HP 2010 Annual Report Download - page 123
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HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Note 10: Financial Instruments (Continued)
HP expects to reclassify an estimated net accumulated other comprehensive loss of $200 million,
net of taxes, to earnings in the next twelve months along with the earnings effects of the related
forecasted transactions in association with cash flow hedges.
The before-tax effect of derivative instruments not designated as hedging instruments on the
Consolidated Statements of Earnings for fiscal years 2010 and 2009 was as follows:
Gain (Loss) Recognized in Income on Derivative
Location 2010
In millions
Foreign exchange contracts ................... Interest and other, net $(764)
Other derivatives .......................... Interest and other, net 8
Interest rate contracts ....................... Interest and other, net 6
Total ................................... $(750)
Gain (Loss) Recognized in Income on Derivative
Location 2009
In millions
Foreign exchange contracts ................... Interest and other, net $(989)
Other derivatives .......................... Interest and other, net (1)
Interest rate contracts ....................... Interest and other, net 1
Total ................................... $(989)
Other Financial Instruments
For the balance of HP’s financial instruments, accounts receivable, financing receivables, notes
payable and short-term borrowings, accounts payable and other accrued liabilities, the carrying amounts
approximate fair value due to their short maturities. The estimated fair value of HP’s short- and
long-term debt was approximately $22.5 billion at October 31, 2010, compared to a carrying value of
$22.3 billion at that date. The estimated fair value of HP’s short- and long-term debt was approximately
$16.0 billion at October 31, 2009, compared to a carrying value of $15.8 billion at that date. The
estimated fair value of the debt is based primarily on quoted market prices, as well as borrowing rates
currently available to HP for bank loans with similar terms and maturities.
Note 11: Financing Receivables and Operating Leases
Financing receivables represent sales-type and direct-financing leases resulting from the placement
of HP’s and third-party products. These receivables typically have terms from two to five years and are
usually collateralized by a security interest in the underlying assets. Financing receivables also include
billed receivables from operating leases. The components of net financing receivables, which are
115