HP 2011 Annual Report Download - page 74

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
Management’s Discussion and Analysis of
Financial Condition and Results of Operations (Continued)
Standard & Poor’s Ratings Services downgraded our short-term and long term ratings on
November 30, 2011, and Fitch Ratings Services downgraded our long term ratings on December 2,
2011. Accordingly, the ratings as of December 14, 2011 were:
Standard & Poor’s Moody’s Investors Fitch Ratings
Ratings Services Service Services
Short-term debt ratings ....................... A-2 Prime-1 F1
Long-term debt ratings ....................... BBB+ A2 A
Our credit ratings remain under negative outlook by Fitch Ratings Services and have been under
review for possible downgrade by Moody’s Investors Service since October 28, 2011. While we do not
have any rating downgrade triggers that would accelerate the maturity of a material amount of our
debt, these downgrades have increased the cost of borrowing under our credit facilities, have reduced
market capacity for our commercial paper, and may require the posting of additional collateral under
some of our derivative contracts. In addition, any further downgrade in our credit ratings by any of the
three rating agencies may further impact us in a similar manner, and, depending on the extent of the
downgrade, could have a negative impact on our liquidity and capital position. We will rely on
alternative sources of funding, including drawdowns under our credit facilities or the issuance of debt
or other securities under our existing shelf registration statement, if necessary to offset reductions in
the market capacity for our commercial paper.
CONTRACTUAL AND OTHER OBLIGATIONS
The impact that we expect our contractual and other obligations as of October 31, 2011 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) ......... $25,953 $4,238 $10,476 $4,800 $ 6,439
Interest payments on long-term debt(2) .......... 5,064 651 993 643 2,777
Operating lease obligations .................. 3,283 811 1,112 650 710
Purchase obligations(3) ..................... 2,297 2,009 183 40 65
Capital lease obligations .................... 423 82 285 18 38
Total .................................. $37,020 $7,791 $13,049 $6,151 $10,029
(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
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