Fair Value

6 Months Ended

Apr. 30, 2013

Fair Value

Fair Value

Note 7: Fair Value

        HP determines fair value based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants.

• Fair Value Hierarchy

        Valuation techniques used by HP are based upon observable and unobservable inputs. Observable or market inputs reflect market data obtained from independent sources, while unobservable inputs reflect HP's assumptions about market participant assumptions based on the best information available. Observable inputs are the preferred basis of valuation. These two types of inputs create the following fair value hierarchy:

        Level 1—Quoted prices (unadjusted) for identical instruments in active markets.

        Level 2—Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

        Level 3—Prices or valuations that require management inputs that are both significant to the fair value measurement and unobservable.

        The following table presents HP's assets and liabilities that are measured at fair value on a recurring basis:

	As of April 30, 2013								As of October 31, 2012
	Fair Value Measured Using								Fair Value Measured Using
							Total Balance								Total Balance
	Level 1		Level 2		Level 3				Level 1		Level 2		Level 3
	In millions
Assets
Time deposits	$	—	$	2,886	$	—	$	2,886	$	—	$	3,641	$	—	$	3,641
Money market funds		7,169		—		—		7,169		4,630		—		—		4,630
Mutual funds		—		371		—		371		—		469		—		469
Marketable equity securities		72		4		—		76		60		3		—		63
Foreign bonds		8		384		—		392		8		377		—		385
Other debt securities		—		2		38		40		1		—		44		45
Derivatives:
Interest rate contracts		—		257		—		257		—		344		—		344
Foreign exchange contracts		—		297		13		310		—		291		—		291
Other derivatives		—		8		—		8		—		1		—		1
Total Assets	$	7,249	$	4,209	$	51	$	11,509	$	4,699	$	5,126	$	44	$	9,869
Liabilities
Derivatives:
Interest rate contracts	$	—	$	10	$	—	$	10	$	—	$	29	$	—	$	29
Foreign exchange contracts		—		556		—		556		—		485		1		486
Other derivatives		—		—		—		—		—		3		—		3
Total Liabilities	$	—	$	566	$	—	$	566	$	—	$	517	$	1	$	518

• Valuation Techniques

        Cash Equivalents and Investments:    HP holds time deposits, money market funds, mutual funds, other debt securities primarily consisting of corporate and foreign government notes and bonds, and common stock and equivalents. Where applicable, HP uses quoted prices in active markets for identical assets to determine fair value. If quoted prices in active markets for identical assets are not available to determine fair value, HP uses quoted prices for similar assets and liabilities or inputs that are observable either directly or indirectly. If quoted prices for identical or similar assets are not available, HP uses internally developed valuation models for which inputs include bid prices, and third-party valuations utilizing underlying assets assumptions.

        Derivative Instruments:    As discussed in Note 8, HP mainly holds non-speculative forwards, swaps and options to hedge certain foreign currency and interest rate exposures. When active market quotes are not available, HP uses industry standard valuation models. Where applicable, these models project future cash flows and discount the future amounts to a present value using market-based observable inputs including interest rate curves, credit risk, foreign exchange rates, and forward and spot prices for currencies. In certain cases, market-based observable inputs are not available and, in those cases, HP uses management judgment to develop assumptions which are used to determine fair value.

• Other Fair Value Disclosures

        Short- and Long-Term Debt:    The estimated fair value of HP's debt is primarily calculated using an expected present value technique based upon observable market inputs. The portion of HP's fixed-rate debt obligations that is hedged is reflected in the Consolidated Condensed Balance Sheets as an amount equal to the debt's carrying value, which includes a fair value adjustment representing changes in the fair value of the hedged debt obligations arising from movements in benchmark interest rates. The estimated fair value of HP's short- and long-term debt was approximately $27.1 billion at April 30, 2013, compared to its carrying value of $26.8 billion at that date. The estimated fair value of HP's short- and long-term debt approximated its carrying value of $28.4 billion at October 31, 2012. If measured at fair value in the Consolidated Condensed Balance Sheets, short- and long-term debt would be classified as Level 2 in the fair value hierarchy.

        Other Financial Instruments:    For the balance of HP's financial instruments, primarily accounts receivable, accounts payable and financial liabilities in other accrued liabilities, the carrying amounts approximate fair value due to their short maturities.