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
	April 30,			January 31,			April 30,
	2008			2008			2007
Net revenue	$	28,262		$	28,467		$	25,534
Costs and expenses(a):
Cost of sales		21,261			21,499			19,283
Research and development		908			898			903
Selling, general and administrative		3,275			3,241			3,044
Amortization of purchased intangible assets		211			206			212
In-process research and development charges		13			--			19
Restructuring		4			10			453
Pension curtailments and pension settlements, net		--			--			(508	)
Total costs and expenses		25,672			25,854			23,406
Earnings from operations		2,590			2,613			2,128
Interest and other, net		3			72			100
Earnings before taxes		2,593			2,685			2,228
Provision for taxes(b)		536			552			453
Net earnings	$	2,057		$	2,133		$	1,775
Net earnings per share:
Basic	$	0.83		$	0.83		$	0.67
Diluted	$	0.80		$	0.80		$	0.65
Cash dividends declared per share	$	--		$	0.16		$	--
Weighted-average shares used to compute net earnings per share:
Basic		2,473			2,560			2,638
Diluted		2,557			2,655			2,731
(a)  Stock-based compensation expense included under SFAS 123(R) was as follows:
Cost of sales	$	36		$	36		$	42
Research and development		19			20			18
Selling, general and administrative		97			101			94
Total costs and expenses	$	152		$	157		$	154
(b)  Tax benefit from stock-based compensation	$	(45	)	$	(47	)	$	(44	)

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

	Six months ended
	April 30,			April 30,
	2008			2007
Net revenue	$	56,729		$	50,616
Costs and expenses(a):
Cost of sales		42,760			38,419
Research and development		1,806			1,780
Selling, general and administrative		6,516			5,952
Amortization of purchased intangible assets		417			413
In-process research and development charges		13			186
Restructuring		14			412
Pension curtailments and pension settlements, net		--			(517	)
Total costs and expenses		51,526			46,645
Earnings from operations		5,203			3,971
Interest and other, net		75			221
Earnings before taxes		5,278			4,192
Provision for taxes(b)		1,088			870
Net earnings	$	4,190		$	3,322
Net earnings per share:
Basic	$	1.67		$	1.24
Diluted	$	1.61		$	1.20
Cash dividends declared per share	$	0.16		$	0.16
Weighted-average shares used to compute net earnings per share:
Basic		2,516			2,672
Diluted		2,603			2,763
(a)  Stock-based compensation expense included under SFAS 123(R) was as follows:
Cost of sales	$	72		$	87
Research and development		39			37
Selling, general and administrative		198			193
Total costs and expenses	$	309		$	317
(b)  Tax benefit from stock-based compensation	$	(92	)	$	(92	)

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

	April 30,		October 31,
	2008		2007
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	11,591	$	11,293
Short-term investments		56		152
Accounts receivable		13,558		13,420
Financing receivables		2,589		2,507
Inventory		7,678		8,033
Other current assets		11,577		11,997
Total current assets		47,049		47,402
Property, plant and equipment		7,906		7,798
Long-term financing receivables and other assets		10,318		7,647
Goodwill and purchased intangible assets		26,531		25,852
Total assets	$	91,804	$	88,699
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable and short-term borrowings	$	711	$	3,186
Accounts payable		12,425		11,787
Employee compensation and benefits		3,103		3,465
Taxes on earnings		798		1,891
Deferred revenue		5,446		5,025
Other accrued liabilities		14,663		13,906
Total current liabilities		37,146		39,260
Long-term debt		7,688		4,997
Other liabilities		8,817		5,916
Stockholders' equity		38,153		38,526
Total liabilities and stockholders' equity	$	91,804	$	88,699

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

	Three months ended
	April 30,			January 31,			April 30,
	2008			2008			2007(a)
Net revenue:
Enterprise Storage and Servers	$	4,780		$	4,820		$	4,594
HP Services		4,627			4,378			4,125
HP Software		727			666			568
Technology Solutions Group		10,134			9,864			9,287
Personal Systems Group		10,071			10,791			8,663
Imaging and Printing Group		7,591			7,312			7,161
HP Financial Services		685			642			550
Corporate Investments		230			218			175
Total Segments		28,711			28,827			25,836
Eliminations of intersegment net revenue and other		(449	)		(360	)		(302	)
Total HP Consolidated	$	28,262		$	28,467		$	25,534
Earnings (Loss) from operations:
Enterprise Storage and Servers	$	655		$	673		$	452
HP Services		508			489			449
HP Software		93			51			7
Technology Solutions Group		1,256			1,213			908
Personal Systems Group		544			628			417
Imaging and Printing Group		1,230			1,150			1,167
HP Financial Services		47			43			36
Corporate Investments		6			8			(18	)
Total Segments		3,083			3,042			2,510
Corporate and unallocated costs and eliminations		(134	)		(89	)		(75	)
Unallocated costs related to stock-based
compensation expense		(131	)		(124	)		(131	)
Amortization of purchased intangible assets		(211	)		(206	)		(212	)
In-process research and development charges		(13	)		--			(19	)
Restructuring		(4	)		(10	)		(453	)
Pension curtailments and pension settlements, net		--			--			508
Interest and other, net		3			72			100
Total HP Consolidated Earnings Before Taxes	$	2,593		$	2,685		$	2,228

(a) Certain fiscal 2008 organizational reclassifications have been reflected retroactively to provide improved visibility and comparability. For each of the quarters in fiscal year 2007, the reclassifications resulted in the transfer of revenue and operating profit among the Enterprise Storage and Servers, HP Services and HP Software segments within the Technology Solutions Group. There was no impact on the previously reported financial results for the other segments.

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

	Six months ended April 30,
	2008			2007(a)
Net revenue:
Enterprise Storage and Servers	$	9,600		$	9,015
HP Services		9,005			8,057
HP Software		1,393			1,166
Technology Solutions Group		19,998			18,238
Personal Systems Group		20,862			17,382
Imaging and Printing Group		14,903			14,160
HP Financial Services		1,327			1,097
Corporate Investments		448			332
Total Segments		57,538			51,209
Eliminations of intersegment net revenue and other		(809	)		(593	)
Total HP Consolidated	$	56,729		$	50,616
Earnings (Loss) from operations:
Enterprise Storage and Servers	$	1,328		$	905
HP Services		997			855
HP Software		144			25
Technology Solutions Group		2,469			1,785
Personal Systems Group		1,172			831
Imaging and Printing Group		2,380			2,240
HP Financial Services		90			68
Corporate Investments		14			(47	)
Total Segments		6,125			4,877
Corporate and unallocated costs and eliminations		(223	)		(141	)
Unallocated costs related to stock-based compensation expense		(255	)		(271	)
Amortization of purchased intangible assets		(417	)		(413	)
In-process research and development charges		(13	)		(186	)
Restructuring		(14	)		(412	)
Pension curtailments and pension settlements, net		--			517
Interest and other, net		75			221
Total HP Consolidated Earnings Before Taxes	$	5,278		$	4,192

(a) Certain fiscal 2008 organizational reclassifications have been reflected retroactively to provide improved visibility and comparability. For each of the quarters in fiscal year 2007, the reclassifications resulted in the transfer of revenue and operating profit among the Enterprise Storage and Servers, HP Services and HP Software segments within the Technology Solutions Group. There was no impact on the previously reported financial results for the other segments.