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Table of Contents
Part I. Financial Information

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________________
FORM 10-Q
(Mark One) 
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
January 31, 2022
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
1-4423
_________________________________________
HP INC.
(Exact name of registrant as specified in its charter)
Delaware94-1081436
(State or other jurisdiction of
incorporation or organization)
(I.R.S. employer
identification no.)
1501 Page Mill Road94304
Palo Alto,California(Zip code)
(Address of principal executive offices)
(650) 857-1501
(Registrant’s telephone number, including area code)
_______________________________________
Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common stock, par value $0.01 per shareHPQNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☒ Accelerated filer ☐
Non-accelerated filer  ☐ Smaller reporting company ☐
                                 Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
The number of shares of HP Inc. common stock outstanding as of January 31, 2022 was 1,060,987,032 shares.



HP INC. AND SUBSIDIARIES
Form 10-Q
For the Quarterly Period ended January 31, 2022
Table of Contents
  Page
 
 
In this report on Form 10-Q, for all periods presented, “we”, “us”, “our”, the “company”, the “Company”, “HP” and “HP Inc.” refer to HP Inc. (formerly Hewlett-Packard Company) and its consolidated subsidiaries.

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Forward-Looking Statements
This Quarterly Report on Form 10-Q, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 2 of Part I, contains forward-looking statements based on current expectations and assumptions that involve risks and uncertainties. If the risks or uncertainties ever materialize or the assumptions prove incorrect, the results of HP Inc. and its consolidated subsidiaries (“HP”) may differ materially from those expressed or implied by such forward-looking statements and assumptions. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including, but not limited to, any statements regarding the potential impact of the COVID-19 pandemic and the actions by governments, businesses and individuals in response to the situation; projections of net revenue, margins, expenses, effective tax rates, net earnings, net earnings per share, cash flows, benefit plan funding, deferred taxes, share repurchases, foreign currency exchange rates or other financial items; any projections of the amount, timing or impact of cost savings or restructuring and other charges, planned structural cost reductions and productivity initiatives; any statements of the plans, strategies and objectives of management for future operations, including, but not limited to, our business model and transformation, our sustainability goals, our go-to-market strategy, the execution of restructuring plans and any resulting cost savings, net revenue or profitability improvements or other financial impacts; any statements concerning the expected development, demand, performance, market share or competitive performance relating to products or services; any statements concerning potential supply constraints, component shortages, manufacturing disruptions or logistics challenges; any statements regarding current or future macroeconomic trends or events and the impact of those trends and events on HP and its financial performance; any statements regarding pending investigations, claims, disputes or other litigation matters; any statements of expectation or belief, including with respect to the timing and expected benefits of acquisitions and other business combination and investment transactions; and any statements of assumptions underlying any of the foregoing. Forward-looking statements can also generally be identified by words such as “future,” “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “projects,” “will,” “would,” “could,” “can,” “may,” and similar terms. Risks, uncertainties and assumptions include factors relating to the effects of the COVID-19 pandemic and the actions by governments, businesses and individuals in response to the situation, the effects of which may give rise to or amplify the risks associated with many of these factors listed here; the need to manage (and reliance on) third-party suppliers, including with respect to component shortages, and the need to manage HP’s global, multi-tier distribution network, limit potential misuse of pricing programs by HP’s channel partners, adapt to new or changing marketplaces and effectively deliver HP’s services; HP’s ability to execute on its strategic plan, including the previously announced initiatives, business model changes and transformation; execution of planned structural cost reductions and productivity initiatives; HP’s ability to complete any contemplated share repurchases, other capital return programs or other strategic transactions; the competitive pressures faced by HP’s businesses; risks associated with executing HP’s strategy and business model changes and transformation; successfully innovating, developing and executing HP’s go-to-market strategy, including online, omnichannel and contractual sales, in an evolving distribution, reseller and customer landscape; the development and transition of new products and services and the enhancement of existing products and services to meet evolving customer needs and respond to emerging technological trends; successfully competing and maintaining the value proposition of HP’s products, including supplies; challenges to HP’s ability to accurately forecast inventories, demand and pricing, which may be due to HP’s multi-tiered channel, sales of HP’s products to unauthorized resellers or unauthorized resale of HP’s products or our uneven sales cycle; integration and other risks associated with business combination and investment transactions; the results of the restructuring plans, including estimates and assumptions related to the cost (including any possible disruption of HP’s business) and the anticipated benefits of the restructuring plans; the protection of HP’s intellectual property assets, including intellectual property licensed from third parties; the hiring and retention of key employees; the impact of macroeconomic and geopolitical trends and events, including the unfolding situation in Ukraine and its regional and global ramifications and the effects of inflation; risks associated with HP’s international operations; the execution and performance of contracts by HP and its suppliers, customers, clients and partners, including logistical challenges with respect to such execution and performance; changes in estimates and assumptions HP makes in connection with the preparation of its financial statements; disruptions in operations from system security risks, data protection breaches, cyberattacks, extreme weather conditions or other effects of climate change, medical epidemics or pandemics such as the COVID-19 pandemic, and other natural or manmade disasters or catastrophic events; the impact of changes to federal, state, local and foreign laws and regulations, including environmental regulations and tax laws; potential impacts, liabilities and costs from pending or potential investigations, claims and disputes; and other risks that are described herein, including but not limited to the items discussed in “Risk Factors” in Item 1A of Part II of this report as well as the risks discussed in Item 1A “Risk Factors” of Part I in our Annual Report on Form 10-K for the fiscal year ended October 31, 2021 and that are otherwise described or updated from time to time in HP’s other filings with the Securities and Exchange Commission (the “SEC”). The forward-looking statements in this report are made as of the date of this filing and HP assumes no obligation and does not intend to update these forward-looking statements.
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Part I. Financial Information

ITEM 1. Financial Statements and Supplementary Data.
Index
 Page
    

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HP INC. AND SUBSIDIARIES
Consolidated Condensed Statements of Earnings
(Unaudited)
 Three months ended January 31
 2022 2021
 In millions, except per share amounts
Net revenue$17,028  $15,646 
Costs and expenses:  
Cost of revenue13,643  12,322 
Research and development418  471 
Selling, general and administrative1,468  1,376 
Restructuring and other charges68 121 
Acquisition-related charges20  6 
Amortization of intangible assets52  29 
Total costs and expenses15,669  14,325 
Earnings from operations1,359  1,321 
Interest and other, net(32)(25)
Earnings before taxes1,327  1,296 
Provision for taxes(241)(228)
Net earnings$1,086  $1,068 
Net earnings per share:   
Basic$1.00  $0.83 
Diluted$0.99  $0.83 
Weighted-average shares used to compute net earnings per share:   
Basic1,081  1,285 
Diluted1,094  1,293 
The accompanying notes are an integral part of these Consolidated Condensed Financial Statements.

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HP INC. AND SUBSIDIARIES
Consolidated Condensed Statements of Comprehensive Income
(Unaudited)
 Three months ended January 31
 20222021
 In millions
Net earnings$1,086 $1,068 
Other comprehensive income (loss) before taxes: 
Change in unrealized components of available-for-sale debt securities: 
Unrealized (loss) gains arising during the period(2)4 
Change in unrealized components of cash flow hedges: 
Unrealized gains (losses) arising during the period299 (366)
(Gains) losses reclassified into earnings(44)49 
255 (317)
Change in unrealized components of defined benefit plans: 
 Gains (losses) arising during the period21 (1)
Amortization of actuarial loss and prior service benefit6 21 
Curtailments, settlements and other— 1 
27 21 
Change in cumulative translation adjustment(10)30 
Other comprehensive income (loss) before taxes270 (262)
 (Provision for) benefit from taxes(26)32 
Other comprehensive income (loss), net of taxes244 (230)
Comprehensive income$1,330 $838 
The accompanying notes are an integral part of these Consolidated Condensed Financial Statements.
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HP INC. AND SUBSIDIARIES
Consolidated Condensed Balance Sheets
(Unaudited)
 As of
 January 31, 2022October 31, 2021
 
In millions, except par value
ASSETS  
Current assets:  
Cash and cash equivalents$3,394 $4,299 
Accounts receivable, net of allowance for credit losses of $103 and $111, respectively
5,180 5,511 
Inventory9,018 7,930 
Other current assets4,840 4,430 
Total current assets22,432 22,170 
Property, plant and equipment, net2,619 2,546 
Goodwill6,821 6,803 
Other non-current assets7,040 7,091 
Total assets$38,912 $38,610 
LIABILITIES AND STOCKHOLDERS’ DEFICIT  
Current liabilities:  
Notes payable and short-term borrowings$689 $1,106 
Accounts payable18,070 16,075 
Other current liabilities11,440 11,915 
Total current liabilities30,199 29,096 
Long-term debt6,368 6,386 
Other non-current liabilities4,673 4,778 
Stockholders’ deficit:  
Preferred stock, $0.01 par value (300 shares authorized; none issued)
— — 
Common stock, $0.01 par value (9,600 shares authorized; 1,060 and 1,092 shares issued and outstanding at January 31, 2022 and October 31, 2021, respectively)
11 11 
Additional paid-in capital1,046 1,060 
Accumulated deficit(3,369)(2,461)
Accumulated other comprehensive loss(16)(260)
Total stockholders’ deficit(2,328)(1,650)
Total liabilities and stockholders’ deficit$38,912 $38,610 
The accompanying notes are an integral part of these Consolidated Condensed Financial Statements.
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HP INC. AND SUBSIDIARIES
Consolidated Condensed Statements of Cash Flows
(Unaudited)
 Three months ended January 31
 20222021
In millions
Cash flows from operating activities:  
Net earnings$1,086 $1,068 
Adjustments to reconcile net earnings to net cash provided by operating activities:  
Depreciation and amortization197 203 
Stock-based compensation expense133 115 
Restructuring and other charges68 121 
Deferred taxes on earnings5 67 
Other, net186 62 
Changes in operating assets and liabilities, net of acquisitions:  
Accounts receivable337 77 
Inventory(1,277)(725)
Accounts payable2,035 280 
Net investment in leases(20)(17)
Taxes on earnings(6)70 
Restructuring and other(99)(69)
Other assets and liabilities(988)(230)
Net cash provided by operating activities1,657 1,022 
Cash flows from investing activities:  
Investment in property, plant and equipment, net(273)(131)
Purchases of available-for-sale securities and other investments— (1)
Maturities and sales of available-for-sale securities and other investments— 274 
Collateral posted for derivative instruments14 (145)
Payment made in connection with business acquisitions, net of cash acquired(21)— 
Net cash used in investing activities(280)(3)
Cash flows from financing activities:  
Payment of short-term borrowings with original maturities less than 90 days, net(400)— 
Proceeds from short-term borrowings with original maturities greater than 90 days9 6 
Proceeds from debt, net of issuance costs30 20 
Payment of debt(50)(68)
Stock-based award activities and others(92)(53)
Repurchase of common stock(1,508)(1,378)
Cash dividends paid(271)(250)
Net cash used in financing activities(2,282)(1,723)
Decrease in cash and cash equivalents(905)(704)
Cash and cash equivalents at beginning of period4,299 4,864 
Cash and cash equivalents at end of period$3,394 $4,160 
The accompanying notes are an integral part of these Consolidated Condensed Financial Statements.
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HP INC. AND SUBSIDIARIES
Consolidated Condensed Statements of Stockholders’ Deficit
(Unaudited)
 Common StockAdditional
Paid-in Capital		 Accumulated
Other
Comprehensive Loss		 Total Stockholders’ Deficit
Number of SharesPar ValueAccumulated Deficit
 In millions, except number of shares in thousands
Balance October 31, 20201,303,927 $13 $963 $(1,961)$(1,243)$(2,228)
Net earnings1,068 1,068 
Other comprehensive loss, net of taxes(230)(230)
Comprehensive income838 
Issuance of common stock in connection with employee stock plans and other9,700 (48)(48)
Repurchases of common stock (Note 10)(61,095)(46)(1,369)(1,415)
Cash dividends ($0.39 per common share)
(497)(497)
Stock-based compensation expense115 115 
Balance January 31, 20211,252,532 $13 $984 $(2,759)$(1,473)$(3,235)
Balance October 31, 20211,092,205 $11 $1,060 $(2,461)$(260)$(1,650)
Net earnings1,086 1,086 
Other comprehensive income, net of taxes244 244 
Comprehensive income1,330 
Issuance of common stock in connection with employee stock plans and other9,777 (106)(106)
Repurchases of common stock (Note 10)(42,082)(41)(1,458)(1,499)
Cash dividends ($0.50 per common share)
(536)(536)
Stock-based compensation expense133 133 
Balance January 31, 20221,059,900 $11 $1,046 $(3,369)$(16)$(2,328)
The accompanying notes are an integral part of these Consolidated Condensed Financial Statements.
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HP INC. AND SUBSIDIARIES
Notes to Consolidated Condensed Financial Statements
(Unaudited)

Note 1: 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, 2021 in the Annual Report on Form 10-K, filed on December 9, 2021. The Consolidated Condensed Balance Sheet for October 31, 2021 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 January 31, 2022, 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 may carry a higher degree of variability and volatility. As the events continue to evolve with respect to the pandemic, our estimates may materially change in future periods.
Recently Adopted Accounting Pronouncements
In October 2021, the Financial Accounting Standards Board (“FASB”) issued guidance on the recognition and measurement of contract assets and contract liabilities acquired in a business combination. This guidance requires that an acquirer recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with ASC 606, Revenue from Contracts with Customers, as if the acquirer had originated the contracts. Under the new guidance, it is generally expected that an acquirer will recognize and measure contract assets and liabilities in a manner consistent with how they were recognized by the acquiree in its preacquisition financial statements. HP is required to adopt the guidance in the first quarter of fiscal year 2024, with early adoption permitted HP has early adopted the guidance in fiscal year 2022, and the implementation of this guidance did not have a material impact on the Consolidated Condensed Financial Statements.

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HP INC. AND SUBSIDIARIES
Notes to Consolidated Condensed Financial Statements (Continued)
(Unaudited)

Note 2: Segment Information
HP is a leading global provider of personal computing and other access devices, imaging and printing products, and related technologies, solutions and services. HP sells to individual consumers, small- and medium-sized businesses (“SMBs”) and large enterprises, including customers in the government, health and education sectors. HP goes to market through its extensive channel network and direct sales.
HP’s operations are organized into three reportable segments: 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 the 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 peripherals, software, support and services. HP groups commercial notebooks, commercial desktops, commercial services, commercial mobility devices, commercial detachables and convertibles, workstations, retail POS systems and thin clients into commercial PCs and consumer notebooks, consumer desktops, consumer services and consumer detachables into consumer PCs when describing performance in these markets. Described below are HP’s global business capabilities within Personal Systems:
•Commercial PCs are optimized for use by enterprise, public sector which includes education, and SMB customers, with a focus on robust designs, security, serviceability, connectivity, reliability and manageability in the customer’s environment. Additionally, HP offers a range of services and solutions to enterprise, public sector which includes education, and SMB customers to help them manage the lifecycle of their PC and mobility installed base. 
•Consumer PCs are optimized for consumer usage, focusing on gaming, learning and working remotely, consuming multi-media for entertainment, managing personal life activities, staying connected, sharing information, getting things done for work including creating content and staying informed and secure.
Personal Systems groups its global business capabilities into the following business units when reporting business performance:
•Notebooks consists of consumer notebooks, commercial notebooks, mobile workstations, peripherals, and commercial mobility devices;
• Desktops includes consumer desktops, commercial desktops, thin clients, displays, peripherals, and retail POS systems;
•     Workstations consists of desktop workstations, displays, and peripherals; 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. Printing is also focused on imaging solutions in the commercial and industrial markets. Described below are HP’s global business capabilities within Printing.
•Office Printing Solutions delivers HP’s office printers, supplies, services and solutions to SMBs and large enterprises. It also includes OEM hardware and solutions, and some Samsung-branded supplies.
•Home Printing Solutions delivers innovative printing products, supplies, services and solutions for the home, home business and micro business customers utilizing both HP’s Ink and Laser technologies. It also includes some Samsung-branded supplies.
•Graphics Solutions delivers large-format, commercial and industrial solutions and supplies to print service providers and packaging converters through a wide portfolio of printers and presses (HP DesignJet, HP Latex, HP Indigo and HP PageWide Web Presses).
•3D Printing & Digital Manufacturing offers a portfolio of additive manufacturing solutions and supplies to help customers succeed in their additive and digital manufacturing journey. HP offers complete solutions in collaboration with an ecosystem of partners.
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HP INC. AND SUBSIDIARIES
Notes to Consolidated Condensed Financial Statements (Continued)
(Unaudited)
Note 2: Segment Information (Continued)
Printing groups its global business capabilities into the following business units when reporting business performance:
•Commercial consists of office printing solutions, graphics solutions and 3D printing & digital manufacturing, excluding supplies;
•Consumer 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.
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HP INC. AND SUBSIDIARIES
Notes to Consolidated Condensed Financial Statements (Continued)
(Unaudited)
Note 2: Segment Information (Continued)
Segment Operating Results from Operations and the reconciliation to HP consolidated results were as follows:
 Three months ended January 31
 20222021
 In millions
Net revenue:
Notebooks$8,421 $7,366 
Desktops2,807 2,400 
Workstations534 382 
Other434 455 
Personal Systems12,196 10,603 
Supplies3,068 3,146 
Commercial1,039 957 
Consumer724 941 
Printing4,831 5,044 
Corporate Investments1 — 
Total segment net revenue17,028 15,647 
Other— (1)
Total net revenue$17,028 $15,646 
  
Earnings before taxes:
Personal Systems$957 $758 
Printing879 998 
Corporate Investments(74)(27)
Total segment earnings from operations1,762 1,729 
Corporate and unallocated costs and other(130)(136)
Stock-based compensation expense(133)(116)
Restructuring and other charges(68)(121)
Acquisition-related charges(20)(6)
Amortization of intangible assets(52)(29)
Interest and other, net(32)(25)
Total earnings before taxes$1,327 $1,296 

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HP INC. AND SUBSIDIARIES
Notes to Consolidated Condensed Financial Statements
(Unaudited)
Note 3: Restructuring and Other Charges
Summary of Restructuring Plans
HP’s restructuring activities for the three months ended January 31, 2022 and 2021 summarized by plan were as follows:
Fiscal 2020 Plan
Severance and EERNon-laborOther prior-year planTotal
In millions
Accrued balance as of October 31, 2021$75 $— $— $75 
Charges53 11 3 67 
Cash payments(91)(4)(3)(98)
Non-cash and other adjustments— (7)— (7)
Accrued balance as of January 31, 2022$37 $— $— $37 
Total costs incurred to date as of January 31, 2022$662 $59 $507 $1,228 
Reflected in Consolidated Condensed Balance Sheets
Other current liabilities$37 $— $— $37 
Accrued balance as of October 31, 2020$55 $— $12 $67 
Charges106 11 — 117 
Cash payments(54)(3)(8)(65)
Non-cash and other adjustments1 (8)— (7)
Accrued balance as of January 31, 2021$108 $— $4 $112 

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 $0.8 billion primarily in labor costs related to workforce reductions and the remaining costs will relate to non-labor actions and other charges.
Other charges
Other charges include non-recurring costs, including those as a result of information technology rationalization efforts, and are distinct from ongoing operational costs. These costs primarily relate to third-party professional services and other non-recurring costs. For the three months ended January 31, 2022 and 2021, HP incurred $1 million and $4 million of other charges, respectively.
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HP INC. AND SUBSIDIARIES
Notes to Consolidated Condensed Financial Statements
(Unaudited)
Note 4: Retirement and Post-Retirement Benefit Plans
The components of HP’s pension and post-retirement benefit (credit) cost recognized in the Consolidated Condensed Statements of Earnings were as follows:
 Three months ended January 31
 U.S. Defined Benefit PlansNon-U.S. Defined Benefit PlansPost-Retirement Benefit Plans
 202220212022202120222021
 In millions
Service cost$— $— $14 $17 $— $— 
Interest cost40 76 6 5 2 2 
Expected return on plan assets(74)(127)(13)(12)(2)(6)
Amortization and deferrals:      
Actuarial loss (gain)1 15 10 13 (4)(4)
Prior service cost (credit)— — 2 — (3)(3)
Net periodic benefit (credit) cost(33)(36)19 23 (7)(11)
Settlement loss — 1 — — — — 
Total benefit (credit) cost$(33)$(35)$19 $23 $(7)$(11)
Employer Contributions and Funding Policy
HP’s policy is to fund its pension plans so that it makes the minimum contribution required by local government, funding and taxing authorities.
During fiscal year 2022, HP anticipates making contributions of approximately $44 million to its non-U.S. pension plans, approximately $36 million to its U.S. non-qualified plan participants and approximately $4 million to cover benefit claims under HP’s post-retirement benefit plans. During the three months ended January 31, 2022, HP contributed $13 million to its non-U.S. pension plans and paid $8 million to cover benefit payments to U.S. non-qualified plan participants.
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 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.
In fiscal 2021, HP entered into an agreement with The Prudential Insurance Company of America (“Prudential”) to purchase an irrevocable group annuity contract and transferred approximately $5.2 billion of the Pension Plan obligations resulted in a decrease in interest cost and expected returns on plan assets in the first quarter of fiscal 2022.
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HP INC. AND SUBSIDIARIES
Notes to Consolidated Condensed Financial Statements
(Unaudited)
Note 5: Taxes on Earnings
Provision for Taxes
HP’s effective tax rate was 18.1% and 17.5% for the three months ended January 31, 2022 and 2021, respectively. The difference between the U.S. federal statutory tax rate of 21% and HP’s effective tax rate for the three months ended January 31, 2022 and 2021, was primarily due to tax effects of favorable tax rates associated with certain earnings from HP’s operations in lower-tax jurisdictions throughout the world.
During the three months ended January 31, 2022, HP recorded $26 million of net income tax charges related to discrete items in the provision for taxes. These amounts included income tax charges of $39 million related to withholding taxes on undistributed foreign earnings and were partially offset by income tax benefits of $12 million related to restructuring charges for the three months ended January 31, 2022. In addition to the discrete items mentioned above, HP recorded excess tax benefits of $37 million associated with stock options, restricted stock units and performance-adjusted restricted stock units for the three months ended January 31, 2022.
During the three months ended January 31, 2021, discrete items in the provision for taxes and excess tax benefits associated with stock options, restricted stock units and performance-adjusted restricted stock units were immaterial.
Uncertain Tax Positions
As of January 31, 2022, the amount of gross unrecognized tax benefits was $827 million, of which up to $647 million would affect HP’s effective tax rate if realized. The amount of unrecognized tax benefit changed by a net immaterial amount. 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 January 31, 2022 and 2021, HP had accrued $75 million and $64 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 $117 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 60 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 Internal Revenue Service (“IRS”) is conducting an audit of HP’s 2018 and 2019 income tax returns.
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HP INC. AND SUBSIDIARIES
Consolidated Condensed Statements of Earnings (Continued)
(Unaudited)
Note 6: Supplementary Financial Information
Accounts Receivable
The allowance for credit losses related to accounts receivable and changes were as follows:
 Three months ended January 31, 2022
 In millions
Balance at beginning of period$111 
Benefit of allowance for credit losses(7)
Deductions, net of recoveries(1)
Balance at end of period$103 
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 January 31, 2022 and October 31, 2021 and the costs associated with the sale of trade receivables for the three months ended January 31, 2022 and 2021 were not material.
The following is a summary of the activity under these arrangements:
Three months ended January 31
 2022 2021
 In millions
Balance at beginning of period(1)
$131 $188 
Trade receivables sold2,967 3,544 
Cash receipts(2,973)(3,534)
Foreign currency and other(4)9 
Balance at end of period(1)
$121 $207 
(1) Amounts outstanding from third parties reported in Accounts receivable in the Consolidated Condensed Balance Sheets.
Inventory
 As of
 January 31, 2022October 31, 2021
 In millions
Finished goods$5,695 $4,532 
Purchased parts and fabricated assemblies3,323 3,398 
$9,018 $7,930 

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HP INC. AND SUBSIDIARIES
Notes to Consolidated Condensed Financial Statements (Continued)
(Unaudited)
Note 6: Supplementary Financial Information (Continued)
Other Current Assets
 As of
 January 31, 2022October 31, 2021
 In millions
Supplier and other receivables$2,441 $2,333 
Prepaid and other current assets1,340 1,087 
Value-added taxes receivable1,054 1,005 
Available-for-sale investments5 5 
$4,840 $4,430 

Property, Plant and Equipment, net
 As of
 January 31, 2022October 31, 2021
 In millions
Land, buildings and leasehold improvements$2,169 $2,166 
Machinery and equipment, including equipment held for lease5,411 5,307 
7,580 7,473 
Accumulated depreciation(4,961)(4,927)
$2,619 $2,546 

Other Non-Current Assets
 As of
 January 31, 2022October 31, 2021
 In millions
Deferred tax assets$2,886 $2,917 
Right-of-use assets from operating leases, net1,174 1,192 
Prepaid pension asset804 766 
Intangible assets716 784 
Deposits and prepaid690 734 
Other770 698 
$7,040 $7,091 
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HP INC. AND SUBSIDIARIES
Notes to Consolidated Condensed Financial Statements (Continued)
(Unaudited)
Note 6: Supplementary Financial Information (Continued)
Other Current Liabilities
 As of
 January 31, 2022October 31, 2021
 In millions
Sales and marketing programs$3,187 $3,179 
Other accrued taxes1,244 1,227 
Deferred revenue1,234 1,277 
Employee compensation and benefit1,103 1,627 
Warranty677 731 
Operating lease liabilities358 350 
Tax liability277 296 
Other3,360 3,228 
$11,440 $11,915 

Other Non-Current Liabilities
 As of
 January 31, 2022October 31, 2021
In millions
Deferred revenue$1,119 $1,099 
Pension, post-retirement, and post-employment liabilities993 1,041 
Operating lease liabilities911 936 
Tax liability790 830 
Deferred tax liability64 57 
Other796 815 
$4,673 $4,778 

Interest and other, net
 Three months ended January 31
 20222021
 In millions
Interest expense on borrowings$(61)$(63)
Other, net29 38 
$(32)$(25)




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HP INC. AND SUBSIDIARIES
Notes to Consolidated Condensed Financial Statements (Continued)
(Unaudited)
Note 6: Supplementary Financial Information (Continued)
Net revenue by region
Three months ended January 31
 20222021
 In millions
Americas$6,859 $6,894 
Europe, Middle East and Africa5,936 5,497 
Asia-Pacific and Japan4,233 3,255 
Total net revenue$17,028 $15,646 

Value of Remaining Performance Obligations
    As of January 31, 2022, the estimated value of transaction price allocated to remaining performance obligations was $3.7 billion. HP expects to recognize approximately $1.7 billion of the unearned amount in next 12 months and $2.0 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 January 31, 2022 and October 31, 2021, HP’s contract liabilities balances were $2.3 billion, respectively, included in Other current liabilities and Other non-current liabilities in the Consolidated Condensed Balance Sheets.
The contract liabilities balance remained flat as of January 31, 2022, driven by sales of fixed-price support and maintenance services, partially offset by $0.4 billion of revenue recognized that was included in the contract liabilities balance as of October 31, 2021.


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HP INC. AND SUBSIDIARIES
Notes to Consolidated Condensed Financial Statements (Continued)
(Unaudited)
Note 7: 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:
 As of January 31, 2022As of October 31, 2021
 Fair Value Measured UsingFair Value Measured Using
 Level 1Level 2Level 3TotalLevel 1Level 2Level 3Total
 In millions
Assets:        
Cash Equivalents:        
Corporate debt$— $1,047 $— $1,047 $— $1,112 $— $1,112 
Government debt(1)
927 — — 927 1,931 — — 1,931 
Available-for-Sale Investments:
Financial institution instruments— 5 — 5 — 5 — 5 
Marketable equity securities and mutual funds
11 53 — 64 15 56 — 71 
Derivative Instruments:     
Interest rate contracts— 13 — 13 — — — — 
Foreign currency contracts— 477 — 477 — 277 — 277 
Other derivatives— — — — — 5 — 5 
Total assets$938 $1,595 $— $2,533 $1,946 $1,455 $— $3,401 
Liabilities:        
Derivative Instruments:        
Interest rate contracts$— $29 $— $29 $— $24 $— $24 
Foreign currency contracts— 159 — 159 — 203 — 203 
Other derivatives— 6 — 6 — — — — 
Total liabilities$— $194 $— $194 $— $227 $— $227 

(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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HP INC. AND SUBSIDIARIES
Notes to Consolidated Condensed Financial Statements (Continued)
(Unaudited)
Note 7: Fair Value (Continued)
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 is 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: 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 $7.3 billion as compared to its carrying amount of $7.1 billion at January 31, 2022. The fair value of HP’s short- and long-term debt was $8.0 billion as compared to its carrying value of $7.5 billion at October 31, 2021. 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 as Level 2 or Level 3 in 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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HP INC. AND SUBSIDIARIES
Notes to Consolidated Condensed Financial Statements (Continued)
(Unaudited)

Note 8: Financial Instruments
Cash Equivalents and Available-for-Sale Investments
 As of January 31, 2022As of October 31, 2021
 CostGross Unrealized GainGross Unrealized LossFair ValueCostGross Unrealized GainGross Unrealized LossFair Value
 In millions
Cash Equivalents:        
Corporate debt$1,047 $— $— $1,047 $1,112 $— $— $1,112 
Government debt927 — — 927 1,931 — — 1,931 
Total cash equivalents1,974 — — 1,974 3,043 — — 3,043 
Available-for-Sale Investments:     
Financial institution instruments5 — — 5 5 — — 5 
Marketable equity securities and mutual funds
42 22 — 64 42 29 — 71 
Total available-for-sale investments47 22 — 69 47 29 — 76 
Total cash equivalents and available-for-sale investments$2,021 $22 $— $2,043 $3,090 $29 $— $3,119 
All highly liquid investments with original maturities of three months or less at the date of acquisition are considered cash equivalents. As of January 31, 2022 and October 31, 2021, 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:
 As of January 31, 2022
 Amortized CostFair Value
 In millions
Due in one year$5 $5 
Non-marketable equity securities in privately held companies are included in Other non-current assets in the Consolidated Condensed Balance Sheets. These amounted to $63 million and $59 million as of January 31, 2022 and October 31, 2021, respectively.
HP determines credit losses on cash equivalents and available-for-sale debt securities at the individual security level. All instruments are considered investment grade. No credit-related or noncredit-related impairment losses were recorded for the three months ended January 31, 2022.

Derivative Instruments
HP uses derivatives to offset business exposure to foreign currency and interest rate risk on expected future cash flows and on certain existing assets and liabilities. As part of its risk management strategy, HP uses derivative instruments, primarily forward contracts, interest rate swaps, total return swaps, treasury rate locks, forward starting swaps and, at times, option contracts to hedge certain foreign currency, interest rate and, return on certain investment exposures. HP 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
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Notes to Consolidated Condensed Financial Statements (Continued)
(Unaudited)
Note 8: Financial Instruments (Continued)
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 $30 million and $64 million as of January 31, 2022 and as of October 31, 2021, respectively, all of which were fully collateralized within two business days.
Under HP’s derivative contracts, the counterparty can terminate all outstanding trades following a covered change of control event affecting HP that results in the surviving entity being rated below a specified credit rating. This credit contingent provision did not affect HP’s financial position or cash flows as of January 31, 2022 and October 31, 2021.
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 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.
Cash Flow Hedges
HP uses forward contracts, treasury rate locks, forward starting swaps and, at times, option contracts designated as cash flow hedges to protect against the foreign currency exchange and interest rate risks inherent in its forecasted net revenue, cost of revenue, operating expenses and debt issuance. HP’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 loss 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.
Other Derivatives
Other derivatives not designated as hedging instruments consist primarily of forward contracts used to hedge foreign currency-denominated balance sheet exposures. HP also 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, forward contracts and forward starting swaps designated as cash flow hedges, HP measures hedge effectiveness by comparing the cumulative change in fair value of the hedge contract with the cumulative change in fair value of the hedged item, both of which are based on forward rates.
During the three months ended January 31, 2022 and 2021, no portion of the hedging instruments’ gain or loss was excluded from the assessment of effectiveness for fair value and cash flow hedges.
Fair Value of Derivative Instruments in the Consolidated Condensed Balance Sheets
The gross notional and fair value of derivative instruments in the Consolidated Condensed Balance Sheets were as follows:
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HP INC. AND SUBSIDIARIES
Notes to Consolidated Condensed Financial Statements (Continued)
(Unaudited)
Note 8: Financial Instruments (Continued)
 As of January 31, 2022As of October 31, 2021
 Outstanding Gross NotionalOther Current AssetsOther Non-Current AssetsOther Current LiabilitiesOther Non-Current LiabilitiesOutstanding Gross NotionalOther Current AssetsOther Non-Current AssetsOther Current LiabilitiesOther Non-Current Liabilities
 In millions
Derivatives designated as hedging instruments     
Fair value hedges:     
Interest rate contracts$750 $— $— $— $27 $750 $— $— $— $16 
Cash flow hedges:
Foreign currency contracts18,015 346 116 117 28 17,137 198 69 148 42 
Interest rate contracts1,500 — 13 — 2 1,500 — — — 8 
Total derivatives designated as hedging instruments20,265 346 129 117 57 19,387 198 69 148 66 
Derivatives not designated as hedging instruments    
Foreign currency contracts4,124 15 — 14 — 6,293 10 — 13 — 
Other derivatives144 — — 6 — 103 5 — — — 
Total derivatives not designated as hedging instruments4,268 15 — 20 — 6,396 15 — 13 — 
Total derivatives$24,533 $361 $129 $137 $57 $25,783 $213 $69 $161 $66 

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 January 31, 2022 and October 31, 2021, information related to the potential effect of HP’s master netting agreements and collateral security agreements was as follows:
 In the Consolidated Condensed Balance Sheets  
 (i)(ii)(iii) = (i)–(ii)(iv)(v)(vi) = (iii)–(iv)–(v)
Gross Amounts Not Offset
 Gross Amount
Recognized		Gross Amount
Offset		Net Amount
Presented		Derivatives
Financial
Collateral		 Net Amount
 In millions
As of January 31, 2022       
Derivative assets$490 $— $490 $153 $321 (1)$16 
Derivative liabilities$194 $— $194 $153 $33 (2)$8 
As of October 31, 2021       
Derivative assets$282 $— $282 $160 $65 (1)$57 
Derivative liabilities$227 $— $227 $160 $64 (2)$3 
(1)Represents the cash collateral posted by counterparties as of the respective reporting date for HP’s asset position, net of derivative amounts that could be offset, as of, generally, two business days prior to the respective reporting date.
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Notes to Consolidated Condensed Financial Statements (Continued)
(Unaudited)
Note 8: Financial Instruments (Continued)
(2)Represents the collateral posted by HP including any re-use of counterparty cash collateral as of the respective reporting date for HP’s liability position, net of derivative amounts that could be offset, as of, generally, two business days prior to the respective reporting date.
Effect of Derivative Instruments in the Consolidated Condensed Statements of Earnings
The pre-tax effect of derivative instruments and related hedged items in a fair value hedging relationship were as follows:
Derivative InstrumentHedged ItemLocationYearTotal amounts of income/(expense) line items in the statement of financial performance in which the effects of fair value hedges are recordedGain/(loss) recognized in earnings on derivative instrumentsGain/(loss) recognized in earnings on hedged item
In millions
Three months ended January 31
Interest rate contractFixed-rate debtInterest and other, net2022$(32)$(11)$11 
2021$(25)$(3)$3 
The pre-tax effect of derivative instruments in cash flow hedging relationships included in Accumulated other comprehensive loss was as follows:
Three months ended January 31
20222021
In millions
Gain/(loss) recognized in Accumulated other comprehensive loss on derivatives:
Foreign currency contracts$280 $(366)
Interest rate contracts$19 $— 
The pre-tax effect of derivative instruments in cash flow hedging relationships included in earnings were as follows:
Total amounts of income/(expense) line items in the statement of financial performance in which the effects of cash flow hedges are recordedGain/(loss) reclassified from Accumulated 
other comprehensive loss into earnings
Three months ended January 31Three months ended January 31
2022202120222021
In millions
Net revenue$17,028 $15,646 $57 $(43)
Cost of revenue(13,643)(12,322)(14)(6)
Other operating expenses(2,026)(2,003)1 — 
Total$44 $(49)
As of January 31, 2022, HP expects to reclassify an estimated accumulated other comprehensive gain of $188 million, net of taxes, to earnings within the next twelve months associated with cash flow hedges along with the earnings effects of the related forecasted transactions. The amounts ultimately reclassified into earnings could be different from the amounts previously included in Accumulated other comprehensive loss based on the change of market rate, and therefore could have different impact on earnings.
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HP INC. AND SUBSIDIARIES
Notes to Consolidated Condensed Financial Statements (Continued)
(Unaudited)
Note 8: Financial Instruments (Continued)
The pre-tax effect of derivative instruments not designated as hedging instruments recognized in Interest and other, net in the Consolidated Condensed Statements of Earnings for the three months ended January 31, 2022 and 2021 was as follows:
Gain/(loss) recognized in earnings on derivative instrument
 Three months ended January 31
 Location20222021
  In millions
Foreign currency contractsInterest and other, net$(36)$14 
Other derivativesInterest and other, net(11)3 
Total $(47)$17 


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HP INC. AND SUBSIDIARIES
Consolidated Condensed Statements of Earnings (Continued)
(Unaudited)
Note 9: Borrowings
Notes Payable and Short-Term Borrowings
 As of January 31, 2022As of October 31, 2021
 Amount
Outstanding		Weighted-Average
Interest Rate		Amount
Outstanding		Weighted-Average
Interest Rate
 In millions
Commercial paper$— — %$400 0.2 %
Current portion of long-term debt662 3.9 %672 3.8 %
Notes payable to banks, lines of credit and other27 1.5 %34 1.2 %
$689  $1,106  
Long-Term Debt
 As of
 January 31, 2022October 31, 2021
 In millions
U.S. Dollar Global Notes(1)
  
$500 issued at discount to par at a price of 99.771% at 4.05%, due September 2022
$499 $499 
$1,200 issued at discount to par at a price of 99.863% at 6.00%, due September 2041
1,199 1,199 
$1,150 issued at discount to par at a price of 99.769% at 2.2%, due June 2025
1,148 1,148 
$1,000 issued at discount to par at a price of 99.718% at 3.0%, due June 2027
997 997 
$850 issued at discount to par at a price of 99.790% at 3.4%, due June 2030
848 848 
$1,000 issued at discount to par at a price of 99.808% at 1.45%, due June 2026
999 999 
$1,000 issued at discount to par at a price of 99.573% at 2.65%, due June 2031(2)
996 996 
6,686 6,686 
Other borrowings at 0.51-9.00%, due in calendar years 2022-2029
421 439 
Fair value adjustment related to hedged debt(27)(16)
Unamortized debt issuance cost(50)(51)
Current portion of long-term debt(662)(672)
Total long-term debt$6,368 $6,386 
(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.
(2)HP intends to allocate an amount equal to the net proceeds to finance or refinance, in whole or in part, environmentally and socially responsible eligible projects in the following eight areas: renewable energy; green buildings; energy efficiency; clean transportation; pollution prevention and control; eco-efficient and/or circular economy products, production technologies and processes; environmentally sustainable management of living natural resources and land use; and socioeconomic advancement and empowerment.
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.
Commercial Paper
As of January 31, 2022, 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.
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HP INC. AND SUBSIDIARIES
Notes to Consolidated Condensed Financial Statements (Continued)
(Unaudited)
Note 9: Borrowings (Continued)
Credit Facilities
As of January 31, 2022, HP maintained a $5.0 billion sustainability-linked senior unsecured committed revolving credit facility, which HP entered into on May 26, 2021. Commitments under the revolving credit facility will be available until May 26, 2026. Commitment fees, interest rates and other terms of borrowing under the revolving credit facility vary based on HP’s external credit ratings and certain sustainability metrics. Funds borrowed under the revolving credit facility may be used for general corporate purposes.
As of January 31, 2022, HP was in compliance with the covenants in the credit agreement governing the revolving credit facility.
Available Borrowing Resources
As of January 31, 2022, HP had available borrowing resources of $633 million from uncommitted lines of credit in addition to the revolving credit facility.

Note 10: Stockholders’ Deficit
Share Repurchase Program
HP’s share repurchase program authorizes both open market and private repurchase transactions. During the three months ended January 31, 2022, HP executed share repurchases of 42 million shares and settled total shares for $1.5 billion. During the three months ended January 31, 2021, HP executed share repurchases of 61 million shares and settled total shares for $1.4 billion. Share repurchases executed during the three months ended January 31, 2022 and 2021 included 1.1 million and 3.2 million shares settled in February 2022 and 2021, respectively.
The shares repurchased during the three months ended January 31, 2022 and 2021 were all open market repurchase transactions. As of January 31, 2022, HP had approximately $4.9 billion remaining under the share repurchase authorizations approved by HP’s Board of Directors.

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HP INC. AND SUBSIDIARIES
Notes to Consolidated Condensed Financial Statements (Continued)
(Unaudited)
Note 10: Stockholders' Deficit (Continued)
Tax effects related to Other Comprehensive Income (Loss)
 Three months ended January 31
 20222021
 In millions
Tax effect on change in unrealized components of available-for-sale debt securities:  
Tax provision on unrealized gains arising during the period$— $(1)
Tax effect on change in unrealized components of cash flow hedges: 
Tax (provision) benefit on unrealized gains (losses) arising during the period(32)47 
Tax provision (benefit) on (gains) losses reclassified into earnings12 (4)
(20)43 
Tax effect on change in unrealized components of defined benefit plans:  
Tax provision on gains arising during the period(6)— 
Tax benefit on amortization of actuarial loss and prior service benefit(1)(5)
(7)(5)
Tax effect on change in cumulative translation adjustment1 (5)
Tax (provision) benefit on other comprehensive income (loss)$(26)$32 

Changes and reclassifications related to Other Comprehensive Income (Loss), net of taxes
 Three months ended January 31
 20222021
 In millions
Other comprehensive income (loss), net of taxes:  
Change in unrealized components of available-for-sale debt securities:  
Unrealized (losses) gains arising during the period$(2)$3 
Change in unrealized components of cash flow hedges: 
Unrealized gains (losses) arising during the period267 (319)
(Gains) losses reclassified into earnings(32)45 
235 (274)
Change in unrealized components of defined benefit plans:  
Gains (losses) arising during the period15 (1)
Amortization of actuarial loss and prior service benefit(1)
5 16 
Curtailments, settlements and other— 1 
20 16 
Change in cumulative translation adjustment(9)25 
Other comprehensive income (loss), net of taxes$244 $(230)
(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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Notes to Consolidated Condensed Financial Statements (Continued)
(Unaudited)
Note 10: Stockholders' Deficit (Continued)
The components of Accumulated other comprehensive loss, net of taxes and changes were as follows:
 Three months ended January 31, 2022
 Net unrealized
gains on
available-for-sale debt
securities		Net unrealized (losses) gains 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$15 $19 $(323)$29 $(260)
Other comprehensive income (loss) before reclassifications(2)267 15 (9)271 
Reclassifications of losses into earnings— (32)5 — (27)
Balance at end of period$13 $254 $(303)$20 $(16)

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Consolidated Condensed Statements of Earnings (Continued)
(Unaudited)
Note 11: 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 2021 employee stock purchase plan.
A reconciliation of the number of shares used for basic and diluted net EPS calculations is as follows:
 Three months ended January 31
 20222021
 In millions, except per share amounts
Numerator:  
Net earnings$1,086 $1,068 
Denominator:  
Weighted-average shares used to compute basic net EPS1,081 1,285 
Dilutive effect of employee stock plans13 8 
Weighted-average shares used to compute diluted net EPS1,094 1,293 
Net earnings per share:  
Basic$1.00 $0.83 
Diluted$0.99 $0.83 
Anti-dilutive weighted-average stock-based compensation awards(1)
3 4 
(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.


Note 12: 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 January 31, 2022, 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 entered into with Hewlett Packard Enterprise Company (“Hewlett Packard Enterprise”), HP shares responsibility with Hewlett Packard Enterprise for certain matters, as indicated below, and Hewlett Packard Enterprise has agreed to indemnify HP in whole or in part with respect to certain matters. Based on its experience, HP believes that any damage amounts claimed in the specific matters discussed below are not a meaningful indicator of HP’s potential liability. 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, challenging the imposition or the modification of levies regimes upon IT equipment (such as PCs or printers) or the restrictions to exonerate the application of private copying levies on devices purchased by business users. The levies are generally based upon the number of products sold and the per-product amounts of the levies, which vary. Some European countries are expected to implement legislation to introduce or extend existing levy schemes to digital devices. HP, other companies and various industry associations have opposed the extension of levies to the digital environment and certain requirements for
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Notes to Consolidated Condensed Financial Statements (Continued)
(Unaudited)
Note 12: Litigation and Contingencies (Continued)
business sales exemptions, and have advocated alternative models of compensation to rights holders. Based on industry opposition to the extension of levies to digital products, HP’s assessments of the merits of various proceedings and HP’s estimates of the number of units impacted and the amounts of the levies, HP has accrued amounts that it believes are adequate to address the ongoing disputes.
Hewlett-Packard Company v. Oracle Corporation.  On June 15, 2011, HP filed suit against Oracle Corporation (“Oracle”) in California Superior Court in Santa Clara County in connection with Oracle’s March 2011 announcement that it was discontinuing software support for HP’s Itanium-based line of mission critical servers. HP asserted, among other things, that Oracle’s actions breached the contract that was signed by the parties as part of the settlement of the litigation relating to Oracle’s hiring of Mark Hurd. In the first phase of the bifurcated trial, the court ruled that the contract at issue required Oracle to continue to offer its software products on HP’s Itanium-based servers for as long as HP decided to sell such servers. In the second phase, the jury returned a verdict in favor of HP, awarding HP approximately $3.0 billion in damages, which included approximately $1.7 billion for past lost profits and $1.3 billion for future lost profits. The court entered judgment for HP for this amount with interest accruing until the judgment is paid. Oracle appealed the trial court’s judgment and HP filed a cross appeal challenging the trial court’s denial of prejudgment interest. The Court of Appeals affirmed both the trial court’s judgment and its denial of prejudgment interest to HP. Oracle filed a petition with the California Supreme Court for review, which was denied on September 29, 2021. On October 12, 2021, Oracle paid approximately $4.65 billion to satisfy the judgment with interest. During the fourth quarter of fiscal 2021, HP recorded approximately $2.3 billion as a gain (Interest and other, net) in relation to the damages awarded, representing HP’s interest in the amount recovered, which is being shared equally between HP and Hewlett Packard Enterprise, less $47.4 million reimbursed to Hewlett Packard Enterprise for certain costs incurred in the prosecution of the action prior to the Separation. On January 27, 2022, Oracle filed a petition for certiorari asking the United States Supreme Court for review. Review by the United States Supreme Court is discretionary, and HP believes the likelihood the award of damages will be reduced or reversed is remote.
Forsyth, et al. 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 (“HPE”) alleging the defendants violated federal and state law by terminating older workers and replacing them with younger workers. In their most recent complaint, plaintiffs seek to represent (1) a putative nationwide federal Age Discrimination in Employment Act (ADEA) collective comprised of all former HP Inc. employees 40 years of age and older who had their employment terminated under a WFR plan in or after 2014 or 2015, depending on state law; and (2) a putative Rule 23 class under California law comprised of all former HP Inc. employees 40 years of age and older who had their employment terminated in California under a WFR plan in or after 2012. Excluded from the putative collective and class are employees who (a) signed a Waiver and General Release Agreement at termination, or (b) signed an Agreement to Arbitrate Claims. Similar claims are pending against HPE. Because the court granted plaintiffs’ motion for preliminary certification of the putative nationwide ADEA collectives, a third-party administrator notified eligible former employees of their right to opt into the ADEA collective. This opt-in period closed on February 15, 2022, and the next case management conference is anticipated to set discovery timelines for the remainder of 2022. Plaintiffs seek monetary damages, punitive damages, and other relief.
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 and interest. Prior to the issuance of the 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 or interrupt business by HP India.
On April 11, 2012, the Bangalore Commissioner of Customs issued an order on the products-related 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 notice. The differential duty demand is subject to interest. On April 20, 2012, the Commissioner issued an order on the parts-related notice affirming certain duties and penalties against HP India and certain of the named individuals of approximately $17 million, of which HP India had already deposited $7 million. After the order, HP India deposited an additional $3 million in connection with the parts-related notice so as to avoid certain penalties.
HP India filed appeals of the Commissioner’s orders before the Customs, Excise and Service Tax Appellate Tribunal (the “Customs Tribunal”) along with applications for waiver of the pre-deposit of remaining demand amounts as a condition for hearing the appeals. The Customs Department has also filed cross-appeals before the Customs Tribunal. On January 24, 2013,
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Notes to Consolidated Condensed Financial Statements (Continued)
(Unaudited)
Note 12: Litigation and Contingencies (Continued)
the Customs Tribunal ordered HP India to deposit an additional $24 million against the products order, which HP India deposited in March 2013. On February 7, 2014, the Customs Tribunal granted HP India’s application for extension of the stay of deposit until disposal of the appeals. On October 27, 2014, the Customs Tribunal commenced hearings on the cross-appeals of the Commissioner’s orders and rejected HP India’s request to remand the matter to the Commissioner on procedural grounds. The Customs Tribunal cancelled hearings to reconvene in 2015, 2016 and January 2019. On January 20, 2021, the Customs Tribunal held a virtual hearing during which the judge allowed HP’s application for a physical hearing on the merits as soon as practicable, which will be scheduled when physical hearings resume at court. 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.
Philips Patent Litigation. In September 2020, Koninklijke Philips N.V. and Philips North America LLC (collectively, “Philips”) filed a complaint against HP for patent infringement in federal court for the District of Delaware and filed a companion complaint with the U.S. International Trade Commission (“ITC”) pursuant to Section 337 of the Tariff Act against HP and 8 other sets of respondents. Both complaints allege that certain digital video-capable devices and components thereof infringe four of Philips’ patents. In October 2020, the ITC instituted an investigation, and Philips later withdrew two of the four patents. On October 21, 2021, the ITC rendered an initial determination that there is no violation of Section 337. The ITC is expected to render a final decision by March 23, 2022. In the ITC proceeding, Philips seeks an order enjoining respondents from importing, or selling after importation, the accused products. In the district court case, Philips seeks unspecified damages and an injunction against HP, and the case has been stayed pending resolution of the ITC proceeding.
Caltech Patent Litigation. On November 11, 2020, the California Institute of Technology (“Caltech”) filed a complaint against HP for patent infringement in the federal court for the Western District of Texas. On March 19, 2021, Caltech filed an amendment to this same complaint. The complaint as amended alleges infringement of five of Caltech’s patents, U.S. Patent Nos. 7,116,710; 7,421,032; 7,716,552; 7,916,781; and 8,284,833. The accused products are HP commercial and consumer PCs as well as wireless printers that comply with the IEEE 802.11n, 802.11ac, and/or 802.11ax standards. Caltech seeks unspecified damages and other relief. The court stayed the case pending the decision by the U.S. Court of Appeals for the Federal Circuit in The California Inst. of Tech. v. Broadcom Ltd et al., Case No. 2020-2222, which was issued on February 4, 2022. The court has directed the parties to submit their positions regarding next steps on the stay.
In re HP Inc. Securities Litigation (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. The court appointed the State of Rhode Island, Office of the General Treasurer, on behalf of the Employees’ Retirement System of Rhode Island and Iron Workers Local 580 Joint Funds as Lead Plaintiffs. Lead Plaintiffs filed an amended complaint, which additionally named as defendants Enrique Lores and Christoph Schell. HP and the named officers filed a motion to dismiss the complaint for failure to state a claim upon which relief can be granted. The court granted HP’s motion to dismiss and granted plaintiffs leave to amend the complaint. Plaintiffs’ second amended complaint, which no longer names Christoph Schell as a defendant, 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. 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 printing supplies business. Plaintiffs seek compensatory damages and other relief. HP and the named officers filed a motion to dismiss the second amended complaint for failure to state a claim upon which relief can be granted. On September 15, 2021, the court granted HP’s motion. Plaintiffs are appealing the decision.
York County on behalf of the County of York Retirement Fund v. HP Inc., et al., and related proceedings. On November 5, 2020, York County, on behalf of the County of York Retirement Fund, filed a putative class action complaint against HP, Dion Weisler, and Catherine Lesjak in federal court in the Northern District of California. The court appointed Maryland Electrical Industry Pension Fund as Lead Plaintiff. Lead Plaintiff filed a consolidated complaint, which additionally names as defendants Enrique Lores and Richard Bailey. The complaint alleges, among other things, that from November 5, 2015 to June 21, 2016, HP and the named current and former officers violated Sections 10(b) and 20(a) of the Exchange Act by concealing material information and making false statements about HP’s printing supplies business. Plaintiff seeks compensatory damages and other relief. HP and the named officers filed a motion to dismiss the complaint for failure to state a claim upon which relief can be granted. On March 3, 2022 the court granted the motion to dismiss with prejudice. On May 17, 2021, stockholder Scott Franklin filed a derivative complaint against certain current and former officers and directors in federal court in the District of Delaware. Plaintiff purports to bring the action on behalf of HP, which he has named as a nominal defendant, and it makes
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Notes to Consolidated Condensed Financial Statements (Continued)
(Unaudited)
Note 12: Litigation and Contingencies (Continued)
substantially the same factual allegations as in the York County securities complaint, bringing claims for breach of fiduciary duty and violations of securities laws. The derivative plaintiff seeks compensatory damages, governance reforms, and other relief. By court order following stipulations by the parties, the case was transferred to the Northern District of California, and the case was stayed pending a ruling on the motion to dismiss in York County. On January 13, 2022, stockholder Gerald Lovoi filed a derivative complaint in federal court in the Northern District of California against the same current and former officers and directors named in the Franklin action. The complaint alleges the same basic claims based on the same alleged conduct as the Franklin action and seeks similar relief. By stipulation of the parties, the Lovoi action was stayed pending a ruling on the motion to dismiss in York County. Both derivative actions will remain stayed until any appeal related to the York decision has been exhausted.
Legal Proceedings re Authentication of Supplies. Civil litigation or government investigations involving supplies authentication protocols used in certain HP printers are pending, have concluded, or may be filed or opened in multiple geographies, including but not limited to the United States, Italy, Israel, and the Netherlands. The supplies authentication protocols are often referred to as Dynamic Security. The core allegations in these proceedings claim misleading or inadequate consumer notifications and permissions pertaining to the use of Dynamic Security, the impact of firmware updates, or the potential inability of cartridges with clone chips or circuitry to work in HP printers with Dynamic Security.
123Inkt Foundation litigation (Netherlands). On November 23, 2016, a foundation known as Stichting 123Inkt-Huismerk Klanten (the “Foundation”) filed a complaint in district court in Amsterdam against HP Nederland B.V. and HP Inc. arising out of the use of Dynamic Security in certain OfficeJet printers. Digital Revolution B.V. (trading as 123Inkt) established the Foundation to pursue the interests of approximately 960 of its customers who transferred their claims to it. The complaint alleges that HP’s use of Dynamic Security was unlawful, asserts a variety of claims, and seeks injunctive relief to prohibit use of Dynamic Security, damages, and attorneys’ fees. In December 2019, the Amsterdam Court of Appeal rejected the Foundation’s argument that Dynamic Security is unlawful but ruled that error messages displayed on HP printers in September 2016 without providing prior warning regarding Dynamic Security were misleading. Both parties appealed to the Supreme Court of the Netherlands. On December 24, 2021, the Supreme Court issued its final decision concluding that both parties’ appeals should be rejected. This affirms the Appeal Court decision. No further appeal is permitted.
Gensin v. HP Inc. (Israel). HP is named in a consolidated, consumer class action pending in the District Court in Jerusalem relating to HP’s use of Dynamic Security in certain OfficeJet printers, which was initially filed on October 25, 2017. Plaintiff asserts consumer protection, tort and other statutory claims primarily on the basis that no information on Dynamic Security was available in Hebrew, and plaintiff seeks class relief, injunctive relief, damages, and attorneys’ fees. HP has reached an agreement to settle this case, which the court approved on February 9, 2022.
Consumer Protection Investigation (Italy). In December 2020, the Italian Competition Authority (Autorità Garante della Concorrenza e del Mercato) (“AGCM”) notified HP of its decision that HP engaged in unfair commercial practices with respect to its disclosures to consumers about Dynamic Security and alleged use of certain warranty and data collection practices regarding the use of third-party cartridges in HP printers. The AGCM decision (i) ordered HP to end the allegedly unfair commercial practices; (ii) fined HP €5 million for each alleged unfair practice (total €10 million); (iii) required HP to file a compliance report within 60 days; (iv) ordered HP to publicly publish a corrective statement within 120 days; and (v) ordered HP to amend the packaging of its printers within 120 days. On December 21, 2020, HP paid the imposed fines. On February 5, 2021, HP filed an appeal. On April 6, 2021, HP filed its compliance report, which it subsequently supplemented, and, on June 23, 2021 the AGCM accepted the compliance plan as sufficient. HP’s appeal is pending in front of the Regional Administrative Court of Lazio.
Digital Revolution B.V. v. HP Nederland B.V., et al. (Netherlands). On March 30, 2020, Digital Revolution B.V. (trading as 123Inkt) served a complaint filed in Amsterdam District Court. The complaint generally alleges that HP’s use of Dynamic Security in certain HP printers constituted a violation of competition law and unfair and misleading commercial practices and advertising. The complaint asserts a variety of claims and seeks injunctive relief, including prohibition of Dynamic Security and disclosure of cartridge authentication protocols, damages, and attorneys’ fees. On December 15, 2021, the court issued its decision rejecting the competition law claims, the request to prohibit Dynamic Security, and the remainder of 123Inkt’s claims but held HP liable to 123inkt where it can show, in separate proceedings, that it suffered damages resulting from the display of certain old error messages. The decision is subject to appeal.
Mobile Emergency Housing Corp., et al. v. HP, Inc. (United States). In December 2020, HP was named in a putative nationwide consumer class action pending in federal court in California arising out of the use of Dynamic Security firmware updates in certain LaserJet printers. The complaint alleges a variety of claims, including state consumer protection and unfair
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Notes to Consolidated Condensed Financial Statements (Continued)
(Unaudited)
Note 12: Litigation and Contingencies (Continued)
business claims and state and federal computer access and data collection claims. Plaintiffs seek compensatory damages, restitution, injunctive relief against alleged unfair business practices, and other relief. The case is in its early stages and discovery has commenced.
Autonomy-Related Legal Matters
Investigations. As a result of the findings of an internal investigation, HP provided information to government authorities, including the U.S. Department of Justice (“DOJ”) related to accounting improprieties, disclosure failures and misrepresentations at Autonomy that occurred before and in connection with HP’s 2011 acquisition of Autonomy. In November 2016, a federal grand jury indicted Sushovan Hussain, former CFO of Autonomy on charges of conspiracy to commit wire fraud, securities fraud, and multiple counts of wire fraud. The indictment alleged that Mr. Hussain engaged in a scheme to defraud purchasers and sellers of securities of Autonomy and HP about Autonomy’s true financial performance and condition. On April 30, 2018, a jury found Mr. Hussain guilty of all charges against him, and that judgment was affirmed on appeal in August 2020. In November 2018, a federal grand jury indicted Michael Lynch, former CEO of Autonomy, and Stephen Chamberlain, former VP of Finance of Autonomy. The indictment charged Dr. Lynch and Mr. Chamberlain with conspiracy to commit wire fraud and multiple counts of wire fraud. On January 28, 2022, the U.K. Home Office approved U.S. demands to have Mr. Lynch extradited to face the charges. The extradition decision is subject to appeal, and Mr. Lynch has stated publicly that he intends to appeal. 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. Trial was completed in January 2020. On January 28, 2022, the court issued a summary of its key findings in a confidential draft judgment, including the court’s ruling that the claimants have substantially succeeded in their claims against Messrs. Lynch and Hussein and that Mr. Lynch’s counterclaim was “undermined” by the court’s findings and is, therefore, not addressed in the draft judgment. The draft judgment remains confidential, and the court has stated it will be released after a usual process for checking and correction is completed, which the court has stated may take longer than usual given the length of the draft judgment. The Court also stated that it will determine damages in a later, separate judgment and indicated that the damages awarded may be substantially less than is claimed. No amount has yet been awarded. Litigation is unpredictable, and there can be no assurance that HP will recover damages or as to how any award of damages will compare with the amount claimed. The amount ultimately awarded, if any, would be recorded in the period received. No adjustment has been recorded in the financial statements in relation to this potential award. Pursuant to the terms of the separation and distribution agreement, HP and Hewlett Packard Enterprise will share equally in any recovery.
Environmental
    HP is 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.


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Notes to Consolidated Condensed Financial Statements (Continued)
(Unaudited)
Note 13: 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
On November 1, 2015, Hewlett-Packard Company completed the separation of Hewlett Packard Enterprise, Hewlett-Packard Company’s former enterprise technology infrastructure, software, services and financing businesses. The separation and distribution agreement provides for cross-indemnities between HP and Hewlett Packard Enterprise for liabilities allocated to the respective party pursuant to the terms of such agreement. For information on cross-indemnifications with Hewlett Packard Enterprise for litigation matters, see Note 12, “Litigation and Contingencies”.
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.
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:
 Three months ended January 31, 2022
 In millions
Balance at beginning of period$959 
Accruals for warranties issued234 
Adjustments related to pre-existing warranties (including changes in estimates)(14)