HP 2007 Annual Report Download - page 79

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
Management’s Discussion and Analysis of
Financial Condition and Results of Operations (Continued)
investments and share repurchases. We are able to supplement this near-term liquidity, if necessary, with broad access to
capital markets and credit line facilities made available by various foreign and domestic financial institutions.
We maintain debt levels that we establish through consideration of a number of factors, including cash flow
expectations, cash requirements for operations, investment plans (including acquisitions), share repurchase activities, and the
overall cost of capital. Outstanding debt increased to $8.2 billion as of October 31, 2007 as compared to $5.2 billion at
October 31, 2006, bearing weighted-average interest rates of 5.2% and 5.1%, respectively. Short-term borrowings increased
to $3.2 billion at October 31, 2007 from $2.7 billion at October 31, 2006. The increase in short-term borrowings was due
primarily to the net issuance of approximately $1.9 billion of our commercial paper and notes payable and the reclassification
from long-term to short-term debt, including $500 million U.S. Dollar Global Notes that will mature in March 2008 and
$50 million Series A Medium-Term Notes that matured and we repaid in December 2007. The increase was offset partially
by our repayment of $1.0 billion Global Notes in December 2006 and $1.0 billion Global Notes in July 2007. During fiscal
2007, we issued $32 billion and repaid $30 billion of commercial paper. As of October 31, 2007, we had $5 million in total
borrowings collateralized by certain financing receivable assets.
The majority of our outstanding debt relates to HPFS. We issue debt in order to finance HPFS and as needed for other
purposes. HPFS has a business model that is asset-intensive in nature and therefore we fund HPFS more by debt than we fund
our other business segments. At October 31, 2007, HPFS had approximately $8.3 billion in net portfolio assets, which
included short- and long-term financing receivables and operating lease assets.
We have the following resources available to obtain short-term or long-term financings, if we need additional liquidity:
Original amount At October 31, 2007
available Used Available
In millions
2002 Shelf Registration Statement
Debt, U.S. global securities and up to $1,500 of Series B
Medium-Term Notes...........................................................................
$3,000 $2,000 $1,000
Euro Medium-Term Notes........................................................................ 3,000 — 3,000
Uncommitted lines of credit ..................................................................... 2,455 645(1)
1,810
Commercial paper programs
U.S. ........................................................................................................ 6,000 1,821 4,179
Euro........................................................................................................ 500 244 256
$14,955 $4,710 $10,245
(1) Approximately $151 million of this amount was recorded as debt as of October 31, 2007; the remaining amount was
used to satisfy business operational requirements.
In addition to the financing resources listed above, we had additional borrowing activities as described below.
In November 2006, in connection with the Mercury acquisition, we assumed notes issued by Mercury with a face value
of $300 million, maturing on July 1, 2007 and bearing interest at a rate of
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