quarterly overview November 20, 2002

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1 quarterly overview November 20, 2002 The information contained in the pages below speaks as of the date issued. Investors should not assume that statements made in these documents remain operative at a later time. View, print or save an Adobe Acrobat PDF file of this document. To view the PDF file, you need to have Adobe Acrobat Reader installed on your computer. Acrobat Reader is a free plug-in. You can download the latest version or download a version with accessibility features. financial statements consolidated condensed statement of earnings combined company consolidated condensed statement of earnings pro forma combined company consolidated condensed statement of earnings consolidated condensed balance sheet consolidated condensed statement of cash flows View, print or save an Adobe Acrobat PDF file of this document. To view the PDF file, you need to have Adobe Acrobat Reader installed on your computer. Acrobat Reader is a free plug-in. You can download the latest version or download a version with accessibility features. Other financial information calculation of net earnings per share calculation of pro forma net earnings per share segment information combined company segment information selected financial information combined company selected financial information geographic revenue growth comparison combined company geographic revenue growth comparison

2 Page 2 CONSOLIDATED CONDENSED STATEMENT OF EARNINGS (Unaudited) (In millions except per share amounts) Three months ended October 31, 2001 (b),(c) (d) 2001 (d),(e) (Combined (Historical 2002 (a) Company) HP)_ Net revenue $ 18,048 $ 18,168 $ 10,876 Costs and expenses: Cost of sales 13,260 13,930 8,077 Research and development Selling, general and administrative 2,950 2,987 1,676 Amortization of goodwill and purchased intangible assets Restructuring charges In-process research and development charges Acquisition-related charges Total costs and expenses 17,623 18,354 10,754 Earnings (loss) from operations 425 (186) 122 Interest and other, net 68 (14) (7) Net investment losses (38) (605) (90) Gain on divestiture Earnings (loss) before extraordinary item and taxes 455 (727) 103 Provision for (benefit from) taxes 65 (209) 19 Net earnings (loss) before extraordinary item 390 (518) 84 extinguishment of debt, net of taxes Net earnings (loss) $ 390 $ (505) $ 97 Basic net earnings (loss) per share: (f) Net earnings (loss) before extraordinary item $ 0.13 $ (0.17) $ 0.04 extinguishment of debt, net of taxes Net earnings (loss) $ 0.13 $ (0.17) $ 0.05 Diluted net earnings (loss) per share: (f),(g) Net earnings (loss) before extraordinary item $ 0.13 $ (0.17) $ 0.04 extinguishment of debt, net of taxes Net earnings (loss) $ 0.13 $ (0.17) $ 0.05 Cash dividends declared per share $ - $ 0.02 $ - Weighted-average shares used to compute net earnings (loss) per share: (f),(g) Basic 3,047 3,009 1,936 Diluted 3,048 3,009 1,960

3 Page 3 (a) The results for the three months ended October 31, 2002 include the results of Compaq for the entire quarter. (b) The combined company results for the three months ended October 31, 2001 include the results of Compaq as if the merger had taken place as of the beginning of the period presented. Due to different fiscal period ends for HP and Compaq, the combined company results for the three months ended October 31, 2001 include the historical results of HP for the three months ended October 31, 2001 and the historical results of Compaq for the three months ended September 30, (c) The combined company results for the three months ended October 31, 2001 have been adjusted to reflect amortization of purchased intangibles, net of taxes, as if the acquisition had occurred at the beginning of the period. (d) Certain reclassifications have been made to prior year balances in order to conform to the current year presentation. (e) The historical HP results for the three months ended October 31, 2001 include only the results of pre-merger HP. (f) The basic and diluted earnings per share for the combined company for the three months ended October 31, 2001 are based on the weighted average number of HP shares outstanding for the three months ended October 31, 2001 and the weighted average number of Compaq shares outstanding for the three months ended September 30, 2001 multiplied by the exchange ratio. (g) The combined company s diluted loss per share for the three months ended October 31, 2001 was calculated based only on the weighted average number of shares outstanding during the period as the inclusion of common stock equivalents, such as stock issuable pursuant to the exercise of stock options and the conversion of debt, would have been antidilutive.

4 Page 4 CONSOLIDATED CONDENSED STATEMENT OF EARNINGS (Unaudited) (In millions except per share amounts) Twelve months ended Percent October 31, increase/ 2002 (a) 2001 (b),(c) (decrease) Net revenue $ 56,588 $ 45, Costs and expenses: Cost of sales 41,579 33,495 Research and development 3,312 2,724 Selling, general and administrative 9,033 6,950 Amortization of goodwill and purchased intangible assets Restructuring charges 1, In-process research and development charges Acquisition-related charges Total costs and expenses 57,600 43, (Loss) earnings from operations (1,012) 1,439 (170) Interest and other, net Net investment losses (106) (455) Litigation settlement 14 (400) Net loss on divestitures - (53) (Loss) earnings before extraordinary item, cumulative effect of change in accounting principle and taxes (1,052) 702 (250) (Benefit from) provision for taxes (129) 78 Net (loss) earnings before extraordinary item and cumulative effect of change in accounting principle (923) 624 (248) extinguishment of debt, net of taxes Cumulative effect of change in accounting principle, net of taxes (d) - (272) Net (loss) earnings $ (903) $ 408 (321) Basic net (loss) earnings per share: Net (loss) earnings before extraordinary item and cumulative effect of change in accounting principle $ (0.37) $ 0.32 extinguishment of debt, net of taxes Cumulative effect of change in accounting principle, net of taxes (d) - (0.14) Net (loss) earnings $ (0.36) $ 0.21 Diluted net (loss) earnings per share: (e) Net (loss) earnings before extraordinary item and cumulative effect of change in accounting principle $ (0.37) $ 0.32 extinguishment of debt, net of taxes Cumulative effect of change in accounting principle, net of taxes (d) - (0.14) Net (loss) earnings $ (0.36) $ 0.21 Cash dividends declared per share $ 0.32 $ 0.32 Weighted-average shares used to compute net earnings per share: Basic 2,499 1,936 Diluted (e) 2,499 1,974

5 Page 5 (a) Results for the twelve months ended October 31, 2002 include the results of Compaq from May 3, 2002 (the acquisition date). (b) The historical HP results for the twelve months ended October 31, 2001 include only the results of pre-merger HP. (c) Certain reclassifications have been made to prior year balances in order to conform to the current year presentation. (d) HP adopted Securities and Exchange Commission Staff Accounting Bulletin No. 101 ( SAB 101 ), Revenue Recognition in Financial Statements in the fourth quarter of fiscal 2001, retroactive to November 1, (e) The diluted loss per share for the twelve months ended October 31, 2002 was calculated based only on the weighted average number of shares outstanding during the period as the inclusion of common stock equivalents, such as stock issuable pursuant to the exercise of stock options and the conversion of debt, would have been antidilutive. The calculation of diluted net earnings per share for the twelve months ended October 31, 2001 included additional dilution from common stock equivalents.

6 Page 6 COMBINED COMPANY CONSOLIDATED CONDENSED STATEMENT OF EARNINGS (Unaudited) (In millions except per share amounts) Twelve months ended Percent October 31, increase/ 2002 (a),(b) 2001 (b),(c),(d) (decrease) Net revenue $ 72,346 $ 81,105 (11) Costs and expenses: Cost of sales 54,010 61,375 Research and development 3,890 4,115 Selling, general and administrative 11,455 12,709 Amortization of goodwill and purchased intangible assets Restructuring charges 1,780 1,040 In-process research and development charges Acquisition-related charges Total costs and expenses 73,364 80,005 (8) (Loss) earnings from operations (1,018) 1,100 (193) Interest and other, net Net investment losses (100) (2,603) Litigation settlement 14 (400) Net loss on divestitures - (53) (Loss) earnings before extraordinary item, cumulative effect of change in accounting principles and taxes (1,084) (1,662) 35 Benefit from taxes (136) (617) Net (loss) earnings before extraordinary item and cumulative effect of change in accounting principles (948) (1,045) 9 extinguishment of debt, net of taxes Cumulative effect of change in accounting principles, net of taxes (e) - (492) Net (loss) earnings $ (928) $ (1,481) 37 Basic net (loss) earnings per share: (f) Net (loss) earnings before extraordinary item and cumulative effect of change in accounting principle $ (0.31) $ (0.35) extinguishment of debt, net of taxes Cumulative effect of change in accounting principles, net of taxes (e) - (0.16) Net (loss) earnings $ (0.30) $ (0.49) Diluted net (loss) earnings per share: (f),(g) Net (loss) earnings before extraordinary item and cumulative effect of change in accounting principle $ (0.31) $ (0.35) extinguishment of debt, net of taxes Cumulative effect of change in accounting principles, net of taxes (e) - (0.16) Net (loss) earnings $ (0.30) $ (0.49) Cash dividends declared per share $ 0.35 $ 0.39 Weighted-average shares used to compute net earnings per share: Basic (f) 3,031 3,004 Diluted (f),(g) 3,031 3,004

7 Page 7 (a) The combined company results for the twelve months ended October 31, 2002 include the results of Compaq as if the merger had taken place as of the beginning of the period presented. Due to different fiscal period ends for HP and Compaq, the combined company results for the twelve months ended October 31, 2002 include the results of HP (standalone) for the twelve months ended October 31, 2002 and the historical quarterly results of Compaq for the six months ended March 31, 2002, and for the period from May 3, 2002 (the acquisition date) to October 31, (b) The combined company results for the twelve months ended October 31, 2002 and 2001 have been adjusted to reflect amortization of purchased intangibles, net of taxes, as if the acquisition had occurred at the beginning of the periods presented. (c) The combined company results for the twelve months ended October 31, 2001 include the results of Compaq as if the merger had taken place as of the beginning of the period presented. Due to different fiscal period ends for HP and Compaq, the combined company results for the twelve months ended October 31, 2001 include the historical results of HP for the twelve months ended October 31, 2001 and the historical quarterly results of Compaq for the twelve months ended September 30, (d) Certain reclassifications have been made to prior year balances in order to conform to the current year presentation. (e) The cumulative effect of change in accounting principles, net of taxes resulted from HP s adoption of Securities and Exchange Commission Staff Accounting Bulletin No. 101 ( SAB 101 ), Revenue Recognition in Financial Statements in the fourth quarter of fiscal 2001, retroactive to November 1, 2000 and Compaq s adoption of Emerging Issues Task Force Issue 01-9 (EITF 01-9) Accounting for Consideration Given by a Vendor to a Customer of a Reseller of a Vendor s Products in Compaq s fourth quarter of fiscal 2001, retroactive to January 1, (f) The basic and diluted earnings (loss) per share for the twelve months ended October 31, 2002 were based on the weighted average number of HP shares outstanding for the twelve months ended October 31, 2002 and the weighted average number of Compaq shares outstanding for the six months ended March 31, 2002 multiplied by the exchange ratio. The basic and diluted earnings per share for the twelve months ended October 31, 2001 were based on the weighted average number of HP shares outstanding for the twelve months ended October 31, 2001 and the weighted average number of Compaq shares outstanding for the twelve months ended September 30, 2001 multiplied by the exchange ratio. (g) The diluted loss per share for the twelve months ended October 31, 2002 and 2001 were calculated based only on the weighted average number of shares outstanding during each of the periods as the inclusion of common stock equivalents, such as stock issuable pursuant to the exercise of stock options and the conversion of debt, would have been antidilutive.

8 Page 8 PRO FORMA COMBINED COMPANY CONSOLIDATED CONDENSED STATEMENT OF EARNINGS Excluding adjustments itemized below (Unaudited) (In millions except per share amounts) Three months ended Percent October 31, increase/ 2002 (a) 2001 (b) (decrease) Net revenue $ 18,048 $ 18,168 (1) Costs and expenses: Cost of sales 13,250 13,930 Research and development Selling, general and administrative 2,950 2,987 Total costs and expenses 17,167 17,867 (4) Earnings from operations Interest and other, net 68 (14) Earnings before extraordinary item and taxes Provision for taxes Net earnings before extraordinary item $ 721 $ Net earnings per share before extraordinary item: (c) Basic $ 0.24 $ 0.08 Diluted $ 0.24 $ 0.08 Weighted-average shares used to compute net earnings per share: (c) Basic 3,047 3,009 Diluted 3,056 3,040 The pro forma amounts above have been adjusted to exclude the following items: Cost of Sales: Acquisition-related inventory write-down 10 - Other costs and expenses: Amortization of goodwill and purchased intangible assets Restructuring charges In-process research and development charges - 16 Acquisition-related charges: Employee retention charges 90 - Other acquisition-related charges 55 8 Total acquisition-related charges Total adjustments to other costs and expenses Net investment losses Gain on divestiture - (78) Income tax effect (163) (258) Total pro forma adjustments $ 331 $ 756

9 Page 9 (a) The pro forma combined company results for the three months ended October 31, 2002 include the results of Compaq for the entire quarter. (b) The pro forma combined company results for the three months ended October 31, 2001 include the results of Compaq as if the merger had taken place as of the beginning of the period presented. Due to different fiscal period ends for HP and Compaq, the pro forma combined results for the three months ended October 31, 2001 include the historical results of HP for the three months ended October 31, 2001, and the historical results of Compaq for the three months ended September 30, (c) The pro forma basic and diluted earnings per share for the combined company for the three months ended October 31, 2001 are based on the weighted average number of HP shares outstanding for the three months ended October 31, 2001 and the weighted average number of Compaq shares outstanding for the three months ended September 30, 2001 multiplied by the exchange ratio.

10 Page 10 PRO FORMA COMBINED COMPANY CONSOLIDATED CONDENSED STATEMENT OF EARNINGS Excluding adjustments itemized below (Unaudited) (In millions except per share amounts) Twelve months ended Percent October 31, increase/ 2002 (a) 2001 (b) (decrease) Net revenue $ 72,346 $ 81,105 (11) Costs and expenses: Cost of sales 53,863 61,358 Research and development 3,890 4,115 Selling, general and administrative 11,455 12,628 Total costs and expenses 69,208 78,101 (11) Earnings from operations 3,138 3,004 4 Interest and other, net Earnings before extraordinary item, cumulative effect of change in accounting principle and taxes 3,158 3,298 Provision for taxes Net earnings before extraordinary item and cumulative effect of change in accounting principle $ 2,409 $ 2,485 (3) Net earnings per share before extraordinary item and cumulative effect of change in accounting principle: (c) Basic $ 0.79 $ 0.83 Diluted $ 0.79 $ 0.82 Weighted-average shares used to compute net earnings per share: (c) Basic 3,031 3,004 Diluted 3,051 3,057 The pro forma amounts above have been adjusted to exclude the following items: Cost of sales: Acquisition-related inventory write-down $ 147 $ - Litigation settlement - 17 Total adjustments to cost of sales Other costs and expenses: Amortization of goodwill and purchased intangible assets Restructuring charges 1,780 1,040 In-process research and development charges Acquisition-related charges: Employee retention charges Other acquisition-related charges Total acquisition-related charges Litigation settlement - 81 Total adjustments to other costs and expenses 4,009 1,887 Net investment losses 100 2,603 Litigation settlement (14) 400 Loss on divestiture - 53 Income tax effect (885) (1,430) Total pro forma adjustments $ 3,357 $ 3,530

11 Page 11 (a) The pro forma combined company results for the twelve months ended October 31, 2002 include the results of Compaq as if the merger had taken place as of the beginning of the period presented. Due to different fiscal period ends for HP and Compaq, the pro forma combined company results for the twelve months ended October 31, 2002 include the results of HP (standalone) for the twelve months ended October 31, 2002 and the historical quarterly results of Compaq for the six months ended March 31, 2002 and for the period from May 3, 2002 (the acquisition date) to October 31, (b) The pro forma combined company results for the twelve months ended October 31, 2001 include the results of Compaq as if the merger had taken place as of the beginning of the period presented. Due to different fiscal period ends for HP and Compaq, the pro forma combined company results for the twelve months ended October 31, 2001 include the historical results of HP for the twelve months ended October 31, 2001 and the historical quarterly results of Compaq for the twelve months ended September 30, (c) The pro forma basic and diluted earnings per share for the twelve months ended October 31, 2002 are based on the weighted average number of HP shares outstanding for the twelve months ended October 31, 2002 and the weighted average number of Compaq shares outstanding for the six months ended March 31, 2002 multiplied by the exchange ratio. The basic and diluted earnings per share for the twelve months ended October 31, 2001 are based on the weighted average number of HP shares outstanding for the twelve months ended October 31, 2001 and the weighted average number of Compaq shares outstanding for the twelve months ended September 30, 2001 multiplied by the exchange ratio.

12 Page 12 CONSOLIDATED CONDENSED BALANCE SHEET (In millions) October 31, October 31, (a) (unaudited) ASSETS Current assets: Cash and cash equivalents $ 11,192 $ 4,197 Short-term investments Accounts receivable, net 8,456 4,488 Financing receivables, net 3,453 2,183 Inventory 5,797 5,204 Other current assets 6,940 5,094 Total current assets 36,075 21,305 Property, plant and equipment, net 6,924 4,397 Long-term investments and other assets 7,760 6,126 Goodwill and other purchased intangible Assets, net 19, Total assets $ 70,710 $ 32,584 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Notes payable and short-term borrowings $ 1,793 $ 1,722 Accounts payable 7,012 3,791 Employee compensation and benefits 2,012 1,477 Taxes on earnings 1,529 1,818 Deferred revenues 3,260 1,867 Accrued restructuring 1, Other accrued liabilities 7,395 3,207 Total current liabilities 24,310 13,964 Long-term debt 6,035 3,729 Other liabilities 4, Stockholders' equity 36,262 13,953 Total liabilities and stockholders' equity $ 70,710 $ 32,584 (a) Certain reclassifications have been made to prior year balances in order to conform to the current year presentation.

13 Page 13 CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS (In millions) Three months ended Twelve months ended October 31, October 31, (a) Cash flows from operating activities: Net (loss) earnings 390 (903) Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 709 2,119 Deferred taxes on earnings 389 (351) Restructuring charges 150 1,780 Acquisition related charges, including in-process research and development 145 1,494 Net investment losses Changes in assets and liabilities Accounts and financing receivables (79) 1,198 Inventory (32) 1,124 Other assets and liabilities (242) (1,157) Net cash provided by operating activities 1,468 5,410 Cash flows from investing activities: Investment in property plant and equipment, net (366) (1,321) Change in investments, net (1) 909 Cash acquired through business acquisitions net of acquisition costs 3,557 Net cash (used in) provided by investing activities (367) 3,145 Cash flows from financing activities: (Decrease) in notes payable and short-term borrowings, net (338) (2,402) Change in long-term debt, net (318) 2,057 Repurchase of zero-coupon subordinated convertible notes (127) Issuance of common stock under employee stock plans Repurchase of common stock (125) (671) Dividends (244) (800) Net cash used in financing activities (1,001) (1,560) Increase in cash and cash equivalents 100 6,995 Cash and cash equivalents at beginning of period 11,092 4,197 Cash and cash equivalents at end of period $ 11,192 $ 11,192 (a) Results of operations for the twelve months ended October 31, 2002 include the results of Compaq from May 3, 2002 (the acquisition date).

Financial Information Included in the Earnings Release. Consolidated Condensed Statement of Earnings

Financial Information Included in the Earnings Release. Consolidated Condensed Statement of Earnings quarterly overview November 19, 2003 The information contained in the pages below speaks as of the date issued. Investors should not assume that statements made in these documents remain operative at a