2013 Annual Report We want to be a company known for its ethical leadership —a company where employees are proud to work; a company with which customers, business partners, and suppliers want to do business. Meg Whitman President and CEO Dear Stockholders, )URPLPSURYLQJ+3oVƭQDQFLDOVWUHQJWKWR UHLJQLWLQJLQQRYDWLRQƭVFDO1ZDVDFULWLFDO VWHSRQRXUPXOWL\HDUWXUQDURXQGMRXUQH\ :LWKDQHPSKDVLVRQƭ[LQJDQGUHEXLOGLQJZH GHOLYHUHGRQRXUNH\REMHFWLYHVIRUƭVFDO1 PDNLQJWKHQHFHVVDU\FKDQJHVWRRXUEXVLQHVV WR GULYH VXFFHVV LQ ƭVFDO 1 DQG EH\RQG Year in Review ,n ƭscal , we focused on improYinJ our operations, driYinJ better cash Ưow and rebuildinJ our balance sheet. 7hese foundational improYements were essential to moYinJ +P forward, and ,om pleased with the results we deliYered. )or the full year, we Jenerated . billion in cash Ưow from operations, well aboYe our outlook as we entered the year. We deliYered non*$$P diluted net earninJs per share in ƭscal within our initial outlook ranJe. $11.6B We also achieYed a maMor milestone—reducinJ operatinJ company net debt to appro[imately ]ero— in cash Ưow ahead of schedule. 6ince the beJinninJ of ƭscal , we haYe reduced +Pos total net debt by from operations . billion. for ƭscal ,n ƭscal , we adYanced innoYation, with research and deYelopment spendinJ of . billion. We also returned a combined . billion to stockholders in the form of share repurchases and diYidends. /ookinJ ahead, we e[pect our strenJthened financial position to afford us eYen more Ưe[ibility to return capital to stockholders and make the inYestments needed to support our business. 1 When , arriYed at +P, we had a cost structure that was out of line with the reYenue traMectory of the business. 7o address this, we better aliJned our cost structure and the oYerall competitiYeness of the company, while continuinJ to inYest in strateJic Jrowth seJments. Our 0ay restructurinJ plan droYe oYer billion in labor saYinJs in ƭscal , and nonlabor actions also continue to driYe siJniƭcant cost reductions. With new leadership in our Enterprise *roup and PrintinJ and Personal 6ystems business, coupled with $2B clear Joforward strateJies and the assets in place to accelerate proJress across all our businesses, we are well positioned for the future. ,n particular, our Enterprise 6erYices business siJniƭcantly in labor saYinJs improYed its operatinJ cadence, helpinJ it successfully achieYe ƭscal operatinJ marJin at the hiJh in ƭscal end of the outlook we proYided at the beJinninJ of the year. $nd with our seasoned leadership team in +P 6oftware, we made tremendous strides in brinJinJ the power of the full 6oftware portfolio toJether. $lso central to our proJress in ƭscal was reconnectinJ with our customers and partners. 7his year alone, , met with close to , customers and partners, and our other leaders haYe increased their enJaJement as well. WeoYe also made chanJes to our customer coYeraJe models and increased traininJ for our sales teams. $nd we launched the +P PartnerOne proJram, which JiYes our channel partners the proJrammatic support they need to sell and succeed. Our focus is on deliYerinJ Jreat e[periences to our customers eYery sinJle day, from sales throuJh to deliYery, and we haYe beJun to see the results in the innoYatiYe work we are doinJ with companies like %ritish 7elecom, )acebook, 1$6C$5 and 8nited $irlines. We are also seeinJ results in the form of new and e[citinJ partnerships, from a collaboration with *ooJle to oƫer a onestopshop solution for small and medium business customers, to a partnership with 6alesforce.com to create the 6uperpod, a dedicated instance of 6alesforce.com runninJ on +Pos ConYerJed ,nfrastructure. Reigniting Innovation ETually important in ƭscal , we reiJnited innoYation with a commitment to speedinJ the commerciali]ation of our best ideas. Our eƫorts are payinJ oƫ in the form of new and e[citinJ products, serYices and solutions that map directly to the companyos strateJy and are more closely aliJned with $2.6B our customerso needs today and in the future. 7his includes our 0oonshot serYer system that was created by +P /abs. 0oonshot is an entirely new returned to cateJory of serYer that reduces enerJy consumption by up to percent, takes up to percent less stockholders in space and costs percent less than traditional serYers. 7his is a siJniƭcant opportunity for both +P the form of share and our customers. repurchases and diYidends We also announced additions to our ConYerJed 6toraJe portfolio that are startinJ to help oƫset declines in our traditional storaJe solutions and are driYinJ oYerall Jrowth in our 6toraJe business. ,n terms of our Cloud business, we e[panded our ConYerJed Cloud oƫerinJ with a common, Open6tackbased architecture for +Pos priYate, manaJed and public cloud oƫerinJs. $ppro[imately , enterprise customers are already usinJ our cloud solutions and serYices, and we are acceleratinJ our eƫorts in ƭscal . ,n software, we launched seYeral new innoYations in biJ data and security. 7his includes +$9En, a biJ data analytics platform that leYeraJes our analytics software, hardware and serYices to enable customers to make decisions in real time. We are also innoYatinJ across our PrintinJ and Personal 6ystems business. %usiness model innoYations like ,nk $dYantaJe and new products like our entirely new line of multifunction printers and the +P OưceMet Pro ; series continue to take hold, with stronJ customer adoption. Our multioperatinJ system and multiform factor strateJies are driYinJ new products like the +P E19< /eap 0otion 1otebook PC and the +P Elite%ook )olio. We continue to enhance and strenJthen our serYices oƫerinJs to help customers adapt to a chanJinJ technoloJy landscape and achieYe better results. ,n Enterprise 6erYices, we introduced seYeral new enterprise cloud and security serYices, includinJ +P $sa6erYice solutions for 6$P +$1$, +P Cloud 6ecurity 5isk and Control $dYisory 6erYices. $lso, in our 7echnoloJy 6erYices business, our 'atacenter Care and )le[ible Capacity serYices enable aJility and JiYe customers conƭdence in their Mourney to the cloud. , continue to belieYe that +Pos turnaround will be driYen by Jreat products and serYices, and e[pect innoYation across our businesses to increase in ƭscal . HP’s Opportunity <ou haYe heard me talk a lot about what we call p7he 1ew 6tyle of ,7q—the shift in how technoloJy is deliYered, paid for and consumed by our customers and partners. 7his 1ew 6tyle of ,7, driYen by forces like cloud, biJ data, mobility and security, is creatinJ opportunities for customers to increase their aJility, speed innoYation and lower costs. %ut it is also applyinJ intense pressure on their orJani]ations as many haYe outdated ,7 architectures. What customers need is a stcentury ,7 architecture capable of handlinJ todayos demands and the speciƭc reTuirements of their uniTue businesses. ,n other words, solutions that brinJ toJether the infrastructure, software, serYices and innoYation that will enable them to reali]e the full promise of technoloJy. 7his is where our opportunity lies. With the depth and breadth of our portfolio, +P can proYide the endtoend solutions from the deYice to the data center—from infrastructure to software to serYices— to help our customers satisfy their uniTue ,7 needs. While we haYe more work to do on our turnaround Mourney, ,om e[cited about the road ahead and see a future where +P leads the way in proYidinJ solutions for the 1ew 6tyle of ,7. %y successfully e[ecutinJ on our strateJy and maintaininJ our focus on innoYation, we e[pect to reaưrm +Pos position as a market leader and create endurinJ Yalue for our customers, as well as stockholders, alonJ the way. 7hank you for your onJoinJ conƭdence in +P. , am inspired on a daily basis by our customers, partners, employees and stockholders and look forward to updatinJ you on our performance as the year continues. 6incerely, 0eJ Whitman OperatinJ company net debt is a non*$$P measure that is deƭned as total company net debt less +P )inancial 6erYices p+P)6q net debt. 7otal company net debt consists of total company Jross debt includinJ the eƫects of hedJinJ less total company Jross cash, which includes cash and cash eTuiYalents, shortterm inYestments, and certain liTuid lonJterm inYestments. +P)6 net debt consists of +P)6 debt, which includes primarily intercompany eTuity that is treated as debt for seJment reportinJ purposes, intercompany debt and borrowinJ and fundinJ related actiYity associated with +P)6 and its subsidiaries, less +P)6 cash. $s of October , , total company Jross debt was . billion, total company Jross cash was . billion, total company net debt was . billion, +P)6 debt was . billion, +P)6 cash was . billion, +P)6 net debt was . billion, and operatinJ company net debt cash was . billion. 7his additional non*$$P information, as well as the other non*$$P information proYided herein, is not intended to be considered in isolation or as a substitute for the related *$$P ƭnancial information. 1et debt is a non*$$P ƭnancial measure that consists of total debt includinJ the eƫects of hedJinJ less Jross cash, which includes cash and cash eTuiYalents, shortterm inYestments, and certain liTuid lonJterm inYestments. $s of October , , total debt includinJ the eƫects of hedJinJ was . billion, Jross cash was . billion, and net debt was . billion. Members of the Board* Marc L. Andreessen Rajiv L. Gupta 'LUHFWRU VLQFH $JH 'LUHFWRU VLQFH $JH 0r. $ndreessen is a cofounder of $+ Capital 0r. *upta serYed as /ead ,ndependent 'irector 0anaJement, //C, doinJ business as $ndreessen of the %oard from 1oYember to $pril . +orowit], a Yenture capital ƭrm founded in -uly 0r. *upta has serYed as Chairman of $Yantor . )rom to , 0r. $ndreessen serYed Performance 0aterials, a manufacturer of as Chairman of Opsware, ,nc., a software company chemistries and materials, since $uJust and that he cofounded. 'urinJ a portion of , as 6enior $dYisor to 1ew 0ountain Capital, //C, 0r. $ndreessen serYed as Chief 7echnoloJy Oưcer a priYate eTuity ƭrm, since -uly .