-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Rgmk8ZmlFDcYGiZFwQjqi5AozfiZRqrqtU+bNopXrXxpe57qWYPauM4M3XwODP4X s6MDjF+dL7F3bXAbtkkMlw== 0000047217-05-000136.txt : 20050816 0000047217-05-000136.hdr.sgml : 20050816 20050816161240 ACCESSION NUMBER: 0000047217-05-000136 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20050816 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050816 DATE AS OF CHANGE: 20050816 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HEWLETT PACKARD CO CENTRAL INDEX KEY: 0000047217 STANDARD INDUSTRIAL CLASSIFICATION: COMPUTER & OFFICE EQUIPMENT [3570] IRS NUMBER: 941081436 STATE OF INCORPORATION: DE FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-04423 FILM NUMBER: 051030925 BUSINESS ADDRESS: STREET 1: 3000 HANOVER ST STREET 2: MS 1050 CITY: PALO ALTO STATE: CA ZIP: 94304 BUSINESS PHONE: 6508571501 MAIL ADDRESS: STREET 1: 3000 HANOVER ST STREET 2: MS 1050 CITY: PALO ALTO STATE: CA ZIP: 94304 8-K 1 form8-k_q305.htm 8-K


SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-1004


FORM 8-K


CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934


August 16, 2005
Date of Report (Date of Earliest Event Reported)


HEWLETT-PACKARD COMPANY
(Exact name of registrant as specified in its charter)
     
     
DELAWARE 1-4423 94-1081436
(State or other jurisdiction
of incorporation)		 (Commission File Number)
 		 (I.R.S. Employer
Identification No.)
     
     
3000 HANOVER STREET, PALO ALTO, CA 94304
(Address of principal executive offices) (Zip code)
     
     
(650) 857-1501
(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

TABLE OF CONTENTS

Item 2.02      Results of Operations and Financial Condition

Item 9.01      Financial Statements and Exhibits

SIGNATURE

EXHIBIT INDEX

Exhibit 99.1     Press Release and Furnished Financial Tables

Exhibit 99.2     Filed Financial Tables

Item 2.02 Results of Operations and Financial Condition
   
  On August 16, 2005, Hewlett-Packard Company ("HP") issued a press release relating to its fiscal quarter ended July 31, 2005, entitled “HP Reports Third Quarter 2005 Results.” The text of this press release, with the non-GAAP consolidated condensed statements of earnings, the consolidated condensed statements of cash flows and certain additional financial information, is furnished herewith as Exhibit 99.1. The information in Exhibit 99.1 attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and shall not be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended (the "Securities Act").

In connection with its press release announcing its earnings for its fiscal quarter ended July 31, 2005, HP also provided the GAAP consolidated condensed quarterly financial statements for the fiscal quarter  ended July 31, 2005 filed herewith as Exhibit 99.2. Exhibit 99.2 is filed for purposes of Section 18 of the Exchange Act, and therefore may be incorporated by reference into filings under the Securities Act.
   
Item 9.01 Financial Statements and Exhibits
   
Exhibit 99.1 Text of HP’s press release relating to its fiscal quarter  ended July 31, 2005, entitled “HP Reports Third Quarter 2005 Results,” with the non-GAAP consolidated condensed statements of earnings, the consolidated condensed statements of cash flows and certain additional financial information (furnished herewith).
   
Exhibit 99.2 GAAP consolidated condensed quarterly financial statements for the fiscal quarter ended July 31, 2005 (filed herewith).


SIGNATURE

        Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


  HEWLETT-PACKARD COMPANY
     
     
     
DATE: August 16, 2005 By:   /s/ Charles N. Charnas
  Name: Charles N. Charnas
  Title: Vice President, Deputy General Counsel
    and Assistant Secretary
 

EXHIBIT INDEX

Exhibit
Number		 Description
   
99.1 Text of HP’s press release relating to its fiscal quarter ended July 31, 2005, entitled “HP Reports Third Quarter 2005 Results,” with the non-GAAP consolidated condensed statements of earnings, the consolidated condensed statements of cash flows and certain additional financial information (furnished herewith).
   
99.2 GAAP consolidated condensed quarterly financial statements for the fiscal quarter ended July 31, 2005 (filed herewith).
   
     
     
 GRAPHIC 2 ballot.jpg GRAPHIC begin 644 ballot.jpg M_]C_X``02D9)1@`!`0$!+`$L``#_VP!#``@&!@<&!0@'!P<)"0@*#!0-#`L+ M#!D2$P\4'1H?'AT:'!P@)"XG("(L(QP<*#7J#A(6&AXB)BI*3E)66EYB9FJ*CI*6FIZBIJK*SM+6VM[BYNL+#Q,7& MQ\C)RM+3U-76U]C9VN'BX^3EYN?HZ>KQ\O/T]?;W^/GZ_\0`'P$``P$!`0$! M`0$!`0````````$"`P0%!@<("0H+_\0`M1$``@$"!`0#!`<%!`0``0)W``$" M`Q$$!2$Q!A)!40=A<1,B,H$(%$*1H;'!"2,S4O`58G+1"A8D-.$E\1<8&1HF M)R@I*C4V-S@Y.D-$149'2$E*4U155E=865IC9&5F9VAI:G-T=79W>'EZ@H.$ MA8:'B(F*DI.4E9:7F)F:HJ.DI::GJ*FJLK.TM;:WN+FZPL/$Q<;'R,G*TM/4 MU=;7V-G:XN/DY>;GZ.GJ\O/T]?;W^/GZ_]H`#`,!``(1`Q$`/P#U."#5-9UW M7U'B/4K&"SO4MX8+6*V*A3;0R$DR0LQ):1N_I6KX5OKC4_!^B7]W()+FZL() MI7``W.T:EC@<#DGI3+GPKI=S>W5V6U"&:Z=9)C;:G EX-99.1 3 ex99-1_q305.htm ex99.1
 
News release
prlogo HP Reports Third Quarter 2005 Results
     
Editorial Contacts:

Robert Sherbin, HP
+1 650 857 2381
robert.sherbin@hp.com

Ryan J. Donovan, HP
+1 650 857 8410
ryan.j.donovan@hp.com		 •


•		 Net revenue of $20.8 billion, up 10% year-over-year


Non-GAAP operating profit of $1.2 billion, $0.36 earnings per share

HP Media Hotline
+1 866 266 7272
pr@hp.com
www.hp.com/go/newsroom 		• GAAP operating profit of $913 million, $0.03 earnings per share

Hewlett-Packard Company
3000 Hanover Street
Palo Alto, CA 94304
www.hp.com 		•


•		 Cash flow from operations of $2.2 billion


Repatriation of $14.5 billion in cash from foreign earnings announced
 

PALO ALTO, Calif., Aug. 16, 2005 – HP today reported financial results for its third fiscal quarter ended July 31, 2005. Third quarter net revenue increased 10% year-over-year to $20.8 billion. Non-GAAP (1) operating profit was $1.2 billion, with non-GAAP diluted earnings per share (EPS) of $0.36, up from $0.24 in the prior-year period. Non-GAAP financial information for the third quarter excludes $988 million of adjustments(1) on an after-tax basis, or $0.33 per diluted share, related primarily to a tax adjustment resulting from HP’s decision in the third quarter to repatriate, in the third and fourth quarters, $14.5 billion in cash from foreign earnings. GAAP operating profit for the third quarter was $913 million and GAAP diluted EPS was $0.03 per share, down from $0.19 in the prior-year period.


Q3 FY05 Q3 FY04 Y/Y
Net revenue ($B)

$20.8

$18.9

10%

Non-GAAP operating margin (1)

5.7%

4.5%

  
GAAP operating margin

4.4%

3.5%

  
Non-GAAP net income (1) ($B)

$1.1

$0.7

46%

GAAP net income (1) ($B)

$0.1

$0.6

-88%

Non-GAAP diluted EPS (1)

$0.36

$0.24

50%

GAAP diluted EPS

$0.03

$0.19

-84%


“We executed well in the third quarter with double-digit revenue growth, solid margin improvements in key segments and strong cash flow,” said Mark Hurd, HP chief executive officer and president. “I’m encouraged by what we have achieved to date, and we are focused on driving further performance improvements.”

During the quarter, on a year-over-year basis, revenue in the Americas grew 8% to $9.0 billion, Europe, the Middle East and Africa grew 10% to $8.2 billion, and Asia Pacific grew 15% to $3.5 billion. On a consolidated basis, when adjusted for the effects of currency, third quarter revenue grew 7% year-over-year.

Personal Systems Group
Personal Systems Group (PSG) revenue grew 8% year-over-year to $6.4 billion, with unit shipments up 14%. On a year-over-year basis, desktop revenue decreased 3% and notebook revenue grew 21%. Revenue for commercial clients, which includes workstations, grew 6% over the prior-year period, while revenue in consumer clients grew 8%. PSG reported an operating profit of $163 million, or 2.6% of revenue, up from a profit of $23 million in the prior-year period.

Imaging and Printing Group
Imaging and Printing Group (IPG) posted quarterly revenue of $5.9 billion, up 5% year-over-year. On a year-over-year basis, consumer hardware revenue increased 1%, with unit shipments up 8%. Commercial hardware revenue grew 5%, with unit shipments up 12%. Color laser unit shipments increased 31% year-over-year and multi-function printer (MFP) shipments increased 67%, reflecting continued momentum in key growth initiatives. Supplies revenue grew 6%. Operating profit was $771 million, or 13.0% of revenue, down from a profit of $836 million in the prior-year period.

Enterprise Storage and Servers
Enterprise Storage and Servers (ESS) reported revenue of $4.0 billion, up 20% over the prior-year period. On a year-over-year basis, industry-standard server revenue increased 28%, business-critical systems (BCS) revenue grew 7% and networked storage revenue grew 15%. Within BCS, revenue in HP Integrity servers grew 113% year-over-year and HP-UX revenue grew 8%. ESS reported an operating profit of $150 million, or 3.8% of revenue, up from a loss of $211 million in the prior-year period.

HP Services
HP Services (HPS) revenue grew 10% year-over-year to $3.8 billion. On a year-over-year basis, Managed Services revenue grew 21%, Technology Services grew 7% and Consulting and Integration grew 12%. Operating profit was $256 million, or 6.7% of revenue, down from a profit of $314 million in the prior-year period.

Software
Software reported quarterly revenue of $249 million, an increase of 11% year-over-year, with revenue in HP OpenView and HP OpenCall increasing 13% and 5%, respectively. Software reported an operating loss of $40 million, compared with a loss of $48 million in the prior-year period.

Financial Services
HP Financial Services (HPFS) reported revenue of $489 million, essentially flat year-over-year. Finance volume, a leading indicator of future revenue, grew 4% over the prior-year period, and net portfolio assets grew 1 percent to $6.9 billion. Operating profit was $58 million, or 11.9% of revenue, up from a profit of $42 million in the prior-year period.


Asset management
Inventory ended the quarter at $6.6 billion, up $180 million sequentially and down $101 million year-over-year. Accounts receivable decreased $502 million sequentially and increased $299 million over the prior-year period to $8.8 billion. HP’s dividend payment of $0.08 per share in the third quarter resulted in cash usage of $231 million. In addition, HP utilized $860 million of cash during the third quarter to repurchase stock. HP exited the quarter with $14.6 billion in gross cash, which includes cash and cash equivalents of $14.4 billion and short- and certain long-term investments of $117 million.

Outlook
HP estimates Q4 FY05 revenue will be in the range of $22.4 billion to $22.8 billion, with non-GAAP earnings per share in the range of $0.44 to $0.47. This excludes after-tax costs of approximately $0.03 per share from amortization of purchased intangible assets, and approximately $900 million, or $0.22 per share in workforce reduction costs. It also excludes a one-time credit of approximately $200 million, or $0.05 per share, related to benefit plan changes.

More information on HP’s quarterly earnings, including additional financial analysis and an earnings overview presentation, is available on HP’s Investor Relations website at www.hp.com/hpinfo/investor/.

HP’s Q3 FY05 earnings conference call is accessible via an audio webcast at www.hp.com/hpinfo/investor/financials/quarters/2005/q3webcast.html.

About HP
HP is a technology solutions provider to consumers, businesses and institutions globally. The company’s offerings span IT infrastructure, global services, business and home computing, and imaging and printing. For the four fiscal quarters ended July 31, 2005, HP revenue totaled $85.2 billion. More information about HP (NYSE, Nasdaq: HPQ) is available at www.hp.com.

(1)     All non-GAAP numbers have been adjusted to exclude certain items. A reconciliation of specific adjustments to GAAP results for this quarter and the prior periods is included in the table below titled: “Non-GAAP Consolidated Condensed Statements of Earnings.” A description of HP’s use of non-GAAP information is provided under “Use of Non-GAAP Financial Information.”

Use of Non-GAAP Financial Information
To supplement HP’s consolidated condensed financial statements presented on a GAAP basis, HP uses non-GAAP additional measures of operating results, net earnings and earnings per share adjusted to exclude certain costs, expenses, gains or losses it believes appropriate to enhance an overall understanding of HP’s past financial performance and also its prospects for the future. These adjustments to HP’s GAAP results are made with the intent of providing both management and investors a more complete understanding of the underlying operational results and trends and HP’s marketplace performance. For example, the non-GAAP results are an indication of HP’s baseline performance before gains, losses or other charges that are considered by management to be outside of HP’s core business segment operational results. In addition, these non-GAAP results are among the primary indicators management uses as a basis for planning and forecasting future periods. The presentation of this additional information is not meant to be considered in isolation or as a substitute for net earnings or diluted earnings per share prepared in accordance with generally accepted accounting principles in the United States.

Forward-Looking Statements
This press release contains forward-looking statements that involve risks, uncertainties and assumptions. If the risks or uncertainties ever materialize or the assumptions prove incorrect, the results of HP may differ materially from those expressed or implied by such forward-looking statements and assumptions. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including but not limited to any projections of revenue, margins, expenses, earnings, charges, cash repatriation and related tax adjustments or other financial items; any statements of the plans, strategies, and objectives of management for future operations, including execution of any restructuring plans; any statements concerning the expected development, performance or market share relating to products or services; any statements of expectation or belief; and any statements of assumptions underlying any of the foregoing. Risks, uncertainties and assumptions include macroeconomic and geopolitical trends and events; execution and performance of contracts by suppliers, customers and partners; employee management issues; the challenge of managing asset levels, including inventory; the difficulty of aligning expense levels with revenue changes; assumptions related to pension and other post-retirement costs; and other risks that are described from time to time in HP’s Securities and Exchange Commission reports, including but not limited to the risks described in HP’s Quarterly Report on Form 10-Q for the fiscal quarter ended April 30, 2005 and other reports filed after HP’s Annual Report on Form 10-K for the fiscal year ended Oct. 31, 2004. HP assumes no obligation and does not intend to update these forward-looking statements.


HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
NON-GAAP CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
Excluding adjustments itemized below
(Unaudited)
(In millions except per share amounts)

Three months ended
July 31,
2005
 April 30,
2005
 July 31,
2004(a)
Net revenue     $ 20,759   $ 21,570   $ 18,889  
   
Costs and expenses:  
     Cost of sales    15,942    16,429    14,545  
     Research and development    863    890    877  
     Selling, general and administrative    2,761    2,933    2,621  
          Total costs and expenses    19,566    20,252    18,043  
   
Non-GAAP earnings from operations    1,193    1,318    846  
   
Interest and other, net    119    (87 )  20  
Dispute settlement    7    --    --  
   
Non-GAAP earnings before taxes    1,319    1,231    866  
   
Provision for taxes    258    158    138  
   
Non-GAAP net earnings   $ 1,061   $ 1,073   $ 728  
   
Non-GAAP net earnings per share:  
     Basic   $ 0.37   $ 0.37   $ 0.24  
     Diluted   $ 0.36   $ 0.37   $ 0.24  
   
Weighted-average shares used to compute non-GAAP net earnings  
    per share:  
     Basic    2,873    2,886    3,037  
     Diluted    2,915    2,917    3,065  
   
An itemized reconciliation between net earnings on a GAAP basis and non-GAAP basis is as follows:
   
GAAP net earnings   $ 73   $ 966   $ 586  
   
     Amortization of purchased intangible assets    168    151    146  
     Restructuring charges    112    4    9  
     Acquisition-related charges    --    --    6  
     In-process research and development charge    --    --    28  
   
     Total non-GAAP adjustments to earnings from operations    280    155    189  
   
Losses (gains) on investments    6    (3 )  (1 )
Income tax effect of reconciling items    (86)    (45 )  (46 )
Non-recurring American Jobs Creation Act income tax expense    788    --  --
   
Non-GAAP net earnings   $ 1,061   $ 1,073   $ 728  
(a) Certain reclassifications have been made to prior year amounts in order to conform to the current year presentation.

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
NON-GAAP CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
Excluding adjustments itemized below
(Unaudited)
(In millions except per share amounts)


Nine months ended July 31,
2005
 2004(a)
Net revenue     $ 63,783   $ 58,516  
   
Costs and expenses:  
     Cost of sales    48,908    44,418  
     Research and development    2,631    2,690  
     Selling, general and administrative    8,398    7,864  
          Total costs and expenses    59,937    54,972  
   
Non-GAAP earnings from operations    3,846    3,544  
   
Interest and other, net    57    33  
Dispute settlement    (109 )  (70 )
   
Non-GAAP earnings before taxes    3,794    3,507  
   
Provision for taxes    582    667  
   
Non-GAAP net earnings   $ 3,212   $ 2,840  
   
Non-GAAP net earnings per share:  
     Basic   $ 1.11   $ 0.93  
     Diluted   $ 1.10   $ 0.92  
   
Weighted-average shares used to compute non-GAAP net earnings   
   per share:  
     Basic    2,889    3,043  
     Diluted    2,919    3,077  
   
An itemized reconciliation between net earnings on a GAAP basis and non-GAAP basis is as follows:
   
GAAP net earnings    1,982    2,406  
   
     Amortization of purchased intangible assets    486    438  
     Restructuring charges    119    101  
     Acquisition-related charges    --    30  
     In-process research and development charge    --    37  
   
     Total non-GAAP adjustments to earnings from operations    605    606  
   
Losses (gains) on investments    27    (5 )
Income tax effect of reconciling items    (190 )  (167 )
Non-recurring American Jobs Creation Act income tax expense    788    --
   
Non-GAAP net earnings   $ 3,212   $ 2,840  
(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 CASH FLOWS
(Unaudited)
(In millions)

Three Months
Ended
July 31,
2005
 Nine Months
Ended
July 31,
2005
 
Cash flows from operating activities:            
   Net earnings   $ 73   $ 1,982  
   Adjustments to reconcile net earnings to net cash provided by   
   operating activities:  
     Depreciation and amortization    588    1,799  
     Provision for bad debt and inventory    89    312  
     Losses on investments    6    27  
     Restructuring charges    112    119  
     Deferred taxes on earnings    (301 )  (124 )
     Other, net    (74 )  (134 )
   
Changes in assets and liabilities:  
     Accounts and financing receivables    635    1,795  
     Inventory    (314 )  52  
     Accounts payable    487    (307 )
     Taxes on earnings    1,237    878  
     Restructuring    (34 )  (118 )
     Other assets and liabilities    (294 )  (139 )
        Net cash provided by operating activities    2,210    6,142  
   
Cash flows from investing activities:  
     Investment in property, plant and equipment, net    (332 )  (1,473 )
     Proceeds from sale of property, plant and equipment    124    466  
     Purchases of available-for-sale securities & other investments    (21 )  (1,724 )
     Maturities and sales of available-for-sale securities & other investments    43    1,947  
     Net cash paid for business acquisitions, net of acquisition costs    (7 )  (339 )
        Net cash used in investing activities    (193 )  (1,123 )
   
Cash flows from financing activities:  
     Increase in notes payable and short-term borrowings, net    202    279  
     Issuance of long-term debt    15    18  
     Payment of long-term debt    (1,506 )  (1,520 )
     Issuance of common stock under employee plans    446    798  
     Repurchase of common stock    (860 )  (2,115 )
     Dividends    (231 )  (697 )
        Net cash used in financing activities    (1,934 )  (3,237 )
   
Increase in cash and cash equivalents    83    1,782  
Cash and cash equivalents at beginning of period    14,362    12,663  
Cash and cash equivalents at end of period   $ 14,445   $ 14,445  

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


Three months ended
July 31,
2005
 April 30,
2005
 July 31,
2004(a)
Net revenue:                
   
     Business Critical Systems   $ 885   $ 991   $ 828  
     Industry Standard Servers    2,316    2,368    1,815  
     Storage    798    825    693  
     Other    --    --    (3 )
    Enterprise Storage and Servers    3,999    4,184    3,333  
     Technology Services    2,394    2,464    2,245  
     Managed Services    753    771    620  
     Consulting & Integration    690    749    615  
     Other    --    --    3  
    HP Services    3,837    3,984    3,483  
     OpenView    164    183    145  
     OpenCall & Other    85    94    80  
    Software    249    277    225  
  Technology Solutions Group    8,085    8,445    7,041  
     Commercial Hardware    1,624    1,723    1,546  
     Consumer Hardware    842    1,019    834  
     Supplies    3,389    3,590    3,192  
     Other    58    58    76  
  Imaging and Printing Group    5,913    6,390    5,648  
     Desktops    3,335    3,520    3,428  
     Notebooks    2,418    2,212    2,003  
     Workstations    317    327    248  
     Handhelds    171    189    169  
     Other    145    121    56  
  Personal Systems Group    6,386    6,369    5,904  
  Financing    489    544    488  
  Corporate Investments    143    123    113  
     Total segments    21,016    21,871    19,194  
   
  Eliminations of intersegment net revenue and other    (257 )  (301 )  (305 )
   
    Total HP Consolidated   $ 20,759   $ 21,570   $ 18,889  

(a) HP has reflected certain fiscal 2005 organizational realignments on a backward-looking basis to provide improved visibility and comparability. In any given quarter, no segment’s operating profit changed more than $8 million as a result of these realignments, with typical movements ranging from $3 million to $5 million.

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

Nine months ended July 31,
2005
 2004(a)
Net revenue:            
   
     Business Critical Systems   $ 2,775   $ 2,715  
     Industry Standard Servers    7,012    5,881  
     Storage    2,443    2,402  
     Other    --    (4 )
    Enterprise Storage and Servers    12,230    10,994  
     Technology Services    7,247    6,554  
     Managed Services    2,278    1,753  
     Consulting & Integration    2,111    1,856  
     Other    --    4  
    HP Services    11,636    10,167  
     OpenView    501    413  
     OpenCall & Other    265    240  
    Software    766    653  
  Technology Solutions Group    24,632    21,814  
     Commercial Hardware    4,958    4,684  
     Consumer Hardware    2,975    3,096  
     Supplies    10,251    9,669  
     Other    186    207  
  Imaging and Printing Group    18,370    17,656  
     Desktops    10,657    10,412  
     Notebooks    6,968    6,156  
     Workstations    929    745  
     Handhelds    650    613  
     Other    424    156  
  Personal Systems Group    19,628    18,082  
  Financing    1,588    1,398  
  Corporate Investments    381    330  
     Total segments    64,599    59,280  
   
   Eliminations of intersegment net revenue and other    (816 )  (764 )
   
    Total HP Consolidated   $ 63,783   $ 58,516  

(a) HP has reflected certain fiscal 2005 organizational realignments on a backward-looking basis to provide improved visibility and comparability. In any given quarter, no segment's operating profit changed more than $8 million as a result of these realignments, with typical movements ranging from $3 million to $5 million.

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

Three months ended
July 31,
2005
 April 30,
2005
 July 31,
2004(a)
Net revenue     $ 20,759   $ 21,570   $ 18,889  
   
Costs and expenses:  
     Cost of sales    15,942    16,429    14,545  
     Research and development    863    890    877  
     Selling, general and administrative    2,761    2,933    2,621  
     Amortization of purchased intangible assets    168    151    146  
     Restructuring charges    112    4    9  
     Acquisition-related charges    --    --    6  
     In-process research and development charge    --    --    28  
          Total costs and expenses    19,846    20,407    18,232  
   
Earnings from operations    913    1,163    657  
   
Interest and other, net    119    (87 )  20  
(Losses) gains on investments    (6 )  3    1  
Dispute settlement    7    --    --  
   
Earnings before taxes    1,033    1,079    678  
   
Provision for taxes    960    113    92  
   
Net earnings   $ 73   $ 966   $ 586  
   
Net earnings per share:  
     Basic   $ 0.03   $ 0.33   $ 0.19  
     Diluted   $ 0.03   $ 0.33   $ 0.19  
   
Cash dividends declared per share   $ 0.16   $ --   $ 0.16  
   
Weighted-average shares used to compute net earnings per share:  
     Basic    2,873    2,886    3,037  
     Diluted    2,907    2,917    3,057  

(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)

Nine months ended July 31,
2005
 2004(a)
Net revenue     $ 63,783   $ 58,516  
   
Costs and expenses:  
     Cost of sales    48,908    44,418  
     Research and development    2,631    2,690  
     Selling, general and administrative    8,398    7,864  
     Amortization of purchased intangible assets    486    438  
     Restructuring charges    119    101  
     Acquisition-related charges    --    30  
     In-process research and development charge    --    37  
          Total costs and expenses    60,542    55,578  
   
Earnings from operations    3,241    2,938  
   
Interest and other, net    57    33  
(Losses) gains on investments    (27 )  5  
Dispute settlement    (109 )  (70 )
   
Earnings before taxes    3,162    2,906  
   
Provision for taxes    1,180    500  
   
Net earnings   $ 1,982   $ 2,406  
   
Net earnings per share:  
     Basic   $ 0.69   $ 0.79  
     Diluted   $ 0.68   $ 0.78  
   
   
Cash dividends declared per share   $ 0.32   $ 0.32  
   
Weighted-average shares used to compute net earnings per share:  
     Basic    2,889    3,043  
     Diluted    2,919    3,077  

(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)

July 31,
2005
 October 31,
2004
(unaudited)
ASSETS            
   
Current assets:  
     Cash and cash equivalents   $ 14,445   $ 12,663  
     Short-term investments    99    311  
     Accounts receivable, net    8,764    10,226  
     Financing receivables, net    2,578    2,945  
     Inventory    6,644    7,071  
     Other current assets    9,172    9,685  
   
        Total current assets    41,702    42,901  
   
Property, plant and equipment, net    6,430    6,649  
   
Long-term financing receivables and other assets    7,431    6,657  
   
Goodwill and purchased intangibles, net    19,853    19,931  
   
Total assets   $ 75,416   $ 76,138  
   
LIABILITIES AND STOCKHOLDERS' EQUITY  
   
Current liabilities:  
     Accounts payable   $ 9,070   $ 9,377  
     Notes payable and short-term borrowings    2,375    2,511  
     Employee compensation and benefits    1,977    2,208  
     Taxes on earnings    2,600    1,709  
     Deferred revenue    3,615    2,958  
     Accrued restructuring    197    193  
     Other accrued liabilities    9,341    9,632  
   
        Total current liabilities    29,175    28,588  
   
Long-term debt    3,397    4,623  
Other liabilities    5,458    5,363  
   
Stockholders' equity    37,386    37,564  
   
Total liabilities and stockholders' equity   $ 75,416   $ 76,138  

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

Three months ended
July 31,
2005
 April 30,
2005
 July 31,
2004(a)
Net revenue:                
   
    Enterprise Storage and Servers   $ 3,999   $ 4,184   $ 3,333  
    HP Services    3,837    3,984    3,483  
    Software    249    277    225  
  Technology Solutions Group    8,085    8,445    7,041  
  Imaging and Printing Group    5,913    6,390    5,648  
  Personal Systems Group    6,386    6,369    5,904  
  Financing    489    544    488  
  Corporate Investments    143    123    113  
    Total segments    21,016    21,871    19,194  
   
  Eliminations of intersegment net revenue and other    (257 )  (301 )  (305 )
   
    Total HP Consolidated   $ 20,759   $ 21,570   $ 18,889  
   
Earnings from operations:  
   
    Enterprise Storage and Servers   $ 150   $ 184   $ (211 )
    HP Services    256    292    314  
    Software    (40 )  (6 )  (48 )
  Technology Solutions Group    366    470    55  
  Imaging and Printing Group    771    814    836  
  Personal Systems Group    163    147    23  
  Financing    58    58    42  
  Corporate Investments    (37 )  (51 )  (52 )
     Total segments    1,321    1,438    904  
   
  Corporate and unallocated costs and eliminations    (128 )  (120 )  (58 )
  Restructuring charges    (112 )  (4 )  (9 )
  Amortization of purchased intangible assets    (168 )  (151 )  (146 )
  Acquisition-related charges    --    --    (6 )
  In-process research and development charges    --    --    (28 )
  Interest and other, net    119    (87 )  20  
  (Losses) gains on investments    (6 )  3    1  
  Dispute settlement    7    --    --  
    
    Total HP Consolidated Earnings Before Taxes   $ 1,033   $ 1,079   $ 678  

(a)   HP has reflected certain fiscal 2005 organizational realignments on a backward-looking basis to provide improved visibility and comparability. In any given quarter, no segment’s operating profit changed more than $8 million as a result of these realignments, with typical movements ranging from $3 million to $5 million.

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

Nine months ended July 31,
2005
 2004(a)
Net revenue:            
   
    Enterprise Storage and Servers   $ 12,230   $ 10,994  
    HP Services    11,636    10,167  
    Software    766    653  
  Technology Solutions Group    24,632    21,814  
  Imaging and Printing Group    18,370    17,656  
  Personal Systems Group    19,628    18,082  
  Financing    1,588    1,398  
  Corporate Investments    381    330  
    Total segments    64,599    59,280  
   
  Eliminations of intersegment net revenue and other    (816 )  (764 )
   
    Total HP Consolidated   $ 63,783   $ 58,516  
   
Earnings from operations:  
   
    Enterprise Storage and Servers   $ 405   $ 61  
    HP Services    829    907  
    Software    (86 )  (149 )
  Technology Solutions Group    1,148    819  
  Imaging and Printing Group    2,517    2,755  
  Personal Systems Group    457    128  
  Financing    161    106  
  Corporate Investments    (139 )  (136 )
     Total segments    4,144    3,672  
   
  Corporate and unallocated costs and eliminations    (298 )  (128 )
  Restructuring charges    (119 )  (101 )
  Amortization of purchased intangible assets    (486 )  (438 )
  Acquisition-related charges    --    (30 )
  In-process research and development charges    --    (37 )
  Interest and other, net    57    33  
  (Losses) gains on investments    (27 )  5  
  Dispute settlement    (109 )  (70 )
   
    Total HP Consolidated Earnings Before Taxes   $ 3,162   $ 2,906  

(a) HP has reflected certain fiscal 2005 organizational realignments on a backward-looking basis to provide improved visibility and comparability. In any given quarter, no segment’s operating profit changed more than $8 million as a result of these realignments, with typical movements ranging from $3 million to $5 million.

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