What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2023-12-18 compared with 2022-12-06 · 342 added, 476 removed, 1659 unchanged (33% of the section changed)

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generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of October 31, 2022, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated December 6, 2022 expressed an unqualified opinion thereon.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of October 31, 2023, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated December 15, 2023 expressed an adverse opinion thereon.

Basis for Opinion

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

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.

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.

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.

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, including the above described judgments.

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 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

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosure to which it relates.

Estimation of variable consideration

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.

In addition, the Company reduces revenue for customer and distributor programs and incentive offerings including rebates, promotions, other volume-based incentives and expected returns.

The Company uses significant estimates to determine the expected variable consideration for such programs based on factors like historical experience, forecasted sales, expected customer behavior and market conditions.

Our assessment of management’s evaluation of the appropriate accounting for revenue contracts and the determination of the variable consideration for sales incentives are significant to our audit because the amounts are material to the financial statements and the assessment process involves significant judgment.

How We Addressed the Matter in Our Audit We tested relevant controls over the identified risks related to the Company’s accounting for revenue recognition, including the controls to evaluate the appropriate accounting treatment for contracts containing non-standard terms and conditions and multiple performance obligations and the controls related to the estimation process to record the variable consideration related to certain sales incentives.

Our audit procedures included, among others, inspection of contracts entered into during the period, evaluation of management’s judgments related to the interpretation of certain contract provisions including the identification of performance obligations, the method of allocating the transaction price to the performance obligations in the arrangement, and the assessment of the appropriateness of the amount of revenue recognized.

We also evaluated the Company’s key assumptions and judgments and tested the completeness and accuracy of the underlying data used to determine the variable consideration for sales incentives.

This included analyzing data related to the historical experience of sales incentive payments as well as understanding the current market dynamics that can affect the estimate of variable consideration to assess the Company’s judgments and estimates.

As described in Note 1 of the consolidated financial statements, the Company reduces revenue for customer and distributor programs and incentive offerings including rebates, promotions and other volume-based incentives.

The Company uses estimates to determine the expected variable consideration for such programs based on factors like historical experience, expected customer behavior and market conditions.

Estimated variable consideration is presented within other current liabilities on the consolidated balance sheet and totaled $3.1 billion at October 31, 2023.

Auditing the Company’s measurement of variable consideration is especially challenging because the calculation reflects management’s assumptions about expected future claims activity and changes in those assumptions can have a material effect on the amount of variable consideration recognized.

How We Addressed the Matter in Our Audit Our audit procedures included, among others, evaluating the Company’s key assumptions and judgments, and testing the completeness and accuracy of the underlying data used to determine the estimated variable consideration.

We inspected the underlying agreements to understand the nature of variable consideration offered to customers.

We evaluated management’s estimate by comparing previous estimates of variable consideration to actual payments in subsequent periods.

We developed an expectation of the ending accrual and compared our expectation to the amount recorded by the Company.

/s/ ERNST & YOUNG LLP

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and subsidiaries’ internal control over financial reporting as of October 31, 2023, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria).

In our opinion, HP Inc.

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.

and subsidiaries as of October 31, 2022 and 2021, the related consolidated statements of earnings, comprehensive income, stockholders' deficit and cash flows for each of the three years in the period ended October 31, 2022, and the related notes and our report dated December 6, 2022 expressed an unqualified opinion thereon.

In our opinion, because of the effect of the material weakness described below on the achievement of the objectives of the control criteria, HP Inc.

and subsidiaries (the Company) has not maintained effective internal control over financial reporting as of October 31, 2023, based on the COSO criteria.

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.

The following material weakness has been identified and included in management’s assessment.

The material weakness resulted from undue reliance on certain software solutions affecting net revenue without effectively designed information technology general controls, specifically around user access and change management.

Information generated from these software solutions is used by management in accounting for net revenue, including estimating variable consideration, and certain of these software solutions are used in the processing of revenue related transactions.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of October 31, 2023 and 2022, the related consolidated statements of earnings, comprehensive income, stockholders' deficit and cash flows for each of the three years in the period ended October 31, 2023, and the related notes and our report dated December 15, 2023 expressed an unqualified opinion thereon.

Basis for Opinion

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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, 2023, utilizing the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework (2013 framework).

Based on the assessment by HP’s management, we determined that HP’s internal control over financial reporting was effective as of October 31, 2022.

The effectiveness of HP’s internal control over financial reporting as of October 31, 2022 has been audited by Ernst & Young LLP, HP’s independent registered public accounting firm, as stated in their report which appears on page 57 of this Annual Report on Form 10-K.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.

During the fourth quarter of fiscal year 2023, management identified a material weakness in internal control over financial reporting.

The material weakness resulted from undue reliance on information generated from certain software solutions affecting net revenue without effectively designed information technology general controls, specifically around user access and change management.

This material weakness did not result in any errors.

While this material weakness did not result in a material misstatement of our financial statements, this control deficiency was not remediated as of October 31, 2023 and there is a reasonable possibility that it could have resulted in a material misstatement in the Company's annual or interim consolidated financial statements that would not be detected.

Accordingly, we determined that this control deficiency constituted a material weakness.

As a result of this material weakness, management has concluded that we did not maintain effective internal control over financial reporting as of October 31, 2023.

The effectiveness of HP’s internal control over financial reporting as of October 31, 2023 has been audited by Ernst & Young LLP, HP’s independent registered public accounting firm, as stated in their report which appears in Part II, Item 8 of this Annual Report on Form 10-K.

/s/ ENRIQUE LORES /s/ MARIE MYERS

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Earnings before taxes 2,937 4,324 7,568

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

Benefit from (provision for) taxes

326 ( 1,192 ) ( 1,027 )

Net earnings $ 3,263 $ 3,132 $ 6,541

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

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

Change in unrealized components of cash flow hedges:

Unrealized gains (losses) arising during the period

Change in unrealized components of cash flow hedges:

Unrealized (losses) gains arising during the period

( 427 ) 1,541 ( 132 )

(Gains) losses reclassified into earnings ( 84 ) ( 779 ) 243

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Change in unrealized components of defined benefit plans:

Gains (losses) arising during the period 4 1,008 ( 29 )

(Losses) gains arising during the period

( 141 ) ( 54 ) 1,029

Amortization of actuarial loss and prior service benefit — 20 80

Curtailments, settlements and other — — ( 36 )

( 141 ) ( 34 ) 1,073

Change in cumulative translation adjustment 23 ( 78 ) 28

Other comprehensive income (loss) before taxes 697 1,196 ( 19 )

(Provision for) benefit from taxes ( 124 ) ( 213 ) 1

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

Other comprehensive (loss) income before taxes

( 627 ) 639 1,217

Benefit (provision for) from taxes

119 ( 109 ) ( 219 )

Other comprehensive (loss) income, net of taxes

( 508 ) 530 998

Comprehensive income $ 2,755 $ 3,662 $ 7,539

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Current assets:

Cash and cash equivalents $ 3,145 $ 4,299

Cash, cash equivalents and restricted cash $ 3,232 $ 3,145

Accounts receivable, net of allowance for credit losses of $ 93 and $ 107 , respectively

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Preferred stock, $ 0.01 par value ( 300 shares authorized;

no ne issued)

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

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Accumulated deficit ( 2,361 ) ( 4,492 )

Accumulated other comprehensive income (loss) 313 ( 260 )

Accumulated other comprehensive (loss) income ( 223 ) 285

Total stockholders’ deficit ( 1,069 ) ( 3,025 )

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Deferred taxes on earnings ( 923 ) 577 ( 582 )

Defined benefit plan settlement (gains) charges — ( 37 ) 214

Defined benefit plan settlement gains

Other, net ( 10 ) 475 440

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(Payments of) Proceeds from short-term borrowings with original maturities less than 90 days, net ( 10 ) ( 400 ) 400

( 400 ) 400 —

Proceeds from debt, net of issuance costs 255 4,175 2,121

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Net cash used in financing activities ( 2,894 ) ( 2,068 ) ( 5,962 )

(Decrease) increase in cash and cash equivalents ( 1,154 ) ( 565 ) 327

Cash and cash equivalents at beginning of period 4,299 4,864 4,537

Cash and cash equivalents at end of period $ 3,145 $ 4,299 $ 4,864

Increase (decrease) in cash, cash equivalents and restricted cash

87 ( 1,154 ) ( 565 )

Cash, cash equivalents and restricted cash at beginning of period 3,145 4,299 4,864

Cash, cash equivalents and restricted cash at end of period $ 3,232 $ 3,145 $ 4,299

Supplemental cash flow disclosures:

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Interest expense paid $ 548 $ 305 $ 261

Supplemental schedule of non-cash activities:

Purchase of assets under finance leases $ — $ — $ 19

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

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Paid-in Capital Accumulated

Comprehensive Loss Total Stockholders’ Deficit

Comprehensive (Loss) Income

Total Stockholders’ Deficit

Number of Shares Par Value Accumulated Deficit

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Net earnings 6,541 6,541

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

Other comprehensive income, net of taxes

Comprehensive income 7,539

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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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Stock-based compensation expense 343 343

Business acquisitions 9 9

Balance October 31, 2022

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Net earnings 3,263 3,263

Other comprehensive income, net of taxes 573 573

Other comprehensive loss, net of taxes

( 508 ) ( 508 )

Comprehensive income 2,755

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Stock-based compensation expense 438 438

Business acquisitions 9 9

Balance October 31, 2023

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Actual results may differ materially from those estimates.

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 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.

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 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 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.

In November 2021, the Financial Accounting Standards Board (“FASB”) issued guidance that enhances the transparency of government assistance received and accounted for by applying a grant or contribution model by analogy.

This guidance requires annual disclosure of government assistance including the types of assistance received, an entity’s accounting for the assistance, the effect of the assistance on the entity’s financial statements and significant terms and conditions of such assistance.

HP adopted this guidance as of and for the fiscal year ended October 31, 2023 using a prospective approach.

Adoption of this guidance did not have a material impact on our consolidated financial statement disclosures.

Recently Issued Accounting Pronouncements Not Yet Adopted

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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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Notes to Consolidated Financial Statements (Continued)

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.

HP will adopt this guidance in the first quarter of fiscal year 2024, except for the disclosure on roll forward information which will be adopted in the fiscal year 2025, in line with the effective adoption dates prescribed by the FASB.

The adoption of this new guidance will result in increased disclosures in the notes to our Consolidated Financial Statements.

Revenue Recognition

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Determine the transaction price - Transaction price is the amount of consideration to which HP expects to be entitled in

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Notes to Consolidated Financial Statements

exchange for transferring goods or services to the customer.

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

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

Consideration is also given to market conditions such as competitor pricing strategies and technology industry life cycles.

When observable price is not available, HP establishes SSP maximizing the use of observable inputs based on management judgment while considering internal factors such as historical discounting trends for products and services, pricing practices and other observable factors.

Recognize revenue when (or as) the performance obligation is satisfied - Revenue is recognized when, or as, a

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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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See Note 7, “Supplementary Financial Information” for details on net revenue by region, cost to obtain a contract and fulfillment cost, contract liabilities and value of remaining performance obligations.

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Notes to Consolidated Financial Statements

At the inception of a contract, HP assesses whether the contract is, or contains, a lease.

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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

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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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The rates used in determining severance accruals are based on existing plans, historical experiences and negotiated settlements.

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.

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

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

Taxes on Earnings

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

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

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Notes to Consolidated Financial Statements

customers, length of time receivables are past due, trends in the weighted-average risk rating for the portfolio, macroeconomic conditions, information derived from competitive benchmarking, significant one-time events, and historical experience.

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

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The ten largest distributor and reseller receivable balances, which were concentrated primarily in North America and Europe, collectively represented approximately 41 % and 52 % of gross accounts receivable as of October 31, 2023 and 2022, respectively.

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.

One customer TD Synnex Corp accounted for 13.2 % of gross accounts receivable as of October 31, 2023.

Two customers, TD Synnex Corp and Ingram Micro Inc., accounted for 13.8 % and 10.4 %, respectively, of gross accounts receivable as of October 31, 2022.

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 may purchase product components from suppliers and sell those components to its outsourced manufacturers thereby creating receivable balances from the outsourced manufacturers.

The three largest outsourced manufacturer receivable balances collectively represented 89 % and 85 % of HP’s supplier receivables of $ 0.3 billion and $ 1.4 billion as of October 31, 2022 and 2021, respectively.

The three largest outsourced manufacturer receivable balances collectively represented 58 % and 89 % of HP’s supplier receivables of $ 0.3 billion as of both October 31, 2023 and 2022, respectively.

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

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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.

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.

HP records inventory at the lower of cost or market (net realizable value) on a first-in, first-out basis.

Cost is computed using standard cost which approximates actual cost.

Adjustments, if required, to reduce the cost of inventory to market are made for estimated excess, obsolete or impaired balances after considering judgments related to future demand and market conditions.

Property, Plant and Equipment, Net

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HP depreciates equipment held for lease over the initial term of the lease to the equipment’s estimated residual value.

On retirement or disposition, the asset cost and related accumulated depreciation are removed from the Consolidated Balance Sheets with any gain or loss recognized in the Consolidated Statements of Earnings.

On retirement or disposition, the

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Notes to Consolidated Financial Statements

asset cost and related accumulated depreciation are removed from the Consolidated Balance Sheets with any gain or loss recognized in the Consolidated Statements of Earnings.

Internal Use Software and Cloud Computing Arrangements

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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

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Notes to Consolidated Financial Statements (Continued)

Summary of Significant Accounting Policies (Continued)

intangible asset.

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

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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.

HP can elect to perform a qualitative assessment to test a reporting unit’s goodwill for impairment or 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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Under the income approach, HP estimates the fair value of a reporting unit based on the present value of estimated future cash flows.

HP bases cash flow projections on management’s estimates of revenue growth rates and operating margins, taking into consideration industry and market conditions.

HP bases the discount rate on the weighted-average cost of capital adjusted for the relevant risk associated with business-specific characteristics and the uncertainty related to the reporting unit’s ability to execute on the projected cash flows.

Under the market approach, HP estimates fair value based on market multiples of revenue and earnings derived from comparable publicly-traded companies with similar operating and investment characteristics as the reporting unit.

Cash flow projections are based on management’s estimates of revenue growth rates and operating margins, taking into consideration industry and market conditions.

The discount rate is based on the weighted-average cost of capital adjusted for the relevant risk associated with business-specific characteristics and the uncertainty related to the reporting unit’s ability to execute on the projected cash flows.

Under the market approach, HP estimates fair value based on market multiples of earnings derived from comparable publicly-traded companies with similar operating and investment characteristics as the reporting unit.

HP weights the fair value derived from the market approach depending on the level of comparability of these publicly-traded companies to the reporting unit.

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HP evaluates the control premium by comparing it to observable control premiums from recent comparable transactions.

If the implied control premium is determined to not be reasonable in light of these recent transactions, HP re-evaluates its reporting unit fair values, which may result in an adjustment to the discount rate and/or other assumptions.

If the implied control premium is not reasonable compared to these recent transactions, HP re-evaluates its reporting unit fair values, which may result in an adjustment to the discount rate and/or other assumptions.

This re-evaluation could result in a change to the estimated fair value for certain or all reporting units.

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

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

All highly liquid investments

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Notes to Consolidated Financial Statements

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

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

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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

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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.

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.

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.

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

HP uses derivative instruments, primarily forward contracts, option contracts, interest rate swaps, total return swaps, treasury rate locks and forward starting swaps to hedge certain foreign currency, interest rate and, return on certain investment exposures.

HP also may use other derivative instruments not designated as hedges, such as forwards used to hedge foreign currency balance sheet exposures.

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Segment Information

HP is a leading global provider of personal computing and other access devices, imaging and printing products, and related technologies, solutions and services.

HP sells to individual consumers, small- and medium-sized businesses (“SMBs”) and large enterprises, including customers in the government, health and education sectors.

HP goes to market through its extensive channel network and direct sales.

HP’s operations are organized into three reportable segments:

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The CODM uses several metrics to evaluate the performance of the overall business, including earnings from operations, and uses these results to allocate resources to each of the segments.

A summary description of each segment is as follows:

Personal Systems offers commercial and consumer desktop and notebook personal computers (“PCs”), workstations, thin clients, commercial mobility devices, retail point-of-sale (“POS”) systems, displays and peripherals, software, support and services.

HP groups commercial notebooks, commercial desktops, commercial services, commercial mobility devices, commercial detachables and convertibles, workstations, retail POS systems and thin clients into commercial PCs and consumer notebooks, consumer desktops, consumer services and consumer detachables into consumer PCs when describing performance in these markets.

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 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.

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

• Notebooks consists of consumer notebooks, commercial notebooks, mobile workstations, peripherals, and commercial mobility devices;

• Desktops includes consumer desktops, commercial desktops, thin clients, displays, peripherals, and retail POS systems;

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

• 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.

Printing is also focused on imaging solutions in the commercial and industrial markets.

Described below are HP’s global business capabilities within Printing.

• Office Printing Solutions delivers HP’s office printers, supplies, services and solutions to SMBs and large enterprises.

It also includes OEM hardware and solutions, and some Samsung-branded supplies.

• Home Printing Solutions delivers innovative printing products, supplies, services and solutions for the home, home business and micro business customers utilizing both HP’s Ink and Laser technologies.

It also includes some Samsung-branded supplies.

• Graphics Solutions delivers large-format, commercial and industrial solutions and supplies to print service providers and packaging converters through a wide portfolio of printers and presses (HP DesignJet, HP Latex, HP Indigo and HP PageWide Web Presses).

• 3D Printing & Digital Manufacturing offers a portfolio of additive manufacturing solutions and supplies to help customers succeed in their additive and digital manufacturing journey.

HP offers complete solutions in collaboration with an ecosystem of partners.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

Segment Information (Continued)

• Commercial PS consist of endpoint computing devices and hybrid systems, 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 personal computers (“PCs”) and mobility installed base.

• Consumer PS consist of devices, accessories and services which 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.

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 and digital manufacturing, excluding supplies;

• Consumer consists of home printing solutions, excluding supplies;

• Commercial Printing consists of office printing solutions, graphics solutions and 3D printing and personalization, excluding supplies;

• Consumer Printing 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 and digital manufacturing supplies, for recurring use in consumer and commercial hardware.

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

Corporate Investments includes certain business incubation and investment projects.

The accounting policies HP uses to derive segment results are substantially the same as those used by HP in preparing these financial statements.

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Notes to Consolidated Financial Statements (Continued)

Segment Information (Continued)

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

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2023 2022 2021

Notebooks $ 29,183 $ 30,522 $ 25,766

Desktops 10,736 9,381 9,806

Workstations 2,100 1,669 1,816

Commercial PS $ 24,712 $ 29,616 $ 26,822

10,972 14,395 16,510

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Supplies 11,452 11,761 12,632

Commercial 4,225 4,209 3,539

Consumer 2,916 3,287 2,516

Commercial Printing 4,183 4,225 4,209

Consumer Printing 2,394 2,916 3,287

Printing 18,029 18,902 20,128

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Total earnings before taxes $ 2,937 $ 4,324 $ 7,568

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

Effective the first quarter of fiscal 2023, HP realigned the Personal Systems business units reporting structure into Commercial PS and Consumer PS to align with its customer market segmentation.

Additionally, in connection with certain other organizational realignments, some costs which were earlier reflected under “Corporate and unallocated cost and other”, have now been reclassified to the Personal Systems and Printing segments .

AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

Segment Information (Continued)

Segment Assets

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Accrued balance as of October 31, 2020

$ — $ — $ 77 $ 77

Charges — — 229 229

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Accrued balance as of October 31, 2023

$ 88 $ 18 $ 2 $ 108

Total costs incurred to date as of October 31, 2023

$ 402 $ 41 $ 866 $ 1,309

Reflected in Consolidated Balance Sheets:

Other current liabilities $ 88 $ 6 $ 2 $ 96

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

Other non-current liabilities $ — $ 12 $ — $ 12

(1) Primarily includes the fiscal 2020 plan along with other legacy plans, all of which are substantially complete.

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.

(2) Includes reclassification of liability related to the Enhanced Early Retirement (“EER”) plan of $ 139 for certain healthcare and medical savings account benefits to pension and post-retirement plans.

See Note 4 “Retirement and Post-Retirement Benefit Plans” for further information .

Fiscal 2023 Plan

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.

On November 18, 2022, HP’s Board of Directors approved the Future Ready Plan (the “Fiscal 2023 Plan”) intended to enable digital transformation, portfolio optimization and operational efficiency which 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.

HP estimates that it will incur pre-tax charges of approximately $ 1.0 billion, of which 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.

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 professional services and other non-recurring costs.

HP incurred $ 83 million, $ 25 million and $ 22 million of other charges in fiscal year 2023, 2022 and 2021, respectively.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

Retirement and Post-Retirement Benefit Plans

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employees under the Pension Plan for service before 1993, if any, by any amounts due to the employee under HP’s frozen defined contribution Deferred Profit-Sharing Plan (“DPSP”).

At October 31, 2022 and 2021, the fair value of plan assets of the DPSP was $ 366 million and $ 482 million, respectively.

At October 31, 2023 and 2022,

AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

the fair value of plan assets of the DPSP was $ 311 million and $ 366 million, respectively.

The DPSP obligations are equal to the plan assets and are recognized as an offset to the Pension Plan when HP calculates its defined benefit pension cost and obligations.

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

Under the agreement, Prudential assumed responsibility for pension benefits and annuity administration for approximately 41,000 retirees and beneficiaries, with no changes to the amount or timing of monthly retirement benefit payments.

This transaction closed in the fourth quarter of fiscal year 2021 and was funded by the assets of the Pension Plan.

HP recorded a settlement gain of approximately $ 39 million in Interest and other, net on the Consolidated Statements of Earnings, with no cash flow impact.

Post-Retirement Benefit Plans

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on the last day of the calendar year to receive a match.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

Retirement and Post-Retirement Benefit Plans (Continued)

Pension and Post-Retirement Benefit Expense

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The weighted-average assumptions used to calculate the total periodic benefit (credit) cost were as follows:

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Notes to Consolidated Financial Statements (Continued)

For the fiscal years ended October 31

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5.0 % 5.0 % 5.0 % 2.6 % 2.6 % 2.6 % 4.2 % 2.9 % 2.9 %

AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

Retirement and Post-Retirement Benefit Plans (Continued)

Funded Status

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Participant contributions — — 17 19 32 39

Actuarial (gain) loss ( 1,724 ) ( 51 ) ( 441 ) ( 23 ) ( 61 ) ( 13 )

Actuarial gain ( 160 ) ( 1,724 ) ( 71 ) ( 420 ) ( 3 ) ( 61 )

Benefits paid ( 274 ) ( 204 ) ( 38 ) ( 21 ) ( 54 ) ( 67 )

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Settlement ( 3 ) ( 4 ) ( 33 ) ( 62 ) — —

Special termination benefit cost 105 — — — 34 —

Currency impact — — 81 ( 181 ) — —

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Accumulated benefit obligation $ 3,854 $ 3,969 $ 1,088 $ 1,035

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

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Notes to Consolidated Financial Statements (Continued)

Retirement and Post-Retirement Benefit Plans (Continued)

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

The increase in losses is primarily due to lower than expected returns on assets and plan experience.

These loss increases were partially offset by gains due to increases in discount rates and lump sum interest rates and other assumption changes.

The weighted-average assumptions used to calculate the projected benefit obligations for the fiscal years ended October 31, 2023 and 2022 were as follows:

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Notes to Consolidated Financial Statements (Continued)

Retirement and Post-Retirement Benefit Plans (Continued)

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

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— 1,208 — 1,208 — 55 — 55 — 100 — 100

Real estate funds — — — — 1 16 — 17 — — — —

Insurance contracts — — — — — 67 — 67 — — — —

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Notes to Consolidated Financial Statements (Continued)

Retirement and Post-Retirement Benefit Plans (Continued)

The table below sets forth the fair value of plan assets by asset category within the fair value hierarchy as of October 31, 2022.

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Notes to Consolidated Financial Statements (Continued)

Retirement and Post-Retirement Benefit Plans (Continued)

Plan Asset Allocations

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HP conducts periodic asset-liability studies for U.S.

plans to model various potential asset allocations in comparison to each plan’s forecasted liabilities and liquidity needs and to develop a policy glide path which adjusts the asset allocation with funded status.

plans to model various potential asset allocations in comparison to each plan’s forecasted liabilities and liquidity needs.

Due to the strong funded status for the U.S.

Pension Plan, consistent with our policy, steps have been taken to de-risk the portfolio by reallocation of assets to liability hedging fixed-income investments.

HP also invests a portion of the U.S.

defined benefit plan assets in private market securities such as private equity funds to provide diversification and a higher expected return on assets.

Outside the United States, asset allocation decisions are typically made by an independent board of trustees for the specific plan.

As in the United States, investment objectives are designed to generate returns that will enable the plan to meet its future obligations.

In some countries, local regulations may restrict asset allocations, typically leading to a higher percentage of investment in fixed-income securities than would otherwise be deployed.

HP reviews the investment strategy and where appropriate, can offer some assistance in the selection of investment managers, with final decisions on asset allocation and investment managers made by the board of trustees for the specific plan.

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Retirement Incentive Program

As part of the Fiscal 2020 Plan, HP announced the voluntary EER program for its U.S.

employees in October 2019.

Voluntary participation in the EER program was limited to those employees who were at least 50 years old with 20 or more years of service at HP.

Employees accepted into the EER program left HP on dates ranging from December 31, 2019 to September 30, 2020.

The EER benefit was a cash lump sum payment which was calculated based on years of service at HP at the time of the retirement and ranging from 13 to 52 weeks of pay.

All employees participating in the EER program were offered the opportunity to continue health care coverage at the active employee contribution rates for up to 36 months following retirement.

In addition, HP provided up to $ 12,000 in employer credits under the Retirement Medical Savings Account (“RMSA”) program.

In relation to the continued health care

AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

Retirement and Post-Retirement Benefit Plans (Continued)

coverage and employer credits under the RMSA program, HP recognized special termination benefit costs of $ 44 million as restructuring and other charges for the twelve months ended October 31, 2020.

Lump Sum Program

HP offered a lump sum program during the third quarter of fiscal year 2020.

Certain terminated vested participants in the HP Inc.

Pension Plan (“Pension Plan”) could elect to take a one-time voluntary lump sum payment equal to the present value of future benefits.

Approximately 12,000 participants elected the lump sum option.

Payments of $ 2.2 billion were made from plan assets to the participants in the fourth quarter of fiscal year 2020.

A non-cash settlement expense of $ 214 million arising from the accelerated recognition of previously deferred actuarial losses was recorded in the fourth quarter of fiscal year 2020.

As part of the Fiscal 2023 Plan, HP announced a voluntary EER program for its U.S.

employees in January 2023.

Voluntary participation in the EER program was limited to employees at least 55 years old with 10 or more years of service at HP.

Employees accepted into the EER program left HP on dates ranging from March 15, 2023 to October 31, 2023.

defined benefit pension plan was amended to provide that the EER benefit will be paid from the plan for eligible electing EER participants.

The retirement incentive benefit is calculated as a lump sum based on years of service at HP at the time of retirement, ranging from 20 to 52 weeks of pay.

As a result of this retirement incentive, HP recognized a special termination benefit (“STB”) expense of $ 105 million for the year ended October 31, 2023 as a restructuring charge.

This expense is the present value of all additional benefits that HP will distribute from the pension plan assets.

All employees participating in the EER program were offered the opportunity to continue health care coverage at the active employee contribution rates for up to 36 months following retirement, but not beyond age 65 when Medicare is available.

In addition, HP is providing up to $ 12,000 in employer credits under the Retirement Medical Savings Account program.

HP recognized an additional STB expense of $ 34 million as restructuring and other charges for the year ended October 31, 2023 for the health care incentives.

Future Contributions and Funding Policy

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

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Notes to Consolidated Financial Statements (Continued)

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

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Next five fiscal years to October 31, 2033 1,597 370 126

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Notes to Consolidated Financial Statements (Continued)

Stock-Based Compensation

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Stock options generally vest over three to four years from the date of grant.

The exercise price of a stock option is equal to the closing price of HP’s stock on the option grant date.

The exercise price of a stock option is equal to the closing price of HP’s stock on the

AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

option grant date.

The majority of stock options issued by HP contain only service vesting conditions.

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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

AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

Stock-Based Compensation (Continued)

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

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:

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Notes to Consolidated Financial Statements (Continued)

Stock-Based Compensation (Continued)

For the fiscal years ended October 31

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The aggregate intrinsic value is the difference between HP’s closing stock price on the last trading day of the fiscal year and the exercise price, multiplied by the number of in-the-money options.

The total intrinsic value of options exercised in fiscal years 2022, 2021 and 2020 was $ 25 million, $ 18 million and $ 12 million, respectively.

The total intrinsic value of options exercised in fiscal years 2023, 2022 and 2021 was $ 13 millions, $ 25 million and $ 18 million, respectively.

The total grant date fair value of options vested in fiscal years 2023, 2022 and 2021 was $ 10 million, $ 9 million and $ 3 million, respectively.

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Notes to Consolidated Financial Statements (Continued)

Stock-Based Compensation (Continued)

Shares Reserved

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Shares available for future grant 133,033 174,264 170,123

174,264 170,123 229,334

Shares reserved for future issuance 169,503 208,351 205,968

208,351 205,968 264,110

(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

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HP has elected to treat GILTI inclusions as period costs.

In fiscal year 2023, HP recorded $ 1.1 billion of net income tax benefits related to discrete items in the provision for taxes.

This amount included $ 726 million of tax effects related to internal reorganization, $ 255 million related to changes in valuation allowances, $ 101 million related to restructuring charges, $ 58 million related to the filing of tax returns in various jurisdictions, and $ 42 million related to acquisition charges.

These benefits were partially offset by income tax charges of $ 60 million related to audit settlements in various jurisdictions, $ 27 million of uncertain tax position charges, and $ 25 million related to extinguishment of debt.

In fiscal year 2023, excess tax benefits associated with stock options, restricted stock units and performance-adjusted restricted stock units were immaterial.

In fiscal year 2022, HP recorded $ 456 million of net income tax charges related to discrete items in the provision for taxes.

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

This amount included $ 649 million of tax effects related to internal reorganization, $ 107 million of uncertain tax position charges,

AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

Taxes on Earnings (Continued)

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

$ 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 $ 189 million related to the filing of tax returns in various jurisdictions, $ 156 million related to changes in valuation allowances, $ 44 million related to restructuring charges, and $ 43 million related to Poly acquisition charges.

In fiscal year 2022, HP 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 $ 4 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.

In fiscal year 2021, excess tax benefits associated with stock options, restricted stock units and performance-adjusted restricted stock units were immaterial.

In fiscal year 2020, HP recorded $ 244 million of net income tax benefits related to discrete items in the provision for taxes.

This amount included tax benefits related to audit settlements of $ 124 million in various jurisdictions and $ 82 million related to restructuring benefits.

Additionally, HP recorded benefits of $ 20 million related to proxy contest costs and $ 17 million of other net tax benefits.

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

These charges were offset by income tax benefits of $ 368 million related to changes in valuation allowances, $ 89 million of tax effects related to internal reorganization, $ 51 million related to restructuring charges, $ 16 million related to the filing of tax returns in various jurisdictions, $ 11 million related to acquisition charges, and $ 9 million of other net tax benefits.

In fiscal year 2021, excess tax benefits associated with stock options, restricted stock units and performance-adjusted restricted stock units were immaterial.

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Balance at end of year $ 1,137 $ 1,045 $ 829

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, 2023, the amount of gross unrecognized tax benefits was $ 1.1 billion, of which up to $ 815 million would affect HP’s effective tax rate if realized.

Total gross unrecognized tax benefits increased by $ 92 million for the twelve months ended October 31, 2023.

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No material tax deficiencies have been assessed in major state or foreign tax jurisdictions related to ongoing audits as of October 31, 2023.

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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.

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The amounts ultimately paid on resolution of an audit could be materially different from the amounts previously included in the Provision for taxes and therefore the resolution of one or more of these uncertainties in any particular period could have a material impact on net income or cash flows.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

HP has not provided for U.S.

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Capitalized research and development 821 654

Intangible assets — 474

Operating lease liabilities 242 238

Investment in partnership 703 70

Cash flow hedges — 8

Other 469 352

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Cash flow hedges ( 64 ) ( 155 )

Other — ( 79 )

Total deferred tax liabilities ( 580 ) ( 718 )

Net deferred tax assets $ 3,111 $ 2,046

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Notes to Consolidated Financial Statements (Continued)

Taxes on Earnings (Continued)

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

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Total $ 3,111 $ 2,046

AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

As of October 31, 2023, HP had recorded deferred tax assets for net operating loss (“NOL”) carryforwards as follows:

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Tax credits in state and foreign jurisdictions $ 324 $ ( 51 ) 2024

R&D and other credits 11 — 2031

Balance at end of year $ 324 $ ( 51 )

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Gross deferred tax assets as of October 31, 2023, 2022, and 2021 were reduced by valuation allowances of $ 7.0 billion, $ 7.6 billion and $ 7.7 billion, respectively.

In fiscal year 2023, the deferred tax asset valuation allowance decreased by $ 598 million primarily due to internal reorganization impacting 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 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.

deferred tax assets that are anticipated to be realized at a lower effective tax 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 $ 202 million primarily due to foreign net operating losses and U.S.

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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.

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

international tax reform implications.

AND SUBSIDIARIES

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Supplementary Financial Information

Cash, cash equivalents and restricted cash

As of October 31

Cash and cash equivalents $ 3,107 $ 3,145

Restricted cash (1)

$ 3,232 $ 3,145

(1) Restricted Cash is related to amounts collected and held on behalf of a third party for trade receivables previously sold.

Accounts Receivable

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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-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, 2022 and 2021, and the costs associated with the sales of trade receivables for fiscal year 2022, 2021 and 2020 were not material.

As these transfers qualify as true sales under the applicable accounting guidance, the receivables are derecognized 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 in the Consolidated Balance Sheets.

The recourse obligations as of October 31, 2023 and 2022 were not material.

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

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

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Notes to Consolidated Financial Statements (Continued)

As of October 31

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$ 6,862 $ 7,614

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Notes to Consolidated Financial Statements (Continued)

Supplementary Financial Information (Continued)

Other Current Assets

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Deposits and prepaid 427 474

Prepaid pension asset (4)

Prepaid pension and post-retirement benefit assets (4)

Other 853 991

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Notes to Consolidated Financial Statements (Continued)

Supplementary Financial Information (Continued)

Other Current Liabilities

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Deferred revenue 1,424 1,393

Other accrued taxes 1,064 1,227

Employee compensation and benefit 1,046 954

Other accrued taxes 994 1,064

Warranty 569 619

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(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.

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Notes to Consolidated Financial Statements (Continued)

Supplementary Financial Information (Continued)

Interest and Other, Net

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2023 2022 2021

Oracle litigation proceeds (1)

$ — $ 2,304 $ —

Non-operating retirement-related credits 144 160 240

Interest expense on borrowings $ ( 548 ) $ ( 359 ) $ ( 254 )

Factoring costs (1)

Net gain (loss) on debt extinguishment 107 — ( 16 )

Non-operating retirement-related credits 51 144 160

Oracle litigation proceeds

Defined benefit plan settlement gains (charges) — — 37

Loss on extinguishment of debt — ( 16 ) ( 40 )

Tax indemnifications — ( 1 ) —

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$ ( 519 ) $ ( 235 ) $ 2,209

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

(1) Factoring costs for fiscal year 2022 and 2021 were included in Selling, general and administrative and were not material.

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Notes to Consolidated Financial Statements (Continued)

Net Revenue by Region

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During the fiscal year ended October 31, 2022, the Company amortized $ 129 million of these costs.

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Notes to Consolidated Financial Statements (Continued)

Supplementary Financial Information (Continued)

Contract Liabilities

As of October 31, 2023 and 2022, HP’s contract liabilities balances were $ 2.7 billion and $ 2.5 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 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 2023 was primarily driven by sales of fixed-price support and maintenance services partially offset by $ 1.3 billion of revenue recognized that were included in the contract liabilities balance as of October 31, 2022.

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

AND SUBSIDIARIES

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$ 4,722 $ 3,751 $ 118 $ 8,591

(1) Goodwill is net of accumulated impairment losses of $ 0.8 billion related to Corporate Investments.

(1) Goodwill is net of accumulated impairment losses of $ 0.8 billion related to Corporate Investments recorded in fiscal year 2011.

Goodwill is tested for impairment at the reporting unit level.

As of October 31, 2023, our reporting units are consistent with the reportable segments identified in Note 2, “Segment Information”.

In the fourth quarter of fiscal 2023, HP performed a quantitative test as of August 1, 2023 and concluded that there was no goodwill impairment.

There were no goodwill impairments in fiscal years 2022 and 2021.

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Total intangible assets $ 2,805 $ 1,212 $ 1,593 $ 2,792 $ 859 $ 1,933

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:

Weighted-Average Useful Life (in years)

Customer contracts and customer lists 13

Technology and patents 7

Trade name and trademarks 5

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Notes to Consolidated Financial Statements (Continued)

Goodwill and Intangible Assets (Continued)

As of October 31, 2023, estimated future amortization expense related to intangible assets was as follows:

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HP uses valuation techniques that are based upon observable and unobservable inputs.

Observable inputs are developed using market data such as publicly available information and reflect the assumptions market participants would use, while unobservable inputs are developed using the best information available about the assumptions market participants would use.

Observable inputs are developed using market data such as publicly available information and reflect the assumptions market participants would use, while unobservable

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Notes to Consolidated Financial Statements (Continued)

inputs are developed using the best information available about the assumptions market participants would use.

Assets and liabilities are classified in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement:

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The fair value hierarchy gives the highest priority to observable inputs and lowest priority to unobservable inputs.

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Notes to Consolidated Financial Statements (Continued)

Fair Value (Continued)

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

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Financial institution instruments — 3 — 3 — 5 — 5

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

Marketable securities and mutual funds 33 45 — 78 17 41 — 58

Derivative Instruments

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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 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

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Notes to Consolidated Financial Statements (Continued)

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 $ 8.5 billion as compared to its carrying amount of $ 9.5 billion at October 31, 2023.

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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.

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Notes to Consolidated Financial Statements (Continued)

Fair Value (Continued)

Other Financial Instruments:

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Financial institution instruments 3 — — 3 5 — — 5

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

Marketable securities and mutual funds 40 38 — 78 50 8 — 58

Total available-for-sale investments 43 38 — 81 55 8 — 63

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Derivative Instruments

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

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

HP uses derivative instruments, primarily forward contracts, interest rate swaps, total return swaps, treasury rate locks, forward starting swaps and option contracts to offset business exposure to foreign currency and interest rate risk on expected future cash flows and on certain existing assets and liabilities.

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

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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

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

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

The Company includes gross collateral posted and received in

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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.

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 $ 91 million and $ 82 million as of October 31, 2023 and 2022, respectively, all of which were fully collateralized within two business days.

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Cash Flow Hedges

HP uses forward contracts, treasury rate locks, forward starting swaps and, at times, option contracts designated as cash flow hedges to protect against the foreign currency exchange and interest rate risks inherent in its forecasted net revenue, cost of revenue, operating expenses and debt issuance.

HP uses forward contracts, option contracts, treasury rate locks and forward starting swaps designated as cash flow hedges to protect against the foreign currency exchange and interest rate risks inherent in its forecasted net revenue, cost of revenue, operating expenses and debt issuance.

HP’s foreign currency cash flow hedges mature predominantly within twelve months ;

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

During the 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

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Notes to Consolidated Financial Statements (Continued)

Financial Instruments (Continued)

Fair Value of Derivative Instruments in the Consolidated Balance Sheets

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Foreign currency contracts 15,278 410 70 147 52 16,014 820 256 206 72

Interest rate contracts — — — — — 1,500 — — — 8

Total derivatives designated as hedging instruments 16,028 410 70 147 110 16,764 820 256 206 150

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(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

The pre-tax effect of derivative instruments and related hedged items in a fair value hedging relationship were as follows:

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Notes to Consolidated Financial Statements (Continued)

Derivative Instrument Hedged Item Location For the fiscal years ended October 31 Total amounts of income/(expense) line items in the statement of financial performance in which the effects of fair value hedges are recorded Gain/(loss) recognized in earnings on derivative instruments Gain/(loss) recognized in earnings on hedged item

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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.

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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 2023, 2022 and 2021 was as follows:

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Interest Rate

Commercial paper $ — — % $ 400 0.2 %

Current portion of long-term debt 179 6.0 % 165 5.4 %

Notes payable to banks, lines of credit and other 51 1.0 % 53 0.6 %

$ 218 $ 1,106

Long-Term Debt

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$ 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

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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.

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Notes to Consolidated Financial Statements (Continued)

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.

(3) During the twelve months ended October 31, 2023, HP repurchased or redeemed and settled $ 497 million of the March 2029 Notes related to the August 2022 Poly acquisition.

(4) During the twelve months ended October 31, 2023, HP repurchased and settled $ 1.15 billion in aggregate principal amount of various Global Notes.

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.

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

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Notes to Consolidated Financial Statements (Continued)

As of October 31, 2023, aggregate future maturities of debt at face value (excluding unamortized debt issuance cost of $ 57 million, discounts on debt issuance of $ 13 million, and fair value adjustment related to hedged debt of $ 58 million), including other borrowings were as follows:

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Total $ 9,612

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.

Extinguishment of Debt

In July 2023, HP commenced and completed a tender offer to purchase approximately $ 1.15 billion in aggregate principal amount of its outstanding US Dollar 1.45 % Global Notes due June 17, 2026, 3.40 % Global Notes due June 17, 2030 and 4.20 % Global Notes due April 15, 2032.

This extinguishment of debt resulted in a net gain of $ 115 million, which was recorded within Interest and other, net on the Consolidated Statements of Earnings.

Additionally during fiscal year 2023, HP repurchased or redeemed and settled $ 497 million of the March 2029 Notes related to the August 2022 Poly acquisition.

This extinguishment of debt resulted in a net loss of $ 8 million, which was also recorded within Interest and other, net on the Consolidated Statement of Earnings.

Commercial Paper

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

program provides for the issuance of U.S.

As of October 31, 2023, HP maintained a U.S.

commercial paper program for the issuance of U.S.

dollar-denominated commercial paper up to a maximum aggregate principal amount of $ 6.0 billion.

HP’s euro commercial paper program provides for the issuance of commercial paper outside of the United States denominated in U.S.

dollars, euros or British pounds up to a maximum aggregate principal amount of $ 6.0 billion or the equivalent in those alternative currencies.

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 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)

The principal amount outstanding under this program and certain short-term borrowings at any time cannot exceed a $ 6.0 billion authorization by HP’s Board of Directors.

As of October 31, 2023 and October 31, 2022, no commercial paper were outstanding under the program.

Credit Facilities

As of October 31, 2023, HP maintained a $ 5.0 billion sustainability-linked senior unsecured committed revolving credit facility, which HP entered into on May 26, 2021, and a $ 1.0 billion senior unsecured committed 364 -day revolving credit facility, which HP entered into in March 2023.

Commitments under the $ 5.0 billion revolving credit facility will be available until May 26, 2026 and commitments under the $ 1.0 billion 364 -day revolving credit facility will be available until March 19, 2024.

Commitment fees, interest rates and other terms of borrowing under the revolving credit facilities vary based on HP’s external credit ratings and, for the $ 5.0 billion facility, certain sustainability metrics.

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

As of October 31, 2023, HP was in compliance with the covenants in the credit agreements governing the revolving credit facilities.

Available Borrowing Resources

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.

As of October 31, 2023, HP had available borrowing resources of $ 1.2 billion from uncommitted lines of credit in addition to the full capacity of the revolving credit facilities.

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In fiscal year 2021, HP executed share repurchases of 224.0 million shares and settled total shares for $6.3 billion.

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.

Share repurchases executed during fiscal year 2021 included 1.6 million shares settled in November 2021.

The shares repurchased in fiscal years 2023, 2022 and 2021 were all open market repurchase transactions.

On February 22, 2020, HP’s Board of Directors increased HP’s share repurchase authorization to $ 15.0 billion in total.

As of October 31, 2023, HP had approximately $ 2.0 billion remaining under the share repurchase authorizations approved by HP’s Board of Directors.

Taxes related to Other Comprehensive Income (Loss)

Taxes related to Other Comprehensive (Loss) Income

For the fiscal years ended October 31

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

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

$ ( 1 ) $ 2 $ ( 1 )

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

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

75 ( 328 ) ( 9 )

Tax provision (benefit) on (gains) losses reclassified into earnings 18 195 ( 17 )

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

Tax (provision) benefit on gains (losses) arising during the period 11 ( 177 ) 11

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

26 26 ( 183 )

Tax benefit on amortization of actuarial loss and prior service benefit 1 ( 6 ) ( 17 )

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Tax effect on change in cumulative translation adjustment — 3 ( 1 )

Tax (provision) benefit on other comprehensive income (loss) $ ( 124 ) $ ( 213 ) $ 1

Tax benefit (provision) on other comprehensive income (loss)

$ 119 $ ( 109 ) $ ( 219 )

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Notes to Consolidated Financial Statements (Continued)

Stockholders’ Deficit (Continued)

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

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

For the year ended October 31

2023 2022 2021

Other comprehensive income (loss), net of taxes:

Other comprehensive (loss) income, net of taxes:

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

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

Change in unrealized components of cash flow hedges:

Unrealized gains (losses) arising during the period

$ 1 $ ( 9 ) $ 4

Change in unrealized components of cash flow hedges:

Unrealized (losses) gains arising during the period

( 352 ) 1,213 ( 141 )

(Gains) losses reclassified into earnings ( 66 ) ( 584 ) 226

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Change in unrealized components of defined benefit plans:

Gains (losses) arising during the period 15 831 ( 18 )

(Losses) gains arising during the period

( 115 ) ( 28 ) 846

Amortization of actuarial loss and prior service benefit (1)

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

( 114 ) ( 15 ) 882

Change in cumulative translation adjustment 23 ( 75 ) 27

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

Other comprehensive (loss) income, net of taxes

$ ( 508 ) $ 530 $ 998

(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:

The components of Accumulated other comprehensive (loss) income, net of taxes as of October 31, 2023 and changes during fiscal year 2023 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 $ 6 $ 648 $ ( 323 ) $ ( 46 ) $ 285

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

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

Reclassifications of curtailments, settlements and other into earnings — — ( 1 ) — ( 1 )

Other comprehensive gains (losses) before reclassifications

1 ( 352 ) ( 115 ) 23 ( 443 )

Reclassifications of (losses) gains into earnings

— ( 66 ) 1 — ( 65 )

Balance at end of period $ 7 $ 230 $ ( 437 ) $ ( 23 ) $ ( 223 )

26 unchanged sentences

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 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.

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

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

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

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

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

HP, other companies and various industry associations have opposed the extension of levies to the digital product and certain requirements for business sales exemptions, and have advocated alternative models of compensation to rights holders.

Based on the exemption of levies on business sales and industry opposition to increasing 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.

Forsyth, et al.

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

In June 2023, the parties reached an agreement in principle to resolve this matter.

The parties have finalized a settlement agreement, and the court preliminarily approved it on October 26, 2023.

The Court has set the Final Approval Hearing for March 28, 2024.

India Directorate of Revenue Intelligence Proceedings .

4 unchanged sentences

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

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

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

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

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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.

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

The Customs Department has also filed crossappeals before the Customs Tribunal.

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

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

On August 10, 2023, HP filed a motion for summary judgment of indefiniteness for all asserted claims.

Caltech Patent Litigation .

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Caltech seeks unspecified damages and other relief.

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

In August 2021, 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.

2020-2222 , which was issued on February 4, 2022, and a request for further review of that decision by the Supreme Court was denied.

On August 16, 2023, the parties informed the court that the stay should be lifted.

On November 6, 2023, the court issued an order staying all discovery and deadlines pending discovery relating to whether Caltech has standing to bring suit with respect to the asserted patents and the court’s resolution of that issue.

In re HP Inc.

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Plaintiffs appealed the decision.

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

The parties settled and the motion for preliminary approval of settlement was filed on March 3, 2023.

Under the terms of the settlement, HP agreed to pay an amount that is immaterial to HP.

The district court granted preliminary approval of the settlement on April 7, 2023.

On September 6, 2023, the court issued an order approving the settlement and directing entry of final judgment.

On October 20, 2023, the Court of Appeals for the Ninth Circuit issued an order dismissing plaintiffs’ appeal.

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

3 unchanged sentences

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

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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.

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.

Plaintiffs seek compensatory damages and other relief.

1 unchanged sentence

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

Plaintiffs are appealing the decision.

Plaintiffs appealed the decision.

On April 11, 2023, the appellate court reversed the

AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

district court’s decision and remanded the case to the district court for further proceedings consistent with the appellate opinion, including consideration of HP’s other arguments for dismissal.

On June 27, 2023, the district court issued an order setting the briefing schedule for a renewed motion to dismiss.

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.

1 unchanged sentence

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 .

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

Both derivative actions will remain stayed while the district court considers on remand HP’s other arguments for dismissal .

Legal Proceedings re Authentication of Supplies .

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.

3 unchanged sentences

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.

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

Civil litigation filed by Digital Revolution B.V.

4 unchanged sentences

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

Investigations .

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

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

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

The indictment alleged that Mr.

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

On April 30, 2018, a jury found Mr.

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

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

The indictment charged 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.

Autonomy Corporation Limited v.

Michael Lynch and Sushovan Hussain .

In the case directed to Laserjet printers, plaintiffs filed a motion for class certification, and, on December 8, 2023, the court entered an order denying in full plaintiffs’ request to certify a damages class and granting certification of a narrowed injunctive relief class composed of those who did not see HP’s disclosures.

In its order, the court declined at this juncture to resolve the merits of the sufficiency of HP’s disclosures.

The case involving Inkjet printers remains in its early stages.

Autonomy-Related Legal Proceedings

As the result of an internal investigation, HP obtained information about certain accounting improprieties, disclosure failures and misrepresentations at Autonomy that occurred before and in connection with its 2011 acquisition of Autonomy.

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

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

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

Lynch and Hussain for breach of their fiduciary duties by causing Autonomy group companies to engage in improper transactions and accounting practices.

On October 1, 2015, Messrs.

Lynch and Hussain filed their defenses.

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

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Notes to Consolidated Financial Statements (Continued)

Litigation and Contingencies (Continued)

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.

High Court of Justice against two members of Autonomy’s former management, Michael Lynch and Sushovan Hussain, for breach of their fiduciary duties in causing Autonomy group companies to engage in improper transactions and accounting practices.

The claims seek more than $ 5 billion in damages.

Lynch and Hussain filed defenses and Mr.

Lynch filed a counterclaim seeking $ 160 million in damages for alleged misstatements regarding Lynch.

Trial concluded in January 2020.

On May 17, 2022, the court issued its final judgment, finding that HP succeeded on substantially all 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.

The court deferred its damages ruling to a later, separate judgment to be issued after further proceedings, which are now set to begin on February 12, 2024, but 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.

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

In addition, Messrs.

Hussein and Lynch, and Stephen Chamberlain, former VP of Finance of Autonomy, were each indicted on federal criminal charges in the Northern District of California.

On April 30, 2018, a jury found Mr.

Hussein guilty of conspiracy to commit wire fraud, securities fraud, and multiple counts of wire fraud, and that judgment was affirmed on appeal in August 2020.

Lynch and Chamberlain are set to face trial on charges of conspiracy to commit wire fraud, and multiple counts of wire fraud on March 18, 2024.

HP is continuing to cooperate with the ongoing enforcement actions .

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Notes to Consolidated Financial Statements (Continued)

Nokia Patent Litigation .

On October 31, 2023, Nokia filed a complaint for patent infringement against HP in federal court for the District of Delaware asserting ten patents and filed two companion complaints with the U.S.

International Trade Commission (“ITC”) pursuant to Section 337 of the Tariff Act against HP, asserting seven of the ten patents asserted in the federal court case.

The complaints allege that HP products that are compliant with certain video coding technology standards, including Advanced Video Coding (H.264) or High Efficiency Video Coding (H.265) standards, infringe Nokia’s patents.

In November 2023, the ITC instituted investigations on Nokia’s complaints.

On December 11, 2023, HP filed counterclaims against Nokia in the Delaware action, including claims that Nokia violated its commitments to license standard-essential patents on fair, reasonable, and non-discriminatory (“FRAND”) terms, and seeking a court determination of the proper FRAND rate.

Nokia’s patent litigation against HP also includes a lawsuit filed in November 2023 against HP and six of its subsidiaries in the European Unified Patent Court in Germany, and a lawsuit filed on December 1, 2023, against a subsidiary, HP Brasil Indústria e Comércio de Equipamentos Eletrônicos Ltda.

(“HP Brasil”), in the state court in Rio de Janeiro in Brazil.

In Brazil, Nokia alleged that HP’s products contain “skip mode” technology compatible with H.264 video standards that infringes one of Nokia’s Brazilian patents.

On December 4, 2023, before HP had received service of the lawsuit, the court granted Nokia an ex parte preliminary injunction against HP Brasil’s commercialization of such products in Brazil.

HP has appealed the injunction and asked the appellate court to suspend its enforcement.

If the court does not do so, the injunction in Brazil will take effect and remain in place unless overturned on appeal, until the state court revokes or modifies it, or the case is resolved.

If HP is not successful in its defenses, it may be subject to injunctions or licensing demands to avoid potential disruptions to its business.

Given the procedural posture and nature of these cases, including proceedings that are in their early stages and have significant factual and legal issues to be resolved, HP is unable to make a reasonable estimate of the potential loss or range of losses that may arise from these matters.

R2 Semiconductor Patent Litigation .

In November 2022, R2 Semiconductor, Inc.

(“R2”) filed a lawsuit in the Dusseldorf Regional Court in Germany against Intel Deutschland GmbH, HP Deutschland GmbH and certain other Intel customers.

R2 asserts one European patent is infringed by HP’s products that contain certain Intel processors.

R2 seeks an injunction prohibiting the sale of the alleged infringing products.

Intel is indemnifying HP.

The Dusseldorf Regional Court conducted a trial on December 7, 2023, and is set to issue a decision on January 25, 2024.

If the Court issues a decision on the merits in favor of R2 and against HP and the other defendants, it could impose an injunction prohibiting sales of the accused products in Germany which could take effect immediately and remain in place unless overturned on appeal or the parties reach an agreement.

Given the procedural posture and the nature of the case, HP is unable to make a reasonable estimate of the potential loss or range of losses that might arise from this lawsuit.

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, and may become a party to, proceedings brought by U.S., state, or other governmental entities or private third parties under federal, state, local, or foreign environmental laws, including 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.

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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.

On November 1, 2015, Hewlett-Packard Company completed the separation (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 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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Historically, payments made related to these indemnifications have been immaterial.

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Notes to Consolidated Financial Statements (Continued)

HP records tax indemnification receivables from various third parties for certain tax liabilities that HP is jointly and severally liable for, but for which it is indemnified by those same third parties under existing legal agreements.

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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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As of October 31, 2023, HP had unconditional purchase obligations of $ 1.9 billion.

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

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

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

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Total $ 1,861

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Notes to Consolidated Financial Statements (Continued)

HP determines, at lease inception, whether or not an arrangement contains a lease.

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Finance leases are included in Property, plant and equipment, net, Notes payable and short-term borrowings and Long-term debt in the Consolidated Balance Sheets.

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Notes to Consolidated Financial Statements (Continued)

As most of the leases do not provide an implicit interest rate, HP uses the incremental borrowing rate based on the information available at the commencement date of a lease in determining the present value of lease payments.

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(1) Includes the impact of new leases as well as remeasurements and modifications to existing leases.

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Notes to Consolidated Financial Statements (Continued)

Leases (Continued)

Weighted-average information associated with the measurement of our remaining operating lease liabilities is as follows:

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The following maturity analysis presents expected undiscounted cash outflows for operating leases on an annual basis for the next five years:

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Notes to Consolidated Financial Statements (Continued)

Fiscal year In millions

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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 the acquisitions in fiscal 2022:

The following table presents the aggregate estimated fair values of the assets acquired and liabilities assumed for the acquisitions in fiscal 2022:

Goodwill $ 1,793

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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

HP’s largest acquisition in fiscal 2021 was its acquisition of HyperX, the gaming division of Kingston Technology Company which was completed in June 2021 with a total fair value purchase consideration of $ 412 million.

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

In connection with this acquisition, HP recorded approximately $ 112 million of goodwill and $ 197 million of amortizable purchased intangible assets.

HP’s largest acquisition in fiscal 2022 was Poly, a leading global provider of workplace collaboration solutions, which was completed in August 2022 with a total fair value purchase consideration of $ 2.8 billion.

The acquisition supports HP’s strategy to drive growth in hybrid work solutions within the Personal Systems segment.

In connection with this acquisition, HP recorded approximately $ 1.8 billion of goodwill and $ 1.4 billion of amortizable purchased intangible assets.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

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