HP 2010 Annual Report Download - page 148

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Note 17: Commitments
HP leases certain real and personal property under non-cancelable operating leases. Certain leases
require HP to pay property taxes, insurance and routine maintenance and include renewal options and
escalation clauses. Rent expense was approximately $1,062 million in fiscal 2010, $1,112 million in fiscal
2009 and $935 million in fiscal 2008. Sublease rental income was approximately $46 million in fiscal
2010, $53 million in fiscal 2009 and $37 million in fiscal 2008.
At October 31, 2010 and October 31, 2009, property under capital lease, which was comprised
primarily of equipment and furniture, was approximately $688 million and $723 million, respectively
and was included in property, plant and equipment in the accompanying Consolidated Balance Sheets.
Accumulated depreciation on the property under capital lease was approximately $482 million and
$406 million, respectively, at October 31, 2010 and October 31, 2009. The related depreciation is
included in depreciation expense.
Future annual minimum lease payments, sublease rental income commitments and capital lease
commitments at October 31, 2010 were as follows:
2011 2012 2013 2014 2015 Thereafter Total
In millions
Minimum lease payments ................ $917 $855 $622 $373 $279 $643 $3,689
Less: Sublease rental income ............. (38) (27) (24) (15) (7) (13) (124)
$879 $828 $598 $358 $272 $630 $3,565
Capital lease commitments ............... $111 $ 72 $ 51 $227 $ 15 $ 72 $ 548
Less: Interest payments ................. (14) (12) (9) (7) (4) (19) (65)
$ 97 $ 60 $ 42 $220 $ 11 $ 53 $ 483
At October 31, 2010, HP had unconditional purchase obligations of approximately $2.6 billion.
These unconditional purchase obligations include agreements to purchase goods or services that are
enforceable and legally binding on HP 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. Unconditional purchase obligations exclude agreements that are cancelable
without penalty. These unconditional purchase obligations are related principally to inventory and other
items. Future unconditional purchase obligations at October 31, 2010 were as follows:
2011 2012 2013 2014 2015 Thereafter Total
In millions
Unconditional purchase obligations ......... $1,973 $483 $126 $36 $26 $ — $2,644
Note 18: Litigation and Contingencies
HP is involved in lawsuits, claims, investigations and proceedings, including those identified below,
consisting of intellectual property, commercial, securities, employment, employee benefits and
environmental matters that arise in the ordinary course of business. HP records a provision for a
liability when management believes that it is both probable that a liability has been incurred and the
amount of the loss can be reasonably estimated. HP believes it has adequate provisions for any such
matters. HP reviews these provisions at least quarterly and adjusts these provisions to reflect the impact
of negotiations, settlements, rulings, advice of legal counsel, and other information and events
pertaining to a particular case. Based on its experience, HP believes that any damage amounts claimed
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