HP 2008 Annual Report Download - page 130

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Note 12: Borrowings (Continued)
HP may redeem some or all of the Global Notes as set forth in the above table at any time at the
redemption prices described in the prospectus supplements relating thereto. The Global Notes are
senior unsecured debt.
HP registered the sale of up to $3.0 billion of debt or global securities, common stock, preferred
stock, depositary shares and warrants under a shelf registration statement in March 2002 (the ‘‘2002
Shelf Registration Statement’’). HP was unable to issue any additional securities under the 2002 Shelf
Registration Statement as of December 1, 2008.
In May 2006, HP filed a shelf registration statement (the ‘‘2006 Shelf Registration Statement’’)
with the SEC to enable HP to offer and sell, from time to time, in one or more offerings, an unlimited
amount of debt securities, common stock, preferred stock, depositary shares and warrants. As of
October 31, 2008, HP had $7.0 billion of global notes issued under the 2006 Shelf Registration
Statement. On December 5, 2008, HP issued an additional $2.0 billion of global notes under the 2006
Shelf Registration Statement. The global notes issued in December 2008 are due March 2014 with a
fixed interest rate of 6.125% per annum and were issued at discounts to par at 99.561%. HP used the
net proceeds from these offerings for general corporate purposes and the repayment of short-term
commercial paper.
In August 2008, in connection with HP’s acquisition of EDS, all of the outstanding debt of EDS
was consolidated into HP’s financial statements. The face value of the EDS debt consisted of
$700 million of 7.125% Senior Notes due October 2009; $1.1 billion of 6.0% unsecured Senior Notes
due August 2013; $1.0 billion of Zero-Coupon Convertible Senior Notes due October 2021 with a
carrying value of $1 million as of October 31, 2008; $690 million of 3.875% unsecured Convertible
Senior Notes due July 2023 with a carrying value of $4 million as of October 31, 2008; and $300 million
of 7.45% Senior Notes due October 2029 (collectively, the ‘‘EDS Debt Securities’’), and capital lease
obligations of approximately $419 million. On September 5, 2008, HP entered into a supplemental
indenture pursuant to which HP agreed to guarantee the EDS Debt Securities. The debt had an
aggregate fair value of approximately $3.3 billion on the acquisition date. In October 2008, HP
redeemed the majority of the $690 million of 3.875% unsecured Convertible Senior Notes for
approximately $685 million. At October 31, 2008, the outstanding amount of the EDS Debt Securities
was $2.6 billion.
In March 2008, HP redeemed all of the outstanding LYONs for approximately $377 million. The
LYONs were convertible at the option of the holders at any time or prior to maturity, unless previously
redeemed or otherwise purchased.
In May 2008, the Board of Directors approved increasing the capacity of HP’s U.S. commercial
paper program by $10.0 billion to $16.0 billion. HP’s subsidiaries are authorized to issue up to an
additional $1.0 billion of commercial paper, of which $500 million of capacity is currently available to
be used by Hewlett-Packard International Bank PLC, a wholly-owned subsidiary of HP, for its Euro
Commercial Paper/Certificate of Deposit Programme. In August 2008, HP issued approximately
$9.9 billion of commercial paper to fund the acquisition of EDS.
In October 2008, HP registered for the Commercial Paper Funding Facility (CPFF) provided by
the Federal Reserve Bank of New York. The facility enables HP to issue three-month unsecured
commercial paper through a special purpose vehicle of the Federal Reserve at a rate established by the
CPFF program, which is currently equal to a spread over the three-month overnight index swap rate.
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