HP 2008 Annual Report Download - page 147

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Note 15: Retirement and Post-Retirement Benefit Plans (Continued)
The following table summarizes the financial impact stemming from the initial adoption of SFAS 158
on October 31, 2007:
Before After
application application
of SFAS 158 Adjustments of SFAS 158
In millions
Other long-term assets (including pension assets) ...... $ 3,431 $ 477 $ 3,908
Deferred tax assets, long-term .................... $ 1,040 $ (79) $ 961
Total assets ................................. $88,301 $ 398 $88,699
Pension, post-retirement, and post-employment liabilities . $ 1,739 $(244) $ 1,495
Deferred tax liabilities, long-term ................. $ 223 $174 $ 397
Total liabilities ............................... $50,243 $ (70) $50,173
Accumulated other comprehensive income ........... $ 91 $468 $ 559
Total stockholders’ equity ....................... $38,058 $ 468 $38,526
Plan Asset Allocations
The weighted-average target and asset allocations across the HP and EDS plans at the respective
measurement dates were as follows:
U. S. Defined Non-U.S. Defined Post-Retirement
Benefit Plans Benefit Plans Benefit Plans
2008 2008 2008
Plan Assets Plan Assets Plan Assets
Target Target Target
Asset Category Allocation 2008 2007 Allocation 2008 2007 Allocation 2008 2007
Public equity securities ...... 27.1% 62.5% 59.5% 62.1% 49.5% 64.3%
Private equity securities ..... 14.6% 5.8% — — 22.9% 11.5%
Real estate and other ...... 0.5% 0.6% 6.2% 6.5% 2.1% 0.9%
Equity-related investments . . . 43% 42.2% 68.9% 70% 65.7% 68.6% 75% 74.5% 76.7%
Public debt securities ....... 56% 56.7% 28.0% 30% 33.4% 30.9% 24% 23.6% 20.5%
Cash ................... 1% 1.1% 3.1% — 0.9% 0.5% 1% 1.9% 2.8%
Total ................. 100% 100.0%100.0% 100% 100.0%100.0% 100% 100.0%100.0%
Investment Policy
HP’s investment strategy for worldwide plan assets is to seek a competitive rate of return relative
to an appropriate level of risk. The majority of the plans’ investment managers employ active
investment management strategies with the goal of outperforming the broad markets in which they
invest. Risk management practices include diversification across asset classes and investment styles and
periodic rebalancing toward asset allocation targets. A number of the plans’ investment managers are
authorized to utilize derivatives for investment purposes, and HP occasionally utilizes derivatives to
effect asset allocation changes or to hedge certain investment exposures.
The target asset allocation selected for each plan reflects a risk/return profile HP feels is
appropriate relative to each plan’s liability structure and return goals. HP regularly conducts periodic
asset-liability studies for U.S. plan assets in order to model various potential asset allocations in
141