What changed in this filing

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Item 7. Management’s Discussion and Analysis

2022-12-06 compared with 2021-12-09 · 217 added, 189 removed, 343 unchanged (54% of the section changed)

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Corporate Investments include HP Labs and certain business incubation and investment projects.

• In Personal Systems, our strategic focus is on profitable growth through innovation and market segmentation.

This focus is with respect to enhanced innovation in multi-operating systems, multi-architecture, geography, customer segments and other key attributes.

Additionally, we are investing in endpoint services and solutions.

• In Personal Systems, our strategic focus is on:

◦ profitable growth through innovation, market segmentation and simplification of our portfolio

◦ enhanced innovation in multi-operating systems, multi-architecture, geography, customer segments and other key attributes;

◦ investing in endpoint services and solutions.

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 with the PC becoming essential for hybrid work, learn and play.

◦ 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 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.

We continue to experience challenges that are representative of trends and uncertainties that may affect our business and results of operations.

One set of challenges relates to dynamic market trends that may adversely impact our product mix.

• 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;

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

In addition to growing our subscription business, we are also focused on rebalancing system profitability to more upfront profitable hardware sales through our product offerings including HP+ and Big Tank.

We are committed to growing our peripherals, gaming, workforce solutions, consumer subscriptions, 3D and industrial graphics businesses.

Our ability to innovate is helping us gain momentum in growth areas like gaming and peripherals, and we see significant opportunities to drive greater recurring revenues across Personal Systems and Printing.

Our acquisition of Poly adds to our growth portfolio by bringing industry-leading video conferencing solutions, cameras, headsets, voice and software capabilities.

To drive more integration across our commercial services, software and security portfolio, we have created a new Workforce Services and Solutions organization.

We continue to build on strong portfolios like Instant Ink to grow our Consumer Subscription business.

In Industrial Graphics, we are driving the shift from analog to digital in segments like labels and packaging.

In Personalization & 3D, we are creating end-to-end solutions that can capture more value with our differentiated technology.

We continue to experience challenges that are representative of the trends and uncertainties that may affect our industry, generally, and our business and financial results, specifically, and we expect these challenges to continue in the short-term.

One set of challenges relates to the current macroeconomic environment and the adverse impact on demand for certain of our products and product mix.

A second set of challenges relates to changes in the competitive landscape.

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A third set of challenges relates to business model changes and our go-to-market execution in an evolving distribution and reseller landscape, with increasing online and omnichannel presence.

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 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.

Additional challenges we face at the segment level, and that we expect to continue facing in the short-term are set forth below.

• In Personal Systems, we face challenges with competitive pricing environment, supply shortages in certain parts of business, elevated commodity and logistics costs compared to pre-pandemic levels.

We are also experiencing softness in demand resulting in overall decline in Personal Systems market.

• 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 which we expect to continue to negatively impact our financial performance in the short term.

We also obtain many Printing components from single

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Management’s Discussion and Analysis of

Financial Condition and Results of Operations

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 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.

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.

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, 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.

These were further updated in February 2020.

These efforts included transforming our operating model to integrate our sales force into a single commercial organization and reducing structural costs across the Company through our restructuring plan approved in September 2019 (the

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, efficiencies and simplification of our product portfolio.

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, effective cost management, strengthening our pricing discipline, and developing and capitalizing on market opportunities.

Macroeconomic Environment

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

We face global macroeconomic challenges, particularly in light of the effects of the ongoing geopolitical conflicts in Ukraine, tensions across the Taiwan Strait, the COVID-19 pandemic, tariff-driven headwinds, uncertainty in the markets, volatility in exchange rates, inflationary trends and evolving dynamics in the global trade environment.

Throughout fiscal 2022, we observed significant market uncertainty, increasing inflationary pressures, supply constraints and a strengthening U.S.

dollar, as well as ongoing effects from the COVID-19 pandemic.

These market dynamics, which we expect will continue in the short-term, have created new and different demand dynamics in our markets and have had significant impacts on our financial results.

While our Personal Systems business benefited from the hybrid work environment and growth in gaming driven by the COVID-19 pandemic, these trends and consumer behavior have started to change as a result of various macroeconomic factors, including but not limited to inflation, foreign currency, and lower consumer spending.

Beginning third quarter of fiscal 2022, we observed an accelerated decline in consumer demand, particularly with respect to Consumer PCs.

This decline in demand is in line with industry-wide declines and we expect this to continue for fiscal 2023.

For the fiscal year 2022, we continued to see strong demand in Windows-based Commercial PCs, and mix shifts from low end to premium products.

However, we anticipate the overall macroeconomic environment to continue to adversely impact the demand for Commercial PCs in the short-term.

In Printing, we continued to see gradual and uneven recovery in Commercial Print, driven by the slow return of workers to the office, and softening of demand in Consumer Print, which accelerated during the fourth quarter of fiscal 2022.

Also, we experienced an increasingly competitive pricing environment in the second half of fiscal 2022, which we expect to continue in the short-term, due to the macroeconomic environment across Personal Systems and Printing.

Further, our operating margins were negatively impacted by the higher cost due to inflationary pressures.

In fiscal 2023, we expect decline in both Personal Systems and Printing market compared to fiscal 2022.

Supply chain dynamics have impacted and we expect will continue to impact logistics and component costs at least in the short term, with logistics costs remaining elevated for the fiscal year as a result of both expedited shipments of components and overall rate costs in the freight network, while capacity improved in the second half of fiscal 2022.

Additionally, we expect industry wide commodity and component constraints, including application specific integrated circuits (“ASICs”) that are unique to our products in Personal Systems and Printing, to continue to impact our businesses in the short-term.

We continue to monitor the COVID-19 pandemic and variants of the coronavirus, as well as the impact the pandemic has on our employees, customers, business partners, and communities.

We have experienced and may experience future disruptions in supply, manufacturing and logistics, particularly in Asia, and with our suppliers and outsourcing partners globally as a result of COVID-19.

In addition to the macroeconomic dynamics, we are exposed to fluctuations in foreign currency exchange rates.

We have a large global presence, with more than 65% of our net revenue for fiscal 2022 coming from outside the United States.

As a result, our financial results can be, and particularly in recent periods have been, impacted by fluctuations in foreign currency exchange rates.

We expect foreign currency fluctuations to continue to negatively impact our financial results in the fiscal 2023.

On May 31, 2022, we announced our decision to wind down business operations in Russia having already suspended all new shipments and paused our marketing and advertising activities in February 2022.

Russia contributed approximately $1.0 billion of total net revenue in fiscal 2021.

In the second half of fiscal 2022, we recognized a charge of $23 million towards severance, cancellation of contracts, inventory write-downs and other one-time exit charges related to our decision.

A significant escalation or expansion of the situation’s current scope could have an adverse effect on our business, results of operations, cash flows or financial position.

We continue to be focused on the safety and security of our employees and their families in the impacted regions and we have provided, and expect to continue to provide grants to support Ukrainian relief efforts.

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Financial Condition and Results of Operations

“Fiscal 2020 Plan”).

We have invested and expect to invest some of the savings from these efforts across our businesses, including investing to build our digital capabilities.

Over time, we expect these investments will make us more efficient and allow us to advance our positions in Personal Systems and Printing, while also disrupting new industries where we see attractive medium to long-term growth opportunities.

However, the rate at which we are able to invest in our business and the returns that we are able to achieve from these investments will be affected by many factors, including the efforts to address the execution, industry and macroeconomic challenges facing our business as discussed above.

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 continued to look at new cost savings opportunities and remained ahead of our $1.2 billion gross run rate structural cost reduction pla n.

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.

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

This will also deliver savings in our real estate portfolio.

For more information on our Fiscal 2020 Plan, see Note 3, “Restructuring and Other Charges”, to the Consolidated Financial Statements in Item 8 of Part II of this report, which is incorporated herein by reference.

We typically experience higher net revenues in our fourth quarter compared to other quarters in our fiscal year due in part to seasonal holiday demand.

Historical seasonal patterns may not continue in the future and have been impacted by increasing supply constraints, shifts in customer behavior and the evolving impacts of the COVID-19 pandemic.

Our COVID-19 Response

We continue to closely monitor the COVID-19 pandemic, including its resurgence in key markets.

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 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.

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

We saw continued strong demand in Consumer PCs and mix shifts from low end to premium products in Commercial PCs in the second half of fiscal year 2021.We had seen a strong Chromebook demand in first half of the year.

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 historically low promotions and incentives have contributed positively towards average selling prices (“ASPs”) and gross margin 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 and component constraints primarily integrated circuits and panels, manufacturing disruptions in Asia 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 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 prevent or limit any reoccurrence;

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

governmental, business and individuals’ actions that have been and continue to be taken in response to the pandemic;

general economic uncertainty in key global markets and financial market volatility;

global economic conditions and levels of economic growth;

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

We typically experience higher net revenues in our fourth fiscal quarter compared to other quarters in our fiscal year due, in part, to seasonal holiday demand.

Historical seasonal patterns may not continue in the future and have been impacted by supply constraints, shifts in customer behavior, continuing impacts of the macroeconomic challenges and different demand dynamics.

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 this Annual Report on Form 10-K.

Transformation Update

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

These initiatives were further updated in February 2020.

These efforts included transforming our operating model to integrate our sales force into a single commercial organization and reducing structural costs across HP through our restructuring plan approved in September 2019 (the “Fiscal 2020 Plan”).

In the third year of our program, we completed our Fiscal 2020 Plan, generating over $1.3 billion dollars in gross annual run-rate structural costs savings, ahead of our $1.2 billion dollar goal.

We have changed our operating model to simplify the way we are structured and the way we work to free up capacity, create scale, efficiency, and effectiveness.

We focused on real estate and site optimization in alignment with our location strategy.

We have also focused on creating efficient digital workspaces with the transition to a hybrid work model, which is in line with real estate optimization.

We made significant progress in optimizing our manufacturing footprint including factory locations (China, India, Puerto Rico) while investing in a best-in-class supply chain network and product supply resiliency.

We have invested a portion of the savings from these efforts across our businesses, including investing to build our digital capabilities such as deployment of our SAP S/4 HANA system, one of the largest ERP implementations.

Now that the Fiscal 2020 plan is complete, we are now starting on the next phase in our transformation.

In November 2022, we announced our Future Ready Plan (the “Fiscal 2023 Plan”) to become a more digitally enabled company, focus investments on key growth opportunities and simplify our operating model.

The new Fiscal 2023 plan is expected to run for three years through end of fiscal 2025.

The three key elements of our Fiscal 2023 plan are digital transformation, portfolio optimization, and operational efficiency.

As part of digital transformation, we will continue the process of digitizing the company to simplify and accelerate many processes through automation and end-to-end management.

As part of optimizing our portfolio, we plan to continue to invest in our key growth areas of Peripherals, Gaming, Workforce Services & Solutions, Consumer Subscriptions and Industrial Graphics and 3D, to drive competitive advantage and market leadership and we also plan to simplify our portfolio to reduce complexity.

Further to achieve operational efficiency, we plan to optimize our performance by driving efficiencies, simplifying organizational structures, and optimizing costs.

We expect to invest some of the savings from these efforts across our businesses to be more efficient and advance our positions in Personal Systems and Printing, while also disrupting new industries where we see attractive growth opportunities.

We also plan to use some of these savings to partially offset headwinds we expect to see across our businesses in fiscal 2023 as a result of macroeconomic factors.

See “Risk Factors— We may not achieve some or all of the expected benefits of our restructuring plans and our restructuring may adversely affect our business” in Item 1A, which is incorporated herein by reference.

For more information on our Fiscal 2020 Plan and Fiscal 2023 Plan, see Note 3, “Restructuring and Other Charges,” to the Consolidated Financial Statements in Item 1 of Part I of this report, which is incorporated herein by reference.

Oracle Corporation (“Oracle”) Litigation proceeds

On October 12, 2021, Oracle paid approximately $4.65 billion, to satisfy the judgment with interest, related to the litigation in connection with Oracle’s discontinuation of software support for former Hewlett-Packard Company’s Itanium-based line of mission-critical servers.

The net proceeds from the judgement were shared equally between HP and Hewlett Packard Enterprise pursuant to the terms of the separation and distribution agreement.

Recent Developments

On August 29, 2022, we completed the acquisition of Poly, a leading global provider of workplace collaboration solutions, in an all-cash transaction for $40 per share, implying a total enterprise value of $3.3 billion, inclusive of Poly’s net debt.

Poly is a leader in video conferencing solutions, cameras, headsets, voice and software.

With the acquisition, we aim to deliver a complete ecosystem of devices, software, and digital services to create premium employee experiences, improve workforce productivity, and provide enterprise customers with better visibility, insights, security, and manageability across their hybrid IT environments.

The financial results of Poly are included in our Consolidated Financial Statements for the year ended October 31, 2022, from the date of the acquisition.

We expect to complete the integration of Poly to HP’s system and process by the end of fiscal year 2023.

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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 fiscal year ended October 31, 2020.

Oracle Corporation (“Oracle”) Litigation proceeds

The net proceeds from the judgement are being shared equally between HP and Hewlett Packard Enterprise pursuant to the terms of the separation and distribution agreement.

For more information, see Note 14, “Litigation and Contingencies” to the Consolidated Financial Statements in Item 8 of Part II of this report, which is incorporated herein by reference.

On September 1, 2022, we consummated our offer (the “Exchange Offer”) to exchange approximately $0.5 billion of outstanding notes issued by Poly (the “Poly Notes”) for new notes issued by us with the same interest rate, interest payment dates, maturity date and redemption terms as the exchanged Poly Notes.

In conjunction with the Exchange Offer, certain proposed amendments that would eliminate substantially all restrictive covenants and certain events of default and other provisions in the indenture governing Poly Notes were adopted, pursuant to a consent solicitation (the “Consent Solicitation”) conducted concurrently with the Exchange Offer.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The Consolidated Financial Statements of HP are prepared in accordance with United States (“U.S.”) generally accepted accounting principles (“GAAP”), which require 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 October 31, 2021, the impact of COVID-19 on our business continued to unfold.

As of October 31, 2022, the impact to our business from the changing macroeconomic factors continued to unfold.

Additionally, HP continues to assess and evaluate impacts from the events in Russia, inflationary concerns, as well as certain supply chain disruptions.

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

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As a result, significant contract interpretation may be required to determine the appropriate accounting, including the identification of performance obligations that are distinct, the allocation of the transaction price among performance obligations in the arrangement and the timing of transfer of control of promised goods or services for each of those performance obligations.

We evaluate each performance obligation in an arrangement to determine whether it represents a distinct good or services.

We evaluate each performance obligation in an arrangement to determine whether it represents distinct goods or services.

A performance obligation constitutes distinct goods or services when the customer can benefit from the goods or services either on its own or together with other resources that are readily available to the customer and the performance obligation is distinct within the context of the contract.

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If the transaction price includes a variable amount, we estimate the amount using either the expected value or most likely amount method.

We reduce the transaction price at the time of revenue recognition for customer and

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Financial Condition and Results of Operations

distributor programs and incentive offerings, rebates, promotions, other volume-based incentives and expected returns.

We reduce the transaction price at the time of revenue recognition for customer and distributor programs and incentive offerings, rebates, promotions, other volume-based incentives and expected returns.

We use estimates to determine the expected variable consideration for such programs based on historical experience, expected consumer behavior and market conditions.

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The selling price for each performance obligation is based on its Standalone Selling Price (“SSP”).

We establish SSP using the price charged for a performance obligation when sold separately (“observable price”) and, in some instances, using the price established by management having the relevant authority.

We establish SSP using the price charged for a performance obligation when

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Management’s Discussion and Analysis of

Financial Condition and Results of Operations

sold separately (“observable price”) and, in some instances, using the price established by management having the relevant authority.

When observable price is not available, we establish SSP based on management’s judgment considering internal factors such as margin objectives, pricing practices and controls, customer segment pricing strategies and the product life-cycle.

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We state our inventory at the lower of cost or market on a first-in, first-out basis.

We make adjustments to reduce the cost of inventory to its net realizable value at the product group level for estimated excess or obsolescence considering judgments related to future demand and market conditions, along with the impact of COVID-19.

Factors influencing these adjustments include changes in demand, technological changes, product life cycle and development plans, component cost trends, product pricing, physical deterioration and quality issues.

Factors influencing these adjustments include changes in demand, ageing of inventory, technological changes, supply constraints, product life cycle and development plans, component cost trends, product pricing, physical deterioration and quality issues.

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Financial Condition and Results of Operations

exchange fluctuations calculated by translating current period revenues using monthly exchange rates from the comparative period and excluding any hedging impact recognized in the current period, and does not adjust for any repricing or demand impacts from changes in foreign currency exchange rates.

exchange fluctuations calculated by translating current period revenues using monthly exchange rates from the comparative period and excluding any hedging impact recognized in the current period, and without adjusting for any repricing or demand impacts from changes in foreign currency exchange rates.

This information is provided so that net revenue can be viewed with and without the effect of fluctuations in foreign currency exchange rates, which is consistent with how management evaluates our net revenue results and trends, as management does not believe that the excluded items are reflective of ongoing operating results.

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Restructuring and other charges 233 0.4 % 245 0.4 % 462 0.9 %

Acquisition-related charges 68 0.1 % 16 — % 35 0.1 %

Acquisition and divestiture charges 318 0.5 % 68 0.1 % 16 — %

Amortization of intangible assets 228 0.4 % 154 0.2 % 113 0.2 %

Russia exit charges 23 — % — — % — — %

Earnings from operations 4,676 7.4 % 5,302 8.4 % 3,462 6.1 %

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Earnings before taxes 4,441 7.1 % 7,511 11.8 % 3,231 5.7 %

(Provision for) benefit from taxes (1,008) (1.6) % (387) (0.7) % 629 1.1 %

Provision for taxes (1,238) (2.0) % (1,008) (1.6) % (387) (0.7) %

Net earnings $ 3,203 5.1 % $ 6,503 10.2 % $ 2,844 5.0 %

In fiscal year 2021, total net revenue increased 12.1% (increased 10.2% on a constant currency basis) as compared to the prior-year period.

Net revenue from the United States increased 11.0% to $22.4 billion, and outside of the United States increased 12.7% to $41.1 billion.

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

The increase in net revenue is due to strong demand and higher ASPs driven by work from home and remote learning.

In fiscal year 2022, total net revenue decreased 0.8% (increased 0.7% on a constant currency basis) as compared to the prior-year period.

Net revenue from the United States decreased 3.4% to $21.7 billion, and outside of the United States increased 0.6% to $41.3 billion.

The decrease in net revenue was primarily driven by unfavorable foreign currency impacts, decline in Supplies, Notebooks and Consumer Printing, partially offset by an increase in Desktops, Workstations and Other Personal Systems.

The decrease was driven by unit decline, partially offset by higher average selling prices (“ASPs”).

Units were down in both Personal Systems and Printing due to supply chain constraints, and demand softness primarily in the second half of fiscal 2022 driven by the macroeconomic environment including inflationary trends.

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

For fiscal year 2021, gross margin increased by 2.7 percentage points, primarily driven by favorable pricing including lower promotions and favorable foreign currency impacts, partially offset by higher costs including commodity costs.

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Financial Condition and Results of Operations

For fiscal year 2022, gross margin decreased by 1.5 percentage points, primarily driven by unfavorable foreign currency impacts and mix shifts, higher costs including commodity costs and reduction in previously estimated sales and marketing program incentives in the prior-year period, partially offset by higher ASPs.

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 29.0% in fiscal year 2021, primarily due to continuing investments in innovation and key growth initiatives and higher variable compensation.

R&D expense decreased 16.5% in fiscal year 2022, primarily driven by increased investments in Personal Systems in the prior-year period, lower variable compensation and joint partner funding.

Selling, general and administrative (“SG&A”)

SG&A expense increased 17.0% in fiscal year 2021, primarily driven by go-to-market initiatives and higher variable compensation.

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Financial Condition and Results of Operations

SG&A expense decreased 8.3% in fiscal year 2022, primarily driven by lower variable compensation and go-to-market initiatives expenses.

Restructuring and other charges

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For more information, see Note 3, “Restructuring and Other Charges”, to the Consolidated Financial Statements in Item 8 of Part II of this report, which is incorporated herein by reference.

Acquisition-related Charges

Acquisition-related charges relate primarily to third-party professional and legal fees, and integration-related costs, as well as fair value adjustments of certain acquired assets such as inventory.

Acquisition-related charges increased by $52 million in the fiscal year 2021, primarily due to recent acquisitions.

Acquisition and divestiture charges

Acquisition and divestiture charges primarily include, direct third-party professional and legal fees, and integration and divestiture-related costs, as well as non-cash adjustments to the fair value of certain acquired assets such as inventory and certain compensation charges related to cash settlement of restricted stock units and performance-based restricted stock units from acquisitions.

Acquisition and divestiture charges increased by $250 million in the fiscal year 2022, primarily due to the Poly acquisition.

Amortization of intangible assets

Amortization of intangible assets relates primarily to intangible assets resulting from acquisitions.

Amortization of Intangible assets increased by $41 million in the fiscal year 2021, primarily due to recent acquisitions.

Amortization of Intangible assets increased by $74 million in the fiscal year 2022, primarily due to the recent acquisition of Poly, and the acquisitions of HyperX and Teradici in the fiscal year 2021.

Russia exit charges

For the fiscal year 2022, HP recognized a charge of $23 million towards severance, cancellation of contracts, inventory write-downs and other one-time exit charges related to our decision to wind down our operations in Russia.

Interest and other, net

Interest and other, net for the fiscal year 2021 was net gain as compared to a net expense in the fiscal year 2020, primarily due to gain from one-time Oracle litigation proceeds of $2.3 billion, impact from defined benefit plan settlements, partially offset by lower Net Periodic Post-retirement Benefit Credit.

Interest and other, net for the fiscal year 2022 was net expense as compared to a net gain in the fiscal year 2021, primarily due to one-time gain from Oracle litigation proceeds of $2.3 billion in the prior-year period and increased interest expenses on senior unsecured notes.

For more information, see Note 7, “Supplementary Financial Information”, to the Consolidated Financial Statements in Item 8 of Part II of this report, which is incorporated herein by reference.

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Our effective tax rate was 27.9% in fiscal year 2022.

In fiscal year 2021, our effective tax rate differed from the U.S.

federal statutory rate of 21% primarily due to changes in valuation allowances and favorable tax rates associated with certain earnings in lower-tax jurisdictions throughout the world.

The jurisdictions with favorable tax rates that had the most significant impact on our effective tax rate in the periods presented were Puerto Rico, Singapore, and Malaysia.

The effective tax rate differs from the U.S.

federal statutory rate of 21% primarily due to impacts of internal reorganization and favorable tax rates associated with certain earnings in lower-tax jurisdictions throughout the world.

The jurisdictions with favorable tax rates that had the most significant impact on our effective tax rate in the periods presented were Singapore, Malaysia and Puerto Rico.

For a reconciliation of our effective tax rate to the U.S.

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In fiscal year 2022, we recorded $470 million of net income tax charges related to discrete items in the provision for taxes.

This amount included income tax charges of $533 million related to the Oracle litigation proceeds, $15 million of uncertain tax position charges, and $9 million of other net tax charges.

These charges were partially offset by income tax benefits of $393 million related to changes in valuation allowances, $89 million of tax effects related to internal reorganization, $50 million related to restructuring charges, and $16 million related to the filing of tax returns in various jurisdictions.

This amount included $649 million of tax effects related to internal reorganization, $118 million of uncertain tax position charges, $55 million related to withholding taxes on undistributed foreign earnings, $51 million related to audit settlements in various jurisdictions and $26 million of other net tax charges.

These charges were partially offset by income tax benefits of $183 million related to the filing of tax returns in various jurisdictions, $156 million related to changes in valuation allowances, $47 million related to restructuring charges, and $43 million related to Poly acquisition charges.

AND SUBSIDIARIES

Management’s Discussion and Analysis of

Financial Condition and Results of Operations

On August 16, 2022, the U.S.

government enacted the Inflation Reduction Act of 2022 (the "Inflation Reduction Act") into law.

The Inflation Reduction Act includes a new corporate alternative minimum tax (the "Corporate AMT") of 15% on the adjusted financial statement income ("AFSI") of corporations with average AFSI exceeding $1.0 billion over a three-year period.

The Corporate AMT is effective for the Company beginning in fiscal 2024 and we have elected to treat any future Corporate AMT as period costs in the period they arise.

Additionally, the Inflation Reduction Act imposes an excise tax of 1% tax on the fair market value of net stock repurchases made after December 31, 2022.

The impact of this provision will be dependent on the extent of share repurchases made in future periods.

We continue to analyze the impacts of the Inflation Reduction Act;

however, it is not expected to have a material impact on our financial statements.

Segment Information

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Future changes to this organizational structure may result in changes to the segments disclosed.

AND SUBSIDIARIES

Management’s Discussion and Analysis of

Financial Condition and Results of Operations

Personal Systems

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Earnings from operations as a % of net revenue 6.6% 7.2 % 5.9%

AND SUBSIDIARIES

Management’s Discussion and Analysis of

Financial Condition and Results of Operations

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

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Workstations 2,100 1,669 1,816 1.0 (0.4)

Other 1,787 1,609 1,331 0.5 0.8

2,065 1,787 1,609 0.7 0.5

Total Personal Systems $ 44,084 $ 43,359 $ 38,997 1.7 11.2

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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.

(2) Includes net revenue of Poly since acquisition date (August 29, 2022).

Fiscal year 2022 compared with fiscal year 2021

Personal Systems net revenue increased 11.2% (increased 8.8% on a constant currency basis) in fiscal year 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.

The net revenue increase was driven by 9.8% increase in unit volume and 1.3% increase in ASPs.

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

Also, industry-wide supply chain constraints limited unit growth during the fiscal year 2021.

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

Consumer PCs revenue increased 19.9% driven by unit growth in Notebooks and Desktops and higher ASPs.

Commercial revenue increased 6.4% primarily driven by unit growth in Notebooks, partially offset by lower ASPs driven by higher Chromebook mix and unit declines in Desktops.

Consequently, net revenue increased 18.5% in Notebooks and decreased 4.3% in Desktops and 8.1% in Workstations.

Personal Systems earnings from operations as a percentage of net revenue increased by 1.3 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 revenue.

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

Operating expenses as a percentage of revenue increased by 0.7 percentage points primarily due to R&D investments in innovation, go-to-market initiatives and higher variable compensation.

Personal Systems net revenue increased 1.7% (increased 3.6% on a constant currency basis) in the fiscal year 2022, as compared to the prior-year period.

The net revenue increase was primarily attributable to Desktops, Workstations and Other, partially offset by unfavorable foreign currency impacts and a decline in Notebooks.

The net revenue increase was driven by 22.4% increase in ASPs, partially offset by 16.9% decrease in unit volume.

The increase in ASPs was primarily due to disciplined pricing and mix shifts to premium, partially offset by unfavorable foreign currency impacts.

The decrease in unit volume was primarily driven by a decline in Notebooks including lower Chromebook sales, partially offset by increases in Desktops and Workstations.

In addition, units were impacted due to the overall macroeconomic environment, demand softness primarily in the second half of fiscal 2022, and supply chain constraints impacting certain parts of the product offerings.

Commercial PCs revenue increased 10.5% primarily driven by higher ASPs and unit growth in Desktops and Workstations, partially offset by unit decline in Notebooks due to lower Chromebooks.

Consumer PCs net revenue decreased 12.7% driven by unit declines in Notebooks, partially offset by higher ASPs.

Consequently, net revenue increased 14.4% in Desktops, 25.8% in Workstations and decreased 4.4% in Notebooks.

Personal Systems earnings from operations as a percentage of net revenue decreased by 0.6 percentage points, primarily due to a decrease in gross margin, partially offset by a decrease in operating expenses as a percentage of revenue.

The gross margin decrease was primarily due to the reduction in previously estimated sales and marketing program incentives in the prior-year period, higher costs including commodity costs, and foreign currency impacts, partially offset by disciplined pricing and mix shifts.

Operating expenses as a percentage of revenue decreased by 0.8 percentage points primarily driven by last year’s increased R&D investments, lower variable compensation and joint partner funding.

AND SUBSIDIARIES

Management’s Discussion and Analysis of

Financial Condition and Results of Operations

For the fiscal years ended October 31

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Earnings from operations as a % of net revenue 19.3% 18.1% 14.1%

AND SUBSIDIARIES

Management’s Discussion and Analysis of

Financial Condition and Results of Operations

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

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Fiscal year 2022 compared with fiscal year 2021

Printing net revenue increased 14.1% (increased 13.2% on a constant currency basis) for fiscal year 2021 as compared to the prior-year period.

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

Net revenue for Supplies increased 9.0% as compared to the prior-year period, primarily driven by favorable pricing including lower promotions and improvement in enterprise and SMB demand.

Printer ASPs increased 26.2% and printer unit volume increased 3.0% as compared to the prior-year period.

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

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

While there has been unit growth compared to prior-year period, we continue to experience supply chain constraints, including component shortages, which limited growth during fiscal year 2021.

Net revenue for Commercial increased 18.9% as compared to the prior-year period, due to a 7.6% increase in printer unit volume and a 20.4% 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 shifts.

Net revenue for Consumer increased 30.6% as compared to the prior-year period, due to a 27.4% increase in ASPs and a 2.4% increase in printer unit volume.

The increase in ASPs was primarily driven by favorable pricing.

The printer unit volume increased due to strong demand from remote working and learning.

Printing earnings from operations as a percentage of net revenue increased by 4.0 percentage points for the fiscal year 2021 as compared to the prior-year period, primarily due to increase in gross margin driven by favorable pricing including lower promotions, partially offset by mix shifts.

Operating expenses as a percentage of revenue remained flat.

Printing net revenue decreased 6.1% (decreased 5.5% on a constant currency basis) for fiscal year 2022 as compared to the prior-year period.

The decline in net revenue was primarily driven by a decline in Supplies, Consumer and unfavorable foreign currency impacts, partially offset by growth in Commercial.

Net revenue for Supplies decreased 6.9%, primarily driven by consumer demand weakness, continued normalization in Home printing and the decision to wind down business operations in Russia, partially offset by the gradual recovery in Industrial print.

Printer unit volume decreased 15.4% and ASPs increased 10.4%.

The decrease in printer unit volume was primarily driven by decreases in both Consumer and Commercial due to component availability and supply chain disruptions.

Printer ASPs increased primarily due to disciplined pricing and mix shifts, partially offset by unfavorable foreign currency impacts.

Net revenue for Commercial increased by 0.4%, primarily due to a 7.7% increase in ASPs, partially offset by an 8.0% decrease in printer unit volume.

The increase in ASPs was primarily driven by disciplined pricing and mix shifts, partially offset by unfavorable foreign currency impacts.

Net revenue for Consumer decreased 11.3%, primarily due to a 16.5% decrease in printer unit volume, partially offset by 5.9% increase in ASPs.

The increase in ASPs was primarily driven by disciplined pricing.

Printing earnings from operations as a percentage of net revenue increased by 1.2 percentage points for fiscal year 2022, primarily due to lower operating expense as a percentage of revenue, partially offset by a decrease in gross margin.

The decrease in gross margin was driven by lower Supplies mix, and higher commodity and supply chain costs, partially offset by disciplined pricing.

Further, 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 decreased primarily due to lower variable compensation and go-to-market initiative expenses.

Corporate Investments

The loss from operations in Corporate Investments for the fiscal year 2022 was primarily due to expenses associated with our incubation projects and investments in digital enablement.

AND SUBSIDIARIES

Management’s Discussion and Analysis of

Financial Condition and Results of Operations

LIQUIDITY AND CAPITAL RESOURCES

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, 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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Our liquidity is subject to various risks including the risks identified in the section entitled “Risk Factors” in Item 1A and market risks identified in the section entitled “Quantitative and Qualitative Disclosures about Market Risk” in Item 7A, which are incorporated herein by reference.

During the fiscal year 2021, HP completed four acquisitions with a combined purchase price of $854 million, net of cash acquired, of which $400 million was recorded as goodwill and $385 million as intangible assets related to these acquisitions.

During the fiscal year 2022, we completed the acquisition of Poly, with a combined purchase price of $2.7 billion, net of cash acquired, of which $1.8 billion was recorded as goodwill and $1.4 billion as intangible assets and net liabilities assumed of $0.4 billion.

For more information, see Note 18, “Acquisitions”, to the Consolidated Financial Statements in Item 8 of Part II of this report, which is incorporated herein by reference.

AND SUBSIDIARIES

Management’s Discussion and Analysis of

Financial Condition and Results of Operations

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

We utilize a variety of planning and financing strategies in an effort to ensure that our worldwide cash is available when and where it is needed.

Amounts held outside of the United States are generally utilized to support non-U.S.

liquidity needs and may from time to time be distributed to the United States.

The Tax Cuts and Jobs Act (“TCJA”) made significant changes to the U.S.

tax law, including a one-time transition tax on accumulated foreign earnings.

The payments associated with this one-time transition tax will be paid over eight years and began in fiscal year 2019.

We expect a significant portion of the cash and cash equivalents held by our foreign subsidiaries will no longer be subject to U.S.

income tax upon a subsequent repatriation to the United States as a result of the transition tax on accumulated foreign earnings.

However, a portion of this cash may still be subject to foreign income tax or withholding tax upon repatriation.

On September 1, 2022, we consummated our Exchange Offer and Consent Solicitation.

The approximately $0.5 billion in aggregate principal amount of our new notes mature in 2029 (the “2029 Notes”), and an aggregate amount of $8 million in consent fee was paid in connection therewith.

In addition, under the terms of the 2029 Notes, we are obligated to, within 60 days after the consummation of our acquisition of Poly, offer to purchase all or a portion of the 2029 Notes at a purchase price in cash equal to 101% of the aggregate principal amount thereof, plus accrued and unpaid interest, if any, to the repurchase date.

On October 19, 2022, we commenced the change of control offer for the 2029 Notes.

On November 17, 2022, we consummated the change of control offer and paid an aggregate amount of approximately $498 million in connection therewith, to repurchase the approximately $488 million of notes tendered.

On November 21, 2022, we issued a notice of redemption to redeem the remaining approximately $3 million of the 2029 Notes.

Amounts held outside of the U.S.

are generally utilized to support non-U.S.

liquidity needs and may from time to time be distributed to the U.S.

Repatriations of amounts held outside the U.S.

generally will not be taxable from a U.S.

federal tax perspective but may be subject to state income or foreign withholding tax upon repatriation.

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.

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As of October 31

2021 2020 2019

Cash and cash equivalents $ 3.1 $ 4.3

Marketable debt securities (1)

$ — $ 0.3 $ —

Total debt $ 11.0 $ 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.

Our key cash flow metrics were as follows:

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Operating activities

Net cash provided by operating activities increased by $2.1 billion for fiscal year 2021 as compared to fiscal year 2020, primarily due to higher earnings from operation including net gain from the one-time Oracle litigation proceeds of $1.8 billion, partially offset by higher cash utilized in working capital activities as a result of changes in demand dynamics and supply chain constraints due to COVID-19.

Net cash provided by operating activities decreased by $1.9 billion for fiscal year 2022 due to lower net earnings as compared to the prior-year period, which included the one-time Oracle litigation proceeds of $1.8 billion partially offset by

AND SUBSIDIARIES

Management’s Discussion and Analysis of

Financial Condition and Results of Operations

working capital management activities, reduction in receivables from contract manufacturers and payment of employee variable compensation accrued in the prior-year period.

Key working capital metrics

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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, macro-economic factors, seasonal trends and the timing of revenue recognition and inventory purchases within the period.

AND SUBSIDIARIES

Management’s Discussion and Analysis of

Financial Condition and Results of Operations

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 and timing, extent of receivables factoring, macro-economic factors, 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 of net revenue.

The decrease in DSO as compared to prior-year period, was due to strong collections and favorable revenue linearity.

The decrease in DSO as compared to prior-year period, was due to higher factoring, partially offset by unfavorable 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 of cost of goods sold.

The increase in DOS as compared to prior-year period, was primarily due to higher strategic buys to better assure supply of commodities in Personal Systems and recovering Printing inventory from the impacts of COVID-19.

The increase in DOS was primarily due to lower cost of revenue and higher inventory for assurance of supply in Printing, partially offset by consumption of commodities 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 of cost of goods sold.

The decrease in DPO compared to prior-year period, was primarily due to higher commodity costs, partially offset by working capital management activities.

The increase in DPO as compared to prior-year period, was primarily due to payment timing partially offset by lower purchasing volumes.

Investing activities

Net cash used in investing activities remained flat for fiscal year 2021 as compared to fiscal year 2020, primarily due to decrease in investments of $0.6 billion and collateral related to derivative instruments of $0.3 billion, partially offset by higher net payments for acquisitions of $0.9 billion.

Net cash used in investing activities increased $2.5 billion for fiscal year 2022 as compared to the prior-year period, primarily due to Poly’s acquisition, lower proceeds from sale of investments of $0.3 billion and higher investments in property, plant and equipment of $0.2 billion.

Financing activities

Net cash used in financing activities increased by $3.0 billion in fiscal year 2021 compared to fiscal year 2020, primarily due to higher share repurchases of $3.1 billion and lower proceeds from debt issuance of $1.0 billion, partially offset by lower payment of debt of $0.6 billion and higher proceeds from commercial paper of $0.4 billion.

Net cash used in financing activities decreased by $3.9 billion in fiscal year 2022 compared to the prior-year period, primarily due to higher proceeds from debt issuance of $2.1 billion, lower share repurchases of $2.0 billion and lower payment of debt of $0.6 billion, partially offset by commercial paper activity of $0.8 billion.

Share repurchases and dividends

In fiscal year 2021, HP returned $7.2 billion to the shareholders in the form of share repurchases of $6.3 billion and cash dividends of $0.9 billion.

In fiscal year 2022, HP returned total $5.3 billion to the shareholders in the form of share repurchases of $4.3 billion and cash dividends of $1.0 billion.

As of October 31, 2022, HP had approximately $2.1 billion remaining under the share repurchase authorizations approved by HP’s Board of Directors.

HP intends to continue to repurchase shares at an elevated level of at least $4.0 billion in fiscal year 2022.

For more information on our share repurchases, see Note 12, “Stockholders’ Deficit”, to the Consolidated Financial Statements in Item 8, which is incorporated herein by reference.

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As of October 31

2021 2020 2019

Dollars in millions

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Weighted-average interest rate 3.7 % 3.1 %

We maintain debt levels that we establish through consideration of a number of factors, including cash flow expectations, cash requirements for operations, investment plans (including acquisitions), share repurchase activities, our cost of capital and targeted leverage ratio.

Short-term debt increased by $0.4 billion and long-term debt increased by $0.8 billion for fiscal year 2021 as compared to fiscal year 2020.

The net increase in total debt was primarily due to issuance of unsecured senior debt in June 2021 amounting to $2.0 billion and commercial paper of $0.4 billion issued in September 2021, which was, partially offset by payment of $1.0 billion in July 2021, towards redemption of existing notes maturing in September and December 2021.

Our weighted-average interest rate reflects the effective interest 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 10, “Financial Instruments” in the Consolidated Financial Statements and notes thereto in Item 8, “Financial Statements and Supplementary Data”, 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”) which will be available until May 26, 2026.

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.

As of October 31, 2021, we continue to maintain the New Revolving Facility.

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

AND SUBSIDIARIES

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Financial Condition and Results of Operations

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 September and December 2021.

Short-term debt decreased by $0.9 billion and long-term debt increased by $4.4 billion for fiscal year 2022 as compared to prior-year period.

The net increase in total debt was primarily due to issuance of unsecured senior debt amounting to $4.0 billion during the year and exchange offer of $0.5 billion related to Poly notes, which was, partially offset by payment of $0.5 billion towards redemption of existing notes maturing in September 2022 and commercial paper payments of $0.4 billion.

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

For more information on the new notes and the redemption of existing notes, see Note 11, “Borrowings”, to the Consolidated Financial Statements in Item 8 of Part II of this report, which is incorporated herein by reference.

As of October 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 October 31, 2021, we had available borrowing resources of $579 million from uncommitted lines of credit in addition to the New Revolving 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.

As of October 31, 2022, we had available borrowing resources of $937 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, as of October 31, 2022, enables us to offer for sale, from time to time, in one or more offerings, $1.0 billion, in the aggregate, of debt securities, common stock, preferred stock, depository shares and warrants.

The 2019 Shelf Registration Statement will expire in December 2022, around which time we expect to file a new shelf registration statement.

For more information on our borrowings, see Note 11, “Borrowings”, to the Consolidated Financial Statements in Item 8, which is incorporated herein by reference.

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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.

See “Risk Factors— Failure to maintain our credit ratings could adversely affect our liquidity, capital position, borrowing costs and access to capital markets” in Item 1A, which is incorporated herein by reference.

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.

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These purchase obligations are related principally to inventory and other items.

Purchase obligations exclude agreements that are cancelable without penalty.

Purchase obligations exclude agreements that are cancellable without penalty.

Purchase obligations also exclude open purchase orders that are routine arrangements entered into in the ordinary course of business as they are difficult to quantify in a meaningful way.

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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.

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

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

For more information on our third-party short-term financing arrangements, see Note 7 “Supplementary Financial Information” to the Consolidated Financial Statements in Item 8, which is incorporated herein by reference.

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-K

Item 7. Management’s Discussion and Analysis