HP Reports Fourth Quarter 2009 Results

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(Unaudited)
(In millions except per share amounts)
	Three months ended
	October 31, 2009^(c)	July 31, 2009^(c)	October 31, 2008

Net revenue	$ 30,777	$ 27,585	$ 33,603

Costs and expenses^(a):
Cost of sales	23,475	21,031	25,853	^(d)
Research and development	704	667	842
Selling, general and administrative	2,966	2,874	3,506	^(d)
Amortization of purchased intangible assets	400	379	337
In-process research and development charges	1	-	32
Restructuring charges	38	362	251
Acquisition-related charges	60	59	41
Total costs and expenses	27,644	25,372	30,862

Earnings from operations	3,133	2,213	2,741

Interest and other, net	(132)	(177)	(98)

Earnings before taxes	3,001	2,036	2,643

Provision for taxes^(b)	589	365	531

Net earnings	$ 2,412	$ 1,671	$ 2,112

Net earnings per share:
Basic	$ 1.02	$ 0.70	$ 0.87
Diluted	$ 0.99	$ 0.69	$ 0.84

Cash dividends declared per share	$ -	$ 0.16	$ -

Weighted-average shares used to compute net earnings per share:
Basic	2,366	2,382	2,440
Diluted	2,433	2,436	2,516

(a) Stock-based compensation expense included under SFAS 123(R) was as follows:
Cost of sales	$ 37	$ 41	$ 46
Research and development	10	12	17
Selling, general and administrative	86	94	94
Acquisition-related charges	1	3	-
Total costs and expenses	$ 134	$ 150	$ 157

(b) Tax benefit from stock-based compensation	$ (41)	$ (51)	$ (37)

(c) In the fourth quarter of fiscal 2009, HP early adopted Accounting Standards Update ("ASU") No. 2009-13, "Multiple-Deliverable Revenue Arrangements" and ASU No. 2009-14, "Certain Revenue Arrangements That Include Software Elements." As a result, fiscal 2009 net revenues and net earnings were higher by $255 million and $55 million, respectively. Fourth quarter fiscal 2009 net revenues and net earnings were higher by $82 million and $19 million, respectively. HP adopted these standards as of the beginning of fiscal 2009; therefore the previously reported quarterly results have been restated to reflect the impact of adoption.
(d) For the prior year reporting period presented, certain pursuit-related costs previously reported as Cost of sales have been realigned retroactively to Selling, general and administrative expenses due to organizational realignments.

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(In millions except per share amounts)
	Twelve months ended
	October 31,
	2009 ^(c)	2008
	(unaudited)

Net revenue	$ 114,552	$ 118,364

Costs and expenses ^(a) :
Cost of sales	87,524	89,699	^(d)
Research and development	2,819	3,543
Selling, general and administrative	11,613	13,326	^(d)
Amortization of purchased intangible assets	1,571	967
In-process research and development charges	7	45
Restructuring charges	640	270
Acquisition-related charges	242	41
Total costs and expenses	104,416	107,891

Earnings from operations	10,136	10,473

Interest and other, net	(721 )	-

Earnings before taxes	9,415	10,473

Provision for taxes ^(b)	1,755	2,144

Net earnings	$ 7,660	$ 8,329

Net earnings per share:
Basic	$ 3.21	$ 3.35
Diluted	$ 3.14	$ 3.25

Cash dividends declared per share	$ 0.32	$ 0.32

Weighted-average shares used to compute net earnings per share:
Basic	2,388	2,483
Diluted	2,437	2,567

(a) Stock-based compensation expense included under SFAS 123(R) was as follows:
Cost of sales	$ 178	$ 152
Research and development	57	72
Selling, general and administrative	374	382
Acquisition-related charges	26	-
Total costs and expenses	$ 635	$ 606

(b) Tax benefit from stock-based compensation	$ (199)	$ (167)

(c) In the fourth quarter of fiscal 2009, HP early adopted Accounting Standards Update ("ASU") No. 2009-13, "Multiple-Deliverable Revenue Arrangements" and ASU No. 2009-14, "Certain Revenue Arrangements That Include Software Elements." As a result, fiscal 2009 net revenues and net earnings were higher by $255 million and $55 million, respectively. Fourth quarter fiscal 2009 net revenues and net earnings were higher by $82 million and $19 million, respectively. HP adopted these standards as of the beginning of fiscal 2009; therefore the previously reported quarterly results have been restated to reflect the impact of adoption.

(d) For the prior year reporting period presented, certain pursuit-related costs previously reported as Cost of sales have been realigned retroactively to Selling, general and administrative expenses due to organizational realignments.

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
ADJUSTMENTS TO GAAP NET EARNINGS, EARNINGS FROM OPERATIONS,
OPERATING MARGIN AND EARNINGS PER SHARE
(Unaudited)
(In millions except per share amounts)


	Three months ended October 31, 2009 ^(a)	Diluted earnings per share	Three months ended July 31, 2009 ^(a)	Diluted earnings per share	Three months ended October 31, 2008	Diluted earnings per share

GAAP net earnings	$ 2,412	$ 0.99	$ 1,671	$ 0.69	$ 2,112	$ 0.84

Non-GAAP adjustments:
Amortization of purchased intangible assets	400	0.16	379	0.16	337	0.13
In-process research and development charges	1	-	-	-	32	0.01
Restructuring charges	38	0.02	362	0.15	251	0.10
Acquisition-related charges	60	0.03	59	0.02	41	0.02
Adjustments for taxes	(147 )	(0.06 )	(232 )	(0.10 )	(179 )	(0.07 )

Non-GAAP net earnings	$ 2,764	$ 1.14	$ 2,239	$ 0.92	$ 2,594	$ 1.03


GAAP earnings from operations	$ 3,133		$ 2,213		$ 2,741

Non-GAAP adjustments:
Amortization of purchased intangible assets	400		379		337
In-process research and development charges	1		-		32
Restructuring charges	38		362		251
Acquisition-related charges	60		59		41

Non-GAAP earnings from operations	$ 3,632		$ 3,013		$ 3,402

GAAP operating margin	10%		8%		8%
Non-GAAP adjustments	2%		3%		2%

Non-GAAP operating margin	12%		11%		10%



(a) In the fourth quarter of fiscal 2009, HP early adopted Accounting Standards Update ("ASU") No. 2009-13, "Multiple-Deliverable Revenue Arrangements" and ASU No. 2009-14, "Certain Revenue Arrangements That Include Software Elements." As a result, fiscal 2009 net revenues and GAAP net earnings were higher by $255 million and $55 million, respectively. Fourth quarter fiscal 2009 net revenues and GAAP net earnings were higher by $82 million and $19 million, respectively. HP adopted these standards as of the beginning of fiscal 2009; therefore the previously reported quarterly results have been restated to reflect the impact of adoption.

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
ADJUSTMENTS TO GAAP NET EARNINGS, EARNINGS FROM OPERATIONS,
OPERATING MARGIN AND EARNINGS PER SHARE
(Unaudited)
(In millions except per share amounts)

	Twelve months ended October 31, 2009 ^(a)	Diluted earnings per share	Twelve months ended October 31, 2008	Diluted earnings per share

GAAP net earnings	$ 7,660	$ 3.14	$ 8,329	$ 3.25

Non-GAAP adjustments:
Amortization of purchased intangible assets	1,571	0.65	967	0.38
In-process research and development charges	7	-	45	0.02
Restructuring charges	640	0.26	270	0.10
Acquisition-related charges	242	0.10	41	0.01
Adjustments for taxes	(727 )	(0.30 )	(350 )	(0.14 )

Non-GAAP net earnings	$ 9,393	$ 3.85	$ 9,302	$ 3.62


GAAP earnings from operations	$ 10,136		$ 10,473

Non-GAAP adjustments:
Amortization of purchased intangible assets	1,571		967
In-process research and development charges	7		45
Restructuring charges	640		270
Acquisition-related charges	242		41

Non-GAAP earnings from operations	$ 12,596		$ 11,796

GAAP operating margin	9%		9%
Non-GAAP adjustments	2%		1%

Non-GAAP operating margin	11%		10%

(a) In the fourth quarter of fiscal 2009, HP early adopted Accounting Standards Update ("ASU") No. 2009-13, "Multiple-Deliverable Revenue Arrangements" and ASU No. 2009-14, "Certain Revenue Arrangements That Include Software Elements." As a result, fiscal 2009 net revenues and GAAP net earnings were higher by $255 million and $55 million, respectively. Fourth quarter fiscal 2009 net revenues and GAAP net earnings were higher by $82 million and $19 million, respectively. HP adopted these standards as of the beginning of fiscal 2009; therefore the previously reported quarterly results have been restated to reflect the impact of adoption.

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


	October 31, 2009	October 31, 2008
	(unaudited)

ASSETS

Current assets:
Cash and cash equivalents	$ 13,279	$ 10,153
Short-term investments	55	93
Accounts receivable	16,537	16,928
Financing receivables	2,675	2,314
Inventory	6,128	7,879
Other current assets	13,865	14,361

Total current assets	52,539	51,728

Property, plant and equipment	11,262	10,838

Long-term financing receivables and other assets	11,289	10,468

Goodwill and purchased intangible assets	39,709	40,297

Total assets	$ 114,799	$ 113,331


LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Notes payable and short-term borrowings	$ 1,850	$ 10,176
Accounts payable	14,809	14,917
Employee compensation and benefits	4,071	4,159
Taxes on earnings	910	869
Deferred revenue	6,182	6,287
Other accrued liabilities	15,181	16,531

Total current liabilities	43,003	52,939

Long-term debt	13,980	7,676
Other liabilities	17,299	13,774

Stockholders' equity	40,517	38,942

Total liabilities and stockholders' equity	$ 114,799	$ 113,331

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) (In millions)


	Three months ended October 31, 2009	Twelve months ended October 31, 2009

Cash flows from operating activities:
Net earnings ^(a)	$ 2,412	$ 7,660
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	1,227	4,773
Stock-based compensation expense	134	635
Provision for bad debt and inventory	104	566
In-process research and development charges	1	7
Restructuring charges	38	640
Deferred taxes on earnings	107	379
Excess tax benefit from stock-based compensation	(95)	(162)
Other, net	(19)	(20)

Changes in assets and liabilities:
Accounts and financing receivables	(2,184)	(549)
Inventory	(311)	1,532
Accounts payable	2,075	(153)
Taxes on earnings	(146)	557
Restructuring	(393)	(1,237)
Other assets and liabilities	483	(1,249 )
Net cash provided by operating activities	3,433	13,379

Cash flows from investing activities:
Investment in property, plant and equipment	(946)	(3,695)
Proceeds from sale of property, plant and equipment	94	495
Purchases of available-for-sale securities and other investments	(55)	(160)
Maturities and sales of available-for-sale securities and other investments	68	171
Payments made in connection with business acquisitions, net	(43 )	(391 )
Net cash used in investing activities	(882 )	(3,580 )

Cash flows from financing activities:
Issuance (repayment) of commercial paper and notes payable, net	10	(6,856)
Issuance of debt	22	6,800
Payment of debt	(1,529)	(2,710)
Issuance of common stock under employee stock plans	901	1,837
Repurchase of common stock	(2,102)	(5,140)
Excess tax benefit from stock-based compensation	95	162
Dividends	(190 )	(766 )
Net cash used in financing activities	(2,793 )	(6,673 )

(Decrease) increase in cash and cash equivalents	(242)	3,126
Cash and cash equivalents at beginning of period	13,521	10,153
Cash and cash equivalents at end of period	$ 13,279	$ 13,279



(a) In the fourth quarter of fiscal 2009, HP early adopted Accounting Standards Update ("ASU") No. 2009-13, "Multiple-Deliverable Revenue Arrangements" and ASU No. 2009-14, "Certain Revenue Arrangements That Include Software Elements." As a result, fiscal 2009 net earnings were higher by $55 million. Fourth quarter fiscal 2009 net earnings were higher by $19 million. HP adopted these standards as of the beginning of fiscal 2009; therefore the previously reported quarterly results have been restated to reflect the impact of adoption.

	HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
	SEGMENT INFORMATION
	(Unaudited)
	(In millions)
		Three months ended
		October 31, 2009 ^(b)	July 31, 2009 ^(b)	October 31, 2008 ^(c)

Net revenue:

	Services ^(a)	$ 8,926	$ 8,520	$ 8,277
	Enterprise Storage and Servers	4,218	3,735	5,059
	HP Software	967	847	1,148
	Technology Solutions Group	14,111	13,102	14,484
	Personal Systems Group	9,862	8,441	11,179
	Imaging and Printing Group	6,454	5,660	7,572
	HP Financial Services	726	670	691
	Corporate Investments	191	193	246
	Total Segments	31,344	28,066	34,172
	Eliminations of intersegment net revenue and other	(567 )	(481 )	(569 )

	Total HP Consolidated	$ 30,777	$ 27,585	$ 33,603

Earnings (Loss) from operations:

	Services ^(a)	$ 1,444	$ 1,302	$ 945
	Enterprise Storage and Servers	481	381	705
	HP Software	234	153	211
	Technology Solutions Group	2,159	1,836	1,861
	Personal Systems Group	460	387	616
	Imaging and Printing Group	1,171	960	1,155
	HP Financial Services	66	53	51
	Corporate Investments	(8 )	(10 )	9
	Total Segments	3,848	3,226	3,692

	Corporate and unallocated costs and eliminations	(100)	(81)	(153)
	Unallocated costs related to stock-based compensation expense	(116)	(132)	(137)
	Amortization of purchased intangible assets	(400)	(379)	(337)
	In-process research and development charges	(1)	-	(32)
	Restructuring charges	(38)	(362)	(251)
	Acquisition-related charges	(60)	(59)	(41)
	Interest and other, net	(132 )	(177 )	(98 )

Total HP Consolidated Earnings Before Taxes		$ 3,001	$ 2,036	$ 2,643

(a) Includes the results of EDS which was acquired on August 26, 2008.

(b) In the fourth quarter of fiscal 2009, HP early adopted Accounting Standards Update ("ASU") No. 2009-13, "Multiple-Deliverable Revenue Arrangements" and ASU No. 2009-14, "Certain Revenue Arrangements That Include Software Elements." HP adopted these standards as of the beginning of fiscal 2009; therefore the previously reported quarterly segment results have been restated to reflect the impact of adoption. The adoption primarily impacted the Services and Enterprise Storage and Servers financial reporting segments.

(c) Certain fiscal 2009 organizational reclassifications have been reflected retroactively to provide improved visibility and comparability. For each of the quarters in fiscal year 2008, the reclassifications resulted in the transfer of revenue and operating profit among the Services, HP Software and Imaging and Printing Group financial reporting segments. In addition, certain previously allocated costs were reclassified to unallocated costs related to stock-based compensation expense. There was no impact on the previously reported financial results for the Enterprise Storage and Servers, Personal Systems Group, HP Financial Services and Corporate Investments segments.

	HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
	SEGMENT INFORMATION
	(Unaudited)
	(In millions)
		Twelve months ended October 31,
		2009 ^(b)	2008 ^(c)
Net revenue:

	Services ^(a)	$ 34,693	$ 20,977
	Enterprise Storage and Servers	15,359	19,400
	HP Software	3,572	4,220
	Technology Solutions Group	53,624	44,597
	Personal Systems Group	35,305	42,295
	Imaging and Printing Group	24,011	29,614
	HP Financial Services	2,673	2,698
	Corporate Investments	768	965
	Total Segments	116,381	120,169
	Eliminations of intersegment net revenue and other	(1,829 )	(1,805 )

Total HP Consolidated		$ 114,552	$ 118,364

Earnings (Loss) from operations:

	Services ^(a)	$ 5,044	$ 2,518
	Enterprise Storage and Servers	1,518	2,577
	HP Software	684	499
	Technology Solutions Group	7,246	5,594
	Personal Systems Group	1,661	2,375
	Imaging and Printing Group	4,310	4,559
	HP Financial Services	206	192
	Corporate Investments	(56 )	49
	Total Segments	13,367	12,769

	Corporate and unallocated costs and eliminations	(219)	(461)
	Unallocated costs related to stock-based compensation expense	(552)	(512)
	Amortization of purchased intangible assets	(1,571)	(967)
	In-process research and development charges	(7)	(45)
	Restructuring charges	(640)	(270)
	Acquisition-related charges	(242)	(41)
	Interest and other, net	(721 )	-

Total HP Consolidated Earnings Before Taxes		$ 9,415	$ 10,473

(a) Includes the results of EDS which was acquired on August 26, 2008.

(b) In the fourth quarter of fiscal 2009, HP early adopted Accounting Standards Update ("ASU") No. 2009-13, "Multiple-Deliverable Revenue Arrangements" and ASU No. 2009-14, "Certain Revenue Arrangements That Include Software Elements." HP adopted these standards as of the beginning of fiscal 2009; therefore the previously reported quarterly segment results have been restated to reflect the impact of adoption. The adoption primarily impacted the Services and Enterprise Storage and Servers financial reporting segments.
(c) Certain fiscal 2009 organizational reclassifications have been reflected retroactively to provide improved visibility and comparability. For each of the quarters in fiscal year 2008, the reclassifications resulted in the transfer of revenue and operating profit among the Services, HP Software and Imaging and Printing Group financial reporting segments. In addition, certain previously allocated costs were reclassified to unallocated costs related to stock-based compensation expense. There was no impact on the previously reported financial results for the Enterprise Storage and Servers, Personal Systems Group, HP Financial Services and Corporate Investments segments.

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

	Three months ended
	October 31, 2009 ^(b)	July 31, 2009 ^(b)	October 31, 2008 ^(c)

Net revenue:

Infrastructure technology outsourcing	$ 4,084	$ 3,967	$ 3,531
Technology services	2,493	2,404	2,657
Application services	1,538	1,399	1,427
Business process outsourcing	778	711	604
Other	33	39	58
Services ^(a)	8,926	8,520	8,277
Industry standard servers	2,669	2,316	2,977
Storage	918	824	1,147
Business critical systems	631	595	935
Enterprise Storage and Servers	4,218	3,735	5,059
Business technology optimization	660	563	786
Other software	307	284	362
HP Software	967	847	1,148
Technology Solutions Group	14,111	13,102	14,484
Notebooks	5,794	4,803	6,270
Desktops	3,481	3,098	4,149
Workstations	342	299	470
Handhelds	36	32	79
Other	209	209	211
Personal Systems Group	9,862	8,441	11,179
Supplies	4,430	3,949	4,808
Commercial Hardware	1,261	1,085	1,846
Consumer Hardware	763	626	918
Imaging and Printing Group	6,454	5,660	7,572
HP Financial Services	726	670	691
Corporate Investments	191	193	246
Total Segments	31,344	28,066	34,172

Eliminations of intersegment net revenue and other	(567 )	(481 )	(569 )

Total HP Consolidated	$ 30,777	$ 27,585	$ 33,603


(a) Includes the results of EDS, which was acquired on August 26, 2008. The businesses included in the former consulting and integration business unit were divided among the application services and technology services business units and the HP software segment. The businesses included in the former outsourcing services business unit were divided among the infrastructure technology outsourcing and business process outsourcing business units. The infrastructure technology outsourcing, application services and business process outsourcing business units were added with the technology services business unit, and these four business units now comprise the Services segment.

(b) In the fourth quarter of fiscal 2009, HP early adopted Accounting Standards Update ("ASU") No. 2009-13, "Multiple-Deliverable Revenue Arrangements" and ASU No. 2009-14, "Certain Revenue Arrangements That Include Software Elements." HP adopted these standards as of the beginning of fiscal 2009; therefore the previously reported quarterly segment results have been restated to reflect the impact of adoption. The adoption primarily impacted the Services and Enterprise Storage and Servers financial reporting segments.

(c) Certain fiscal 2009 organizational reclassifications have been reflected retroactively to provide improved visibility and comparability. For each of the quarters in fiscal year 2008, the reclassifications resulted in the transfer of revenue among the Services, HP Software and Imaging and Printing Group financial reporting segments. In addition, revenue was transferred among the business units within the Services, HP Software, Imaging and Printing Group, and Personal Systems Group segments. There was no impact on the previously reported financial results for the Enterprise Storage and Servers, HP Financial Services and Corporate Investments segments.

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

	Twelve months ended October 31,
	2009 ^(b)	2008 ^(c)

Net revenue:

Infrastructure technology outsourcing	$ 15,751	$ 7,488
Technology services	9,789	10,297
Application services	6,032	2,411
Business process outsourcing	2,941	723
Other	180	58
Services ^(a)	34,693	20,977
Industry standard servers	9,296	11,657
Storage	3,473	4,205
Business critical systems	2,590	3,538
Enterprise Storage and Servers	15,359	19,400
Business technology optimization	2,385	2,792
Other software	1,187	1,428
HP Software	3,572	4,220
Technology Solutions Group	53,624	44,597
Notebooks	20,210	22,657
Desktops	12,864	16,643
Workstations	1,261	1,885
Handhelds	172	360
Other	798	750
Personal Systems Group	35,305	42,295
Supplies	16,532	18,472
Commercial Hardware	4,778	7,422
Consumer Hardware	2,701	3,720
Imaging and Printing Group	24,011	29,614
HP Financial Services	2,673	2,698
Corporate Investments	768	965
Total Segments	116,381	120,169

Eliminations of intersegment net revenue and other	(1,829 )	(1,805 )

Total HP Consolidated	$ 114,552	$ 118,364


(a) Includes the results of EDS, which was acquired on August 26, 2008. The businesses included in the former consulting and integration business unit were divided among the application services and technology services business units and the HP software segment. The businesses included in the former outsourcing services business unit were divided among the infrastructure technology outsourcing and business process outsourcing business units. The infrastructure technology outsourcing, application services and business process outsourcing business units were added with the technology services business unit,and these four business units now comprise the Services segment.

(b) In the fourth quarter of fiscal 2009, HP early adopted Accounting Standards Update ("ASU") No. 2009-13, "Multiple-Deliverable Revenue Arrangements" and ASU No. 2009-14, "Certain Revenue Arrangements That Include Software Elements." HP adopted these standards as of the beginning of fiscal 2009; therefore the previously reported quarterly segment results have been restated to reflect the impact of adoption. The adoption primarily impacted the Services and Enterprise Storage and Servers financial reporting segments.

(c) Certain fiscal 2009 organizational reclassifications have been reflected retroactively to provide improved visibility and comparability. For each of the quarters in fiscal year 2008, the reclassifications resulted in the transfer of revenue among the Services, HP Software and Imaging and Printing Group financial reporting segments. In addition, revenue was transferred among the business units within the Services, HP Software, Imaging and Printing Group, and Personal Systems Group segments. There was no impact on the previously reported financial results for the Enterprise Storage and Servers, HP Financial Services and Corporate Investments segments.

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
CALCULATION OF NET EARNINGS PER SHARE
(Unaudited)
(In millions except per share amounts)


	Three months ended
	October 31, 2009 ^(c)	July 31, 2009 ^(c)	October 31, 2008

Numerator:
Net earnings	$ 2,412	$ 1,671	$ 2,112
Adjustment for interest expense on zero-coupon subordinated convertible notes, net of taxes	-	-	-

Net earnings, adjusted	$ 2,412	$ 1,671	$ 2,112

Denominator:
Weighted-average shares used to compute
basic EPS	2,366	2,382	2,440
Effect of dilutive securities:
Dilution from employee stock plans	67	54	76
Zero-coupon subordinated convertible notes	-	-	-
Dilutive potential common shares	67	54	76

Weighted-average shares used to compute diluted EPS	2,433	2,436	2,516

Net earnings per share:
Basic ^(a)	$ 1.02	$ 0.70	$ 0.87
Diluted ^(b)	$ 0.99	$ 0.69	$ 0.84



(a) HP's basic earnings per share was calculated based on net earnings and the weighted-average number of shares outstanding during the reporting period.

(b) The diluted earnings per share included additional dilution from potential issuance of common stock, such as stock issuable pursuant to exercise of stock options and vesting of restricted stock units, except when such issuances would be anti-dilutive.

(c) In the fourth quarter of fiscal 2009, HP early adopted Accounting Standards Update ("ASU") No. 2009-13, "Multiple-Deliverable Revenue Arrangements" and ASU No. 2009-14, "Certain Revenue Arrangements That Include Software Elements." As a result, fiscal 2009 net revenues and net earnings were higher by $255 million and $55 million, respectively. Fourth quarter fiscal 2009 net revenues and net earnings were higher by $82 million and $19 million, respectively. HP adopted these standards as of the beginning of fiscal 2009; therefore the previously reported quarterly results have been restated to reflect the impact of adoption.

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
CALCULATION OF NET EARNINGS PER SHARE
(In millions except per share amounts)


	Twelve months ended October 31,
	2009 ^(c)	2008
	(unaudited)

Numerator:
Net earnings	$ 7,660	$ 8,329
Adjustment for interest expense on zero-coupon subordinated convertible notes, net of taxes	-	3

Net earnings, adjusted	$ 7,660	$ 8,332

Denominator:
Weighted-average shares used to compute
basic EPS	2,388	2,483
Effect of dilutive securities:
Dilution from employee stock plans	49	81
Zero-coupon subordinated convertible notes	-	3
Dilutive potential common shares	49	84

Weighted-average shares used to compute diluted EPS	2,437	2,567

Net earnings per share:
Basic ^(a)	$ 3.21	$ 3.35
Diluted ^(b)	$ 3.14	$ 3.25


(a) HP's basic earnings per share was calculated based on net earnings and the weighted-average number of shares outstanding during the reporting period.

(b) The diluted earnings per share included additional dilution from potential issuance of common stock, such as stock issuable pursuant to exercise of stock options, vesting of restricted stock units and conversion of debt, except when such issuances would be anti-dilutive.

(c) In the fourth quarter of fiscal 2009, HP early adopted Accounting Standards Update ("ASU") No. 2009-13, "Multiple-Deliverable Revenue Arrangements" and ASU No. 2009-14, "Certain Revenue Arrangements That Include Software Elements." As a result, fiscal 2009 net revenues and net earnings were higher by $255 million and $55 million, respectively. Fourth quarter fiscal 2009 net revenues and net earnings were higher by $82 million and $19 million, respectively. HP adopted these standards as of the beginning of fiscal 2009; therefore the previously reported quarterly results have been restated to reflect the impact of adoption.

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
CALCULATION OF NON-GAAP NET EARNINGS PER SHARE
(Unaudited)
(In millions except per share amounts)




	Three months ended
	October 31, 2009 ^(c)	July 31, 2009 ^(c)	October 31, 2008

Numerator:
Non-GAAP net earnings	$ 2,764	$ 2,239	$ 2,594
Adjustment for interest expense on zero- coupon subordinated convertible notes, net of taxes	-	-	-

Non-GAAP net earnings, adjusted	$ 2,764	$ 2,239	$ 2,594

Denominator:
Weighted-average shares used to compute basic EPS	2,366	2,382	2,440
Effect of dilutive securities:
Dilution from employee stock plans	67	54	76
Zero-coupon subordinated convertible notes	-	-	-
Dilutive potential common shares	67	54	76

Weighted-average shares used to compute diluted EPS	2,433	2,436	2,516

Non-GAAP net earnings per share:
Basic ^(a)	$ 1.17	$ 0.94	$ 1.06
Diluted ^(b)	$ 1.14	$ 0.92	$ 1.03



(a) HP's basic non-GAAP earnings per share was calculated based on non-GAAP net earnings and the weighted-average number of shares outstanding during the reporting period.

(b) HP’s diluted non-GAAP earnings per share included additional dilution from potential issuance of common stock, such as stock issuable pursuant to exercise of stock options and vesting of restricted stock units, except when such issuances would be anti-dilutive.

(c) In the fourth quarter of fiscal 2009, HP early adopted Accounting Standards Update ("ASU") No. 2009-13, "Multiple-Deliverable Revenue Arrangements" and ASU No. 2009-14, "Certain Revenue Arrangements That Include Software Elements." As a result, fiscal 2009 net revenues and Non-GAAP net earnings were higher by $255 million and $55 million, respectively. Fourth quarter fiscal 2009 net revenues and Non-GAAP net earnings were higher by $82 million and $19 million, respectively. HP adopted these standards as of the beginning of fiscal 2009; therefore the previously reported quarterly results have been restated to reflect the impact of adoption.

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
CALCULATION OF NON-GAAP NET EARNINGS PER SHARE
(Unaudited)
(In millions except per share amounts)


	Twelve months ended October 31,
	2009 ^(c)	2008

Numerator:
Non-GAAP net earnings	$ 9,393	$ 9,302
Adjustment for interest expense on zero- coupon subordinated convertible notes, net of taxes	-	3

Non-GAAP net earnings, adjusted	$ 9,393	$ 9,305

Denominator:
Weighted-average shares used to compute basic EPS	2,388	2,483
Effect of dilutive securities:
Dilution from employee stock plans	49	81
Zero-coupon subordinated convertible notes	-	3
Dilutive potential common shares	49	84

Weighted-average shares used to compute diluted EPS	2,437	2,567

Non-GAAP net earnings per share:
Basic ^(a)	$ 3.93	$ 3.75
Diluted ^(b)	$ 3.85	$ 3.62


(a) HP's basic non-GAAP earnings per share was calculated based on non-GAAP net earnings and the weighted-average number of shares outstanding during the reporting period.

(b) HP’s diluted non-GAAP earnings per share included additional dilution from potential issuance of common stock, such as stock issuable pursuant to exercise of stock options, vesting of restricted stock units and conversion of debt, except when such issuances would be anti-dilutive.

(c) In the fourth quarter of fiscal 2009, HP early adopted Accounting Standards Update ("ASU") No. 2009-13, "Multiple-Deliverable Revenue Arrangements" and ASU No. 2009-14, "Certain Revenue Arrangements That Include Software Elements." As a result, fiscal 2009 net revenues and Non-GAAP net earnings were higher by $255 million and $55 million, respectively. Fourth quarter fiscal 2009 net revenues and Non-GAAP net earnings were higher by $82 million and $19 million, respectively. HP adopted these standards as of the beginning of fiscal 2009; therefore the previously reported quarterly results have been restated to reflect the impact of adoption.

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



	Three months ended
	July 31, 2009 ^(a)	April 30, 2009 ^(a)	January 31, 2009 ^(a)
	(Restated)	(Restated)	(Restated)

Net revenue	$ 27,585	$ 27,383	$ 28,807

Costs and expenses:
Cost of sales	21,031	20,945	22,073
Research and development	667	716	732
Selling, general and administrative	2,874	2,880	2,893
Amortization of purchased intangible assets	379	380	412
In-process research and development charges	-	-	6
Restructuring charges	362	94	146
Acquisition-related charges	59	75	48
Total costs and expenses	25,372	25,090	26,310


Earnings from operations	2,213	2,293	2,497

Interest and other, net	(177 )	(180 )	(232 )

Earnings before taxes	2,036	2,113	2,265

Provision for taxes	365	392	409

Net earnings	$ 1,671	$ 1,721	$ 1,856

Net earnings per share:
Basic	$ 0.70	$ 0.72	$ 0.77
Diluted	$ 0.69	$ 0.71	$ 0.75

Cash dividends declared per share	$ 0.16	$ -	$ 0.16

Weighted-average shares used to compute net earnings per share:
Basic	2,382	2,394	2,410
Diluted	2,436	2,438	2,464

Impact from adoption of ASU No. 2009-13 and ASU No. 2009-14 was as follows:
Net Revenue	$ 134	$ 32	$ 7
Cost of Sales	95	26	4
Earnings before taxes	39	6	3
Net earnings	$ 29	$ 5	$ 2
Net earnings per share	$ 0.02	$ 0.01	$ -


(a) In the fourth quarter of fiscal 2009, HP early adopted Accounting Standards Update ("ASU") No. 2009-13, "Multiple-Deliverable Revenue Arrangements" and ASU No. 2009-14, "Certain Revenue Arrangements That Include Software Elements." As a result, fiscal 2009 net revenues and net earnings were higher by $255 million and $55 million, respectively. Fourth quarter fiscal 2009 net revenues and net earnings were higher by $82 million and $19 million, respectively. HP adopted these standards as of the beginning of fiscal 2009; therefore the previously reported quarterly results have been restated to reflect the impact of adoption.

Use of Non-GAAP Financial Measures

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