HP 2011 Annual Report Download - page 116

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Note 10: Financial Instruments (Continued)
recognized an insignificant impairment charge associated with debt securities. In fiscal years 2010 and
2009, HP recognized an impairment charge of $12 million and $24 million, respectively, on total
investments.
Contractual maturities of short-term and long-term investments in available-for-sale debt securities
at October 31, 2011 were as follows:
October 31, 2011
Estimated
Cost Fair Value
In millions
Due in one to five years ............................................. $ 80 $ 59
Due in more than five years .......................................... 319 385
$399 $444
A summary of the carrying values and balance sheet classification of all short-term and long-term
investments in debt and equity securities as of October 31, 2011 and October 31, 2010 was as follows:
October 31, October 31,
2011 2010
In millions
Available-for-sale debt securities ................................... $ — $ 5
Included in Other current assets ................................. — 5
Available-for-sale debt securities ................................... 444 435
Available-for-sale equity securities ................................. 118 9
Equity securities in privately-held companies .......................... 48 154
Other investments ............................................. 8 9
Included in long-term financing receivables and other assets ............. $618 $607
Total investments .............................................. $618 $612
Equity securities in privately held companies include cost basis and equity method investments.
Other investments include marketable trading securities. HP includes gains or losses from changes in
fair value of these securities, offset by losses or gains on the related liabilities, in Interest and other,
net, in HP’s Consolidated Statements of Earnings. The net impact associated with these securities was
not material in fiscal years 2011 and 2010, respectively.
Derivative Financial Instruments
HP is a global company that is exposed to foreign currency exchange rate fluctuations and interest
rate changes in the normal course of its business. As part of its risk management strategy, HP uses
derivative instruments, primarily forward contracts, option contracts, interest rate swaps, and total
return swaps, to hedge certain foreign currency, interest rate and, to a lesser extent, equity exposures.
HP’s objective is to offset gains and losses resulting from these exposures with losses and gains on the
derivative contracts used to hedge them, thereby reducing volatility of earnings or protecting fair values
of assets and liabilities. HP does not have any leveraged derivatives and does not use derivative
contracts for speculative purposes. HP designates its derivatives as fair value hedges, cash flow hedges
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