What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2022-12-06 compared with 2021-12-09 · 339 added, 358 removed, 1796 unchanged (28% of the section changed)

Financial Statements and Supplementary Data.

Reports of Independent Registered Public Accounting Firm

Reports of Independent Registered Public Accounting Firm (PCAOB ID:

Management's Report on Internal Control Over Financial Reporting

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Description of the Matter

As described in Notes 1 and 6 of the consolidated financial statements,

the Company is subject to income taxes in the United States and several other countries and is subject to routine corporate income tax audits in many of those jurisdictions.

As described in Notes 1 and 6 of the consolidated financial statements, the Company is subject to income taxes in the United States and several other countries and is subject to routine corporate income tax audits in many of those jurisdictions.

Uncertainty in the Company’s tax positions may arise as tax laws are subject to interpretation and the Company’s positions are subject to examination by taxing authorities, which may result in assessments of additional amounts owed.

Determining the income tax provision for these potential assessments and recording the related effects requires significant management judgment in estimating whether a tax position’s technical merits are more-likely-than-not to be sustained and measuring the amount of tax benefit that qualifies for recognition.

Additionally, the Company records a valuation allowance to reduce deferred tax assets to the amount which are more likely than not to be realized.

In determining the need for a valuation allowance, the Company considers certain subjective factors such as future market growth, forecasted earnings, future taxable income, mix of earnings in the jurisdictions in which they operate and prudent and feasible tax planning strategies.

Our assessment of management’s analyses of the reserve for uncertain tax positions and the realizability of its deferred tax assets are significant to our audit because the amounts are material to the financial statements and the assessment process involves significant judgment.

For example, management’s assumptions that may be affected by future market and economic conditions or interpretations of tax laws and legal rulings are challenging to audit .

How We Addressed the Matter in Our Audit We tested controls over management’s processes relating to the recording of unrecognized tax benefits, including controls over the Company’s process to assess the technical merits of its uncertain tax positions, and the realizability of deferred tax assets, including the development of the above described assumptions and judgments.

Our assessment of management’s analyses of the reserve for uncertain tax positions is significant to our audit because the amounts are material to the financial statements and the assessment process involves significant judgment.

For example, management’s interpretations of tax laws and legal rulings are challenging to audit.

Our audit procedures included an evaluation of the Company’s key assumptions and judgments and testing the completeness and accuracy of the underlying data used to determine the amount of unrecognized tax benefits recognized.

For example, we evaluated the measurement of the amounts recorded taking into consideration the applicable tax laws and the Company’s positions examined by taxing authorities.

We also evaluated the key assumptions and judgments used by management in determining the need for a valuation allowance and testing the completeness and accuracy of the underlying data used in the Company’s process.

For example, we compared the projections of future taxable income with the actual results of prior periods as well as management’s consideration of current industry and economic trends.

In each of these areas, we involved our tax professionals to assess the technical merits of the Company’s tax positions.

We involved our tax professionals to assess the technical merits of the Company’s tax positions.

This included assessing the Company’s correspondence with the relevant tax authorities and evaluating income tax opinions or other third-party advice obtained by the Company.

Revenue Recognition

Description of the Matter As described in Note 1 of the consolidated financial statements, the Company enters into certain contracts to sell their products and services that contain non-standard terms and conditions and multiple performance obligations.

Description of the Matter

As described in Note 1 of the consolidated financial statements, the Company enters into certain contracts to sell their products and services that contain non-standard terms and conditions and multiple performance obligations.

For such contracts, significant interpretation may be required to determine the appropriate accounting, including the allocation of the transaction price among performance obligations in the arrangement and the timing of the transfer of control of promised goods or services for each of those performance obligations.

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and subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of October 31, 2022, based on the COSO criteria.

As indicated in the accompanying Management’s Report on Internal Control Over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of Poly, which is included in the 2022 consolidated financial statements of the Company and constituted 1.3% of total assets as of October 31, 2022 and 0.5% of net revenues for the year then ended.

Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of Poly.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of HP Inc.

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Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In accordance with guidance issued by the Securities and Exchange Commission, companies are permitted to exclude acquisitions from their final assessment of internal control over financial reporting for the first fiscal year in which the acquisition occurred.

Our management’s evaluation of internal control over financial reporting excluded the internal control activities of Poly, which we acquired on August 29, 2022, as discussed in Note 18, “Acquisitions".

The exclusion represents internal control over financial reporting of 1.3 percent of total assets as of October 31, 2022 and less than 0.5 percent of net revenue for the then year ended.

We have included the financial results of Poly in the consolidated financial statements from the date of acquisition.

HP’s management assessed the effectiveness of HP’s internal control over financial reporting as of October 31, 2022, utilizing the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework (2013 framework).

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Restructuring and other charges 233 245 462

Acquisition-related charges 68 16 35

Acquisition and divestiture charges 318 68 16

Amortization of intangible assets 228 154 113

Russia exit charges 23 — —

Total costs and expenses 58,307 58,185 53,177

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Earnings before taxes 4,441 7,511 3,231

(Provision for) benefit from taxes ( 1,008 ) ( 387 ) 629

Provision for taxes ( 1,238 ) ( 1,008 ) ( 387 )

Net earnings $ 3,203 $ 6,503 $ 2,844

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

Unrealized gains arising during the period 5 2 1

Losses reclassified into earnings — — 3

Change in unrealized components of cash flow hedges:

Unrealized (losses) gains arising during the period ( 11 ) 5 2

Losses (gains) reclassified into earnings 243 ( 85 ) ( 380 )

Change in unrealized components of cash flow hedges:

Unrealized gains (losses) arising during the period 1,541 ( 132 ) ( 201 )

(Gains) losses reclassified into earnings ( 779 ) 243 ( 85 )

762 111 ( 286 )

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Curtailments, settlements and other — ( 36 ) 215

1,052 269 ( 218 )

Change in cumulative translation adjustment ( 78 ) 28 ( 4 )

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Accumulated deficit ( 4,413 ) ( 2,461 )

Accumulated other comprehensive loss ( 260 ) ( 1,243 )

Accumulated other comprehensive income (loss) 313 ( 260 )

Total stockholders’ deficit ( 2,918 ) ( 1,650 )

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Cash flows from financing activities:

Proceeds from (Payments of) short-term borrowings with original maturities less than 90 days, net

(Payments of) Proceeds from short-term borrowings with original maturities less than 90 days, net

( 400 ) 400 —

Proceeds from short-term borrowings with original maturities greater than 90 days 22 27 —

Proceeds from debt, net of issuance costs 4,175 2,121 3,108

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Cash dividends paid ( 1,037 ) ( 938 ) ( 997 )

Collateral withdrawn for derivative instruments 200 — —

Settlement of cash flow hedges 79 — —

Net cash used in financing activities ( 2,068 ) ( 5,962 ) ( 2,973 )

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Issuance of common stock in connection with employee stock plans and other 14,065 ( 37 ) ( 37 )

Repurchases of common stock ( 117,598 ) ( 1 ) ( 55 ) ( 2,340 ) ( 2,396 )

Repurchases of common stock (Note 12) ( 167,857 ) ( 2 ) ( 113 ) ( 3,017 ) ( 3,132 )

Cash dividends ($ 0.70 per common share)

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Net earnings 6,503 6,503

Other comprehensive loss, net of taxes ( 18 ) ( 18 )

Other comprehensive income, net of taxes 983 983

Comprehensive income 7,486

Issuance of common stock in connection with employee stock plans and other 11,896 ( 45 ) ( 45 )

Repurchases of common stock ( 167,857 ) ( 2 ) ( 113 ) ( 3,017 ) ( 3,132 )

Repurchases of common stock (Note 12) ( 223,618 ) ( 2 ) ( 188 ) ( 6,065 ) ( 6,255 )

Cash dividends ($ 0.78 per common share)

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Stock-based compensation expense 330 330

Adjustment for adoption of accounting standards 27 27

Balance October 31, 2021

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Issuance of common stock in connection with employee stock plans and other 11,951 ( 111 ) ( 111 )

Repurchases of common stock ( 223,618 ) ( 2 ) ( 188 ) ( 6,065 ) ( 6,255 )

Repurchases of common stock (Note 12) ( 124,287 ) ( 1 ) ( 129 ) ( 4,118 ) ( 4,248 )

Cash dividends ($ 1.00 per common share)

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Stock-based compensation expense 343 343

Business acquisitions 9 9

Balance October 31, 2022

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All intercompany balances and transactions have been eliminated.

Reclassifications

HP has reclassified certain prior-year amounts to conform to the current-year presentation.

Use of Estimates

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Actual results may differ materially from those estimates.

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

As of October 31, 2022, the extent to which the current macroeconomic factors will impact our business going forward depends on numerous dynamic factors which we cannot reliably predict.

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

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

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

Foreign Currency Translation

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dollars at the balance sheet dates as translation adjustments and includes them as a component of Accumulated other comprehensive loss.

Separation Transaction

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

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

For more information on the impacts of these agreements, see Note 14, “Litigation and Contingencies”.

Oracle litigation proceeds

On October 12, 2021, Oracle paid approximately $ 4.65 billion, to satisfy the judgement 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 are being shared equally between HP and Hewlett Packard Enterprise pursuant to the terms of the separation and distribution agreement.

For the fiscal year 2021, HP has recorded a gain of $ 2.3 billion in Interest and other, net and corresponding tax impact of $ 0.5 billion in Provision for taxes on the Consolidated Statements of Earnings as HP believes that the likelihood of the reduction or reversal of the judgement is remote.

For more information, see Note 14, “Litigation and Contingencies”.

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 between the parties.

For the fiscal year 2021, HP recorded a gain of $ 2.3 billion in Interest and other, net and corresponding tax impact of $ 0.5 billion in Provision for taxes on the Consolidated Statements of Earnings as Oracle has exhausted legal appeals and has no further legal recourse to reverse the judgment.

Recently Adopted Accounting Pronouncements

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

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

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

The cumulative effect upon adoption was not material to the Consolidated Financial Statements.

Revenue Recognition

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

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

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

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

Recently Issued Accounting Pronouncements Not Yet Adopted

In September 2022, the FASB issued guidance that enhances the transparency about the use of supplier finance programs.

Under the new guidance, companies that use a supplier finance program in connection with the purchase of goods or services will be required to disclose information about the program to allow users of financial statements to understand the program’s nature, activity during the period, changes from period to period, and potential magnitude.

HP is required to adopt the guidance

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Summary of Significant Accounting Policies (Continued)

in the first quarter of fiscal year 2024, except for the amendment on roll forward information which is effective one year later.

Early adoption is permitted.

HP is currently evaluating the impact of this guidance on the Consolidated Financial Statements.

Revenue Recognition

HP recognizes revenues at a point in time or over time depicting the transfer of promised goods or services to customers in an amount that reflects the consideration to which HP expects to be entitled in exchange for those goods or services.

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HP records revenue from the sale of equipment under sales-type leases as revenue at the commencement of the lease.

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Notes to Consolidated Financial Statements (Continued)

Summary of Significant Accounting Policies (Continued)

HP recognizes revenue from fixed-price support, maintenance and other service contracts over time depicting the pattern of service delivery and recognizes the costs associated with these contracts as incurred.

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Such contract assets are not material to HP’s Consolidated Financial Statements.

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Notes to Consolidated Financial Statements (Continued)

Summary of Significant Accounting Policies (Continued)

Contract liabilities are recorded as deferred revenues when amounts invoiced to customers are more than the revenues recognized or when payments are received in advance for fixed-price support or maintenance contracts.

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HP records charges associated with management-approved restructuring plans to reorganize one or more of HP’s business segments, to remove duplicative headcount and infrastructure associated with business acquisitions or to simplify business processes and accelerate innovation.

Restructuring charges can include severance costs to reduce a specified number of employees, enhanced early retirement incentives, infrastructure charges to vacate facilities and consolidate operations, and contract cancellation costs.

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Notes to Consolidated Financial Statements (Continued)

Summary of Significant Accounting Policies (Continued)

contract cancellation costs.

HP records restructuring charges based on estimated employee terminations, committed early retirements and site closure and consolidation plans.

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Taxes on Earnings

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Notes to Consolidated Financial Statements (Continued)

Summary of Significant Accounting Policies (Continued)

HP recognizes deferred tax assets and liabilities for the expected tax consequences of temporary differences between the tax bases of assets and liabilities and their reported amounts using enacted tax rates in effect for the year the differences are expected to reverse.

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

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

HP utilizes certain third-party arrangements in the normal course of business as part of HPs cash and liquidity management and also to provide liquidity to certain partners to facilitate their working capital requirements.

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

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The ten largest distributor and reseller receivable balances, which were concentrated primarily in North America and Europe, collectively represented approximately 52 % and 42 % of gross accounts receivable as of October 31, 2022 and 2021, respectively.

No single customer accounts for more than 10% of gross accounts receivable as of October 31, 2021 or 2020.

Two customers TD Synnex Corp and Ingram Micro Inc., accounted for 13.8 % and 10.4 %, respectively, of gross accounts receivable

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Notes to Consolidated Financial Statements (Continued)

Summary of Significant Accounting Policies (Continued)

as of October 31, 2022.

No single customer accounted for more than 10% of gross accounts receivable as of October 31, 2021.

Credit risk with respect to other accounts receivable is generally diversified due to HP’s large customer base and their dispersion across many different industries and geographic markets.

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HP includes the supplier receivables in Other current assets in the Consolidated Balance Sheets on a gross basis.

HP’s credit risk

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Notes to Consolidated Financial Statements (Continued)

Summary of Significant Accounting Policies (Continued)

associated with these receivables is mitigated wholly or in part, by the amount HP owes to these outsourced manufacturers, as HP generally has the legal right to offset its payables to the outsourced manufacturers against these receivables.

HP’s credit risk associated with these receivables is mitigated wholly or in part, by the amount HP owes to these outsourced manufacturers, as HP generally has the legal right to offset its payables to the outsourced manufacturers against these receivables.

HP does not reflect the sale of these components in net revenue and does not recognize any profit on these component sales until the related products are sold by HP, at which time any profit is recognized as a reduction to cost of revenue.

HP obtains a significant number of components from single source suppliers due to technology, availability, price, quality or other considerations.

HP obtains a significant number of components from single source suppliers like Canon, due to technology, availability, price, quality or other considerations.

The loss of a single source supplier, the deterioration of HP’s relationship with a single source supplier, or any unilateral modification to the contractual terms under which HP is supplied components by a single source supplier could adversely affect HP’s net revenue, cash flows and gross margins.

Upon completion of the Separation on November 1, 2015, HP recorded net income tax indemnification receivables from Hewlett Packard Enterprise for certain income tax liabilities that HP is jointly and severally liable for, but for which it is indemnified by Hewlett Packard Enterprise under the tax matters agreement (“TMA”).

The TMA was terminated during the fourth quarter of fiscal year 2019.

HP values inventory at the lower of cost or market.

Cost is computed using standard cost which approximates actual cost on a first-in, first-out basis.

Adjustments, if required, to reduce the cost of inventory to market (net realizable value) are made for estimated excess, obsolete or impaired balances after considering judgments related to future demand and market conditions, along with the impact of COVID-19.

Property, Plant and Equipment, Net

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The excess of the fair value of purchase consideration over the fair value of these assets acquired, liabilities assumed and non-controlling interests in the acquired entity is recorded as goodwill.

The primary items that generate goodwill include the value of the synergies between the acquired company and HP, and the value of the acquired assembled workforce, neither of which qualify for recognition as an intangible asset.

Acquisition-related charges are recognized separately from the business combination and are expensed as incurred.

These charges primarily include, direct third-party professional and legal fees, and integration-related costs.

HP reviews goodwill for impairment annually during its fourth quarter and whenever events or changes in circumstances indicate the carrying amount of goodwill may not be recoverable.

HP can elect to perform a qualitative assessment to test a

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Summary of Significant Accounting Policies (Continued)

reporting unit’s goodwill for impairment or HP can directly perform the quantitative impairment test.

intangible asset.

Acquisition and divestiture charges are recognized separately from the business combination and are expensed as incurred.

These charges primarily include, direct third-party professional and legal fees, integration and divestiture-related costs, as well as non-cash adjustments to the fair value adjustments 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 of acquired companies .

HP reviews goodwill for impairment annually during its fourth quarter and whenever events or changes in circumstances indicate the carrying amount of goodwill may not be recoverable.

HP can elect to perform a qualitative assessment to test a reporting unit’s goodwill for impairment or HP can directly perform the quantitative impairment test.

Based on the qualitative assessment, if HP determines that the fair value of a reporting unit is more likely than not (i.e., a likelihood of more than 50 percent) to be less than its carrying amount, a quantitative impairment test will be performed.

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

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

HP recognizes the corresponding charge in Interest and other, net and the remaining unrealized

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Notes to Consolidated Financial Statements (Continued)

Summary of Significant Accounting Policies (Continued)

loss, if any, in Accumulated other comprehensive loss in the Consolidated Balance Sheets.

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

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See Note 10, “Financial Instruments” for a full description of HP’s derivative instrument activities and related accounting policies.

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Notes to Consolidated Financial Statements (Continued)

Summary of Significant Accounting Policies (Continued)

Loss Contingencies

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Described below are HP’s global business capabilities within Personal Systems:

• Commercial PCs are optimized for use by enterprise, public sector which includes education, and SMB customers, with a focus on robust designs, security, serviceability, connectivity, reliability and manageability in the customer’s environment.

Additionally, HP offers a range of services and solutions to enterprise, public sector which includes education, and SMB customers to help them manage the lifecycle of their PC and mobility installed base.

• Commercial PCs are optimized for use by enterprise, public sector (which includes education), and SMBs customers, with a focus on robust designs, security, serviceability, connectivity, reliability and manageability in the customer’s environment.

Additionally, HP offers a range of services and solutions to enterprise, public sector (which includes education), and SMBs customers to help them manage the lifecycle of their PC and mobility installed base.

• Consumer PCs are optimized for consumer usage, focusing on gaming, learning and working remotely, consuming multi-media for entertainment, managing personal life activities, staying connected, sharing information, getting things done for work including creating content and staying informed and secure.

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• Workstations consists of desktop workstations, displays, and peripherals;

• Other consists of consumer and commercial services as well as other Personal Systems capabilities.

• Other consists of consumer and commercial services, Plantronics, Inc.

(“Poly”) products and services as well as other Personal Systems capabilities.

Printing provides consumer and commercial printer hardware, supplies, services and solutions.

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Printing groups its global business capabilities into the following business units when reporting business performance:

• Commercial consists of office printing solutions, graphics solutions and 3D printing & digital manufacturing, excluding supplies;

• Commercial consists of office printing solutions, graphics solutions and 3D printing and digital manufacturing, excluding supplies;

• Consumer consists of home printing solutions, excluding supplies;

• Supplies comprises a set of highly innovative consumable products, ranging from ink and laser cartridges to media, graphics supplies and 3D printing & digital manufacturing supplies, for recurring use in consumer and commercial hardware.

• Supplies comprises a set of highly innovative consumable products, ranging from ink and laser cartridges to media, graphics supplies and 3D printing and digital manufacturing supplies, for recurring use in consumer and commercial hardware.

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

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HP does not allocate certain operating expenses, which it manages at the corporate level, to its segments.

These unallocated amounts include certain corporate governance costs and infrastructure investments, stock-based compensation expense, restructuring and other charges, acquisition-related charges and amortization of intangible assets .

These unallocated amounts include expenses such as certain corporate governance costs and infrastructure investments, stock-based compensation expense, restructuring and other charges, acquisition and divestiture charges, amortization of intangible assets and Russia exit charges.

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Workstations 2,100 1,669 1,816

Other 1,787 1,609 1,331

2,065 1,787 1,609

Personal Systems 44,084 43,359 38,997

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Restructuring and other charges ( 233 ) ( 245 ) ( 462 )

Acquisition-related charges ( 68 ) ( 16 ) ( 35 )

Acquisition and divestiture charges ( 318 ) ( 68 ) ( 16 )

Amortization of intangible assets ( 228 ) ( 154 ) ( 113 )

Russia exit charges ( 23 ) — —

Interest and other, net ( 235 ) 2,209 ( 231 )

Total earnings before taxes $ 4,441 $ 7,511 $ 3,231

(1) Includes net revenue for Poly since acquisition date (August 29, 2022).

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Notes to Consolidated Financial Statements (Continued)

Segment Information (Continued)

Segment Assets

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Total assets $ 38,587 $ 38,610

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Notes to Consolidated Financial Statements (Continued)

Segment Information (Continued)

Major Customers

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(1) Includes prior-year plans which are substantially complete.

HP does not expect any further material activity associated

with these plans.

HP does not expect any further material activity associated with these plans.

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

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Fiscal 2023 Plan

On September 30, 2019, HP’s Board of Directors approved the Fiscal 2020 Plan intended to optimize and simplify its operating model and cost structure that HP expects will be implemented through fiscal 2022.

HP expects to reduce global headcount by approximately 7,000 to 9,000 employees through a combination of employee exits and voluntary EER.

On November 18, 2022, HP’s Board of Directors approved the Fiscal 2023 Plan intended to enable digital transformation, portfolio optimization and operational efficiency that HP expects will be implemented through fiscal 2025.

HP expects to reduce global headcount by approximately 4,000 to 6,000 employees.

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

HP expects to incur approximately $ 0.7 billion primarily in labor costs related to workforce reductions and the remaining costs will relate to non-labor actions and other charges.

Fiscal 2020 Plan

On September 30, 2019, HP’s Board of Directors approved the Fiscal 2020 Plan intended to optimize and simplify its operating model and cost structure that has been implemented through fiscal 2022.

The Fiscal 2020 Plan is substantially complete.

HP does not expect any significant further costs associated with the plan.

Approximately 7,700 employees departed as part of the plan through a combination of employee exits and voluntary EER.

HP incurred $ 740 million in severance costs and $ 281 million in infrastructure costs related to non-labor and other charges.

Other charges

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

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

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

HP incurred $ 25 million, $ 22 million and $ 105 million of other charges in fiscal year 2022, 2021 and 2020, respectively.

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Net periodic benefit (credit) cost ( 132 ) ( 144 ) ( 224 ) 71 93 79 ( 26 ) ( 41 ) ( 33 )

Curtailment gain — — — — — ( 22 ) — — —

Settlement (gain) loss — ( 37 ) 217 — 1 1 — — —

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Settlement ( 4 ) ( 5,407 ) ( 62 ) ( 5 ) — —

Special termination benefit cost — — — — — 44

Currency impact — — ( 181 ) ( 9 ) — —

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Accumulated benefit obligation $ 3,969 $ 5,740 $ 1,035 $ 1,602

The cumulative net actuarial losses for our defined pension plans and retiree welfare plans decreased year over year.

The decrease in losses is primarily due to the higher than expected returns on assets, increases in discount rates, partially offset by

(1) $ 11 million of defined benefit plans as a result of the Poly acquisition

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Retirement and Post-Retirement Benefit Plans (Continued)

increases in the cost of living assumptions and the recognition of gains as a result of the U.S.

This has also resulted in improvement in the funded status of HP’s defined benefit and post-retirement benefit plans.

The cumulative net actuarial losses for our defined pension plans and retiree welfare plans decreased as compared to the prior-year period.

The decrease in losses is primarily due to significant increases in discount rates and lump sum interest rates, partially offset by lower than expected return on assets, plan experience, and other assumption changes.

The weighted-average assumptions used to calculate the projected benefit obligations for the fiscal years ended October 31, 2022 and 2021 were as follows:

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Funded status at end of year $ 238 $ 320 $ ( 238 ) $ ( 536 ) $ 109 $ 103

The following table summarizes the pre-tax net actuarial loss (gain) and prior service cost (credit) recognized in Accumulated other comprehensive loss for the defined benefit and post-retirement benefit plans.

The following table summarizes the pre-tax net actuarial loss (gain) and prior service cost (credit) recognized in Accumulated other comprehensive income (loss) for the defined benefit and post-retirement benefit plans.

As of October 31, 2022

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Prior service cost (credit) — 42 ( 68 )

Total recognized in Accumulated other comprehensive loss $ 128 $ 375 $ ( 281 )

Total recognized in Accumulated other comprehensive income (loss) $ 370 $ 87 $ ( 259 )

Defined benefit plans with projected benefit obligations exceeding the fair value of plan assets were as follows:

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Investments using NAV as a practical expedient (7)

2,545 354 242

Investments at fair value $ 6,060 $ 1,211 $ 457

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HP uses the closing stock price on the grant date to estimate the fair value of service-based restricted stock units.

HP estimates the fair value of restricted stock units subject to performance-adjusted vesting conditions using a combination of the closing stock price on the grant date and a Monte Carlo simulation model.

The assumptions used to measure the fair value of restricted stock units subject to performance-adjusted vesting conditions in the Monte Carlo simulation model were as follows:

HP estimates the fair value of restricted stock units subject to performance-adjusted vesting conditions using a combination of the

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Stock-Based Compensation (Continued)

closing stock price on the grant date and a Monte Carlo simulation model.

The assumptions used to measure the fair value of restricted stock units subject to performance-adjusted vesting conditions in the Monte Carlo simulation model were as follows:

For the fiscal years ended October 31

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Outstanding at beginning of year 30,197 $ 23 29,831 $ 21 29,960 $ 21

Granted 15,517 $ 25 18,109 $ 20 17,216 $ 22

15,337 $ 36 15,517 $ 25 18,109 $ 20

Vested ( 14,168 ) $ 22 ( 13,374 ) $ 21 ( 14,929 ) $ 20

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The weighted-average fair value and the assumptions used to measure fair value were as follows:

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Notes to Consolidated Financial Statements (Continued)

Stock-Based Compensation (Continued)

For the fiscal years ended October 31

13 unchanged sentences

(4) The expected dividend yield represents a constant dividend yield applied for the duration of the expected term of the award.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

Stock-Based Compensation (Continued)

(5) For awards subject to service-based vesting, the expected term was estimated using a simplified method;

34 unchanged sentences

The 2021 ESPP terms are similar to the previous ESPP.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

Stock-Based Compensation (Continued)

Shares Reserved

6 unchanged sentences

208,351 205,968 264,110

(1) For years 2020 and 2019, shares authorized under the 2011 ESPP were included in the shares available for future grant and shares reserved for future issuance.

(1) For year 2020, shares authorized under the 2011 ESPP were included in the shares available for future grant and shares reserved for future issuance .

AND SUBSIDIARIES

4 unchanged sentences

For the fiscal years ended October 31

2021 2020 2019

h 2022 2021 2020

$ 1,522 $ 4,662 $ 884

19 unchanged sentences

Impact of foreign earnings including GILTI and FDII, net ( 7.6 ) % ( 3.6 ) % ( 6.1 ) %

Tax Reform enactment

— % — % ( 2.6 ) %

Research and development (“R&D”) credit ( 0.4 ) % ( 0.7 ) % ( 1.1 ) %

Valuation allowances 0.3 % ( 3.8 ) % 2.3 %

Uncertain tax positions and audit settlements 3.0 % 0.8 % ( 4.1 ) %

Indemnification related items — % — % 6.8 %

Impact of internal reorganization 9.2 % ( 1.2 ) % — %

1 unchanged sentence

27.9 % 13.4 % 12.0 %

The jurisdictions with favorable tax rates that have the most significant effective tax rate impact in the periods presented include Puerto Rico, Singapore, and Malaysia.

The jurisdictions with favorable tax rates that have the most significant effective tax rate impact in the periods presented include Singapore, Malaysia, and Puerto Rico.

HP has elected to treat GILTI inclusions as period costs.

In fiscal year 2022, HP 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

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.

In the fiscal year 2022, HP

AND SUBSIDIARIES

1 unchanged sentence

Taxes on Earnings (Continued)

position charges, and $ 9 million of other net tax charges.

recorded excess tax benefits of $ 33 million associated with stock options, restricted stock units and performance-adjusted restricted stock.

In fiscal year 2021, HP recorded $ 9 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.

4 unchanged sentences

In fiscal year 2020, excess tax benefits associated with stock options, restricted stock units and performance-adjusted restricted stock units were immaterial.

In fiscal year 2019, HP recorded $ 1.3 billion of net income tax benefits related to discrete items in the provision for taxes.

This amount included tax benefits related to audit settlements of $ 1.0 billion, $ 75 million due to ability to utilize tax attributes, $ 57 million of restructuring benefits and net valuation allowance releases of $ 94 million.

HP also recorded benefits of $ 78 million related to U.S.

tax reform as a result of new guidance issued by the U.S.

Internal Revenue Service (“IRS”).

These benefits were partially offset by uncertain tax position charges of $ 51 million.

In fiscal year 2019, in addition to the discrete items mentioned above, HP recorded excess tax benefits of $ 20 million associated with stock options, restricted stock units and performance-adjusted restricted stock units.

As a result of certain employment actions and capital investments HP has undertaken, income from manufacturing and services in certain countries is subject to reduced tax rates, and in some cases is wholly exempt from taxes, through 2029.

12 unchanged sentences

As of October 31, 2022, the amount of gross unrecognized tax benefits was $ 1,045 million, of which up to $ 807 million would affect HP’s effective tax rate if realized.

As of October 31, 2020, the amount of unrecognized tax benefits was $ 820 million of which up to $ 657 million would affect HP’s effective tax rate if realized.

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

Total gross unrecognized tax benefits increased by $ 225 million for the twelve months ended October 31, 2022.

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

3 unchanged sentences

HP believes it is reasonably possible that its existing gross unrecognized tax benefits may be reduced by up to $ 38 million within the next 12 months, affecting HP’s effective tax rate if realized.

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Notes to Consolidated Financial Statements (Continued)

Taxes on Earnings (Continued)

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

3 unchanged sentences

No material tax deficiencies have been assessed in major state or foreign tax jurisdictions related to ongoing audits as of October 31, 2022.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

Taxes on Earnings (Continued)

HP believes it has provided adequate reserves for all tax deficiencies or reductions in tax benefits that could result from federal, state and foreign tax audits.

7 unchanged sentences

Determination of the amount of unrecognized deferred tax liability related to these earnings is not practicable.

The TCJA taxed HP’s historic earnings and profits of its non-U.S.

subsidiaries.

HP will remit these taxed reinvested earnings for which deferred U.S.

federal and withholding taxes have been provided where excess cash has accumulated and HP determines that it is advantageous for business operations, tax or cash management reasons.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

Taxes on Earnings (Continued)

Deferred Income Taxes

12 unchanged sentences

Investment in partnership 70 95

Cash flow hedges — 8

Other 353 444

5 unchanged sentences

Right-of-use assets from operating leases ( 227 ) ( 215 )

Intangible assets ( 261 ) —

Cash flow hedges ( 155 ) —

Other — ( 79 )

1 unchanged sentence

Net deferred tax assets $ 2,038 $ 2,860

AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

Taxes on Earnings (Continued)

Deferred tax assets and liabilities included in the Consolidated Balance Sheets as follows:

9 unchanged sentences

Balance at end of year $ 28,919 $ 7,454 $ ( 7,195 )

AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

Taxes on Earnings (Continued)

As of October 31, 2022, HP had recorded deferred tax assets for various tax credit carryforwards as follows:

2 unchanged sentences

Tax credits in state and foreign jurisdictions $ 312 $ ( 55 ) 2023

R&D and other credits 11 — 2031

Balance at end of year $ 323 $ ( 55 )

5 unchanged sentences

Income tax (benefit) expense ( 274 ) ( 193 ) 74

Other comprehensive loss (income), currency translation and charges to other accounts ( 34 ) ( 28 ) 363

Goodwill, other comprehensive loss (income), currency translation and charges to other accounts 117 ( 34 ) ( 28 )

Balance at end of year $ 7,592 $ 7,749 $ 7,976

Gross deferred tax assets as of October 31, 2022, 2021, and 2020 were reduced by valuation allowances of $ 7.6 billion, $ 7.7 billion and $ 8.0 billion, respectively.

In fiscal year 2021, the deferred tax asset valuation allowance decreased by $ 227 million primarily due to the expected utilization of foreign net operating losses and U.S.

deferred tax assets that are anticipated to be realized at a lower effective rate than the federal statutory tax rate.

In fiscal year 2022, the deferred tax asset valuation allowance decreased by $ 157 million primarily due to foreign net operating losses, U.S.

deferred tax assets that are anticipated to be realized at a lower effective rate than the federal statutory tax rate, and the impact of the acquisition of Poly on the company’s deferred tax assets.

In fiscal year 2021, the deferred tax asset valuation allowance decreased by $ 227 million primarily due to foreign net operating losses and U.S.

deferred tax assets that are anticipated to be realized at a lower effective rate due to certain future U.S.

international tax reform implications.

In fiscal year 2020, the deferred tax asset valuation allowance increased by $ 46 million primarily associated with foreign net operating losses and U.S.

1 unchanged sentence

international tax reform implications.

In fiscal year 2019, the deferred tax asset valuation allowance increased by $ 24 million primarily associated with the recognition of the income tax consequences of intra-entity transfers other than inventory.

This increase was partially offset by the impact of tax rate changes in foreign jurisdictions and state valuation allowance releases.

See Note 1, “Summary of Significant Accounting Policies” for detailed information.

AND SUBSIDIARIES

9 unchanged sentences

Balance at end of period $ 107 $ 111 $ 122

HP has third-party arrangements, consisting of revolving short-term financing, which provide liquidity to certain partners to facilitate their working capital requirements.

These financing arrangements, which in certain circumstances may contain partial recourse, result in a transfer of HP’s receivables and risk to the third-party.

As these transfers qualify as true sales under the applicable accounting guidance, the receivables are de-recognized from the Consolidated Balance Sheets upon transfer, and HP receives a payment for the receivables from the third-party within a mutually agreed upon time period.

As these transfers qualify as true sales under the applicable accounting guidance, the receivables are de-recognised from the Consolidated Balance Sheets upon transfer, and HP receives a payment for the receivables from the third-party within a mutually agreed upon time period.

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

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

The costs associated with the sales of trade receivables for fiscal year 2021, 2020 and 2019 were not material.

The recourse obligations as of October 31, 2022 and 2021, and the costs associated with the sales of trade receivables for fiscal year 2022, 2021 and 2020 were not material.

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

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As of October 31

Supplier and other receivables $ 2,333 $ 2,092

Prepaid and other current assets $ 2,170 $ 1,092

Supplier and other receivables 1,377 2,333

Value-added taxes receivable 968 1,005

Available-for-sale investments 5 274

$ 4,515 $ 4,430

10 unchanged sentences

$ 2,159 $ 2,917

Right-of-use assets from operating leases (2)

Intangible assets (2)

Prepaid pension asset (4)

Right-of-use assets (3)

Deposits and prepaid 588 734

Prepaid pension asset (4)

Other 990 698

1 unchanged sentence

(1) See Note 6, “Taxes on Earnings” for detailed information.

(2) See Note 17, “Leases” for detailed information.

(2) See Note 8, “Goodwill and Intangible Assets” for detailed information.

(3) See Note 17, “Leases” for detailed information.

(4) See Note 4, “Retirement and Post-Retirement Benefit Plans” for detailed information.

5 unchanged sentences

Sales and marketing programs $ 2,967 $ 3,179

Employee compensation and benefit 1,627 1,194

Deferred revenue 1,393 1,277

Other accrued taxes 1,064 1,227

Employee compensation and benefit 954 1,627

Warranty 619 731

7 unchanged sentences

Deferred revenue $ 1,171 $ 1,099

Pension, post-retirement, and post-employment liabilities (1)

Operating lease liabilities (2)

Tax liability 931 830

Operating lease liabilities (1)

Pension, post-retirement, and post-employment liabilities (2)

Deferred tax liability 121 57

1 unchanged sentence

$ 4,556 $ 4,778

(1) See Note 4, “Retirement and Post-Retirement Benefit Plans” for detailed information.

(1) See Note 17, “Leases” for detailed information.

(3) See Note 6, “Taxes on Earnings” for detailed information.

(2) See Note 4, “Retirement and Post-Retirement Benefit Plans” for detailed information.

Russia exit charges

For fiscal 2022, HP recognized charges 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.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

Supplementary Financial Information (Continued)

Interest and other, net

8 unchanged sentences

Tax indemnifications ( 1 ) — 1

— 1 ( 1,186 )

Other, net ( 19 ) ( 22 ) 21

$ ( 235 ) $ 2,209 $ ( 231 )

AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

Supplementary Financial Information (Continued)

(1) See Note 1, “Summary of Significant Accounting Policies” and Note 14, “Litigation and Contingencies” for detailed information.

(2) Fiscal year ended October 31, 2019, includes an adjustment of $ 764 million, of indemnification receivables, primarily related to resolution of various income tax audits settlements and an adjustment of $ 417 million pursuant to the termination of the TMA with Hewlett Packard Enterprise.

(1) See Note 1, “Summary of Significant Accounting Policies” for detailed information.

Net Revenue by Region

18 unchanged sentences

During the fiscal year ended October 31, 2021, the Company amortized $ 79 million of these costs.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

Supplementary Financial Information (Continued)

Contract Liabilities

As of October 31, 2022 and 2021, HP’s contract liabilities balances were $ 2.5 billion and $ 2.3 billion, respectively, included in Other Current Liabilities and Other Non-Current Liabilities in the Consolidated Balance Sheets.

The increase in the contract liabilities balance for the fiscal year 2021 was primarily driven by sales of fixed-price support and maintenance services, partially offset by $ 1.1 billion of revenue recognized that were included in the opening contract liabilities balance as of October 31, 2020.

The increase in the contract liabilities balance for the fiscal year 2022 was primarily driven by sales of fixed-price support and maintenance services and the Poly acquisition, partially offset by $ 1.1 billion of revenue recognized that were included in the contract liabilities balance as of October 31, 2021.

As of October 31, 2021 and 2020, HP’s contract liabilities balances were $ 2.3 billion and $ 2.2 billion, respectively, included in Other Current Liabilities and Other Non-Current Liabilities in the Consolidated Balance Sheets.

The increase in the contract liabilities balance for the fiscal year 2020 was primarily driven by sales of fixed-price support and maintenance services, partially offset by $ 1.1 billion of revenue recognized that were included in the opening contract liabilities balance as of October 31, 2019.

The increase in the contract liabilities balance for the fiscal year 2021 was primarily driven by sales of fixed-price support and maintenance services, partially offset by $ 1.1 billion of revenue recognized that were included in the contract liabilities balance as of October 31, 2020.

AND SUBSIDIARIES

26 unchanged sentences

Total intangible assets $ 2,792 $ 859 $ 1,933 $ 1,435 $ 651 $ 784

For the fiscal year 2021, the increase in gross intangible assets was primarily due to intangible assets resulting from acquisitions.

The intangibles acquired during the year were based on preliminary fair value estimates.

For the fiscal year 2022, the increase in gross intangible assets was primarily due to intangible assets resulting from recent acquisitions.

See Note 18, “Acquisitions” for detailed information.

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

9 unchanged sentences

Thereafter 543

Total $ 1,933

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date.

16 unchanged sentences

Corporate debt $ — $ 904 $ — $ 904 $ — $ 1,112 $ — $ 1,112

Financial institution instruments — — — — — 59 — 59

Government debt (1)

1 unchanged sentence

Available-for-Sale Investments

Corporate debt — — — — — 169 — 169

Financial institution instruments — 5 — 5 — 5 — 5

Government debt (1)

— — — — — 73 — 73

Marketable equity securities and mutual funds 17 41 — 58 15 56 — 71

Derivative Instruments

Interest rate contracts — — — — — 4 — 4

Foreign currency contracts — 1,088 — 1,088 — 277 — 277

23 unchanged sentences

HP estimates the fair value of its debt primarily using an expected present value technique, which is based on observable market inputs using interest rates currently available to companies of similar credit standing for similar terms and remaining maturities and considering its own credit risk.

The portion of HP’s debt that is hedged is reflected in the Consolidated Balance Sheets as an amount equal to the debt’s carrying amount and a fair value adjustment representing

AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

Fair Value (Continued)

changes in the fair value of the hedged debt obligations arising from movements in benchmark interest rates.

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

The fair value of HP’s short- and long-term debt was $ 9.6 billion as compared to its carrying amount of $ 11.0 billion at October 31, 2022.

1 unchanged sentence

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

AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

Fair Value (Continued)

Other Financial Instruments:

13 unchanged sentences

Corporate debt $ 904 $ — $ — $ 904 $ 1,112 $ — $ — $ 1,112

Financial institution instruments — — — — 59 — — 59

Government debt 1,289 — — 1,289 1,931 — — 1,931

1 unchanged sentence

Available-for-Sale Investments:

Corporate debt (1)

— — — — 169 — — 169

Financial institution instruments 5 — — 5 5 — — 5

5 — — 5 32 — — 32

Government debt (1)

— — — — 73 — — 73

Marketable equity securities and mutual funds 50 8 — 58 42 29 — 71

1 unchanged sentence

Total cash equivalents and available-for-sale investments $ 2,248 $ 8 $ — $ 2,256 $ 3,090 $ 29 $ — $ 3,119

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

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

11 unchanged sentences

No credit-related or noncredit-related impairment losses were recorded in the fiscal year 2022.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

Financial Instruments (Continued)

Derivative Instruments

6 unchanged sentences

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

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

To further limit

AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

Financial Instruments (Continued)

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

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

The Company includes gross collateral posted and received in other current assets and other current liabilities in the Consolidated Balance Sheets, respectively.

The fair value of derivatives with credit contingent features in a net liability position was $ 82 million and $ 64 million as of October 31, 2022 and 2021, respectively, all of which were fully collateralized within two business days.

4 unchanged sentences

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

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

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

Cash Flow Hedges

4 unchanged sentences

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

During the fiscal year 2021, HP entered into a series of forward starting swap agreements with notional amounts totaling $ 2.25 billion to hedge the exposure to variability in future cash flows resulting from changes in interest rate related to anticipated issuance of long-term debt.

These agreements were designated as cash flow hedges.

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

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

During the fiscal year 2022, a series of forward starting swaps, which were executed with a total notional amount of $ 1.75 billion along with already existing forward starting swaps with a total notional amount of $ 1.5 billion, were settled upon the issuance of the senior unsecured notes, resulting in a gain of $ 79 million recognized in Accumulated other comprehensive income (loss).

The gain will be reclassified to Interest and other, net, in the Consolidated Statements of Earnings over a portion of the life of the related debt.

Other Derivatives

1 unchanged sentence

HP also uses total return swaps to hedge its executive deferred compensation plan liability.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

Financial Instruments (Continued)

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

2 unchanged sentences

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

During the fiscal 2021 and 2020, no portion of the hedging instruments’ gain or loss was excluded from the assessment of effectiveness for fair value and cash flow hedges.

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

AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

Financial Instruments (Continued)

Fair Value of Derivative Instruments in the Consolidated Balance Sheets

21 unchanged sentences

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

AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

Financial Instruments (Continued)

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

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

In the Consolidated Balance Sheets

13 unchanged sentences

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

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Notes to Consolidated Financial Statements (Continued)

Financial Instruments (Continued)

Effect of Derivative Instruments in the Consolidated Statements of Earnings

4 unchanged sentences

2020 $ ( 231 ) $ 6 $ ( 6 )

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

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

For the fiscal years ended October 31

2022 2021 2020

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

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

Foreign currency contracts $ 1,456 $ ( 117 ) $ ( 197 )

Interest rate contracts $ 85 $ ( 15 ) $ ( 4 )

AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

Financial Instruments (Continued)

The pre-tax effect of derivative instruments in cash flow hedging relationships included in earnings were as follows:

9 unchanged sentences

As of October 31, 2022, HP expects to reclassify an estimated accumulated other comprehensive gain of approximately $ 453 million, net of taxes, to earnings within the next twelve months associated with cash flow hedges along with the earnings effects of the related forecasted transactions.

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

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

AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

Financial Instruments (Continued)

The pre-tax effect of derivative instruments not designated as hedging instruments recognized in Interest and other, net in the Consolidated Statements of Earnings for fiscal years 2022, 2021 and 2020 was as follows:

19 unchanged sentences

Dollar Global Notes (1)

2009 Shelf Registration Statement:

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

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

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

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

2019 Shelf Registration Statement:

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

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

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

Private Placement:

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

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

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

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

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

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

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

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

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

$ 1,000 issued at discount to par at a price of 99.767 % at 4.00 %, due April 2029

$ 1,000 issued at discount to par at a price of 99.966 % at 4.20 %, due April 2032

$ 900 issued at discount to par at a price of 99.841 % at 4.75 %, due January 2028

$ 1,100 issued at discount to par at a price of 99.725 % at 5.50 %, due January 2033

$ 500 issued at par at a price of 100 % at 4.75 %, due March 2029 (3)

Other borrowings at 0.51 %- 9.00 %, due in fiscal years 2023-2029

6 unchanged sentences

Dollar Global Notes are senior unsecured debt .

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

HP incurred issuance costs of $ 17 million.

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

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

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

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

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

renewable energy;

6 unchanged sentences

and socioeconomic advancement and empowerment.

(3) Includes approximately $ 9 million of senior notes issued by Poly, not exchanged under Poly Exchange Offer.

In June 2022, HP completed its offering of $ 2.0 billion aggregate principal amount of senior unsecured notes, consisting of $ 0.9 billion of 4.75 % notes due January 2028 and $ 1.1 billion of 5.50 % notes due January 2033.

HP incurred issuance costs of $ 17 million.

HP will pay interest semi-annually on each series of the notes on January 15 and July 15, beginning January 15, 2023.

In June 2022, HP terminated a series of forward starting swap agreements with notional amounts totaling $ 1.75 billion that were executed to mitigate the treasury rate volatility associated with this debt issuance.

HP used the net proceeds from the offering, together with other available funds, to fund the purchase price of the acquisition of Poly, repay Poly’s existing term loan, and pay any related fees and expenses.

AND SUBSIDIARIES

1 unchanged sentence

Borrowings (Continued)

In March 2022, HP completed its offering of $ 2.0 billion aggregate principal amount of senior unsecured notes, consisting of $ 1.0 billion of 4.00 % notes due April 2029 and $ 1.0 billion of 4.20 % notes due April 2032.

HP incurred issuance costs of $ 17 million.

HP will pay interest semi-annually on each series of the notes on April 15 and October 15, beginning October 15, 2022.

HP terminated a series of forward starting swap agreements with notional amounts totaling $ 1.5 billion that were executed to mitigate the treasury rate volatility associated with this debt issuance.

HP used the net proceeds from the offering of the notes for general corporate purposes, which may include, without limitation, repayment and refinancing of debt, funding of acquisition opportunities, working capital, capital expenditures, and share repurchases.

As disclosed in Note 10, “Financial Instruments”, HP uses interest rate swaps to mitigate some of the exposure of its debt portfolio to changes in fair value resulting from changes in benchmark interest rates.

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Total $ 11,190

Extinguishment of Debt

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

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

Dollar 4.650 % Global Notes due December 9, 2021.

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

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

Poly Exchange Offer

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.

The portion not exchanged, approximately $ 9 million, remains outstanding.

Because the debt instruments are not substantially different, the exchange was treated as a debt modification for accounting purposes resulting in a portion of the unamortized fair value adjustment of HP senior notes.

On November 17, 2022, HP consummated its post-acquisition change of control repurchase offer for the new notes issued by HP, and an aggregate amount of $ 498 million in repurchase price was paid in connection therewith.

Commercial Paper

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

Credit Facilities

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

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

As of October 31, 2020, HP had maintained a $ 4.0 billion senior unsecured committed revolving credit facility and a $ 1.0 billion 364 -day revolving credit facility to support the issuance of commercial paper or for general corporate purposes.

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

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

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

As of October 31, 2021, HP was in compliance with the covenants in the New Revolving Facility.

Credit Facility

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

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

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

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

On August 23, 2022, HP entered into an amendment to the credit agreement governing the revolving credit facility, pursuant to which the credit agreement has been amended to provide for interest rates at Term SOFR instead of LIBOR.

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

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Notes to Consolidated Financial Statements (Continued)

Borrowings (Continued)

Available Borrowing Resources

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

As of October 31, 2022, HP had available borrowing resources of $ 937 million from uncommitted lines of credit in addition to the revolving credit facility.

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In fiscal year 2020, HP executed share repurchases of 168 million shares and settled total shares for $ 3.1 billion.

Share repurchases executed during fiscal years 2021, 2020, and 2019 included 1.6 million shares, 2.3 million shares, and 0.9 million shares settled in November 2021, 2020, and 2019, respectively.

Share repurchases executed during fiscal years 2021, and 2020 included 1.6 million shares, and 2.3 million shares settled in November 2021, and 2020, respectively.

The shares repurchased in fiscal years 2022, 2021 and 2020 were all open market repurchase transactions.

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

Tax provision on unrealized gains arising during the period $ ( 1 ) $ — $ —

Tax benefit (provision) on unrealized (losses) gains arising during the period $ 2 $ ( 1 ) $ —

Tax effect on change in unrealized components of cash flow hedges:

Tax (provision) benefit on unrealized gains (losses) arising during the period ( 328 ) ( 9 ) 20

Tax (benefit) provision on losses (gains) reclassified into earnings ( 17 ) 28 46

Tax provision (benefit) on (gains) losses reclassified into earnings 195 ( 17 ) 28

( 133 ) ( 26 ) 48

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

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Tax benefit on amortization of actuarial loss and prior service benefit ( 6 ) ( 17 ) ( 19 )

Tax benefit (provision) on curtailments, settlements and other 9 ( 41 ) ( 104 )

Tax (provision) benefit on curtailments, settlements and other ( 1 ) 9 ( 41 )

4 ( 185 ) ( 49 )

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

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

Losses reclassified into earnings — — 3

Change in unrealized components of cash flow hedges:

Unrealized (losses) gains arising during the period $ ( 9 ) $ 4 $ 2

Losses (gains) reclassified into earnings 226 ( 57 ) ( 334 )

Change in unrealized components of cash flow hedges:

Unrealized gains (losses) arising during the period 1,213 ( 141 ) ( 181 )

(Gains) losses reclassified into earnings ( 584 ) 226 ( 57 )

629 85 ( 238 )

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Curtailments, settlements and other ( 1 ) ( 27 ) 174

867 220 ( 269 )

Change in cumulative translation adjustment ( 75 ) 27 ( 2 )

Other comprehensive income (loss), net of taxes $ 573 $ 983 $ ( 18 )

(1) These components are included in the computation of net pension and post-retirement benefit (credit) charges in Note 4,

“Retirement and Post-Retirement Benefit Plans”.

The components of Accumulated other comprehensive loss, net of taxes as of October 31, 2021 and changes during fiscal year 2021 were as follows:

(1) These components are included in the computation of net pension and post-retirement benefit (credit) charges in Note 4, “Retirement and Post-Retirement Benefit Plans” .

The components of Accumulated other comprehensive income (loss), net of taxes as of October 31, 2022 and changes during fiscal year 2022 were as follows:

Net unrealized gains on available-for-sale securities Net unrealized gains (losses) on cash flow hedges Unrealized components of defined benefit plans Change in cumulative translation adjustment Accumulated other comprehensive loss

Balance at beginning of period $ 15 $ 19 $ ( 323 ) $ 29 $ ( 260 )

Other comprehensive gains (losses) before reclassifications 4 ( 141 ) 831 27 721

Other comprehensive (losses) gains before reclassifications ( 9 ) 1,213 15 ( 75 ) 1,144

Reclassifications of losses into earnings — ( 584 ) 14 — ( 570 )

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

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

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

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

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

Hewlett-Packard Company v.

Oracle Corporation .

On June 15, 2011, HP filed suit against Oracle Corporation (“Oracle”) in California Superior Court in Santa Clara County in connection with Oracle’s March 2011 announcement that it was discontinuing software support for HP’s Itanium-based line of mission-critical servers.

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

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

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

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

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

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

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

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

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

Oracle has until December 28, 2021 to file a petition for certiorari asking the United States Supreme Court for review.

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

Forsyth, et al.

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

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Notes to Consolidated Financial Statements (Continued)

Litigation and Contingencies (Continued)

claims are pending against HPE.

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

Former employees must opt in by February 15, 2022.

Similar claims are pending against HPE.

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

This opt-in period closed on February 15, 2022.

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

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The differential duty demand is subject to interest.

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

On April 20, 2012, the Commissioner issued an order on the parts-related notice affirming certain duties and penalties against HP India and certain of the named

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Notes to Consolidated Financial Statements (Continued)

Litigation and Contingencies (Continued)

individuals of approximately $ 17 million, of which HP India had already deposited $ 7 million.

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

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

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

The ITC is expected to render a final decision by February 22, 2022.

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

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

On March 23, 2022, the ITC rendered a final determination that no violation of section 337 has occurred.

Philips did not appeal and elected to resume litigation with its case in federal court.

Philips seeks unspecified damages and an injunction against HP, and the prior stay has been lifted .

Caltech Patent Litigation .

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Caltech seeks unspecified damages and other relief.

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

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

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

Broadcom Ltd et al., Case No.

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

On March 12, 2022, the parties filed a status report regarding whether the court should lift the stay, which remains pending.

In re HP Inc.

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

Lead Plaintiffs filed an amended complaint, which

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Notes to Consolidated Financial Statements (Continued)

Litigation and Contingencies (Continued)

additionally named as defendants Enrique Lores and Christoph Schell.

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

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

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

Plaintiffs are appealing the decision.

Plaintiffs appealed the decision.

An appellate hearing scheduled for December 5, 2022 was cancelled as the parties have reached a settlement in principle.

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

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

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

Plaintiff seeks compensatory damages and other relief.

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Notes to Consolidated Financial Statements (Continued)

Litigation and Contingencies (Continued)

material information and making false statements about HP’s printing supplies business.

Plaintiffs seek compensatory damages and other relief.

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

That motion is fully briefed.

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

Plaintiffs are appealing the decision.

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

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

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

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

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

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

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

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

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

Legal Proceedings re Authentication of Supplies .

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

Since 2016, HP has from time to time been named in civil litigation, or been the subject of government investigations, involving supplies authentication protocols used in certain HP printers in multiple geographies, including but not limited to the United States, Italy, Israel, and the Netherlands.

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

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

123Inkt Foundation litigation (Netherlands) .

On November 23, 2016, a foundation known as Stichting 123Inkt-Huismerk Klanten (the “Foundation”) filed a complaint in district court in Amsterdam against HP Nederland B.V.

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

Digital Revolution B.V.

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

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

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

Both parties appealed to the Supreme Court of the Netherlands.

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

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

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

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

HP has reached an agreement to settle this case, which has been submitted to the Court for approval.

The Court has scheduled a hearing for January 13, 2022 to address any issues that may arise with the settlement.

(United States) .

In August 2019, HP was named in this purported nationwide consumer class action in federal court in the Northern District of California arising out of the use of Dynamic Security in certain OfficeJet printers.

Plaintiff’s Second Amended Complaint alleged claims under Florida Consumer Protection statutes, the federal Computer Fraud and Abuse Act, and for trespass to chattels.

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

On September 29, 2020, the court granted HP’s motion to dismiss, dismissing the case in

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Notes to Consolidated Financial Statements (Continued)

Litigation and Contingencies (Continued)

full with prejudice.

The plaintiff appealed, and the parties subsequently reached a settlement.

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

Consumer Protection Investigation (Italy) .

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

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

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

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

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

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

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

On February 5, 2021, HP filed an appeal.

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

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

Digital Revolution B.V.

HP Nederland B.V., et al.

(Netherlands) .

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

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

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

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

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

The Court held an oral hearing on September 13, 2021.

The Court’s decision has not yet issued and is subject to appeal.

Mobile Emergency Housing Corp., et al.

(United States) .

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

The complaint alleges a variety of claims, including state consumer protection and unfair business claims and state and federal computer access and data collection claims.

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

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

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

Plaintiffs base or have based their claims on various legal theories, including but not limited to unfair competition, computer trespass, and similar statutory claims.

Among other relief, Plaintiffs have sought or seek money damages and in certain cases have or may seek injunctive relief against the use or operation of Dynamic Security or relief requiring interoperability.

If HP is not successful in its defense of these cases or investigations, it could be subject to damages, penalties, significant settlement demands, or injunctive relief that may be costly or may disrupt operations.

Certain of these proceedings in Italy, the Netherlands and Israel have been resolved, have concluded, or have concluded subject only to HP’s pending appeal.

Civil litigation filed by Digital Revolution B.V.

(trading as 123Inkt) against HP Nederlands B.V., et al.

(Netherlands) in March 2020, including its competition claim, remains pending.

Both parties have appealed.

In addition, two putative class actions have been filed against HP in federal court in California, in December 2020 and April 2022, arising out of the use of Dynamic Security firmware updates in HP Laserjet printers and HP Inkjet printers, respectively.

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

The cases are in their early stages.

Autonomy-Related Legal Matters

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

The indictment charged Dr.

The indictment charged Mr.

Lynch and Mr.

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

On January 28, 2022, the U.K.

Home Office approved U.S.

demands to have Mr.

Lynch extradited to face the charges.

In February 2022, Mr.

Lynch sought permission to appeal, and his request is pending.

HP is continuing to cooperate with the ongoing enforcement actions.

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Lynch and Hussain filed their defenses.

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

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

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

The parties are awaiting a ruling from the Court.

Environmental

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

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

Lynch also filed a counterclaim against Autonomy Corporation Limited seeking $ 160

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Litigation and Contingencies (Continued)

contribution towards clean-up costs.

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

million in damages, among other things, for alleged misstatements regarding Lynch.

Trial was completed in January 2020.

On May 17, 2022, the court issued its final judgment, memorializing its findings that HP succeeded in substantially all of its claims and that Messrs.

Lynch and Hussein engaged in fraud, and dismissing Mr.

Lynch’s counterclaim.

The court deferred its assessment of damages to a later, separate judgment to be issued after further submissions, but it has indicated that damages awarded may be substantially less than is claimed.

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

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

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

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

Environmental

HP is, and may become a party to, proceedings brought by U.S.

or state agencies or private third parties under the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”), known as “Superfund,” or state laws similar to CERCLA.

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

Guarantees, Indemnifications and Warranties

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Cross-Indemnifications with Hewlett Packard Enterprise

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

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

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however, contractual warranty terms, repair costs, product call rates, average cost per call, current period product shipments and ongoing product failure rates, as well as specific product class failures outside of HP’s baseline experience, affect the estimated warranty obligation.

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Notes to Consolidated Financial Statements (Continued)

Guarantees, Indemnifications and Warranties (Continued)

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

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Balance at end of year $ 876 $ 959

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Notes to Consolidated Financial Statements (Continued)

Unconditional Purchase Obligations

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Acquisitions in fiscal 2022

I n fiscal 2021, HP completed four acquisitions.

The estimated fair value of the assets acquired and liabilities assumed at the acquisition date for all four acquisitions, as set forth in the table below, reflects various preliminary fair value estimates and analyses, including preliminary work performed by third-party valuation specialists, which are subject to change within the measurement period as valuations are finalized.

The fair values of certain tangible assets and liabilities acquired, the valuation of intangible assets acquired, certain legal matters, income and non income-based taxes, and residual goodwill are not yet finalized and subject to change.

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

In fiscal 2022, HP completed two acquisitions.

HP estimated the preliminary fair values of net tangible and intangible assets acquired, and the excess of the consideration transferred over the aggregate of such fair values was recorded as goodwill.

The preliminary fair values of net tangible assets and intangible assets acquired were based on preliminary valuations performed by third-party valuation specialists, and our estimates and assumptions are subject to change within the measurement period (up to one year from the acquisition date).

The primary areas that remain preliminary relate to the fair values of intangible assets acquired, certain tangible assets and liabilities acquired, certain legal matters, income and non-income based taxes and residual goodwill.

We expect to continue to obtain information to assist us in determining the fair values of the net assets acquired during the measurement period.

Pro forma results of operations for these acquisitions have not been presented because they are not material to HP’s consolidated results of operations, either individually or in the aggregate.

Goodwill, which represents the excess of the purchase price over the net tangible and intangible assets acquired, is not deductible for tax purposes.

The following table presents the aggregate estimated fair values of the assets acquired and liabilities assumed, including those items that are still preliminary allocations, for all of HP's acquisitions in fiscal 2021:

Goodwill $ 1,766

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Total fair value of consideration $ 2,858

Acquisition of Poly

In fiscal 2022, HP completed the acquisition of Poly, a leading global provider of workplace collaboration solutions at a total enterprise value of $ 3.3 billion, inclusive of the Exchange Offer.

The purchase consideration of $ 2.8 billion included payment to shareholders in an all-cash transaction for $ 40 per share, amounting to $ 1.8 billion and repayment of Poly’s existing term loan of $ 1.0 billion.

Poly's results of operations are included within the Personal Systems segment.

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.

On September 1, 2022, HP consummated its offer to exchange approximately $ 0.5 billion of outstanding notes issued by Poly for new notes issued by HP with the same interest rate, interest payment dates, maturity date and redemption terms as the exchanged Poly Notes.

See Note 11, “Borrowings” for detailed information.

Of the total consideration, $ 109 million related to cash settlement of restricted stock units and performance-based restricted stock units was allocated to the purchase consideration, and $ 81 million was expensed immediately.

In addition, HP assumed unvested restricted stock units and performance-based restricted stock units (“assumed awards”) with a preliminary estimated fair value of $ 47 million allocated to future services to be expensed over the remaining service periods on a straight-line basis, of which $ 4 million was attributed to purchase consideration.

For the year ended October 31, 2022, HP recorded stock-based compensation expense of $ 3 million related to these assumed awards.

Acquisitions in fiscal 2021

I n fiscal 2021, HP completed four acquisitions.

The estimated fair value of the assets acquired and liabilities assumed at the acquisition date for all four acquisitions, as set forth in the table below.

Pro forma results of operations for these acquisitions have not been presented because they were not material to HP’s consolidated results of operations, either individually or in the aggregate.

Goodwill, which represents the excess of the purchase price over the net tangible and intangible assets acquired, is not deductible for tax purposes.

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Notes to Consolidated Financial Statements (Continued)

The following table presents the aggregate estimated fair values of the assets acquired and liabilities assumed for all of HP's acquisitions in fiscal 2021:

Goodwill $ 400

Amortizable intangible assets 385

Net assets acquired 120

Total fair value of consideration $ 905

Acquisition of HyperX, the gaming division of Kingston Technology Company

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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-K

Item 8. Financial Statements and Supplementary Data