What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-03-07 compared with 2021-09-03 · 131 added, 233 removed, 225 unchanged (62% of the section changed)

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• Results of Operations.

An analysis of our operations financial results comparing the three and nine months ended July 31, 2021 to the prior-year period.

An analysis of our operations financial results comparing the three months ended January 31, 2022 to the prior-year period.

A discussion of the results of operations is followed by a more detailed discussion of the results of operations by segment.

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We are focused on services, including Device as a Service, as the market begins to shift to contractual solutions, and accelerating in attractive adjacencies such as peripherals.

We are driving innovation to enable productivity and collaboration as near-term demand continues with the PC becoming essential for hybrid work, learn and play.

We believe that we are well positioned due to our competitive product lineup.

• In Printing, our strategic focus is on offering contractual solutions to serve consumers, SMBs and large enterprises through our Instant Ink Services, HP+ and Managed Print Services solutions, providing digital printing solutions for graphics segments and applications including commercial publishing, labels, packaging and textiles;

We are driving innovation to enable productivity and collaboration with the PC becoming essential for hybrid work, learn and play.

We believe that we are well positioned due to our competitive product lineup along with our recent acquisitions in peripherals and remote-computing solutions.

• In Printing, our strategic focus is on offering innovative printing solutions and contractual solutions to serve consumers, SMBs and large enterprises through our Instant Ink Services, HP+ and Managed Print Services solutions, providing digital printing solutions for graphics segments and applications including commercial publishing, labels, packaging and textiles;

as well as expanding our footprint in 3D printing across digital manufacturing and strategic applications.

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Additional challenges we face at the segment level are set forth below.

• In Personal Systems, we face challenges with industry component availability which we expect to continue to negatively impact our ability to meet demand, and a competitive environment.

• In Printing, we face challenges from a competitive environment, including non-original supplies (which includes imitation, refill, or remanufactured alternatives) and we face component constraints particularly in printer hardware which we expect to continue to negatively impact our ability to meet demand.

We also obtain many Printing components from single sources due to technology, availability, price, quality, or other considerations.

• In Personal Systems, we face challenges with industry component availability which we expect to continue to negatively impact our ability to meet demand at least in the short-term, and a competitive environment.

• In Printing, we face challenges from a competitive environment, including non-original supplies (which includes imitation, refill, or remanufactured alternatives), and we face component constraints and other supply chain disruptions particularly in printer hardware which we expect to continue to negatively impact our ability to meet demand at least in the short-term.

We also obtain many Printing components from single source due to technology, availability, price, quality or other considerations.

For instance, we source the majority of our A4 and a portion of our A3 portfolio of laser printer engines and laser toner cartridges from Canon.

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however, we have a long-standing business relationship with Canon and anticipate renewal of this agreement.

In the fourth quarter of fiscal 2021, we expect continued strong demand in both Personal Systems and Printing.

However, we expect that component shortages, manufacturing disruptions and logistics challenges will continue to constrain revenue due to the impacts of the COVID-19 pandemic.

In fiscal year 2022, we expect to see continued demand for both Personal Systems and Printing.

We also anticipate that component shortages, manufacturing disruptions and logistics challenges will continue to impact our revenues and margins.

Additionally, we are closely monitoring the unfolding events due to the Russian invasion of Ukraine and its regional and global ramifications.

While the situation is still evolving and the outcomes remain highly uncertain, we expect these events to have an unfavorable impact on our business, results of operations, cash flows and financial position.

Our business and financial performance also depend significantly on worldwide economic conditions.

Accordingly, we face global macroeconomic challenges, particularly in light of the effects of the COVID-19 pandemic as discussed below, tariff-driven headwinds, uncertainty in the markets, volatility in exchange rates and evolving dynamics in the global trade environment.

Accordingly, we face global macroeconomic challenges, particularly in light of the effects of the COVID-19 pandemic as discussed below, tariff-driven headwinds, uncertainty in the markets, volatility in exchange rates, inflationary trends and evolving dynamics in the global trade environment.

The full impact of these and other global macroeconomic challenges on our business cannot be known at this time.

To address these challenges, we continue to pursue innovation with a view towards developing new products and services aligned with generating market demand and meeting the needs of our customers and partners.

In addition, we continue to work on improving our operations and adapting our business models, with a particular focus on enhancing our end-to-end processes, analytics and efficiencies.

We also continue to work on optimizing our sales coverage models, aligning our sales incentives with our strategic goals, improving channel execution and inventory management, strengthening our capabilities in our areas of strategic focus, strengthening our pricing discipline and developing and capitalizing on market opportunities.

In addition, we continue to work on improving our operations and adapting our business models, with a particular focus on enhancing our end-to-end processes,

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Financial Condition and Results of Operations (Continued)

analytics and efficiencies.

We also continue to work on optimizing our sales coverage models, aligning our sales incentives with our strategic goals, improving channel execution and inventory, production and backlog management, strengthening our capabilities in our areas of strategic focus, strengthening our pricing discipline, and developing and capitalizing on market opportunities.

In October 2019, we announced cost-reduction and operational efficiency initiatives intended to simplify the way we work, move closer to our customers and facilitate specific investment in our business.

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As a result, we may experience delays in the anticipated timing of activities related to these efforts, and the anticipated benefits of these efforts may not materialize.

In the second year of our program, we continue to look at new cost savings opportunities and remain ahead of our $1.2 billion gross run rate structural cost reduction plan.

In the third quarter of fiscal 2021, we completed the initial deployment of our SAP S/4 HANA system, one of the largest ERP implementations.

In the second year of our program, we continued to look at new cost savings opportunities and remained ahead of our $1.2 billion gross run rate structural cost reduction plan.

In the third quarter of fiscal year 2021, we completed the initial deployment of our SAP S/4 HANA system, one of the largest ERP implementations.

Also, as part of our end-to-end business planning and forecasting efforts, we went live with our new cloud-based platform which we believe will improve our forecasting agility as part of our digital transformation.

Further, our hybrid work strategy has enabled us to accelerate our location strategy while providing a more flexible workspace.

Further, our hybrid work strategy has enabled us to accelerate our location strategy while

providing a more flexible workspace.

Going forward we are enabling HP’s hybrid work strategy by modernizing our sites to be critical hubs for collaboration and innovation.

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We will continue promoting the health, safety, and well-being of workers and their loved ones.

In response to the COVID-19 pandemic, we have established a cross-functional COVID-19 program management office that meets regularly to review the latest data from our business and site leaders, identify and address emerging risks, and formulate response to actions taken by governments and public policy organizations.

We have put in place global policies and protocols based on guidance from healthcare experts and public health leaders, and we regularly review and update them to reflect current information and the requirements and recommendations of national, federal, state, and local authorities.

In response to the COVID-19 pandemic, we have established a cross-functional COVID-19 program management office that reviews the latest data from our business and site leaders and identifies and addresses emerging risks and issues, and we have put in place global policies and protocols based on guidance from healthcare experts and public health leaders, which we continue to review and update.

We balance our company-wide approach by assessing risk and adjusting our response at the site level, taking into consideration each country's or area's COVID-19 case trends and related measures.

We have commenced a phased approach to returning our employees onsite, which included modifications to certain of our facilities as we adapt to a hybrid work environment.

The business impact of the COVID-19 pandemic has created new and different demand dynamics in the market.

We have seen a higher mix of Consumer PCs and shift from Desktops to Notebooks.

Our Personal Systems business benefited from the remote working and learning environment, including growth in gaming.

In Printing, we have seen ongoing demand for Consumer print, and some improvement in Commercial print as the demand in the SMBs and enterprise segments continue to improve.

Ongoing consumer demand may be impacted as we slowly start to see commercial recovery.

However, the recovery in Commercial print may be uneven given the varying pace of economic recovery and the resurgence of COVID-19 case rates largely driven by the newer variants in some countries.

Also, favorable pricing including historically lower promotions and incentives has contributed positively towards average selling prices (“ASPs”) and gross margin in both Personal Systems and Printing.

Our Personal Systems business benefited from the hybrid work environment and growth in gaming.

In the first quarter of fiscal 2022, we saw strong demand in non-Chromebook Commercial PCs, and mix shifts from low end to premium products.

In Printing, Consumer print demand remained strong, and Commercial print is expected to continue its gradual improvement as more offices reopen.

Also, favorable pricing including lower promotions and incentives have contributed positively towards average selling prices (“ASPs”) in both Personal Systems and Printing.

We estimate sales and marketing program incentives based on a number of factors like historical experience, expected customer behavior and market conditions.

These estimates have been and may continue to be impacted by lower-than-expected incentives due to increased supply constraints, shifts in customer behavior and the evolving impact of the COVID-19 pandemic.

Demand fulfillment has been and is expected to continue to be impacted by industry wide commodity constraints primarily integrated circuits and panels, and manufacturing disruptions in Asia.

Also, we continue to see logistics challenges globally.

As the COVID-19 pandemic continues and new variants of the virus, including the Delta and Lambda variants, emerge, we are seeing a resurgence of the pandemic in key markets.

We have and may experience future disruptions in supply, manufacturing and logistics, including in Asia, and with our suppliers and outsourcing partners.

Demand fulfillment has been and is expected to continue to be impacted by industry wide commodity and component constraints primarily integrated circuits and panels, and logistics challenges globally, at least in short-term.

As the COVID-19 pandemic continues and new variants of the virus emerge, we are seeing a resurgence of the pandemic in key markets.

We have experienced and may experience future disruptions in supply, manufacturing and logistics, including in Asia, and with our suppliers and outsourcing partners.

The full extent of the impact of the COVID-19 pandemic on our business, results of operations, cash flows and financial position will depend on many factors that are not within our control, including, but not limited to:

the severity, duration and scope of the pandemic, including the impact of coronavirus mutations and resurgences;

the effectiveness of actions taken to contain or mitigate the pandemic and

the severity, duration and scope of the pandemic, including the impact of coronavirus mutations

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Financial Condition and Results of Operations (Continued)

prevent or limit any reoccurrence;

and resurgences;

the effectiveness of actions taken to contain or mitigate the pandemic and prevent or limit any reoccurrence;

the development, availability and public acceptance of effective treatments or vaccines;

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and the pace of recovery when the COVID-19 pandemic subsides.

Unsolicited Exchange Offer in Fiscal Year 2020

On March 2, 2020, Xerox Holdings Corporation (“Xerox”) commenced an unsolicited exchange offer for all outstanding shares of HP’s common stock (the “Offer”).

Xerox had also previously nominated candidates for election to HP’s Board of Directors at HP’s 2020 annual meeting of stockholders.

On March 31, 2020, Xerox announced that the Offer had been terminated and subsequently withdrew its slate of director nominees.

In order to respond to Xerox’s actions, HP incurred certain costs during the three and nine months ended July 31, 2020.

For a further discussion of trends, uncertainties and other factors that could impact our operating results, see the section entitled “Risk Factors” in Item 1A of Part I in our Annual Report on Form 10-K for the fiscal year ended October 31, 2020.

For a further discussion of trends, uncertainties and other factors that could impact our operating results, see the section entitled “Risk Factors” in Item 1A of Part II of this report as well as in Item 1A of Part I in our Annual Report on Form 10-K for the fiscal year ended October 31, 2021.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

MD&A is based on our Consolidated Condensed Financial Statements, which have been prepared in accordance with U.S.

The preparation of these financial statements requires management to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, net revenues and expenses, and the disclosure of contingent liabilities.

As of July 31, 2021, the impact of COVID-19 on our business continued to unfold.

The preparation of these financial statements requires management to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, net revenue and expenses, and the disclosure of contingent liabilities.

As of January 31, 2022, the impact of COVID-19 on our business continued to unfold.

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

As events continue to evolve and additional information becomes available, our estimates may change in future periods.

Our management believes that there have been no significant changes during the nine months ended July 31, 2021 to the items that we disclosed as our critical accounting policies and estimates in MD&A in our Annual Report on Form 10-K for the fiscal year ended October 31, 2020, except as mentioned in Note 1, “Basis of Presentation”.

Our management believes that there have been no significant changes during the three months ended January 31, 2022 to the items that we disclosed as our critical accounting policies and estimates in MD&A in our Annual Report on Form 10-K for the fiscal year ended October 31, 2021, except as mentioned in Note 1, “Basis of Presentation”.

ACCOUNTING PRONOUNCEMENTS

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Results of operations in dollars and as a percentage of net revenue were as follows:

Three months ended July 31 Nine months ended July 31

2021 2020 2021 2020

Dollars % of Net Revenue Dollars % of Net Revenue Dollars % of Net Revenue Dollars % of Net Revenue

Three months ended January 31

Dollars % of Net Revenue Dollars % of Net Revenue

Dollars in millions

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Net earnings $ 1,086 6.4 % $ 1,068 6.8 %

For the three months ended July 31, 2021, net revenue increased 7.0% (increased 4.1% on a constant currency basis) as compared to the prior-year period.

net revenue increased 11.4% to $5.8 billion, while net revenue from international operations increased 4.4% to $9.5 billion.

The increase in net revenue was primarily driven by growth in Supplies, favorable foreign currency impacts, a reduction to previously estimated sales and marketing program incentives and growth in Commercial Printing, partially offset by decline in Notebooks.

The increase in Supplies and Commercial Printing was primarily driven by improvement in enterprise and SMBs.

Supply chain constraints impacted both Printing and Personal Systems revenue growth.

For more information on the reduction to previously estimated sales and marketing program incentives, see the “Changes in Variable Consideration” section in Note 6, “Supplementary Financial Information”, to the Consolidated Condensed Financial Statements in Item 1 of Part I of this report, which is incorporated herein by reference.

Three months ended January 31, 2022 compared with three months ended January 31, 2021

Net revenue increased 8.8% (increased 8.2% on a constant currency basis) as compared to the prior-year period.

net revenue decreased 0.3% to $5.6 billion, while net revenue from international operations increased 14.0% to $11.4 billion.

The increase in net revenue was primarily driven by growth in Notebooks, Desktops, Workstations, favorable foreign currency impacts and growth in Commercial Printing, partially offset by decline in Consumer Printing and Supplies.

The increase was driven by higher ASP’s due to favorable pricing and mix, partially offset by unit decline.

Supply chain constraints impacted the availability of both Printing and Personal Systems units.

A detailed discussion of the factors contributing to the changes in segment net revenue is included in “Segment Information” below.

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Financial Condition and Results of Operations (Continued)

For the nine months ended July 31, 2021, total net revenue increased 13.1% (increased 11.4% on a constant currency basis) as compared to the prior-year period.

net revenue increased 18.3% to $17.0 billion, while net revenue from international operations increased 10.4% to $29.8 billion.

The increase in net revenue was primarily driven by growth in Notebooks, Supplies, favorable foreign currency impacts, and growth in Consumer and Commercial Printing, partially offset by decline in Desktops.

The increase in net revenue was driven by strong demand from work from home and remote learning.

Also, net revenue for the prior-year period, was negatively impacted by supply chain constraints and demand weakness resulting from COVID-19.

A detailed discussion of the factors contributing to the changes in segment net revenue is included in “Segment Information” below.

For the three months ended July 31, 2021, gross margin increased by 5.5 percentage points, primarily driven by continued favorable pricing including lower promotions as well as a reduction to previously estimated sales and marketing program incentives and favorable currency impacts, partially offset by higher costs.

For the nine months ended July 31, 2021, gross margin increased by 3.0 percentage points, primarily driven by favorable pricing including lower promotions and favorable currency impacts, partially offset by higher costs.

Gross margin decreased by 1.3 percentage points, primarily driven by mix shift towards Personal Systems, higher commodity and supply chain costs, partially offset by favorable pricing and foreign currency impacts .

A detailed discussion of the factors contributing to the changes in segment gross margins is included under “Segment Information” below.

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Research and Development (“R&D”)

R&D expense increased 32.9% and 33.3% for the three and nine months ended July 31, 2021, respectively, primarily due to continuing investments in innovation and key growth initiatives and higher variable compensation.

R&D expense decreased 11.3%, primarily due to joint R&D partner funding in Personal Systems.

Selling, General and Administrative (“SG&A”)

SG&A expense increased 21.8% for the three months ended July 31, 2021, primarily due to go-to-market initiatives and higher variable compensation.

SG&A expense increased 16.5% for the nine months ended July 31, 2021, primarily due to higher variable compensation and go-to-market initiatives.

SG&A expense increased 6.7%, primarily due to investments in go-to-market initiatives.

Restructuring and Other Charges

Restructuring and other charges for the three and nine months ended July 31, 2021 relate primarily to the Fiscal 2020 Plan.

Restructuring and other charges relate primarily to the Fiscal 2020 Plan.

For more information, see Note 3, “Restructuring and other charges”, to the Consolidated Condensed Financial Statements in Item 1 of Part I of this report, which is incorporated herein by reference.

Amortization of Intangible Assets

Amortization of intangible assets for the three and nine months ended July 31, 2021 relates primarily to intangible assets resulting from acquisitions.

Amortization of intangible assets increased by $23 million, primarily due to recent acquisitions.

Interest and Other, Net

Interest and other, net expense increased $27 million and $91 million for the three and nine months ended July 31, 2021, respectively, primarily due to lower Net Periodic Post-retirement Benefit Credit and higher interest expenses on debt, partially offset by lower debt extinguishment costs.

Interest and other, net expense increased $7 million, primarily due to foreign currency movements, partially offset by lower interest expense on debt.

Provision for taxes

Our 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.

Our 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 our 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 our operations in lower-tax jurisdictions throughout the world.

For the three and nine months ended July 31, 2020, our 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 our operations in lower-tax jurisdictions throughout the world.

During the three and nine months ended July 31, 2021, we 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

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Management’s Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

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, we 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 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 our 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 our operations in lower-tax jurisdictions throughout the world.

During the three months ended January 31, 2022, we 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, we 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.

Segment Information

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Personal Systems

Three months ended July 31 Nine months ended July 31

2021 2020 % Change 2021 2020 % Change

Three months ended January 31

2022 2021 % Change

Dollars in millions

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The components of net revenue and the weighted net revenue change by business unit were as follows:

Three months ended July 31 Nine months ended July 31

Net Revenue Weighted Net Revenue Change (1)

Three months ended January 31

Net Revenue Weighted Net Revenue Change (1)

2021 2020 2021 2020

Dollars in millions Percentage Points Dollars in millions Percentage Points

Dollars in millions Percentage Points

Notebooks $ 8,421 $ 7,366 10.0

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It is calculated by dividing the change in revenue of each business unit from the prior-year period by total segment revenue for the prior-year period.

Three months ended July 31, 2021 compared with three months ended July 31, 2020

Personal Systems net revenue increased 0.4% (decreased 2.8% on a constant currency basis) for the three months ended July 31, 2021 as compared to the prior-year period.

The net revenue increase was primarily due to favorable foreign currency impacts and a reduction to previously estimated sales and marketing program incentives, partially offset by decline in Notebooks, Desktops and Workstations.

Unit volumes were flat and ASPs increased by 0.3%.

The unit volumes were flat driven by an increase in Notebooks, offset by decline in Desktops and Workstations .

Also, industry-wide supply chain constraints limited unit growth during the three months ended July 31,2021.

The increase in ASPs was primarily due to favorable pricing including lower promotions as well as a reduction to previously estimated sales and marketing program incentives, a nd favorable foreign currency impacts, partially offset by mix shifts towards low-end products.

Consumer PCs net revenue increased 3.5%, primarily driven by higher ASPs, partially offset by unit decline in Notebooks.

Commercial PCs net revenue decreased 1.3% primarily driven by lower ASPs and unit decline in Desktops, partially offset by unit growth in Notebooks.

The lower ASPs in Commercial PCs was primarily due to mix shifts, partially offset by favorable foreign currency impacts and pricing.

Consequently, net revenue increased 0.3% in Notebooks and 1.1% in Desktops, and decreased 9.3% in Workstations.

Three months ended January 31, 2022 compared with three months ended January 31, 2021

Personal Systems net revenue increased 15.0% (increased 14.3% on a constant currency basis) for the three months ended January 31, 2022 as compared to the prior-year period.

The net revenue increase was primarily due to growth in Notebooks, Desktops and Workstations driven by 22.3% increase in ASPs, partially offset by 6.0% decrease in unit volume.

The increase in ASPs was primarily due to favorable pricing and mix shifts.

The decrease in unit volume was primarily driven by a decline in Notebooks due to lower Chromebooks and supply chain constraints, partially offset by increases in Desktops and Workstations.

Commercial PCs revenue increased 26.2% primarily driven by higher ASPs and unit growth in Desktops and Workstations, partially offset by unit decline in Notebooks due to lower Chromebooks and supply chain constraints.

Consumer PCs net revenue decreased 0.9% driven by unit declines in Notebooks and Desktops, partially offset by higher ASPs.

Consequently, net revenue increased 14.3% in Notebooks, 17.0% in Desktops and 39.8% in Workstations.

Personal Systems earnings from operations as a percentage of net revenue increased by 0.7 percentage points.

The increase was primarily due to an increase in gross margin, partially offset by an increase in operating expenses as a percentage of net revenue.

The increase in gross margin was primarily due to favorable pricing including lower promotions as well as a reduction to previously estimated sales and marketing program incentives and favorable foreign currency impacts, partially offset by higher commodity costs.

Operating expenses as a percentage of revenue increased by 1.8 percentage points as compared to prior-year period primarily due to increased spend on go-to-market initiatives, R&D investments in innovation and higher variable compensation.

The gross margin remained flat and there was a decrease in operating expenses as a percentage of revenue.

The gross margin remained flat primarily due to favorable pricing, mix shifts and foreign currency impacts, offset by higher costs including commodity costs.

Operating expenses as a percentage of revenue decreased by 0.7 percentage points primarily driven by joint R&D partner funding, partially offset by increases in go-to-market initiatives.

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Financial Condition and Results of Operations (Continued)

Nine months ended July 31, 2021 compared with nine months ended July 31, 2020

Personal Systems net revenue increased 10.5% (increased 8.4% on a constant currency basis) for the nine months ended July 31, 2021 as compared to the prior-year period.

The net revenue increase was primarily due to growth in Notebooks and favorable foreign currency impacts, partially offset by decline in Desktops and Workstations.

The net revenue increase was driven by a 17.4% growth in unit volume, partially offset by a 5.9% decline in ASPs.

The increase in unit volume was driven by an increase in Notebooks due to strong demand driven by work from home, remote learning and gaming, partially offset by decline is Desktops and Workstations.

Also, industry-wide supply chain constraints limited unit growth during the nine months ended July 31, 2021.

Further, for the prior-year period, unit shipments were negatively impacted by supply chain constraints resulting from COVID-19.

The decrease in ASPs was primarily due to mix shifts towards low-end products, partially offset by favorable foreign currency impacts and favorable pricing including lower promotions.

Consumer PCs revenue increased 31.1% driven by unit growth in Notebooks and Desktops and higher ASPs.

Commercial PCs revenue increased 0.5%, primarily driven by unit growth in Notebooks, partially offset by lower ASPs and decline in unit volumes of Desktops and Workstations.

The lower ASPs in Commercial PCs was primarily due to mix shifts, partially offset by favorable foreign currency impacts.

Consequently, net revenue increased 20.8% in Notebooks, and decreased 9.0% in Desktops and 19.4% in Workstations.

Personal Systems earnings from operations as a percentage of net revenue increased by 1.2 percentage points.

The increase was primarily due to an increase in gross margin, partially offset by an increase in operating expenses as a percentage of net revenue.

The increase in gross margin was primarily due to favorable pricing including lower promotions and favorable foreign currency impacts, partially offset by higher costs including commodity costs and unfavorable mix shifts.

Operating expenses as a percentage of revenue increased by 0.8 percentage points primarily due to R&D investments in innovation, higher variable compensation and go-to-market initiatives.

Three months ended July 31 Nine months ended July 31

2021 2020 % Change 2021 2020 % Change

Three months ended January 31

2022 2021 % Change

Dollars in millions

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The components of net revenue and the weighted net revenue change by business unit were as follows:

Three Months Ended July 31 Nine months ended July 31

Net Revenue Weighted Net Revenue Change (1)

Three Months Ended January 31

Net Revenue Weighted Net Revenue Change (1)

2021 2020 2021 2020

Dollars in millions Percentage Points Dollars in millions Percentage Points

Dollars in millions Percentage Points

Supplies $ 3,068 $ 3,146 (1.5)

Commercial Hardware 1,070 732 8.6 3,112 2,616 3.9

Consumer Hardware 720 628 2.3 2,562 1,744 6.4

Commercial 1,039 957 1.6

Consumer 724 941 (4.3)

Total Printing $ 4,831 $ 5,044 (4.2)

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It is calculated by dividing the change in revenue of each business unit from the prior-year period by total segment revenue for the prior-year period.

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Management’s Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

Three months ended July 31, 2021 compared with three months ended July 31, 2020

Printing net revenue increased 24.1% (increased 22.2% on a constant currency basis) for the three months ended July 31, 2021.

The increase in net revenue was driven by growth in Supplies, Commercial, a reduction to previously estimated sales and marketing program incentives, Consumer and favorable foreign currency impact.

Net revenue for Supplies increased 20.2%, primarily driven by inventory replenishment, improved demand in commercial, and favorable pricing including lower promotion.

Also, Supplies net revenue was impacted by COVID-19 in the prior-year period.

Printer ASPs increased 43.8% and unit volume decreased 4.2%.

Printer ASPs increased primarily due to favorable pricing including lower promotion as well as a reduction to previously estimated sales and marketing program incentives and favorable mix shifts.

The decrease in printer unit volume was primarily driven by unit decrease in Consumer partially offset by increase in Commercial.

Further , component availability and supply chain disruptions continued to impact unit growth for both Commercial and Consumer, during the three months ended July 31, 2021.

Net revenue for Commercial increased by 46.2%, primarily due to 28.8% increase in printer unit volume and 35.6% increase in ASPs.

The printer unit volume increased due to improved demand as compared to prior-year period which was impacted by COVID-19.

The increase in ASPs was primarily driven by favorable pricing and mix shift.

Net revenue for Consumer increased 14.6%, primarily due to a 24.2% increase in ASPs, partially offset by 8.1% decrease in printer unit volume.

The increase in ASPs was primarily driven by favorable pricing.

The printer unit volume decreased due to supply chain constraints.

Printing earnings from operations as a percentage of net revenue increased by 5.4 percentage points for the three months ended July 31, 2021, primarily due to increase in gross margin and lower operating expense as a percentage of revenue.

The increase in gross margin is primarily due to favorable pricing including lower promotions as well as a reduction to previously estimated sales and marketing program incentives , partially offset by unfavorable mix shifts and higher costs including commodity costs.

Operating expenses as a percentage of revenue decreased primarily due to less variability in expenses as some expenses are fixed or semi-variable, partially offset by increase spend on go-to-market initiatives, R&D investments in innovation, and higher variable compensation.

Nine months ended July 31, 2021 compared with Nine months ended July 31, 2020

Printing net revenue increased 19.0% (increased 18.2% on a constant currency basis) for the nine months ended July 31, 2021 .

The increase in net revenue was driven by growth in Supplies, Consumer and Commercial.

Net revenue for Supplies increased 13.2%, primarily driven by favorable pricing including lower promotions and improvement in enterprise and SMB demand, and continued consumer demand .

Also, for the prior-year period, Supplies net revenue was impacted by COVID-19 .

Printer ASPs increased 19.6% and unit volume increased 16.2%.

Printer ASPs increased primarily due to favorable pricing including lower promotions.

The increase in printer unit volume was primarily driven by unit increase in both Consumer and Commercial .

Further , component availability and supply chain disruptions continued to impact unit growth for both Commercial and Consumer, during the nine months ended July 31, 2021.

Net revenue for Commercial increased by 19.0%, primarily due to 15.4% increase in printer unit volume and 12.7% increase in ASPs.

The printer unit volume increased due to improved demand as compared to prior-year period which was impacted by COVID-19.

Three months ended January 31, 2022 compared with three months ended January 31, 2021

Printing net revenue decreased 4.2% (decreased 4.6% on a constant currency basis) for the three months ended January 31, 2022.

The decrease in net revenue was driven by Consumer and Supplies, partially offset by Commercial.

Net revenue for Supplies decreased 2.5%, primarily due to normalization in home printing and gradual return to office.

Printer A SPs increased 24.9% and unit volume decreased 27.8%.

Printer ASPs increased primarily due to favorable mix shifts and pricing.

The decrease in printer unit volume was due to component availability and supply chain disruptions continuing to limit unit availability for both Commercial and Consumer, during the three months ended January 31, 2022.

Net revenue for Commercial increased by 8.6%, primarily due to 16.0% increase in ASPs, partially offset by 3.0% decrease in printer unit volume.

The increase in ASPs was primarily driven by favorable pricing and mix shifts.

Net revenue for Consumer increased 46.9%, primarily due to 26.4% increase in ASPs and 16.3% increase in printer unit volume.

The printer unit volume increased due to strong demand from remote working and learning and supply chain disruption in prior-year period due to COVID-19.

The increase in ASPs was primarily driven by favorable pricing.

Printing earnings from operations as a percentage of net revenue increased by 4.5 percentage points for the nine months ended July 31, 2021, primarily due to increase in gross margin and lower operating expense as a percentage of revenue.

The increase in gross margin is primarily due to favorable pricing including lower promotions , partially offset by mix shifts.

Operating expenses as a percentage of revenue decreased primarily due to less variability in expenses as some expenses are fixed or semi-variable, partially offset by higher variable compensation and go-to-market initiatives.

Net revenue for Consumer decreased 23.1% , primarily due to 30.9% decrease in printer unit volume, partially offset by 10.4% increase in ASPs.

The increase in ASPs was primarily driven by favorable mix shifts, pricing and foreign currency impacts.

Printing earnings from operations as a percentage of net revenue decreased by 1.6 percentage points, primarily due to decrease in gross margin driven by higher commodity and supply chain costs, partially offset by favorable pricing and mix shifts.

Further, the hardware gross margin was impacted by component shortages and supply chain disruptions which impacted mix and unit availability for both Commercial and Consumer.

Operating expenses as a percentage of revenue remained flat.

Corporate Investments

The loss from operations in Corporate Investments for the three and nine months ended July 31, 2021, was primarily due to expenses associated with our incubation projects and investments in digital enablement.

The loss from operations in Corporate Investments for the three months ended January 31, 2022, was primarily due to expenses associated with our incubation projects and investments in digital enablement.

AND SUBSIDIARIES

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We use cash generated by operations as our primary source of liquidity.

While the impacts from the COVID-19 pandemic were originally expected to be temporary, the duration and impact of the pandemic remains unclear.

With the emergence of variants, there remains uncertainty around the extent and duration of the pandemic and how our liquidity and working capital needs may be impacted in the future periods as a result.

The impacts from the COVID-19 pandemic were originally expected to be temporary, however, with the emergence of new variants, there remains uncertainty around the extent and duration of the pandemic and how our liquidity and working capital needs may be impacted in the future periods as a result.

We believe that current cash, cash flow from operating activities, new borrowings, available commercial paper authorization and the credit facilities will be sufficient to meet HP’s operating cash requirements, planned capital expenditures, interest and principal payments on all borrowings, pension and post-retirement funding requirements, authorized share repurchases and annual dividend payments for the foreseeable future.

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While our access to capital markets may be constrained and our cost of borrowing may increase under certain business, market and economic conditions, our access to a variety of funding sources to meet our liquidity needs is designed to facilitate continued access to capital resources under all such conditions.

Our liquidity is subject to various risks including the risks identified in the section entitled “Risk Factors” in Item 1A of Part I in our Annual Report on Form 10-K for the fiscal year ended October 31, 2020 and the market risks identified in the section entitled “Quantitative and Qualitative Disclosures about Market Risk” in Item 3 of Part I of this report.

During the nine months ended July 31, 2021, HP completed three acquisitions with a combined purchase price of $582 million, net of cash acquired, of which $217 million was recorded as goodwill and $288 million as intangible assets related to these acquisitions.

On July 27, 2021, we announced a definitive agreement to acquire Teradici Corporation, a global innovator in remote computing software that enables users to securely access high-performance computing from any PC, Chromebook, or tablet, for $275 million , subject to customary working capital and other adjustments.

The transaction is expected to close in the fourth quarter of calendar 2021, pending regulatory review and other customary closing conditions.

Our liquidity is subject to various risks including the risks identified in the section entitled “Risk Factors” in Item 1A of Part II of this report as well as Item 1A of Part I in our Annual Report on Form 10-K for the fiscal year ended October 31, 2021 and the market risks identified in the section entitled “Quantitative and Qualitative Disclosures about Market Risk” in Item 3 of Part I of this report.

Our cash and cash equivalents balances are held in numerous locations throughout the world.

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As we evaluate the future cash needs of our operations, we may revise the amount of foreign earnings considered to be permanently reinvested in our foreign subsidiaries and how to utilize such funds, including reducing our gross debt level, or other uses.

Our cash and cash equivalents, marketable debt securities and total debt were as follows:

Nine months ended July 31

Our cash and cash equivalents and total debt were as follows:

January 31, 2022 October 31, 2021

Cash and cash equivalents $ 3.4 $ 4.3

Marketable debt securities (1)

Total debt $ 7.1 $ 7.5

(1) Includes highly liquid U.S.

treasury notes, U.S.

agency securities, non-U.S.

government bonds, corporate debt securities, money market and other funds.

We classify these investments within Other current assets in Consolidated Balance Sheets, including those with maturity dates beyond one year, based on their highly liquid nature and availability for use in current operations.

AND SUBSIDIARIES

Management’s Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

Our key cash flow metrics were as follows:

Nine months ended July 31

Three months ended January 31

Net cash provided by operating activities $ 1,657 $ 1,022

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

Net (decrease) increase in cash and cash equivalents $ (1,425) $ 142

Net decrease in cash and cash equivalents $ (905) $ (704)

Operating Activities

Compared to the corresponding period in fiscal year 2020, net cash provided by operating activities increased by $1.1 billion for the nine months ended July 31, 2021, primarily due to higher earnings from operations.

Compared to the corresponding period in fiscal year 2021, net cash provided by operating activities increased by $0.6 billion for the three months ended January 31, 2022, primarily due to favorable working capital changes.

AND SUBSIDIARIES

Management’s Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

Key Working Capital Metrics

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Our working capital metrics and cash conversion cycle impacts were as follows:

July 31, 2021 October 31, 2020 Change July 31, 2020 October 31, 2019 Change Y/Y Change

January 31, 2022 October 31, 2021 Change January 31, 2021 October 31, 2020 Change Y/Y Change

Days of sales outstanding in accounts receivable (“DSO”) 27 30 (3) 30 32 (2) (3)

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Cash conversion cycle (33) (25) (8) (30) (30) — (3)

July 31, 2021 as compared to July 31, 2020

January 31, 2022 as compared to January 31, 2021

The cash conversion cycle is the sum of days of DSO and DOS less DPO.

Items which may cause the cash conversion cycle in a particular period to differ from a long-term sustainable rate include, but are not limited to, changes in business mix, changes in payment terms, extent of receivables factoring, seasonal trends and the timing of revenue recognition and inventory purchases within the period.

Items which may cause the cash conversion cycle in a particular period to differ from historical trends include, but are not limited to, changes in business mix, changes in payment terms and timing, extent of receivables factoring, seasonal trends and the timing of revenue recognition and inventory purchases within the period.

DSO measures the average number of days our receivables are outstanding.

DSO is calculated by dividing ending accounts receivable, net of allowance for credit losses, by a 90-day average net revenue.

The decrease in DSO was primarily due to higher revenue as compared to prior-year period and favorable revenue linearity.

The decrease in DSO was primarily due to favorable revenue linearity.

DOS measures the average number of days from procurement to sale of our product.

DOS is calculated by dividing ending inventory by a 90-day average cost of revenue.

The increase in DOS was primarily due to higher strategic buys to better assure supply of commodities in Personal Systems, partially offset by improvement in Printing.

The increase in DOS was primarily due to higher inventory as a result of in-transit sea shipments, partially offset by higher cost of revenue in Personal Systems.

DPO measures the average number of days our accounts payable balances are outstanding.

DPO is calculated by dividing ending accounts payable by a 90-day average cost of revenue.

The increase in DPO was primarily due to working capital management activities and higher inventory purchasing volume.

The increase in DPO was primarily due to an increase in inventory.

Investing Activities

Compared to the corresponding period in fiscal year 2020, net cash used in investing activities decreased by $0.3 billion for the nine months ended July 31, 2021, primarily due to lower investments of $0.5 billion and collateral for derivative instruments of $0.4 billion, partially offset by higher net payments for acquisitions of $0.6 billion.

AND SUBSIDIARIES

Management’s Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

Compared to the corresponding period in fiscal year 2021, net cash used in investing activities increased by $0.3 billion for the three months ended January 31, 2022, primarily due to lower proceeds from sale of investments of $0.3 billion and increase in net investment in property, plant and equipment of $0.1 billion, partially offset by lower collateral posted for derivative instruments of $0.2 billion.

Financing Activities

Compared to the corresponding period in fiscal year 2020, net cash used in financing activities increased by $3.0 billion for the nine months ended July 31, 2021, primarily due to higher share repurchases of $2.7 billion and lower proceeds from debt issuance of $1.0 billion, partially offset by lower repayment of debt of $0.6 billion.

Compared to the corresponding period in fiscal year 2021, net cash used in financing activities increased by $0.6 billion for the three months ended January 31, 2022, primarily due to payment towards commercial paper of $0.4 billion and higher share repurchases of $0.1 billion.

Share Repurchases and Dividends

During the nine months ended July 31, 2021, HP returned $5.2 billion to the shareholders in the form of share repurchases of $4.5 billion and cash dividends of $0.7 billion.

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 returned $1.8 billion to the shareholders in the form of share repurchases of $1.5 billion and cash dividends of $0.3 billion.

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

For more information on our share repurchases, see Note 10, “Stockholders’ Deficit”, to the Consolidated Condensed Financial Statements in Item 1 of Part I of this report, which is incorporated herein by reference.

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Depending on these factors, we may, from time to time, incur additional indebtedness or refinance existing indebtedness.

Outstanding borrowings increased to $7.1 billion as of July 31, 2021 as compared to $6.2 billion as of October 31, 2020, bearing weighted-average interest rates of 3.3% and 3.9% for July 31, 2021 and October 31, 2020, respectively.

On June 16, 2021, we issued $2.0 billion in aggregate principal amount of senior notes across various maturities.

We used approximately $1.0 billion of the proceeds from such issuance to fund the redemption of existing notes maturing in 2021.

For more information on the new notes and the redemption of existing notes, see Note 9, “Borrowings”, to the Consolidated Condensed Financial Statements in Item 1 of Part I of this report, which is incorporated herein by reference.

Outstanding borrowings decreased to $7.1 billion as of January 31, 2022 as compared to $7.5 billion as

AND SUBSIDIARIES

Management’s Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

of October 31, 2021, bearing weighted-average interest rates of 3.3% and 3.1% for January 31, 2022 and October 31, 2021, respectively.

Our weighted-average interest rate reflects the effective rate on our borrowings prevailing during the period and reflects the effect of interest rate swaps.

For more information on our interest rate swaps, see Note 8, “Financial Instruments”, to the Consolidated Condensed Financial Statements in Item 1 of Part I of this report, which is incorporated herein by reference.

On May 26, 2021, we entered into a new $5.0 billion 5-year sustainability-linked senior unsecured committed revolving credit facility (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, we maintained the above mentioned 5-year senior unsecured committed revolving credit facility with aggregate lending commitments of $5.0 billion.

Commitments under the $5.0 billion revolving credit facility will be available until May 26, 2027.

As of January 31, 2022, we maintained the 5-year sustainability-linked senior unsecured committed revolving credit facility with aggregate lending commitments of $5.0 billion which will be available until May 26, 2026.

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

Available Borrowing Resources

As of July 31, 2021, we had available borrowing resources of $575 million from uncommitted lines of credit in addition to the senior unsecured committed revolving credit facilities.

In December 2020, we filed a post-effective amendment to convert the shelf registration statement we initially filed in December 2019 (the “2019 Shelf Registration Statement”) to a non-automatic shelf registration statement because we are no longer a “well-known seasoned issuer”.

The 2019 Shelf Registration Statement was declared effective by the SEC on February 25, 2021 and enables us to offer for sale, from time to time, in one or more offerings, $5.0 billion, in the aggregate, of debt securities, common stock, preferred stock, depository shares and warrants.

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

The amendment to our 2019 Shelf Registration Statement to convert to a non-automatic shelf registration statement was declared effective by the SEC on February 25, 2021 and enables us to offer for sale, from time to time, in one or more offerings, $5.0 billion, in the aggregate, of debt securities, common stock, preferred stock, depository shares and warrants.

For more information on our borrowings, see Note 9, “Borrowings”, to the Consolidated Condensed Financial Statements in Item 1 of Part I of this report, which is incorporated herein by reference.

Credit Ratings

Our credit risk is evaluated by major independent rating agencies based upon publicly available information as well as information obtained in our ongoing discussions with them.

While we do not have any rating downgrade triggers that would accelerate the maturity of a material amount of our debt, previous downgrades have increased the cost of borrowing under our credit facilities, have reduced market capacity for our commercial paper and have required the posting of additional collateral under some of our derivative contracts.

In addition, any further downgrade to our credit ratings by any rating agencies may further impact us in a similar manner, and, depending on the extent of any such downgrade, could have a negative impact on our liquidity and capital position.

We can access alternative sources of funding, including drawdowns under our credit facilities, if necessary, to offset potential reductions in the market capacity for our commercial paper.

AND SUBSIDIARIES

Management’s Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

Our credit risk is evaluated by major independent rating agencies based upon publicly available information as well as information they obtain during our ongoing discussions.

While we currently do not have any rating downgrade triggers that would accelerate the maturity of a material amount of our debt, a downgrade from our current credit rating may increase the cost of borrowing under our credit facility, reduce market capacity for our commercial paper, require the posting of additional collateral under some of our derivative contracts and may have a negative impact on our liquidity and capital position, depending on the extent of such downgrade.

We can access alternative sources of funding, including drawdowns under our credit facility, if necessary, to offset potential reductions in the market capacity for our commercial paper.

CONTRACTUAL AND OTHER OBLIGATIONS

Principal and Interest payments on debt

In June 2021, we issued $2.0 billion in aggregate principal amount of senior notes across various maturities.

We used approximately $1.0 billion of the proceeds from such issuance to fund the redemption of existing notes maturing in 2021.

As a result our future principal payments on debt increased from $6.2 billion as at October 31, 2020 to $7.2 billion as at July 31, 2021 and interest payment on debt increased from $2.2 billion as at October 31, 2020 to $2.4 billion as at July 31, 2021.

Unconditional Purchase Obligation

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, the Company had outstanding purchase commitments of $6.8 billion.

The majority of these commitments are due within five years, see Note 14, “Commitments”, to the Consolidated Condensed Financial Statements in Item 1 of Part I of this report, which is incorporated herein by reference.

Retirement and Post-Retirement Benefit Plan Contributions

As of July 31, 2021, we anticipate making contributions for the remainder of fiscal year 2021 of approximately $27 million to our non-U.S.

As of January 31, 2022, we anticipate making contributions for the remainder of fiscal year 2022 of approximately $31 million to our non-U.S.

pension plans, $28 million to cover benefit payments to U.S.

non-qualified pension plan participants and $4 million to cover benefit claims for our post-retirement benefit plans.

Our policy is to fund our pension plans so that we meet at least the minimum contribution required by local government, funding and taxing authorities.

Our policy is to fund our pension plans so that we meet the minimum contribution required by local government, funding and taxing authorities.

For more information on our retirement and post-retirement benefit plans, see Note 4, “Retirement and Post-Retirement Benefit Plans”, to the Consolidated Condensed Financial Statements in Item 1 of Part I of this report, which is incorporated herein by reference.

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As a result of our approved restructuring plans, we expect to make future cash payments of approximately $0.2 billion.

We expect to make future cash payments of $0.1 billion in fiscal year 2021 with remaining cash payments through fiscal year 2023.

For more information on our restructuring activities that are part of our cost improvements, see Note 3, “Restructuring and Other Charges”, to the Consolidated Condensed Financial Statements in Item 1 of Part I of this report, which is incorporated herein by reference.

Uncertain Tax Positions

As of July 31, 2021, we had approximately $566 million of recorded liabilities and related interest and penalties pertaining to uncertain tax positions.

As of January 31, 2022, we had approximately $600 million of recorded liabilities and related interest and penalties pertaining to uncertain tax positions.

We are unable to make a reasonable estimate as to when cash settlement with the tax authorities might occur due to the uncertainties related to these tax matters.

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Off-balance sheet arrangements

As part of our ongoing business, we have not participated in transactions that generate material relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

AND SUBSIDIARIES

Management’s Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

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

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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 2. Management’s Discussion and Analysis