HP 2009 Annual Report Download - page 151

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Note 17: Commitments (Continued)
escalation clauses. Rent expense was approximately $1,112 million in fiscal 2009, $935 million in fiscal
2008 and $767 million in fiscal 2007. The increase in fiscal 2009 rent expense was primarily a result of
the EDS acquisition in August 2008. Sublease rental income was approximately $53 million in fiscal
2009, $37 million in fiscal 2008 and $44 million in fiscal 2007.
At October 31, 2009, property under capital lease which was comprised primarily of equipment and
furniture was approximately $723 million and was included in property, plant and equipment in the
accompanying Consolidated Balance Sheet. Accumulated depreciation on the property under capital
lease was approximately $406 million at October 31, 2009. The related depreciation is included in
depreciation expense.
Future annual minimum lease payments, sublease rental income commitments and capital lease
commitments at October 31, 2009 were as follows:
2010 2011 2012 2013 2014 Thereafter Total
In millions
Minimum lease payments ................ $988 $779 $519 $365 $265 $637 $3,553
Less: Sublease rental income ............. (39) (29) (25) (20) (13) (15) (141)
$949 $750 $494 $345 $252 $622 $3,412
Capital lease commitments ............... $134 $ 82 $ 60 $ 39 $ 23 $230 $ 568
Less: Interest payments ................. (18) (11) (7) (4) (3) (2) (45)
$116 $ 71 $ 53 $ 35 $ 20 $228 $ 523
At October 31, 2009, HP had unconditional purchase obligations of approximately $2.0 billion.
These unconditional purchase obligations include agreements to purchase goods or services that are
enforceable and legally binding on HP 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. Unconditional purchase obligations exclude agreements that are cancelable
without penalty. These unconditional purchase obligations are related principally to inventory and other
items. Future unconditional purchase obligations at October 31, 2009 were as follows:
2010 2011 2012 2013 2014 Thereafter
In millions
Unconditional purchase obligations ............... $1,775 $118 $106 $15 $16 $3
Note 18: Litigation and Contingencies
HP is involved in lawsuits, claims, investigations and proceedings, including those identified below,
consisting of intellectual property, commercial, securities, employment, employee benefits and
environmental matters that arise in the ordinary course of business. HP records a provision for a
liability when management believes that it is both probable that a liability has been incurred and the
amount of the loss can be reasonably estimated. HP believes it has adequate provisions for any such
matters. HP reviews these provisions at least quarterly and adjusts these provisions to reflect the impact
of negotiations, settlements, rulings, advice of legal counsel, and other information and events
pertaining to a particular case. Based on its experience, HP believes that any damage amounts claimed
in the specific matters discussed below are not a meaningful indicator of HP’s potential liability.
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