HP 2015 Annual Report Download - page 86

Table of Contents
The swap transactions generally involve the exchange of fixed for floating interest payments. However, we may choose not to swap fixed for floating interest
payments or may terminate a previously executed swap if we believe a larger proportion of fixed-rate debt would be beneficial.
In order to hedge the fair value of certain fixed-rate investments, we may enter into interest rate swaps that convert fixed interest returns into variable
interest returns. We may use cash flow hedges to hedge the variability of LIBOR-based interest income received on certain variable-rate investments. We may
also enter into interest rate swaps that convert variable rate interest returns into fixed-rate interest returns.
We have performed sensitivity analyses as of October 31, 2015 and 2014, using a modeling technique that measures the change in the fair values arising
from a hypothetical 10% adverse movement in the levels of interest rates across the entire yield curve, with all other variables held constant. The analyses
cover our debt, investments, financing receivables and interest rate swaps. The analyses use actual or approximate maturities for the debt, investments,
financing receivables and interest rate swaps. The discount rates used were based on the market interest rates in effect at October 31, 2015 and 2014. The
sensitivity analyses indicated that a hypothetical 10% adverse movement in interest rates would result in a loss in the fair values of our debt, investments and
financing receivables, net of interest rate swaps, of $119 million at October 31, 2015 and $80 million at October 31, 2014.
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Source: HP INC, 10-K, December 16, 2015 Powered by Morningstar® Document Research℠
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