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Contractual commitments

Debt, leases and purchase obligations a company has already signed: how to read the 10-K table, and what it leaves out, with P&G, Lockheed Martin and Apple.

The short answer

Contractual commitments are payments a company has already signed up for: debt principal, interest, leases, and purchase obligations to suppliers. Many 10-Ks put them in a table in the MD&A or the notes, split by when the cash is due. The table is not a complete picture of future spending; it usually includes only arrangements the company cannot cancel without a penalty.

A typical table

Procter & Gamble's 10-K for fiscal 2026 totals "TOTAL CONTRACTUAL COMMITMENTS" and includes, among other lines, interest payments on long-term debt, minimum pension funding and "Purchase obligations." A footnote says the amounts do not include other contractual purchase obligations that are not take-or-pay arrangements, and that those are primarily purchase orders at fair value that are part of normal operations.

Lockheed Martin's 10-K for 2025 reports "Total contractual cash obligations" and explains that purchase obligations related to operating activities include agreements and contracts that give the supplier recourse for cancellation or nonperformance, or that contain liquidated-damages terms. That is the usual test: if the company can walk away at no cost, the order often stays out of the table.

Source: Procter & Gamble 10-K for fiscal 2026, filed Aug 4, 2026 · Lockheed Martin 10-K for fiscal 2025, filed Jan 29, 2026

What usually sits in the table

Debt and interest. Principal from the maturity schedule, and sometimes the interest on it.
Leases. Future payments on leases already recognized on the balance sheet. Leases on the balance sheet covers those liabilities.
Purchase obligations. Take-or-pay supply contracts and, in some industries, large manufacturing commitments. Apple's 10-K describes manufacturing purchase obligations as covering its forecasted component and manufacturing requirements.
Other items the company chooses to list, such as minimum pension contributions.

What it is not

The table is not a budget for the next five years. It leaves out spending the company has not yet committed to, including most ordinary purchase orders, and it does not say whether a contract will be renewed. Read it next to the cash flow statement and the liquidity discussion, not as a stand-alone forecast.

Common questions

What is a purchase obligation?

A commitment to buy goods or services that the company cannot cancel without a penalty, often called a take-or-pay contract. Ordinary purchase orders that can be cancelled at little cost are often left out of the table, as P&G's footnote describes.

Where is the commitments table?

Usually in the liquidity section of the MD&A, or in a commitments and contingencies note. The heading may say contractual commitments, contractual cash obligations or contractual obligations.

Are leases in the table?

Often yes, as future lease payments. Those same leases also appear as liabilities on the balance sheet.

Does the table include all future costs?

No. It is limited to arrangements already signed, and many companies exclude cancellable purchase orders. Planned hiring, uncommitted capital spending and routine inventory buys may not appear.

How is this different from a remaining performance obligation?

A purchase obligation is what the company has promised to pay a supplier. A remaining performance obligation is revenue the company has contracted to deliver to a customer. They sit on opposite sides of the business.

Disclosures

Editor holdings: The editor holds no position in any company named on this page. As of Nov 11, 2026.
Compensation: Nobody paid for this page. No affiliate links on this page.
Sources: Each company's own SEC filings, linked next to each number.
Last updated: Nov 10, 2026

General education, the same for every reader. Not a recommendation to buy, sell or hold any security, and it doesn't consider your situation.

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