HP 2009 Annual Report Download - page 128
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HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Note 10: Financial Instruments (Continued)
The before-tax effect of derivative instruments not designated as hedging instruments on the
Consolidated Statements of Earnings for fiscal 2009 was as follows:
Gain (Loss) Recognized in Income on Derivative
Location 2009
In millions
Foreign exchange contracts ................... Interest and other, net $(989)
Total return contracts ....................... Interest and other, net (1)
Interest rate contracts ....................... Interest and other, net 1
Total ................................... $(989)
Other Financial Instruments
For the balance of HP’s financial instruments, accounts receivable, financing receivables, notes
payable and short-term borrowings, accounts payable and other accrued liabilities, the carrying amounts
approximate fair value due to their short maturities. The estimated fair value of HP’s short- and
long-term debt was approximately $16.0 billion at October 31, 2009, compared to a carrying value of
$15.8 billion at that date. The estimated fair value of the debt is based primarily on quoted market
prices, as well as borrowing rates currently available to HP for bank loans with similar terms and
maturities.
Note 11: Financing Receivables and Operating Leases
Financing receivables represent sales-type and direct-financing leases resulting from the marketing
of HP’s and third-party products. These receivables typically have terms from two to five years and are
usually collateralized by a security interest in the underlying assets. Financing receivables also include
billed receivables from operating leases. The components of net financing receivables, which are
included in financing receivables and long-term financing receivables and other assets, were as follows
for the following fiscal years ended October 31:
2009 2008
In millions
Minimum lease payments receivable ................................... $6,413 $ 5,338
Allowance for doubtful accounts ...................................... (108) (90)
Unguaranteed residual value ........................................ 244 254
Unearned income ................................................ (571) (466)
Financing receivables, net ........................................... 5,978 5,036
Less current portion ............................................... (2,675) (2,314)
Amounts due after one year, net ..................................... $3,303 $ 2,722
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