HP 2008 Annual Report Download - page 77

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
Management’s Discussion and Analysis of
Financial Condition and Results of Operations (Continued)
We have revolving trade receivables-based facilities permitting us to sell certain trade receivables
to third parties on a non-recourse basis. The aggregate maximum capacity under these programs was
approximately $584 million as of October 31, 2008. We sold approximately $2.7 billion of trade
receivables during fiscal 2008. As of October 31, 2008, we had approximately $142 million available
under these programs.
Our credit risk is evaluated by three independent rating agencies based upon publicly available
information as well as information obtained in our ongoing discussions with them. Standard & Poor’s
Ratings Services, Moody’s Investors Service and Fitch Ratings currently rate our senior unsecured
long-term debt A, A2 and A+ and our short-term debt A-1, Prime-1 and F1, respectively. We do not
have any rating downgrade triggers that would accelerate the maturity of a material amount of our
debt. However, a downgrade in our credit rating would increase the cost of borrowings under our credit
facilities. Also, a downgrade in our credit rating could limit our ability to issue commercial paper under
our current programs. If this occurs, we would seek alternative sources of funding, including drawdowns
under our credit facility or the issuance of notes under our existing shelf registration statements.
Contractual Obligations
The impact that we expect our contractual obligations as of October 31, 2008 to have on our
liquidity and cash flow in future periods is as follows:
Payments Due by Period
Less than More than
Total 1 Year 1-3 Years 3-5 Years 5 Years
In millions
Long-term debt, including capital lease obligations(1) . . $10,271 $2,682 $1,113 $4,765 $1,711
Operating lease obligations ..................... 3,754 1,017 1,357 656 724
Purchase obligations(2) ........................ 3,303 2,596 572 110 25
Total ..................................... $17,328 $6,295 $3,042 $5,531 $2,460
(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 $372 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.
In addition to the above, at October 31, 2008, we had approximately $1.7 billion of recorded
FIN 48 liabilities and related interest and penalties. Of this liability amount, approximately $340 million
is expected to be paid within one year. For the remaining amount, we are unable to make a reasonable
estimate as to when cash settlement with tax authorities might occur due to the uncertainties related to
these tax matters. The $1.7 billion of FIN 48 liabilities and related interest and penalties will be
partially offset by $330 million of deferred tax assets and interest receivable.
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