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

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(Unaudited)
(In millions except per share amounts)

	Three months ended
	October 31, 2004			July 31, 2004		October 31, 2003(a)
Net revenue	$	21,389		$	18,889	$	19,853
Costs and expenses:
Cost of sales		16,288			14,443		14,804
Research and development		859			862		907
Selling, general and administrative		2,751			2,738		2,707
Amortization of purchased intangible assets		165			146		143
Restructuring charges		13			9		190
Acquisition-related charges		24			6		28
In-process research and development charges		--			28		1
Total costs and expenses		20,100			18,232		18,780
Earnings from operations		1,289			657		1,073
Interest and other, net		2			20		(20	)
(Losses) gains on investments		(1	)		1		12
Earnings before taxes	$	1,290		$	678	$	1,065
Provision for taxes		199			92		203
Net earnings	$	1,091		$	586	$	862
Net earnings per share:
Basic	$	0.37		$	0.19	$	0.28
Diluted	$	0.37		$	0.19	$	0.28
Cash dividends declared per share	$	--		$	0.16	$	--
Weighted-average shares used to compute net
earnings per share:
Basic		2,968			3,037		3,046
Diluted		2,991			3,057		3,075

^(a)     Certain reclassifications have been made to prior year amounts in order to conform to the current year presentation.

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(Unaudited)
(In millions except per share amounts)

	Twelve months ended October 31,
	2004			2003(a)
Net revenue	$	79,905		$	73,061
Costs and expenses:
Cost of sales		60,340			53,858
Research and development		3,506			3,651
Selling, general and administrative		11,024			11,012
Amortization of purchased intangible assets		603			563
Restructuring charges		114			800
Acquisition-related charges		54			280
In-process research and development charges		37			1
Total costs and expenses		75,678			70,165
Earnings from operations		4,227			2,896
Interest and other, net		35			21
Gains (losses) on investments		4			(29	)
Dispute settlement		(70	)		--
Earnings before taxes		4,196			2,888
Provision for taxes		699			349
Net earnings	$	3,497		$	2,539
Net earnings per share:
Basic	$	1.16		$	0.83
Diluted	$	1.15		$	0.83
Cash dividends declared per share	$	0.32		$	0.32
Weighted-average shares used to compute net
earnings per share:
Basic		3,024			3,047
Diluted		3,055			3,063

^(a)     Certain reclassifications have been made to prior year amounts in order to conform to the current year presentation.

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(In millions)

	October 31, 2004		October 31, 2003(a)
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	12,663	$	14,188
Short-term investments		311		403
Accounts receivable, net		10,226		8,921
Financing receivables, net		2,945		3,026
Inventory		7,071		6,065
Other current assets		9,685		8,351
Total current assets		42,901		40,954
Property, plant and equipment, net		6,649		6,482
Long-term financing receivables and other
assets		6,657		8,030
Goodwill and purchased intangibles, net		19,931		19,250
Total assets	$	76,138	$	74,716
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable and short-term borrowings	$	2,511	$	1,080
Accounts payable		9,377		9,285
Employee compensation and benefits		2,208		1,755
Taxes on earnings		1,709		1,599
Deferred revenue		4,348		3,665
Accrued restructuring		193		709
Other accrued liabilities		9,632		8,545
Total current liabilities		29,978		26,638
Long-term debt		4,623		6,494
Other liabilities		3,973		3,838
Stockholders' equity		37,564		37,746
Total liabilities and stockholders' equity	$	76,138	$	74,716

^(a)     Certain reclassifications have been made to prior year balances in order to conform to the current year presentation.

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
SEGMENT INFORMATION
(Unaudited)
(In millions)

Net revenue (which includes intersegment revenue) and earnings from operations for each segment are provided in the tables below, which includes a reconciliation to our consolidated condensed statement of earnings:

	Three months ended
	October 31, 2004			July 31, 2004			October 31, 2003(a)
Net revenue:
Enterprise Storage and Servers	$	4,104		$	3,352		$	3,846
Software		277			223			221
HP Services		3,659			3,466			3,245
Technology Solutions Group		8,040			7,041			7,312
Imaging and Printing Group		6,543			5,648			6,233
Personal Systems Group		6,540			5,904			5,986
Financing		497			488			461
Corporate Investments		119			114			96
Total segments		21,739			19,195			20,088
Eliminations of intersegment
net revenue and other		(350	)		(306	)		(235	)
Total HP Consolidated	$	21,389		$	18,889		$	19,853
Earnings from operations:
Enterprise Storage and Servers	$	107		$	(208	)	$	131
Software		(5	)		(45	)		(22	)
HP Services		367			309			391
Technology Solutions Group		469			56			500
Imaging and Printing Group		1,089			837			1,015
Personal Systems Group		78			25			22
Financing		19			42			26
Corporate Investments		(43	)		(52	)		(33	)
Total segments		1,612			908			1,530
Corporate and unallocated costs,
and eliminations		(121	)		(62	)		(95	)
Restructuring charges		(13	)		(9	)		(190	)
Amortization of purchased intangible assets		(165	)		(146	)		(143	)
Acquisition-related charges		(24	)		(6	)		(28	)
In-process research and development charges		--			(28	)		(1	)
Interest and other, net		2			20			(20	)
(Losses) gains on investments		(1	)		1			12
Total HP Consolidated Earnings Before Taxes	$	1,290		$	678		$	1,065

^(a)     Certain reclassifications have been made to prior year amounts in order to conform to the current year presentation.

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
SEGMENT INFORMATION
(Unaudited)
(In millions)

Net revenue (which includes intersegment revenue) and earnings from operations for each segment are provided in the tables below, which includes a reconciliation to our consolidated condensed statement of earnings:

	Twelve months ended October 31,
	2004			2003(a)
Net revenue:
Enterprise Storage and Servers	$	15,152		$	14,593
Software		922			774
HP Services		13,778			12,357
Technology Solutions Group		29,852			27,724
Imaging and Printing Group		24,199			22,569
Personal Systems Group		24,622			21,210
Financing		1,895			1,921
Corporate Investments		449			344
Total segments		81,017			73,768
Eliminations of inter-segment
net revenue and other		(1,112	)		(707	)
Total HP Consolidated	$	79,905		$	73,061
Earnings from operations:
Enterprise Storage and Servers	$	173		$	142
Software		(145	)		(190	)
HP Services		1,263			1,362
Technology Solutions Group		1,291			1,314
Imaging and Printing Group		3,847			3,596
Personal Systems Group		210			22
Financing		125			79
Corporate Investments		(178	)		(161	)
Total segments		5,295			4,850
Corporate and unallocated costs,
and eliminations		(260	)		(310	)
Restructuring charges		(114	)		(800	)
Amortization of purchased intangible assets		(603	)		(563	)
Acquisition-related charges		(54	)		(280	)
In-process research and development charges		(37	)		(1	)
Interest and other, net		35			21
Gains (losses) on investments		4			(29	)
Litigation settlement		(70	)		--
Total HP Consolidated Earnings Before Taxes	$	4,196		$	2,888

(a)     Certain reclassifications have been made to prior year amounts in order to conform to the current year presentation.