HP 2006 Annual Report Download - page 120

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Note 14: Stockholders’ Equity (Continued)
Under the PVSPP, the prices at which HP purchases the shares are subject to a minimum and
maximum price that was determined in advance of any repurchases being completed under the
program, thereby effectively hedging HP’s repurchase price. The minimum and maximum number of
shares HP could receive under the program are 52 million shares and 70 million shares, respectively.
The exact number of shares to be repurchased is based upon the volume weighted average market
price of HP’s shares during each weekly settlement period, subject to the minimum and maximum price
as well as regulatory limitations on the number of shares HP is permitted to repurchase. HP decreases
its shares outstanding each settlement period as shares are physically received. HP will retire all shares
repurchased under the PVSPP, and HP will no longer deem those shares outstanding. In fiscal 2006,
HP had received approximately 34 million shares for an aggregate price of $1.1 billion under the
PVSPP.
The Accelerated Purchase began on September 2004 and was completed in November 2004. Upon
completion of the Accelerated Purchase HP paid a $51 million price adjustment based on the
difference between the $18.82 weighted average price of the open market stock purchases by the
investment bank and the initial purchase price of $18.11 per share. The price adjustment also included
certain amounts reflecting the investment bank’s carrying costs or benefits from purchasing shares at
prices other than the initial price and its benefits from receiving the $1.3 billion payment in advance of
its purchases. HP accounted for the Accelerated Purchase as an equity transaction on the cash
settlement dates.
HP repurchased shares from the Packard Foundation under a memorandum of understanding
dated September 9, 2002 and amended and restated September 17, 2004 that, among other things,
priced the repurchases by reference to the volume weighted-average price for composite New York
Stock Exchange transactions on trading days in which a repurchase occurred. Either HP or the Packard
Foundation may suspend or terminate sales under the amended and restated memorandum of
understanding at any time.
HP’s Board of Directors authorized an additional $10.0 billion, $4.0 billion and $5.0 billion for
future repurchases of outstanding common stock in fiscal 2006, 2005 and 2004, respectively. As of
October 31, 2006, HP had remaining authorization of $5.6 billion for future share repurchases.
Previously authorized share repurchases also will be made under the PVSPP until the remaining
available balance is exhausted in the second quarter of fiscal 2007.
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