Meg Whitman President and CEO Dear Stockholders, Fiscal 2012 was the first year in a multi-year journey to turn HP around. We diagnosed the problems facing the company, laid the foundation to fix them, and put in place a plan to restore HP to growth. We know where we need to go, and we are starting to make progress. The Year in Review In the first year of our turnaround effort, we provided a frank assessment of the challenges facing HP, laid out clear strategies at all levels of the corporation, and mapped out our journey to restore HP’s financial performance. Most importantly, we did what we said we would do in fiscal 2012 – we began taking action to bring costs in line with the revenue trajectory of the business and met our full-year non-GAAP earnings per share outlook. We have just completed year one of our journey, and we are already seeing tangible proof that the steps we have taken are working. This includes generating $10.6 billion in cash flow from operations for fiscal $10.6B 2012. HP used that cash to make significant progress in rebuilding our balance sheet – reducing our in cash flow from net debt by $5.6 billion during the year – and returned $2.6 billion to stockholders in the form of share operations for repurchases and dividends. fiscal 2012 Our efforts in fiscal 2012 also included beginning to tackle the structural and execution issues we identified, and building the foundation we need to improve our performance in the face of dynamic market trends and macroeconomic challenges. 1 This foundation includes assembling a strong leadership team and investing in systems and tools that make it easier for us to manage our business, allocate resources, and prioritize investment dollars. For example, to better empower and enable our sales teams, we successfully rolled out a new customer relationship management system to almost 30,000 HP employees. To bring more focus back to the business, we implemented a series of organizational changes, such as consolidating our personal computer and printing businesses under the same senior executive leadership. We also combined our global accounts sales organization with our enterprise servers, storage, and networking business and our technology services business to create a new Enterprise Group. Finally, we centralized all of our marketing and communications activities. In May, we announced a multi-year restructuring program to streamline the company and create the capacity to invest in innovation. As of the end of fiscal 2012, we are on track to realize the savings that we outlined in that announcement. We began working to optimize our supply chain, reduce the number of stock-keeping units (SKUs) and platforms, refine our real estate strategy, improve our business processes, and implement consistent pricing and promotions. We have also taken steps to refocus our research and development efforts to extend HP’s technology leadership in our core markets. Our product and service development teams have moved aggressively to better understand customer needs, align our portfolio, and speed our time to market. We modified our incentive compensation structure for senior executives to increase the focus on the underlying drivers of stockholder value, including an increased emphasis on cash flow and the addition of a new return on invested capital performance metric. Finally, fiscal 2012 was a landmark year for product announcements, including our first new line of multi-function printers in seven years, an impressive new line of Windows 8 PCs, such as the Spectre XT TouchSmart and ENVY x2, and the HP ElitePad, the world’s first tablet optimized for the enterprise. In addition, we introduced a comprehensive cloud strategy and a number of new cloud products and services. And we updated our enterprise security portfolio with scalable solutions that give customers the 360-degree view they need to protect the 21st century enterprise. $2.6B Multi-Year Journey returned to We began fiscal 2013 with a stronger financial foundation, an empowered leadership team, and a clear stockholders in strategy, but we have more work to do on the multi-year journey ahead of us. the form of share repurchases and Fiscal 2013 is going to be a fix-and-rebuild year as we focus on working through the anticipated dividends disruptions expected to accompany the organizational changes we made in fiscal 2012. We will continue to implement our cost-reduction and operational initiatives, make investments in our business – particularly in tools, systems, processes, and instrumentation – and maintain our focus on disciplined capital allocation. We will also continue to drive product innovation in our core markets; improve our commercialization strategy with a focus on cloud computing, security, and information optimization; and rebuild our go-to-market capability. We are working hard to accelerate the timing of this journey. Success hinges on consistency of leadership, focus, execution and, most importantly, great products and services delivered in the way that customers want to buy them. 2 Looking Ahead While we have faced some big challenges, we also see some big opportunities ahead, and we are well positioned to take advantage of those opportunities with our remarkable set of assets and strengths. Our unparalleled scale and distribution allows us to reach customers and partners in any corner of the globe at the best possible price. Our brand is trusted by customers around the world. We have talented and resilient employees that are committed to our customers, and a culture of great engineering and innovation. Above all, we have an incredibly loyal group of customers and partners who want our company to succeed. Over the years, these customers have made enormous investments in HP’s technology, and they need us to continue to provide solutions for today’s new style of IT. This new style of IT promises lower costs, simplicity, and speed. Driven by cloud, mobility, and big data, it is changing how technology is consumed and delivered, and how end users engage with it. For organizations around the world, this new style of IT has the potential to reshape the competitive landscape by lowering barriers of entry in all industries. And this new style of IT will demand a foundation to support much greater agility, lower cost, and a higher degree of accessibility. This foundation will span devices, infrastructure, software, and services to meet the expectations of employees, customers, and partners. The IT industry must evolve how it works to succeed in this new environment and can no longer focus on just the pieces – hardware, software, and services – but must focus on all of the above. HP is the ideal partner with the right solutions for the future. Our diverse portfolio sets us apart, and we are the only company that can deliver hardware, software, and services that meet the needs of all of our customers, from the enterprise to the consumer. After a full year as CEO, it is clear to me that HP is at the forefront of a unique opportunity at a critical time. Taking advantage of this moment will reinforce HP’s position as a world-class technology leader, delivering unrivaled integrated solutions for our customers over the next generation. I am confident that over time this will increasingly equate to improved financial performance and increased stockholder value. Looking ahead, I remain optimistic and confident about our future. We now have the people, the plan, and the foundation in place to help us succeed on the next phase of the journey. Thank you for the confidence you have given to all of us by investing in HP and believing in all that we can accomplish together. Sincerely, Meg Whitman 3 Members of the Board* Marc L. Andreessen Haas after joining the company in 1971, including Director since 2009 Vice Chairman from 1998 to 1999, Director of the Age 41 Electronic Materials business from 1996 to 1999, Mr. Andreessen is a co-founder of AH Capital and Vice President and Regional Director of the Management, LLC, doing business as Andreessen Asia-Pacific Region from 1993 to 1998. Mr. Gupta Horowitz, a venture capital firm founded in July also is a director of Delphi Automotive PLC, Tyco 2009. From 1999 to July 2007, Mr. Andreessen International Ltd., The Vanguard Group and several served as Chairman of Opsware, Inc., a software private companies. company that he co-founded. From March 1999 to September 1999, Mr. Andreessen served as John H. Hammergren Chief Technology Officer of America Online, Inc., Director since 2005 Age 53 a software company. Mr. Andreessen co-founded Netscape Communications Corporation, a software Mr. Hammergren has served as Chairman of company, and served in various positions, McKesson Corporation, a healthcare services and including Chief Technology Officer and Executive information technology company, since 2002. Mr. Vice President of Products from 1994 to 1999. Hammergren joined McKesson in 1996 and held a Mr. Andreessen also is a director of eBay Inc., number of management positions before becoming Facebook, Inc. and several private companies. President and Chief Executive Officer in 2001. Mr. Hammergren also is a former director of Nadro, S.A. Shumeet Banerji de C.V. (Mexico). Director since 2011 Age 53 Raymond J. Lane Mr. Banerji has served as a senior partner of Booz & Director since 2010 Age 66 Company, a consulting company, since May 2012. Previously, Mr. Banerji served as Chief Executive Mr. Lane was appointed executive Chairman in Officer of Booz & Company from July 2008 to May September 2011 after having served as HP’s 2012. Prior to that, Mr. Banerji served in multiple non-executive Chairman since November 2010. Mr. roles at Booz Allen Hamilton, a consulting company Lane has served as Managing Partner of Kleiner and predecessor to Booz & Company, while based in Perkins Caufield & Byers, a private equity firm, offices in North America, Asia and Europe, including since 2000.