Cash equivalents and available-for-sale investments at fair value as of July 31, 2012 and October 31, 2011 were as follows:

	July 31, 2012									October 31, 2011

	Cost		Gross Unrealized Gain		Gross Unrealized Loss			Estimated Fair Value		Cost		Gross Unrealized Gain		Gross Unrealized Loss			Estimated Fair Value
	In millions
Cash Equivalents
Time deposits	$	2,985	$	—	$	—		$	2,985	$	5,112	$	—	$	—		$	5,112
Money market funds		3,632		—		—			3,632		236		—		—			236
Mutual funds		41		—		—			41		—		—		—			—

Total cash equivalents		6,658		—		—			6,658		5,348		—		—			5,348

Available-for-Sale Investments
Debt securities:
Time deposits		8		—		—			8		8		—		—			8
Foreign bonds		287		72		—			359		317		66		—			383
Mutual funds		355		—		—			355		—		—		—			—
Corporate bonds and other debt securities		69		—		(18	)		51		74		—		(21	)		53

Total debt securities		719		72		(18	)		773		399		66		(21	)		444

Equity securities in public companies		50		2		(18	)		34		114		4		—			118

Total cash equivalents and available-for-sale investments	$	7,427	$	74	$	(36	)	$	7,465	$	5,861	$	70	$	(21	)	$	5,910

Cash equivalents consist of investments in time deposits, money market funds and mutual funds with original maturities of three months or less. Time deposits were primarily issued by institutions outside the United States as of July 31, 2012 and October 31, 2011. Available-for-sale securities consist of short-term investments which mature within twelve months or less and long-term investments with maturities greater than twelve months. Investments primarily include institutional bonds, mutual funds, equity securities in public companies, fixed-interest securities and time deposits. HP estimates the fair values of its investments based on quoted market prices or pricing models using current market rates. These estimated fair values may not be representative of actual values that will be realized in the future.

As of July 31, 2012, $18 million of the total gross unrealized losses were related to certain debt securities that had been in a continuous loss position for more than twelve months. The gross unrealized loss as of October 31, 2011 was due primarily to declines in certain debt securities of $21 million that had been in a continuous loss position for more than twelve months. HP does not intend to sell these debt securities, and it is not likely that HP will be required to sell these debt securities prior to the recovery of the amortized cost.

Contractual maturities of short-term and long-term investments in available-for-sale debt securities at July 31, 2012 were as follows:

For the three and nine months ended July 31, 2012, HP recognized an insignificant impairment charge associated with debt securities. For the three and nine months ended July 31, 2011, HP did not recognize any impairment charge associated with debt securities.

During the quarter ended July 31, 2012, HP recognized approximately $10 million impairment charge related to a public equity investment as HP determined that such impairment was other than temporary. The total impairment related to this public equity investment for the nine months ended July 31, 2012 was $60 million. HP made its determination based on the closing prices for the nine months ended July 31, 2012. HP has evaluated the near-term prospects of its remaining equity investments in a gross unrealized loss position in relation to the severity and duration of the impairment and considers the decline in market value of the equity investments to be temporary in nature.

Equity securities in privately held companies include cost basis and equity method investments. These amounted to $50 million and $48 million for the periods ended July 31, 2012 and October 31, 2011, respectively, and are included in long-term financing receivables and other assets.

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 or hedges of the foreign currency exposure of a net investment in a foreign operation ("net investment hedges"). Additionally, for derivatives not designated as hedging instruments, HP categorizes those economic hedges as other derivatives. HP recognizes all derivatives, on a gross basis, in the Consolidated Condensed Balance Sheets at fair value and reports them in Other current assets, Long-term financing receivables and other assets, Other accrued liabilities, or Other liabilities. HP classifies cash flows from the derivative programs as operating activities in the Consolidated Condensed Statements of Cash Flows.

As a result of the use of derivative instruments, HP is exposed to the risk that counterparties to derivative contracts will fail to meet their contractual obligations. To mitigate the counterparty credit risk, HP has a policy of only entering into contracts with carefully selected major financial institutions based upon their credit ratings and other factors, and HP maintains dollar risk limits that correspond to each institution's credit rating and other factors. HP's established policies and procedures for mitigating credit risk on principal transactions and short-term cash include reviewing and establishing limits for credit exposure and continually assessing the creditworthiness of counterparties. Master agreements with counterparties include master netting arrangements as further mitigation of credit exposure to counterparties. These arrangements permit HP to net amounts due from HP to a counterparty with amounts due to HP from the same counterparty.

To further mitigate credit exposure to counterparties, HP may enter into collateral security arrangements with its counterparties. These arrangements require HP to post collateral or to hold collateral from counterparties when the derivative fair values exceed contractually established thresholds which are generally based on the credit ratings of HP and its counterparties. Such funds are generally transferred within two business days of the due date. As of July 31, 2012, HP held $613 million of collateral and posted $21 million through re-hypothecation in association with the counterparties under these collateralized arrangements. As of July 31, 2011 HP held $40 million of treasury securities under those collateralized arrangements. As of July 31, 2012 and 2011, HP did not have any derivative instruments under these collateralized arrangements that were in a significant net liability position.

HP enters into fair value hedges to reduce the exposure of its debt portfolio to interest rate risk. HP issues long-term debt in U.S. dollars based on market conditions at the time of financing. HP uses interest rate swaps to mitigate the market risk exposures in connection with the debt to achieve primarily U.S. dollar LIBOR-based floating interest expense. The swap transactions generally involve principal and interest obligations for U.S. dollar-denominated amounts. Alternatively, HP may choose not to swap fixed for floating interest payments or may terminate a previously executed swap if it believes a larger proportion of fixed-rate debt would be beneficial. When investing in fixed-rate instruments, HP may enter into interest rate swaps that convert the fixed interest payments into variable interest payments and would classify these swaps as fair value hedges. For derivative instruments that are designated and qualify as fair value hedges, HP recognizes the gain or loss on the derivative instrument, as well as the offsetting loss or gain on the hedged item, in Interest and other, net in the Consolidated Condensed Statements of Earnings in the current period.

HP uses a combination of forward contracts and options designated as cash flow hedges to protect against the foreign currency exchange rate risks inherent in its forecasted net revenue and, to a lesser extent, cost of sales, operating expense, and intercompany lease loan denominated in currencies other than the U.S. dollar. HP's foreign currency cash flow hedges mature generally within twelve months. However, certain leasing revenue-related forward contracts and intercompany lease loan forward contracts extend for the duration of the lease term, which can be up to five years. For derivative instruments that are designated and qualify as cash flow hedges, HP initially records the effective portion of the gain or loss on the derivative instrument in accumulated other comprehensive income or loss as a separate component of stockholders' equity and subsequently reclassifies these amounts into earnings in the period during which the hedged transaction is recognized in earnings. HP reports the effective portion of cash flow hedges in the same financial statement line item as the changes in value of the hedged item. During the three and nine months ended July 31, 2012 and 2011, HP did not discontinue any cash flow hedge for which it was probable that a forecasted transaction would not occur.

HP uses forward contracts designated as net investment hedges to hedge net investments in certain foreign subsidiaries whose functional currency is the local currency. These derivative instruments are designated as net investment hedges and, as such, HP records the effective portion of the gain or loss on the derivative instrument together with changes in the hedged items in cumulative translation adjustment as a separate component of stockholders' equity.

Other derivatives not designated as hedging instruments consist primarily of forward contracts HP uses to hedge foreign currency balance sheet exposures. HP also uses total return swaps and, to a lesser extent, interest rate swaps, based on the equity and fixed income indices, to hedge its executive deferred compensation plan liability. For derivative instruments not designated as hedging instruments, HP recognizes changes in the fair values in earnings in the period of change. HP recognizes the gain or loss on foreign currency forward contracts used to hedge balance sheet exposures in Interest and other, net in the same period as the remeasurement gain and loss of the related foreign currency denominated assets and liabilities. HP recognizes the gain or loss on the total return swaps and interest rate swaps in Interest and other, net in the same period as the gain or loss from the change in market value of the executive deferred compensation plan liability.

For interest rate swaps designated as fair value hedges, HP measures effectiveness by offsetting the change in fair value of the hedged debt with the change in fair value of the derivative. For foreign currency options and forward contracts designated as cash flow or net investment hedges, HP measures effectiveness by comparing the cumulative change in the hedge contract with the cumulative change in the hedged item, both of which are based on forward rates. HP recognizes any ineffective portion of the hedge, as well as amounts not included in the assessment of effectiveness, in the Consolidated Condensed Statements of Earnings. As of July 31, 2012 and 2011, the portion of hedging instruments' gain or loss excluded from the assessment of effectiveness was not material for fair value, cash flow or net investment hedges. Hedge ineffectiveness for fair value, cash flow and net investment hedges was not material in the three and nine months ended July 31, 2012 and 2011.

As discussed in Note 7, HP estimates the fair values of derivatives primarily based on pricing models using current market rates and records all derivatives on the balance sheet at fair value. The gross notional and fair value of derivative financial instruments in the Consolidated Condensed Balance Sheets was recorded as follows:

	As of July 31, 2012										As of October 31, 2011

	Gross Notional⁽¹⁾		Other Current Assets		Long-term Financing Receivables and Other Assets		Other Accrued Liabilities		Other Liabilities		Gross Notional⁽¹⁾		Other Current Assets		Long-term Financing Receivables and Other Assets		Other Accrued Liabilities		Other Liabilities
	In millions
Derivatives designated as hedging instruments
Fair value hedges:
Interest rate contracts	$	7,900	$	23	$	340	$	—	$	—	$	10,075	$	30	$	508	$	—	$	—
Cash flow hedges:
Foreign exchange contracts		19,620		496		84		220		53		21,666		192		30		324		126
Net investment hedges:
Foreign exchange contracts		1,665		22		26		29		22		1,556		7		4		44		56

Total derivatives designated as hedging instruments		29,185		541		450		249		75		33,297		229		542		368		182

Derivatives not designated as hedging instruments
Foreign exchange contracts		12,487		42		36		106		23		13,994		66		5		244		38
Interest rate contracts⁽²⁾		2,200		—		32		—		37		2,200		—		55		—		71
Other derivatives		401		2		22		1		—		410		25		6		—		1

Total derivatives not designated as hedging instruments		15,088		44		90		107		60		16,604		91		66		244		110

Total derivatives	$	44,273	$	585	$	540	$	356	$	135	$	49,901	$	320	$	608	$	612	$	292

The before-tax effect of a derivative instrument and related hedged item in a fair value hedging relationship for the three and nine months ended July 31, 2012 and 2011 were as follows:

	Gain (Loss) Recognized in Income on Derivative and Related Hedged Item

Derivative Instrument	Location	Three months ended July 31, 2012			Nine months ended July 31, 2012			Hedged Item	Location	Three months ended July 31, 2012		Nine months ended July 31, 2012
		In millions								In millions
Interest rate contracts	Interest and other, net	$	(10	)	$	(86	)	Fixed-rate debt	Interest and other, net	$	13	$	93

	Gain (Loss) Recognized in Income on Derivative and Related Hedged Item

Derivative Instrument	Location	Three months ended July 31, 2011		Nine months ended July 31, 2011			Hedged Item	Location	Three months ended July 31, 2011			Nine months ended July 31, 2011
		In millions							In millions
Interest rate contracts	Interest and other, net	$	68	$	(135	)	Fixed-rate debt	Interest and other, net	$	(63	)	$	138

The before-tax effect of derivative instruments in cash flow and net investment hedging relationships for the three and nine months ended July 31, 2012 were as follows:

	Gain (Loss) Recognized in Other Comprehensive Income ("OCI") on Derivative (Effective Portion)						Gain (Loss) Reclassified from Accumulated OCI Into Income (Effective Portion)							Gain Recognized in Income on Derivative (Ineffective portion and Amount Excluded from Effectiveness Testing)

	Three months ended July 31, 2012			Nine months ended July 31, 2012			Location	Three months ended July 31, 2012			Nine months ended July 31, 2012			Location	Three months ended July 31, 2012		Nine months ended July 31, 2012
	In millions							In millions							In millions
Cash flow hedges:
Foreign exchange contracts	$	412		$	729		Net revenue	$	274		$	360		Net revenue	$	—	$	—
Foreign exchange contracts		22			(39	)	Cost of products		(23	)		(5	)	Cost of products		—		—
Foreign exchange contracts		(5	)		(9	)	Other operating expenses		(2	)		(4	)	Other operating expenses		—		—
Foreign exchange contracts		17			—		Interest and other, net		21			6		Interest and other, net		—		—
Foreign exchange contracts		6			(13	)	Net revenue		9			9		Interest and other, net		—		—

Total cash flow hedges	$	452		$	668			$	279		$	366			$	—	$	—

Net investment hedges:
Foreign exchange contracts	$	33		$	71		Interest and other, net	$	—		$	—		Interest and other, net	$	—	$	—

The before-tax effect of derivative instruments in cash flow and net investment hedging relationships for the three and nine months ended July 31, 2011 were as follows:

	Gain (Loss) Recognized in Other Comprehensive Income ("OCI") on Derivative (Effective Portion)						Gain (Loss) Reclassified from Accumulated OCI Into Income (Effective Portion)							Gain Recognized in Income on Derivative (Ineffective portion and Amount Excluded from Effectiveness Testing)

	Three months ended July 31, 2011			Nine months ended July 31, 2011			Location	Three months ended July 31, 2011			Nine months ended July 31, 2011			Location	Three months ended July 31, 2011		Nine months ended July 31, 2011
	In millions							In millions							In millions
Cash flow hedges:
Foreign exchange contracts	$	115		$	(565	)	Net revenue	$	(333	)	$	(653	)	Net revenue	$	—	$	—
Foreign exchange contracts		10			28		Cost of products		9			31		Cost of products		—		—
Foreign exchange contracts		—			5		Other operating expenses		2			4		Other operating expenses		—		—
Foreign exchange contracts		(37	)		(57	)	Interest and other, net		(20	)		(52	)	Interest and other, net		—		—
Foreign exchange contracts		7			5		Net revenue		3			9		Interest and other, net		1		4

Total cash flow hedges	$	95		$	(584	)		$	(339	)	$	(661	)		$	1	$	4

Net investment hedges:
Foreign exchange contracts	$	(21	)	$	(118	)	Interest and other, net	$	—		$	—		Interest and other, net	$	—	$	—

As of July 31, 2012, HP expects to reclassify an estimated net accumulated other comprehensive gain of approximately $146 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 Condensed Statements of Earnings for the three and nine months ended July 31, 2012 and 2011 were as follows:

	Gain (Loss) Recognized in Income on Derivative

	Location	Three months ended July 31, 2012		Nine months ended July 31, 2012
		In millions
Foreign exchange contracts	Interest and other, net	$	172	$	328
Other derivatives	Interest and other, net		9		(7	)
Interest rate contracts	Interest and other, net		—		11

Total		$	181	$	332

	Gain (Loss) Recognized in Income on Derivative

	Location	Three months ended July 31, 2011			Nine months ended July 31, 2011
		In millions
Foreign exchange contracts	Interest and other, net	$	(49	)	$	(747	)
Other derivatives	Interest and other, net		(22	)		(12	)
Interest rate contracts	Interest and other, net		—			3

Total		$	(71	)	$	(756	)

For the balance of HP's financial instruments, accounts receivable, financing receivables, accounts payable and other accrued liabilities, the carrying amounts approximate fair value due to their short maturities.