HP 2007 Annual Report Download - page 81

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
Management’s Discussion and Analysis of
Financial Condition and Results of Operations (Continued)
receivables during fiscal 2007. As of October 31, 2007, we had approximately $117 million available under these programs.
Contractual Obligations
The impact that we expect our contractual obligations as of October 31, 2007 to have on our liquidity and cash flow in
future periods is as follows:
Payments Due by Period
Total
Less than
1 Year 1-3 Years 3-5 Years
More than
5 Years
In millions
Long-term debt, including capital lease obligations ‘(1)........... $5,827 $683 $2,059 $2,012 $1,073
Operating lease obligations..................................................... 2,193 595 761 409 428
Purchase obligations(2) ............................................................ 2,029 1,826 164 24 15
Total........................................................................................ $10,049 $3,104 $2,984 $2,445 $1,516
‘(1) Amounts represent the expected cash payments of our long-term debt and do not include any fair value adjustments or
discounts. Included in our long-term debt are approximately $48 million of capital lease obligations that are secured by
certain equipment.
‘(2) Purchase obligations include agreements to purchase goods or services that are enforceable and legally binding on us and
that specify all significant terms, including fixed or minimum quantities to be purchased; fixed, minimum or variable
price provisions; and the approximate timing of the transaction. Purchase obligations exclude agreements that are
cancelable without penalty. These purchase obligations are related principally to inventory and other items.
Funding Commitments
During fiscal 2007, we made approximately $133 million of contributions to non-U.S. pension plans, paid $16 million to
cover benefit payments to U.S. non-qualified plan participants, and paid $58 million to cover benefit claims under post-
retirement benefit plans. In addition, we used $108 million of cash to fund the distribution and subsequent transfer of accrued
pension benefits from the U.S. Excess Benefit Plan to the U.S. Executive Deferred Compensation Plan for the terminated
vested plan participants. In fiscal 2008, we expect to contribute approximately $145 million to our pension plans and
approximately $15 million to cover benefit payments to U.S. non-qualified plan participants. We also expect to pay
approximately $80 million to cover benefit claims for our post-retirement benefit plans in fiscal 2008. Our funding policy is
to contribute cash to our pension plans so that we meet at least the minimum contribution requirements, as established by
local government and funding and taxing authorities. We expect to use contributions made to the post-retirement benefit
plans primarily for the payment of retiree health claims incurred during the fiscal year.
In conjunction with our February 2007 announcement to modify our U.S. defined benefit pension plan and our Pre-2003
Retiree Medical Program, we offered eligible affected employees an option to participate in the 2007 EER. We funded the
cash expenditures associated with the 2007 EER primarily by using available U.S. pension plan assets. We made no
incremental pension contributions to the pension plan stemming from the 2007 EER.
67