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

	Three months ended
	January 31, 2007			October 31, 2006			January 31, 2006
Net revenue	$	25,082		$	24,555		$	22,659
Costs and expenses(a):
Cost of sales		19,136			18,593			17,392
Research and development		877			870			871
Selling, general and administrative		2,908			2,886			2,692
Amortization of purchased intangible assets		201			153			147
In-process research and development charges		167			--			50
Restructuring		(41	)		152			15
Pension curtailment		(9	)		--			--
Total costs and expenses		23,239			22,654			21,167
Earnings from operations		1,843			1,901			1,492
Interest and other, net		111			190			38
Gains (losses) on investments		10			14			(2	)
Earnings before taxes		1,964			2,105			1,528
Provision for taxes(b)		417			408			301
Net earnings	$	1,547		$	1,697		$	1,227
Net earnings per share:
Basic	$	0.57		$	0.62		$	0.43
Diluted	$	0.55		$	0.60		$	0.42
Cash dividends declared per share	$	0.16		$	--		$	0.16
Weighted-average shares used to compute net earnings per share:
Basic		2,705			2,730			2,822
Diluted		2,801			2,816			2,893
(a) Stock-based compensation expense included under SFAS 123(R) was as follows:
Cost of sales	$	45		$	37		$	39
Research and development		19			20			18
Selling, general and administrative		99			84			87
Total costs and expenses	$	163		$	141		$	144
(b) Tax benefit from stock-based compensation	$	(44	)	$	(40	)	$	(43	)

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

	January 31, 2007		October 31, 2006
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	10,057	$	16,400
Short-term investments		306		22
Accounts receivable		10,403		10,873
Financing receivable		2,511		2,440
Inventory		8,380		7,750
Other current assets		10,862		10,779
Total current assets		42,519		48,264
Property, plant and equipment		7,045		6,863
Long-term financing receivables and other assets		7,392		6,649
Goodwill and purchased intangible assets		24,358		20,205
Total assets	$	81,314	$	81,981
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Notes payable and short-term borrowings	$	3,337	$	2,705
Accounts payable		11,360		12,102
Employee compensation and benefits		2,120		3,148
Taxes on earnings		1,673		1,905
Deferred revenue		4,750		4,309
Accrued restructuring		324		547
Other accrued liabilities		11,480		11,134
Total current liabilities		35,044		35,850
Long-term debt		2,438		2,490
Other liabilities		5,789		5,497
Stockholders’ equity		38,043		38,144
Total liabilities and stockholders’ equity	$	81,314	$	81,981

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

	Three months ended
	January 31, 2007			October 31, 2006(a)			January 31, (2006)(a)
Net revenue:
Enterprise Storage and Servers	$	4,453		$	4,670		$	4,240
HP Services		3,948			4,080			3,757
HP Software		550			349			304
Technology Solutions Group		8,951			9,099			8,301
Personal Systems Group		8,719			7,823			7,449
Imaging and Printing Group		6,999			7,283			6,545
HP Financial Services		547			545			496
Corporate Investments		157			160			129
Total Segments		25,373			24,910			22,920
Eliminations of intersegment net revenue and other		(291	)		(355	)		(261	)
Total HP Consolidated	$	25,082		$	24,555		$	22,659
Earnings from operations:
Enterprise Storage and Servers	$	416		$	502		$	326
HP Services		414			505			293
HP Software		47			60			9
Technology Solutions Group		877			1,067			628
Personal Systems Group		414			336			293
Imaging and Printing Group		1,073			1,080			973
HP Financial Services		32			35			38
Corporate Investments		(29	)		(36	)		(33	)
Total Segments		2,367			2,482			1,899
Corporate and unallocated costs and eliminations		(66	)		(156	)		(72	)
Unallocated costs related to stock-based compensation expense		(140	)		(120	)		(123	)
Amortization of purchased intangible assets		(201	)		(153	)		(147	)
In-process research and development charges		(167	)		--			(50	)
Restructuring		41			(152	)		(15	)
Pension curtailment		9			--			--
Interest and other, net		111			190			38
Gains (losses) on investments		10			14			(2	)
Total HP Consolidated Earnings Before Taxes	$	1,964		$	2,105		$	1,528

(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.