems and communications networks and the development and deployment of new technologies. Substantial performance risk exists in each agreement with these characteristics, and some or all elements of service delivery under these agreements are dependent upon successful completion of the development, construction and deployment phases. Any failure to perform satisfactorily under these agreements may expose us to legal liability, result in the loss of customers and harm our reputation, which could decrease the revenues and profitability of our IT services business.

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Some of our outsourcing services agreements contain pricing provisions that permit a client to request a benchmark study by a mutually acceptable third party. The benchmarking process typically compares the contractual price of our services against the price of similar services offered by other specified providers in a peer comparison group, subject to agreed upon adjustment and normalization factors. Generally, if the benchmarking study shows that our pricing has a difference outside a specified range, and the difference is not due to the unique requirements of the client, then the parties will negotiate in good faith any appropriate adjustments to the pricing. This may result in the reduction of our rates for the benchmarked services performed after the implementation of those pricing adjustments, which could decrease the revenues and profitability of our IT services business.

If we fail to comply with our customer contracts or government contracting regulations, our revenue could suffer.

        Our contracts with our customers may include unique and specialized performance requirements. In particular, our contracts with federal, state, provincial and local governmental customers are subject to various procurement regulations, contract provisions and other requirements relating to their formation, administration and performance. Any failure by us to comply with the specific provisions in our customer contracts or any violation of government contracting regulations could result in the imposition of various civil and criminal penalties, which may include termination of contracts, forfeiture of profits, suspension of payments and, in the case of our government contracts, fines and suspension from future government contracting. In addition, we have in the past been, and may in the future be, subject to qui tam litigation brought by private individuals on behalf of the government relating to our government contracts, which could include claims for up to treble damages. Further, any negative publicity related to our customer contracts or any proceedings surrounding them, regardless of its accuracy, may damage our business by affecting our ability to compete for new contracts. If our customer contracts are terminated, if we are suspended or disbarred from government work, or if our ability to compete for new contracts is adversely affected, we could suffer a reduction in expected revenue.

Failure to maintain our credit ratings could adversely affect our liquidity, capital position, borrowing costs and access to capital markets.

        Our credit risk is evaluated by three independent rating agencies. Those rating agencies, Standard & Poor's Ratings Services, Fitch Ratings Services and Moody's Investors Service, downgraded our ratings on November 30, 2011, December 2, 2011 and January 20, 2012, respectively. Our credit ratings remain under negative outlook by Fitch Ratings Services. These downgrades have increased the cost of borrowing under our credit facilities, have reduced market capacity for our commercial paper, and may require the posting of additional collateral under some of our derivative contracts. There can be no assurance that we will be able to maintain our current credit ratings, and any additional actual or anticipated changes or downgrades in our credit ratings, including any announcement that our ratings are under further review for a downgrade, may further impact us in a similar manner and may have a negative impact on our liquidity, capital position and access to capital markets.

We make estimates and assumptions in connection with the preparation of HP's Consolidated Condensed Financial Statements, and any changes to those estimates and assumptions could adversely affect our results of operations.

        In connection with the preparation of HP's Consolidated Condensed Financial Statements, we use certain estimates and assumptions based on historical experience and other factors. Our most critical accounting estimates are described in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in this report. In addition, as discussed in Note 15 to the Consolidated Condensed Financial Statements, we make certain estimates, including decisions related to provisions

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for legal proceedings and other contingencies. While we believe that these estimates and assumptions are reasonable under the circumstances, they are subject to significant uncertainties, some of which are beyond our control. Should any of these estimates and assumptions change or prove to have been incorrect, it could adversely affect our results of operations.

Unanticipated changes in HP's tax provisions, the adoption of new tax legislation or exposure to additional tax liabilities could affect our profitability.

        We are subject to income and other taxes in the United States and numerous foreign jurisdictions. Our tax liabilities are affected by the amounts we charge for inventory, services, licenses, funding and other items in intercompany transactions. We are subject to ongoing tax audits in various jurisdictions. Tax authorities may disagree with our intercompany charges, cross jurisdictional transfer pricing or other matters and assess additional taxes. We regularly assess the likely outcomes of these audits in order to determine the appropriateness of our tax provision. However, there can be no assurance that we will accurately predict the outcomes of these audits, and the amounts ultimately paid upon resolution of audits could be materially different from the amounts previously included in our income tax expense and therefore could have a material impact on our tax provision, net income and cash flows. In addition, our effective tax rate in the future could be adversely affected by changes to our operating structure, changes in the mix of earnings in countries with differing statutory tax rates, changes in the valuation of deferred tax assets and liabilities, changes in tax laws and the discovery of new information in the course of our tax return preparation process. In particular, the carrying value of deferred tax assets, which are predominantly in the United States, is dependent on our ability to generate future taxable income in the United States. In addition, President Obama's administration has announced proposals for other U.S. tax legislation that, if adopted, could adversely affect our tax rate. There are also other tax proposals that have been introduced, that are being considered, or that have been enacted by the United States Congress or the legislative bodies in foreign jurisdictions that could affect our tax rate, the carrying value of deferred tax assets, or our other tax liabilities. Any of these changes could affect our profitability.

Our sales cycle makes planning and inventory management difficult and future financial results less predictable.

        In some of our segments, our quarterly sales often have reflected a pattern in which a disproportionate percentage of each quarter's total sales occurs towards the end of such quarter. This uneven sales pattern makes prediction of revenue, earnings, cash flow from operations and working capital for each financial period difficult, increases the risk of unanticipated variations in quarterly results and financial condition and places pressure on our inventory management and logistics systems. If predicted demand is substantially greater than orders, there will be excess inventory. Alternatively, if orders substantially exceed predicted demand, we may not be able to fulfill all of the orders received in the last few weeks of each quarter. Other developments late in a quarter, such as a systems failure, component pricing movements, component shortages or global logistics disruptions, could adversely impact inventory levels and results of operations in a manner that is disproportionate to the number of days in the quarter affected.

        We experience some seasonal trends in the sale of our products that also may produce variations in quarterly results and financial condition. For example, sales to governments (particularly sales to the U.S. government) are often stronger in the third calendar quarter, consumer sales are often stronger in the fourth calendar quarter, and many customers whose fiscal and calendar years are the same spend their remaining capital budget authorizations in the fourth calendar quarter prior to new budget constraints in the first calendar quarter of the following year. European sales are often weaker during the summer months. Demand during the spring and early summer also may be adversely impacted by market anticipation of seasonal trends. Moreover, to the extent that we introduce new products in anticipation of seasonal demand trends, our discounting of existing products may adversely affect our

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gross margin prior to or shortly after such product launches. Typically, our third fiscal quarter is our weakest and our fourth fiscal quarter is our strongest. Many of the factors that create and affect seasonal trends are beyond our control.

In order to be successful, we must attract, retain, train, motivate, develop and transition key employees, and failure to do so could seriously harm us.

        In order to be successful, we must attract, retain, train, motivate, develop and transition qualified executives and other key employees, including those in managerial, technical, sales, marketing and IT support positions. Identifying, developing internally or hiring externally, training and retaining qualified executives, engineers, skilled solutions providers in the IT support business and qualified sales representatives are critical to our future, and competition for experienced employees in the IT industry can be intense. In order to attract and retain executives and other key employees in a competitive marketplace, we must provide a competitive compensation package, including cash- and share-based compensation. Our share-based incentive awards include stock options, restricted stock units and performance-based restricted units, some of which contain conditions relating to HP's stock price performance and HP's long-term financial performance that make the future value of those awards uncertain. If the anticipated value of such share-based incentive awards does not materialize, if our share-based compensation otherwise ceases to be viewed as a valuable benefit, or if our total compensation package is not viewed as being competitive, our ability to attract, retain, and motivate executives and key employees could be weakened. The failure to successfully hire executives and key employees or the loss of any executives and key employees could have a significant impact on our operations. Further, changes in our management team may be disruptive to our business, and any failure to successfully transition and assimilate key new hires or promoted employees could adversely affect our business and results of operations.

Terrorist acts, conflicts, wars and geopolitical uncertainties may seriously harm our business and revenue, costs and expenses and financial condition and stock price.

        Terrorist acts, conflicts or wars (wherever located around the world) may cause damage or disruption to HP, our employees, facilities, partners, suppliers, distributors, resellers or customers or adversely affect our ability to manage logistics, operate our transportation and communication systems or conduct certain other critical business operations. The potential for future attacks, the national and international responses to attacks or perceived threats to national security, and other actual or potential conflicts or wars, including the military operations now being wound down in Iraq and the ongoing military operations in Afghanistan, have created many economic and political uncertainties. In addition, as a major multinational company with headquarters and significant operations located in the United States, actions against or by the United States may impact our business or employees. Although it is impossible to predict the occurrences or consequences of any such events, if they occur, they could result in a decrease in demand for our products, make it difficult or impossible to provide services or deliver products to our customers or to receive components from our suppliers, create delays and inefficiencies in our supply chain and result in the need to impose employee travel restrictions. We are predominantly uninsured for losses and interruptions caused by terrorist acts, conflicts and wars.

Any failure by us to identify, manage, complete and integrate acquisitions, divestitures and other significant transactions successfully could harm our financial results, business and prospects, and the costs, expenses and other financial and operational effects associated with managing, completing and integrating acquisitions may result in financial results that are different than expected.

        As part of our business strategy, we frequently acquire complementary companies or businesses, divest non-core businesses or assets, enter into strategic alliances and joint ventures and make investments to further our business (collectively, "business combination and investment transactions"). In order to pursue this strategy successfully, we must identify suitable candidates for and successfully

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complete business combination and investment transactions, some of which may be large or complex, and manage post-closing issues such as the integration of acquired businesses, products or employees. We may not fully realize all of the anticipated benefits of any business combination and investment transaction, and the timeframe for achieving benefits of a business combination and investment transaction may depend partially upon the actions of employees, suppliers or other third parties. In addition, the pricing and other terms of our contracts for business combination and investment transactions require us to make estimates and assumptions at the time we enter into these contracts, and, during the course of our due diligence, we may not identify all of the factors necessary to estimate our costs accurately. Any increased or unexpected costs, unanticipated delays or failure to meet contractual obligations could make these transactions less profitable or unprofitable. Moreover, if we fail to identify and successfully complete business combination and investment transactions that further our strategic objectives, we may be required to expend resources to develop products and technology internally, we may be at a competitive disadvantage or we may be adversely affected by negative market perceptions, any of which could adversely affect our revenue, gross margin and profitability.

        Integration issues are often complex, time-consuming and expensive and, without proper planning and implementation, could significantly disrupt our business. The challenges involved in integration include:

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combining product offerings and entering into new markets in which we are not experienced;

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convincing customers and distributors that the transaction will not diminish client service standards or business focus, preventing customers and distributors from deferring purchasing decisions or switching to other suppliers (which could result in our incurring additional obligations in order to address customer uncertainty), minimizing sales force attrition and coordinating sales, marketing and distribution efforts;

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consolidating and rationalizing corporate IT infrastructure, which may include multiple legacy systems from various acquisitions and integrating software code;

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minimizing the diversion of management attention from ongoing business concerns;

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persuading employees that business cultures are compatible, maintaining employee morale and retaining key employees, engaging with employee works councils representing an acquired company's non-U.S. employees, integrating employees into HP, correctly estimating employee benefit costs and implementing restructuring programs;

•

coordinating and combining administrative, manufacturing, research and development and other operations, subsidiaries, facilities and relationships with third parties in accordance with local laws and other obligations while maintaining adequate standards, controls and procedures;

•

achieving savings from supply chain integration; and

•

managing integration issues shortly after or pending the completion of other independent transactions.

        Managing business combination and investment transactions requires varying levels of management resources, which may divert our attention from other business operations. These business combination and investment transactions also have resulted, and in the future may result, in significant costs and expenses and charges to earnings, including those related to severance pay, early retirement costs, employee benefit costs, asset impairment charges, charges from the elimination of duplicative facilities and contracts, in-process research and development charges, inventory adjustments, assumed litigation and other liabilities, legal, accounting and financial advisory fees, and required payments to executive officers and key employees under retention plans. Moreover, HP has incurred and will incur additional depreciation and amortization expense over the useful lives of certain assets acquired in connection with business combination and investment transactions, and, to the extent that the value of goodwill or

88

intangible assets with indefinite lives acquired in connection with a business combination and investment transaction becomes impaired, we may be required to incur additional material charges relating to the impairment of those assets. For example, as discussed in Note 17 to the Consolidated Condensed Financial Statements, we have reached a preliminary conclusion that we expect to record an impairment charge of up to approximately $1.2 billion in our third fiscal quarter of 2012 as a result of an asset impairment analysis of the "Compaq" trade name acquired in 2002, and we are evaluating the impact, if any, of the company-wide restructuring announced in May 2012, current market conditions and the long-term profitability outlook for our services business on the carrying value of our long-lived assets within our services segment, which could result in additional impairment charges being recorded in that quarter and/or in future periods. In order to complete an acquisition, we may issue common stock, potentially creating dilution for existing stockholders. We may also borrow to finance acquisitions, and the amount and terms of any potential future acquisition-related or other borrowings, as well as other factors, could affect our liquidity and financial condition. In addition, HP's effective tax rate on an ongoing basis is uncertain, and business combination and investment transactions could adversely impact our effective tax rate. We also may experience risks relating to the challenges and costs of closing a business combination and investment transaction and the risk that an announced business combination and investment transaction may not close. As a result, any completed, pending or future transactions may contribute to financial results that differ from the investment community's expectations in a given quarter.

Unforeseen environmental costs could impact our future net earnings.

        We are subject to various federal, state, local and foreign laws and regulations concerning environmental protection, including laws addressing the discharge of pollutants into the air and water, the management and disposal of hazardous substances and wastes, the cleanup of contaminated sites, the content of our products and the recycling, treatment and disposal of our products, including batteries. In particular, we face increasing complexity in our product design and procurement operations as we adjust to new and future requirements relating to the chemical and materials composition of our products, their safe use, the energy consumption associated with those products, climate change laws and regulations, and product take-back legislation. We could incur substantial costs, our products could be restricted from entering certain jurisdictions, and we could face other sanctions, if we were to violate or become liable under environmental laws or if our products become non-compliant with environmental laws. Our potential exposure includes fines and civil or criminal sanctions, third-party property damage, personal injury claims and clean up costs. Further, liability under some environmental laws relating to contaminated sites can be imposed retroactively, on a joint and several basis, and without any finding of noncompliance or fault. The amount and timing of costs under environmental laws are difficult to predict.

Some anti-takeover provisions contained in our certificate of incorporation and bylaws, as well as provisions of Delaware law, could impair a takeover attempt.

        We have provisions in our certificate of incorporation and bylaws, each of which could have the effect of rendering more difficult or discouraging an acquisition of HP deemed undesirable by our Board of Directors. These include provisions:

•

authorizing blank check preferred stock, which HP could issue with voting, liquidation, dividend and other rights superior to our common stock;

•

limiting the liability of, and providing indemnification to, HP's directors and officers;

•

specifying that HP stockholders may take action only at a duly called annual or special meeting of stockholders and otherwise in accordance with our bylaws and limiting the ability of our stockholders to call special meetings;

89

•

requiring advance notice of proposals by HP stockholders for business to be conducted at stockholder meetings and for nominations of candidates for election to our Board of Directors;

•

requiring a vote by the holders of two-thirds of HP's outstanding shares to amend certain bylaws relating to HP stockholder meetings, the Board of Directors and indemnification; and

•

controlling the procedures for conduct of HP's Board and stockholder meetings and election, appointment and removal of HP directors.

        These provisions, alone or together, could deter or delay hostile takeovers, proxy contests and changes in control or management of HP. As a Delaware corporation, HP also is subject to provisions of Delaware law, including Section 203 of the Delaware General Corporation Law, which prevents some stockholders from engaging in certain business combinations without approval of the holders of substantially all of HP's outstanding common stock.

        Any provision of our certificate of incorporation or bylaws or Delaware law that has the effect of delaying or deterring a change in control of HP could limit the opportunity for our stockholders to receive a premium for their shares of HP common stock and also could affect the price that some investors are willing to pay for HP common stock.

Item 3.    Quantitative and Qualitative Disclosures About Market Risk.

        For quantitative and qualitative disclosures about market risk affecting HP, see "Quantitative and Qualitative Disclosures About Market Risk" in Item 7A of Part II of our Annual Report on Form 10-K for the fiscal year ended October 31, 2011, which is incorporated herein by reference. Our exposure to market risk has not changed materially since October 31, 2011.

Item 4.    Controls and Procedures.

        Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as of the end of the period covered by this report (the "Evaluation Date"). Based on this evaluation, our principal executive officer and principal financial officer concluded as of the Evaluation Date that our disclosure controls and procedures were effective such that the information relating to HP, including our consolidated subsidiaries, required to be disclosed in our SEC reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (ii) is accumulated and communicated to HP's management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

        Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during our most recently completed fiscal quarter. Based on that evaluation, our principal executive officer and principal financial officer concluded that there has not been any change in our internal control over financial reporting during that quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

90

PART II. OTHER INFORMATION

Item 1.    Legal Proceedings.

        The information set forth above under Note 15 contained in the "Notes to Consolidated Condensed Financial Statements" is incorporated herein by reference.

Item 1A.    Risk Factors.

        A description of factors that could materially affect our business, financial condition or operating results is included under "Factors that Could Affect Future Results" in "Management's Discussion and Analysis of Financial Condition and Results of Operations," contained in Item 2 of Part I of this report. This description includes any material changes to the risk factor disclosure in Item 1A of Part I of our Annual Report on Form 10-K for the fiscal year ended October 31, 2011 and is incorporated herein by reference.

Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds.

Recent Sales of Unregistered Securities

        There were no unregistered sales of equity securities during the period covered by this report.

Issuer Purchases of Equity Securities

Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Approximate Dollar Value of Shares that May Yet Be Purchased under the Plans or Programs
	In thousands, except per share amounts
Month #1
(February 2012)		5,229	$	28.68		5,229	$	9,865,570
Month #2
(March 2012)		2,639	$	24.88		2,639	$	9,799,936
Month #3
(April 2012)		5,569	$	24.11		5,569	$	9,665,655
Total		13,437	$	26.04		13,437

        HP repurchased shares in the second quarter of fiscal 2012 under an ongoing program to manage the dilution created by shares issued under employee stock plans as well as to repurchase shares opportunistically. This program, which does not have a specific expiration date, authorizes repurchases in the open market or in private transactions. All shares repurchased in the second quarter of fiscal 2012 were purchased in open market transactions. As of April 30, 2012, HP had remaining authorization of $9.7 billion for future share repurchases.

Item 6.    Exhibits.

        The Exhibit Index beginning on page 93 of this report sets forth a list of exhibits.

91

SIGNATURE

        Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

HEWLETT-PACKARD COMPANY

/s/ CATHERINE A. LESJAK
Catherine A. Lesjak
Executive Vice President and Chief Financial Officer
(Principal Financial Officer and Authorized Signatory)

Date: June 8, 2012

92

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
EXHIBIT INDEX

		Incorporated by Reference
Exhibit Number
	Exhibit Description	Form	File No.	Exhibit(s)	Filing Date
3(a)	Registrant's Certificate of Incorporation.	10-Q	001-04423	3(a)	June 12, 1998
3(b)	Registrant's Amendment to the Certificate of Incorporation.	10-Q	001-04423	3(b)	March 16, 2001
3(c)	Registrant's Amended and Restated Bylaws effective March 21, 2012.	8-K	001-04423	3.1	March 23, 2012
4(a)	Senior Indenture between HP and The Bank of New York Mellon Trust Company, National Association, as successor in interest to J.P. Morgan Trust Company, National Association (formerly known as Chase Manhattan Bank and Trust Company, National Association), as Trustee, dated June 1, 2000.	S-3	333-134327	4.9	June 7, 2006
4(b)	Form of Registrant's Fixed Rate Note and Floating Rate Note and related Officers' Certificate.	8-K	001-04423	4.1, 4.2 and 4.4	May 24, 2001
4(c)	Form of Registrant's 6.50% Global Note due July 1, 2012 and form of related Officers' Certificate.	8-K	001-04423	4.2 and 4.3	June 27, 2002
4(d)	Form of Registrant's Fixed Rate Note and form of Floating Rate Note.	8-K	001-04423	4.1 and 4.2	December 11, 2002
4(e)	Indenture, dated as of June 1, 2000, between the Registrant and J.P. Morgan Trust Company, National Association (formerly Chase Manhattan Bank), as Trustee.	S-3	333-134327	4.9	June 7, 2006
4(f)	Form of Registrant's Floating Rate Global Note due March 1, 2012, 5.25% Global Note due March 1, 2012 and 5.40% Global Note due March 1, 2017.	8-K	001-04423	4.1, 4.2 and 4.3	February 28, 2007
4(g)	Form of Registrant's Floating Rate Global Note due September 3, 2009, 4.50% Global Note due March 1, 2013 and 5.50% Global Note due March 1, 2018.	8-K	001-04423	4.1, 4.2 and 4.3	February 29, 2008

93

		Incorporated by Reference
Exhibit Number
	Exhibit Description	Form	File No.	Exhibit(s)	Filing Date
4(h)	Form of Registrant's 6.125% Global Note due March 1, 2014 and form of related Officers' Certificate.	8-K	001-04423	4.1 and 4.2	December 8, 2008
4(i)	Form of Registrant's Floating Rate Global Note due February 24, 2011, 4.250% Global Note due February 24, 2012 and 4.750% Global Note due June 2, 2014 and form of related Officers' Certificate.	8-K	001-04423	4.1, 4.2, 4.3 and 4.4	February 27, 2009
4(j)	Form of Registrant's Floating Rate Global Note due May 27, 2011, 2.25% Global Note due May 27, 2011 and 2.95% Global Note due August 15, 2012 and form of related Officers' Certificate.	8-K	001-04423	4.1, 4.2, 4.3 and 4.4	May 28, 2009
4(k)	Form of Registrant's Floating Rate Global Note due September 13, 2012, 1.250% Global Note due September 13, 2013 and 2.125% Global Note due September 13, 2015 and form of related Officers' Certificate.	8-K	001-04423	4.1, 4.2, 4.3 and 4.4	September 13, 2010
4(l)	Form of Registrant's 2.200% Global Note due December 1, 2015 and 3.750% Global Note due December 1, 2020 and form of related Officers' Certificate.	8-K	001-04423	4.1, 4.2 and 4.3	December 2, 2010
4(m)	Form of Registrant's Floating Rate Global Note due May 24, 2013, Floating Rate Global Note due May 30, 2014, 1.550% Global Note due May 30, 2014, 2.650% Global Note due June 1, 2016 and 4.300% Global Note due June 1, 2021 and form of related Officers' Certificate.	8-K	001-04423	4.1, 4.2, 4.3, 4.4, 4.5 and 4.6	June 1, 2011
4(n)	Form of Registrant's Floating Rate Global Note due September 19, 2014, 2.350% Global Note due March 15, 2015, 3.000% Global Note due September 15, 2016, 4.375% Global Note due September 15, 2021 and 6.000% Global Note due September 15, 2041 and form of related Officers' Certificate.	8-K	001-04423	4.1, 4.2, 4.3, 4.4, 4.5 and 4.6	September 19, 2011

94

		Incorporated by Reference
Exhibit Number
	Exhibit Description	Form	File No.	Exhibit(s)	Filing Date
4(o)	Form of Registrant's 2.625% Global Note due December 9, 2014, 3.300% Global Note due December 9, 2016, 4.650% Global Note due December 9, 2021 and related Officers' Certificate.	8-K	001-04423	4.1, 4.2, 4.3 and 4.4	December 12, 2011
4(p)	Form of Registrant's 2.600% Global Note due September 15, 2017 and 4.050% Global Note due September 15, 2022 and related Officers' Certificate.	8-K	001-04423	4.1, 4.2 and 4.3	March 12, 2012
4(q)	Specimen certificate for the Registrant's common stock.	8-A/A	001-04423	4.1	June 23, 2006
10(a)	Registrant's 2004 Stock Incentive Plan.*	S-8	333-114253	4.1	April 7, 2004
10(b)	Registrant's 2000 Stock Plan, amended and restated effective September 17, 2008.*	10-K	001-04423	10(b)	December 18, 2008
10(c)	Registrant's 1997 Director Stock Plan, amended and restated effective November 1, 2005.*	8-K	001-04423	99.4	November 23, 2005
10(d)	Registrant's 1995 Incentive Stock Plan, amended and restated effective May 1, 2007.*	10-Q	001-04423	10(d)	June 8, 2007
10(e)	Registrant's 1990 Incentive Stock Plan, amended and restated effective May 1, 2007.*	10-Q	001-04423	10(e)	June 8, 2007
10(f)	Registrant's Excess Benefit Retirement Plan, amended and restated as of January 1, 2006.*	8-K	001-04423	10.2	September 21, 2006
10(g)	Hewlett-Packard Company Cash Account Restoration Plan, amended and restated as of January 1, 2005.*	8-K	001-04423	99.3	November 23, 2005
10(h)	Registrant's 2005 Pay-for-Results Plan, as amended.*	10-K	001-04423	10(h)	December 14, 2011
10(i)	Registrant's 2005 Executive Deferred Compensation Plan, as amended and restated effective October 1, 2006.*	8-K	001-04423	10.1	September 21, 2006
10(j)	First Amendment to the Registrant's 2005 Executive Deferred Compensation Plan, as amended and restated effective October 1, 2006.*	10-Q	001-04423	10(q)	June 8, 2007

95

		Incorporated by Reference
Exhibit Number
	Exhibit Description	Form	File No.	Exhibit(s)	Filing Date
10(k)	Employment Agreement, dated June 9, 2005, between Registrant and R. Todd Bradley.*	10-Q	001-04423	10(x)	September 8, 2005
10(l)	Registrant's Amended and Restated Severance Plan for Executive Officers.*	8-K	001-04423	99.1	July 27, 2005
10(m)	Registrant's Executive Severance Agreement.*	10-Q	001-04423	10(u)(u)	June 13, 2002
10(n)	Registrant's Executive Officers Severance Agreement.*	10-Q	001-04423	10(v)(v)	June 13, 2002
10(o)	Form letter regarding severance offset for restricted stock and restricted units.*	8-K	001-04423	10.2	March 22, 2005
10(p)	Form of Restricted Stock Agreement for Registrant's 2004 Stock Incentive Plan, Registrant's 2000 Stock Plan, as amended, and Registrant's 1995 Incentive Stock Plan, as amended.*	10-Q	001-04423	10(b)(b)	June 8, 2007
10(q)	Form of Restricted Stock Unit Agreement for Registrant's 2004 Stock Incentive Plan.*	10-Q	001-04423	10(c)(c)	June 8, 2007
10(r)	Form of Stock Option Agreement for Registrant's 1990 Incentive Stock Plan, as amended.*	10-K	001-04423	10(e)	January 27, 2000
10(s)	Form of Common Stock Payment Agreement and Option Agreement for Registrant's 1997 Director Stock Plan, as amended.*	10-Q	001-04423	10(j)(j)	March 11, 2005
10(t)	Form of Long-Term Performance Cash Award Agreement for Registrant's 2004 Stock Incentive Plan and Registrant's 2000 Stock Plan, as amended.*	10-K	001-04423	10(t)(t)	January 14, 2005
10(u)	Amendment One to the Long-Term Performance Cash Award Agreement for the 2004 Program.*	10-Q	001-04423	10(q)(q)	September 8, 2005
10(v)	Form of Long-Term Performance Cash Award Agreement for the 2005 Program.*	10-Q	001-04423	10(r)(r)	September 8, 2005
10(w)	Form of Long-Term Performance Cash Award Agreement.*	10-Q	001-04423	10(o)(o)	March 10, 2006

96

		Incorporated by Reference
Exhibit Number
	Exhibit Description	Form	File No.	Exhibit(s)	Filing Date
10(x)	Second Amendment to the Registrant's 2005 Executive Deferred Compensation Plan, as amended and restated effective October 1, 2006.*	10-K	001-04423	10(l)(l)	December 18, 2007
10(y)	Form of Stock Notification and Award Agreement for awards of performance-based restricted units.*	8-K	001-04423	10.1	January 24, 2008
10(z)	Form of Agreement Regarding Confidential Information and Proprietary Developments (California).*	8-K	001-04423	10.2	January 24, 2008
10(a)(a)	Form of Agreement Regarding Confidential Information and Proprietary Developments (Texas).*	10-Q	001-04423	10(o)(o)	March 10, 2008
10(b)(b)	Form of Restricted Stock Agreement for Registrant's 2004 Stock Incentive Plan.*	10-Q	001-04423	10(p)(p)	March 10, 2008
10(c)(c)	Form of Restricted Stock Unit Agreement for Registrant's 2004 Stock Incentive Plan.*	10-Q	001-04423	10(q)(q)	March 10, 2008
10(d)(d)	Form of Stock Option Agreement for Registrant's 2004 Stock Incentive Plan.*	10-Q	001-04423	10(r)(r)	March 10, 2008
10(e)(e)	Form of Special Performance-Based Cash Incentive Notification Letter.*	8-K	001-04423	10.1	May 20, 2008
10(f)(f)	Form of Option Agreement for Registrant's 2000 Stock Plan.*	10-Q	001-04423	10(t)(t)	June 6, 2008
10(g)(g)	Form of Common Stock Payment Agreement for Registrant's 2000 Stock Plan.*	10-Q	001-04423	10(u)(u)	June 6, 2008
10(h)(h)	Third Amendment to the Registrant's 2005 Executive Deferred Compensation Plan, as amended and restated effective October 1, 2006.*	10-K	001-04423	10(v)(v)	December 18, 2008
10(i)(i)	Form of Stock Notification and Award Agreement for awards of restricted stock units.*	10-K	001-04423	10(w)(w)	December 18, 2008
10(j)(j)	Form of Stock Notification and Award Agreement for awards of performance-based restricted units.*	10-K	001-04423	10(x)(x)	December 18, 2008

97

		Incorporated by Reference
Exhibit Number
	Exhibit Description	Form	File No.	Exhibit(s)	Filing Date
10(k)(k)	Form of Stock Notification and Award Agreement for awards of non-qualified stock options.*	10-K	001-04423	10(y)(y)	December 18, 2008
10(l)(l)	Form of Stock Notification and Award Agreement for awards of restricted stock.*	10-K	001-04423	10(z)(z)	December 18, 2008
10(m)(m)	Form of Restricted Stock Unit Agreement for Registrant's 2004 Stock Incentive Plan.*	10-Q	001-04423	10(a)(a)(a)	March 10, 2009
10(n)(n)	First Amendment to the Hewlett-Packard Company Excess Benefit Retirement Plan.*	10-Q	001-04423	10(b)(b)(b)	March 10, 2009
10(o)(o)	Fourth Amendment to the Registrant's 2005 Executive Deferred Compensation Plan, as amended and restated effective October 1, 2006.*	10-Q	001-04423	10(c)(c)(c)	June 5, 2009
10(p)(p)	Fifth Amendment to the Registrant's 2005 Executive Deferred Compensation Plan, as amended and restated effective October 1, 2006.*	10-Q	001-04423	10(d)(d)(d)	September 4, 2009
10(q)(q)	Amended and Restated Hewlett-Packard Company 2004 Stock Incentive Plan.*	8-K	001-04423	10.2	March 23, 2010
10(r)(r)	Employment Agreement, dated September 29, 2010, between the Registrant and Léo Apotheker.*	8-K	001-04423	10.1	October 1, 2010
10(s)(s)	Form of Stock Notification and Award Agreement for awards of restricted stock units.*	10-K	001-04423	10(f)(f)(f)	December 15, 2010
10(t)(t)	Form of Stock Notification and Award Agreement for awards of performance-based restricted units.*	10-K	001-04423	10(g)(g)(g)	December 15, 2010
10(u)(u)	Form of Stock Notification and Award Agreement for awards of restricted stock.*	10-K	001-04423	10(h)(h)(h)	December 15, 2010
10(v)(v)	Form of Stock Notification and Award Agreement for awards of non-qualified stock options.*	10-K	001-04423	10(i)(i)(i)	December 15, 2010
10(w)(w)	Form of Agreement Regarding Confidential Information and Proprietary Developments (California—new hires).*	10-K	001-04423	10(j)(j)(j)	December 15, 2010

98

		Incorporated by Reference
Exhibit Number
	Exhibit Description	Form	File No.	Exhibit(s)	Filing Date
10(x)(x)	Form of Agreement Regarding Confidential Information and Proprietary Developments (California—current employees).*	10-K	001-04423	10(k)(k)(k)	December 15, 2010
10(y)(y)	Letter Agreement, dated December 15, 2010, between the Registrant and Catherine A. Lesjak.*	10-K	001-04423	10(l)(l)(l)	December 15, 2010
10(z)(z)	Letter Agreement, dated September 29, 2010, between the Registrant and Michael J. Holston.*	10-Q	001-04423	10(m)(m)(m)	June 8, 2011
10(a)(a)(a)	First Amendment to the Registrant's Executive Deferred Compensation Plan, as amended and restated effective October 1, 2004.*	10-Q	001-04423	10(o)(o)(o)	September 9, 2011
10(b)(b)(b)	Sixth Amendment to the Registrant's 2005 Executive Deferred Compensation Plan, as amended and restated effective October 1, 2006.*	10-Q	001-04423	10(p)(p)(p)	September 9, 2011
10(c)(c)(c)	Separation and General Release Agreement, dated September 28, 2011, between the Registrant and Léo Apotheker.*	8-K	001-04423	10.1	September 29, 2011
10(d)(d)(d)	Employment offer letter, dated September 27, 2011, between the Registrant and Margaret C. Whitman.*	8-K	001-04423	10.2	September 29, 2011
10(e)(e)(e)	Letter Agreement, dated November 17, 2011, among the Registrant, Relational Investors LLC and the other parties named therein.*	8-K	001-04423	99.1	November 17, 2011
10(f)(f)(f)	Seventh Amendment to the Registrant's 2005 Executive Deferred Compensation Plan, as amended and restated effective October 1, 2006.*	10-K	001-04423	10(e)(e)(e)	December 14, 2011
10(g)(g)(g)	Registrant's Severance Plan for Executive Officers, as amended and restated.*	10-K	001-04423	10(f)(f)(f)	December 14, 2011
10(h)(h)(h)	Aircraft Time Sharing Agreement, dated March 16, 2012, between the Registrant and Margaret C. Whitman.*‡

99

		Incorporated by Reference
Exhibit Number
	Exhibit Description	Form	File No.	Exhibit(s)	Filing Date
11	None.
12	Statement of Computation of Ratio of Earnings to Fixed Charges.‡
15	None.
18-19	None.
22-24	None.
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended.‡
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended.‡
32	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.†
101.INS	XBRL Instance Document.‡
101.SCH	XBRL Taxonomy Extension Schema Document.‡
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.‡
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.‡
101.LAB	XBRL Taxonomy Extension Label Linkbase Document.‡
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.‡

*

Indicates management contract or compensatory plan, contract or arrangement.

‡

Filed herewith.

†

Furnished herewith.

        The registrant agrees to furnish to the Commission supplementally upon request a copy of (1) any instrument with respect to long-term debt not filed herewith as to which the total amount of securities authorized thereunder does not exceed 10 percent of the total assets of the registrant and its subsidiaries on a consolidated basis and (2) any omitted schedules to any material plan of acquisition, disposition or reorganization set forth above.

100

EX-10.(H)(H)(H)

Exhibit 10(h)(h)(h)

AIRCRAFT TIME SHARING AGREEMENT

This Aircraft Time Sharing Agreement (“Agreement”) is entered into this 16th day of March, 2012, between Hewlett-Packard Company, whose principal address is 3000 Hanover St., Palo Alto, CA 94304 (“Operator”) and Margaret C. Whitman, whose principal address is [address] (“Lessee”).

WHEREAS, Operator has operational control of certain aircraft listed on Exhibit A (“Aircraft”) and employs flight crews that are fully qualified to operate each of the Aircraft; and

WHEREAS, Lessee wishes to lease certain of the Aircraft and flight crew from time to time; and

WHEREAS, Operator and Lessee wish to enter into an arrangement for Operator to lease the Aircraft and flight crew to Lessee on a Time Sharing basis (as defined in FAR 91.501(c)(1)) under certain terms and conditions;

NOW THEREFORE, Operator and Lessee agree as follows:

1.Use of Aircraft and Provision of Flight Crew.  Lessee may lease the Aircraft according to the terms of its Agreement, so long as such use is for Lessee’s own account.  Lessee’s use shall be subject to the use limitations set forth in Sections 91.501 and 91.321 of the Federal Aviation Regulations (“FAR”).  Operator shall employ, pay for and provide to Lessee a qualified flight crew for each flight undertaken under this Agreement.

During the term of this Agreement, Lessee will abide by and conform to all applicable laws, governmental and airport orders, rules and regulations.  Lessee shall not use the Aircraft for the transportation of passengers or cargo for compensation or hire.  Lessee shall refrain from incurring any mechanics or other lien in connection with inspection, preventive maintenance, maintenance or storage of aircraft, whether permissible or impermissible under this Agreement, nor shall Lessee make any attempt to mortgage, assign or create any kind of security interest involving the Aircraft.

2.Scheduling.  Lessee shall provide Operator with requests for flight time and proposed flight schedules as far in advance of any given flight as possible, and in any case, no less than 24 hours before Lessee’s expected departure.  Requests for flights shall be in a form agreed to by the parties.  Lessee shall provide Operator with the following information for each proposed flight:  (a) proposed date and time of departure flight; (b) destination; (c) number of anticipated passengers; (d) the nature and extent of luggage; (e) the date and time of a return flight, and (f) any other information concerning the proposed flight that may be requested by Operator or Operator’s flight crew.

Operator shall have final authority over the scheduling of the Aircraft, provided, however, that Operator will use its best efforts to accommodate the request of Lessee, to the extent of available flight crews, Aircraft and other conditions permitting.  The parties agree that Operator shall not be liable for delay or failure to furnish the Aircraft and crew pursuant to this Lease for any reason.

3.Operational Control.  At all times during which a flight is made by or on behalf of Lessee under this Agreement, Operator (including, without limitation, through its Pilots and flight crew), shall have sole possession, command and control of the Aircraft.  Operator shall have complete and exclusive responsibility for (a) scheduling, dispatching and flight of the Aircraft on all flights conducted pursuant to this Lease, (b) the physical and technical operation of the Aircraft and (c) the safe performance of all flights.  Operator shall have operational control of the Aircraft for all purposes of the Federal Aviation Regulations.  In addition, the pilot-in-command of each flight shall have the final authority with respect to

1

(a) the initiation or termination of any flight, (b) selection of the routing of any flight, (c) determination of the load to be carried, and (d) all decisions relating to the safety of any flight.

4.Maintenance.  Operator shall be solely responsible for securing maintenance, preventative maintenance and required or otherwise necessary inspections of the Aircraft.  The Aircraft shall be inspected in and maintained in accordance with applicable rules and regulations of FAR Part 91 during the term of this Lease.  No period of maintenance, preventive maintenance or inspection shall be delayed or postponed for the purpose of scheduling the Aircraft for Lessee.  The pilot in command shall have final and complete authority to cancel any flight for any reason or condition, which in his judgment would compromise the safety of the flight.

5.Insurance.  During the term of this Lease, Operator shall maintain in effect insurance covering the Aircraft with respect to such risks, in such amounts and with such deductibles and other terms as determined by Operator in its sole discretion.  In addition, Operator shall maintain comprehensive public liability and property damage insurance with such terms as determined by Operator in its sole discretion. Such insurance shall be primary as to Operator with Lessee being an additional insured (as evidenced by a certificate of insurance) and shall waive all right of subrogation as to Lessee and her agents.  Notwithstanding the foregoing and subject to the limitations of FAR Section 91.501(d), Lessee shall reimburse Operator for the cost and expense of insurance obtained at Lessee’s request for any specific flight.

6.Charges for Lease of Aircraft.  For each flight conducted under this Agreement, Lessee shall pay Operator amounts specified under (a) and (b) below, within the time specified in (c).

(a)  Expenses.  Expenses to be charged Lessee for each flight under this Agreement shall consist of those permitted or required to be charged under FAR 91.501(d), including, without limitation, the following item:

1)Fuel, oil, lubricants and other additives.

2)Travel expenses of the crew, including food, lodging and ground transportation.

3)Hangar and tie down costs away from the Aircraft’s base of operation.

4)Insurance obtained for the specific flight.

5)Landing fees, airport taxes and similar assessments.

6)Customs, foreign permit, and similar fees directly related to the flight.

7)In-flight food and beverages.

8)Passenger ground transportation.

9)Flight planning and weather contract services.

10)An additional charge equal to 100% of the expenses listed in (1) of this subsection.

(b)  Taxes.  Lessee shall also pay to Operator the federal excise tax imposed on the transportation of persons for flights conducted under this Agreement.  This tax currently consists of a 7.5 percent tax imposed on the amounts paid and a $3.30 per leg segment fee (which segment fee is subject to change on January 1 of every year).  Amounts due for taxes shall be included on the monthly invoices submitted to Lessee.

(c)  Invoicing.  Operator shall pay all expenses related to the operation of the Aircraft and will provide an invoice and bill to Lessee for the expenses detailed in (a) and (b) above, as of the last day of the month in which any flight(s) for Lessee have occurred.  Lessee shall pay Operator for the billed amount within 30 days of receipt of the invoice.

2

7.Warranties.  Operator makes no representations or warranties, whether expressed or implied, other than those set forth in this Agreement, including, but not limited to, any warranty of merchantability or fitness for a particular purpose with respect to the services to be performed hereunder or the use of the Aircraft.  Operator shall not be liable for any special, incidental, indirect or consequential damages or for the lost profits or revenues in connection with the furnishing, performance or use of the services to be performed hereunder.  Operator shall not be liable for any act or omission occurring in the course of or in connections with the use of the Aircraft by Lessee, or the performance of the services hereunder by Operator or its employees or agents, or for any loss or damage which Lessee may sustain or suffer as the result of or in the course of the discharge by Operator of its duties hereunder.  Operator’s liability for any damages, claims, actions or causes of action arising, directly or indirectly, in connection with this Agreement, the use of the Aircraft by Lessee, or otherwise is specifically limited to an amount not to exceed six months’ average billing in the most recent 12-month period by Lessee under this Agreement.

8.Regulatory Requirements.  Operator understands that it is required to, and represents that it will, mail a copy of this Agreement to the Federal Aviation Administration (“FAA”) within 24 hours of its execution to the following address via certified mail, return receipt requested:  Federal Aviation Administration; Aircraft Registration Branch; ATTN: Technical Section; POB 25724; Oklahoma City, OK 73125.

Lessee understands and agrees that it is required to, and represents that it will, provide notification (or cause such notification to be provided) to the FAA at least 48 hours prior to the first flight of the Aircraft under this Agreement.  This notification must be made to the flight standards district office, general aviation district office, air carrier district office or international field office nearest the airport where the lease or contract flight will originate, and may be made in person or by telephone.

9.Truth-in-Leasing.  In accordance with FAR Section 91.23, the parties state as follows:

a.OPERATOR HEREBY CERTIFIES THAT THE AIRCRAFT HAS BEEN INSPECTED AND MAINTAINED WITHIN THE 12-MONTH PERIOD PRECEDING THE DATE OF THIS AGREEMENT (OR SUCH SHORTER PERIOD TO THE EXTENT THE AIRCRAFT IS LESS THAN 12 MONTHS OLD), AND WILL CONTINUE TO BE MAINTAINED AND INSPECTED, IN ACCORDANCE WITH THE PROVISIONS OF FAR PARTS 91 AND 135, IF APPLICABLE, AND ALL APPLICABLE REQUIREMENTS FOR MAINTENANCE AND INSPECTION THEREUNDER HAVE BEEN COMPLIED WITH.

b.LESSEE AGREES, CERTIFIES AND KNOWINGLY ACKNOWLEDGES THAT WHEN LESSEE OPERATES THE AIRCRAFT UNDER THIS AGREEMENT, IT SHALL BE KNOWN AS, CONSIDERED, AND IN FACT WILL BE THE OPERATOR OF THE AIRCRAFT AS PROVIDED HEREIN.

c.AN EXPLANATION OF FACTORS BEARING ON OPERATIONAL CONTROL AND PERTINENT FARs CAN BE OBTAINED FROM THE NEAREST FAA FLIGHT STANDARDS DISTRICT OFFICE, GENERAL AVIATION DISTRICT OFFICE OR AIR CARRIER DISTRICT OFFICE.  LESSEE ACKNOWLEDGES SHE UNDERSTANDS AND AGREES TO ABIDE BY THESE REGULATIONS.

d.THE PARTIES HERETO CERTIFY THAT A TRUE COPY OF THIS AGREEMENT SHALL BE CARRIED ON THE AIRCRAFT AT ALL TIMES, AND SHALL BE MADE AVAILABLE FOR INSPECTION UPON REQUEST BY AN APPROPRIATELY CONSTITUTED IDENTIFIED REPRESENTATIVE OF THE ADMINISTRATOR OF THE FAA.

10.General Provisions.  This Agreement and all rights of the parties hereunder shall be construed and enforced in accordance with the laws of the State of Delaware, without giving effect to its conflicts of

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laws.  This Agreement supersedes all prior written understandings between the parties with respect to the subject matter hereof, and no modification or termination shall be valid unless in writing and signed by both parties below.  Either party may terminate this Agreement upon 30 days written notice to the other.  The Aircraft is and all times shall remain the property of the Operator, and Lessee and shall have no right, title or interest therein or in the proceeds thereof except as expressly permitted hereunder.  Any controversy or claims arising out of or relating to this Agreement shall be settled by arbitration in accordance with the then-prevailing commercial arbitration rules of the American Arbitration Association, and judgment upon the award rendered by the arbitrators may be entered by any court having jurisdiction.  In any disputes, each party shall bear its own costs and attorneys fees.  If any clause or provision herein shall be found to be invalid or unenforceable by an arbitrator or court of competent jurisdiction, such finding shall not affect the validity of any other clause or provision, which shall remain in full force and effect.

IN WITNESS WHEREOF, the parties has caused this Agreement to be executed as of the date first written above, by their duly authorized representatives.

OPERATOR:

Hewlett-Packard Company

/s/ Paul T. Porrini

Paul T. Porrini

Vice President, Deputy General Counsel
and Assistant Secretary

March 16, 2012

Date

LESSEE:

/s/ Margaret C. Whitman

Margaret C. Whitman

March 16, 2012

Date

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EX-12

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Exhibit 12

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
Statements of Computation of Ratio of Earnings to Fixed Charges⁽¹⁾

	Six months ended April 30, 2012			Fiscal years ended October 31
				2011		2010		2009		2008		2007
	In millions, except ratios
Earnings:
Earnings before taxes	$	3,800		$	8,982	$	10,974	$	9,415	$	10,473	$	9,177
Adjustments:
Non-controlling interests in the income of subsidiaries with fixed charges		71			75		108		74		17		19
Undistributed (earnings) loss of equity method investees		(1	)		3		12		2		—		9
Fixed charges		654			1,027		868		1,098		1,147		995
	$	4,524		$	10,087	$	11,962	$	10,589	$	11,637	$	10,200
Fixed charges:
Total interest expense, including interest expense on borrowings, amortization of debt discount and premium on all indebtedness and other	$	413		$	551	$	417	$	585	$	467	$	531
Interest included in rent		241			476		451		513		680		464
Total fixed charges	$	654		$	1,027	$	868	$	1,098	$	1,147	$	995
Ratio of earnings to fixed charges		6.9x			9.8x		13.8x		9.6x		10.1x		10.3x

⁽¹⁾

HP computed the ratio of earnings to fixed charges by dividing earnings (earnings before cumulative effect of change in accounting principle and taxes, adjusted for fixed charges, non-controlling interests in the income of subsidiaries with fixed charges and undistributed earnings or loss of equity method investees) by fixed charges for the periods indicated. Fixed charges include (i) interest expense on borrowings and amortization of debt discount or premium on all indebtedness and other, and (ii) a reasonable approximation of the interest factor deemed to be included in rental expense.

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Exhibit 12

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES Statements of Computation of Ratio of Earnings to Fixed Charges⁽¹⁾

EX-31.1

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Exhibit 31.1

CERTIFICATION

        I, Margaret C. Whitman, certify that:

1.

I have reviewed this Quarterly Report on Form 10-Q of Hewlett-Packard Company;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)

Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)

Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.

The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: June 8, 2012

/s/ MARGARET C. WHITMAN
Margaret C. Whitman
President and Chief Executive Officer
(Principal Executive Officer)

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Exhibit 31.1

CERTIFICATION

EX-31.2

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Exhibit 31.2

CERTIFICATION

        I, Catherine A. Lesjak, certify that:

1.

I have reviewed this Quarterly Report on Form 10-Q of Hewlett-Packard Company;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)

Evaluated the effectiveness of the registrant's disclosure controls and procedures, and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)

Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.

The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: June 8, 2012

/s/ CATHERINE A. LESJAK
Catherine A. Lesjak
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)

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Exhibit 31.2

EX-32

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Exhibit 32

CERTIFICATION
OF
CHIEF EXECUTIVE OFFICER
AND
CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

        I, Margaret C. Whitman, certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report on Form 10-Q of Hewlett-Packard Company for the second quarter ended April 30, 2012 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Quarterly Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Hewlett-Packard Company.

June 8, 2012

By: /s/ MARGARET C. WHITMAN
Margaret C. Whitman
President and Chief Executive Officer

        I, Catherine A. Lesjak, certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report on Form 10-Q of Hewlett-Packard Company for the second quarter ended April 30, 2012 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Quarterly Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Hewlett-Packard Company.

June 8, 2012

By: /s/ CATHERINE A. LESJAK
Catherine A. Lesjak
Executive Vice President
and Chief Financial Officer

        A signed original of this written statement required by Section 906 has been provided to Hewlett-Packard Company and will be retained by Hewlett-Packard Company and furnished to the Securities and Exchange Commission or its staff upon request.

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Exhibit 32

XML

Net Earnings Per Share (Details) (USD $) In Millions, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Apr. 30, 2012	Apr. 30, 2011	Apr. 30, 2012	Apr. 30, 2011
Numerator:
Net earnings	$ 1,593	$ 2,304	$ 3,061	$ 4,909
Denominator:
Weighted-average shares used to compute basic EPS	1,979	2,150	1,980	2,166
Dilutive effect of employee stock plans (in shares)	8	34	15	37
Weighted-average shares used to compute diluted EPS	1,987	2,184	1,995	2,203
Net earnings per share:
Basic (in dollars per share)	$ 0.80	$ 1.07	$ 1.55	$ 2.27
Diluted (in dollars per share)	$ 0.80	$ 1.05	$ 1.53	$ 2.23
Options with exercise price greater than market price of stock
Other information related to EPS computation
Antidilutive securities excluded from the calculation of EPS (in shares)	50	6	50	6
Stock options combined exercise price unamortized fair value excess tax benefits greater than market price
Other information related to EPS computation
Antidilutive securities excluded from the calculation of EPS (in shares)	10	1	10	1

XML

Borrowings (Details) (USD $)									6 Months Ended
	Apr. 30, 2012	Oct. 31, 2011	Apr. 30, 2012 Commercial paper	Oct. 31, 2011 Commercial paper	Apr. 30, 2012 Current portion of long-term debt	Oct. 31, 2011 Current portion of long-term debt	Apr. 30, 2012 Obligation related to notes payable to banks, lines of credit, uncommitted line of credit and other debt	Oct. 31, 2011 Obligation related to notes payable to banks, lines of credit, uncommitted line of credit and other debt	Apr. 30, 2012 Credit facility expiring March 2017	Apr. 30, 2012 Credit facility expired February 2015
Notes Payable and Short-Term Borrowings
Amount outstanding	$ 4,252,000,000	$ 8,083,000,000	$ 345,000,000	$ 3,215,000,000	$ 3,346,000,000	$ 4,345,000,000	$ 561,000,000	$ 523,000,000
Weighted average interest rate (as a percent)			1.50%	0.40%	1.80%	2.40%	3.40%	2.90%
Deposits associated with banking activities							343,000,000	355,000,000
U.S. commercial paper authorization			16,000,000,000
Subsidiaries' commercial paper authorization			1,000,000,000
Subsidiaries' commercial paper authorization, available for Hewlett-Packard International Bank PLC			500,000,000
Term of credit facility (in years)									P5Y	P4Y
Amount available under credit facility	7,500,000,000								3,000,000,000	4,500,000,000
Available borrowing resources, other than 2009 Shelf Registration	$ 17,500,000,000		$ 16,200,000,000				$ 1,300,000,000

XML

Financial Instruments (Details 2) (USD $) In Millions, unless otherwise specified	6 Months Ended
	Apr. 30, 2012	Apr. 30, 2012 Equity securities in privately held companies	Oct. 31, 2011 Equity securities in privately held companies
Investment Holdings
Included in long-term financing receivables and other assets		$ 51	$ 48
Contractual maturities of short-term and long-term investments in available-for-sale debt securities, Cost
Due in less than one year	314
Due in one to five years	71
Due in more than five years	311
Total debt securities, at cost	696
Contractual maturities of short-term and long-term investments in available-for-sale debt securities, Fair value
Due in less than one year	314
Due in one to five years	54
Due in more than five years	374
Total debt securities, at estimated fair value	742
Impairment charge related to a public equity investment	$ 50.7

XML

Borrowings (Details 2) (USD $) In Millions, unless otherwise specified	6 Months Ended	12 Months Ended
	Apr. 30, 2012	Oct. 31, 2011
Long-term debt
Fair value adjustment related to hedged debt	$ 463	$ 543
Less: current portion	(3,346)	(4,345)
Total long-term debt	25,825	22,551
U.S. Dollar Global Notes
Long-term debt
Balance outstanding	26,578	24,082
2002 Shelf Registration Statement-$500 issued at discount to par at a price of 99.505% in June 2002 at 6.5%, due July 2012
Long-term debt
Balance outstanding	500	500
Discount to par (as a percent)	99.505%	99.505%
Interest rate (as a percent)	6.50%	6.50%
Face amount of debt instrument	500	500
2006 Shelf Registration Statement-$600 issued at par in February 2007 at three-month USD LIBOR plus 0.11%, paid March 2012
Long-term debt
Balance outstanding		600
Face amount of debt instrument		600
Reference interest rate		three-month USD LIBOR
Spread on reference interest rate (as a percent)		0.11%
2006 Shelf Registration Statement-$900 issued at discount to par at a price of 99.938% in February 2007 at 5.25%, paid March 2012
Long-term debt
Balance outstanding		900
Discount to par (as a percent)		99.938%
Interest rate (as a percent)		5.25%
Face amount of debt instrument		900
2006 Shelf Registration Statement-$500 issued at discount to par at a price of 99.694% in February 2007 at 5.4%, due March 2017
Long-term debt
Balance outstanding	499	499
Discount to par (as a percent)	99.694%	99.694%
Interest rate (as a percent)	5.40%	5.40%
Face amount of debt instrument	500	500
2006 Shelf Registration Statement-$1,500 issued at discount to par at a price of 99.921% in March 2008 at 4.5%, due March 2013
Long-term debt
Balance outstanding	1,500	1,500
Discount to par (as a percent)	99.921%	99.921%
Interest rate (as a percent)	4.50%	4.50%
Face amount of debt instrument	1,500	1,500
2006 Shelf Registration Statement-$750 issued at discount to par at a price of 99.932% in March 2008 at 5.5%, due March 2018
Long-term debt
Balance outstanding	750	750
Discount to par (as a percent)	99.932%	99.932%
Interest rate (as a percent)	5.50%	5.50%
Face amount of debt instrument	750	750
2006 Shelf Registration Statement-$2,000 issued at discount to par at a price of 99.561% in December 2008 at 6.125%, due March 2014
Long-term debt
Balance outstanding	1,997	1,996
Discount to par (as a percent)	99.561%	99.561%
Interest rate (as a percent)	6.125%	6.125%
Face amount of debt instrument	2,000	2,000
2006 Shelf Registration Statement-$1,000 issued at discount to par at a price of 99.956% in February 2009 at 4.25%, paid February 2012
Long-term debt
Balance outstanding		1,000
Discount to par (as a percent)		99.956%
Interest rate (as a percent)		4.25%
Face amount of debt instrument		1,000
2006 Shelf Registration Statement-$1,500 issued at discount to par at a price of 99.993% in February 2009 at 4.75%, due June 2014
Long-term debt
Balance outstanding	1,500	1,500
Discount to par (as a percent)	99.993%	99.993%
Interest rate (as a percent)	4.75%	4.75%
Face amount of debt instrument	1,500	1,500
2009 Shelf Registration Statement-$250 issued at discount to par at a price of 99.984% in May 2009 at 2.95%, due August 2012
Long-term debt
Balance outstanding	250	250
Discount to par (as a percent)	99.984%	99.984%
Interest rate (as a percent)	2.95%	2.95%
Face amount of debt instrument	250	250
2009 Shelf Registration Statement-$800 issued at par in September 2010 at three-month USD LIBOR plus 0.125%, due September 2012
Long-term debt
Balance outstanding	800	800
Face amount of debt instrument	800	800
Reference interest rate	three-month USD LIBOR	three-month USD LIBOR
Spread on reference interest rate (as a percent)	0.125%	0.125%
2009 Shelf Registration Statement-$1,100 issued at discount to par at a price of 99.921% in September 2010 at 1.25% due September 2013
Long-term debt
Balance outstanding	1,100	1,099
Discount to par (as a percent)	99.921%	99.921%
Interest rate (as a percent)	1.25%	1.25%
Face amount of debt instrument	1,100	1,100
2009 Shelf Registration Statement-$1,100 issued at discount to par at a price of 99.887% in September 2010 at 2.125% due September 2015
Long-term debt
Balance outstanding	1,099	1,099
Discount to par (as a percent)	99.887%	99.887%
Interest rate (as a percent)	2.125%	2.125%
Face amount of debt instrument	1,100	1,100
2009 Shelf Registration Statement-$650 issued at discount to par at a price of 99.911% in December 2010 at 2.2% due December 2015
Long-term debt
Balance outstanding	650	650
Discount to par (as a percent)	99.911%	99.911%
Interest rate (as a percent)	2.20%	2.20%
Face amount of debt instrument	650	650
2009 Shelf Registration Statement-$1,350 issued at discount to par at a price of 99.827% in December 2010 at 3.75% due December 2020
Long-term debt
Balance outstanding	1,348	1,348
Discount to par (as a percent)	99.827%	99.827%
Interest rate (as a percent)	3.75%	3.75%
Face amount of debt instrument	1,350	1,350
2009 Shelf Registration Statement-$1,750 issued at par in May 2011 at three month USD LIBOR plus 0.28%, due May 2013
Long-term debt
Balance outstanding	1,750	1,750
Face amount of debt instrument	1,750	1,750
Reference interest rate	three-month USD LIBOR	three-month USD LIBOR
Spread on reference interest rate (as a percent)	0.28%	0.28%
2009 Shelf Registration Statement-$500 issued at par in May 2011 at three month USD LIBOR plus 0.4%, due May 2014
Long-term debt
Balance outstanding	500	500
Face amount of debt instrument	500	500
Reference interest rate	three-month USD LIBOR	three-month USD LIBOR
Spread on reference interest rate (as a percent)	0.40%	0.40%
2009 Shelf Registration Statement-$500 issued at discount to par at a price of 99.971% in May 2011 at 1.55%, due May 2014
Long-term debt
Balance outstanding	500	500
Discount to par (as a percent)	99.971%	99.971%
Interest rate (as a percent)	1.55%	1.55%
Face amount of debt instrument	500	500
2009 Shelf Registration Statement-$1,000 issued at discount to par at a price of 99.958% in May 2011 at 2.65%, due June 2016
Long-term debt
Balance outstanding	1,000	1,000
Discount to par (as a percent)	99.958%	99.958%
Interest rate (as a percent)	2.65%	2.65%
Face amount of debt instrument	1,000	1,000
2009 Shelf Registration Statement-$1,250 issued at discount to par at a price of 99.799% in May 2011 at 4.3%, due June 2021
Long-term debt
Balance outstanding	1,248	1,248
Discount to par (as a percent)	99.799%	99.799%
Interest rate (as a percent)	4.30%	4.30%
Face amount of debt instrument	1,250	1,250
2009 Shelf Registration Statement-$750 issued at discount to par at a price of 99.977% in September 2011 at 2.35%, due March 2015
Long-term debt
Balance outstanding	750	750
Discount to par (as a percent)	99.977%	99.977%
Interest rate (as a percent)	2.35%	2.35%
Face amount of debt instrument	750	750
2009 Shelf Registration Statement-$1,300 issued at discount to par at a price of 99.784% in September 2011 at 3.0%, due September 2016
Long-term debt
Balance outstanding	1,298	1,297
Discount to par (as a percent)	99.784%	99.784%
Interest rate (as a percent)	3.00%	3.00%
Face amount of debt instrument	1,300	1,300
2009 Shelf Registration Statement-$1,000 issued at discount to par at a price of 99.816% in September 2011 at 4.375%, due September 2021
Long-term debt
Balance outstanding	998	998
Discount to par (as a percent)	99.816%	99.816%
Interest rate (as a percent)	4.375%	4.375%
Face amount of debt instrument	1,000	1,000
2009 Shelf Registration Statement-$1,200 issued at discount to par at a price of 99.863% in September 2011 at 6.0% due September 2041
Long-term debt
Balance outstanding	1,198	1,198
Discount to par (as a percent)	99.863%	99.863%
Interest rate (as a percent)	6.00%	6.00%
Face amount of debt instrument	1,200	1,200
2009 Shelf Registration Statement-$350 issued at par in September 2011 at three month USD LIBOR plus 1.55%, due September 2014
Long-term debt
Balance outstanding	350	350
Face amount of debt instrument	350	350
Reference interest rate	three-month USD LIBOR	three-month USD LIBOR
Spread on reference interest rate (as a percent)	1.55%	1.55%
2009 Shelf Registration Statement-$650 issued at discount to par at a price of 99.946% in December 2011 at 2.625%, due December 2014
Long-term debt
Balance outstanding	650
Discount to par (as a percent)	99.946%
Interest rate (as a percent)	2.625%
Face amount of debt instrument	650
2009 Shelf Registration Statement-$850 issued at discount to par at a price of 99.790% in December 2011 at 3.3%, due December 2016
Long-term debt
Balance outstanding	848
Discount to par (as a percent)	99.79%
Interest rate (as a percent)	3.30%
Face amount of debt instrument	850
2009 Shelf Registration Statement-$1,500 issued at discount to par at a price of 99.707% in December 2011 at 4.65%, due December 2021
Long-term debt
Balance outstanding	1,496
Discount to par (as a percent)	99.707%
Interest rate (as a percent)	4.65%
Face amount of debt instrument	1,500
2009 Shelf Registration Statement-$1,500 issued at discount to par at a price of 99.985% in March 2012 at 2.6%, due September 2017
Long-term debt
Balance outstanding	1,500
Discount to par (as a percent)	99.985%
Interest rate (as a percent)	2.60%
Face amount of debt instrument	1,500
2009 Shelf Registration Statement-$500 issued at discount to par at a price of 99.771% in March 2012 at 4.05%, due September 2022
Long-term debt
Balance outstanding	499
Discount to par (as a percent)	99.771%
Interest rate (as a percent)	4.05%
Face amount of debt instrument	500
EDS Senior Notes
Long-term debt
Balance outstanding	1,428	1,435
EDS Senior Notes-$1,100 issued June 2003 at 6.0%, due August 2013
Long-term debt
Balance outstanding	1,114	1,120
Interest rate (as a percent)	6.00%	6.00%
Face amount of debt instrument	1,100	1,100
EDS Senior Notes-$300 issued October 1999 at 7.45%, due October 2029
Long-term debt
Balance outstanding	314	315
Interest rate (as a percent)	7.45%	7.45%
Face amount of debt instrument	300	300
Other, including capital lease obligations, at 0.60%-8.63%, due in calendar years 2012-2024
Long-term debt
Other, including capital lease obligations	702	836
Minimum interest rate (as a percent)	0.60%	0.60%
Maximum interest rate (as a percent)	8.63%	8.63%
Borrowings collateralized by certain financing receivable assets	$ 215

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Fair Value (Details) (USD $)	Apr. 30, 2012	Oct. 31, 2011
Fair Value and Carrying Value of Debt
Fair value, short- and long-term debt	$ 30,600,000,000	$ 31,100,000,000
Carrying value, short- and long-term debt	30,100,000,000	30,600,000,000
Fair Value, Measurements, Recurring | Estimate of Fair Value, Fair Value Disclosure
Financial assets and liabilities measured at fair value on a recurring basis
Total Assets, measured at fair value on a recurring basis	6,499,000,000	6,842,000,000
Total Liabilities, measured at fair value on a recurring basis	521,000,000	904,000,000
Fair Value, Measurements, Recurring | Estimate of Fair Value, Fair Value Disclosure | Time deposits
Financial assets and liabilities measured at fair value on a recurring basis
Total Assets, measured at fair value on a recurring basis	2,796,000,000	5,120,000,000
Fair Value, Measurements, Recurring | Estimate of Fair Value, Fair Value Disclosure | Money market funds
Financial assets and liabilities measured at fair value on a recurring basis
Total Assets, measured at fair value on a recurring basis	1,985,000,000	236,000,000
Fair Value, Measurements, Recurring | Estimate of Fair Value, Fair Value Disclosure | Mutual funds
Financial assets and liabilities measured at fair value on a recurring basis
Total Assets, measured at fair value on a recurring basis	380,000,000
Fair Value, Measurements, Recurring | Estimate of Fair Value, Fair Value Disclosure | Marketable equity securities
Financial assets and liabilities measured at fair value on a recurring basis
Total Assets, measured at fair value on a recurring basis	50,000,000	122,000,000
Fair Value, Measurements, Recurring | Estimate of Fair Value, Fair Value Disclosure | Foreign bonds
Financial assets and liabilities measured at fair value on a recurring basis
Total Assets, measured at fair value on a recurring basis	372,000,000	383,000,000
Fair Value, Measurements, Recurring | Estimate of Fair Value, Fair Value Disclosure | Corporate bonds and other debt securities
Financial assets and liabilities measured at fair value on a recurring basis
Total Assets, measured at fair value on a recurring basis	53,000,000	53,000,000
Fair Value, Measurements, Recurring | Estimate of Fair Value, Fair Value Disclosure | Interest rate contracts
Financial assets and liabilities measured at fair value on a recurring basis
Total Assets, measured at fair value on a recurring basis	411,000,000	593,000,000
Total Liabilities, measured at fair value on a recurring basis	44,000,000	71,000,000
Fair Value, Measurements, Recurring | Estimate of Fair Value, Fair Value Disclosure | Foreign exchange contracts
Financial assets and liabilities measured at fair value on a recurring basis
Total Assets, measured at fair value on a recurring basis	438,000,000	304,000,000
Total Liabilities, measured at fair value on a recurring basis	477,000,000	832,000,000
Fair Value, Measurements, Recurring | Estimate of Fair Value, Fair Value Disclosure | Other derivatives
Financial assets and liabilities measured at fair value on a recurring basis
Total Assets, measured at fair value on a recurring basis	14,000,000	31,000,000
Total Liabilities, measured at fair value on a recurring basis		1,000,000
Fair Value, Measurements, Recurring | Fair Value Measured Using Level 1
Financial assets and liabilities measured at fair value on a recurring basis
Total Assets, measured at fair value on a recurring basis	2,040,000,000	366,000,000
Fair Value, Measurements, Recurring | Fair Value Measured Using Level 1 | Money market funds
Financial assets and liabilities measured at fair value on a recurring basis
Total Assets, measured at fair value on a recurring basis	1,985,000,000	236,000,000
Fair Value, Measurements, Recurring | Fair Value Measured Using Level 1 | Marketable equity securities
Financial assets and liabilities measured at fair value on a recurring basis
Total Assets, measured at fair value on a recurring basis	45,000,000	120,000,000
Fair Value, Measurements, Recurring | Fair Value Measured Using Level 1 | Foreign bonds
Financial assets and liabilities measured at fair value on a recurring basis
Total Assets, measured at fair value on a recurring basis	7,000,000	7,000,000
Fair Value, Measurements, Recurring | Fair Value Measured Using Level 1 | Corporate bonds and other debt securities
Financial assets and liabilities measured at fair value on a recurring basis
Total Assets, measured at fair value on a recurring basis	3,000,000	3,000,000
Fair Value, Measurements, Recurring | Fair Value Measured Using Level 2
Financial assets and liabilities measured at fair value on a recurring basis
Total Assets, measured at fair value on a recurring basis	4,398,000,000	6,387,000,000
Total Liabilities, measured at fair value on a recurring basis	512,000,000	895,000,000
Fair Value, Measurements, Recurring | Fair Value Measured Using Level 2 | Time deposits
Financial assets and liabilities measured at fair value on a recurring basis
Total Assets, measured at fair value on a recurring basis	2,796,000,000	5,120,000,000
Fair Value, Measurements, Recurring | Fair Value Measured Using Level 2 | Mutual funds
Financial assets and liabilities measured at fair value on a recurring basis
Total Assets, measured at fair value on a recurring basis	380,000,000
Fair Value, Measurements, Recurring | Fair Value Measured Using Level 2 | Marketable equity securities
Financial assets and liabilities measured at fair value on a recurring basis
Total Assets, measured at fair value on a recurring basis	5,000,000	2,000,000
Fair Value, Measurements, Recurring | Fair Value Measured Using Level 2 | Foreign bonds
Financial assets and liabilities measured at fair value on a recurring basis
Total Assets, measured at fair value on a recurring basis	365,000,000	376,000,000
Fair Value, Measurements, Recurring | Fair Value Measured Using Level 2 | Corporate bonds and other debt securities
Financial assets and liabilities measured at fair value on a recurring basis
Total Assets, measured at fair value on a recurring basis	2,000,000	2,000,000
Fair Value, Measurements, Recurring | Fair Value Measured Using Level 2 | Interest rate contracts
Financial assets and liabilities measured at fair value on a recurring basis
Total Assets, measured at fair value on a recurring basis	411,000,000	593,000,000
Total Liabilities, measured at fair value on a recurring basis	44,000,000	71,000,000
Fair Value, Measurements, Recurring | Fair Value Measured Using Level 2 | Foreign exchange contracts
Financial assets and liabilities measured at fair value on a recurring basis
Total Assets, measured at fair value on a recurring basis	437,000,000	269,000,000
Total Liabilities, measured at fair value on a recurring basis	468,000,000	823,000,000
Fair Value, Measurements, Recurring | Fair Value Measured Using Level 2 | Other derivatives
Financial assets and liabilities measured at fair value on a recurring basis
Total Assets, measured at fair value on a recurring basis	2,000,000	25,000,000
Total Liabilities, measured at fair value on a recurring basis		1,000,000
Fair Value, Measurements, Recurring | Fair Value Measured Using Level 3
Financial assets and liabilities measured at fair value on a recurring basis
Total Assets, measured at fair value on a recurring basis	61,000,000	89,000,000
Total Liabilities, measured at fair value on a recurring basis	9,000,000	9,000,000
Fair Value, Measurements, Recurring | Fair Value Measured Using Level 3 | Corporate bonds and other debt securities
Financial assets and liabilities measured at fair value on a recurring basis
Total Assets, measured at fair value on a recurring basis	48,000,000	48,000,000
Fair Value, Measurements, Recurring | Fair Value Measured Using Level 3 | Foreign exchange contracts
Financial assets and liabilities measured at fair value on a recurring basis
Total Assets, measured at fair value on a recurring basis	1,000,000	35,000,000
Total Liabilities, measured at fair value on a recurring basis	9,000,000	9,000,000
Fair Value, Measurements, Recurring | Fair Value Measured Using Level 3 | Other derivatives
Financial assets and liabilities measured at fair value on a recurring basis
Total Assets, measured at fair value on a recurring basis	$ 12,000,000	$ 6,000,000

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Borrowings (Tables)

6 Months Ended

Apr. 30, 2012

Borrowings

Notes Payable and Short-Term Borrowings

	April 30, 2012					October 31, 2011
	Amount Outstanding		Weighted- Average Interest Rate			Amount Outstanding		Weighted- Average Interest Rate
	In millions					In millions
Commercial paper	$	345		1.5	%	$	3,215		0.4	%
Current portion of long-term debt		3,346		1.8	%		4,345		2.4	%
Notes payable to banks, lines of credit and other		561		3.4	%		523		2.9	%
	$	4,252				$	8,083

Long-Term Debt

	April 30, 2012			October 31, 2011
	In millions
U.S. Dollar Global Notes
2002 Shelf Registration Statement:
$500 issued at discount to par at a price of 99.505% in June 2002 at 6.5%, due July 2012	$	500		$	500
2006 Shelf Registration Statement:
$600 issued at par in February 2007 at three-month USD LIBOR plus 0.11%, paid March 2012		—			600
$900 issued at discount to par at a price of 99.938% in February 2007 at 5.25%, paid March 2012		—			900
$500 issued at discount to par at a price of 99.694% in February 2007 at 5.4%, due March 2017		499			499
$1,500 issued at discount to par at a price of 99.921% in March 2008 at 4.5%, due March 2013		1,500			1,500
$750 issued at discount to par at a price of 99.932% in March 2008 at 5.5%, due March 2018		750			750
$2,000 issued at discount to par at a price of 99.561% in December 2008 at 6.125%, due March 2014		1,997			1,996
$1,000 issued at discount to par at a price of 99.956% in February 2009 at 4.25%, paid February 2012		—			1,000
$1,500 issued at discount to par at a price of 99.993% in February 2009 at 4.75%, due June 2014		1,500			1,500
2009 Shelf Registration Statement:
$250 issued at discount to par at a price of 99.984% in May 2009 at 2.95%, due August 2012		250			250
$800 issued at par in September 2010 at three-month USD LIBOR plus 0.125%, due September 2012		800			800
$1,100 issued at discount to par at a price of 99.921% in September 2010 at 1.25%, due September 2013		1,100			1,099
$1,100 issued at discount to par at a price of 99.887% in September 2010 at 2.125%, due September 2015		1,099			1,099
$650 issued at discount to par at a price of 99.911% in December 2010 at 2.2%, due December 2015		650			650
$1,350 issued at discount to par at a price of 99.827% in December 2010 at 3.75%, due December 2020		1,348			1,348
$1,750 issued at par in May 2011 at three month USD LIBOR plus 0.28%, due May 2013		1,750			1,750
$500 issued at par in May 2011 at three month USD LIBOR plus 0.4%, due May 2014		500			500
$500 issued at discount to par at a price of 99.971% in May 2011 at 1.55%, due May 2014		500			500
$1,000 issued at discount to par at a price of 99.958% in May 2011 at 2.65%, due June 2016		1,000			1,000
$1,250 issued at discount to par at a price of 99.799% in May 2011 at 4.3%, due June 2021		1,248			1,248
$750 issued at discount to par at a price of 99.977% in September 2011 at 2.35%, due March 2015		750			750
$1,300 issued at discount to par at a price of 99.784% in September 2011 at 3.0%, due September 2016		1,298			1,297
$1,000 issued at discount to par at a price of 99.816% in September 2011 at 4.375%, due September 2021		998			998
$1,200 issued at discount to par at a price of 99.863% in September 2011 at 6.0%, due September 2041		1,198			1,198
$350 issued at par in September 2011 at three-month USD LIBOR plus 1.55%, due September 2014		350			350
$650 issued at discount to par at a price of 99.946% in December 2011 at 2.625%, due December 2014		650			—
$850 issued at discount to par at a price of 99.790% in December 2011 at 3.3%, due December 2016		848			—
$1,500 issued at discount to par at a price of 99.707% in December 2011 at 4.65%, due December 2021		1,496			—
$1,500 issued at discount to par at a price of 99.985% in March 2012 at 2.6%, due September 2017		1,500			—
$500 issued at discount to par at a price of 99.771% in March 2012 at 4.05%, due September 2022		499			—
		26,578			24,082
EDS Senior Notes
$1,100 issued June 2003 at 6.0%, due August 2013		1,114			1,120
$300 issued October 1999 at 7.45%, due October 2029		314			315
		1,428			1,435
Other, including capital lease obligations, at 0.60%-8.63%, due in calendar years 2012-2024		702			836
Fair value adjustment related to hedged debt		463			543
Less: current portion		(3,346	)		(4,345	)
Total long-term debt	$	25,825		$	22,551

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Stockholders' Equity (Details) (USD $) Share data in Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Apr. 30, 2012	Apr. 30, 2011	Apr. 30, 2012	Apr. 30, 2011	Oct. 31, 2011
Stockholders' Equity
Share repurchases executed	13		43
Share repurchases settled	13	63	43	117
Share repurchases settled	$ 350,000,000	$ 2,700,000,000	$ 1,130,000,000	$ 4,976,000,000
Share repurchases executed during period, which will settle in next period	1
Share repurchase authorization remaining			9,700,000,000
Comprehensive Income
Net earnings	1,593,000,000	2,304,000,000	3,061,000,000	4,909,000,000
Accumulated Other Comprehensive Income (Loss), net of taxes
Net unrealized gain on available-for-sale securities	23,000,000		23,000,000		37,000,000
Net unrealized gain (loss) on cash flow hedges	33,000,000		33,000,000		(41,000,000)
Cumulative translation adjustment	(147,000,000)		(147,000,000)		(385,000,000)
Unrealized components of defined benefit plans	(2,975,000,000)		(2,975,000,000)		(3,109,000,000)
Accumulated other comprehensive loss	(3,066,000,000)		(3,066,000,000)		(3,498,000,000)
Total HP Stockholders' Equity
Comprehensive Income
Net earnings	1,593,000,000	2,304,000,000	3,061,000,000	4,909,000,000
Net change in unrealized gains (losses) on available-for-sale securities:
Net change in unrealized (losses) gains on available-for-sale securities, with no tax effect and net of tax benefit of $7 million for three months and net of tax benefit of $5 million and $2 million for six months ended April 30, 2012 and 2011 respectively	43,000,000		(14,000,000)	10,000,000
Net change in unrealized gains/losses on cash flow hedges:
Unrealized (losses) gains recognized in OCI, net of tax benefit of $60 million and $273 million for three months and net of tax of $92 million and net of tax benefit of $241 million for six months ended April 30, 2012 and 2011 respectively	(131,000,000)	(498,000,000)	124,000,000	(438,000,000)
Losses (gains) reclassified into income, with no tax effect and net of tax benefit of $110 million for three months and net of tax of $37 million and net of tax benefit of $109 million for six months ended April 30, 2012 and 2011 respectively	11,000,000	226,000,000	(50,000,000)	213,000,000
Net change in unrealized gains on cash flow hedges	(120,000,000)	(272,000,000)	74,000,000	(225,000,000)
Net change in cumulative translation adjustment, net of tax of $52 million and $1 million for three months and net of tax of $38 million and $18 million for six months ended April 30, 2012 and 2011 respectively	471,000,000	81,000,000	238,000,000	132,000,000
Net change in unrealized components of defined benefit plans, net of tax benefit of $14 million and $108 million for three months and net of tax of $56 million and net of tax benefit of $98 million for six months ended April 30, 2012 and 2011 respectively	47,000,000	297,000,000	134,000,000	328,000,000
Comprehensive income	2,034,000,000	2,410,000,000	3,493,000,000	5,154,000,000
Components of comprehensive income, tax effects
Change in net unrealized gains, tax effect		(7,000,000)	(5,000,000)	(2,000,000)
Unrealized gains (losses) recognized in OCI, tax effect	(60,000,000)	(273,000,000)	92,000,000	(241,000,000)
Losses (Gains) reclassified into income, tax effect		110,000,000	(37,000,000)	109,000,000
Net change in cumulative translation adjustment, tax effect	52,000,000	1,000,000	38,000,000	18,000,000
Net change in unrealized components of defined benefit plans, tax effect	$ (14,000,000)	$ (108,000,000)	$ 56,000,000	$ (98,000,000)

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Net Earnings Per Share (Tables)

6 Months Ended

Apr. 30, 2012

Net Earnings Per Share

Basic and diluted EPS calculations

	Three months ended April 30				Six months ended April 30
	2012		2011		2012		2011
	In millions, except per share amounts
Numerator:
Net earnings(1)	$	1,593	$	2,304	$	3,061	$	4,909
Denominator:
Weighted-average shares used to compute basic EPS		1,979		2,150		1,980		2,166
Dilutive effect of employee stock plans		8		34		15		37
Weighted-average shares used to compute diluted EPS		1,987		2,184		1,995		2,203
Net earnings per share:
Basic	$	0.80	$	1.07	$	1.55	$	2.27
Diluted	$	0.80	$	1.05	$	1.53	$	2.23

⁽¹⁾

Net earnings available to participating securities were not significant for the three and six months ended April 30, 2012 and 2011. HP considers restricted stock that provides the holder with a non-forfeitable right to receive dividends to be a participating security.

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Financial Instruments (Details 4) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Apr. 30, 2012	Apr. 30, 2011	Apr. 30, 2012	Apr. 30, 2011
Effect of derivative instruments not designated as hedging instruments on earnings
Gain (Loss) recognized in income on derivatives not designated as hedges	$ (79)	$ (608)	$ (161)	$ (685)
Interest rate contracts | Interest and other, net
Effect of fair value hedges on earnings
Gain (Loss) recognized in income on derivative, fair value hedges	(80)	(25)	(76)	(203)
Gain (Loss) recognized in income on related hedged item, fair value hedges	80	27	80	201
Effect of derivative instruments not designated as hedging instruments on earnings
Gain (Loss) recognized in income on derivatives not designated as hedges	1	1	11	3
Foreign exchange contracts | Interest and other, net
Effect of derivative instruments not designated as hedging instruments on earnings
Gain (Loss) recognized in income on derivatives not designated as hedges	(74)	(621)	(156)	(698)
Other derivatives | Interest and other, net
Effect of derivative instruments not designated as hedging instruments on earnings
Gain (Loss) recognized in income on derivatives not designated as hedges	(6)	12	(16)	10
Cash flow hedges
Effect of cash flow hedges on earnings
Gain (Loss) recognized in Other Comprehensive Income ("OCI") on derivative (effective portion)	(191)	(771)	216	(679)
Gain (Loss) Reclassified from Accumulated OCI Into Income (Effective Portion)	(11)	(336)	87	(322)
Gain recognized in income on derivative (ineffective portion and amount excluded from effectiveness testing)		1		3
Gain expected to be reclassified from Accumulated OCI into earnings in next 12 months			47
Cash flow hedges | Foreign exchange contracts | Net revenue
Effect of cash flow hedges on earnings
Gain (Loss) recognized in Other Comprehensive Income ("OCI") on derivative (effective portion)	(110)	(780)	317	(680)
Gain (Loss) Reclassified from Accumulated OCI Into Income (Effective Portion)	(2)	(296)	86	(320)
Cash flow hedges | Foreign exchange contracts | Cost of products
Effect of cash flow hedges on earnings
Gain (Loss) recognized in Other Comprehensive Income ("OCI") on derivative (effective portion)	(53)	27	(61)	18
Gain (Loss) Reclassified from Accumulated OCI Into Income (Effective Portion)	2	(4)	18	22
Cash flow hedges | Foreign exchange contracts | Other operating expenses
Effect of cash flow hedges on earnings
Gain (Loss) recognized in Other Comprehensive Income ("OCI") on derivative (effective portion)	(1)	7	(4)	5
Gain (Loss) Reclassified from Accumulated OCI Into Income (Effective Portion)	(1)	1	(2)	2
Cash flow hedges | Foreign exchange contracts | Interest and other, net
Effect of cash flow hedges on earnings
Gain (Loss) recognized in Other Comprehensive Income ("OCI") on derivative (effective portion)	(17)	(36)	(17)	(20)
Gain (Loss) Reclassified from Accumulated OCI Into Income (Effective Portion)	(15)	(39)	(15)	(32)
Cash flow hedges | Foreign exchange contracts - joint venture | Net revenue
Effect of cash flow hedges on earnings
Gain (Loss) recognized in Other Comprehensive Income ("OCI") on derivative (effective portion)	(10)	11	(19)	(2)
Gain (Loss) Reclassified from Accumulated OCI Into Income (Effective Portion)	5	2		6
Cash flow hedges | Foreign exchange contracts - joint venture | Interest and other, net
Effect of cash flow hedges on earnings
Gain recognized in income on derivative (ineffective portion and amount excluded from effectiveness testing)		1		3
Net investment hedges | Foreign exchange contracts | Interest and other, net
Effect of cash flow hedges on earnings
Gain (Loss) recognized in Other Comprehensive Income ("OCI") on derivative (effective portion)	$ 13	$ (92)	$ 38	$ (97)

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Goodwill and Purchased Intangible Assets (Details) (USD $) In Millions, unless otherwise specified	6 Months Ended			6 Months Ended						6 Months Ended
	Apr. 30, 2012	Apr. 30, 2012 Personal Systems Group	Oct. 31, 2011 Personal Systems Group	Apr. 30, 2012 Services	Apr. 30, 2012 Imaging and Printing Group	Apr. 30, 2012 Enterprise Servers, Storage and Networking	Apr. 30, 2012 Software	Apr. 30, 2012 HP Financial Services	Oct. 31, 2011 HP Financial Services	Apr. 30, 2012 Corporate Investments
Goodwill
Goodwill beginning balance	$ 44,551	$ 2,498	$ 2,498	$ 17,280	$ 2,471	$ 8,070	$ 14,063	$ 144	$ 144	$ 25
Goodwill acquired during the period	12				12
Goodwill adjustments/reclassifications	375			(20)		(302)	712			(15)
Goodwill ending balance	44,938	2,498	2,498	17,260	2,483	7,768	14,775	144	144	10
Goodwill reclassification adjustment	280
Goodwill purchase accounting, adjustments to estimated fair values of purchased intangible assets and net tangible assets							224
Goodwill, currency translation adjustments							$ 213

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Segment Information (Tables)

6 Months Ended

Apr. 30, 2012

Segment Information

Schedule of Revenue and Earnings (Loss) from Operations, by Segment

	Three months ended April 30
	Net Revenue				Earnings (Loss) from Operations
	2012		2011		2012			2011
	In millions
Personal Systems Group	$	9,452	$	9,415	$	524		$	533
Services		8,831		8,916		997			1,372
Imaging and Printing Group		6,132		6,843		808			1,136
Enterprise Servers, Storage and Networking		5,211		5,516		585			760
Software(1)		970		797		172			158
HP Financial Services		968		885		96			83
Corporate Investments		18		42		(49	)		(199	)
Total segments	$	31,582	$	32,414	$	3,133		$	3,843

	Six months ended April 30
	Net Revenue				Earnings (Loss) from Operations
	2012		2011		2012			2011
	In millions
Personal Systems Group	$	18,325	$	19,864	$	988		$	1,205
Services		17,457		17,445		1,902			2,753
Imaging and Printing Group		12,390		13,574		1,569			2,255
Enterprise Servers, Storage and Networking		10,229		11,115		1,147			1,590
Software(1)		1,916		1,522		334			278
HP Financial Services		1,918		1,712		187			162
Corporate Investments		76		104		(97	)		(377	)
Total segments	$	62,311	$	65,336	$	6,030		$	7,866

⁽¹⁾

Includes results of Autonomy from the date of acquisition in October 2011.

Schedule of Reconciliation of Revenues and Earnings before Taxes from Segments to Consolidated

	Three months ended April 30						Six months ended April 30
	2012			2011			2012			2011
	In millions
Net revenue:
Segment total	$	31,582		$	32,414		$	62,311		$	65,336
Elimination of intersegment net revenue and other		(889	)		(782	)		(1,582	)		(1,402	)
Total HP consolidated net revenue	$	30,693		$	31,632		$	60,729		$	63,934
Earnings before taxes:
Total segment earnings from operations	$	3,133		$	3,843		$	6,030		$	7,866
Corporate and unallocated costs and eliminations		(203	)		(153	)		(356	)		(4	)
Unallocated costs related to stock-based compensation expense		(168	)		(130	)		(342	)		(296	)
Amortization of purchased intangible assets		(470	)		(413	)		(936	)		(838	)
Restructuring charges		(53	)		(158	)		(93	)		(316	)
Acquisition-related charges		(17	)		(21	)		(39	)		(50	)
Interest and other, net		(243	)		(76	)		(464	)		(173	)
Total HP consolidated earnings before taxes	$	1,979		$	2,892		$	3,800		$	6,189

Schedule of Revenue by Segment and Business Unit

	Three months ended April 30						Six months ended April 30
	2012			2011			2012			2011
	In millions
Net revenue:
Notebooks	$	4,900		$	5,039		$	9,842		$	10,847
Desktops		3,827			3,641			7,033			7,537
Workstations		537			541			1,072			1,076
Other		188			194			378			404
Personal Systems Group		9,452			9,415			18,325			19,864
Infrastructure Technology Outsourcing		3,669			3,786			7,370			7,430
Technology Services		2,638			2,629			5,200			5,143
Application and Business Services		2,524			2,501			4,887			4,872
Services		8,831			8,916			17,457			17,445
Supplies		4,060			4,612			8,139			8,970
Commercial Hardware		1,479			1,536			2,968			3,101
Consumer Hardware		593			695			1,283			1,503
Imaging and Printing Group		6,132			6,843			12,390			13,574
Industry Standard Servers		3,186			3,387			6,258			6,835
Storage		990			980			1,945			1,992
Business Critical Systems		421			546			826			1,101
Networking		614			603			1,200			1,187
Enterprise Servers, Storage and Networking		5,211			5,516			10,229			11,115
Software(1)		970			797			1,916			1,522
HP Financial Services		968			885			1,918			1,712
Corporate Investments		18			42			76			104
Total segments		31,582			32,414			62,311			65,336
Eliminations of intersegment net revenue and other		(889	)		(782	)		(1,582	)		(1,402	)
Total HP consolidated net revenue	$	30,693		$	31,632		$	60,729		$	63,934

⁽¹⁾

Includes results of Autonomy from the date of acquisition in October 2011.

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Financing Receivables and Operating Leases (Details 2) (USD $) In Millions, unless otherwise specified	6 Months Ended
	Apr. 30, 2012 D	Oct. 31, 2011
Gross financing receivables
Net Investment	$ 7,405	$ 7,307
Allowance for doubtful accounts
Balance at beginning of period	130
Additions to allowance	22
Deductions, net of recoveries	(6)
Balance, end of period	146
Allowance for financing receivables individually evaluated for loss	48	35
Allowance for financing receivables collectively evaluated for loss	98	95
Gross financing receivables individually evaluated for loss	313	228
Gross financing receivables collectively evaluated for loss	7,092	7,079
Period past due, after which account is put on non-accrual status (in days)	90
Period past due, after which a write-off or specific reserve is created (in days)	180
Total financing receivables on non-accrual status	197	157
Total financing receivables greater than 90 days past due and still accruing interest	116	71
Low
Gross financing receivables
Net Investment	4,414	4,261
Moderate
Gross financing receivables
Net Investment	2,913	2,989
High
Gross financing receivables
Net Investment	$ 78	$ 57

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Subsequent Events (Details) (USD $) In Billions, unless otherwise specified	1 Months Ended
	May 31, 2012 position
Restructuring plan
Subsequent Events
Expected number of employees to exit the entity	27,000
Expected aggregate pre-tax charges	$ 3.5
Aggregate pre-tax charges to result in cash expenditures	2.7
Workforce reductions
Subsequent Events
Expected aggregate pre-tax charges	3.0
Other items
Subsequent Events
Expected aggregate pre-tax charges	0.5
Compaq trade name impairment
Subsequent Events
Remaining useful life (in years)	5
Expected impairment charges	$ 1.2

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Financial Instruments (Details) (USD $) In Millions, unless otherwise specified	Apr. 30, 2012	Oct. 31, 2011
Cash equivalents and available-for-sale investments
Cost, Total	$ 5,602	$ 5,861
Gross Unrealized Gain	66	70
Gross Unrealized Loss	(36)	(21)
Estimated Fair Value, Total	5,632	5,910
Total cash equivalents
Cash equivalents and available-for-sale investments
Cost, Cash Equivalents	4,844	5,348
Estimated Fair Value, Cash Equivalents	4,844	5,348
Time deposits
Cash equivalents and available-for-sale investments
Cost, Cash Equivalents	2,788	5,112
Estimated Fair Value, Cash Equivalents	2,788	5,112
Money market funds
Cash equivalents and available-for-sale investments
Cost, Cash Equivalents	1,985	236
Estimated Fair Value, Cash Equivalents	1,985	236
Mutual funds
Cash equivalents and available-for-sale investments
Cost, Cash Equivalents	71
Estimated Fair Value, Cash Equivalents	71
Total debt securities
Cash equivalents and available-for-sale investments
Cost, Investments	696	399
Gross Unrealized Gain	63	66
Gross Unrealized Loss	(17)	(21)
Estimated Fair Value, Investments	742	444
Gross unrealized loss of debt securities in a continuous loss position for more than 12 months	17	21
Time deposits, debt securities
Cash equivalents and available-for-sale investments
Cost, Investments	8	8
Estimated Fair Value, Investments	8	8
Foreign bonds
Cash equivalents and available-for-sale investments
Cost, Investments	309	317
Gross Unrealized Gain	63	66
Estimated Fair Value, Investments	372	383
Mutual funds
Cash equivalents and available-for-sale investments
Cost, Investments	309
Estimated Fair Value, Investments	309
Corporate bonds and other debt securities
Cash equivalents and available-for-sale investments
Cost, Investments	70	74
Gross Unrealized Loss	(17)	(21)
Estimated Fair Value, Investments	53	53
Equity securities in public companies
Cash equivalents and available-for-sale investments
Cost, Investments	62	114
Gross Unrealized Gain	3	4
Gross Unrealized Loss	(19)
Estimated Fair Value, Investments	$ 46	$ 118

XML

Balance Sheet Details

6 Months Ended

Apr. 30, 2012

Balance Sheet Details

Balance Sheet Details

Note 4: Balance Sheet Details

        Balance sheet details were as follows:

• Accounts Receivable

	April 30, 2012			October 31, 2011
	In millions
Accounts receivable	$	17,064		$	18,694
Allowance for doubtful accounts		(455	)		(470	)
	$	16,609		$	18,224

        HP has revolving trade receivables-based facilities permitting it to sell certain trade receivables to third parties. In accordance with the accounting requirements under the Accounting Standards Codification relating to "Transfers and Servicing," trade receivables are derecognized from the Consolidated Condensed Balance Sheets when sold to third parties. The total aggregate capacity of the facilities was $1.4 billion as of April 30, 2012, including a $0.9 billion partial recourse facility entered into in May 2011 and an aggregate capacity of $0.5 billion in non-recourse facilities. The recourse obligation is measured using market data from similar transactions and reported as a current liability in the Consolidated Condensed Balance Sheets. The recourse obligation as of April 30, 2012 was not material.

        For the first six months of fiscal 2012 and 2011, trade receivables sold under these facilities were $2.1 billion and $897 million, respectively, which approximates the amount of cash received. The resulting loss on the sales of trade accounts receivable for the three months and six months ended April 30, 2012 was not material. HP had $725 million as of April 30, 2012 and $701 million as of October 31, 2011 of available capacity under these programs.

• Inventory

	April 30, 2012		October 31, 2011
	In millions
Finished goods	$	4,518	$	4,869
Purchased parts and fabricated assemblies		2,788		2,621
	$	7,306	$	7,490

• Property, Plant and Equipment

	April 30, 2012			October 31, 2011
	In millions
Land	$	652		$	687
Buildings and leasehold improvements		8,804			8,620
Machinery and equipment		16,622			16,155
		26,078			25,462
Accumulated depreciation		(13,842	)		(13,170	)
	$	12,236		$	12,292

XML

Goodwill and Purchased Intangible Assets (Details 2) (USD $) In Millions, unless otherwise specified	6 Months Ended
	Apr. 30, 2012	Oct. 31, 2011
Purchased intangible assets
Amortizable purchased intangible assets, gross	$ 13,328	$ 13,908
Amortizable purchased intangible assets, accumulated amortization	(4,949)	(4,441)
Amortizable purchased intangible assets, net	8,379	9,467
Purchased intangible assets, gross	14,757	15,339
Purchased intangible assets, net	9,808	10,898
Amount of fully amortized intangible assets	428
Purchased intangible assets, purchase accounting adjustment	293
Purchased intangible assets, translation adjustments	(165)
In-process research and development ("IPR&D")
Purchased intangible assets
Indefinite-lived purchased intangible assets	7	9
Compaq trade name
Purchased intangible assets
Indefinite-lived purchased intangible assets, trade names	1,422	1,422
Customer contracts, customer lists and distribution agreements
Purchased intangible assets
Amortizable purchased intangible assets, gross	6,073	6,346
Amortizable purchased intangible assets, accumulated amortization	(2,503)	(2,376)
Amortizable purchased intangible assets, net	3,570	3,970
Developed and core technology and patents
Purchased intangible assets
Amortizable purchased intangible assets, gross	6,934	7,226
Amortizable purchased intangible assets, accumulated amortization	(2,319)	(1,944)
Amortizable purchased intangible assets, net	4,615	5,282
Product trademarks
Purchased intangible assets
Amortizable purchased intangible assets, gross	321	336
Amortizable purchased intangible assets, accumulated amortization	(127)	(121)
Amortizable purchased intangible assets, net	$ 194	$ 215

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Fair Value (Tables)

6 Months Ended

Apr. 30, 2012

Fair Value

Assets and Liabilities Measured at Fair Value on a Recurring Basis

	As of April 30, 2012								As of October 31, 2011
	Fair Value Measured Using								Fair Value Measured Using
							Total Balance								Total Balance
	Level 1		Level 2		Level 3				Level 1		Level 2		Level 3
	In millions
Assets
Time deposits	$	—	$	2,796	$	—	$	2,796	$	—	$	5,120	$	—	$	5,120
Money market funds		1,985		—		—		1,985		236		—		—		236
Mutual funds		—		380		—		380		—		—		—		—
Marketable equity securities		45		5		—		50		120		2		—		122
Foreign bonds		7		365		—		372		7		376		—		383
Corporate bonds and other debt securities		3		2		48		53		3		2		48		53
Derivatives:
Interest rate contracts		—		411		—		411		—		593		—		593
Foreign exchange contracts		—		437		1		438		—		269		35		304
Other derivatives		—		2		12		14		—		25		6		31
Total Assets	$	2,040	$	4,398	$	61	$	6,499	$	366	$	6,387	$	89	$	6,842
Liabilities
Derivatives:
Interest rate contracts	$	—	$	44	$	—	$	44	$	—	$	71	$	—	$	71
Foreign exchange contracts		—		468		9		477		—		823		9		832
Other derivatives		—		—		—		—		—		1		—		1
Total Liabilities	$	—	$	512	$	9	$	521	$	—	$	895	$	9	$	904

XML

Restructuring Charges (Tables)

6 Months Ended

Apr. 30, 2012

Restructuring Charges

Schedule of Restructuring Reserve by Type of Cost

			Three months ended April 30, 2012 charges		Six months ended April 30, 2012 charges											As of April 30, 2012
	Balance, October 31, 2011							Cash payments			Non-cash settlements and other adjustments			Balance, April 30, 2012		Total costs and adjustments to date		Total expected costs and adjustments
	In millions
Fiscal 2010 acquisitions	$	59	$	—	$	—		$	(18	)	$	—		$	41	$	114	$	121
Fiscal 2010 ES Plan:
Severance		493		—		(100	)		(72	)		(16	)		305		623		623
Infrastructure		3		35		139			(104	)		(37	)		1		332		369
Total ES Plan		496		35		39			(176	)		(53	)		306		955		992
Fiscal 2009 Plan		—		—		7			(8	)		1			—		301		301
Fiscal 2008 HP/EDS Plan:
Severance		—		—		5			(6	)		1			—		2,195		2,195
Infrastructure		258		18		42			(66	)		(7	)		227		1,016		1,085
Total HP/EDS Plan		258		18		47			(72	)		(6	)		227		3,211		3,280
Total restructuring plans	$	813	$	53	$	93		$	(274	)	$	(58	)	$	574	$	4,581	$	4,694

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Income Taxes (Details) (USD $)	3 Months Ended			6 Months Ended		12 Months Ended	70 Months Ended
	Apr. 30, 2012 country	Apr. 30, 2011	Jan. 31, 2011	Apr. 30, 2012 M country	Apr. 30, 2011	Oct. 31, 2008	Aug. 26, 2008	Oct. 31, 2011
Income Taxes
Effective tax rate (as a percent)	19.50%	20.30%		19.50%	20.70%
U.S. federal statutory income tax rate (as a percent)				35.00%
Tax benefits resulting from reconciling items	$ 25,000,000	$ 56,000,000		$ 74,000,000	$ 157,000,000
Tax benefits from restructuring and acquisition charges	22,000,000	53,000,000		50,000,000	112,000,000
Other miscellaneous tax benefits	3,000,000			24,000,000
Tax benefit from the retroactive research and development credit			43,000,000
Unrecognized tax benefits	2,400,000,000			2,400,000,000
Unrecognized tax benefits that would affect effective tax rate if realized	1,100,000,000			1,100,000,000
Accrued income tax payable for interest and penalties	186,000,000			186,000,000
Net interest expense on net tax underpayments, net of tax	4,000,000			4,000,000
Net interest income on net tax overpayments, net of tax				19,000,000
Income tax examination, likelihood of no resolution period (in months)				12
Income tax examination, likelihood of conclusion period (in months)				12
Reasonably possible, reduction in existing unrecognized tax benefits within the next 12 months	297,000,000			297,000,000
Number of foreign countries in which HP is subject to income taxes	80			80
Income tax examination, reduction in tax benefits				626,000,000
Income tax examination, additional tax payable						17,000,000	320,000,000
Classification of current and long-term deferred tax assets and liabilities
Current deferred tax assets	5,042,000,000			5,042,000,000				5,374,000,000
Current deferred tax liabilities	(71,000,000)			(71,000,000)				(41,000,000)
Long-term deferred tax assets	1,590,000,000			1,590,000,000				1,283,000,000
Long-term deferred tax liabilities	(5,241,000,000)			(5,241,000,000)				(5,163,000,000)
Total deferred tax assets net of deferred tax liabilities	$ 1,320,000,000			$ 1,320,000,000				$ 1,453,000,000

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Goodwill and Purchased Intangible Assets (Details 3) (USD $) In Millions, unless otherwise specified	6 Months Ended
	Apr. 30, 2012
Estimated future amortization expense related to finite-lived purchased intangible assets
2012 (remaining 6 months)	$ 937
2013	1,751
2014	1,363
2015	1,201
2016	1,041
2017	609
Thereafter	1,477
Total	$ 8,379

XML

Financial Instruments (Tables)

6 Months Ended

Apr. 30, 2012

Financial Instruments

Cash Equivalents and Available-for-Sale Investments

	April 30, 2012									October 31, 2011
	Cost		Gross Unrealized Gain		Gross Unrealized Loss			Estimated Fair Value		Cost		Gross Unrealized Gain		Gross Unrealized Loss			Estimated Fair Value
	In millions
Cash Equivalents
Time deposits	$	2,788	$	—	$	—		$	2,788	$	5,112	$	—	$	—		$	5,112
Money market funds		1,985		—		—			1,985		236		—		—			236
Mutual funds		71		—		—			71		—		—		—			—
Total cash equivalents		4,844		—		—			4,844		5,348		—		—			5,348
Available-for-Sale Investments
Debt securities:
Time deposits		8		—		—			8		8		—		—			8
Foreign bonds		309		63		—			372		317		66		—			383
Mutual funds		309		—		—			309		—		—		—			—
Corporate bonds and other debt securities		70		—		(17	)		53		74		—		(21	)		53
Total debt securities		696		63		(17	)		742		399		66		(21	)		444
Equity securities in public companies		62		3		(19	)		46		114		4		—			118
Total cash equivalents and available-for-sale investments	$	5,602	$	66	$	(36	)	$	5,632	$	5,861	$	70	$	(21	)	$	5,910

Contractual maturities of short-term and long-term investments in available-for-sale debt securities

	April 30, 2012
	Cost		Estimated Fair Value
	In millions
Due in less than one year	$	314	$	314
Due in one to five years		71		54
Due in more than five years		311		374
	$	696	$	742

Fair Value of Derivative Instruments in the Consolidated Condensed Balance Sheets

	As of April 30, 2012										As of October 31, 2011
	Gross Notional(1)		Other Current Assets		Long-term Financing Receivables and Other Assets		Other Accrued Liabilities		Other Liabilities		Gross Notional(1)		Other Current Assets		Long-term Financing Receivables and Other Assets		Other Accrued Liabilities		Other Liabilities
	In millions
Derivatives designated as hedging instruments
Fair value hedges:
Interest rate contracts	$	8,350	$	34	$	338	$	—	$	—	$	10,075	$	30	$	508	$	—	$	—
Cash flow hedges:
Foreign exchange contracts		19,336		321		26		246		92		21,666		192		30		324		126
Net investment hedges:
Foreign exchange contracts		1,686		15		8		36		15		1,556		7		4		44		56
Total derivatives designated as hedging instruments		29,372		370		372		282		107		33,297		229		542		368		182
Derivatives not designated as hedging instruments
Foreign exchange contracts		12,919		57		11		73		15		13,994		66		5		244		38
Interest rate contracts(2)		2,200		—		39		—		44		2,200		—		55		—		71
Other derivatives		414		2		12		—		—		410		25		6		—		1
Total derivatives not designated as hedging instruments		15,533		59		62		73		59		16,604		91		66		244		110
Total derivatives	$	44,905	$	429	$	434	$	355	$	166	$	49,901	$	320	$	608	$	612	$	292

⁽¹⁾

Represents the face amounts of contracts that were outstanding as of April 30, 2012 and October 31, 2011, respectively.

⁽²⁾

Represents offsetting swaps acquired through previous business combinations that were not designated as hedging instruments.

Effect of Derivative Instruments on the Consolidated Condensed Statements of Earnings

	Gain (Loss) Recognized in Income on Derivative and Related Hedged Item
Derivative Instrument	Location	Three months ended April 30, 2012			Six months ended April 30, 2012			Hedged Item	Location	Three months ended April 30, 2012		Six months ended April 30, 2012
		In millions								In millions
Interest rate contracts	Interest and other, net	$	(80	)	$	(76	)	Fixed-rate debt	Interest and other, net	$	80	$	80

	Gain (Loss) Recognized in Income on Derivative and Related Hedged Item
Derivative Instrument	Location	Three months ended April 30, 2011			Six months ended April 30, 2011			Hedged Item	Location	Three months ended April 30, 2011		Six months ended April 30, 2011
		In millions								In millions
Interest rate contracts	Interest and other, net	$	(25	)	$	(203	)	Fixed-rate debt	Interest and other, net	$	27	$	201

Gain (Loss) Recognized on Cash Flow and Net Investment Hedges

	Gain (Loss) Recognized in Other Comprehensive Income ("OCI") on Derivative (Effective Portion)						Gain (Loss) Reclassified from Accumulated OCI Into Income (Effective Portion)							Gain Recognized in Income on Derivative (Ineffective portion and Amount Excluded from Effectiveness Testing)
	Three months ended April 30, 2012			Six months ended April 30, 2012			Location	Three months ended April 30, 2012			Six months ended April 30, 2012			Location	Three months ended April 30, 2012		Six months ended April 30, 2012
	In millions							In millions							In millions
Cash flow hedges:
Foreign exchange contracts	$	(110	)	$	317		Net revenue	$	(2	)	$	86		Net revenue	$	—	$	—
Foreign exchange contracts		(53	)		(61	)	Cost of products		2			18		Cost of products		—		—
Foreign exchange contracts		(1	)		(4	)	Other operating expenses		(1	)		(2	)	Other operating expenses		—		—
Foreign exchange contracts		(17	)		(17	)	Interest and other, net		(15	)		(15	)	Interest and other, net		—		—
Foreign exchange contracts		(10	)		(19	)	Net revenue		5			—		Interest and other, net		—		—
Total cash flow hedges	$	(191	)	$	216			$	(11	)	$	87			$	—	$	—
Net investment hedges:
Foreign exchange contracts	$	13		$	38		Interest and other, net	$	—		$	—		Interest and other, net	$	—	$	—

	Gain (Loss) Recognized in OCI on Derivative (Effective Portion)						Gain (Loss) Reclassified from Accumulated OCI Into Income (Effective Portion)							Gain Recognized in Income on Derivative (Ineffective portion and Amount Excluded from Effectiveness Testing)
	Three months ended April 30, 2011			Six months ended April 30, 2011			Location	Three months ended April 30, 2011			Six months ended April 30, 2011			Location	Three months ended April 30, 2011		Six months ended April 30, 2011
	In millions							In millions							In millions
Cash flow hedges:
Foreign exchange contracts	$	(780	)	$	(680	)	Net revenue	$	(296	)	$	(320	)	Net revenue	$	—	$	—
Foreign exchange contracts		27			18		Cost of products		(4	)		22		Cost of products		—		—
Foreign exchange contracts		7			5		Other operating expenses		1			2		Other operating expenses		—		—
Foreign exchange contracts		(36	)		(20	)	Interest and other, net		(39	)		(32	)	Interest and other, net		—		—
Foreign exchange contracts		11			(2	)	Net revenue		2			6		Interest and other, net		1		3
Total cash flow hedges	$	(771	)	$	(679	)		$	(336	)	$	(322	)		$	1	$	3
Net investment hedges:
Foreign exchange contracts	$	(92	)	$	(97	)	Interest and other, net	$	—		$	—		Interest and other, net	$	—	$	—

Gain (Loss) Recognized in Income on Derivatives Not Designated as Hedges

	Gain (Loss) Recognized in Income on Derivative
	Location	Three months ended April 30, 2012			Six months ended April 30, 2012
		In millions
Foreign exchange contracts	Interest and other, net	$	(74	)	$	(156	)
Other derivatives	Interest and other, net		(6	)		(16	)
Interest rate contracts	Interest and other, net		1			11
Total		$	(79	)	$	(161	)

	Gain (Loss) Recognized in Income on Derivative
	Location	Three months ended April 30, 2011			Six months ended April 30, 2011
		In millions
Foreign exchange contracts	Interest and other, net	$	(621	)	$	(698	)
Other derivatives	Interest and other, net		12			10
Interest rate contracts	Interest and other, net		1			3
Total		$	(608	)	$	(685	)

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Financing Receivables and Operating Leases (Tables)

6 Months Ended

Apr. 30, 2012

Financing Receivables and Operating Leases

Components of financing receivables

	April 30, 2012			October 31, 2011
	In millions
Minimum lease payments receivable	$	7,828		$	7,721
Unguaranteed residual value		231			233
Unearned income		(654	)		(647	)
Financing receivables, gross		7,405			7,307
Allowance for doubtful accounts		(146	)		(130	)
Financing receivables, net		7,259			7,177
Less current portion		(3,139	)		(3,162	)
Amounts due after one year, net	$	4,120		$	4,015

Credit risk profile of gross financing receivables

	April 30, 2012		October 31, 2011
	In millions
Risk Rating
Low	$	4,414	$	4,261
Moderate		2,913		2,989
High		78		57
Total	$	7,405	$	7,307

Allowance for doubtful accounts

	Six months ended April 30, 2012
	In millions
Allowance for doubtful accounts
Balance, beginning of period	$	130
Additions to allowance		22
Deductions, net of recoveries		(6	)
Balance, end of period	$	146

Allowance for financing receivables and the related financing receivables evaluated for loss

	April 30, 2012		October 31, 2011
	In millions
Allowance for financing receivables individually evaluated for loss	$	48	$	35
Allowance for financing receivables collectively evaluated for loss		98		95
Total	$	146	$	130
Gross financing receivables individually evaluated for loss	$	313	$	228
Gross financing receivables collectively evaluated for loss		7,092		7,079
Total	$	7,405	$	7,307

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Net Earnings Per Share

6 Months Ended

Apr. 30, 2012

Net Earnings Per Share

Net Earnings Per Share

Note 3: Net Earnings Per Share

        HP calculates basic earnings per share ("EPS") using net earnings and the weighted-average number of shares outstanding during the reporting period. Diluted EPS includes any dilutive effect of outstanding stock options, PRUs, restricted stock units and restricted stock.

        The reconciliation of the numerators and denominators of the basic and diluted EPS calculations was as follows:

	Three months ended April 30				Six months ended April 30
	2012		2011		2012		2011
	In millions, except per share amounts
Numerator:
Net earnings(1)	$	1,593	$	2,304	$	3,061	$	4,909
Denominator:
Weighted-average shares used to compute basic EPS		1,979		2,150		1,980		2,166
Dilutive effect of employee stock plans		8		34		15		37
Weighted-average shares used to compute diluted EPS		1,987		2,184		1,995		2,203
Net earnings per share:
Basic	$	0.80	$	1.07	$	1.55	$	2.27
Diluted	$	0.80	$	1.05	$	1.53	$	2.23

⁽¹⁾

Net earnings available to participating securities were not significant for the three and six months ended April 30, 2012 and 2011. HP considers restricted stock that provides the holder with a non-forfeitable right to receive dividends to be a participating security.

        HP excludes options with exercise prices that are greater than the average market price from the calculation of diluted EPS because their effect would be anti-dilutive. For both the three and six months ended April 30, 2012, HP excluded from the calculation of diluted EPS options to purchase 50 million shares, compared to 6 million shares for both the three and six months ended April 30, 2011. In addition, HP also excluded from the calculation of diluted EPS options to purchase an additional 10 million shares for both the three and six months ended April 30, 2012, compared to an additional 1 million shares for both the three and six months ended April 30, 2011, whose combined exercise price, unamortized fair value and excess tax benefits were greater in each of those periods than the average market price for HP's common stock because their effect would be anti-dilutive.

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Guarantees (Tables)

6 Months Ended

Apr. 30, 2012

Guarantees

Changes in aggregate product warranty liabilities

	In millions
Product warranty liability at October 31, 2011	$	2,451
Accruals for warranties issued		1,158
Adjustments related to pre-existing warranties (including changes in estimates)		(62	)
Settlements made (in cash or in kind)		(1,242	)
Product warranty liability at April 30, 2012	$	2,305

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Balance Sheet Details (Details) (USD $)	6 Months Ended
	Apr. 30, 2012	Apr. 30, 2011	Oct. 31, 2011
Accounts receivable
Accounts receivable, gross	$ 17,064,000,000		$ 18,694,000,000
Allowance for doubtful accounts	(455,000,000)		(470,000,000)
Accounts receivable, net	16,609,000,000		18,224,000,000
Maximum capacity, program for sale of trade receivables	1,400,000,000
Partial recourse facility	900,000,000
Non-recourse facility capacity	500,000,000
Trade receivables sold	2,100,000,000	897,000,000
Available capacity, program for sale of trade receivables	725,000,000		701,000,000
Inventory
Finished goods	4,518,000,000		4,869,000,000
Purchased parts and fabricated assemblies	2,788,000,000		2,621,000,000
Inventory, net	$ 7,306,000,000		$ 7,490,000,000

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Guarantees (Details) (USD $) In Millions, unless otherwise specified	6 Months Ended
	Apr. 30, 2012
Changes in aggregated product warranty liabilities
Product warranty liability at the beginning of the period	$ 2,451
Accruals for warranties issued	1,158
Adjustments related to pre-existing warranties (including changes in estimates)	(62)
Settlements made (in cash or in kind)	(1,242)
Product warranty liability at the end of the period	$ 2,305

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Consolidated Condensed Statements of Earnings (USD $) In Millions, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Apr. 30, 2012	Apr. 30, 2011	Apr. 30, 2012	Apr. 30, 2011
Net revenue:
Products	$ 19,962	$ 21,055	$ 39,473	$ 43,249
Services	10,614	10,466	21,023	20,468
Financing income	117	111	233	217
Total net revenue	30,693	31,632	60,729	63,934
Costs and expenses:
Cost of products	15,181	15,819	30,230	32,617
Cost of services	8,280	7,939	16,466	15,447
Financing interest	80	74	158	149
Research and development	850	815	1,636	1,613
Selling, general and administrative	3,540	3,425	6,907	6,542
Amortization of purchased intangible assets	470	413	936	838
Restructuring charges	53	158	93	316
Acquisition-related charges	17	21	39	50
Total operating expenses	28,471	28,664	56,465	57,572
Earnings from operations	2,222	2,968	4,264	6,362
Interest and other, net	(243)	(76)	(464)	(173)
Earnings before taxes	1,979	2,892	3,800	6,189
Provision for taxes	386	588	739	1,280
Net earnings	$ 1,593	$ 2,304	$ 3,061	$ 4,909
Net earnings per share:
Basic (in dollars per share)	$ 0.80	$ 1.07	$ 1.55	$ 2.27
Diluted (in dollars per share)	$ 0.80	$ 1.05	$ 1.53	$ 2.23
Cash dividends declared per share (in dollars per share)			$ 0.24	$ 0.16
Weighted-average shares used to compute net earnings per share:
Basic (in shares)	1,979	2,150	1,980	2,166
Diluted (in shares)	1,987	2,184	1,995	2,203

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Restructuring Charges (Details) (USD $)	3 Months Ended	6 Months Ended		6 Months Ended	12 Months Ended	3 Months Ended	6 Months Ended	1 Months Ended	3 Months Ended	6 Months Ended	3 Months Ended		6 Months Ended	1 Months Ended	6 Months Ended		1 Months Ended	3 Months Ended	6 Months Ended	1 Months Ended	6 Months Ended		3 Months Ended	6 Months Ended
	Apr. 30, 2012	Apr. 30, 2012	Oct. 31, 2011	Apr. 30, 2012 Fiscal 2010 Acquisitions	Oct. 31, 2011 Fiscal 2010 Acquisitions	Apr. 30, 2012 Fiscal 2010 ES Restructuring Plan	Apr. 30, 2012 Fiscal 2010 ES Restructuring Plan	Jun. 30, 2010 Fiscal 2010 ES Restructuring Plan Severance position	Jan. 31, 2012 Fiscal 2010 ES Restructuring Plan Severance	Apr. 30, 2012 Fiscal 2010 ES Restructuring Plan Severance position	Apr. 30, 2012 Fiscal 2010 ES Restructuring Plan Infrastructure	Jan. 31, 2012 Fiscal 2010 ES Restructuring Plan Infrastructure	Apr. 30, 2012 Fiscal 2010 ES Restructuring Plan Infrastructure	May 31, 2009 Fiscal 2009 Restructuring Plan position	Apr. 30, 2012 Fiscal 2009 Restructuring Plan	Oct. 31, 2011 Fiscal 2009 Restructuring Plan position	Aug. 31, 2008 Fiscal 2008 HP/EDS Restructuring Plan	Apr. 30, 2012 Fiscal 2008 HP/EDS Restructuring Plan	Apr. 30, 2012 Fiscal 2008 HP/EDS Restructuring Plan	Aug. 31, 2008 Fiscal 2008 HP/EDS Restructuring Plan Severance position	Apr. 30, 2012 Fiscal 2008 HP/EDS Restructuring Plan Severance	Oct. 31, 2011 Fiscal 2008 HP/EDS Restructuring Plan Severance position	Apr. 30, 2012 Fiscal 2008 HP/EDS Restructuring Plan Infrastructure	Apr. 30, 2012 Fiscal 2008 HP/EDS Restructuring Plan Infrastructure
Restructuring and related costs
Additional restructuring costs					$ 33,000,000
Expected positions to be eliminated								8,000						4,400						25,000
Positions eliminated										7,000						4,400						25,000
Implementation period (in years)																	4 years
Costs reflected in purchase price of Electronic Data Systems Corporation ("EDS")																	1,500,000,000
Restructuring Reserve
Balance at the beginning of the period		813,000,000		59,000,000			496,000,000		493,000,000	493,000,000		3,000,000	3,000,000						258,000,000					258,000,000
Charges	53,000,000	93,000,000				35,000,000	39,000,000		(100,000,000)	(100,000,000)	35,000,000	104,000,000	139,000,000		7,000,000			18,000,000	47,000,000		5,000,000		18,000,000	42,000,000
Cash payments		(274,000,000)		(18,000,000)			(176,000,000)			(72,000,000)			(104,000,000)		(8,000,000)				(72,000,000)		(6,000,000)			(66,000,000)
Non-cash settlements and other adjustments		(58,000,000)					(53,000,000)			(16,000,000)			(37,000,000)		1,000,000				(6,000,000)		1,000,000			(7,000,000)
Balance at the end of the period	574,000,000	574,000,000		41,000,000	59,000,000	306,000,000	306,000,000			305,000,000	1,000,000		1,000,000					227,000,000	227,000,000				227,000,000	227,000,000
Total costs and adjustments to date		4,581,000,000		114,000,000			955,000,000			623,000,000			332,000,000		301,000,000				3,211,000,000		2,195,000,000			1,016,000,000
Total expected costs and adjustments		4,694,000,000		121,000,000	121,000,000		992,000,000			623,000,000			369,000,000		301,000,000				3,280,000,000		2,195,000,000			1,085,000,000
Long-term portion of restructuring reserve, recorded in Other liabilities	301,000,000	301,000,000	159,000,000
Expected cost of the plan								1,000,000,000						301,000,000			3,300,000,000
Short-term portion of restructuring reserve, recorded in Accrued restructuring	$ 273,000,000	$ 273,000,000	$ 654,000,000

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Basis of Presentation

6 Months Ended

Apr. 30, 2012

Basis of Presentation

Basis of Presentation

Note 1: Basis of Presentation

        In the opinion of management, the accompanying Consolidated Condensed Financial Statements of Hewlett-Packard Company and its consolidated subsidiaries ("HP") contain all adjustments, including normal recurring adjustments, necessary to present fairly HP's financial position as of April 30, 2012, its results of operations for the three and six months ended April 30, 2012 and 2011 and its cash flows for the six months ended April 30, 2012 and 2011. The Consolidated Condensed Balance Sheet as of October 31, 2011 is derived from the October 31, 2011 audited consolidated financial statements.

        The results of operations for the three and six months ended April 30, 2012 are not necessarily indicative of the results to be expected for the full year. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with "Risk Factors," "Legal Proceedings," "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Quantitative and Qualitative Disclosures About Market Risk" and the Consolidated Financial Statements and notes thereto included in Items 1A, 3, 7, 7A and 8, respectively, of the Hewlett-Packard Company Annual Report on Form 10-K for the fiscal year ended October 31, 2011.

        The preparation of financial statements in accordance with U.S. generally accepted accounting principles ("GAAP") requires management to make estimates and assumptions that affect the amounts reported in HP's Consolidated Condensed Financial Statements and accompanying notes. Actual results could differ materially from those estimates.

• Reclassifications and Segment Reorganization

        In connection with organizational realignments implemented in the first quarter of fiscal 2012, certain costs previously reported as cost of sales have been reclassified as selling, general and administrative expenses to better align those costs with the functional areas that benefit from those expenditures. HP has made certain segment and business unit realignments in order to optimize its operating structure. Reclassifications of prior year financial information have been made to conform to the current year presentation. None of the changes impacts HP's previously reported consolidated net revenue, earnings from operations, net earnings or net earnings per share. See Note 16 for a further discussion of HP's segment reorganization.

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Litigation and Contingencies (Details)	1 Months Ended					2 Months Ended	1 Months Ended				6 Months Ended	72 Months Ended	1 Months Ended		6 Months Ended
	Dec. 31, 2004 EUR (€)	Aug. 31, 2010 Inkjet Printer Litigation USD ($)	Dec. 31, 2010 Fair Labor Standards Act Litigation employee code	Oct. 31, 2010 India Directorate of Revenue Intelligence Proceedings USD ($)	Jun. 30, 2010 India Directorate of Revenue Intelligence Proceedings USD ($)	May 31, 2010 India Directorate of Revenue Intelligence Proceedings USD ($)	Apr. 30, 2012 Bangalore Commissioner of Customs USD ($)	Apr. 20, 2012 Bangalore Commissioner of Customs USD ($)	Apr. 11, 2012 Bangalore Commissioner of Customs USD ($)	Mar. 12, 2012 Chennai Commissioner of Customs USD ($)	Apr. 30, 2012 Russia GPO and Related Investigations USD ($)	Oct. 31, 2006 Russia GPO and Related Investigations EUR (€)	Jul. 31, 2011 ECT Proceedings Year	Jan. 31, 2011 ECT Proceedings contract	Apr. 30, 2012 ECT Proceedings Minimum Year	Apr. 30, 2012 ECT Proceedings Maximum Year
Copyright Levies
Levy assessed on a specific vendor on personal computers sold since March 2001 in Germany (euros per unit)	€ 12
Litigation and Contingencies
Number of job codes			20
Total settlement agreement amount of e-credits		5,000,000
Number of employees filed consent to opt-in to litigation			2,600
Recovery sought						370,000,000
Additional recovery sought					5,300,000
Loss contingency deposit to prevent interruption of business					16,700,000
Loss contingency deposit under demand notices					130,000
Amount of duty differential deposit under demand notices				38,000
Penalties affirmed under software show cause notices										254,000
Duties and penalties under software show cause notices								17,320,000	386,250,000
Additional amount deposited against parts show cause notice							3,640,000
Transaction of former subsidiary under investigation												35,000,000
Civil penalties per violation											500,000
Criminal penalties per violation, specific value											$ 2,000,000
Number of ECT contracts related to alleged improprieties														3
ETC Proceedings, period to suspend right to bid and contract (in years)													5
Length of sanctions (in years)															2	5

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Stockholders' Equity (Tables)

6 Months Ended

Apr. 30, 2012

Stockholders' Equity

Comprehensive Income

	Three months ended April 30
	2012			2011
	In millions
Net earnings	$	1,593		$	2,304
Net change in unrealized gains on available-for-sale securities, with no tax effect in 2012 and net of tax benefit of $7 million in 2011		43			—
Net change in unrealized gains/losses on cash flow hedges:
Unrealized losses recognized in OCI, net of tax benefit of $60 million in 2012 and $273 million in 2011		(131	)		(498	)
Losses reclassified into income, with no tax effect in 2012 and net of tax benefit of $110 million in 2011		11			226
		(120	)		(272	)
Net change in cumulative translation adjustment, net of tax of $52 million in 2012 and $1 million in 2011		471			81
Net change in unrealized components of defined benefit plans, net of tax benefit of $14 million in 2012 and $108 million in 2011		47			297
Comprehensive income	$	2,034		$	2,410

	Six months ended April 30
	2012			2011
	In millions
Net earnings	$	3,061		$	4,909
Net change in unrealized (losses) gains on available-for-sale securities, net of tax benefit of $5 million in 2012 and $2 million in 2011		(14	)		10
Net change in unrealized gains/losses on cash flow hedges:
Unrealized gains (losses) recognized in OCI, net of tax of $92 million in 2012 and net of tax benefit of $241 million in 2011		124			(438	)
(Gains) losses reclassified into income, net of tax of $37 million in 2012 and net of tax benefit of $109 million in 2011		(50	)		213
		74			(225	)
Net change in cumulative translation adjustment, net of tax of $38 million in 2012 and $18 million in 2011		238			132
Net change in unrealized components of defined benefit plans, net of tax of $56 million in 2012 and net of tax benefit of $98 million in 2011		134			328
Comprehensive income	$	3,493		$	5,154

Accumulated Other Comprehensive Loss

	April 30, 2012			October 31, 2011
	In millions
Net unrealized gain on available-for-sale securities	$	23		$	37
Net unrealized gain (loss) on cash flow hedges		33			(41	)
Cumulative translation adjustment		(147	)		(385	)
Unrealized components of defined benefit plans		(2,975	)		(3,109	)
Accumulated other comprehensive loss	$	(3,066	)	$	(3,498	)

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Subsequent Events

6 Months Ended

Apr. 30, 2012

Subsequent Events

Subsequent Event

Note 17: Subsequent Events

• Restructuring Plan

        On May 23, 2012, HP adopted a restructuring plan designed to simplify business processes, accelerate innovation and deliver better results for customers, employees and stockholders. HP expects that the restructuring plan will be implemented through the end of HP's 2014 fiscal year. In connection with the restructuring plan, HP expects approximately 27,000 employees to exit the company by the end of fiscal 2014, with a portion of those employees exiting the company as part of a voluntary early retirement program for U.S. employees whose combined age and years of service exceed certain levels.

        In connection with the restructuring plan, HP expects to record aggregate pre-tax charges of approximately $3.5 billion through the end of HP's 2014 fiscal year beginning in the third quarter of HP's 2012 fiscal year. Of that amount, HP expects approximately $3.0 billion to relate to the workforce reductions and approximately $0.5 billion to relate to other items, including data center and real estate consolidation. HP expects approximately $2.7 billion of those aggregate pre-tax charges to result in cash expenditures during the term of the plan. HP expects to amend its U.S. pension plans to facilitate the funding of a portion of the voluntary early retirement program using available U.S. pension plan assets. These restructuring actions could result in curtailments or potential settlements with HP's various pension and post-retirement plans.

        HP is also evaluating the impact, if any, on the carrying value of its long-lived assets within the Services segment as a result of the restructuring plan and other related initiatives, market conditions and the long-term profitability outlook for the Services business subsequent to the execution of the restructuring plan.

• Compaq Trade Name Impairment

        On May 23, 2012, HP approved a change to its branding strategy for personal computers, which is expected to result in a more limited and focused use of the "Compaq" trade name acquired in 2002. In conjunction with the change in branding strategy, HP also revised its assumption as to the useful life of that intangible asset, which resulted in a reclassification of that asset from indefinite-lived to an asset with a remaining useful life of approximately five years. As a result of these changes, HP has commenced an asset impairment analysis to determine the impact of this change on the fair value of the intangible asset associated with that trade name. Based on the preliminary results of this analysis, HP expects to record an impairment charge of approximately $1.2 billion in its third fiscal quarter of 2012. HP does not expect the impairment charge to result in any future cash expenditures.

• Shelf Registration Statement

        On May 24, 2012, HP filed a shelf registration statement (the "2012 Shelf Registration Statement") with the SEC to enable the company to offer for sale, from time to time, in one or more offerings, an unspecified amount of debt securities, common stock, preferred stock, depositary shares and warrants. The 2012 Shelf Registration Statement replaced the 2009 Shelf Registration Statement, which expired in May 2012.

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Retirement and Post-Retirement Benefit Plans (Tables)

6 Months Ended

Apr. 30, 2012

Retirement and Post-Retirement Benefit Plans

Net pension and post-retirement benefit cost (gain)

	Three months ended April 30
	U.S. Defined Benefit Plans						Non-U.S. Defined Benefit Plans						Post- Retirement Benefit Plans
	2012			2011			2012			2011			2012			2011
	In millions
Service cost	$	—		$	—		$	74		$	89		$	2		$	2
Interest cost		141			149			174			177			8			9
Expected return on plan assets		(198	)		(186	)		(206	)		(225	)		(9	)		(9	)
Amortization and deferrals:
Actuarial loss		11			8			59			60			(1	)		—
Prior service benefit		—			—			(6	)		(4	)		(22	)		(20	)
Net periodic benefit (gain) cost		(46	)		(29	)		95			97			(22	)		(18	)
Settlement loss		—			—			8			2			—			—
Special termination benefits		—			—			1			6			—			—
Net benefit (gain) cost	$	(46	)	$	(29	)	$	104		$	105		$	(22	)	$	(18	)

	Six months ended April 30
	U.S. Defined Benefit Plans						Non-U.S. Defined Benefit Plans						Post- Retirement Benefit Plans
	2012			2011			2012			2011			2012			2011
	In millions
Service cost	$	—		$	—		$	148		$	174		$	4		$	4
Interest cost		283			297			349			346			17			17
Expected return on plan assets		(396	)		(372	)		(413	)		(438	)		(18	)		(18	)
Amortization and deferrals:
Actuarial loss		21			17			119			122			(2	)		1
Prior service benefit		—			—			(12	)		(7	)		(44	)		(41	)
Net periodic benefit (gain) cost		(92	)		(58	)		191			197			(43	)		(37	)
Settlement (gain) loss		—			—			(20	)		2			—			—
Special termination benefits		—			—			2			8			—			—
Net benefit (gain) cost	$	(92	)	$	(58	)	$	173		$	207		$	(43	)	$	(37	)

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Stock-Based Compensation (Tables)

6 Months Ended

Apr. 30, 2012

Share-based compensation arrangements by share-based payment award

Restricted Stock Awards Activity

	Shares			Weighted- Average Grant Date Fair Value Per Share
	In thousands
Outstanding at October 31, 2011		16,813		$	39
Granted		17,791		$	28
Vested		(3,027	)	$	43
Forfeited		(1,250	)	$	36
Outstanding at April 30, 2012		30,327		$	33

Stock Options Activity

	Shares			Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Term		Aggregate Intrinsic Value
	In thousands					In years		In millions
Outstanding at October 31, 2011		120,243		$	28
Granted		6,761		$	28
Exercised		(27,967	)	$	21
Forfeited/cancelled/expired		(5,122	)	$	35
Outstanding at April 30, 2012		93,915		$	29		3.5	$	201
Vested and expected to vest at April 30, 2012		91,972		$	29		3.5	$	195
Exercisable at April 30, 2012		68,259		$	31		2.2	$	122

Performance-based Restricted Units (PRUs) Activity

	Shares
	In thousands
Outstanding Target Shares at October 31, 2011		11,382
Granted		1,157
Vested		—
Change in units due to performance and market conditions achievement for PRUs vested in the period		—
Forfeited		(843	)
Outstanding Target Shares at April 30, 2012		11,696
Outstanding Target Shares assigned a fair value at April 30, 2012		9,434	(1)

⁽¹⁾

Excludes Target Shares for the third year for PRUs granted in fiscal 2011 and for the second and third years for PRUs granted in the six months ended April 30, 2012 as the measurement date has not yet been established. The measurement date and related fair value for the excluded PRUs will be established when the annual performance goals are approved.

Stock Options

Share-based compensation arrangements by share-based payment award

Schedule of weighted average assumptions, in addition to projections of market conditions

	Three months ended April 30						Six months ended April 30
	2012			2011			2012			2011
Weighted-average fair value of grants per share(1)	$	5.82		$	10.73		$	9.46		$	11.06
Implied volatility		32	%		27	%		43	%		28	%
Risk-free interest rate		0.91	%		2.16	%		1.20	%		1.97	%
Dividend yield		2.14	%		0.77	%		1.73	%		0.76	%
Expected life in months		61			60			67			60

⁽¹⁾

The fair value calculation was based on stock options granted during the period.

Performance-based Restricted Units (PRUs)

Share-based compensation arrangements by share-based payment award

Schedule of weighted average assumptions, in addition to projections of market conditions

	Six months ended April 30
	2012			2011
Weighted-average fair value of grants per share	$	3.35	(1)	$	27.59	(2)
Expected volatility(3)		41	%		30	%
Risk-free interest rate		0.14	%		0.38	%
Dividend yield		1.78	%		0.75	%
Expected life in months		15			19

⁽¹⁾

Reflects the weighted-average fair value for the third year of the three-year performance period applicable to PRUs granted in fiscal 2010 and for the second year of the three-year performance period applicable to PRUs granted in fiscal 2011. The estimated fair value of the Target Shares for the third year for PRUs granted in fiscal 2011 will be determined on the measurement date applicable to those PRUs, which will occur during the period that the annual performance goals are approved for those PRUs, and the expense will be amortized over the remainder of the applicable three-year performance period.

⁽²⁾

Reflects the weighted-average fair value for the third year of the three-year performance period applicable to PRUs granted in fiscal 2009, for the second year of the three-year performance period applicable to PRUs granted in fiscal 2010 and for the first year of the three-year performance period applicable to PRUs granted in the six months ended April 30, 2011.

⁽³⁾

HP uses historic volatility for PRU awards as implied volatility cannot be used when simulating multivariate prices for companies in the S&P 500.

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Stock-Based Compensation

6 Months Ended

Apr. 30, 2012

Stock-Based Compensation

Stock-Based Compensation

Note 2: Stock-Based Compensation

        HP's stock-based compensation plans include HP's principal equity plans as well as various equity plans assumed through acquisitions. HP's principal equity plans include restricted stock awards, stock options and performance-based restricted units ("PRUs").

        Total stock-based compensation expense before income taxes for the three and six months ended April 30, 2012 was $169 million and $344 million, respectively. The resulting income tax benefit for the three and six months ended April 30, 2012 was $54 million and $111 million, respectively. Total stock-based compensation expense before income taxes for the three and six months ended April 30, 2011 was $147 million and $327 million, respectively. The resulting income tax benefit for the three and six months ended April 30, 2011 was $61 million and $104 million, respectively.

• Restricted Stock Awards

        Restricted stock awards are non-vested stock awards that include grants of restricted stock and grants of restricted stock units.

        Non-vested restricted stock awards as of April 30, 2012 and changes during the six months ended April 30, 2012 were as follows:

	Shares			Weighted- Average Grant Date Fair Value Per Share
	In thousands
Outstanding at October 31, 2011		16,813		$	39
Granted		17,791		$	28
Vested		(3,027	)	$	43
Forfeited		(1,250	)	$	36
Outstanding at April 30, 2012		30,327		$	33

        At April 30, 2012, there was $758 million of unrecognized pre-tax stock-based compensation expense related to non-vested restricted stock awards, which HP expects to recognize over the remaining weighted-average vesting period of 1.4 years.

• Stock Options

        HP utilized the Black-Scholes option pricing model to value the service-based stock options granted under its principal equity plans. HP estimates the fair value of the performance-contingent stock options using a combination of the Monte Carlo simulation model and lattice model, as these awards contain market conditions.

        HP estimated the weighted-average fair value of stock options using the following weighted-average assumptions:

	Three months ended April 30						Six months ended April 30
	2012			2011			2012			2011
Weighted-average fair value of grants per share(1)	$	5.82		$	10.73		$	9.46		$	11.06
Implied volatility		32	%		27	%		43	%		28	%
Risk-free interest rate		0.91	%		2.16	%		1.20	%		1.97	%
Dividend yield		2.14	%		0.77	%		1.73	%		0.76	%
Expected life in months		61			60			67			60

⁽¹⁾

The fair value calculation was based on stock options granted during the period.

        Option activity as of April 30, 2012 and changes during the six months ended April 30, 2012 were as follows:

	Shares			Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Term		Aggregate Intrinsic Value
	In thousands					In years		In millions
Outstanding at October 31, 2011		120,243		$	28
Granted		6,761		$	28
Exercised		(27,967	)	$	21
Forfeited/cancelled/expired		(5,122	)	$	35
Outstanding at April 30, 2012		93,915		$	29		3.5	$	201
Vested and expected to vest at April 30, 2012		91,972		$	29		3.5	$	195
Exercisable at April 30, 2012		68,259		$	31		2.2	$	122

        The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value that option holders would have received had all option holders exercised their options on April 30, 2012. The aggregate intrinsic value is the difference between HP's closing stock price on the last trading day of the second quarter of fiscal 2012 and the exercise price, multiplied by the number of in-the-money options. Total intrinsic value of options exercised for the three and six months ended April 30, 2012 was $55 million and $164 million, respectively.

        At April 30, 2012, there was $227 million of unrecognized pre-tax stock-based compensation expense related to stock options, which HP expects to recognize over the remaining weighted-average vesting period of 2.1 years.

• Performance-based Restricted Units

        HP's PRU program provides for the issuance of PRUs representing hypothetical shares of HP common stock. Each PRU award reflects a target number of shares ("Target Shares") that may be issued to the award recipient before adjusting for performance and market conditions. The actual number of shares the recipient receives is determined at the end of a three-year performance period based on results achieved versus company performance goals and may range from 0% to 200% of the Target Shares granted. The performance goals for PRUs granted in fiscal year 2012 are based on HP's annual cash flow from operations as a percentage of revenue and on HP's annual revenue growth. The performance goals for PRUs granted in previous years are based on HP's annual cash flow from operations as a percentage of revenue and on a market condition based on total shareholder return ("TSR") relative to the S&P 500 over the three-year performance period.

        For PRU awards granted in fiscal year 2012, HP estimates the fair value of the Target Shares using HP's closing stock price on the measurement date. The weighted-average fair value per share for the first year of the three-year performance period applicable to PRUs granted in the six months ended April 30, 2012 was $27.00. The estimated fair value of the Target Shares for the second and third years for PRUs granted in the six months ended April 30, 2012 will be determined on the measurement date applicable to those PRUs, which will occur during the period that the annual performance goals are approved for those PRUs, and the expense will be amortized over the remainder of the applicable three-year performance period.

        For PRU awards granted prior to fiscal year 2012, HP estimates the fair value of the Target Shares subject to those awards using the Monte Carlo simulation model, as the TSR modifier represents a market condition. The following weighted-average assumptions, in addition to projections of market conditions, were used to determine the weighted-average fair values of these PRU awards:

	Six months ended April 30
	2012			2011
Weighted-average fair value of grants per share	$	3.35	(1)	$	27.59	(2)
Expected volatility(3)		41	%		30	%
Risk-free interest rate		0.14	%		0.38	%
Dividend yield		1.78	%		0.75	%
Expected life in months		15			19

⁽¹⁾

Reflects the weighted-average fair value for the third year of the three-year performance period applicable to PRUs granted in fiscal 2010 and for the second year of the three-year performance period applicable to PRUs granted in fiscal 2011. The estimated fair value of the Target Shares for the third year for PRUs granted in fiscal 2011 will be determined on the measurement date applicable to those PRUs, which will occur during the period that the annual performance goals are approved for those PRUs, and the expense will be amortized over the remainder of the applicable three-year performance period.

⁽²⁾

Reflects the weighted-average fair value for the third year of the three-year performance period applicable to PRUs granted in fiscal 2009, for the second year of the three-year performance period applicable to PRUs granted in fiscal 2010 and for the first year of the three-year performance period applicable to PRUs granted in the six months ended April 30, 2011.

⁽³⁾

HP uses historic volatility for PRU awards as implied volatility cannot be used when simulating multivariate prices for companies in the S&P 500.

        Non-vested PRUs as of April 30, 2012 and changes during the six months ended April 30, 2012 were as follows:

	Shares
	In thousands
Outstanding Target Shares at October 31, 2011		11,382
Granted		1,157
Vested		—
Change in units due to performance and market conditions achievement for PRUs vested in the period		—
Forfeited		(843	)
Outstanding Target Shares at April 30, 2012		11,696
Outstanding Target Shares assigned a fair value at April 30, 2012		9,434	(1)

⁽¹⁾

Excludes Target Shares for the third year for PRUs granted in fiscal 2011 and for the second and third years for PRUs granted in the six months ended April 30, 2012 as the measurement date has not yet been established. The measurement date and related fair value for the excluded PRUs will be established when the annual performance goals are approved.

        At April 30, 2012, there was $48 million of unrecognized pre-tax stock-based compensation expense related to PRUs with an assigned fair value, which HP expects to recognize over the remaining weighted-average vesting period of 1.1 years.

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Consolidated Condensed Balance Sheets (USD $) In Millions, unless otherwise specified	Apr. 30, 2012	Oct. 31, 2011
Current assets:
Cash and cash equivalents	$ 8,311	$ 8,043
Accounts receivable	16,609	18,224
Financing receivables	3,139	3,162
Inventory	7,306	7,490
Other current assets	14,324	14,102
Total current assets	49,689	51,021
Property, plant and equipment	12,236	12,292
Long-term financing receivables and other assets	11,018	10,755
Goodwill	44,938	44,551
Purchased intangible assets	9,808	10,898
Total assets	127,689	129,517
Current liabilities:
Notes payable and short-term borrowings	4,252	8,083
Accounts payable	12,900	14,750
Employee compensation and benefits	3,609	3,999
Taxes on earnings	871	1,048
Deferred revenue	7,582	7,449
Accrued restructuring	273	654
Other accrued liabilities	13,312	14,459
Total current liabilities	42,799	50,442
Long-term debt	25,825	22,551
Other liabilities	17,368	17,520
Commitments and contingencies
HP stockholders' equity
Preferred stock, $0.01 par value (300 shares authorized; none issued)
Common stock, $0.01 par value (9,600 shares authorized; 1,978 and 1,991 shares issued and outstanding, respectively)	20	20
Additional paid-in capital	6,576	6,837
Retained earnings	37,758	35,266
Accumulated other comprehensive loss	(3,066)	(3,498)
Total HP stockholders' equity	41,288	38,625
Non-controlling interests	409	379
Total stockholders' equity	41,697	39,004
Total liabilities and stockholders' equity	$ 127,689	$ 129,517

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Income Taxes

6 Months Ended

Apr. 30, 2012

Income Taxes

Income Taxes

Note 12: Income Taxes

        HP's effective tax rate was 19.5% and 20.3% for the three months ended April 30, 2012 and April 30, 2011, respectively, and 19.5% and 20.7% for the six months ended April 30, 2012 and April 30, 2011, respectively. HP's effective tax rate decreased due to an increase in the percentage of total earnings earned in lower-tax jurisdictions. HP's effective tax rate generally differs from the U.S. federal statutory rate of 35% due to favorable tax rates associated with certain earnings from HP's operations in lower-tax jurisdictions throughout the world. HP has not provided U.S. taxes for all of such earnings because HP plans to reinvest some of those earnings indefinitely outside the United States.

        In the three and six months ended April 30, 2012, HP recorded discrete items with a net tax benefit of $25 million and $74 million, respectively, decreasing the effective tax rate. These amounts included net tax benefits of $22 million and $50 million, respectively, from restructuring and acquisition charges, and other miscellaneous tax benefits of $3 million and $24 million, respectively.

        In the three and six months ended April 30, 2011, HP recorded discrete items with a net tax benefit of $56 million and $157 million, respectively. These amounts included net tax benefits of $53 million and $112 million, respectively, from restructuring and acquisition charges. In addition, in December 2010, the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 was signed into law. HP recorded a tax benefit of $43 million arising from the retroactive research and development credit provided by that legislation in the first quarter of fiscal 2011.

        As of April 30, 2012, the amount of gross unrecognized tax benefits was $2.4 billion, of which up to $1.1 billion would affect HP's effective tax rate if realized. HP recognizes interest income from favorable settlements and income tax receivables and interest expense and penalties accrued on unrecognized tax benefits within income tax expense. As of April 30, 2012, HP had accrued a net payable of $186 million for interest and penalties. In the three and six months ended April 30, 2012, HP recognized $4 million of net interest expense on net tax underpayments, net of tax, and $19 million of net interest income on tax overpayments, net of tax, respectively.

        HP engages in continuous discussion and negotiation with taxing authorities regarding tax matters in various jurisdictions. HP does not expect complete resolution of any Internal Revenue Service ("IRS") audit cycle within the next 12 months. However, it is reasonably possible that certain federal, foreign and state tax issues may be concluded in the next 12 months, including issues involving transfer pricing and other matters. Accordingly, HP believes it is reasonably possible that its existing unrecognized tax benefits may be reduced by an amount up to $297 million within the next 12 months.

        HP is subject to income tax in the United States and approximately 80 foreign countries and is subject to routine corporate income tax audits in many of these jurisdictions. In addition, HP is subject to numerous ongoing audits by state and foreign tax authorities. The IRS began an audit of HP's 2008 income tax returns in 2010 and began its audit of HP's 2009 income tax returns during 2011. HP has received from the IRS Notices of Deficiency for its fiscal 1999, 2000, 2003, 2004 and 2005 tax years, and Revenue Agent's Reports ("RAR") for its fiscal 2001, 2002, 2006, 2007 and 2008 tax years. The proposed IRS adjustments for these tax years would, if sustained, reduce the benefits of tax refund claims HP has filed for net operating loss carrybacks to earlier fiscal years and tax credit carryforwards to subsequent years by approximately $626 million. HP has filed petitions with the United States Tax Court regarding certain proposed IRS adjustments regarding tax years 1999 through 2003 and is continuing to contest additional adjustments proposed by the IRS for other tax years. The United States Tax Court has recently ruled against HP regarding one of the IRS adjustments. HP currently intends to appeal the decision. HP believes that it has provided adequate reserves for any tax deficiencies or reductions in tax benefits that could result from the IRS actions. With respect to major foreign and state tax jurisdictions, HP is no longer subject to tax authority examinations for years prior to 1999. HP believes that adequate accruals have been provided for all open tax years.

        Tax years of EDS through 2002 have been audited by the IRS, and all proposed adjustments have been resolved. EDS has received RAR's for exam years 2003, 2004, 2005, 2006, 2007 and the short period ended August 26, 2008, proposing total tax deficiencies of $320 million. HP is contesting certain issues and believes it has provided adequate reserves for any tax deficiencies or reductions in tax benefits that could result from the IRS actions.

        The IRS began an audit of HP's U.S. group of subsidiaries providing enterprise services, for its 2008 and 2009 income tax return in 2010 and 2011, respectively. That group of subsidiaries has received an RAR for the short period ended October 31, 2008 proposing a total tax deficiency of $17 million. HP is contesting certain issues and believes it has provided adequate reserves for any tax deficiencies or reductions in tax benefits that could result from the IRS actions.

        The breakdown between current and long-term deferred tax assets and deferred tax liabilities was as follows:

	April 30, 2012			October 31, 2011
	In millions
Current deferred tax assets	$	5,042		$	5,374
Current deferred tax liabilities		(71	)		(41	)
Long-term deferred tax assets		1,590			1,283
Long-term deferred tax liabilities		(5,241	)		(5,163	)
Total deferred tax assets net of deferred tax liabilities	$	1,320		$	1,453

XML

Document and Entity Information	6 Months Ended
	Apr. 30, 2012	May 31, 2012
Document and Entity Information
Entity Registrant Name	HEWLETT PACKARD CO
Entity Central Index Key	0000047217
Document Type	10-Q
Document Period End Date	Apr. 30, 2012
Amendment Flag	false
Current Fiscal Year End Date	--10-31
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		1,971,832,590
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q2

XML

Stockholders' Equity

6 Months Ended

Apr. 30, 2012

Stockholders' Equity

Stockholders' Equity

Note 13: Stockholders' Equity

• Share Repurchase Program

        HP's share repurchase program authorizes both open market and private repurchase transactions. In the three and six months ended April 30, 2012, HP executed share repurchases of 13 million shares and 43 million shares, respectively. For the three months ended April 30, 2012, repurchases of 13 million shares were settled for $350 million. For the six months ended April 30, 2012, repurchases of 43 million shares were settled for $1.1 billion. HP had approximately 1 million shares repurchased in the second quarter of fiscal 2012 that will be settled in the third quarter of fiscal 2012. HP paid approximately $2.7 billion in connection with repurchases of approximately 63 million shares during the three months ended April 30, 2011 and paid approximately $5.0 billion in connection with repurchases of approximately 117 million shares in the first six months of fiscal 2011. As of April 30, 2012, HP had remaining authorization of $9.7 billion for future share repurchases.

• Comprehensive Income

        The changes in the components of other comprehensive income ("OCI"), net of taxes, were as follows:

	Three months ended April 30
	2012			2011
	In millions
Net earnings	$	1,593		$	2,304
Net change in unrealized gains on available-for-sale securities, with no tax effect in 2012 and net of tax benefit of $7 million in 2011		43			—
Net change in unrealized gains/losses on cash flow hedges:
Unrealized losses recognized in OCI, net of tax benefit of $60 million in 2012 and $273 million in 2011		(131	)		(498	)
Losses reclassified into income, with no tax effect in 2012 and net of tax benefit of $110 million in 2011		11			226
		(120	)		(272	)
Net change in cumulative translation adjustment, net of tax of $52 million in 2012 and $1 million in 2011		471			81
Net change in unrealized components of defined benefit plans, net of tax benefit of $14 million in 2012 and $108 million in 2011		47			297
Comprehensive income	$	2,034		$	2,410

	Six months ended April 30
	2012			2011
	In millions
Net earnings	$	3,061		$	4,909
Net change in unrealized (losses) gains on available-for-sale securities, net of tax benefit of $5 million in 2012 and $2 million in 2011		(14	)		10
Net change in unrealized gains/losses on cash flow hedges:
Unrealized gains (losses) recognized in OCI, net of tax of $92 million in 2012 and net of tax benefit of $241 million in 2011		124			(438	)
(Gains) losses reclassified into income, net of tax of $37 million in 2012 and net of tax benefit of $109 million in 2011		(50	)		213
		74			(225	)
Net change in cumulative translation adjustment, net of tax of $38 million in 2012 and $18 million in 2011		238			132
Net change in unrealized components of defined benefit plans, net of tax of $56 million in 2012 and net of tax benefit of $98 million in 2011		134			328
Comprehensive income	$	3,493		$	5,154

        The components of accumulated other comprehensive loss, net of taxes, were as follows:

	April 30, 2012			October 31, 2011
	In millions
Net unrealized gain on available-for-sale securities	$	23		$	37
Net unrealized gain (loss) on cash flow hedges		33			(41	)
Cumulative translation adjustment		(147	)		(385	)
Unrealized components of defined benefit plans		(2,975	)		(3,109	)
Accumulated other comprehensive loss	$	(3,066	)	$	(3,498	)

XML

Consolidated Condensed Balance Sheets (Parenthetical) (USD $) In Millions, except Per Share data, unless otherwise specified	Apr. 30, 2012	Oct. 31, 2011
Consolidated Condensed Balance Sheets
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized	300	300
Preferred stock, shares issued	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized	9,600	9,600
Common stock, shares issued	1,978	1,991
Common stock, shares outstanding	1,978	1,991

XML

Fair Value

6 Months Ended

Apr. 30, 2012

Fair Value

Fair Value

Note 7: Fair Value

        HP determines fair value based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants.

        Valuation techniques used by HP are based upon observable and unobservable inputs. Observable or market inputs reflect market data obtained from independent sources, while unobservable inputs reflect HP's assumptions about market participant assumptions based on the best information available. Observable inputs are the preferred basis of valuation. These two types of inputs create the following fair value hierarchy:

        Level 1—Quoted prices (unadjusted) for identical instruments in active markets.

        Level 2—Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

        Level 3—Prices or valuations that require management inputs that are both significant to the fair value measurement and unobservable.

        The following section describes the valuation methodologies HP uses to measure its financial assets and liabilities at fair value.

        Cash Equivalents and Investments: HP holds time deposits, money market funds, mutual funds, other debt securities primarily consisting of corporate and foreign government notes and bonds, and common stock and equivalents. Where applicable, HP uses quoted prices in active markets for identical assets to determine fair value. If quoted prices in active markets for identical assets are not available to determine fair value, HP uses quoted prices for similar assets and liabilities or inputs that are observable either directly or indirectly. If quoted prices for identical or similar assets are not available, HP uses internally developed valuation models, whose inputs include bid prices, and third-party valuations utilizing underlying assets assumptions.

        Derivative Instruments: As discussed in Note 8, HP mainly holds non-speculative forwards, swaps and options to hedge certain foreign currency and interest rate exposures. When active market quotes are not available, HP uses industry standard valuation models. Where applicable, these models project future cash flows and discount the future amounts to a present value using market-based observable inputs including interest rate curves, credit risk, foreign exchange rates, and forward and spot prices for currencies. In certain cases, market-based observable inputs are not available and, in those cases, HP uses management judgment to develop assumptions which are used to determine fair value.

        Short- and Long-Term Debt: The estimated fair value of publicly-traded debt is based on quoted market prices for the identical liability when traded as an asset in an active market. For other debt for which a quoted market price is not available, an expected present value method that uses rates currently available to HP for debt with similar terms and remaining maturities is used to estimate fair value. The portion of the company's fixed-rate debt obligations that is hedged is reflected in the Consolidated Condensed Balance Sheets as an amount equal to the debt's carrying value, including a fair value adjustment representing changes in the fair value of the hedged debt obligations arising from movements in benchmark interest rates. The estimated fair value of HP's short- and long-term debt was approximately $30.6 billion at April 30, 2012, compared to a carrying value of $30.1 billion at that date. The estimated fair value of HP's short- and long-term debt was approximately $31.1 billion at October 31, 2011, compared to a carrying value of $30.6 billion at that date. If measured at fair value in the Consolidated Condensed Financial Statements, short- and long-term debt would be classified as Level 2 in the fair value hierarchy.

        The following table presents HP's assets and liabilities that are measured at fair value on a recurring basis:

	As of April 30, 2012								As of October 31, 2011
	Fair Value Measured Using								Fair Value Measured Using
							Total Balance								Total Balance
	Level 1		Level 2		Level 3				Level 1		Level 2		Level 3
	In millions
Assets
Time deposits	$	—	$	2,796	$	—	$	2,796	$	—	$	5,120	$	—	$	5,120
Money market funds		1,985		—		—		1,985		236		—		—		236
Mutual funds		—		380		—		380		—		—		—		—
Marketable equity securities		45		5		—		50		120		2		—		122
Foreign bonds		7		365		—		372		7		376		—		383
Corporate bonds and other debt securities		3		2		48		53		3		2		48		53
Derivatives:
Interest rate contracts		—		411		—		411		—		593		—		593
Foreign exchange contracts		—		437		1		438		—		269		35		304
Other derivatives		—		2		12		14		—		25		6		31
Total Assets	$	2,040	$	4,398	$	61	$	6,499	$	366	$	6,387	$	89	$	6,842
Liabilities
Derivatives:
Interest rate contracts	$	—	$	44	$	—	$	44	$	—	$	71	$	—	$	71
Foreign exchange contracts		—		468		9		477		—		823		9		832
Other derivatives		—		—		—		—		—		1		—		1
Total Liabilities	$	—	$	512	$	9	$	521	$	—	$	895	$	9	$	904

XML

Restructuring Charges

6 Months Ended

Apr. 30, 2012

Restructuring Charges

Restructuring Charges

Note 6: Restructuring Charges

        HP records restructuring charges associated with management approved restructuring plans to either reorganize one or more of HP's business segments, or to remove duplicative headcount and infrastructure associated with one or more business acquisitions. Restructuring charges can include severance costs to eliminate a specified number of employees, infrastructure charges to vacate facilities and consolidate operations, and contract cancellation costs. Restructuring charges are recorded based upon planned employee termination dates and site closure and consolidation plans. The timing of associated cash payments is dependent upon the type of restructuring charge and can extend over a multi-year period. HP records the short-term portion of the restructuring liability in Accrued restructuring and the long-term portion in Other liabilities in the Consolidated Condensed Balance Sheets.

• Fiscal 2010 Acquisitions

        In connection with the acquisitions of Palm, Inc. ("Palm") and 3Com Corporation ("3Com") in fiscal 2010, HP's management approved and initiated plans to restructure the operations of the acquired companies, including severance for employees, contract cancellation costs, costs to vacate duplicative facilities and other items. The total expected combined cost of the plans is $121 million, which includes $33 million of additional restructuring costs recorded in the fourth quarter of fiscal 2011 in connection with HP's decision to wind down the webOS device business. As of October 31, 2011, HP had recorded the majority of the costs of the plans based upon the anticipated timing of planned terminations and facility closure costs. With respect to the Palm plan, no further restructuring charges are anticipated, and the majority of the remaining costs are expected to be paid out through fiscal 2012. The remaining costs pertaining to the 3Com plan are expected to be paid out through fiscal 2016 as fixed lease payments are made.

• Fiscal 2010 Enterprise Services Business Restructuring Plan

        On June 1, 2010, HP's management announced a plan to restructure its enterprise services business ("ES"), which includes its Infrastructure Technology Outsourcing and Application and Business Services business units. The multi-year restructuring program includes plans to consolidate commercial data centers, tools and applications. The total expected cost of the plan that will be recorded as restructuring charges is approximately $1.0 billion, and includes severance costs to eliminate approximately 8,000 positions and infrastructure charges. As the execution of the restructuring activities has evolved, certain components and their related cost estimates have been revised. While the total cost of the plan remains consistent, during the first quarter of fiscal 2012, HP reduced the severance accrual by $100 million and recognized additional infrastructure related charges of $104 million. HP expects to record the majority of the infrastructure charges through fiscal 2012. The timing of the charges is based upon planned termination dates and site closure and consolidation plans. The majority of the associated cash payments are expected to be paid out through the first quarter of fiscal 2013. As of April 30, 2012, approximately 7,000 positions had been eliminated.

• Fiscal 2009 Restructuring Plan

        In May 2009, HP's management approved and initiated a restructuring plan to structurally change and improve the effectiveness of the Imaging and Printing Group ("IPG"), the Personal Systems Group ("PSG"), and Enterprise Servers, Storage and Networking ("ESSN") businesses. The total expected cost of the plan was $301 million in severance-related costs associated with the planned elimination of approximately 4,400 positions. All planned eliminations had occurred and the vast majority of the restructuring costs had been paid out as of October 31, 2011.

• Fiscal 2008 HP/EDS Restructuring Plan

        In connection with the acquisition of Electronic Data Systems Corporation ("EDS") on August 26, 2008, HP's management approved and initiated a restructuring plan to combine and align HP's services businesses, eliminate duplicative overhead functions and consolidate and vacate duplicative facilities. The restructuring plan is expected to be implemented over four years from the acquisition date at a total expected cost of $3.3 billion. Approximately $1.5 billion of the expected costs were associated with pre-acquisition EDS and were reflected in the fair value of purchase consideration of EDS. These costs are subject to change based on the actual costs incurred. The remaining costs are primarily associated with HP and will be recorded as a restructuring charge.

        The restructuring plan includes severance costs related to eliminating approximately 25,000 positions. As of October 31, 2011, all planned eliminations had occurred and the vast majority of the associated severance costs had been paid out. The infrastructure charges in the restructuring plan include facility closure and consolidation costs and the costs associated with early termination of certain contractual obligations. HP has recorded the majority of these costs based upon the execution of site closure and consolidation plans. The associated cash payments are expected to be paid out through fiscal 2016.

• Summary of Restructuring Plans

        The adjustments to the accrued restructuring expenses related to all of HP's restructuring plans described above for the six months ended April 30, 2012 were as follows:

			Three months ended April 30, 2012 charges		Six months ended April 30, 2012 charges											As of April 30, 2012
	Balance, October 31, 2011							Cash payments			Non-cash settlements and other adjustments			Balance, April 30, 2012		Total costs and adjustments to date		Total expected costs and adjustments
	In millions
Fiscal 2010 acquisitions	$	59	$	—	$	—		$	(18	)	$	—		$	41	$	114	$	121
Fiscal 2010 ES Plan:
Severance		493		—		(100	)		(72	)		(16	)		305		623		623
Infrastructure		3		35		139			(104	)		(37	)		1		332		369
Total ES Plan		496		35		39			(176	)		(53	)		306		955		992
Fiscal 2009 Plan		—		—		7			(8	)		1			—		301		301
Fiscal 2008 HP/EDS Plan:
Severance		—		—		5			(6	)		1			—		2,195		2,195
Infrastructure		258		18		42			(66	)		(7	)		227		1,016		1,085
Total HP/EDS Plan		258		18		47			(72	)		(6	)		227		3,211		3,280
Total restructuring plans	$	813	$	53	$	93		$	(274	)	$	(58	)	$	574	$	4,581	$	4,694

        At April 30, 2012 and October 31, 2011, HP included the long-term portion of the restructuring liability of $301 million and $159 million, respectively, in Other liabilities, and the short-term portion of $273 million and $654 million, respectively, in Accrued restructuring in the accompanying Consolidated Condensed Balance Sheets.

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Basis of Presentation (Policies)

6 Months Ended

Apr. 30, 2012

Basis of Presentation

Reclassifications and Segment Reorganization

In connection with organizational realignments implemented in the first quarter of fiscal 2012, certain costs previously reported as cost of sales have been reclassified as selling, general and administrative expenses to better align those costs with the functional areas that benefit from those expenditures. HP has made certain segment and business unit realignments in order to optimize its operating structure. Reclassifications of prior year financial information have been made to conform to the current year presentation. None of the changes impacts HP's previously reported consolidated net revenue, earnings from operations, net earnings or net earnings per share. See Note 16 for a further discussion of HP's segment reorganization.

Transfers and Servicing Trade Receivables Policy

HP has revolving trade receivables-based facilities permitting it to sell certain trade receivables to third parties. In accordance with the accounting requirements under the Accounting Standards Codification relating to "Transfers and Servicing," trade receivables are derecognized from the Consolidated Condensed Balance Sheets when sold to third parties. The recourse obligation is measured using market data from similar transactions and reported as a current liability in the Consolidated Condensed Balance Sheets. The recourse obligation as of April 30, 2012 was not material.

Restructuring Policy

HP records restructuring charges associated with management approved restructuring plans to either reorganize one or more of HP's business segments, or to remove duplicative headcount and infrastructure associated with one or more business acquisitions. Restructuring charges can include severance costs to eliminate a specified number of employees, infrastructure charges to vacate facilities and consolidate operations, and contract cancellation costs. Restructuring charges are recorded based upon planned employee termination dates and site closure and consolidation plans. The timing of associated cash payments is dependent upon the type of restructuring charge and can extend over a multi-year period. HP records the short-term portion of the restructuring liability in Accrued restructuring and the long-term portion in Other liabilities in the Consolidated Condensed Balance Sheets.

Fair Value Policy

HP determines fair value based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants.

        Valuation techniques used by HP are based upon observable and unobservable inputs. Observable or market inputs reflect market data obtained from independent sources, while unobservable inputs reflect HP's assumptions about market participant assumptions based on the best information available. Observable inputs are the preferred basis of valuation. These two types of inputs create the following fair value hierarchy:

        Level 1—Quoted prices (unadjusted) for identical instruments in active markets.

        Level 2—Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

        Level 3—Prices or valuations that require management inputs that are both significant to the fair value measurement and unobservable.

        The following section describes the valuation methodologies HP uses to measure its financial assets and liabilities at fair value.

        Cash Equivalents and Investments: HP holds time deposits, money market funds, mutual funds, other debt securities primarily consisting of corporate and foreign government notes and bonds, and common stock and equivalents. Where applicable, HP uses quoted prices in active markets for identical assets to determine fair value. If quoted prices in active markets for identical assets are not available to determine fair value, HP uses quoted prices for similar assets and liabilities or inputs that are observable either directly or indirectly. If quoted prices for identical or similar assets are not available, HP uses internally developed valuation models, whose inputs include bid prices, and third-party valuations utilizing underlying assets assumptions.

        Derivative Instruments: As discussed in Note 8, HP mainly holds non-speculative forwards, swaps and options to hedge certain foreign currency and interest rate exposures. When active market quotes are not available, HP uses industry standard valuation models. Where applicable, these models project future cash flows and discount the future amounts to a present value using market-based observable inputs including interest rate curves, credit risk, foreign exchange rates, and forward and spot prices for currencies. In certain cases, market-based observable inputs are not available and, in those cases, HP uses management judgment to develop assumptions which are used to determine fair value.

        Short- and Long-Term Debt: The estimated fair value of publicly-traded debt is based on quoted market prices for the identical liability when traded as an asset in an active market. For other debt for which a quoted market price is not available, an expected present value method that uses rates currently available to HP for debt with similar terms and remaining maturities is used to estimate fair value. The portion of the company's fixed-rate debt obligations that is hedged is reflected in the Consolidated Condensed Balance Sheets as an amount equal to the debt's carrying value, including a fair value adjustment representing changes in the fair value of the hedged debt obligations arising from movements in benchmark interest rates.

Derivative Financial Instruments

HP is a global company that is exposed to foreign currency exchange rate fluctuations and interest rate changes in the normal course of its business. As part of its risk management strategy, HP uses derivative instruments, primarily forward contracts, option contracts, interest rate swaps, and total return swaps, to hedge certain foreign currency, interest rate and, to a lesser extent, equity exposures. HP's objective is to offset gains and losses resulting from these exposures with losses and gains on the derivative contracts used to hedge them, thereby reducing volatility of earnings or protecting fair values of assets and liabilities. HP does not have any leveraged derivatives and does not use derivative contracts for speculative purposes. HP designates its derivatives as fair value hedges, cash flow hedges or hedges of the foreign currency exposure of a net investment in a foreign operation ("net investment hedges"). Additionally, for derivatives not designated as hedging instruments, HP categorizes those economic hedges as other derivatives. HP recognizes all derivatives, on a gross basis, in the Consolidated Condensed Balance Sheets at fair value and reports them in Other current assets, Long-term financing receivables and other assets, Other accrued liabilities, or Other liabilities. HP classifies cash flows from the derivative programs as operating activities in the Consolidated Condensed Statements of Cash Flows.

        As a result of the use of derivative instruments, HP is exposed to the risk that counterparties to derivative contracts will fail to meet their contractual obligations. To mitigate the counterparty credit risk, HP has a policy of only entering into contracts with carefully selected major financial institutions based upon their credit ratings and other factors, and HP maintains dollar risk limits that correspond to each institution's credit rating and other factors. HP's established policies and procedures for mitigating credit risk on principal transactions and short-term cash include reviewing and establishing limits for credit exposure and continually assessing the creditworthiness of counterparties. Master agreements with counterparties include master netting arrangements as further mitigation of credit exposure to counterparties. These arrangements permit HP to net amounts due from HP to a counterparty with amounts due to HP from the same counterparty.

        To further mitigate credit exposure to counterparties, HP may enter into collateral security arrangements with its counterparties. These arrangements require HP to post collateral or to hold collateral from counterparties when the derivative fair values exceed contractually established thresholds which are generally based on the credit ratings of HP and its counterparties. Such funds are generally transferred within two business days of the due date.

• Fair Value Hedges

        For derivative instruments that are designated and qualify as fair value hedges, HP recognizes the gain or loss on the derivative instrument, as well as the offsetting loss or gain on the hedged item, in Interest and other, net in the Consolidated Condensed Statements of Earnings in the current period.

• Cash Flow Hedges

        HP uses a combination of forward contracts and options designated as cash flow hedges to protect against the foreign currency exchange rate risks inherent in its forecasted net revenue and, to a lesser extent, cost of sales, operating expense, and intercompany lease loan denominated in currencies other than the U.S. dollar. HP's foreign currency cash flow hedges mature generally within twelve months. However, certain leasing revenue-related forward contracts and intercompany lease loan forward contracts extend for the duration of the lease term, which can be up to five years. For derivative instruments that are designated and qualify as cash flow hedges, HP initially records the effective portion of the gain or loss on the derivative instrument in accumulated other comprehensive income or loss as a separate component of stockholders' equity and subsequently reclassifies these amounts into earnings in the period during which the hedged transaction is recognized in earnings. HP reports the effective portion of cash flow hedges in the same financial statement line item as the changes in value of the hedged item.

• Net Investment Hedges

        HP uses forward contracts designated as net investment hedges to hedge net investments in certain foreign subsidiaries whose functional currency is the local currency. These derivative instruments are designated as net investment hedges and, as such, HP records the effective portion of the gain or loss on the derivative instrument together with changes in the hedged items in cumulative translation adjustment as a separate component of stockholders' equity.

• Other Derivatives

        Other derivatives not designated as hedging instruments consist primarily of forward contracts HP uses to hedge foreign currency balance sheet exposures. HP also uses total return swaps and, to a lesser extent, interest rate swaps, based on the equity and fixed income indices, to hedge its executive deferred compensation plan liability. For derivative instruments not designated as hedging instruments, HP recognizes changes in the fair values in earnings in the period of change. HP recognizes the gain or loss on foreign currency forward contracts used to hedge balance sheet exposures in Interest and other, net in the same period as the remeasurement gain and loss of the related foreign currency denominated assets and liabilities. HP recognizes the gain or loss on the total return swaps and interest rate swaps in Interest and other, net in the same period as the gain or loss from the change in market value of the executive deferred compensation plan liability.

• Hedge Effectiveness

        For interest rate swaps designated as fair value hedges, HP measures effectiveness by offsetting the change in fair value of the hedged debt with the change in fair value of the derivative. For foreign currency options and forward contracts designated as cash flow or net investment hedges, HP measures effectiveness by comparing the cumulative change in the hedge contract with the cumulative change in the hedged item, both of which are based on forward rates. HP recognizes any ineffective portion of the hedge, as well as amounts not included in the assessment of effectiveness, in the Consolidated Condensed Statements of Earnings.

Receivables Financing Allowance and Reserves Policy

The allowance for doubtful accounts balance is comprised of a general reserve, which is determined based on a percentage of the financing receivables balance, and a specific reserve, which is established for certain leases with identified exposures, such as customer default, bankruptcy or other events, that make it unlikely that HP will recover its investment in the lease. The general reserve percentages are maintained on a regional basis and are based on several factors, which include consideration of historical credit losses and portfolio delinquencies, trends in the overall weighted-average risk rating of the portfolio, and information derived from competitive benchmarking. 

        Accounts are generally put on non-accrual status (cessation of interest accrual) when they reach 90 days past due. The non-accrual status may not impact a customer's risk rating. In certain circumstances, such as when the delinquency is deemed to be of an administrative nature, accounts may still accrue interest when they reach 90 days past due. A write-off or specific reserve is generally recorded when an account reaches 180 days past due.

Warranty Policy

HP provides for the estimated cost of product warranties at the time it recognizes revenue. HP engages in extensive product quality programs and processes, including actively monitoring and evaluating the quality of its component suppliers; however, product warranty terms offered to customers, ongoing product failure rates, material usage and service delivery costs incurred in correcting a product failure, as well as specific product class failures outside of HP's baseline experience, affect the estimated warranty obligation. If actual product failure rates, repair rates or any other post sales support costs differ from these estimates, revisions to the estimated warranty liability would be required.

Litigation and Contingencies Policy

HP is involved in lawsuits, claims, investigations and proceedings, including those identified below, consisting of intellectual property, commercial, securities, employment, employee benefits and environmental matters that arise in the ordinary course of business. HP records a provision for a liability when management believes that it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. HP believes it has adequate provisions for any such matters, and, as of April 30, 2012, it was not reasonably possible that an additional material loss had been incurred in an amount in excess of the amounts already recognized on HP's financial statements. HP reviews these provisions at least quarterly and adjusts these provisions to reflect the impact of negotiations, settlements, rulings, advice of legal counsel, and other information and events pertaining to a particular case. Based on its experience, HP believes that any damage amounts claimed in the specific matters discussed below are not a meaningful indicator of HP's potential liability. Litigation is inherently unpredictable. However, HP believes that it has valid defenses with respect to legal matters pending against it. Nevertheless, cash flows or results of operations could be materially affected in any particular period by the unfavorable resolution of one or more of these contingencies.

Segment Reporting Policy

HP derives the results of the business segments directly from its internal management reporting system. The accounting policies HP uses to derive business segment results are substantially the same as those the consolidated company uses. Management measures the performance of each business segment based on several metrics, including earnings from operations. Management uses these results, in part, to evaluate the performance of, and to assign resources to, each of the business segments. HP does not allocate to its business segments certain operating expenses, which it manages separately at the corporate level. These unallocated costs include primarily restructuring charges and any associated adjustments related to restructuring actions, amortization of purchased intangible assets, stock-based compensation expense related to HP-granted employee stock options, PRUs, restricted stock awards and the employee stock purchase plan, certain acquisition-related charges and charges for purchased IPR&D, as well as certain corporate governance costs.

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Retirement and Post-Retirement Benefit Plans

6 Months Ended

Apr. 30, 2012

Retirement and Post-Retirement Benefit Plans

Retirement and Post-Retirement Benefit Plans

Note 14: Retirement and Post-Retirement Benefit Plans

        HP's net pension and post-retirement benefit costs were as follows:

	Three months ended April 30
	U.S. Defined Benefit Plans						Non-U.S. Defined Benefit Plans						Post- Retirement Benefit Plans
	2012			2011			2012			2011			2012			2011
	In millions
Service cost	$	—		$	—		$	74		$	89		$	2		$	2
Interest cost		141			149			174			177			8			9
Expected return on plan assets		(198	)		(186	)		(206	)		(225	)		(9	)		(9	)
Amortization and deferrals:
Actuarial loss		11			8			59			60			(1	)		—
Prior service benefit		—			—			(6	)		(4	)		(22	)		(20	)
Net periodic benefit (gain) cost		(46	)		(29	)		95			97			(22	)		(18	)
Settlement loss		—			—			8			2			—			—
Special termination benefits		—			—			1			6			—			—
Net benefit (gain) cost	$	(46	)	$	(29	)	$	104		$	105		$	(22	)	$	(18	)

	Six months ended April 30
	U.S. Defined Benefit Plans						Non-U.S. Defined Benefit Plans						Post- Retirement Benefit Plans
	2012			2011			2012			2011			2012			2011
	In millions
Service cost	$	—		$	—		$	148		$	174		$	4		$	4
Interest cost		283			297			349			346			17			17
Expected return on plan assets		(396	)		(372	)		(413	)		(438	)		(18	)		(18	)
Amortization and deferrals:
Actuarial loss		21			17			119			122			(2	)		1
Prior service benefit		—			—			(12	)		(7	)		(44	)		(41	)
Net periodic benefit (gain) cost		(92	)		(58	)		191			197			(43	)		(37	)
Settlement (gain) loss		—			—			(20	)		2			—			—
Special termination benefits		—			—			2			8			—			—
Net benefit (gain) cost	$	(92	)	$	(58	)	$	173		$	207		$	(43	)	$	(37	)

        During the first quarter of fiscal 2012, HP completed the transfer of the substitutional portion of its Japan pension liability and obligation to the Japanese government. This transfer resulted in recognizing a net gain of $28 million, which is comprised of a net settlement loss of $150 million and a gain on government subsidy of $178 million. The government subsidy consisted of the elimination of $344 million of pension obligations and the transfer of $166 million of pension assets to the Japanese government.

• Employer Contributions and Funding Policy

        HP previously disclosed in its Consolidated Financial Statements for the fiscal year ended October 31, 2011 that it expected to contribute approximately $597 million to its pension plans and approximately $31 million to cover benefit payments to U.S. non-qualified plan participants. HP expects to pay approximately $30 million to cover benefit claims for HP's post-retirement benefit plans. HP's funding policy is to contribute cash to its pension plans so that it makes at least the minimum contribution required by local government, funding and taxing authorities.

        During the six months ended April 30, 2012, HP made $345 million of contributions to its pension plans, paid $15 million to cover benefit payments to U.S. non-qualified plan participants, and paid $14 million to cover benefit claims under post-retirement benefit plans. During the remainder of fiscal 2012, HP anticipates making additional contributions of approximately $252 million to its pension plans and approximately $16 million to its U.S. non-qualified plan participants and expects to pay up to $16 million to cover benefit claims under post-retirement benefit plans. HP's pension and other post-retirement benefit costs and obligations are dependent on various assumptions. Differences between expected and actual returns on investments will be reflected as unrecognized gains or losses, and such gains or losses will be amortized and recorded in future periods. Poor financial performance of invested assets in any year could lead to increased contributions in certain countries and increased future pension plan expense. Asset gains or losses are determined at the measurement date and amortized over the remaining service life or life expectancy of plan participants. HP's next measurement date is October 31, 2012.

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Guarantees

6 Months Ended

Apr. 30, 2012

Guarantees

Guarantees

Note 10: Guarantees

• Guarantees and Indemnifications

        In the ordinary course of business, HP may provide certain clients with subsidiary performance guarantees and/or financial performance guarantees, which may be backed by standby letters of credit or surety bonds. In general, HP would be liable for the amounts of these guarantees in the event HP or HP's subsidiaries' nonperformance permits termination of the related contract by the client, the likelihood of which HP believes is remote. HP believes that the company is in compliance with the performance obligations under all material service contracts for which there is a performance guarantee.

        HP has certain service contracts supported by client financing or securitization arrangements. Under specific circumstances involving nonperformance resulting in service contract termination or failure to comply with terms under the financing arrangement, HP would be required to acquire certain assets. HP considers the possibility of its failure to comply to be remote and the asset amounts involved to be immaterial.

        In the ordinary course of business, HP enters into contractual arrangements under which HP may agree to indemnify the third party to such arrangement from any losses incurred relating to the services they perform on behalf of HP or for losses arising from certain events as defined within the particular contract, which may include, for example, litigation or claims relating to past performance. Such indemnification obligations may not be subject to maximum loss clauses. Historically, payments made related to these indemnifications have been immaterial.

• Warranty

        HP provides for the estimated cost of product warranties at the time it recognizes revenue. HP engages in extensive product quality programs and processes, including actively monitoring and evaluating the quality of its component suppliers; however, product warranty terms offered to customers, ongoing product failure rates, material usage and service delivery costs incurred in correcting a product failure, as well as specific product class failures outside of HP's baseline experience, affect the estimated warranty obligation. If actual product failure rates, repair rates or any other post sales support costs differ from these estimates, revisions to the estimated warranty liability would be required.

        The changes in HP's aggregate product warranty liabilities for the six months ended April 30, 2012 were as follows:

	In millions
Product warranty liability at October 31, 2011	$	2,451
Accruals for warranties issued		1,158
Adjustments related to pre-existing warranties (including changes in estimates)		(62	)
Settlements made (in cash or in kind)		(1,242	)
Product warranty liability at April 30, 2012	$	2,305

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Segment Information (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Apr. 30, 2012	Apr. 30, 2011	Apr. 30, 2012 segment	Apr. 30, 2011
Segment Reporting Information
Number of business segments			7
Net revenue:
Net revenue	$ 30,693	$ 31,632	$ 60,729	$ 63,934
Earnings (Loss) from Operations	2,222	2,968	4,264	6,362
Earnings before taxes:
Amortization of purchased intangible assets	(470)	(413)	(936)	(838)
Restructuring charges	(53)	(158)	(93)	(316)
Acquisition related charges	(17)	(21)	(39)	(50)
Interest and other, net	(243)	(76)	(464)	(173)
Earnings before taxes	1,979	2,892	3,800	6,189
Notebooks
Net revenue:
Net revenue - segment information	4,900	5,039	9,842	10,847
Desktops
Net revenue:
Net revenue - segment information	3,827	3,641	7,033	7,537
Workstations
Net revenue:
Net revenue - segment information	537	541	1,072	1,076
Other personal systems
Net revenue:
Net revenue - segment information	188	194	378	404
Infrastructure Technology Outsourcing
Net revenue:
Net revenue - segment information	3,669	3,786	7,370	7,430
Technology Services
Net revenue:
Net revenue - segment information	2,638	2,629	5,200	5,143
Application and Business Services
Net revenue:
Net revenue - segment information	2,524	2,501	4,887	4,872
Supplies
Net revenue:
Net revenue - segment information	4,060	4,612	8,139	8,970
Commercial Hardware
Net revenue:
Net revenue - segment information	1,479	1,536	2,968	3,101
Consumer Hardware
Net revenue:
Net revenue - segment information	593	695	1,283	1,503
Industry Standard Servers
Net revenue:
Net revenue - segment information	3,186	3,387	6,258	6,835
Storage
Net revenue:
Net revenue - segment information	990	980	1,945	1,992
Business Critical Systems
Net revenue:
Net revenue - segment information	421	546	826	1,101
Networking
Net revenue:
Net revenue - segment information	614	603	1,200	1,187
Total segment
Net revenue:
Net revenue - segment information	31,582	32,414	62,311	65,336
Earnings (Loss) from Operations	3,133	3,843	6,030	7,866
Personal Systems Group
Net revenue:
Net revenue - segment information	9,452	9,415	18,325	19,864
Earnings (Loss) from Operations	524	533	988	1,205
Services
Segment Reporting Information
Number of business units within segment			3
Net revenue:
Net revenue - segment information	8,831	8,916	17,457	17,445
Earnings (Loss) from Operations	997	1,372	1,902	2,753
Imaging and Printing Group
Net revenue:
Net revenue - segment information	6,132	6,843	12,390	13,574
Earnings (Loss) from Operations	808	1,136	1,569	2,255
Enterprise Servers, Storage and Networking
Net revenue:
Net revenue - segment information	5,211	5,516	10,229	11,115
Earnings (Loss) from Operations	585	760	1,147	1,590
Software
Segment Reporting Information
Number of business units within segment			2
Net revenue:
Net revenue - segment information	970	797	1,916	1,522
Earnings (Loss) from Operations	172	158	334	278
HP Financial Services
Net revenue:
Net revenue - segment information	968	885	1,918	1,712
Earnings (Loss) from Operations	96	83	187	162
Corporate Investments
Net revenue:
Net revenue - segment information	18	42	76	104
Earnings (Loss) from Operations	(49)	(199)	(97)	(377)
Significant Reconciling Items
Net revenue:
Eliminations of intersegment net revenue and other	(889)	(782)	(1,582)	(1,402)
Net revenue - segment information	31,582	32,414	62,311	65,336
Earnings before taxes:
Corporate and unallocated costs, gains and eliminations	(203)	(153)	(356)	(4)
Unallocated costs related to stock based compensation expense	(168)	(130)	(342)	(296)
Amortization of purchased intangible assets	(470)	(413)	(936)	(838)
Restructuring charges	(53)	(158)	(93)	(316)
Acquisition related charges	(17)	(21)	(39)	(50)
Interest and other, net	(243)	(76)	(464)	(173)
Earnings before taxes	$ 1,979	$ 2,892	$ 3,800	$ 6,189

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Financial Instruments

6 Months Ended

Apr. 30, 2012

Financial Instruments

Financial Instruments

Note 8: Financial Instruments

• Cash Equivalents and Available-for-Sale Investments

        Cash equivalents and available-for-sale investments at fair value as of April 30, 2012 and October 31, 2011 were as follows:

	April 30, 2012									October 31, 2011
	Cost		Gross Unrealized Gain		Gross Unrealized Loss			Estimated Fair Value		Cost		Gross Unrealized Gain		Gross Unrealized Loss			Estimated Fair Value
	In millions
Cash Equivalents
Time deposits	$	2,788	$	—	$	—		$	2,788	$	5,112	$	—	$	—		$	5,112
Money market funds		1,985		—		—			1,985		236		—		—			236
Mutual funds		71		—		—			71		—		—		—			—
Total cash equivalents		4,844		—		—			4,844		5,348		—		—			5,348
Available-for-Sale Investments
Debt securities:
Time deposits		8		—		—			8		8		—		—			8
Foreign bonds		309		63		—			372		317		66		—			383
Mutual funds		309		—		—			309		—		—		—			—
Corporate bonds and other debt securities		70		—		(17	)		53		74		—		(21	)		53
Total debt securities		696		63		(17	)		742		399		66		(21	)		444
Equity securities in public companies		62		3		(19	)		46		114		4		—			118
Total cash equivalents and available-for-sale investments	$	5,602	$	66	$	(36	)	$	5,632	$	5,861	$	70	$	(21	)	$	5,910

        Cash equivalents consist of investments in time deposits, money market funds and mutual funds with original maturities of three months or less. Time deposits were primarily issued by institutions outside the U.S. as of April 30, 2012 and October 31, 2011. Available-for-sale securities consist of short-term investments which mature within twelve months or less and long-term investments with maturities greater than twelve months. Investments primarily include institutional bonds, mutual funds, equity securities in public companies, fixed-interest securities and time deposits. HP estimates the fair values of its investments based on quoted market prices or pricing models using current market rates. These estimated fair values may not be representative of actual values that will be realized in the future.

        As of April 30, 2012, $17 million of the total gross unrealized losses were related to certain debt securities that had been in a continuous loss position for more than twelve months. The gross unrealized loss as of October 31, 2011 was due primarily to declines in certain debt securities of $21 million that had been in a continuous loss position for more than twelve months. HP does not intend to sell these debt securities, and it is not likely that HP will be required to sell these debt securities prior to the recovery of the amortized cost.

        Contractual maturities of short-term and long-term investments in available-for-sale debt securities at April 30, 2012 were as follows:

	April 30, 2012
	Cost		Estimated Fair Value
	In millions
Due in less than one year	$	314	$	314
Due in one to five years		71		54
Due in more than five years		311		374
	$	696	$	742

        For the three and six months ended April 30, 2012, HP recognized an insignificant impairment charge associated with debt securities. For the three and six months ended April 30, 2011, HP did not recognize any impairment charge associated with debt securities.

        During the quarter ended April 30, 2012, HP recognized a $50.7 million impairment charge related to a public equity investment as HP determined that such impairment was other than temporary. HP made its determination based on an average of closing prices for the six months ended April 30, 2012. HP has evaluated the near-term prospects of its remaining equity investments in a gross unrealized loss position in relation to the severity and duration of the impairment and considers the decline in market value of the equity investments to be temporary in nature.

        Equity securities in privately held companies include cost basis and equity method investments. These amounted to $51 million and $48 million for the periods ended April 30, 2012 and October 31, 2011, respectively, and are included in long-term financing receivables and other assets.

• Derivative Financial Instruments

        HP is a global company that is exposed to foreign currency exchange rate fluctuations and interest rate changes in the normal course of its business. As part of its risk management strategy, HP uses derivative instruments, primarily forward contracts, option contracts, interest rate swaps, and total return swaps, to hedge certain foreign currency, interest rate and, to a lesser extent, equity exposures. HP's objective is to offset gains and losses resulting from these exposures with losses and gains on the derivative contracts used to hedge them, thereby reducing volatility of earnings or protecting fair values of assets and liabilities. HP does not have any leveraged derivatives and does not use derivative contracts for speculative purposes. HP designates its derivatives as fair value hedges, cash flow hedges or hedges of the foreign currency exposure of a net investment in a foreign operation ("net investment hedges"). Additionally, for derivatives not designated as hedging instruments, HP categorizes those economic hedges as other derivatives. HP recognizes all derivatives, on a gross basis, in the Consolidated Condensed Balance Sheets at fair value and reports them in Other current assets, Long-term financing receivables and other assets, Other accrued liabilities, or Other liabilities. HP classifies cash flows from the derivative programs as operating activities in the Consolidated Condensed Statements of Cash Flows.

        As a result of the use of derivative instruments, HP is exposed to the risk that counterparties to derivative contracts will fail to meet their contractual obligations. To mitigate the counterparty credit risk, HP has a policy of only entering into contracts with carefully selected major financial institutions based upon their credit ratings and other factors, and HP maintains dollar risk limits that correspond to each institution's credit rating and other factors. HP's established policies and procedures for mitigating credit risk on principal transactions and short-term cash include reviewing and establishing limits for credit exposure and continually assessing the creditworthiness of counterparties. Master agreements with counterparties include master netting arrangements as further mitigation of credit exposure to counterparties. These arrangements permit HP to net amounts due from HP to a counterparty with amounts due to HP from the same counterparty.

        To further mitigate credit exposure to counterparties, HP may enter into collateral security arrangements with its counterparties. These arrangements require HP to post collateral or to hold collateral from counterparties when the derivative fair values exceed contractually established thresholds which are generally based on the credit ratings of HP and its counterparties. Such funds are generally transferred within two business days of the due date. As of April 30, 2012, HP held $195 million of collateral and posted $40 million through re-hypothecation in association with the counterparties under these collateralized arrangements. As of April 30, 2011, HP held $30 million of treasury securities under those collateralized arrangements. As of April 30, 2012 and 2011, HP did not have any derivative instruments under these collateralized arrangements that were in a significant net liability position.

• Fair Value Hedges

        HP enters into fair value hedges to reduce the exposure of its debt portfolio to interest rate risk. HP issues long-term debt in U.S. dollars based on market conditions at the time of financing. HP uses interest rate swaps to mitigate the market risk exposures in connection with the debt to achieve primarily U.S. dollar LIBOR-based floating interest expense. The swap transactions generally involve principal and interest obligations for U.S. dollar-denominated amounts. Alternatively, HP may choose not to swap fixed for floating interest payments or may terminate a previously executed swap if it believes a larger proportion of fixed-rate debt would be beneficial. When investing in fixed-rate instruments, HP may enter into interest rate swaps that convert the fixed interest payments into variable interest payments and would classify these swaps as fair value hedges. For derivative instruments that are designated and qualify as fair value hedges, HP recognizes the gain or loss on the derivative instrument, as well as the offsetting loss or gain on the hedged item, in Interest and other, net in the Consolidated Condensed Statements of Earnings in the current period.

• Cash Flow Hedges

        HP uses a combination of forward contracts and options designated as cash flow hedges to protect against the foreign currency exchange rate risks inherent in its forecasted net revenue and, to a lesser extent, cost of sales, operating expense, and intercompany lease loan denominated in currencies other than the U.S. dollar. HP's foreign currency cash flow hedges mature generally within twelve months. However, certain leasing revenue-related forward contracts and intercompany lease loan forward contracts extend for the duration of the lease term, which can be up to five years. For derivative instruments that are designated and qualify as cash flow hedges, HP initially records the effective portion of the gain or loss on the derivative instrument in accumulated other comprehensive income or loss as a separate component of stockholders' equity and subsequently reclassifies these amounts into earnings in the period during which the hedged transaction is recognized in earnings. HP reports the effective portion of cash flow hedges in the same financial statement line item as the changes in value of the hedged item. During the three and six months ended April 30, 2012 and 2011, HP did not discontinue any cash flow hedge for which it was probable that a forecasted transaction would not occur.

• Net Investment Hedges

        HP uses forward contracts designated as net investment hedges to hedge net investments in certain foreign subsidiaries whose functional currency is the local currency. These derivative instruments are designated as net investment hedges and, as such, HP records the effective portion of the gain or loss on the derivative instrument together with changes in the hedged items in cumulative translation adjustment as a separate component of stockholders' equity.

• Other Derivatives

        Other derivatives not designated as hedging instruments consist primarily of forward contracts HP uses to hedge foreign currency balance sheet exposures. HP also uses total return swaps and, to a lesser extent, interest rate swaps, based on the equity and fixed income indices, to hedge its executive deferred compensation plan liability. For derivative instruments not designated as hedging instruments, HP recognizes changes in the fair values in earnings in the period of change. HP recognizes the gain or loss on foreign currency forward contracts used to hedge balance sheet exposures in Interest and other, net in the same period as the remeasurement gain and loss of the related foreign currency denominated assets and liabilities. HP recognizes the gain or loss on the total return swaps and interest rate swaps in Interest and other, net in the same period as the gain or loss from the change in market value of the executive deferred compensation plan liability.

• Hedge Effectiveness

        For interest rate swaps designated as fair value hedges, HP measures effectiveness by offsetting the change in fair value of the hedged debt with the change in fair value of the derivative. For foreign currency options and forward contracts designated as cash flow or net investment hedges, HP measures effectiveness by comparing the cumulative change in the hedge contract with the cumulative change in the hedged item, both of which are based on forward rates. HP recognizes any ineffective portion of the hedge, as well as amounts not included in the assessment of effectiveness, in the Consolidated Condensed Statements of Earnings. As of April 30, 2012 and 2011, the portion of hedging instruments' gain or loss excluded from the assessment of effectiveness was not material for fair value, cash flow or net investment hedges. Hedge ineffectiveness for fair value, cash flow and net investment hedges was not material in the three and six months ended April 30, 2012 and 2011.

• Fair Value of Derivative Instruments in the Consolidated Condensed Balance Sheets

        As discussed in Note 7, HP estimates the fair values of derivatives primarily based on pricing models using current market rates and records all derivatives on the balance sheet at fair value. The gross notional and fair value of derivative financial instruments in the Consolidated Condensed Balance Sheets was recorded as follows:

	As of April 30, 2012										As of October 31, 2011
	Gross Notional(1)		Other Current Assets		Long-term Financing Receivables and Other Assets		Other Accrued Liabilities		Other Liabilities		Gross Notional(1)		Other Current Assets		Long-term Financing Receivables and Other Assets		Other Accrued Liabilities		Other Liabilities
	In millions
Derivatives designated as hedging instruments
Fair value hedges:
Interest rate contracts	$	8,350	$	34	$	338	$	—	$	—	$	10,075	$	30	$	508	$	—	$	—
Cash flow hedges:
Foreign exchange contracts		19,336		321		26		246		92		21,666		192		30		324		126
Net investment hedges:
Foreign exchange contracts		1,686		15		8		36		15		1,556		7		4		44		56
Total derivatives designated as hedging instruments		29,372		370		372		282		107		33,297		229		542		368		182
Derivatives not designated as hedging instruments
Foreign exchange contracts		12,919		57		11		73		15		13,994		66		5		244		38
Interest rate contracts(2)		2,200		—		39		—		44		2,200		—		55		—		71
Other derivatives		414		2		12		—		—		410		25		6		—		1
Total derivatives not designated as hedging instruments		15,533		59		62		73		59		16,604		91		66		244		110
Total derivatives	$	44,905	$	429	$	434	$	355	$	166	$	49,901	$	320	$	608	$	612	$	292

⁽¹⁾

Represents the face amounts of contracts that were outstanding as of April 30, 2012 and October 31, 2011, respectively.

⁽²⁾

Represents offsetting swaps acquired through previous business combinations that were not designated as hedging instruments.

• Effect of Derivative Instruments on the Consolidated Condensed Statements of Earnings

        The before-tax effect of a derivative instrument and related hedged item in a fair value hedging relationship for the three and six months ended April 30, 2012 and 2011 were as follows:

	Gain (Loss) Recognized in Income on Derivative and Related Hedged Item
Derivative Instrument	Location	Three months ended April 30, 2012			Six months ended April 30, 2012			Hedged Item	Location	Three months ended April 30, 2012		Six months ended April 30, 2012
		In millions								In millions
Interest rate contracts	Interest and other, net	$	(80	)	$	(76	)	Fixed-rate debt	Interest and other, net	$	80	$	80

	Gain (Loss) Recognized in Income on Derivative and Related Hedged Item
Derivative Instrument	Location	Three months ended April 30, 2011			Six months ended April 30, 2011			Hedged Item	Location	Three months ended April 30, 2011		Six months ended April 30, 2011
		In millions								In millions
Interest rate contracts	Interest and other, net	$	(25	)	$	(203	)	Fixed-rate debt	Interest and other, net	$	27	$	201

        The before-tax effect of derivative instruments in cash flow and net investment hedging relationships for the three and six months ended April 30, 2012 was as follows:

	Gain (Loss) Recognized in Other Comprehensive Income ("OCI") on Derivative (Effective Portion)						Gain (Loss) Reclassified from Accumulated OCI Into Income (Effective Portion)							Gain Recognized in Income on Derivative (Ineffective portion and Amount Excluded from Effectiveness Testing)
	Three months ended April 30, 2012			Six months ended April 30, 2012			Location	Three months ended April 30, 2012			Six months ended April 30, 2012			Location	Three months ended April 30, 2012		Six months ended April 30, 2012
	In millions							In millions							In millions
Cash flow hedges:
Foreign exchange contracts	$	(110	)	$	317		Net revenue	$	(2	)	$	86		Net revenue	$	—	$	—
Foreign exchange contracts		(53	)		(61	)	Cost of products		2			18		Cost of products		—		—
Foreign exchange contracts		(1	)		(4	)	Other operating expenses		(1	)		(2	)	Other operating expenses		—		—
Foreign exchange contracts		(17	)		(17	)	Interest and other, net		(15	)		(15	)	Interest and other, net		—		—
Foreign exchange contracts		(10	)		(19	)	Net revenue		5			—		Interest and other, net		—		—
Total cash flow hedges	$	(191	)	$	216			$	(11	)	$	87			$	—	$	—
Net investment hedges:
Foreign exchange contracts	$	13		$	38		Interest and other, net	$	—		$	—		Interest and other, net	$	—	$	—

        The before-tax effect of derivative instruments in cash flow and net investment hedging relationships for the three and six months ended April 30, 2011 was as follows:

	Gain (Loss) Recognized in OCI on Derivative (Effective Portion)						Gain (Loss) Reclassified from Accumulated OCI Into Income (Effective Portion)							Gain Recognized in Income on Derivative (Ineffective portion and Amount Excluded from Effectiveness Testing)
	Three months ended April 30, 2011			Six months ended April 30, 2011			Location	Three months ended April 30, 2011			Six months ended April 30, 2011			Location	Three months ended April 30, 2011		Six months ended April 30, 2011
	In millions							In millions							In millions
Cash flow hedges:
Foreign exchange contracts	$	(780	)	$	(680	)	Net revenue	$	(296	)	$	(320	)	Net revenue	$	—	$	—
Foreign exchange contracts		27			18		Cost of products		(4	)		22		Cost of products		—		—
Foreign exchange contracts		7			5		Other operating expenses		1			2		Other operating expenses		—		—
Foreign exchange contracts		(36	)		(20	)	Interest and other, net		(39	)		(32	)	Interest and other, net		—		—
Foreign exchange contracts		11			(2	)	Net revenue		2			6		Interest and other, net		1		3
Total cash flow hedges	$	(771	)	$	(679	)		$	(336	)	$	(322	)		$	1	$	3
Net investment hedges:
Foreign exchange contracts	$	(92	)	$	(97	)	Interest and other, net	$	—		$	—		Interest and other, net	$	—	$	—

        As of April 30, 2012, HP expects to reclassify an estimated net accumulated other comprehensive gain of approximately $47 million, net of taxes, to earnings in the next twelve months along with the earnings effects of the related forecasted transactions in association with cash flow hedges.

        The before-tax effect of derivative instruments not designated as hedging instruments on the Consolidated Condensed Statements of Earnings for the three and six months ended April 30, 2012 and 2011 was as follows:

	Gain (Loss) Recognized in Income on Derivative
	Location	Three months ended April 30, 2012			Six months ended April 30, 2012
		In millions
Foreign exchange contracts	Interest and other, net	$	(74	)	$	(156	)
Other derivatives	Interest and other, net		(6	)		(16	)
Interest rate contracts	Interest and other, net		1			11
Total		$	(79	)	$	(161	)

	Gain (Loss) Recognized in Income on Derivative
	Location	Three months ended April 30, 2011			Six months ended April 30, 2011
		In millions
Foreign exchange contracts	Interest and other, net	$	(621	)	$	(698	)
Other derivatives	Interest and other, net		12			10
Interest rate contracts	Interest and other, net		1			3
Total		$	(608	)	$	(685	)

• Other Financial Instruments

        For the balance of HP's financial instruments, accounts receivable, financing receivables, accounts payable and other accrued liabilities, the carrying amounts approximate fair value due to their short maturities.

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Financing Receivables and Operating Leases

6 Months Ended

Apr. 30, 2012

Financing Receivables and Operating Leases

Financing Receivables and Operating Leases

Note 9: Financing Receivables and Operating Leases

        Financing receivables represent sales-type and direct-financing leases resulting from the placement of HP and third-party products. These receivables typically have terms from two to five years and are usually collateralized by a security interest in the underlying assets. Financing receivables also include billed receivables from operating leases. The components of financing receivables, which are included in Financing receivables and Long-term financing receivables and other assets in the accompanying Consolidated Condensed Balance Sheets, were as follows:

	April 30, 2012			October 31, 2011
	In millions
Minimum lease payments receivable	$	7,828		$	7,721
Unguaranteed residual value		231			233
Unearned income		(654	)		(647	)
Financing receivables, gross		7,405			7,307
Allowance for doubtful accounts		(146	)		(130	)
Financing receivables, net		7,259			7,177
Less current portion		(3,139	)		(3,162	)
Amounts due after one year, net	$	4,120		$	4,015

        Equipment leased to customers under operating leases was $4.0 billion at April 30, 2012 and October 31, 2011, and is included in machinery and equipment. Accumulated depreciation on equipment under lease was $1.5 billion at April 30, 2012 and $1.3 billion at October 31, 2011.

        Due to the homogenous nature of the leasing transactions, HP manages its financing receivables on an aggregate basis when assessing and monitoring credit risk. Credit risk is generally diversified due to the large number of entities comprising HP's customer base and their dispersion across many different industries and geographical regions. The credit quality of an obligor is evaluated at lease inception and monitored over the term of a transaction. Risk ratings are assigned to each lease based on the creditworthiness of the obligor and other variables that augment or diminish the inherent credit risk of a particular transaction. Such variables include the underlying value and liquidity of the collateral, the essential use of the equipment, the term of the lease, and the inclusion of guarantees, letters of credit, security deposits or other credit enhancements.

        The credit risk profile of the gross financing receivables, based on internally assigned ratings, was as follows:

	April 30, 2012		October 31, 2011
	In millions
Risk Rating
Low	$	4,414	$	4,261
Moderate		2,913		2,989
High		78		57
Total	$	7,405	$	7,307

        Accounts rated low risk typically have the equivalent of a Standard & Poor's rating of BBB- or higher, while accounts rated moderate risk would generally be the equivalent of BB+ or lower. HP closely monitors accounts rated high risk and, based upon an impairment analysis, may establish specific reserves against a portion of these leases.

        The allowance for doubtful accounts balance is comprised of a general reserve, which is determined based on a percentage of the financing receivables balance, and a specific reserve, which is established for certain leases with identified exposures, such as customer default, bankruptcy or other events, that make it unlikely that HP will recover its investment in the lease. The general reserve percentages are maintained on a regional basis and are based on several factors, which include consideration of historical credit losses and portfolio delinquencies, trends in the overall weighted-average risk rating of the portfolio, and information derived from competitive benchmarking.

        The allowance for doubtful accounts and the related financing receivables were as follows:

	Six months ended April 30, 2012
	In millions
Allowance for doubtful accounts
Balance, beginning of period	$	130
Additions to allowance		22
Deductions, net of recoveries		(6	)
Balance, end of period	$	146

	April 30, 2012		October 31, 2011
	In millions
Allowance for financing receivables individually evaluated for loss	$	48	$	35
Allowance for financing receivables collectively evaluated for loss		98		95
Total	$	146	$	130
Gross financing receivables individually evaluated for loss	$	313	$	228
Gross financing receivables collectively evaluated for loss		7,092		7,079
Total	$	7,405	$	7,307

        Accounts are generally put on non-accrual status (cessation of interest accrual) when they reach 90 days past due. The non-accrual status may not impact a customer's risk rating. In certain circumstances, such as when the delinquency is deemed to be of an administrative nature, accounts may still accrue interest when they reach 90 days past due. A write-off or specific reserve is generally recorded when an account reaches 180 days past due. Total financing receivables on non-accrual status were $197 million and $157 million at April 30, 2012 and October 31, 2011, respectively. Total financing receivables greater than 90 days past due and still accruing interest were $116 million and $71 million at April 30, 2012 and October 31, 2011, respectively.

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Borrowings

6 Months Ended

Apr. 30, 2012

Borrowings

Borrowings

Note 11: Borrowings

• Notes Payable and Short-Term Borrowings

        Notes payable and short-term borrowings, including the current portion of long-term debt, were as follows:

	April 30, 2012					October 31, 2011
	Amount Outstanding		Weighted- Average Interest Rate			Amount Outstanding		Weighted- Average Interest Rate
	In millions					In millions
Commercial paper	$	345		1.5	%	$	3,215		0.4	%
Current portion of long-term debt		3,346		1.8	%		4,345		2.4	%
Notes payable to banks, lines of credit and other		561		3.4	%		523		2.9	%
	$	4,252				$	8,083

        Notes payable to banks, lines of credit and other includes deposits associated with HP's banking-related activities of approximately $343 million and $355 million at April 30, 2012 and October 31, 2011, respectively.

• Long-Term Debt

        Long-term debt was as follows:

	April 30, 2012			October 31, 2011
	In millions
U.S. Dollar Global Notes
2002 Shelf Registration Statement:
$500 issued at discount to par at a price of 99.505% in June 2002 at 6.5%, due July 2012	$	500		$	500
2006 Shelf Registration Statement:
$600 issued at par in February 2007 at three-month USD LIBOR plus 0.11%, paid March 2012		—			600
$900 issued at discount to par at a price of 99.938% in February 2007 at 5.25%, paid March 2012		—			900
$500 issued at discount to par at a price of 99.694% in February 2007 at 5.4%, due March 2017		499			499
$1,500 issued at discount to par at a price of 99.921% in March 2008 at 4.5%, due March 2013		1,500			1,500
$750 issued at discount to par at a price of 99.932% in March 2008 at 5.5%, due March 2018		750			750
$2,000 issued at discount to par at a price of 99.561% in December 2008 at 6.125%, due March 2014		1,997			1,996
$1,000 issued at discount to par at a price of 99.956% in February 2009 at 4.25%, paid February 2012		—			1,000
$1,500 issued at discount to par at a price of 99.993% in February 2009 at 4.75%, due June 2014		1,500			1,500
2009 Shelf Registration Statement:
$250 issued at discount to par at a price of 99.984% in May 2009 at 2.95%, due August 2012		250			250
$800 issued at par in September 2010 at three-month USD LIBOR plus 0.125%, due September 2012		800			800
$1,100 issued at discount to par at a price of 99.921% in September 2010 at 1.25%, due September 2013		1,100			1,099
$1,100 issued at discount to par at a price of 99.887% in September 2010 at 2.125%, due September 2015		1,099			1,099
$650 issued at discount to par at a price of 99.911% in December 2010 at 2.2%, due December 2015		650			650
$1,350 issued at discount to par at a price of 99.827% in December 2010 at 3.75%, due December 2020		1,348			1,348
$1,750 issued at par in May 2011 at three month USD LIBOR plus 0.28%, due May 2013		1,750			1,750
$500 issued at par in May 2011 at three month USD LIBOR plus 0.4%, due May 2014		500			500
$500 issued at discount to par at a price of 99.971% in May 2011 at 1.55%, due May 2014		500			500
$1,000 issued at discount to par at a price of 99.958% in May 2011 at 2.65%, due June 2016		1,000			1,000
$1,250 issued at discount to par at a price of 99.799% in May 2011 at 4.3%, due June 2021		1,248			1,248
$750 issued at discount to par at a price of 99.977% in September 2011 at 2.35%, due March 2015		750			750
$1,300 issued at discount to par at a price of 99.784% in September 2011 at 3.0%, due September 2016		1,298			1,297
$1,000 issued at discount to par at a price of 99.816% in September 2011 at 4.375%, due September 2021		998			998
$1,200 issued at discount to par at a price of 99.863% in September 2011 at 6.0%, due September 2041		1,198			1,198
$350 issued at par in September 2011 at three-month USD LIBOR plus 1.55%, due September 2014		350			350
$650 issued at discount to par at a price of 99.946% in December 2011 at 2.625%, due December 2014		650			—
$850 issued at discount to par at a price of 99.790% in December 2011 at 3.3%, due December 2016		848			—
$1,500 issued at discount to par at a price of 99.707% in December 2011 at 4.65%, due December 2021		1,496			—
$1,500 issued at discount to par at a price of 99.985% in March 2012 at 2.6%, due September 2017		1,500			—
$500 issued at discount to par at a price of 99.771% in March 2012 at 4.05%, due September 2022		499			—
		26,578			24,082
EDS Senior Notes
$1,100 issued June 2003 at 6.0%, due August 2013		1,114			1,120
$300 issued October 1999 at 7.45%, due October 2029		314			315
		1,428			1,435
Other, including capital lease obligations, at 0.60%-8.63%, due in calendar years 2012-2024		702			836
Fair value adjustment related to hedged debt		463			543
Less: current portion		(3,346	)		(4,345	)
Total long-term debt	$	25,825		$	22,551

        As disclosed in Note 8 to the Consolidated Condensed Financial Statements, HP uses interest rate swaps to mitigate the market risk exposures in connection with certain fixed interest global notes to achieve primarily U.S. dollar LIBOR-based floating interest expense. The interest rates in the table above have not been adjusted to reflect the impact of any interest rate swaps.

        HP may redeem some or all of the Global Notes set forth in the above table at any time at the redemption prices described in the prospectus supplements relating thereto. The Global Notes are senior unsecured debt.

        In May 2009, HP filed a shelf registration statement (the "2009 Shelf Registration Statement") with the SEC to enable the company to offer for sale, from time to time, in one or more offerings, an unspecified amount of debt securities, common stock, preferred stock, depositary shares and warrants. The 2009 Shelf Registration Statement replaced other registration statements filed in March 2002 and May 2006.

        HP's Board of Directors has approved a $16.0 billion U.S. commercial paper program. HP's subsidiaries are authorized to issue up to an additional $1.0 billion of commercial paper, of which $500 million of capacity was available as of April 30, 2012 to be used by Hewlett-Packard International Bank PLC, a wholly-owned subsidiary of HP, for its Euro Commercial Paper/Certificate of Deposit Programme.

        HP has a $3.0 billion five-year credit facility that expires in March 2017 and a $4.5 billion four-year credit facility that expires in February 2015. Commitment fees, interest rates and other terms of borrowing under the credit facilities vary based on HP's external credit ratings. The credit facilities are senior unsecured committed borrowing arrangements primarily to support the issuance of U.S. commercial paper. HP's ability to have a U.S. commercial paper outstanding balance that exceeds the $7.5 billion supported by these credit facilities is subject to a number of factors, including liquidity conditions and business performance.

        Within Other, including capital lease obligations, are borrowings that are collateralized by certain financing receivable assets. As of April 30, 2012, the carrying value of the assets approximated the carrying value of the borrowings of $215 million.

        As of April 30, 2012, HP had the capacity to issue an unspecified amount of additional debt securities, common stock, preferred stock, depositary shares and warrants under the 2009 Shelf Registration Statement. As of that date, HP also had up to approximately $17.5 billion of available borrowing resources, including $16.2 billion under its commercial paper programs and approximately $1.3 billion relating to uncommitted lines of credit.

XML

Income Taxes (Tables)

6 Months Ended

Apr. 30, 2012

Income Taxes

Schedule of current and long-term deferred tax assets and liabilities

	April 30, 2012			October 31, 2011
	In millions
Current deferred tax assets	$	5,042		$	5,374
Current deferred tax liabilities		(71	)		(41	)
Long-term deferred tax assets		1,590			1,283
Long-term deferred tax liabilities		(5,241	)		(5,163	)
Total deferred tax assets net of deferred tax liabilities	$	1,320		$	1,453

XML

Financing Receivables and Operating Leases (Details) (USD $)	6 Months Ended
	Apr. 30, 2012 Year	Oct. 31, 2011
Financing Receivables and Operating Leases
Financing receivable term, low end of range (in years)	2
Financing receivable term, high end of range (in years)	5
Minimum lease payments receivable	$ 7,828,000,000	$ 7,721,000,000
Unguaranteed residual value	231,000,000	233,000,000
Unearned income	(654,000,000)	(647,000,000)
Financing receivables, gross	7,405,000,000	7,307,000,000
Allowance for doubtful accounts	(146,000,000)	(130,000,000)
Financing receivables, net	7,259,000,000	7,177,000,000
Less current portion	(3,139,000,000)	(3,162,000,000)
Amounts due after one year, net	4,120,000,000	4,015,000,000
Equipment leased to customers under operating leases	4,000,000,000	4,000,000,000
Accumulated depreciation on equipment under lease	$ 1,500,000,000	$ 1,300,000,000

XML

Segment Information

6 Months Ended

Apr. 30, 2012

Segment Information

Segment Information

Note 16: Segment Information

• Description of Segments

        HP is a leading global provider of products, technologies, software, solutions and services to individual consumers, small- and medium-sized businesses ("SMBs"), and large enterprises, including customers in the government, health and education sectors. HP's offerings span personal computing and other access devices; multi-vendor customer services, including infrastructure technology and business process outsourcing, technology support and maintenance, application development and support services and consulting and integration services; imaging and printing-related products and services; and enterprise information technology ("IT") infrastructure, including enterprise storage and server technology, networking products and solutions, IT management software, information management solutions and security intelligence/risk management solutions.

        HP and its operations are organized into seven reportable business segments for financial reporting purposes: PSG, Services, IPG, ESSN, Software, HP Financial Services ("HPFS") and Corporate Investments. HP's organizational structure is based on a number of factors that management uses to evaluate, view and run its business operations, which include, but are not limited to, customer base, homogeneity of products and technology. The reportable business segments are based on this organizational structure and information reviewed by HP's management to evaluate the business segment results.

        In March 2012, HP announced that it will realign the organizational structure of its business. As part of that realignment, HP will consolidate PSG and IPG into a newly formed Printing and Personal Systems Group. HP continues to report the results of IPG and PSG separately.

        A description of the types of products and services provided by each reportable business segment follows.

• •

  Personal Systems Group provides commercial PCs, consumer PCs, workstations, calculators and other related accessories, software and services for the commercial and consumer markets. Commercial PCs are optimized for commercial uses, including enterprise and SMB customers, and for connectivity and manageability in networked environments. Commercial PCs include the HP ProBook and HP EliteBook lines of notebooks and the Compaq Pro, Compaq Elite, HP Pro and HP Elite lines of business desktops, as well as the All-in-One Touchsmart and Omni PCs, HP Mini-Note PCs, retail POS systems, HP Thin Clients, and HP Slate Tablet PCs. Consumer PCs include the HP Pavilion, HP Elite, Envy and Compaq Presario series of multi-media consumer notebooks, desktops and mini notebooks, including the TouchSmart line of touch-enabled all-in-one notebooks and desktops. HP's workstations are designed for users demanding enhanced performance, such as computer animation, engineering design and other programs requiring high-resolution graphics, and run on both Windows and Linux-based operating systems.

  •

  Services provides technology consulting, outsourcing and support services across infrastructure, applications and business process domains. Services is divided into three main areas: Infrastructure Technology Outsourcing ("ITO"), Technology Services, and Application and Business Services ("ABS"). ITO delivers comprehensive services that encompass the data center, IT security, Cloud-based computing, workplace technology, network, unified communications, and enterprise service management. Technology Services provides technology consulting and support services for transforming IT, and converging and supporting IT infrastructure. The technology consulting portfolio includes strategic IT advisory services, cloud consulting services, unified communications solutions, data center transformation services and education consulting services. In addition to warranty support across HP's product lines, support services includes HP Foundation Care, the portfolio of reactive hardware and software support services; HP Proactive Care, which includes advanced remote system-monitoring tools, continuous onsite rapid response and direct access to HP's technical experts and resources; HP Datacenter Care for flexible customer support for HP and multivendor systems; and Lifecycle Event services, which are event-based services offering HP's technology expertise and consulting for each phase of the technology lifecycle. ABS helps clients develop, revitalize and manage their applications and information assets. The full applications lifecycle approach encompasses application development, testing, modernization, system integration, maintenance and management for both packaged and custom built applications. The ABS portfolio also offers IP-based industry solutions, services and technologies to help clients better manage critical business processes. HP also offers services for customer relationship management, finance and administration, human resources, payroll and document processing.

  •

  Imaging and Printing Group provides consumer and commercial printer hardware, supplies, media and scanning devices. IPG is also focused on imaging solutions in the commercial markets. These solutions range from managed print services to capturing high-value pages in areas such as industrial applications, outdoor signage, and the graphic arts business. Inkjet and Web Solutions delivers HP's consumer and SMB inkjet solutions (hardware, supplies, media, web-connected hardware and services) and develops HP's retail publishing and web businesses. It includes single function and all-in-one inkjet printers targeted toward consumers and SMBs, as well as retail publishing solutions, Snapfish and ePrintCenter. LaserJet and Enterprise Solutions delivers products, services and solutions to the medium-sized business and enterprise segments, including LaserJet printers and supplies, multi-function devices, scanners, web-connected hardware and services and enterprise software solutions, such as Exstream Software and Web Jetadmin. Managed Enterprise Solutions include managed print service products, support and solutions delivered to enterprise customers partnering with third-party software providers to offer workflow solutions in the enterprise environment. Graphics Solutions include large format printing (Designjet and Scitex), large format supplies, WebPress supplies, Indigo printing, specialty printing systems and inkjet high-speed production solutions. HP's printer supplies offerings include LaserJet toner and inkjet printer cartridges, graphic solutions ink products and other printing-related media.

  •

  Enterprise Servers, Storage and Networking provides server, storage, networking and, when combined with HP Software's Cloud Service Automation software suite, HP's CloudSystem. The CloudSystem enables infrastructure, platform and software as a service in private, public or hybrid environments. Industry Standard Servers offers ProLiant servers, running primarily Windows, Linux and virtualization platforms from Microsoft, VMware and other major vendors and leveraging Intel and Advanced Micro Devices, Inc. x86 processors. The business spans a range of server product lines, including pedestal tower, traditional rack, density optimized rack and HP's BladeSystem family of server blades. Business Critical Systems offers HP Integrity servers based on the Intel Itanium-based processor, HP Integrity NonStop solutions and scale-up x86 ProLiant Servers for scalability of systems with more than four industry standard processors. HP's storage offerings include storage area networks, network attached storage, storage management software and virtualization technologies, StoreOnce data deduplication solutions, tape drives and tape libraries. HP's networking portfolio spans routers and switches for the data center, branch or campus delivering network management and unified communications. HP's wireless networking offerings include WLAN access points and controllers/switches.

  •

  Software provides enterprise information management solutions for both structured and unstructured data, IT management software and security intelligence/risk management solutions. Solutions are delivered in the form of traditional software licenses, software-as-a-service, hybrid or appliance deployment models. Augmented by support and professional services, HP's software solutions allow IT organizations to gain customer insight and optimize infrastructure, operations, application life cycles, application quality, security, IT services and business processes. In addition, these solutions help businesses proactively safeguard digital assets, comply with corporate and regulatory policies, and control internal and external security risks. For segment reporting purposes, our Software reportable segment aggregates two operating units within our software business.

  •

  HP Financial Services supports and enhances HP's global product and services solutions, providing a broad range of value-added financial life cycle management services. HPFS enables HP's worldwide customers to acquire complete IT solutions, including hardware, software and services. HPFS offers leasing, financing, utility programs, and asset recovery services, as well as financial asset management services, for large global and enterprise customers. HPFS also provides an array of specialized financial services to SMBs and educational and governmental entities. HPFS offers innovative, customized and flexible alternatives to balance unique customer cash flow, technology obsolescence and capacity needs.

  •

  Corporate Investments includes business intelligence solutions, HP Labs and certain business incubation projects. Business intelligence solutions enable business to standardize on consistent data management schemes, connect and share data across the enterprise and apply analytics. This segment also derives revenue from licensing specific HP technology to third parties.

  Segment Data

        HP derives the results of the business segments directly from its internal management reporting system. The accounting policies HP uses to derive business segment results are substantially the same as those the consolidated company uses. Management measures the performance of each business segment based on several metrics, including earnings from operations. Management uses these results, in part, to evaluate the performance of, and to assign resources to, each of the business segments. HP does not allocate to its business segments certain operating expenses, which it manages separately at the corporate level. These unallocated costs include primarily restructuring charges and any associated adjustments related to restructuring actions, amortization of purchased intangible assets, stock-based compensation expense related to HP-granted employee stock options, PRUs, restricted stock awards and the employee stock purchase plan, certain acquisition-related charges and charges for purchased IPR&D, as well as certain corporate governance costs.

        To provide improved visibility and comparability, HP has reclassified segment operating results for fiscal 2011 to conform to certain fiscal 2012 organizational realignments. The realignment resulted in transfer of revenue and operating profit among Services, IPG, ESSN, Software and Corporate Investments. In addition, revenue was transferred among the business units within Services. These realignments include:

• •

  The transfer of Indigo Scitex support and the LaserJet and enterprise solutions trade support business from the Technology Services business unit within Services to the Commercial Hardware business unit within IPG;

  •

  The transfer of the TippingPoint business from the Networking business unit within ESSN to Software;

  •

  The transfer of the business intelligence services business from Corporate Investments to a newly formed ABS business unit within Services;

  •

  The consolidation of the Application Services, Business Process Outsourcing and Other Services business units within Services into the new ABS business unit; and

  •

  The transfer of the information management services business from Software to the new ABS business unit within Services.

        These changes had no impact on the previously reported financial results for PSG or HPFS. In addition, none of these changes impacted HP's previously reported consolidated net revenue, earnings from operations, net earnings or net earnings per share.

        Selected operating results information for each business segment was as follows:

	Three months ended April 30
	Net Revenue				Earnings (Loss) from Operations
	2012		2011		2012			2011
	In millions
Personal Systems Group	$	9,452	$	9,415	$	524		$	533
Services		8,831		8,916		997			1,372
Imaging and Printing Group		6,132		6,843		808			1,136
Enterprise Servers, Storage and Networking		5,211		5,516		585			760
Software(1)		970		797		172			158
HP Financial Services		968		885		96			83
Corporate Investments		18		42		(49	)		(199	)
Total segments	$	31,582	$	32,414	$	3,133		$	3,843

	Six months ended April 30
	Net Revenue				Earnings (Loss) from Operations
	2012		2011		2012			2011
	In millions
Personal Systems Group	$	18,325	$	19,864	$	988		$	1,205
Services		17,457		17,445		1,902			2,753
Imaging and Printing Group		12,390		13,574		1,569			2,255
Enterprise Servers, Storage and Networking		10,229		11,115		1,147			1,590
Software(1)		1,916		1,522		334			278
HP Financial Services		1,918		1,712		187			162
Corporate Investments		76		104		(97	)		(377	)
Total segments	$	62,311	$	65,336	$	6,030		$	7,866

⁽¹⁾

Includes results of Autonomy from the date of acquisition in October 2011.

        The reconciliation of segment operating results information to HP consolidated totals was as follows:

	Three months ended April 30						Six months ended April 30
	2012			2011			2012			2011
	In millions
Net revenue:
Segment total	$	31,582		$	32,414		$	62,311		$	65,336
Elimination of intersegment net revenue and other		(889	)		(782	)		(1,582	)		(1,402	)
Total HP consolidated net revenue	$	30,693		$	31,632		$	60,729		$	63,934
Earnings before taxes:
Total segment earnings from operations	$	3,133		$	3,843		$	6,030		$	7,866
Corporate and unallocated costs and eliminations		(203	)		(153	)		(356	)		(4	)
Unallocated costs related to stock-based compensation expense		(168	)		(130	)		(342	)		(296	)
Amortization of purchased intangible assets		(470	)		(413	)		(936	)		(838	)
Restructuring charges		(53	)		(158	)		(93	)		(316	)
Acquisition-related charges		(17	)		(21	)		(39	)		(50	)
Interest and other, net		(243	)		(76	)		(464	)		(173	)
Total HP consolidated earnings before taxes	$	1,979		$	2,892		$	3,800		$	6,189

        In connection with certain fiscal 2012 organizational realignments, HP reclassified total assets between its Services, IPG, ESSN, Software and Corporate Investments financial reporting segments. There have been no material changes to the total assets of HP's individual segments since October 31, 2011.

• Net revenue by segment and business unit

	Three months ended April 30						Six months ended April 30
	2012			2011			2012			2011
	In millions
Net revenue:
Notebooks	$	4,900		$	5,039		$	9,842		$	10,847
Desktops		3,827			3,641			7,033			7,537
Workstations		537			541			1,072			1,076
Other		188			194			378			404
Personal Systems Group		9,452			9,415			18,325			19,864
Infrastructure Technology Outsourcing		3,669			3,786			7,370			7,430
Technology Services		2,638			2,629			5,200			5,143
Application and Business Services		2,524			2,501			4,887			4,872
Services		8,831			8,916			17,457			17,445
Supplies		4,060			4,612			8,139			8,970
Commercial Hardware		1,479			1,536			2,968			3,101
Consumer Hardware		593			695			1,283			1,503
Imaging and Printing Group		6,132			6,843			12,390			13,574
Industry Standard Servers		3,186			3,387			6,258			6,835
Storage		990			980			1,945			1,992
Business Critical Systems		421			546			826			1,101
Networking		614			603			1,200			1,187
Enterprise Servers, Storage and Networking		5,211			5,516			10,229			11,115
Software(1)		970			797			1,916			1,522
HP Financial Services		968			885			1,918			1,712
Corporate Investments		18			42			76			104
Total segments		31,582			32,414			62,311			65,336
Eliminations of intersegment net revenue and other		(889	)		(782	)		(1,582	)		(1,402	)
Total HP consolidated net revenue	$	30,693		$	31,632		$	60,729		$	63,934

⁽¹⁾

Includes results of Autonomy from the date of acquisition in October 2011.

XML

Balance Sheet Details (Tables)

6 Months Ended

Apr. 30, 2012

Balance Sheet Details

Accounts Receivable

	April 30, 2012			October 31, 2011
	In millions
Accounts receivable	$	17,064		$	18,694
Allowance for doubtful accounts		(455	)		(470	)
	$	16,609		$	18,224

Inventory

	April 30, 2012		October 31, 2011
	In millions
Finished goods	$	4,518	$	4,869
Purchased parts and fabricated assemblies		2,788		2,621
	$	7,306	$	7,490

Property, Plant and Equipment

	April 30, 2012			October 31, 2011
	In millions
Land	$	652		$	687
Buildings and leasehold improvements		8,804			8,620
Machinery and equipment		16,622			16,155
		26,078			25,462
Accumulated depreciation		(13,842	)		(13,170	)
	$	12,236		$	12,292

XML

Financial Instruments (Details 3) (USD $) In Millions, unless otherwise specified	6 Months Ended
	Apr. 30, 2012	Oct. 31, 2011	Apr. 30, 2011
Derivative disclosures
Cash held as collateral from counterparties	$ 195
Number of business days in which the funds held as collateral and posted as collateral, from/to counterparties are transferred	2 days
Cash posted as collateral to counterparties	40
Treasury securities under collateralized arrangements			30
Total derivatives, gross notional amount	44,905	49,901
Other Current Assets
Derivative disclosures
Derivative asset, fair value	429	320
Long-term Financing Receivables and Other Assets
Derivative disclosures
Derivative asset, fair value	434	608
Other Accrued Liabilities
Derivative disclosures
Derivative liability, fair value	355	612
Other Liabilities
Derivative disclosures
Derivative liability, fair value	166	292
Cash flow hedges
Cash flow hedges
Maturity period of foreign currency cash flow hedges (in months)	12
Maximum maturity period for lease-related cash flow hedges (in years)	5
Derivatives designated as hedging instruments
Derivative disclosures
Total derivatives, gross notional amount	29,372	33,297
Derivatives designated as hedging instruments | Other Current Assets
Derivative disclosures
Derivative asset, fair value	370	229
Derivatives designated as hedging instruments | Long-term Financing Receivables and Other Assets
Derivative disclosures
Derivative asset, fair value	372	542
Derivatives designated as hedging instruments | Other Accrued Liabilities
Derivative disclosures
Derivative liability, fair value	282	368
Derivatives designated as hedging instruments | Other Liabilities
Derivative disclosures
Derivative liability, fair value	107	182
Derivatives designated as hedging instruments | Fair value hedges | Interest rate contracts
Derivative disclosures
Total derivatives, gross notional amount	8,350	10,075
Derivatives designated as hedging instruments | Fair value hedges | Interest rate contracts | Other Current Assets
Derivative disclosures
Derivative asset, fair value	34	30
Derivatives designated as hedging instruments | Fair value hedges | Interest rate contracts | Long-term Financing Receivables and Other Assets
Derivative disclosures
Derivative asset, fair value	338	508
Derivatives designated as hedging instruments | Cash flow hedges | Foreign exchange contracts
Derivative disclosures
Total derivatives, gross notional amount	19,336	21,666
Derivatives designated as hedging instruments | Cash flow hedges | Foreign exchange contracts | Other Current Assets
Derivative disclosures
Derivative asset, fair value	321	192
Derivatives designated as hedging instruments | Cash flow hedges | Foreign exchange contracts | Long-term Financing Receivables and Other Assets
Derivative disclosures
Derivative asset, fair value	26	30
Derivatives designated as hedging instruments | Cash flow hedges | Foreign exchange contracts | Other Accrued Liabilities
Derivative disclosures
Derivative liability, fair value	246	324
Derivatives designated as hedging instruments | Cash flow hedges | Foreign exchange contracts | Other Liabilities
Derivative disclosures
Derivative liability, fair value	92	126
Derivatives designated as hedging instruments | Net investment hedges | Foreign exchange contracts
Derivative disclosures
Total derivatives, gross notional amount	1,686	1,556
Derivatives designated as hedging instruments | Net investment hedges | Foreign exchange contracts | Other Current Assets
Derivative disclosures
Derivative asset, fair value	15	7
Derivatives designated as hedging instruments | Net investment hedges | Foreign exchange contracts | Long-term Financing Receivables and Other Assets
Derivative disclosures
Derivative asset, fair value	8	4
Derivatives designated as hedging instruments | Net investment hedges | Foreign exchange contracts | Other Accrued Liabilities
Derivative disclosures
Derivative liability, fair value	36	44
Derivatives designated as hedging instruments | Net investment hedges | Foreign exchange contracts | Other Liabilities
Derivative disclosures
Derivative liability, fair value	15	56
Derivatives not designated as hedging instruments
Derivative disclosures
Total derivatives, gross notional amount	15,533	16,604
Derivatives not designated as hedging instruments | Other Current Assets
Derivative disclosures
Derivative asset, fair value	59	91
Derivatives not designated as hedging instruments | Long-term Financing Receivables and Other Assets
Derivative disclosures
Derivative asset, fair value	62	66
Derivatives not designated as hedging instruments | Other Accrued Liabilities
Derivative disclosures
Derivative liability, fair value	73	244
Derivatives not designated as hedging instruments | Other Liabilities
Derivative disclosures
Derivative liability, fair value	59	110
Derivatives not designated as hedging instruments | Foreign exchange contracts
Derivative disclosures
Total derivatives, gross notional amount	12,919	13,994
Derivatives not designated as hedging instruments | Foreign exchange contracts | Other Current Assets
Derivative disclosures
Derivative asset, fair value	57	66
Derivatives not designated as hedging instruments | Foreign exchange contracts | Long-term Financing Receivables and Other Assets
Derivative disclosures
Derivative asset, fair value	11	5
Derivatives not designated as hedging instruments | Foreign exchange contracts | Other Accrued Liabilities
Derivative disclosures
Derivative liability, fair value	73	244
Derivatives not designated as hedging instruments | Foreign exchange contracts | Other Liabilities
Derivative disclosures
Derivative liability, fair value	15	38
Derivatives not designated as hedging instruments | Interest rate contracts
Derivative disclosures
Total derivatives, gross notional amount	2,200	2,200
Derivatives not designated as hedging instruments | Interest rate contracts | Long-term Financing Receivables and Other Assets
Derivative disclosures
Derivative asset, fair value	39	55
Derivatives not designated as hedging instruments | Interest rate contracts | Other Liabilities
Derivative disclosures
Derivative liability, fair value	44	71
Derivatives not designated as hedging instruments | Other derivatives
Derivative disclosures
Total derivatives, gross notional amount	414	410
Derivatives not designated as hedging instruments | Other derivatives | Other Current Assets
Derivative disclosures
Derivative asset, fair value	2	25
Derivatives not designated as hedging instruments | Other derivatives | Long-term Financing Receivables and Other Assets
Derivative disclosures
Derivative asset, fair value	12	6
Derivatives not designated as hedging instruments | Other derivatives | Other Liabilities
Derivative disclosures
Derivative liability, fair value		$ 1

XML

Balance Sheet Details (Details 2) (USD $) In Millions, unless otherwise specified	Apr. 30, 2012	Oct. 31, 2011
Property, Plant and Equipment
Property, plant and equipment, gross	$ 26,078	$ 25,462
Accumulated depreciation	(13,842)	(13,170)
Property, plant and equipment, net	12,236	12,292
Land
Property, Plant and Equipment
Property, plant and equipment, gross	652	687
Buildings and leasehold improvements
Property, Plant and Equipment
Property, plant and equipment, gross	8,804	8,620
Machinery and equipment
Property, Plant and Equipment
Property, plant and equipment, gross	$ 16,622	$ 16,155

XML

Consolidated Condensed Statements of Cash Flows (USD $) In Millions, unless otherwise specified	6 Months Ended
	Apr. 30, 2012	Apr. 30, 2011
Cash flows from operating activities:
Net earnings	$ 3,061	$ 4,909
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	2,588	2,497
Stock-based compensation expense	344	327
Provision for doubtful accounts-accounts and financing receivables	57	(7)
Provision for inventory	90	103
Restructuring charges	93	316
Deferred taxes on earnings	(155)	641
Excess tax benefit from stock-based compensation	(12)	(154)
Other, net	240	(139)
Changes in operating assets and liabilities:
Accounts and financing receivables	1,479	(608)
Inventory	89	(415)
Accounts payable	(1,851)	(143)
Taxes on earnings	(54)	93
Restructuring	(274)	(505)
Other assets and liabilities	(2,029)	117
Net cash provided by operating activities	3,666	7,032
Cash flows from investing activities:
Investment in property, plant and equipment	(1,963)	(2,026)
Proceeds from sale of property, plant and equipment	224	633
Purchases of available-for-sale securities and other investments	(565)
Maturities and sales of available-for-sale securities and other investments	346	57
Payments in connection with business acquisitions, net of cash acquired	(141)	(246)
Proceeds from business divestiture, net	81
Net cash used in investing activities	(2,018)	(1,582)
Cash flows from financing activities:
Repayment of commercial paper and notes payable, net	(2,792)	(998)
Issuance of debt	5,052	2,216
Payment of debt	(2,661)	(454)
Issuance of common stock under employee stock plans	634	774
Repurchase of common stock	(1,130)	(4,976)
Excess tax benefit from stock-based compensation	12	154
Cash dividends paid	(495)	(357)
Net cash used in financing activities	(1,380)	(3,641)
Increase in cash and cash equivalents	268	1,809
Cash and cash equivalents at beginning of period	8,043	10,929
Cash and cash equivalents at end of period	8,311	12,738
Supplemental schedule of non-cash investing and financing activities:
Issuance of common stock and stock awards assumed in business acquisitions		2
Purchase of assets under capital lease	$ 12	$ 3

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Goodwill and Purchased Intangible Assets

6 Months Ended

Apr. 30, 2012

Goodwill and Purchased Intangible Assets

Goodwill and Purchased Intangible Assets

Note 5: Goodwill and Purchased Intangible Assets

• Goodwill

        Goodwill allocated to HP's business segments as of April 30, 2012 and changes in the carrying amount of goodwill for the six months ended April 30, 2012 are as follows:

	Personal Systems Group		Services			Imaging and Printing Group		Enterprise Servers, Storage and Networking			Software		HP Financial Services		Corporate Investments			Total
	In millions
Balance at October 31, 2011	$	2,498	$	17,280		$	2,471	$	8,070		$	14,063	$	144	$	25		$	44,551
Goodwill acquired during the period		—		—			12		—			—		—		—			12
Goodwill adjustments/reclassifications		—		(20	)		—		(302	)		712		—		(15	)		375
Balance at April 30, 2012	$	2,498	$	17,260		$	2,483	$	7,768		$	14,775	$	144	$	10		$	44,938

        In connection with certain fiscal 2012 organizational realignments, HP reclassified $280 million of goodwill related to the TippingPoint network security solutions business from the Enterprise Servers, Storage and Networking segment to the Software segment. During the six months ended April 30, 2012, HP recorded additional goodwill of $224 million in the Software segment due to a change in the estimated fair values of purchased intangible assets and net tangible assets associated with the acquisition of Autonomy Corporation plc ("Autonomy"). HP also recorded a net increase to goodwill of $213 million as a result of a currency translation adjustment on goodwill related to Autonomy subsidiaries whose functional currency is not the U.S. dollar.

• Purchased Intangible Assets

        HP's purchased intangible assets associated with completed acquisitions are composed of:

	April 30, 2012							October 31, 2011
	Gross		Accumulated Amortization			Net		Gross		Accumulated Amortization			Net
	In millions
Customer contracts, customer lists and distribution agreements	$	6,073	$	(2,503	)	$	3,570	$	6,346	$	(2,376	)	$	3,970
Developed and core technology and patents		6,934		(2,319	)		4,615		7,226		(1,944	)		5,282
Product trademarks		321		(127	)		194		336		(121	)		215
Total amortizable purchased intangible assets		13,328		(4,949	)		8,379		13,908		(4,441	)		9,467
In-process research and development ("IPR&D")		7		—			7		9		—			9
Compaq trade name		1,422		—			1,422		1,422		—			1,422
Total purchased intangible assets	$	14,757	$	(4,949	)	$	9,808	$	15,339	$	(4,441	)	$	10,898

        For the first six months of fiscal 2012, the majority of the decrease in gross intangibles was related to $428 million of fully amortized intangible assets which have been eliminated from both the gross and accumulated amortization amounts and a $293 million change in the estimated fair value of Autonomy's purchased intangible assets acquired. The decrease to intangibles was partially offset by a net currency translation adjustment of $165 million on intangibles related to Autonomy subsidiaries whose functional currency is not the U.S. dollar.

        Estimated future amortization expense related to finite-lived purchased intangible assets at April 30, 2012 was as follows:

Fiscal year:	In millions
2012 (remaining six months)	$	937
2013		1,751
2014		1,363
2015		1,201
2016		1,041
2017		609
Thereafter		1,477
Total	$	8,379

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Retirement and Post-Retirement Benefit Plans (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Apr. 30, 2012	Apr. 30, 2011	Apr. 30, 2012	Apr. 30, 2011	Oct. 31, 2011
Amortization and deferrals:
Net gain recognized due to transfer of substitutional portion of entity's Japan pension to Japanese government			$ 28
Settlement loss related to transfer of substitutional portion of entity's Japan pension to Japanese government			150
Government subsidy related to transfer of substitutional portion of entity's Japan pension to Japanese government	178		178
Elimination of pension obligations included in government subsidy	344		344
Transfer of pension assets included in government subsidy	166		166
Pension Plans
Future Contributions and Funding Policy
Expected contribution to defined benefit plans in fiscal 2012					597
Contributions to benefit plans			345
Expected contribution to benefit plans as of balance sheet date	252		252
U.S. Defined Benefit Plans
Net benefit (gain) cost
Interest cost	141	149	283	297
Expected return on plan assets	(198)	(186)	(396)	(372)
Amortization and deferrals:
Actuarial loss	11	8	21	17
Net periodic benefit (gain) cost	(46)	(29)	(92)	(58)
Net benefit (gain) cost	(46)	(29)	(92)	(58)
Non-U.S. Defined Benefit Plans
Net benefit (gain) cost
Service cost	74	89	148	174
Interest cost	174	177	349	346
Expected return on plan assets	(206)	(225)	(413)	(438)
Amortization and deferrals:
Actuarial loss	59	60	119	122
Prior service benefit	(6)	(4)	(12)	(7)
Net periodic benefit (gain) cost	95	97	191	197
Settlement (gain) loss	8	2	(20)	2
Special termination benefits	1	6	2	8
Net benefit (gain) cost	104	105	173	207
U.S. non-qualified plan participants
Future Contributions and Funding Policy
Expected contribution to defined benefit plans in fiscal 2012					31
Contributions to benefit plans			15
Expected contribution to benefit plans as of balance sheet date	16		16
Post-Retirement Benefit Plans
Net benefit (gain) cost
Service cost	2	2	4	4
Interest cost	8	9	17	17
Expected return on plan assets	(9)	(9)	(18)	(18)
Amortization and deferrals:
Actuarial loss	(1)		(2)	1
Prior service benefit	(22)	(20)	(44)	(41)
Net periodic benefit (gain) cost	(22)	(18)	(43)	(37)
Net benefit (gain) cost	(22)	(18)	(43)	(37)
Future Contributions and Funding Policy
Expected contribution to defined benefit plans in fiscal 2012					30
Contributions to benefit plans			14
Expected contribution to benefit plans as of balance sheet date	$ 16		$ 16

XML

Goodwill and Purchased Intangible Assets (Tables)

6 Months Ended

Apr. 30, 2012

Goodwill and Purchased Intangible Assets

Goodwill

	Personal Systems Group		Services			Imaging and Printing Group		Enterprise Servers, Storage and Networking			Software		HP Financial Services		Corporate Investments			Total
	In millions
Balance at October 31, 2011	$	2,498	$	17,280		$	2,471	$	8,070		$	14,063	$	144	$	25		$	44,551
Goodwill acquired during the period		—		—			12		—			—		—		—			12
Goodwill adjustments/reclassifications		—		(20	)		—		(302	)		712		—		(15	)		375
Balance at April 30, 2012	$	2,498	$	17,260		$	2,483	$	7,768		$	14,775	$	144	$	10		$	44,938

Purchased Intangible Assets

	April 30, 2012							October 31, 2011
	Gross		Accumulated Amortization			Net		Gross		Accumulated Amortization			Net
	In millions
Customer contracts, customer lists and distribution agreements	$	6,073	$	(2,503	)	$	3,570	$	6,346	$	(2,376	)	$	3,970
Developed and core technology and patents		6,934		(2,319	)		4,615		7,226		(1,944	)		5,282
Product trademarks		321		(127	)		194		336		(121	)		215
Total amortizable purchased intangible assets		13,328		(4,949	)		8,379		13,908		(4,441	)		9,467
In-process research and development ("IPR&D")		7		—			7		9		—			9
Compaq trade name		1,422		—			1,422		1,422		—			1,422
Total purchased intangible assets	$	14,757	$	(4,949	)	$	9,808	$	15,339	$	(4,441	)	$	10,898

Finite-lived purchased intangible assets

Fiscal year:	In millions
2012 (remaining six months)	$	937
2013		1,751
2014		1,363
2015		1,201
2016		1,041
2017		609
Thereafter		1,477
Total	$	8,379

XML

Stock-Based Compensation (Details) (USD $) In Millions, except Share data in Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Apr. 30, 2012	Apr. 30, 2011	Apr. 30, 2012	Apr. 30, 2011
Stock Based Compensation Expense
Stock-based compensation expense	$ 169	$ 147	$ 344	$ 327
Income tax benefit from stock-based compensation	54	61	111	104
Restricted Stock Awards
Share-based compensation arrangements by share-based payment award
Unrecognized pre-tax stock-based compensation expense	758		758
Remaining weighted-average vesting period (in years)			1.4
Activity
Outstanding Target Shares at the beginning of the period			16,813
Granted (in shares)			17,791
Vested (in shares)			(3,027)
Forfeited (in shares)			(1,250)
Outstanding Target Shares at the end of the period	30,327		30,327
Weighted-average grant date fair value, beginning of period (in dollars per share)			$ 39
Weighted-average grant date fair value of shares granted (in dollars per share)			$ 28
Weighted-average grant date fair value of shares vested (in dollars per share)			$ 43
Weighted-average grant date fair value of shares forfeited (in dollars per share)	$ 36		$ 36
Weighted-average grant date fair value, end of period (in dollars per share)	$ 33		$ 33
Stock Options
Share-based compensation arrangements by share-based payment award
Unrecognized pre-tax stock-based compensation expense	227		227
Remaining weighted-average vesting period (in years)			2.1
Weighted average fair value of grants per share and weighted average assumptions used to determine fair values
Weighted average fair value of grants per share	$ 5.82	$ 10.73	$ 9.46	$ 11.06
Expected or implied volatility (as a percent)	32.00%	27.00%	43.00%	28.00%
Risk-free interest rate (as a percent)	0.91%	2.16%	1.20%	1.97%
Dividend yield (as a percent)	2.14%	0.77%	1.73%	0.76%
Expected life (in months)	61	60	67	60
Option activity:
Outstanding at the beginning of the period (in shares)			120,243
Granted (in shares)			6,761
Exercised (in shares)			(27,967)
Forfeited/cancelled/expired (in shares)			(5,122)
Outstanding at the end of the period (in shares)	93,915		93,915
Vested and expected to vest (in shares)	91,972		91,972
Shares exercisable	68,259		68,259
Weighted-average exercise price of shares outstanding, at the beginning of the period (in dollars per share)			$ 28
Weighted-average exercise price of shares granted (in dollars per share)	$ 28		$ 28
Weighted-average exercise price of shares exercised (in dollars per share)	$ 21		$ 21
Weighted-average exercise price of shares forfeited, cancelled or expired (in dollars per share)			$ 35
Weighted-average exercise price of shares outstanding, at the end of the period (in dollars per share)	$ 29		$ 29
Weighted-average exercise price of shares vested and expected to vest (in dollars per share)	$ 29		$ 29
Weighted-average exercise price of exercisable options (in dollars per share)	$ 31		$ 31
Weighted-average remaining contractual term of shares outstanding (in years)	3.5		3.5
Weighted-average remaining contractual term of shares vested and expected to vest (in years)			3.5
Weighted-average remaining contractual term of exercisable options (in years)			2.2
Aggregate intrinsic value of shares outstanding	201		201
Aggregate intrinsic value of shares vested and expected to vest	195		195
Aggregate intrinsic value of exercisable options	122		122
Aggregate intrinsic value of options exercised	55		164
Performance-based Restricted Units (PRUs)
Share-based compensation arrangements by share-based payment award
Unrecognized pre-tax stock-based compensation expense	$ 48		$ 48
Remaining weighted-average vesting period (in years)			1.1
Activity
Outstanding Target Shares at the beginning of the period			11,382
Granted (in shares)			1,157
Forfeited (in shares)			(843)
Outstanding Target Shares at the end of the period	11,696		11,696
Outstanding Target shares assigned a fair value	9,434		9,434
Performance-based Restricted Units (PRUs)
Percentage of performance target, low end of range			0.00%
Percentage of performance target, high end of range			200.00%
Performance period to determine share based awards (in years)			3
Performance-based Restricted Units (PRUs) granted in fiscal year 2012
Activity
Weighted-average grant date fair value of shares granted (in dollars per share)			$ 27.00
Performance-based Restricted Units (PRUs) granted prior to fiscal year 2012
Activity
Weighted-average grant date fair value of shares granted (in dollars per share)			$ 3.35	$ 27.59
Weighted average fair value of grants per share and weighted average assumptions used to determine fair values
Expected or implied volatility (as a percent)			41.00%	30.00%
Risk-free interest rate (as a percent)			0.14%	0.38%
Dividend yield (as a percent)			1.78%	0.75%
Expected life (in months)			15	19

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Litigation and Contingencies

6 Months Ended

Apr. 30, 2012

Litigation and Contingencies

Litigation and Contingencies

Note 15: Litigation and Contingencies

        HP is involved in lawsuits, claims, investigations and proceedings, including those identified below, consisting of intellectual property, commercial, securities, employment, employee benefits and environmental matters that arise in the ordinary course of business. HP records a provision for a liability when management believes that it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. HP believes it has adequate provisions for any such matters, and, as of April 30, 2012, it was not reasonably possible that an additional material loss had been incurred in an amount in excess of the amounts already recognized on HP's financial statements. HP reviews these provisions at least quarterly and adjusts these provisions to reflect the impact of negotiations, settlements, rulings, advice of legal counsel, and other information and events pertaining to a particular case. Based on its experience, HP believes that any damage amounts claimed in the specific matters discussed below are not a meaningful indicator of HP's potential liability. Litigation is inherently unpredictable. However, HP believes that it has valid defenses with respect to legal matters pending against it. Nevertheless, cash flows or results of operations could be materially affected in any particular period by the unfavorable resolution of one or more of these contingencies.

Litigation, Proceedings and Investigations

        Copyright Levies.    As described below, proceedings are ongoing or have been concluded involving HP in certain European Union ("EU") member countries, including litigation in Germany, Belgium and Austria, seeking to impose or modify levies upon equipment (such as multifunction devices ("MFDs"), personal computers ("PCs") and printers) and alleging that these devices enable producing private copies of copyrighted materials. Descriptions of some of the ongoing proceedings are included below. The levies are generally based upon the number of products sold and the per-product amounts of the levies, which vary. Some EU member countries that do not yet have levies on digital devices are expected to implement similar legislation to enable them to extend existing levy schemes, while some other EU member countries are expected to limit the scope of levy schemes and applicability in the digital hardware environment. HP, other companies and various industry associations have opposed the extension of levies to the digital environment and have advocated alternative models of compensation to rights holders.

        VerwertungsGesellschaft Wort ("VG Wort"), a collection agency representing certain copyright holders, instituted legal proceedings against HP in the Stuttgart Civil Court seeking levies on printers. On December 22, 2004, the court held that HP is liable for payments regarding all printers using ASCII code sold in Germany but did not determine the amount payable per unit. HP appealed this decision in January 2005 to the Stuttgart Court of Appeals. On May 11, 2005, the Stuttgart Court of Appeals issued a decision confirming that levies are due. On June 6, 2005, HP filed an appeal to the German Federal Supreme Court in Karlsruhe. On December 6, 2007, the German Federal Supreme Court issued a judgment that printers are not subject to levies under the existing law. The court issued a written decision on January 25, 2008, and VG Wort subsequently filed an application with the German Federal Supreme Court under Section 321a of the German Code of Civil Procedure contending that the court did not consider their arguments. On May 9, 2008, the German Federal Supreme Court denied VG Wort's application. VG Wort appealed the decision by filing a claim with the German Federal Constitutional Court challenging the ruling that printers are not subject to levies. On September 21, 2010, the Constitutional Court published a decision holding that the German Federal Supreme Court erred by not referring questions on interpretation of German copyright law to the Court of Justice of the European Union ("CJEU") and therefore revoked the German Federal Supreme Court decision and remitted the matter to it. On July 21, 2011, the German Federal Supreme Court stayed the proceedings and referred several questions to the CJEU with regard to the interpretation of the European Copyright Directive.

        In September 2003, VG Wort filed a lawsuit against Fujitsu Siemens Computer GmbH ("FSC") in the Munich Civil Court in Munich, Germany seeking levies on PCs. This is an industry test case in Germany, and HP has agreed not to object to the delay if VG Wort sues HP for such levies on PCs following a final decision against FSC. On December 23, 2004, the Munich Civil Court held that PCs are subject to a levy and that FSC must pay €12 plus compound interest for each PC sold in Germany since March 2001. FSC appealed this decision in January 2005 to the Munich Court of Appeals. On December 15, 2005, the Munich Court of Appeals affirmed the Munich Civil Court decision. FSC filed an appeal with the German Federal Supreme Court in February 2006. On October 2, 2008, the German Federal Supreme Court issued a judgment that PCs were not photocopiers within the meaning of the German copyright law that was in effect until December 31, 2007 and, therefore, not subject to the levies on photocopiers established by that law. VG Wort subsequently filed a claim with the German Federal Constitutional Court challenging that ruling. In January 2011, the Constitutional Court published a decision holding that the German Federal Supreme Court decision was inconsistent with the German Constitution and revoking the German Federal Supreme Court decision. The Constitutional Court remitted the matter to the German Federal Supreme Court for further action. On July 21, 2011, the German Federal Supreme Court stayed the proceedings and referred several questions to the CJEU with regard to the interpretation of the European Copyright Directive.

        Reprobel, a cooperative society with the authority to collect and distribute the remuneration for reprography to Belgian copyright holders, requested HP by extra-judicial means to amend certain copyright levy declarations submitted for inkjet MFDs sold in Belgium from January 2005 to December 2009 to enable it to collect copyright levies calculated based on the generally higher copying speed when the MFDs are operated in draft print mode rather than when operated in normal print mode. In March 2010, HP filed a lawsuit against Reprobel in the French-speaking chambers of the Court of First Instance of Brussels seeking a declaratory judgment that no copyright levies are payable on sales of MFDs in Belgium or, alternatively, that copyright levies payable on such MFDs must be assessed based on the copying speed when operated in the normal print mode set by default in the device. The schedule for the court proceedings has been determined, and no decision from the court is expected before September 2012.

        Based on industry opposition to the extension of levies to digital products, HP's assessments of the merits of various proceedings and HP's estimates of the number of units impacted and amounts of levies, HP has accrued amounts that it believes are adequate to address the matters described above. However, the ultimate resolution of these matters and the associated financial impact on HP, including the number of units impacted, the amount of levies imposed and the ability of HP to recover such amounts through increased prices, remains uncertain.

Skold, et al. v. Intel Corporation and Hewlett-Packard Company is a lawsuit in which HP was joined on June 14, 2004 that is pending in state court in Santa Clara County, California. The lawsuit alleges that Intel Corporation ("Intel") misled the public by suppressing and concealing the alleged material fact that systems that use the Intel Pentium 4 processor are less powerful and slower than systems using the Intel Pentium III processor. The lawsuit alleges that HP aided and abetted Intel's allegedly unlawful conduct. The plaintiffs seek unspecified damages, restitution, attorneys' fees and costs, and certification of a nationwide class. On November 23, 2011, plaintiffs filed a motion seeking to certify a nationwide class asserting claims under the California Unfair Competition Law. On April 19, 2012, the court issued an order granting in part and denying in part the plaintiffs' motion. As to Intel, the court certified a nationwide class excluding residents of Illinois. As to HP, the court certified a class limited to California residents. As required by the same order, the plaintiffs filed their Fifth Amended Complaint on April 30, 2012, pursuant to which the plaintiffs have limited their claims against HP to a California class while reserving the right to seek additional state-specific subclasses as to HP. On May 31, 2012, the plaintiffs filed their Sixth Amended Complaint eliminating one claim against Intel but not affecting the claims against HP.

        Inkjet Printer Litigation.    As described below, HP is involved in several lawsuits claiming breach of express and implied warranty, unjust enrichment, deceptive advertising and unfair business practices where the plaintiffs have alleged, among other things, that HP employed a "smart chip" in certain inkjet printing products in order to register ink depletion prematurely and to render the cartridge unusable through a built-in expiration date that is hidden, not documented in marketing materials to consumers, or both. The plaintiffs have also contended that consumers received false ink depletion warnings and that the smart chip limits the ability of consumers to use the cartridge to its full capacity or to choose competitive products.

• •

  A consolidated lawsuit captioned In re HP Inkjet Printer Litigation is pending in the United States District Court for the Northern District of California where the plaintiffs are seeking class certification, restitution, damages (including enhanced damages), injunctive relief, interest, costs, and attorneys' fees. On January 4, 2008, the court heard plaintiffs' motions for class certification and to add a class representative and HP's motion for summary judgment. On July 25, 2008, the court denied all three motions. On March 30, 2009, the plaintiffs filed a renewed motion for class certification. A hearing on the plaintiffs' motion for class certification scheduled for April 9, 2010 was postponed.

  •

  A lawsuit captioned Blennis v. HP was filed on January 17, 2007 in the United States District Court for the Northern District of California where the plaintiffs are seeking class certification, restitution, damages (including enhanced damages), injunctive relief, interest, costs, and attorneys' fees. A class certification hearing was scheduled for May 21, 2010 but was taken off the calendar.

  •

  A lawsuit captioned Rich v. HP was filed against HP on May 22, 2006 in the United States District Court for the Northern District of California. The suit alleges that HP designed its color inkjet printers to unnecessarily use color ink in addition to black ink when printing black and white images and text. The plaintiffs are seeking to certify a nationwide injunctive class and a California-only damages class. A class certification hearing was scheduled for May 7, 2010 but was taken off the calendar.

  •

  Two class actions against HP and its subsidiary, Hewlett-Packard (Canada) Co., are pending in Canada, one commenced in British Columbia in February 2006 and one commenced in Ontario in June 2006, where the plaintiffs are seeking class certification, restitution, declaratory relief, injunctive relief and unspecified statutory, compensatory and punitive damages.

        On August 25, 2010, HP and the plaintiffs in In re HP Inkjet Printer Litigation, Blennis v. HP and Rich v. HP entered into an agreement to settle those lawsuits on behalf of the proposed classes, which agreement is subject to approval of the court before it becomes final. Under the terms of the proposed settlement, the lawsuits will be consolidated, and eligible class members will each have the right to obtain e-credits not to exceed $5 million in the aggregate for use in purchasing printers or printer supplies through HP's website. As part of the proposed settlement, HP also agreed to provide class members with additional information regarding HP inkjet printer functionality and to change the content of certain software and user guide messaging provided to users regarding the life of inkjet printer cartridges. In addition, class counsel and the class representatives will be paid attorneys' fees and expenses and stipends. On March 29, 2011, the court granted final approval of the settlement. On April 27, 2011, certain class members who objected to the settlement filed an appeal of the court's order granting final approval of the settlement.

Sinacori v. HP is a consumer class action originally filed against HP on December 1, 2011 in the United States District Court for the Northern District of California alleging that HP printers have a design defect in the software installed on the printers which could allow hackers and unauthorized users to gain access to the printers, steal personal and confidential information from consumers and otherwise control and cause physical damage to the printers. The original complaint also alleged that HP was aware of this security vulnerability and failed to disclose it to consumers. The original complaint sought certification of a nationwide class of purchasers of all HP printers and unspecified damages, restitution, punitive damages, injunctive relief, attorneys' fees and costs. On February 3, 2012, an amended complaint was filed substituting a new plaintiff from the state of New York in place of the original plaintiff. The amended complaint asserts only a single claim under the New York consumer protection statute, and the amended complaint now seeks to certify a class of consumers in the state of New York who purchased an HP printer that lacks a "digital signature" or "code signing" security feature. Like the original complaint, the amended complaint seeks unspecified damages, restitution, punitive damages, injunctive relief, attorneys' fees and costs. HP has filed a motion to dismiss the amended complaint, and a hearing on HP's motion is scheduled to be held on September 6, 2012.

        Fair Labor Standards Act Litigation.    HP is involved in several lawsuits in which the plaintiffs are seeking unpaid overtime compensation and other damages based on allegations that various employees of EDS or HP have been misclassified as exempt employees under the Fair Labor Standards Act and/or in violation of the California Labor Code or other state laws. Those matters include the following:

• •

  Cunningham and Cunningham, et al. v. Electronic Data Systems Corporation is a purported collective action filed on May 10, 2006 in the U.S. District Court for the Southern District of New York claiming that current and former EDS employees allegedly involved in installing and/or maintaining computer software and hardware were misclassified as exempt employees. Another purported collective action, Steavens, et al. v. Electronic Data Systems Corporation, which was filed on October 23, 2007, is also now pending in the same court alleging similar facts. The Steavens case has been consolidated for pretrial purposes with the Cunningham case. On December 14, 2010, the court granted conditional certification of a class consisting of employees in 20 legacy EDS job codes in the consolidated Cunningham and Steavens matter. Approximately 2,600 current and former EDS employees have filed consents to opt-in to the litigation. Plaintiffs have also alleged separate "opt out" classes based on the overtime laws of the states of California, Washington, Massachusetts, and New York, but plaintiffs have not yet sought class certification for those classes.

  •

  Heffelfinger, et al. v. Electronic Data Systems Corporation is a class action filed in November 2006 in California Superior Court claiming that certain EDS information technology workers in California were misclassified as exempt employees. The case was subsequently transferred to the U.S. District Court for the Central District of California, which, on January 7, 2008, certified a class of information technology workers in California. On June 6, 2008, the court granted the defendant's motion for summary judgment. The plaintiffs subsequently filed an appeal with the U.S. Court of Appeals for the Ninth Circuit. A hearing on the appeal was held in August 2011, and the decision is pending. Two other purported class actions originally filed in California Superior Court, Karlbom, et al. v. Electronic Data Systems Corporation, which was filed on March 16, 2009, and George, et al. v. Electronic Data Systems Corporation, which was filed on April 2, 2009, allege similar facts. The Karlbom case is pending in San Diego County Superior Court but has been temporarily stayed based on the pending Steavens consolidated matter. The George case was pending in the U.S. District Court for the Southern District of New York and had been consolidated for pretrial purposes with the Cunningham and Steavens cases. On September 9, 2011, the court granted a request by the plaintiffs' counsel in the George matter to amend the plaintiffs' complaint and sever the case from the Steavens consolidated matter. The plaintiff thereafter filed his first amended complaint on October 21, 2011. On November 23, 2011, the court transferred the George matter back to the U.S. District Court for the Central District of California.

  •

  Blake, et al. v. Hewlett-Packard Company is a purported nationwide collective action filed on February 17, 2011 in the U.S. District Court for the Southern District of Texas claiming that a class of information technology support personnel were misclassified as exempt employees under the Fair Labor Standards Act. On February 10, 2012, plaintiffs filed a motion requesting that the court conditionally certify the case as a collective action. Only one opt-in plaintiff had joined the named plaintiff in the lawsuit at the time that the motion was filed. HP has opposed plaintiffs' motion for conditional certification.

  •

  Fenn, et al. v. Hewlett-Packard Company is a purported collective action filed on May 24, 2011 in the United States District Court for the District of Idaho alleging that customer service representatives working in HP's U.S. call centers are not paid for time spent on start-up and shut-down tasks (such as booting up and shutting down their computers) in violation of the Fair Labor Standards Act. On December 12, 2011, the court denied the plaintiff's motion for conditional class certification but allowed the plaintiff to re-file that motion following limited discovery on the issue of conditional certification. On March 12, 2012, the plaintiff filed an amended motion for conditional certification seeking to certify a class of all HP customer service representatives located in Boise, Idaho. On May 17, 2012, the court granted in part and denied in part plaintiff's motion. The court authorized plaintiff to notify certain HP employees of the collective action, but narrowed the scope of the proposed class and shortened the length of the proposed class period.

        India Directorate of Revenue Intelligence Proceedings.    As described below, Hewlett-Packard India Sales Private Ltd ("HPI"), a subsidiary of HP, and certain current and former HP employees have received show cause notices from the India Directorate of Revenue Intelligence (the "DRI") alleging underpayment of certain customs duties:

• •

  On April 30 and May 10, 2010, the DRI issued show cause notices to HPI, seven current HP employees and one former HP employee alleging that HP underpaid customs duties while importing products and spare parts into India and seeking to recover an aggregate of approximately $370 million, plus penalties. On June 2, 2010, the DRI issued an additional show cause notice to HPI and three current HPI employees alleging that HP failed to pay customs duties on the appropriate value of recovery CDs containing Microsoft operating systems and seeking to recover approximately $5.3 million, plus penalties. HP has deposited a total of approximately $16.7 million with the DRI and agreed to post a provisional bond in exchange for the DRI's agreement not to seize HP products and spare parts and not to interrupt the transaction of business by HP in India.

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  On June 17, 2010, the DRI issued show cause notices to HPI and two current HPI employees regarding non-inclusion of the value of software contained in the products imported from third-party original design manufacturers. The total amount of the alleged unpaid customs duties relating to such software, including the interest proposed to be demanded under these notices, is approximately $130,000, which amount HPI has deposited with the DRI. The DRI is also seeking to impose penalties.

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  On October 1, 2010, in connection with an existing DRI investigation commenced against SAP AG, the DRI issued a show cause notice to HPI alleging underpayment of customs duties related to the importation of certain SAP software. The amount of the alleged duty differential is approximately $38,000, which amount has been deposited with the DRI. The DRI is also seeking to impose interest and penalties.

HPI has responded to the show cause notices, and the Bangalore Commissioner of Customs has concluded hearings into, and issued orders under, the products and the parts show cause notices. The Commissioner issued an order on the products show cause notice on April 11, 2012, affirming certain duties and penalties against HPI and the named individuals of approximately $386.25 million. The Commissioner issued an order on the parts show cause notice on April 20, 2012, affirming certain duties and penalties against HPI and certain of the named individuals of approximately $17.32 million. HPI subsequently deposited an additional $3.64 million against the parts show cause notice. On March 12, 2012, the Chennai Commissioner of Customs issued an order affirming penalties of approximately $254,000 on one of the two June 17, 2010 software show cause notices. HPI will appeal the orders to the Customs Tribunal and, if necessary, to the India courts, but such appeals could require HP or HPI to deposit additional monies with the applicable Commissioner of Customs.

        Russia GPO and Related Investigations.    The German Public Prosecutor's Office ("German PPO") has been conducting an investigation into allegations that current and former employees of HP engaged in bribery, embezzlement and tax evasion relating to a transaction between Hewlett-Packard ISE GmbH in Germany, a former subsidiary of HP, and the General Prosecutor's Office of the Russian Federation. The approximately €35 million transaction, which was referred to as the Russia GPO deal, spanned the years 2001 to 2006 and was for the delivery and installation of an information technology network.

        The U.S. Department of Justice and the SEC have also been conducting an investigation into the Russia GPO deal and potential violations of the Foreign Corrupt Practices Act ("FCPA"). Under the FCPA, a person or an entity could be subject to fines, civil penalties of up to $500,000 per violation and equitable remedies, including disgorgement and other injunctive relief. In addition, criminal penalties could range from the greater of $2 million per violation or twice the gross pecuniary gain or loss from the violation.

        In addition to information about the Russia GPO deal, the U.S. enforcement authorities have requested (i) information related to certain other transactions, including transactions in Russia, Serbia and in the Commonwealth of Independent States (CIS) subregion dating back to 2000, and (ii) information related to two former HP executives seconded to Russia and to whether HP personnel in Russia, Germany, Austria, Serbia, the Netherlands or CIS were involved in kickbacks or other improper payments to channel partners or state-owned or private entities.

        HP is cooperating with these investigating agencies.

        ECT Proceedings.    In January 2011, the postal service of Brazil, Empresa Brasileira de Correios e Telégrafos ("ECT"), notified HP that it had initiated administrative proceedings against an HP subsidiary in Brazil ("HP Brazil") to consider whether to suspend HP Brazil's right to bid and contract with ECT related to alleged improprieties in the bidding and contracting processes whereby employees of HP Brazil and employees of several other companies coordinated their bids for three ECT contracts in 2007 and 2008. In late July 2011, ECT notified HP it had decided to apply the penalties against HP Brazil, suspending HP Brazil's right to bid and contract with ECT for five years, based upon the evidence before it. In August 2011, HP filed petitions with ECT requesting that the decision be revoked and seeking injunctive relief to have the application of the penalties suspended until a final, non-appealable decision is made on the merits of the case. HP is currently awaiting a response from ECT on both petitions. Because ECT did not rule on the substance of HP's petitions in a timely manner, HP filed a lawsuit seeking similar relief from the court. The court of first instance has not decided the merits of HP's lawsuit, but has denied HP's request for injunctive relief suspending application of the penalties pending a final, non-appealable decision on the merits of the case. HP appealed the denial of its request for injunctive relief to the intermediate appellate court, which issued a preliminary ruling denying the request for injunctive relief but reducing the length of the sanctions from five to two years. HP appealed that decision and, in December 2011, obtained a ruling staying enforcement of ECT's sanctions until HP can be heard on the full merits of the case. HP expects the appeal on the merits to last several years.

        Stockholder Litigation.    As described below, HP is involved in stockholder litigation commenced against certain current and former HP executive officers and certain current and former members of the HP Board of Directors in which the plaintiffs are seeking to recover certain compensation paid by HP to the defendants and other damages:

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  Heather M. Bendit, et al. v. Mark V. Hurd, et al. (formerly Henrietta Klein v. Mark V. Hurd, et al.), is a lawsuit filed on September 24, 2010 in California Superior Court alleging the individual defendants wasted corporate assets and breached their fiduciary duties by failing to implement and oversee HP's compliance with the FCPA.

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  Saginaw Police & Fire Pension Fund v. Marc L. Andreessen, et al. is a lawsuit filed on October 19, 2010 in the United States District Court for the Northern District of California alleging, among other things, that the defendants breached their fiduciary duties and were unjustly enriched by consciously disregarding HP's alleged violations of the FCPA. On August 15, 2011, the defendants filed a motion to dismiss the lawsuit. On March 21, 2012, the court granted the defendants' motion to dismiss, and the court entered judgment in the defendants' favor and closed the case on May 29, 2012.

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  A.J. Copeland v. Raymond J. Lane, et al. is a lawsuit filed on March 7, 2011 in the United States District Court for the Northern District of California alleging, among other things, that the defendants breached their fiduciary duties and wasted corporate assets in connection with HP's alleged violations of the FCPA, severance payments made to former Chairman and Chief Executive Officer Mark Hurd, and HP's acquisition of 3PAR Inc. The lawsuit also alleges violations of Section 14(a) of the Exchange Act in connection with HP's 2010 and 2011 proxy statements. On February 8, 2012, the defendants filed a motion to dismiss the lawsuit. The court has not yet ruled on that motion.

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  Richard Gammel v. Hewlett-Packard Company, et al. is a putative securities class action filed on September 13, 2011 in the United States District Court for the Central District of California alleging, among other things, that from November 22, 2010 to August 18, 2011, the defendants violated Section 10(b) and 20(a) of the Exchange Act by concealing material information and making false statements about HP's business model, the future of the webOS operating system, and HP's commitment to developing and integrating webOS products, including the TouchPad tablet PC. On April 11, 2012, the defendants filed a motion to dismiss the lawsuit. The court has not yet ruled on that motion.

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  Ernesto Espinoza v. Léo Apotheker, et al. and Larry Salat v. Léo Apotheker, et al. are consolidated lawsuits filed on September 21, 2011 in the United States District Court for the Central District of California alleging, among other things, that the defendants violated Sections 10(b) and 20(a) of the Exchange Act by concealing material information and making false statements about HP's business model and the future of webOS, the TouchPad and HP's PC business. The lawsuits also allege that the defendants breached their fiduciary duties, wasted corporate assets and were unjustly enriched when they authorized HP's repurchase of its own stock on August 29, 2010 and July 21, 2011. The consolidated lawsuits are currently stayed pending resolution of the defendants' motion to dismiss the Gammel lawsuit.

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  Luis Gonzalez v. Léo Apotheker, et al. and Richard Tyner v. Léo Apotheker, et al. are consolidated lawsuits filed on September 29, 2011 and October 5, 2011, respectively, in California Superior Court alleging, among other things, that the defendants breached their fiduciary duties, wasted corporate assets and were unjustly enriched by concealing material information and making false statements about HP's business model and the future of webOS, the TouchPad and HP's PC business and by authorizing HP's repurchase of its own stock on August 29, 2010 and July 21, 2011. The lawsuits are currently stayed pending resolution of the Espinoza/Salat consolidated action in federal court.

Environmental

        HP's operations and products are subject to various federal, state, local and foreign laws and regulations concerning environmental protection, including laws addressing the discharge of pollutants into the air and water, the management and disposal of hazardous substances and wastes, the cleanup of contaminated sites, the content of HP's products and the recycling, treatment and disposal of those products. In particular, HP faces increasing complexity in its product design and procurement operations as it adjusts to new and future requirements relating to the chemical and materials composition of its products, their safe use, and the energy consumption associated with those products, including requirements relating to climate change. HP is also subject to legislation in an increasing number of jurisdictions that makes producers of electrical goods, including computers and printers, financially responsible for specified collection, recycling, treatment and disposal of past and future covered products (sometimes referred to as "product take-back legislation"). HP could incur substantial costs, its products could be restricted from entering certain jurisdictions, and it could face other sanctions, if it were to violate or become liable under environmental laws or if its products become non-compliant with environmental laws. HP's potential exposure includes fines and civil or criminal sanctions, third-party property damage or personal injury claims and clean up costs. The amount and timing of costs under environmental laws are difficult to predict.

        HP is party to, or otherwise involved in, proceedings brought by U.S. or state environmental agencies under the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), known as "Superfund," or state laws similar to CERCLA. HP is also conducting environmental investigations or remediations at several current or former operating sites pursuant to administrative orders or consent agreements with state environmental agencies.