Hewlett-Packard (HPQ)

Shares Reserved

        Shares available for future grant under the ESPP and stock-based compensation plans were 181,704,000 at October 31, 2007, including 45,312,000 shares under the assumed Compaq plans; 217,556,000 at October 31, 2006, including 39,151,000 shares under the assumed Compaq plans; and 260,669,000 at October 31, 2005, including 32,449,000 shares under the assumed Compaq plans.

94

        HP had 549,045,000 shares of common stock reserved at October 31, 2007, 664,267,000 shares of common stock reserved at October 31, 2006, and 794,750,000 shares of common stock reserved at October 31, 2005 for future issuance under all stock-related benefit plans. Additionally, HP had 21,494,000 shares of common stock reserved at each of October 31, 2007, October 31, 2006 and October 31, 2005 for future issuances related to conversion of its outstanding zero-coupon subordinated notes.

Note 3: Net Earnings Per Share

        HP calculates basic earnings per share ("EPS") using net earnings and the weighted-average number of shares outstanding during the reporting period. Diluted EPS includes the effect from potential issuance of common stock, such as stock issuable pursuant to the exercise of stock options and the assumed conversion of convertible notes.

        The reconciliation of the numerators and denominators of the basic and diluted EPS calculations was as follows for the following fiscal years ended October 31:

        HP excludes options with exercise prices that are greater than the average market price from the calculation of diluted EPS because their effect would be anti-dilutive. In fiscal 2007, 2006 and 2005, HP excluded 60 million shares, 130 million shares and 255 million shares, respectively, from its diluted EPS calculation. Also, as a result of adopting SFAS 123R on November 1, 2005, HP excluded from the calculation of diluted EPS options to purchase an additional 33 million shares and 48 million shares in fiscal 2007 and fiscal 2006, respectively, whose combined exercise price, unamortized fair value and excess tax benefits were greater in each of those periods than the average market price for HP's common stock, as their effect would be anti-dilutive. In addition, HP excluded approximately 8 million

95

shares of HP stock issuable upon the assumed conversion of zero-coupon subordinated notes from the calculation of diluted EPS in fiscal 2005 because the effect was anti-dilutive.

Note 4: Balance Sheet Details

        Balance sheet details were as follows for the following fiscal years ended October 31:

Shares Reserved

        Shares available for the ESPP and stock-based compensation plans were 217,556,000 at October 31, 2006, including 39,151,000 shares under the assumed Compaq plans, 260,669,000 at October 31, 2005, including 32,449,000 shares under the assumed Compaq plans; and 257,554,000 at October 31, 2004, including 29,123,000 shares under the assumed Compaq plans.

        HP had 664,267,000 shares of common stock reserved at October 31, 2006, 794,750,000 shares of common stock reserved at October 31, 2005, and 808,855,000 shares of common stock reserved at October 31, 2004 for future issuance under all stock-related benefit plans. Additionally, HP had 21,494,000 shares of common stock reserved at October 31, 2006, 2005, and 2004 for future issuances related to conversion of its outstanding zero-coupon subordinated notes.

Shares Reserved

        Shares available for the ESPP and incentive compensation plans were 260,669,000 at October 31, 2005, including 32,449,000 shares under the assumed Compaq plans; 257,554,000 at October 31, 2004, including 29,123,000 shares under the assumed Compaq plans; and 168,951,000 at October 31, 2003, including 42,967,000 shares under the assumed Compaq plans.

        HP had 794,750,000 shares of common stock reserved at October 31, 2005, 808,855,000 shares of common stock reserved at October 31, 2004, and 670,929,000 shares of common stock reserved at October 31, 2003 for future issuance under all stock-related benefit plans. Additionally, HP had 21,494,000 shares of common stock reserved at October 31, 2005, 2004, and 2003 for future issuances related to conversion of its outstanding zero-coupon subordinated notes.

Shares Reserved

        Shares available for the ESPP and incentive compensation plans were 257,554,000 at October 31, 2004, including 29,123,000 shares under the assumed Compaq plans, and 168,951,000 at October 31, 2003, including 42,967,000 shares under the assumed Compaq plans.

        HP had 808,855,000 shares of common stock reserved at October 31, 2004 and 670,929,000 shares of common stock reserved at October 31, 2003 for future issuance under stock-related benefit plans. Additionally, HP had 21,494,000 shares of common stock reserved at October 31, 2004 and 2003 for future issuances related to conversion of zero-coupon subordinated notes.