HP 2013 Annual Report Download - page 40

that fiscal year. In addition, Moody’s Investors Service downgraded our ratings again in November
2012. Our credit ratings remain under negative outlook by Moody’s Investors Service. 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. There can be no assurance that we will be able to maintain our current credit
ratings, and any additional actual or anticipated changes or downgrades in our credit ratings, including
any announcement that our ratings are under further review for a downgrade, may further impact us in
a similar manner and may have a negative impact on our liquidity, capital position and access to capital
markets.
We make estimates and assumptions in connection with the preparation of HP’s Consolidated Financial
Statements, and any changes to those estimates and assumptions could adversely affect our results of
operations.
In connection with the preparation of HP’s Consolidated Financial Statements, we use certain
estimates and assumptions based on historical experience and other factors. Our most critical
accounting estimates are described in ‘‘Management’s Discussion and Analysis of Financial Condition
and Results of Operations’’ in Item 7 of this report. In addition, as discussed in Note 17 to the
Consolidated Financial Statements, we make certain estimates, including decisions related to provisions
for legal proceedings and other contingencies. While we believe that these estimates and assumptions
are reasonable under the circumstances, they are subject to significant uncertainties, some of which are
beyond our control. Should any of these estimates and assumptions change or prove to have been
incorrect, it could adversely affect our results of operations.
Unanticipated changes in our tax provisions, the adoption of new tax legislation or exposure to additional tax
liabilities could affect our profitability.
We are subject to income and other taxes in the United States and numerous foreign jurisdictions.
Our tax liabilities are affected by the amounts we charge in intercompany transactions for inventory,
services, licenses, funding and other items. We are subject to ongoing tax audits in various jurisdictions.
Tax authorities may disagree with our intercompany charges, cross-jurisdictional transfer pricing or
other matters and assess additional taxes. We regularly assess the likely outcomes of these audits in
order to determine the appropriateness of our tax provision. However, there can be no assurance that
we will accurately predict the outcomes of these audits, and the amounts ultimately paid upon
resolution of audits could be materially different from the amounts previously included in our income
tax expense and therefore could have a material impact on our tax provision, net income and cash
flows. In addition, our effective tax rate in the future could be adversely affected by changes to our
operating structure, changes in the mix of earnings in countries with differing statutory tax rates,
changes in the valuation of deferred tax assets and liabilities, changes in tax laws and the discovery of
new information in the course of our tax return preparation process. In particular, the carrying value of
deferred tax assets, which are predominantly in the United States, is dependent on our ability to
generate future taxable income in the United States. In addition, there are proposals for tax legislation
that have been introduced or that are being considered that could have a significant adverse effect on
our tax rate, the carrying value of deferred tax assets, or our deferred tax liabilities. Any of these
changes could affect our profitability.
In order to be successful, we must attract, retain, train, motivate, develop and transition key employees, and
failure to do so could seriously harm us.
In order to be successful, we must attract, retain, train, motivate, develop and transition qualified
executives and other key employees, including those in managerial, technical, sales, marketing and IT
support positions. Identifying, developing internally or hiring externally, training and retaining qualified
32