HP 2009 Annual Report Download - page 127

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HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Note 10: Financial Instruments (Continued)
Effect of Derivative Instruments on the Consolidated Statements of Earnings
The before-tax effect of a derivative instrument and related hedged item in a fair value hedging
relationship for fiscal year ended October 31, 2009 was as follows:
Gain (Loss) Recognized in Income on Derivative and Related Hedged Item
Derivative Instrument Location 2009 Hedged Item Location 2009
In millions In millions
Interest rate contracts ............. Interest and $232 Fixed-rate debt Interest and $(236)
other, net other, net
The before-tax effect of derivative instruments in cash flow and net investment hedging
relationships for fiscal 2009 was as follows:
Gain Recognized in
Gain (Loss) Income on Derivative(1)
Recognized in Gain (Loss) Reclassified from (Ineffective portion
OCI on Derivative Accumulated OCI Into Income and Amount Excluded
(Effective Portion) (Effective Portion) from Effectiveness Testing)
2009 Location 2009 Location 2009
In millions In millions In millions
Cash flow hedges:
Foreign exchange
contracts ........ $(1,044) Net revenue $475 Net revenue $—
Foreign exchange
contracts ........ 115 Cost of products 142 Cost of products —
Foreign exchange Other operating Other operating
contracts ........ (3) expenses (4) expenses —
Foreign exchange
contracts ........ 1 Interest and other, net (4) Interest and other, net —
Foreign exchange
contracts ........ 29 Net revenue 9 Interest and other, net 7
Total cash flow
hedges ........ $ (902) $618 $ 7
Net investment hedges:
Foreign exchange
contracts ........ $ (169) Interest and other, net $ — Interest and other, net $—
(1) Amount of gain recognized in income on derivative represents a $7 million gain related to the amount excluded from the
assessment of hedge effectiveness in fiscal 2009.
HP expects to reclassify net accumulated other comprehensive loss of $167 million, net of taxes, to
earnings in the next twelve months along with the earnings effects of the related forecasted transactions
in association with cash flow hedges.
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