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, 2007			July 31, 2007			October 31, 2006
Net revenue	$	28,293		$	25,377		$	24,555
Costs and expenses(a):
Cost of sales		21,304			19,164			18,593
Research and development		914			917			870
Selling, general and administrative		3,272			3,002			2,886
Amortization of purchased intangible assets		187			183			153
In-process research and development charges		4			--			--
Restructuring		(20	)		(5	)		152
Pension curtailments and pension settlements, net		--			--			--
Total costs and expenses		25,661			23,261			22,654
Earnings from operations		2,632			2,116			1,901
Interest and other, net		81			165			190
(Losses) gains on investments		(14	)		5			14
Earnings before taxes		2,699			2,286			2,105
Provision for taxes(b)		535			508			408
Net earnings	$	2,164		$	1,778		$	1,697
Net earnings per share:
Basic	$	0.84		$	0.68		$	0.62
Diluted	$	0.81		$	0.66		$	0.60
Cash dividends declared per share	$	--		$	0.16		$	--
Weighted-average shares used to compute net earnings per share:
Basic		2,576			2,600			2,730
Diluted		2,678			2,697			2,816
(a) Stock-based compensation expense included under SFAS 123(R) was as follows:
Cost of sales	$	40		$	34		$	37
Research and development		18			19			20
Selling, general and administrative		110			91			84
Total costs and expenses	$	168		$	144		$	141
(b) Tax benefit from stock-based compensation	$	(54	)	$	(36	)	$	(40	)

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

	Twelve months ended October 31,
	2007			2006
	(Unaudited)
Net revenue	$	104,286		$	91,658
Costs and expenses(a):
Cost of sales		78,887			69,427
Research and development		3,611			3,591
Selling, general and administrative		12,226			11,266
Amortization of purchased intangible assets		783			604
In-process research and development charges		190			52
Restructuring		387			158
Pension curtailments and pension settlements, net		(517	)		--
Total costs and expenses		95,567			85,098
Earnings from operations		8,719			6,560
Interest and other, net		444			606
Gains on investments		14			25
Earnings before taxes		9,177			7,191
Provision for taxes(b)		1,913			993
Net earnings	$	7,264		$	6,198
Net earnings per share:
Basic	$	2.76		$	2.23
Diluted	$	2.68		$	2.18
Cash dividends declared per share	$	0.32		$	0.32
Weighted-average shares used to compute net earnings per share:
Basic		2,630			2,782
Diluted		2,716			2,852
(a) Stock-based compensation expense included under SFAS 123(R) was as follows:
Cost of sales	$	161		$	144
Research and development		74			70
Selling, general and administrative		394			322
Total costs and expenses	$	629		$	536
(b) Tax benefit from stock-based compensation	$	(182	)	$	(160	)

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

	October 31, 2007		October 31, 2006
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	11,293	$	16,400
Short-term investments		152		22
Accounts receivable		13,420		10,873
Financing receivables		2,507		2,440
Inventory		8,033		7,750
Other current assets		11,997		10,779
Total current assets		47,402		48,264
Property, plant and equipment		7,798		6,863
Long-term financing receivables and other assets		7,647		6,649
Goodwill and purchased intangible assets		25,852		20,205
Total assets	$	88,699	$	81,981
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable and short-term borrowings	$	3,186	$	2,705
Accounts payable		11,787		12,102
Employee compensation and benefits		3,465		3,148
Taxes on earnings		1,891		1,905
Deferred revenue		5,025		4,309
Accrued restructuring		123		547
Other accrued liabilities		13,783		11,134
Total current liabilities		39,260		35,850
Long-term debt		4,997		2,490
Other liabilities		5,916		5,497
Stockholders' equity		38,526		38,144
Total liabilities and stockholders' equity	$	88,699	$	81,981

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

	Three months ended
	October 31,			July 31,			October 31,
	2007			2007			2006(a)
Net revenue:
Enterprise Storage and Servers	$	5,150		$	4,547		$	4,670
HP Services		4,367			4,186			4,080
HP Software		698			554			349
Technology Solutions Group		10,215			9,287			9,099
Personal Systems Group		10,133			8,894			7,823
Imaging and Printing Group		7,554			6,751			7,283
HP Financial Services		657			582			545
Corporate Investments		210			220			160
Total Segments		28,769			25,734			24,910
Eliminations of intersegment net revenue and other		(476	)		(357	)		(355	)
Total HP Consolidated	$	28,293		$	25,377		$	24,555
Earnings from operations:
Enterprise Storage and Servers	$	693		$	464		$	502
HP Services		526			430			505
HP Software		177			81			60
Technology Solutions Group		1,396			975			1,067
Personal Systems Group		589			519			336
Imaging and Printing Group		1,094			981			1,080
HP Financial Services		48			39			35
Corporate Investments		(5	)		(5	)		(36	)
Total Segments		3,122			2,509			2,482
Corporate and unallocated costs and eliminations		(197	)		(101	)		(156	)
Unallocated costs related to stock-based compensation expense		(122	)		(114	)		(120	)
Amortization of purchased intangible assets		(187	)		(183	)		(153	)
In-process research and development charges		(4	)		--			--
Restructuring		20			5			(152	)
Pension curtailments and pension settlements, net		--			--			--
Interest and other, net		81			165			190
(Losses) gains on investments		(14	)		5			14
Total HP Consolidated Earnings Before Taxes	$	2,699		$	2,286		$	2,105

(a) Certain fiscal 2007 organizational realignments have been reflected retroactively to provide improved visibility and comparability. For each of the quarters in fiscal year 2006, the realignments primarily resulted in revenue movement within business units within the ESS and HPS segments. There was no impact to total segment revenue.

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

	Twelve months ended October 31,
	2007			2006(a)
Net revenue:
Enterprise Storage and Servers	$	18,769		$	17,308
HP Services		16,646			15,617
HP Software		2,325			1,301
Technology Solutions Group		37,740			34,226
Personal Systems Group		36,409			29,166
Imaging and Printing Group		28,465			26,786
HP Financial Services		2,336			2,078
Corporate Investments		762			566
Total Segments		105,712			92,822
Eliminations of intersegment net revenue and other		(1,426	)		(1,164	)
Total HP Consolidated	$	104,286		$	91,658
Earnings from operations:
Enterprise Storage and Servers	$	1,980		$	1,446
HP Services		1,829			1,507
HP Software		347			85
Technology Solutions Group		4,156			3,038
Personal Systems Group		1,939			1,152
Imaging and Printing Group		4,315			3,978
HP Financial Services		155			147
Corporate Investments		(57	)		(151	)
Total Segments		10,508			8,164
Corporate and unallocated costs and eliminations		(439	)		(331	)
Unallocated costs related to stock-based compensation expense		(507	)		(459	)
Amortization of purchased intangible assets		(783	)		(604	)
In-process research and development charges		(190	)		(52	)
Restructuring		(387	)		(158	)
Pension curtailments and pension settlements, net		517			--
Interest and other, net		444			606
(Losses) gains on investments		14			25
Total HP Consolidated Earnings Before Taxes	$	9,177		$	7,191

(a) Certain fiscal 2007 organizational realignments have been reflected retroactively to provide improved visibility and comparability. For fiscal year 2006, the realignments primarily resulted in revenue movement within business units within the ESS and HPS segments. There was no impact to total segment revenue.