

	As of July 31, 2019								As of October 31, 2018
	Cost		Gross Unrealized Gain		Gross Unrealized Loss		Fair Value		Cost		Gross Unrealized Gain		Gross Unrealized Loss			Fair Value
	In millions
Cash Equivalents:
Corporate debt	$	1,188	$	—	$	—	$	1,188	$	1,620	$	—	$	—		$	1,620
Financial institution instruments	—		—		—		—		9		—		—			9
Government debt	2,929		—		—		2,929		2,367		—		—			2,367
Total cash equivalents	4,117		—		—		4,117		3,996		—		—			3,996
Available-for-Sale Investments:
Corporate debt⁽¹⁾	—		—		—		—		368		—		(2		)	366
Financial institution instruments⁽¹⁾	—		—		—		—		32		—		—			32
Government debt⁽¹⁾	—		—		—		—		314		—		(1		)	313
Marketable equity securities	4		2		—		6		4		2		—			6
Mutual funds	38		11		—		49		38		9		—			47
Total available-for-sale investments	42		13		—		55		756		11		(3		)	764
Total cash equivalents and available-for-sale investments	$	4,159	$	13	$	—	$	4,172	$	4,752	$	11	$	(3	)	$	4,760

All highly liquid investments with original maturities of three months or less at the date of acquisition are considered cash equivalents. As of July 31, 2019 and October 31, 2018, the carrying amount of cash equivalents approximated fair value due to the short period of time to maturity. The estimated fair value of the available-for-sale investments may not be representative of values that will be realized in the future.

Equity securities in privately held companies are included in Other non-current assets on the Consolidated Condensed Balance Sheets. These amounted to $60 million and $36 million as of July 31, 2019 and October 31, 2018, respectively.

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 and, at times, option contracts to hedge certain foreign currency, interest rate and, return on certain investment exposures. HP may designate its derivative contracts as fair value hedges or cash flow hedges and classifies the cash flows with the activities that correspond to the underlying hedged items. Additionally, for derivatives not designated as hedging instruments, HP categorizes those economic hedges as other derivatives. HP recognizes all derivative instruments at fair value in the Consolidated Condensed Balance Sheets.

As a result of its use of derivative instruments, HP is exposed to the risk that its counterparties will fail to meet their contractual obligations. Master netting agreements mitigate credit exposure to counterparties by permitting HP to net amounts due from HP to counterparty against amounts due to HP from the same counterparty under certain conditions. To further limit credit risk, HP has collateral security agreements that allow HP’s custodian to hold collateral from, or require HP to post collateral to, counterparties when aggregate derivative fair values exceed contractually established thresholds which are generally based on the credit ratings of HP and its counterparties. If HP’s or the counterparty’s credit rating falls below a specified credit rating, either party has the right to request full collateralization of the derivatives’ net liability position. The fair value of derivatives with credit contingent features in a net liability position was $35 million and $68 million as of July 31, 2019 and as of October 31, 2018, respectively, all of which were fully collateralized within two business days.

Under HP’s derivative contracts, the counterparty can terminate all outstanding trades following a covered change of control event affecting HP that results in the surviving entity being rated below a specified credit rating. This credit contingent provision did not affect HP’s financial position or cash flows as of July 31, 2019 and October 31, 2018.

HP enters into fair value hedges, such as interest rate swaps, to reduce the exposure of its debt portfolio to changes in fair value resulting from changes in interest rates by achieving a primarily U.S. dollar London Interbank Offered Rate (“LIBOR”)-based floating interest expense.

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

HP uses forward contracts and at times, option contracts designated as cash flow hedges to protect against the foreign currency exchange rate risks inherent in its forecasted net revenue and, to a lesser extent, cost of revenue, operating expenses, and intercompany loans denominated in currencies other than the U.S. dollar. HP’s foreign currency cash flow hedges mature predominantly within twelve months. However, hedges related to longer-term procurement arrangements extend several years and forward contracts associated with intercompany loans extend for the duration of the loan term, which typically range from two to five years.

For derivative instruments that are designated and qualify as cash flow hedges, HP initially records changes in fair value for the effective portion of the derivative instrument in accumulated other comprehensive loss as a separate component of stockholders’ deficit on the Consolidated Condensed Balance Sheets and subsequently reclassifies these amounts into earnings in the period during which the hedged transaction is recognized in earnings. HP reports the effective portion of its cash flow hedges in the same financial statement line item as changes in the fair value of the hedged item.

Other derivatives not designated as hedging instruments consist primarily of forward contracts used to hedge foreign currency-denominated balance sheet exposures. HP uses total return swaps to hedge its executive deferred compensation plan liability.

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

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

HP recognizes any ineffective portion of the hedge in the Consolidated Condensed Statements of Earnings in the same period in which ineffectiveness occurs. Amounts excluded from the assessment of effectiveness are recognized in the Consolidated Condensed Statements of Earnings in the period they arise.

As of July 31, 2019 and 2018, no portion of the hedging instruments’ gain or loss was excluded from the assessment of effectiveness for fair value and cash flow hedges. Hedge ineffectiveness for fair value and cash flow hedges recognized in earnings were not material for the three and nine months ended July 31, 2019 and 2018.



	As of July 31, 2019										As of October 31, 2018
	Outstanding Gross Notional		Other Current Assets		Other Non-Current Assets		Other Accrued Liabilities		Other Non-Current Liabilities		Outstanding Gross Notional		Other Current Assets		Other Non-Current Assets		Other Accrued Liabilities		Other Non-Current Liabilities
	In millions
Derivatives designated as hedging instruments
Fair value hedges:
Interest rate contracts	$	750	$	—	$	—	$	—	$	—	$	1,000	$	—	$	—	$	—	$	23

Cash flow hedges:
Foreign currency contracts	15,930		330		130		68		23		17,147		386		107		86		52
Total derivatives designated as hedging instruments	16,680		330		130		68		23		18,147		386		107		86		75
Derivatives not designated as hedging instruments
Foreign currency contracts	5,072		9		—		13		—		5,437		22		—		26		—
Other derivatives	136		6		—		1		—		122		—		—		8		—
Total derivatives not designated as hedging instruments	5,208		15		—		14		—		5,559		22		—		34		—
Total derivatives	$	21,888	$	345	$	130	$	82	$	23	$	23,706	$	408	$	107	$	120	$	75

HP recognizes all derivative instruments on a gross basis in the Consolidated Condensed Balance Sheets. HP does not offset the fair value of its derivative instruments against the fair value of cash collateral posted under its collateral security agreements. As of July 31, 2019 and October 31, 2018, information related to the potential effect of HP’s master netting agreements and collateral security agreements was as follows:



	In the Consolidated Condensed Balance Sheets
							Gross Amounts Not Offset
	Gross Amount Recognized (i)		Gross Amount Offset (ii)		Net Amount Presented (iii) = (i)–(ii)		Derivatives (iv)		Financial Collateral (v)			Net Amount (vi) = (iii)–(iv)–(v)
	In millions
As of July 31, 2019
Derivative assets	$	475	$	—	$	475	$	63	$	341	⁽¹⁾	$	71
Derivative liabilities	$	105	$	—	$	105	$	63	$	36	⁽²⁾	$	6
As of October 31, 2018
Derivative assets	$	515	$	—	$	515	$	112	$	299	⁽¹⁾	$	104
Derivative liabilities	$	195	$	—	$	195	$	112	$	69	⁽²⁾	$	14

Interest rate swaps agreements are designated as hedge relationships with gains or losses on the derivative recognized in interest and other financial charges offsetting the gains and losses on the underlying debt being hedged. Gain on interest rate swap agreements recognized in earnings was $8 million for the three months ended July 31, 2019 and nil for the three months ended July 31, 2018. Gain on interest rate swap agreements recognized in earnings was $24 million for the nine months ended July 31, 2019 and loss of $11 million for the nine months ended July 31, 2018. Gains and losses are fully offset by changes in the fair value of the debt being hedged.



	Gain Recognized in Other Comprehensive Income ("OCI") on Derivatives (Effective Portion)				Gain (Loss) Reclassified from Accumulated OCI Into Earnings (Effective Portion)
	Three months ended July 31, 2019		Nine months ended July 31, 2019		Location	Three months ended July 31, 2019			Nine months ended July 31, 2019
	In millions					In millions
Cash flow hedges:
Foreign currency contracts	$	180	$	271	Net revenue	$	98		$	289
					Cost of revenue	(12		)	(28		)
					Operating expenses	—			(2		)
Total	$	180	$	271		$	86		$	259

The pre-tax effect of derivative instruments in cash flow hedging relationships for the three and nine months ended July 31, 2018 was as follows:



	Gain Recognized in Other Comprehensive Income ("OCI") on Derivatives (Effective Portion)				(Loss) Gain Reclassified from Accumulated OCI Into Earnings (Effective Portion)
	Three months ended July 31, 2018		Nine months ended July 31, 2018		Location	Three months ended July 31, 2018			Nine months ended July 31, 2018
	In millions					In millions
Cash flow hedges:
Foreign currency contracts	$	273	$	19	Net revenue	$	(20	)	$	(349	)
					Cost of revenue	4			(14		)
					Operating expenses	(1		)	—
Total	$	273	$	19		$	(17	)	$	(363	)

As of July 31, 2019, HP expects to reclassify an estimated accumulated other comprehensive gain of $220 million, net of taxes, to earnings within the next twelve months associated with cash flow hedges along with the earnings effects of the related forecasted transactions. The amounts ultimately reclassified into earnings could be different from the amounts previously included in accumulated OCI based on the change of market rate, and therefore could have a different impact on earnings.

The pre-tax effect of derivative instruments not designated as hedging instruments recognized in Interest and Other, net in the Consolidated Condensed Statements of Earnings for the three and nine months ended July 31, 2019 and 2018 was as follows: