HP 2009 Annual Report Download - page 79

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
Management’s Discussion and Analysis of
Financial Condition and Results of Operations (Continued)
Credit Ratings
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. The ratings for the
fiscal year ended October 31, 2009 were:
For the fiscal year ended October 31, 2009
Standard & Poor’s Moody’s Investors Fitch Ratings
Ratings Services Service Services
Short-term debt ratings ....................... A-1 Prime-1 F1
Long-term debt ratings ....................... A A2 A+
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 facilities or the issuance of notes under our existing
shelf registration statements.
CONTRACTUAL AND OTHER OBLIGATIONS
The impact that we expect our contractual and other obligations as of October 31, 2009 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
Principal payments on long-term debt(1) ......... $14,203 $1,027 $5,403 $6,119 $1,654
Interest payments on long-term debt(2) .......... 1,772 386 661 328 397
Operating lease obligations .................. 3,412 949 1,244 597 622
Purchase obligations(3) ...................... 2,033 1,775 224 31 3
Capital lease obligations .................... 568 134 142 62 230
Total .................................. $21,988 $4,271 $7,674 $7,137 $2,906
(1) Amounts represent the expected principal cash payments relating to our long-term debt and do not
include any fair value adjustments or discounts and premiums.
(2) Amounts represent the expected interest cash payments relating to our long-term debt. We have
outstanding interest rate swap agreements accounted for as fair value hedges that have the
economic effect of modifying the fixed interest obligations associated with some of our fixed global
notes for variable rate obligations. The impact of these interest rate swaps was factored into the
calculation of the future interest payments on long-term debt.
(3) 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.
72