HP 2013 Annual Report Download - page 123
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HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Note 8: Fair Value (Continued)
value calculations for the Autonomy intangibles and the ‘‘Compaq’’ trade name were based on a
weighted average cost of capital adjusted for the relevant risk associated with those assets. The
unobservable inputs used in these valuations include projected revenue growth rates, operating margins,
royalty rates and the risk factor added to the discount rate. The discount rates ranged from 11% to
16%. Projected revenue growth rates ranged from (61)% to 13%. The (61)% rate reflected the
significant decline in expected future revenues for Compaq-branded products from fiscal 2013 to fiscal
2014 due to the change in branding strategy discussed in Note 6.
Note 9: Financial Instruments
Cash Equivalents and Available-for-Sale Investments
Cash equivalents and available-for-sale investments as of October 31, 2013 and October 31, 2012
were as follows:
October 31, 2013 October 31, 2012
Gross Gross Gross Gross
Unrealized Unrealized Fair Unrealized Unrealized Fair
Cost Gain Loss Value Cost Gain Loss Value
In millions
Cash Equivalents
Time deposits .......... $2,207 $— $ — $2,207 $3,633 $— $ — $3,633
Money market funds ..... 6,819 — — 6,819 4,630 — — 4,630
Mutual funds .......... 13 — — 13 69 — — 69
Total cash equivalents ...... 9,039 — — 9,039 8,332 — — 8,332
Available-for-Sale
Investments
Debt securities:
Time deposits .......... 14 — — 14 8 — — 8
Foreign bonds .......... 310 86 — 396 303 82 — 385
Other debt securities ..... 64 — (15) 49 73 — (17) 56
Total debt securities ....... 388 86 (15) 459 384 82 (17) 449
Equity securities:
Mutual funds .......... 300 — — 300 400 — — 400
Equity securities in public
companies ........... 5 6 — 11 50 9 — 59
Total equity securities ...... 305 6 — 311 450 9 — 459
Total available-for-sale
investments ............ 693 92 (15) 770 834 91 (17) 908
Total cash equivalents and
available-for-sale
investments ............ $9,732 $92 $(15) $9,809 $9,166 $91 $(17) $9,240
All highly liquid investments with original maturities of three months or less at the date of
acquisition are considered to be cash equivalents. As of October 31, 2013 and 2012, the carrying value
of cash equivalents approximates fair value due to the short period of time to maturity. Interest income
115