Hewlett-Packard (HPQ)

NOTE 14:  COMMITMENTS AND RENTAL EXPENSE

Total rentals under cancelable and non-cancelable leases of tangible property and equipment included in costs and charged to expenses were $561 million, $557 million and $552 million for the years ended December 31, 2007, 2006 and 2005, respectively. Commitments for rental payments under non-cancelable operating leases of tangible property and equipment net of sublease rental income are: 2008 – $398 million; 2009 – $353 million; 2010 – $263 million; 2011 – $182 million; 2012 – $135 million; and all years thereafter – $260 million.

The Company has signed certain service agreements with terms of up to ten years with certain vendors to obtain favorable pricing and commercial terms for services that are necessary for the ongoing operation of its business. These agreements relate to software and telecommunications services. Under the terms of these agreements, the Company has committed to contractually specified minimums over the contractual periods. The contractual minimums are: 2008 – $1,099 million; 2009 – $393 million; 2010 – $166 million; 2011 – $48 million; 2012 – $1 million; and all years thereafter – $1 million. Amounts purchased under these agreements were $1,598 million, $1,452 million and $991 million during the years ended December 31, 2007, 2006 and 2005, respectively. To the extent that the Company does not purchase the contractual minimum amount of services, the Company must pay the vendors the shortfall. The Company believes that it will meet the contractual minimums through the normal course of business.