HEWLETT-PACKARD COMPANY AND SUBSIDIARIES

Consolidated Statements of Earnings

For the fiscal years ended October 31

2007 2006 2005
In millions, except per share amounts
Net revenue:
Products ........................................................................................................................... $84,229 $73,557 $68,945
Services............................................................................................................................ 19,699 17,773 17,380
Financing income............................................................................................................. 358 328 371
Total net revenue........................................................................................................... 104,286 91,658 86,696
Costs and expenses:
Cost of products ............................................................................................................... 63,435 55,248 52,550
Cost of services................................................................................................................ 15,163 13,930 13,674
Financing interest............................................................................................................. 289 249 216
Research and development .............................................................................................. 3,611 3,591 3,490
Selling, general and administrative.................................................................................. 12,226 11,266 11,184
Amortization of purchased intangible assets.................................................................... 783 604 622
In-process research and development charges ................................................................. 190 52 2
Restructuring charges....................................................................................................... 387 158 1,684
Pension curtailments and pension settlements, net .......................................................... (517) — (199)
Total operating expenses............................................................................................... 95,567 85,098 83,223
Earnings from operations.................................................................................................... 8,719 6,560 3,473
Interest and other, net ......................................................................................................... 444 606 83
Gains (losses) on investments............................................................................................. 14 25 (13)
Earnings before taxes.......................................................................................................... 9,177 7,191 3,543
Provision for taxes .............................................................................................................. 1,913 993 1,145
Net earnings........................................................................................................................ $7,264 $6,198 $2,398
Net earnings per share:
Basic ................................................................................................................................ $2.76 $2.23 $0.83
Diluted ............................................................................................................................. $2.68 $2.18 $0.82
Weighted-average shares used to compute net earnings per share:
Basic ................................................................................................................................ 2,630 2,782 2,879
Diluted ............................................................................................................................. 2,716 2,852 2,909

The accompanying notes are an integral part of these Consolidated Financial Statements.

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