HP 2005 Annual Report Download - page 117

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HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Note 15: Retirement and Post-Retirement Benefit Plans (Continued)
The Medicare Act reduced HP’s post-retirement medical plan obligations and expense during fiscal
2005 and 2004. See Note 1 for a full description of the impact of the Medicare Act as adopted by HP,
which is incorporated herein by reference.
Defined Contribution Plans
HP offers various defined contribution plans for U.S. and non-U.S. employees. Total defined
contribution expense was $422 million in fiscal 2005, $405 million in fiscal 2004 and $377 million in
fiscal 2003. U.S. employees are automatically enrolled in the Hewlett-Packard Company 401(k) Plan
(the ‘‘HP 401(k) Plan’’) when they meet eligibility requirements, unless they decline participation. On
May 3, 2002, HP assumed sponsorship of the Compaq Computer Corporation 401(k) Investment Plan
(the ‘‘Compaq 401(k) Plan’’). Effective January 1, 2004, HP merged the Compaq 401(k) Plan into the
HP 401(k) Plan.
During fiscal 2005, HP matched employee contributions to the HP 401(k) Plan with cash
contributions up to a maximum of 4% of eligible compensation. During the last eight months of
calendar 2002, for the Compaq 401(k) Plan only, HP matched up to a maximum of 6% of eligible
compensation. Effective January 1, 2006 newly-hired employees, rehired employees and employees
whose combination of age plus years of service is less than 62 will be eligible for a 6% HP matching
contribution.
Effective January 31, 2004, HP desginated the HP Stock Fund, an investment option under the HP
401(k) Plan, as an Employee Stock Ownership Plan and, as a result, participants in the HP Stock Fund
may receive dividends in cash or may reinvest such dividends into the HP Stock Fund. HP paid
approximately $12 million and $13 million in dividends for the HP common shares held by the HP
Stock Fund in fiscal 2005 and 2004, respectively. HP records the dividends as a reduction of retained
earnings in the Consolidated Statements of Stockholders’ Equity. The HP Stock Fund held
approximately 34 million shares of HP common stock at October 31, 2005.
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