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

	Three months ended
	January 31, 2006			October 31, 2005			January 31, 2005
Net revenue	$	22,659		$	22,913		$	21,454
Costs and expenses (a):
Cost of sales		17,392			17,532			16,537
Research and development		871			859			878
Selling, general and administrative		2,692			2,786			2,704
Pension curtailment gain		--			(199	)		--
Restructuring charges		15			1,565			3
Amortization of purchased intangible assets		147			136			167
In-process research and development charges		50			2			--
Total costs and expenses		21,167			22,681			20,289
Earnings from operations		1,492			232			1,165
Interest and other, net		38			132			25
(Losses) gains on investments		(2	)		14			(24	)
Dispute settlement		--			3			(116	)
Earnings before taxes		1,528			381			1,050
Provision for (benefit from) taxes (b)		301			(35	)		107
Net earnings	$	1,227		$	416		$	943
Net earnings per share:
Basic	$	0.43		$	0.15		$	0.32
Diluted	$	0.42		$	0.14		$	0.32
Cash dividends declared per share	$	0.08		$	--		$	0.16
Weighted-average shares used to compute net earnings per share:
Basic		2,822			2,850			2,908
Diluted		2,893			2,908			2,936
(a) Stock-based compensation expense included under SFAS 123(R) were as follows:
Cost of sales	$	39		$	--		$	--
Research and development		18			--			--
Selling, general and administrative		87			--			--
Total costs and expenses	$	144		$	--		$	--
(b) Tax benefit from stock-based compensation	$	(43	)	$	--		$	--

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

	January 31, 2006		October 31, 2005
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	11,934	$	13,911
Short-term investments		12		18
Accounts receivable, net		8,679		9,903
Financing receivables, net		2,542		2,551
Inventory		6,731		6,877
Other current assets		9,280		10,074
Total current assets		39,178		43,334
Property, plant and equipment, net		6,346		6,451
Long-term financing receivables and other assets		8,316		7,502
Goodwill and purchased intangibles, net		20,573		20,030
Total assets	$	74,413	$	77,317
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable and short-term borrowings	$	2,632	$	1,831
Accounts payable		8,932		10,223
Employee compensation and benefits		1,923		2,343
Taxes on earnings		2,273		2,367
Deferred revenue		3,824		3,815
Accrued restructuring		989		1,119
Other accrued liabilities		10,104		9,762
Total current liabilities		30,677		31,460
Long-term debt		2,416		3,392
Other liabilities		5,514		5,289
Stockholders' equity		35,806		37,176
Total liabilities and stockholders' equity	$	74,413	$	77,317

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

	Three months ended
	January 31, 2006			October 31, 2005 (a)			January 31, 2005 (a)
Net revenue:
Enterprise Storage and Servers	$	4,240		$	4,476		$	4,051
HP Services		3,757			3,900			3,815
Software		304			306			236
Technology Solutions Group		8,301			8,682			8,102
Personal Systems Group		7,449			7,113			6,873
Imaging and Printing Group		6,545			6,785			6,067
HP Financial Services		496			514			555
Corporate Investments		129			142			115
Total Segments		22,920			23,236			21,712
Eliminations of intersegment net revenue and other		(261	)		(323	)		(258	)
Total HP Consolidated	$	22,659		$	22,913		$	21,454
Earnings from operations:
Enterprise Storage and Servers	$	326		$	404		$	69
HP Services		293			322			281
Software		9			28			(38	)
Technology Solutions Group		628			754			312
Personal Systems Group		293			200			147
Imaging and Printing Group		973			896			932
HP Financial Services		38			52			45
Corporate Investments		(33	)		(35	)		(51	)
Total Segments		1,899			1,867			1,385
Corporate and unallocated costs and eliminations,
excluding stock-based compensation expense		(72	)		(131	)		(50	)
Unallocated costs related to stock-based compensation expense		(123	)		--			--
Pension curtailment gain		--			199			--
Restructuring charges		(15	)		(1,565	)		(3	)
In-process research and development charges		(50	)		(2	)		--
Amortization of purchased intangible assets		(147	)		(136	)		(167	)
Interest and other, net		38			132			25
(Losses) gains on investments		(2	)		14			(24	)
Dispute settlement		--			3			(116	)
Total HP Consolidated Earnings Before Taxes	$	1,528		$	381		$	1,050

(a) Reflects certain fiscal 2006 organizational realignments retroactively to provide improved visibility and comparability. For each of the quarters in fiscal year 2005, the realignments resulted primarily in revenue and operating profit movement of $5 million or less between ESS and SW segments within TSG. There was no impact to the remaining segments.