Hewlett-Packard (HPQ)

Fiscal 2007 U.S. Enhanced Early Retirement Program

        In the second quarter of fiscal 2007, HP announced that it was offering eligible employees an option to participate in the 2007 EER. The 2007 EER was open to employees who satisfied defined eligibility criteria based on combined age and years of service as well as to otherwise eligible employees who had been included in previous restructuring programs or who voluntarily left the company since November 30, 2006. A total of 3,080 employees participated in the 2007 EER, including 595 persons who had been included in previous restructuring programs or who had voluntarily left the company since November 30, 2006. All participating employees left the company by May 31, 2007. HP recorded a net restructuring charge of $354 million in fiscal 2007 in connection with the 2007 EER. This charge reflected $367 million of severance and benefits cost for the participating employees, $29 million of stock-based compensation expense for accelerating the vesting of options held by participating employees and $2 million of outplacement costs. These charges were partially offset by a $28 million settlement gain from HP's U.S. pension plan and a $16 million curtailment gain from its U.S. post-retirement benefit plans. The net restructuring charge of $354 million for the 2007 EER program was subsequently offset by a $542 million curtailment gain that HP recognized in fiscal 2007, resulting from changes in the U.S. defined benefit pension and post-retirement plans that HP also announced in the second quarter of 2007. HP funded the cash expenditures associated with the 2007 EER primarily by using available U.S. pension plan assets. For more information, see Note 15, which is incorporated herein by reference.

Fiscal 2007 U.S. Enhanced Early Retirement Program

        On February 20, 2007, HP announced that it was offering eligible employees an option to participate in the 2007 EER. HP recorded a restructuring charge of $395 million during the second quarter of fiscal 2007 in connection with the 2007 EER. This charge reflected $366 million of severance and benefits cost for the participating employees and $29 million of stock-based compensation expense for accelerating the vesting of options held by participating employees. The 2007 EER was open to employees who satisfied defined eligibility criteria based on combined age and years of service as well

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as to otherwise eligible employees who had been included in previous restructuring programs or who voluntarily left the company since November 30, 2006. A total of 3,080 employees participated in the 2007 EER, including 595 persons who had been included in previous restructuring programs or who had voluntarily left the company since November 30, 2006. All participating employees left the company by May 31, 2007. During the three months ended July 31, 2007, HP included a curtailment gain of $16 million relating to its U.S. post-retirement benefit plans in the restructuring charges. This gain reflected the reduction in the eligible plan population stemming from the 2007 EER. During the nine months ended July 31, 2007, the net restructuring expense of $379 million for the 2007 EER program was offset by a $542 million curtailment gain that HP recognized in the second quarter of fiscal 2007, resulting from the changes in the U.S. defined benefit pension and post-retirement plans that HP also announced on February 20, 2007. HP funded the cash expenditures associated with the 2007 EER primarily by using available U.S. pension plan assets. For more information, see Note 13 to the Consolidated Condensed Financial Statements in Item 1, which is incorporated herein by reference.

Fiscal 2007 U.S. Enhanced Early Retirement Program

        On February 20, 2007, HP announced that it was offering eligible employees an option to participate in the 2007 EER. HP recorded a restructuring charge of $395 million during the second quarter of fiscal 2007 in connection with the 2007 EER. The 2007 EER was open to employees who satisfied defined eligibility criteria based on combined age and years of service as well as to otherwise eligible employees who had been included in previous restructuring programs or who voluntarily left the company since November 30, 2006. A total of 3,077 employees participated in the 2007 EER, including 593 persons who had been included in previous restructuring programs or who voluntarily left the company since November 30, 2006. All participating employees left the company by May 31, 2007. The 2007 EER restructuring charge reflected $366 million of severance and benefits cost for the participating employees and $29 million of stock-based compensation expense for accelerating the vesting of options held by participating employees. The expense of the 2007 EER program was offset by a $542 million curtailment gain that HP recognized in the second quarter of fiscal 2007, resulting

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from the changes in the U.S. defined benefit pension and post-retirement plans that HP also announced on February 20, 2007. HP funded the cash expenditures associated with the 2007 EER primarily by using available U.S. pension plan assets. For more information, see Note 13 to the Consolidated Condensed Financial Statements in Item 1, which is incorporated herein by reference.

Fiscal 2007 U.S. Enhanced Early Retirement Program

On February 20, 2007, HP announced that it is offering an option for eligible employees to participate in a 2007 U.S. Enhanced Early Retirement program (the “2007 EER”). The employee severance and other benefits cost for the 2007 EER will be recorded in the second quarter of fiscal 2007 as restructuring charges. The cost is expected to approximate a curtailment gain of approximately $500 million resulting from the U.S. defined benefit pension and post-retirement plan changes, also announced on February 20, 2007. HP expects approximately 3,000 employees to exit the company by May 2007 under the 2007 EER. For more information, see Note 13 to the Consolidated Condensed Financial Statements in Item 1, which is incorporated herein by reference.