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
	July 31,			April 30,			July 31,
	2008			2008			2007
Net revenue	$	28,032		$	28,262		$	25,377
Costs and expenses(a):
Cost of sales		21,253			21,261			19,164
Research and development		895			908			917
Selling, general and administrative		3,137			3,275			3,002
Amortization of purchased intangible assets		213			211			183
In-process research and development charges		--			13			--
Restructuring		5			4			(5	)
Total costs and expenses		25,503			25,672			23,261
Earnings from operations		2,529			2,590			2,116
Interest and other, net		23			3			170
Earnings before taxes		2,552			2,593			2,286
Provision for taxes(b)		525			536			508
Net earnings	$	2,027		$	2,057		$	1,778
Net earnings per share:
Basic	$	0.82		$	0.83		$	0.68
Diluted	$	0.80		$	0.80		$	0.66
Cash dividends declared per share	$	0.16		$	--		$	0.16
Weighted-average shares used to compute net earnings per share:
Basic		2,459			2,473			2,600
Diluted		2,533			2,557			2,697
(a) Stock-based compensation expense included under SFAS 123(R) was as follows:
Cost of sales	$	34		$	36		$	34
Research and development		16			19			19
Selling, general and administrative		90			97			91
Total costs and expenses	$	140		$	152		$	144
(b) Tax benefit from stock-based compensation	$	(38	)	$	(45	)	$	(36	)

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

	Nine months ended
	July 31,			July 31,
	2008			2007
Net revenue	$	84,761		$	75,993
Costs and expenses(a):
Cost of sales		64,013			57,583
Research and development		2,701			2,697
Selling, general and administrative		9,653			8,954
Amortization of purchased intangible assets		630			596
In-process research and development charges		13			186
Restructuring		19			407
Pension curtailments and pension settlements, net		--			(517	)
Total costs and expenses		77,029			69,906
Earnings from operations		7,732			6,087
Interest and other, net		98			391
Earnings before taxes		7,830			6,478
Provision for taxes(b)		1,613			1,378
Net earnings	$	6,217		$	5,100
Net earnings per share:
Basic	$	2.49		$	1.93
Diluted	$	2.41		$	1.87
Cash dividends declared per share	$	0.32		$	0.32
Weighted-average shares used to compute net earnings per share:
Basic		2,497			2,648
Diluted		2,577			2,734
(a) Stock-based compensation expense included under SFAS 123(R) was as follows:
Cost of sales	$	106		$	121
Research and development		55			56
Selling, general and administrative		288			284
Total costs and expenses	$	449		$	461
(b) Tax benefit from stock-based compensation	$	(130	)	$	(128	)

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

	July 31,		October 31,
	2008		2007
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	14,783	$	11,293
Short-term investments		64		152
Accounts receivable		13,754		13,420
Financing receivables		2,594		2,507
Inventory		8,160		8,033
Other current assets		11,681		11,997
Total current assets		51,036		47,402
Property, plant and equipment		7,971		7,798
Long-term financing receivables and other assets		10,306		7,647
Goodwill and purchased intangible assets		26,581		25,852
Total assets	$	95,894	$	88,699
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable and short-term borrowings	$	3,591	$	3,186
Accounts payable		14,021		11,787
Employee compensation and benefits		3,206		3,465
Taxes on earnings		806		1,891
Deferred revenue		5,664		5,025
Other accrued liabilities		14,612		13,906
Total current liabilities		41,900		39,260
Long-term debt		6,628		4,997
Other liabilities		8,871		5,916
Stockholders' equity		38,495		38,526
Total liabilities and stockholders' equity	$	95,894	$	88,699

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

	Three months ended
	July 31,			April 30,			July 31,
	2008			2008			2007(a)
Net revenue:
Enterprise Storage and Servers	$	4,741		$	4,780		$	4,516
HP Services		4,753			4,627			4,165
HP Software		781			727			606
Technology Solutions Group		10,275			10,134			9,287
Personal Systems Group		10,254			10,071			8,894
Imaging and Printing Group		6,979			7,591			6,751
HP Financial Services		680			685			582
Corporate Investments		271			230			220
Total Segments		28,459			28,711			25,734
Eliminations of intersegment net revenue and other		(427	)		(449	)		(357	)
Total HP Consolidated	$	28,032		$	28,262		$	25,377
Earnings (Loss) from operations:
Enterprise Storage and Servers	$	544		$	655		$	507
HP Services		574			508			417
HP Software		122			93			51
Technology Solutions Group		1,240			1,256			975
Personal Systems Group		587			544			519
Imaging and Printing Group		1,048			1,230			981
HP Financial Services		51			47			39
Corporate Investments		26			6			(5	)
Total Segments		2,952			3,083			2,509
Corporate and unallocated costs and eliminations		(85	)		(134	)		(101	)
Unallocated costs related to stock-based compensation
expense		(120	)		(131	)		(114	)
Amortization of purchased intangible assets		(213	)		(211	)		(183	)
In-process research and development charges		--			(13	)		--
Restructuring		(5	)		(4	)		5
Pension curtailments and pension settlements, net		--			--			--
Interest and other, net		23			3			170
Total HP Consolidated Earnings Before Taxes	$	2,552		$	2,593		$	2,286

(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)

	Nine months ended July 31,
	2008			2007(a)
Net revenue:
Enterprise Storage and Servers	$	14,341		$	13,531
HP Services		13,758			12,222
HP Software		2,174			1,772
Technology Solutions Group		30,273			27,525
Personal Systems Group		31,116			26,276
Imaging and Printing Group		21,882			20,911
HP Financial Services		2,007			1,679
Corporate Investments		719			552
Total Segments		85,997			76,943
Eliminations of intersegment net revenue and other		(1,236	)		(950	)
Total HP Consolidated	$	84,761		$	75,993
Earnings (Loss) from operations:
Enterprise Storage and Servers	$	1,872		$	1,412
HP Services		1,571			1,272
HP Software		266			76
Technology Solutions Group		3,709			2,760
Personal Systems Group		1,759			1,350
Imaging and Printing Group		3,428			3,221
HP Financial Services		141			107
Corporate Investments		40			(52	)
Total Segments		9,077			7,386
Corporate and unallocated costs and eliminations		(308	)		(242	)
Unallocated costs related to stock-based compensation  expense		(375	)		(385	)
Amortization of purchased intangible assets		(630	)		(596	)
In-process research and development charges		(13	)		(186	)
Restructuring		(19	)		(407	)
Pension curtailments and pension settlements, net		--			517
Interest and other, net		98			391
Total HP Consolidated Earnings Before Taxes	$	7,830		$	6,478

(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.