Hewlett-Packard (HPQ)

Contractual Obligations

        At April 30, 2009, our unconditional purchase obligations are approximately $2.3 billion, compared with $3.3 billion as previously reported in our Annual Report on Form 10-K for the fiscal year ended October 31, 2008. The decrease in unconditional purchase obligations is due primarily to reduced commitments for certain components. Purchase obligations include agreements to purchase goods or services that are enforceable and legally binding on us and that specify all significant terms, including fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction. Purchase obligations exclude agreements that are cancelable without significant penalty. These purchase obligations are related principally to cost of sales, inventory and other items.

        In addition to the above, at April 30, 2009, we had approximately $1.7 billion of recorded FIN 48 liabilities and related interest and penalties. Of this liability amount, approximately $120 million is expected to be paid within one year. For the remaining amount, we are unable to make a reasonable estimate as to when cash settlement with tax authorities might occur due to the uncertainties related to these tax matters. The $1.7 billion of FIN 48 liabilities and related interest and penalties will be

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partially offset by $155 million of tax benefits for which a deferred tax asset has been recorded related to future income tax return deductions that will be claimed.

Contractual Obligations

        At January 31, 2009, our unconditional purchase obligations are approximately $3.0 billion, compared with $3.3 billion as previously reported in our Annual Report on Form 10-K for the fiscal year ended October 31, 2008. Purchase obligations include agreements to purchase goods or services that are enforceable and legally binding on us and that specify all significant terms, including fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction. Purchase obligations exclude agreements that are cancelable without significant penalty. These purchase obligations are related principally to cost of sales, inventory and other items.

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        In addition to the above, at January 31, 2009, we had approximately $1.7 billion of recorded FIN 48 liabilities and related interest and penalties. Of this liability amount, approximately $270 million is expected to be paid within one year. For the remaining amount, we are unable to make a reasonable estimate as to when cash settlement with tax authorities might occur due to the uncertainties related to these tax matters. The $1.7 billion of FIN 48 liabilities and related interest and penalties will be partially offset by $350 million of deferred tax assets and interest receivable.

Contractual Obligations

        The impact that we expect our contractual obligations as of October 31, 2008 to have on our liquidity and cash flow in future periods is as follows:

⁽¹⁾

Amounts represent the expected cash payments of our long-term debt and do not include any fair value adjustments or discounts. Included in our long-term debt are approximately $372 million of capital lease obligations that are secured by certain equipment.

⁽²⁾

Purchase obligations include agreements to purchase goods or services that are enforceable and legally binding on us and that specify all significant terms, including fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction. Purchase obligations exclude agreements that are cancelable without penalty. These purchase obligations are related principally to inventory and other items.

        In addition to the above, at October 31, 2008, we had approximately $1.7 billion of recorded FIN 48 liabilities and related interest and penalties. Of this liability amount, approximately $340 million is expected to be paid within one year. For the remaining amount, we are unable to make a reasonable estimate as to when cash settlement with tax authorities might occur due to the uncertainties related to these tax matters. The $1.7 billion of FIN 48 liabilities and related interest and penalties will be partially offset by $330 million of deferred tax assets and interest receivable.

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Table of Contents

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES

Management's Discussion and Analysis of
Financial Condition and Results of Operations (Continued)

Contractual Obligations

        The impact that we expect our contractual obligations as of October 31, 2008 to have on our liquidity and cash flow in future
periods is as follows:

⁽¹⁾

Amounts
represent the expected cash payments of our long-term debt and do not include any fair value adjustments or discounts.
Included in our long-term debt are approximately $372 million of capital lease obligations that are secured by certain equipment.

⁽²⁾

Purchase
obligations include agreements to purchase goods or services that are enforceable and legally binding on us and that specify all
significant terms, including fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction. Purchase obligations exclude
agreements that are cancelable without penalty. These purchase obligations are related principally to inventory and other items.

        In
addition to the above, at October 31, 2008, we had approximately $1.7 billion of recorded FIN 48 liabilities and related interest and penalties. Of this liability
amount, approximately $340 million is expected to be paid within one year. For the remaining amount, we are unable to make a reasonable estimate as to when cash settlement with tax authorities
might occur due to the uncertainties related to these tax matters. The $1.7 billion of FIN 48 liabilities and related interest and penalties will be partially offset by
$330 million of deferred tax assets and interest receivable.

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HREF="#bg72001a_main_toc">Table of Contents

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES

Management's Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

Contractual Obligations

        At July 31, 2008, our unconditional purchase obligations are approximately $4.4 billion, compared with $2.0 billion as previously reported in our Annual Report on Form 10-K for the fiscal year ended October 31, 2007. Purchase obligations include agreements to purchase goods or services that are enforceable and legally binding on us and that specify all significant terms, including fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction. Purchase obligations exclude agreements that are cancelable without penalty. These purchase obligations are related principally to cost of sales, inventory and other items.

        In addition to the above, at July 31, 2008, we had approximately $1.2 billion of recorded FIN 48 liabilities and related interest and penalties. Of this liability amount, approximately $295 million is expected to be paid within one year. For the remaining amount, we are unable to make a reasonable estimate as to when cash settlement with tax authorities might occur due to the uncertainties related to these tax matters. The $1.2 billion of FIN 48 liabilities and related interest and penalties will be partially offset by $340 million of deferred tax assets and interest receivable.

Contractual Obligations

        At April 30, 2008, our unconditional purchase obligations are approximately $3.0 billion, compared with $2.0 billion as previously reported in our Annual Report on Form 10-K for the fiscal year ended October 31, 2007. Purchase obligations include agreements to purchase goods or services that are enforceable and legally binding on us and that specify all significant terms, including fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction. Purchase obligations exclude agreements that are cancelable without penalty. These purchase obligations are related principally to cost of sales, inventory and other items.

        In addition to the above, at April 30, 2008, we had approximately $1.2 billion of recorded FIN 48 liabilities and related interest and penalties. Of this liability amount, approximately $308 million is expected to be paid within one year. For the remaining amount, we are unable to make a reasonable estimate as to when cash settlement with tax authorities might occur due to the uncertainties related to these tax matters. The $1.2 billion of FIN 48 liabilities and related interest and penalties will be partially offset by $305 million of deferred tax assets and interest receivable.

Contractual Obligations

        At January 31, 2008, our unconditional purchase obligations are approximately $2.7 billion, compared with $2.0 billion as previously reported in our Annual Report on Form 10-K for the fiscal year ended October 31, 2007. Purchase obligations include agreements to purchase goods or services that are enforceable and legally binding on us and that specify all significant terms, including fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction. Purchase obligations exclude agreements that are cancelable without penalty. These purchase obligations are related principally to cost of sales, inventory and other items.

        In addition to the above and as discussed in Note 11 to the Consolidated Condensed Financial Statements in Item 1, we have approximately $1.2 billion of recorded FIN 48 liabilities and related interest and penalties. Of this liability amount, approximately $118 million is expected to be paid within one year. For the remaining liability, we are unable to make a reasonable reliable estimate as to when cash settlement with tax authorities will occur due to the uncertainties related to these tax matters. The $1.2 billion of FIN 48 liabilities and related interest and penalties will be partially offset by approximately $300 million of deferred tax assets and interest receivable.

Contractual Obligations

        The impact that we expect our contractual obligations as of October 31, 2007 to have on our liquidity and cash flow in future periods is as follows:

⁽¹⁾

Amounts represent the expected cash payments of our long-term debt and do not include any fair value adjustments or discounts. Included in our long-term debt are approximately $48 million of capital lease obligations that are secured by certain equipment.

⁽²⁾

Purchase obligations include agreements to purchase goods or services that are enforceable and legally binding on us and that specify all significant terms, including fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction. Purchase obligations exclude agreements that are cancelable without penalty. These purchase obligations are related principally to inventory and other items.

Contractual Obligations

        At July 31, 2007, our unconditional purchase obligations are approximately $3.1 billion, compared with $2.8 billion as previously reported in our Annual Report on Form 10-K for the fiscal year ended October 31, 2006. Purchase obligations include agreements to purchase goods or services that are enforceable and legally binding on us and that specify all significant terms, including fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction. Purchase obligations exclude agreements that are cancelable without penalty. These purchase obligations are related principally to cost of sales, inventory and other items.

Contractual Obligations

        At April 30, 2007, our unconditional purchase obligations are approximately $2.4 billion, compared with $2.8 billion as previously reported in our Annual Report on Form 10-K for the fiscal year ended October 31, 2006. Purchase obligations include agreements to purchase goods or services that are enforceable and legally binding on us and that specify all significant terms, including fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction. Purchase obligations exclude agreements that are cancelable without penalty. These purchase obligations are related principally to cost of sales, inventory and other items.

Contractual Obligations

At January 31, 2007, our unconditional purchase obligations are approximately $4.4 billion, compared with $2.8 billion as previously reported in our Annual Report on Form 10-K for the fiscal year ended October 31, 2006. Purchase obligations include agreements to purchase goods or services that are enforceable and legally binding on us and that specify all significant terms, including fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction. Purchase obligations exclude agreements that are cancelable without penalty. These purchase obligations are related principally to cost of sales, inventory and other items. The increase in our unconditional purchase obligations was due primarily to increased commitments for components.

Contractual Obligations

        The impact that our contractual obligations as of October 31, 2006 are expected to have on our liquidity and cash flow in future periods was as follows:

⁽¹⁾

Amounts represent the expected cash payments of our long-term debt and do not include any fair value adjustments or discounts. Included in our long-term debt are approximately $52 million of capital lease obligations that are secured by certain equipment.

⁽²⁾

Purchase obligations include agreements to purchase goods or services that are enforceable and legally binding on us and that specify all significant terms, including fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction. Purchase obligations exclude agreements that are cancelable without penalty. These purchase obligations are related principally to cost of sales, inventory and other items. Our purchase obligation includes the settlement agreement with EMC Corporation ("EMC") pursuant to which we agreed to pay $325 million (the net amount of the valuation of EMC's claims against us less the valuation of our claims against EMC) to EMC, which we can satisfy through the purchase for resale or internal use of complementary EMC products in equal installments of $65 million over the next five years, of which the first installment was paid on August 29, 2005. As of October 31, 2006, the remaining payment to EMC was $260 million. In addition, if EMC purchases our products during the five-year period, we will be required to purchase an equivalent amount of additional products or services from EMC of up to an aggregate of $108 million.

        In November 2006, we completed our acquisition of Mercury. The aggregate purchase price was approximately $4.8 billion, consisting of cash paid for outstanding stock, the value of vested employee stock options and estimated direct transaction costs. The acquisition will combine Mercury's application management, application delivery and IT governance capabilities with our broad portfolio of management solutions.

Contractual Obligations

        At July 31, 2006, our unconditional purchase obligations were approximately $2.7 billion, compared with $2.1 billion at October 31, 2005. Purchase obligations include agreements to purchase goods or services that are enforceable and legally binding on us and that specify all significant terms, including fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction. Purchase obligations exclude agreements that are cancelable without penalty. These purchase obligations are related principally to cost of sales, inventory and other

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items. The increase in our unconditional purchase obligations was due primarily to strategic buying opportunities and volume growth.

Contractual Obligations

        At April 30, 2006, our unconditional purchase obligations are approximately $2.3 billion, compared with $2.1 billion as previously reported in our Annual Report on Form 10-K for the fiscal year ended October 31, 2005. Purchase obligations include agreements to purchase goods or services that are enforceable and legally binding on us and that specify all significant terms, including fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction. Purchase obligations exclude agreements that are cancelable without penalty. These purchase obligations are related principally to cost of sales, inventory and other items.

Contractual Obligations

        At January 31, 2006, our unconditional purchase obligations are approximately $2.2 billion, compared with $2.1 billion as previously reported in our Annual Report on Form 10-K for the fiscal year ended October 31, 2005. Purchase obligations include agreements to purchase goods or services that are enforceable and legally binding on us and that specify all significant terms, including fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction. Purchase obligations exclude agreements that are cancelable without penalty. These purchase obligations are related principally to cost of sales, inventory and other items.

Contractual Obligations

        The impact that our contractual obligations as of October 31, 2005 are expected to have on our liquidity and cash flow in future periods is as follows:

⁽¹⁾

Amounts represent the expected cash payments of our long-term debt and do not include any fair value adjustments or discounts. Included in our long-term debt are approximately $39 million of capital lease obligations that are secured by certain equipment.

⁽²⁾

Purchase obligations include agreements to purchase goods or services that are enforceable and legally binding on HP and that specify all significant terms, including fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction. Purchase obligations exclude agreements that are cancelable without penalty. These purchase obligations are related principally to cost of sales, inventory and other items. Our purchase obligation includes the settlement agreement with EMC Corporation ("EMC") pursuant to which HP agreed to pay $325 million (the net amount of the valuation of EMC's claims against HP less the valuation of HP's claims against EMC) to EMC, which HP can satisfy through the purchase for resale or internal use of complementary EMC products in equal installments of $65 million over the next five years, of which the first installment was paid on August 29, 2005. As

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of October 31, 2005, the remaining payment to EMC is $260 million. In addition, if EMC purchases HP products during the five-year period, HP will be required to purchase an equivalent amount of additional products or services from EMC of up to an aggregate of $108 million.

        On November 1, 2005, HP acquired substantially all of the assets of Scitex Vision Ltd., a market leader in super-wide digital imaging, for $230 million in cash. This acquisition is expected to expand HP's leadership in printing into the industrial wide-format market.

        On September 19, 2005, HP announced it signed a definitive agreement to acquire Peregrine Systems, Inc. ("Peregrine") in a cash merger for $26.08 per share, representing an aggregate equity value of $425 million. The acquisition of Peregrine, completed during the first quarter of fiscal 2006, is intended to add key asset and service management components to the HP OpenView portfolio, a distributed management software suite for business operations and IT.

Contractual Obligations

        At July 31, 2005, our unconditional purchase obligations are approximately $1.2 billion, compared with $1.0 billion as previously reported in our Annual Report on Form 10-K for the fiscal year ended October 31, 2004. Our unconditional purchase obligation at July 31, 2005 includes the settlement agreement with EMC pursuant to which HP agreed to pay $325 million (the net amount of the valuation of EMC's claims against HP less the valuation of HP's claims against EMC) to EMC, which HP can satisfy through the purchase for resale or internal use of complementary EMC products in equal installments of $65 million over the next five years, of which the first installment was paid on August 29, 2005. In addition, if EMC purchases HP products during the five year period, HP will be required to purchase an equivalent amount of additional products or services from EMC of up to an aggregate of $108 million.

        On August 1, 2005, $300 million of Medium-Term Notes assumed from Compaq became due and were paid.

        On August 11, 2005, HP announced it signed an agreement to acquire substantially all of the assets of Scitex Vision Ltd., a market leader in super-wide digital printing, for $230 million in cash. This acquisition is subject to certain regulatory approvals and customary closing conditions and is expected to be completed within approximately 90 days.

Contractual Obligations

        At April 30, 2005, our unconditional purchase obligations are approximately $1.1 billion, compared with $1.0 billion as previously reported in our Annual Report on Form 10-K for the fiscal year ended October 31, 2004. Our unconditional purchase obligation at April 30, 2005 included a settlement agreement with EMC pursuant to which HP agreed to pay $325 million (the net amount of the valuation of EMC's claims against HP less the valuation of HP's claims against EMC) to EMC, which HP can satisfy through the purchase for resale or internal use of complementary EMC products in equal installments of $65 million, over the next five years. In addition, if EMC purchases HP products during the five year period, HP will be required to make an equivalent amount of additional product or services purchases from EMC of up to an aggregate of $108 million.

Contractual Obligations

        At January 31, 2005, our unconditional purchase obligations are approximately $827 million, compared with $1.0 billion as previously reported in our Annual Report on Form 10-K for the fiscal year ended October 31, 2004.

Contractual Obligations

        The impact that our contractual obligations as of October 31, 2004 are expected to have on our liquidity and cash flow in future periods is as follows:

⁽¹⁾

Amounts represent the expected cash payments of our long-term debt and include the fair value adjustment. Included in our long-term debt are approximately $54 million of capital lease obligations that are secured by certain equipment.

⁽²⁾

Purchase obligations include agreements to purchase goods or services that are enforceable and legally binding on HP and that specify all significant terms, including fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction. Purchase obligations exclude agreements that are cancelable without penalty. These purchase obligations are related principally to cost of sales, inventory and other items.

⁽³⁾

As a result of our approved restructuring plans, we expect future cash expenditures of approximately $294 million, primarily for employee severance and other employee benefits and facilities costs. Of this amount, $288 million is recorded on our Consolidated Balance Sheet at October 31, 2004, and $6 million will be expensed in future periods as the costs are incurred or the requirements to record the costs as a liability are met.

        In addition to the contractual obligations noted in the table above, we also have the following funding commitments.

        In fiscal 2004, we made contributions of approximately $564 million to our pension plans and $49 million to our post-retirement benefit plans, for a total of $613 million, compared to a total of approximately $1.2 billion in fiscal 2003. We estimate that we will contribute a total of approximately $910 million to the pension and post-retirement plans during fiscal 2005. Our funding policy is to contribute cash to our pension plans so that we meet the minimum contribution requirements, as established by local government funding and taxing authorities. In the current fiscal year, we will continue to contribute cash to our global pension plans in amounts that are consistent with local funding requirements and tax considerations.

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        We issued approximately 53 million non-transferable contingent value rights ("CVRs") in connection with our acquisition of Indigo that entitle each holder to a one-time contingent cash payment of up to $4.50 per CVR, based on the achievement of certain cumulative revenue results over a three-year period. The future cash pay-out, if any, of the CVRs will be payable after a three-year period that began on April 1, 2002 and could result in a maximum obligation of $237 million. HP has not incurred a liability associated with CVRs as of October 31, 2004.