FILED PURSUANT TO RULE 424(b)(5)
REGISTRATION NO. 333-83346
PROSPECTUS SUPPLEMENT
JUNE 21, 2002
(TO PROSPECTUS DATED MARCH 11, 2002)
$1,500,000,000
[LOGO]
$1,000,000,000 5.50% Global Notes due July 1, 2007
$500,000,000 6.50% Global Notes due July 1, 2012
------------------
Hewlett-Packard Company will pay interest on the 2007 Global Notes and the
2012 Global Notes on each January 1 and July 1. The first interest payment will
be made on January 1, 2003. The 2007 Global Notes and the 2012 Global Notes are
referred to together in this prospectus supplement as the Global Notes.
We may redeem some or all of the Global Notes of either series at any time
at the redemption prices described beginning on page S-26. We may also redeem
all but not part of the Global Notes of either series prior to maturity upon the
occurrence of certain events involving United States taxation. There is no
sinking fund for the Global Notes.
Application has been made to list both series of Global Notes on the
Luxembourg Stock Exchange.
---------------------
SEE "RISK FACTORS" BEGINNING ON PAGE S-9 OF THIS PROSPECTUS SUPPLEMENT AND
ON PAGE 7 OF THE ACCOMPANYING PROSPECTUS FOR A DISCUSSION OF CERTAIN RISKS THAT
YOU SHOULD CONSIDER IN CONNECTION WITH AN INVESTMENT IN THE GLOBAL NOTES.
---------------------
PRICE TO UNDERWRITING PROCEEDS, BEFORE
PUBLIC(1) DISCOUNT EXPENSES, TO HP
------------ ------------ ----------------
Per 2007 Global Note........................ 99.800% .350% 99.450%
Total..................................... $998,000,000 $3,500,000 $994,500,000
Per 2012 Global Note........................ 99.955% .450% 99.505%
Total..................................... $499,775,000 $2,250,000 $497,525,000
------------------------
(1) Plus accrued interest, if any, from June 26, 2002 if settlement occurs after
that date.
Delivery of the Global Notes in book-entry form only will be made through
The Depository Trust Company on or about June 26, 2002. The Global Notes of each
series have been approved for clearance through the Clearstream and Euroclear
systems.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO WHICH IT RELATES IS TRUTHFUL OR
COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
JOINT BOOK-RUNNERS
Banc of America Securities LLC Deutsche Bank Securities JPMorgan
------------------
Scotia Capital
ABN AMRO Incorporated
BNP PARIBAS
Commerzbank Securities
Credit Suisse First Boston
HSBC
Salomon Smith Barney
Wachovia
Securities
TABLE OF CONTENTS
Prospectus Supplement
PAGE
--------
Documents Incorporated by Reference......................... S-3
Forward-Looking Statements.................................. S-4
Summary..................................................... S-5
Risk Factors................................................ S-9
Use of Proceeds............................................. S-10
Capitalization.............................................. S-11
Selected Consolidated Financial Data........................ S-12
Unaudited Pro Forma Condensed Combined Consolidated
Financial Statements...................................... S-14
Description of the Global Notes............................. S-25
United States Federal Taxation.............................. S-32
Underwriting................................................ S-37
Offering Restrictions....................................... S-39
Validity of the Global Notes................................ S-41
Experts..................................................... S-41
General Information......................................... S-41
Prospectus
PAGE
--------
Summary..................................................... 1
Where You Can Find More Information......................... 5
Risk Factors................................................ 7
Ratio of Earnings to Fixed Charges.......................... 7
Use of Proceeds............................................. 7
Description of the Debt Securities.......................... 8
Description Common Stock.................................... 19
Description of Preferred Stock.............................. 21
Description of the Depositary Shares........................ 24
Description of the Warrants................................. 27
Plan of Distribution........................................ 29
Legal Matters............................................... 30
Experts..................................................... 30
------------------------
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY
REFERENCE IN THIS DOCUMENT OR TO WHICH WE HAVE REFERRED YOU. WE HAVE NOT
AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT. THIS
DOCUMENT MAY BE USED ONLY WHERE IT IS LEGAL TO SELL THESE SECURITIES. THE
INFORMATION CONTAINED OR INCORPORATED BY REFERENCE IN THIS DOCUMENT IS ACCURATE
ONLY AS OF THE DATE OF THIS DOCUMENT OR AS OF ITS DATE, AS APPLICABLE.
------------------------
This prospectus supplement and the accompanying prospectus include specific
information given in compliance with the rules governing the listing of
securities on the Luxembourg Stock Exchange for the purpose of giving
information about us.
In this prospectus supplement and accompanying prospectus, unless otherwise
specified or the context otherwise requires, references to "dollars," "$" and
"U.S.$" are to U.S. dollars, and references
S-2
to "Hewlett-Packard," "HP," "we," "us" or "our" refer to Hewlett-Packard
Company, and not to any of our subsidiaries unless otherwise indicated.
We cannot guarantee that listing will be obtained on the Luxembourg Stock
Exchange. Inquiries regarding our listing status on the Luxembourg Stock
Exchange should be directed to our Luxembourg listing agent, Dexia Banque
Internationale a Luxembourg, 69 Route D'Esch, L-2953, Luxembourg.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents previously filed by HP (File No. 1-4423) with the
U.S. Securities and Exchange Commission, which we refer to in this prospectus
supplement as the Commission, under the Securities Exchange Act of 1934, as
amended, are incorporated herein by reference:
(a) Our Annual Report on Form 10-K, as amended on January 30, 2002, for the
fiscal year ended October 31, 2001;
(b) Our Quarterly Reports on Form 10-Q for the quarterly periods ended
January 31, 2002 and April 30, 2002; and
(c) Our Current Reports on Form 8-K dated November 5, 2001, November 14,
2001, November 15, 2001, November 29, 2001, December 7, 2001,
February 13, 2002, February 14, 2002, February 27, 2002, March 14, 2002,
March 28, 2002, April 1, 2002, April 12, 2002, April 17, 2002, May 1,
2002, May 3, 2002, May 14, 2002 and June 18, 2002.
The documents incorporated by reference into this prospectus supplement and
the accompanying prospectus are available from us upon request. We will provide
a copy of any and all of the information that is incorporated by reference in
this prospectus supplement and the accompanying prospectus (not including
exhibits to the information unless those exhibits are specifically incorporated
by reference into this prospectus supplement and the accompanying prospectus) to
any person, without charge, upon written or oral request. You may request a copy
of information incorporated by reference into this prospectus supplement and the
accompanying prospectus by contacting us in writing or by telephone at the
following address:
Hewlett-Packard Company
3000 Hanover Street
Palo Alto, California 94304
Attention: Investor Relations
(650) 857-1501
INVESTOR_RELATIONS@HP.COM
In addition, you may obtain copies of the documents incorporated by
reference by making a request through our investor relations website,
http://www.hp.com/hpinfo/investor. Please note, however, that we have not
incorporated any other information by reference from our website, other than the
documents listed above.
We file annual, quarterly and current reports, proxy and information
statements and other information with the Commission. Copies of the reports,
proxy and information statements and other information filed by us with the
Commission may be inspected and copied at the public reference facilities
maintained by the Commission at:
450 Fifth Street, N.W.
Washington, D.C. 20549
Copies of these materials can also be obtained by mail at prescribed rates
from the public reference facilities of the Commission, 450 Fifth Street, N.W.,
Washington, D.C. 20549 or by calling the Commission at 1-800-SEC-0330. The
Commission maintains a website that contains reports, proxy
S-3
statements and other information regarding us. The address of the Commission
website is http://www.sec.gov.
Reports, proxy and information statements and other information concerning
HP may be inspected at:
The New York Stock Exchange
20 Broad Street
New York, New York 10005
The documents incorporated by reference are obtainable free of charge at the
office of the Luxembourg listing agent. See "General Information" below for
additional information regarding incorporation by reference.
FORWARD-LOOKING STATEMENTS
This prospectus supplement, the accompanying prospectus and the documents
incorporated by reference in this prospectus supplement and the accompanying
prospectus contain forward-looking statements that involve risks and
uncertainties, as well as assumptions that, if they never materialize or prove
incorrect, could cause the results of HP and its consolidated subsidiaries to
differ materially from those expressed or implied by such forward-looking
statements. All statements other than statements of historical fact are
statements that could be deemed forward-looking statements, including any
projections of earnings, revenue, synergies, accretion, margins or other
financial items; any statements of the plans, strategies and objectives of
management for future operations, including the execution of integration and
restructuring plans; any statement concerning proposed new products, services,
developments or industry rankings; any statements regarding future economic
conditions or performance; any statements of belief; and any statements of
assumptions underlying any of the foregoing. The risks, uncertainties and
assumptions referred to above include the performance of contracts by customers
and partners, employee management issues, the challenge of managing asset
levels, the difficulty of keeping expense growth at modest levels, the
assumption of maintaining revenues on a combined company basis following the
closing of the Compaq merger and other risks that are described under "Factors
that Could Affect Future Results" set forth in "Management's Discussion and
Analysis of Financial Condition and Results of Operations" in Item 2 of HP's
Quarterly Report on Form 10-Q for the quarter ended April 30, 2002 incorporated
by reference herein, and that are otherwise described from time to time in HP's
Commission reports filed subsequent to HP's Annual Report on Form 10-K, as
amended on January 30, 2002, for the fiscal year ended October 31, 2001.
S-4
SUMMARY
YOU SHOULD READ THE FOLLOWING SUMMARY TOGETHER WITH THE ENTIRE PROSPECTUS
SUPPLEMENT AND ACCOMPANYING PROSPECTUS AND THE DOCUMENTS INCORPORATED BY
REFERENCE, INCLUDING OUR CONSOLIDATED CONDENSED FINANCIAL STATEMENTS AND RELATED
NOTES. YOU SHOULD CAREFULLY CONSIDER, AMONG OTHER THINGS, THE MATTERS DISCUSSED
IN "RISK FACTORS" BELOW.
About Hewlett-Packard Company
We are a leading global provider of products, technologies, solutions and
services to consumers and businesses. We organize our operations into five major
businesses. These segments are determined in accordance with how management
views and evaluates HP's businesses. The factors that management uses to
identify HP's separate businesses include customer base, homogeneity of
products, technology and delivery channels. After May 3, 2002, the closing date
of the Compaq merger (as described herein), certain changes were made to the
previous organizational structure based on product roadmap decisions for the
combined company, resulting in the descriptions of the types of products and
services provided by each reportable segment set forth below. However, future
changes to this organizational structure due to product roadmap decisions and
other integration decisions related to the Compaq merger may result in further
changes to our reportable segments.
- PERSONAL SYSTEMS provides commercial personal computers ("PCs"), home PCs,
workstations, a range of handheld computing devices, digital entertainment
systems, calculators and other related accessories, software and services
for commercial and consumer markets. Commercial PCs include the e-PC, Evo
and Vectra desktop series as well as Evo, Armada and Omnibook notebook
PCs. Home PCs include the Pavilion and Presario series of multi-media
consumer desktop PCs and notebook PCs. Workstations provide
UNIX-Registered Trademark-, Windows and Linux-based systems. Handheld
computing devices include the iPAQ and Jornada handheld products that run
on Pocket PC-Registered Trademark- software. Digital entertainment systems
offer the DVD+RW drives as well as digital entertainment center products.
- ENTERPRISE SYSTEMS provides UNIX-Registered Trademark- servers, industry
standard servers, storage and software solutions. UNIX-Registered
Trademark- servers include RISC-based servers running on the HP-UX
operating system and the HP AlphaServer product line running on Tru64
UNIX-Registered Trademark-. The various UNIX-Registered Trademark- server
offerings range from low-end servers to high-end scalable servers,
including the Superdome line. Additionally, under UNIX-Registered
Trademark- servers, HP offers its NonStop fault-tolerant server products,
which deliver high levels of availability, performance, scale and
manageability for business critical solutions. Industry standard servers
offer primarily entry-level and mid-range ProLiant servers, which run on
the Windows, Linux and Novell operating systems. Storage provides
entry-level, mid-range and enterprise array offerings, storage area
networks, storage management software and virtualization technologies, as
well as tape drives, tape libraries and optical archival storage. Software
offers management and telecommunications software solutions designed
primarily for large-scale systems and networks. These software solutions
run on a variety of operating systems including Windows and multiple
versions of UNIX-Registered Trademark-.
- IMAGING AND PRINTING SYSTEMS provides printer hardware, digital imaging
products, printer supplies, and related professional and consulting
services. Printer hardware consists of business and home printing devices,
which include color and monochrome printers for shared and personal use,
multi-function laser and all-in-one inkjet devices, personal color copiers
and faxes, wide- and large-format inkjet printers, and digital presses.
Digital imaging products include scanner and digital photography products.
Supplies offer laser and inkjet printer cartridges and other related
printing media. Professional and consulting services are provided to
customers on the optimal use of printing and imaging assets.
S-5
- SERVICES provides a comprehensive, integrated portfolio of IT Services
offerings, including customer support, consulting and integration, and
managed services. Customer support provides a range of services from
standalone product support to high availability services for complex,
global, networked, multi-vendor environments. Customer support also
manages warranty support through its own service organization, as well as
through full-service resellers and independent service companies.
Consulting and integration provides services to design, build and
integrate IT infrastructure. Consulting and integration also provides
cross-industry solutions in areas such as customer relationship
management, supply chain, e-commerce, business portals, messaging and
security, as well as industry focused solutions for financial services,
telecommunications, manufacturing and government. Managed services offers
a range of IT management services, both comprehensive and selective,
including transformational infrastructure services, client computing
managed services, managed web services, application services, as well as
business continuity and recovery services. Services teams with leading
software, networking and services companies to bring complete solutions to
our customers.
- FINANCING supports and enhances HP's global product and services solutions
by providing a broad range of value-added financial services offerings
that enable HP's customers worldwide to acquire complete IT solutions,
including hardware, software and services. Financing offerings include
lease and loan financing and computing and printing utility offerings, as
well as financial asset management services for large global and
enterprise customers. Financing also offers an array of specialized
financial services to small- and medium-sized businesses and educational
and governmental customers. Financing offers innovative, customized and
flexible alternatives to balance unique customer cash flow, technology
obsolescence and capacity needs.
We were incorporated in 1947 under the laws of the State of California as
the successor to a partnership founded in 1939 by William R. Hewlett and David
Packard. Effective in May 1998, we changed our state of incorporation from
California to Delaware. Our principal executive offices are located at 3000
Hanover Street, Palo Alto, California 94304. Our telephone number is
(650) 857-1501.
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UNIX is a registered trademark of The Open Group. Windows is a registered
trademark of Microsoft Corporation in the United States and other countries.
Linux is a registered trademark of Linus Torvalds.
------------------------
Recent Developments
MERGER TRANSACTION WITH COMPAQ COMPUTER CORPORATION
Effective May 3, 2002, pursuant to the Agreement and Plan of Reorganization
dated as of September 4, 2001, referred to as the Merger Agreement, among HP,
Compaq Computer Corporation, referred to as Compaq, and Heloise Merger
Corporation, a wholly-owned subsidiary of HP, Heloise Merger Corporation was
merged with and into Compaq with Compaq continuing as the surviving corporation
and a wholly-owned subsidiary of HP. This transaction is referred to as the
Compaq merger in this prospectus supplement. Compaq is a leading global provider
of information technology products, services and solutions for enterprise
customers. Compaq designs, develops, manufactures and markets information
technology equipment, software, services and solutions, fault-tolerant business
critical solutions, communication products, personal desktop and notebook
computers and personal entertainment and Internet devices.
Pursuant to the Merger Agreement, as a result of the Compaq merger, each
share of Compaq common stock outstanding at the effective time of the Compaq
merger was converted into the right to receive 0.6325 of a share of HP common
stock. In addition, upon completion of the Compaq merger, HP assumed outstanding
stock appreciation rights and options to purchase shares of Compaq common
S-6
stock, each at the exchange ratio referred to in the preceding sentence, and HP
assumed certain Compaq stock plans.
Following consummation of the Compaq merger, Compaq's common stock was
delisted from the New York Stock Exchange. HP common stock now trades on the New
York Stock Exchange and the Pacific Exchange under the symbol "HPQ." In
addition, in connection with the Compaq merger we plan to guarantee certain of
Compaq's indebtedness.
The issuance of HP common stock under the Merger Agreement as described
above was registered under the Securities Act of 1933, as amended, pursuant to
HP's registration statement on Form S-4 (File No. 333-73454) filed with the
Commission and declared effective on February 5, 2002, and HP's post-effective
amendment to the registration statement on Form S-4 filed with the Commission
pursuant to Rule 462(d), which became effective immediately upon filing on
February 5, 2002. The Joint Proxy Statement/Prospectus of HP and Compaq included
in the registration statement on Form S-4 contains additional information about
the Compaq merger. A copy of the Merger Agreement is attached as Exhibit 2.1 to
HP's Current Report on Form 8-K filed with the Commission on September 4, 2001.
S-7
The Offering
Issuer Hewlett-Packard Company.
Securities Offered $1,000,000,000 aggregate initial principal amount of 2007
Global Notes.
$500,000,000 aggregate initial principal amount of 2012
Global Notes.
Maturity Dates July 1, 2007 for the 2007 Global Notes.
July 1, 2012 for the 2012 Global Notes.
Interest Rates The 2007 Global Notes will bear interest beginning from
June 26, 2002 at the rate of 5.50% per year, payable
semiannually.
The 2012 Global Notes will bear interest beginning from
June 26, 2002 at the rate of 6.50% per year, payable
semiannually.
Interest Payment Dates January 1 and July 1 of each year, beginning on January 1,
2003.
Ranking Each series of Global Notes is a senior unsecured obligation
of HP and will rank equally with all of HP's other senior
unsecured indebtedness from time to time outstanding.
Optional Redemption HP may redeem each series of Global Notes, in whole or in
part, at any time, at the redemption prices described under
the heading "Description of the Global Notes--Optional
Redemption" in this prospectus supplement.
Redemption for Tax Purposes HP may redeem all, but not part, of the Global Notes of each
series upon the occurrence of certain tax events at the
redemption prices described under the heading "Description
of the Global Notes--Redemption for Tax Purposes" in this
prospectus supplement.
Listing Application has been made to list both series of Global
Notes on the Luxembourg Stock Exchange.
S-8
RISK FACTORS
IN CONSULTATION WITH YOUR OWN FINANCIAL AND LEGAL ADVISORS, AND IN ADDITION
TO THE OTHER INFORMATION CONTAINED IN, OR INCORPORATED BY REFERENCE INTO, THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS, YOU SHOULD CAREFULLY
CONSIDER THE FOLLOWING DISCUSSION OF RISKS BEFORE DECIDING WHETHER AN INVESTMENT
IN EITHER SERIES OF GLOBAL NOTES IS SUITABLE FOR YOU. IN ADDITION, YOU SHOULD
CAREFULLY CONSIDER THE OTHER RISKS, UNCERTAINTIES AND ASSUMPTIONS THAT ARE
DESCRIBED UNDER "FACTORS THAT COULD AFFECT FUTURE RESULTS" SET FORTH IN
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATION" IN ITEM 2 OF HP'S QUARTERLY REPORT ON FORM 10-Q FOR THE FISCAL
QUARTER ENDED APRIL 30, 2002, INCORPORATED BY REFERENCE HEREIN, AND THAT ARE
OTHERWISE DESCRIBED FROM TIME TO TIME IN HP'S COMMISSION REPORTS FILED
SUBSEQUENT TO HP'S ANNUAL REPORT ON FORM 10-K, AS AMENDED ON JANUARY 30, 2002,
FOR THE FISCAL YEAR ENDED OCTOBER 31, 2001.
CHANGES IN OUR CREDIT RATINGS MAY ADVERSELY AFFECT YOUR INVESTMENT IN THE 2007
GLOBAL NOTES AND THE 2012 GLOBAL NOTES
Our long-term debt, including the 2007 Global Notes and the 2012 Global
Notes, is currently rated "A3" (with negative outlook) by Moody's Investors
Service, "A-" (with negative outlook) by Standard & Poor's and "A" (with
negative outlook) by Fitch Ratings. Actual or anticipated changes or downgrades
in our credit ratings, including any announcement that our ratings are under
further review for a downgrade, could increase our corporate borrowing costs and
affect the market value of your 2007 Global Notes and 2012 Global Notes.
THERE MAY BE AN UNCERTAIN TRADING MARKET FOR YOUR GLOBAL NOTES
We cannot assure you that a trading market for the 2007 Global Notes or the
2012 Global Notes will ever develop or will be maintained. Many factors
independent of our creditworthiness affect the trading market. These factors
include:
- time remaining to the maturity of the 2007 Global Notes or the 2012 Global
Notes;
- outstanding amount of the 2007 Global Notes or the 2012 Global Notes;
- redemption of the 2007 Global Notes or the 2012 Global Notes; and
- level, direction and volatility of market interest rates generally.
REDEMPTION MAY ADVERSELY AFFECT YOUR RETURN ON THE GLOBAL NOTES
We have the right to redeem some or all of the Global Notes prior to
maturity, including for tax purposes. We may redeem the Global Notes at times
when prevailing interest rates may be relatively low. Accordingly, you may not
be able to reinvest the redemption in a comparable security at an effective
interest rate as high as that of the 2007 Global Notes or the 2012 Global Notes.
THE GLOBAL NOTES ARE STRUCTURALLY SUBORDINATED TO THE INDEBTEDNESS OF OUR
SUBSIDIARIES
The Global Notes are obligations exclusively of HP and not of any of our
subsidiaries. A substantial portion of our operations is conducted in part
through subsidiaries, including Compaq. Our subsidiaries are separate legal
entities that have no obligation to pay any amounts due under the Global Notes
or to make any funds available therefor, whether by dividends, loans or other
payments. Except to the extent we are a creditor with recognized claims against
our subsidiaries, all claims of creditors (including trade creditors) and
holders of preferred stock, if any, of our subsidiaries will have priority with
respect to the assets of such subsidiaries over our claims (and therefore the
claims of our creditors, including holders of the Global Notes). Consequently,
the Global Notes will be effectively subordinated to all liabilities of any of
our subsidiaries and any subsidiaries that we may in the future acquire or
establish.
S-9
USE OF PROCEEDS
The net proceeds from the sale of the Global Notes are estimated to be
approximately $1,491,725,000, after deducting the underwriting discounts and
commissions and the estimated offering expenses payable by us.
The net proceeds from the sale of the Global Notes will be used for general
corporate purposes, which may include capital expenditures, repurchases of
common stock, payment of dividends, repayment of indebtedness of HP and its
subsidiaries, acquisitions of products, technology and businesses, including
related restructuring expenses and meeting working capital needs. Pending such
uses, we will invest the net proceeds in interest-bearing securities.
S-10
CAPITALIZATION
The following table sets forth:
- our long-term debt and capitalization as of April 30, 2002, and
- our long-term debt and capitalization as of April 30, 2002, as adjusted to
give effect to the sale by us of the 2007 Global Notes and the 2012 Global
Notes offered hereby (but not adjusted to give effect to the Compaq
merger).
This table should be read in conjunction with our historical unaudited
consolidated condensed financial statements, including the notes thereto and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," which are contained in our Quarterly Report on Form 10-Q for the
quarterly period ended April 30, 2002 and incorporated by reference in this
prospectus supplement and the accompanying prospectus.
APRIL 30, 2002
------------------------
HISTORICAL AS ADJUSTED
---------- -----------
(DOLLARS IN MILLIONS)
Long-term debt:
7.15% Global Notes due June 15, 2005...................... $ 1,632 $ 1,632
5.75% Global Notes due December 15, 2006.................. 989 989
5.50% Global Notes due July 1, 2007....................... -- 1,000
6.50% Global Notes due July 1, 2012....................... -- 500
Other long-term debt........................................ 1,821(1) 1,821(1)
------- -------
Total long-term debt(2)..................................... $ 4,442 $ 5,942
======= =======
Stockholders' equity:
Preferred Stock, $0.01 par value; 300,000,000 shares
authorized; no shares issued and outstanding............ -- --
Common Stock, $0.01 par value; 9,600,000,000 shares
authorized; 1,977,000,000 shares issued and
outstanding............................................. $ 20 $ 20
Additional paid-in capital................................ 845 845
Retained earnings......................................... 14,101 14,101
Accumulated other comprehensive income.................... (5) (5)
------- -------
Total stockholders' equity(3)........................... $14,961 $14,961
------- -------
Total capitalization.................................. $19,403 $20,903
======= =======
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(1) Includes approximately $313 million of our zero-coupon subordinated
convertible notes due 2017, convertible at a rate of 15.09 shares of common
stock for each $1,000 face value.
(2) Pro forma "Total long-term debt" as of April 30, 2002 giving effect to the
closing of the Compaq merger, but without consideration of the effect of the
offering of the Global Notes contemplated by this prospectus supplement and
the accompanying prospectus, would have been $5,072 million. See the
Unaudited Pro Forma Condensed Combined Financial Statements beginning on
page S-14.
(3) Pro forma "Total stockholders' equity" as of April 30, 2002 giving effect to
the closing of the Compaq merger, but without consideration of the effect of
the offering of the Global Notes contemplated by this prospectus supplement
and the accompanying prospectus, would have been $38,301 million. See the
Unaudited Pro Forma Condensed Combined Financial Statements beginning on
page S-14.
S-11
SELECTED CONSOLIDATED FINANCIAL DATA
The table below presents a summary of selected consolidated financial data
as of the dates and for the periods indicated. The historical consolidated
statements of earnings data presented below for the fiscal years ended
October 31, 2001, 2000 and 1999 and the historical consolidated balance sheets
data as of October 31, 2001 and 2000 have been derived from our historical
consolidated financial statements, which are incorporated by reference into this
prospectus supplement. The historical consolidated balance sheet data as of
October 31, 1999 have been derived from our historical consolidated financial
statements, which are not incorporated by reference into this prospectus
supplement. The selected historical consolidated financial data as of and for
the six months ended April 30, 2002 and 2001 have been derived from our
unaudited historical consolidated condensed financial statements which are
incorporated by reference into this prospectus supplement and include, in the
opinion of our management, all adjustments, consisting of only normal recurring
adjustments, which we consider necessary for a fair presentation of the results
of operations for those periods and financial position at those dates. Operating
results for the six months ended April 30, 2002 are not necessarily indicative
of results that may be expected for the entire year ending October 31, 2002.
It is important that you read the following summary selected historical
consolidated financial data together with the consolidated financial statements
and accompanying notes contained in our Annual Report on Form 10-K, as amended
on January 30, 2002, for the fiscal year ended October 31, 2001 and our
Quarterly Report on Form 10-Q for the fiscal quarter ended April 30, 2002, each
as filed with the Commission, as well as the sections of our Annual Report on
Form 10-K, as amended on January 30, 2002, for the fiscal year ended
October 31, 2001 and Quarterly Report on Form 10-Q for the quarterly period
ended April 30, 2002, entitled "Management's Discussion and Analysis of
Financial Condition and Results of Operations," all of which are incorporated by
reference into this prospectus supplement. See "Documents Incorporated by
Reference" above and "General Information" below, as well as "Where You Can Find
More Information" in the accompanying prospectus.
Our consolidated financial statements for the fiscal year ended October 31,
2001 included in our 2001 Annual Report on Form 10-K, as amended on January 30,
2002, included a cumulative effect of an accounting change as a result of the
adoption of Commission Staff Accounting Bulletin No. 101, "Revenue Recognition
in Financial Statements," as amended, as well as certain minor
reclassifications.
S-12
Selected Consolidated Financial Data(1)(2)
(In Millions, Except Per Share Amounts)
AS OF OR FOR THE
SIX MONTHS ENDED AS OF OR FOR THE
APRIL 30, YEAR ENDED OCTOBER 31,
------------------- ------------------------------
2002 2001(3) 2001(3) 2000 1999
-------- -------- -------- -------- --------
HISTORICAL CONSOLIDATED STATEMENTS OF EARNINGS DATA:
Net revenue:............................................ $22,004 $24,066 $45,226 $48,870 $42,371
Earnings from operations(4)............................. 1,039 1,113 1,439 4,025 3,818
Net earnings from continuing operations before
extraordinary item and cumulative effect of change in
accounting principle(5)............................... 716 425 624 3,561 3,104
Net earnings per share from continuing operations before
extraordinary item and cumulative effect of change in
accounting principle(5)(6)............................
Basic................................................. $ 0.37 $ 0.22 $ 0.32 $ 1.80 $ 1.54
Diluted............................................... $ 0.37 $ 0.22 $ 0.32 $ 1.73 $ 1.49
Cash dividends declared per share(6).................... $ 0.16 $ 0.16 $ 0.32 $ 0.32 $ 0.32
HISTORICAL CONSOLIDATED BALANCE SHEET DATA:
Total assets(1)....................................... $34,280 $33,458 $32,584 $34,009 $35,297
Long-term debt........................................ 4,442 2,843 3,729 3,402 1,764
OTHER DATA:
Ratio of earnings to fixed charges(7)................. 6.7x 2.7x 2.6x 12.5x 13.7x
--------------------------
(1) HP's consolidated financial statements and notes for all periods present the
businesses of Agilent Technologies, Inc. as a discontinued operation through
the spin-off date of June 2, 2000. Accordingly, total assets includes net
assets of discontinued operations of $3,533 million at October 31, 1999.
(2) Certain reclassifications have been made to prior year balances in order to
conform to the current year presentation.
(3) HP adopted Commission Staff Accounting Bulletin No. 101, "Revenue
Recognition in Financial Statements" in the fourth quarter of fiscal year
2001, retroactive to November 1, 2000.
(4) Earnings from operations includes: $178 million of merger-related charges
and $18 million of restructuring charges for the six months ended April 30,
2002; $102 million of restructuring charges for the six months ended
April 30, 2001; $384 million of restructuring charges in fiscal 2001 and
$102 million of restructuring charges in fiscal 2000.
(5) Net earnings and net earnings per share from continuing operations before
extraordinary item and cumulative effect of change in accounting principle
include the following items before related tax effects: $178 million of
merger-related charges, $18 million of restructuring charges and
$16 million of net investment losses for the six months ended April 30,
2002; $102 million of restructuring charges, $365 million of net investment
losses and a $400 million charge for litigation settlement for the six
months ended April 30, 2001; $384 million of restructuring charges,
$455 million of net investment losses, a $400 million charge for litigation
settlement and $53 million of net losses on divestitures in fiscal 2001 and
$102 million of restructuring charges and $203 million of gains from
divestitures in fiscal 2000.
(6) All per-share amounts reflect the retroactive effects of the two-for-one
stock split in the form of a stock dividend effective October 27, 2000.
(7) The ratio of earnings to fixed charges was computed by dividing earnings
(earnings from continuing operations before extraordinary item, cumulative
effect of change in accounting principle and taxes, adjusted for fixed
charges from continuing operations, minority interest in the income of
subsidiaries with fixed charges and undistributed earnings or loss of equity
investees) by fixed charges from continuing operations for the periods
indicated. Fixed charges from continuing operations include (i) interest
expense and amortization of debt discount or premium on all indebtedness,
and (ii) a reasonable approximation of the interest factor deemed to be
included in rental expense.
S-13
UNAUDITED PRO FORMA CONDENSED COMBINED
CONSOLIDATED FINANCIAL STATEMENTS
The following unaudited pro forma condensed combined consolidated balance
sheet as of April 30, 2002 and the unaudited pro forma condensed combined
consolidated statements of earnings for the six months ended April 30, 2002 and
for the year ended October 31, 2001 are based on the historical financial
statements of HP and Compaq after giving effect to the Compaq merger as a
purchase of Compaq by HP using the purchase method of accounting and the
assumptions and adjustments described in the accompanying notes to the unaudited
pro forma condensed combined consolidated financial statements. The Compaq
merger was completed on May 3, 2002.
The unaudited pro forma condensed combined consolidated balance sheet as of
April 30, 2002 is presented to give effect to the Compaq merger as if it
occurred on April 30, 2002 and, due to different fiscal period ends, combines
the historical balance sheet for HP at April 30, 2002 and the historical balance
sheet of Compaq at March 31, 2002. The unaudited pro forma condensed combined
consolidated statement of earnings of HP and Compaq for the six months ended
April 30, 2002 is presented as if the combination had taken place on
November 1, 2001 and, due to different fiscal period ends, combines the
historical results of HP for the six months ended April 30, 2002 and the
historical results of Compaq for the six months ended March 31, 2002. The
unaudited pro forma condensed combined consolidated statement of earnings of HP
and Compaq for the year ended October 31, 2001 is presented as if the
combination had taken place on November 1, 2000 and, due to different fiscal
period ends, combines the historical results of HP for the year ended
October 31, 2001 and the historical results of Compaq for the twelve months
ended September 30, 2001.
Under the purchase method of accounting, the total estimated purchase price,
calculated as described in Note 1 to these unaudited pro forma condensed
combined consolidated financial statements, is allocated to the net tangible and
intangible assets of Compaq acquired in connection with the Compaq merger, based
on their fair values as of the completion of the Compaq merger. Independent
valuation specialists are currently conducting an independent valuation in order
to assist management of HP in determining the fair values of a significant
portion of these assets. The preliminary work performed by the independent
valuation specialists has been considered in management's estimates of the fair
values reflected in these unaudited pro forma condensed combined consolidated
financial statements. A final determination of these fair values will include
management's consideration of a final valuation prepared by the independent
valuation specialists. This final valuation will be based on the actual net
tangible and intangible assets of Compaq that existed as of the date of
completion of the Compaq merger.
As of the completion of the Compaq merger, management of the combined
company had begun to assess and formulate plans to exit certain activities of
Compaq and to terminate or relocate certain employees of Compaq. These
assessments are still in process. Based on a preliminary analysis to date, costs
of approximately $1.3 billion will be accrued as of the completion of the Compaq
merger for severance or relocation costs related to Compaq employees, costs of
vacating some facilities (leased or owned) of Compaq, and other costs associated
with exiting activities of Compaq. A pro forma adjustment for $1.3 billion has
been included in the unaudited pro forma condensed combined consolidated balance
sheet as of April 30, 2002. In addition, based on a preliminary analysis, HP
expects to incur, during the quarter ended July 31, 2002 or in subsequent
quarters, additional costs of approximately $1.3 billion for severance costs
related to HP employees, costs of vacating some facilities (leased or owned) of
HP, and other costs associated with exiting activities of HP. Management expects
to be committed to a formal exit plan such that a significant portion of these
costs will be recorded as a restructuring charge in the quarter ended July 31,
2002. An adjustment for an estimate of the restructuring costs to be incurred by
HP has not been included in the unaudited pro forma condensed combined
consolidated statements of earnings since such adjustment is non-recurring in
nature. HP estimates that this preliminary estimate of these costs, in total,
would result in cash expenditures of
S-14
approximately $2.1 billion, with the remainder being non-cash charges. These
estimates are preliminary and subject to change based on HP's further
assessments. However, any changes will likely be increases to these amounts as
additional exit activities are identified and assessments are completed.
These unaudited pro forma condensed combined consolidated financial
statements have been prepared based on preliminary estimates of fair values.
Therefore, the actual amounts recorded as of the completion of the Compaq merger
may differ materially from the information presented in these unaudited pro
forma condensed combined consolidated financial statements due to the receipt of
the final valuation, the impact of ongoing integration activities and Compaq's
net assets as of the completion date (May 3, 2002).
The unaudited pro forma condensed combined consolidated financial statements
should be read in conjunction with the historical consolidated financial
statements and accompanying notes contained in HP's Annual Report on Form 10-K,
as amended on January 30, 2002, for its fiscal year ended October 31, 2001 and
Quarterly Report on Form 10-Q for its quarter ended April 30, 2002 and Compaq's
Annual Report on Form 10-K for its fiscal year ended December 31, 2001 and
Quarterly Report on Form 10-Q for its quarter ended March 31, 2002. The
unaudited pro forma condensed combined consolidated financial statements are not
intended to represent or be indicative of the consolidated results of operations
or financial condition of HP that would have been reported had the Compaq merger
been completed as of the dates presented and should not be taken as
representative of the future consolidated results of operations or financial
condition of HP.
S-15
Unaudited Pro Forma Condensed Combined Consolidated Balance Sheet
of HP and Compaq
April 30, 2002
(In millions)
HISTORICAL
------------------- PRO FORMA PRO FORMA
HP COMPAQ ADJUSTMENTS(1) COMBINED
-------- -------- -------------- ---------
ASSETS
Current assets:
Cash and cash equivalents....................... $ 8,741 $ 3,702 $ -- $12,443
Short-term investments.......................... 147 -- -- 147
Accounts receivable, net........................ 3,936 4,147 -- 8,083
Financing receivables, net...................... 2,216 1,222 (30)(a) 3,408
Inventory....................................... 4,017 1,419 (260)(b) 5,176
Other current assets............................ 4,798 2,521 543 (c) 7,862
------- ------- ------- -------
Total current assets.......................... 23,855 13,011 253 37,119
Property, plant and equipment, net................ 4,305 3,171 90 (d) 7,566
Long-term investments and other assets............ 4,831 5,324 (3,506)(e) 6,649
Amortizable intangible assets, net................ 228 1,363 2,137 (f) 3,728
Goodwill and intangible assets with indefinite
lives........................................... 1,061 248 15,020 (g) 16,329
------- ------- ------- -------
Total assets.................................. $34,280 $23,117 $13,994 $71,391
======= ======= ======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable and short-term borrowings......... $ 1,618 $ 1,666 $ -- $ 3,284
Accounts payable................................ 3,584 3,350 -- 6,934
Deferred revenue................................ 1,943 1,191 (40)(h) 3,094
Other accrued liabilities....................... 6,687 3,870 1,650 (i) 12,207
------- ------- ------- -------
Total current liabilities..................... 13,832 10,077 1,610 25,519
Long-term debt.................................... 4,442 600 30 (j) 5,072
Other liabilities................................. 1,045 1,304 150 (k) 2,499
Total stockholders' equity........................ 14,961 11,136 12,204 (l) 38,301
------- ------- ------- -------
Total liabilities and stockholders' equity.... $34,280 $23,117 $13,994 $71,391
======= ======= ======= =======
------------------------
(1) The letters refer to a description of the adjustments in Note 2.
SEE ACCOMPANYING NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED
FINANCIAL STATEMENTS.
S-16
Unaudited Pro Forma Condensed Combined Consolidated Statement of Earnings
of HP and Compaq
Six Months ended April 30, 2002
(In millions, except per share amounts)
HISTORICAL
------------------- PRO FORMA PRO FORMA
HP COMPAQ ADJUSTMENTS(1) COMBINED
-------- -------- -------------- ---------
Net revenue:
Products......................................... $18,206 $12,389 $ -- $30,595
Services......................................... 3,612 3,269 -- 6,881
Financing income................................. 186 101 -- 287
------- ------- ------- -------
Total net revenue.............................. 22,004 15,759 -- 37,763
Costs and expenses:
Cost of products sold(2)......................... 13,412 9,888 25 (m) 23,325
Cost of services................................. 2,420 2,362 -- 4,782
Financing interest............................... 68 69 -- 137
Research and development......................... 1,420 578 -- 1,998
Selling, general and administrative(2)........... 3,346 2,340 (5)(d) 5,681
Merger-related costs............................. 178 71 -- 249
Restructuring and related charges................ 18 -- -- 18
Amortization of intangible assets................ 15 166 84 (f) 265
Amortization of goodwill......................... 88 8 -- 96
------- ------- ------- -------
Total costs and expenses....................... 20,965 15,482 104 36,551
------- ------- ------- -------
Earnings from operations........................... 1,039 277 (104) 1,212
Interest and other, net............................ (51) (84) -- (135)
------- ------- ------- -------
Earnings before taxes.............................. 988 193 (104) 1,077
Provision (benefit) for taxes...................... 272 57 (34)(n) 295
------- ------- ------- -------
Net earnings(3).................................... $ 716 $ 136 $ (70) $ 782
======= ======= ======= =======
Net earnings per share(3):
Basic............................................ $ 0.37 $ 0.08 $ 0.26
======= ======= =======
Diluted.......................................... $ 0.37 $ 0.08 $ 0.26
======= ======= =======
Average number of shares and share equivalents:
Basic............................................ 1,948 1,699 3,023
Diluted.......................................... 1,968 1,710 3,050
------------------------
(1) The letters refer to a description of the adjustments in Note 2.
(2) Historical amounts for amortization of intangibles and goodwill have been
reclassified to separate line items.
(3) Net earnings and net earnings per share are presented before extraordinary
items.
SEE ACCOMPANYING NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED
FINANCIAL STATEMENTS.
S-17
Unaudited Pro Forma Condensed Combined Consolidated Statement of Earnings
of HP and Compaq
Year ended October 31, 2001
(In millions, except per share amounts)
HISTORICAL
------------------- PRO FORMA PRO FORMA
HP COMPAQ ADJUSTMENTS(1) COMBINED
-------- -------- -------------- ---------
Net revenue:
Products......................................... $37,498 $29,061 $ -- $66,559
Services......................................... 7,325 6,650 -- 13,975
Financing income................................. 403 168 -- 571
------- ------- ----- -------
Total net revenue.............................. 45,226 35,879 -- 81,105
Costs and expenses:
Cost of products sold(2)......................... 28,370 22,788 10 (m) 51,168
Cost of services................................. 4,870 4,718 -- 9,588
Financing interest............................... 234 114 -- 348
Research and development......................... 2,670 1,390 -- 4,060
Selling, general and administrative(2)........... 7,085 5,657 (10)(d) 12,732
Restructuring and related charges................ 384 656 -- 1,040
Amortization of intangible assets................ 12 302 198 (f) 512
Amortization of goodwill......................... 162 29 -- 191
------- ------- ----- -------
Total costs and expenses....................... 43,787 35,654 198 79,639
------- ------- ----- -------
Earnings from operations........................... 1,439 225 (198) 1,466
Interest and other, net............................ (737) (2,116) -- (2,853)
------- ------- ----- -------
Earnings (loss) from continuing operations before
taxes............................................ 702 (1,891) (198) (1,387)
Provision (benefit) for taxes...................... 78 (564) (63)(n) (549)
------- ------- ----- -------
Net earnings (loss) from continuing
operations(3).................................... $ 624 $(1,327) $(135) $ (838)
======= ======= ===== =======
Net earnings (loss) per share from continuing
operations:
Basic............................................ $ 0.32 $ (0.79) $ (0.28)
======= ======= =======
Diluted.......................................... $ 0.32 $ (0.79) $ (0.28)
======= ======= =======
Average number of shares and share equivalents:
Basic............................................ 1,936 1,689 3,004
Diluted.......................................... 1,974 1,689 3,004
------------------------
(1) The letters refer to a description of the adjustments in Note 2.
(2) Historical amounts for amortization of intangibles and goodwill have been
reclassified to separate line items.
(3) Net earnings (loss) and net earnings (loss) per share from continuing
operations are presented before extraordinary items and cumulative effect of
change in accounting principle.
SEE ACCOMPANYING NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED
FINANCIAL STATEMENTS.
S-18
Notes to Unaudited Pro Forma Condensed Combined Consolidated Financial
Statements
1. BASIS OF PRO FORMA PRESENTATION
On September 4, 2001, HP and Compaq entered into the Merger Agreement which
resulted in Compaq becoming a wholly-owned subsidiary of HP in a transaction to
be accounted for using the purchase method. The total purchase price of
$24.2 billion includes HP common stock valued at $22.7 billion, assumed stock
options with a fair value of $1.4 billion and estimated direct transaction costs
of $120 million.
The unaudited pro forma condensed combined consolidated financial statements
provide for the issuance of approximately 1.1 billion shares of HP common stock,
based upon an exchange ratio of 0.6325 of a share of HP common stock for each
outstanding share of Compaq common stock as of May 3, 2002, the completion date
of the Compaq merger. The average market price per share of HP common stock of
$20.92 is based on an average of the closing prices for a range of trading days
(August 30, August 31, September 4 and September 5, 2001) around the
announcement date (September 3, 2001) of the Compaq merger. In addition, HP
assumed options to purchase approximately 200 million shares of HP common stock
at a weighted average exercise price of $33.29. The fair value of the
outstanding options was determined using a Black-Scholes valuation model. In
accordance with the terms of Compaq's equity-based plans, all of Compaq's
outstanding options which were granted prior to September 1, 2001 vested upon
Compaq shareowner approval of the Compaq merger. The estimated intrinsic value
of $70 million as of May 3, 2002 of unvested Compaq options, which relates to
options granted subsequent to August 31, 2001, has been allocated to deferred
compensation in the unaudited pro forma condensed combined consolidated
financial statements and will be amortized over a period of approximately
4 years.
The total purchase price of the Compaq merger is as follows (in millions):
Value of HP common stock issued............................. $22,670
Assumption of Compaq options................................ 1,440
-------
Total value of HP securities.............................. 24,110
Estimated direct transaction costs.......................... 120
-------
Total purchase price........................................ $24,230
=======
Under the purchase method of accounting, the total purchase price as shown
in the table above is allocated to Compaq's net tangible and intangible assets
based on their fair values as of the date of the completion of the Compaq
merger. Based on the preliminary independent valuation, and subject to material
changes upon receipt of the final valuation, the impact of ongoing integration
activities, and
S-19
Compaq's net assets as of the completion date (May 3, 2002), the purchase price
is preliminarily allocated as follows (in millions):
Preliminary estimated purchase price allocation:
Net tangible assets....................................... $ 4,885
Amortizable intangible assets:
Customer contracts and lists, distribution agreements... 1,950
Developed and core technology, patents.................. 1,480
Other................................................... 70
Intangible assets with indefinite lives................... 1,400
Goodwill.................................................. 13,868
Deferred compensation..................................... 70
Net deferred tax liability................................ (193)
In-process research and development....................... 700
-------
Total preliminary estimated purchase price allocation....... $24,230
=======
Of the total purchase price, a preliminary estimate of $4.9 billion has been
allocated to net tangible assets acquired and approximately $3.5 billion has
been allocated to amortizable intangible assets acquired. The depreciation and
amortization effect of the fair value adjustment to net tangible assets and the
amortization related to the amortizable intangible assets are reflected as pro
forma adjustments to the unaudited pro forma condensed combined consolidated
statement of earnings.
Developed technology, which comprises products that have reached
technological feasibility, includes products in most of Compaq's product lines,
principally the Compaq Himalaya, Proliant, Enterprise Storage Array, and
AlphaServer products. Core technology and patents represent a combination of
Compaq processes, patents and trade secrets developed through years of
experience in design and development: clustering, fault tolerant systems,
proprietary Alpha processor architecture, and storage area networks. Compaq's
technology and products are designed for hardware, software, solutions and
services, including enterprise storage and computing solutions, fault tolerant
business critical solutions, communication products, and desktop and portable
personal computers. This proprietary know-how can be leveraged by Compaq to
develop new technology and improved products and manufacturing processes. HP
expects to amortize the developed and core technology and patents on a
straight-line basis over an average estimated life of 6 years.
Customer contracts represent existing contracts that relate primarily to
underlying customer relationships pertaining to the services provided by Compaq
Global Services, including contractual Customer Services relationships,
contractual Managed Services client relationships and contractual Systems
Integration consulting client relationships. Customer lists and distribution
agreements represent Compaq's relationships with its Enterprise and Personal
Systems installed base, and agreements with Enterprise value-added resellers. HP
expects to amortize the fair value of these assets on a straight-line basis over
an average estimated life of 9 years.
Of the total estimated purchase price, approximately $15.3 billion has been
allocated to goodwill and intangible assets with indefinite lives. Goodwill of
$13.9 billion represents the excess of the purchase price of an acquired
business over the fair value of the underlying net tangible and intangible
assets. Intangible assets of $1.4 billion with indefinite lives consist
primarily of the estimated fair value allocated to the Compaq trade name. This
intangible asset will not be amortized because it has an indefinite remaining
useful life based on many factors and considerations, including the length of
time that the Compaq name has been in use, the Compaq brand awareness and market
position, and the plans for continued use of the Compaq brand within a portion
of HP's overall product portfolio.
S-20
In accordance with the Statement of Financial Accounting Standards No. 142,
"Goodwill and Other Intangible Assets," goodwill and intangible assets with
indefinite lives resulting from business combinations completed subsequent to
June 30, 2001 will not be amortized but instead will be tested for impairment at
least annually (more frequently if certain indicators are present). In the event
that management determines that the value of goodwill or intangible assets with
indefinite lives has become impaired, HP will incur an accounting charge for the
amount of impairment during the fiscal quarter in which the determination is
made.
Of the total purchase price, a preliminary estimate of $700 million has been
allocated to in-process research and development and will be charged to expense
in the quarter ended July 31, 2002. Due to its non-recurring nature, the
in-process research and development expense has been excluded in the unaudited
pro forma condensed combined consolidated statement of earnings.
Compaq is currently developing new products that qualify as in-process
research and development in multiple product areas. Projects which qualify as
in-process research and development represent those that have not yet reached
technological feasibility. Technological feasibility is defined as being
equivalent to completion of a beta-phase working prototype in which there is no
remaining risk relating to the development.
Compaq is currently involved in numerous research and development projects,
which are focused on developing new products, integrating new technologies,
improving product performance and broadening features and functionalities. The
principal research and development efforts of Compaq are directed within the
Enterprise and Personal Systems businesses. There is a risk that these
developments and enhancements will not be competitive with other products using
alternative technologies that offer comparable functionality.
The value assigned to in-process research and development was determined by
considering the importance of each project to the overall development plan,
estimating costs to develop the purchased in-process research and development
into commercially viable products, estimating the resulting net cash flows from
the projects when completed and discounting the net cash flows to their present
value. The revenue estimates used to value the purchased in-process research and
development were based on estimates of relevant market sizes and growth factors,
expected trends in technology and the nature and expected timing of new product
introductions by Compaq and its competitors.
The rates utilized to discount the net cash flows to their present value are
based on Compaq's weighted average cost of capital. The weighted average cost of
capital was adjusted to reflect the difficulties and uncertainties in completing
each project and thereby achieving technological feasibility, the percentage of
completion of each project, anticipated market acceptance and penetration,
market growth rates and risks related to the impact of potential changes in
future target markets. Based on these factors, discount rates that range from
25%-42% were deemed appropriate for valuing the in-process research and
development.
The estimates used in valuing in-process research and development were based
upon assumptions believed to be reasonable but which are inherently uncertain
and unpredictable. Assumptions may be incomplete or inaccurate, and
unanticipated events and circumstances may occur. Accordingly, actual results
may vary from the projected results.
2. PRO FORMA ADJUSTMENTS
Pro forma adjustments are necessary to reflect the purchase price, to adjust
amounts related to Compaq's net tangible and intangible assets to a preliminary
estimate of their fair values, to reflect the amortization expense related to
the estimated amortizable intangible assets, to reflect changes in depreciation
and amortization expense resulting from the estimated fair value adjustments to
net tangible assets and to reflect the income tax effect related to the pro
forma adjustments.
S-21
Intercompany balances or transactions between HP and Compaq were not
significant. Certain reclassifications have been made to conform Compaq's
historical amounts to HP's presentation.
The pro forma combined provision for income taxes does not reflect the
amounts that would have resulted had HP and Compaq filed consolidated income tax
returns during the periods presented.
HP has not identified any preacquisition contingencies where a liability is
probable and the amount of the liability can be reasonably estimated. Prior to
the end of the purchase price allocation period, if information becomes
available that would indicate it is probable that such events had occurred and
the amounts can be reasonably estimated, such items will be included in the
purchase price allocation.
The pro forma adjustments included in the unaudited pro forma condensed
combined consolidated financial statements are as follows:
(a) Adjustment to record the effect on the current portion of financing
receivables resulting from the difference between the preliminary
estimate of the fair value and the historical amount of residual value of
equipment under operating leases.
(b) Adjustment to record the difference between the preliminary estimate of
the fair value and the historical amount of Compaq's inventory.
(c) Adjustment to record the current portion of tax adjustments related to
the transaction.
(d) Adjustment to record the difference between the preliminary estimate of
the fair value and the historical amount of Compaq's property, plant and
equipment and the resulting adjustment to depreciation expense, as
follows (in millions):
HISTORICAL PRELIMINARY CHANGE IN CHANGE IN USEFUL
AMOUNT, FAIR INCREASE ANNUAL SIX MONTHS LIFE
NET VALUE (DECREASE) DEPRECIATION DEPRECIATION (YEARS)
---------- ----------- ---------- ------------ ------------ --------
Land....................... $ 300 $ 460 $160 $ -- $ -- n/a
Buildings, machinery and
equipment................ 2,871 2,801 (70) (40) (20) 2-22
------ ------ ---- ---- ----
Total property, plant
and equipment........ $3,171 $3,261 $ 90 $(40) $(20)
====== ====== ==== ==== ====
Included in cost of
products sold.......... $(30) $(15)
Included in selling,
general and
administrative......... (10) (5)
---- ----
$(40) $(20)
==== ====
(e) Adjustments to reflect certain other long-term assets of Compaq at a
preliminary estimate of their fair values (in millions):
Pension assets.............................................. $ (640)
Residual value of equipment under operating leases.......... (30)
Long-term portion of tax adjustments related to the
transaction............................................... (2,836)
-------
$(3,506)
=======
S-22
(f) Adjustments to reflect the preliminary estimate of the fair value of
amortizable intangible assets and the resulting increase in amortization
expense, as follows (in millions):
HISTORICAL PRELIMINARY INCREASE IN INCREASE IN USEFUL
AMOUNT, FAIR ANNUAL SIX MONTH LIFE
NET VALUE INCREASE AMORTIZATION AMORTIZATION (YEARS)
---------- ----------- -------- ------------ ------------ --------
Customer contracts and
lists, distribution
agreements............ $ 916 $1,950 $1,034 $ 37 $10 4-13
Developed and core
technology, patents... 399 1,480 1,081 157 72 2-13
Other................... 48 70 22 4 2 1-10
------ ------ ------ ---- ---
$1,363 $3,500 $2,137 $198 $84
====== ====== ====== ==== ===
(g) Adjustments to reflect the preliminary estimate of the fair value of
goodwill and intangible assets with indefinite lives, as follows (in
millions):
PRELIMINARY
HISTORICAL FAIR
AMOUNT VALUE INCREASE
---------- ----------- --------
Intangible assets with indefinite lives........ $ -- $ 1,400 $ 1,400
Goodwill....................................... 248 13,868 13,620
---- ------- -------
$248 $15,268 $15,020
==== ======= =======
(h) Adjustment to record the difference between the preliminary estimate of
the fair value and the historical amount of Compaq's deferred revenue.
(i) Adjustments to reflect the estimated direct transaction
costs and other liabilities............................... $ 350
Adjustment for an estimate of costs associated with exiting
activities of Compaq...................................... 1,300
------
$1,650
======
As of the completion of the Compaq merger, management of the combined
company had begun to assess and formulate plans to exit certain
activities of Compaq and to terminate or relocate certain employees of
Compaq. These assessments are still in process. Based on a preliminary
analysis to date, costs of approximately $1.3 billion will be accrued as
of the completion of the Compaq merger for severance or relocation costs
related to Compaq employees, costs of vacating some facilities (leased or
owned) of Compaq, and other costs associated with exiting activities of
Compaq. The pro forma adjustment above for $1.3 billion has been included
in the unaudited pro forma condensed combined consolidated balance sheet
as of April 30, 2002. In addition, based on a preliminary analysis, HP
expects to incur, during the quarter ended July 31, 2002 or in subsequent
quarters, additional costs of approximately $1.3 billion for severance
costs related to HP employees, costs of vacating some facilities (leased
or owned) of HP, and other costs associated with exiting activities of
HP. Management expects to be committed to a formal exit plan such that a
significant portion of these costs will be recorded as a restructuring
charge in the quarter ended July 31, 2002. An adjustment for an estimate
of the restructuring costs to be incurred by HP has not been included in
the unaudited pro forma condensed combined consolidated statements of
earnings since such adjustment is non-recurring in nature. HP estimates
that this preliminary estimate of these costs, in total, would result in
cash expenditures of approximately $2.1 billion, with the remainder being
non-cash charges. These estimates are preliminary and subject to change
S-23
based on HP's further assessments. However, any changes will likely be
increases to these amounts as additional exit activities are identified
and assessments are completed.
(j) Adjustment to record the difference between the preliminary estimate of
fair value and the historical amount of long-term debt.
(k) Adjustments to reflect pension and other long-term liabilities at a
preliminary estimate of their fair values.
(l) Adjustments to stockholders' equity (in millions):
To record the value of HP shares to be issued and Compaq
options to be assumed in the transaction.................. $ 24,110
To record the preliminary estimate of the fair value of
in-process research and development....................... (700)
To record deferred compensation related to unvested Compaq
options................................................... (70)
To eliminate Compaq's historical stockholders' equity....... (11,136)
--------
$ 12,204
========
(m) Adjustments to cost of products sold (in millions):
ANNUAL SIX MONTHS
-------- ----------
To record the related costs of products sold resulting
from the change in inventory to its estimated fair
value................................................... $ 40 $ 40
To record the related depreciation effect resulting from
the fair value adjustment to property, plant and
equipment as noted in (d) above......................... (30) (15)
---- ----
$ 10 $ 25
==== ====
(n) Adjustment to record the income tax effect of the pro forma adjustments.
3. PRO FORMA EARNINGS PER SHARE
The pro forma basic and diluted earnings per share are based on the weighted
average number of shares of HP common stock outstanding and weighted average
number of Compaq common stock outstanding multiplied by the exchange ratio.
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DESCRIPTION OF THE GLOBAL NOTES
Each series of Global Notes will be issued under an indenture, dated as of
June 1, 2000, between HP and J.P. Morgan Trust Company, National Association,
formerly known as Chase Manhattan Bank and Trust Company, National Association,
as trustee, which indenture is more fully described in the accompanying
prospectus. The following summary of certain provisions of each series of Global
Notes and of the indenture does not purport to be complete and is qualified in
its entirety by reference to the indenture. A copy of the indenture has been
incorporated by reference into the registration statement of which this
prospectus supplement and the accompanying prospectus are a part. Capitalized
terms used but not defined in this prospectus supplement or in the accompanying
prospectus have the meanings given to them in the indenture. The term
"Securities," as used in this section, refers to all securities issuable from
time to time under the indenture.
GENERAL
All Securities, including each series of Global Notes, to be issued under
the indenture will be our senior unsecured obligations and will rank on the same
basis with all of our other senior unsecured indebtedness from time to time
outstanding. The indenture does not limit the aggregate principal amount of
Securities that may be issued under the indenture. Without the consent of the
holders, we may increase the aggregate principal amount of each series of Global
Notes in the future, on the same terms and conditions and with the same CUSIP
numbers as each series of Global Notes being offered hereby. Securities may be
issued thereunder from time to time as a single series or in two or more
separate series up to the aggregate principal amount authorized by us from time
to time for each series.
We may redeem some or all of the Global Notes of either series at any time
at the redemption prices described below under "--Optional Redemption." In
addition, we may redeem the Global Notes upon the occurrence of certain events
involving United States taxation. See "--Redemption for Tax Purposes."
2007 GLOBAL NOTES. The 2007 Global Notes are initially being offered in the
aggregate principal amount of $1,000,000,000 and will mature at par on July 1,
2007. Interest on the 2007 Global Notes will be paid on the basis of a 360-day
year comprised of twelve 30-day months, at the rate of 5.50% per year. Interest
on the 2007 Global Notes will be payable semiannually in arrears on January 1
and July 1 of each year, beginning on January 1, 2003. Interest will accrue from
June 26, 2002. Interest will be paid to holders of record of the 2007 Global
Notes on the fifteenth day (whether or not a business day) immediately preceding
the related interest payment date. Payments of principal, premium, if any, and
interest on the 2007 Global Notes will be made by us through the trustee to the
depositary. See "Description of the Debt Securities--Global Securities" in the
accompanying prospectus. The covenant provisions of the indenture described
under the caption "Description of the Debt Securities--Senior Debt
Securities--Covenants in the Senior Indenture" in the accompanying prospectus
will apply to the 2007 Global Notes.
2012 GLOBAL NOTES. The 2012 Global Notes are initially being offered in the
aggregate principal amount of $500,000,000 and will mature at par on July 1,
2012. Interest on the 2012 Global Notes will be paid on the basis of a 360-day
year comprised of twelve 30-day months, at the rate of 6.50% per year, beginning
on January 1, 2003. Interest on the 2012 Global Notes will be payable
semiannually in arrears on January 1 and July 1 of each year. Interest will
accrue from June 26, 2002. Interest will be paid to holders of record of the
2012 Global Notes on the fifteenth day (whether or not a business day)
immediately preceding the related interest payment date. Payments of principal,
premium, if any, and interest on the 2012 Global Notes will be made by us
through the trustee to the depositary. See "Description of the Debt
Securities--Global Securities" in the accompanying prospectus. The covenant
provisions of the indenture described under the caption "Description of the Debt
Securities--Senior
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Debt Securities--Covenants in the Senior Indenture" in the accompanying
prospectus will apply to the 2012 Global Notes.
OPTIONAL REDEMPTION
We will have the right to redeem each of the 2007 Global Notes and the 2012
Global Notes, in whole or in part at any time, on at least 30 days but no more
than 60 days prior written notice (a) mailed to the registered holders of the
series of Global Notes to be redeemed and (b) published in accordance with
"--Notices, Definitive Notes and Transfers." The redemption price will be equal
to the greater of (1) 100% of the principal amount of the applicable series of
Global Notes to be redeemed or (2) the sum, as determined by the Quotation Agent
(as defined below), of the present value of the principal amount of the
applicable Global Notes to be redeemed and the remaining scheduled payments of
interest thereon from the redemption date to the maturity date (the "Remaining
Life") discounted from the scheduled payment dates to the redemption date on a
semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at
the Treasury Rate (as defined below) plus 25 basis points in the case of the
2007 Global Notes and 30 basis points in the case of the 2012 Global Notes, plus
accrued and unpaid interest on the principal amount being redeemed to the
redemption date.
If money sufficient to pay the redemption price of and accrued interest on
the series of Global Notes (or portions thereof) to be redeemed on the
redemption date is deposited with the trustee or paying agent on or before the
redemption date and certain other conditions are satisfied, then on and after
the redemption date, interest will cease to accrue on such Global Notes (or such
portion thereof) called for redemption and such Global Notes will cease to be
outstanding. If any redemption date is not a business day, we will pay the
redemption price on the next business day without any interest or other payment
due to the delay.
If fewer than all of the Global Notes of a series are to be redeemed, the
trustee will select the Global Notes of such series for redemption on a pro rata
basis, by lot or by such other method as the trustee deems appropriate and fair.
No Global Notes of $1,000 or less will be redeemed in part.
For the purposes above:
"Comparable Treasury Issue" means the United States Treasury security
selected by the Quotation Agent as having a maturity comparable to the Remaining
Life that would be utilized, at the time of selection, and in accordance with
customary financial practice, in pricing new issues of corporate debt securities
of comparable maturity with the Remaining Life.
"Comparable Treasury Price" means, with respect to any redemption date, the
average of the three Reference Treasury Dealer Quotations for such redemption
date.
"Quotation Agent" means the Reference Treasury Dealers.
"Reference Treasury Dealer" means each of Banc of America Securities LLC,
Deutsche Bank Securities Inc. and J.P. Morgan Securities Inc., and their
respective successors; provided, however, that if any of the foregoing shall
cease to be a primary U.S. Government securities dealer in The City of New York
(a "Primary Treasury Dealer"), we shall substitute therefor another Primary
Treasury Dealer.
"Reference Treasury Dealer Quotations" means, with respect to each Reference
Treasury Dealer and any redemption date, the average, as determined by the
trustee, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the trustee by each Reference Treasury Dealer at 5:00 p.m., New York
City time, on the third business day preceding the redemption date.
"Treasury Rate" means, with respect to any redemption date, the rate per
year equal to the semiannual equivalent yield to maturity of the Comparable
Treasury Issue, assuming a price for the
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Comparable Treasury Issue (expressed as a percentage of its principal amount)
equal to the Comparable Treasury Price for the redemption date.
PAYMENT OF ADDITIONAL AMOUNTS
Subject to certain exceptions and limitations set forth below, we will pay
to the holder of any 2007 Global Note or 2012 Global Note that is a United
States Alien (as defined below), as additional interest, such additional amounts
as may be necessary in order that every net payment on such Global Note
(including payment of the principal of and interest on such Global Note) by us
or our specified paying agent, after deduction or withholding for or on account
of any present or future tax, assessment or other governmental charge imposed
upon or as a result of such payment by the United States (or any political
subdivision or taxing authority thereof or therein), will not be less than the
amount provided in such Global Note to be then due and payable. However, our
obligation to pay additional amounts will not apply to:
(1) any tax, assessment or other governmental charge that would not have
been so imposed but for:
- the existence of any present or former connection between such holder
or beneficial owner of such Global Note (or between a fiduciary,
settlor or beneficiary of, or a person holding a power over, such
holder, if such holder is an estate or a trust, or a member or
shareholder of such holder, if such holder is a partnership or
corporation) and the United States or any political subdivision or
taxing authority thereof or therein, including, without limitation,
such holder (or such fiduciary, settlor, beneficiary, person holding a
power, member or shareholder) being or having been a citizen or
resident of the United States or treated as a resident thereof or being
or having been engaged in a trade or business or present therein or
having or having had a permanent establishment therein; or
- such holder's or beneficial owner's past or present status as a
personal holding company, passive foreign investment company, foreign
personal holding company, foreign private foundation or other foreign
tax-exempt organization with respect to the United States, controlled
foreign corporation for United States tax purposes or corporation that
accumulates earnings to avoid United States federal income tax;
(2) any estate, inheritance, gift, excise, sales, transfer, wealth or
personal property tax or any similar tax, assessment or other
governmental charge;
(3) any tax, assessment or other governmental charge that would not have
been imposed but for the presentation by the holder of a Global Note
for payment more than 30 days after the date on which such payment
became due and payable or the date on which payment thereof was duly
provided for, whichever occurred later;
(4) any tax, assessment or other governmental charge that is payable
otherwise than by withholding from a payment on a Global Note;
(5) any tax, assessment or other governmental charge required to be
withheld by any paying agent from a payment on a Global Note, if such
payment can be made without such withholding by any other paying agent;
(6) any tax, assessment or other governmental charge that would not have
been imposed but for a failure to comply with applicable certification,
information, documentation, identification or other reporting
requirements concerning the nationality, residence, identity or
connection with the United States of the holder or beneficial owner of
a Global Note if such compliance is required by statute or regulation
of the United States or an applicable tax treaty to which the United
States is a party as precondition to relief or exemption from such tax,
assessment or other governmental charge;
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(7) any tax, assessment or other governmental charge imposed on a holder
that actually or constructively owns 10% or more of the combined voting
power of all classes of stock of HP;
(8) any tax, assessment or governmental charge that would not have been
imposed or withheld but for an election by the holder the effect of
which is to make the payment of the principal of, or interest (or any
other amount) on, a Global Note by HP or a paying agent subject to
United States federal income tax; or
(9) any combination of items (1), (2), (3), (4), (5), (6), (7) and (8).
In addition, we shall not be required to pay additional amounts on any 2007
Global Note or 2012 Global Note to a holder that is a fiduciary or partnership
or other than the sole beneficial owner of such payment to the extent a
beneficiary or settlor with respect to such fiduciary or a member of such
partnership or a beneficial owner would not have been entitled to additional
amounts (or payment of additional amounts would not have been necessary) had
such beneficiary, settlor, member or beneficial owner been the holder of such
Global Note.
For the purposes above:
"United States Alien" means any person who, for United States federal income
tax purposes, is a foreign corporation, a non-resident alien individual, a
non-resident alien fiduciary of a foreign estate or trust, or a foreign
partnership, one or more of the members of which is, for United States federal
income tax purposes, a foreign corporation, a non-resident alien individual or a
non-resident alien fiduciary, of a foreign estate or trust.
"United States" or "U.S." means the United States of America (including the
States and the District of Columbia) and its territories, its possessions and
other areas subject to its jurisdiction.
REDEMPTION FOR TAX PURPOSES
At our option, we may redeem, as a whole, but not in part, the 2007 Global
Notes or the 2012 Global Notes on not fewer than 30 nor more than 60 days' prior
notice to the holder of record at a redemption price equal to 100% of the
principal amount of the Global Notes being redeemed, together with interest
accrued to the redemption date, if either of the following occurs:
(1) as a result of any change in, or amendment to, the laws (or any
regulations or rulings promulgated thereunder) of the United States (or
any political subdivision or taxing authority thereof or therein), or any
change in the official application (including a ruling by a court of
competent jurisdiction in the United States) or interpretation of such
laws, regulations or rulings, which change or amendment is announced or
becomes effective on or after the consummation of this offering, we
become or will become obligated to pay additional amounts as described
above under "--Payment of Additional Amounts;" or
(2) any act is taken by a taxing authority of the United States on or after
the consummation of this offering, whether or not such act is taken with
respect to us or any affiliate, that results in a substantial likelihood
that we will or may be required to pay any additional amounts as
described above under "--Payment of Additional Amounts."
However, in order to redeem a series of Global Notes pursuant to this
provision we will be required to determine, in our business judgment, that the
obligation to pay such additional amounts cannot be avoided by the use of
commercially reasonable measures available to us, not including substitution of
the obligor under the applicable series of Global Notes or any action that would
entail a material cost to us. We may not redeem unless we shall have received an
opinion of counsel to the effect that because of an act taken by a taxing
authority of the United States (as discussed above) such an act results in a
substantial likelihood that we will or may be required to pay additional amounts
described above and we shall have delivered to the trustee a certificate, signed
by a duly authorized officer, stating that based on such opinion we are entitled
to redeem the applicable series of Global Notes pursuant to their terms.
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BOOK-ENTRY NOTES
THE DEPOSITARY, CLEARSTREAM AND EUROCLEAR. Upon issuance, each series of
Global Notes will be represented by one or more fully registered global
securities. Each global security will be deposited with The Depository Trust
Company, as depositary, and registered in the name of Cede & Co. Unless and
until it is exchanged in whole or in part for notes in definitive form, no
global security may be transferred except as a whole by the depositary to a
nominee of such depositary. Investors may elect to hold interests in the global
securities through:
- the depositary in the United States; or
- in Europe, (i) Clearstream Banking, societe anonyme, referred to in this
prospectus supplement as Clearstream, or (ii) Euroclear Bank S.A./N.V., as
operator of the Euroclear System, referred to in this prospectus
supplement as Euroclear,
if they are participants in such systems, or indirectly through organizations
which are participants in such systems. Clearstream and Euroclear will hold
interests on behalf of their participants through customers' securities accounts
in Clearstream's and Euroclear's names on the books of their respective
depositaries, which in turn will hold such interests in customers' securities
accounts in the depositaries' names on the books of the depositary. Citibank,
N.A. will act as depositary for Clearstream and JPMorgan Chase Bank will act as
depositary for Euroclear, and in such capacities are referred to in this
prospectus supplement as the U.S. depositaries.
Clearstream has advised us that it is a limited liability company organized
under Luxembourg law. Clearstream holds securities for its participating
organizations, referred to in this prospectus supplement as Clearstream
participants, and facilitates the clearance and settlement of securities
transactions between Clearstream participants through electronic book-entry
changes in accounts of Clearstream participants, thereby eliminating the need
for physical movement of certificates. Clearstream provides to Clearstream
participants, among other things, services for safekeeping, administration,
clearance and settlement of internationally traded securities and securities
lending and borrowing. Clearstream interfaces with domestic markets in several
countries. Clearstream is registered as a bank in Luxembourg, and as such is
subject to regulation by the Commission de Surveillance du Secteur Financier.
Clearstream participants are recognized financial institutions around the world,
including underwriters, securities brokers and dealers, banks, trust companies,
clearing corporations and certain other organizations and may include the
underwriters. Indirect access to Clearstream is available to other institutions
that clear through or maintain a custodial relationship with a Clearstream
participant.
Distributions with respect to each series of Global Notes held beneficially
through Clearstream will be credited to cash accounts of Clearstream
participants in accordance with its rules and procedures, to the extent received
by the U.S. depositary for Clearstream.
Euroclear advises that it was created in 1968 to hold securities for
participants of Euroclear, referred to in this prospectus supplement as
Euroclear participants, and to clear and settle transactions between Euroclear
participants through simultaneous electronic book-entry delivery against
payment, thereby eliminating the need for physical movement of certificates and
any risk from lack of simultaneous transfers of securities and cash. Euroclear
includes various other services, including securities lending and borrowing and
interfaces with domestic markets in several countries.
Euroclear is operated by Euroclear Bank S.A./N.V., referred to in this
prospectus supplement in such role as the Euroclear operator, under contract
with Euroclear Clearance Systems S.C., a Belgian cooperative corporation,
referred to in this prospectus supplement as the cooperative. All operations are
conducted by the Euroclear operator, and all Euroclear securities clearance
accounts and Euroclear cash accounts are accounts with the Euroclear operator,
not the cooperative. The cooperative establishes policy for Euroclear on behalf
of Euroclear participants. Euroclear participants include
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banks, securities brokers and dealers and other professional financial
intermediaries and may include the underwriters. Indirect access to Euroclear is
also available to other firms that clear through or maintain a custodial
relationship with a Euroclear participant, either directly or indirectly.
The Euroclear operator is regulated and examined by Belgian Banking and
Finance Commission. Securities clearance accounts and cash accounts with the
Euroclear operator are governed by the Terms and Conditions Governing Use of
Euroclear and the related Operating Procedures of the Euroclear System, and
applicable Belgian law, collectively referred to in this prospectus supplement
as the terms and conditions. The terms and conditions govern transfers of
securities and cash within Euroclear, withdrawals of securities and cash from
Euroclear, and receipts of payments with respect to securities in Euroclear. All
securities in Euroclear are held on a fungible basis without attribution of
specific certificates to specific securities clearance accounts. The Euroclear
operator acts under the terms and conditions only on behalf of Euroclear
participants, and has no record of or relationship with persons holding through
Euroclear participants.
Distributions with respect to each series of Global Notes held beneficially
through Euroclear will be credited to the cash accounts of Euroclear
participants in accordance with the terms and conditions of Euroclear, to the
extent received by the U.S. depositary for Euroclear.
GLOBAL CLEARANCE AND SETTLEMENT PROCEDURES. Initial settlement for each
series of Global Notes will be made in immediately available funds. Secondary
market trading between the depositary participants will occur in the ordinary
way in accordance with the depositary's rules and will be settled in immediately
available funds using the depositary's Same-Day Funds Settlement System.
Secondary market trading between Clearstream participants or Euroclear
participants will occur in the ordinary way in accordance with the applicable
rules and operating procedures of Clearstream and Euroclear and will be settled
using the procedures applicable to conventional eurobonds in immediately
available funds.
Cross-market transfers between persons holding directly or indirectly
through the depositary, on the one hand, and directly or indirectly through
Clearstream participants or Euroclear participants, on the other hand, will be
effected in the depositary in accordance with the depositary's rules on behalf
of the relevant European international clearing system by its U.S. depositary.
However, these cross-market transactions will require delivery of instructions
to the relevant European international clearing system by the counterparty in
such system in accordance with its rules and procedures and within its
established deadlines (European time). If the transaction meets its settlement
requirements, the relevant European international clearing system will deliver
instructions to its U.S. depositary to take action to effect final settlement on
its behalf by delivering or receiving Global Notes in the depositary and making
or receiving payment in accordance with normal procedures for same-day funds
settlement applicable to the depositary. Clearstream participants and Euroclear
participants may not deliver instructions directly to the depositary.
Because of time-zone differences, credits of Global Notes received in
Clearstream or Euroclear as a result of a transaction with a depositary
participant will be made during subsequent securities settlement processing and
will be credited the business day following the depositary settlement date. Such
credits or any transactions in such Global Notes settled during such processing
will be reported to the relevant Euroclear or Clearstream participants on such
business day. Cash received in Clearstream or Euroclear as a result of sales of
Global Notes by or through a Clearstream participant or a Euroclear participant
to a depositary participant will be received with value on the depositary
settlement date but will be available in the relevant Clearstream or Euroclear
cash account only as of the business day following settlement in the depositary.
Although the depositary, Clearstream and Euroclear have agreed to the
foregoing procedures in order to facilitate transfers of Global Notes among
participants of the depositary, Clearstream and
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Euroclear, they are under no obligation to perform or continue to perform such
procedures and such procedures may be discontinued at any time.
NOTICES, DEFINITIVE NOTES AND TRANSFERS
Notices to holders of each series of the Global Notes will be sent by mail
to the registered holders of the Global Notes of such series. In addition, as
long as any series of Global Notes is listed on the Luxembourg Stock Exchange,
notices with respect to such series will be published in a daily newspaper of
general circulation in Luxembourg. It is expected that publication will be made
in the LUXEMBURGER WORT. Any such notice shall be deemed to have been given on
the date of such publication or, if published more than once, on the date of the
first such publication.
In the event certificated Global Notes are issued with respect to a
particular series of Global Notes, the holders thereof will be able to receive
payments thereon and effect transfers thereof at the offices of J.P. Morgan Bank
Luxembourg S.A. or its successor as paying agent in Luxembourg with respect to
the applicable Global Notes. The indenture provides for the replacement of a
mutilated, lost, stolen or destroyed definitive 2007 Global Note or 2012 Global
Note, as long as the applicant shall furnish to us and the trustee such security
or indemnity as may be required by us or the trustee to hold us and the trustee
harmless and such evidence of ownership of such Global Note as we or the trustee
may require.
We have appointed J.P. Morgan Bank Luxembourg S.A. as a paying agent in
Luxembourg with respect to the 2007 Global Notes and the 2012 Global Notes. As
long as any series of Global Notes is listed on the Luxembourg Stock Exchange,
we will maintain a paying agent in Luxembourg with respect to such series and
any change in the Luxembourg paying agent and transfer agent will be published
in Luxembourg in accordance with the first paragraph above under this
subheading.
As provided in the indenture and subject to certain limitations described in
the indenture, the 2007 Global Notes and the 2012 Global Notes are transferable,
in whole or in part, upon surrender of the applicable Global Notes for
registration of transfer at the corporate trust office of the trustee in The
City of New York, or, in the event definitive Global Notes are issued and as
long as the applicable series of Global Notes is listed on the Luxembourg Stock
Exchange, at the offices of the paying agent in Luxembourg, duly endorsed by or
accompanied by a written instrument of transfer in form satisfactory to us and
the securities registrar, and, upon this occurring, one or more new Global
Notes, for the aggregate principal amount being transferred, will be issued to
the designated transferee, and a new Global Note, as applicable, for any amount
not being transferred will be issued to the transferor.
DEFEASANCE
The provisions of the indenture relating to defeasance and covenant
defeasance described under the caption "Description of Debt
Securities--Satisfaction and Discharge; Defeasance" in the accompanying
prospectus will apply to the 2007 Global Notes and the 2012 Global Notes.
SINKING FUND
There will not be a sinking fund for either the 2007 Global Notes or the
2012 Global Notes.
GOVERNING LAW; COURTS
The indenture provides that New York law shall govern any action regarding
either series of Global Notes brought pursuant to the indenture. Actions
regarding either series of Global Notes may be brought in any court of competent
jurisdiction.
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UNITED STATES FEDERAL TAXATION
The following summary describes the material United States federal income
and certain estate tax consequences of ownership and disposition of the 2007
Global Notes and the 2012 Global Notes. This summary provides general
information only and is directed solely to original beneficial owners who
purchase Global Notes of either series at the applicable "issue price," that is,
the first price at which a substantial amount of the applicable series of Global
Notes is sold to the public (excluding sales to bond houses, brokers or similar
persons or organizations acting in the capacity of underwriters, placement
agents or wholesalers). This summary is based on the Internal Revenue Code of
1986, as amended to the date hereof (the "Code"), existing administrative
pronouncements and judicial decisions, existing and proposed Treasury
Regulations currently in effect, and interpretations of the foregoing, changes
to any of which subsequent to the date of this prospectus supplement may affect
the tax consequences described herein, possibly with retroactive effect. This
summary deals only with 2007 Global Notes or 2012 Global Notes held as capital
assets within the meaning of Section 1221 of the Code. This summary does not
discuss all of the tax consequences that may be relevant to beneficial owners in
light of their particular circumstances or to beneficial owners subject to
special rules, such as certain financial institutions, insurance companies, real
estate investment trusts, regulated investment companies, dealers in securities,
persons holding the 2007 Global Notes or the 2012 Global Notes in connection
with a hedging, "straddle," conversion or other integrated transaction or
persons who have ceased to be either United States citizens or are taxed as
resident aliens.
Persons considering the purchase of either series of Global Notes should
consult their own tax advisors with regard to the application of the United
States federal income and estate tax laws to their particular situations, as
well as any tax consequence arising under the laws of any state, local or
foreign taxing jurisdiction.
TAX CONSEQUENCES TO UNITED STATES PERSONS
For purposes of the following discussion, a "United States person" means a
beneficial owner of a Global Note that is for United States federal income tax
purposes:
- a citizen or resident of the United States; or
- a corporation (other than an "S" corporation) or other entity taxable as a
corporation for United States federal income tax purposes created or
organized in or under the laws of the United States, any state or the
District of Columbia; or
- an estate, the income of which is subject to United States federal income
taxation regardless of its source; or
- a trust (other than a grantor trust) if a United States court is able to
exercise primary jurisdiction over the administration of the trust and one
or more United States persons have the authority to control all
substantial decisions of the trust.
Partnerships, S corporations and grantor trusts are subject to special tax
rules and should contact their own tax advisors.
PAYMENTS OF INTEREST. Interest on a Global Note generally will be taxable
to a United States person as ordinary interest income at the time it is accrued
or is received in accordance with the United States person's method of
accounting for tax purposes.
SALE, EXCHANGE, REDEMPTION OR RETIREMENT OF THE GLOBAL NOTES. Upon the
sale, exchange, redemption or retirement of a Global Note, a United States
person will recognize taxable gain or loss equal to the difference between the
amount realized on the sale, exchange, redemption or retirement and the United
States person's adjusted tax basis in the Global Note. For these purposes, the
amount realized does not include any amount attributable to accrued interest on
the Global Note. Amounts attributable
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to accrued interest are treated as interest as described under "--Payments of
Interest" above. A United States person's adjusted tax basis in a Global Note
generally will equal the cost of the Global Note to the United States person.
Gain or loss realized on the sale, exchange or redemption of a Global Note will
be capital gain or loss and will be long-term capital gain or loss if the United
States person held the Global Note for more than one year. Long-term capital
gains of non-corporate taxpayers are taxed at lower rates than those applicable
to ordinary income. The deductibility of capital losses is subject to
limitation. Therefore, United States persons should consult their own tax
advisors regarding the treatment of capital gains and losses in their particular
circumstances.
BACKUP WITHHOLDING AND INFORMATION REPORTING. Backup withholding and
information reporting requirements may apply to certain payments of principal,
premium and interest on a Global Note and to payments of proceeds of the sale or
redemption of a Global Note to certain non-corporate United States persons. The
backup withholding tax rate is currently 30% and is being reduced in stages to a
rate of 28% in 2006 and increased to a rate of 31% in 2011. HP, its agent, a
broker, or any paying agent, as the case may be, will be required to withhold
from any payment a tax at the then applicable rate if:
- the United States person fails to furnish or certify its correct taxpayer
identification number to the payor in the manner required;
- fails to certify, under penalty of perjury, that such United States person
is not subject to backup withholding; or
- otherwise fails to comply with the applicable requirements of the backup
withholding rules.
Partnerships created or organized in or under the laws of the United States
and certain United States grantor trusts will be subject to withholding under
the same rules as other United States persons. Any amounts withheld under the
backup withholding rules from a payment to a United States person may be
credited against such United States person's United States federal income tax
and may entitle such United States person to a refund, provided that the
required information is furnished to the Internal Revenue Service.
TAX CONSEQUENCES TO NON-UNITED STATES PERSONS
As used herein, the term "non-United States person" means a beneficial owner
of a Global Note that is, for United States federal income tax purposes:
- a nonresident alien individual; or
- a foreign corporation; or
- an estate or trust (other than a grantor trust or simple trust) that is
not a United States person.
Foreign partnerships, grantor trusts and simple trusts are subject to
special tax rules and should contact their own tax advisors.
INCOME, ESTATE AND WITHHOLDING TAX FOR NON-UNITED STATES PERSONS. The
discussion under this heading is subject to the discussion of backup withholding
below.
Payments of principal and interest on a Global Note that is beneficially
owned by a non-United States person will not be subject to United States federal
withholding tax, provided that, in the case of interest:
- each of the following conditions is met:
(1) the beneficial owner does not actually or constructively own 10% or
more of the total combined voting power of all classes of HP stock
entitled to vote, and
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(2) the beneficial owner is not a controlled foreign corporation that is
related, directly or indirectly, to us through stock ownership, and
(3) the beneficial owner of the Global Note provides an IRS Form W-8BEN
or other acceptable documentation that provides its name and address
and certifies that it is not a United States person;
OR
- the beneficial owner is entitled to the benefits of an income tax treaty
under which the interest is exempt from United States federal withholding
tax, and the beneficial owner provides an IRS Form W-8BEN or other
acceptable documentation claiming the exemption;
OR
- the beneficial owner conducts a trade or business in the United States to
which the interest is effectively connected and the beneficial owner
provides an IRS Form W-8ECI or other acceptable documentation;
provided that, in each such case, the relevant IRS form or documentation is
delivered pursuant to applicable procedures, is properly transmitted to the
person otherwise required to withhold United States federal income tax, and is
updated and resubmitted when required; and, provided further, that none of the
persons receiving the relevant IRS form or documentation has actual knowledge or
reason to know that the certification or any statement on the IRS form or
documentation is false. If the transmission involves a foreign intermediary (for
example, a financial institution) or foreign flow-through entity (for example, a
foreign partnership or foreign simple or grantor trust), the intermediary or
flow-through entity must properly complete and submit Form W-8IMY and comply
with applicable reporting and other requirements.
A non-United States person will not be subject to United States federal
income or withholding tax on any gain realized on the sale, exchange, redemption
or other disposition of a Global Note unless the gain is effectively connected
with the beneficial owner's trade or business in the United States or, in the
case of an individual, the beneficial owner is present in the United States for
183 days or more in the taxable year in which the sale, exchange, redemption or
other disposition occurs and certain other conditions are met.
A Global Note owned by an individual who at the time of death is not, for
United States estate tax purposes, a citizen or resident of the United States
generally will not be subject to United States federal estate tax if the
individual does not actually or constructively own 10% or more of the total
combined voting power of all classes of HP stock entitled to vote and, at the
time of such individual's death, the income on the Global Note would not have
been effectively connected with a United States trade or business of the
individual.
If a non-United States person owning a Global Note is engaged in a trade or
business in the United States, and if interest on the Global Note (or gain
realized on its sale, exchange, redemption or other disposition) is effectively
connected with the conduct of such trade or business, such owner, although
exempt from the withholding tax discussed in the preceding paragraphs, will be
subject generally to regular United States income tax on such effectively
connected income in the same manner as if it were a United States person. In
addition, if such owner is a foreign corporation, it may be subject to a 30%
branch profits tax (unless reduced or eliminated by an applicable treaty) on its
effectively connected earnings and profits for the taxable year, subject to
certain adjustments. For purposes of the branch profits tax, interest on, and
any gain recognized on the sale, exchange or other disposition of, a Global Note
will be included in the effectively connected earnings and profits of such
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owner if such interest or gain, as the case may be, is effectively connected
with the conduct by such owner of a trade or business in the United States.
Each beneficial owner of a Global Note should be aware that, if it does not
properly provide the required IRS form or other acceptable documentation or if
the IRS form or documentation is not updated and resubmitted when required or
not properly transmitted to and received by the United States person otherwise
required to withhold United States federal income tax, interest on the Global
Note may be subject to United States withholding tax at a 30% rate and the owner
will not be entitled to any additional amounts from us described under the
heading "Description of the Global Notes--Payment of Additional Amounts" with
respect to such tax. Alternatively, United States backup withholding may apply,
as described below. Such tax, however, may in certain circumstances be allowed
as a refund or as a credit against such owner's United States federal income
tax. The foregoing does not deal with all aspects of federal income tax
withholding that may be relevant to a non-United States person that owns a
Global Note. Investors are advised to consult their own tax advisors for
specific advice concerning the ownership and disposition of 2007 Global Notes or
the 2012 Global Notes.
BACKUP WITHHOLDING AND INFORMATION REPORTING FOR NON-UNITED STATES
PERSONS. Under current Treasury Regulations, backup withholding (currently at a
rate of 30% and being reduced in stages to a rate of 28% in 2006 and increased
to a rate of 31% in 2011) will not apply to payments made by us or a paying
agent to an owner in respect of a Global Note if the certifications described
above are received, provided in each case that we or the paying agent, as the
case may be, do not have actual knowledge or reason to know that the payee is a
United States person.
Under current Treasury Regulations, payments of the proceeds from the sale,
exchange, redemption or other disposition of a Global Note effected at a foreign
office of a broker (including a custodian, nominee or other agent acting on
behalf of the beneficial owner of a Global Note) generally will not be subject
to information reporting or backup withholding. However, if such broker is a
United States person, a controlled foreign corporation for United States federal
income tax purposes, a foreign partnership in which U.S. partners hold more than
50 percent of the income or capital interest, a U.S. branch of a foreign bank or
foreign insurance company treated as a U.S. person for certain U.S. tax purposes
or a foreign person with certain connections to the United States, then
information reporting will be required unless, in general, the broker has in its
records documentary evidence that the beneficial owner is not a United States
person and certain other conditions are met or the beneficial owner otherwise
establishes an exemption. Backup withholding may apply to any payment that such
broker is required to report if such broker has actual knowledge or reason to
know that the payee is a United States person. Payments to or through the United
States office of a broker are subject to information reporting and backup
withholding unless the beneficial owner certifies, under penalties of perjury on
an appropriate withholding certificate, that it is a non-United States person
and that it satisfies certain other conditions or otherwise establishes an
exemption from information reporting and backup withholding.
Non-United States persons owning either series of Global Notes should
consult their own tax advisors regarding the application of information
reporting and backup withholding in their particular situations, the
availability of an exemption therefrom, and the procedure for obtaining such an
exemption. Backup withholding is not a separate tax but is allowed as a refund
or credit against the owner's United States federal income tax, provided the
necessary information is furnished to the IRS. Interest on a Global Note that is
beneficially owned by a non-United States person will be reported annually on
IRS Form 1042-S, which must be filed with the IRS and furnished to such
beneficial owner.
The United States federal income tax discussion set forth above is included
for general information only and may not be applicable depending upon an owner's
particular situation. Owners should consult their own tax advisors with respect
to the tax consequences to them of the ownership and disposition of
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the 2007 Global Notes or the 2012 Global Notes, including the tax consequences
under state, local, foreign and other tax laws and the possible effects of
changes in federal or other tax laws.
POSSIBLE EUROPEAN UNION REQUIREMENTS
The European Union is currently considering proposals for a new directive
regarding the taxation of savings income. Subject to a number of important
conditions being met, it is proposed that, if interest or other similar income
is paid by a person within the jurisdiction of one member state to an individual
resident in another member state, the former member state will be required to
provide the latter member state with information concerning such payment.
However, certain member states would be permitted to elect not to provide such
information but instead to impose withholding tax on such payments for a
transitional period of time.
S-36
UNDERWRITING
Under the terms and conditions contained in an underwriting agreement dated
June 21, 2002, we have agreed to sell to the underwriters named below, for which
Banc of America Securities LLC, Deutsche Bank Securities Inc. and J.P. Morgan
Securities Inc. are acting as representatives, and each underwriter has agreed
to purchase, the following respective principal amounts of the 2007 Global Notes
and the 2012 Global Notes set forth opposite its name below.
PRINCIPAL AMOUNT OF PRINCIPAL AMOUNT OF
2007 GLOBAL NOTES 2012 GLOBAL NOTES
------------------- -------------------
Banc of America Securities LLC............................ $ 250,000,000 $125,000,000
Deutsche Bank Securities Inc.............................. 250,000,000 125,000,000
J.P. Morgan Securities Inc................................ 250,000,000 125,000,000
Scotia Capital (USA) Inc.................................. 40,000,000 20,000,000
ABN AMRO Incorporated..................................... 30,000,000 15,000,000
BNP Paribas Securities Corp............................... 30,000,000 15,000,000
Commerzbank Capital Markets Corp.......................... 30,000,000 15,000,000
Credit Suisse First Boston Corporation.................... 30,000,000 15,000,000
HSBC Securities (USA) Inc................................. 30,000,000 15,000,000
Salomon Smith Barney Inc.................................. 30,000,000 15,000,000
Wachovia Securities, Inc.................................. 30,000,000 15,000,000
-------------- ------------
Total................................................... $1,000,000,000 $500,000,000
============== ============
The underwriting agreement provides that the underwriters are obligated to
purchase all of a series of the Global Notes if any are purchased. In addition,
the underwriting agreement provides that, if an underwriter defaults on its
purchase obligations, and such underwriter's purchase commitment was less than
10% of the aggregate amount of such series of Global Notes, the purchase
commitments of non-defaulting underwriters with respect to such series shall be
increased. If the defaulting underwriter's purchase commitment was more than 10%
of the aggregate principal amount of such series of Global Notes, the purchase
commitments of the non-defaulting underwriters with respect to such series may
be increased or the offering of that series of Global Notes may be terminated.
The underwriters propose to offer the 2007 Global Notes and the 2012 Global
Notes initially at the public offering prices on the cover page of this
prospectus supplement and to selling group members at that price less a
concession of .20% of the principal amount per 2007 Global Note and .30% of the
principal amount per 2012 Global Note. The underwriters and selling group
members may allow a discount of .125% of such principal amount per 2007 Global
Note and .125% of such principal amount per 2012 Global Note on sales to other
broker-dealers. After the initial public offering of a series of Global Notes,
the public offering prices and concessions and discounts to broker-dealers with
respect thereto may be changed.
We estimate that our out-of-pocket expenses for this offering will be
approximately $300,000.
We have agreed to indemnify the underwriters against certain liabilities
under the Securities Act of 1933, as amended, or to contribute to payments that
the underwriters may be required to make in that respect.
Application has been made to list the 2007 Global Notes and the 2012 Global
Notes on the Luxembourg Stock Exchange. There can be no assurance that the
listing will be obtained.
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The underwriters may engage in over-allotment, stabilizing transactions,
syndicate covering transactions and penalty bids, in accordance with
Regulation M under the Securities Exchange Act of 1934, as amended, as described
below:
- Over-allotment involves syndicate sales in excess of the offering size,
which creates a syndicate short position.
- Stabilizing transactions permit bids to purchase the underlying security
as long as the stabilizing bids do not exceed a specified maximum.
- Syndicate covering transactions involve purchases of a series of Global
Notes in the open market after the distribution for such series has been
completed in order to cover syndicate short positions.
- Penalty bids permit the representatives of a series of Global Notes to
reclaim a selling concession from a syndicate member when the applicable
Global Notes originally sold by such syndicate member are purchased in a
stabilizing transaction or a syndicate covering transaction to cover
syndicate short positions.
Such stabilizing transactions, syndicate covering transactions and penalty bids
may cause the price of the applicable series of Global Notes to be higher than
it would otherwise be in the absence of such transactions. These transactions
may be effected on the Luxembourg Stock Exchange or otherwise and, if commenced,
may be discontinued at any time.
Certain of the underwriters and their respective affiliates have performed
from time to time and may perform in the future various financial advisory,
commercial banking and investment banking services for us, for which they
received or will receive customary fees.
Banc of America Securities LLC, referred to in this paragraph as Banc of
America, and J.P. Morgan Securities Inc., referred to in this paragraph as
JPMorgan, will make the Global Notes available for distribution on the Internet
through a proprietary website and/or a third-party system operated by Market
Axess Inc., an Internet-based communications technology provider. Market Axess
Inc. is providing the system as a conduit for communications between Banc of
America and its customers and between JPMorgan and its customers and is not a
party to any transactions. Market Axess Inc., a registered broker-dealer, will
receive compensation from Banc of America or JPMorgan based on transactions Banc
of America or JPMorgan conducts through the system. Banc of America and JPMorgan
will make the Global Notes available to their respective customers through the
Internet distributions, whether made through a proprietary or third-party
system, on the same terms as distributions made through other channels.
S-38
OFFERING RESTRICTIONS
The 2007 Global Notes and the 2012 Global Notes are offered for sale in
those jurisdictions in the United States, Canada, Europe and Asia where it is
legal to make such offers.
Each of the underwriters has agreed that it will not offer, sell or deliver
any Global Notes, directly or indirectly, or distribute this prospectus
supplement or the accompanying prospectus or any other offering material
relating to the Global Notes, in or from any jurisdiction outside the United
States except under circumstances that will, to the best of the underwriter's
knowledge and belief, result in compliance with the applicable laws and
regulations.
Purchasers of any of the Global Notes may be required to pay stamp taxes and
other charges in accordance with the laws and practices of the country of
purchase in addition to the public offering prices set forth on the cover page.
UNITED KINGDOM
Each of the underwriters has represented and agreed that (a) it has not
offered or sold, and, prior to the expiration of the period of six months from
the closing date for the issue of the Global Notes, will not offer or sell any
Global Notes to persons in the United Kingdom, except to those persons whose
ordinary activities involve them in acquiring, holding, managing or disposing of
investments (as principal or agent) for the purposes of their businesses or
otherwise in circumstances which have not resulted and will not result in an
offer to the public in the United Kingdom within the meaning of the Public
Offers of Securities Regulations 1995, (b) it has only communicated or caused to
be communicated and will only communicate or cause to be communicated any
invitation or inducement to engage in investment activity (within the meaning of
section 21 of the Financial Services and Markets Act 2000 (the "FSMA")) received
by it in connection with the issue or sale of any Global Notes in circumstances
in which section 21(1) of the FSMA does not apply to us, and (c) it has complied
with and will comply with all applicable provisions of the FSMA with respect to
anything done by it in relation to the Global Notes in, from or otherwise
involving the United Kingdom.
GERMANY
In connection with the initial placement of the Global Notes in Germany,
each of the underwriters has represented and agreed that it has not offered or
sold and it will not offer or sell any Global Notes in Germany other than in
compliance with the Securities Prospectus Act (WERTPAPIER-
VERKAUFSPROSPEKTGESETZ) of 13th December, 1990, as amended, or any other law
applicable in Germany governing this issue, offering and sale of securities.
THE NETHERLANDS
Each of the underwriters has represented and agreed that it has not,
directly or indirectly, offered or sold and will not, directly or indirectly,
offer or sell in the Netherlands any Global Notes other than to persons who
trade or invest in securities in the conduct of a profession or business (which
include banks, stockbrokers, insurance companies, pension funds, other
institutional investors and finance companies and treasury departments of large
enterprises).
THE REPUBLIC OF FRANCE
Each of the underwriters has represented and agreed that the Global Notes
are being issued outside of France, and that it, in connection with the initial
distribution of the Global Notes, has not offered or sold and will not offer or
sell any of the Global Notes in France, and that it has not distributed and will
not distribute or cause to be distributed in France this prospectus supplement
and accompanying prospectus or any other offering material relating to the
Global Notes, except to
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(i) qualified investors (INVESTISSEURS QUALIFIES) or (ii) a restricted circle of
investors (CERCLE RESTREINT D'INVESTISSEURS), all as defined in Article 6 of the
Order ("Ordinance") dated 28th September, 1967 (as amended) and Decree
no. 98-880 dated 1st October, 1998 and in compliance with regulations issued
from time to time by the COMMISSION DES OPERATIONS DE BOURSE.
JAPAN
Each of the underwriters has represented and agreed that it has not offered
or sold, and will not offer or sell, directly or indirectly, any of the Global
Notes in or to residents of Japan or to any persons for reoffering or resale,
directly or indirectly, in Japan or to any resident of Japan, except pursuant to
an exemption from the registration requirements of the Securities and Exchange
Law available thereunder and in compliance with the other relevant laws of
Japan.
SINGAPORE
Each of the underwriters has represented and agreed that it has not offered
or sold, and will not offer or sell, any of the Global Notes, or distribute any
document or other material in connection with the offer of Global Notes, either
directly or indirectly, to the public or any member of the public in Singapore
other than (i) to an institutional investor or other person specified in
Section 106C of the Companies Act, Chapter 50 of Singapore (the "Singapore
Companies Act"), (ii) to a sophisticated investor in accordance with the
conditions specified in Section 106D of the Singapore Companies Act, or
(iii) otherwise pursuant to, and in accordance with the conditions of, any other
provisions of the Singapore Companies Act.
CANADA
Each of the underwriters has represented and agreed that it has not offered
or sold and will not offer or sell any of the 2007 Global Notes and the 2012
Global Notes in Canada other than on a private placement basis that exempts us
from the requirement that we prepare and file a prospectus with the securities
regulatory authorities in each province where trades of the applicable series of
Global Notes are made. Resales of any Global Notes in Canada must be made under
applicable securities laws, which will vary depending on the relevant
jurisdiction, and which may require resales to be made under available statutory
exemptions or under a discretionary exemption granted by the applicable Canadian
securities regulatory authority.
S-40
VALIDITY OF THE GLOBAL NOTES
The validity of the 2007 Global Notes and the 2012 Global Notes will be
passed upon for us by Wilson Sonsini Goodrich & Rosati, Professional
Corporation, 650 Page Mill Road, Palo Alto, California 94304. The underwriters
have been represented by Cravath, Swaine & Moore, Worldwide Plaza, 825 Eighth
Avenue, New York, New York 10019.
EXPERTS
Our consolidated financial statements and schedule at October 31, 2001 and
2000 and for each of the two years in the period ended October 31, 2001,
appearing in our Annual Report on Form 10-K/A for the year ended October 31,
2001, have been audited by Ernst &Young LLP, independent auditors, as set forth
in their report thereon included therein and incorporated herein by reference.
Such consolidated financial statements and schedule are incorporated herein by
reference in reliance upon such report given on the authority of such firm as
experts in accounting and auditing.
Our consolidated financial statements and schedule for the year ended
October 31, 1999 incorporated in this prospectus by reference to the Annual
Report on Form 10-K, as amended January 30, 2002, for the year ended
October 31, 2001, have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
The consolidated financial statements and schedule of Compaq Computer
Corporation at December 31, 2001 and 2000 and for each of the two years in the
period ended December 31, 2001, appearing in our Current Report on Form 8-K
dated February 14, 2002, have been audited by Ernst & Young LLP, independent
auditors, as set forth in their reports thereon included therein and
incorporated herein by reference. Such consolidated financial statements and
schedule are incorporated herein by reference in reliance upon such reports
given on the authority of such firm as experts in accounting and auditing.
The consolidated financial statements and schedule of Compaq Computer
Corporation for the year ended December 31, 1999 incorporated in this prospectus
by reference to Hewlett-Packard Company's Current Report on Form 8-K dated
February 14, 2002, have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
GENERAL INFORMATION
Application has been made to list each series of Global Notes on the
Luxembourg Stock Exchange. In connection with the listing application, the
Certificate of Incorporation and the By-Laws of Hewlett-Packard and a legal
notice relating to the issuance of the 2007 Global Notes and the 2012 Global
Notes will be deposited prior to listing with the GREFFIER EN CHEF DU TRIBUNAL
D'ARRONDISSEMENT DE ET A LUXEMBOURG, where copies thereof may be obtained upon
request. Copies of the above documents together with this prospectus supplement,
the accompanying prospectus, the indenture and our Annual Report on Form 10-K,
as amended on January 30, 2002, for the fiscal year ended October 31, 2001, our
Quarterly Reports on Form 10-Q for the fiscal quarters ended January 31, 2002
and April 30, 2002, as well as all other documents incorporated by reference
herein, including future Annual Reports on Form 10-K and Quarterly Reports on
Form 10-Q, as long as any of the Global Notes are listed on the Luxembourg Stock
Exchange, will be made available for inspection, and may be obtained free of
charge, at the main office of Dexia Banque Internationale a Luxembourg. Dexia
Banque Internationale a Luxembourg will act as a contact between us and the
Luxembourg Stock Exchange or the holders of Global Notes.
S-41
The Global Notes have been accepted for clearance through The Depository
Trust Company, Euroclear and Clearstream. The 2007 Global Notes have been
assigned CUSIP No. 428236 AF 0, ISIN No. US428236AF02 and Common Code
No. 015057670. The 2012 Global Notes have been assigned CUSIP
No. 428236 AG 8, ISIN No. US428236AG84 and Common Code No. 015055685.
All documents filed by us pursuant to Section 13(a), 13(c), 14 or 15(d) of
the Securities Exchange Act of 1934, as amended, prior to the termination of the
offering of the securities made hereby shall be deemed to be incorporated by
reference into this prospectus supplement and the accompanying prospectus and to
be a part hereof, and information that we file later with the Commission will
automatically update and supersede this information.
Any statement contained in this prospectus supplement and the accompanying
prospectus, including in a document incorporated or deemed to be incorporated by
reference in this prospectus supplement and the accompanying prospectus, shall
be deemed to be modified or superseded for purposes hereof to the extent that a
statement contained in this prospectus supplement and the accompanying
prospectus (or in any other subsequently filed document that is or is deemed to
be incorporated by reference herein) modifies or supersedes such previous
statement. Any statement so modified or superseded shall not be deemed to
constitute a part of this prospectus supplement and the accompanying prospectus
except as so modified or superseded.
Our common stock is listed on the New York Stock Exchange Composite Tape
under the symbol "HPQ." On June 21, 2002, the last reported sale price of our
common stock on The New York Stock Exchange was $16.46 per share.
S-42
PROSPECTUS
$3,000,000,000
HEWLETT-PACKARD COMPANY
By this prospectus, we may offer--
DEBT SECURITIES
COMMON STOCK
PREFERRED STOCK
DEPOSITARY SHARES
WARRANTS
SEE "RISK FACTORS" ON PAGE 7 FOR INFORMATION YOU SHOULD
CONSIDER BEFORE BUYING THE SECURITIES.
Our common stock is listed on the New York Stock Exchange Composite Tape
under the symbol "HWP." On March 8, 2002, the reported last sale price of our
common stock on the New York Stock Exchange Composite Tape was $20.59 per share.
--------------------
We will provide specific terms of these securities in supplements to this
prospectus. You should read this prospectus and any supplement carefully before
you invest.
--------------------
This prospectus may not be used to offer and sell securities unless
accompanied by a prospectus supplement.
--------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
This prospectus is dated March 11, 2002
TABLE OF CONTENTS
Summary..................................................... 1
Where You Can Find More Information......................... 5
Risk Factors................................................ 7
Ratio of Earnings to Fixed Charges.......................... 7
Use of Proceeds............................................. 7
Description of the Debt Securities.......................... 8
Description of Common Stock................................. 19
Description of Preferred Stock.............................. 21
Description of the Depositary Shares........................ 24
Description of the Warrants................................. 27
Plan of Distribution........................................ 29
Legal Matters............................................... 30
Experts..................................................... 30
-i-
SUMMARY
This prospectus is part of a registration statement on Form S-3 that we
filed with the Securities and Exchange Commission utilizing a "shelf"
registration process. Under this shelf process, we may sell any combination of
securities described in this prospectus in one or more offerings, up to a total
dollar amount of $3,000,000,000. This prospectus provides you with a general
description of the securities we may offer. Each time we sell securities, we
will provide a prospectus supplement containing specific information about the
terms of that offering. The prospectus supplement may also add, update or change
information contained in this prospectus. You should read both this prospectus
and any prospectus supplement together with additional information described
below under the heading "Where You Can Find More Information."
ABOUT HEWLETT-PACKARD COMPANY
We are a leading global provider of computing, printing and imaging
solutions and services for business and home, and are focused on making
technology and its benefits accessible to all. We currently organize our
operations into five major businesses.
- IMAGING AND PRINTING SYSTEMS provides printer hardware, supplies, imaging
products and related professional and consulting services. Printer
hardware consists of laser and inkjet printing devices, which include
color and monochrome printers for the business and home, multi-function
laser devices and wide- and large-format inkjet printers. Supplies offer
laser and inkjet printer cartridges and other related printing media.
Imaging products include all-in-one inkjet devices, scanners, digital
photography products, personal color copiers and faxes. Professional and
consulting services are provided to customers on the optimal use of
printing and imaging assets.
- EMBEDDED AND PERSONAL SYSTEMS provides commercial personal computers
(PCs), home PCs, a range of handheld computing devices, digital
entertainment systems, calculators and other related accessories, software
and services for commercial and consumer markets. Commercial PCs include
the Vectra and e-PC desktop series, as well as OmniBook notebook PCs. Home
PCs include the Pavilion series of multi-media consumer desktop PCs and
notebook PCs. Digital Entertainment systems offer the DVD+RW drives as
well as digital entertainment center products. Handheld computing devices
include the Jornada handheld products which run on Pocket
PC-Registered Trademark- software.
- COMPUTING SYSTEMS provides workstations, UNIX-Registered Trademark-
servers, PC servers, storage and software solutions. Workstations provide
UNIX-Registered Trademark-, Windows-Registered Trademark- and
Linux-Registered Trademark--based systems. The UNIX-Registered Trademark-
server offering ranges from low-end servers to high-end scalable systems
such as the Superdome line, all of which run on our PA-RISC architecture
and the HP-UX operating system. PC servers offer primarily low-end and
mid-range products that run on the Windows-Registered Trademark- and
Linux-Registered Trademark- operating systems. Storage provides mid-range
and high-end array offerings, storage area networks and storage area
management and virtualization software, as well as tape and optical
libraries, tape drive mechanisms and tape media. The software category
offers OpenView and other solutions designed to manage large-scale systems
and networks. In addition, software includes telecommunications
infrastructure solutions and middleware.
- IT SERVICES provides customer support, consulting, outsourcing and
complementary third-party products delivered with the sales of HP
solutions. Customer support offers a range of high-value solutions from
mission-critical and networking services that span the entire IT
environment to low-cost, high-volume product support. Consulting provides
industry-specific business and IT consulting and system integration
services in areas such as financial services, telecommunications and
manufacturing, as well as cross-industry expertise in Customer
Relationship Management (CRM), e-commerce and IT infrastructure.
Outsourcing offers a range of IT management services, both comprehensive
and selective, including transformational infrastructure services, client
computing managed services, managed web services and application services
to medium and large companies.
-1-
- FINANCING supports and enhances HP's global product and services
solutions. As a strategic enabler to HP, financing provides a broad range
of value-added financial services and computing and printing utility
offerings to large global and enterprise customers as well as small and
medium businesses and consumers. Financing offers innovative, personalized
and flexible alternatives to balance individual customer cash flow,
technology obsolescence and capacity needs.
We were incorporated in 1947 under the laws of the State of California as
the successor to a partnership founded in 1939 by William R. Hewlett and David
Packard. Effective in May 1998, we changed our state of incorporation from
California to Delaware. Our principal executive offices are located at 3000
Hanover Street, Palo Alto, California 94304. Our telephone number is
(650) 857-1501.
--------------------
UNIX is a registered trademark of the Open Group; Windows is a registered
trademark of Microsoft Corporation in the United States and/or other countries;
Linux is a registered trademark of Linus Torvalds.
RECENT DEVELOPMENTS
MERGER WITH COMPAQ COMPUTER CORPORATION
As of September 4, 2001, HP entered into a merger agreement with Compaq
Computer Corporation. Under the terms of the merger agreement, a wholly-owned
subsidiary of HP will merge with and into Compaq and Compaq will survive the
merger as a wholly-owned subsidiary of HP.
Compaq is a leading global provider of information technology products,
services and solutions for enterprise customers. Compaq designs, develops,
manufactures and markets information technology equipment, software, services
and solutions, including industry-leading enterprise storage and computing
solutions, fault-tolerant business-critical solutions, communication products,
personal desktop and notebook computers and personal entertainment and Internet
access devices.
Upon completion of the merger, holders of Compaq common stock will be
entitled to receive 0.6325 of a share of HP common stock for each share of
Compaq common stock they then hold. In addition, upon completion of the merger,
HP will assume outstanding stock appreciation rights and options to purchase
shares of Compaq common stock, each at the exchange ratio referred to in the
preceding sentence, and will assume certain Compaq stock plans. HP shareowners
will continue to own their existing shares of HP common stock after the merger.
The shares of HP common stock issued in exchange for shares of Compaq common
stock in connection with the merger will represent approximately 35.7% of the
outstanding shares of HP common stock immediately following the completion of
the merger, based on the number of shares of HP and Compaq common stock
outstanding on January 28, 2002.
Completion of the merger is subject to customary closing conditions that
include, among others, receipt of required approvals from HP shareowners and
from Compaq shareowners, respectively, and receipt of required antitrust
approvals. If any of the conditions to the merger is not satisfied or, if waiver
is permissible, not waived, the merger will not be completed. In addition, under
certain circumstances specified in the merger agreement, Compaq or HP may
terminate the merger agreement. As a result, we cannot assure you that the
merger will be completed.
On February 5, 2002 HP filed a registration statement on Form S-4 with the
Securities and Exchange Commission containing a definitive joint proxy
statement/prospectus regarding the merger.
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THE SECURITIES WE MAY OFFER
We may offer up to $3,000,000,000 of debt securities, common stock,
preferred stock, depositary shares and warrants. The prospectus supplement will
describe the specific amounts, prices and terms of these securities.
We may sell the securities to or through underwriters, dealers or agents or
directly to purchasers. Our agents and we reserve the sole right to accept and
to reject in whole or in part any proposed purchase of securities. The
prospectus supplement, which we will provide to you each time we offer
securities, will set forth the names of any underwriters, dealers or agents
involved in the sale of the securities and any applicable fee, commission or
discount arrangements with them.
DEBT SECURITIES
We may offer unsecured general obligations in the form of either senior or
subordinated debt. The senior debt securities and the subordinated debt
securities are together referred to in this prospectus as the "debt securities."
The senior debt securities will have the same rank as all of our other
unsecured, unsubordinated debt. The subordinated debt securities will be
entitled to payment only after payment on our senior debt. Senior debt generally
includes all indebtedness for money borrowed by us, except indebtedness that is
stated to be not senior to, to have the same rank as, or to be expressly junior
to the subordinated debt securities.
The senior and subordinated debt securities will be issued under separate
indentures between Hewlett-Packard and J.P. Morgan Trust Company, National
Association (formerly known as Chase Manhattan Bank and Trust Company, National
Association), as trustee. We have summarized the general features of the debt
from the indentures. We encourage you to read the forms of indentures that are
exhibits to our registration statement on Form S-3 (file number 333-30786) dated
March 17, 2000, and to read our most recent annual report on Form 10-K and our
other reports filed with the Securities and Exchange Commission. Instructions on
how you can get copies of these documents are provided below under the heading
"Where You Can Find More Information."
GENERAL INDENTURE PROVISIONS THAT APPLY TO SENIOR AND SUBORDINATED DEBT
- Neither indenture limits the amount of debt that we may issue or provides
holders any protection should there be a highly leveraged transaction
involving HP.
- The indentures allow HP to merge or to consolidate with another U.S.
entity or convey, transfer or lease our properties and assets
substantially as an entirety to another U.S. entity, as long as certain
conditions are met. If these events occur, the other company will be
required to assume our responsibilities on the debt, and we will be
released from all liabilities and obligations (except in the case of a
sale lease-back).
- The indentures provide that holders of a majority of the total principal
amount of the debt outstanding in any series may request in writing that
we enter into a supplemental indenture with the trustee to change certain
of our obligations or your rights concerning the debt; but to change the
payment of principal, interest or to adversely effect the right to convert
or certain other matters, every holder in that series must consent.
- We may discharge the indentures and defease restrictive covenants by
depositing sufficient funds with the trustee to pay the obligations when
due, as long as certain conditions are met. The trustee would pay all
amounts due to you on the debt from the deposited funds.
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EVENTS OF DEFAULT
Each of the following is an event of default under the indentures:
- Principal not paid when due;
- Failure to make sinking fund payment for 30 days;
- Failure to pay interest for 30 days;
- Covenants not performed for 90 days after notice;
- Bankruptcy, insolvency or reorganization; and
- Any other event of default in the indenture.
Upon the occurrence of an event of default, other than a bankruptcy,
insolvency or reorganization, the trustee or holders of 25% of the principal
amount outstanding in a series may declare the outstanding principal immediately
payable. Under certain circumstances, however, the holders of a majority in
principal amount may rescind this action.
GENERAL INDENTURE PROVISIONS THAT APPLY ONLY TO SENIOR DEBT SECURITIES
The indenture relating to the senior debt securities contains covenants
restricting our ability to incur liens and enter into sale and lease-back
transactions.
GENERAL INDENTURE PROVISIONS THAT APPLY ONLY TO SUBORDINATED DEBT SECURITIES
The subordinated debt securities will be subordinated to all senior debt.
COMMON STOCK
We may issue our common stock, par value $0.01 per share. Holders of common
stock are entitled to receive dividends declared by our board of directors or an
authorized committee of our board of directors. Currently, we pay a dividend of
$0.08 per share per quarter. Each holder of common stock as of the applicable
record date is entitled to one vote per share. The holders of common stock have
no preemptive rights. Holders of common stock have cumulative voting rights for
the election of our directors in accordance with our bylaws and Delaware law.
PREFERRED STOCK AND DEPOSITARY SHARES
We may issue our preferred stock, par value $0.01 per share, in one or more
series. Our board of directors, or an authorized committee of our board of
directors, will determine the dividend, voting, conversion and other rights of
the series being offered and the terms and conditions relating to its offering
and sale at the time of the offer and sale. We may also issue fractional shares
of preferred stock that will be represented by depositary shares and depositary
receipts.
WARRANTS
We may issue warrants for the purchase of debt securities, preferred stock
or common stock. We may issue warrants independently or together with other
securities.
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WHERE YOU CAN FIND MORE INFORMATION
This prospectus incorporates documents by reference that are not presented
in or delivered with this prospectus. You should rely only on the information
contained in this prospectus and in the documents that we have incorporated by
reference into this prospectus. We have not authorized anyone to provide you
with information that is different from or in addition to the information
contained in this document and incorporated by reference into this prospectus.
The following documents, which were filed by us with the Securities and
Exchange Commission, and any future filings made by us with the Securities and
Exchange Commission under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act
until our offering is complete, are incorporated by reference into this
prospectus:
- Annual report on Form 10-K for the fiscal year ended October 31, 2001,
filed with the Securities and Exchange Commission on January 29, 2002 as
amended on Form 10-K/A filed with the Securities and Exchange Commission
on January 30, 2002;
- Current report on Form 8-K, dated November 5, 2001, filed with the
Securities and Exchange Commission on November 6, 2001;
- Current report on Form 8-K, dated November 14, 2001, filed with the
Securities and Exchange Commission on November 14, 2001;
- Current report on Form 8-K, dated November 15, 2001, filed with the
Securities and Exchange Commission on November 16, 2001;
- Current report on Form 8-K, dated November 29, 2001, filed with the
Securities and Exchange Commission on November 30, 2001;
- Current report on Form 8-K, dated December 7, 2001, filed with the
Securities and Exchange Commission on December 7, 2001;
- Current report on Form 8-K, dated February 13, 2002, filed with the
Securities and Exchange Commission on February 14, 2002;
- Current report on Form 8-K, dated February 14, 2002, filed with the
Securities and Exchange Commission on February 14, 2002;
- Current report on Form 8-K, dated February 27, 2002, filed with the
Securities and Exchange Commission on February 27, 2002;
- The description of HP's common stock contained in our registration
statement on Form 8-A, filed with the Securities and Exchange Commission
on or about November 6, 1957 and any amendment or report filed with the
Securities and Exchange Commission for the purposes of updating such
description; and
- The description of HP's preferred share purchase rights contained in our
registration statement on Form 8-A, filed with the Securities and Exchange
Commission on September 4, 2001 and any amendment or report filed with the
Securities and Exchange Commission for the purpose of updating such
description.
In addition, all documents filed by us pursuant to Section 13(a), 13(c), 14
or 15(d) of the Securities Exchange Act of 1934 after the date of the initial
registration statement and before the date of effectiveness of the registration
statement are deemed to be incorporated by reference into, and to be a part of,
this prospectus from the date of filing of those documents.
Any statement contained in this prospectus or in a document incorporated or
deemed to be incorporated by reference into this prospectus will be deemed to be
modified or superseded for purposes
-5-
of this prospectus to the extent that a statement contained in this prospectus
or any other subsequently filed document that is deemed to be incorporated by
reference into this prospectus modifies or supersedes the statement. Any
statement so modified or superseded will not be deemed, except as so modified or
superseded, to constitute a part of this prospectus.
The documents incorporated by reference into this prospectus are available
from us upon request. We will provide a copy of any and all of the information
that is incorporated by reference in this prospectus (not including exhibits to
the information unless those exhibits are specifically incorporated by reference
into this prospectus) to any person, without charge, upon written or oral
request. You may request a copy of information incorporated by reference into
this prospectus by contacting us in writing or by telephone at the following
address:
Hewlett-Packard Company
3000 Hanover Street
Palo Alto, California 94304
Attention: Investor Relations
(650) 857-1501
In addition, you may obtain copies of our information by making a request
through our investor relations website, http://www.hp.com/hpinfo/investor, or by
sending an e-mail to investor_relations@hp.com.
We file annual, quarterly and current reports, proxy and information
statements and other information with the Securities and Exchange Commission.
Copies of the reports, proxy and information statements and other information
filed by HP with the Securities and Exchange Commission may be inspected and
copied at the public reference facilities maintained by the Securities and
Exchange Commission at:
450 Fifth Street, N.W.
Washington, D.C. 20549
Reports, proxy and information statements and other information concerning
HP may be inspected at:
New York Stock Exchange
20 Broad Street
New York, New York 10005
Copies of these materials can also be obtained by mail at prescribed rates
from the Public Reference Section of the Securities and Exchange Commission, 450
Fifth Street, N.W., Washington, D.C. 20549 or by calling the Securities and
Exchange Commission at 1-800-SEC-0330. The Securities and Exchange Commission
maintains a Website that contains reports, proxy statements and other
information regarding us. The address of the Securities and Exchange Commission
web site is http://www.sec.gov.
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RISK FACTORS
Before acquiring any of the securities that may be offered hereby, you
should carefully consider the risks discussed in the section of our Form 10-K,
as amended January 30, 2002, for the fiscal year ended October 31, 2001,
entitled "Management's Discussion and Analysis of Financial Condition and
Results of Operations--Factors That Could Affect Future Results," which is
incorporated in this document by reference.
RATIO OF EARNINGS TO FIXED CHARGES
The ratio of earnings to fixed charges for each of the periods indicated is
as follows:
FISCAL YEAR ENDED OCTOBER 31,
--------------------------------------------------------------
2001 2000 1999 1998 1997
---------- ---------- ---------- ---------- ----------
Ratio of earnings to fixed charges... 2.6x 12.5x 13.7x 11.4x 12.1x
The ratio of earnings to fixed charges was computed by dividing earnings
(earnings from continuing operations before extraordinary item, cumulative
effect of change in accounting principle and taxes, adjusted for fixed charges
from continuing operations, minority interest in the income of subsidiaries with
fixed charges and undistributed earnings or loss of equity method investees) by
fixed charges from continuing operations for the periods indicated.
Fixed charges from continuing operations include:
- interest expense and amortization of debt discount or premium on all
indebtedness; and
- a reasonable approximation of the interest factor deemed to be included in
rental expense.
There are currently no preference equity securities outstanding; therefore
the computation of the ratio of earnings to fixed charges and preference
dividends is not included.
USE OF PROCEEDS
Unless otherwise indicated in the prospectus supplement, the net proceeds
from the sale of securities offered by this prospectus will be used for general
corporate purposes, which may include repayment of existing and future
indebtedness, acquisitions of products, technology and businesses, capital
expenditures, repurchases of common stock, investments in or extensions of
credit to our subsidiaries and to meet working capital needs. Pending such uses,
we will invest the net proceeds in interest-bearing securities.
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DESCRIPTION OF THE DEBT SECURITIES
This section describes the general terms and provisions of any debt
securities that we may offer in the future. A prospectus supplement relating to
a particular series of debt securities will describe the material terms of that
particular series and to the extent to which the general terms and provisions
contained herein apply to that particular series.
GENERAL
The debt securities will either be our senior debt securities or our
subordinated debt securities. We expect to issue the debt securities under one
or more separate indentures between us and J.P. Morgan Trust Company, National
Association (formerly known as Chase Manhattan Bank and Trust Company, National
Association), as trustee. Senior debt securities will be issued under a senior
indenture and subordinated debt securities will be issued under a subordinated
indenture. Together, the senior indenture and subordinated indenture are called
indentures. For additional information, you should look at the applicable form
of indenture that is filed as an exhibit to our registration statement on
Form S-3 (file number 333-30786), dated March 17, 2000. Each of the indentures
is incorporated by reference into this prospectus. In this description of the
debt securities, the words "Hewlett-Packard," "we," "us" or "our" refer only to
Hewlett-Packard Company and not to any of our subsidiaries.
Debt securities may be issued in separate series without limitation as to
aggregate principal amount. We may specify a maximum aggregate principal amount
for the debt securities of any series. We are not limited as to the amount of
debt securities we may issue under the indentures. Unless otherwise provided in
a prospectus supplement, a series of debt securities may be reopened for
issuance of additional debt securities of such series.
TERMS OF A PARTICULAR SERIES
Each prospectus supplement relating to a particular series of debt
securities will include specific information relating to the offering. This
information will include some or all of the following terms of the debt
securities of the series:
- whether the debt securities are senior or subordinated;
- the offering price;
- the title;
- any limit on the aggregate principal amount;
- the person who shall be entitled to receive interest, if other than the
record holder on the record date;
- the date the principal will be payable;
- the interest rate, if any, the date interest will accrue, the interest
payment dates and the regular record dates;
- the interest rate, if any, payable on overdue installments of principal,
premium or interest;
- the place where payments shall be made;
- any mandatory or optional redemption provisions;
-8-
- if applicable, the method for determining how principal, premium, if any,
or interest will be calculated by reference to an index or formula;
- if other than U.S. currency, the currency or currency units in which
principal, premium, if any, or interest will be payable and whether we or
the holder may elect payment to be made in a different currency;
- the portion of the principal amount that will be payable upon acceleration
of stated maturity, if other than the entire principal amount;
- if the principal amount payable at stated maturity will not be
determinable as of any date prior to stated maturity, that the amount
payable will be deemed to be the principal amount;
- any defeasance provisions if different from those described below under
"Satisfaction and Discharge--Defeasance;"
- any conversion or exchange provisions;
- whether the debt securities will be issuable in the form of a global
security;
- any subordination provisions if different from those described below under
"Subordinated Debt Securities;"
- any paying agents, authenticating agents or security registrars;
- any guarantees on the debt securities;
- any security for any of the debt securities;
- any deletions of, or changes or additions to, the events of default or
covenants; and
- any other specific terms of such debt securities.
Unless otherwise specified in the prospectus supplement:
- the debt securities will be registered debt securities; and
- registered debt securities denominated in U.S. dollars will be issued in
denominations of $1,000 or multiples of $1,000.
Debt securities may be sold at a substantial discount below their stated
principal amount, bearing no interest or interest at a rate that at time of
issuance is below market rates.
EXCHANGE AND TRANSFER
Debt securities may be transferred or exchanged at the office of the
security registrar or at the office of any transfer agent designated by us. We
will not impose a service charge for any transfer or exchange, but we may
require holders to pay any tax or other governmental charges associated with any
transfer or exchange.
In the event of any potential redemption of debt securities of any series in
part, we will not be required to:
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- issue, register the transfer of, or exchange any debt security of that
series during a period beginning at the opening of business 15 days before
the day of mailing of a notice of redemption and ending at the close of
business on the day of the mailing; or
- register the transfer of or exchange any debt security of that series
selected for redemption, in whole or in part, except the unredeemed
portion being redeemed in part.
We have initially appointed the trustee as the security registrar. Any
transfer agent, in addition to the security registrar, initially designated by
us will be named in the prospectus supplement. We may designate additional
transfer agents, change transfer agents or change the office of the transfer
agent, change any security registrar or act as security registrar. However, we
will be required to maintain a transfer agent in each place of payment for the
debt securities of each series.
GLOBAL SECURITIES
The debt securities of any series may be represented, in whole or in part,
by one or more global securities. Each global security will:
- be registered in the name of a depositary that we will identify in a
prospectus supplement;
- be deposited with the depositary or nominee or custodian; and
- bear any required legends.
No global security may be exchanged in whole or in part for debt securities
registered in the name of any person other than the depositary or any nominee,
referred to as certificated debt securities, unless:
- the depositary has notified us that it is unwilling or unable to continue
as depositary or has ceased to be qualified to act as depositary;
- an event of default is continuing; or
- any other circumstances described in a prospectus supplement have occurred
permitting the issuance of certificated debt securities.
As long as the depositary, or its nominee, is the registered owner of a
global security, the depositary or nominee will be considered the sole owner and
holder of the debt securities represented by the global security for all
purposes under the indenture. Except in the above limited circumstances, owners
of beneficial interests in a global security will not be:
- entitled to have the debt securities registered in their names;
- entitled to physical delivery of certificated debt securities; and
- considered to be holders of those debt securities under the indenture.
Payments on a global security will be made to the depositary or its nominee
as the holder of the global security. Some jurisdictions have laws that require
that certain purchasers of securities take physical delivery of such securities
in definitive form. These laws may impair the ability to transfer beneficial
interests in a global security.
Institutions that have accounts with the depositary or its nominee are
referred to as "participants." Ownership of beneficial interests in a global
security will be limited to participants and to persons that
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may hold beneficial interests through participants. The depositary will credit,
on its book-entry registration and transfer system, the respective principal
amounts of debt securities represented by the global security to the accounts of
its participants.
Ownership of beneficial interests in a global security will be shown on and
effected through records maintained by the depositary, with respect to
participants' interests, or any participant, with respect to interests of
persons held by participants on their behalf.
Payments, transfers and exchanges relating to beneficial interests in a
global security will be subject to policies and procedures of the depositary.
The depositary policies and procedures may change from time to time. Neither the
trustee nor we will have any responsibility or liability for the depositary's or
any participant's records with respect to beneficial interests in a global
security.
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in the prospectus supplement:
- Payment of interest on a debt security on any interest payment date will
be made to the person in whose name the debt security is registered at the
close of business on the regular record date; and
- Payment on debt securities of a particular series will be payable at the
office of a paying agent or paying agents designated by us.
At our option, however, we may pay interest by mailing a check to the record
holder.
The corporate trust office of the trustee will initially be designated as
our sole paying agent. We may also name any other paying agents in the
prospectus supplement. We may designate additional paying agents, change paying
agents or change the office of any paying agent. However, we will be required to
maintain a paying agent in each place of payment for the debt securities of a
particular series.
All monies paid by us to a paying agent for payment on any debt security
which remain unclaimed for a period ending the earlier of 10 business days prior
to the date the money would be turned over to the state, or at the end of two
years after the payment was due, will be repaid to us. Thereafter, the holder
may look only to us for such payment.
CONSOLIDATION, MERGER AND SALE OF ASSETS
We may not consolidate with or merge into any other person, in a transaction
in which we are not the surviving corporation, or convey, transfer or lease our
properties and assets substantially as an entirety to, any person, unless:
- the successor, if any, is a U.S. corporation, limited liability company,
partnership, trust or other entity;
- the successor assumes our obligations on the debt securities and under the
indentures;
- immediately after giving effect to the transaction, no default or event of
default shall have occurred and be continuing; and
- certain other conditions are met.
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EVENTS OF DEFAULT
Each indenture defines an event of default with respect to any series of
debt securities as one or more of the following events:
(1) failure to pay principal of or any premium on any debt security of that
series when due;
(2) failure to pay any interest on any debt security of that series for
30 days when due;
(3) failure to make any sinking fund payment for 30 days when due;
(4) failure to perform any other covenant in the indenture if that failure
continues for 90 days after we are given the notice required in the
indenture;
(5) our bankruptcy, insolvency or reorganization; and
(6) any other event of default specified in the prospectus supplement.
An event of default of one series of debt securities is not necessarily an
event of default for any other series of debt securities.
If an event of default, other than an event of default described in
clause (5) above, shall occur and be continuing, either the trustee or the
holders of at least 25% in aggregate principal amount of the outstanding
securities of that series may declare the principal amount of the debt
securities of that series to be due and payable immediately. If an event of
default described in clause (5) above shall occur, the principal amount of all
the debt securities of that series will automatically become immediately due and
payable. Any payment by us on the subordinated debt securities following any
acceleration will be subject to the subordination provisions described below
under "Subordinated Debt Securities."
After acceleration the holders of a majority in aggregate principal amount
of the outstanding securities of that series, under certain circumstances, may
rescind and annul such acceleration if all events of default, other than the
non-payment of accelerated principal, or other specified amount, have been cured
or waived.
Other than the duty to act with the required care during an event of
default, the trustee will not be obligated to exercise any of its rights or
powers at the request of the holders unless the holders shall have offered to
the trustee reasonable indemnity. Generally, the holders of a majority in
aggregate principal amount of the outstanding debt securities of any series will
have the right to direct the time, method and place of conducting any proceeding
for any remedy available to the trustee or exercising any trust or power
conferred on the trustee.
A holder will not have any right to institute any proceeding under the
indentures, or for the appointment of a receiver or a trustee, or for any other
remedy under the indentures, unless:
(1) the holder has previously given to the trustee written notice of a
continuing event of default with respect to the debt securities of that
series;
(2) the holders of at least 25% in aggregate principal amount of the
outstanding debt securities of that series have made a written request
and have offered reasonable indemnity to the trustee to institute the
proceeding; and
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(3) the trustee has failed to institute the proceeding and has not received
direction inconsistent with the original request from the holders of a
majority in aggregate principal amount of the outstanding debt
securities of that series within 60 days after the original request.
Holders may, however, sue to enforce the payment of principal, premium or
interest on any series of debt securities or after the due date without
following the procedures listed in (1) through (3) above.
We will furnish the trustee an annual statement by our officers as to
whether or not we are in default in the performance of the indenture and, if so,
specifying all known defaults.
MODIFICATION AND WAIVER
We and the trustee may make modifications and amendments to the indentures
with the consent of the holders of a majority in aggregate principal amount of
the outstanding securities of each series affected by the modification or
amendment. We may also make modifications and amendments to the indentures for
the benefit of the holders, without their consent, for certain purposes
including, but not limited to:
- providing for our successor to assume the covenants under the indenture;
- adding covenants or events of default;
- making certain changes to facilitate the issuance of the securities;
- securing the securities;
- providing for a successor trustee;
- curing any ambiguities or inconsistencies;
- permitting or facilitating the defeasance and discharge of the securities;
and
- other changes specified in the indenture.
However, neither we nor the trustee may make any modification or amendment
without the consent of the holder of each outstanding security of that series
affected by the modification or amendment if such modification or amendment
would:
- change the stated maturity of any debt security;
- reduce the principal, premium, if any, or interest on any debt security;
- reduce the principal of an original issue discount security or any other
debt security payable on acceleration of maturity;
- change the place of payment or the currency in which any debt security is
payable;
- impair the right to sue for any payment after the stated maturity or
redemption date;
- if subordinated debt securities, modify the subordination provisions in a
materially adverse manner to the holders of subordinated debt securities;
- adversely affect the right to convert any debt security; or
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- change the provisions in the indenture that relate to modifying or
amending the indenture.
SATISFACTION AND DISCHARGE; DEFEASANCE
We may be discharged from our obligations on the debt securities of any
series if we deposit enough money with the trustee to pay all the principal,
interest and any premium due to the stated maturity date or redemption date of
the debt securities.
Each indenture contains a provision that permits us to elect either or both
of the following:
- to be discharged from all of our obligations, subject to limited
exceptions, with respect to any series of debt securities then
outstanding; and
- to be released from our obligations under the following covenants and from
the consequences of an event of default resulting from a breach of these
and a number of other covenants:
(1) the limitations on sale and lease-back transactions under the senior
indenture;
(2) the limitations on liens under the senior indenture;
(3) covenants as to payment of taxes and maintenance of properties; and
(4) the subordination provisions under the subordinated indenture.
To make either of the above elections, we must deposit in trust with the
trustee enough money to pay in full the principal, interest and premium on the
debt securities. This amount may be made in cash and/or U.S. government
obligations. As a condition to either of the above elections, we must deliver to
the trustee an opinion of counsel that the holders of the debt securities will
not recognize income, gain or loss for United States federal income tax purposes
as a result of the action.
If any of the above events occur, the holders of the debt securities of the
series will not be entitled to the benefits of the indenture, except for
registration of transfer and exchange of debt securities, replacement of lost,
stolen or mutilated debt securities and, if applicable, conversion and exchange
of debt securities.
NOTICES
Notices to holders will be given by mail to the addresses of the holders in
the security register.
GOVERNING LAW
The indentures and the debt securities will be governed by, and construed
under, the laws of the State of New York, without regard to conflicts of laws
principles.
REGARDING THE TRUSTEE
The indentures limit the right of the trustee, if it becomes our creditor,
to obtain payment of claims or secure its claims.
The trustee is permitted to engage in certain other transactions. If the
trustee acquires any conflicting interest, however, and there is a default under
the debt securities of any series for which they are trustee, the trustee must
eliminate the conflict or resign. J.P. Morgan Trust Company, National
Association is also
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our depositary and affiliates of J.P. Morgan Trust Company, National
Association, have performed and continue to perform other services for us in the
normal course of business.
SENIOR DEBT SECURITIES
The senior debt securities will be unsecured, unless we elect otherwise, and
will rank equally with all of our other unsecured and non-subordinated senior
debt.
COVENANTS IN THE SENIOR INDENTURE
LIMITATIONS ON LIENS. Neither we nor any restricted subsidiary will issue,
incur, create, assume or guarantee any secured debt without securing the senior
debt securities equally and ratably with or prior to that secured debt unless
the total amount of all secured debt with which the senior debt securities are
not at least equally and ratably secured would not exceed the greater of
$500 million or 10% of our consolidated net tangible assets.
LIMITATIONS ON SALE AND LEASE-BACK TRANSACTIONS. Subject to the last
paragraph of this section, neither we nor any restricted subsidiary will enter
into any lease with a term longer than three years covering any of our principal
property or any restricted subsidiary that is sold to any other person in
connection with that lease unless either:
(1) we or any restricted subsidiary would be entitled to incur indebtedness
secured by a mortgage on the principal property involved in such
transaction at least equal in amount to the attributable debt with
respect to the lease, without equally and ratably securing the senior
debt securities, pursuant to "Limitation on Liens" described above; or
(2) an amount equal to the greater of the following amounts is applied
within 180 days of such sale to the retirement of our or any restricted
subsidiary's long-term debt or the purchase or development of comparable
property:
- the net proceeds from the sale; or
- the attributable debt with respect to the sale and lease-back
transaction.
However, either we or our restricted subsidiaries would be able to enter
into a sale and lease-back transaction without being required to apply the net
proceeds as required by (2) above if the sum of the following amounts would not
exceed the greater of $500 million or 10% of our consolidated net tangible
assets:
- the total amount of the sale and lease-back transactions; and
- the total amount of secured debt.
DEFINITIONS RELATING TO THE SENIOR DEBT SECURITIES
"attributable debt" with regard to a sale and lease-back transaction means
the lesser of:
(1) the fair market value of such property as determined in good faith
by our board of directors; or
(2) discounted present value of all net rentals under the lease.
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"consolidated net tangible assets" means total assets, less reserves, after
deducting:
(1) total current liabilities, excluding:
- notes and loans payable;
- current maturities of long-term debt;
- current maturities of capital leases; and
(2) certain intangible assets, to the extent included in total assets.
"mortgage" means a mortgage, security interest, pledge, lien, charge or
other encumbrance.
"nonrecourse obligation" means indebtedness substantially related to:
- the acquisition of assets not previously owned by us or any restricted
subsidiary; or
- the financing of any project involving the development of our or any of
our restricted subsidiaries' property in which the only recourse is to the
assets acquired with the proceeds of the transaction or the project
financed with the proceeds of the transaction.
"principal property" means the land, improvements, buildings and fixtures
owned by us or a restricted subsidiary located in the United States that
constitutes our principal corporate office, any manufacturing plant or any
manufacturing facility and has a book value in excess of .75% of our
consolidated net tangible assets as of the determination date. Principal
property does not include any property that our board of directors has
determined not to be of material importance to the business conducted by our
subsidiaries and us, taken as a whole.
"restricted subsidiary" means any subsidiary that owns any principal
property, but does not include:
- any subsidiary primarily engaged in financing receivables or in the
finance business; or
- any of our less than 80%-owned subsidiaries if the common stock of the
subsidiary is traded on any national securities exchange or quoted on the
Nasdaq National Market or on the over-the-counter markets.
"secured debt" means any of our debt or any debt of a restricted subsidiary
for borrowed money secured by either a mortgage on any principal property or
stock or indebtedness of a restricted subsidiary. Secured debt does not include:
- mortgages on property existing at the time of acquisition of the property
by us or any subsidiary, whether or not assumed;
- mortgages on property, shares of stock or indebtedness or other assets of
a corporation existing at the time such corporation becomes a restricted
subsidiary;
- mortgages on property, shares of stock or indebtedness or other assets
existing at the time of acquisition by us or by a restricted subsidiary
(including leases);
- mortgages to secure payment of all or any part of the purchase price, or
to secure any debt within 12 months after the acquisition thereof, or in
the case of property, the completion of construction, improvement or
commencement of substantial commercial operation of the property;
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- mortgages to secure indebtedness owing to us or to a restricted
subsidiary;
- mortgages existing at the date of the senior indenture;
- mortgages on property of an entity existing at the time such entity is
merged or consolidated with us or a restricted subsidiary;
- mortgages on property of an entity at the time of a sale or lease of the
properties of such entity as an entirety or substantially as an entirety
to us or a restricted subsidiary;
- mortgages incurred to finance the acquisition or construction of property
secured by mortgages in favor of the United States or a political
subdivision of the United States;
- mortgages for taxes, assessments or other governmental charges not yet due
or payable without penalty that are being contested by us or a restricted
subsidiary, and for which we have adequately reserved;
- mortgages incurred in connection with an asset acquisition or a project
financed with a non-recourse obligation;
- mortgages for materialmen's, mechanics', workmen's, repairmen's,
landlord's mortgages for rent or other similar mortgages arising in the
ordinary course of business in respect of obligations which are not
overdue or which are being contested by us or any restricted subsidiary in
good faith and by appropriate proceedings;
- mortgages consisting of zoning restrictions, licenses, easements and
restrictions on the use of real property and minor irregularities that do
not materially impair the use of the real property; or
- mortgages constituting any extension, renewal or replacement of any
mortgage listed above to the extent the mortgage is not increased.
SUBORDINATED DEBT SECURITIES
The subordinated debt securities are subordinated in right of payment to the
prior payment in full of all senior debt, including any senior debt securities.
In the event of our dissolution, winding up, liquidation or reorganization, the
holders of senior debt shall be entitled to receive payment in full before
holders of subordinated debt securities shall be entitled to receive any payment
or distribution on any subordinated debt securities.
In the event of insolvency, upon any distribution of our assets:
- holders of subordinated debt securities are required to pay over their
share of such distribution to the trustee in bankruptcy, receiver or other
person distributing our assets to pay all senior debt remaining to the
extent necessary to pay all holders of senior debt in full; and
- our unsecured creditors who are not holders of subordinated debt
securities or holders of senior debt may recover less, ratably, than
holders of senior debt and may recover more, ratably, than the holders of
subordinated debt securities.
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DEFINITIONS RELATING TO SUBORDINATED DEBT SECURITIES
"senior debt" means the principal, premium, if any, and unpaid interest on:
- our indebtedness for borrowed money;
- our obligations evidenced by bonds, debentures, notes or similar
instruments;
- our obligations under any interest rate swaps, caps, collars, options, and
similar arrangements;
- our obligations under any foreign exchange contract, currency swap
contract, futures contract, currency option contract, or other foreign
currency hedge arrangements;
- our obligations under any credit swaps, caps, floors, collars and similar
arrangements;
- indebtedness incurred, assumed or guaranteed by us in connection with the
acquisition by us or any of our subsidiaries of any business, properties
or assets, except purchase-money indebtedness classified as accounts
payable under generally accepted accounting principles;
- our obligations as lessee under leases required to be capitalized on the
balance sheet in conformity with generally accepted accounting principles;
- all obligations under any lease or related document, including a purchase
agreement, in connection with the lease of real property which provides
that we are contractually obligated to purchase or cause a third party to
purchase the leased property and thereby guarantee a minimum residual
value of the leased property to the lessor and our obligations under such
lease or related document to purchase or to cause a third party to
purchase such leased property;
- our reimbursement obligations in respect of letters of credit relating to
indebtedness or our other obligations that qualify as indebtedness or
obligations of the kind referred to above; and
- our obligations under direct or indirect guaranties in respect of, and
obligations to purchase or otherwise acquire, or otherwise to assure a
creditor against loss in respect of, indebtedness or obligations of others
of the kinds referred to above.
However, senior debt shall not include (i) any indebtedness or obligation
that provides that such indebtedness or obligation is not superior in right of
payment to the subordinated debt securities or provides that such indebtedness
is subordinate to our other indebtedness and obligations and (ii) indebtedness
related to our Liquid Yield Option-TM- Notes due 2017.
The subordinated debt securities are effectively subordinated to all
existing and future liabilities of our subsidiaries. Any right we have to
participate in any distribution of the assets of any of our subsidiaries upon
their liquidation, reorganization or insolvency, and the consequent right of
holders of senior debt securities to participate in those assets, will be
subject to the claims of the creditors of such subsidiary. In addition, any
claim we may have as a creditor would still be subordinate to any security
interest in the assets of such subsidiary and any indebtedness of such
subsidiary senior to that held by us.
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DESCRIPTION OF COMMON STOCK
Our certificate of incorporation authorizes us to issue up to 9,600,000,000
shares of common stock, par value $0.01 per share. As of January 28, 2002 there
were approximately 1,941,391,000 shares of common stock outstanding.
The holders of common stock as of the applicable record date are entitled to
one vote per share on all matters to be voted upon by the stockholders. The
holders of common stock have cumulative voting rights for the election of our
directors in accordance with our bylaws and Delaware law. Subject to preferences
applicable to any outstanding preferred stock, the holders of common stock are
entitled to receive ratably such dividends as may be declared from time to time
by the board of directors out of funds legally available for distribution, and,
in the event of our liquidation, dissolution or winding up, the holders of
common stock are entitled to share in all assets remaining after payment of
liabilities. The common stock has no preemptive or conversion rights and is not
subject to further calls or assessments by us. There are no redemption or
sinking fund provisions available to the common stock. The common stock
currently outstanding is validly issued, fully paid and nonassessable.
See "Description of Preferred Stock--Shareowner Rights Plan; Preferred Stock
Rights Agreement" for information regarding the rights that currently attach to
each outstanding share of our common stock.
The transfer agent and registrar for the common stock is Computershare
Investor Services.
ANTI-TAKEOVER EFFECTS OF DELAWARE LAW
We are subject to the provisions of Section 203 of the Delaware General
Corporation Law, which, subject to certain exceptions, prohibits a Delaware
corporation from engaging in any business combination with any interested
stockholder for a period of three years following the time that such stockholder
became an interested stockholder, unless:
(1) prior to such time, the board of directors of the corporation approved
either the business combination or the transaction that resulted in the
stockholder's becoming an interested stockholder;
(2) upon consummation of the transaction that resulted in the stockholder's
becoming an interested stockholder, the interested stockholder owned at
least 85% of the voting stock of the corporation outstanding at the time
the transaction commenced, excluding for purposes of determining the
number of shares outstanding those shares owned:
- by persons who are directors and also officers; and
- by employee stock plans in which employee participants do not have the
right to determine confidentially whether shares held subject to the
plan will be tendered in a tender or exchange offer; or
(3) at or subsequent to such time the business combination is approved by
the board of directors and authorized at an annual or special meeting of
the stockholders, and not by written consent, by the affirmative vote of
at least 66 2/3% of the outstanding voting stock that is not owned by
the interested stockholder.
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Section 203 defines "business combination" to include:
(1) any merger or consolidation involving the corporation and the interested
stockholder;
(2) any sale, transfer, pledge or other disposition of 10% or more of the
assets of the corporation involving the interested stockholder;
(3) subject to certain exceptions, any transaction that results in the
issuance or transfer by the corporation of any stock of the corporation
to the interested stockholder;
(4) any transaction involving the corporation that has the effect of
increasing the proportionate share of the stock of any class or series
of the corporation beneficially owned by the interested stockholder; or
(5) the receipt by the interested stockholder of the benefit of any loans,
advances, guarantees, pledges or other financial benefits provided by or
through the corporation.
In general, Section 203 defines an "interested stockholder" as any entity or
person who or which beneficially owns (or within three years did own) 15% or
more of the outstanding voting stock of the corporation and any entity or person
affiliated with or controlling or controlled by such entity or person.
The existence of this provision would be expected to have an anti-takeover
effect with respect to transactions not approved in advance by our board of
directors, including discouraging attempts that might result in a premium over
the market price for the shares of common stock held by stockholders.
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DESCRIPTION OF PREFERRED STOCK
GENERAL
Our certificate of incorporation authorizes us to issue up to 300,000,000
shares of preferred stock, par value $0.01 per share, in one or more series. As
of the date of this prospectus, we did not have any outstanding shares of
preferred stock or options to purchase preferred stock. Our board of directors,
however, has the authority without stockholder consent, subject to certain
limitations imposed by law or our bylaws, to issue one or more series of
preferred stock at any time. The certificate of designation relating to each
series will fix the rights, preferences and restrictions of the preferred stock
of each series. A prospectus supplement relating to each such series will
specify the terms of the preferred stock as determined by our board of
directors, including the following:
- the number of shares in any series;
- the designation for any series by number, letter or title that shall
distinguish the series from any other series of preferred stock;
- the dividend rate and whether dividends on that series of preferred stock
will be cumulative, noncumulative or partially cumulative;
- the voting rights of that series of preferred stock, if any;
- any conversion provisions applicable to that series of preferred stock;
- any redemption or sinking fund provisions applicable to that series of
preferred stock including whether there is any restriction on the
repurchase or redemption of the preferred stock while there is any
arrearage in the payment of dividends or sinking fund installments;
- the liquidation preference per share of that series of preferred stock, if
any; and
- the terms of any other preferences or rights, if any, applicable to that
series of preferred stock.
We will describe the specific terms of a particular series of preferred
stock in the prospectus supplement relating to that series. The description of
preferred stock above and the description of the terms of a particular series of
preferred stock in the related prospectus supplement will not be complete. You
should refer to the certificate of designation for complete information. The
prospectus supplement will also contain a description of certain U.S. federal
income tax consequences relating to the preferred stock.
Although it has no present intention to do so, our board of directors,
without stockholder approval, may issue preferred stock with voting and
conversion rights, which could adversely affect the voting power of the holders
of common stock. If we issue preferred stock, it may have the effect of
delaying, deferring or preventing a change of control.
SHAREOWNER RIGHTS PLAN; PREFERRED STOCK RIGHTS AGREEMENT
The following summary of the principal terms of the rights and the Preferred
Stock Rights Agreement, referred to as the rights agreement, is a general
description only and is subject to the detailed terms and conditions of the
rights agreement. A copy of the rights agreement is attached as Exhibit 4.1 to
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our registration statement on Form 8-A filed with the SEC on September 4, 2001
and incorporated by reference in this registration statement.
On August 31, 2001, our board of directors declared a dividend distribution
of one right for each outstanding share of our common stock to our shareowners
of record at the close of business on September 17, 2001. Each right is subject
to the terms of the rights agreement. The rights agreement provides that each
share of our outstanding common stock will have the right to purchase one
one-thousandth of a share of our Series A Participating Preferred Stock at an
exercise price of $180.00, subject to adjustment.
The rights under the rights agreement currently are attached to and trade
only together with outstanding certificates representing our common stock. The
rights will separate from our common stock and be represented by separate and
distinct certificates approximately ten days after someone acquires or commences
a tender offer for 15% or more of our outstanding common stock.
After the rights separate from our common stock, certificates representing
the rights will be mailed to record holders of our common stock. Once
distributed, the rights certificates alone will represent the rights.
All shares of our common stock issued prior to the date the rights separate
from the common stock will be issued with the rights attached. The rights are
not exercisable until the date the rights separate from the common stock. The
rights will expire on September 17, 2011 unless earlier redeemed or exchanged by
us.
If an acquiror, which could be a person or group, obtains, or commences a
tender or exchange offer to obtain, 15% or more of our common stock, then each
right will entitle the holder to purchase a number of shares of our common stock
having a then current market value equal to two times the exercise price.
Each right will entitle the holder to purchase a number of shares of common
stock of the acquiring entity having a then current market value of twice the
purchase price if an acquiror obtains 15% or more of our common stock and any of
the following occurs:
- HP merges into another entity;
- an acquiring entity merges into HP; or
- HP sells more than 50% of its assets or earning power.
Under the rights agreement, any rights that are or were owned by an acquiror
or its affiliates of more than 15% of our outstanding common stock will be null
and void.
The rights agreement provides that after an acquiror obtains 15% or more of
outstanding HP common stock, but less than 50% of outstanding HP common stock,
our board of directors may, at its option, exchange all or part of the then
outstanding and exercisable rights for HP common stock, other than rights owned
by the acquiror or its affiliates. In such an event, the exchange ratio is one
common share per right, adjusted to reflect any stock split, stock dividend or
similar transaction.
At its option, our board of directors may redeem all of the outstanding
rights under the rights agreement at any time on or prior to the close of
business on the earlier of:
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- the fifth day following the time that an acquiror obtains 15% or more of
outstanding HP common stock or such later date as may be determined by a
majority of the board and publicly announced by us; or
- September 17, 2011.
The redemption price under the rights agreement is $0.001 per right. The
right to exercise the rights will terminate upon the action of our board of
directors ordering the redemption of the rights and the only right of the
holders of the rights will be to receive the redemption price.
Holders of rights will have no rights as HP shareowners, including without
limitation the right to vote or receive dividends, simply by virtue of holding
the rights.
The provisions of the rights agreement may be amended by the board of
directors prior to the date ten days after any person acquires 15% or more of HP
common stock without approval of the holders of the rights. However, after the
date any person acquires 15% or more of HP common stock, the rights agreement
may not be amended in any manner which would adversely affect the interests of
the holders of the rights, excluding any interests of the acquiror.
The rights issued under the rights agreement are designed to protect and
maximize the value of the outstanding equity interests in HP in the event of an
unsolicited attempt by an acquiror to take over HP in a manner or on terms that
are not approved by our board of directors. The rights are designed to deter
unfair tactics, including a gradual accumulation of shares in the open market of
a 15% or greater position, followed by a merger or a partial or two-tier tender
offer that does not treat all HP shareowners equally.
Subject to the restrictions described above, the rights may be redeemed by
us at $0.001 per right at any time prior to the time the rights separate from HP
common stock. Accordingly, the rights should not interfere with any merger or
business combination approved by our board of directors. The rights are not
intended to prevent a takeover of HP. However, the rights may have the effect of
rendering more difficult or discouraging an acquisition of HP deemed undesirable
by our board of directors. The rights will cause substantial dilution to a
person or group that attempts to acquire HP on terms or in a manner not approved
by our board of directors, except pursuant to an offer conditioned upon
redemption of the rights.
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DESCRIPTION OF THE DEPOSITARY SHARES
At our option, we may elect to offer fractional shares of preferred stock,
rather than full shares of preferred stock. If we do, we will issue to the
public receipts for depositary shares and each of these depositary shares will
represent a fraction, to be set forth in the prospectus supplement, of a share
of a particular series of preferred stock. Each owner of a depositary share will
be entitled, in proportion to the applicable fractional interest in shares of
preferred stock underlying that depositary share, to all rights and preferences
of the preferred stock underlying that depositary share. Those rights include
dividend, voting, redemption and liquidation rights.
The shares of preferred stock underlying the depositary shares will be
deposited with a bank or trust company selected by us to act as depositary,
under a deposit agreement between us, the depositary and the holders of the
depositary receipts. The depositary will be the transfer agent, registrar and
dividend disbursing agent for the depositary shares.
Depositary receipts issued pursuant to the depositary agreement will
evidence the depositary shares. Holders of depositary receipts agree to be bound
by the deposit agreement, which requires holders to take certain actions such as
filing proof of residence and paying certain charges.
The summary of terms of the depositary shares contained in this prospectus
is not complete. You should refer to the forms of the deposit agreement, our
certificate of incorporation and the certificate of amendment for the applicable
series of preferred stock that are, or will be, filed with the Securities and
Exchange Commission.
DIVIDENDS
The depositary will distribute all cash dividends or other cash
distributions received in respect of the series of preferred stock underlying
the depositary shares to the record holders of depositary receipts in proportion
to the number of depositary shares owned by those holders on the relevant record
date, which will be the same date as the record date for the preferred stock.
In the event of a distribution other than in cash, the depositary will
distribute property received by it to the record holders of depositary receipts
that are entitled to receive the distribution, unless the depositary determines
that it is not feasible to make the distribution. If this occurs, the
depositary, with our approval, may adopt another method for the distribution,
including selling the property and distributing the net proceeds to the holders.
LIQUIDATION PREFERENCE
In the event of our voluntary or involuntary liquidation, dissolution or
winding up, the holders of each depositary share will be entitled to receive the
fraction of the liquidation preference accorded each share of the applicable
series of preferred stock, as set forth in the applicable prospectus supplement.
REDEMPTION
If a series of preferred stock underlying the depositary shares is subject
to redemption, the depositary shares will be redeemed from the proceeds received
by the depositary resulting from the redemption, in whole or in part, of
preferred stock held by the depositary. Whenever we redeem any preferred stock
held by the depositary, the depositary will redeem, as of the same redemption
date, the number of depositary shares representing the preferred stock so
redeemed. The depositary will mail the notice of redemption to the record
holders of the depositary receipts promptly upon receiving the notice from us
and not fewer
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than 35 nor more than 60 days, unless otherwise provided in the applicable
prospectus supplement, prior to the date fixed for redemption of the preferred
stock and the depositary shares.
VOTING
Upon receipt of notice of any meeting at which the holders of preferred
stock are entitled to vote, the depositary will mail the information contained
in the notice of meeting to the record holders of the depositary receipts
underlying the preferred stock. Each record holder of those depositary receipts
on the record date will be entitled to instruct the depositary as to the
exercise of the voting rights pertaining to the amount of preferred stock
underlying that holder's depositary shares. The record date for the depositary
will be the same date as the record date for the preferred stock. The depositary
will try, as far as practicable, to vote the preferred stock underlying the
depositary shares in accordance with such instructions, and we will agree to
take all action which may be deemed necessary by the depositary in order to
enable the depositary to do so. The depositary will not vote the preferred stock
to the extent that it does not receive specific instructions from the holders of
depositary receipts.
WITHDRAWAL OF PREFERRED STOCK
Owners of depositary shares are entitled, upon surrender of depositary
receipts at the principal office of the depositary and payment of any unpaid
amount due to the depositary, to receive the number of whole shares of preferred
stock underlying the depositary shares. Partial shares of preferred stock will
not be issued. Holders of preferred stock will not be entitled to deposit the
shares under the deposit agreement or to receive depositary receipts evidencing
depositary shares for the preferred stock.
AMENDMENT AND TERMINATION OF DEPOSIT AGREEMENT
The form of depositary receipt evidencing the depositary shares and any
provision of the deposit agreement may be amended at any time and from time to
time by agreement between us and the depositary. However, any amendment which
materially and adversely alters the rights of the holders of depositary shares,
other than fee changes, will not be effective unless the amendment has been
approved by at least a majority of the depositary shares then outstanding. The
deposit agreement may be terminated by the depositary or us only if:
- all outstanding depositary shares have been redeemed; or
- there has been a final distribution in respect of the preferred stock in
connection with our dissolution and such distribution has been made to all
the holders of depositary shares.
CHARGES OF DEPOSITARY
We will pay all transfer and other taxes and governmental charges arising
solely from the existence of the depositary arrangements. We will also pay
charges of the depositary in connection with the initial deposit of the
preferred stock and the initial issuance of the depositary shares, any
redemption of the preferred stock and all withdrawals of preferred stock by
owners of depositary shares. Holders of depositary receipts will pay transfer,
income and other taxes and governmental charges and other specified charges as
provided in the deposit agreement to be for their accounts. The depositary may
refuse to transfer depositary shares, withhold dividends and distributions and
sell the depositary shares evidenced by the depositary receipt if the charges
are not paid.
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MISCELLANEOUS
The depositary will forward to the holders of depositary receipts all
reports and communications we deliver to the depositary that we are required to
furnish to the holders of the preferred stock. In addition, the depositary will
make available for inspection by holders of depositary receipts at the principal
office of the depositary, and at such other places as it may from time to time
deem advisable, any reports and communications we deliver to the depositary as
the holder of preferred stock.
Neither the depositary nor we will be liable if either of us is prevented or
delayed by law or any circumstance beyond our control in performing our
respective obligations under the deposit agreement. Our obligations and those of
the depositary will be limited to performance in good faith of our respective
duties under the deposit agreement. Neither the depositary nor we will be
obligated to prosecute or defend any legal proceeding in respect of any
depositary shares or preferred stock unless satisfactory indemnity is furnished.
We and the depositary may rely on written advice of counsel or accountants, on
information provided by holders of depositary receipts or other persons believed
in good faith to be competent to give such information and on documents believed
to be genuine and to have been signed or presented by the proper party or
parties.
RESIGNATION AND REMOVAL OF DEPOSITARY
The depositary may resign at any time by delivering a notice to us of its
election to do so. We may remove the depositary at any time. Any such
resignation or removal will take effect upon the appointment of a successor
depositary and its acceptance of such appointment. The successor depositary must
be appointed within 60 days after delivery of the notice for resignation or
removal and must be a bank or trust company having its principal office in the
United States of America and having a combined capital and surplus of at least
$150,000,000.
FEDERAL INCOME TAX CONSEQUENCES
Owners of the depositary shares will be treated for United States federal
income tax purposes as if they were owners of the preferred stock underlying the
depositary shares. As a result, owners will be entitled to take into account for
United States federal income tax purposes, income and deductions to which they
would be entitled if they were holders of such preferred stock. No gain or loss
will be recognized for United States federal income tax purposes upon the
withdrawal of preferred stock in exchange for depositary shares. The tax basis
of each share of preferred stock to an exchanging owner of depositary shares
will be, upon such exchange, the same as the aggregate tax basis of the
depositary shares exchanged. The holding period for preferred stock in the hands
of an exchanging owner of depositary shares will include the period during which
such person owned such depositary shares.
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DESCRIPTION OF THE WARRANTS
GENERAL
We may issue warrants for the purchase of debt securities, preferred stock
or common stock. Warrants may be issued independently or together with debt
securities, preferred stock or common stock and may be attached to or separate
from any offered securities. Each series of warrants will be issued under a
separate warrant agreement to be entered into between us and a bank or trust
company, as warrant agent. The warrant agent will act solely as our agent in
connection with the warrants and will not have any obligation or relationship of
agency or trust for or with any holders or beneficial owners of warrants.
This summary of certain provisions of the warrants is not complete. For the
complete terms of the warrant agreement, you should refer to the provisions of
the warrant agreement that will be filed with the Securities and Exchange
Commission in connection with the offering of warrants.
DEBT WARRANTS
The prospectus supplement relating to a particular issue of warrants to
issue debt securities will describe the terms of the debt warrants, including
the following:
- the title of the debt warrants;
- the offering price for the debt warrants, if any;
- the aggregate number of the debt warrants;
- the designation and terms of the debt securities purchasable upon exercise
of the debt warrants;
- if applicable, the designation and terms of the debt securities that the
debt warrants are issued with and the number of debt warrants issued with
each debt security;
- if applicable, the date from and after which the debt warrants and any
debt securities issued with them will be separately transferable;
- the principal amount of debt securities that may be purchased upon
exercise of a debt warrant and the price at which the debt securities may
be purchased upon exercise, which may be payable in cash, securities or
other property;
- the dates on which the right to exercise the debt warrants will commence
and expire;
- if applicable, the minimum or maximum amount of the debt warrants that may
be exercised at any one time;
- whether the debt warrants represented by the debt warrant certificates or
debt securities that may be issued upon exercise of the debt warrants will
be issued in registered or bearer form;
- information with respect to book-entry procedures, if any;
- the currency or currency units in which the offering price, if any, and
the exercise price are payable;
-27-
- if applicable, a discussion of material United States federal income tax
considerations;
- the antidilution provisions of the debt warrants, if any;
- the redemption or call provisions, if any, applicable to the debt
warrants; and
- any additional terms of the debt warrants, including terms, procedures and
limitations relating to the exchange and exercise of the debt warrants.
STOCK WARRANTS
The prospectus supplement relating to a particular issue of warrants to
issue our common stock or preferred stock will describe the terms of the
warrants, including the following:
- the title of the warrants;
- the offering price for the warrants, if any;
- the aggregate number of the warrants;
- the designation and terms of the common stock or preferred stock that may
be purchased upon exercise of the warrants;
- if applicable, the designation and terms of the securities with which the
warrants are issued and the number of warrants issued with each security;
- if applicable, the date from and after which the warrants and any
securities issued with the warrants will be separately transferable;
- the number of shares of common stock or preferred stock that may be
purchased upon exercise of a warrant and the price at which such shares
may be purchased upon exercise;
- the dates on which the right to exercise the warrants shall commence and
expire;
- if applicable, the minimum or maximum amount of the warrants that may be
exercised at any one time;
- the currency or currency units in which the offering price, if any, and
the exercise price are payable;
- if applicable, a discussion of material United States federal income tax
considerations;
- the antidilution provisions of the warrants, if any;
- the redemption or call provisions, if any, applicable to the warrants; and
- any additional terms of the warrants, including terms, procedures and
limitations relating to the exchange and exercise of the warrants.
-28-
PLAN OF DISTRIBUTION
We may sell the securities separately or together:
- through one or more underwriters or dealers in a public offering and sale
by them,
- directly to investors, or
- through agents.
We may distribute the securities from time to time:
- in one or more transactions at a fixed price or prices, which may be
changed from time to time,
- at market prices prevailing at the times of sale,
- at prices related to such prevailing market prices, or
- at negotiated prices.
We will describe the method of distribution of the securities in the
prospectus supplement.
We may determine the price or other terms of the securities offered under
this prospectus by use of an electronic auction. We will describe how any
auction will determine the price or any other terms, how potential investors may
participate in the auction and the nature of the underwriters' obligations in
the related supplement to this prospectus.
Underwriters, dealers or agents may receive compensation in the form of
discounts, concessions or commissions from us or our purchasers, as their agents
in connection with the sale of securities. These underwriters, dealers or agents
may be considered to be underwriters under the Securities Act of 1933, as
amended. As a result, discounts, commissions or profits on resale received by
the underwriters, dealers or agents may be treated as underwriting discounts and
commissions. The prospectus supplement will identify any such underwriter,
dealer or agent and describe any compensation received by them from us. Any
initial public offering price and any discounts or concessions allowed or
reallowed or paid to dealers may be changed from time to time.
Underwriters, dealers and agents may be entitled to indemnification by us
against certain civil liabilities, including liabilities under the Securities
Act, or to contribution with respect to payments made by the underwriters,
dealers or agents, under agreements between us and the underwriters, dealers and
agents.
We may grant underwriters who participate in the distribution of securities
an option to purchase additional securities to cover over-allotments, if any, in
connection with the distribution.
All debt securities will be new issues of securities with no established
trading market. Underwriters involved in the public offering and sale of debt
securities may make a market in the debt securities. However, they are not
obligated to make a market and may discontinue market-making activity at any
time. No assurance can be given as to the liquidity of the trading market for
any debt securities.
Underwriters or agents and their associates may be customers of, engage in
transactions with or perform services for us in the ordinary course of business.
-29-
LEGAL MATTERS
Wilson Sonsini Goodrich & Rosati, Professional Corporation, Palo Alto,
California, will pass upon the validity of the issuance of the securities
offered by this prospectus for us.
EXPERTS
Our consolidated financial statements and schedule at October 31, 2001 and
2000 and for the years then ended, appearing in our Annual Report on Form 10-K,
as amended January 30, 2002, for the year ended October 31, 2001, have been
audited by Ernst &Young LLP, independent auditors, as set forth in their report
thereon included therein and incorporated herein by reference. Such consolidated
financial statements and schedule are incorporated herein by reference in
reliance upon such report given on the authority of such firm as experts in
accounting and auditing.
Our consolidated financial statements and schedule for the year ended
October 31, 1999 incorporated in this prospectus by reference to the Annual
Report on Form 10-K, as amended January 30, 2002, for the year ended
October 31, 2001, have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
The consolidated financial statements and schedule of Compaq Computer
Corporation at December 31, 2001 and 2000 and for each of the two years in the
period ended December 31, 2001, appearing in our Current Report on Form 8-K
dated February 14, 2002, have been audited by Ernst & Young LLP, independent
auditors, as set forth in their reports thereon included therein and
incorporated herein by reference. Such consolidated financial statements and
schedule are incorporated herein by reference in reliance upon such reports
given on the authority of such firm as experts in accounting and auditing.
The consolidated financial statements and schedule of Compaq Computer
Corporation for the year ended December 31, 1999 incorporated in this prospectus
by reference to Hewlett-Packard Company's Current Report on Form 8-K dated
February 14, 2002, have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
-30-
THE COMPANY
HEWLETT-PACKARD COMPANY
3000 HANOVER STREET
PALO ALTO, CA 94304
TRUSTEE, REGISTRAR AND
PAYING AGENT
J.P. MORGAN TRUST COMPANY,
NATIONAL ASSOCIATION
101 CALIFORNIA STREET
SUITE 3800
SAN FRANCISCO, CA 94111
LUXEMBOURG LISTING AGENT
DEXIA BANQUE INTERNATIONALE A LUXEMBOURG
69, ROUTE D'ESCH
L-2953 LUXEMBOURG
LUXEMBOURG PAYING AGENT
J.P. MORGAN BANK LUXEMBOURG S.A.
5 RUE PLAETIS
LUXEMBOURG, L-2338
LUXEMBOURG
LEGAL ADVISORS
TO THE COMPANY: TO THE UNDERWRITERS:
WILSON SONSINI GOODRICH & ROSATI CRAVATH, SWAINE & MOORE
650 PAGE MILL ROAD WORLDWIDE PLAZA
PALO ALTO, CALIFORNIA 94304-1050 825 EIGHTH AVENUE
NEW YORK, NEW YORK 10019
INDEPENDENT AUDITORS FOR THE COMPANY
ERNST & YOUNG LLP
303 ALMADEN BOULEVARD
SAN JOSE, CALIFORNIA 95110
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$1,500,000,000
[LOGO]
$1,000,000,000 5.50% Global Notes due July 1, 2007
$500,000,000 6.50% Global Notes due July 1, 2012
---------------------------
PROSPECTUS SUPPLEMENT
JUNE 21, 2002
--------------------------------
JOINT BOOK-RUNNERS
Banc of America Securities LLC
Deutsche Bank Securities
JPMorgan
------------------
Scotia Capital
ABN AMRO Incorporated
BNP PARIBAS
Commerzbank Securities
Credit Suisse First Boston
HSBC
Salomon Smith Barney
Wachovia Securities
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