What changed in this filing

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Item 1. Financial Statements

2022-03-07 compared with 2021-09-03 · 293 added, 600 removed, 728 unchanged (55% of the section changed)

Financial Statements and Supplementary Data.

Consolidated Condensed Statements of Earnings for the three and nine months ended July 3 1 , 2021 and 2020 (Unaudited)

Consolidated Condensed Statements of Comprehensive Income for the three and nine months ended July 3 1 , 2021 and 2020 (Unaudited)

Consolidated Condensed Balance Sheets as of July 3 1 , 2021 and as of October 31, 2020 (Unaudited)

Consolidated Condensed Statements of Cash Flows for the nine months ended July 3 1 , 2021 and 2020 (Unaudited)

Consolidated Condensed Statements of Earnings for the three months ended J an u ary 31, 202 2 and 202 1 (Unaudited)

Consolidated Condensed Statements of Comprehensive Income for the three months ended J anuary 31, 202 2 and 202 1 (Unaudited)

Consolidated Condensed Balance Sheets as of J anua ry 31, 202 2 and October 31, 202 1 (Unaudited)

Consolidated Condensed Statements of Cash Flows for the three months ended J an uary 31, 202 2 and 202 1 (Unaudited)

Consolidated Condensed Statements of Stockholders’ Deficit (Unaudited)

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Consolidated Condensed Statements of Earnings

Three months ended July 31 Nine months ended July 31

2021 2020 2021 2020

Three months ended January 31

In millions, except per share amounts

22 unchanged sentences

Consolidated Condensed Statements of Comprehensive Income

Three months ended July 31 Nine months ended July 31

2021 2020 2021 2020

Three months ended January 31

Net earnings $ 1,086 $ 1,068

1 unchanged sentence

Change in unrealized components of available-for-sale debt securities:

Unrealized gains arising during the period 1 2 5 1

Unrealized (loss) gains arising during the period ( 2 ) 4

Change in unrealized components of cash flow hedges:

Unrealized gains (losses) arising during the period 299 ( 366 )

Losses (gains) reclassified into earnings 64 ( 130 ) 262 ( 242 )

197 ( 693 ) 8 ( 514 )

(Gains) losses reclassified into earnings ( 44 ) 49

Change in unrealized components of defined benefit plans:

(Losses) gains arising during the period ( 1 ) ( 5 ) 40 ( 6 )

Gains (losses) arising during the period 21 ( 1 )

Amortization of actuarial loss and prior service benefit 6 21

8 unchanged sentences

Consolidated Condensed Balance Sheets

July 31, 2021 October 31, 2020

January 31, 2022 October 31, 2021

In millions, except par value

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Common stock, $ 0.01 par value ( 9,600 shares authorized;

1,153 and 1,304 shares issued and outstanding at July 31, 2021 and October 31, 2020, respectively)

1,060 and 1,092 shares issued and outstanding at January 31, 2022 and October 31, 2021, respectively)

Additional paid-in capital 1,046 1,060

6 unchanged sentences

Consolidated Condensed Statements of Cash Flows

Nine months ended July 31

Three months ended January 31

Cash flows from operating activities:

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Cash flows from investing activities:

Investment in property, plant and equipment ( 410 ) ( 464 )

Proceeds from sale of property, plant and equipment — 3

Investment in property, plant and equipment, net ( 273 ) ( 131 )

Purchases of available-for-sale securities and other investments — ( 1 )

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Cash flows from financing activities:

Payment of short-term borrowings with original maturities less than 90 days, net ( 400 ) —

Proceeds from short-term borrowings with original maturities greater than 90 days 9 6

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Net cash used in financing activities ( 2,282 ) ( 1,723 )

(Decrease) increase in cash and cash equivalents ( 1,425 ) 142

Decrease in cash and cash equivalents ( 905 ) ( 704 )

Cash and cash equivalents at beginning of period 4,299 4,864

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In millions, except number of shares in thousands

Balance April 30, 2020 1,429,957 $ 14 $ 926 $ ( 633 ) $ ( 1,050 ) $ ( 743 )

Net earnings 734 734

Other comprehensive loss, net of taxes ( 555 ) ( 555 )

Comprehensive income 179

Issuance of common stock in connection with employee stock plans and other 2,379 23 23

Repurchases of common stock (Note 10) ( 58,839 ) ( 40 ) ( 961 ) ( 1,001 )

Cash dividends ($ 0.35 per common share)

( 493 ) ( 493 )

Stock-based compensation expense 49 49

Balance July 31, 2020 1,373,497 $ 14 $ 958 $ ( 1,353 ) $ ( 1,605 ) $ ( 1,986 )

Balance April 30, 2021 1,201,255 $ 12 $ 1,018 $ ( 3,070 ) $ ( 1,320 ) $ ( 3,360 )

Net earnings 1,108 1,108

Other comprehensive income, net of taxes 187 187

Comprehensive income 1,295

Issuance of common stock in connection with employee stock plans and other 968 7 7

Repurchases of common stock (Note 10) ( 49,704 ) ( 44 ) ( 1,456 ) ( 1,500 )

Cash dividends ($ 0.39 per common share)

( 453 ) ( 453 )

Stock-based compensation expense 69 69

Balance July 31, 2021 1,152,519 $ 12 $ 1,050 $ ( 3,871 ) $ ( 1,133 ) $ ( 3,942 )

Common Stock Additional

Paid-in Capital Accumulated

Comprehensive Loss Total Stockholders’ Deficit

Number of Shares Par Value Accumulated Deficit

In millions, except number of shares in thousands

Balance October 31, 2020 1,303,927 $ 13 $ 963 $ ( 1,961 ) $ ( 1,243 ) $ ( 2,228 )

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Stock-based compensation expense 115 115

Adjustment for adoption of accounting standards 27 27

Balance July 31, 2020 1,373,497 $ 14 $ 958 $ ( 1,353 ) $ ( 1,605 ) $ ( 1,986 )

Balance January 31, 2021 1,252,532 $ 13 $ 984 $ ( 2,759 ) $ ( 1,473 ) $ ( 3,235 )

Balance October 31, 2021 1,092,205 $ 11 $ 1,060 $ ( 2,461 ) $ ( 260 ) $ ( 1,650 )

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Stock-based compensation expense 133 133

Balance July 31, 2021 1,152,519 $ 12 $ 1,050 $ ( 3,871 ) $ ( 1,133 ) $ ( 3,942 )

Balance January 31, 2022 1,059,900 $ 11 $ 1,046 $ ( 3,369 ) $ ( 16 ) $ ( 2,328 )

The accompanying notes are an integral part of these Consolidated Condensed Financial Statements.

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Actual results may differ materially from those estimates.

As of July 31, 2021, the extent to which the COVID-19 pandemic will impact our business going forward depends on numerous dynamic factors which we cannot reliably predict.

As of January 31, 2022, the extent to which the COVID-19 pandemic will impact our business going forward depends on numerous dynamic factors which we cannot reliably predict.

As a result, many of our estimates and assumptions required increased judgment and may carry a higher degree of variability and volatility.

As the events continue to evolve with respect to the pandemic, our estimates may materially change in future periods.

Separation Transaction

On November 1, 2015, Hewlett-Packard Company completed the separation of Hewlett Packard Enterprise Company (“Hewlett Packard Enterprise”), Hewlett-Packard Company’s former enterprise technology infrastructure, software, services and financing businesses (the “Separation”).

In connection with the Separation, HP and Hewlett Packard Enterprise entered into a separation and distribution agreement, an employee matters agreement and various other agreements which remain enforceable and provide a framework for the continuing relationships between the parties.

For more information on the impacts of these agreements, see Note 12, “Litigation and Contingencies”.

Recently Adopted Accounting Pronouncements

In June 2016, the FASB issued guidance, which requires credit losses on financial assets measured at amortized cost basis to be presented at the net amount expected to be collected, not based on incurred losses.

Furthermore, credit losses on available-for-sale debt securities should be recorded through an allowance for credit losses limited to the amount by which fair value is below amortized cost.

HP adopted the new credit loss standard as of November 1, 2020 using a modified retrospective approach.

The cumulative effect upon adoption was not material to the consolidated condensed financial statements.

Accounts receivable

HP records allowance for credit losses for the current expected credit losses inherent in the asset over its expected life.

The allowance for credit losses is maintained based on the relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount.

HP records a specific reserve for individual accounts when HP becomes aware of specific customer circumstances, such as in the case of a bankruptcy filing or deterioration in the customer’s operating results or financial position.

If there are additional changes in circumstances related to the specific customer, HP further adjusts estimates of the recoverability of receivables.

HP assesses collectability by pooling receivables where similar risk characteristics exist.

HP maintains an allowance for credit losses for all other customers based on a variety of factors, including the use of third-party credit risk models that generate quantitative measures of default probabilities based on market factors, financial condition of customers, length of time receivables are past due, trends in the weighted-average risk rating for the portfolio, macroeconomic conditions, information derived from competitive benchmarking, significant one-time events, and historical experience.

The past due or delinquency status of a receivable is based on the contractual payment terms of the receivable.

HP has third-party short-term financing arrangements intended to facilitate the working capital requirements of certain customers.

These financing arrangements, which in certain cases provide for partial recourse, result in the transfer of HP’s trade receivables to a third-party.

HP reflects amounts transferred to, but not yet collected from the third-party in Accounts receivable in the Consolidated Condensed Balance Sheets.

For arrangements involving an element of recourse, the fair value of the

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Notes to Consolidated Condensed Financial Statements (Continued)

Basis of Presentation (Continued)

recourse obligation is measured using market data from similar transactions and reported as a current liability in the Consolidated Condensed Balance Sheets.

Debt and Marketable Equity Securities Investments

HP determines the appropriate classification of its investments at the time of purchase and re-evaluates the classifications at each balance sheet date.

Debt and marketable equity securities are generally considered available-for-sale.

All highly liquid investments with maturities of three months or less at the date of purchase are classified as cash equivalents.

Marketable debt securities with maturities of twelve months or less are classified as short-term investments and marketable debt securities with maturities greater than twelve months are classified based on their availability for use in current operations.

Marketable equity securities, including mutual funds, are classified as either short or long-term based on the nature of each security and its availability for use in current operations.

Available-for-sale debt securities are reported at fair value with unrealized gains and losses, net of applicable taxes, in Accumulated other comprehensive loss.

Unrealized gains and losses on equity securities, credit losses and impairments on available-for-sale debt securities are recorded in Consolidated Condensed Statements of Earnings.

Realized gains and losses on available-for-sale securities are calculated at the individual security level and included in Interest and other, net in the Consolidated Condensed Statements of Earnings.

HP monitors its investment portfolio for potential impairment and credit losses on a quarterly basis.

If HP intends to sell a debt security or it is more likely than not that HP will be required to sell the security before recovery, then a decline in fair value below cost is recorded as an impairment charge in Interest and other, net and a new cost basis in the investment is established.

In other cases, if the carrying amount of an investment in debt securities exceeds its fair value and the decline in value is determined to be due to credit related reasons, HP records a credit loss allowance, limited by the amount that fair value is less than the amortized cost basis.

HP recognizes the corresponding charge in Interest and other, net and the remaining unrealized loss, if any, in Accumulated other comprehensive loss in the Consolidated Condensed Balance Sheets.

Factors that HP considers while determining the credit loss allowance includes, but is not limited to, severity and the reason for the decline in value, interest rate changes and counterparty long-term ratings.

In October 2021, the Financial Accounting Standards Board (“FASB”) issued guidance on the recognition and measurement of contract assets and contract liabilities acquired in a business combination.

This guidance requires that an acquirer recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with ASC 606, Revenue from Contracts with Customers, as if the acquirer had originated the contracts.

Under the new guidance, it is generally expected that an acquirer will recognize and measure contract assets and liabilities in a manner consistent with how they were recognized by the acquiree in its preacquisition financial statements.

HP is required to adopt the guidance in the first quarter of fiscal year 2024, with early adoption permitted HP has early adopted the guidance in fiscal year 2022, and the implementation of this guidance did not have a material impact on the Consolidated Condensed Financial Statements.

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Segment Operating Results from Operations and the reconciliation to HP consolidated results were as follows:

Three months ended July 31 Nine months ended July 31

2021 2020 2021 2020

Three months ended January 31

Notebooks $ 8,421 $ 7,366

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Summary of Restructuring Plans

HP’s restructuring activities for the nine months ended July 31, 2021 and 2020 summarized by plan were as follows:

HP’s restructuring activities for the three months ended January 31, 2022 and 2021 summarized by plan were as follows:

Fiscal 2020 Plan

Severance and EER Non-labor Other prior-year Plans Total

Severance and EER Non-labor Other prior-year plan Total

Accrued balance as of October 31, 2021 $ 75 $ — $ — $ 75

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Non-cash and other adjustments — ( 7 ) — ( 7 )

Accrued balance as of July 31, 2021 $ 86 $ — $ — $ 86

Total costs incurred to date as of July 31, 2021 $ 592 $ 45 $ 1,817 $ 2,454

Accrued balance as of January 31, 2022 $ 37 $ — $ — $ 37

Total costs incurred to date as of January 31, 2022 $ 662 $ 59 $ 507 $ 1,228

Reflected in Consolidated Condensed Balance Sheets

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Non-cash and other adjustments 1 ( 8 ) — ( 7 )

Accrued balance as of July 31, 2020 $ 97 $ — $ 16 $ 113

(1) Includes reclassification of liability related to the Enhanced Early Retirement (“EER”) plan of $ 44 million for certain healthcare and medical savings account benefits to pension and post-retirement plans.

HP’s restructuring charges for the three months ended July 31, 2021 summarized by the plans outlined below were as follows:

Fiscal 2020 Plan

Severance and EER Non-labor Total

For the three months ended July 31, 2021 $ 28 $ 20 $ 48

Accrued balance as of January 31, 2021 $ 108 $ — $ 4 $ 112

Fiscal 2020 Plan

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HP estimates that it will incur pre-tax charges of approximately $ 1.0 billion relating to labor and non-labor actions.

HP now expects to incur approximately $ 0.8 billion primarily in labor costs related to workforce reductions and the remaining costs will relate to non-labor actions and other charges.

HP expects to incur approximately $ 0.8 billion primarily in labor costs related to workforce reductions and the remaining costs will relate to non-labor actions and other charges.

Other charges

Other charges include non-recurring costs, including those as a result of information technology rationalization efforts and proxy contest activities, and are distinct from ongoing operational costs.

These costs primarily relate to third-party legal, professional services and other non-recurring costs.

For the three and nine months ended July 31, 2021, HP incurred $ 8 million

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Notes to Consolidated Condensed Financial Statements (Continued)

Restructuring and Other Charges (Continued)

and $ 17 million of other charges, respectively.

For the three and nine months ended July 31, 2020, HP incurred $ 13 million and $ 100 million of other charges, respectively.

Other charges include non-recurring costs, including those as a result of information technology rationalization efforts, and are distinct from ongoing operational costs.

These costs primarily relate to third-party professional services and other non-recurring costs.

For the three months ended January 31, 2022 and 2021, HP incurred $ 1 million and $ 4 million of other charges, respectively.

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The components of HP’s pension and post-retirement benefit (credit) cost recognized in the Consolidated Condensed Statements of Earnings were as follows:

Three months ended July 31

Defined Benefit Plans Non-U.S.

Defined Benefit Plans Post-Retirement Benefit Plans

2021 2020 2021 2020 2021 2020

Service cost $ — $ — $ 16 $ 16 $ — $ —

Interest cost 76 103 5 4 2 3

Expected return on plan assets ( 127 ) ( 175 ) ( 13 ) ( 10 ) ( 5 ) ( 6 )

Amortization and deferrals:

Actuarial loss (gain) 14 16 13 11 ( 4 ) ( 3 )

Prior service benefit — — ( 1 ) ( 1 ) ( 2 ) ( 3 )

Net periodic benefit (credit) cost ( 37 ) ( 56 ) 20 20 ( 9 ) ( 9 )

Settlement loss — 2 — — — —

Total periodic benefit (credit) cost $ ( 37 ) $ ( 54 ) $ 20 $ 20 $ ( 9 ) $ ( 9 )

Nine months ended July 31

Three months ended January 31

Defined Benefit Plans Non-U.S.

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Actuarial loss (gain) 1 15 10 13 ( 4 ) ( 4 )

Prior service benefit — — ( 2 ) ( 2 ) ( 8 ) ( 9 )

Prior service cost (credit) — — 2 — ( 3 ) ( 3 )

Net periodic benefit (credit) cost ( 33 ) ( 36 ) 19 23 ( 7 ) ( 11 )

Settlement loss — 1 — — — —

Special termination benefit cost — — — — — 44

Total periodic benefit (credit) cost $ ( 108 ) $ ( 165 ) $ 65 $ 59 $ ( 30 ) $ 19

Total benefit (credit) cost $ ( 33 ) $ ( 35 ) $ 19 $ 23 $ ( 7 ) $ ( 11 )

Employer Contributions and Funding Policy

HP’s policy is to fund its pension plans so that it makes at least the minimum contribution required by local government, funding and taxing authorities.

HP’s policy is to fund its pension plans so that it makes the minimum contribution required by local government, funding and taxing authorities.

During fiscal year 2022, HP anticipates making contributions of approximately $ 44 million to its non-U.S.

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non-qualified plan participants and approximately $ 4 million to cover benefit claims under HP’s post-retirement benefit plans.

During the nine months ended July 31, 2021, HP contributed $ 50 million to its non-U.S.

pension plans, paid $ 21 million to cover benefit payments to U.S.

non-qualified plan participants and paid $ 3 million to cover benefit claims under HP’s post-retirement benefit plans.

During the three months ended January 31, 2022, HP contributed $ 13 million to its non-U.S.

pension plans and paid $ 8 million to cover benefit payments to U.S.

non-qualified plan participants.

HP’s pension and other post-retirement benefit costs and obligations depend on various assumptions.

Differences between expected and actual returns on investments and changes in discount rates and other actuarial assumptions are reflected as unrecognized gains or losses, and such gains or losses are amortized to earnings in future periods.

A deterioration in the funded status of a plan could result in a need for additional company contributions or an increase in net pension and post-retirement benefit costs in future periods.

A deterioration in the funded status of a plan could result in a need for additional contributions or an increase in net pension and post-retirement benefit costs in future periods.

Actuarial gains or losses are determined at the measurement date and amortized over the remaining service life for active plans or the life expectancy of plan participants for frozen plans.

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Notes to Consolidated Condensed Financial Statements (Continued)

Retirement and Post-Retirement Benefit Plans (Continued)

In August 2021, HP entered into an agreement with The Prudential Insurance Company of America (“Prudential”) to purchase an irrevocable group annuity contract and transfer approximately $ 5.2 billion of the HP Inc.

Pension Plan (“Pension Plan”) obligations, subject to customary closing conditions.

Under the agreement, Prudential will assume responsibility for pension benefits and annuity administration for approximately 41,000 retirees and beneficiaries.

This transaction will not change the amount or timing of monthly retirement benefit payments.

Upon closing this transaction in the fourth quarter of fiscal 2021, HP will record a settlement gain of approximately $ 40 million.

As the transaction will be funded directly by the assets of the Pension Plan, there will be no cash flow impact to HP.

In fiscal 2021, HP entered into an agreement with The Prudential Insurance Company of America (“Prudential”) to purchase an irrevocable group annuity contract and transferred approximately $ 5.2 billion of the Pension Plan obligations resulted in a decrease in interest cost and expected returns on plan assets in the first quarter of fiscal 2022.

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Provision for Taxes

HP’s effective tax rate was 16.5 % and 2.2 % for the three months ended July 31, 2021 and 2020, respectively, and 14.0 % and 11.4 % for the nine months ended July 31, 2021 and 2020, respectively.

HP’s effective tax rate was 18.1 % and 17.5 % for the three months ended January 31, 2022 and 2021, respectively.

The difference between the U.S.

federal statutory tax rate of 21% and HP’s effective tax rate for the three and nine months ended July 31, 2021 was primarily due to tax effects of internal reorganization and by favorable tax rates associated with certain earnings from HP’s operations in lower-tax jurisdictions throughout the world.

For the three and nine months ended July 31, 2020, HP’s effective tax rate differed from the U.S.

federal statutory rate of 21% primarily due to audit settlements in various jurisdictions and favorable tax rates associated with certain earnings from HP’s operations in lower-tax jurisdictions throughout the world.

During the three and nine months ended July 31, 2021, HP recorded $ 21 million and $ 150 million, respectively, of net income tax benefits related to discrete items in the provision for taxes.

These amounts included income tax benefits of $ 9 million and $ 45 million related to restructuring charges and $ 23 million and $ 30 million related to the filing of tax returns in various jurisdictions for the three and nine months ended July 31, 2021, respectively.

The nine months ended July 31, 2021 also included a tax benefit of $ 89 million related to tax effects of internal reorganization and a tax benefit of $ 10 million related to audit settlements in various jurisdictions.

These benefits were partially offset by uncertain tax position charges of $ 13 million and $ 25 million for the three and nine months ended July 31, 2021, respectively.

For the three and nine months ended July 31, 2021, excess tax benefits associated with stock options, restricted stock units and performance-adjusted restricted stock units were immaterial.

During the three and nine months ended July 31, 2020, HP recorded $ 116 million and $ 182 million, respectively, of net tax benefits related to discrete items in the provision for taxes.

These amounts included tax benefits of $ 102 million and $ 143 million related to audit settlements in various jurisdictions, $ 20 million and $ 75 million related to restructuring charges, and $ 4 million and $ 20 million related to acquisition charges for the three and nine months ended July 31, 2020, respectively.

These benefits were partially offset by uncertain tax position charges of $ 3 million and $ 54 million for the three and nine months ended July 31, 2020, respectively.

For the three and nine months ended July 31, 2020, excess tax benefits associated with stock options, restricted stock units and performance-adjusted restricted stock units were immaterial.

federal statutory tax rate of 21% and HP’s effective tax rate for the three months ended January 31, 2022 and 2021, was primarily due to tax effects of favorable tax rates associated with certain earnings from HP’s operations in lower-tax jurisdictions throughout the world.

During the three months ended January 31, 2022, HP recorded $ 26 million of net income tax charges related to discrete items in the provision for taxes.

These amounts included income tax charges of $ 39 million related to withholding taxes on undistributed foreign earnings and were partially offset by income tax benefits of $ 12 million related to restructuring charges for the three months ended January 31, 2022.

In addition to the discrete items mentioned above, HP recorded excess tax benefits of $ 37 million associated with stock options, restricted stock units and performance-adjusted restricted stock units for the three months ended January 31, 2022.

During the three months ended January 31, 2021, discrete items in the provision for taxes and excess tax benefits associated with stock options, restricted stock units and performance-adjusted restricted stock units were immaterial.

Uncertain Tax Positions

As of July 31, 2021, the amount of gross unrecognized tax benefits was $ 822 million, of which up to $ 653 million would affect HP’s effective tax rate if realized.

As of January 31, 2022, the amount of gross unrecognized tax benefits was $ 827 million, of which up to $ 647 million would affect HP’s effective tax rate if realized.

The amount of unrecognized tax benefit changed by a net immaterial amount.

HP recognizes interest income from favorable settlements and interest expense and penalties accrued on unrecognized tax benefits in the provision for taxes in the Consolidated Condensed Statements of Earnings.

As of July 31, 2021 and 2020, HP had accrued $ 70 million and $ 37 million, respectively, for interest and penalties.

As of January 31, 2022 and 2021, HP had accrued $ 75 million and $ 64 million, respectively, for interest and penalties.

HP engages in continuous discussions and negotiations with taxing authorities regarding tax matters in various jurisdictions.

HP expects to complete the resolution of certain tax years with various tax authorities within the next 12 months.

HP believes it is reasonably possible that its existing gross unrecognized tax benefits may be reduced by up to $ 98 million within the next 12 months, affecting HP’s effective tax rate if realized.

HP expects to complete resolution of certain tax years with various tax authorities within the next 12 months.

HP believes it is reasonably possible that its existing gross unrecognized tax benefits may be reduced by $ 117 million within the next 12 months, affecting HP’s effective tax rate if realized.

HP is subject to income tax in the United States and approximately 60 other countries and is subject to routine corporate income tax audits in many of these jurisdictions.

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The allowance for credit losses related to accounts receivable and changes were as follows:

Nine months ended July 31, 2021

Three months ended January 31, 2022

Balance at beginning of period $ 111

Current-period allowance for credit losses 9

Benefit of allowance for credit losses ( 7 )

Deductions, net of recoveries ( 1 )

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For arrangements involving an element of recourse, the recourse obligation is measured using market data from similar transactions and reported as a current liability in the Consolidated Condensed Balance Sheets.

The recourse obligations as of July 31, 2021 and October 31, 2020 were not material.

The costs associated with the sale of trade receivables for the three and nine months ended July 31, 2021 and 2020 were not material.

The recourse obligations as of January 31, 2022 and October 31, 2021 and the costs associated with the sale of trade receivables for the three months ended January 31, 2022 and 2021 were not material.

The following is a summary of the activity under these arrangements:

Three months ended July 31 Nine months ended July 31

2021 2020 2021 2020

Three months ended January 31

Balance at beginning of period (1)

$ 212 $ 124 $ 188 $ 235

Trade receivables sold 2,967 3,544

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Balance at end of period (1)

$ 166 $ 109 $ 166 $ 109

(1) Amounts outstanding from third parties reported in Accounts receivable in the Consolidated Condensed Balance Sheets.

July 31, 2021 October 31, 2020

January 31, 2022 October 31, 2021

Finished goods $ 5,695 $ 4,532

1 unchanged sentence

$ 9,018 $ 7,930

(1) Increase is attributable to strategic buys in Personal Systems.

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Other Current Assets

July 31, 2021 October 31, 2020

January 31, 2022 October 31, 2021

Supplier and other receivables $ 2,441 $ 2,333

4 unchanged sentences

Property, Plant and Equipment, net

July 31, 2021 October 31, 2020

January 31, 2022 October 31, 2021

Land, buildings and leasehold improvements $ 2,169 $ 2,166

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Other Non-Current Assets

July 31, 2021 October 31, 2020

January 31, 2022 October 31, 2021

Deferred tax assets $ 2,886 $ 2,917

Right-of-use assets from operating leases, net 1,174 1,192

Deposits and prepaid 757 337

Prepaid pension asset 804 766

Intangible assets 716 784

Deposits and prepaid 690 734

Other 770 698

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Other Current Liabilities

July 31, 2021 October 31, 2020

January 31, 2022 October 31, 2021

Sales and marketing programs $ 3,187 $ 3,179

Employee compensation and benefit 1,462 1,194

Deferred revenue 1,335 1,208

Other accrued taxes 1,244 1,227

Deferred revenue 1,234 1,277

Employee compensation and benefit 1,103 1,627

Warranty 677 731

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Other Non-Current Liabilities

July 31, 2021 October 31, 2020

Pension, post-retirement, and post-employment liabilities $ 1,342 $ 1,576

January 31, 2022 October 31, 2021

Deferred revenue $ 1,119 $ 1,099

Pension, post-retirement, and post-employment liabilities 993 1,041

Operating lease liabilities 911 936

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Interest and other, net

Three months ended July 31 Nine months ended July 31

2021 2020 2021 2020

Three months ended January 31

Interest expense on borrowings $ ( 61 ) $ ( 63 )

Loss on extinguishment of debt (1)

( 16 ) ( 40 ) ( 16 ) ( 40 )

Other, net 29 38

$ ( 32 ) $ ( 25 )

(1) See Note 9 “Borrowings” for detailed information.

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Net revenue by region

Three months ended July 31 Nine months ended July 31

2021 2020 2021 2020

Three months ended January 31

Americas $ 6,859 $ 6,894

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Value of Remaining Performance Obligations

As of July 31, 2021, the estimated value of transaction price allocated to remaining performance obligations was $ 3.8 billion.

As of January 31, 2022, the estimated value of transaction price allocated to remaining performance obligations was $ 3.7 billion.

HP expects to recognize approximately $ 1.7 billion of the unearned amount in next 12 months and $ 2.0 billion thereafter.

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Contract Liabilities

As of July 31, 2021 and October 31, 2020, HP’s contract liabilities balances were $ 2.4 billion and $ 2.2 billion, respectively, included in Other current liabilities and Other non-current liabilities in the Consolidated Condensed Balance Sheets.

The increase in the contract liabilities balance for the nine months ended July 31, 2021 was primarily driven by sales of fixed-price support and maintenance services, partially offset by $ 0.9 billion of revenue recognized that was included in the contract liabilities balance as of October 31, 2020.

Changes in Variable Consideration

HP reduces the transaction price at the time performance obligations are satisfied for various customer and distributor sales incentive and promotional programs.

During the three months ended July 31, 2021, we recorded an increase to our estimated transaction price for performance obligations satisfied in the prior periods of approximately $ 350 million.

The change in estimate is a result of lower-than-expected marketing incentives due to increasing supply constraints, shifts in customer behavior and the evolving impact of the COVID-19 pandemic.

The changes in estimates recorded during the nine months ended July 31, 2021 and the three and nine months ended July 31, 2020 were immaterial.

As of January 31, 2022 and October 31, 2021, HP’s contract liabilities balances were $ 2.3 billion, respectively, included in Other current liabilities and Other non-current liabilities in the Consolidated Condensed Balance Sheets.

The contract liabilities balance remained flat as of January 31, 2022, driven by sales of fixed-price support and maintenance services, partially offset by $ 0.4 billion of revenue recognized that was included in the contract liabilities balance as of October 31, 2021.

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The following table presents HP’s assets and liabilities that are measured at fair value on a recurring basis:

As of July 31, 2021 As of October 31, 2020

As of January 31, 2022 As of October 31, 2021

Fair Value Measured Using Fair Value Measured Using

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Corporate debt $ — $ 1,047 $ — $ 1,047 $ — $ 1,112 $ — $ 1,112

Financial institution instruments — — — — — 59 — 59

Government debt (1)

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Available-for-Sale Investments:

Corporate debt — — — — — 169 — 169

Financial institution instruments — 5 — 5 — 5 — 5

Government debt (1)

Marketable equity securities and mutual funds

11 53 — 64 15 56 — 71

Mutual funds 6 57 — 63 5 53 — 58

Derivative Instruments:

29 unchanged sentences

The portion of HP’s debt that is hedged is reflected in the Consolidated Condensed Balance Sheets as an amount equal to the debt’s carrying amount and a fair value adjustment representing changes in the fair value of the hedged debt obligations arising from movements in benchmark interest rates.

The fair value of HP’s short- and long-term debt was $ 7.7 billion as of July 31, 2021, compared to its carrying amount of $ 7.1 billion at that date.

The fair value of HP’s short- and long-term debt was $ 6.7 billion as of October 31, 2020, compared to its carrying value of $ 6.2 billion at that date.

The fair value of HP’s short- and long-term debt was $ 7.3 billion as compared to its carrying amount of $ 7.1 billion at January 31, 2022.

The fair value of HP’s short- and long-term debt was $ 8.0 billion as compared to its carrying value of $ 7.5 billion at October 31, 2021.

If measured at fair value in the Consolidated Condensed Balance Sheets, short- and long-term debt would be classified in Level 2 of the fair value hierarchy.

10 unchanged sentences

Cash Equivalents and Available-for-Sale Investments

As of July 31, 2021 As of October 31, 2020

As of January 31, 2022 As of October 31, 2021

Cost Gross Unrealized Gain Gross Unrealized Loss Fair Value Cost Gross Unrealized Gain Gross Unrealized Loss Fair Value

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Corporate debt $ 1,047 $ — $ — $ 1,047 $ 1,112 $ — $ — $ 1,112

Financial institution instruments

— — — — 59 — — 59

Government debt 927 — — 927 1,931 — — 1,931

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Available-for-Sale Investments:

Corporate debt (1)

— — — — 169 — — 169

Financial institution instruments 5 — — 5 5 — — 5

8 — — 8 32 — — 32

Government debt (1)

Marketable equity securities and mutual funds

42 22 — 64 42 29 — 71

Mutual funds 44 19 — 63 42 16 — 58

Total available-for-sale investments 47 22 — 69 47 29 — 76

Total cash equivalents and available-for-sale investments $ 2,021 $ 22 $ — $ 2,043 $ 3,090 $ 29 $ — $ 3,119

(1) HP classifies its marketable debt securities as Available-for-sale investments within Other current assets on the Consolidated Condensed Balance Sheets, including those with maturity dates beyond one year, based on their highly liquid nature and availability for use in current operations.

All highly liquid investments with original maturities of three months or less at the date of acquisition are considered cash equivalents.

As of July 31, 2021 and October 31, 2020, the carrying amount of cash equivalents approximated fair value due to the short period of time to maturity.

As of January 31, 2022 and October 31, 2021, the carrying amount of cash equivalents approximated fair value due to the short period of time to maturity.

The estimated fair value of the available-for-sale investments may not be representative of values that will be realized in the future.

Contractual maturities of investments in available-for-sale debt securities were as follows:

As of July 31, 2021

Cost Fair Value

As of January 31, 2022

Amortized Cost Fair Value

Due in one year $ 5 $ 5

Non-marketable equity securities in privately held companies are included in Other non-current assets in the Consolidated Condensed Balance Sheets.

These amounted to $ 53 million and $ 44 million as of July 31, 2021 and October 31, 2020, respectively.

These amounted to $ 63 million and $ 59 million as of January 31, 2022 and October 31, 2021, respectively.

HP determines credit losses on cash equivalents and available-for-sale debt securities at the individual security level.

All instruments are considered investment grade.

No credit-related or noncredit-related impairment losses were recorded for the three and nine months ended July 31, 2021.

No credit-related or noncredit-related impairment losses were recorded for the three months ended January 31, 2022.

Derivative Instruments

HP uses derivatives to offset business exposure to foreign currency and interest rate risk on expected future cash flows and on certain existing assets and liabilities.

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Notes to Consolidated Condensed Financial Statements (Continued)

Financial Instruments (Continued)

contracts to hedge certain foreign currency, interest rate and, return on certain investment exposures.

As part of its risk management strategy, HP uses derivative instruments, primarily forward contracts, interest rate swaps, total return swaps, treasury rate locks, forward starting swaps and, at times, option contracts to hedge certain foreign currency, interest rate and, return on certain investment exposures.

HP may designate its derivative contracts as fair value hedges or cash flow hedges and classifies the cash flows with the activities that correspond to the underlying hedged items.

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As a result of its use of derivative instruments, HP is exposed to the risk that its counterparties will fail to meet their contractual obligations.

Master netting agreements mitigate credit exposure to counterparties by permitting HP to net amounts due from HP to counterparty against amounts due to HP from the same counterparty under certain conditions.

Master netting agreements mitigate credit exposure to counterparties by permitting HP to net amounts

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Notes to Consolidated Condensed Financial Statements (Continued)

Financial Instruments (Continued)

due from HP to counterparty against amounts due to HP from the same counterparty under certain conditions.

To further limit credit risk, HP has collateral security agreements that allow HP’s custodian to hold collateral from, or require HP to post collateral to, counterparties when aggregate derivative fair values exceed contractually established thresholds which are generally based on the credit ratings of HP and its counterparties.

If HP’s or the counterparty’s credit rating falls below a specified credit rating, either party has the right to request full collateralization of the derivatives’ net liability position.

The fair value of derivatives with credit contingent features in a net liability position was $ 95 million and $ 90 million as of July 31, 2021 and as of October 31, 2020, respectively, all of which were fully collateralized within two business days.

The fair value of derivatives with credit contingent features in a net liability position was $ 30 million and $ 64 million as of January 31, 2022 and as of October 31, 2021, respectively, all of which were fully collateralized within two business days.

Under HP’s derivative contracts, the counterparty can terminate all outstanding trades following a covered change of control event affecting HP that results in the surviving entity being rated below a specified credit rating.

This credit contingent provision did not affect HP’s financial position or cash flows as of July 31, 2021 and October 31, 2020.

This credit contingent provision did not affect HP’s financial position or cash flows as of January 31, 2022 and October 31, 2021.

Fair Value Hedges

HP enters into fair value hedges, such as interest rate swaps, to reduce the exposure of its debt portfolio to changes in fair value resulting from changes in benchmark interest rates on HP’s future interest rate payments.

For derivative instruments that are designated and qualify as fair value hedges, HP recognizes the change in fair value of the derivative instrument, as well as the offsetting change in the fair value of the hedged item, in Interest and other, net in the Consolidated Condensed Statements of Earnings in the period of change.

During the nine months ended July 31, 2021, HP entered into interest rate swaps with a notional amount of $ 375 million that were designated as fair value hedges, to convert a portion of its fixed-rate debt to floating.

HP terminated interest rate swaps with a notional amount of $ 500 million that were de-designated as fair value hedges including $ 250 million notional amount related to certain fixed-rate debt securities that were extinguished, resulting in an immaterial loss.

Cash Flow Hedges

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HP reports the changes in the fair value of the derivative instrument in the same financial statement line item as changes in the fair value of the hedged item.

During the nine months ended July 31, 2021, HP entered into a series of forward starting swap agreements with notional amounts totaling $ 1.75 billion to hedge the exposure to variability in future cash flows resulting from changes in interest rates related to the anticipated issuance of long-term debt.

These agreements were designated as cash flow hedges.

In June 2021, a series of these forward starting swaps totaling $ 750 million notional amount were settled upon the issuance of the senior notes resulting in an immaterial loss recognized in Accumulated other comprehensive loss.

The loss will be reclassified to Interest and other, net over the life of the related debt.

Other Derivatives

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For derivative instruments not designated as hedging instruments, HP recognizes changes in fair value of the derivative instrument, as well as the offsetting change in the fair value of the hedged item, in Interest and other, net in the Consolidated Condensed Statements of Earnings in the period of change.

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Notes to Consolidated Condensed Financial Statements (Continued)

Financial Instruments (Continued)

Hedge Effectiveness

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For foreign currency options, forward contracts and forward starting swaps designated as cash flow hedges, HP measures hedge effectiveness by comparing the cumulative change in fair value of the hedge contract with the cumulative change in fair value of the hedged item, both of which are based on forward rates.

During the three and nine months ended July 31, 2021 and 2020, no portion of the hedging instruments’ gain or loss was excluded from the assessment of effectiveness for fair value and cash flow hedges.

During the three months ended January 31, 2022 and 2021, no portion of the hedging instruments’ gain or loss was excluded from the assessment of effectiveness for fair value and cash flow hedges.

Fair Value of Derivative Instruments in the Consolidated Condensed Balance Sheets

Gross notional and fair value of derivative instruments in the Consolidated Condensed Balance Sheets were as follows:

As of July 31, 2021 As of October 31, 2020

The gross notional and fair value of derivative instruments in the Consolidated Condensed Balance Sheets were as follows:

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Notes to Consolidated Condensed Financial Statements (Continued)

Financial Instruments (Continued)

As of January 31, 2022 As of October 31, 2021

Outstanding Gross Notional Other Current Assets Other Non-Current Assets Other Current Liabilities Other Non-Current Liabilities Outstanding Gross Notional Other Current Assets Other Non-Current Assets Other Current Liabilities Other Non-Current Liabilities

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HP does not offset the fair value of its derivative instruments against the fair value of cash collateral posted under its collateral security agreements.

As of July 31, 2021 and October 31, 2020, information related to the potential effect of HP’s master netting agreements and collateral security agreements was as follows:

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Notes to Consolidated Condensed Financial Statements (Continued)

Financial Instruments (Continued)

As of January 31, 2022 and October 31, 2021, information related to the potential effect of HP’s master netting agreements and collateral security agreements was as follows:

In the Consolidated Condensed Balance Sheets

(i) (ii) (iii) = (i)–(ii) (iv) (v) (vi) = (iii)–(iv)–(v)

Gross Amounts Not Offset

(i) Gross Amount

(ii) Net Amount

(iii) = (i)–(ii) Derivatives

(iv) Financial

(v) Net Amount

(vi) = (iii)–(iv)–(v)

As of July 31, 2021

Recognized Gross Amount

Offset Net Amount

Presented Derivatives

Collateral Net Amount

As of January 31, 2022

Derivative assets $ 490 $ — $ 490 $ 153 $ 321 (1) $ 16

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(1) Represents the cash collateral posted by counterparties as of the respective reporting date for HP’s asset position, net of derivative amounts that could be offset, as of, generally, two business days prior to the respective reporting date.

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Notes to Consolidated Condensed Financial Statements (Continued)

Financial Instruments (Continued)

(2) Represents the collateral posted by HP including any re-use of counterparty cash collateral as of the respective reporting date for HP’s liability position, net of derivative amounts that could be offset, as of, generally, two business days prior to the respective reporting date.

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Derivative Instrument Hedged Item Location Year Total amounts of income/(expense) line items in the statement of financial performance in which the effects of fair value hedges are recorded Gain/(loss) recognized in earnings on derivative instruments Gain/(loss) recognized in earnings on hedged item

Three months ended July 31

Interest rate contract Fixed-rate debt Interest and other, net 2021 $ ( 55 ) $ 5 $ ( 5 )

2020 $ ( 28 ) $ 1 $ ( 1 )

Nine months ended July 31

Three months ended January 31

Interest rate contract Fixed-rate debt Interest and other, net 2022 $ ( 32 ) $ ( 11 ) $ 11

2021 $ ( 25 ) $ ( 3 ) $ 3

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Notes to Consolidated Condensed Financial Statements (Continued)

Financial Instruments (Continued)

The pre-tax effect of derivative instruments in cash flow hedging relationships included in Accumulated other comprehensive loss was as follows:

Three months ended July 31 Nine months ended July 31

2021 2020 2021 2020

Three months ended January 31

Gain/(loss) recognized in Accumulated other comprehensive loss on derivatives:

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other comprehensive loss into earnings

Three months ended July 31 Nine months ended July 31 Three months ended July 31 Nine months ended July 31

Three months ended January 31 Three months ended January 31

2022 2021 2022 2021

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Other operating expenses ( 2,026 ) ( 2,003 ) 1 —

Interest and other, net ( 55 ) ( 28 ) ( 106 ) ( 15 ) — — — —

Total $ 44 $ ( 49 )

As of July 31, 2021, HP expects to reclassify an estimated accumulated other comprehensive loss of $ 40 million, net of taxes, to earnings within the next twelve months associated with cash flow hedges along with the earnings effects of the related forecasted transactions.

As of January 31, 2022, HP expects to reclassify an estimated accumulated other comprehensive gain of $ 188 million, net of taxes, to earnings within the next twelve months associated with cash flow hedges along with the earnings effects of the related forecasted transactions.

The amounts ultimately reclassified into earnings could be different from the amounts previously included in Accumulated other comprehensive loss based on the change of market rate, and therefore could have different impact on earnings.

The pre-tax effect of derivative instruments not designated as hedging instruments recognized in Interest and other, net in the Consolidated Condensed Statements of Earnings for the three and nine months ended July 31, 2021 and 2020 was as follows:

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Notes to Consolidated Condensed Financial Statements (Continued)

Financial Instruments (Continued)

The pre-tax effect of derivative instruments not designated as hedging instruments recognized in Interest and other, net in the Consolidated Condensed Statements of Earnings for the three months ended January 31, 2022 and 2021 was as follows:

Gain/(loss) recognized in earnings on derivative instrument

Three months ended July 31 Nine months ended July 31

Three months ended January 31

Location 2022 2021

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Notes Payable and Short-Term Borrowings

As of July 31, 2021 As of October 31, 2020

As of January 31, 2022 As of October 31, 2021

Outstanding Weighted-Average

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Interest Rate

Commercial paper $ — — % $ 400 0.2 %

Current portion of long-term debt 662 3.9 % 672 3.8 %

Notes payable to banks, lines of credit and other 27 1.5 % 34 1.2 %

$ 689 $ 1,106

Long-Term Debt

July 31, 2021 October 31, 2020

January 31, 2022 October 31, 2021

Dollar Global Notes (1)

2009 Shelf Registration Statement:

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

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

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

$ 1,200 issued at discount to par at a price of 99.863 % in September 2011 at 6.00 %, due September 2041

2019 Shelf Registration Statement:

$ 1,150 issued at discount to par at a price of 99.769 % in June 2020 at 2.2 %, due June 2025

$ 1,000 issued at discount to par at a price of 99.718 % in June 2020 at 3.0 %, due June 2027

$ 850 issued at discount to par at a price of 99.790 % in June 2020 at 3.4 %, due June 2030

$ 1,000 issued at discount to par at a price of 99.808 % in June 2021 at 1.45 %, due June 2026

$ 1,000 issued at discount to par at a price of 99.573 % in June 2021 at 2.65 %, due June 2031

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

$ 1,200 issued at discount to par at a price of 99.863 % at 6.00 %, due September 2041

$ 1,150 issued at discount to par at a price of 99.769 % at 2.2 %, due June 2025

$ 1,000 issued at discount to par at a price of 99.718 % at 3.0 %, due June 2027

$ 850 issued at discount to par at a price of 99.790 % at 3.4 %, due June 2030

$ 1,000 issued at discount to par at a price of 99.808 % at 1.45 %, due June 2026

$ 1,000 issued at discount to par at a price of 99.573 % at 2.65 %, due June 2031 (2)

Other borrowings at 0.51 - 9.00 %, due in calendar years 2022-2029

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Dollar Global Notes are senior unsecured debt.

In June 2021, HP completed its offering of $ 2.0 billion aggregate principal amount of senior unsecured notes, consisting of $ 1.0 billion of 1.450 % notes due June 2026 (the “2026 Notes”), and $ 1.0 billion of 2.650 % notes due June 2031 (the “2031 Notes”).

HP incurred issuance costs of $ 17 million.

HP will pay interest semi-annually on the notes on June 17 and December 17, beginning December 17, 2021.

In June 2021, HP terminated a series of forward starting swap agreements with notional amounts totaling $ 750 million that were executed to mitigate the treasury rate volatility associated with this debt issuance.

The net proceeds from the 2026 Notes were used for general corporate purposes, including redemption of existing notes maturing in 2021, as described below.

HP intends to allocate an amount equal to the net proceeds of the 2031 Notes to finance or refinance, in whole or in part, environmentally and socially responsible eligible projects in the following eight areas:

(2) HP intends to allocate an amount equal to the net proceeds to finance or refinance, in whole or in part, environmentally and socially responsible eligible projects in the following eight areas:

renewable energy;

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Interest rates shown in the table of long-term debt have not been adjusted to reflect the impact of any interest rate swaps.

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Notes to Consolidated Condensed Financial Statements (Continued)

Borrowings (Continued)

Extinguishment of debt

In July 2021, HP redeemed the remaining aggregate principal amounts of $ 0.4 billion in outstanding U.S.

Dollar 4.375 % Global Notes due September 15, 2021 and $ 0.6 billion in outstanding U.S.

Dollar 4.650 % Global Notes due December 9, 2021.

This extinguishment of debt resulted in a net loss of $ 16 million, which was recorded as Interest and other, net on the Consolidated Condensed Statements of Earnings.

As part of the above transactions, HP terminated and settled interest rate swaps with a notional amount of $ 250 million that were de-designated as fair value hedges.

Commercial Paper

As of July 31, 2021, HP maintained two commercial paper programs.

As of January 31, 2022, HP maintained two commercial paper programs.

program provides for the issuance of U.S.

3 unchanged sentences

The combined aggregate principal amount of commercial paper outstanding under those programs at any one time cannot exceed the $ 6.0 billion authorized by HP’s Board of Directors.

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Notes to Consolidated Condensed Financial Statements (Continued)

Borrowings (Continued)

Credit Facilities

As of July 31, 2021, HP maintained a $ 5.0 billion sustainability-linked senior unsecured committed revolving credit facility (the “New Revolving Facility”), which HP entered into on May 26, 2021.

Commitments under the New Revolving Facility will be available until May 26, 2026.

HP had maintained a $ 4.0 billion senior unsecured committed revolving credit facility and a $ 1.0 billion 364-day revolving credit facility to support the issuance of commercial paper or for general corporate purposes.

Commitments under the $ 4.0 billion and $ 1.0 billion revolving credit facilities were terminated concurrently with the execution of the New Revolving Facility.

Commitment fees, interest rates and other terms of borrowing under the New Revolving Facility vary based on HP’s external credit ratings and certain sustainability metrics.

Funds borrowed under the New Revolving Facility may be used for general corporate purposes.

As of July 31, 2021, HP was in compliance with the financial covenants in the credit agreement governing the New Revolving Facility.

As of January 31, 2022, HP maintained a $ 5.0 billion sustainability-linked senior unsecured committed revolving credit facility, which HP entered into on May 26, 2021.

Commitments under the revolving credit facility will be available until May 26, 2026.

Commitment fees, interest rates and other terms of borrowing under the revolving credit facility vary based on HP’s external credit ratings and certain sustainability metrics.

Funds borrowed under the revolving credit facility may be used for general corporate purposes.

As of January 31, 2022, HP was in compliance with the covenants in the credit agreement governing the revolving credit facility.

Available Borrowing Resources

As of July 31, 2021, HP had available borrowing resources of $ 575 million from uncommitted lines of credit in addition to the New Revolving Facility.

As of January 31, 2022, HP had available borrowing resources of $ 633 million from uncommitted lines of credit in addition to the revolving credit facility.

Stockholders’ Deficit

1 unchanged sentence

HP’s share repurchase program authorizes both open market and private repurchase transactions.

During the three and nine months ended July 31, 2021, HP executed share repurchases of 50 million shares and 163 million shares and settled total shares for $ 1.5 billion and $ 4.5 billion, respectively.

During the three and nine months ended July 31, 2020, HP executed share repurchases of 59 million shares and 97 million shares and settled total shares for $ 1.0 billion and $ 1.8 billion, respectively.

Share repurchases executed during the three and nine months ended July 31, 2021 and 2020 included 1.8 million and 2.8 million shares settled in August 2021 and 2020, respectively.

The shares repurchased during the nine months ended July 31, 2021 and 2020 were all open market repurchase transactions.

As of July 31, 2021, HP had approximately $ 8.2 billion remaining under the share repurchase authorizations approved by HP’s Board of Directors.

During the three months ended January 31, 2022, HP executed share repurchases of 42 million shares and settled total shares for $ 1.5 billion.

During the three months ended January 31, 2021, HP executed share repurchases of 61 million shares and settled total shares for $ 1.4 billion.

Share repurchases executed during the three months ended January 31, 2022 and 2021 included 1.1 million and 3.2 million shares settled in February 2022 and 2021, respectively.

The shares repurchased during the three months ended January 31, 2022 and 2021 were all open market repurchase transactions.

As of January 31, 2022, HP had approximately $ 4.9 billion remaining under the share repurchase authorizations approved by HP’s Board of Directors.

AND SUBSIDIARIES

2 unchanged sentences

Tax effects related to Other Comprehensive Income (Loss)

Three months ended July 31 Nine months ended July 31

2021 2020 2021 2020

Three months ended January 31

Tax effect on change in unrealized components of available-for-sale debt securities:

2 unchanged sentences

Tax (provision) benefit on unrealized gains (losses) arising during the period ( 32 ) 47

Tax (benefit) provision on losses (gains) reclassified into earnings ( 4 ) 25 ( 25 ) 51

( 26 ) 108 ( 7 ) 85

Tax provision (benefit) on (gains) losses reclassified into earnings 12 ( 4 )

Tax effect on change in unrealized components of defined benefit plans:

Tax benefit (provision) on (losses) gains arising during the period — 1 ( 11 ) 1

Tax provision on gains arising during the period ( 6 ) —

Tax benefit on amortization of actuarial loss and prior service benefit ( 1 ) ( 5 )

( 4 ) ( 4 ) ( 25 ) ( 14 )

Tax effect on change in cumulative translation adjustment 1 ( 5 )

1 unchanged sentence

Changes and reclassifications related to Other Comprehensive Income (Loss), net of taxes

Three months ended July 31 Nine months ended July 31

2021 2020 2021 2020

Three months ended January 31

Other comprehensive income (loss), net of taxes:

Change in unrealized components of available-for-sale debt securities:

Unrealized gains arising during the period $ 1 $ 2 $ 4 $ 1

Unrealized (losses) gains arising during the period $ ( 2 ) $ 3

Change in unrealized components of cash flow hedges:

Unrealized gains (losses) arising during the period 267 ( 319 )

Losses (gains) reclassified into earnings 60 ( 105 ) 237 ( 191 )

171 ( 585 ) 1 ( 429 )

(Gains) losses reclassified into earnings ( 32 ) 45

Change in unrealized components of defined benefit plans:

(Losses) gains arising during the period ( 1 ) ( 4 ) 29 ( 5 )

Gains (losses) arising during the period 15 ( 1 )

Amortization of actuarial loss and prior service benefit (1)

7 unchanged sentences

The components of Accumulated other comprehensive loss, net of taxes and changes were as follows:

Nine months ended July 31, 2021

Three months ended January 31, 2022

Net unrealized

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Reclassifications of losses into earnings — ( 32 ) 5 — ( 27 )

Reclassifications of settlements into earnings — — 1 — 1

Balance at end of period $ 13 $ 254 $ ( 303 ) $ 20 $ ( 16 )

5 unchanged sentences

A reconciliation of the number of shares used for basic and diluted net EPS calculations is as follows:

Three months ended July 31 Nine months ended July 31

2021 2020 2021 2020

Three months ended January 31

In millions, except per share amounts

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HP accrues a liability when management believes that it is both probable that a liability has been incurred and the amount of loss can be reasonably estimated.

HP believes it has recorded adequate provisions for any such matters and, as of July 31, 2021, it was not reasonably possible that a material loss had been incurred in excess of the amounts recognized in HP’s financial statements.

HP believes it has recorded adequate provisions for any such matters and, as of January 31, 2022, it was not reasonably possible that a material loss had been incurred in excess of the amounts recognized in HP’s financial statements.

HP reviews these matters at least quarterly and adjusts its accruals to reflect the impact of negotiations, settlements, rulings, advice of legal counsel, and other information and events pertaining to a particular case.

Pursuant to the separation and distribution agreement, HP shares responsibility with Hewlett Packard Enterprise for certain matters, as indicated below, and Hewlett Packard Enterprise has agreed to indemnify HP in whole or in part with respect to certain matters.

Pursuant to the separation and distribution agreement entered into with Hewlett Packard Enterprise Company (“Hewlett Packard Enterprise”), HP shares responsibility with Hewlett Packard Enterprise for certain matters, as indicated below, and Hewlett Packard Enterprise has agreed to indemnify HP in whole or in part with respect to certain matters.

Based on its experience, HP believes that any damage amounts claimed in the specific matters discussed below are not a meaningful indicator of HP’s potential liability.

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Proceedings are ongoing or have been concluded involving HP in certain European countries, including litigation in Belgium and other countries, seeking to impose or modify levies upon IT equipment (such as multifunction devices (“MFDs”) and PCs), alleging that these devices enable the production of private copies of copyrighted materials.

Proceedings are ongoing or have been concluded involving HP in certain European countries, challenging the imposition or the modification of levies regimes upon IT equipment (such as PCs or printers) or the restrictions to exonerate the application of private copying levies on devices purchased by business users.

The levies are generally based upon the number of products sold and the per-product amounts of the levies, which vary.

Some European countries that do not yet have levies on digital devices are expected to implement similar legislation to enable them to extend existing levy schemes, while other European countries have phased out levies or are expected to limit the scope of levy schemes and applicability in the digital hardware environment, particularly with respect to sales to business users.

Some European countries are expected to implement legislation to introduce or extend existing levy schemes to digital devices.

HP, other companies and various industry associations have opposed the extension of levies to the digital environment and certain requirements for

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Litigation and Contingencies (Continued)

HP, other companies and various industry associations have opposed the extension of levies to the digital environment and have advocated alternative models of compensation to rights holders.

Reprobel SCRL (“Reprobel”), a collecting society administering the remuneration for reprography to Belgian copyright holders, requested by extrajudicial means that HP amend certain copyright levy declarations submitted for inkjet MFDs sold in Belgium from January 2005 to December 2009 to enable it to collect copyright levies calculated based on the generally higher copying speed when the MFDs are operated in draft print mode rather than when operated in normal print mode.

In March 2010, HP filed a lawsuit against Reprobel in the Brussels Court of First Instance in Belgium, seeking a declaratory judgment that no copyright levies are payable on sales of MFDs in Belgium or, alternatively, that payments already made by HP are sufficient to comply with its obligations.

The Brussels Court of Appeal (the “Court of Appeal”) stayed the proceedings and referred several questions to the Court of Justice of the European Union (“CJEU”).

On November 12, 2015, the CJEU published its judgment providing that a national legislation such as the Belgian one at issue in the main proceedings is incompatible with EU law on multiple legal points, as argued by HP, and returned the proceedings to the referring court.

On May 12, 2017, the Court of Appeal held that (1) reprographic copyright levies are due notwithstanding the lack of conformity of the Belgian system with EU law in certain aspects and (2) the applicable levies are to be calculated based on the objective speed of each MFD as established by an expert appointed by the Court of Appeal.

HP appealed this decision before the Belgian Supreme Court on January 18, 2018.

The Belgian Supreme Court rejected HP’s appeal on September 24, 2020 and the matter has been remitted to the Court of Appeal, where the expert will give an opinion on the objective speed and amount of compensation due.

Under a settlement agreement executed on June 16, 2021 HP and Reprobel have resolved all ongoing disputes in relation to the Belgian copyright exceptions system that was applicable until December 2016, when the relevant provisions of the copyright law were abolished.

business sales exemptions, and have advocated alternative models of compensation to rights holders.

Based on industry opposition to the extension of levies to digital products, HP’s assessments of the merits of various proceedings and HP’s estimates of the number of units impacted and the amounts of the levies, HP has accrued amounts that it believes are adequate to address the ongoing disputes.

Hewlett-Packard Company v.

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HP asserted, among other things, that Oracle’s actions breached the contract that was signed by the parties as part of the settlement of the litigation relating to Oracle’s hiring of Mark Hurd.

The matter eventually progressed to trial, which was bifurcated into two phases.

HP prevailed in the first phase of the trial, in which the court ruled that the contract at issue required Oracle to continue to offer its software products on HP’s Itanium-based servers for as long as HP decided to sell such servers.

The second phase of the trial was then postponed by Oracle’s appeal of the trial court’s denial of Oracle’s “anti-SLAPP” motion, in which Oracle argued that HP’s damages claim infringed on Oracle’s First Amendment rights.

On August 27, 2015, the California Court of Appeals rejected Oracle’s appeal.

The matter was remanded to the trial court for the second phase of the trial, which began on May 23, 2016 and was submitted to the jury on June 29, 2016.

On June 30, 2016, the jury returned a verdict in favor of HP, awarding HP approximately $ 3.0 billion in damages, which included approximately $ 1.7 billion for past lost profits and $ 1.3 billion for future lost profits.

On October 20, 2016, the court entered judgment for HP for this amount with interest accruing until the judgment is paid.

Oracle’s motion for new trial was denied on December 19, 2016, and Oracle filed its notice of appeal from the trial court’s judgment on January 17, 2017.

On February 2, 2017, HP filed a notice of cross-appeal challenging the trial court’s denial of prejudgment interest.

Oral argument in front of the Court of Appeals was held on May 27, 2021.

On June 14, 2021, the Court of Appeals affirmed both the trial court’s judgment and its denial of prejudgment interest to HP.

On July 26, 2021, Oracle filed a petition with the California Supreme Court for review, which HP answered on August 16, 2021.

Litigation is unpredictable, and there can be no assurance that HP will recover damages, or that any award of damages will be for the amount awarded by the jury’s verdict.

The amount ultimately awarded, if any, would be recorded in the period received.

No adjustment has been recorded in the financial statements in relation to this potential award.

Pursuant to the terms of the separation and distribution agreement, HP and Hewlett Packard Enterprise will share equally in any recovery from Oracle once Hewlett Packard Enterprise has been reimbursed for all costs incurred in the prosecution of the action prior to the Separation.

In the first phase of the bifurcated trial, the court ruled that the contract at issue required Oracle to continue to offer its software products on HP’s Itanium-based servers for as long as HP decided to sell such servers.

In the second phase, the jury returned a verdict in favor of HP, awarding HP approximately $ 3.0 billion in damages, which included approximately $ 1.7 billion for past lost profits and $ 1.3 billion for future lost profits.

The court entered judgment for HP for this amount with interest accruing until the judgment is paid.

Oracle appealed the trial court’s judgment and HP filed a cross appeal challenging the trial court’s denial of prejudgment interest.

The Court of Appeals affirmed both the trial court’s judgment and its denial of prejudgment interest to HP.

Oracle filed a petition with the California Supreme Court for review, which was denied on September 29, 2021.

On October 12, 2021, Oracle paid approximately $ 4.65 billion to satisfy the judgment with interest.

During the fourth quarter of fiscal 2021, HP recorded approximately $ 2.3 billion as a gain (Interest and other, net) in relation to the damages awarded, representing HP’s interest in the amount recovered, which is being shared equally between HP and Hewlett Packard Enterprise, less $ 47.4 million reimbursed to Hewlett Packard Enterprise for certain costs incurred in the prosecution of the action prior to the Separation.

On January 27, 2022, Oracle filed a petition for certiorari asking the United States Supreme Court for review.

Review by the United States Supreme Court is discretionary, and HP believes the likelihood the award of damages will be reduced or reversed is remote.

Forsyth, et al.

and Hewlett Packard Enterprise .

This is a purported class and collective action filed on August 18, 2016 in the United States District Court, Northern District of California, against HP and Hewlett Packard Enterprise alleging the defendants violated the Federal Age Discrimination in Employment Act (“ADEA”), the California Fair Employment and Housing Act, California public policy and the California Business and Professions Code by terminating older workers and replacing them with younger workers.

The operative complaint is the Fourth Amended Complaint, filed in July 2020.

By their complaint, plaintiffs seek to represent (1) a putative nationwide ADEA collective comprised of all individuals 40 years of age and older who had their employment terminated pursuant to a WFR plan on or after December 9, 2014 or April 8, 2015, depending on state law;

and (2) a putative Rule 23 class under California law comprised of all individuals 40 years of age and older who had their employment terminated in California pursuant to a WFR plan on or after August 18, 2012.

Excluded from the putative collective and class are employees who (a) signed a Waiver and General Release Agreement at termination, or

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Litigation and Contingencies (Continued)

(b) signed an Agreement to Arbitrate Claims.

A similar purported collective and class are proposed for Hewlett Packard Enterprise, but the periods start on November 1, 2015.

Plaintiffs seek monetary damages in the form of back and front pay and benefits, liquidated damages under the ADEA, punitive damages under the state law claims, an award of attorneys’ fees, and other relief.

In December 2020, plaintiffs filed a motion for preliminary certification of the putative nationwide ADEA collectives, and the Court granted this motion on April 13, 2021.

As a result, potential members of the ADEA collectives will be notified of their right to opt into the case to join the current thirty-six named and opt-in plaintiffs.

This is a purported class and collective action filed on August 18, 2016 in the United States District Court, Northern District of California, against HP and Hewlett Packard Enterprise (“HPE”) alleging the defendants violated federal and state law by terminating older workers and replacing them with younger workers.

In their most recent complaint, plaintiffs seek to represent (1) a putative nationwide federal Age Discrimination in Employment Act (ADEA) collective comprised of all former HP Inc.

employees 40 years of age and older who had their employment terminated under a WFR plan in or after 2014 or 2015, depending on state law;

and (2) a putative Rule 23 class under California law comprised of all former HP Inc.

employees 40 years of age and older who had their employment terminated in California under a WFR plan in or after 2012.

Excluded from the putative collective and class are employees who (a) signed a Waiver and General Release Agreement at termination, or (b) signed an Agreement to Arbitrate Claims.

Similar claims are pending against HPE.

Because the court granted plaintiffs’ motion for preliminary certification of the putative nationwide ADEA collectives, a third-party administrator notified eligible former employees of their right to opt into the ADEA collective.

This opt-in period closed on February 15, 2022, and the next case management conference is anticipated to set discovery timelines for the remainder of 2022.

Plaintiffs seek monetary damages, punitive damages, and other relief.

India Directorate of Revenue Intelligence Proceedings .

On April 30 and May 10, 2010, the India Directorate of Revenue Intelligence (the “DRI”) issued show cause notices to Hewlett-Packard India Sales Private Limited (“HP India”), a subsidiary of HP, seven HP India employees and one former HP India employee alleging that HP India underpaid customs duties while importing products and spare parts into India and seeking to recover an aggregate of approximately $ 370 million, plus penalties.

Prior to the issuance of the show cause notices, HP India deposited approximately $ 16 million with the DRI and agreed to post a provisional bond in exchange for the DRI’s agreement to not seize HP India products and spare parts and to not interrupt the transaction of business by HP India.

On April 11, 2012, the Bangalore Commissioner of Customs issued an order on the products-related show cause notice affirming certain duties and penalties against HP India and the named individuals of approximately $ 386 million, of which HP India had already deposited $ 9 million.

On December 11, 2012, HP India voluntarily deposited an additional $ 10 million in connection with the products-related show cause notice.

Prior to the issuance of the notices, HP India deposited approximately $ 16 million with the DRI and agreed to post a provisional bond in exchange for the DRI’s agreement to not seize HP India products and spare parts or interrupt business by HP India.

On April 11, 2012, the Bangalore Commissioner of Customs issued an order on the products-related notice affirming certain duties and penalties against HP India and the named individuals of approximately $ 386 million, of which HP India had already deposited $ 9 million.

On December 11, 2012, HP India voluntarily deposited an additional $ 10 million in connection with the products-related notice.

The differential duty demand is subject to interest.

On April 20, 2012, the Commissioner issued an order on the parts-related show cause notice affirming certain duties and penalties against HP India and certain of the named individuals of approximately $ 17 million, of which HP India had already deposited $ 7 million.

After the order, HP India deposited an additional $ 3 million in connection with the parts-related show cause notice so as to avoid certain penalties.

On April 20, 2012, the Commissioner issued an order on the parts-related notice affirming certain duties and penalties against HP India and certain of the named individuals of approximately $ 17 million, of which HP India had already deposited $ 7 million.

After the order, HP India deposited an additional $ 3 million in connection with the parts-related notice so as to avoid certain penalties.

HP India filed appeals of the Commissioner’s orders before the Customs, Excise and Service Tax Appellate Tribunal (the “Customs Tribunal”) along with applications for waiver of the pre-deposit of remaining demand amounts as a condition for hearing the appeals.

The Customs Department has also filed cross-appeals before the Customs Tribunal.

On January 24, 2013, the Customs Tribunal ordered HP India to deposit an additional $ 24 million against the products order, which HP India deposited in March 2013.

The Customs Tribunal did not order any additional deposit to be made under the parts order.

In December 2013, HP India filed applications before the Customs Tribunal seeking early hearing of the appeals as well as an extension of the stay of deposit as to HP India and the individuals already granted until final disposition of the appeals.

On February 7, 2014, the application for extension of the stay of deposit was granted by the Customs Tribunal until disposal of the appeals.

On October 27, 2014, the Customs Tribunal commenced hearings on the cross-appeals of the Commissioner’s orders.

The Customs Tribunal rejected HP India’s request to remand the matter to the Commissioner on procedural grounds.

The hearings scheduled to reconvene on April 6, 2015 and again on November 3, 2015 and April 11, 2016 were cancelled at the request of the Customs Tribunal.

A hearing scheduled for January 15, 2019 was cancelled.

On January 20, 2021, the Customs Tribunal held a virtual hearing during which the judge allowed HP’s application for a physical hearing on the merits as soon as practicable, which will be scheduled when physical hearings resume at court.

Pursuant to the separation and distribution agreement, Hewlett Packard Enterprise has agreed to indemnify HP in part, based on the extent to which any liability arises from the products and spare parts of Hewlett Packard Enterprise’s businesses.

Slingshot Printing LLC Litigation .

On June 11, 2019, Slingshot Printing LLC (“Slingshot”) filed three complaints in U.S.

District Court in the Western District of Texas alleging HP infringes or has infringed sixteen patents.

On September 20, 2019, Slingshot filed a four th complaint and amended the three earlier complaints, alleging that HP infringes or has infringed thirty-two patents.

On December 12, 2019, Slingshot voluntarily dismissed its allegations as to one patent because it did not own a related patent.

On January 23, 2020, Slingshot filed a fifth complaint, re-asserting the dismissed patent as well as the related patent.

On February 13, 2020, Slingshot voluntarily dismissed its allegations as to another patent, which was asserted in its third complaint.

On March 25, 2020, Slingshot voluntarily dismissed its allegations as to an additional patent, which was also asserted in its third complaint.

The five complaints assert a total of 31 patents and seek monetary damages.

The accused products include inkjet printers, cartridges, and printheads.

In December 2020, HP received notice that in September 2020, Slingshot filed two actions in China’s Guangzhou IP Specialized Court that had been removed to Guangdong High Court.

The Guangzhou cases assert two patents related to patents in the U.S.

On January 14, 2021, the U.S.

Patent and Trademark Office Patent Trial and Appeal Board granted HP’s petitions to challenge the validity of four Slingshot patents and instituted inter partes review.

On January 31, 2021, HP and Slingshot entered into an agreement to resolve all litigation.

civil actions and Guangzhou cases have been dismissed and HP’s petitions have been terminated.

Philips Patent Litigation .

On September 17, 2020, Koninklijke Philips N.V.

and Philips North America LLC (collectively, “Philips”) filed a complaint against HP for patent infringement in federal court for the District of Delaware.

On January 24, 2013,

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September 18, 2020, Philips filed a companion complaint with the U.S.

International Trade Commission (“ITC”) pursuant to Section 337 of the Tariff Act of 1930 against HP and 8 other sets of respondents.

Both the district court complaint and the ITC complaint allege that certain digital video-capable devices and components thereof infringe four of Philips owned patents.

On October 16, 2020, the ITC instituted an investigation, and on July 19, 2021, the ITC held an evidentiary trial that concluded on July 23, 2021.

The ITC is expected to render an initial determination by October 22, 2021, and a final decision by February 22, 2022.

In the ITC proceeding, Philips seeks an order enjoining respondents from importing, or selling after importation, certain digital video-capable devices and components thereof, including certain PCs, display devices, and components thereof.

In the district court case, Philips seeks unspecified damages and an injunction against HP, among other remedies.

The district court case has been stayed pending resolution of the ITC proceeding.

the Customs Tribunal ordered HP India to deposit an additional $ 24 million against the products order, which HP India deposited in March 2013.

On February 7, 2014, the Customs Tribunal granted HP India’s application for extension of the stay of deposit until disposal of the appeals.

On October 27, 2014, the Customs Tribunal commenced hearings on the cross-appeals of the Commissioner’s orders and rejected HP India’s request to remand the matter to the Commissioner on procedural grounds.

The Customs Tribunal cancelled hearings to reconvene in 2015, 2016 and January 2019.

Philips Patent Litigation .

In September 2020, Koninklijke Philips N.V.

and Philips North America LLC (collectively, “Philips”) filed a complaint against HP for patent infringement in federal court for the District of Delaware and filed a companion complaint with the U.S.

International Trade Commission (“ITC”) pursuant to Section 337 of the Tariff Act against HP and 8 other sets of respondents.

Both complaints allege that certain digital video-capable devices and components thereof infringe four of Philips’ patents.

In October 2020, the ITC instituted an investigation, and Philips later withdrew two of the four patents.

On October 21, 2021, the ITC rendered an initial determination that there is no violation of Section 337.

The ITC is expected to render a final decision by March 23, 2022.

In the ITC proceeding, Philips seeks an order enjoining respondents from importing, or selling after importation, the accused products.

In the district court case, Philips seeks unspecified damages and an injunction against HP, and the case has been stayed pending resolution of the ITC proceeding.

Caltech Patent Litigation .

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Caltech seeks unspecified damages and other relief.

The court has stayed the case pending the decision by the U.S.

The court stayed the case pending the decision by the U.S.

Court of Appeals for the Federal Circuit in The California Inst.

Broadcom Ltd et al.

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2020-2222, which was issued on February 4, 2022.

The court has directed the parties to submit their positions regarding next steps on the stay.

In re HP Inc.

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District Court in the Northern District of California.

On May 20, 2020, the court appointed the State of Rhode Island, Office of the General Treasurer, on behalf of the Employees’ Retirement System of Rhode Island and Iron Workers Local 580 Joint Funds as Lead Plaintiffs.

On July 20, 2020, Lead Plaintiffs filed an amended complaint, which additionally named as defendants Enrique Lores and Christoph Schell.

On October 2, 2020, HP and the named officers filed a motion to dismiss the complaint for failure to state a claim upon which relief can be granted.

On March 19, 2021, the court granted HP’s motion to dismiss and granted plaintiffs leave to amend the complaint.

On May 3, 2021, plaintiffs filed their second amended complaint, which no longer names Christoph Schell as a defendant.

The second amended complaint alleges, among other things, that from February 23, 2017 to October 3, 2019, HP and the named officers violated Sections 10(b) and 20(a) of the Exchange Act by making false or misleading statements about HP’s printing supplies business, including alleged statements made about changes to HP’s channel inventory management and sales practices, and stabilization of printing supplies revenue.

The court appointed the State of Rhode Island, Office of the General Treasurer, on behalf of the Employees’ Retirement System of Rhode Island and Iron Workers Local 580 Joint Funds as Lead Plaintiffs.

Lead Plaintiffs filed an amended complaint, which additionally named as defendants Enrique Lores and Christoph Schell.

HP and the named officers filed a motion to dismiss the complaint for failure to state a claim upon which relief can be granted.

The court granted HP’s motion to dismiss and granted plaintiffs leave to amend the complaint.

Plaintiffs’ second amended complaint, which no longer names Christoph Schell as a defendant, alleges, among other things, that from February 23, 2017 to October 3, 2019, HP and the named officers violated Sections 10(b) and 20(a) of the Exchange Act by making false or misleading statements about HP’s printing supplies business.

It further alleges that Dion Weisler and Enrique Lores violated Sections 10(b) and 20A of the Exchange Act by allegedly selling shares of HP common stock during this period while in possession of material, non-public adverse information about HP’s printing supplies business.

Plaintiffs seek compensatory damages and other relief.

On June 4, 2021, HP and the named officers filed a motion to dismiss the second amended complaint for failure to state a claim upon which relief can be granted.

The motion is fully briefed and oral argument in front of the court is scheduled for September 9, 2021.

HP and the named officers filed a motion to dismiss the second amended complaint for failure to state a claim upon which relief can be granted.

On September 15, 2021, the court granted HP’s motion.

Plaintiffs are appealing the decision.

York County on behalf of the County of York Retirement Fund v.

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On November 5, 2020, York County, on behalf of the County of York Retirement Fund, filed a putative class action complaint against HP, Dion Weisler, and Catherine Lesjak in federal court in the Northern District of California.

On February 11, 2021, the court appointed Maryland Electrical Industry Pension Fund as Lead Plaintiff.

On April 21, 2021, Lead Plaintiff filed a consolidated complaint, which additionally names as defendants Enrique Lores and Richard Bailey.

The complaint alleges, among other things, that from November 5, 2015 to June 21, 2016, HP and the named current and former officers violated Sections 10(b) and 20(a) of the Exchange Act by concealing material information and making false statements about HP’s printing supplies business, including information about HP’s channel inventory management and sales practices.

The court appointed Maryland Electrical Industry Pension Fund as Lead Plaintiff.

Lead Plaintiff filed a consolidated complaint, which additionally names as defendants Enrique Lores and Richard Bailey.

Plaintiff seeks compensatory damages and other relief.

On June 21, 2021, HP and the named officers filed a motion to dismiss the complaint for failure to state a claim upon which relief can be granted.

That motion is anticipated to be fully briefed on October 4, 2021.

HP and the named officers filed a motion to dismiss the complaint for failure to state a claim upon which relief can be granted.

On March 3, 2022 the court granted the motion to dismiss with prejudice.

On May 17, 2021, stockholder Scott Franklin filed a derivative complaint against certain current and former officers and directors in federal court in the District of Delaware.

Plaintiff purports to bring the action on behalf of HP, which he has named as a nominal defendant, and it makes substantially the same factual allegations as in the York County securities complaint, bringing claims for breach of fiduciary duty and violations of securities laws.

Plaintiff purports to bring the action on behalf of HP, which he has named as a nominal defendant, and it makes

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substantially the same factual allegations as in the York County securities complaint, bringing claims for breach of fiduciary duty and violations of securities laws.

The derivative plaintiff seeks compensatory damages, governance reforms, and other relief.

By court order following stipulations by the parties, the case was transferred to the Northern District of California on June 22, 2021, and on July 1, 2021, the case was stayed pending a ruling on the motion to dismiss in York County .

By court order following stipulations by the parties, the case was transferred to the Northern District of California, and the case was stayed pending a ruling on the motion to dismiss in York County.

On January 13, 2022, stockholder Gerald Lovoi filed a derivative complaint in federal court in the Northern District of California against the same current and former officers and directors named in the Franklin action.

The complaint alleges the same basic claims based on the same alleged conduct as the Franklin action and seeks similar relief.

By stipulation of the parties, the Lovoi action was stayed pending a ruling on the motion to dismiss in York County .

Both derivative actions will remain stayed until any appeal related to the York decision has been exhausted.

Legal Proceedings re Authentication of Supplies .

Civil litigation or government investigations are pending in the United States, Italy, Israel, and the Netherlands involving supplies authentication protocols used in certain HP printers.

These protocols are often referred to as Dynamic Security.

Civil litigation or government investigations involving supplies authentication protocols used in certain HP printers are pending, have concluded, or may be filed or opened in multiple geographies, including but not limited to the United States, Italy, Israel, and the Netherlands.

The supplies authentication protocols are often referred to as Dynamic Security.

The core allegations in these proceedings claim misleading or inadequate consumer notifications and permissions pertaining to the use of Dynamic Security, the impact of firmware updates, or the potential inability of cartridges with clone chips or circuitry to work in HP printers with Dynamic Security.

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Digital Revolution B.V.

123Inkt) established the Foundation to pursue the interests of approximately 960 of its customers who transferred their claims to it.

The complaint alleges:

(1) violation of right of ownership;

(2) destruction and damage to property;

(3) computer vandalism;

(4) unlawful act;

(5) non-compliance;

(6) unfair commercial practices;

(7) misleading commercial practices;

and (8) misleading advertising.

The complaint seeks injunctive relief to prohibit use of Dynamic Security, damages, and attorneys’ fees.

On December 27, 2017, the District Court dismissed the case and awarded fees to HP.

On January 25, 2018, the Foundation filed a summons with the Amsterdam Court of Appeal to appeal.

On December 17, 2019, the Court of Appeal set aside the judgment of the District Court, adopted a new decision declaring that HP provided inadequate and partially incorrect information to the Foundation members around September 13, 2016, awarded damages to them in an amount to be later determined, but denied all other claims, including injunctive relief, holding that the use of Dynamic Security is not inherently impermissible and the Foundation lacks legal interest to pursue such action.

On March 19, 2020, the Foundation filed a cassation writ of summons with the

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Supreme Court of the Netherlands (Hoge Raad der Nederlanden) appealing the decision of the Court of Appeal.

On May 29, 2020, HP filed its statement of defense and incidental appeal in cassation with the Supreme Court appealing the decision of the Court of Appeal.

The Attorney General issued a non-binding opinion on July 9, 2021 concluding that both parties’ appeals should be rejected.

The Supreme Court has scheduled its final decision to be delivered on January 7, 2022.

On October 25, 2017, a purported consumer class action, captioned Gensin v.

HP Inc., was filed in the District Court in Jerusalem against HP arising out of the use of Dynamic Security in certain OfficeJet printers.

The petition and motion for certification as a class action alleges:

(1) tortious wrongdoing in violation of the Computers Law, 5755-1995;

(2) breach of Contracts Law, 5731-1970;

(3) breach of the Consumer Protection Law, 5741-1981;

(4) negligence;

and (5) improper enrichment.

The named petitioner initially sought to represent nationwide classes comprised of anyone who “owns an HP printer that has been blocked, disrupted, or interfered with by HP in the use of ink cartridges not manufactured by HP” or who “purchased ink cartridges not manufactured by HP for use in the blocked printers.” Plaintiff seeks class relief, injunctive relief, damages, and attorneys’ fees.

On November 16, 2017, a second purported consumer class action was filed against HP in the Central District Court, captioned Dror v.

, also arising out of the use of Dynamic Security in certain OfficeJet printers.

The petition and motion allege similar causes of action on behalf of similar nationwide classes.

After the Dror case was consolidated with the Gensin case in Jerusalem, the District Court on June 24, 2018 dismissed the Dror case and designated Gensin as the lead matter.

On March 9, 2020, the petitioner moved to modify the proposed nationwide class to be comprised of “[a]ll persons who have an HP printer and whose printer was blocked or rendered unusable by HP with any ink cartridge that is not made by HP” and “[a]ll persons who purchased ink cartridges that are not made by HP, for use in the Blocked Printers.” On July 2, 2020, HP filed its response to the amended petition.

(United States) .

On August 27, 2019, a purported consumer class action was filed against HP in federal court in the Northern District of California arising out of the use of Dynamic Security in certain OfficeJet printers.

The complaint alleges two causes of action under Florida Consumer Protection statutes:

(1) violation of the Florida Deceptive and Unfair Trade Practices Act, F.S.A.

§§ 501.201 et seq., and (2) violation of the Florida Misleading Advertisement Law, F.S.A.

§§ 817.41 et seq.

The named plaintiff seeks to represent a nationwide class of “[a]ll United States Citizens who, between the applicable statute of limitations and the present, had an HP Printer that was modified to reject third party ink cartridges or refilled HP ink cartridges.” On November 13, 2019, plaintiff filed an amended complaint, adding three causes of action to the case:

(1) violation of the Computer Fraud and Abuse Act, 18 U.S.C.

§ 1030 et seq., (2) trespass to chattels, and (3) tortious interference with business relations.

Plaintiff seeks class relief, injunctive relief, damages, including punitive damages, and attorneys’ fees.

On December 30, 2019, HP moved to dismiss plaintiff’s amended complaint.

On April 24, 2020, the Court granted in part and denied in part HP’s motion to dismiss.

The Court dismissed plaintiff’s causes of action under the Florida Consumer Protection statutes, as well as the tortious interference with business relations claim and four of the five claims under the Computer Fraud and Abuse Act.

The Court denied HP’s motion to dismiss on the remaining claims and on the request for injunctive relief and granted plaintiff leave to file an amended complaint.

On June 5, 2020, plaintiff filed a second amended complaint on behalf of both a nationwide class and a Florida subclass alleging violation of the Florida Deceptive and Unfair Trade Practices Act, violation of the Computer Fraud and Abuse Act, and trespass to chattels.

Plaintiff sought class relief, injunctive relief, damages, including punitive damages, and attorneys’ fees.

On September 29, 2020, the Court granted HP’s motion to dismiss, dismissing the case in full with prejudice.

The plaintiff appealed and the parties subsequently reached a settlement.

On August 2, 2021, the plaintiff dismissed the appeal with prejudice.

(trading as 123Inkt) established the Foundation to pursue the interests of approximately 960 of its customers who transferred their claims to it.

The complaint alleges that HP’s use of Dynamic Security was unlawful, asserts a variety of claims, and seeks injunctive relief to prohibit use of Dynamic Security, damages, and attorneys’ fees.

In December 2019, the Amsterdam Court of Appeal rejected the Foundation’s argument that Dynamic Security is unlawful but ruled that error messages displayed on HP printers in September 2016 without providing prior warning regarding Dynamic Security were misleading.

Both parties appealed to the Supreme Court of the Netherlands.

On December 24, 2021, the Supreme Court issued its final decision concluding that both parties’ appeals should be rejected.

This affirms the Appeal Court decision.

No further appeal is permitted.

HP is named in a consolidated, consumer class action pending in the District Court in Jerusalem relating to HP’s use of Dynamic Security in certain OfficeJet printers, which was initially filed on October 25, 2017.

Plaintiff asserts consumer protection, tort and other statutory claims primarily on the basis that no information on Dynamic Security was available in Hebrew, and plaintiff seeks class relief, injunctive relief, damages, and attorneys’ fees.

HP has reached an agreement to settle this case, which the court approved on February 9, 2022.

Consumer Protection Investigation (Italy) .

On September 26, 2019, the Italian Competition Authority (Autorità Garante della Concorrenza e del Mercato) (“AGCM”) served a Notice of Initiation of Proceedings on HP concerning the investigation of alleged aggressive practices involving undue influence on consumers and alleged misleading actions and omissions regarding the restriction or prevention of the use of third-party ink cartridges in HP printers, accompanied by a request for information.

HP submitted its reply to the AGCM’s request for information on November 15, 2019 and has addressed subsequent requests for information.

On May 22, 2020, the AGCM gave notice that it intended to expand its investigation into certain alleged warranty practices regarding the use of third-party cartridges.

On June 26, 2020, HP submitted its response to the warranty allegations.

On December 7, 2020, the AGCM notified HP of the AGCM’s final decision finding that HP engaged in two unfair commercial practices as follows:

(a) the information HP provided to consumers about limitations on the use of certain third-party cartridges in HP printers was allegedly misleading pursuant to Articles 20, 21 and 22 of the Italian Consumer Code, and (b) the alleged use of data to deny warranty coverage and certain alleged data collection practices were aggressive pursuant to Articles 20, 24 and 25 of the Italian Consumer Code.

The final decision (i) orders HP to end the allegedly unfair commercial practices;

(ii) fines HP € 5 million for each alleged unfair practice (total € 10 million);

(iii) requires HP to file a compliance report within 60 days;

(iv) orders HP to publicly publish a corrective statement within 120 days;

and (v) orders HP to amend the packaging of its printers within 120 days.

In December 2020, the Italian Competition Authority (Autorità Garante della Concorrenza e del Mercato) (“AGCM”) notified HP of its decision that HP engaged in unfair commercial practices with respect to its disclosures to consumers about Dynamic Security and alleged use of certain warranty and data collection practices regarding the use of third-party cartridges in HP printers.

The AGCM decision (i) ordered HP to end the allegedly unfair commercial practices;

(ii) fined HP € 5 million for each alleged unfair practice (total € 10 million);

(iii) required HP to file a compliance report within 60 days;

(iv) ordered HP to publicly publish a corrective statement within 120 days;

and (v) ordered HP to amend the packaging of its printers within 120 days.

On December 21, 2020, HP paid the imposed fines.

On February 5, 2021, HP filed an

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On April 6, 2021, HP filed its compliance report, which it subsequently supplemented, and, on June 23, 2021 the AGCM communicated that it was satisfied with the measures that HP submitted.

On February 5, 2021, HP filed an appeal.

On April 6, 2021, HP filed its compliance report, which it subsequently supplemented, and, on June 23, 2021 the AGCM accepted the compliance plan as sufficient.

HP’s appeal is pending in front of the Regional Administrative Court of Lazio.

Digital Revolution B.V.

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On March 30, 2020, Digital Revolution B.V.

123Inkt) served a complaint filed in Amsterdam District Court arising out of the use of Dynamic Security in certain HP printers.

The complaint alleges several causes of action:

(1) abuse of dominant position;

(2) misleading advertising;

(3) unfair and misleading commercial practice;

and (4) misleading comparative advertising.

The complaint seeks injunctive relief, including prohibition of Dynamic Security and disclosure of cartridge authentication protocols, damages, and attorneys’ fees.

The parties’ initial appearance in front of the Court took place on July 8, 2020.

On September 9, 2020, HP filed its defense and a counterclaim for unfair commercial practices and misleading and unlawful comparative advertising against Digital Revolution B.V.

An oral hearing is scheduled for September 13, 2021.

(trading as 123Inkt) served a complaint filed in Amsterdam District Court.

The complaint generally alleges that HP’s use of Dynamic Security in certain HP printers constituted a violation of competition law and unfair and misleading commercial practices and advertising.

The complaint asserts a variety of claims and seeks injunctive relief, including prohibition of Dynamic Security and disclosure of cartridge authentication protocols, damages, and attorneys’ fees.

On December 15, 2021, the court issued its decision rejecting the competition law claims, the request to prohibit Dynamic Security, and the remainder of 123Inkt’s claims but held HP liable to 123inkt where it can show, in separate proceedings, that it suffered damages resulting from the display of certain old error messages.

The decision is subject to appeal.

Mobile Emergency Housing Corp., et al.

(United States) .

On December 17, 2020, a putative consumer class action was filed against HP in federal court in the Northern District of California arising out of the use of Dynamic Security firmware updates.

The complaint alleges seven claims under federal and California law:

(1) violation of the federal Computer Fraud and Abuse Act (“CFAA”) for allegedly causing “damage without authorization” to the plaintiffs’ printers;

(2) violation of the California Comprehensive Computer Data Access and Fraud Act (“CDAFA”);

(3) violation of the California False Advertising Law (“FAL”);

(4) violation of the “fraudulent” prong of the California Unfair Competition Law (“UCL”);

(5) violation of the “unfair” prong of the UCL;

(6) violation of the “unlawful” prong of the UCL;

and (7) trespass to chattels.

Plaintiffs seek to represent a nationwide injunctive-relief class of “all persons in the United States who own a Class Printer” and a monetary relief subclass of those who experienced an error message due to third-party cartridge incompatibility resulting from a firmware update, defining “Class Printers” to include the “HP Color LaserJet Pro M254, HP Color LaserJet Pro MFP M280, HP Color LaserJet Pro MFP M281, and all other models affected” by the firmware updates described in the complaint.

On February 10, 2021, HP filed a motion to dismiss the complaint, and in response, on March 2, 2021, plaintiffs amended their complaint.

The amended complaint added an additional named plaintiff, a California state consumer subclass, and a California Consumers Legal Remedies Act claim seeking injunctive relief on behalf of the new plaintiff and the state consumer subclass.

Plaintiffs subsequently filed Second and Third Amended Complaints respectively on March 19 and April 8, 2021.

The Third Amended Complaint adds allegations pertaining to data collection—specifically, that HP allegedly collected data on the type of third-party cartridges that Plaintiffs used on their printers without their knowledge, in violation of the FAL and UCL and in a manner giving rise to a trespass of chattels.

The Third Amended Complaint also pleads new claims under the CFAA and CDAFA based on these data collection allegations, as well as a new claim under the CDAFA based on the theory that HP lacked authorization to issue the firmware updates at issue.

In December 2020, HP was named in a putative nationwide consumer class action pending in federal court in California arising out of the use of Dynamic Security firmware updates in certain LaserJet printers.

The complaint alleges a variety of claims, including state consumer protection and unfair

AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements (Continued)

Litigation and Contingencies (Continued)

business claims and state and federal computer access and data collection claims.

Plaintiffs seek compensatory damages, restitution, injunctive relief against alleged unfair business practices, and other relief.

On May 24, 2021, HP filed a motion to dismiss the Third Amended Complaint.

The case is in its early stages and discovery has commenced.

Autonomy-Related Legal Matters

Investigations .

As a result of the findings of an ongoing investigation, HP has provided information to the U.K.

Serious Fraud Office, the U.S.

Department of Justice (“DOJ”) and the SEC related to the accounting improprieties, disclosure failures and misrepresentations at Autonomy that occurred prior to and in connection with HP’s acquisition of Autonomy.

On January 19, 2015, the U.K.

Serious Fraud Office notified HP that it was closing its investigation and had decided to cede jurisdiction of the investigation to the U.S.

On November 14, 2016, the DOJ announced that a federal grand jury indicted Sushovan Hussain, the former CFO of Autonomy.

Hussain was charged with conspiracy to commit wire fraud, securities fraud, and multiple counts of wire fraud.

As a result of the findings of an internal investigation, HP provided information to government authorities, including the U.S.

Department of Justice (“DOJ”) related to accounting improprieties, disclosure failures and misrepresentations at Autonomy that occurred before and in connection with HP’s 2011 acquisition of Autonomy.

In November 2016, a federal grand jury indicted Sushovan Hussain, former CFO of Autonomy on charges of conspiracy to commit wire fraud, securities fraud, and multiple counts of wire fraud.

The indictment alleged that Mr.

Hussain engaged in a scheme to defraud purchasers and sellers of securities of Autonomy and HP about the true performance of Autonomy’s business, its financial condition, and its prospects for growth.

A jury trial commenced on February 26, 2018.

On April 30, 2018, the jury found Mr.

Hussain guilty of all charges against him.

On August 26, 2020, the U.S.

Court of Appeals for the Ninth Circuit affirmed the judgment of conviction against Mr.

On November 15, 2016, the SEC announced that Stouffer Egan, the former CEO of Autonomy’s U.S.-based operations, settled charges relating to his participation in an accounting scheme to meet internal sales targets and analyst revenue expectations.

On November 29, 2018, the DOJ announced that a federal grand jury indicted Michael Lynch, former CEO of Autonomy, and Stephen Chamberlain, former VP of Finance of Autonomy.

Hussain engaged in a scheme to defraud purchasers and sellers of securities of Autonomy and HP about Autonomy’s true financial performance and condition.

On April 30, 2018, a jury found Mr.

Hussain guilty of all charges against him, and that judgment was affirmed on appeal in August 2020.

In November 2018, a federal grand jury indicted Michael Lynch, former CEO of Autonomy, and Stephen Chamberlain, former VP of Finance of Autonomy.

The indictment charged Dr.

Lynch and Mr.

Chamberlain were charged with conspiracy to commit wire fraud and multiple counts of wire fraud.

Chamberlain with conspiracy to commit wire fraud and multiple counts of wire fraud.

On January 28, 2022, the U.K.

Home Office approved U.S.

demands to have Mr.

Lynch extradited to face the charges.

The extradition decision is subject to appeal, and Mr.

Lynch has stated publicly that he intends to appeal.

HP is continuing to cooperate with the ongoing enforcement actions.

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On April 17, 2015, four former HP subsidiaries that became subsidiaries of Hewlett Packard Enterprise at the time of the Separation (Autonomy Corporation Limited, Hewlett Packard Vision BV, Autonomy Systems, Limited, and Autonomy, Inc.) initiated civil proceedings in the U.K.

High Court of

AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements (Continued)

Litigation and Contingencies (Continued)

Justice against two members of Autonomy’s former management, Michael Lynch and Sushovan Hussain.

High Court of Justice against two members of Autonomy’s former management, Michael Lynch and Sushovan Hussain.

The Particulars of Claim seek damages in excess of $ 5 billion from Messrs.

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Lynch also filed a counterclaim against Autonomy Corporation Limited seeking $ 160 million in damages, among other things, for alleged misstatements regarding Lynch.

The Hewlett Packard Enterprise subsidiary claimants filed their replies to the defenses and the asserted counter-claim on March 11, 2016.

Trial began on March 25, 2019 and was completed in January 2020.

The parties are awaiting a ruling from the Court.

Trial was completed in January 2020.

On January 28, 2022, the court issued a summary of its key findings in a confidential draft judgment, including the court’s ruling that the claimants have substantially succeeded in their claims against Messrs.

Lynch and Hussein and that Mr.

Lynch’s counterclaim was “undermined” by the court’s findings and is, therefore, not addressed in the draft judgment.

The draft judgment remains confidential, and the court has stated it will be released after a usual process for checking and correction is completed, which the court has stated may take longer than usual given the length of the draft judgment.

The Court also stated that it will determine damages in a later, separate judgment and indicated that the damages awarded may be substantially less than is claimed.

No amount has yet been awarded.

Litigation is unpredictable, and there can be no assurance that HP will recover damages or as to how any award of damages will compare with the amount claimed.

The amount ultimately awarded, if any, would be recorded in the period received.

No adjustment has been recorded in the financial statements in relation to this potential award.

Pursuant to the terms of the separation and distribution agreement, HP and Hewlett Packard Enterprise will share equally in any recovery.

Environmental

HP’s business is subject to various federal, state, local and foreign laws and regulations that could result in costs or other sanctions that adversely affect our business and results of operations.

For example, HP is subject to laws and regulations concerning environmental protection, including laws addressing the discharge of pollutants into the air and water, the management and disposal of hazardous substances and wastes, the clean-up of contaminated sites, the content of HP’s products and the recycling, treatment and disposal of those products, including batteries.

In particular, HP faces increasing complexity in its product design and procurement operations as it adjusts to new and future requirements relating to the chemical and materials composition of its products, their safe use, the energy consumption associated with those products, climate change laws and regulations, and product repairability, reuse and take-back legislation.

HP could incur substantial costs, its products could be restricted from entering certain jurisdictions, and it could face other sanctions, if it were to violate or become liable under environmental laws or if its products become noncompliant with environmental laws.

HP’s potential exposure includes fines and civil or criminal sanctions, third-party property damage or personal injury claims and clean-up costs.

The amount and timing of costs to comply with environmental laws are difficult to predict.

HP is party to, or otherwise involved in, proceedings brought by U.S.

or state environmental agencies under the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”), known as “Superfund,” or state laws similar to CERCLA, and may become a party to, or otherwise involved in, proceedings brought by private parties for contribution towards clean-up costs.

HP is also conducting environmental investigations or remediation at several current or former operating sites pursuant to administrative orders or consent agreements with state environmental agencies.

The separation and distribution agreement between HP and Hewlett Packard Enterprise includes provisions that provide for the allocation of environmental liabilities including certain remediation obligations;

responsibilities arising from the chemical and materials composition of their respective products, their safe use and their energy consumption;

obligations under product take back legislation that addresses the collection, recycling, treatment and disposal of products;

and other environmental matters.

HP will generally be responsible for environmental liabilities related to the properties and other assets, including products, allocated to HP under the separation and distribution agreement and other ancillary agreements.

Under these agreements, HP will indemnify Hewlett Packard Enterprise for liabilities for specified ongoing remediation projects, subject to certain limitations, and Hewlett Packard Enterprise has a payment obligation for a specified portion of the cost of those remediation projects.

In addition, HP will share with Hewlett Packard Enterprise other environmental liabilities as set forth in the separation and distribution agreement.

HP is indemnified in whole or in part by Hewlett Packard Enterprise for liabilities arising from the assets assigned to Hewlett Packard Enterprise and for certain environmental matters as detailed in the separation and distribution agreement.

HP is also conducting environmental investigations or remediations at several current or former operating sites pursuant to administrative orders or consent agreements with state environmental agencies.

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Cross-Indemnifications with Hewlett Packard Enterprise

Under the separation and distribution agreement, HP agreed to indemnify Hewlett Packard Enterprise, each of its subsidiaries and each of their respective directors, officers and employees from and against all liabilities relating to, arising out of or resulting from, among other matters, the liabilities allocated to HP as part of the Separation.

Hewlett Packard Enterprise similarly agreed to indemnify HP, each of its subsidiaries and each of their respective directors, officers and employees from and against all liabilities relating to, arising out of or resulting from, among other matters, the liabilities allocated to Hewlett Packard Enterprise as part of the Separation.

HP expects Hewlett Packard Enterprise to fully perform under the terms of the separation and distribution agreement.

On November 1, 2015, Hewlett-Packard Company completed the separation of Hewlett Packard Enterprise, Hewlett-Packard Company’s former enterprise technology infrastructure, software, services and financing businesses.

The separation and distribution agreement provides for cross-indemnities between HP and Hewlett Packard Enterprise for liabilities allocated to the respective party pursuant to the terms of such agreement.

For information on cross-indemnifications with Hewlett Packard Enterprise for litigation matters, see Note 12, “Litigation and Contingencies”.

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HP’s aggregate product warranty liabilities and changes were as follows:

Nine months ended July 31, 2021

Three months ended January 31, 2022

Balance at beginning of period $ 959

3 unchanged sentences

Balance at end of period $ 925

AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements (Continued)

Unconditional Purchase Obligations

As of July 31, 2021, HP had unconditional purchase obligations of $ 6.8 billion.

These unconditional purchase obligations include agreements to purchase goods or services that are enforceable and legally binding on HP and that specify all significant terms, including fixed or minimum quantities to be purchased, fixed, minimum or variable price provisions and the approximate timing of the transaction.

These unconditional purchase obligations are primarily related to inventory and service support.

Unconditional purchase obligations exclude agreements that are cancellable without penalty.

As of July 31, 2021, unconditional purchase obligations were as follows:

Fiscal year In millions

Thereafter 18

Total $ 6,815

(1) Represents expected unconditional purchase obligations for the remaining three months of the fiscal year 2021.

On June 1, 2021, HP completed the acquisition of HyperX, the gaming division of Kingston Technology Company.

The acquisition supports HP’s strategy to drive growth in gaming and peripherals within the Personal Systems segment.

The table below presents the preliminary purchase price allocation for HP's acquisition as of June 1, 2021 and reflects various preliminary fair value estimates and analyses, including preliminary work performed by third-party valuation specialists, which are subject to change within the measurement period as valuations are finalized.

The primary areas of the preliminary purchase price allocation that are not yet finalized relate to the fair values of certain tangible assets and liabilities acquired, the valuation of intangible assets acquired and residual goodwill.

HP expects to continue to obtain information to assist it in determining the fair value of the net assets acquired at the acquisition date during the measurement period.

Goodwill $ 101

Amortizable intangible assets 208

Net assets assumed 103

Total fair value of consideration $ 412

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Notes to Consolidated Condensed Financial Statements (Continued)

HP’s acquired intangible assets were composed of:

As of July 31, 2021 As of October 31, 2020

Gross Accumulated Amortization Net Gross Accumulated Amortization Net

Customer contracts, customer lists and distribution agreements $ 479 $ 189 $ 290 $ 382 $ 149 $ 233

Technology and patents 764 399 365 621 332 289

Trade name and trademarks 98 12 86 26 8 18

Total intangible assets $ 1,341 $ 600 $ 741 $ 1,029 $ 489 $ 540

During the nine months ended July 31, 2021, the increase in gross intangible assets was primarily due to intangible assets resulting from acquisitions.

The reported amounts are based on preliminary fair value estimates of the assets acquired.

The weighted-average useful lives of intangible assets acquired during the period are as follows:

Weighted-Average Useful Life (in years)

Customer contracts and customer lists 2

Technology and patents 7

Trade name and trademarks 15

As of July 31, 2021, estimated future amortization expense related to intangible assets was as follows:

Fiscal year In millions

Thereafter 202

(1) Represents expected amortization for the remaining three months of the fiscal year 2021.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements