(Mark One) | |||||
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the quarterly period ended | |||||
Or | |||||
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the transition period from to | |||||
Commission file number | |||||
(State or other jurisdiction of incorporation or organization) | (I.R.S. employer identification no.) | ||||||||||
(Zip code) | |||||||||||
(Address of principal executive offices) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Page | ||||||||
Page | |||||
Three months ended July 31 | Nine months ended July 31 | ||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
In millions, except per share amounts | |||||||||||||||||||||||
Net revenue | $ | $ | $ | $ | |||||||||||||||||||
Costs and expenses: | |||||||||||||||||||||||
Cost of revenue | |||||||||||||||||||||||
Research and development | |||||||||||||||||||||||
Selling, general and administrative | |||||||||||||||||||||||
Restructuring and other charges | |||||||||||||||||||||||
Acquisition-related charges (credits) | ( | ||||||||||||||||||||||
Amortization of intangible assets | |||||||||||||||||||||||
Total costs and expenses | |||||||||||||||||||||||
Earnings from operations | |||||||||||||||||||||||
Interest and other, net | ( | ( | ( | ( | |||||||||||||||||||
Earnings before taxes | |||||||||||||||||||||||
(Provision for) benefit from taxes | ( | ( | |||||||||||||||||||||
Net earnings | $ | $ | $ | $ | |||||||||||||||||||
Net earnings per share: | |||||||||||||||||||||||
Basic | $ | $ | $ | $ | |||||||||||||||||||
Diluted | $ | $ | $ | $ | |||||||||||||||||||
Weighted-average shares used to compute net earnings per share: | |||||||||||||||||||||||
Basic | |||||||||||||||||||||||
Diluted |
Three months ended July 31 | Nine months ended July 31 | ||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
In millions | |||||||||||||||||||||||
Net earnings | $ | $ | $ | $ | |||||||||||||||||||
Other comprehensive (loss) income before taxes: | |||||||||||||||||||||||
Change in unrealized components of available-for-sale debt securities: | |||||||||||||||||||||||
Unrealized gains arising during the period | |||||||||||||||||||||||
Losses reclassified into earnings | |||||||||||||||||||||||
Change in unrealized components of cash flow hedges: | |||||||||||||||||||||||
Unrealized (losses) gains arising during the period | ( | ( | |||||||||||||||||||||
Gains reclassified into earnings | ( | ( | ( | ( | |||||||||||||||||||
( | ( | ||||||||||||||||||||||
Change in unrealized components of defined benefit plans: | |||||||||||||||||||||||
Losses arising during the period | ( | ( | ( | ( | |||||||||||||||||||
Amortization of actuarial loss and prior service benefit | |||||||||||||||||||||||
Curtailments, settlements and other | |||||||||||||||||||||||
Change in cumulative translation adjustment | ( | ( | |||||||||||||||||||||
Other comprehensive (loss) income before taxes | ( | ( | |||||||||||||||||||||
Benefit from (provision for) taxes | ( | ( | |||||||||||||||||||||
Other comprehensive (loss) income, net of taxes | ( | ( | ( | ||||||||||||||||||||
Comprehensive income | $ | $ | $ | $ |
As of | |||||||||||
July 31, 2020 | October 31, 2019 | ||||||||||
In millions, except par value | |||||||||||
ASSETS | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Accounts receivable, net | |||||||||||
Inventory | |||||||||||
Other current assets | |||||||||||
Total current assets | |||||||||||
Property, plant and equipment, net | |||||||||||
Goodwill | |||||||||||
Other non-current assets | |||||||||||
Total assets | $ | $ | |||||||||
LIABILITIES AND STOCKHOLDERS’ DEFICIT | |||||||||||
Current liabilities: | |||||||||||
Notes payable and short-term borrowings | $ | $ | |||||||||
Accounts payable | |||||||||||
Other current liabilities | |||||||||||
Total current liabilities | |||||||||||
Long-term debt | |||||||||||
Other non-current liabilities | |||||||||||
Stockholders’ deficit: | |||||||||||
Preferred stock, $ | |||||||||||
Common stock, $ | |||||||||||
Additional paid-in capital | |||||||||||
Accumulated deficit | ( | ( | |||||||||
Accumulated other comprehensive loss | ( | ( | |||||||||
Total stockholders’ deficit | ( | ( | |||||||||
Total liabilities and stockholders’ deficit | $ | $ |
Nine months ended July 31 | |||||||||||
2020 | 2019 | ||||||||||
In millions | |||||||||||
Cash flows from operating activities: | |||||||||||
Net earnings | $ | $ | |||||||||
Adjustments to reconcile net earnings to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | |||||||||||
Stock-based compensation expense | |||||||||||
Restructuring and other charges | |||||||||||
Deferred taxes on earnings | |||||||||||
Other, net | |||||||||||
Changes in operating assets and liabilities, net of acquisitions: | |||||||||||
Accounts receivable | ( | ||||||||||
Inventory | ( | ( | |||||||||
Accounts payable | ( | ( | |||||||||
Net investment in leases | ( | — | |||||||||
Taxes on earnings | ( | ( | |||||||||
Restructuring and other | ( | ( | |||||||||
Other assets and liabilities | ( | ||||||||||
Net cash provided by operating activities | |||||||||||
Cash flows from investing activities: | |||||||||||
Investment in property, plant and equipment | ( | ( | |||||||||
Proceeds from sale of property, plant and equipment | |||||||||||
Purchases of available-for-sale securities and other investments | ( | ( | |||||||||
Maturities and sales of available-for-sale securities and other investments | |||||||||||
Collateral posted for derivative instruments | ( | ( | |||||||||
Collateral returned for derivative instruments | |||||||||||
Payment made in connection with business acquisitions, net of cash acquired | ( | ||||||||||
Net cash used in investing activities | ( | ( | |||||||||
Cash flows from financing activities: | |||||||||||
Payments of short-term borrowings with original maturities less than 90 days, net | ( | ||||||||||
Proceeds from short-term borrowings with original maturities greater than 90 days | |||||||||||
Proceeds from debt, net of issuance costs | |||||||||||
Payment of debt | ( | ( | |||||||||
Stock-based award activities and others | ( | ( | |||||||||
Repurchase of common stock | ( | ( | |||||||||
Cash dividends paid | ( | ( | |||||||||
Net cash used in financing activities | ( | ( | |||||||||
Increase (decrease) in cash and cash equivalents | ( | ||||||||||
Cash and cash equivalents at beginning of period | |||||||||||
Cash and cash equivalents at end of period | $ | $ | |||||||||
Supplemental schedule of non-cash activities: | |||||||||||
Purchase of assets under finance leases | $ | $ | |||||||||
Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Loss | Total Stockholders’ Deficit | ||||||||||||||||||||||||||||||||
Number of Shares | Par Value | Accumulated Deficit | |||||||||||||||||||||||||||||||||
In millions, except number of shares in thousands | |||||||||||||||||||||||||||||||||||
Balance April 30, 2019 | $ | $ | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||||||||
Net earnings | |||||||||||||||||||||||||||||||||||
Other comprehensive loss, net of taxes | |||||||||||||||||||||||||||||||||||
Comprehensive income | |||||||||||||||||||||||||||||||||||
Issuance of common stock in connection with employee stock plans and other | |||||||||||||||||||||||||||||||||||
Repurchases of common stock | ( | ( | ( | ( | |||||||||||||||||||||||||||||||
Cash dividends ($ | ( | ( | |||||||||||||||||||||||||||||||||
Stock-based compensation expense | |||||||||||||||||||||||||||||||||||
Adjustment for adoption of accounting standards | |||||||||||||||||||||||||||||||||||
Balance July 31, 2019 | $ | $ | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||||||||
Balance April 30, 2020 | $ | $ | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||||||||
Net earnings | |||||||||||||||||||||||||||||||||||
Other comprehensive loss, net of taxes | ( | ( | |||||||||||||||||||||||||||||||||
Comprehensive income | |||||||||||||||||||||||||||||||||||
Issuance of common stock in connection with employee stock plans and other | |||||||||||||||||||||||||||||||||||
Repurchases of common stock | ( | ( | ( | ( | |||||||||||||||||||||||||||||||
Cash dividends ($ | ( | ( | |||||||||||||||||||||||||||||||||
Stock-based compensation expense | |||||||||||||||||||||||||||||||||||
Balance July 31, 2020 | $ | $ | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||||||||
Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Loss | Total Stockholders’ Deficit | ||||||||||||||||||||||||||||||||
Number of Shares | Par Value | Accumulated Deficit | |||||||||||||||||||||||||||||||||
In millions, except number of shares in thousands | |||||||||||||||||||||||||||||||||||
Balance October 31, 2018 | $ | $ | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||||||||
Net earnings | |||||||||||||||||||||||||||||||||||
Other comprehensive income, net of taxes | ( | ( | |||||||||||||||||||||||||||||||||
Comprehensive income | |||||||||||||||||||||||||||||||||||
Issuance of common stock in connection with employee stock plans and other | ( | ( | |||||||||||||||||||||||||||||||||
Repurchases of common stock | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||
Cash dividends ($ | ( | ( | |||||||||||||||||||||||||||||||||
Stock-based compensation expense | |||||||||||||||||||||||||||||||||||
Adjustment for adoption of accounting standards | ( | ( | |||||||||||||||||||||||||||||||||
Balance July 31, 2019 | $ | $ | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||||||||
Balance October 31, 2019 | $ | $ | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||||||||
Net earnings | |||||||||||||||||||||||||||||||||||
Other comprehensive income, net of taxes | ( | ( | |||||||||||||||||||||||||||||||||
Comprehensive income | |||||||||||||||||||||||||||||||||||
Issuance of common stock in connection with employee stock plans and other | ( | ( | |||||||||||||||||||||||||||||||||
Repurchases of common stock | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||
Cash dividends ($ | ( | ( | |||||||||||||||||||||||||||||||||
Stock-based compensation expense | |||||||||||||||||||||||||||||||||||
Adjustment for adoption of accounting standards (Note 1) | |||||||||||||||||||||||||||||||||||
Balance July 31, 2020 | $ | $ | $ | ( | $ | ( | $ | ( |
Three months ended July 31 | Nine months ended July 31 | ||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
In millions | |||||||||||||||||||||||
Net revenue: | |||||||||||||||||||||||
Notebooks | $ | $ | $ | $ | |||||||||||||||||||
Desktops | |||||||||||||||||||||||
Workstations | |||||||||||||||||||||||
Other | |||||||||||||||||||||||
Personal Systems | |||||||||||||||||||||||
Supplies | |||||||||||||||||||||||
Commercial Hardware | |||||||||||||||||||||||
Consumer Hardware | |||||||||||||||||||||||
Printing | |||||||||||||||||||||||
Corporate Investments | |||||||||||||||||||||||
Total segment net revenue | |||||||||||||||||||||||
Other | ( | ( | |||||||||||||||||||||
Total net revenue | $ | $ | $ | $ | |||||||||||||||||||
Earnings before taxes: | |||||||||||||||||||||||
Personal Systems | $ | $ | $ | $ | |||||||||||||||||||
Printing | |||||||||||||||||||||||
Corporate Investments | ( | ( | ( | ( | |||||||||||||||||||
Total segment earnings from operations | |||||||||||||||||||||||
Corporate and unallocated costs and other | ( | ( | ( | ( | |||||||||||||||||||
Stock-based compensation expense | ( | ( | ( | ( | |||||||||||||||||||
Restructuring and other charges | ( | ( | ( | ( | |||||||||||||||||||
Acquisition-related (charges) credits | ( | ( | ( | ||||||||||||||||||||
Amortization of intangible assets | ( | ( | ( | ( | |||||||||||||||||||
Interest and other, net | ( | ( | ( | ( | |||||||||||||||||||
Total earnings before taxes | $ | $ | $ | $ |
Fiscal 2020 Plan | |||||||||||||||||||||||
Severance and EER | Non-labor | Other prior-year Plans (1) | Total | ||||||||||||||||||||
In millions | |||||||||||||||||||||||
Accrued balance as of October 31, 2019 | $ | $ | $ | $ | |||||||||||||||||||
Charges | |||||||||||||||||||||||
Cash payments | ( | ( | ( | ( | |||||||||||||||||||
Non-cash and other adjustments | ( | (2) | ( | ( | |||||||||||||||||||
Accrued balance as of July 31, 2020 | $ | $ | $ | $ | |||||||||||||||||||
Total costs incurred to date as of July 31, 2020 | $ | $ | $ | $ | |||||||||||||||||||
Reflected in Consolidated Condensed Balance Sheets | |||||||||||||||||||||||
Other current liabilities | $ | $ | $ | $ | |||||||||||||||||||
Accrued balance as of October 31, 2018 | $ | $ | $ | $ | |||||||||||||||||||
Charges | |||||||||||||||||||||||
Cash payments | ( | ( | |||||||||||||||||||||
Non-cash and other adjustments | ( | ( | |||||||||||||||||||||
Accrued balance as of July 31, 2019 | $ | $ | $ | $ |
Fiscal 2020 Plan | |||||||||||||||||||||||
Severance and EER | Non-labor | Other prior-year Plans(1) | Total | ||||||||||||||||||||
In millions | |||||||||||||||||||||||
For the three months ended July 31, 2020 | $ | $ | $ | $ |
Three months ended July 31 | |||||||||||||||||||||||||||||||||||
U.S. Defined Benefit Plans | Non-U.S. Defined Benefit Plans | Post-Retirement Benefit Plans | |||||||||||||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||||||||||||
In millions | |||||||||||||||||||||||||||||||||||
Service cost | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
Interest cost | |||||||||||||||||||||||||||||||||||
Expected return on plan assets | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||
Amortization and deferrals: | |||||||||||||||||||||||||||||||||||
Actuarial loss (gain) | ( | ( | |||||||||||||||||||||||||||||||||
Prior service benefit | ( | ( | ( | ( | |||||||||||||||||||||||||||||||
Net periodic (credit) benefit cost | ( | ( | ( | ( | |||||||||||||||||||||||||||||||
Curtailment gain | ( | ||||||||||||||||||||||||||||||||||
Settlement loss | |||||||||||||||||||||||||||||||||||
Total periodic (credit) benefit cost | $ | ( | $ | ( | $ | $ | $ | ( | $ | ( | |||||||||||||||||||||||||
Nine months ended July 31 | |||||||||||||||||||||||||||||||||||
U.S. Defined Benefit Plans | Non-U.S. Defined Benefit Plans | Post- Retirement Benefit Plans | |||||||||||||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||||||||||||
In millions | |||||||||||||||||||||||||||||||||||
Service cost | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
Interest cost | |||||||||||||||||||||||||||||||||||
Expected return on plan assets | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||
Amortization and deferrals: | |||||||||||||||||||||||||||||||||||
Actuarial loss (gain) | ( | ( | |||||||||||||||||||||||||||||||||
Prior service benefit | ( | ( | ( | ( | |||||||||||||||||||||||||||||||
Net periodic (credit) benefit cost | ( | ( | ( | ( | |||||||||||||||||||||||||||||||
Curtailment gain | ( | ||||||||||||||||||||||||||||||||||
Settlement loss | |||||||||||||||||||||||||||||||||||
Special termination benefit cost | |||||||||||||||||||||||||||||||||||
Total periodic (credit) benefit cost | $ | ( | $ | ( | $ | $ | $ | $ | ( | ||||||||||||||||||||||||||
As of | |||||||||||
July 31, 2020 | October 31, 2019 | ||||||||||
In millions | |||||||||||
Accounts receivable | $ | $ | |||||||||
Allowance for doubtful accounts | ( | ( | |||||||||
$ | $ |
Nine months ended July 31, 2020 | |||||
In millions | |||||
Balance at beginning of period | $ | ||||
Provision for doubtful accounts | |||||
Deductions, net of recoveries | ( | ||||
Balance at end of period | $ |
Three months ended July 31 | Nine months ended July 31 | ||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
In millions | |||||||||||||||||||||||
Balance at beginning of period(1) | $ | $ | $ | $ | |||||||||||||||||||
Trade receivables sold | |||||||||||||||||||||||
Cash receipts | ( | ( | ( | ( | |||||||||||||||||||
Foreign currency and other | ( | ( | |||||||||||||||||||||
Balance at end of period(1) | $ | $ | $ | $ |
As of | |||||||||||
July 31, 2020 | October 31, 2019 | ||||||||||
In millions | |||||||||||
Finished goods | $ | $ | |||||||||
Purchased parts and fabricated assemblies | |||||||||||
$ | $ |
As of | |||||||||||
July 31, 2020 | October 31, 2019 | ||||||||||
In millions | |||||||||||
Supplier and other receivables | $ | $ | |||||||||
Prepaid and other current assets | |||||||||||
Value-added taxes receivable | |||||||||||
$ | $ |
As of | |||||||||||
July 31, 2020 | October 31, 2019 | ||||||||||
In millions | |||||||||||
Land, buildings and leasehold improvements | $ | $ | |||||||||
Machinery and equipment, including equipment held for lease | |||||||||||
Accumulated depreciation | ( | ( | |||||||||
$ | $ |
As of | |||||||||||
July 31, 2020 | October 31, 2019 | ||||||||||
In millions | |||||||||||
Deferred tax assets | $ | $ | |||||||||
Right-of-use assets from operating leases, net(1) | |||||||||||
Intangible assets | |||||||||||
Other(2) | |||||||||||
$ | $ |
As of | |||||||||||
July 31, 2020 | October 31, 2019 | ||||||||||
In millions | |||||||||||
Sales and marketing programs | $ | $ | |||||||||
Deferred revenue | |||||||||||
Other accrued taxes | |||||||||||
Employee compensation and benefit | |||||||||||
Warranty | |||||||||||
Operating lease liabilities(1) | — | ||||||||||
Tax liability | |||||||||||
Other | |||||||||||
$ | $ |
As of | |||||||||||
July 31, 2020 | October 31, 2019 | ||||||||||
In millions | |||||||||||
Pension, post-retirement, and post-employment liabilities | $ | $ | |||||||||
Deferred revenue | |||||||||||
Operating lease liabilities(1) | — | ||||||||||
Tax liability | |||||||||||
Deferred tax liability | |||||||||||
Other | |||||||||||
$ | $ |
Three months ended July 31 | Nine months ended July 31 | ||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
In millions | |||||||||||||||||||||||
Tax indemnifications(1) | $ | ( | $ | ( | $ | $ | ( | ||||||||||||||||
Interest expense on borrowings | ( | ( | ( | ( | |||||||||||||||||||
Loss on extinguishment of debt | ( | ( | |||||||||||||||||||||
Other, net | |||||||||||||||||||||||
$ | ( | $ | ( | $ | ( | $ | ( |
Three months ended July 31 | Nine months ended July 31 | ||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
In millions | |||||||||||||||||||||||
Americas | $ | $ | $ | $ | |||||||||||||||||||
Europe, Middle East and Africa | |||||||||||||||||||||||
Asia-Pacific and Japan | |||||||||||||||||||||||
Total net revenue | $ | $ | $ | $ |
As of July 31, 2020 | As of October 31, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measured Using | Fair Value Measured Using | ||||||||||||||||||||||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||||||||||||||||||||
In millions | |||||||||||||||||||||||||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||||||||||||||||||||
Cash Equivalents: | |||||||||||||||||||||||||||||||||||||||||||||||
Corporate debt | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Financial Institution | |||||||||||||||||||||||||||||||||||||||||||||||
Government debt(1) | |||||||||||||||||||||||||||||||||||||||||||||||
Available-for-Sale Investments: | |||||||||||||||||||||||||||||||||||||||||||||||
Corporate debt | |||||||||||||||||||||||||||||||||||||||||||||||
Financial institution instruments | |||||||||||||||||||||||||||||||||||||||||||||||
Government debt | |||||||||||||||||||||||||||||||||||||||||||||||
Marketable equity securities and mutual funds | |||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments: | |||||||||||||||||||||||||||||||||||||||||||||||
Interest rate contracts | |||||||||||||||||||||||||||||||||||||||||||||||
Foreign currency contracts | |||||||||||||||||||||||||||||||||||||||||||||||
Other derivatives | |||||||||||||||||||||||||||||||||||||||||||||||
Total Assets | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Liabilities: | |||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments: | |||||||||||||||||||||||||||||||||||||||||||||||
Foreign currency contracts | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Other derivatives | |||||||||||||||||||||||||||||||||||||||||||||||
Total Liabilities | $ | $ | $ | $ | $ | $ | $ | $ |
As of July 31, 2020 | As of October 31, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||
Cost | Gross Unrealized Gain | Gross Unrealized Loss | Fair Value | Cost | Gross Unrealized Gain | Gross Unrealized Loss | Fair Value | ||||||||||||||||||||||||||||||||||||||||
In millions | |||||||||||||||||||||||||||||||||||||||||||||||
Cash Equivalents: | |||||||||||||||||||||||||||||||||||||||||||||||
Corporate debt | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Financial institution instruments | |||||||||||||||||||||||||||||||||||||||||||||||
Government debt | |||||||||||||||||||||||||||||||||||||||||||||||
Total cash equivalents | |||||||||||||||||||||||||||||||||||||||||||||||
Available-for-Sale Investments: | |||||||||||||||||||||||||||||||||||||||||||||||
Corporate debt | |||||||||||||||||||||||||||||||||||||||||||||||
Financial institution instruments | |||||||||||||||||||||||||||||||||||||||||||||||
Government debt | |||||||||||||||||||||||||||||||||||||||||||||||
Marketable equity securities and mutual funds | |||||||||||||||||||||||||||||||||||||||||||||||
Total available-for-sale investments | |||||||||||||||||||||||||||||||||||||||||||||||
Total cash equivalents and available-for-sale investments | $ | $ | $ | $ | $ | $ | $ | $ |
As of July 31, 2020 | |||||||||||
Amortized Cost | Fair Value | ||||||||||
In millions | |||||||||||
Due in one year or less | $ | $ |
As of July 31, 2020 | As of October 31, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Outstanding Gross Notional | Other Current Assets | Other Non-Current Assets | Other Current Liabilities | Other Non-Current Liabilities | Outstanding Gross Notional | Other Current Assets | Other Non-Current Assets | Other Current Liabilities | Other Non-Current Liabilities | ||||||||||||||||||||||||||||||||||||||||||||||||||
In millions | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivatives designated as hedging instruments | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value hedges: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest rate contracts | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||
Cash flow hedges: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign currency contracts | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total derivatives designated as hedging instruments | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivatives not designated as hedging instruments | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign currency contracts | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other derivatives | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total derivatives not designated as hedging instruments | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total derivatives | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ |
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, 2020 | |||||||||||||||||||||||||||||||||||||||||
Derivative assets | $ | $ | $ | $ | $ | (1) | $ | ||||||||||||||||||||||||||||||||||
Derivative liabilities | $ | $ | $ | $ | $ | (2) | $ | ||||||||||||||||||||||||||||||||||
As of October 31, 2019 | |||||||||||||||||||||||||||||||||||||||||
Derivative assets | $ | $ | $ | $ | $ | (1) | $ | ||||||||||||||||||||||||||||||||||
Derivative liabilities | $ | $ | $ | $ | $ | (2) | $ |
Total amounts of income/ (expense) line items presented in the statement of financial performance in which the effects of fair value hedges are recorded | Gain/(Loss) Recognized in Earnings on Derivative Instrument | Gain/(Loss) Recognized in Earnings on Derivative and Related Hedged Item | ||||||||||||||||||||||||||||||||||||||||||
Derivative Instrument | Location | Three months ended July 31, 2020 | Three months ended July 31, 2020 | Hedged Item | Location | Three months ended July 31, 2020 | ||||||||||||||||||||||||||||||||||||||
In millions | ||||||||||||||||||||||||||||||||||||||||||||
Interest rate contracts | Interest and other, net | $ | ( | $ | Fixed-rate debt | Interest and other, net | $ | ( |
Total amounts of income/ (expense) line items presented in the statement of financial performance in which the effects of fair value hedges are recorded | Gain/(Loss) Recognized in Earnings on Derivative Instrument | Gain/(Loss) Recognized in Earnings on Derivative and Related Hedged Item | ||||||||||||||||||||||||||||||||||||||||||
Derivative Instrument | Location | Nine months ended July 31, 2020 | Nine months ended July 31, 2020 | Hedged Item | Location | Nine months ended July 31, 2020 | ||||||||||||||||||||||||||||||||||||||
In millions | ||||||||||||||||||||||||||||||||||||||||||||
Interest rate contracts | Interest and other, net | $ | ( | $ | Fixed-rate debt | Interest and other, net | $ | ( |
Total amounts of income/ (expense) line items presented in the statement of financial performance in which the effects of fair value hedges are recorded | Gain/(Loss) Recognized in Earnings on Derivative Instrument | Gain/(Loss) Recognized in Earnings on Derivative and Related Hedged Item | ||||||||||||||||||||||||||||||||||||||||||
Derivative Instrument | Location | Three months ended July 31, 2019 | Three months ended July 31, 2019 | Hedged Item | Location | Three months ended July 31, 2019 | ||||||||||||||||||||||||||||||||||||||
In millions | ||||||||||||||||||||||||||||||||||||||||||||
Interest rate contracts | Interest and other, net | $ | ( | $ | Fixed-rate debt | Interest and other, net | $ | ( |
Total amounts of income/ (expense) line items presented in the statement of financial performance in which the effects of fair value hedges are recorded | Gain/(Loss) Recognized in Earnings on Derivative Instrument | Gain/(Loss) Recognized in Earnings on Derivative and Related Hedged Item | ||||||||||||||||||||||||||||||||||||||||||
Derivative Instrument | Location | Nine months ended July 31, 2019 | Nine months ended July 31, 2019 | Hedged Item | Location | Nine months ended July 31, 2019 | ||||||||||||||||||||||||||||||||||||||
In millions | ||||||||||||||||||||||||||||||||||||||||||||
Interest rate contracts | Interest and other, net | $ | ( | $ | Fixed-rate debt | Interest and other, net | $ | ( |
Gain/(Loss) Recognized in AOCI on Derivatives | Total amounts of income and expense line items presented in the statement of financial performance in which the effects of cash flow hedges are recorded | Gain /(Loss) Reclassified from AOCI into Earnings | |||||||||||||||||||||
Three months ended July 31, 2020 | Location | Three months ended July 31, 2020 | |||||||||||||||||||||
In millions | |||||||||||||||||||||||
Cash flow hedges: | |||||||||||||||||||||||
Foreign currency contracts | $ | ( | Net revenue | $ | $ | ||||||||||||||||||
Interest rate contracts | Cost of revenue | ( | ( | ||||||||||||||||||||
Operating expenses | ( | ||||||||||||||||||||||
Total | $ | ( | $ |
Gain/(Loss) Recognized in AOCI on Derivatives | Total amounts of income and expense line items presented in the statement of financial performance in which the effects of cash flow hedges are recorded | Gain /(Loss) Reclassified from AOCI into Earnings | |||||||||||||||||||||
Nine months ended July 31, 2020 | Location | Nine months ended July 31, 2020 | |||||||||||||||||||||
In millions | |||||||||||||||||||||||
Cash flow hedges: | |||||||||||||||||||||||
Foreign currency contracts | $ | ( | Net revenue | $ | $ | ||||||||||||||||||
Interest rate contracts | ( | Cost of revenue | ( | ( | |||||||||||||||||||
Operating expenses | ( | ||||||||||||||||||||||
Total | $ | ( | $ |
Gain/(Loss) Recognized in AOCI on Derivatives | Total amounts of income and expense line items presented in the statement of financial performance in which the effects of cash flow hedges are recorded | Gain /(Loss) Reclassified from AOCI into Earnings | |||||||||||||||||||||
Three months ended July 31, 2019 | Location | Three months ended July 31, 2019 | |||||||||||||||||||||
In millions | |||||||||||||||||||||||
Cash flow hedges: | |||||||||||||||||||||||
Foreign currency contracts | $ | Net revenue | $ | $ | |||||||||||||||||||
Cost of revenue | ( | ( | |||||||||||||||||||||
Operating expenses | ( | ||||||||||||||||||||||
Total | $ | $ |
Gain/(Loss) Recognized in AOCI on Derivatives | Total amounts of income and expense line items presented in the statement of financial performance in which the effects of cash flow hedges are recorded | Gain /(Loss) Reclassified from AOCI into Earnings | |||||||||||||||||||||
Nine months ended July 31, 2019 | Location | Nine months ended July 31, 2019 | |||||||||||||||||||||
In millions | |||||||||||||||||||||||
Cash flow hedges: | |||||||||||||||||||||||
Foreign currency contracts | $ | Net revenue | $ | $ | |||||||||||||||||||
Cost of revenue | ( | ( | |||||||||||||||||||||
Operating expenses | ( | ( | |||||||||||||||||||||
Total | $ | $ |
Three months ended July 31 | Nine months ended July 31 | ||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
In millions | |||||||||||||||||||||||
Foreign currency contracts | $ | $ | ( | $ | $ | ( | |||||||||||||||||
Other derivatives | ( | ( | |||||||||||||||||||||
Total | $ | $ | ( | $ | $ | ( |
As of July 31, 2020 | As of October 31, 2019 | ||||||||||||||||||||||
Amount Outstanding | Weighted-Average Interest Rate | Amount Outstanding | Weighted-Average Interest Rate | ||||||||||||||||||||
In millions | |||||||||||||||||||||||
Current portion of long-term debt | $ | % | $ | % | |||||||||||||||||||
Notes payable to banks, lines of credit and other | % | % | |||||||||||||||||||||
$ | $ |
As of | |||||||||||
July 31, 2020 | October 31, 2019 | ||||||||||
In millions | |||||||||||
U.S. Dollar Global Notes(1) | |||||||||||
2009 Shelf Registration Statement: | |||||||||||
$ | $ | $ | |||||||||
$ | |||||||||||
$ | |||||||||||
$ | |||||||||||
$ | |||||||||||
$ | |||||||||||
2019 Shelf Registration Statement: | |||||||||||
$ | |||||||||||
$ | |||||||||||
$ | |||||||||||
Other borrowings at | |||||||||||
Fair value adjustment related to hedged debt | |||||||||||
Unamortized debt issuance cost | ( | ( | |||||||||
Current portion of long-term debt | ( | ( | |||||||||
Total long-term debt | $ | $ |
Three months ended July 31 | Nine months ended July 31 | ||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
In millions | |||||||||||||||||||||||
Tax effect on change in unrealized components of cash flow hedges: | |||||||||||||||||||||||
Tax benefit (provision) on unrealized (losses) gains arising during the period | $ | $ | ( | $ | $ | ( | |||||||||||||||||
Tax provision on gains reclassified into earnings | |||||||||||||||||||||||
Tax effect on change in unrealized components of defined benefit plans: | |||||||||||||||||||||||
Tax benefit on losses arising during the period | |||||||||||||||||||||||
Tax provision on amortization of actuarial loss and prior service benefit | ( | ( | ( | ( | |||||||||||||||||||
Tax provision on curtailments, settlements and other | ( | ( | |||||||||||||||||||||
( | ( | ( | ( | ||||||||||||||||||||
Tax effect on change in cumulative translation adjustment | |||||||||||||||||||||||
Tax benefit (provision) on other comprehensive (loss) income | $ | $ | ( | $ | $ | ( |
Three months ended July 31 | Nine months ended July 31 | ||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
In millions | |||||||||||||||||||||||
Other comprehensive income (loss), net of taxes: | |||||||||||||||||||||||
Change in unrealized components of available-for-sale debt securities: | |||||||||||||||||||||||
Unrealized gains arising during the period | $ | $ | $ | $ | |||||||||||||||||||
Losses reclassified into earnings | |||||||||||||||||||||||
Change in unrealized components of cash flow hedges: | |||||||||||||||||||||||
Unrealized (losses) gains arising during the period | ( | ( | |||||||||||||||||||||
Gains reclassified into earnings | ( | ( | ( | ( | |||||||||||||||||||
( | ( | ||||||||||||||||||||||
Change in unrealized components of defined benefit plans: | |||||||||||||||||||||||
Losses arising during the period | ( | ( | ( | ( | |||||||||||||||||||
Amortization of actuarial loss and prior service benefit(1) | |||||||||||||||||||||||
Curtailments, settlements and other | ( | ( | |||||||||||||||||||||
( | ( | ||||||||||||||||||||||
Change in cumulative translation adjustment | ( | ( | |||||||||||||||||||||
Other comprehensive (loss) income, net of taxes | $ | ( | $ | $ | ( | $ | ( |
Nine months ended July 31, 2020 | |||||||||||||||||||||||||||||
Net unrealized gains on available-for-sale debt securities | Net unrealized gains (losses) on cash flow hedges | Unrealized components of defined benefit plans | Change in cumulative translation adjustment | Accumulated other comprehensive loss | |||||||||||||||||||||||||
In millions | |||||||||||||||||||||||||||||
Balance at beginning of period | $ | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||||
Other comprehensive income (loss) before reclassifications | ( | ( | ( | ||||||||||||||||||||||||||
Reclassifications of (gains) losses into earnings | ( | ( | |||||||||||||||||||||||||||
Reclassifications of settlements into earnings | — | — | — | ||||||||||||||||||||||||||
Balance at end of period | $ | $ | ( | $ | ( | $ | $ | ( |
Three months ended July 31 | Nine months ended July 31 | ||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
In millions, except per share amounts | |||||||||||||||||||||||
Numerator: | |||||||||||||||||||||||
Net earnings | $ | $ | $ | $ | |||||||||||||||||||
Denominator: | |||||||||||||||||||||||
Weighted-average shares used to compute basic net EPS | |||||||||||||||||||||||
Dilutive effect of employee stock plans | |||||||||||||||||||||||
Weighted-average shares used to compute diluted net EPS | |||||||||||||||||||||||
Net earnings per share: | |||||||||||||||||||||||
Basic | $ | $ | $ | $ | |||||||||||||||||||
Diluted | $ | $ | $ | $ | |||||||||||||||||||
Anti-dilutive weighted-average stock-based compensation awards(1) |
Nine months ended July 31, 2020 | |||||
In millions | |||||
Balance at beginning of period | $ | ||||
Accruals for warranties issued | |||||
Adjustments related to pre-existing warranties (including changes in estimates) | ( | ||||
Settlements made (in cash or in kind) | ( | ||||
Balance at end of period | $ |
Three months ended July 31, 2020 | Nine months ended July 31, 2020 | ||||||||||
In millions | |||||||||||
Operating lease cost | $ | $ | |||||||||
Variable cost | |||||||||||
Total lease expense | $ | $ |
Nine months ended July 31, 2020 | |||||
In millions | |||||
Cash paid for amount included in the measurement of lease liabilities | $ | ||||
Right-of-use assets obtained in exchange of lease liabilities(1) | $ |
As of July 31, 2020 | |||||
Weighted-average remaining lease term in years | |||||
Weighted-average discount rate | % |
Fiscal year | In millions | ||||
2020 | $ | ||||
2021 | |||||
2022 | |||||
2023 | |||||
2024 | |||||
Thereafter | |||||
Total lease payments | |||||
Less: Imputed interest | ( | ||||
Total lease liabilities | $ |
Fiscal year | In millions | ||||
Less than 1 year | $ | ||||
1-3 years | |||||
3-5 years | |||||
More than 5 years | |||||
Total (1) | $ |
Three months ended July 31 | Nine months ended July 31 | ||||||||||||||||||||||||||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||||||||||||||||||||||||||
Dollars | % of Net Revenue | Dollars | % of Net Revenue | Dollars | % of Net Revenue | Dollars | % of Net Revenue | ||||||||||||||||||||||||||||||||||||||||
Dollars in millions | |||||||||||||||||||||||||||||||||||||||||||||||
Net revenue | $ | 14,294 | 100.0 | % | $ | 14,603 | 100.0 | % | $ | 41,381 | 100.0 | % | $ | 43,349 | 100.0 | % | |||||||||||||||||||||||||||||||
Cost of revenue | (11,901) | (83.3) | % | (11,698) | (80.1) | % | (33,623) | (81.3) | % | (35,103) | (81.0) | % | |||||||||||||||||||||||||||||||||||
Gross profit | 2,393 | 16.7 | % | 2,905 | 19.9 | % | 7,758 | 18.7 | % | 8,246 | 19.0 | % | |||||||||||||||||||||||||||||||||||
Research and development | (359) | (2.5) | % | (413) | (2.8) | % | (1,097) | (2.7) | % | (1,110) | (2.6) | % | |||||||||||||||||||||||||||||||||||
Selling, general and administrative | (1,156) | (8.1) | % | (1,376) | (9.5) | % | (3,662) | (8.8) | % | (3,963) | (9.1) | % | |||||||||||||||||||||||||||||||||||
Restructuring and other charges | (59) | (0.4) | % | (17) | (0.1) | % | (431) | (1.0) | % | (141) | (0.3) | % | |||||||||||||||||||||||||||||||||||
Acquisition-related (charges) credits | (11) | (0.1) | % | 9 | 0.1 | % | (14) | — | % | (12) | — | % | |||||||||||||||||||||||||||||||||||
Amortization of intangible assets | (29) | (0.2) | % | (29) | (0.2) | % | (84) | (0.2) | % | (87) | (0.2) | % | |||||||||||||||||||||||||||||||||||
Earnings from operations | 779 | 5.4 | % | 1,079 | 7.4 | % | 2,470 | 6.0 | % | 2,933 | 6.8 | % | |||||||||||||||||||||||||||||||||||
Interest and other, net | (28) | (0.1) | % | (831) | (5.7) | % | (15) | (0.1) | % | (902) | (2.1) | % | |||||||||||||||||||||||||||||||||||
Earnings before taxes | 751 | 5.3 | % | 248 | 1.7 | % | 2,455 | 5.9 | % | 2,031 | 4.7 | % | |||||||||||||||||||||||||||||||||||
(Provision for) benefit from taxes | (17) | (0.2) | % | 931 | 6.4 | % | (279) | (0.6) | % | 733 | 1.7 | % | |||||||||||||||||||||||||||||||||||
Net earnings | $ | 734 | 5.1 | % | $ | 1,179 | 8.1 | % | $ | 2,176 | 5.3 | % | $ | 2,764 | 6.4 | % |
Three months ended July 31 | Nine months ended July 31 | ||||||||||||||||||||||||||||||||||
2020 | 2019 | % Change | 2020 | 2019 | % Change | ||||||||||||||||||||||||||||||
Dollars in millions | |||||||||||||||||||||||||||||||||||
Net revenue | $ | 10,360 | $ | 9,690 | 6.9 | % | $ | 28,565 | $ | 28,268 | 1.1 | % | |||||||||||||||||||||||
Earnings from operations | $ | 570 | $ | 547 | 4.2 | % | $ | 1,784 | $ | 1,342 | 32.9 | % | |||||||||||||||||||||||
Earnings from operations as a % of net revenue | 5.5 | % | 5.6 | % | 6.2 | % | 4.7 | % |
Three months ended July 31 | Nine months ended July 31 | ||||||||||||||||||||||||||||||||||
Net Revenue | Weighted Net Revenue Change(1) | Net Revenue | Weighted Net Revenue Change(1) | ||||||||||||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||||||||||||||
Dollars in millions | Percentage Points | Dollars in millions | Percentage Points | ||||||||||||||||||||||||||||||||
Notebooks | $ | 7,304 | $ | 5,630 | 17.3 | $ | 18,361 | $ | 16,648 | 6.1 | |||||||||||||||||||||||||
Desktops | 2,221 | 3,111 | (9.2) | 7,553 | 8,908 | (4.8) | |||||||||||||||||||||||||||||
Workstations | 428 | 609 | (1.9) | 1,461 | 1,740 | (1.0) | |||||||||||||||||||||||||||||
Other | 407 | 340 | 0.7 | 1,190 | 972 | 0.8 | |||||||||||||||||||||||||||||
Total Personal Systems | $ | 10,360 | $ | 9,690 | 6.9 | $ | 28,565 | $ | 28,268 | 1.1 |
Three months ended July 31 | Nine months ended July 31 | ||||||||||||||||||||||||||||||||||
2020 | 2019 | % Change | 2020 | 2019 | % Change | ||||||||||||||||||||||||||||||
Dollars in millions | |||||||||||||||||||||||||||||||||||
Net revenue | $ | 3,933 | $ | 4,912 | (19.9) | % | $ | 12,815 | $ | 15,084 | (15.0) | % | |||||||||||||||||||||||
Earnings from operations | $ | 480 | $ | 765 | (37.3) | % | $ | 1,782 | $ | 2,425 | (26.5) | % | |||||||||||||||||||||||
Earnings from operations as a % of net revenue | 12.2 | % | 15.6 | % | 13.9 | % | 16.1 | % |
Three months ended July 31 | Nine months ended July 31 | ||||||||||||||||||||||||||||||||||
Net Revenue | Weighted Net Revenue Change(1) | Net Revenue | Weighted Net Revenue Change(1) | ||||||||||||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||||||||||||||
Dollars in millions | Percentage Points | Dollars in millions | Percentage Points | ||||||||||||||||||||||||||||||||
Supplies | $ | 2,573 | $ | 3,164 | (12.0) | $ | 8,455 | $ | 9,762 | (8.7) | |||||||||||||||||||||||||
Commercial Hardware | 732 | 1,160 | (8.7) | 2,616 | 3,429 | (5.3) | |||||||||||||||||||||||||||||
Consumer Hardware | 628 | 588 | 0.8 | 1,744 | 1,893 | (1.0) | |||||||||||||||||||||||||||||
Total Printing | $ | 3,933 | $ | 4,912 | (19.9) | $ | 12,815 | $ | 15,084 | (15.0) |
Nine months ended July 31 | |||||||||||
2020 | 2019 | ||||||||||
In millions | |||||||||||
Net cash provided by operating activities | $ | 2,442 | $ | 4,066 | |||||||
Net cash used in investing activities | (931) | (211) | |||||||||
Net cash used in financing activities | (1,369) | (4,102) | |||||||||
Net increase (decrease) in cash and cash equivalents | $ | 142 | $ | (247) |
As of | As of | ||||||||||||||||||||||||||||||||||||||||
July 31, 2020 | October 31, 2019 | Change | July 31, 2019 | October 31, 2018 | Change | Y/Y Change | |||||||||||||||||||||||||||||||||||
Days of sales outstanding in accounts receivable (“DSO”) | 33 | 35 | (2) | 33 | 30 | 3 | — | ||||||||||||||||||||||||||||||||||
Days of supply in inventory (“DOS”) | 45 | 41 | 4 | 44 | 43 | 1 | 1 | ||||||||||||||||||||||||||||||||||
Days of purchases outstanding in accounts payable (“DPO”) | (108) | (107) | (1) | (113) | (105) | (8) | 5 | ||||||||||||||||||||||||||||||||||
Cash conversion cycle | (30) | (31) | 1 | (36) | (32) | (4) | 6 |
As of July 31, 2020 | |||||
In millions | |||||
2019 Shelf Registration Statement | Unspecified | ||||
Uncommitted lines of credit | $ | 725 |
Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet Be Purchased under the Plans or Programs | |||||||||||||||||||
In thousands, except per share amounts | |||||||||||||||||||||||
May 2020 | — | $ | — | — | $ | 14,971,698 | |||||||||||||||||
June 2020 | 25,263 | $ | 16.61 | 25,263 | $ | 14,551,984 | |||||||||||||||||
July 2020 | 30,760 | $ | 17.33 | 30,760 | $ | 14,018,768 | |||||||||||||||||
Total | 56,023 | 56,023 |
HP INC. | |||||
/s/ STEVE FIELER | |||||
Steve Fieler Chief Financial Officer (Principal Financial Officer and Authorized Signatory) |
Exhibit Number | Incorporated by Reference | |||||||||||||||||||||||||||||||
Exhibit Description | Form | File No. | Exhibit(s) | Filing Date | ||||||||||||||||||||||||||||
2(a) | 8-K | 001-04423 | 2.1 | November 5, 2015 | ||||||||||||||||||||||||||||
2(b) | 8-K | 001-04423 | 2.2 | November 5, 2015 | ||||||||||||||||||||||||||||
2(d) | 8-K | 001-04423 | 2.4 | November 5, 2015 | ||||||||||||||||||||||||||||
3(a) | 10-Q | 001-04423 | 3(a) | June 12, 1998 | ||||||||||||||||||||||||||||
3(b) | 10-Q | 001-04423 | 3(b) | March 16, 2001 |
3(c) | 8-K | 001-04423 | 3.2 | October 22, 2015 | ||||||||||||||||||||||||||||
3(d) | 8-K | 001-04423 | 3.1 | April 7, 2016 | ||||||||||||||||||||||||||||
3(e) | 8-K | 001-04423 | 3.1 | February 13, 2019 | ||||||||||||||||||||||||||||
3(f) | 8-K | 001-04423 | 3.1 | February 20, 2020 | ||||||||||||||||||||||||||||
4(a) | S-3 | 333-215116 | 4.1 | December 15, 2016 | ||||||||||||||||||||||||||||
4(b) | S-3 | 333-21516 | 4.2 | December 15, 2016 | ||||||||||||||||||||||||||||
4(c) | Form of Registrant’s 4.375% Global Note due September 15, 2021 and 6.000% Global Note due September 15, 2041 and form of related Officers’ Certificate. | 8-K | 001-04423 | September 19, 2011 | ||||||||||||||||||||||||||||
4(d) | Form of Registrant’s 4.650% Global Note due December 9, 2021 and related Officers’ Certificate. | 8-K | 001-04423 | December 12, 2011 | ||||||||||||||||||||||||||||
4(e) | Form of Registrant’s 4.050% Global Note due September 15, 2022 and related Officers’ Certificate. | 8-K | 001-04423 | March 12, 2012 | ||||||||||||||||||||||||||||
4(f) | 8-K/A | 001-04423 | 4.1 | June 23, 2006 | ||||||||||||||||||||||||||||
4(g) | 10-Q | 001-04423 | 4(j) | June 5, 2018 | ||||||||||||||||||||||||||||
4(h) | 10-K | 001-04423 | 4(j) | December 12, 2019 | ||||||||||||||||||||||||||||
4(i) | 8-K | 001-04423 | 4.1 | February 20, 2020 | ||||||||||||||||||||||||||||
4(j) | 8-K | 001-04423 | 4.1 | June 26, 2020 | ||||||||||||||||||||||||||||
4(k) | 8-K | 001-04423 | 4.1 | June 17, 2020 | ||||||||||||||||||||||||||||
4(l) | Form of 2.200% notes due 2025 and related Officers’ Certificate. | 8-K | 001-04423 | June 17, 2020 | ||||||||||||||||||||||||||||
4(m) | Form of 3.000% notes due 2027 and related Officers’ Certificate. | 8-K | 001-04423 | June 17, 2020 | ||||||||||||||||||||||||||||
4(n) | Form of 3.400% notes due 2030 and related Officers’ Certificate. | 8-K | 001-04423 | June 17, 2020 |
Exhibit Number | Incorporated by Reference | |||||||||||||||||||||||||||||||
Exhibit Description | Form | File No. | Exhibit(s) | Filing Date | ||||||||||||||||||||||||||||
10(a) | S-8 | 333-114253 | 4.1 | April 7, 2004 | ||||||||||||||||||||||||||||
10(b) | 8-K | 001-04423 | 10.2 | September 21, 2006 | ||||||||||||||||||||||||||||
10(c) | 8-K | 001-04423 | 99.3 | November 23, 2005 | ||||||||||||||||||||||||||||
10(d) | 10-K | 001-04423 | 10(h) | December 14, 2011 | ||||||||||||||||||||||||||||
10(e) | 10-Q | 001-04423 | 10(u)(u) | June 13, 2002 | ||||||||||||||||||||||||||||
10(f) | 10-Q | 001-04423 | 10(v)(v) | June 13, 2002 | ||||||||||||||||||||||||||||
10(g) | 8-K | 001-04423 | 10.2 | March 22, 2005 | ||||||||||||||||||||||||||||
10(h) | 8-K | 001-04423 | 10.2 | January 24, 2008 | ||||||||||||||||||||||||||||
10(i) | 10-Q | 001-04423 | 10(o)(o) | March 10, 2008 | ||||||||||||||||||||||||||||
10(j) | 10-Q | 001-04423 | 10(p)(p) | March 10, 2008 | ||||||||||||||||||||||||||||
10(k) | 10-Q | 001-04423 | 10(t)(t) | June 6, 2008 | ||||||||||||||||||||||||||||
10(1) | 10-Q | 001-04423 | 10(u)(u) | June 6, 2008 | ||||||||||||||||||||||||||||
10(m) | 10-K | 001-04423 | 10(y)(y) | December 18, 2008 | ||||||||||||||||||||||||||||
10(n) | 10-Q | 001-04423 | 10(b)(b)(b) | March 10, 2009 | ||||||||||||||||||||||||||||
10(o) | 10-K | 001-04423 | 10(i)(i)(i) | December 15, 2010 | ||||||||||||||||||||||||||||
10(p) | 10-K | 001-04423 | 10(j)(j)(j) | December 15, 2010 | ||||||||||||||||||||||||||||
10(q) | 10-K | 001-04423 | 10(k)(k)(k) | December 15, 2010 | ||||||||||||||||||||||||||||
10(r) | 8-K | 001-04423 | 10.2 | March 21, 2013 | ||||||||||||||||||||||||||||
10(s) | 10-Q | 001-04423 | 10(u)(u) | March 11, 2014 | ||||||||||||||||||||||||||||
10(t) | 10-Q | 001-04423 | 10(v)(v) | March 11, 2014 | ||||||||||||||||||||||||||||
10(u) | 10-Q | 001-04423 | 10(w)(w) | March 11, 2014 | ||||||||||||||||||||||||||||
10(v) | 10-Q | 001-04423 | 10(x)(x) | March 11, 2014 | ||||||||||||||||||||||||||||
10(w) | 10-Q | 001-04423 | 10(y)(y) | March 11, 2014 |
Exhibit Number | Incorporated by Reference | |||||||||||||||||||||||||||||||
Exhibit Description | Form | File No. | Exhibit(s) | Filing Date | ||||||||||||||||||||||||||||
10(x) | 10-Q | 001-04423 | 10(z)(z) | March 11, 2014 | ||||||||||||||||||||||||||||
10(y) | 10-Q | 001-04423 | 10(a)(a)(a) | March 11, 2014 | ||||||||||||||||||||||||||||
10(z) | 10-Q | 001-04423 | 10(b)(b)(b) | March 11, 2014 | ||||||||||||||||||||||||||||
10(a)(a) | 10-K | 001-04423 | 10(c)(c)(c) | March 11, 2015 | ||||||||||||||||||||||||||||
10(b)(b) | 10-K | 001-04423 | 10(d)(d)(d) | March 11, 2015 | ||||||||||||||||||||||||||||
10(c)(c) | 10-K | 001-04423 | 10(e)(e)(e) | March 11, 2015 | ||||||||||||||||||||||||||||
10(d)(d) | 8-K | 001-04423 | 10(f)(f)(f) | March 11, 2015 | ||||||||||||||||||||||||||||
10(e)(e) | 10-Q | 001-04423 | 10(g)(g)(g) | March 11, 2015 | ||||||||||||||||||||||||||||
10(f)(f) | 10-Q | 001-04423 | 10(h)(h)(h) | March 11, 2015 | ||||||||||||||||||||||||||||
10(g)(g) | 10-Q | 001-04423 | 10(i)(i)(i) | March 11, 2015 | ||||||||||||||||||||||||||||
10(h)(h) | 10-Q | 001-04423 | 10(b)(b)(b) | June 8, 2015 | ||||||||||||||||||||||||||||
10(i)(i) | 10-Q | 001-04423 | 10(c)(c)(c) | June 8, 2015 | ||||||||||||||||||||||||||||
10(j)(j) | 10-Q | 001-04423 | 10(j)(j) | June 5, 2018 | ||||||||||||||||||||||||||||
10(k)(k) | 10-Q | 001-04423 | 10(k)(k) | March 5, 2019 | ||||||||||||||||||||||||||||
10(l)(l) | 10-K | 001-04423 | 10(e)(e)(e) | December 16, 2015 | ||||||||||||||||||||||||||||
10(m)(m) | 10-K | 001-04423 | 10(f)(f)(f) | December 16, 2015 | ||||||||||||||||||||||||||||
10(n)(n) | 10-K | 001-04423 | 10(g)(g)(g) | December 16, 2015 |
Exhibit Number | Incorporated by Reference | |||||||||||||||||||||||||||||||
Exhibit Description | Form | File No. | Exhibit(s) | Filing Date | ||||||||||||||||||||||||||||
10(o)(o) | 10-K/A | 001-04423 | 10(n)(n) | December 15, 2017 | ||||||||||||||||||||||||||||
10(p)(p) | 10-Q | 001-04423 | 10(p)(p) | March 5, 2020 | ||||||||||||||||||||||||||||
10(q)(q) | 10-Q | 001-04423 | 10(p)(p) | March 3, 2016 | ||||||||||||||||||||||||||||
10(r)(r) | 10-Q | 001-04423 | 10(q)(q) | March 3, 2016 | ||||||||||||||||||||||||||||
10(s)(s) | 10-Q | 001-04423 | 10(r)(r) | March 3, 2016 | ||||||||||||||||||||||||||||
10(t)(t) | 10-Q | 001-04423 | 10(s)(s) | March 3, 2016 | ||||||||||||||||||||||||||||
10(u)(u) | 10-Q | 001-04423 | 10(t)(t) | March 3, 2016 | ||||||||||||||||||||||||||||
10(v)(v) | 10-Q | 001-04423 | 10(w)(w) | March 2, 2017 | ||||||||||||||||||||||||||||
10(w)(w) | 10-Q | 001-04423 | 10(x)(x) | March 2, 2017 | ||||||||||||||||||||||||||||
10(x)(x) | 10-Q | 001-04423 | 10(y)(y) | March 2, 2017 | ||||||||||||||||||||||||||||
10(y)(y) | 10-Q | 001-04423 | 10(z)(z) | March 2, 2017 | ||||||||||||||||||||||||||||
10(z)(z) | 10-Q | 001-04423 | 10(a)(a)(a) | March 2, 2017 | ||||||||||||||||||||||||||||
10(a)(a)(a) | 10-Q | 001-04423 | 10(b)(b)(b) | March 1, 2018 | ||||||||||||||||||||||||||||
10(b)(b)(b) | 10-Q | 001-04423 | 10(c)(c)(c) | March 1, 2018 | ||||||||||||||||||||||||||||
10(c)(c)(c) | 10-Q | 001-04423 | 10(d)(d)(d) | March 1, 2018 | ||||||||||||||||||||||||||||
10(d)(d)(d) | 10-Q | 001-04423 | 10(e)(e)(e) | March 1, 2018 | ||||||||||||||||||||||||||||
10(e)(e)(e) | 10-Q | 001-04423 | 10(f)(f)(f) | March 1, 2018 | ||||||||||||||||||||||||||||
10(f)(f)(f) | 10-K | 001-04423 | 10(g)(g)(g) | December 13, 2018 | ||||||||||||||||||||||||||||
10(g)(g)(g) | 10-K | 001-04423 | 10(h)(h)(h) | December 13, 2018 |
Exhibit Number | Incorporated by Reference | |||||||||||||||||||||||||||||||
Exhibit Description | Form | File No. | Exhibit(s) | Filing Date | ||||||||||||||||||||||||||||
10(h)(h)(h) | 10-Q | 001-04423 | 10(j)(j)(j) | March 5, 2019 | ||||||||||||||||||||||||||||
10(i)(i)(i) | 10-Q | 001-04423 | 10(k)(k)(k) | March 5, 2019 | ||||||||||||||||||||||||||||
10(j)(j)(j) | 10-Q | 001-04423 | 10(l)(l)(l) | August 29, 2019 | ||||||||||||||||||||||||||||
10(k)(k)(k) | 10-K | 001-04423 | 10(m)(m)(m) | December 12, 2019 | ||||||||||||||||||||||||||||
10(l)(l)(l) | 10-K | 001-04423 | 10(n)(n)(n) | December 12, 2019 | ||||||||||||||||||||||||||||
10(m)(m)(m) | 10-Q | 001-04423 | 10(m)(m)(m) | March 5, 2020 | ||||||||||||||||||||||||||||
10(n)(n)(n) | 10-Q | 001-04423 | 10(n)(n)(n) | March 5, 2020 | ||||||||||||||||||||||||||||
10(o)(o)(o) | 10-Q | 001-04423 | 10(o)(o)(o) | March 5, 2020 | ||||||||||||||||||||||||||||
10(p)(p)(p) | 10-Q | 001-04423 | 10(p)(p)(p) | March 5, 2020 | ||||||||||||||||||||||||||||
10(q)(q)(q) | 10-Q | 001-04423 | 10(q)(q)(q) | March 5, 2020 | ||||||||||||||||||||||||||||
10(r)(r)(r) | 10-Q | 001-04423 | 10(r)(r)(r) | June 5, 2020 | ||||||||||||||||||||||||||||
10(s)(s)(s) | 10-Q | 001-04423 | 10(s)(s)(s) | June 5, 2020 | ||||||||||||||||||||||||||||
10(t)(t)(t) | 10-Q | 001-04423 | 10(t)(t)(t) | June 5, 2020 | ||||||||||||||||||||||||||||
10(u)(u)(u) | 10-Q | 001-04423 | 10(u)(u)(u) | June 5, 2020 | ||||||||||||||||||||||||||||
31.1 | ||||||||||||||||||||||||||||||||
31.2 | ||||||||||||||||||||||||||||||||
32 | ||||||||||||||||||||||||||||||||
101.INS | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.† | |||||||||||||||||||||||||||||||
101.SCH | Inline XBRL Taxonomy Extension Schema Document.† | |||||||||||||||||||||||||||||||
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document.† | |||||||||||||||||||||||||||||||
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document.† |
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document.† | |||||||||||||||||||||||||||||||
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document.† | |||||||||||||||||||||||||||||||
104 | The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended July 31, 2020, formatted in Inline XBRL (included within the Exhibit 101 attachments).† |
/s/ ENRIQUE LORES | ||||||||
Enrique Lores President and Chief Executive Officer |
/s/ STEVE FIELER | ||||||||
Steve Fieler Chief Financial Officer (Principal Financial Officer) |
/s/ ENRIQUE LORES | ||||||||||||||
By: | Enrique Lores President and Chief Executive Officer |
/s/ STEVE FIELER | ||||||||||||||
By: | Steve Fieler Chief Financial Officer |
Consolidated Condensed Statements of Earnings (Unaudited) - USD ($) shares in Millions, $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jul. 31, 2020 |
Jul. 31, 2019 |
Jul. 31, 2020 |
Jul. 31, 2019 |
|
Income Statement [Abstract] | ||||
Net revenue | $ 14,294 | $ 14,603 | $ 41,381 | $ 43,349 |
Costs and expenses: | ||||
Cost of revenue | 11,901 | 11,698 | 33,623 | 35,103 |
Research and development | 359 | 413 | 1,097 | 1,110 |
Selling, general and administrative | 1,156 | 1,376 | 3,662 | 3,963 |
Restructuring and other charges | 59 | 17 | 431 | 141 |
Acquisition-related charges (credits) | 11 | (9) | 14 | 12 |
Amortization of intangible assets | 29 | 29 | 84 | 87 |
Total costs and expenses | 13,515 | 13,524 | 38,911 | 40,416 |
Earnings from operations | 779 | 1,079 | 2,470 | 2,933 |
Interest and other, net | (28) | (831) | (15) | (902) |
Earnings before taxes | 751 | 248 | 2,455 | 2,031 |
(Provision for) benefit from taxes | (17) | 931 | (279) | 733 |
Net earnings | $ 734 | $ 1,179 | $ 2,176 | $ 2,764 |
Net earnings per share: | ||||
Basic (usd per share) | $ 0.52 | $ 0.79 | $ 1.52 | $ 1.81 |
Diluted (usd per share) | $ 0.52 | $ 0.78 | $ 1.51 | $ 1.80 |
Weighted-average shares used to compute net earnings per share: | ||||
Basic (shares) | 1,417 | 1,499 | 1,435 | 1,528 |
Diluted (shares) | 1,423 | 1,508 | 1,441 | 1,537 |
Consolidated Condensed Balance Sheets (Unaudited) (Parenthetical) - $ / shares |
Jul. 31, 2020 |
Oct. 31, 2019 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (usd per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 300,000,000 | 300,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Common stock, par value (usd per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 9,600,000,000 | 9,600,000,000 |
Common stock, shares issued (in shares) | 1,373,000,000 | 1,458,000,000 |
Common stock, shares outstanding (in shares) | 1,373,000,000 | 1,458,000,000 |
Consolidated Condensed Statements of Stockholders’ Deficit (Unaudited) (Parenthetical) - $ / shares |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jul. 31, 2020 |
Jul. 31, 2019 |
Jul. 31, 2020 |
Jul. 31, 2019 |
|
Statement of Stockholders' Equity [Abstract] | ||||
Cash dividends per share (usd per share) | $ 0.35 | $ 0.32 | $ 0.70 | $ 0.64 |
Basis of Presentation |
9 Months Ended |
---|---|
Jul. 31, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation Basis of Presentation The accompanying Consolidated Condensed Financial Statements of HP and its wholly-owned subsidiaries are prepared in conformity with United States (“U.S.”) generally accepted accounting principles (“GAAP”). The interim financial information is unaudited but reflects all normal adjustments that are necessary to provide a fair statement of results for the interim periods presented. This interim information should be read in conjunction with the Consolidated Financial Statements for the fiscal year ended October 31, 2019 in the Annual Report on Form 10-K, filed on December 12, 2019. The Consolidated Condensed Balance Sheet for October 31, 2019 was derived from audited financial statements. Principles of Consolidation The Consolidated Condensed Financial Statements include the accounts of HP and its subsidiaries and affiliates in which HP has a controlling financial interest or is the primary beneficiary. All intercompany balances and transactions have been eliminated. Use of Estimates The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in HP’s Consolidated Condensed Financial Statements and accompanying notes. Actual results may differ materially from those estimates. As of July 31, 2020, the extent to which the COVID-19 pandemic will impact our business going forward depends on numerous dynamic factors which we cannot reliably predict. As a result, many of our estimates and assumptions required increased judgment and carry a higher degree of variability and volatility. As the events continue to evolve with respect to the pandemic, our estimates may materially change in future periods. Separation Transaction On November 1, 2015, Hewlett-Packard Company completed the separation of Hewlett Packard Enterprise Company (“Hewlett Packard Enterprise”), Hewlett-Packard Company’s former enterprise technology infrastructure, software, services and financing businesses (the “Separation”). In connection with the Separation, HP and Hewlett Packard Enterprise entered into a separation and distribution agreement, an employee matters agreement and various other agreements which remain enforceable and provide a framework for the continuing relationships between the parties. For more information on the impacts of these agreements, see Note 6, “Supplementary Financial Information”, Note 12, “Litigation and Contingencies” and Note 13, “Guarantees, Indemnifications and Warranties”. Recently Adopted Accounting Pronouncements In August 2017, the FASB issued guidance, which amends the existing accounting standards for derivatives and hedging. The amendment improves the financial reporting of hedging relationships to better represent the economic results of an entity’s risk management activities in its financial statements and made certain targeted improvements to simplify the application of the hedge accounting guidance in current U.S. GAAP. HP adopted this guidance in the first quarter of fiscal year 2020. The implementation of this guidance did not have a material impact on its Consolidated Condensed Financial Statements. In February 2016, the FASB issued amended guidance on the accounting for leasing transactions. The primary objective of this update is to increase transparency and comparability among organizations by requiring lessees to recognize a lease liability for the obligation to make lease payments and a right-of-use (“ROU”) asset for the right to use the underlying asset over the lease term. The guidance also results in some changes to lessor accounting and requires additional disclosures about all leasing arrangements. HP adopted the standard (the “new lease standard”) as of November 1, 2019 using a modified retrospective approach, with the cumulative effect adjustment to the opening balance of accumulated deficit as of the adoption date. HP elected to apply the practical expedient using the transition option whereby prior comparative periods were not retrospectively adjusted in the Consolidated Condensed Financial Statements. HP also elected the package of practical expedients, which does not require reassessment of initial direct costs, classification of a lease, and definition of a lease. The Company has elected not to record leases with an initial term of 12 months or less on the Consolidated Condensed Balance Sheets. Lease expense on such leases is recognized on a straight-line basis over the lease term. HP has also elected the lessee practical expedient to combine lease and non-lease components for certain asset classes. The adoption of the new lease standard resulted in the recognition of $1.2 billion in operating lease liabilities and $1.2 billion of related ROU assets on the Consolidated Condensed Balance Sheets. The net impact of adoption to accumulated deficit as on November 1, 2019 is not material. As of November 1, 2019, there were no material finance leases for which HP was a lessee. The new lease standard also made some changes to lessor accounting, including alignment with the new revenue recognition standard. HP now records revenue upfront on certain aspects of its as-a-service offerings and reflects financing of these offerings as cash flows from financing activities on the Consolidated Condensed Statements of Cash Flows. These changes did not have a material impact on the Consolidated Condensed Financial Statements. Refer to Note 14, “Leases”, for additional disclosures related to leases. Recently Issued Accounting Pronouncements Not Yet Adopted In June 2016, the FASB issued guidance, which requires credit losses on financial assets measured at amortized cost basis to be presented at the net amount expected to be collected, not based on incurred losses. Further, credit losses on available-for-sale debt securities should be recorded through an allowance for credit losses limited to the amount by which fair value is below amortized cost. HP will adopt the guidance in the first quarter of fiscal year 2021 using a modified retrospective approach. HP has established a cross-functional implementation team to evaluate the impact of the new standard on the Consolidated Condensed Financial Statements. Revenue Recognition General HP recognizes revenues at a point in time or over time depicting the transfer of promised goods or services to customers in an amount that reflects the consideration to which HP expects to be entitled in exchange for those goods or services. HP follows the five-step model for revenue recognition as summarized below: 1. Identify the contract with a customer - A contract with customer exists when (i) it is approved and signed by all parties, (ii) each party’s rights and obligations can be identified, (iii) payment terms are defined, (iv) it has commercial substance and (v) the customer has the ability and intent to pay. HP evaluates customers’ ability to pay based on various factors like historical payment experience, financial metrics and customer credit scores. While the majority of our sales contracts contain standard terms and conditions, there are certain contracts with non-standard terms and conditions. 2. Identify the performance obligations in the contract - HP evaluates each performance obligation in an arrangement to determine whether it is distinct, such as hardware and/or service. A performance obligation constitutes distinct goods or services when the customer can benefit from such goods or services either on its own or together with other resources that are readily available to the customer and the performance obligation is distinct within the context of the contract. 3. Determine the transaction price - Transaction price is the amount of consideration to which HP expects to be entitled in exchange for transferring goods or services to the customer. If the transaction price includes a variable amount, HP estimates the amount it expects to be entitled to using either the expected value or the most likely amount method. HP reduces the transaction price at the time of revenue recognition for customer and distributor programs and incentive offerings, rebates, promotions, other volume-based incentives and expected returns. HP uses estimates to determine the expected variable consideration for such programs based on factors like historical experience, expected consumer behavior and market conditions. HP has elected the practical expedient of not accounting for significant financing components if the period between revenue recognition and when the customer pays for the product or service is one year or less. 4. Allocate the transaction price to performance obligations in the contract - When a sales arrangement contains multiple performance obligations, such as hardware and/or services, HP allocates revenue to each performance obligation in proportion to their selling price. The selling price for each performance obligation is based on its Standalone Selling Price (“SSP”). 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. 5. Recognize revenue when (or as) the performance obligation is satisfied - Revenue is recognized when, or as, a performance obligation is satisfied by transferring control of a promised good or service to a customer. HP generally invoices the customer upon delivery of the goods or services and the payments are due as per contract terms. For fixed price support or maintenance contracts that are in the nature of stand-ready obligations, payments are generally received in advance from customers and revenue is recognized on a straight-line basis over the duration of the contract. HP reports revenue net of any taxes collected from customers and remitted to government authorities, and the collected taxes are recorded as other current liabilities until remitted to the relevant government authority. HP includes costs related to shipping and handling in cost of revenue. HP records revenue on a gross basis when HP is a principal in the transaction and on a net basis when HP is acting as an agent between the customer and the vendor. HP considers several factors to determine whether it is acting as a principal or an agent, most notably whether HP is the primary obligor to the customer, has established its own pricing and has inventory and credit risks. Hardware HP transfers control of the products to the customer at the time the product is delivered to the customer and recognizes revenue accordingly, unless customer acceptance is uncertain or significant obligations to the customer remain unfulfilled. HP records revenue from the sale of equipment under sales-type leases as revenue at the commencement of the lease. Services 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. Contract Assets and Liabilities Contract assets are rights to consideration in exchange for goods or services that HP has transferred to a customer when such right is conditional on something other than the passage of time. Such contract assets are not material to HP’s Consolidated Financial Statements. Contract liabilities are recorded as deferred revenues when amounts invoiced to customers are more than the revenues recognized or when payments are received in advance for fixed price support or maintenance contracts. The short-term and long-term deferred revenues are reported within the other current liabilities and other non-current liabilities respectively. Cost to obtain a contract and fulfillment cost Incremental direct costs of obtaining a contract primarily consist of sales commissions. HP has elected the practical expedient to expense as incurred the costs to obtain a contract with a benefit period equal to or less than one year. For contracts with a period of benefit greater than one year, HP capitalizes incremental costs of obtaining a contract with a customer and amortizes these costs over their expected period of benefit provided such costs are recoverable. Fulfillment costs consist of set-up and transition costs related to other service contracts. These costs generate or enhance resources of HP that will be used in satisfying the performance obligation in the future and are capitalized and amortized over the expected period of the benefit, provided such costs are recoverable. See Note 6, “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. Leases At the inception of a contract, HP assesses whether the contract is, or contains, a lease. The assessment is based on (1) whether the contract involves the use of a distinct identified asset, (2) whether HP obtains the right to substantially all the economic benefit from the use of the asset throughout the period, and (3) whether HP has the right to direct the use of the asset. All significant lease arrangements are recognized at lease commencement. Leases with a lease term of 12 months or less at inception are not recorded on the Consolidated Condensed Balance Sheets and are expensed on a straight-line basis over the lease term in the Consolidated Condensed Statement of Earnings. HP determines the lease term by assuming the exercise of renewal options that are reasonably certain. As most of the leases do not provide an implicit interest rate, HP uses the unsecured borrowing rate and risk-adjusts that rate to approximate a collateralized rate at the commencement date to determine the present value of future payments that are reasonably certain.
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Segment Information |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information | 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’s operations are organized into three reportable segments: Personal Systems, Printing and Corporate Investments. HP’s organizational structure is based on many factors that the chief operating decision maker (“CODM”) uses to evaluate, view and run its business operations, which include, but are not limited to, customer base and homogeneity of products and technology. The segments are based on this organizational structure and information reviewed by HP’s CODM to evaluate segment results. 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 other related accessories, 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 and SMB customers, with a focus on robust designs, security, serviceability, connectivity, reliability and manageability in networked and cloud-based environments. Additionally, HP offers a range of services and solutions to enterprise, public sector and SMB customers to help them manage the lifecycle of their PC and mobility installed base. •Consumer PCs are optimized for consumer usage, focusing on gaming, distance learning, consuming multi-media for entertainment, managing personal life activities, staying connected, sharing information, getting things done for work including creating content, staying informed and security. 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 and commercial mobility devices; • Desktops includes consumer desktops, commercial desktops, thin clients, and retail POS systems; • Workstations consists of desktop workstations and accessories; and • Other consists of consumer and commercial services as well as other Personal Systems capabilities. Printing provides consumer and commercial printer hardware, supplies, services and solutions, as well as scanning devices. Printing is also focused on imaging solutions in the commercial and industrial markets. Described below are HP’s global business capabilities within Printing. HP goes to market through its extensive channel network and direct sales. •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. Printing groups its global business capabilities into the following business units when reporting business performance: •Commercial Hardware consists of office printing solutions, graphics solutions and 3D printing & digital manufacturing, excluding supplies; •Consumer Hardware consists of home printing solutions, excluding supplies; and •Supplies comprises a set of highly innovative consumable products, ranging from ink and laser cartridges to media, graphics supplies and 3D printing & digital manufacturing supplies, for recurring use in consumer and commercial hardware. Corporate Investments includes HP Labs and 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. HP derives the results of the business segments directly from its internal management reporting system. HP does not allocate certain operating expenses, which it manages at the corporate level, to its segments. These unallocated amounts include certain corporate governance costs and infrastructure investments, stock-based compensation expense, restructuring and other charges, acquisition-related charges and amortization of intangible assets. Segment Operating Results from Operations and the reconciliation to HP consolidated results were as follows:
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Restructuring and Other Charges |
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Restructuring and Other Charges | Restructuring and Other Charges Summary of Restructuring Plans HP’s restructuring activities for the nine months ended July 31, 2020 and 2019 summarized by plan were as follows:
HP’s restructuring charges for the three months ended July 31, 2020 summarized by the plans outlined below were as follows:
(1)Primarily includes the fiscal 2017 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. See Note 4, “Retirement and Post-Retirement Benefit Plans”, for further information. 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 HP expects will be implemented through fiscal 2022. HP expects to reduce global headcount by approximately 7,000 to 9,000 employees through a combination of employee exits and voluntary EER. 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 $0.9 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 Separation, information technology rationalization efforts and proxy contest activities, and are distinct from ongoing operational costs. These costs primarily relate to third-party legal, professional services and other non-recurring costs. For the three and nine months ended July 31, 2020, HP incurred $13 million and $100 million of other charges, respectively. For the three and nine months ended July 31, 2019, HP incurred $3 million and $11 million of other charges, respectively.
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Retirement and Post-Retirement Benefit Plans |
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Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement and Post-Retirement Benefit Plans | Retirement and Post-Retirement Benefit Plans The components of HP’s pension and post-retirement benefit (credit) cost recognized in the Consolidated Condensed Statements of Earnings were as follows:
Employer Contributions and Funding Policy 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. During fiscal year 2020, HP anticipates making contributions of approximately $76 million to its non-U.S. pension plans, approximately $36 million to its U.S. non-qualified plan participants and approximately $6 million to cover benefit claims under HP’s post-retirement benefit plans. During the nine months ended July 31, 2020, HP contributed $30 million to its non-U.S. pension plans, paid $27 million to cover benefit payments to U.S. non-qualified plan participants and paid $4 million to cover benefit claims under HP’s post-retirement benefit plans. HP’s pension and other post-retirement benefit costs and obligations depend on various assumptions. Differences between expected and actual returns on investments and changes in discount rates and other actuarial assumptions are reflected as unrecognized gains or losses, and such gains or losses are amortized to earnings in future periods. A deterioration in the funded status of a plan could result in a need for additional company contributions or an increase in net pension and post- retirement benefit costs in future periods. Actuarial gains or losses are determined at the measurement date and amortized over the remaining service life for active plans or the life expectancy of plan participants for frozen plans. 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 are at least 50 years old with 20 or more years of service at HP. Employees accepted into the EER program will leave HP on dates ranging from December 31, 2019 to September 30, 2020. The EER benefit will be a cash lump sum payment which is 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 coverage and employer credits under the RMSA program, HP recognized special termination benefit costs of $44 million as restructuring and other charges for the nine months ended July 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 approximately $2.0 billion will be made from plan assets to the participants in the fourth quarter of fiscal year 2020 and an estimated non-cash settlement expense of approximately $240 million arising from the accelerated recognition of previously deferred actuarial losses will be recorded in such quarter.
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Taxes on Earnings |
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Jul. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Taxes on Earnings | Taxes on Earnings Provision for Taxes HP’s effective tax rate was 2.2% and (375.4)% for the three months ended July 31, 2020 and 2019, respectively and 11.4% and (36.1)% for the nine months ended July 31, 2020 and 2019, respectively. The difference between the U.S. federal statutory tax rate of 21% and HP’s effective tax rate for the three and nine months ended July 31, 2020 is primarily due to audit settlements in various jurisdictions and favorable tax rates associated with certain earnings from HP’s operations in lower-tax jurisdictions throughout the world. For the three and nine months ended July 31, 2019, HP’s effective tax rate generally differs from the U.S. federal statutory rate of 21% primarily due to the resolution of various audits, transitional impacts of U.S. tax reform, and favorable tax rates associated with certain earnings from HP’s operations in lower-tax jurisdictions throughout the world. During the three and nine months ended July 31, 2020, HP recorded $116 million and $182 million, respectively, of net tax benefits related to discrete items in the provision for taxes. These amounts included tax benefits of $102 million and $143 million related to audit settlements in various jurisdictions, $20 million and $75 million related to restructuring charges, and $4 million and $20 million related to acquisition charges for the three and nine months ended July 31, 2020, respectively. These benefits were partially offset by uncertain tax position charges of $3 million and $54 million for the three and nine months ended July 31, 2020, respectively. For the nine months ended July 31, 2020, excess tax benefits associated with stock options, restricted stock units and performance-adjusted restricted stock units were immaterial. During the three and nine months ended July 31, 2019, HP recorded $1.1 billion of net income tax benefits related to discrete items in the provision for taxes. This amount included tax benefits of $1.0 billion related to various audit settlements, $75 million due to the ability to utilize tax attributes, along with $57 million and $78 million for the three and nine months ended July 31, 2019, respectively, related to U.S. tax reform as a result of new guidance issued by the U.S. Internal Revenue Service (“IRS”). These benefits were partially offset by valuation allowance charges of $98 million for the three and nine months ended July 31, 2019. In addition to the discrete items mentioned above, HP recorded excess tax benefits of $21 million associated with stock options, restricted stock units and performance-adjusted restricted stock units for the nine months ended July 31, 2019. Uncertain Tax Positions As of July 31, 2020, the amount of gross unrecognized tax benefits was $824 million, of which up to $680 million would affect HP’s effective tax rate if realized. Total gross unrecognized tax benefits decreased by $105 million for the nine months ended July 31, 2020, primarily related to the resolution of various audits. HP recognizes interest income from favorable settlements and interest expense and penalties accrued on unrecognized tax benefits in the provision for taxes in the Consolidated Condensed Statements of Earnings. As of July 31, 2020 and 2019, HP had accrued $37 million and $75 million, respectively, for interest and penalties. HP engages in continuous discussions and negotiations with taxing authorities regarding tax matters in various jurisdictions. HP expects to complete resolution of certain tax years with various tax authorities within the next 12 months. HP believes it is reasonably possible that its existing gross unrecognized tax benefits may be reduced by up to $80 million within the next 12 months, affecting HP’s effective tax rate if realized. HP is subject to income tax in the United States and approximately 58 other countries and is subject to routine corporate income tax audits in many of these jurisdictions. In addition, HP is subject to numerous ongoing audits by federal, state and foreign tax authorities. The IRS is conducting an audit of HP’s 2018 and 2019 income tax returns.
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Supplementary Financial Information |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplementary Financial Information | Supplementary Financial Information Accounts Receivable, net
The allowance for doubtful accounts related to accounts receivable and changes were as follows:
HP has third-party arrangements, consisting of revolving short-term financing, which provide liquidity to certain partners to facilitate their working capital requirements. These financing arrangements, which in certain circumstances may contain partial recourse, result in a transfer of HP’s receivables and risk to the third party. As these transfers qualify as true sales under the applicable accounting guidance, the receivables are de-recognized from the Consolidated Condensed 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 similar transactions and reported as a current liability in the Consolidated Condensed Balance Sheets. The recourse obligations as of July 31, 2020 and October 31, 2019 were not material. The costs associated with the sale of trade receivables for the three and nine months ended July 31, 2020 and 2019 were not material. The following is a summary of the activity under these arrangements:
(1) Amounts outstanding from third parties reported in Accounts Receivable in the Consolidated Condensed Balance Sheets. Inventory
Other Current Assets
Property, Plant and Equipment, net
Other Non-Current Assets
(1) See Note 1, “Basis of Presentation” and Note 14, “Leases” for detailed information. (2) Includes marketable equity securities and mutual funds classified as available-for-sale investments of $57 million and $56 million as of July 31, 2020 and October 31, 2019, respectively. See Note 8, “Financial Instruments” for detailed information. Other Current Liabilities
(1) See Note 1, “Basis of Presentation” and Note 14, “Leases” for detailed information. Other Non-Current Liabilities
(1) See Note 1, “Basis of Presentation” and Note 14, “Leases” for detailed information. Interest and other, net
(1) Includes an adjustment of $764 million for the three and nine months ended July 31, 2019, primarily related to indemnification receivables, pursuant to resolution of various tax matters. . Net revenue by region
Value of Remaining Performance Obligations As of July 31, 2020, the estimated value of transaction price allocated to remaining performance obligations was $4.2 billion. HP expects to recognize approximately $1.8 billion of the unearned amount in next 12 months and $2.4 billion thereafter. HP has elected the practical expedients and accordingly does not disclose the aggregate amount of the transaction price allocated to remaining performance obligations if: •the contract has an original expected duration of one year or less; or •the revenue from the performance obligation is recognized over time on an as-invoiced basis when the amount corresponds directly with the value to the customer; or •the portion of the transaction price that is variable in nature is allocated entirely to a wholly unsatisfied performance obligation. The remaining performance obligations are subject to change and may be affected by various factors, such as termination of contracts, contract modifications and adjustment for currency. Contract Liabilities As of July 31, 2020 and October 31, 2019, HP’s contract liabilities balances were $2.3 billion and $2.1 billion, respectively, included in Other Current Liabilities and Other Non-Current Liabilities in the Consolidated Condensed Balance Sheet. The increase in the contract liabilities balance for the nine months ended July 31, 2020 is primarily driven by sales of fixed price support and maintenance services, partially offset by $0.9 billion of revenue recognized that were included in the contract liabilities balance as of October 31, 2019.
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Fair Value |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value | Fair Value Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. Fair Value Hierarchy 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. Assets and liabilities are classified in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement: Level 1—Quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2—Quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability and market-corroborated inputs. Level 3—Unobservable inputs for the asset or liability. The fair value hierarchy gives the highest priority to observable inputs and lowest priority to unobservable inputs. The following table presents HP’s assets and liabilities that are measured at fair value on a recurring basis:
(1) Government debt includes instruments such as U.S. treasury notes, U.S. agency securities and non-U.S. government bonds. Money market funds invested in government debt and traded in active markets are included in Level 1. Valuation Techniques Cash Equivalents and Investments: HP holds time deposits, money market funds, mutual funds, other debt securities primarily consisting of corporate and foreign government notes and bonds, and common stock and equivalents. HP values cash equivalents and equity investments using quoted market prices, alternative pricing sources, including net asset value, or models utilizing market observable inputs. The fair value of debt investments was based on quoted market prices or model-driven valuations using inputs primarily derived from or corroborated by observable market data, and, in certain instances, valuation models that utilize assumptions which cannot be corroborated with observable market data. Derivative Instruments: From time to time, HP uses forward contracts, interest rate and total return swaps, treasury rate locks and, at times, option contracts to hedge certain foreign currency interest rate and return on certain investment exposures. HP uses industry standard valuation models to measure fair value. Where applicable, these models project future cash flows and discount the future amounts to present value using market-based observable inputs, including interest rate curves, HP and counterparty credit risk, foreign exchange rates, and forward and spot prices for currencies and interest rates. See Note 8, “Financial Instruments” for a further discussion of HP’s use of derivative instruments. Other Fair Value Disclosures Short- and Long-Term Debt: 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 Condensed 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 $6.8 billion as of July 31, 2020, compared to its carrying amount of $6.3 billion at that date. The fair value of HP’s short- and long-term debt was $5.4 billion as of October 31, 2019, compared to its carrying value of $5.1 billion at that date. If measured at fair value in the Consolidated Condensed Balance Sheets, short- and long-term debt would be classified in Level 2 of the fair value hierarchy. Other Financial Instruments: For the balance of HP’s financial instruments, primarily accounts receivable, accounts payable and financial liabilities included in Other current liabilities on the Consolidated Condensed Balance Sheets, the carrying amounts approximate fair value due to their short maturities. If measured at fair value in the Consolidated Condensed Balance Sheets, these other financial instruments would be classified in Level 2 or Level 3 of the fair value hierarchy. Non-Marketable Equity Investments and Non-Financial Assets: HP’s non-marketable equity investments are measured at cost less impairment, adjusted for observable price changes. HP’s non-financial assets, such as intangible assets, goodwill and property, plant and equipment, are recorded at fair value in the period an impairment charge is recognized. If measured at fair value in the Consolidated Condensed Balance Sheets these would generally be classified within Level 3 of the fair value hierarchy.
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Financial Instruments |
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Investments, All Other Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Instruments | Financial Instruments Cash Equivalents and Available-for-Sale Investments
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, 2020 and October 31, 2019, 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. Contractual maturities of investments in available-for-sale debt securities were as follows:
Equity securities in privately held companies are included in Other non-current assets in the Consolidated Condensed Balance Sheets. These amounted to $43 million and $46 million as of July 31, 2020 and October 31, 2019, respectively. 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 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 $281 million and $45 million as of July 31, 2020 and as of October 31, 2019, respectively, all of which were fully collateralized within 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, 2020 and October 31, 2019. Fair Value Hedges 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 benchmark interest rates on HP’s future interest rate payments. For derivative instruments that are designated and qualify as fair value hedges, HP recognizes the change in fair value of the derivative instrument, as well as the offsetting change in the fair value of the hedged item, in Interest and other, net in the Consolidated Condensed Statements of Earnings in the period of change. During the quarter, HP terminated interest rate swaps with a notional amount of $0.5 billion that were de-designated as fair value hedges of certain fixed rate debt securities that were extinguished. HP also entered into $0.5 billion notional amount interest rate swaps designated as fair value hedges to convert a portion of newly issued $1.15 billion fixed-rate debt to floating. Cash Flow Hedges HP uses forward contracts, treasury rate locks 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’s foreign currency cash flow hedges mature predominantly within twelve months; however, hedges related to long-term procurement arrangements extend several years. For derivative instruments that are designated and qualify as cash flow hedges, HP initially records changes in fair value of the derivative instrument in accumulated other comprehensive income/loss (“AOCI”) as a separate component of stockholders’ deficit in 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 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. In March 2020, HP entered into a series of treasury rate lock agreements with notional amounts totaling $750 million to hedge the exposure to variability in future cash flows resulting from changes in interest rate related to an anticipated issuance of long-term debt. These agreements were designated as cash flow hedges. These agreements were settled upon issuance of the senior notes in June 2020 resulting in an immaterial loss recognized in Other Comprehensive Income (Loss). The loss will be reclassified to Interest and other, net over the life of the related debt. Other Derivatives 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. Hedge Effectiveness 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. As of July 31, 2020 and 2019, no portion of the hedging instruments’ gain or loss was excluded from the assessment of effectiveness for fair value and cash flow hedges. Fair Value of Derivative Instruments in the Consolidated Condensed Balance Sheets Gross notional and fair value of derivative instruments in the Consolidated Condensed Balance Sheets were as follows:
Offsetting of Derivative Instruments 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, 2020 and October 31, 2019, information related to the potential effect of HP’s master netting agreements and collateral security agreements was as follows:
(1)Represents the cash collateral posted by counterparties as of the respective reporting date for HP’s asset position, net of derivative amounts that could be offset, as of, generally, business days prior to the respective reporting date. (2)Represents the collateral posted by HP through 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, business days prior to the respective reporting date. Effect of Derivative Instruments in the Consolidated Condensed Statements of Earnings The pre-tax effect of derivative instruments and related hedged items in a fair value hedging relationship for the three and nine months ended July 31, 2020 and 2019 were as follows:
The pre-tax effect of derivative instruments in cash flow hedging relationships for the three and nine months ended July 31, 2020 and 2019 was as follows:
As of July 31, 2020, HP expects to reclassify an estimated accumulated other comprehensive loss of $221 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 AOCI based on the change of market rate, and therefore could have different impact on earnings. The pre-tax effect of derivative instruments not designated as hedging instruments recognized in the Consolidated Condensed Statements of Earnings for the three and nine months ended July 31, 2020 and 2019 was as follows:
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Borrowings |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Borrowings | Borrowings Notes Payable and Short-Term Borrowings
Long-Term Debt
(1)HP may redeem some or all of the fixed-rate U.S. Dollar Global Notes at any time in accordance with the terms thereof. The U.S. Dollar Global Notes are senior unsecured debt. In December 2019, HP filed a shelf registration statement (the “2019 Shelf Registration Statement”) with the SEC to enable the Company to offer for sale, from time to time, in one or more offerings, an unspecified amount of debt securities, common stock, preferred stock, depository shares and warrants. In June 2020, HP completed its public offering of $3.0 billion aggregate principal amount of senior unsecured notes, consisting of $1.15 billion of 2.2% notes due June 2025, $1.0 billion of 3.0% notes due June 2027, and $850 million of 3.4% notes due June 2030. HP incurred $26 million towards issuance costs. HP will pay interest semi-annually on the notes on June 17 and December 17, beginning December 17, 2020. HP had entered into treasury rate lock agreements with notional amounts totaling $750 million to hedge exposure to variability in future cash flows resulting from changes in interest rates related to the forecasted issuance of long-term debt. These agreements were settled upon issuance of the senior notes in June 2020. The net proceeds from this offering were used to fund approximately $0.7 billion and $0.9 billion for the cash tender offer (“Tender Offer”) and the redemption, respectively, of certain existing notes, as described below. Net proceeds from this offering in excess of the amounts used to repurchase the notes were used for general corporate purposes. As disclosed in Note 8, “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. Extinguishment of Debt In June 2020, HP commenced and completed the Tender Offer to purchase approximately $0.7 billion in aggregate principal amount of its outstanding US Dollar 3.750% Global Notes due December 1,2020, 4.300% Global Notes due June 1, 2021, 4.375% Global Notes due September 15, 2021 and 4.650% Global Notes due December 9, 2021. This extinguishment of debt resulted in a net loss of $23 million, which was recorded as Interest and other, net on the Consolidated Condensed Statements of Earnings. On July 22, 2020, HP redeemed the remaining aggregate principal amounts of $0.5 billion in outstanding U.S. Dollar 3.750% Global Notes due December 1, 2020 and $0.4 billion in outstanding U.S. Dollar 4.300% Global Notes due June 1, 2021. This extinguishment of debt resulted in a net loss of $17 million, which was recorded as Interest and other, net on the Consolidated Condensed Statements of Earnings. As part of the above transactions, HP terminated and settled interest rate swaps with a notional of $0.5 billion that were de-designated as fair value hedges. Commercial Paper As of July 31, 2020, HP maintained two commercial paper programs. HP’s U.S. program provides 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 Facilities As of July 31, 2020, HP maintained a $4.0 billion senior unsecured committed revolving credit facility to support the issuance of commercial paper or for general corporate purposes. Commitments under the revolving credit facility will be available until March 30, 2023. Commitment fees, interest rates and other terms of borrowing under the credit facilities vary based on HP’s external credit ratings. On May 29, 2020, we entered into a 364-day revolving credit facility providing for a senior unsecured revolving credit facility with aggregate lending commitments of $1.0 billion. Commitments under the 364-day revolving credit facility will be available until May 28, 2021. Funds borrowed under this revolving credit facility may be used for general corporate purposes. As of July 31, 2020, HP was in compliance with the financial covenants in the credit agreements governing the revolving credit facilities. Available Borrowing Resources As of July 31, 2020, HP had available borrowing resources of $725 million from uncommitted lines of credit in addition to the senior unsecured committed revolving credit facilities.
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Stockholders' Deficit |
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Stockholders' Equity Note [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Deficit | Stockholders’ Deficit Share Repurchase Program HP’s share repurchase program authorizes both open market and private repurchase transactions. During the three and nine months ended July 31, 2020, HP executed share repurchases of 59 million shares and 97 million shares and settled total shares for $1.0 billion and $1.8 billion, respectively. During the three and nine months ended July 31, 2019, HP executed share repurchases of 26 million and 92 million shares and settled total shares for $0.5 billion and $1.9 billion, respectively. Share repurchases executed during the three and nine months ended July 31, 2020 and 2019 included 2.8 million and 0.7 million shares settled in August 2020 and August 2019, respectively. The shares repurchased during the nine months ended July 31, 2020 and 2019 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 July 31, 2020, HP had approximately $14.0 billion remaining under the share repurchase authorizations approved by HP’s Board of Directors. Shareholder Rights Plan On February 20, 2020, HP’s Board of Directors adopted a shareholder rights plan and declared a dividend of one preferred share purchase right for each outstanding share of HP’s common stock to shareholders of record on March 2, 2020. The dividend distribution was made on March 2, 2020. The rights were set to expire on February 20, 2021, unless terminated earlier by HP’s Board of Directors. The Board of Directors terminated the shareholder rights plan, effective June 25, 2020, and at the time of the termination, all rights distributed to holders of HP’s common stock under the shareholder rights plan expired. Tax effects related to Other Comprehensive Income (Loss)
Changes and reclassifications related to Other Comprehensive Income (Loss), net of taxes
(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 AOCI, net of taxes and changes were as follows:
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Net Earnings Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Earnings Per Share | Net Earnings Per Share HP calculates basic net EPS using net earnings and the weighted-average number of shares outstanding during the reporting period. Diluted net EPS includes any dilutive effect of restricted stock units, stock options, performance-based awards and shares purchased under the 2011 employee stock purchase plan. A reconciliation of the number of shares used for basic and diluted net EPS calculations is as follows:
(1)HP excludes from the calculation of diluted net EPS stock options and restricted stock units where the assumed proceeds exceed the average market price, because their effect would be anti-dilutive. The assumed proceeds of a stock option include the sum of its exercise price, and average unrecognized compensation cost. The assumed proceeds of a restricted stock unit represent unrecognized compensation cost.
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Litigation and Contingencies |
9 Months Ended |
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Jul. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Litigation and Contingencies | Litigation and Contingencies HP is involved in lawsuits, claims, investigations and proceedings, including those identified below, consisting of IP, commercial, securities, employment, employee benefits and environmental matters that arise in the ordinary course of business. HP accrues a liability when management believes that it is both probable that a liability has been incurred and the amount of loss can be reasonably estimated. HP believes it has recorded adequate provisions for any such matters and, as of July 31, 2020, it was not reasonably possible that a material loss had been incurred in excess of the amounts recognized in HP’s financial statements. HP reviews these matters at least quarterly and adjusts its accruals to reflect the impact of negotiations, settlements, rulings, advice of legal counsel, and other information and events pertaining to a particular case. Pursuant to the separation and distribution agreement, HP shares responsibility with Hewlett Packard Enterprise for certain matters, as indicated below, and Hewlett Packard Enterprise has agreed to indemnify HP in whole or in part with respect to certain matters. 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. Litigation is inherently unpredictable. However, HP believes it has valid defenses with respect to legal matters pending against it. Nevertheless, cash flows or results of operations could be materially affected in any particular period by the resolution of one or more of these contingencies. Litigation, Proceedings and Investigations Copyright Levies. Proceedings are ongoing or have been concluded involving HP in certain European countries, including litigation in Belgium and other countries, seeking to impose or modify levies upon IT equipment (such as multifunction devices (“MFDs”) and PCs), alleging that these devices enable the production of private copies of copyrighted materials. The levies are generally based upon the number of products sold and the per-product amounts of the levies, which vary. Some European countries that do not yet have levies on digital devices are expected to implement similar legislation to enable them to extend existing levy schemes, while other European countries have phased out levies or are expected to limit the scope of levy schemes and applicability in the digital hardware environment, particularly with respect to sales to business users. HP, other companies and various industry associations have opposed the extension of levies to the digital environment and have advocated alternative models of compensation to rights holders. Reprobel SCRL (“Reprobel”), a collecting society administering the remuneration for reprography to Belgian copyright holders, requested by extrajudicial means that HP amend certain copyright levy declarations submitted for inkjet MFDs sold in Belgium from January 2005 to December 2009 to enable it to collect copyright levies calculated based on the generally higher copying speed when the MFDs are operated in draft print mode rather than when operated in normal print mode. In March 2010, HP filed a lawsuit against Reprobel in the Brussels Court of First Instance in Belgium, seeking a declaratory judgment that no copyright levies are payable on sales of MFDs in Belgium or, alternatively, that payments already made by HP are sufficient to comply with its obligations. The Brussels Court of Appeal (the “Court of Appeal”) stayed the proceedings and referred several questions to the Court of Justice of the European Union (“CJEU”). On November 12, 2015, the CJEU published its judgment providing that a national legislation such as the Belgian one at issue in the main proceedings is incompatible with EU law on multiple legal points, as argued by HP, and returned the proceedings to the referring court. On May 12, 2017, the Court of Appeal held that (1) reprographic copyright levies are due notwithstanding the lack of conformity of the Belgian system with EU law in certain aspects and (2) the applicable levies are to be calculated based on the objective speed of each MFD as established by an expert appointed by the Court of Appeal. HP appealed this decision before the Belgian Supreme Court on January 18, 2018. Based on industry opposition to the extension of levies to digital products, HP’s assessments of the merits of various proceedings and HP’s estimates of the number of units impacted and the amounts of the levies, HP has accrued amounts that it believes are adequate to address the ongoing disputes. Hewlett-Packard Company v. Oracle Corporation. On June 15, 2011, HP filed suit against Oracle Corporation (“Oracle”) in California Superior Court in Santa Clara County in connection with Oracle’s March 2011 announcement that it was discontinuing software support for HP’s Itanium-based line of mission-critical servers. HP asserted, among other things, that Oracle’s actions breached the contract that was signed by the parties as part of the settlement of the litigation relating to Oracle’s hiring of Mark Hurd. The matter eventually progressed to trial, which was bifurcated into two phases. HP prevailed in the first phase of the trial, in which the court ruled that the contract at issue required Oracle to continue to offer its software products on HP’s Itanium-based servers for as long as HP decided to sell such servers. The second phase of the trial was then postponed by Oracle’s appeal of the trial court’s denial of Oracle’s “anti-SLAPP” motion, in which Oracle argued that HP’s damages claim infringed on Oracle’s First Amendment rights. On August 27, 2015, the California Court of Appeals rejected Oracle’s appeal. The matter was remanded to the trial court for the second phase of the trial, which began on May 23, 2016 and was submitted to the jury on June 29, 2016. On June 30, 2016, the jury returned a verdict in favor of HP, awarding HP approximately $3.0 billion in damages, which included approximately $1.7 billion for past lost profits and $1.3 billion for future lost profits. On October 20, 2016, the court entered judgment for HP for this amount with interest accruing until the judgment is paid. Oracle’s motion for new trial was denied on December 19, 2016, and Oracle filed its notice of appeal from the trial court’s judgment on January 17, 2017. On February 2, 2017, HP filed a notice of cross-appeal challenging the trial court’s denial of prejudgment interest. The case is fully briefed and awaiting the Court of Appeals to schedule oral argument. HP expects that the appeals process could take several years to complete. Litigation is unpredictable, and there can be no assurance that HP will recover damages, or that any award of damages will be for the amount awarded by the jury’s verdict. The amount ultimately awarded, if any, would be recorded in the period received. No adjustment has been recorded in the financial statements in relation to this potential award. Pursuant to the terms of the separation and distribution agreement, HP and Hewlett Packard Enterprise will share equally in any recovery from Oracle once Hewlett Packard Enterprise has been reimbursed for all costs incurred in the prosecution of the action prior to the Separation. Forsyth, et al. v. HP Inc. and Hewlett Packard Enterprise. This is a purported class and collective action filed on August 18, 2016 in the United States District Court, Northern District of California, against HP and Hewlett Packard Enterprise alleging the defendants violated the Federal Age Discrimination in Employment Act (“ADEA”), the California Fair Employment and Housing Act, California public policy and the California Business and Professions Code by terminating older workers and replacing them with younger workers. In their initial complaint, Plaintiffs sought to certify a nationwide collective class action under the ADEA comprised of all U.S. residents employed by defendants who had their employment terminated pursuant to a workforce reduction (“WFR”) plan on or after May 23, 2012 and who were 40 years of age or older. Plaintiffs also sought to represent a Rule 23 class under California law comprised of all persons 40 years or older employed by defendants in the state of California and terminated pursuant to a WFR plan on or after May 23, 2012. In November 2016, the plaintiffs amended their complaint, adding new plaintiffs and narrowing the class period for the nationwide collective action to a period that started on December 9, 2014. On September 20, 2017, the Court granted defendants’ motions to compel arbitration as to the party plaintiffs who signed WFR release agreements, and also stayed the entire case until the arbitrations were completed. In October 2018, the claims of all 16 arbitration claimants were resolved. Between November 2018 and April 2019, an additional 154 individuals filed consents to opt‐in to the action as party‐plaintiffs, which brought the total number of named and opt-in plaintiffs to 193. Of the new opt-ins, 145 signed separation agreements that included class waivers and mandatory arbitration provisions. The parties have resolved the claims of 142 of those 145 opt-ins, and the remaining three opt-ins who signed separation agreements dismissed their claims without prejudice. In February 2020, the claims of thirteen additional party plaintiffs were dismissed voluntarily without prejudice, leaving the total number of named and opt-in plaintiffs at 35. On January 7, 2020, the plaintiffs filed a Third Amended Complaint that seeks to represent (1) a putative nationwide ADEA collective comprised of all individuals 40 years of age and older who had their employment terminated pursuant to a WFR plan on or after December 9, 2014 and did not sign a Waiver and General Release Agreement in connection with their selection for WFR; and (2) a putative Rule 23 class under California law comprised of all individuals 40 years of age and older who had their employment terminated pursuant to a WFR plan on or after August 18, 2012 and did not sign a Waiver and General Release Agreement in connection with their selection for WFR. On May 18, 2020, the Court granted defendants’ motion to dismiss in part, and granted plaintiffs leave to amend. On July 9, 2020, the plaintiffs filed a fourth amended complaint that further narrowed the scope of the putative ADEA collectives and California state law classes. On August 24, 2020, defendants filed a motion to dismiss or strike certain allegations from the fourth amended complaint. The stay of the litigation otherwise remains in place. India Directorate of Revenue Intelligence Proceedings. On April 30 and May 10, 2010, the India Directorate of Revenue Intelligence (the “DRI”) issued show cause notices to Hewlett-Packard India Sales Private Limited (“HP India”), a subsidiary of HP, seven HP India employees and one former HP India employee alleging that HP India underpaid customs duties while importing products and spare parts into India and seeking to recover an aggregate of approximately $370 million, plus penalties. Prior to the issuance of the show cause notices, HP India deposited approximately $16 million with the DRI and agreed to post a provisional bond in exchange for the DRI’s agreement to not seize HP India products and spare parts and to not interrupt the transaction of business by HP India. On April 11, 2012, the Bangalore Commissioner of Customs issued an order on the products-related show cause notice affirming certain duties and penalties against HP India and the named individuals of approximately $386 million, of which HP India had already deposited $9 million. On December 11, 2012, HP India voluntarily deposited an additional $10 million in connection with the products-related show cause notice. The differential duty demand is subject to interest. On April 20, 2012, the Commissioner issued an order on the parts-related show cause 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 show cause 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 the appeals. The Customs Department has also filed cross-appeals before the Customs Tribunal. On January 24, 2013, the Customs Tribunal ordered HP India to deposit an additional $24 million against the products order, which HP India deposited in March 2013. The Customs Tribunal did not order any additional deposit to be made under the parts order. In December 2013, HP India filed applications before the Customs Tribunal seeking early hearing of the appeals as well as an extension of the stay of deposit as to HP India and the individuals already granted until final disposition of the appeals. On February 7, 2014, the application for extension of the stay of deposit was granted by the Customs Tribunal until disposal of the appeals. On October 27, 2014, the Customs Tribunal commenced hearings on the cross-appeals of the Commissioner’s orders. The Customs Tribunal rejected HP India’s request to remand the matter to the Commissioner on procedural grounds. The hearings scheduled to reconvene on April 6, 2015 and again on November 3, 2015 and April 11, 2016 were canceled at the request of the Customs Tribunal. A hearing on the merits of the appeal scheduled for January 15, 2019 has been cancelled. Pursuant to the separation and distribution agreement, Hewlett Packard Enterprise has agreed to indemnify HP in part, based on the extent to which any liability arises from the products and spare parts of Hewlett Packard Enterprise’s businesses. Neodron Patent Litigation. United States. On May 21, 2019, Neodron Ltd. (“Neodron”) filed a patent infringement lawsuit against Hewlett Packard Enterprise in U.S. District Court for the Western District of Texas. On the same day, Neodron filed a companion complaint with the U.S. International Trade Commission (“ITC”) pursuant to Section 337 of the Tariff Act of 1930 against seven sets of respondents, including Hewlett Packard Enterprise. On May 23 and June 14, 2019, Neodron filed amended complaints in the ITC and the Western District of Texas, respectively, to replace Hewlett Packard Enterprise with HP. Both complaints alleged that certain touch-controlled devices infringe four patents owned by Neodron. On June 19, 2019, the ITC instituted an investigation. In the ITC proceeding, Neodron sought an order enjoining HP from importing, selling for importation, or selling after importation certain touch-controlled notebook computers and tablets. On June 28, 2019, Neodron filed a second lawsuit in the Western District of Texas, asserting four additional patents against HP touch-controlled devices. Neodron amended its complaint in the second lawsuit to assert a total of eight patents against HP touch-controlled devices. Neodron sought unspecified damages and a permanent injunction, among other remedies. Germany. On October 29, 2019, Neodron served HP with a claim of patent infringement at the Munich State Court in Germany. The patent asserted in the German case is related to a patent asserted in the ITC. The initial hearing was held on July 29, 2020. If the German court had found infringement of a valid patent, the court may have issued an injunction as part of any remedy. Settlement of Litigation. On July 31, 2020, HP and Neodron entered into an agreement to settle all pending litigation between them on a worldwide basis and to dismiss all pending legal actions against one another. Slingshot Printing LLC Litigation. On June 11, 2019, Slingshot Printing LLC (“Slingshot”) filed three complaints in U.S. District Court in the Western District of Texas alleging HP infringes or has infringed sixteen patents. On September 20, 2019, Slingshot filed a fourth complaint and amended the three earlier complaints, alleging that HP infringes or has infringed thirty-two patents. On December 12, 2019, Slingshot voluntarily dismissed its allegations as to one patent because it did not own a related patent. On January 23, 2020, Slingshot filed a fifth complaint, re-asserting the dismissed patent as well as the related patent. On February 13, 2020, Slingshot voluntarily dismissed its allegations as to another patent, which was asserted in its third complaint. On March 25, 2020, Slingshot voluntarily dismissed its allegations as to an additional patent, which was also asserted in its third complaint. Slingshot is currently asserting a total of 31 patents. The accused products include inkjet printers, cartridges, and printheads. The complaints seek monetary damages. Electrical Workers Pension Fund, Local 103, I.B.E.W. v. HP Inc., et al. On February 19, 2020, Electrical Workers Pension Fund, Local 103, I.B.E.W. filed a putative class action complaint against HP, Dion Weisler, Catherine Lesjak, and Steven Fieler in U.S. District Court in the Northern District of California. On May 20, 2020, the court appointed the State of Rhode Island, Office of the General Treasurer, on behalf of the Employees’ Retirement System of Rhode Island and Iron Workers Local 580 Joint Funds as Lead Plaintiffs. On July 20, 2020, Lead Plaintiffs filed an amended complaint, which additionally names as defendants Enrique Lores and Christoph Schell. The amended complaint alleges, among other things, that from February 23, 2017 to October 3, 2019, HP and the named officers violated Sections 10(b) and 20(a) of the Exchange Act by making false or misleading statements about HP’s printing supplies business, including HP’s use of its four-box model to predict the demand for supplies. It further alleges that Dion Weisler and Enrique Lores violated Sections 10(b) and 20A of the Exchange Act by allegedly selling shares of HP common stock during this period while in possession of material, non-public adverse information about HP’s print business. Plaintiffs seek compensatory damages and other relief. Legal Proceedings re Authentication of Supplies. Civil litigation or government investigations are pending in the United States, Italy, Israel, and the Netherlands involving supplies authentication protocols used in certain HP printers. These protocols are often referred to as Dynamic Security. The core allegations in these proceedings claim misleading or inadequate consumer notifications and permissions pertaining to the use of Dynamic Security, the impact of firmware updates, or the potential inability of cartridges with clone chips or circuitry to work in HP printers with Dynamic Security. 123Inkt Foundation litigation (Netherlands). On November 23, 2016, a foundation known as Stichting 123Inkt-Huismerk Klanten (the “Foundation”) filed a complaint in district court in Amsterdam against HP Nederland B.V. and HP Inc. arising out of the use of Dynamic Security in certain OfficeJet printers. Digital Revolution B.V. (a.k.a. 123Inkt) established the Foundation to pursue the interests of approximately 960 of its customers who transferred their claims to it. The complaint alleges: (1) violation of right of ownership; (2) destruction and damage to property; (3) computer vandalism; (4) unlawful act; (5) non-compliance; (6) unfair commercial practices; (7) misleading commercial practices; and (8) misleading advertising. The complaint seeks injunctive relief to prohibit use of Dynamic Security, damages, and attorneys’ fees. On December 27, 2017, the District Court dismissed the case and awarded fees to HP. On January 25, 2018, the Foundation filed a summons with the Amsterdam Court of Appeal to appeal. On December 17, 2019, the Court of Appeal set aside the judgment of the District Court, adopted a new decision declaring that HP provided inadequate and partially incorrect information to the Foundation members around September 13, 2016, awarded damages to them in an amount to be later determined, but denied all other claims, including injunctive relief, holding that the use of Dynamic Security is not inherently impermissible and the Foundation lacks legal interest to pursue such action. On March 19, 2020, the Foundation filed a cassation writ of summons with the Supreme Court of the Netherlands (Hoge Raad der Nederlanden) appealing the decision of the Court of Appeal. On May 29, 2020, HP filed its statement of defense and incidental appeal in cassation with the Supreme Court appealing the decision of the Court of Appeal. Gensin v. HP Inc. (Israel). On October 25, 2017, a purported consumer class action, captioned Gensin v. HP Inc., was filed in the District Court in Jerusalem against HP arising out of the use of Dynamic Security in certain OfficeJet printers. The petition and motion for certification as a class action alleges: (1) tortious wrongdoing in violation of the Computers Law, 5755-1995; (2) breach of Contracts Law, 5731-1970; (3) breach of the Consumer Protection Law, 5741-1981; (4) negligence; and (5) improper enrichment. The named petitioner initially sought to represent nationwide classes comprised of anyone who “owns an HP printer that has been blocked, disrupted, or interfered with by HP in the use of ink cartridges not manufactured by HP” or who “purchased ink cartridges not manufactured by HP for use in the blocked printers.” Plaintiff seeks class relief, injunctive relief, damages, and attorneys’ fees. On November 16, 2017, a second purported consumer class action was filed against HP in the Central District Court, captioned Dror v. HP, Inc., also arising out of the use of Dynamic Security in certain OfficeJet printers. The petition and motion allege similar causes of action on behalf of similar nationwide classes. After the Dror case was consolidated with the Gensin case in Jerusalem, the District Court on June 24, 2018 dismissed the Dror case and designated Gensin as the lead matter. On March 9, 2020, the petitioner moved to modify the proposed nationwide class to be comprised of “[a]ll persons who have an HP printer and whose printer was blocked or rendered unusable by HP with any ink cartridge that is not made by HP” and “[a]ll persons who purchased ink cartridges that are not made by HP, for use in the Blocked Printers.” On July 2, 2020, HP filed its response to the amended petition. Parziale v. HP Inc. (United States). On August 27, 2019, a purported consumer class action was filed against HP in federal court in the Northern District of California arising out of the use of Dynamic Security in certain OfficeJet printers. The complaint alleges two causes of action under Florida Consumer Protection statutes: (1) violation of the Florida Deceptive and Unfair Trade Practices Act, F.S.A. §§ 501.201 et seq., and (2) violation of the Florida Misleading Advertisement Law, F.S.A. §§ 817.41 et seq. The named plaintiff seeks to represent a nationwide class of “[a]ll United States Citizens who, between the applicable statute of limitations and the present, had an HP Printer that was modified to reject third party ink cartridges or refilled HP ink cartridges.” On November 13, 2019, plaintiff filed an amended complaint, adding three causes of action to the case: (1) violation of the Computer Fraud and Abuse Act, 18 U.S.C. § 1030 et seq., (2) trespass to chattels, and (3) tortious interference with business relations. Plaintiff seeks class relief, injunctive relief, damages, including punitive damages, and attorneys’ fees. On December 30, 2019, HP moved to dismiss plaintiff’s amended complaint. On April 24, 2020, the Court granted in part and denied in part HP’s motion to dismiss. The Court dismissed plaintiff’s causes of action under the Florida Consumer Protection statutes, as well as the tortious interference with business relations claim and four of the five claims under the Computer Fraud and Abuse Act. The Court denied HP’s motion to dismiss on the remaining claims and on the request for injunctive relief and granted plaintiff leave to file an amended complaint. On June 5, 2020, plaintiff filed a second amended complaint on behalf of both a nationwide class and a Florida subclass alleging violation of the Florida Deceptive and Unfair Trade Practices Act, violation of the Computer Fraud and Abuse Act, and trespass to chattels. Plaintiff is seeking class relief, injunctive relief, damages, including punitive damages, and attorneys’ fees. On July 17, 2020, HP moved to dismiss the complaint. Consumer Protection Investigation (Italy). On September 26, 2019, the Italian Competition and Consumer Protection Authority (Autorità Garante della Concorrenza e del Mercato) (“AGCM”) served a Notice of Initiation of Proceedings on HP concerning the investigation of alleged aggressive practices involving undue influence on consumers and alleged misleading actions and omissions regarding the restriction or prevention of the use of third-party ink cartridges in HP printers, accompanied by a request for information. In such an investigation, the AGCM may impose fines for violations and impose orders to cease and desist. HP submitted its reply to the AGCM’s request for information on November 15, 2019 and has addressed subsequent requests for information. On May 22, 2020, the AGCM gave notice that it intended to expand its investigation into certain alleged warranty practices regarding the use of third-party cartridges. On June 26, 2020, HP submitted its response to the warranty allegations. The AGCM must conclude the proceedings and adopt its final decision by November 18, 2020. Digital Revolution B.V. v. HP Nederland B.V., et al. (Netherlands). On March 30, 2020, Digital Revolution B.V. (a.k.a. 123Inkt) served a complaint filed in Amsterdam District Court arising out of the use of Dynamic Security in certain HP printers. The complaint alleges several causes of action: (1) abuse of dominant position; (2) misleading advertising; (3) unfair and misleading commercial practice; and (4) misleading comparative advertising. The complaint seeks injunctive relief, including prohibition of Dynamic Security and disclosure of cartridge authentication protocols, damages, and attorneys’ fees. The parties’ initial appearance in front of the Court took place on July 8, 2020. SEC Investigation. In 2017, the Company received a subpoena from the SEC requesting documents regarding HP’s printing supplies business for the time period before June 2016, with a primary focus on the APJ region. HP has been fully cooperating with the SEC in connection with its investigation. Following recent discussions, HP has reached an understanding in principle on the terms of a settlement with the Division of Enforcement staff, subject to approval by the SEC. If the settlement is approved, HP would enter into an administrative resolution that would include allegations that HP violated Sections 17(a)(2) and 17(a)(3) of the Securities Act of 1933 and Section 13(a) of the Securities Exchange Act of 1934 and the rules thereunder, and impose a civil penalty of $6 million, for failure to disclose certain known trends and uncertainties regarding supplies sales practices and their impact on margin and supplies channel inventory and for incomplete disclosures regarding supplies channel inventory in its SEC filings and related earnings calls from November 2015 through June 2016. HP would neither admit nor deny these allegations. Autonomy-Related Legal Matters Investigations. As a result of the findings of an ongoing investigation, HP has provided information to the U.K. Serious Fraud Office, the U.S. Department of Justice (“DOJ”) and the SEC related to the accounting improprieties, disclosure failures and misrepresentations at Autonomy that occurred prior to and in connection with HP’s acquisition of Autonomy. On January 19, 2015, the U.K. Serious Fraud Office notified HP that it was closing its investigation and had decided to cede jurisdiction of the investigation to the U.S. authorities. On November 14, 2016, the DOJ announced that a federal grand jury indicted Sushovan Hussain, the former CFO of Autonomy. Mr. Hussain was charged with 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 the true performance of Autonomy’s business, its financial condition, and its prospects for growth. A jury trial commenced on February 26, 2018. On April 30, 2018, the jury found Mr. Hussain guilty of all charges against him. On August 26, 2020, the U.S. Court of Appeals for the Ninth Circuit affirmed the judgment of conviction against Mr. Hussain. On November 15, 2016, the SEC announced that Stouffer Egan, the former CEO of Autonomy’s U.S.-based operations, settled charges relating to his participation in an accounting scheme to meet internal sales targets and analyst revenue expectations. On November 29, 2018, the DOJ announced that a federal grand jury indicted Michael Lynch, former CEO of Autonomy, and Stephen Chamberlain, former VP of Finance of Autonomy. Dr. Lynch and Mr. Chamberlain were charged with conspiracy to commit wire fraud and multiple counts of wire fraud. HP is continuing to cooperate with the ongoing enforcement actions. Autonomy Corporation Limited v. Michael Lynch and Sushovan Hussain. 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. Mr. Lynch also filed a counterclaim against Autonomy Corporation Limited seeking $160 million in damages, among other things, for alleged misstatements regarding Lynch. The Hewlett Packard Enterprise subsidiary claimants filed their replies to the defenses and the asserted counter-claim on March 11, 2016. Trial began on March 25, 2019 and was completed in January 2020. The parties are awaiting a ruling from the Court. Environmental HP’s business is subject to various federal, state, local and foreign laws and regulations that could result in costs or other sanctions that adversely affect our business and results of operations. For example, HP is subject to laws and regulations concerning environmental protection, including laws addressing the discharge of pollutants into the air and water, the management and disposal of hazardous substances and wastes, the clean-up of contaminated sites, the content of HP’s products and the recycling, treatment and disposal of those products, including batteries. In particular, HP faces increasing complexity in its product design and procurement operations as it adjusts to new and future requirements relating to the chemical and materials composition of its products, their safe use, the energy consumption associated with those products, climate change laws and regulations, and product repairability, reuse and take-back legislation. HP could incur substantial costs, its products could be restricted from entering certain jurisdictions, and it could face other sanctions, if it were to violate or become liable under environmental laws or if its products become noncompliant with environmental laws. HP’s potential exposure includes fines and civil or criminal sanctions, third-party property damage or personal injury claims and clean-up costs. The amount and timing of costs to comply with environmental laws are difficult to predict. HP is party to, or otherwise involved in, proceedings brought by U.S. or state environmental agencies under the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”), known as “Superfund,” or state laws similar to CERCLA, and may become a party to, or otherwise involved in, proceedings brought by private parties for contribution towards clean-up costs. HP is also conducting environmental investigations or remediations at several current or former operating sites pursuant to administrative orders or consent agreements with state environmental agencies. The separation and distribution agreement includes provisions that provide for the allocation of environmental liabilities between HP and Hewlett Packard Enterprise including certain remediation obligations; responsibilities arising from the chemical and materials composition of their respective products, their safe use and their energy consumption; obligations under product take back legislation that addresses the collection, recycling, treatment and disposal of products; and other environmental matters. HP will generally be responsible for environmental liabilities related to the properties and other assets, including products, allocated to HP under the separation and distribution agreement and other ancillary agreements. Under these agreements, HP will indemnify Hewlett Packard Enterprise for liabilities for specified ongoing remediation projects, subject to certain limitations, and Hewlett Packard Enterprise has a payment obligation for a specified portion of the cost of those remediation projects. In addition, HP will share with Hewlett Packard Enterprise other environmental liabilities as set forth in the separation and distribution agreement. HP is indemnified in whole or in part by Hewlett Packard Enterprise for liabilities arising from the assets assigned to Hewlett Packard Enterprise and for certain environmental matters as detailed in the separation and distribution agreement.
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Guarantees, Indemnifications and Warranties |
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Guarantees, Indemnifications and Warranties | Guarantees, Indemnifications and Warranties Guarantees In the ordinary course of business, HP may issue performance guarantees to certain of its clients, customers and other parties pursuant to which HP has guaranteed the performance obligations of third parties. Some of those guarantees may be backed by standby letters of credit or surety bonds. In general, HP would be obligated to perform over the term of the guarantee in the event a specified triggering event occurs as defined by the guarantee. HP believes the likelihood of having to perform under a material guarantee is remote. Cross-Indemnifications with Hewlett Packard Enterprise Under the separation and distribution agreement, HP agreed to indemnify Hewlett Packard Enterprise, each of its subsidiaries and each of their respective directors, officers and employees from and against all liabilities relating to, arising out of or resulting from, among other matters, the liabilities allocated to HP as part of the Separation. Hewlett Packard Enterprise similarly agreed to indemnify HP, each of its subsidiaries and each of their respective directors, officers and employees from and against all liabilities relating to, arising out of or resulting from, among other matters, the liabilities allocated to Hewlett Packard Enterprise as part of the Separation. HP expects Hewlett Packard Enterprise to fully perform under the terms of the separation and distribution agreement. For information on cross-indemnifications with Hewlett Packard Enterprise for litigation matters, see Note 12, “Litigation and Contingencies.” In connection with the Separation, HP entered into the Tax Matters Agreement (“TMA”) with Hewlett Packard Enterprise, effective on November 1, 2015. The TMA provided that HP and Hewlett Packard Enterprise will share certain pre-Separation income tax liabilities. The TMA was terminated during the fourth quarter of fiscal year 2019. Indemnifications In the ordinary course of business, HP enters into contractual arrangements under which HP may agree to indemnify a third party to such arrangement from any losses incurred relating to the services they perform on behalf of HP or for losses arising from certain events as defined within the particular contract, which may include, for example, litigation or claims relating to past performance. HP also provides indemnifications to certain vendors and customers against claims of intellectual property infringement made by third parties arising from the vendors’ and customers’ use of HP’s software products and services and certain other matters. Some indemnifications may not be subject to maximum loss clauses. Historically, payments made related to these indemnifications have been immaterial. 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. HP records a tax indemnification payable to various third parties under these agreements when management believes that it is both probable that a liability has been incurred and the amount can be reasonably estimated. The actual amount that the third parties pay or may be obligated to pay HP could vary depending on the outcome of certain unresolved tax matters, which may not be resolved for several years. The net payable as of July 31, 2020 and October 31, 2019 were $30 million and $57 million, respectively. Warranties HP accrues the estimated cost of product warranties at the time it recognizes revenue. HP engages in extensive product quality programs and processes, including actively monitoring and evaluating the quality of its component suppliers; 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. HP’s aggregate product warranty liabilities and changes were as follows:
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Leases |
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Leases | Leases HP determines, at lease inception, whether or not an arrangement contains a lease. A significant portion of the operating lease portfolio includes real estate leases. Additionally, HP has identified embedded operating leases within certain outsourced supply chain contracts. Leasing arrangements typically range in terms from 1 to 20 years with varying renewal and termination options. Substantially all of HP’s leases are considered operating leases. Finance leases, short-term leases and sub-lease income were not material as of July 31, 2020 or for the three and nine months ended July 31, 2020. Lease terms include options to extend or terminate the lease when it is reasonably certain that HP will exercise such options. HP generally considers the economic life of the ROU assets to be comparable to the useful life of similar owned assets. HP’s leases generally do not provide a residual guarantee. Operating leases are included in Other non-current assets, Other current liabilities and Other non-current liabilities. Finance leases are included in Property, plant and equipment, net, Notes payable and short-term borrowings and Long-term debt in the Consolidated Condensed Balance Sheets. 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. The incremental borrowing rate is determined based on the rate of interest that HP would have to pay to borrow an amount equal to the lease payments on a collateralized basis over a similar term. HP uses the unsecured borrowing rate and risk-adjusts that rate to approximate a collateralized rate. HP has elected the practical expedient to combine lease and non-lease components as a single lease element for its real estate leases and certain outsourced supply chain contracts in calculating the ROU assets and lease liabilities. Where HP chooses not to combine the lease and non-lease components, HP allocates contract consideration to the lease and non-lease components based on relative standalone prices. HP reviews the impairment of the ROU assets consistent with the approach applied for other long-lived assets. The components of lease expense are as follows:
All lease expenses, including variable lease costs, are primarily included in Cost of revenue and Selling, general and administrative expenses in the Consolidated Condensed Statements of Earnings based on the use of the facilities. Variable lease expense relates primarily to leased real estate utilized for office space and outsourced warehousing. These costs primarily include adjustments for inflation, payments dependent on a rate or index or usage of asset and common area maintenance charges. These costs are not included in the lease liability and are recognized in the period in which they are incurred. The following table presents supplemental information relating to the cash flows arising from lease transactions. Cash payments made from variable lease costs and short-term leases are not included in the measurement of operating lease liabilities, and, as such, are excluded from the amounts below:
(1) Includes the impact of new leases as well as remeasurements and modifications to existing leases. Weighted-average information associated with the measurement of our remaining operating lease liabilities is as follows:
The following maturity analysis presents expected undiscounted cash outflows for operating leases on an annual basis for the next five years, with the exception of 2020, which presents the expected undiscounted cash outflows for operating leases for the remaining three months of the year:
The following table, which was included in our Annual Report on Form 10-K for the fiscal year ended October 31, 2019, depicts gross minimum rental commitments under non-cancelable leases for real estate, personal property leases, sublease income commitments and operating lease commitments at October 31, 2019:
(1) Amounts represent the operating lease obligations, net of total sublease income of $130 million. There were no material operating leases that HP had entered into and that were yet to commence as of July 31, 2020.
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Basis of Presentation (Policies) |
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Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying Consolidated Condensed Financial Statements of HP and its wholly-owned subsidiaries are prepared in conformity with United States (“U.S.”) generally accepted accounting principles (“GAAP”). The interim financial information is unaudited but reflects all normal adjustments that are necessary to provide a fair statement of results for the interim periods presented. This interim information should be read in conjunction with the Consolidated Financial Statements for the fiscal year ended October 31, 2019 in the Annual Report on Form 10-K, filed on December 12, 2019. The Consolidated Condensed Balance Sheet for October 31, 2019 was derived from audited financial statements.
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Principles of Consolidation | Principles of Consolidation The Consolidated Condensed Financial Statements include the accounts of HP and its subsidiaries and affiliates in which HP has a controlling financial interest or is the primary beneficiary. All intercompany balances and transactions have been eliminated.
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Use of Estimates | Use of Estimates The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in HP’s Consolidated Condensed Financial Statements and accompanying notes. Actual results may differ materially from those estimates. As of July 31, 2020, the extent to which the COVID-19 pandemic will impact our business going forward depends on numerous dynamic factors which we cannot reliably predict. As a result, many of our estimates and assumptions required increased judgment and carry a higher degree of variability and volatility. As the events continue to evolve with respect to the pandemic, our estimates may materially change in future periods.
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Recently Adopted Accounting Pronouncements and Recently Issued Accounting Pronouncements Not Yet Adopted | Recently Adopted Accounting Pronouncements In August 2017, the FASB issued guidance, which amends the existing accounting standards for derivatives and hedging. The amendment improves the financial reporting of hedging relationships to better represent the economic results of an entity’s risk management activities in its financial statements and made certain targeted improvements to simplify the application of the hedge accounting guidance in current U.S. GAAP. HP adopted this guidance in the first quarter of fiscal year 2020. The implementation of this guidance did not have a material impact on its Consolidated Condensed Financial Statements. In February 2016, the FASB issued amended guidance on the accounting for leasing transactions. The primary objective of this update is to increase transparency and comparability among organizations by requiring lessees to recognize a lease liability for the obligation to make lease payments and a right-of-use (“ROU”) asset for the right to use the underlying asset over the lease term. The guidance also results in some changes to lessor accounting and requires additional disclosures about all leasing arrangements. HP adopted the standard (the “new lease standard”) as of November 1, 2019 using a modified retrospective approach, with the cumulative effect adjustment to the opening balance of accumulated deficit as of the adoption date. HP elected to apply the practical expedient using the transition option whereby prior comparative periods were not retrospectively adjusted in the Consolidated Condensed Financial Statements. HP also elected the package of practical expedients, which does not require reassessment of initial direct costs, classification of a lease, and definition of a lease. The Company has elected not to record leases with an initial term of 12 months or less on the Consolidated Condensed Balance Sheets. Lease expense on such leases is recognized on a straight-line basis over the lease term. HP has also elected the lessee practical expedient to combine lease and non-lease components for certain asset classes. The adoption of the new lease standard resulted in the recognition of $1.2 billion in operating lease liabilities and $1.2 billion of related ROU assets on the Consolidated Condensed Balance Sheets. The net impact of adoption to accumulated deficit as on November 1, 2019 is not material. As of November 1, 2019, there were no material finance leases for which HP was a lessee. The new lease standard also made some changes to lessor accounting, including alignment with the new revenue recognition standard. HP now records revenue upfront on certain aspects of its as-a-service offerings and reflects financing of these offerings as cash flows from financing activities on the Consolidated Condensed Statements of Cash Flows. These changes did not have a material impact on the Consolidated Condensed Financial Statements. Refer to Note 14, “Leases”, for additional disclosures related to leases. Recently Issued Accounting Pronouncements Not Yet Adopted In June 2016, the FASB issued guidance, which requires credit losses on financial assets measured at amortized cost basis to be presented at the net amount expected to be collected, not based on incurred losses. Further, credit losses on available-for-sale debt securities should be recorded through an allowance for credit losses limited to the amount by which fair value is below amortized cost. HP will adopt the guidance in the first quarter of fiscal year 2021 using a modified retrospective approach. HP has established a cross-functional implementation team to evaluate the impact of the new standard on the Consolidated Condensed Financial Statements.
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Revenue Recognition | Revenue Recognition General HP recognizes revenues at a point in time or over time depicting the transfer of promised goods or services to customers in an amount that reflects the consideration to which HP expects to be entitled in exchange for those goods or services. HP follows the five-step model for revenue recognition as summarized below: 1. Identify the contract with a customer - A contract with customer exists when (i) it is approved and signed by all parties, (ii) each party’s rights and obligations can be identified, (iii) payment terms are defined, (iv) it has commercial substance and (v) the customer has the ability and intent to pay. HP evaluates customers’ ability to pay based on various factors like historical payment experience, financial metrics and customer credit scores. While the majority of our sales contracts contain standard terms and conditions, there are certain contracts with non-standard terms and conditions. 2. Identify the performance obligations in the contract - HP evaluates each performance obligation in an arrangement to determine whether it is distinct, such as hardware and/or service. A performance obligation constitutes distinct goods or services when the customer can benefit from such goods or services either on its own or together with other resources that are readily available to the customer and the performance obligation is distinct within the context of the contract. 3. Determine the transaction price - Transaction price is the amount of consideration to which HP expects to be entitled in exchange for transferring goods or services to the customer. If the transaction price includes a variable amount, HP estimates the amount it expects to be entitled to using either the expected value or the most likely amount method. HP reduces the transaction price at the time of revenue recognition for customer and distributor programs and incentive offerings, rebates, promotions, other volume-based incentives and expected returns. HP uses estimates to determine the expected variable consideration for such programs based on factors like historical experience, expected consumer behavior and market conditions. HP has elected the practical expedient of not accounting for significant financing components if the period between revenue recognition and when the customer pays for the product or service is one year or less. 4. Allocate the transaction price to performance obligations in the contract - When a sales arrangement contains multiple performance obligations, such as hardware and/or services, HP allocates revenue to each performance obligation in proportion to their selling price. The selling price for each performance obligation is based on its Standalone Selling Price (“SSP”). 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. 5. Recognize revenue when (or as) the performance obligation is satisfied - Revenue is recognized when, or as, a performance obligation is satisfied by transferring control of a promised good or service to a customer. HP generally invoices the customer upon delivery of the goods or services and the payments are due as per contract terms. For fixed price support or maintenance contracts that are in the nature of stand-ready obligations, payments are generally received in advance from customers and revenue is recognized on a straight-line basis over the duration of the contract. HP reports revenue net of any taxes collected from customers and remitted to government authorities, and the collected taxes are recorded as other current liabilities until remitted to the relevant government authority. HP includes costs related to shipping and handling in cost of revenue. HP records revenue on a gross basis when HP is a principal in the transaction and on a net basis when HP is acting as an agent between the customer and the vendor. HP considers several factors to determine whether it is acting as a principal or an agent, most notably whether HP is the primary obligor to the customer, has established its own pricing and has inventory and credit risks. Hardware HP transfers control of the products to the customer at the time the product is delivered to the customer and recognizes revenue accordingly, unless customer acceptance is uncertain or significant obligations to the customer remain unfulfilled. HP records revenue from the sale of equipment under sales-type leases as revenue at the commencement of the lease. Services 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. Contract Assets and Liabilities Contract assets are rights to consideration in exchange for goods or services that HP has transferred to a customer when such right is conditional on something other than the passage of time. Such contract assets are not material to HP’s Consolidated Financial Statements. Contract liabilities are recorded as deferred revenues when amounts invoiced to customers are more than the revenues recognized or when payments are received in advance for fixed price support or maintenance contracts. The short-term and long-term deferred revenues are reported within the other current liabilities and other non-current liabilities respectively. Cost to obtain a contract and fulfillment cost Incremental direct costs of obtaining a contract primarily consist of sales commissions. HP has elected the practical expedient to expense as incurred the costs to obtain a contract with a benefit period equal to or less than one year. For contracts with a period of benefit greater than one year, HP capitalizes incremental costs of obtaining a contract with a customer and amortizes these costs over their expected period of benefit provided such costs are recoverable. Fulfillment costs consist of set-up and transition costs related to other service contracts. These costs generate or enhance resources of HP that will be used in satisfying the performance obligation in the future and are capitalized and amortized over the expected period of the benefit, provided such costs are recoverable. See Note 6, “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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Leases | Leases At the inception of a contract, HP assesses whether the contract is, or contains, a lease. The assessment is based on (1) whether the contract involves the use of a distinct identified asset, (2) whether HP obtains the right to substantially all the economic benefit from the use of the asset throughout the period, and (3) whether HP has the right to direct the use of the asset. All significant lease arrangements are recognized at lease commencement. Leases with a lease term of 12 months or less at inception are not recorded on the Consolidated Condensed Balance Sheets and are expensed on a straight-line basis over the lease term in the Consolidated Condensed Statement of Earnings. HP determines the lease term by assuming the exercise of renewal options that are reasonably certain. As most of the leases do not provide an implicit interest rate, HP uses the unsecured borrowing rate and risk-adjusts that rate to approximate a collateralized rate at the commencement date to determine the present value of future payments that are reasonably certain.
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Segment Information | The accounting policies HP uses to derive segment results are substantially the same as those used by HP in preparing these financial statements. HP derives the results of the business segments directly from its internal management reporting system.HP does not allocate certain operating expenses, which it manages at the corporate level, to its segments. These unallocated amounts include certain corporate governance costs and infrastructure investments, stock-based compensation expense, restructuring and other charges, acquisition-related charges and amortization of intangible assets. |
Employer Contributions and Funding Policy | Employer Contributions and Funding Policy 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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Taxes on Earnings | HP recognizes interest income from favorable settlements and interest expense and penalties accrued on unrecognized tax benefits in the provision for taxes in the Consolidated Condensed Statements of Earnings. |
Transfers and Servicing Trade Receivables Policy | HP has third-party arrangements, consisting of revolving short-term financing, which provide liquidity to certain partners to facilitate their working capital requirements. These financing arrangements, which in certain circumstances may contain partial recourse, result in a transfer of HP’s receivables and risk to the third party. As these transfers qualify as true sales under the applicable accounting guidance, the receivables are de-recognized from the Consolidated Condensed 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 similar transactions and reported as a current liability in the Consolidated Condensed Balance Sheets. The recourse obligations as of July 31, 2020 and October 31, 2019 were not material. The costs associated with the sale of trade receivables for the three and nine months ended July 31, 2020 and 2019 were not material. |
Fair Value | Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. Fair Value Hierarchy 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. Assets and liabilities are classified in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement: Level 1—Quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2—Quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability and market-corroborated inputs. Level 3—Unobservable inputs for the asset or liability. The fair value hierarchy gives the highest priority to observable inputs and lowest priority to unobservable inputs. Valuation Techniques Cash Equivalents and Investments: HP holds time deposits, money market funds, mutual funds, other debt securities primarily consisting of corporate and foreign government notes and bonds, and common stock and equivalents. HP values cash equivalents and equity investments using quoted market prices, alternative pricing sources, including net asset value, or models utilizing market observable inputs. The fair value of debt investments was based on quoted market prices or model-driven valuations using inputs primarily derived from or corroborated by observable market data, and, in certain instances, valuation models that utilize assumptions which cannot be corroborated with observable market data. Derivative Instruments: From time to time, HP uses forward contracts, interest rate and total return swaps, treasury rate locks and, at times, option contracts to hedge certain foreign currency interest rate and return on certain investment exposures. HP uses industry standard valuation models to measure fair value. Where applicable, these models project future cash flows and discount the future amounts to present value using market-based observable inputs, including interest rate curves, HP and counterparty credit risk, foreign exchange rates, and forward and spot prices for currencies and interest rates. See Note 8, “Financial Instruments” for a further discussion of HP’s use of derivative instruments. Other Fair Value Disclosures Short- and Long-Term Debt: 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 Condensed 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 $6.8 billion as of July 31, 2020, compared to its carrying amount of $6.3 billion at that date. The fair value of HP’s short- and long-term debt was $5.4 billion as of October 31, 2019, compared to its carrying value of $5.1 billion at that date. If measured at fair value in the Consolidated Condensed Balance Sheets, short- and long-term debt would be classified in Level 2 of the fair value hierarchy. Other Financial Instruments: For the balance of HP’s financial instruments, primarily accounts receivable, accounts payable and financial liabilities included in Other current liabilities on the Consolidated Condensed Balance Sheets, the carrying amounts approximate fair value due to their short maturities. If measured at fair value in the Consolidated Condensed Balance Sheets, these other financial instruments would be classified in Level 2 or Level 3 of the fair value hierarchy. Non-Marketable Equity Investments and Non-Financial Assets: HP’s non-marketable equity investments are measured at cost less impairment, adjusted for observable price changes. HP’s non-financial assets, such as intangible assets, goodwill and property, plant and equipment, are recorded at fair value in the period an impairment charge is recognized. If measured at fair value in the Consolidated Condensed Balance Sheets these would generally be classified within Level 3 of the fair value hierarchy.
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Cash Equivalents and Available-for-Sale Investments | All highly liquid investments with original maturities of three months or less at the date of acquisition are considered cash equivalents. |
Debt and Marketable Equity Securities | Equity securities in privately held companies are included in Other non-current assets in the Consolidated Condensed Balance Sheets. |
Derivative Instruments | 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 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 $281 million and $45 million as of July 31, 2020 and as of October 31, 2019, respectively, all of which were fully collateralized within 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, 2020 and October 31, 2019. Fair Value Hedges 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 benchmark interest rates on HP’s future interest rate payments. For derivative instruments that are designated and qualify as fair value hedges, HP recognizes the change in fair value of the derivative instrument, as well as the offsetting change in the fair value of the hedged item, in Interest and other, net in the Consolidated Condensed Statements of Earnings in the period of change. During the quarter, HP terminated interest rate swaps with a notional amount of $0.5 billion that were de-designated as fair value hedges of certain fixed rate debt securities that were extinguished. HP also entered into $0.5 billion notional amount interest rate swaps designated as fair value hedges to convert a portion of newly issued $1.15 billion fixed-rate debt to floating. Cash Flow Hedges HP uses forward contracts, treasury rate locks 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’s foreign currency cash flow hedges mature predominantly within twelve months; however, hedges related to long-term procurement arrangements extend several years. For derivative instruments that are designated and qualify as cash flow hedges, HP initially records changes in fair value of the derivative instrument in accumulated other comprehensive income/loss (“AOCI”) as a separate component of stockholders’ deficit in 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 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. In March 2020, HP entered into a series of treasury rate lock agreements with notional amounts totaling $750 million to hedge the exposure to variability in future cash flows resulting from changes in interest rate related to an anticipated issuance of long-term debt. These agreements were designated as cash flow hedges. These agreements were settled upon issuance of the senior notes in June 2020 resulting in an immaterial loss recognized in Other Comprehensive Income (Loss). The loss will be reclassified to Interest and other, net over the life of the related debt. Other Derivatives 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. Hedge Effectiveness 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.
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Offsetting of Derivatives Instruments | Offsetting of Derivative InstrumentsHP 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. |
Net Earnings Per Share | HP calculates basic net EPS using net earnings and the weighted-average number of shares outstanding during the reporting period. Diluted net EPS includes any dilutive effect of restricted stock units, stock options, performance-based awards and shares purchased under the 2011 employee stock purchase plan. |
Litigation and Contingencies | HP is involved in lawsuits, claims, investigations and proceedings, including those identified below, consisting of IP, commercial, securities, employment, employee benefits and environmental matters that arise in the ordinary course of business. HP accrues a liability when management believes that it is both probable that a liability has been incurred and the amount of loss can be reasonably estimated. HP believes it has recorded adequate provisions for any such matters and, as of July 31, 2020, it was not reasonably possible that a material loss had been incurred in excess of the amounts recognized in HP’s financial statements. HP reviews these matters at least quarterly and adjusts its accruals to reflect the impact of negotiations, settlements, rulings, advice of legal counsel, and other information and events pertaining to a particular case. Pursuant to the separation and distribution agreement, HP shares responsibility with Hewlett Packard Enterprise for certain matters, as indicated below, and Hewlett Packard Enterprise has agreed to indemnify HP in whole or in part with respect to certain matters. 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. Litigation is inherently unpredictable. However, HP believes it has valid defenses with respect to legal matters pending against it. Nevertheless, cash flows or results of operations could be materially affected in any particular period by the resolution of one or more of these contingencies. |
Warranties | Warranties HP accrues the estimated cost of product warranties at the time it recognizes revenue. HP engages in extensive product quality programs and processes, including actively monitoring and evaluating the quality of its component suppliers; 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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Segment Information (Tables) |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of Segment Operating Results to Consolidated Results | Segment Operating Results from Operations and the reconciliation to HP consolidated results were as follows:
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Schedule of Reconciliation of Segment Operating Results to HP Consolidated Results | Segment Operating Results from Operations and the reconciliation to HP consolidated results were as follows:
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Restructuring and Other Charges (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Restructuring Plans | HP’s restructuring activities for the nine months ended July 31, 2020 and 2019 summarized by plan were as follows:
HP’s restructuring charges for the three months ended July 31, 2020 summarized by the plans outlined below were as follows:
(1)Primarily includes the fiscal 2017 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. See Note 4, “Retirement and Post-Retirement Benefit Plans”, for further information.
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Retirement and Post-Retirement Benefit Plans (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Pension and Post-Retirement Benefit (Credit) Cost | The components of HP’s pension and post-retirement benefit (credit) cost recognized in the Consolidated Condensed Statements of Earnings were as follows:
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Supplementary Financial Information (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Receivable | Accounts Receivable, net
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Schedule of Allowance for Doubtful Accounts Related to Accounts Receivable | The allowance for doubtful accounts related to accounts receivable and changes were as follows:
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Schedule of Transferred Trade Receivables Not Collected from Third Parties | The following is a summary of the activity under these arrangements:
(1) Amounts outstanding from third parties reported in Accounts Receivable in the Consolidated Condensed Balance Sheets.
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Inventory | Inventory
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Other Current Assets | Other Current Assets
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Property, Plant and Equipment | Property, Plant and Equipment, net
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Other Non-Current Assets | Other Non-Current Assets
(1) See Note 1, “Basis of Presentation” and Note 14, “Leases” for detailed information. (2) Includes marketable equity securities and mutual funds classified as available-for-sale investments of $57 million and $56 million as of July 31, 2020 and October 31, 2019, respectively. See Note 8, “Financial Instruments” for detailed information.
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Other Current Liabilities | Other Current Liabilities
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Other Non-Current Liabilities | Other Non-Current Liabilities
(1) See Note 1, “Basis of Presentation” and Note 14, “Leases” for detailed information.
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Interest and Other, Net | Interest and other, net
(1) Includes an adjustment of $764 million for the three and nine months ended July 31, 2019, primarily related to indemnification receivables, pursuant to resolution of various tax matters.
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Disaggregation of Revenue | Net revenue by region
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Fair Value (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets and Liabilities Measured and Recorded at Fair Value on a Recurring Basis | The following table presents HP’s assets and liabilities that are measured at fair value on a recurring basis:
(1) Government debt includes instruments such as U.S. treasury notes, U.S. agency securities and non-U.S. government bonds. Money market funds invested in government debt and traded in active markets are included in Level 1.
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Financial Instruments (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments, All Other Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Cash Equivalents and Available-for-Sale Investments | Cash Equivalents and Available-for-Sale Investments
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Schedule of Gross Notional and Fair Value of Derivative Financial Instruments in the Consolidated Condensed Balance Sheets | Gross notional and fair value of derivative instruments in the Consolidated Condensed Balance Sheets were as follows:
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Schedule of Offsetting Assets | As of July 31, 2020 and October 31, 2019, information related to the potential effect of HP’s master netting agreements and collateral security agreements was as follows:
(1)Represents the cash collateral posted by counterparties as of the respective reporting date for HP’s asset position, net of derivative amounts that could be offset, as of, generally, business days prior to the respective reporting date. (2)Represents the collateral posted by HP through 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, business days prior to the respective reporting date.
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Schedule of Offsetting Liabilities | As of July 31, 2020 and October 31, 2019, information related to the potential effect of HP’s master netting agreements and collateral security agreements was as follows:
(1)Represents the cash collateral posted by counterparties as of the respective reporting date for HP’s asset position, net of derivative amounts that could be offset, as of, generally, business days prior to the respective reporting date. (2)Represents the collateral posted by HP through 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, business days prior to the respective reporting date.
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Schedule of Pre-Tax Effect of Derivative Instruments and Related Hedged Items in a Fair Value Hedging Relationship | The pre-tax effect of derivative instruments and related hedged items in a fair value hedging relationship for the three and nine months ended July 31, 2020 and 2019 were as follows:
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Schedule of Pre-Tax Effect of Derivative Instruments in Cash Flow Hedging Relationships | The pre-tax effect of derivative instruments in cash flow hedging relationships for the three and nine months ended July 31, 2020 and 2019 was as follows:
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Schedule of Pre-Tax Effect of Derivative Instruments not Designated as Hedging Instruments on the Consolidated Condensed Statements of Earnings | The pre-tax effect of derivative instruments not designated as hedging instruments recognized in the Consolidated Condensed Statements of Earnings for the three and nine months ended July 31, 2020 and 2019 was as follows:
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Schedule of Contractual Maturities | Contractual maturities of investments in available-for-sale debt securities were as follows:
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Borrowings (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Notes Payable and Short-Term Borrowings | Notes Payable and Short-Term Borrowings
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Schedule of Long-Term Debt | Long-Term Debt
(1)HP may redeem some or all of the fixed-rate U.S. Dollar Global Notes at any time in accordance with the terms thereof. The U.S. Dollar Global Notes are senior unsecured debt.
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Stockholders' Deficit (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Stockholders' Equity Note [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Tax Effects Related to Other Comprehensive (Loss) Income | Tax effects related to Other Comprehensive Income (Loss)
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Schedule of Changes and Reclassifications Related to Other Comprehensive Income, Net of Taxes | Changes and reclassifications related to Other Comprehensive Income (Loss), net of taxes
(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”.
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Schedule of Accumulated Other Comprehensive Loss, Net of Taxes | The components of AOCI, net of taxes and changes were as follows:
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Net Earnings Per Share (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basic and Diluted Net Earnings Per Share Calculations | A reconciliation of the number of shares used for basic and diluted net EPS calculations is as follows:
(1)HP excludes from the calculation of diluted net EPS stock options and restricted stock units where the assumed proceeds exceed the average market price, because their effect would be anti-dilutive. The assumed proceeds of a stock option include the sum of its exercise price, and average unrecognized compensation cost. The assumed proceeds of a restricted stock unit represent unrecognized compensation cost.
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Guarantees, Indemnifications and Warranties (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||
Guarantees [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Changes in Aggregate Product Warranty Liabilities and Changes | HP’s aggregate product warranty liabilities and changes were as follows:
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Leases (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Lease Expense and Supplemental Cash Flow Information | The components of lease expense are as follows:
The following table presents supplemental information relating to the cash flows arising from lease transactions. Cash payments made from variable lease costs and short-term leases are not included in the measurement of operating lease liabilities, and, as such, are excluded from the amounts below:
(1) Includes the impact of new leases as well as remeasurements and modifications to existing leases. Weighted-average information associated with the measurement of our remaining operating lease liabilities is as follows:
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Future Operating Lease Payments | The following maturity analysis presents expected undiscounted cash outflows for operating leases on an annual basis for the next five years, with the exception of 2020, which presents the expected undiscounted cash outflows for operating leases for the remaining three months of the year:
The following table, which was included in our Annual Report on Form 10-K for the fiscal year ended October 31, 2019, depicts gross minimum rental commitments under non-cancelable leases for real estate, personal property leases, sublease income commitments and operating lease commitments at October 31, 2019:
(1) Amounts represent the operating lease obligations, net of total sublease income of $130 million.
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Basis of Presentation - Narrative (Details) - USD ($) $ in Millions |
Jul. 31, 2020 |
Oct. 31, 2019 |
---|---|---|
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Total lease liabilities | $ 1,161 | |
Other non-current assets | $ 1,099 | $ 0 |
ASU 2016-02 | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Total lease liabilities | 1,200 | |
Other non-current assets | $ 1,200 |
Segment Information - Narrative (Details) |
9 Months Ended |
---|---|
Jul. 31, 2020
segment
| |
Segment Reporting [Abstract] | |
Number of reportable segments | 3 |
Restructuring and Other Charges - Narrative (Details) employee in Thousands, $ in Millions |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2019
USD ($)
employee
|
Jul. 31, 2020
USD ($)
|
Jul. 31, 2019
USD ($)
|
Jul. 31, 2020
USD ($)
|
Jul. 31, 2019
USD ($)
|
|
Restructuring Cost and Reserve [Line Items] | |||||
Other charges | $ 13 | $ 3 | $ 100 | $ 11 | |
Fiscal 2020 Plan | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Estimated pre-tax charges | $ 1,000 | ||||
Minimum | Fiscal 2020 Plan | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Expected positions to be eliminated | employee | 7 | ||||
Maximum | Fiscal 2020 Plan | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Expected positions to be eliminated | employee | 9 | ||||
Severance and EER | Fiscal 2020 Plan | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Estimated pre-tax charges | $ 900 |
Supplementary Financial Information - Accounts Receivable (Details) - USD ($) $ in Millions |
Jul. 31, 2020 |
Oct. 31, 2019 |
---|---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Accounts receivable | $ 5,401 | $ 6,142 |
Allowance for doubtful accounts | (132) | (111) |
Accounts receivable | $ 5,269 | $ 6,031 |
Supplementary Financial Information - Allowance for Doubtful Accounts (Details) $ in Millions |
9 Months Ended |
---|---|
Jul. 31, 2020
USD ($)
| |
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | |
Balance at beginning of period | $ 111 |
Provision for doubtful accounts | 53 |
Deductions, net of recoveries | (32) |
Balance at end of period | $ 132 |
Supplementary Financial Information - Schedule of Transferred Trade Receivables Not Collected from Third Parties (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jul. 31, 2020 |
Jul. 31, 2019 |
Jul. 31, 2020 |
Jul. 31, 2019 |
|
Trade Receivables Sold and Cash Received [Roll Forward] | ||||
Balance at beginning of period | $ 124 | $ 182 | $ 235 | $ 165 |
Trade receivables sold | 2,231 | 2,311 | 7,411 | 7,836 |
Cash receipts | (2,254) | (2,330) | (7,544) | (7,838) |
Foreign currency and other | 8 | (4) | 7 | (4) |
Balance at end of period | $ 109 | $ 159 | $ 109 | $ 159 |
Supplementary Financial Information - Inventory (Details) - USD ($) $ in Millions |
Jul. 31, 2020 |
Oct. 31, 2019 |
---|---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Finished goods | $ 3,937 | $ 3,855 |
Purchased parts and fabricated assemblies | 1,959 | 1,879 |
Inventory | $ 5,896 | $ 5,734 |
Supplementary Financial Information - Other Current Assets (Details) - USD ($) $ in Millions |
Jul. 31, 2020 |
Oct. 31, 2019 |
---|---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Supplier and other receivables | $ 2,028 | $ 1,951 |
Prepaid and other current assets | 1,472 | 967 |
Value-added taxes receivable | 925 | 957 |
Other current assets | $ 4,425 | $ 3,875 |
Supplementary Financial Information - Property Plant & Equipment (Details) - USD ($) $ in Millions |
Jul. 31, 2020 |
Oct. 31, 2019 |
---|---|---|
Property, Plant and Equipment, Net | ||
Property, plant and equipment, gross | $ 7,303 | $ 7,037 |
Accumulated depreciation | (4,645) | (4,243) |
Property, plant and equipment, net | 2,658 | 2,794 |
Land, buildings and leasehold improvements | ||
Property, Plant and Equipment, Net | ||
Property, plant and equipment, gross | 2,069 | 1,977 |
Machinery and equipment, including equipment held for lease | ||
Property, Plant and Equipment, Net | ||
Property, plant and equipment, gross | $ 5,234 | $ 5,060 |
Supplementary Financial Information - Other Non-Current Assets (Details) - USD ($) $ in Millions |
Jul. 31, 2020 |
Oct. 31, 2019 |
---|---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Deferred tax assets | $ 2,506 | $ 2,620 |
Right-of-use assets from operating leases, net | 1,099 | 0 |
Intangible assets | 572 | 661 |
Other | 754 | 843 |
Other non-current assets | 4,931 | 4,124 |
Equity securities | $ 57 | $ 56 |
Supplementary Financial Information - Other Current Liabilities (Details) - USD ($) $ in Millions |
Jul. 31, 2020 |
Oct. 31, 2019 |
---|---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Sales and marketing programs | $ 3,070 | $ 3,361 |
Deferred revenue | 1,190 | 1,178 |
Other accrued taxes | 943 | 1,060 |
Employee compensation and benefit | 961 | 1,103 |
Warranty | 640 | 663 |
Operating lease liabilities | 257 | |
Tax liability | 170 | 237 |
Other | 3,243 | 2,541 |
Other accrued liabilities | $ 10,474 | $ 10,143 |
Supplementary Financial Information - Other Non-Current Liabilities (Details) - USD ($) $ in Millions |
Jul. 31, 2020 |
Oct. 31, 2019 |
---|---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Pension, post-retirement, and post-employment liabilities | $ 1,550 | $ 1,762 |
Deferred revenue | 1,067 | 1,069 |
Operating lease liabilities | 904 | |
Tax liability | 774 | 848 |
Deferred tax liability | 21 | 60 |
Other | 907 | 848 |
Other non-current liabilities | $ 5,223 | $ 4,587 |
Supplementary Financial Information - Interest and Other, Net (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||||
---|---|---|---|---|---|---|
Jul. 31, 2020 |
Oct. 31, 2019 |
Jul. 31, 2020 |
Jul. 31, 2019 |
Jul. 31, 2020 |
Jul. 31, 2019 |
|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||
Tax indemnifications | $ 30 | $ 57 | $ (1) | $ (784) | $ 0 | $ (769) |
Interest expense on borrowings | (55) | (57) | (176) | (182) | ||
Loss on extinguishment of debt | (40) | 0 | (40) | 0 | ||
Other, net | 68 | 10 | 201 | 49 | ||
Interest and other, net | $ (28) | (831) | $ (15) | (902) | ||
Change in tax indemnification | $ 764 | $ 764 |
Supplementary Financial Information - Disaggregation of revenue (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jul. 31, 2020 |
Jul. 31, 2019 |
Jul. 31, 2020 |
Jul. 31, 2019 |
|
Disaggregation of Revenue [Line Items] | ||||
Total net revenue | $ 14,294 | $ 14,603 | $ 41,381 | $ 43,349 |
Americas | ||||
Disaggregation of Revenue [Line Items] | ||||
Total net revenue | 6,229 | 6,574 | 17,393 | 18,391 |
Europe, Middle East and Africa | ||||
Disaggregation of Revenue [Line Items] | ||||
Total net revenue | 4,725 | 4,746 | 14,611 | 15,214 |
Asia-Pacific and Japan | ||||
Disaggregation of Revenue [Line Items] | ||||
Total net revenue | $ 3,340 | $ 3,283 | $ 9,377 | $ 9,744 |
Supplementary Financial Information - Costs of Obtaining Contracts (Details) - USD ($) $ in Billions |
9 Months Ended | |
---|---|---|
Jul. 31, 2020 |
Oct. 31, 2019 |
|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Contract liability | $ 2.3 | $ 2.1 |
Revenue recognized | $ 0.9 |
Financial Instruments - Schedule of Contractual Maturities of Available for-sale Debt Securities (Details) $ in Millions |
Jul. 31, 2020
USD ($)
|
---|---|
Amortized Cost | |
Due in one year or less | $ 229 |
Fair Value | |
Due in one year or less | $ 229 |
Financial Instruments - Schedule of Information Related to the Potential Effect of Entity's Master Netting Agreements and Collateral Security Agreements (Details) - USD ($) $ in Millions |
9 Months Ended | |
---|---|---|
Jul. 31, 2020 |
Oct. 31, 2019 |
|
Derivative assets | ||
Gross Amount Recognized | $ 199 | $ 392 |
Gross Amount Offset | 0 | 0 |
Net Amount Presented | 199 | 392 |
Gross Amounts Not Offset | ||
Derivatives | 154 | 113 |
Financial Collateral | 9 | 259 |
Net Amount | 36 | 20 |
Derivative liabilities | ||
Gross Amount Recognized | 444 | 166 |
Gross Amount Offset | 0 | 0 |
Net Amount Presented | 444 | 166 |
Gross Amounts Not Offset | ||
Derivatives | 154 | 113 |
Financial Collateral | 249 | 43 |
Net Amount | $ 41 | $ 10 |
Period to collateralize | 2 days |
Financial Instruments - Schedule of Pre-Tax Effect of Derivative Instruments and Related Hedged Items in a Fair Value Hedging Relationship (Details) - Interest rate contracts - Interest and other, net - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jul. 31, 2020 |
Jul. 31, 2019 |
Jul. 31, 2020 |
Jul. 31, 2019 |
|
Derivative Instruments, Gain (Loss) | ||||
Total amounts of income/ (expense) line items presented in the statement of financial performance in which the effects of fair value hedges are recorded | $ (28) | $ (831) | $ (15) | $ (902) |
Gain/(Loss) Recognized in Earnings on Derivative Instrument | 1 | 8 | 11 | 24 |
Gain/(Loss) Recognized in Earnings on Derivative and Related Hedged Item | $ (1) | $ (8) | $ (11) | $ (24) |
Financial Instruments - Schedule of Pre-Tax Effect of Derivative Instruments not Designated as Hedging Instruments on the Consolidated Condensed Statements of Earnings (Details) - Interest and other, net - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jul. 31, 2020 |
Jul. 31, 2019 |
Jul. 31, 2020 |
Jul. 31, 2019 |
|
Derivative Instruments, Gain (Loss) | ||||
(Loss) /Gain Recognized in Earnings on Derivatives | $ 57 | $ (62) | $ 79 | $ (128) |
Foreign currency contracts | ||||
Derivative Instruments, Gain (Loss) | ||||
(Loss) /Gain Recognized in Earnings on Derivatives | 46 | (59) | 63 | (116) |
Other derivatives | ||||
Derivative Instruments, Gain (Loss) | ||||
(Loss) /Gain Recognized in Earnings on Derivatives | $ 11 | $ (3) | $ 16 | $ (12) |
Borrowings - Schedule of Notes Payable and Short-Term Borrowings (Details) - USD ($) $ in Millions |
Jul. 31, 2020 |
Oct. 31, 2019 |
---|---|---|
Amount Outstanding | ||
Current portion of long-term debt | $ 232 | $ 307 |
Amount outstanding | $ 276 | $ 357 |
Weighted-Average Interest Rate | ||
Current portion of long-term debt | 3.30% | 3.60% |
Notes payable to banks, lines of credit and other | ||
Amount Outstanding | ||
Amount outstanding | $ 44 | $ 50 |
Weighted-Average Interest Rate | ||
Notes payable to banks, lines of credit and other | 0.80% | 2.00% |
Stockholders' Deficit - Narrative (Details) - USD ($) |
1 Months Ended | 3 Months Ended | 9 Months Ended | |||||
---|---|---|---|---|---|---|---|---|
Feb. 20, 2020 |
Aug. 31, 2020 |
Aug. 31, 2019 |
Jul. 31, 2020 |
Jul. 31, 2019 |
Jul. 31, 2020 |
Jul. 31, 2019 |
Feb. 22, 2020 |
|
Stockholders' Equity Note [Abstract] | ||||||||
Repurchases of common stock (shares) | 59,000,000 | 26,000,000 | 97,000,000 | 92,000,000 | ||||
Payment in connection with repurchases of shares | $ 1,000,000,000.0 | $ 500,000,000 | $ 1,767,000,000 | $ 1,944,000,000 | ||||
Authorized repurchase amount | $ 15,000,000,000.0 | |||||||
Share repurchase authorization remaining | $ 14,000,000,000.0 | $ 14,000,000,000.0 | ||||||
Common stock dividends, preferred share purchase right declared (in shares) | 1 | |||||||
Subsequent Event [Line Items] | ||||||||
Shares settled (in shares) | 700,000 | |||||||
Subsequent event | ||||||||
Subsequent Event [Line Items] | ||||||||
Shares settled (in shares) | 2,800,000 |
Net Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jul. 31, 2020 |
Jul. 31, 2019 |
Jul. 31, 2020 |
Jul. 31, 2019 |
|
Numerator: | ||||
Net earnings | $ 734 | $ 1,179 | $ 2,176 | $ 2,764 |
Denominator: | ||||
Weighted-average shares used to compute basic net EPS (shares) | 1,417 | 1,499 | 1,435 | 1,528 |
Dilutive effect of employee stock plans (shares) | 6 | 9 | 6 | 9 |
Weighted-average shares used to compute diluted net EPS (shares) | 1,423 | 1,508 | 1,441 | 1,537 |
Net earnings per share: | ||||
Basic (usd per share) | $ 0.52 | $ 0.79 | $ 1.52 | $ 1.81 |
Diluted (usd per share) | $ 0.52 | $ 0.78 | $ 1.51 | $ 1.80 |
Anti-dilutive weighted average stock-based compensation awards (shares) | 15 | 7 | 13 | 6 |
Guarantees, Indemnifications and Warranties (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||||
---|---|---|---|---|---|---|
Jul. 31, 2020 |
Oct. 31, 2019 |
Jul. 31, 2020 |
Jul. 31, 2019 |
Jul. 31, 2020 |
Jul. 31, 2019 |
|
Guarantees [Abstract] | ||||||
Tax indemnifications | $ 30 | $ 57 | $ (1) | $ (784) | $ 0 | $ (769) |
Changes in aggregated product warranty liabilities | ||||||
Balance at beginning of period | 922 | |||||
Accruals for warranties issued | 674 | |||||
Adjustments related to pre-existing warranties (including changes in estimates) | (5) | |||||
Settlements made (in cash or in kind) | (700) | |||||
Balance at end of period | $ 891 | $ 922 | $ 891 | $ 891 |
Leases - Narrative (Details) |
Jul. 31, 2020 |
---|---|
Minimum | |
Lessee, Lease, Description [Line Items] | |
Operating lease term | 1 year |
Maximum | |
Lessee, Lease, Description [Line Items] | |
Operating lease term | 20 years |
Leases - Components of Lease Expense (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended |
---|---|---|
Jul. 31, 2020 |
Jul. 31, 2020 |
|
Leases [Abstract] | ||
Operating lease cost | $ 57 | $ 177 |
Variable cost | 23 | 81 |
Total lease expense | $ 80 | $ 258 |
Leases - Supplemental Cash Flow Information (Details) $ in Millions |
9 Months Ended |
---|---|
Jul. 31, 2020
USD ($)
| |
Leases [Abstract] | |
Cash paid for amount included in the measurement of lease liabilities | $ 175 |
Right-of-use assets obtained in exchange of lease liabilities | $ 151 |
Weighted-average remaining lease term in years | 7 years |
Weighted-average discount rate | 2.80% |
Leases - Operating Lease Payments (Details) - USD ($) $ in Millions |
12 Months Ended | |
---|---|---|
Oct. 31, 2019 |
Jul. 31, 2020 |
|
Lessee, Operating Lease, Liability, Payment, Due [Abstract] | ||
2020 | $ 73 | |
2021 | 273 | |
2022 | 222 | |
2023 | 167 | |
2024 | 123 | |
Thereafter | 413 | |
Total lease payments | 1,271 | |
Less: Imputed interest | (110) | |
Total lease liabilities | $ 1,161 | |
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | ||
Less than 1 year | $ 284 | |
1-3 years | 399 | |
3-5 years | 262 | |
More than 5 years | 395 | |
Total | 1,340 | |
Sublease income | $ 130 |