HP 2014 Annual Report Download - page 159

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Note 12: Borrowings (Continued)
As disclosed in Note 11, HP uses interest rate swaps to mitigate the exposure of its debt portfolio
to changes in fair value resulting from changes in interest rates by achieving a primarily U.S. dollar
LIBOR-based floating interest expense. Interest rates shown in the table of long-term debt have not
been adjusted to reflect the impact of any interest rate swaps.
In May 2012, HP filed a shelf registration statement (the ‘‘2012 Shelf Registration Statement’’)
with the Securities and Exchange Commission (‘‘SEC’’) to enable the company to offer for sale, from
time to time, in one or more offerings, an unspecified amount of debt securities, common stock,
preferred stock, depositary shares and warrants.
HP’s Board of Directors has authorized the issuance of up to $16.0 billion in aggregate principal
amount of commercial paper by HP. HP’s subsidiaries are authorized to issue up to an additional
$1.0 billion in aggregate principal amount of commercial paper. HP maintains two commercial paper
programs, and a wholly-owned subsidiary maintains a third program. HP’s U.S. program provides for
the issuance of U.S. dollar-denominated commercial paper up to a maximum aggregate principal
amount of $16.0 billion. HP’s euro commercial paper program provides for the issuance of commercial
paper outside of the U.S. denominated in U.S. dollars, euros or British pounds up to a maximum
aggregate principal amount of $3.0 billion or the equivalent in those alternative currencies. The
combined aggregate principal amount of commercial paper outstanding under those programs at any
one time cannot exceed the $16.0 billion authorized by HP’s Board of Directors. The HP subsidiary’s
Euro Commercial Paper/Certificate of Deposit Programme provides for the issuance of commercial
paper in various currencies of up to a maximum aggregate principal amount of $500 million.
HP maintains senior unsecured committed credit facilities primarily to support the issuance of
commercial paper. HP has a $3.0 billion five-year credit facility that expires in March 2017 and a
$4.5 billion five-year credit facility that expires in April 2019. The $4.5 billion credit facility expiring in
April 2019 was executed in the second quarter of fiscal 2014 and replaced a previous $4.5 billion credit
facility that was to expire in February 2015. Both facilities support the U.S. commercial paper program
and the euro commercial paper program. Commitment fees, interest rates and other terms of
borrowing under the credit facilities vary based on HP’s external credit ratings. HP’s ability to have an
outstanding U.S. commercial paper balance that exceeds the $7.5 billion supported by these credit
facilities is subject to a number of factors, including liquidity conditions and business performance. In
addition, the $3.0 billion five-year credit facility was amended in September 2012 to permit borrowings
in euros and British pounds, with the amounts available in euros and British pounds being limited to
the U.S. dollar equivalent of $2.2 billion and $300 million, respectively.
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