HP 2010 Annual Report Download - page 73

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
Management’s Discussion and Analysis of
Financial Condition and Results of Operations (Continued)
funding, including drawdowns under our credit facilities or the issuance of notes under our existing
shelf registration statement.
CONTRACTUAL AND OTHER OBLIGATIONS
The impact that we expect our contractual and other obligations as of October 31, 2010 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) ......... $16,294 $2,111 $ 7,945 $4,600 $1,638
Interest payments on long-term debt(2) .......... 1,489 386 570 173 360
Operating lease obligations .................. 3,565 879 1,426 630 630
Purchase obligations(3) ..................... 2,644 1,973 609 62 —
Capital lease obligations .................... 548 111 123 242 72
Total .................................. $24,540 $5,460 $10,673 $5,707 $2,700
(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. These purchase obligations are related principally to inventory and other items.
Purchase obligations exclude agreements that are cancellable without penalty. Purchase obligations
also exclude open purchase orders that are routine arrangements entered into in the ordinary
course of business as they are difficult to quantify in a meaningful way. Even though open
purchase orders are considered enforceable and legally binding, the terms generally allow us the
option to cancel, reschedule, and adjust our requirements based on our business need prior to the
delivery of goods or performance of services.
In addition to the above, at October 31, 2010, we had approximately $2.0 billion of recorded
liabilities and related interest and penalties pertaining to uncertainty in income tax positions, which will
be partially offset by $90 million of deferred tax assets and interest receivable. These liabilities and
related interest and penalties include $55 million expected to be paid within one year. For the
remaining amount, we are unable to make a reasonable estimate as to when cash settlement with the
tax authorities might occur due to the uncertainties related to these tax matters. See Note 14 to the
Consolidated Financial Statements in Item 8, which is incorporated herein by reference, for additional
information on taxes.
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