Hewlett-Packard (HPQ)

Portfolio Assets and Ratios

        HPFS maintains a strategy to generate a competitive return on equity by effectively leveraging its portfolio against the risks associated with interest rates and credit. The HPFS business model is asset-intensive and uses certain internal metrics to measure its performance against other financial services companies, including a segment balance sheet that is derived from our internal management reporting system. The accounting policies used to derive these amounts are substantially the same as those used by the consolidated company. However, certain intercompany loans and accounts that are reflected in the segment balances are eliminated in our Consolidated Condensed Financial Statements.

        The portfolio assets and ratios derived from the segment balance sheet for HPFS were as follows:

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        Net portfolio assets at January 31, 2010 increased 1.8% from October 31, 2009. The increase resulted from a favorable currency impact in the first quarter of fiscal 2010. The overall percentage of portfolio asset reserves decreased due primarily to the write-offs of customer accounts that had been reserved in prior periods.

        For the three months ended January 31, 2010 and 2009, HPFS recorded write-offs, net of recoveries, of $12 million and $13 million, respectively.

Portfolio Assets and Ratios

        HPFS maintains a strategy to generate a competitive return on equity by effectively leveraging its portfolio against the risks associated with interest rates and credit. The HPFS business model is asset-intensive and uses certain internal metrics to measure its performance against other financial services companies, including a segment balance sheet that is derived from our internal management reporting system. The accounting policies used to derive these amounts are substantially the same as those used by the consolidated company. However, certain intercompany loans and accounts that are reflected in the segment balances are eliminated in our Consolidated Financial Statements.

        The portfolio assets and ratios derived from the segment balance sheet for HPFS were as follows for the following fiscal years ended October 31:

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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)

        Net portfolio assets at October 31, 2009 increased 20.8% from October 31, 2008. The increase resulted from higher levels of financing originations in fiscal 2009 and a favorable currency impact. The overall percentage of portfolio assets reserves remained flat due to continued strong portfolio performance. HPFS funds its operations mainly through a combination of intercompany debt and equity. In addition to the balances reflected above, HP assumed net portfolio assets of $51 million through the acquisition of EDS.

Portfolio Assets and Ratios

        HPFS maintains a strategy to generate a competitive return on equity by effectively leveraging its portfolio against the risks associated with interest rates and credit. The HPFS business model is asset-intensive and uses certain internal metrics to measure its performance against other financial services companies, including a segment balance sheet that is derived from our internal management reporting system. The accounting policies used to derive these amounts are substantially the same as those used by the consolidated company. However, certain intercompany loans and accounts that are reflected in the segment balances are eliminated in our Consolidated Condensed Financial Statements.

        The portfolio assets and ratios derived from the segment balance sheet for HPFS were as follows:

⁽¹⁾

Portfolio assets include gross financing receivables of approximately $5.3 billion and $5.1 billion at April 30, 2009 and October 31, 2008, respectively and net equipment under operating leases of $1.9 billion and $1.8 billion at April 30, 2009 and at October 31, 2008, respectively, as disclosed in Note 10 to the Consolidated Condensed Financial Statements in Item 1, which is incorporated herein by reference. Portfolio assets also include capitalized profit on intercompany equipment transactions of approximately $700 million at April 30, 2009 and at October 31, 2008 and intercompany leases of approximately $800 million at April 30, 2009 and at October 31, 2008, both of which are eliminated in consolidation.

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⁽²⁾

Allowance for doubtful accounts includes both the short-term and the long-term portions of the allowance on financing receivables.

⁽³⁾

HPFS debt consists of intercompany equity that is treated as debt for segment reporting purposes, intercompany debt and debt issued directly by HPFS.

        Net portfolio assets at April 30, 2009 increased 4.4% from October 31, 2008. The increase resulted from higher levels of financing originations during the first six months of fiscal 2009, the effect of which was offset by an unfavorable currency impact and increased reserves. The overall percentage of portfolio assets reserves increased due primarily to higher specific customer reserves. In addition to the balances reflected above, HP assumed net portfolio assets of $89 million through the acquisition of EDS.

Portfolio Assets and Ratios

        HPFS maintains a strategy to generate a competitive return on equity by effectively leveraging its portfolio against the risks associated with interest rates and credit. The HPFS business model is asset-intensive and uses certain internal metrics to measure its performance against other financial services companies, including a segment balance sheet that is derived from our internal management reporting system. The accounting policies used to derive these amounts are substantially the same as those used by the consolidated company. However, certain intercompany loans and accounts that are reflected in the segment balances are eliminated in our Consolidated Condensed Financial Statements.

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        The portfolio assets and ratios derived from the segment balance sheet for HPFS were as follows:

⁽¹⁾

Portfolio assets include gross financing receivables of approximately $5.1 billion at both January 31, 2009 and October 31, 2008 and net equipment under operating leases of $1.8 billion at January 31, 2009 and at October 31, 2008, as disclosed in Note 9 to the Consolidated Condensed Financial Statements in Item 1, which is incorporated herein by reference. Portfolio assets also include capitalized profit on intercompany equipment transactions of approximately $600 million at January 31, 2009 and $700 million at October 31, 2008 and intercompany leases of approximately $800 million at both January 31, 2009 and at October 31, 2008, both of which are eliminated in consolidation.

⁽²⁾

Allowance for doubtful accounts includes both the short-term and the long-term portions of the allowance on financing receivables.

⁽³⁾

HPFS debt consists of intercompany equity that is treated as debt for segment reporting purposes, intercompany debt and debt issued directly by HPFS.

        Net portfolio assets at January 31, 2009 increased 0.1% from October 31, 2008. The increase resulted from higher levels of financing originations during the first quarter of fiscal 2009, the effect of which was offset by an unfavorable currency impact and increased reserves. The overall percentage of portfolio assets reserves increased due primarily to higher specific customer reserves. In addition to the balances reflected above, HP assumed net portfolio assets of $109 million through the acquisition of EDS.

Portfolio Assets and Ratios

        HPFS maintains a strategy to generate a competitive return on equity by effectively leveraging its portfolio against the risks associated with interest rates and credit. The HPFS business model is asset-intensive and uses certain internal metrics to measure its performance against other financial services companies, including a segment balance sheet that is derived from our internal management reporting system. The accounting policies used to derive these amounts is substantially the same as those used by the consolidated company. However, certain intercompany loans and accounts that are reflected in the segment balances are eliminated in our Consolidated Financial Statements.

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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)

        The portfolio assets and ratios derived from the segment balance sheet for HPFS were as follows for the following fiscal years ended October 31:

⁽¹⁾

Portfolio assets include gross financing receivables of approximately $5.1 billion at October 31, 2008 and $5.4 billion at October 31, 2007 and net equipment under operating leases of $1.8 billion at October 31, 2008 and at October 31, 2007, as disclosed in Note 10 to the Consolidated Financial Statements in Item 8, which is incorporated herein by reference. Portfolio assets also include capitalized profit on intercompany equipment transactions of approximately $700 million at October 31, 2008 and $500 million at October 31, 2007, and intercompany leases of approximately $800 million at October 31, 2008 and $700 million at October 31, 2007, both of which are eliminated in consolidation.

⁽²⁾

HPFS debt consists of intercompany equity that is treated as debt for segment reporting purposes, intercompany debt and debt issued directly by HPFS.

        Net portfolio assets at October 31, 2008 decreased 2% from October 31, 2007. The decrease resulted from unfavorable currency impact partially offset by financing originations in fiscal 2008. The overall percentage of portfolio assets reserved increased due primarily to higher specific customer reserves. HPFS funds its operations mainly through a combination of intercompany debt and equity. In addition to the balances reflected above, HP assumed net portfolio assets of $140 million through the acquisition of EDS.

Portfolio Assets and Ratios

        HPFS maintains a strategy to generate a competitive return on equity by effectively leveraging its portfolio against the risks
associated with interest rates and credit. The HPFS business model is asset-intensive and uses certain internal metrics to measure its performance against other financial services companies, including
a segment balance sheet that is derived from our internal management reporting system. The accounting policies used to derive these amounts is substantially the same as those used by the consolidated
company. However, certain intercompany loans and accounts that are reflected in the segment balances are eliminated in our Consolidated Financial Statements.

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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)

        The portfolio assets and ratios derived from the segment balance sheet for HPFS were as follows for the following fiscal years ended October 31:

⁽¹⁾

Portfolio
assets include gross financing receivables of approximately $5.1 billion at October 31, 2008 and $5.4 billion
at October 31, 2007 and net equipment under operating leases of $1.8 billion at October 31, 2008 and at October 31, 2007, as disclosed in Note 10 to the Consolidated
Financial Statements in Item 8, which is incorporated herein by reference. Portfolio assets also include capitalized profit on intercompany equipment transactions of approximately
$700 million at October 31, 2008 and $500 million at October 31, 2007, and intercompany leases of approximately $800 million at October 31, 2008 and
$700 million at October 31, 2007, both of which are eliminated in consolidation.

⁽²⁾

HPFS
debt consists of intercompany equity that is treated as debt for segment reporting purposes, intercompany debt and debt issued directly
by HPFS.

        Net
portfolio assets at October 31, 2008 decreased 2% from October 31, 2007. The decrease resulted from unfavorable currency impact partially offset by financing
originations in fiscal 2008. The overall percentage of portfolio assets reserved increased due primarily to higher specific customer reserves. HPFS funds its operations mainly through a combination of
intercompany debt and equity. In addition
to the balances reflected above, HP assumed net portfolio assets of $140 million through the acquisition of EDS.

Portfolio Assets and Ratios

        HPFS maintains a strategy to generate a competitive return on equity by effectively leveraging its portfolio against the risks associated with interest rates and credit. The HPFS business model is asset-intensive and uses certain internal metrics to measure its performance against other financial services companies, including a segment balance sheet that is derived from our internal management reporting system. The accounting policies used to derive these amounts are substantially the same as those used by the consolidated company. However, certain intercompany loans and accounts that are reflected in the segment balances are eliminated in our Consolidated Condensed Financial Statements.

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        The portfolio assets and ratios derived from the segment balance sheet for HPFS were as follows:

⁽¹⁾

Portfolio assets include gross financing receivables of approximately $5.5 billion at July 31, 2008 and $5.4 billion at October 31, 2007 and net equipment under operating leases of $2.1 billion at July 31, 2008 and $1.8 billion at October 31, 2007, as disclosed in Note 8 to the Consolidated Condensed Financial Statements in Item 1, which is incorporated herein by reference. Portfolio assets also include capitalized profit on intercompany equipment transactions of approximately $600 million at July 31, 2008 and $500 million at October 31, 2007, and intercompany leases of approximately $700 million at both July 31, 2008 and October 31, 2007, both of which are eliminated in consolidation.

⁽²⁾

Allowance for doubtful accounts includes both the short-term and the long-term portions of the allowance on financing receivables.

⁽³⁾

HPFS debt consists of intercompany equity that is treated as debt for segment reporting purposes, intercompany debt and debt issued directly by HPFS.

        Portfolio assets at July 31, 2008 increased 5% from October 31, 2007. The increase resulted from a high level of financing originations in the first nine months of fiscal 2008 and a favorable currency impact.

Portfolio Assets and Ratios

        HPFS maintains a strategy to generate a competitive return on equity by effectively leveraging its portfolio against the risks associated with interest rates and credit. The HPFS business model is asset-intensive and uses certain internal metrics to measure its performance against other financial services companies, including a segment balance sheet that is derived from our internal management reporting system. The accounting policies used to derive these amounts are substantially the same as those used by the consolidated company. However, certain intercompany loans and accounts that are reflected in the segment balances are eliminated in our Consolidated Condensed Financial Statements.

        The portfolio assets and ratios derived from the segment balance sheet for HPFS were as follows:

⁽¹⁾

Portfolio assets include gross financing receivables of approximately $5.5 billion at April 30, 2008 and $5.4 billion at October 31, 2007 and net equipment under operating leases of $1.8 billion each at April 30, 2008 and October 31, 2007, as disclosed in Note 8 to the Consolidated Condensed Financial Statements in Item 1, which is incorporated herein by reference. Portfolio assets also include capitalized profit on intercompany equipment transactions of approximately $600 million at April 30, 2008 and $500 million at October 31, 2007, and intercompany leases of approximately $800 million at April 30, 2008 and $700 million at October 31, 2007, both of which are eliminated in consolidation.

⁽²⁾

HPFS debt consists of intercompany equity that is treated as debt for segment reporting purposes, intercompany debt and debt issued directly by HPFS.

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        Portfolio assets at April 30, 2008 increased 4% from October 31, 2007. The increase resulted from a favorable currency impact and a high level of financing originations in the first six months of fiscal 2008.