Hewlett-Packard (HPQ)

Note 3: Reclassifications

Certain reclassifications have been made to conform EDS’s historical amounts to HP’s presentation.  These adjustments primarily relate to reclassifying VAT receivables from other accrued liabilities to other current assets, reclassifying certain software assets from intangible assets to property, plant and equipment, reclassifying the long-term portion of deferred revenue to other liabilities and reclassifying the short-term portion of deferred costs to other current assets.

Reclassifications

        HP has made certain reclassifications to its Consolidated Balance Sheet as of October 31, 2006 and its Consolidated Statement of Cash Flows for the fiscal year ended October 31, 2006 since HP reported its preliminary fourth quarter financial results on November 16, 2006. These reclassifications were made in connection with the completion of an extensive internal and external review of tax data (including consolidating and reviewing the tax provisions of numerous domestic and foreign entities) in the ordinary course of preparing this Annual Report on Form 10-K. These reclassifications are limited to the "Other current assets," "Long-term financing receivables and other assets," "Taxes on earnings" and "Other liabilities" line items of that Consolidated Balance Sheet and the "Deferred taxes on earnings" and "Taxes on earnings" line items of the Consolidated Statement of Cash Flows and do not affect HP's previously reported Consolidated Statement of Earnings for the fiscal year ended October 31, 2006.

PART I

ITEM 1. Business.

        HP is a leading global provider of products, technologies, software, solutions and services to individual consumers, small and medium sized businesses ("SMBs"), large enterprises, including the public and education sectors. Our offerings span:

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personal computing and other access devices,



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imaging and printing-related products and services,



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enterprise information technology infrastructure, including enterprise storage and server technology, enterprise system and network management software, and



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multi-vendor customer services, including technology support and maintenance, consulting and integration and managed services.

3

        HP was incorporated in 1947 under the laws of the State of California as the successor to a partnership founded in 1939 by William R. Hewlett and David Packard. Effective in May 1998, we changed our state of incorporation from California to Delaware. In May 2002 we acquired Compaq Computer Corporation ("Compaq"), which significantly expanded the breadth and depth of our product offerings, increased our overall scale and reach, drove substantial improvements in our cost structure and generally improved our competitive position.