HEWLETT PACKARD CO | 2013 | FY | 3

Note 12: Borrowings

        Notes payable and short-term borrowings, including the current portion of long-term debt, were as follows for the following fiscal years ended October 31:

 
   2013   2012  
 
   Amount
Outstanding		   Weighted-
Average Interest
Rate		   Amount
Outstanding		   Weighted-
Average Interest
Rate		  
 
   In millions
    
   In millions
    
  

Current portion of long-term debt

   $ 5,226     2.8 % $ 5,744     1.6 %

Commercial paper(1)

     327     0.4 %   365     0.9 %

Notes payable to banks, lines of credit and other(1)

     426     1.7 %   538     2.3 %
                       

 

   $ 5,979         $ 6,647        
                       
(1)
Commercial paper includes $327 million and $365 million and Notes payable to banks, lines of credit and other includes $368 million and $465 million at October 31, 2013 and October 31, 2012, respectively, of borrowing and funding related activity associated with HP Financial Services ("HPFS") and its subsidiaries.

        Long-term debt was as follows for the following fiscal years ended October 31:

 
   2013   2012  
 
   In millions
  

U.S. Dollar Global Notes

              

2006 Shelf Registration Statement:

              

$500 issued at discount to par at a price of 99.694% in February 2007 at 5.4%, due March 2017

   $ 499   $ 499  

$1,500 issued at discount to par at a price of 99.921% in March 2008 at 4.5%, paid March 2013

     —     1,500  

$750 issued at discount to par at a price of 99.932% in March 2008 at 5.5%, due March 2018

     750     750  

$2,000 issued at discount to par at a price of 99.561% in December 2008 at 6.125%, due March 2014

     1,999     1,998  

$1,500 issued at discount to par at a price of 99.993% in February 2009 at 4.75%, due June 2014

     1,500     1,500  

2009 Shelf Registration Statement:

              

$1,100 issued at discount to par at a price of 99.921% in September 2010 at 1.25%, paid September 2013

     —     1,100  

$1,100 issued at discount to par at a price of 99.887% in September 2010 at 2.125%, due September 2015

     1,100     1,100  

$650 issued at discount to par at a price of 99.911% in December 2010 at 2.2%, due December 2015

     650     650  

$1,350 issued at discount to par at a price of 99.827% in December 2010 at 3.75%, due December 2020

     1,349     1,348  

$1,750 issued at par in May 2011 at three month USD LIBOR plus 0.28%, paid May 2013

     —     1,750  

$500 issued at par in May 2011 at three month USD LIBOR plus 0.4%, due May 2014

     500     500  

$500 issued at discount to par at a price of 99.971% in May 2011 at 1.55%, due May 2014

     500     500  

$1,000 issued at discount to par at a price of 99.958% in May 2011 at 2.65%, due June 2016

     1,000     1,000  

$1,250 issued at discount to par at a price of 99.799% in May 2011 at 4.3%, due June 2021

     1,248     1,248  

$750 issued at discount to par at a price of 99.977% in September 2011 at 2.35%, due March 2015

     750     750  

$1,300 issued at discount to par at a price of 99.784% in September 2011 at 3.0%, due September 2016

     1,298     1,298  

$1,000 issued at discount to par at a price of 99.816% in September 2011 at 4.375%, due September 2021

     999     998  

$1,200 issued at discount to par at a price of 99.863% in September 2011 at 6.0%, due September 2041

     1,198     1,198  

$350 issued at par in September 2011 at three-month USD LIBOR plus 1.55%, due September 2014

     350     350  

$650 issued at discount to par at a price of 99.946% in December 2011 at 2.625%, due December 2014

     650     650  

$850 issued at discount to par at a price of 99.790% in December 2011 at 3.3%, due December 2016

     849     849  

$1,500 issued at discount to par at a price of 99.707% in December 2011 at 4.65%, due December 2021

     1,496     1,496  

$1,500 issued at discount to par at a price of 99.985% in March 2012 at 2.6%, due September 2017

     1,500     1,500  

$500 issued at discount to par at a price of 99.771% in March 2012 at 4.05%, due September 2022

     499     499  
           

 

     20,684     25,031  
           

EDS Senior Notes

              

$1,100 issued June 2003 at 6.0%, paid August 2013

     —     1,109  

$300 issued October 1999 at 7.45%, due October 2029

     314     314  
           

 

     314     1,423  
           

Other, including capital lease obligations, at 0.00%-8.39%, due in calendar years 2014-2024(1)

     689     680  

Fair value adjustment related to hedged debt

     147     399  

Less: current portion

     (5,226 )   (5,744 )
           

Total long-term debt

   $ 16,608   $ 21,789  
           
(1)
Other, including capital lease obligations includes $244 million and $225 million at October 31, 2013 and October 31, 2012, respectively, of borrowing and funding related activity associated with HPFS and its subsidiaries.

        As disclosed in Note 9, HP uses interest rate swaps to mitigate interest rate risk in connection with certain fixed-rate global notes in order to achieve primarily U.S. dollar LIBOR-based floating interest expense. The interest rates in the table above have not been adjusted to reflect the impact of any interest rate swaps.

        HP may redeem some or all of the fixed-rate U.S. Dollar Global Notes set forth in the above table at any time in accordance with the terms thereof. The U.S. Dollar Global Notes are senior unsecured debt.

        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. The 2012 Shelf Registration Statement replaced the registration statement filed in May 2009.

        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, which was established in September 2012, provides for the issuance of commercial paper outside of the United States 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 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 four-year credit facility that expires in February 2015. Both facilities support the U.S. commercial paper program and the euro commercial paper program. In addition, the five-year credit facility was amended in September 2012 to permit borrowings in euros and British pounds, with the amounts available in euros and pounds being limited to the U.S. dollar equivalent of $2.2 billion and $300 million, respectively. 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.

        Within Other, including capital lease obligations, are borrowings that are collateralized by certain financing receivable assets. As of October 31, 2013 and October 31, 2012, the carrying value of the assets approximated the carrying amount of the borrowings of $244 million and $225 million, respectively.

        As of October 31, 2013, HP had the capacity to issue an unspecified amount of additional debt securities, common stock, preferred stock, depositary shares and warrants under the 2012 Shelf Registration Statement. As of that date, HP also had up to $17.8 billion of available borrowing resources, including $16.2 billion in available capacity under its commercial paper programs and $1.6 billion relating to uncommitted lines of credit. The extent to which HP is able to utilize the 2012 Shelf Registration Statement and the commercial paper programs as sources of liquidity at any given time is subject to a number of factors, including market demand for HP securities and commercial paper, HP's financial performance, HP's credit ratings and market conditions generally.

        Aggregate future maturities of long-term debt at face value (excluding a fair value adjustment related to hedged debt of $147 million, a premium on debt issuance of $14 million, and a discount on debt issuance of $16 million) were as follows at October 31, 2013:

 
   2014   2015   2016   2017   2018   Thereafter   Total  
 
   In millions
  

Aggregate future maturities of debt outstanding including capital lease obligations

   $ 5,195   $ 2,543   $ 3,013   $ 2,891   $ 842   $ 7,205   $ 21,689  

        Interest expense on borrowings was as follows:

 
   For the fiscal years ended October 31  
 
   2013   2012   2011  
 
   In millions
  

Financing interest

   $ 312   $ 317   $ 306  

Interest expense

     426     514     216  
               

Total interest expense

   $ 738   $ 831   $ 522  
               

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