SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE
REQUIRED]
For the fiscal year ended: July 31, 1993
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
[NO FEE REQUIRED]
For the transition period from _____ to _____
Commission file number: 1-4423
A. Full title of the plan and address of the
plan, if different from that of the issuer
named below:
HEWLETT-PACKARD COMPANY
TAX SAVING CAPITAL ACCUMULATION PLAN
B. Name of issuer of the securities held pursuant
to the plan and the address of its principal
executive office:
HEWLETT-PACKARD COMPANY
3000 Hanover Street
Palo Alto, CA 94304
REQUIRED INFORMATION
Hewlett-Packard Company
Tax Saving Capital Accumulation Plan
Index to Financial Statements
Page
Report of Independent Accountants 1
(a) Financial Statements
Statement of Net Assets Available for Benefits
at July 31, 1993 and July 31, 1992 2
Statement of Changes in Net Assets Available for Benefits
for the Years Ended July 31, 1993 and 1992 3
Fund Level Statement of Net Assets Available for Benefits
at July 31, 1993 and 1992 4-5
Fund Level Statement of Changes in Net Assets Available
for Benefits for the Years Ended July 31, 1993 and 1992 6-7
Notes to Financial Statements 8-11
Additional Information
Schedule I - Assets Held for Investment at July 31, 1993 12
Schedule II - Transactions Occurring During the Year Ended
July 31, 1993 Which Were in Excess of 5% of the
Current Value of Plan Assets as of the Beginning
of the Year (August 1, 1992) 13
Note: Other schedules required by Section 2520.103-10 of the
Department of Labor Rules and Regulations for Reporting
and Disclosure under ERISA have been omitted because
they are not applicable.
(b) Exhibits:
1. Hewlett-Packard Company Tax Saving
Capital Accumulation Plan, as Amended and
Restated Effective November 1, 1988,
which was filed as Exhibit 4A to
Registrant's Post-Effective Amendment No.
3 to Form S-8 Registration Statement No.
2-92331, and which is incorporated herein
by reference.
2. Description of Tax Saving Capital
Accumulation Plan included in the 1993
Edition of "Your Hewlett-Packard Benefits
Summary" booklet which is distributed to
employees of Hewlett-Packard Company and
its U.S. subsidiaries.
3. Consent of Independent Accountants.
SIGNATURES
The Plan. Pursuant to the requirements of
the Securities Exchange Act of 1934, the trustees
(or other persons who administer the employee
benefit plan) have duly caused this annual report
to be signed by the undersigned thereunto duly
authorized.
HEWLETT-PACKARD COMPANY
TAX SAVING CAPITAL ACCUMULATION PLAN
/s/ Ann O. Baskins
------------------
Ann O. Baskins
Assistant Secretary and
Managing Counsel,
Hewlett-Packard Company, Plan Administrator
Date: January 25, 1994
Report of Independent Accountants
To the Participants and Administrator of
the Hewlett-Packard Company Tax Saving
Capital Accumulation Plan
In our opinion, the financial statements listed in the accompanying
index present fairly, in all material respects, the net assets available
for benefits of the Hewlett-Packard Company (the Company) Tax
Saving Capital Accumulation Plan at July 31, 1993 and 1992, and
the changes in its net assets available for benefits for the years then
ended, in conformity with generally accepted accounting principles.
These financial statements are the responsibility of the Company's
management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits
of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the
overall financial statement presentation. We believe that our audits
provide a reasonable basis for the opinion expressed above.
Our audits were made for the purpose of forming an opinion on the
basic financial statements taken as a whole. The additional
information included in Schedules I and II is presented for purposes
of additional analysis and is not a required part of the basic financial
statements but is additional information required by ERISA. Such
information has been subjected to the procedures applied in the
audits of the basic financial statements and, in our opinion, is fairly
stated in all material respects in relation to the basic financial
statements taken as a whole.
Price Waterhouse
San Francisco, California
September 24, 1993
<TABLE>
Hewlett-Packard Company
Tax Saving Capital Accumulation Plan
Statement of Net Assets Available for Benefits
(In thousands)
<CAPTION>
July 31,
1993 1992
<S> <C> <C>
Assets:
Investments:
Hewlett-Packard Company Common Stock
(Cost: $209,316 and $195,803 at July 31, 1993
and July 31, 1992, respectively) $ 300,524 $311,273
Fidelity Magellan Fund
(Cost: $445,231 and $324,754 at July 31, 1993
and July 31, 1992, respectively) 471,609 319,820
Fidelity U.S. Equity Index Portfolio
(Cost: $40,530 and $21,754 at July 31, 1993
and July 31, 1992, respectively) 42,800 22,893
Fidelity Intermediate Bond Fund
(Cost: $45,889 and $27,895 at July 31, 1993
and July 31, 1992, respectively) 47,274 28,690
Fidelity Retirement Money Market Portfolio
(Cost: $131,780 and $105,886 at July 31, 1993
and July 31, 1992, respectively) 131,780 105,886
Fidelity Institutional Cash Portfolio Money Market
(Cost: $23,873 and $21,678 at July 31, 1993
and July 31, 1992, respectively) 23,873 21,678
Fidelity U.S. Government Reserves Portfolio
(Cost: $4,008 and $874 at July 31, 1993
and July 31, 1992, respectively) 4,008 874
Loans receivable from participants 57,087 46,523
---------- --------
Total assets held for investment 1,078,955 857,637
Receivables:
Receivable from Hewlett-Packard Company 15,664 13,896
Due from brokers for securities sold 537 1,898
Miscellaneous receivables 892 74
---------- --------
Total assets 1,096,048 873,505
---------- --------
Liabilities:
Due to brokers for securities purchased 935
Administrative expenses payable 174 151
Miscellaneous payables 279
---------- --------
Total liabilities 1,109 430
---------- --------
Net assets $1,094,939 $873,075
========== ========
The accompanying notes are an integral part of these financial statements.
-2-
</TABLE>
<TABLE>
Hewlett-Packard Company
Tax Saving Capital Accumulation Plan
Statement of Changes in Net Assets Available for Benefits
(In thousands)
For the year ended
July 31,
1993 1992
<S> <C> <C>
Contributions:
Employees $96,853 $82,618
Company 29,483 26,214
Non-cash 28,372 22,195
Investment income:
Net appreciation in fair value
of investments:
Hewlett-Packard Company Common Stock 102 83,581
Net investment gain from registered
investment companies:
Fidelity Magellan Fund 79,232 34,964
Fidelity U.S. Equity Index Portfolio 2,690 1,746
Fidelity Intermediate Bond Fund 3,947 2,251
Loan interest income 3,907 3,573
Interest income 3,993 4,999
Dividend income 3,681 2,845
Transfer from Avantek, Inc.
Profit-Sharing Investment Plan 21,502 ---
---------- --------
Total additions 273,762 264,986
Amounts paid to participants 48,881 70,356
Loans deemed repaid due to termination 2,117 2,812
Administrative expenses 900 818
---------- --------
Total deductions 51,898 73,986
Net additions 221,864 191,000
Net assets allocated to participants:
Beginning of year 873,075 682,075
---------- --------
End of year $1,094,939 $873,075
========== ========
The accompanying notes are an integral part of these financial statements.
-3-
</TABLE>
<TABLE>
Hewlett-Packard Company
Tax Saving Capital Accumulation Plan
Fund Level Statement of Net Assets Available for Benefits
July 31, 1993
(In thousands)
<CAPTION>
Stock Equity Equity Index Bond Money Market Loan Total
<S> <C> <C> <C> <C> <C> <C> <C>
Assets:
Investments:
Hewlett-Packard Company
Common Stock $300,524 $ 300,524
Fidelity Magellan Fund $471,609 471,609
Fidelity U.S. Equity Index Portfolio $42,800 42,800
Fidelity Intermediate Bond Fund $ 47,274 47,274
Fidelity Retirement Money
Market Portfolio $131,780 131,780
Fidelity Institutional Cash
Portfolio Money Market 23,873 23,873
Fidelity U.S. Government
Reserves Portfolio 4,008 4,008
Loans receivable from participants $57,087 57,087
-------- -------- ------- ------- -------- ------- ----------
Total assets held for
investment 328,405 471,609 42,800 47,274 131,780 57,087 1,078,955
Receivables:
Receivable from Hewlett-
Packard Company 3,464 7,978 1,059 925 2,238 15,664
Due from brokers for
securities sold 537 537
Miscellaneous receivables 892 892
Fund transfer to be made (18,859) 12,175 1,671 1,432 3,581 0
-------- -------- ------- ------- -------- ------- ----------
Total assets 314,439 491,762 45,530 49,631 137,599 57,087 1,096,048
-------- -------- ------- ------- -------- ------- ----------
Liabilities:
Due to brokers for
securities purchased 935 935
Administrative expenses payable 35 54 8 14 63 174
-------- -------- ------- ------- -------- ------- ----------
Total liabilities 970 54 8 14 63 0 1,109
-------- -------- ------- ------- -------- ------- ----------
Net assets $313,469 $491,708 $45,522 $49,617 $137,536 $57,087 $1,094,939
======== ======== ======= ======= ======== ======= ==========
The accompanying notes are an integral part of these financial statements.
-4-
</TABLE>
<TABLE>
Hewlett-Packard Company
Tax Saving Capital Accumulation Plan
Fund Level Statement of Net Assets Available for Benefits
July 31, 1992
(In thousands)
<CAPTION>
Stock Equity Equity Index Bond Money Market Loan Total
Assets
<S> <C> <C> <C> <C> <C> <C> <C>
Investments:
Hewlett-Packard Company
Common Stock $311,273 $311,273
Fidelity Magellan Fund $319,820 319,820
Fidelity U.S. Equity
Index Portfolio $ 22,893 22,893
Fidelity Intermediate Bond Fund $ 28,690 28,690
Fidelity Retirement Money
Market Portfolio $105,886 105,886
Fidelity Institutional Cash
Portfolio Money Market 21,678 21,678
Fidelity U.S. Government
Reserves Portfolio 874 874
Loans receivable from participants $ 46,523 46,523
________ ________ ________ ________ ________ ________ ________
Total assets held for
investment 333,825 319,820 22,893 28,690 105,886 46,523 857,637
Receivables:
Receivable from Hewlett-
Packard Company 3,423 6,819 612 666 2,376 13,896
Due from brokers for
securities sold 1,898 1,898
Miscellaneous receivables 74 74
Fund transfer to be made (16,476) 10,622 1,301 1,084 3,469 0
________ ________ ________ ________ ________ ________ ________
Total assets 322,744 337,261 24,806 30,440 111,731 46,523 873,505
________ ________ ________ ________ ________ ________ ________
Liabilities:
Administrative expenses payable 36 45 5 9 56 151
Miscellaneous payables 279 279
________ ________ ________ ________ ________ ________ ________
Total liabilities 315 45 5 9 56 0 430
________ ________ ________ ________ ________ ________ ________
Net assets $322,429 $337,216 $ 24,801 $ 30,431 $111,675 $ 46,523 $873,075
======== ======== ======== ======== ======== ======== ========
The accompanying notes are an integral part of these financial statements.
-5-
</TABLE>
<TABLE>
Hewlett-Packard Company
Tax Saving Capital Accumulation Plan
Fund Level Statement of Changes in Net Assets Available for Benefits
For the Year Ended July 31, 1993
(In thousands)
<CAPTION>
Stock Equity Equity Index Bond Money Market Loan Total
<S> <C> <C> <C> <C> <C> <C> <C>
Contributions:
Employees $ 3,787 $ 56,937 $ 8,579 $ 7,955 $ 19,369 $ 226 $ 96,853
Company 1,118 18,117 2,399 2,128 5,721 29,483
Non-cash 28,372 28,372
Investment income:
Net appreciation in fair value
of investments:
Hewlett-Packard Company
Common Stock 102 102
Net investment gain from registered
investment companies:
Fidelity Magellan Fund 79,232 79,232
Fidelity U.S. Equity Index
Portfolio 2,690 2,690
Fidelity Intermediate Bond Fund 3,947 3,947
Loan interest income 1,287 1,693 152 158 617 3,907
Interest income 87 3,906 3,993
Dividend income 3,681 3,681
Transfer from Avantek, Inc.
Profit-Sharing Investment Plan 3,536 17,966 21,502
-------- -------- ------- ------- -------- ------- ----------
Total additions 38,434 159,515 13,820 14,188 47,579 226 273,762
Amounts paid to participants 13,337 19,378 1,664 2,563 11,939 48,881
Loans deemed repaid due to
termination 2,117 2,117
Administrative expenses 147 202 28 49 248 226 900
-------- -------- ------- ------- -------- ------- ----------
Total deductions 13,484 19,580 1,692 2,612 12,187 2,343 51,898
-------- -------- ------- ------- -------- ------- ----------
Asset transfers between funds:
Loans issued (8,899) (16,046) (1,945) (2,800) (12,038) 41,728 0
Loans repayments 9,011 12,923 1,164 1,264 4,685 (29,047) 0
Amounts reallocated among funds (34,022) 17,680 9,374 9,146 (2,178) 0
-------- -------- ------- ------- -------- ------- ----------
Net (deductions)/additions (8,960) 154,492 20,721 19,186 25,861 10,564 221,864
Net assets allocated to participants:
Beginning of year 322,429 337,216 24,801 30,431 111,675 46,523 873,075
-------- -------- ------- ------- -------- ------- ----------
End of year $313,469 $491,708 $45,522 $49,617 $137,536 $57,087 $1,094,939
======== ======== ======= ======= ======== ======= ==========
The accompanying notes are an integral part of these financial statements.
-6-
</TABLE>
<TABLE>
Hewlett-Packard Company
Tax Saving Capital Accumulation Plan
Fund Level Statement of Changes in Net Assets Available for Benefits
For the Year Ended July 31, 1992
(In thousands)
<CAPTION>
Stock Equity Equity Index Bond Money Market Loan Total
<S> <C> <C> <C> <C> <C> <C> <C>
Contributions:
Employees $ 7,853 $ 48,032 $ 4,291 $ 4,177 $ 18,050 $ 215 $ 82,618
Company 2,444 15,575 1,310 1,262 5,623 26,214
Non-cash 22,195 22,195
Investment income:
Net appreciation in fair value
of investments:
Hewlett-Packard Company
Common Stock 83,581 83,581
Net investment gain from registered
investment companies:
Fidelity Magellan Fund 34,964 34,964
Fidelity U.S. Equity Index
Portfolio 1,746 1,746
Fidelity Intermediate Bond Fund 2,251 2,251
Loan interest income 1,195 1,569 92 98 619 3,573
Interest income 92 4,907 4,999
Dividend income 2,845 2,845
--------- -------- -------- ------- -------- ------- --------
Total additions 120,205 100,140 7,439 7,788 29,199 215 264,986
Amounts paid to participants 23,413 28,522 1,137 2,082 15,202 70,356
Loans deemed repaid due to termination 2,812 2,812
Administrative expenses 184 164 14 26 215 215 818
--------- -------- -------- ------- -------- ------- --------
Total deductions 23,597 28,686 1,151 2,108 15,417 3,027 73,986
Asset transfers between funds:
Loans issued (9,629) (12,776) (1,063) (1,438) (10,658) 35,564 0
Loans repayments 8,077 10,736 740 749 4,143 (24,445) 0
Amounts reallocated among funds (45,187) 17,578 18,836 25,440 (16,667) 0
--------- -------- -------- ------- -------- ------- -------
Net additions/(deductions) 49,869 86,992 24,801 30,431 (9,400) 8,307 191,000
Net assets allocated to participants:
Beginning of year 272,560 250,224 121,075 38,216 682,075
--------- -------- -------- ------- -------- ------- --------
End of year $322,429 $337,216 $ 24,801 $30,431 $111,675 $46,523 $873,075
======== ======== ======== ======= ======== ======= ========
The accompanying notes are an integral part of these financial statements.
-7-
</TABLE>
Hewlett-Packard Company
Tax Saving Capital Accumulation Plan
Notes to Financial Statements
1. Plan Description
The following brief description of the Hewlett-Packard Company (the
Company) Tax Saving Capital Accumulation Plan (the Plan) is provided
for general information purposes only and is effective as of July 31,
1993. Participants should refer to the Plan agreement for a more
complete description of the Plan's provisions. The purpose of the
Plan is to provide a convenient way for eligible employees to share
in the ownership, earnings and growth of the Company, thereby offering
them an additional incentive to continue their careers with the Company.
Additionally, the Plan provides eligible employees an opportunity to
save for their retirement to supplement benefits provided under the
Company's retirement programs and the Federal Social Security Act.
The Plan is designed to qualify as a stock bonus plan under Section
401(a) of the Internal Revenue Code of 1986, as amended (the Code), and
to meet the requirements set forth in Section 401(k) of the Code. The
Plan is also intended to qualify as an individual account plan which
permits each participant to exercise control over certain assets of the
Plan pursuant to Section 404(c) of the Employee Retirement Income
Security Act (ERISA).
Employees who are eligible to participate in the 401(k) program include
those employees of the Company and designated domestic subsidiaries who
are on the U.S. payroll and who are employed as regular full-time or
regular part-time employees by the Company one year after their
original hire date. Participation in the 401(k) program is at the
election of the employee. Mr. David Packard, who retired as Chairman
of the Board effective November 1, 1993, was not eligible to participate
in the Plan.
Participating employees may have their salary deferred by the Company
through payroll deductions and contributions made directly to their
401(k) account. The deferrals are funded by the Company at the end of
each payroll period. In addition, the Company contributes to the
employee's account one-third of the amount which has been deferred and
contributed on behalf of the employee. The Company matching
contribution is funded after the close of each fiscal quarter and
includes interest earned on deferrals prior to investment in the
participant's elected investment options. Employees are one hundred
percent vested in the Plan.
Employees can invest their account balance and/or future contributions
in any combination of the five investment options. Participating
employees can transfer their invested funds among the investment
options and/or change the investment of their future contributions
daily as desired. These transfers and changes can be made in whole
percent increments.
All contributions made under the Plan are paid to and invested by the
trustee in one or more of five investment options. Contributions can
be invested in short-term investments prior to the purchase of fund
securities. Four of the investment options are mutual funds of
Fidelity Investments, managed by the Fidelity Management and Research
Company. The five investment funds are:
-8-
Hewlett-Packard Company
Tax Saving Capital Accumulation Plan
Notes to Financial Statements
Stock Fund - A fund comprised primarily of Hewlett-Packard
Company common stock purchased on the open market or
contributed by the Company. The fund also includes
the Fidelity Institutional Cash Portfolio Money
Market and the Fidelity U.S. Government Reserves
Portfolio.
Equity Fund - A fund comprised of investments in the Fidelity
Magellan Fund. The fund manager makes investments
primarily in common stock and securities convertible
into common stock.
Equity Index Fund - A fund comprised of investments in the Fidelity
U.S. Equity Index Portfolio. The fund manager
makes investments in equity securities and
attempts to duplicate the composition and total
returns of the Standard & Poor's Daily Stock Price
Index of 500 Common Stocks.
Bond Fund - A fund comprised of investments in Fidelity
Intermediate Bond Fund. Investments are made in
high and upper medium grade fixed income
obligations, and may include U.S. government and
agency securities, corporate bonds, bank
obligations, and similar instruments.
Money Market Fund - A fund comprised of investments in Fidelity
Retirement Money Market Portfolio. Investments
are made in high quality, U.S. dollar-denominated
money market instruments of U.S. and foreign
issuers, including short-term obligations of
banks, governments and their agencies and
corporations.
Employees are permitted to borrow portions of their account balance.
The loan amount and term are limited by the Code and ERISA. Funds for
the loans are obtained by liquidating the investment in the employee's
account. Principal and interest payments, representing repayments of
loans taken by participants, are typically made through payroll
deductions and are paid directly into the employee's account after the
end of each semi-monthly payroll period. Loans may be repaid in full
at any time following the issuance of the loan.
The Plan also provides for hardship withdrawals subject to certain
restrictions as outlined in the Plan document.
Although the company has no present intention to terminate the Plan,
the Plan provides that in the event of Plan termination, participants'
interest accrued to the date of termination shall be nonforfeitable.
Benefits shall continue to be distributed in accordance with the Plan.
The trustee shall continue in its capacity until all assets of the Plan
have been distributed to the participants. Benefits are payable in a
lump sum. Certain participants from certain companies acquired by the
Company may elect to take their benefits as an annuity.
-9-
Hewlett-Packard Company
Tax Saving Capital Accumulation Plan
Notes to Financial Statements
Fidelity Investments provides investment management, record keeping and
trustee services for the Plan. The Company determines questions of
eligibility for participation, interprets the Plan, communicates with
participants and their beneficiaries and is otherwise generally
responsible for Plan operations.
2. Summary of Significant Accounting Policies
The financial statements are prepared on the accrual basis of
accounting with investments being carried at current market value, as
quoted on the active market. Loans to participants are valued at their
outstanding principal amount.
Realized gains/losses on investments sold and the unrealized
gains/losses on investments held during the year are determined on a
revalued cost basis.
All dividends and capital distributions received from the Fidelity
Magellan Fund, Fidelity U.S. Equity Index Portfolio, and Fidelity
Intermediate Bond Fund are reinvested, and are recognized as part of
the net investment gains from registered investment companies.
All direct administrative expenses are borne by the Plan as allowed by
law.
3. Contributions
Employee and Company contributions are made in cash for all Funds
except the Stock Fund. Contributions to the Stock Fund may be made in
either cash or Hewlett-Packard Company common stock. Stock
contributions attributable to employee deferrals totaled $21,279,000 in
1993 and $16,646,000 in 1992. Stock contributions attributable to
Company contributions totaled $7,093,000 in 1993 and $5,549,000 in
1992. Contributions of Hewlett-Packard Company common stock are valued
at their fair market value, as quoted on the active market, on the date
of contribution.
4. Investments
For the years ended July 31, 1993 and 1992, the net appreciation in the
fair market value of the Hewlett-Packard Company common stock held
during the year comprised realized gains of $2,737,000 and $4,981,000,
respectively, and unrealized losses of $2,635,000 and unrealized gains
of $78,600,000, respectively.
-10-
Hewlett-Packard Company
Tax Saving Capital Accumulation Plan
Notes to Financial Statements
5. Taxes
The Company has received a favorable determination letter from the
Internal Revenue Service (IRS) as to the initial qualified status of
the Plan. Additionally, the Company has received a favorable
determination letter as to the amendments adopted relating to the
Retirement Equity and Deficit Reduction Acts of 1984 and to the Tax
Equity and Fiscal Responsibility Act of 1982. The Company has not yet
requested but intends to request a determination letter from the IRS
for the subsequent amendments adopted.
The Company's management is of the opinion that the Plan and the trust
which forms a part of the Plan have been maintained in accordance with
Section 401(a) of the Internal Revenue Code, and, therefore, it is
believed that the Plan continues to be qualified. Accordingly, no
provision for federal or state income tax has been provided.
Deferrals made on behalf of the employees and the Company's matching
contributions are not subject to federal income taxes until such time
as the employees' funds are withdrawn from the Plan. At withdrawal,
the employees' funds may qualify for special tax treatment. Pursuant
to the Unemployment Compensation amendments of 1992, effective January
1, 1993, all "eligible rollover distributions" which are not paid out
in the form of a direct rollover to an IRA or another qualified plan
are subject to a mandatory 20% federal income tax withholding. Loans
taken by employees against their 401(k) account are not subject to
federal income taxes if they are repaid within five years. However, if
the employee terminates with an outstanding loan, the employee will be
subject to taxation on the entire amount of the loan.
6. Transfer of Plan Assets
The Company acquired Avantek, Inc. (Avantek) on November 4, 1991 via a
cash acquisition. At the time of purchase, Avantek maintained the
Avantek, Inc. Profit-Sharing Investment Plan, a defined contribution
plan that provided retirement benefits for eligible employees. The
profit-sharing and after-tax participant accounts in the Avantek, Inc.
Profit-Sharing Investment Plan were transferred to a new plan, The
Profit-Sharing Plan of Avantek, Inc. on July 1, 1992. The remaining
pre-tax participant accounts in the Avantek, Inc. Profit-Sharing
Investment Plan were transferred to the Plan on October 1, 1992. The
Avantek, Inc. Profit-Sharing Investment Plan was subsequently
terminated. The plan termination was done pursuant to a favorable
Internal Revenue Service determination letter.
-11-
<TABLE>
Hewlett-Packard Company (Form 5500)
Tax Saving Capital Accumulation Plan (Plan 004)
Employer Identification Number 94-1081436 (Item 27a - Schedule of Assets
Schedule I - Assets Held for Investment at Held for Investment Purposes)
July 31, 1993
(In thousands except number of shares/loans)
<CAPTION>
Number of Historical Current
Issuer Description Shares/Loans Cost Value
<S> <C> <C> <C> <C>
Hewlett-Packard Company Common Stock, $1.00 par value 4,173,945 $ 209,316 $ 300,524
Fidelity Investments
Fidelity Magellan Fund Equity Mutual Fund, no par value 6,682,851 445,231 471,609
Fidelity Investments
Fidelity U.S. Equity Index Portfolio Equity Mutual Fund, no par value 2,552,144 40,530 42,800
Fidelity Investments
Fidelity Intermediate Bond Fund Fixed Income Mutual Fund, no par value 4,369,085 45,888 47,274
Fidelity Investments
Fidelity Retirement Money
Market Portfolio Money Market Fund, $1.00 par value 131,780,387 131,780 131,780
Fidelity Investments
Fidelity Institutional Cash Portfolio
Money Market Money Market Fund, $1.00 par value 23,872,972 23,873 23,873
Fidelity Investments
Fidelity U.S. Government Reserves
Portfolio Money Market Fund, $1.00 par value 4,008,428 4,008 4,008
Participant Loans Loans issued for terms of 1 - 4 years, with
6.5% interest during the 1993 Plan year 14,780 57,087
----------
Total assets held for investment $1,078,955
==========
-12-
</TABLE>
<TABLE>
Hewlett-Packard Company
Tax Saving Capital Accumulation Plan (Plan 004)
Employer Identification Number 94-1081436 Form 5500
Schedule II - Transactions Occurring During the Year Ended July 31, 1993 (Item 27d - Schedule of
Which Were in Excess of 5% of the Current Value of Plan Assets Reportable Transactions)
as of the Beginning of the Year (August 1, 1992)
Series of Transactions in the Same Security
(In thousands, except number of transactions)
<CAPTION>
Number Proceeds Cost of Net
Identity of Party Involved of from Assets Realized
Description of Asset Transactions Purchases Sales Disposed Gain/(Loss)
<S> <C> <C> <C> <C> <C>
Fidelity U.S. Government Reserves Portfolio
Money Market Fund 258 $ 73,156 $ 70,022 $ 70,022 $ -
Fidelity Retirement Money Market Portfolio
Money Market Fund 257 117,839 91,945 91,945 -
Fidelity Intermediate Bond Fund
Fixed Income Mutual Fund 257 39,431 21,678 21,437 (14)
Fidelity Magellan Fund
Equity Mutual Fund 252 201,950 81,492 81,473 818
Hewlett-Packard Company
Common Stock 110 57,571 68,599 44,058 2,737
Note: Cost of assets disposed is stated at historical cost. Net realized gain/(loss) is calculated as described in Note 2
to the financial statements. The normal expenses associated with asset purchases and sales are built into the cost
records and therefore are not shown separately here. Additionally, the number of transactions for the Fidelity funds
represent record keeping transaction activity, not the gross numbers of purchases and sales.
-13-
</TABLE>
EXHIBIT 2
CHAPTER 10
Tax Saving Capital Accumulation Plan
This section is a "Summary Plan Description" as required by the
Employee Retirement Income Security Act of 1974 (ERISA). This
section provides the highlights of the Plan, but it is far shorter
and less technical than the official Plan documents. The official
Plan documents are always used to determine when and what benefits
will be provided under the Plan.
You Will Find Information About On Page:
What TAXCAP Offers You . . . . . . . . . . . . . . . . . . . .139
Who Can Join The Plan. . . . . . . . . . . . . . . . . . . . .140
When You May Join The Plan . . . . . . . . . . . . . . . . . .140
How Much You May Defer . . . . . . . . . . . . . . . . . . . .140
How Your Deferrals Can Reduce Your Current Taxes . . . . . . .140
How Much HP Contributes. . . . . . . . . . . . . . . . . . . .141
How Your TAXCAP Account Is Invested. . . . . . . . . . . . . .141
When Payouts Are Made. . . . . . . . . . . . . . . . . . . . .142
How You Can Borrow From Your Account . . . . . . . . . . . . .144
Special Rules For Acquisition Employees. . . . . . . . . . . .146
How to Make Changes or Receive Your Money. . . . . . . . . . .146
How To Claim Benefits. . . . . . . . . . . . . . . . . . . . .147
If a Claim Is Denied . . . . . . . . . . . . . . . . . . . . .147
How You Can Make Rollover Contributions. . . . . . . . . . . .148
What Circumstances Can Affect Your Benefits. . . . . . . . . .149
How The Plan Is Funded . . . . . . . . . . . . . . . . . . . .150
How The Stock Purchase Plan Compares To TAXCAP . . . . . . . .151
138
What TAXCAP Offers You
Your retirement income comes from three sources: HP retirement
benefits, Social Security benefits and your personal savings. The
Company offers the Hewlett-Packard Company Tax Saving Capital
Accumulation Plan (TAXCAP) to help you accumulate personal savings
for retirement.
TAXCAP provides you:
An opportunity to share in the ownership and performance of HP.
An incentive to save regularly on a pretax basis and gain
additional contributions from HP.
The Plan in Brief
Hewlett-Packard administers and sponsors TAXCAP. The Company
determines eligibility for participation and benefits, interprets
the Plan and authorizes transactions.
In 1991, HP hired Fidelity Investments (Fidelity), a group of
affiliated financial service companies, to be the full-service
provider for TAXCAP. Full service is a package which offers
recordkeeping, trustee and investment management services.
Headquartered in Boston, with offices in 54 cities nationwide,
Fidelity is one of the largest and best known investment management
organizations in the country. The firm currently manages more than
$150 billion for more than nine million individual and
institutional accounts. As a leader in the mutual fund industry,
Fidelity has developed both investment products and services that
are now standard for the industry.
If you are a regular full-time or regular part-time employee, you
become eligible to join TAXCAP on the first February 1, May 1,
August 1, or November 1 which is one year after your original hire
date. You may also join the first of any following month after you
have satisfied the eligibility requirements.
Under TAXCAP, generally you can elect to have HP defer 1 to 6
percent of your pay into your TAXCAP account through payroll
deductions. However, if your Plan year compensation is less than
an amount defined by federal tax laws ($60,535 for the Plan year
ending July 31, 1992) you can defer up to 12 percent for the
following Plan year (beginning August 1, 1992). You will be
informed in August of each year whether your TAXCAP limit is 6
percent or 12 percent. The combined limit on your TAXCAP deferrals
and contributions to the Stock Purchase Plan is 12 percent.
For every $3 of your deferrals, HP contributes an additional $1
(which includes interest on your deferred contributions prior to
investment in your elected investment options) to your account. You
choose how you want to invest your TAXCAP deferred contributions
among five options: four mutual funds from the Fidelity family of
funds plus the HP Stock Fund. These options reflect risk versus
investment return opportunities ranging from conservative to
aggressive.
Saving in TAXCAP reduces your current income taxes. This is
because deferrals to your TAXCAP account are made before federal
and most state income taxes are calculated. In addition, you do
not pay any taxes on amounts in your account as long as they remain
in TAXCAP.
TAXCAP is offered to help you meet your long range financial goals.
Your full account value is paid when you leave HP or die. Because
of the tax advantages the Plan offers you, the government limits
withdrawals of your account before these events. While you are an
active employee, you can make in-service withdrawals either after
you reach age 59 1/2 or for reasons of hardship. You can also
borrow money from your account while you are an active employee.
The following pages describe the main provisions of TAXCAP. The
ERISA Information section of this book contains administrative
details and other information about the Plan.
The following special terms used to describe the provisions of the
Plan are more fully defined in the Glossary:
defer or deferrals
fiscal quarter
fiscal year
pay
Pension Benefit Guaranty Corporation (PBGC)
TAXCAP
valuation date
vested
years of service
139
Who Can Join The Plan
You are eligible to join the Plan only if you are a regular
full-time or regular part-time employee on the U.S. payroll except
employees in Puerto Rico. You are not eligible to join the Plan if
you are classified in any other employment status. If you meet the
eligibility requirements, you may enroll in the Plan-enrollment is
not automatic.
When You May Join The Plan
You may join TAXCAP on the first of any month, starting with the
first entry date one year after your original hire date. Entry
dates are February 1, May 1, August 1, and November 1. Your
Personnel Department will let you know when you first become
eligible.
For Example:
If your hire date is June 1, 1992, you may first enroll on August
1, 1993. That is the first entry date one year after your hire
date. If you choose not to enroll on August 1, 1993, you may
enroll as of the first day of any following month.
You can enroll in TAXCAP via HP's Telephone Activated Benefits
System - TABS. TABS phone number is 800-262-TABS or Telnet 857-TABS.
When you call TABS you must enter your desired deferral percentage
and specify the investment mix you want in 10 percent increments.
Once you have enrolled in TAXCAP via TABS, your participation will
begin in the first pay period after you become eligible.
Your Beneficiary
Once you enroll via TABS, you should also name a beneficiary to
receive your TAXCAP benefits at your death. A beneficiary form can
be obtained from your Personnel Department. If you are married,
your spouse will automatically be your sole beneficiary. If you
wish to name someone other than your spouse as beneficiary for any
part of your TAXCAP benefit, the law requires that you obtain your
spouse's written consent. This consent must be witnessed by a Plan
representative or a notary public. If your spouse does not provide
consent, the full value of your account will be paid to your spouse
in the event of your death, regardless of whom you have named as
beneficiary. If you remarry, any previous consent is no longer
valid and you must obtain your new spouse's consent. To change
your beneficiary, you must complete a new beneficiary form and
submit it to your Personnel Department.
If you do not name a beneficiary - or if your beneficiary is not
living at the time of your death - payment of your TAXCAP account
will be made, in the following order, to:
your surviving spouse
your surviving children - in equal portions
your surviving parents - in equal portions
your estate
How Much You May Defer
When you enroll, you authorize HP to defer up to your deferral
percentage limit of 1 to 12 percent of your pay through payroll
deductions from each paycheck. Generally, pay is your regular wage
or salary, including commissions and shift differential, but not
including overtime or bonuses. Pay is defined more completely in
the Glossary.
Your combined TAXCAP deferrals and Stock Purchase Plan
contributions cannot exceed 12 percent of your pay at any time. You
will be informed on your earnings statement for the July 31 pay
period the percentage you are eligible to defer for the following
Plan year (up to 6 percent or 12 percent).
You may change your deferral rate as of any pay period. You can
stop your deferrals at any time. However, when your deferrals
stop, so do HP's contributions. Once you have stopped, you can
resume your deferrals as of any February 1, May 1, August 1, or
November 1. YOUR DEFERRALS ARE PAID INTO THE TRUST ON THE
SCHEDULED HP PAYDAYS BUT ARE NOT INVESTED IN YOUR DESIGNATED
INVESTMENT OPTIONS UNTIL AFTER THE END OF EACH FISCAL QUARTER.
How Your Deferrals Can Reduce Your Current Taxes
Federal and most state income taxes are based on the portion of
your pay remaining after your deferrals have been taken. Therefore,
participating in TAXCAP lowers your current federal taxable income
and possibly lowers current state and local taxable income.
For Example:
Assume your annual pay is $35,000 and you elect to defer 6 percent
in TAXCAP. Your annual deferral will be $2,100. Although your
actual pay is $35,000, your taxable pay will be $32,900. This is
because you are deferring $2,100 in the Plan before taxes.
As of late 1992, the state of Pennsylvania and some cities are the
only tax-levying entities that consider your deferrals to be part
of your taxable income.
140
How Much HP Contributes
HP contributes $1 (which includes interest on your deferred
contributions prior to investment in your elected investment
options) for every $3 you defer in the Plan. You do not pay any
income taxes on HP's contributions until you receive them from the
Plan.
HP's contributions are paid into the trust after the end of each
fiscal quarter. HP's contributions will be added to your account
if you:
Are an employee on the last business day of the fiscal quarter.
Retired from HP at age 55 or older and had at least 15 years of
service, as defined in the retirement plan, with HP.
Died during the quarter.
How Your TAXCAP Account Is Invested
You can choose to invest the money in your TAXCAP account among the
five investment options described below. Investment earnings or
dividends will be reinvested in the options you have chosen and
included in your account balance. You can invest your account
entirely in one option or can divide it among the five options, in
any combination.
For Example:
You can choose to invest 100 percent in one option or choose to
invest 10 percent in one option, 60 percent in another, 20 percent
in a third, and 10 percent in a fourth.
After the end of each fiscal quarter, your deferrals and HP's
contributions are invested as you choose. In the following
paragraphs, the options are described beginning with the most
conservative and ending with the most aggressive.
Fidelity Retirement Money Market Portfolio - Retirement Money
Market Portfolio is a money market fund. It seeks as high a level
of current income as is consistent with the preservation of
principal and liquidity. It invests in high-quality, U.S. dollar-
denominated money market instruments of U.S. and foreign issuers.
While the Portfolio seeks to maintain a $1.00 share price, there is
no assurance that it will be able to do so. An investment in the
Portfolio is not insured or guaranteed by the U.S. government. The
Portfolio's yield will fluctuate. Retirement Money Market Portfolio
is a conservative, relatively low-risk investment.
Fidelity Intermediate Bond Fund - Intermediate Bond Fund is an
income fund. It seeks a high level of current income by investing
primarily in investment-grade fixed income obligations rated Baa or
better by Moody's or BBB or better by Standard & Poor's, including
corporate bonds, mortgage securities, bank obligations and U.S.
government and agency securities. The Fund's dollar-weighted
average portfolio maturity ranges between three and ten years. The
Fund's share price, yield and return will fluctuate.
Fidelity U.S. Equity Index Portfolio - U.S. Equity Index Portfolio
is a growth and income fund. It seeks investment results that
correspond to the total return performance of the S&P 500 Index,
which is comprised of common stocks. Dividend amounts will vary.
The Portfolio's share price and return will fluctuate.
Fidelity Magellan Fund - Magellan Fund is a growth fund. It
seeks long-term capital appreciation by investing in the stocks of
both well-known and lesser known companies with potentially
above-average growth potential and a correspondingly higher level
of risk. Securities may be of foreign and domestic companies. The
Fund's share price and return will fluctuate.
Hewlett-Packard Stock Fund - The Hewlett-Packard Stock Fund
enables you to become a stockholder in the Company and to
participate in HP's growth by investing almost exclusively in
Hewlett-Packard Common Stock. Like a mutual fund, this option
holds a small percentage of high-quality money market instruments
providing the option with same day exchangeability without the
five-day-settlement period normally associated with purchases and
sales of common stocks. Unlike a mutual fund, this option is
neither a managed nor diversified portfolio and is subject to both
the normal external factors affecting the general level of stock
prices and to specific factors affecting HP. As a TAXCAP par-
ticipant investing in the Hewlett-Packard Stock Fund, you have the
right to vote the full shares of stock represented by your TAXCAP
account. Each year before the annual meeting, information will be
mailed to you that will enable you to exercise your voting right.
If you do not specify how your account is to be invested the entire
amount will automatically be invested in the Fidelity Retirement
Money Market Portfolio which is the most conservative investment.
Once you have enrolled in TAXCAP you may change your investment
mixes for future contributions in 1 percent increments as often as
you feel necessary by calling Fidelity at their toll free number
800-457-4015. You may also exchange your current account balance
as often as you feel necessary by calling Fidelity at this number.
141
Fund Information
To obtain your current account balances or performance and
investment information about the Fidelity funds offered in TAXCAP,
call the Fidelity toll-free automated phone line at 800-457-4015,
24 hours a day, seven days a week. To access your account, you
must have your Social Security number, the TAXCAP number - 89740,
your date of birth, and the fund codes. The fund codes are:
Fidelity Retirement Money Market Portfolio 0630
Fidelity Intermediate Bond Fund 0032
Fidelity U.S. Equity Index Portfolio 0650
Fidelity Magellan Fund 0021
HP Stock Fund 8655
To exchange existing assets from one investment option to another
or to redirect your future contributions to a different investment
option with the help of a Fidelity representative, you can call the
same toll-free number, 800-457-4015. A Fidelity representative is
on duty from 8:30 am to 8:00 pm Eastern Time. FIDELITY
REPRESENTATIVES CAN ONLY GIVE INFORMATION ABOUT THE FUNDS AND
LIMITED PLAN INFORMATION. THEY CANNOT PROVIDE FINANCIAL ADVICE.
If you have a hearing impairment, you can call Fidelity toll-free
at 800-835-5089 to conduct account transactions or to get specific
information about your TAXCAP account. A Fidelity representative
will be available to answer your questions any business day from
8:30 am to 8:00 pm Eastern Time.
Quarterly Participant Statements
Approximately four weeks after the end of each fiscal quarter you
will receive a statement from Fidelity summarizing all of your
account activity and administrative costs since the last statement
and the total value of your account.
The information provided includes:
the beginning balance, which is the closing balance from the
previous statement
investment performance (gains or losses)
investment elections (mixes)
any fund exchange activities that you authorized for the quarter
your deferrals for the quarter
loan information
HP's contributions for the quarter (which include interest on
your deferred contributions prior to investment in your elected
investment options)
your ending balance
administrative costs
Administrative costs for TAXCAP include administrative costs for
both Fidelity and TAXCAP Administration in Corporate Offices. The
costs are divided among participants based on the number of
individuals enrolled in the Plan. The administrative costs are
expected to be $16 to $18 per participant, per year and are a line
item on the TAXCAP quarterly participant statement.
How You Vest in Your Account
You are 100 percent vested in the value of all funds contributed to
your account from the moment they are placed in your account. This
includes your deferrals, HP's contributions, rollover
contributions, and gains or losses. The trustee holds the assets
for your exclusive benefit and they cannot be used for any other
purpose.
Being immediately 100 percent vested does not mean you have
immediate access to the funds. Rather, it means that 100 percent
of your account can be distributed if you leave HP or die.
When Payouts Are Made
The primary purpose of TAXCAP is to help you meet your long-range
financial goals. Therefore, your account value is only payable
when you leave HP or die. EXCEPTIONS: While you are still an HP
employee, you can request an in-service hardship withdrawal, or
after you reach age 59 1/2, you can withdraw all or part of your
account.
When Your HP Career Ends
The full value of your TAXCAP account is payable when you leave HP
or die.
You must elect a distribution option on the TAXCAP Payment
Application at Termination of Participant form before you leave HP.
The distribution options you have are:
lump sum amount in cash
HP stock and cash (only available if you are invested in the HP
Stock Fund)
a direct rollover from TAXCAP to a Fidelity Investments
Individual Retirement Account (IRA)
a direct rollover from TAXCAP to any other Individual Retirement
Arrangement or another qualified plan
142
If you elect a direct rollover form of payment, no federal or state
income tax withholding will apply to the amount directly rolled
over. If you elect to have a portion of your TAXCAP account paid
directly to you, that portion of the distribution and any loan
amount outstanding in your account will be subject to mandatory 20
percent federal income tax withholding and, where applicable,
elective state income tax withholding. You can avoid the mandatory
federal income tax withholding by electing to roll over 100 percent
of your distribution through the direct rollover options.
If you elect to be paid in HP stock for your investments in the HP
Stock Fund, you will receive an HP stock certificate for the
equivalent number of whole shares in your HP Stock Fund. The
remainder of your TAXCAP account after the stock shares are issued
will be paid in cash. This distribution is subject to the
mandatory 20 percent federal income tax withholding. However,
income tax will be withheld only to the extent that cash is
available.
If you do not make a distribution election within 60 days after the
time of termination and your account balance is $3,500 or less, or
your account balance exceeds $3,500 and you have a loan
outstanding, then your full account balance will default to payment
in cash and the 20 percent mandatory federal income tax withholding
will apply.
If you do not elect a form of payment at the time of termination
and your account balance exceeds $3,500, and you have no loan
outstanding, distribution of your account balance will not be made
until TAXCAP Administration receives a signed TAXCAP Payment
Application at Termination of Participant form.
If you terminate between quarters, you are not eligible for the
company contribution for the quarter in which you terminate unless
your termination is due to retirement (at least age 55 with 15 or
more years of retirement plan service) or death. If you terminate
on the last business day of the quarter, you are eligible for a
company contribution.
Any benefit paid from the Plan will be based on the valuation date
immediately following the next HP payday after Fidelity's receipt
of your claim from HP. See the Glossary for the definition of
"valuation date" for TAXCAP.
While You Are an HP Employee
Withdrawals from TAXCAP are available after age 59 1/2. After you
reach age 59 1/2, you may withdraw all or part of your account.
The minimum amount you can withdraw is $1,000, or if there is less
in the account, the entire value of the account. The withdrawal
will be subject to mandatory 20 percent federal income tax
withholding unless it is directly rolled over. The withdrawal will
not be subject to the 10 percent early withdrawal tax penalty.
Hardship withdrawals are available to participants who meet certain
stringent Internal Revenue Service (IRS) requirements. The
following financial needs qualify a participant for a TAXCAP
hardship withdrawal:
Unreimbursed medical expenses for you, your spouse or dependents.
Purchase or construction of your principal residence.
Payment of tuition and related educational fees for the next 12
months of post-secondary education for you, your spouse, your
children, or dependents.
Prevention of eviction from or foreclosure on the mortgage on
your principal residence.
Funeral expenses of a family member.
As a further requirement for applying for a hardship withdrawal,
you must exhaust all other financial resources available to you.
One of these resources is loans available through TAXCAP. You must
have two TAXCAP loans outstanding prior to applying for a hardship
withdrawal. If you are not eligible to apply for a loan, then you
may apply for a hardship withdrawal directly.
As a condition of receiving your hardship withdrawal, the IRS
requires that you will be unable to contribute to TAXCAP or the HP
Stock Purchase Plan until the beginning of the quarter following
one year from the date of your hardship withdrawal. The combined
amount of your deferrals into TAXCAP for the year you request a
hardship withdrawal and the next calendar year will be limited to
the next year's maximum employee pre-tax contribution limit as set
by the IRS.
The minimum withdrawal amount is the lesser of $1,000 or all that
is available. All withdrawals are subject to mandatory 20 percent
federal income tax withholding unless directly rolled over.
Hardship withdrawals may be subject to a 10 percent early
withdrawal tax penalty. There are exceptions to the 10 percent tax
penalty so you should consult your accountant or tax advisor.
Withdrawals are funded through the sale of your TAXCAP investments
beginning with the most conservative and progressing to the most
aggressive investment fund.
To request a withdrawal, call Fidelity at 800-457-4015 for your
available withdrawal amount and an application. Fill out the
required information and mail the application to Hewlett-Packard
Company, TAXCAP Administration, 3000 Hanover Street, Palo Alto,
California, 94304, MS 20CAX. There is no processing fee for
in-service withdrawals.
In-service withdrawal requests are processed each Wednesday by
TAXCAP Administration, and checks are issued from Fidelity within
10 business days after the application is received by TAXCAP
Administration.
143
How You Can Borrow From Your Account
While you are an active employee, regular full-time or regular
part-time, you can borrow from your TAXCAP account. You cannot
borrow from your account if you are on a medical, military, or
personal leave of absence, or receiving benefits under the Income
Protection Plan.
The maximum amount available is 50 percent of the account balance
(including outstanding loan amounts) on the date of valuation less
any loan balance outstanding. The total of all loans is limited to
$50,000 minus the highest loan balance outstanding during the prior
12-month period. Loans are subject to a $1,000 minimum. No more
than two loans can be outstanding at any time.
This chart shows the maximum outstanding loan amount you may have
at any one time.
If your TAXCAP account The maximum/outstanding
balance is... loan amount is...
$2,000 - $100,000 50 percent of
account balance
$100,000+ $50,000
To initiate a loan, call Fidelity at 800-457-4015. Once you have
provided the proper security information, the Fidelity
representative will guide you through the steps of the loan process
and inform you of any restrictions that may apply (maximum
allowable loan amount, etc.). The Fidelity representative will
complete the loan application over the phone once you have accepted
the terms of the loan. The loan application includes the
confirmation number for the loan, and the terms of the loan
including the principal amount, interest rate, payback period for
the loan, and payroll deduction amount.
Your eligibility for a loan is based on your account value as of
the date you call Fidelity to request a loan application.
Your loan application is dated by the Fidelity phone representative
and becomes void on the 30th day after the date of your request.
You will receive the application from Fidelity via U.S. mail. If
you find the application to be in order, you must sign it, keep a
copy for yourself and forward the remaining copy to TAXCAP
Administration in Corporate Offices. Your application must be
accompanied by a $35 processing fee, payable to Hewlett-Packard
Company. The processing fee is non-refundable. If you do not
agree with the personalized loan information stated on the
application, you can call Fidelity to change this information and
receive a new application.
Loan applications are processed each Wednesday by TAXCAP
Administration, and checks are issued from Fidelity within 10
business days after the application is received by TAXCAP
Administration. Any loan applications received by TAXCAP after the
expiration date will not be processed.
How Your Loan Is Funded
Your loan will be funded through the sale of your TAXCAP
investments beginning with the most conservative fund and
progressing to the most aggressive fund.
For Example:
You have a total of $30,000 in TAXCAP investments. You have
$10,000 in the Retirement Money Market Portfolio, $10,000 in the
Intermediate Bond Fund and $10,000 in the Magellan Fund. If you
want to take a $15,000 loan, $10,000 will come from your Retirement
Money Market Portfolio and the remaining $5,000 will come from your
Intermediate Bond Fund.
How You Repay Your Loan
You repay your loan through automatic, irrevocable payroll
deductions. You can choose to repay the loan over one two, three,
or four years. TAXCAP loan interest rates are determined by the
prime rate on the last business day of the month preceding the loan
request plus 1/2 percent. The loan interest rate may change
monthly. TAXCAP loans are amortized on a semi-monthly basis.
Amounts repaid are reinvested semi-monthly based on your investment
elections (mixes) in effect at the time of reinvestment.
Payroll deductions for your loan will begin approximately two weeks
after receipt of the loan distribution check. Repayments,
including interest paid, will be taken out of your paycheck each
payday. Payroll deductions CANNOT be discontinued until the loan
is fully repaid.
144
Loan Prepayment
If you wish, you may prepay the full amount of the outstanding
principal and accrued interest without penalty. You cannot make
partial prepayments except in the case of certain personal leaves
of absence.
To initiate a prepayment, you can call Fidelity at 800-457-4015.
Once you have provided the proper security information, the
Fidelity representative will guide you through the steps of the
prepayment process. The Fidelity representative will provide you
with the prepayment amount and the terms of the prepayment
transaction.
If you want to have your prepayment effective for the end of the
current month you must call Fidelity on or before the second payday
of the month. If the request is made after this date, Fidelity
will inform you that the prepayment will be effective for the next
month.
Once you have agreed to the terms of the prepayment, Fidelity will
process your loan prepayment application and send it to you. Upon
receipt of the application, you must sign it, attach a money order,
cashier's check or HP Credit Union teller check - payable to
Fidelity Investments - and send both the application and check to
TAXCAP Administration in Corporate Offices.
In order to have your prepayment effective in the current month,
TAXCAP Administration must receive the completed application and
check from you on or before the last business day of the month.
If your application is received after this time, the prepayment
application is void. All prepayment applications received by
TAXCAP Administration by the last business day of the month will
be forwarded to Fidelity. Fidelity will process your loan
prepayment on the following payday. The prepayment will be
invested according to your investment elections (mixes) on file at
the time of repayment to the TAXCAP trust fund. The next statement
that you receive will reflect that your loan is paid in full.
If you are transferring to a foreign entity or to HP's Flex Force
as an On-Contract or On-Call employee, you must prepay your loan in
full prior to transfer.
Loan Repayment Due to Leave of Absence
IRS restrictions regarding loans prohibit the employee from
defaulting on a loan. The loan MUST be repaid per the terms of the
loan. If you are going on a medical leave of absence and you have
an outstanding TAXCAP loan, you do not have to prepay your loan
unless you so desire. However, if you are taking a military or
personal (this includes parental) leave, you must prepay ALL
anticipated missed payments during your leave. In some instances,
you may be required to prepay the entire loan before being granted
time off for a leave.
The loan repayment procedure for leaves is as follows. You and
your personnel representative will determine the amount of the
repayment. Personnel will forward your money order, cashier's
check, or HP Credit Union teller check - made payable to Fidelity
Investments - to TAXCAP Administration for review and processing on
the last business day of each pay period. Fidelity will process
the repayment on the payday following receipt. Your repayments
will either be entered as individual payments (if payroll
deductions were just interrupted and you will be returning from
leave) or as a lump sum (if the amount is a full repayment). If
applicable, you will resume payroll deductions upon returning to
work. Repayments will be invested according to your investment
election (mixes) on file at the time of repayment to the TAXCAP
trust fund.
Outstanding Loan at Termination
If you leave HP while a loan is outstanding, the amount you owe
will be subtracted from the payout of your TAXCAP account. For
income tax purposes, HP will report the amount you owe on your loan
as part of the total payout you received from the Plan. Therefore,
the entire amount distributed from the Plan - including the
outstanding loan amount and interest due - is taxable income and
subject to 20 percent mandatory federal income tax withholding
unless the part of your account actually distributed from TAXCAP is
subject to a direct rollover. You can defer taxation on your loan
amount by rolling over this amount to an Individual Retirement
Arrangement (IRA) or another qualified plan within 60 days of the
distribution.
145
Special Rules for Acquisition Employees
If you were formerly employed by Avantek or AOT and had money
transferred from the Avantek or AOT plan to TAXCAP, there are
special TAXCAP rules described in this section that apply to you.
In addition to cash or HP stock distributions upon termination of
employment, you may also receive your distribution in various
annuity forms of benefit - single life, joint and survivor or term
certain annuities. Former Avantek plan participants may also elect
an in-service withdrawal of any money formerly attributed to a
"rollover account" in the Avantek plan.
Upon termination of employment, you will need spousal consent to
receive your distribution in any form other than a joint and
survivor annuity. You will also need spousal consent to receive
in-service withdrawals (at age 59 1/2, for hardship, or for an
Avantek rollover account) as well as for loans.
The rules regarding beneficiary designations described at page 140
will apply to you. In addition, if you name someone other than
your spouse as beneficiary before the plan year in which you turn
age 35, you must complete a new form in the plan year you turn age
35 or your spouse will automatically become your beneficiary.
Special claim forms for former Avantek and AOT plan participants
have been prepared and will be provided to you as needed. These
forms will reflect the special rules described in this section.
How to Make Changes or Receive Your Money
This chart provides a brief summary of how to change the way you
are participating in TAXCAP and to receive money from you account.
If You Want To... You Need To...
Enroll in the Plan. Call TABS at 800-262-TABS or
Telnet 800-262-TABS or Telnet
857-TABS and enroll in TAXCAP. You
must enter your desired deferral
percentage and specify the
investment mix you want in 10
percent increments. Once you have
enrolled in TAXCAP, your
participation will begin in the
first pay period after you become
eligible. It is your responsibility
to complete a beneficiary
designation form for TAXCAP and
return it to your personnel
representative upon enrollment.
Change your deferral Call TABS and make the desired
percentage. deferral percentage changes. TABS
will tell you when your changes will
become effective.
Stop making deferrals into Call TABS and change your deferral
TAXCAP (that is, to 0 percent. Your deferral will
change the percentage to stop as of the first possible
zero). pay period after you call TABS.
TABS will tell you when your
deferrals will be stopped.
Resume making deferrals to Call TABS to re-enroll. TABS
TAXCAP after you have will tell you when you are eligible
stopped. to begin deferrals again.
Resume making deferrals Take no action. Your deferrals
after a period of suspension will resume automatically at
due to a formal leave of the previous percentage when you
absence. absence. return. If you wish to
change your percentage or cease
deferrals entirely, call TABS upon
your return. TABS will tell you
when your deferral amount will be
changed or stopped.
146
How to Make Changes or Receive Your Money continued
If You Want To... You Need To...
Change your beneficiaries. Complete a new beneficiary form. If
you are married and your spouse is
not named as your sole beneficiary,
your TAXCAP account will be
distributed to your spouse upon your
death unless the spousal consent
section on the beneficiary form is
completed. The change in
beneficiary will be effective when
the completed beneficiary form is
received by your Personnel
Department.
Apply for a withdrawal after Call Fidelity Investments at
age 59 1/2. 800-457-4015 to obtain an
application. Once Fidelity mails
you the application, sign it and
send it to TAXCAP Administration.
Apply for a hardship Call Fidelity Investments at
withdrawal. 800-457-4015 to obtain an
application. Once Fidelity mails
you the application, sign it and
send it to TAXCAP Administration.
Apply for a loan. Call Fidelity Investments at
800-457-4015 to obtain a loan
application. Once Fidelity mails
you the application, sign it and
send it and a $35 non-refundable
check made out to Hewlett-Packard
Company to TAXCAP Administration.
Elect payout options. Complete a TAXCAP Payment
Application at Termination of
Participant form and return it to
your Personnel Department prior to
termination of employment with HP.
How To Claim Benefits
To receive payment of your TAXCAP account balance, you should
complete and return the TAXCAP Payment Application at Termination
of Participant form to your Personnel Department prior to leaving
HP. A TAXCAP Payment Application at Termination of Participant
form is available from your Personnel Department.
If information provided results in incorrect benefit amounts
(whether the information is false, wrong or incomplete), the
benefit amount will be adjusted. If HP pays a larger benefit
amount than it should have, reasonable steps will be taken to
recover the overpayment.
If a Qualified Domestic Relations Order has required the Plan to
set aside a portion of your account for payment to your ex-spouse
or children, you will have no rights to that portion of the value
of your account. If HP determines that a person who is to receive
benefits has become unable to handle them properly, the Company may
make any reasonable arrangement to distribute the benefits on the
person's behalf.
If a Claim Is Denied
If all or part of a claim is denied, HP will notify the claimant
(you or your beneficiary) in writing, within 90 days after the
claim is received. This notice will explain:
Why the claim was denied and the specific Plan provisions on
which the denial is based.
What additional information is needed and why.
How to appeal the denial.
The Plan's review procedure.
If you or your beneficiary do not receive this notice within 90
days after HP receives the claim, you or your beneficiary can
consider the claim denied. To appeal a claim denial, use the
procedure described in the next section.
147
How to Appeal a Denied Claim
You or your beneficiary can appeal a denied claim by submitting a
written request for the appeal to the Plan's Review Panel. You or
your beneficiary must make the request within 60 days after the
date of the denial. If you or your beneficiary do not receive a
written denial, you must make the request within 150 days after the
date you first filed the claim.
Send the written request to:
Review Panel Under the Hewlett-Packard Company Tax Saving Capital
Accumulation Plan
3000 Hanover Street, 20CAX
Palo Alto, CA 94304
The request must explain why you or your beneficiary believe an
appeal is in order and it must include supporting facts and any
other pertinent information. HP will let you or your beneficiary
review any pertinent documents which legally can be disclosed in
preparing the request.
The Review Panel will act upon the request within 60 days after
receiving it. The Panel may ask for additional time, but a
decision, in writing, will be given within 120 days after the date
of the written request for appeal. You or your beneficiary will
receive a written explanation of the reasons for the Panel's
decision. If you or your beneficiary do not receive notice of the
Panel's decision by the end of the 120-day period, you may
consider the appeal denied.
If the Panel decides that benefits should have been paid, HP will
take whatever action is necessary to pay them as soon as possible
after receiving notice of the Panel's decision.
You Cannot Assign Benefits
No action can be taken to assign your interest in the Plan or your
account to anyone other than you. However, a court order that
divides your benefits under this Plan as part of a marital
settlement agreement will be allowed if it is a Qualified Domestic
Relations Order as defined by law and approved by the Company.
How You Can Make
Rollover Contributions
If you are a newly hired or rehired employee, you may be able to
make a rollover contribution to the Plan before you are otherwise
eligible to enroll. You may do this as described in this section
if the check is made payable to you. You may also make a direct
rollover, as prescribed by law, into TAXCAP if the check is made
payable to Fidelity Investments as trustee of the TAXCAP.
A rollover contribution is a contribution you make to the Plan with
the funds distributed to you from another qualified retirement plan
in order to preserve the tax deferred status of the money. A
rollover contribution will be allowed if HP decides that all IRS
requirements have been met.
There are two situations when you may make a rollover contribution
to TAXCAP with a payout from a qualified retirement plan from a
previous employer:
You are still in possession of this payout and less than 60 days
have elapsed since the date the payout was received by you.
You originally rolled the payout into a new and separate IRA.
See your Personnel Department for a rollover contribution form if
you think you are qualified.
148
What Circumstances Can Affect Your Benefits
The chart below describes situations which can affect your
benefits.
This Situation Has This Effect on Your Account
You leave HP. Your deferrals and HP's
contributions end. You elect a
payout option of HP stock, and/or
2cash, or direct rollover to a
Fidelity Investments or other IRA,
or qualified plan of your choice.
TAXCAP termination distributions are
processed semi-monthly provided
payout options have been entered
into HP's payroll/benefits system.
You take an unpaid personal, Your deferrals and HP's
medical or military leave contributions are suspended
of absence. during leave of absence. Your
deferrals and HP's contrib- utions
resume automatically once you return
to active employment status. You
are not eligible to take a loan
while on leave.
You are disabled and on the You may continue your
HP Income Protection Plan, deferrals and HP's contributions
integrating FTO and in the under TAXCAP. The amount
first 90 days of disability. contributed will be a percent-
age of both your IPP benefits
and the pay you receive from HP
while on IPP. You are not
eligible to take a loan while
on IPP.
You are disabled and have As with FTO accrual, cash
been on the Income profit-sharing and the Stock
Protection Plan for 90 Purchase Plan, you will no
days. You are still longer be able to participate
integrating benefits. in TAXCAP. You are not
eligible to take a loan while
on IPP.
You die. Your deferrals and HP's
contributions end. Your
beneficiaries may elect a
payout option of HP stock,
and/or cash or a direct
rollover to an IRA. TAXCAP
termination distributions are
processed semi-monthly provided
payment application forms from
the beneficiary are received by
TAXCAP Administration.
If You Leave and Are Rehired
If you leave HP and are rehired, your eligibility to enroll will be
measured from your original hire date, as if you had never left. It
does not matter whether you had previously participated in TAXCAP
or not. Therefore, if less than a year has passed since your
original hire date, you become eligible to enroll, after you are on
HP's payroll, on the same entry date on which you would have been
eligible when you were first hired. If more than a year has passed
since your original hire date and you are already eligible to
enroll when you return, you may enroll immediately or on the first
day of any following month, after you are on HP's payroll.
Under no circumstances will you receive a payout while on HP's
payroll. Payment cannot be made until you leave HP or die.
When Your Participation Is Automatically Suspended
Your participation in TAXCAP is automatically suspended while you
are on:
a leave of absence without pay
military leave
a non-U.S. Hewlett-Packard payroll
the HP Income Protection Plan after 90 days of disability (The
suspension will start with the pay period after the 90th day.
However, your deferrals before the 90th day will be eligible for
HP's contributions.)
149
During this time, you cannot make deferrals and HP will not make
any contributions to your account. Your account will continue to
share in the performance of the investment options you have
selected. Your deferrals will automatically resume when you return
to active employment status.
How Your Deferrals May Be Limited
The Internal Revenue Code places a limit on the amount you may
defer in TAXCAP during a calendar year. This limit is $8,728 for
calendar year 1992. At the time of this printing, the calendar
1993 limit was not yet available. This limit does not include HP's
contributions.
In addition, the IRS requires the Plan to pass a special test -
called a non-discrimination test - designed to ensure a fair mix of
deferrals and HP's contributions among employees at all income
levels. If the Plan does not meet the test, it may be necessary to
reduce the deferral rate of higher-paid participants from time to
time. If so, the percentage of pay that those participants may
defer may be reduced below 6 percent. You will be notified if you
are affected by this test.
TAXCAP Participation Does Not Affect Your Other HP Benefits
Although participating in TAXCAP reduces your taxable pay, it does
not affect your Social Security or other pay-related-HP benefits,
nor will participation affect future pay increases.
How HP Contributions May Be Limited
The law limits the maximum annual contributions HP can make to your
TAXCAP account when combined with contributions to your Deferred
Profit-Sharing Plan account. Currently, the maximum amount HP can
contribute to both accounts combined each year - including your
TAXCAP deferrals - cannot exceed $30,000 or 25 percent of
compensation, whichever is less. This limit generally will apply
only to certain highly paid employees. The Company will notify
you if this limit applies to you.
TAXCAP deferrals may only be taken from the first $228,860 of
covered compensation (that is, wages or salary, commissions and
shift differential) in the Plan year August 1, 1992 through July
31, 1993. This limitation will be adjusted for cost of living by
the Secretary of the Treasury.
Changing or Ending the Plan
Although HP expects to continue the Plan indefinitely, the Company
reserves the right to amend or terminate the Plan at any time. No
amendment of the Plan will reduce the benefits that any participant
has accumulated before the date the amendment is adopted, except as
allowed by law.
The assets of the trust fund exist to provide benefits under the
Plan and to pay reasonable expenses of administering the Plan. No
amendment may divert any part of the assets for other purposes.
If the Plan is terminated, each participant retains a 100 percent
vested non-forfeitable right in his or her Plan accounts. No part
of the trust funds will revert to HP.
Under present law, the Pension Benefit Guaranty Corporation does
not insure the adequacy of trusts such as TAXCAP. Therefore,
benefits under TAXCAP are not insured.
This Plan is subject to Internal Revenue Service approval under the
Internal Revenue Code. The Plan and this book are subject to any
changes required by the Internal Revenue Service to meet applicable
federal rules and regulations.
Income Tax Withholding
A new federal law, The Unemployment Compensation Amendments of
1992, imposes a mandatory 20 percent federal tax withholding rate
on distributions that are not directly and immediately rolled over
to an individual retirement account or individual retirement
annuity (both referred to as IRAs) or to another qualified plan.
If you request that any portion of your TAXCAP account balance be
paid directly to you, you will have 20 percent of that distribution
withheld as federal income taxes. In general, this applies to most
distributions, e.g., a distribution upon termination from HP, a
withdrawal at or after age 59 1/2 or a hardship withdrawal - but not
a TAXCAP loan.
The Company will provide you with a statement entitled TAXCAP
Special Tax Notice Regarding Plan Payments whenever you make a
withdrawal from the Plan. This statement will give you general
information about taxation of your benefits at the time your
benefits are payable.
Special rules apply for payments made to individuals who live
outside the U.S.
How The Plan Is Funded
HP makes its contributions to the Plan's trust fund based on the
amount contributed by Plan participants. Assets in this trust are
invested according to the directions of the Plan participants
within the guidelines established by the Company.
All the money in this trust is used exclusively for providing Plan
benefits to eligible employees and beneficiaries and for paying the
cost of administering the Plan.
150
How The Stock Purchase Plan Compares To TAXCAP
The following chart compares the Stock Purchase Plan to TAXCAP.
A Comparison
Stock Purchase Plan TAXCAP
Eligibility Regular full-time and Regular full-time and
regular part-time employees regular part-time
after one year of active employees one year
service. after the original
hire date.
Earliest Date February 1, May 1, February 1, May 1,
Participation August 1, or November 1, August 1, or November
Starts after meeting eligibility 1, after meeting
requirements. eligibility
requirements.
Employee Generally 1 to 10 percent Generally 1 to 6
Contributions of pay. Combined maximum percent of pay.
or Deferrals of 12 percent if you are Combined maximum of
in both Plans. 12 percent if you
are in both Plans.
Company Shares For every two Employee One dollar for every
or Shares purchased, HP three dollars the
Contributions contributes one additional employee contributes.
share. The Company Shares (The company
are subject to a two-year contribution includes
restriction period. interest on
participant's deferred
contributions prior to
investment in your
elected investment
options.)
Income Taxes Income taxes are withheld Income taxes are not
on Employee from contributions. withheld from deferral
Contributions Taxes are also withheld amounts.
or Deferrals at the time of purchase
at quarter end, if the
valuation price is greater
than the purchase price.
Withholding Income taxes are withheld Income taxes are not
Taxes on on Company Shares at withheld from company
Company the end of the contributions.
Contributions restriction period.
Access to Unrestricted shares can Leaving HP or upon
Funds be withdrawn or sold at death; in-service
any time. To receive Company withdrawals
Shares, employees must hold ($1,000 minimum)
their Employee Shares for are available at age
two years; or upon 59 1/2; in-service
retirement or death. hardship withdrawals
are available upon
meeting certain IRS
requirements.
Loans From Not allowed. Allowed--$1,000
Account minimum.
Form of HP stock or cash. HP stock, cash, or
Payout a combination.
Stopping If due to withdrawal Stays in trust, HP
Contributions from Stock Purchase contributions are made
or Deferrals Plan, refunded and at the end of the
During Quarter no company quarter.
contributions. If due
to leave of absence,
purchase and match will
occur.
151
EXHIBIT 3
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference of the
Registration Statement constituting part of Post-Effective Amendment
No. 3 to the Registration Statement on Form S-8 (registration
No. 2-92331) of the Hewlett-Packard Company Tax Saving Capital
Accumulation Plan of our report dated September 24, 1993 appearing
on page 1 of this Form 11-K.
Price Waterhouse
San Francisco, California
January 25, 1994
