June 28, 2001
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington D.C. 20549
Re: Hewlett-Packard Company
Commission File No. 1-4423
Annual Report on Form 11-K for
The Tax Saving Capital Accumulation Plan
Ladies and Gentlemen:
Pursuant to Section 15(d) of the Securities Exchange Act of 1934, as amended, I
am transmitting on behalf of Hewlett-Packard Company its Annual Report on Form
11-K for the Tax Saving Capital Accumulation Plan for the fiscal year January 1,
2000 to December 31, 2000.
Very truly yours,
/s/ ANN O. BASKINS
-------------------
ANN O. BASKINS
Vice President
General Counsel and
Secretary
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 December 31, 2000
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, CALIFORNIA 94304
REQUIRED INFORMATION
HEWLETT-PACKARD COMPANY
TAX SAVING CAPITAL ACCUMULATION PLAN
INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE
DECEMBER 31, 2000 AND 1999
--------------------------------------------------------------------------------
Page
----
Independent Accountants' Report........................................ 1
Financial Statements:
Statements of Net Assets Available for Benefits........................ 2
Statements of Changes in Net Assets Available for Benefits............. 3
Notes to Financial Statements.......................................... 4
Supplemental Schedule as of December 31, 2000:
Schedule of Assets Held for Investment Purposes........................ 11
Note: Other schedules required by Section 2520.103-10 of the Department of
Labor's Rules and Regulations for Reporting and Disclosure under the
Employee Retirement Income Security Act of 1974 have been omitted
because they are not applicable.
INDEPENDENT ACCOUNTANTS' REPORT
To the Participants and Administrator of
The Hewlett-Packard Company
Tax Saving Capital Accumulation Plan
We have audited the financial statements of the Hewlett-Packard Company Tax
Saving Capital Accumulation Plan (the Plan) as of December 31, 2000, and for the
year then ended, as listed in the accompanying table of contents. These
financial statements are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements based on
our audit. Other auditors were engaged to audit the financial statements and
supplemental schedule of the Plan as of and for the year ended December 31,
1999, and in their report dated June 15, 2000, they expressed an unqualified
opinion on those statements.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards 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. An audit also includes assessing the accounting principles used and
significant estimates made by the Plan's management, as well as evaluating the
overall financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan as of
December 31, 2000, and the changes in net assets available for benefits for the
year then ended, in conformity with accounting principles generally accepted in
the United States of America.
Our audit was performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule is presented
for the purpose of additional analysis and is not a required part of the basic
financial statements but is supplementary information required by the Department
of Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. This supplemental schedule is the
responsibility of the Plan's management. The supplemental schedule has been
subjected to the auditing procedures applied in the audit 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.
/s/ MOHLER, NIXON & WILLIAMS
-----------------------------
MOHLER, NIXSON & WILLIAMS
Accountancy Corporation
Campbell, California
May 11, 2001
-1-
HEWLETT-PACKARD COMPANY
TAX SAVING CAPITAL ACCUMULATION PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
(in thousands)
--------------------------------------------------------------------------------
FOR THE YEAR ENDED
DECEMBER 31,
------------------
2000 1999
---------------------------
Assets:
Investments, at fair value:
Mutual Funds $ 2,675,666 $ 4,826,945
Hewlett-Packard Company Common Stock 815,759 1,882,709
Agilent Technologies, Inc. Common Stock 198,452
Loans receivable from participants 58,835 93,195
------ ------
Total investments 3,748,712 6,802,849
--------- ---------
Receivables:
Receivable from Hewlett-Packard Company 12,781 17,132
Receivable from brokers for securities sold 671 24,654
Interest and dividend income receivable 2,148 2,801
----- -----
Total receivables 15,600 44,587
------ ------
Total assets 3,764,312 6,847,436
--------- ---------
Liabilities:
Payable to brokers for securities purchased 850 4,624
--- -----
Total liabilities 850 4,624
--- -----
Net assets available for benefits $ 3,763,462 $ 6,842,812
========== ==========
See notes to financial statements.
-2-
HEWLETT-PACKARD COMPANY
TAX SAVING CAPITAL ACCUMULATION PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
(in thousands)
--------------------------------------------------------------------------------
FOR THE YEAR ENDED
DECEMBER 31,
------------------
2000 1999
------------------------------
Contributions:
Cash
Employees $ 325,003 $ 315,481
Company 130,661 122,236
Non-cash
Employees 2,476 34,524
Company 4 24,757
Transfer of net assets from the
Verifone, Inc. 401(k)Retirement
Savings and Investment Plan 54,198
Investment income:
Net realized and unrealized appreciation
(depreciation) in fair value of investments (1,067,022) 1,259,405
Interest and dividend income 239,875 379,001
------- -------
Total additions (369,003) 2,189,602
-------- ---------
Benefits paid to participants (466,735) (300,654)
Transfer of net assets to the
Agilent Technologies, Inc. 401(k) Plan (2,243,612)
---------- ------
Total deductions (2,710,347) (300,654)
----------- ---------
Net increase (decrease) (3,079,350) 1,888,948
Net assets available for benefits:
Beginning of year 6,842,812 4,953,864
--------- ---------
End of year $ 3,763,462 $ 6,842,812
========== ==========
See notes to financial statements.
-3-
HEWLETT-PACKARD COMPANY
TAX SAVING CAPITAL ACCUMULATION PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2000 AND 1999
--------------------------------------------------------------------------------
NOTE 1 - PLAN DESCRIPTION
PURPOSE AND PLAN BENEFITS
The purpose of the Hewlett-Packard Company (the Company) Tax Saving Capital
Accumulation Plan (the Plan) is to provide eligible employees an opportunity
for regular savings of tax-deferred dollars for their retirement to supplement
benefits provided under the Company's Retirement Program and the Federal Social
Security Act. The following brief description of the Plan is provided for
general information purposes only. Participants should refer to the Plan
agreement for a more complete description of the Plan's provisions.
The Plan is designed to qualify as a stock bonus plan under Section 401(a) of
the Internal Revenue Code of 1986 (the Code), as amended, 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 of 1974 (ERISA).
Fidelity Institutional Retirement Services Company (Fidelity) provides record
keeping and investment management for the Plan. Fidelity Management Trust
Company provides trustee services for the Plan. The Company determines
eligibility for participation, interprets the Plan, communicates with
participants and their beneficiaries and is otherwise generally responsible for
Plan operations.
ELIGIBILITY
Employees who are eligible to participate in the Plan 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 of the
Company.
EMPLOYEE CONTRIBUTIONS
All employees who were hired on or after February 1, 1998 are deemed to have
elected a three percent deferral effective on the first day of their employment,
unless the employee makes a change to that election in the manner prescribed by
the Company.
Participating employees may have from 1% to 20% of their salary deferred by the
Company through payroll deductions and have contributions made directly to their
401(k) account. Employee contributions are deposited into the trust account
after the end of each semi-monthly pay period.
-4-
COMPANY CONTRIBUTIONS
The Company contributes to the employee's 401(k) account a percentage of the
amount which has been deferred and contributed by the employee. The Company
contributes an amount equal to the employee's deferral for the first 3% of
salary deferred and an amount equal to half of the employee's deferral for the
next 2% of salary deferred. The Company matching contribution is deposited into
the individual employee's 401(k) account after the end of each of the Company's
fiscal quarters, which are January 31, April 30, July 31 and October 31.
The Company may guarantee a minimum amount of employee and Company contributions
that will be made to the Plan in a Plan year. The amount, if any, that this
minimum exceeds the actual employee and Company contributions as determined
above will be allocated to non-highly compensated employees (as defined in the
Code) in the manner prescribed by the Plan document. Minimum contributions were
guaranteed for the 2000 Plan year.
VESTING
Participants are one hundred percent vested in the Plan at all times.
PARTICIPANT ACCOUNTS
Participants can invest their account balance and/or future contributions in any
combination of sixteen investment options offered by the Plan. Participant
accounts that are established at the three percent deferral default for new
hires will have their contributions invested in the fund designated as the Plan
default fund until the participant makes a change to that investment election.
On March 1, 1999, the default fund became the Fidelity Institutional Money
Market Fund. Participating employees can transfer their invested funds among the
investment options and/or change the investment of their future contributions as
often as desired. These transfers and changes must 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 the available investment options. Fifteen of the sixteen
investment options are mutual funds of registered investment companies. The
Hewlett-Packard Company Stock Fund is an investment option consisting primarily
of the Company's stock. The Transitional Agilent Technologies Stock fund is an
investment option consisting primarily of Agilent Technologies, Inc. common
stock and is a frozen fund. The sixteen investment fund options and one frozen
fund are:
FIDELITY INSTITUTIONAL MONEY MARKET FUND
A fund comprised of investments in the Fidelity Institutional Money Market Fund.
Investments are made in high quality, U.S. dollar-denominated money market
instruments of U.S. and foreign issuers.
FIDELITY INTERMEDIATE BOND FUND
A fund comprised of investments in the Fidelity Intermediate Bond Fund.
Investments are made primarily in bonds rated BBB or better with a
dollar-weighted average maturity of between three and ten years.
-5-
PIMCO TOTAL RETURN FUND
A fund comprised of investments in the PIMCO Total Return Fund. The fund invests
primarily in debt securities, including U.S. government securities, corporate
bonds and mortgage-related securities. Portfolio duration generally ranges from
three to six years.
DOMINI SOCIAL EQUITY FUND
A fund comprised of investments in the Domini Social Equity Fund. The fund
invests in all the stocks that make up the Domini Social Index, in approximately
the same proportions as they are represented in the Index. The Index is
comprised of approximately 400 companies that meet certain social criteria.
FIDELITY CONTRAFUND
A fund comprised of investments in the Fidelity Contrafund. The investment
manager invests mainly in U.S. and foreign common stocks believed to be
undervalued or out of favor.
FIDELITY GROWTH & Income Portfolio
A fund comprised of investments in the Fidelity Growth & Income Portfolio. The
investment manager invests in a broad combination of stocks, convertibles, and
fixed-income securities that currently pay dividends, or that carry the
potential for increased earnings.
FIDELITY MAGELLAN 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 with the objective of seeking to increase the value of the
investment over the long term through capital appreciation.
HARBOR CAPITAL APPRECIATION FUND
A fund comprised of investments in the Harbor Capital Appreciation Fund.
Investments are made in equity securities of established companies with
above-average potential for growth.
ICAP EQUITY PORTFOLIO
A fund comprised of investments in the ICAP Equity Portfolio. The fund invests
primarily in domestic equities of market capitalization of at least $500
million. The fund attempts to achieve a total return greater than the S&P 500
Index with an equal or lesser degree of risk.
VANGUARD INSTITUTIONAL PLUS SHARES INDEX FUND
A fund comprised of investments in the Vanguard Institutional Plus Shares Index
Fund. 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.
-6-
JANUS ASPEN SERIES WORLDWIDE GROWTH PORTFOLIO
A fund comprised of investments in the Janus Aspen Series Worldwide Growth
Portfolio. The fund invests primarily in foreign and domestic companies, and
investments are usually spread across at least five different countries,
including the United States.
FIDELITY LOW-PRICED STOCK FUND
A fund comprised of investments in the Fidelity Low-Priced Stock Fund. The fund
invests primarily in equity securities that are priced at $35 per share or less.
The stocks purchased are considered to be undervalued and out of favor with
other investors yet offer the possibility of significant growth.
MAS MID CAP GROWTH PORTFOLIO
The fund invests primarily in common stocks of small to mid-sized companies with
market capitalizations between $500 million and $3 billion that are growing
rapidly and that are expected to continue to grow. Because of the small to
mid-sized growth oriented nature of the companies that the fund invests in, the
fund's market price will undoubtedly experience more volatility than the market
in general.
SPARTAN EXTENDED MARKET INDEX FUND
The fund seeks investment results that correspond to the total return of stocks
of mid- to small-capitalization U.S. companies. At least 80% of the fund's
assets are invested in common stocks included in the Wilshire 4500 Index. The
Index includes the companies represented in the Wilshire 5000 Index less those
in the S&P 500 Index.
TEMPLETON FOREIGN FUND A
A fund comprised of investments in the Templeton Foreign Fund A. This investment
is a growth mutual fund that invests internationally. It seeks to increase the
value of the investments over the long term through capital growth. The mutual
fund is invested primarily in common stocks, and can invest in any developed or
developing foreign country.
HEWLETT-PACKARD COMPANY 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 a minor
investment in the Fidelity Institutional Money Market Fund.
TRANSITIONAL AGILENT TECHNOLOGIES STOCK FUND
A fund comprised primarily of Agilent Technologies, Inc. common stock received
by the Plan in connection with the establishment of Agilent Technologies, Inc.
(see Note 7). The fund also includes a minor investment in the Fidelity
Institutional Money Market Fund. Employee contributions and account balance
transfers into the fund are prohibited.
-7-
LOANS AND DISTRIBUTIONS
Participants 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 selected fund and recognizing a loan receivable from
the participant. Principal and interest payments, representing repayments of
loans taken by participants, are typically made through payroll deductions and
are paid directly into the participant'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. Loans outstanding at December 31, 2000 carried interest
rates which ranged from 7.0% to 11.0%.
Benefits are payable in a lump sum. Certain participants from particular
companies acquired by the Company may elect to take their benefits as an annuity
or in installments.
PLAN TERMINATION
Although the Company has no present intention to terminate the Plan, the Plan
provides that in the event of Plan termination, participants' interests accrued
to the date of termination will be nonforfeitable. Benefits will continue to be
distributed in accordance with the Plan and the trustee will continue in its
capacity until all assets of the Plan have been distributed to the participants.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of accounting - 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. Sales and purchases are recorded on the trade date. Loans
to participants are valued at their outstanding principal amount, which
approximates fair value. Benefits are recorded when paid.
All direct administrative expenses are absorbed by the Company.
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires the administrator
and trustee to make estimates and assumptions that affect the reported amounts
of assets and liabilities in the financial statements. Actual results may differ
from those estimates.
-8-
NOTE 3 - CONTRIBUTIONS
Employee and Company contributions are made in cash for all funds except the
Hewlett-Packard Company Stock Fund (Stock Fund). Contributions to the Stock Fund
are made in either cash or Hewlett-Packard Company common stock. Stock
contributions attributable to employee deferrals totaled $2,476,000 and
$34,524,000 in 2000 and 1999, respectively. Stock contributions attributable to
Company contributions totaled $4,000 and $24,757,000 in 2000 and 1999,
respectively. Contributions of Hewlett-Packard Company common stock are valued
at their fair market value at the closing price, as quoted on the New York Stock
Exchange, on the date of contribution.
NOTE 4 - INVESTMENTS
The number of shares of Hewlett-Packard Company common stock in the Stock Fund
was 25,845,834 and 16,524,053 at December 31, 2000 and 1999, respectively. The
Stock Fund assigns units of participation to those participants with account
balances in this fund. The total number of units in the Stock Fund at December
31, 2000 and 1999 was 17,806,828 and 23,010,826, respectively, and the net asset
value per unit was $46.35 and $83.20 at these dates.
The following investments represent 5% or more of the Plan's net assets at
December 31:
2000 1999
---- ----
Hewlett-Packard Company common stock $ 815,759,000 $ 1,882,709,000
Fidelity Magellan Fund 905,759,000 1,759,996,000
Fidelity Contrafund 328,069,000 639,771,000
Fidelity Institutional Money Market Fund 252,956,000 549,398,000
Fidelity Growth & Income Portfolio 247,151,000 469,583,000
Spartan U.S. Equity Index Fund 474,043,000
Vanguard Institutional Plus Shares Index Fund 237,406,000
Agilent Technologies, Inc. common stock 198,452,000
The Plan's investments (including gains and losses on investments bought and
sold, as well as held during the year) appreciated (depreciated) in value as
follows for the years ended December 31:
2000 1999
---- ----
Mutual Funds ($ 423,023,000) $ 454,555,000
Agilent Technologies, Inc. common stock 50,381,000
Hewlett-Packard Company common stock (694,380,000) 804,850,000
-------------- ------------
($ 1,067,022,000) $ 1,259,405,000
================= ================
-9-
FUNDS
During the year, one fund was replaced with a new fund with similar attributes:
effective November 1, 2000, the Spartan U.S. Equity Index Fund was replaced by
the Vanguard Institutional Plus Shares Index Fund.
NOTE 5 - TAXES
The Company received a favorable determination letter from the Internal Revenue
Service dated August 2000 for amendments to the Plan through July 1999. The Plan
has been subsequently amended; however, 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,
there has been no provision for federal or state income tax.
Deferrals made on behalf of the employee and the Company's matching contribution
are not subject to federal income taxes until such time as the employee's funds
are withdrawn from the Plan. At withdrawal, the employee's funds may qualify for
special tax treatment. Pursuant to the Unemployment Compensation Amendments of
1992, all "eligible rollover distributions" which are not paid out in the form
of a direct rollover 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.
NOTE 6 - RELATED PARTY TRANSACTIONS
Certain Plan investments in mutual funds are managed by an affiliate of Fidelity
Management Trust Company, the Plan trustee, and therefore these transactions
qualify as party-in-interest. Such transactions, while considered
party-in-interest transactions under ERISA regulations, are permitted under the
provisions of the Plan and are specifically exempt from the prohibition of
party-in-interest transactions under ERISA.
NOTE 7 - ESTABLISHMENT OF AGILENT TECHNOLOGIES, INC.
On March 2, 1999, the Company announced its intention to launch a new company,
subsequently named Agilent Technologies, Inc. (Agilent Technologies), through a
distribution of Agilent Technologies'common stock to the Company's stockholders
in the form of a tax-free spin-off. The Company distributed its interest in
Agilent Technologies to the Company's stockholders on June 2, 2000.
In conjunction with this transaction, Agilent Technologies established the
Agilent Savings Accumulation Plan (the Agilent Plan) and a trust to hold the
assets of this plan. The Agilent Plan is qualified pursuant to Section 401(a)
and 401(k) of the Internal Revenue Code. The Agilent Technologies employees
continued to participate in the Plan through June 1, 2000. On June 2, 2000,
Agilent Technologies employees eligible to participant in the Agilent Plan began
to participate in that plan. Also, effective June 2, 2000, the Plan assets for
the participants in the Agilent Plan who had been participants in the Plan were
transferred to the Agilent Plan in accordance with an Employee Matters Agreement
dated August 12, 1999.
-10-
HEWLETT-PACKARD COMPANY
TAX SAVING CAPITAL ACCUMULATION PLAN [PLAN 004]
EMPLOYER IDENTIFICATION # 94-1081436
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 2000
(in thousands)
--------------------------------------------------------------------------------
Identity of issue, borrower, Description Current
lessor or similar party of investment value
---------------------------- ------------- -------
Fidelity Management Trust Company Harbor Capital Appreciation Fund $ 140,317
Fidelity Management Trust Company ICAP Equity Portfolio 16,747
Fidelity Management Trust Company Templeton Foreign Fund Index 55,720
Fidelity Management Trust Company Janus Aspen Series Worldwide Growth Portfolio 144,409
Fidelity Management Trust Company MAS Mid Cap Growth Portfolio 169,994
Fidelity Management Trust Company PIMCO Total Return Fund 30,510
Fidelity Management Trust Company Domini Social Equity Fund 24,307
Fidelity Management Trust Company Vanguard Institutional Plus Shares Index Fund 237,406
* Fidelity Management Trust Company Fidelity Institutional Money Market Fund 252,956
* Fidelity Management Trust Company Fidelity Magellan Fund 905,759
* Fidelity Management Trust Company Fidelity Contrafund 328,069
* Fidelity Management Trust Company Fidelity Growth & Income Portfolio 247,151
* Fidelity Management Trust Company Fidelity Intermediate Bond Fund 78,372
* Fidelity Management Trust Company Fidelity Low-Priced Stock Fund 23,072
Fidelity Management Trust Company Spartan Extended Market Index 20,877
* Hewlett-Packard Company Hewlett-Packard Company common stock 815,759
Agilent Technologies, Inc. Agilent Technologies, Inc. common stock 198,452
* Various Participant loans with interest rates
which range from 7.0 percent to 11.0 percent 58,835
-----------
$ 3,748,712
=============
* Party-in-interest
-11-
SIGNATURES
The Plan. Pursuant to the requirements of the Securities and Exchange Act of
1934, the trustees (or other persons who administer the employee benefits plan)
have duly caused this annual report to be signed by the undersigned therunto
duly authorized.
Date: June 28, 2001
HEWLETT-PACKARD COMPANY
TAX SAVINGS CAPITAL ACCUMULATION PLAN
/s/ ANN O. BASKINS
------------------
ANN O. BASKINS
Vice President
General Counsel and
Secretary
-12-
HEWLETT-PACKARD COMPANY
TAX SAVING CAPITAL ACCUMULATION PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
TAX SAVING CAPITAL ACCUMULATION PLAN
2000 EDITION
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
----------------------
-13-
YOU WILL FIND INFORMATION ABOUT: ON PAGE:
What TAXCAP Offers You............................................ 171
TAXCAP: A Participant-Directed Investment Plan.................... 172
Required Information.............................................. 173
General and Participant-Specific Investment Information........... 173
Who Can Participate In The Plan................................... 174
When You May Enroll In The Plan................................... 174
How Much You May Contribute....................................... 174
How Your Contributions Can Reduce Your Current Taxes.............. 174
How Much HP Contributes........................................... 174
How Your TAXCAP Account Is Invested............................... 175
When Payouts Are Made............................................. 178
How You Can Borrow From Your Account.............................. 180
Loan Prepayment................................................... 181
Loan Repayment While On Leave of Absence.......................... 181
Loan Outstanding at Termination of Employment..................... 181
Special Rules For Acquisition Employees........................... 182
How To Make Changes Or Receive Your Money......................... 183
How To Claim Benefits............................................. 184
If A Claim Is Denied.............................................. 184
How You Can Make Rollover Contributions........................... 184
What Circumstances Can Affect Your Benefits....................... 185
How The Plan Is Funded............................................ 186
-14-
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-- HP's
401(k) plan) as an integral part of the Hewlett-Packard Retirement Program to
help you accumulate personal savings for retirement.
TAXCAP provides you with an incentive to save regularly for retirement on a
pretax basis while receiving additional contributions from HP.
THE PLAN IN BRIEF
HP administers and sponsors TAXCAP. HP has full and final discretion to
determine eligibility for participation and benefits, to interpret the Plan and
to authorize certain transactions.
Fidelity Investments (Fidelity), a group of affiliated financial service
companies, is the full-service provider for TAXCAP. Full service is a package
which offers record keeping, trustee and investment management services, as well
as employee communications. Headquartered in Boston, with 80 branches
nationwide, Fidelity is one of the largest and best known investment management
organizations in the country. 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 are
automatically enrolled in TAXCAP on your date of hire unless you decline
participation by electing a zero contribution rate. If you decline
participation, you may join TAXCAP in any subsequent pay period.
If you are automatically enrolled in TAXCAP when you are hired, your
contribution rate is 3 percent of your pay. You may increase or decrease your
contribution rate in any pay period. If you do not specify an investment
election, your contributions will be invested in the Institutional Money Market
Fund.
Under TAXCAP, you can elect to have HP contribute up to 20 percent of your pay
into your TAXCAP account through payroll deductions subject to an annual limit
set by the IRS--$10,500 in 2001, (and see How Your Contributions May Be Limited
in this section on page 185).
HP makes a matching contribution of $1 for every $1 you contribute of the first
1 percent, 2 percent or 3 percent of your pay. HP makes a matching contribution
of $.50 for every $1 you contribute on the next 2 percent of your pay.
Contributions above 5 percent of your pay are not matched by HP. In some
instances, matching contributions may be limited. See How Your Contributions May
Be Limited in this section on page 185.
TAXCAP accounts are invested in seventeen options: six mutual funds from the
Fidelity family of funds, one Fidelity institutional fund, eight mutual funds
outside the Fidelity family of funds, plus the HP Stock Fund and Transitional
Agilent Technologies Stock Fund. You may choose to invest in any of these
options except the Transitional Agilent Technologies 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
contributions 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 retirement goals. Your full
account value can be 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.
-15-
The following pages describe the main provisions of TAXCAP. The ERISA and Other
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:
Fiscal Quarter
Fiscal Year
Pay
Pension Benefit Guaranty Corporation (PBGC)
TAXCAP
Vested
TAXCAP: A PARTICIPANT-DIRECTED INVESTMENT PLAN
----------------------------------------------
TAXCAP requires that you decide how the assets in your account are invested.
TAXCAP is intended to be a "404(c) plan" which means that it is described in
Section 404(c) of ERISA and Section 2550.404(c)-1 of Title 29 of the Code of
Federal Regulations. Plan fiduciaries of a 404(c) plan like TAXCAP are not
liable for losses that are the direct and necessary result of your investment
instructions. The following information is given to you so that TAXCAP will
comply with Section 404(c) and applicable regulations under ERISA
REQUIRED INFORMATION DESCRIPTION OF INFORMATION OR SOURCE
-----------------------------------------------------------------
Investment Alternatives See pages 175-177 of this HP Benefits Summary.
Information is also available on the Fidelity
NetBenefits Web site at www.401k.com. Also see
mutual fund prospectuses mailed to your home upon
request from Fidelity's TAXCAP Line Toll-free at
(800) 457-4015 and when you first invest in a
mutual fund.
Investment Managers Fidelity Management and Research Company serves as
an advisor to the Fidelity mutual funds offered
under TAXCAP (except the HP Stock Fund and the
Transitional Agilent Technologies Stock Fund).
Templeton Worldwide Incorporated serves as advisor
to the Templeton Foreign Fund A. Pacific Investment
Management Company serves as advisor to the PIMCO
Total Return Fund (Institutional Shares). Domini
Social Investments, LLC and Mellon Equity
Associates serve as advisor and manager,
respectively, of the Domini Social Equity Fund.
Harbor Capital Advisors, Inc., and Jennison
Associates Capital Corporation serve as advisor
and sub-advisor, respectively, of the Harbor
Capital Appreciation Fund. Institutional Capital
Corporation serves as advisor to the ICAP Equity
Portfolio. Janus serves as advisor to the Janus
Aspen Series Worldwide Growth Portfolio. Miller
Anderson and Sherrerd, LLP serves as advisor to the
MAS Mid Cap Growth Portfolio. Vanguard Group serves
as advisor to the Vanguard Institutional Index Plus
Shares Fund.
Investment Instructions See page 174 WHEN YOU MAY ENROLL IN THE PLAN and
By Participant page 174 FUND INFORMATION of this HP Benefits
Summary.
Transaction Fees in There are no transaction fees imposed on the
Connection With Purchase purchase, sale or exchange of the investment
or Sale of Investment alternatives in TAXCAP except for the Fidelity Low-
Alternatives Priced Stock Fund and the Spartan Extended Market
Index, both of which carry a short-term trading fee
if shares are held less than 90 days. See the
mutual fund prospectuses for the trading fee and
operating expenses imposed within each mutual fund.
-16-
Funds Prospectus on After the initial investment in a TAXCAP investment
Initial Investment alternative (other than the HP Stock Fund and
Transitional Agilent Technologies Stock Fund),
Fidelity will mail a copy of the most recent fund
prospectus to the participant.
Investment Alternative Fidelity Management Trust Company, the TAXCAP,
Voting Rights Trustee will mail the notice of meetings and all
proxy solicitation materials relating to voting,
tender or similar rights to each participant
invested in a TAXCAP investment alternative (other
than the HP Stock Fund and the Transitional Agilent
Technologies Stock Fund) to the extent voting
rights in the mutual fund are available to fund
investors. The procedures for voting HP and
Transitional Agilent Technologies Stock are
described in the trust agreements underlying each
of their 401(k) plans and are available upon
request from HP or Agilent.
HP/Agilent Stock Fund- Information regarding the purchase, holding and
Purchase, Holding, sale of HP stock and Transitional Agilent
Sale and Voting of Technologies stock and the exercise of voting,
HP/Agilent Stock (See page tender and similar rights with respect to HP stock
173 for description of HP and Transitional Agilent Technologies stock by
Stock Fund and Transitional participants is maintained under procedures
Agilent Technologies Stock intended to safeguard confidentiality. The
Fund.) purchase, holding and sale of HP stock and
Transitional Agilent Technologies stock is governed
by the procedures described in this HP Benefits
Summary at page 171 WHEN YOU MAY JOIN THE PLAN and
at page 174 FUND INFORMATION. Voting, tender and
similar rights with respect to HP stsock and
Transitional Agilent Technologies stock are passed
through to participants and these rights are
exercised onfidentially as with any HP and Agilent
Technologies shareholder. The procedures for voting
HP and Transitional Agilent Technologies stock are
described in the trust agreements underlying each
of their 401(k) plans and are available upon
request from HP or Agilent. These procedures are
monitored and carried out by:
1. Fidelity Management Trust Company, as a plan
fiduciary and TAXCAP trustee
82 Devonshire Street
Boston, Massachusetts 02109
Telephone: (800) 457-4015
2. Computershare Investor Services, as HP's and
Agilent Technologies' stock transfer agent
and agent of the TAXCAP Trustee
P.O. Box 1689
Chicago, Illinois 60690-1689
Telephone: (800) 286-5977
-17-
REQUIRED INFORMATION DESCRIPTION OF INFORMATION OF SOURCE
-----------------------------------------------------------------
General and Participant- General and participant-specific investment
Specific Investment information is provided by Fidelity Investments,
Information 82 Devonshire Street, Boston, Massachusetts, 02109
The following information sources can be requested
from Fidelity by phone at the TAXCAP Line Toll-free
at (800) 457-4015.
Information Sources
-------------------
Mutual Fund Mutual Fund Fidelity NetBenefits
Prospectus Annual/ Web site and the
Semiannual Report Fidelity TAXCAP
Automated Phone
Service
A. Annual Operating Expenses X
of Available Investment
Alternatives
B. Copies of Prospectuses X X
C. Copies of Financial X
Statements and Reports of
Available Investment
Alternatives
D. List of Assets in the X
Portfolio of Available
Investment Alternatives
E. Value of Shares/Units in X X X
Available Investment
Alternatives
F. Past and Current Investment X X
Performance of Available
Investment Alternatives
G. Value of Shares/Units in X
Designated Investment
Alternatives in
Participant's Account
WHO CAN PARTICIPATE IN THE PLAN
-------------------------------
You are eligible to participate in TAXCAP 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 participate in TAXCAP if you are classified in any other
employment status. If you meet the eligibility requirements, enrollment is
automatic when you are hired unless you decline participation by electing a zero
contribution rate.
WHEN YOU MAY ENROLL IN THE PLAN
-------------------------------
You will be automatically enrolled in TAXCAP on your date of hire unless you
decline participation by electing a zero contribution rate. If you decline
participation when you are hired, you may enroll in any subsequent pay period.
Newly hired employees can enroll in TAXCAP using the Fidelity New Hire
Enrollment Tool. When you enroll, you must enter your desired contribution rate
and specify the investment mix you want, both in whole percent increments.
Investment mixes must total 100 percent. Once you have enrolled in TAXCAP, your
participation will begin as soon as administratively feasible thereafter.
At any time after receipt of your first earnings statement, you can use the
Fidelity NetBenefits Web site www.401k.com or call the Fidelity TAXCAP line
Toll-free at (800) 457-4015 to change your contribution rate or your investment
elections.
-18-
YOUR BENEFICIARY
Once you enroll, you should also name a beneficiary to receive your TAXCAP
benefits at your death. A TAXCAP Beneficiary Form, OFIS Form No. 0070 is
available on the @hp portal.
If you do not designate a beneficiary and you are married when you die, your
spouse will automatically be your sole beneficiary. If you wish to name someone
other than your spouse as primary beneficiary for any part of your TAXCAP
benefit, federal law requires that you obtain your spouse's written consent. The
spouse's written consent must be given on the beneficiary form. This consent
must be witnessed by 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 as instructed on the form.
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/Domestic Partner
your surviving children-in equal portions
your surviving parents-in equal portions
your estate
HOW MUCH YOU MAY CONTRIBUTE
---------------------------
You may contribute up to 20 percent of your pay (but see HOW YOUR CONTRIBUTIONS
MAY BE LIMITED in this section on page 185). Generally, pay is your regular wage
or salary. Pay is defined more completely in the GLOSSARY Section on page 213.
You may change your contribution rate in any pay period. You can stop your
contributions at any time. However, when your contributions stop, so does the
company match. Once you have stopped, you can resume your contribution in any
subsequent pay period. Your contributions are paid into the trust and invested
in your designated investment alternatives as soon as administratively feasible
on or after the scheduled HP payday.
HOW YOUR CONTRIBUTIONS CAN REDUCE YOUR CURRENT TAXES
Federal and most state income taxes are based on the portion of your pay
remaining after your contributions 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 contribute 6
percent to TAXCAP. Your annual contribution will be $2,100.
Although your actual pay is $35,000, your taxable pay will be
$32,900. This is because you are contributing $2,100 to TAXCAP
before taxes.
Currently, the state of Pennsylvania and some cities are the only tax-levying
entities that consider your contributions to be part of your taxable income.
Your contributions are also subject to FICA (Social Security withholding tax).
HOW MUCH HP CONTRIBUTES
-----------------------
HP makes matching contributions of $1 for every $1 you contribute of the first 1
percent, 2 percent or 3 percent of your pay. HP makes matching contributions of
$.50 for every $1 on the next 2 percent you contribute to the Plan.
Contributions above 5 percent are not matched by HP. You do not pay any income
taxes on HP's contributions until you receive them from the Plan. (But see How
Your Contributions May Be Limited in this section on page 185.)
-19-
YOUR CONTRIBUTIONS HP CONTRIBUTIONS
------------------ ----------------
1 percent of your pay 1 percent of your pay
2 percent 2 percent
3 percent 3 percent
4 percent 3 1/2 percent
5 percent or more 4 percent
HP's contributions are calculated on a per pay period basis and are paid into
the trust and invested in your designated investment alternatives 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 during the fiscal quarter at age 55 or older with at
least 15 years of service, as defined in the Retirement Plan.
Died during the fiscal quarter.
HP may commit to making minimum contributions to TAXCAP for a calendar year in
advance of the time they are otherwise due. This commitment will be allocated to
both your contributions and the HP matching contributions.
HOW YOUR TAXCAP ACCOUNT IS INVESTED
-----------------------------------
You can choose to invest the money in your TAXCAP account among sixteen of the
seventeen investment alternatives 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 in any whole percentage
combination. Investment mixes must total 100 percent.
NOTE: You may not make any new investments in the Transitional Agilent
Technologies Stock Fund.
FOR EXAMPLE: You can choose to invest 25 percent in each of four different
options or you can choose to invest 10 percent in each of ten
different options.
After the end of each pay period, your contributions are invested as you choose.
In the following paragraphs, the options are described.
INSTITUTIONAL MONEY MARKET FUND - The Institutional Money Market Fund is a
unitized trust fund at the Fidelity Management Trust Company. Its assets are
invested in the Fidelity Institutional Money Market Fund, which 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 Fund seeks to
maintain a $1.00 share price, there is no assurance that it will be able to
do so. An investment in the Fund is not insured or guaranteed by the U.S.
government. The Fund's yield will fluctuate. Institutional Money Market Fund
is a conservative, relatively low-risk investment.
FIDELITY INTERMEDIATE BOND FUND - The Fidelity Intermediate Bond Fund seeks a
high level of current income by investing primarily in high and medium grade
fixed income obligations. These fixed income obligations include 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.
PIMCO TOTAL RETURN FUND (INSTITUTIONAL SHARES) - The PIMCO Total Return Fund
(Institutional Shares) seeks total return consistent with the preservation of
capital. The Fund invests at least 65 percent of assets in debt securities,
including U.S. government securities, corporate bonds, and mortgage-related
securities. It may invest up to 20 percent of assets in foreign denominated
securities. While portfolio duration generally ranges three to six years,
investments may include short and long maturity bonds.
-20-
DOMINI SOCIAL EQUITY FUND - The Domini Social Equity Fund seeks investment
results that correspond to the total return performance of the Domini Social
Index, which is comprised of approximately 400 companies that meet certain
social criteria. The Fund invests at least 80 percent of assets in stocks in
the index and includes companies of positive records in community
involvement, the environment, employee relations and hiring practices. The
index also includes about 150 companies not included in the S&P 500.
FIDELITY CONTRAFUND - The Fidelity Contrafund seeks capital appreciation by
investing in common stocks and convertible securities of companies that are
believed to be undervalued or out of favor with the investing public, and
that may have favorable long-term outlooks because of termination of
unprofitable operations; changes in management, industry, or products; or a
possible merger or acquisition. The Fund may invest in foreign securities,
and up to 5 percent of assets may be invested in lower-quality debt
obligations. The Fund's share price and return will fluctuate.
FIDELITY GROWTH AND INCOME PORTFOLIO - The Fidelity Growth and Income
Portfolio seeks long-term capital growth, current income and growth of
income, consistent with reasonable investment risk. It invests primarily in
the securities of companies with the potential for growth of earnings while
paying current dividends. Consistent with the objective, the Portfolio's
manager will generally sell securities of companies for which dividends fall
to a level lower than the yield of the S&P 500. The Fund's share price, yield
and return will fluctuate.
FIDELITY MAGELLAN FUND - The Fidelity Magellan Fund 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. Up to 20 percent of assets may be
invested in debt securities of all types and qualities. There are no
limitations placed on total foreign investments, but no more than 40 percent
of assets may be invested in companies operating exclusively in one foreign
country.
HARBOR CAPITAL APPRECIATION FUND - The Harbor Capital Appreciation Fund seeks
long-term growth of capital by investing in equity securities of established
companies with above-average potential for growth. The Fund invests at least
65 percent of its assets in companies of market capitalization of at least $1
billion. The Fund may invest up to 20 percent of its assets in foreign
securities. ICAP Equity Portfolio - The ICAP Equity Portfolio seeks total
return of moderate risk and invests in domestic equities of market
capitalization of at least $500 million. The Portfolio attempts to achieve a
total return greater than the S&P 500 Index with an equal or lesser degree of
risk. Investments are made based on corporate models which search for issuers
possessing best relative value based on P/E projections and earnings
momentum.
VANGUARD INSTITUTIONAL INDEX PLUS SHARES FUND - The Vanguard Institutional
Index Plus Shares Fund 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 Fund's share price and return will fluctuate.
Janus Aspen Series Worldwide Growth Portfolio - The Janus Aspen Series
Worldwide Growth Portfolio seeks long-term growth of capital consistent with
preservation of capital. The Portfolio invests primarily in foreign and
domestic companies, and investments are usually spread across at least five
countries and may use derivatives for hedging purposes as a means of
enhancing returns. Fidelity Low-Priced Stock Fund - The Fidelity Low-Priced
Stock Fund seeks capital appreciation by investing at least 65 percent of
assets in equity securities that are priced at $35 per share or less. The
issuing companies often have market capitalizations of less than $100
million. The low-priced stocks purchased are considered to be undervalued and
out of favor with other investors yet offer the possibility of significant
growth. The Fund reserves the right to invest, without limitation, in
preferred stocks and investment-grade debt for temporary defensive purposes.
A short-term trading fee of 1.5 percent of the value of the shares sold is
charged if the shareholders sell shares held less than 90 days.
-21-
SPARTAN EXTENDED MARKET INDEX FUND - The Spartan Extended Market Index Fund
seeks investment results that correspond to the total return of stocks of
mid- to small-capitalization United States companies. At least 80% of the
fund's assets are invested in common stocks included in the Wilshire 4500
Index. The Wilshire 4500 Index includes the companies represented in the
Wilshire 5000 Index less those in the S&P 500 Index. The Wilshire 5000 Index
represents all U.S. headquartered companies that are publicly traded, and now
includes 7,000 stocks. As a result, the fund offers exposure to approximately
6,500 small- and mid-sized companies. A short-term trading fee of 1.5 percent
of the value of the shares sold is charged if the shareholders sell shares
held less than 90 days.
MAS MID CAP GROWTH PORTFOLIO -The MAS Mid Cap Growth Portfolio invests
primarily in common stocks of small to mid-sized companies with market
capitalizations between $500 million and $3 billion that are growing rapidly
and that are expected to continue to grow. TAXCAP offers this fund's
"institutional class" shares which have no sales load. Because of the small
to mid-sized growth oriented nature of the companies that the fund invests
in, the fund's market price will undoubtedly experience more volatility than
the market in general.
TEMPLETON FOREIGN FUND A - The Templeton Foreign Fund A seeks long-term
capital growth by investing primarily in stocks of companies outside the
United States. International investments can present the potential for
expanded investment opportunities over domestic funds, significant growth
potential, as well as an opportunity through diversification to reduce
overall equity portfolio risk. Foreign investing can also involve special
considerations, including currency fluctuations and political uncertainty.
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
three-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 participant 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.
TRANSITIONAL AGILENT TECHNOLOGIES STOCK FUND - The Transitional Agilent
Technologies Stock Fund established you as a stockholder in Agilent
Technologies (if you were invested in the Hewlett-Packard Stock Fund at the
time Agilent Technologies, Inc. legally separated from Hewlett-Packard
Company) by investing almost exclusively in Agilent Technologies 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 three-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 Agilent Technologies. As a TAXCAP participant
investing in the Transitional Agilent Technologies 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. Note: The Company may
terminate this investment option at some future date.
If you do not specify how your account is to be invested, the entire amount will
automatically be invested in the Institutional Money Market Fund which is the
most conservative investment.
Once you are enrolled in TAXCAP, you may change your investment mixes for future
contributions in 1 percent increments as often as you feel necessary by logging
on to NetBenefits or calling Fidelity at their Toll-free number (800) 457-4015.
NOTE: You are not able to invest your future TAXCAP contributions in, nor
are you able to move your current account balances into, the
Transitional Agilent Technologies Stock Fund.
-22-
FUND INFORMATION
To obtain your current account balances or performance and investment
information about the funds offered in TAXCAP, log on to NetBenefits
www.401k.com or 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, and your Personal Identification Number (PIN)
with Fidelity. To establish a Fidelity PIN, you will need to pass the security
check by providing your Social Security number, your date of birth, and your
employee number (eight digits--you must enter leading zeros). The fund codes
are:
Institutional Money Market Fund 1400
Fidelity Intermediate Bond Fund 0032
PIMCO Total Return Fund (Institutional Shares) 9622
Domini Social Equity Fund 3967
Fidelity Contrafund 0022
Fidelity Growth & Income Portfolio 0027
Fidelity Magellan Fund 0021
Harbor Capital Appreciation Fund 2171
ICAP Equity Portfolio 3603
Vanguard Institutional Index Plus Shares 20528
Janus Aspen Series Worldwide Growth Portfolio 2170
Fidelity Low-Priced Stock Fund 0316
Spartan Extended Market Index Fund 0398
MAS Mid Cap Growth Portfolio 3586
Templeton Foreign Fund A 9500
HP Stock Fund 8655
Transitional Agilent Technologies Stock Fund 6477
To exchange existing assets from one investment option to another or to redirect
your future contributions to a different investment option, you can log on to
NetBenefits www.401k.com or call Fidelity's Toll-free number at (800) 457-4015.
Fidelity representatives are on duty Monday through Friday from 8:30 a.m. to
12:00 midnight, 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 log on to NetBenefits at www.401k.com
or call Fidelity Toll-free at (800) 835-5089 (if you have a TDD) 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 a.m. to 12:00 midnight, Eastern time.
PARTICIPANT STATEMENTS
Participants can view and print monthly, quarterly or custom date statements
online through the Fidelity NetBenefits Web site at www.401k.com. You may
contact Fidelity to request paper copies.
The information provided includes:
the beginning balance
investment performance (gains or losses)
investment elections (mixes)
personal portfolio rate of return
any fund exchange activities that you authorized for the quarter
your contributions for the quarter
loan information
HP's matching contributions for the quarter
the ending balance
-23-
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
contributions, HP's matching 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 retirement 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. 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. If
your account balance is greater than $5,000 and you do not request a
distribution, your pay out is automatically deferred until you request a
distribution, except that distribution of your account must be made (or begin)
by April 1of the year following the year in which you turn 70 1/2, or if later,
the year in which you retire. The distribution options you have are:
lump sum amount in cash payable to you
HP and/or Agilent stock and cash (stock only available for that portion
of your account invested in the HP Stock Fund or Transitional Agilent
Technologies Stock Fund) payable to you.
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 employer's qualified retirement plan
NOTE: Required distributions beginning at age 70 1/2 cannot be rolled over.
If you die, your beneficiary must request a distribution within one year from
your date of death or distribution will be made automatically at the end of the
one year period.
Once Fidelity receives notice of your termination you will then be able to
request your distribution by calling Fidelity Investments at Toll-free (800)
457-4015 on business days between 8:30 a.m. and 12:00 midnight, Eastern Time, to
speak with a Fidelity telephone representative. No distribution forms are
needed.
At the time of termination, you will be directed to the Web site that contains
information on how to complete the TAXCAP distribution process and includes a
federally required Tax Notice.
Any benefit paid from TAXCAP will be based on the closing price of the New York
Stock Exchange on the business day you call Fidelity for your distribution (if
you call before 4:00 p.m. Eastern Time). If you call after 4:00 p.m. Eastern
time, your distribution will be valued as of the close of the market on the
following business day.
-24-
EXCEPTIONS:
If you are an employee who had money transferred from the Avantek, AOT,
EEsof, or CMS 401(k) plans to TAXCAP with the acquisition, you will be
required to submit TAXCAP distribution forms including spousal consent.
These forms may be found on the Web site provided to you at the time of
your termination. The completed forms should be sent to TAXCAP
Administration for processing.
If you are a beneficiary of a deceased HP employee, distribution forms
will be provided to you by the HR Services (HRS). Completed forms
should be returned as instructed on the form. Once received, HRS will
forward them to TAXCAP Administration for processing.
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 plus any loan balance 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 or Transitional Agilent Technologies stock
for your investments in the HP Stock Fund or Transitional Agilent Technologies
Stock Fund, you will receive a stock certificate for the equivalent number of
whole shares. 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 of your cash distribution.
If your account is $5,000 or less and you do not request a distribution, your
account will be distributed in cash with taxes withheld. Once a quarter,
accounts of all terminated employees are reviewed. If your account balance is
$5,000 or less, a letter will be sent to your home address as it appears on the
Fidelity system informing you that your account will be distributed as a cash
distribution unless you make an alternate election within 60 days. If no
election is made, and your account does not exceed $5,000 after the 60 days,
your account will be distributed in cash. If after the 60 days, your account
balance exceeds $5,000, subject to tax withholding no automatic distribution
will occur.
Your distribution must be made or begin by your "Required Beginning Date," which
is April 1 of the year following the year in which you turn 70 1/2 or, if later,
the year in which you retire.
If you have a loan outstanding at termination see Loan Outstanding at
Termination in this section on page 181.
WHILE YOU ARE AN HP EMPLOYEE-AGE 59 1/2 AND HARDSHIP WITHDRAWALS
After you reach age 59 1/2, you may withdraw all or part of your account in
TAXCAP. 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 maximum withdrawal amount
available is specified by IRS Regulations. 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 (excluding
mortgage payments).
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.
-25-
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
stop contributing to TAXCAP and/or the Share Ownership Plan (SOP) until at least
the beginning of the pay period following one year from the date of your
hardship withdrawal. (Additonal information about SOP is available on the @hp
portal.) The combined amount of your contributions 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
($10,500 for calendar year 2001).
The minimum withdrawal amount is the lesser of $1,000 or all that is available.
All hardship withdrawals are subject to mandatory 20 percent federal income tax
withholding. 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. Unless you direct how you
want your account sold, 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 Toll-free at (800) 457-4015 for your
maximum available withdrawal amount and an application. Fill out the required
information and mail the application to:
Hewlett-Packard Company
TAXCAP Administration MS 20BAX
3000 Hanover Street
Palo Alto, California, 94304
In-service withdrawal requests are processed each business day by Fidelity, and
checks are issued from Fidelity generally within seven business days after the
application is received.
Special rules apply for in-service withdrawals for certain acquisition
employees, (see Special Rules for Acquisition Employees in this section on page
182).
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, personal, or Family and Medical Leave Act leave of
absence, or receiving benefits under the Income Protection Plan. Upon returning
from a leave of absence, once the employee database systems have been updated,
you will be eligible for a loan.
The maximum loan 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 balance is... The maximum/outstanding loan amount is...
------------------------------------ -----------------------------------------
$2,000 - $100,000 50 percent of account balance
$100,000+ $50,000
-26-
You may initiate a loan, through the Fidelity NetBenefits Web site at
www.401k.com or by calling Fidelity at Toll-free (800) 457-4015. Once you have
provided the proper security information, you will be guided through the steps
of the loan process and informed of any restrictions that may apply (maximum
allowable loan amount, etc.).
Your eligibility for a loan is based on your account value as of the date you
contact Fidelity to request a loan.
Once the details of the loan transaction have been agreed to and confirmed, a
TAXCAP Loan Agreement and Promissory Note will be mailed to your home address on
file at Fidelity. Upon receipt of the TAXCAP Loan Agreement and Promissory Note,
you must review the information to make sure everything is correct. The loan
amount will be liquidated from your account on the same day that you contact
Fidelity (if the loan is processed at Fidelity before 4:00 p.m. Eastern time).
Your loan check will automatically be generated from Fidelity and mailed to your
home address on file. There is endorsement disclosure information on the back of
the loan check informing you that by endorsing the loan check, you have entered
a legally binding contract with TAXCAP, and that you have agreed to all the
terms and conditions under the loan provisions in the Hewlett-Packard Company
Tax Saving Capital Accumulation Plan. If the terms in the TAXCAP Loan Agreement
and Promissory Note are not correct, do not sign, cash or deposit your loan
check. Call a Fidelity plan representative immediately Toll-free at (800)
457-4015.
Special rules apply for loans for certain acquisition employees (see Special
Rules for Acquisition Employees in this section on page 182).
HOW YOUR LOAN IS FUNDED
Unless you direct how you want your account sold, your loan will be funded
through the sale of your TAXCAP investments in the following order:
Institutional Money Market Fund
Fidelity Intermediate Bond Fund
PIMCO Total Return Fund (Institutional Shares)
Domini Social Equity Fund
Fidelity Contrafund
Fidelity Growth & Income Portfolio
Fidelity Magellan Fund
Harbor Capital Appreciation Fund
ICAP Equity Portfolio
Vanguard Institutional Index Plus Shares Fund
Janus Aspen Series Worldwide Growth Portfolio
Fidelity Low-Priced Stock Fund
MAS Mid Cap Growth Portfolio
Spartan Extended Market Index Fund
Templeton Foreign Fund A
Hewlett-Packard Stock Fund
Transitional Agilent Technologies Stock Fund
FOR EXAMPLE: You have a total of $30,000 in TAXCAP investments. You have $10,000
in the Institutional Money Market Fund, $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 Institutional Money
Market Fund and the remaining $5,000 will come from your
Intermediate Bond Fund, unless you direct Fidelity to sell your
account in a different order.
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.
-27-
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 leaves of absence.
To initiate a prepayment, you can call Fidelity at Toll-free (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.
Once you have agreed to the terms of the prepayment, send a money order,
cashier's check or HP Credit Union teller check--payable to "Fidelity
Investments Institutional Operations Company" to:
Fidelity Investments
Client Service Operations
P.O. Box 9029
Boston, MA 02205-9029
The prepayment will be invested according to your investment elections (mixes)
on file at the time of repayment to the TAXCAP trust fund.
LOAN REPAYMENT WHILE ON LEAVE OF ABSENCE
----------------------------------------
If you have a TAXCAP loan outstanding and you are receiving a disability benefit
(medical leave only) your loan repayment will be taken from your disability
benefit and any FTO pay you receive from HP.
If you have a TAXCAP loan outstanding and you are on an unpaid leave of absence,
your loan repayment will be suspended. When you return from the leave of
absence, your loan payroll deductions will resume. The Internal Revenue Code and
Internal Revenue Service (IRS) regulations do not permit a TAXCAP loan to be
extended beyond the 60th month from the date the loan was taken. If the 60th
month is reached while you are on a:
medical leave of absence (also during the Family and Medical Leave Act
(FMLA) entitlement period for one's own illness), your outstanding loan
amount and accrued interest will be considered a taxable distribution
to you in that year. You will be taxed on the outstanding loan amount
and the accrued interest owed on the loan as ordinary income.
personal leave of absence (also during the FMLA entitlement period for
reasons other than one's own illness) or military leave, your
outstanding loan amount will be considered a taxable distribution to
you in that year. You will be taxed on the outstanding loan amount and
the accrued interest owed on the loan as ordinary income. You may also
have to pay a 10 percent penalty.
YOU CAN PREPAY THE LOAN IN FULL PRIOR TO THE 60TH MONTH AND AVOID TAXATION IN
THAT YEAR.
If you desire to make your loan payments during a personal leave of absence, the
loan repayment procedure is as follows. You can initiate the process by calling
TAXCAP Administration. They will determine the amount and timing of the
repayment. You will be requested to forward your money order, cashier's check or
HP Credit Union teller check made payable to Fidelity Investments. You will be
given instructions on the rest of the process during the call. 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.
-28-
LOAN OUTSTANDING AT TERMINATION OF EMPLOYMENT
---------------------------------------------
If you leave HP and request a distribution 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 a
qualified plan within 60 days of the distribution.
Once a quarter, accounts of terminated employees are reviewed. Terminated
participants who have a TAXCAP loan outstanding will be sent a letter to their
address on file at Fidelity to notify them that the outstanding loan balance
will be defaulted to a taxable distribution unless the loan is repaid in full
within 60 days.
SPECIAL RULES FOR ACQUISITION EMPLOYEES
---------------------------------------
If you were formerly employed by Avantek, AOT, EEsof, or Colorado Memory Systems
(CMS) and had money transferred from the Avantek, AOT, EEsof or CMS 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 installments or various
annuity forms of benefit--single life, joint and survivor or term certain
annuities. Former EEsof and Convex plan participants may also elect an
in-service withdrawal of any money formerly attributed to a rollover account in
the EEsof and Convex plans.
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 a rollover account) as well as for loans.
Loan requests for acquisition employees will be processed through TAXCAP
Administration on a daily basis. Acquisition employees can initiate a loan
through the Fidelity NetBenefits Web site at www.401k.com or by calling Fidelity
at Toll-Free at (800) 457-4015. Fidelity will mail the application to the home
address on file. You will need to check the appropriate marital status on the
application, sign the application, and, if you are married, have your spouse
sign the consent for the withdrawal and have the spousal consent form witnessed
by a notary public. The completed forms need to be mailed to TAXCAP
Administration at Corporate Offices for processing. TAXCAP Administration will
review the application for accuracy and release the loan for processing by
Fidelity. Fidelity will issue the loan check after the loan application has been
approved and released by TAXCAP Administration.
The rules regarding beneficiary designations described in the section Your
Beneficiary on page 174 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 beneficiary form in the plan year you turn age 35 or
your spouse will automatically become your beneficiary.
Special claim forms for former Avantek, AOT, EEsof, and CMS plan participants
have been prepared and will be provided to you as needed. These forms will
reflect the special rules described in this section.
-29-
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 your account. For additional
information, visit the TAXCAP Web site at: http://www.401k.retirement.hp.com/.
If You Want To... You Need To...
----------------- --------------
Enroll in the Plan if you declined Log on to the Fidelity NetBenefits
participation when you were hired. Web site at www.401k.com or call
Fidelity Investments Toll-free at
(800) 457-4015. You must enter
your desired TAXCAP contribution
rate and specify the investment
mix you want in whole percent
increments. Investment mixes must
total 100 percent. Upon
enrollment, it is your
responsibility to complete the
TAXCAP Beneficiary Designation
Form, OFIS Form No. 0070) and
submit it as instructed on the
form.
Change your contribution rate. Log on to the Fidelity NetBenefits
Web site at www.401k.com or call
Fidelity Investments Toll-free at
(800)457-4015.
Stop making contributions into TAXCAP Log on to the Fidelity NetBenefits
(that is, change the percentage to zero). Web site at www.401k.com or call
Fidelity Investments Toll-free at
(800) 457-4015 to change your
TAXCAP contribution to 0 percent.
Your contribution will stop as of
the first possible pay period
after you submit the change.
Resume making contributions to TAXCAP Log on to the Fidelity NetBenefits
(re-enroll) after you have stopped. Web site www.401k.com or call
Fidelity Investments Toll-free at
(800) 457-4015. Your contribution
will resume as of the first
possible pay period after you
submit the change.
Resume making contributions after a period Take no action. Your contributions
of suspension due to a formal leave of will resume automatically at the
absence. previous percentage when you
return. If you wish to change your
percentage or cease contributions
entirely, log on to the Fidelity
NetBenefits Web site at
www.401k.com or call Fidelity
Investments Toll-free at (800)
457-4015.
Change your beneficiaries. Complete a new TAXCAP 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 HP.
-30-
Change the investment mix of your current Log on to Fidelity NetBenefits Web
contributions. site at www.401k.com or call
Fidelity Investments Toll-free at
(800) 457-4015.
Transfer assets between the various Log on to Fidelity NetBenefits Web
investment alternatives. site at www.401k.com or call
Fidelity Investments Toll-free at
(800) 457-4015.
Apply for a withdrawal at age 59.* Log on to Fidelity NetBenefits Web
site at www.401k.com or call
Fidelity Investments Toll-free at
(800) 457-4015 to initiate the
transaction.
Apply for a hardship withdrawal.* Log on to Fidelity NetBenefits Web
site at www.401k.com or call
Fidelity Investments Toll-free at
(800) 457-4015 to obtain an
application. Once Fidelity mails
you the application, sign it and
send it to: TAXCAP Administration,
3000 Hanover Street, MS 20BAX,
Palo Alto, CA 94304.
Apply for a loan.* Log on to Fidelity NetBenefits Web
site at www.401k.com or call
Fidelity Investments Toll-free at
(800) 457-4015 to initiate a loan
Once you have agreed to the terms
of your loan, your account will be
liquidated for the loan amount.
The TAXCAP Loan Agreement and
Promissory Note and loan check
will be mailed to you.
Elect payout options.** To receive payment of your TAXCAP
account balance, call Fidelity
Investments Toll-free at (800)
457-4015 to speak to a Fidelity
Representative. You will be
permitted to request a payout of
your account balance once Fidelity
has received notice of your
termination.
* Special rules for certain acquisition employees apply here (see Special
Rules for Acquisition Employees on page 182 for details).
** Special rules for certain acquisition employees apply here (see Special
Rules for Acquisition Employees on page 182 for details).
HOW TO CLAIM BENEFITS
---------------------
To receive payment of your TAXCAP account balance, follow the procedures under
When Payouts are Made in this section on page 178.
If information provided by you results in incorrect benefit amounts (whether the
information is false, wrong or incomplete), the benefit amount will be adjusted.
If TAXCAP pays a larger benefit amount than it should have, the overpayment will
be payable to the Plan.
If a Qualified Domestic Relations Order has required TAXCAP 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 TAXCAP determines
that a person who is to receive benefits has become unable to handle them
properly, HP may make any reasonable arrangement to distribute the benefits on
the person's behalf.
-31-
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.
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, 20BAX
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 yourself. However, a domestic relations order that divides
your benefits under this Plan will be allowed if it is a Qualified Domestic
Relations Order as defined by law and approved by HP.
HOW YOU CAN MAKE ROLLOVER CONTRIBUTIONS
---------------------------------------
If you are a regular full-time or regular part-time employee, you may be able to
make a rollover contribution to the Plan. 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 Institutional Operations Company as trustee of TAXCAP" and
mailed to:
Fidelity Investments
Client Service Operations
P.O. Box 9029
Boston, MA 02205-9029
-32-
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 the payout made payable to you and less
than 60 days have elapsed since the date the payout was received by
you.
You originally rolled the payout into a separate rollover or conduit
IRA.
The TAXCAP Rollover Contribution Form, OFIS Form No. 5032 is available on the
@hp portal.
IF YOU LEAVE AND ARE REHIRED
If you leave HP and are rehired, you will be automatically enrolled in TAXCAP on
your rehire date unless you decline participation by electing a zero
contribution rate. If you do not specify how your account is to be invested, the
entire amount will automatically be invested in the Institutional Money Market
Fund, which is the most conservative investment.
Under no circumstances will you receive a payout while on any HP payroll.
Payment cannot be made until you leave HP or die.
WHAT CIRCUMSTANCES CAN AFFECT YOUR BENEFITS
-------------------------------------------
When Your Participation Is Automatically Suspended
Your participation in TAXCAP is automatically suspended while you are on:
A leave of absence without pay
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 beginning after the 90th
day.)
During this time, you cannot make contributions and HP will not make any
matching contributions to your account. Your account will continue to share in
the performance of the investment alternatives you have selected. Your
contributions will automatically resume when you return to active employment
status from a leave without pay or a disability leave. If you return to the U.S.
payroll, from a non-U.S. payroll, you will be automatically re-enrolled in
TAXCAP at the 3 percent rate on your date of transfer unless you decline
participation by electing a zero contribution rate (see When You May Enroll In
The Plan in this section on page 174).
Upon returning to employment from "military service" as defined in the Uniformed
Services Employment and Reemployment Rights Act (USERRA), you have the right to
make contributions into TAXCAP for the period of your unpaid military leave of
absence. If you elect to make such contributions, HP will also make a company
match. The amount of your contributions and company match will be as allowed by
TAXCAP and USERRA. If you wish to make such contributions, contact TAXCAP
Administration.
-33-
HOW YOUR CONTRIBUTIONS AND HP'S CONTRIBUTIONS MAY BE LIMITED
The Internal Revenue Code places a combined limit on the amount you may
contribute to TAXCAP and all other 401(k) plans during a calendar year. For
calendar year 2001, this limit is $10,500 for all 401(k) plans combined. This
limit does not include HP's matching contributions.
In addition, the IRS requires the Plan to pass special tests called
non-discrimination tests designed to ensure a fair mix of participant
contributions and HP's contributions among employees at all income levels. In
order to ensure that the plan satisfies these tests, it may be necessary to
reduce the contribution rate of higher-paid participants from time to time or to
limit HP's contributions to higher paid participants. If so, the percentage of
pay that those participants may contribute may be reduced below 20 percent. You
will be notified if you are affected by this test.
TAXCAP contributions may only be taken from the first $170,000 of covered
compensation (generally, wages or salary, commissions and shift differential) in
the pay year January 2001 through December 31, 2001. This limitation will be
periodically adjusted for cost of living by the Secretary of the Treasury.
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.
CHANGING OR ENDING THE PLAN
Although HP expects to continue the Plan indefinitely, HP 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 effective.
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
The Unemployment Compensation Amendments of 1992, impose 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 retirement
plan.
If you request that any portion of your TAXCAP account balance be paid directly
to you, 20 percent of that distribution will automatically be withheld for
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 make available to you 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.
-34-
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 HP.
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.
-35-
CONSENT OF INDEPENDENT ACCOUNTS
We consent to the incorporation by reference in the Registration Statement
on Form S-8 (No 2-92331) of Hewlett-Packard Company of our report dated May 11,
2001, with respect to the financial statements and schedule of the
Hewlett-Packard Company Tax Savings Capital Accumulation Plan included in this
Annual Report on Form 11-K.
/s/ MOHLER, NIXON & WILLIAMS
-----------------------------
MOHLER, NIXON & WILLIAMS
Accountancy Corporation
Campbell, California
June 26, 2001
-36-