HP 2009 Annual Report Download - page 129

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Note 11: Financing Receivables and Operating Leases (Continued)
As of October 31, 2009, scheduled maturities of HP’s minimum lease payments receivable were as
follows for the following fiscal years ended October 31:
2010 2011 2012 2013 Thereafter Total
Scheduled maturities of minimum lease payments
receivable ........................... $2,956 $1,816 $1,007 $427 $207 $6,413
Equipment leased to customers under operating leases was $3.0 billion at October 31, 2009 and
$2.3 billion at October 31, 2008 and is included in machinery and equipment. Accumulated
depreciation on equipment under lease was $0.9 billion at October 31, 2009 and $0.5 billion at
October 31, 2008. As of October 31, 2009, minimum future rentals on non-cancelable operating leases
related to leased equipment were as follows for the following fiscal years ended October 31:
2010 2011 2012 2013 Thereafter Total
Minimum future rentals on non-cancelable operating
leases .................................. $976 $647 $336 $114 $49 $2,122
Note 12: Guarantees
Guarantees and Indemnifications
In the ordinary course of business, HP may provide certain clients with subsidiary performance
guarantees and/or financial performance guarantees, which may be backed by standby letters of credit
or surety bonds. In general, HP would be liable for the amounts of these guarantees in the event HP or
HP’s subsidiaries’ nonperformance permits termination of the related contract by the client, the
likelihood of which HP believes is remote. HP believes that the company is in compliance with the
performance obligations under all material service contracts for which there is a performance
guarantee.
As a result of the acquisition of EDS, HP acquired certain service contracts supported by client
financing or securitization arrangements. Under specific circumstances involving nonperformance
resulting in service contract termination or failure to comply with terms under the financing
arrangement, HP would be required to acquire certain assets. HP considers the possibility of its failure
to comply to be remote and the asset amounts involved to be immaterial.
In the ordinary course of business, HP enters into contractual arrangements under which HP may
agree to indemnify the third party to such arrangement from any losses incurred relating to the services
they perform on behalf of HP or for losses arising from certain events as defined within the particular
contract, which may include, for example, litigation or claims relating to past performance. Such
indemnification obligations may not be subject to maximum loss clauses. Historically, payments made
related to these indemnifications have been immaterial.
Warranty
HP provides for the estimated cost of product warranties at the time it recognizes revenue. HP
engages in extensive product quality programs and processes, including actively monitoring and
evaluating the quality of its component suppliers; however, product warranty terms offered to
customers, ongoing product failure rates, material usage and service delivery costs incurred in
122