HP 2011 Annual Report Download - page 122

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Note 11: Financing Receivables and Operating Leases (Continued)
included in financing receivables and long-term financing receivables and other assets, were as follows
for the following fiscal years ended October 31:
2011 2010
In millions
Minimum lease payments receivable ................................... $7,721 $ 7,094
Unguaranteed residual value ........................................ 233 212
Unearned income ................................................ (647) (596)
Financing receivables, gross ......................................... 7,307 6,710
Allowance for doubtful accounts ...................................... (130) (140)
Financing receivables, net ........................................... 7,177 6,570
Less current portion ............................................... (3,162) (2,986)
Amounts due after one year, net ..................................... $4,015 $ 3,584
As of October 31, 2011, scheduled maturities of HP’s minimum lease payments receivable were as
follows for the following fiscal years ended October 31:
2012 2013 2014 2015 Thereafter Total
Scheduled maturities of minimum lease payments
receivable ........................... $3,518 $2,256 $1,257 $517 $173 $7,721
Equipment leased to customers under operating leases was $4.0 billion at October 31, 2011 and
$3.5 billion at October 31, 2010 and is included in machinery and equipment. Accumulated
depreciation on equipment under lease was $1.3 billion at October 31, 2011 and $1.0 billion at
October 31, 2010. As of October 31, 2011, minimum future rentals on non-cancelable operating leases
related to leased equipment were as follows for the following fiscal years ended October 31:
2012 2013 2014 2015 Thereafter Total
Minimum future rentals on non-cancelable operating
leases ................................. $1,273 $801 $414 $152 $42 $2,682
Due to the homogenous nature of the leasing transactions, HP manages its financing receivables
on an aggregate basis when assessing and monitoring credit risk. Credit risk is generally diversified due
to the large number of entities comprising HP’s customer base and their dispersion across many
different industries and geographical regions. The credit quality of an obligor is evaluated at lease
inception and monitored over the term of a transaction. Risk ratings are assigned to each lease based
on the creditworthiness of the obligor and other variables that augment or diminish the inherent credit
risk of a particular transaction. Such variables include the underlying value and liquidity of the
collateral, the essential use of the equipment, the term of the lease, and the inclusion of guarantees,
letters of credit, security deposits or other credit enhancements.
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