HP 2014 Annual Report Download - page 84

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
Management’s Discussion and Analysis of
Financial Condition and Results of Operations (Continued)
CONTRACTUAL AND OTHER OBLIGATIONS
Our contractual and other obligations as of October 31, 2014, were as follows:
Payments Due by Period
1 Year or More than
Total Less 1-3 Years 3-5 Years 5 Years
In millions
Principal payments on long-term debt(1) ......... $18,539 $2,647 $5,938 $2,785 $ 7,169
Interest payments on long-term debt(2) .......... 3,990 480 793 601 2,116
Operating lease obligations .................. 3,001 721 951 534 795
Purchase obligations(3) ...................... 2,113 1,383 518 212 —
Capital lease obligations .................... 48 8 12 7 21
Total(4)(5)(6) .............................. $27,691 $5,239 $8,212 $4,139 $10,101
(1) Amounts represent the principal cash payments relating to our long-term debt and do not include
any fair value adjustments, discounts or premiums.
(2) Amounts represent the expected interest 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 changing fixed interest rates associated with some of our U.S. Dollar Global
Notes to variable interest rates. The impact of our outstanding interest rate swaps at October 31,
2014 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 cancelable 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 terms based on our business needs prior to the delivery of
goods or performance of services.
(4) In fiscal 2015, HP anticipates making contributions of $686 million to its non-U.S. pension plans,
expects to pay benefits of $35 million to its U.S. non-qualified pension plan participants and
expects to pay claims of $47 million under its post-retirement benefit plans. Our policy is to fund
our pension plans so that we meet at least the minimum contribution requirements, as established
by local government, funding and taxing authorities. Expected contributions and payments to our
pension and post-retirement benefit plans are excluded from the contractual obligations table
because they do not represent contractual cash outflows as they are dependent on numerous
factors which may result in a wide range of outcomes. For more information on our retirement
and post-retirement benefit plans, see Note 4 to the Consolidated Financial Statements in Item 8,
which is incorporated herein by reference.
(5) We expect future cash payments of $1.8 billion in connection with our approved restructuring plans
which includes $1.0 billion expected to be paid in fiscal 2015 with the remaining approximately
$800 million cash payments to be made through fiscal 2021. Payments for restructuring have been
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