Merger of HP and Compaq

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Rev. Dec. 1, 2009
THE MERGER OF HEWLETT-PACKARD AND COMPAQ (B):

DEAL DESIGN
Reflecting on her prior analysis, Kathryn Macalester was comfortable with the pricing
and believed there were strategic benefits to the proposed merger. Like all smart investors,
however, Macalester knew that the trade-off between deal terms and pricing could mean the
difference between success and failure. She had directed her research associate to gather
additional information specific to transaction structure, the exchange ratio, and other provisions
of the deal so she could assess the strengths and weaknesses of the proposed merger. Macalester
was working over the weekend to prepare for a Monday morning meeting with her partners, as
the funds vote on the merger proposal was due by 8:00 a.m. on Tuesday, March 19, 2002.
Summary of Terms
Under the terms of the merger agreement, each Compaq shareholder would receive
0.6325 share of Hewlett-Packard (HP) common stock, resulting in approximately 36%
ownership of the new company by former Compaq shareholders. The company was to retain the
Hewlett-Packard name, and the HWP ticker symbol would be changed to HPQ. Carly Fiorina,
HPs chairman and CEO, was to maintain those positions in the new company, and Michael
Capellas, Compaqs chairman and CEO, was to be named president of the new HP. The new
board of directors would have 11 members, with a maximum of two employee directors; six
directors would come from HP. Macalester reviewed the other significant deal terms regarding
ownership and control, as summarized by her associate (Exhibit 1).
Reverse-Triangular Merger
The merger was described as a tax-free reorganization, in which a Hewlett-Packard
subsidiary, Heloise Merger Corporation, was created solely for merging with Compaq. The
supplemental research material provided to Macalester included a diagram of the merger
transaction (Exhibit 2). Macalester was familiar with a reverse-triangular merger, and she
This case was prepared by Anna D. Buchanan under the supervision of Robert F. Bruner. It was written as a basis
for class discussion rather than to illustrate effective or ineffective handling of an administrative situation. Copyright
2004 by the University of Virginia Darden School Foundation, Charlottesville, VA. All rights reserved. To order
copies, send an e-mail to sales@dardenbusinesspublishing.com. No part of this publication may be reproduced,
stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any meanselectronic,
mechanical, photocopying, recording, or otherwisewithout the permission of the Darden School Foundation. Rev.
12/09.
This document is authorized for use only by Rahul Gohil (gohil3@illinois.edu). Copying or posting is an infringement of copyright. Please contact customerservice@harvardbusiness.org or
800-988-0886 for additional copies.
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reflected on the pros and cons of such a deal structure. A reverse-triangular merger would result
in a tax-free reorganization in which HP would control substantially all of Compaqs assets
through a wholly owned subsidiary, thereby limiting HPs exposure to Compaqs liabilities. The
transaction would be tax free to HP, as long as the form of payment for at least 80% of the
consideration was paid with HP voting stock. Although a shareholder vote of the target was
required, a minority freeze-out could be accomplished, if necessary. This form of transaction
would limit HPs ability to sell or spin off assets immediately before the transaction.1
Exchange Ratio
In considering whether an appropriate exchange ratio was being offered, Macalester
studied the contribution analysis that had been prepared for her (Exhibit 3). Based on a variety
of measures, the CPQ/HWP ratios were broadly distributed. In reviewing the Goldman Sachs
and Salomon Smith Barney fairness opinions (Exhibit 4), Macalester paid particularly close
attention to each advisers assessment of the exchange ratio.
Acquisition Premium
On August 31, 2001, the last trading day before the September 3, 2001, announcement
date, HP and Compaq shares closed at $23.21 and $12.35, respectively, which implied an 18.9%
premium at the 0.6325 exchange ratio. As of the February 4, 2002, proxy, when HP and Compaq
shares closed at $22.04 and $12.20, respectively, the implied premium was 14.3%. At the end of
trading on Friday, March 15, 2002, HP and Compaq shares closed at $19.05 and $10.33,
respectively.
Merger of Equals
From the announcement date throughout the contentious campaign for shareholder votes,
Hewlett-Packard and Compaq executives touted the transaction as a merger of equals (MOE).
Fiorina and Capellas continued to describe the business combination as a mutually beneficial
marriage of two technology companies, each with different strengths and areas of contribution.
Perhaps aiming to downplay valuation differences or integration challenges, the CEOs as well as
members of their boards of directorsWalter Hewlett notwithstandingcontinued to describe
the deal as a merger of equals. Informed observers could be justifiably dubious of the MOE
characterization, whether euphemism or earnest intent. In spite of the terms presumably positive
intended consequences, Hewlett took issue with the merger of equals and later stated his view to
the Council of Institutional Investors:
The description of a reverse-triangular merger presented in this section (as well as the diagram shown in
Exhibit 2) also appears in Robert F. Bruner, Applied Mergers & Acquisitions (Hoboken, NJ: John Wiley & Sons,
2004), 55657, 560.
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A merger of equals is the toughest kind of integration to pull off. It is much harder
than an acquisition, and certainly much harder than a spin-off. A spin-off creates
focus, creates winners, and doesnt require integration. In mergers of equals there
is invariably a battle for power, sometimes subtle at first but often becoming quite
blatant, and there is no reason to think it will be different this time. Who will win
two years from now? Texas or Silicon Valley? The Dallas Morning News is
already placing its chips on Michael Capellas, and the Houston Chronicles
technology columnist has said that Compaq would be better off without HP and
the huge problems integration would bring.2
Macalester understood the MOE term to describe a merger of firms that are approximately equal
in size and where a low (or zero) acquisition premium is paid. By indicating that neither party is
strongly dominant in the combined companies, the term often conveys an attitude of teamwork
and cooperation. Although both acquirer and target benefit from the realization of synergies that
result from the merger, given the lower acquisition premium typically paid, the targets
shareholders are believed to bear more of the cost of an MOE structure.3 While an MOE
structure might facilitate getting a deal done and be beneficial to HP shareholders in the short
term, Macalester wondered about the ramifications to HP of an MOE after the deal was
consummated.
Integration
As Macalester thoughtfully considered a merger of equals, she pondered both the
similarities and differences of the two companies and how the integration would play out. Walter
Hewlett and others had repeatedly claimed that technology mergers were particularly susceptible
to failure, given the difficulty of quickly and effectively combining two businesses whose
product life cycles were short and whose businesses were driven by fast delivery of innovative
products to market. Macalesters assistant had provided her with a few observations on the
integration of HP and Compaq (Exhibit 5). As she reviewed the analysis before her, as well as
the section of the proxy statement that addressed integration (Exhibit 6), she questioned whether
the HP and Compaq management teams presented a compelling case for integration success.
Accretion/Dilution
Macalester turned her attention to the mergers impact on shareholder dilution. By
acquiring Compaq with equity, HP would be issuing more than a billion new shares of stock. She
studied the pro forma financial statements provided in the joint proxy/prospectus statement
(Exhibits 7 and 8). Clearly, the merger would be dilutive if synergies were not realized.
Macalester reviewed the information on synergies valuation and revenue losses previously
2
Walter Hewlett, Council of Institutional Investors Presentation Comments, March 11, 2002, filed with the
SEC on March 12, 2002, 8.
3
This description of a merger of equals also appears in Bruner, Applied Mergers & Acquisitions, 67274.
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provided by her associate. It would be important for her to quantify the mergers accretive value
to HP shareholders.
The Proxy Deadline Nears

After reviewing the deal terms and structure, Macalester prepared a list of additional
analyses required to assess fully the merits of the merger. Furthermore, in recommending how
her firm should vote its shares, she would need to summarize for her partners the significant
aspects of the transaction. Macalester made a to-do list:
1. Evaluate the deal terms.
2. Evaluate the exchange ratio and accretion/dilution impact.
3. Critique the merger of equals.
4. Evaluate the integration plan.
5. Decide how to vote.
Macalester was scheduled to meet with her partners in the morning to discuss the merger and
deliver her recommendation.
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Exhibit 1
DEAL DESIGN
Summary Term Sheet, Announced September 4, 2001
Consideration
Form of payment
Exchange ratio
Ownership
Ownership in merged company:
Number of Hewlett-Packard shares issued (millions)
Ratio of former CPQ shareholders to HWP shareholders
Price
Market value per HWP share at 8/31/01
Market value per CPQ share at 8/31/01
Value of each CPQ share implied by exchange ratio
Implied premium paid for CPQ shares
Combined market capitalization 8/31/01 (millions)
Market value per HWP share at 9/4/01
Market value per CPQ share at 9/4/01
Value of each CPQ share implied by exchange ratio
Implied premium paid for CPQ shares
Combined market capitalization 9/4/01 (millions)
Tax and Accounting
Accounting method
Tax considerations
Reorganization structure
Merger method
Management, Board, and Control
Company name of new firm
Chairman and CEO
President
Board of directors
Executive officers
Corporate headquarters
Voting rights by former HP and Compaq shareholders
Hewlett & Packard families ownership
Stock
0.6325 shares of HWP for each share of CPQ
64% HP; 36% Compaq
1,068
1 to 1.8
$23.21
$12.35
$14.68
18.9%
$65,961
$18.87
$11.08
$11.94
7.7%
$55,388
Purchase
Tax-free reorganization
Merger of Equals
Reverse Triangular merger
Hewlett-Packard
Carly Fiorina (former HP Chairman & CEO)
Michael Capellas (former Compaq Chairman & CEO)
Eleven members, with five from Compaq and no
more than two employee directors
Six of 20 most senior executive positions occupied by
former Compaq executives
Palo Alto, CA (company maintained a significant
presence in Houston, TX, for strategic R&D)
64% HP; 36% Compaq
18.6% before; 8.4% after
Other
Shareholder vote Shareholder approvals from both parties required
Termination fees $750 million by either party if either HP or Compaq:
a) was acquired by a third party
b) breached its representations and warranties
c) suffered a material adverse change
Ticker symbol change From HWP to HPQ
Synergies $2.0 billion was expected in fiscal 2003; annualized
cost savings of $2.5 billion by mid fiscal 2004
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-6Exhibit 2
DEAL DESIGN
Reverse-Triangular Merger
At Effective Time
HewlettPackard
HewlettPackard
Compaq
Merger
Result
Stock (and cash for

fractional shares)
Compaq
Shareholders
Stock
Heloise
Merger Corp.
Compaq
Merger Sub
Surviving Corporation
From summary section of HP/Compaq joint proxy statement/prospectus dated February 4, 2002
(page 7):
Under the terms of the merger agreement, a wholly owned subsidiary of HP will
merger with and into Compaq and Compaq will survive the merger as wholly
owned subsidiary of HP. Upon completion of the merger, holders of Compaq
common stock will be entitled to receive 0.6325 of a share of HP common stock
for each share of Compaq common stock they then hold. HP shareowners will
continue to own their existing shares of HP common stock after the merger. HP
currently intends to merge Compaq into HP as soon as reasonably practicable
following the merger.
From Article I of the Agreement and Plan of Reorganization by and among Hewlett-Packard
Company, Heloise Merger Corporation, and Compaq Computer Corporation, dated September 4,
2001:
At Effective Time, and subject to and upon the terms and conditions of this
Agreement and the applicable provisions of Delaware Law, Merger Sub shall be
merged with and into Compaq (the Merger), the separate corporate existence of
Merger Sub shall cease and Compaq shall continue as the surviving corporation.
Compaq, as the surviving corporation after the Merger, is hereafter sometimes
referred to as the Surviving Corporation.
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-7Exhibit 3
DEAL DESIGN
Contribution Analysis
HewlettPackard
Ticker
Primary location
Auditor
Fiscal year-end
Employees
HWP
California
E&Y
31-Oct
86,200
Ratio of Ratio of CPQ to

Compaq CPQ/HWP (CPQ+HWP)
CPQ
Texas
PWC
31-Dec
63,700
73.9%
42.5%
Selected Financial Data at 2001 FYE (dollars in millions)

Total assets
32,584
23,689
72.7%
Total long-term debt
3,729
600
16.1%
Total liabilities
18,631
12,572
67.5%
Total stockholders equity
13,953
11,117
79.7%
Sales
45,226
33,554
74.2%
Gross profit
12,947
8,489
65.6%
Gross-profit margin
28.6%
25.3%
88.4%
EBIT
2,030
479
23.6%
EBIT margin
4.5%
1.4%
31.8%
42.1%
13.9%
40.3%
44.3%
42.6%
39.6%
46.9%
19.1%
24.1%
Shares Outstanding (millions)

Basic
1,936
Diluted
1,974
Share Prices
07/31/01
$24.66
08/31/01
$23.21
09/28/01
$16.05
10/31/01
$16.83
11/30/01
$21.99
12/31/01
$20.54
01/31/02
$22.11
1,689
1,689
87.2%
85.5%
46.6%
46.1%
$14.94
$12.35
$8.31
$8.75
$10.15
$9.76
$12.35
60.6%
53.2%
51.8%
52.0%
46.2%
47.5%
55.9%
NMF
NMF
NMF
NMF
NMF
NMF
NMF
Market Value (dollars in millions)

07/31/01
47,928
08/31/01
45,110
09/28/01
31,137
10/31/01
32,651
11/30/01
42,661
12/31/01
39,848
01/31/02
42,924
25,398
20,995
14,127
14,875
17,255
16,592
20,995
53.0%
46.5%
45.4%
45.6%
40.4%
41.6%
48.9%
34.6%
31.8%
31.2%
31.3%
28.8%
29.4%
32.8%
Proposed exchange ratio
0.6325
Data source: Standard & Poors Research Insight 7.9, a division of the McGraw-Hill Companies, Inc.
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-8Exhibit 4
DEAL DESIGN
Summary of Financial Advisers Fairness Opinions
Goldman Sachs & Co.

Role in Merger Financial Advisor to HewlettPackard in the merger
Previous Engagements with HP Co-manager on Agilent IPO, 1999
Manager of HP public debt
offerings:
June 2000 ($1.5 billion)
July 2001 ($750 million)
July 2001 ($50 million)
Previous Engagements with Compaq Various unspecified financial
advisory and securities services
Advisors ownership of HWP or CPQ
securities (in either proprietary or
custodial accounts)
Items reviewed, analyzed or
accomplished in connection with
fairness opinion
Salomon Smith Barney

Financial Advisor to Compaq in the
merger
Various unspecified.
Various unspecified.
451,315 shares HP
160,896 shares Compaq
$42.4 million in Compaq
convertible bonds
Acknowledged but amounts not

disclosed.
Merger Agreement
Previous five years of 10-K
reports (HWP & CPQ)
Interim 10-Q reports and other
reports to shareholders (HWP
& CPQ)
Other communications from
HP and Compaq to
shareholders
Internal financial analyses and
forecasts for HP and Compaq
prepared by their respective
managements, including
estimates of Synergies
Discussions with senior
management of HP and
Compaq
Trading history of HP and
Compaq shares
Merger Agreement
Discussions with senior
management of HP and
Compaq
Publicly available financial
information
Financial Forecasts and
information provided by
management
Historical market prices,
trading volumes, historical and
projected earnings,
capitalization and financial
condition of Compaq and HP
Comparable transactions
Data source: Joint proxy/prospectus statement dated February 4, 2002, 6571, 7483.
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-9Exhibit 4 (continued)
Goldman Sachs & Co.
Analyses conducted and
Exchange Ratios calculated
as a result of analyses
Disclaimer
Contribution analysis (0.524 to

1.00)
Historical Exchange Ratio
analysis (0.494 to 0.627)
Selected Companies analysis

Synergies analysis (WACC range
of 10% to 14% and terminal
value growth rates of 0% to 4%
resulted in a NPV $11.3 billion
to $24.5 billion for synergies)
Pro Forma Merger analysis
(scenario analysis indicated
merger would be from 6.5%
dilutive to 34.3% accretive in FY

2003)
Relied on accuracy and

completeness of financial and
accounting information, internal
forecasts
Assumed estimates of Synergies
provided by HP and Compaq
would be realized
No independent evaluation of
assets or liabilities of HP or
Compaq
Assumed all regulatory consents
and approvals would be obtained
Opinion Based upon and subject to the

foregoing and based upon such other
matters as we consider relevant, it is
our opinion that as of the date hereof
the Exchange Ratio is fair from a
financial point of view to HewlettPackard.
Fees
Salomon Smith Barney
$5 million upon execution of

Merger Agreement
$28 million upon completion
Contribution analysis (0.617 to

0.764 based on EBIT and 0.491
to 0.565 based on net income)
Historical Exchange Ratio
Comparable Public Market
Valuations
Synergies analysis (WACC range
of 12.5%13.5% and terminal
value of 13.414.5 EBIT resulted
in NPV of $28.3 billion to 31.2
billion)
Similar Transactions Premium
Precedent Industry Transaction
Valuation analysis (0.637 to
0.863)
Relied upon accuracy and
completeness of public data and
internal information
No view expressed with respect
to forecasts or analyses
No likely trading range on stock
implied
Relative merits of other
alternatives not considered
Based upon and subject to the

foregoing, our experience as
investment bankers, our work as
described above and other financial
factors we deemed relevant, we are of
the opinion that, as of the date hereof
the Exchange Ratio is Fair, from a
financial point of view, to the holders
of Company Stock.
$500,000 at engagement
$9.5 million upon execution of
Merger Agreement
0.25% of deal value (less $10
million described above)
Data source: Joint proxy/prospectus statement dated February 4, 2002, 6571, 7483.
Enterprise Computing
Industry Standard Servers
Business Critical Servers
Storage Products
Hewlett-Packard has three main operating segments: Imaging and Printing, Computing, and IT Services. For descriptive benefit to the reader, a few key product groups
within each segment are shown, which do not necessarily reflect actual organizational operating groups.
2
Compaqs three main segments of operations are Access, Enterprise Computing, and Global Services. For descriptive benefit to the reader, a few key product groups within
each segment are shown, which do not necessarily reflect actual organizational operating groups.
3
As described in managements package of presentation slides, HP Position on Compaq Merger, provided to shareholders and filed with the SEC on December 19, 2001.
IT Services
Support
Outsourcing
Education
Financial Services
Global Services
Support
Professional Services
Financial Services
In enterprise computing, HP and Compaq brought different strengths to the combined company.
Compaqs position was strong in the higher growth markets of industry standard servers, business
critical servers, and storage products. HP was strong in the slower growing but higher margin Unix
server market. Integration of the enterprise groups would require a significant amount of strategic
planning, careful R&D resource allocation, and supply chain optimization for optimal merger
synergies to be realized. Decision-making in the area of enterprise computing would have a direct
impact on the success of the companys aim to rival IBM in offering customers a one-stop shop
in enterprise products.
At the proxy date, management believed HP and Compaq held the No. 8 and No. 9 positions,
respectively, in IT services market share, and post-merger, management hoped to claim the No 3
spot in services.3 Integration here would probably be most challenging, as neither company was a
clear leader in this highly fragmented, competitive segment, and success would depend somewhat
on the companys successful integration of the enterprise-computing group. Success in services
was important to the companys goal to be a serious competitor with IBM in end-to-end solutions.
Access
Commercial PCs
Consumer PCs
Computing
Commercial PCs
Consumer PCs
Notebooks
Workstations
PC Servers
Unix Servers
Storage Products
Software
Observations on Integration
Although there was no overlap with Compaq in imaging and printing, IPG would be impacted by
merger integration. For synergies to be completely realized, Compaqs strengths in cost cutting and
inventory management would need to be adopted by IPG. Furthermore, R&D priorities and
allocations would need to be revisited given the companys more balanced product portfolio. With
the new and improved end-to-end product portfolio of HP overall, IPG would be one of four key
segments of company operations rather than the core.
Compaqs strength in PCs would rule in the integration of PC groups. Compaq had successfully
created a direct model in PCs and believed scale would enable it to maintain market leader status,
compete more effectively with Dell on costs, and return to profitability.
Compaq2
No market presence
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Hewlett Packard1
Imaging and Printing (IPG)
Printers
Scanners
Supplies
Exhibit 5
DEAL DESIGN
Integration Impact by Segment
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Exhibit 6
DEAL DESIGN
Integration Planning
The following description of HP and Compaqs integration plan is excerpted from page 113 of
the joint proxy statement/prospectus dated February 4, 2002:
HP recognizes the challenge inherent in integrating enterprises of the size and complexity of HP and
Compaq. HP also recognizes that a swift and successful integration of the two companies is crucial to capturing the
potential value of the merger. Accordingly, HP has established an integration office that will report directly to Ms.
Fiorina. This office will be run jointly by Mr. McKinney and Mr. Clarke, each a key executive officer at HP and
Compaq, respectively. Mr. McKinney currently serves as the President of HPs Business Customer Organization and
provides a proven record as line manager and deep expertise in the HP organization. Mr. Clarke currently serves as
Compaqs Senior Vice President, Finance and Administration, and Chief Financial Officer and provides his depth of
knowledge of the IT industry and of Compaq. Mr. Clarke also brings significant expertise in finance and general
corporate matters. The integration office now consists of more than 450 dedicated employees, supported by advisors
and divided into teams with specifically defined functions.
By the time of completion of the merger, the integration office plans to have established:
an operating model and organization to design and implement a transition plan and provide internal clarity
regarding asset and resources allocation and priorities, go-to-market strategy and customer account
responsibilities;
management structure, roles and responsibilities multiple layers into the organization, as well as
compensation and human resources policies, which we believe will encourage our employees to focus on
business performance and avoid the distraction of personal and organizational uncertainty;
clear product roadmaps and investment protection programs, which we believe will give our customers a
high degree of confidence in our ability to meet or exceed their business requirements without disrupting
their existing relationship with us or their installed technology platform; and
standard policies, practices, and procedures to govern our relationships with our partners and facilitate a
smooth transition of our respective commercial arrangements to the combined company.
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-12Exhibit 7
DEAL DESIGN
Unaudited Pro Forma Condensed Combined Consolidated Balance Sheet of HP and Compaq
October 31, 2001 (in millions of dollars)
Historical
HP
Compaq
Assets
Current assets:
Cash and cash equivalents
Short-term investments
Accounts receivable, net
Financing receivables, net
Inventory
Other current assets
Total current assets
Property, plant and equipment, net
Long-term investments and other assets
Amortizable intangible assets, net
Goodwill and intangible assets with indefinite lives
Total assets
$ 4,197
139
4,488
2,183
5,204
5,094
21,305
4,397
6,126
89
667
$32,584
$ 3,940
-4,780
1,076
1,582
3,291
14,669
3,244
4,224
1,451
220
$23,808
Liabilities and stockholders equity

Current liabilities:
Notes payable and short-term borrowings
Accounts payable
Deferred revenue
Other accrued liabilities
Total current liabilities
Long-term debt
Other liabilities
Total stockholders equity
Total liabilities and stockholders equity
$ 1,722
3,791
1,867
6,584
13,964
3,729
938
13,953
$32,584
$ 1,501
3,619
1,170
4,493
10,783
600
1,185
11,240
$23,808
Pro forma
adjustments
50
50
1,100
(2,366)
2,649
11,363
$12,796
(220)
150
(70)
1,256
11,610
$12,796
Pro forma
combined
$ 8,137
139
9,268
3,259
6,836
8,385
36,024
8,741
7,984
4,189
12,250
$69,188
$ 3,223
7,410
2,817
11,227
24,677
4,329
3,379
36,803
$69,188
Data source: Joint proxy/prospectus statement dated February 4, 2002.
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-13Exhibit 8
DEAL DESIGN
Unaudited Pro Forma Condensed Combined Consolidated Statement of Earnings of

HP and Compaq for Year Ended October 31, 2001
(in millions of dollars, except per-share amounts)
Historical
Pro forma Pro forma
HP
Compaq adjustments combined
Net revenue:
Products
$37,498
Services
7,325
Financing income
403
Total net revenue
45,226
Cost and expenses:
Cost of products sold1
28,370
Cost of services
4,870
Financing interest
234
Research and development
2,670
Selling, general and administrative1
7,085
Restructuring and related charges
384
Amortization of intangible assets
12
Amortization of goodwill
162
Total cost and expenses
43,787
Earnings from operations
1,439
Interest and other, net
(737)
Earnings (loss) from continuing operations before taxes
702
Provision (benefit) for taxes
78
Net earnings (loss) from continuing operations2
$624
Net earnings (loss) per share from continuing operations:2
Basic
$ 0.32
Diluted
$ 0.32
Average number of shares and share equivalents:
Basic
1,936
Diluted
1,974
$29,834
6,505
168
36,507
23,485
4,718
114
1,390
5,657
656
302
29
36,351
156
(2,116)
(1,960)
(588)
$(1,372)
$67,332
13,830
571
81,733
110
20
298
428
(428)
(428)
(150)
$ (278)
51,965
9,588
348
4,060
12,762
1,040
612
191
80,566
1,167
(2,853)
(1,686)
(660)
$(1,026)
$ (0.81)
$ (0.81)
$ (0.34)
$ (0.34)
1,689
1,689
3,004
3,004
Historical amounts for amortization of intangibles and goodwill have been reclassified to separate line items.
Net earnings (loss) and net earnings (loss) per share from continuing operations are presented before
extraordinary items and cumulative effect of change in accounting principle.
2
Data source: Joint proxy/prospectus statement dated February 4, 2002.

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UV3982

Rev. Dec. 1, 2009

THE MERGER OF HEWLETT-PACKARD AND COMPAQ (B):

The Proxy Deadline Nears

Stock (and cash for

Ratio of Ratio of CPQ to

Selected Financial Data at 2001 FYE (dollars in millions)

Shares Outstanding (millions)

Market Value (dollars in millions)

Proposed exchange ratio

Goldman Sachs & Co.

Salomon Smith Barney

Acknowledged but amounts not

Contribution analysis (0.524 to

Selected Companies analysis

dilutive to 34.3% accretive in FY

Relied on accuracy and

Opinion Based upon and subject to the

Salomon Smith Barney

$5 million upon execution of

Contribution analysis (0.617 to

Based upon and subject to the

Liabilities and stockholders equity

Data source: Joint proxy/prospectus statement dated February 4, 2002.

Unaudited Pro Forma Condensed Combined Consolidated Statement of Earnings of

Data source: Joint proxy/prospectus statement dated February 4, 2002.

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