HP (HPQ) 8-K Results of Operations and Financial Condition

EXHIBIT 99.2

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(Unaudited)
(In millions except per share amounts)
	Three months ended
	April 30, 2014			January 31, 2014			April 30, 2013
Net revenue	$	27,309		$	28,154		$	27,582
Costs and expenses:
Cost of sales		20,704			21,736			21,055
Research and development		873			811			815
Selling, general and administrative		3,391			3,210			3,342
Amortization of intangible assets		264			283			350
Restructuring charges		252			114			408
Acquisition-related charges		3			3			11
Total costs and expenses		25,487			26,157			25,981
Earnings from operations		1,822			1,997			1,601
Interest and other, net		(174	)		(163	)		(193	)
Earnings before taxes		1,648			1,834			1,408
Provision for taxes		(375	)		(409	)		(331	)
Net earnings	$	1,273		$	1,425		$	1,077
Net earnings per share:
Basic	$	0.67		$	0.75		$	0.56
Diluted	$	0.66		$	0.74		$	0.55
Cash dividends declared per share	$	-		$	0.29		$	-
Weighted-average shares used to compute net earnings per share:
Basic		1,890			1,907			1,935
Diluted		1,916			1,935			1,947

Page 1 of 5

 

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(Unaudited)
(In millions except per share amounts)
	Six months ended
	April 30,
	2014			2013
Net revenue	$	55,463		$	55,941
Costs and expenses:
Cost of sales		42,440			43,084
Research and development		1,684			1,609
Selling, general and administrative		6,601			6,642
Amortization of intangible assets		547			700
Restructuring charges		366			538
Acquisition-related charges		6			15
Total costs and expenses		51,644			52,588
Earnings from operations		3,819			3,353
Interest and other, net		(337	)		(372	)
Earnings before taxes		3,482			2,981
Provision for taxes		(784	)		(672	)
Net earnings	$	2,698		$	2,309
Net earnings per share:
Basic	$	1.42		$	1.19
Diluted	$	1.40		$	1.18
Cash dividends declared per share	$	0.29		$	0.26
Weighted-average shares used to compute net earnings per share:
Basic		1,898			1,944
Diluted		1,922			1,952

Page 2 of 5

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(In millions)
	As of
	April 30, 2014		October 31, 2013
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	15,096	$	12,163
Accounts receivable		14,288		15,876
Financing receivables		3,112		3,144
Inventory		5,840		6,046
Other current assets		11,547		13,135
Total current assets		49,883		50,364
Property, plant and equipment		11,350		11,463
Long-term financing receivables and other assets		9,043		9,556
Goodwill and intangible assets		33,696		34,293
Total assets	$	103,972	$	105,676
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable and short-term borrowings	$	5,396	$	5,979
Accounts payable		13,521		14,019
Employee compensation and benefits		3,662		4,436
Taxes on earnings		1,263		1,203
Deferred revenue		6,416		6,477
Other accrued liabilities		13,022		13,407
Total current liabilities		43,280		45,521
Long-term debt		17,190		16,608
Other liabilities		14,920		15,891
Stockholders' equity:
HP stockholders' equity		28,185		27,269
Non-controlling interests		397		387
Total stockholders' equity		28,582		27,656
Total liabilities and stockholders' equity	$	103,972	$	105,676

Page 3 of 5

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
SEGMENT INFORMATION
(Unaudited)
(In millions)
	Three months ended
	April 30, 2014			January 31, 2014			April 30, 2013
Net revenue:(a)
Personal Systems	$	8,176		$	8,530		$	7,610
Printing		5,834			5,815			6,094
Total Printing and Personal Systems Group		14,010			14,345			13,704
Enterprise Group		6,657			6,993			6,794
Enterprise Services		5,702			5,595			6,133
Software		971			916			967
HP Financial Services		867			870			881
Corporate Investments		6			288			10
Total segments		28,213			29,007			28,489
Elimination of intersegment net revenue and other		(904	)		(853	)		(907	)
Total HP consolidated net revenue	$	27,309		$	28,154		$	27,582
Earnings before taxes:(a)
Personal Systems	$	290		$	279		$	244
Printing		1,140			979			970
Total Printing and Personal Systems Group		1,430			1,258			1,214
Enterprise Group		961			1,006			1,074
Enterprise Services		144			57			156
Software		186			145			180
HP Financial Services		99			101			97
Corporate Investments		(98	)		121			(75	)
Total segment earnings from operations		2,722			2,688			2,646
Corporate and unallocated costs and eliminations		(251	)		(121	)		(169	)
Stock-based compensation expense		(130	)		(170	)		(107	)
Amortization of intangible assets		(264	)		(283	)		(350	)
Restructuring charges		(252	)		(114	)		(408	)
Acquisition-related charges		(3	)		(3	)		(11	)
Interest and other, net		(174	)		(163	)		(193	)
Total HP consolidated earnings before taxes	$	1,648		$	1,834		$	1,408

(a) Effective at the beginning of its first quarter of fiscal 2014, HP implemented certain organizational changes to align its segment financial reporting more closely with its current business structure. These organizational changes include (i) transferring the HP Exstream business from the Commercial Hardware business unit within the Printing segment to the Software segment; (ii) transferring the Personal Systems trade and warranty support business from the Technology Services business unit within the Enterprise Group segment to the Other business unit within the Personal Systems segment; (iii) transferring the spare and replacement parts business supporting the Personal Systems and Printing segments from the Technology Services business unit within the Enterprise Group segment to the Other business unit within the Personal Systems segment and the Commercial Hardware business unit within the Printing segment, respectively; and (iv) transferring certain cloud-related incubation activities previously reported in Corporate and unallocated costs and eliminations and in the Enterprise Group segment to the Corporate Investments segment. In addition, HP transferred certain intrasegment eliminations from the Enterprise Services segment and the Enterprise Group segment to corporate intersegment revenue eliminations.   HP reflected these changes to its segment information in prior reporting periods on an as-if basis, which resulted in the transfer of revenue among the Personal Systems, Printing, the Enterprise Group, Enterprise Services and Software segments. These changes also resulted in the transfer of operating profit among the Personal Systems, Printing, the Enterprise Group, Software and Corporate Investments segments. These changes had no impact on HP’s previously reported consolidated net revenue, earnings from operations, net earnings or net earnings per share.

Page 4 of 5

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
SEGMENT INFORMATION
(Unaudited)
(In millions)
	Six months ended
	April 30,
	2014			2013
Net revenue:(a)
Personal Systems	$	16,706		$	15,842
Printing		11,649			12,040
Total Printing and Personal Systems Group		28,355			27,882
Enterprise Group		13,650			13,742
Enterprise Services		11,297			12,171
Software		1,887			1,918
HP Financial Services		1,737			1,838
Corporate Investments		294			14
Total segments		57,220			57,565
Elimination of intersegment net revenue and other		(1,757	)		(1,624	)
Total HP consolidated net revenue	$	55,463		$	55,941
Earnings before taxes:(a)
Personal Systems	$	569		$	477
Printing		2,119			1,937
Total Printing and Personal Systems Group		2,688			2,414
Enterprise Group		1,967			2,144
Enterprise Services		201			232
Software		331			335
HP Financial Services		200			198
Corporate Investments		23			(148	)
Total segment earnings from operations		5,410			5,175
Corporate and unallocated costs and eliminations		(372	)		(278	)
Stock-based compensation expense		(300	)		(291	)
Amortization of intangible assets		(547	)		(700	)
Restructuring charges		(366	)		(538	)
Acquisition-related charges		(6	)		(15	)
Interest and other, net		(337	)		(372	)
Total HP consolidated earnings before taxes	$	3,482		$	2,981

(a) Effective at the beginning of its first quarter of fiscal 2014, HP implemented certain organizational changes to align its segment financial reporting more closely with its current business structure. These organizational changes include (i) transferring the HP Exstream business from the Commercial Hardware business unit within the Printing segment to the Software segment; (ii) transferring the Personal Systems trade and warranty support business from the Technology Services business unit within the Enterprise Group segment to the Other business unit within the Personal Systems segment; (iii) transferring the spare and replacement parts business supporting the Personal Systems and Printing segments from the Technology Services business unit within the Enterprise Group segment to the Other business unit within the Personal Systems segment and the Commercial Hardware business unit within the Printing segment, respectively; and (iv) transferring certain cloud-related incubation activities previously reported in Corporate and unallocated costs and eliminations and in the Enterprise Group segment to the Corporate Investments segment. In addition, HP transferred certain intrasegment eliminations from the Enterprise Services segment and the Enterprise Group segment to corporate intersegment revenue eliminations.   HP reflected these changes to its segment information in prior reporting periods on an as-if basis, which resulted in the transfer of revenue among the Personal Systems, Printing, the Enterprise Group, Enterprise Services and Software segments. These changes also resulted in the transfer of operating profit among the Personal Systems, Printing, the Enterprise Group, Software and Corporate Investments segments. These changes had no impact on HP’s previously reported consolidated net revenue, earnings from operations, net earnings or net earnings per share. 

Page 5 of 5