Item 1. Financial Statements and Supplementary Data.

135K characters. Original on sec.gov · Markdown

Item 1. Financial Statements and Supplementary Data.

Index


			Page
Consolidated Condensed Statements of Earnings for the three months ended J anuary 31, 202 5 and 202 4 (Unaudited)			6
Consolidated Condensed Statements of Comprehensive Income for the three months ended J anuary 31, 202 5 and 202 4 (Unaudited)			7
Consolidated Condensed Balance Sheets as of J anuary 31, 202 5 and October 31, 202 4 (Unaudited)			8
Consolidated Condensed Statements of Cash Flows for the three months ended J anuary 31, 202 5 and 202 4 (Unaudited)			9
Consolidated Condensed Statements of Stockholders’ Deficit (Unaudited)			10
Notes to Consolidated Condensed Financial Statements (Unaudited)			11
Note 1: Basis of Presentation			11
Note 2: Segment Information			12
Note 3: Restructuring and Other Charges			14
Note 4: Retirement and Post-Retirement Benefit Plans			15
Note 5: Taxes on Earnings			16
Note 6: Supplementary Financial Information			17
Note 7: Fair Value			21
Note 8: Financial Instruments			23
Note 9: Borrowings			28
Note 10: Stockholders’ Deficit			30
Note 11: Earnings Per Share			32
Note 12: Litigation and Contingencies			32
Note 13: Guarantees, Indemnifications and Warranties			36

HP INC. AND SUBSIDIARIES

Consolidated Condensed Statements of Earnings

(Unaudited)


	Three months ended January 31
		2025		2024
		In millions, except per share amounts
Net revenue:
Products		$	12,695	$	12,419
Services		809		766
Total net revenue		13,504		13,185
Cost of net revenue:
Products		10,194		9,871
Services		470		426
Total cost of net revenue		10,664		10,297
Gross profit		2,840		2,888
Research and development		397		399
Selling, general and administrative		1,459		1,383
Restructuring and other charges		70		63
Acquisition and divestiture charges		6		27
Amortization of intangible assets		63		81
Total operating expenses		1,995		1,953
Earnings from operations		845		935
Interest and other, net		(141)		(142)
Earnings before taxes		704		793
Provision for taxes		(139)		(171)
Net earnings		$	565	$	622

Net earnings per share:
Basic		$	0.60	$	0.63
Diluted		$	0.59	$	0.62

Weighted-average shares used to compute net earnings per share:
Basic		948		995
Diluted		957		1,002

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

HP INC. AND SUBSIDIARIES

Consolidated Condensed Statements of Comprehensive Income

(Unaudited)


	Three months ended January 31
		2025		2024
		In millions
Net earnings		$	565	$	622
Other comprehensive income (loss) before taxes:
Change in unrealized components of available-for-sale debt securities:
Unrealized gains arising during the period		4		4



Change in unrealized components of cash flow hedges:
Unrealized gains (losses) arising during the period		332		(162)
Gains reclassified into earnings		(43)		(159)
		289		(321)
Change in unrealized components of defined benefit plans:
Unrealized gains (losses) arising during the period		1		(10)
Amortization of actuarial loss and prior service benefit		5		2
Curtailments, settlements and other		(1)		—
		5		(8)

Change in cumulative translation adjustment		(13)		20
Other comprehensive income (loss) before taxes		285		(305)
(Provision for) benefit from taxes		(55)		70
Other comprehensive income (loss), net of taxes		230		(235)
Comprehensive income		$	795	$	387

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

HP INC. AND SUBSIDIARIES

Consolidated Condensed Balance Sheets

(Unaudited)


	As of
	January 31, 2025		October 31, 2024
	In millions, except par value
ASSETS
Current assets:
Cash, cash equivalents and restricted cash	$	2,894	$	3,253
Accounts receivable, net of allowance for credit losses of $84 and $83, as of January 31, 2025 and October 31, 2024, respectively	4,188		5,117
Inventory	8,443		7,720
Other current assets	4,309		4,670
Total current assets	19,834		20,760
Property, plant and equipment, net	2,900		2,914
Goodwill	8,599		8,627
Other non-current assets	7,597		7,608
Total assets	$	38,930	$	39,909
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Notes payable and short-term borrowings	$	1,418	$	1,406
Accounts payable	16,483		16,903
Other current liabilities	9,533		10,378
Total current liabilities	27,434		28,687
Long-term debt	8,273		8,263
Other non-current liabilities	4,295		4,282
Stockholders’ deficit:
Preferred stock, $0.01 par value (300 shares authorized; none issued)	—		—
Common stock, $0.01 par value (9,600 shares authorized; 945 and 939 shares issued and outstanding as of January 31, 2025 and October 31, 2024, respectively)	9		9
Additional paid-in capital	1,874		1,778
Accumulated deficit	(2,751)		(2,676)
Accumulated other comprehensive loss	(204)		(434)
Total stockholders’ deficit	(1,072)		(1,323)
Total liabilities and stockholders’ deficit	$	38,930	$	39,909

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

HP INC. AND SUBSIDIARIES

Consolidated Condensed Statements of Cash Flows

(Unaudited)


	Three months ended January 31
	2025		2024
	In millions
Cash flows from operating activities:
Net earnings	$	565	$	622
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	197		205
Stock-based compensation expense	192		177
Restructuring and other charges	70		63
Deferred taxes on earnings	(23)		(5)

Other, net	35		(20)
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable	966		446
Inventory	(751)		(47)
Accounts payable	(397)		(744)
Net investment in leases related to integrated financing	2		(62)
Taxes on earnings	12		49
Restructuring and other	(74)		(87)
Other assets and liabilities	(420)		(476)
Net cash provided by operating activities	374		121
Cash flows from investing activities:
Investment in property, plant, equipment and purchased intangible	(302)		(158)

Purchases of available-for-sale securities and other investments	(3)		—
Maturities and sales of available-for-sale securities and other investments	5		—
Collateral posted for derivative instruments	—		(70)


Net cash used in investing activities	(300)		(228)
Cash flows from financing activities:
Proceeds from short-term borrowings with original maturities less than 90 days, net	—		100

Proceeds from debt, net of issuance costs	82		92

Payment of debt and associated costs	(50)		(49)
Stock-based award activities and others	(92)		(76)
Repurchase of common stock	(100)		(500)
Cash dividends paid	(273)		(275)


Net cash used in financing activities	(433)		(708)
Decrease in cash, cash equivalents and restricted cash	(359)		(815)
Cash, cash equivalents and restricted cash at beginning of period	3,253		3,232
Cash, cash equivalents and restricted cash at end of period	$	2,894	$	2,417

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

HP INC. AND SUBSIDIARIES

Consolidated Condensed Statements of Stockholders’ Deficit

(Unaudited)


	Common Stock			Additional Paid-in Capital					Accumulated Other Comprehensive Loss		Total Stockholders’ Deficit
	Number of Shares	Par Value				Accumulated Deficit
	In millions, except number of shares in thousands
Balance as of October 31, 2024	938,989	$	9	$	1,778		$	(2,676)	$	(434)	$	(1,323)
Net earnings	—	—		—			565		—		565
Other comprehensive income, net of taxes	—	—		—			—		230		230
Comprehensive income	—	—		—			—		—		795
Issuance of common stock in connection with employee stock plans and other	8,405	—		(92)			—		—		(92)
Repurchases of common stock (Note 10)	(2,734)	—		(4)			(93)		—		(97)
Cash dividends ($0.58 per common share)	—	—		—			(547)		—		(547)
Stock-based compensation expense	—	—		192			—		—		192

Balance as of January 31, 2025	944,660	$	9	$	1,874		$	(2,751)	$	(204)	$	(1,072)


	Common Stock			Additional Paid-in Capital					Accumulated Other Comprehensive Loss		Total Stockholders’ Deficit
	Number of Shares	Par Value				Accumulated Deficit
	In millions, except number of shares in thousands
Balance as of October 31, 2023	988,782	$	10	$	1,505		$	(2,361)	$	(223)	$	(1,069)
Net earnings	—	—		—			622		—		622
Other comprehensive loss, net of taxes	—	—		—			—		(235)		(235)
Comprehensive income	—	—		—			—		—		387
Issuance of common stock in connection with employee stock plans and other	8,677	—		(76)			—		—		(76)
Repurchases of common stock (Note 10)	(17,062)	—		(27)			(487)		—		(514)
Cash dividends ($0.55 per common share)	—	—		—			(545)		—		(545)
Stock-based compensation expense	—	—		177			—		—		177

Balance as of January 31, 2024	980,397	$	10	$	1,579		$	(2,771)	$	(458)	$	(1,640)

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

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, 2024 in HP’s Annual Report on Form 10-K, filed on December 13, 2024. The Consolidated Condensed Balance Sheet for October 31, 2024 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.

Recently Adopted Accounting Pronouncements

In September 2022, the Financial Accounting Standards Board (“FASB”) issued guidance that enhances the transparency about the use of supplier finance programs. Under the new guidance, companies that use a supplier finance program in connection with the purchase of goods or services are required to disclose information about those programs to allow users of financial statements to understand the nature, activity during the period, changes from period to period, and potential magnitude. HP adopted this guidance in the first quarter of fiscal year 2024, except for the disclosure on rollforward information which will be adopted in its fiscal year 2025 Form 10-K, in line with the effective adoption dates prescribed by the FASB. See Note 6, “Supplementary Financial Information,” for additional disclosure related to HP’s supplier finance programs.

Recently Issued Accounting Pronouncements Not Yet Adopted

In November 2024, the FASB issued guidance that requires disaggregation of specific expense categories in disclosures within the footnotes to the financial statements on an annual and interim basis. HP is required to adopt this guidance for its annual period ending October 31, 2028 and all interim periods thereafter on a prospective basis. Early adoption is permitted. HP is currently evaluating the impact of this guidance on its disclosures.

In December 2023, the FASB issued guidance that enhances the transparency of income tax disclosures by expanding annual disclosure requirements related to the rate reconciliation and income taxes paid. HP is required to adopt this guidance for its annual period ending October 31, 2026. Early adoption is permitted. HP is currently evaluating the impact of this guidance on its disclosures.

In November 2023, the FASB issued guidance that updates reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses and information used to assess segment performance on an annual and interim basis. HP is required to adopt this guidance for its annual period ending October 31, 2025 and all interim periods thereafter. Early adoption is permitted. HP is currently evaluating the impact of this guidance on its disclosures.

HP INC. AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements (Continued)

(Unaudited)

Note 2: Segment Information

HP’s operations are organized into three reportable segments: Personal Systems, Printing, and Corporate Investments.

Personal Systems offers desktops, notebooks, and workstations (including HP’s portfolio of AI PCs and workstations), thin clients, retail point-of-sale (“POS”) systems, displays, hybrid systems, software, solutions including endpoint security and services. Personal Systems includes support and deployment, configurations and extended warranty services and maintains multi-operating system and multi-architecture strategies using Microsoft Windows and Google Chrome operating systems, and predominantly using processors from Intel, AMD, and NVIDIA.

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

Commercial PS consists of endpoint computing devices and hybrid systems, for use by enterprise, public sector (which includes education), and small- and medium-sized business (“SMB”) customers. These devices include our Pro and Elite commercial PC portfolio, our Z line of workstations, thin clients, retail POS systems, and HP’s Dragonfly and Chromebook PCs. HP offers a range of secure services and solutions to commercial customers to help them manage the lifecycle of their PCs and mobility installed base.
Consumer PS consists of devices, accessories and services which are optimized for consumer usage, focusing on gaming, learning and working remotely, consuming multi-media for entertainment, managing personal life activities, sharing information and staying connected, informed, and secure. These devices include our new Omni consumer PC portfolio, the Omen and Victus gaming lines, and HP’s Spectre, Envy, Pavilion and Chromebook PCs.

Printing provides consumer and commercial printer hardware, supplies, services and solutions. Printing is also focused on Graphics and 3D Printing and Personalization in the commercial and industrial markets. Our global business capabilities within Printing are described below:

Office Printing Solutions delivers HP’s security enhanced office printers, supplies, services, and solutions to SMBs, public sector and large enterprises. It also includes Original Equipment Manufacturer (“OEM”) hardware and solutions.

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

*•*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.

*•*3D Printing & Personalization offers a portfolio of additive manufacturing solutions and supplies to help customers succeed in their additive and digital manufacturing journey. HP offers complete solutions in collaboration with an ecosystem of partners.

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

Commercial Printing consists of office printing solutions, graphics solutions and 3D printing and personalization, excluding supplies;
Consumer Printing 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, industrial graphics supplies and 3D printing and personalization supplies, for recurring use in consumer and commercial hardware.

Corporate Investments includes certain business incubation and investment projects.

HP does not allocate certain operating expenses, which it manages at the corporate level, to its segments. These unallocated amounts include expenses such as certain corporate governance costs and infrastructure investments, stock-based compensation expense, restructuring and other charges, acquisition and divestiture charges and amortization of intangible assets.

HP INC. AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements (Continued)

(Unaudited)

Segment operating results and the reconciliation to HP consolidated results were as follows:


	Three months ended January 31
		2025		2024
		In millions
Net revenue:
Commercial PS		$	6,645	$	6,045
Consumer PS		2,579		2,764
Personal Systems		9,224		8,809
Supplies		2,826		2,863
Commercial Printing		1,144		1,227
Consumer Printing		299		285
Printing		4,269		4,375
Corporate Investments		11		2
Total segment net revenue		13,504		13,186
Other		—		(1)
Total net revenue		$	13,504	$	13,185

Earnings before taxes:
Personal Systems		$	507	$	537
Printing		810		872
Corporate Investments		(27)		(37)
Total segment earnings from operations		1,290		1,372
Corporate and unallocated costs and other		(114)		(89)
Stock-based compensation expense		(192)		(177)
Restructuring and other charges		(70)		(63)
Acquisition and divestiture charges		(6)		(27)
Amortization of intangible assets		(63)		(81)

Interest and other, net		(141)		(142)
Total earnings before taxes		$	704	$	793

HP INC. AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements (Continued)

(Unaudited)

Note 3: Restructuring and Other Charges

Summary of Restructuring Plans

HP’s restructuring activities summarized by plan were as follows:


	Fiscal 2023 Plan
	Severance and EER		Non-labor		Other prior-year plans(1)		Total
	In millions
Accrued balance as of October 31, 2024	$	120	$	11	$	7	$	138
Charges	44		12		—		56
Cash payments	(56)		(3)		(1)		(60)
Non-cash and other adjustments	(2)		(10)		—		(12)
Accrued balance as of January 31, 2025	$	106	$	10	$	6	$	122
Total costs incurred to date as of January 31, 2025	$	651	$	69	$	878	$	1,598

Reflected in the Consolidated Condensed Balance Sheets
Other current liabilities	$	106	$	2	$	6	$	114
Other non-current liabilities	$	—	$	8	$	—	$	8


Accrued balance as of October 31, 2023	$	88	$	18	$	2	$	108
Charges	43		2		3		48
Cash payments	(63)		(6)		(3)		(72)
Non-cash and other adjustments	2		—		(2)		—
Accrued balance as of January 31, 2024	$	70	$	14	$	—	$	84

(1) Primarily includes the fiscal 2020 plan along with other legacy plans, all of which are substantially complete. HP does not expect any further material activity associated with these plans.

Fiscal 2023 Plan

On November 18, 2022, HP’s Board of Directors approved the Future Ready Plan (the “Fiscal 2023 Plan”) intended to enable digital transformation, portfolio optimization and operational efficiency which HP expects will be implemented through fiscal 2025. HP expects workforce reductions of approximately 7,000 employees. HP estimates that it will incur pre-tax charges of approximately $1.0 billion of which approximately $0.7 billion primarily in labor costs related to workforce reductions and the remaining costs will relate to non-labor actions and other charges.

On February 27, 2025, HP approved an amendment to the Fiscal 2023 Plan increasing its expected gross workforce reductions by approximately 1,000 to 2,000 employees. The changes to the workforce will vary by country, based on local legal requirements and consultations with employee works councils and other employee representatives, as appropriate. The Company anticipates incurring an additional $150 million in restructuring and other charges primarily related to labor costs in connection with the plan amendment.

Other Charges

Other charges include non-recurring costs, including those as a result of information technology rationalization efforts and transformation program management costs, and are distinct from ongoing operational costs. These costs primarily relate to third-party professional services and other non-recurring costs. HP incurred $14 million and $15 million of other charges for the three months ended January 31, 2025 and January 31, 2024, respectively.

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 Plans				Non-U.S. Defined Benefit Plans				Post-Retirement Benefit Plans
	2025		2024		2025		2024		2025		2024
	In millions
Service cost	$	—	$	—	$	9	$	9	$	—	$	—
Interest cost	53		57		10		12		4		4
Expected return on plan assets	(59)		(61)		(14)		(13)		(4)		(4)
Amortization and deferrals:
Actuarial loss (gain)	7		7		2		—		(4)		(4)
Prior service cost (credit)	—		—		2		2		(2)		(3)
Net periodic benefit cost (credit)	$	1	$	3	$	9	$	10	$	(6)	$	(7)



Total periodic benefit cost (credit)	$	1	$	3	$	9	$	10	$	(6)	$	(7)

Employer Contributions and Funding Policy

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

During fiscal year 2025, HP expects to contribute approximately $36 million to its non-U.S. pension plans, $30 million to its U.S. non-qualified pension plan participants and $4 million to cover benefit claims under HP’s post-retirement benefit plans. During the three months ended January 31, 2025, HP contributed $8 million to its non-U.S. pension plans, $7 million to cover benefit payments to U.S. non-qualified plan participants and $2 million to cover benefit claims under HP’s post-retirement benefit plans.

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 19.7% and 21.6% for the three months ended January 31, 2025 and 2024, respectively. During the three months ended January 31, 2025, excess tax benefits associated with stock options, restricted stock units and performance-adjusted restricted stock units were $15 million.

Uncertain Tax Positions

As of January 31, 2025, the amount of gross unrecognized tax benefits was $1.2 billion, of which up to $873 million would affect HP’s effective tax rate if realized. Total gross unrecognized tax benefits decreased by $9 million for the three months ended January 31, 2025. 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, 2025 and 2024, HP had accrued $145 million and $105 million, respectively, for interest and penalties.

HP engages in continuous discussions and negotiations with taxing authorities regarding tax matters in various jurisdictions. HP expects 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 $166 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 61 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.

HP INC. AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements (Continued)

(Unaudited)

Note 6: Supplementary Financial Information

Cash, Cash Equivalents and Restricted Cash


	As of
	January 31, 2025		October 31, 2024
	In millions
Cash and cash equivalents	$	2,880	$	3,238
Restricted cash(1)	14		15
	$	2,894	$	3,253

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

Accounts Receivable

The allowance for credit losses related to accounts receivable and changes were as follows:


	Three months ended January 31, 2025
	In millions
Balance at beginning of period	$	83
Current-period allowance for credit losses	4
Deductions, net of recoveries	(3)
Balance at end of period	$	84

HP utilizes certain third-party arrangements in the normal course of business as part of HPs cash and liquidity management and also to provide liquidity to certain partners to facilitate their working capital requirements. These financing arrangements, which in certain 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, 2025 and October 31, 2024 were not material.

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


	Three months ended January 31
			2025		2024
		In millions
Balance at beginning of period(1)			$	284	$	141
Trade receivables sold			3,049		3,298
Cash receipts			(3,191)		(3,232)
Foreign currency and other			(9)		5
Balance at end of period(1)			$	133	$	212

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

HP INC. AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements (Continued)

(Unaudited)

Inventory


	As of
	January 31, 2025		October 31, 2024
	In millions
Finished goods	$	4,554	$	4,338
Purchased parts and fabricated assemblies	3,889		3,382
	$	8,443	$	7,720

Other Current Assets


	As of
	January 31, 2025		October 31, 2024
	In millions
Supplier and other receivables	$	1,792	$	2,180
Prepaid and other current assets	1,596		1,462
Value-added taxes receivable	921		1,028

	$	4,309	$	4,670

Property, Plant and Equipment, Net


	As of
	January 31, 2025		October 31, 2024
	In millions
Land, buildings and leasehold improvements	$	2,518	$	2,527
Machinery and equipment, including equipment held for lease	5,534		5,465
	8,052		7,992
Accumulated depreciation	(5,152)		(5,078)
	$	2,900	$	2,914

Other Non-Current Assets


	As of
	January 31, 2025		October 31, 2024
	In millions
Deferred tax assets	$	3,283	$	3,311
Intangible assets	1,252		1,319
Right-of-use assets	1,158		1,165
Deposits and prepaid	301		322
Prepaid pension and post-retirement benefit assets	374		362
Other	1,229		1,129
	$	7,597	$	7,608

HP INC. AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements (Continued)

(Unaudited)

Other Current Liabilities


	As of
	January 31, 2025		October 31, 2024
	In millions
Sales and marketing programs	$	2,900	$	3,060
Deferred revenue	1,452		1,446
Other accrued taxes	1,058		1,233
Employee compensation and benefit	642		970
Warranty	457		486
Operating lease liabilities	431		443
Tax liability	281		291
Other	2,312		2,449
	$	9,533	$	10,378

Other Non-Current Liabilities


	As of
	January 31, 2025		October 31, 2024
	In millions
Deferred revenue	$	1,519	$	1,487
Tax liability	873		839
Operating lease liabilities	781		787
Pension, post-retirement, and post-employment liabilities	588		607
Deferred tax liability	49		31
Other	485		531
	$	4,295	$	4,282

Interest and Other, Net


	Three months ended January 31
			2025		2024
		In millions
Interest expense on borrowings			$	(104)	$	(116)
Factoring costs			(37)		(40)

Non-operating retirement-related credits			6		4
Other, net			(6)		10
			$	(141)	$	(142)

HP INC. AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements (Continued)

(Unaudited)

Net Revenue by Region


	Three months ended January 31
			2025		2024
		In millions
Americas			$	5,519	$	5,408
Europe, Middle East and Africa			4,754		4,668
Asia-Pacific and Japan			3,231		3,109
Total net revenue			$	13,504	$	13,185

Value of Remaining Performance Obligations

As of January 31, 2025, the estimated value of transaction price allocated to remaining performance obligations was $3.9 billion. HP expects to recognize approximately $1.7 billion of the unearned amount in next 12 months and $2.2 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, 2025 and October 31, 2024, HP’s contract liabilities balances were $3.0 billion and $2.9 billion, respectively, included in Other current liabilities and Other non-current liabilities in the Consolidated Condensed Balance Sheets.

The increase in the contract liabilities balance for the three months ended January 31, 2025, was primarily driven by sales of fixed-price support and maintenance services, partially offset by $0.5 billion of revenue recognized that was included in the contract liabilities balance as of October 31, 2024.

Supplier Finance Programs

HP facilitates voluntary supplier finance programs to provide certain suppliers the opportunity to sell their right to HP’s payment obligations to participating financial institutions. Under these programs, HP agrees to pay the participating financial institutions the stated amount of confirmed invoices from its designated suppliers on the original maturity dates of the invoices. Participation by suppliers in these programs have no impact on the payment terms and amounts due from HP. HP does not have an economic interest in a supplier's participation in the program and is not a party to the agreement between the supplier and the financial institutions. In connection with these programs, HP does not pledge assets or other forms of guarantees as security for the committed payment to the participating financial institutions. For certain programs, HP pays a monthly service fee to a third-party administrator that provides the supplier finance platform and related support. HP and the participating financial institutions may terminate the agreement upon at least 30 days notice. As of January 31, 2025 and October 31, 2024, HP had $8.7 billion and $7.8 billion respectively, in obligations outstanding (i.e., unpaid invoices) that were confirmed as valid under the supplier finance programs. Of the amounts confirmed as valid under the program and outstanding, the amounts owed to participating financial institutions were $0.8 billion and $0.9 billion as of January 31, 2025 and October 31, 2024, respectively. These obligations are included within the Accounts payable line item of HP’s Consolidated Condensed Balance Sheets.

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, 2025								As of October 31, 2024
	Fair Value Measured Using								Fair Value Measured Using
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
	In millions
Assets:
Cash Equivalents:
Time deposits	$	—	$	1,011	$	—	$	1,011	$	—	$	1,012	$	—	$	1,012

Government debt(1)	426		—		—		426		1,332		—		—		1,332
Available-for-Sale Investments:

Financial institution instruments	—		3		—		3		—		3		—		3

Marketable securities and mutual funds(2)	58		124		—		182		54		130		—		184

Derivative Instruments:
Interest rate contracts	—		11		—		11		—		4		—		4
Foreign currency contracts	—		451		—		451		—		225		—		225
Other derivatives	—		2		—		2		—		—		—		—
Total assets	$	484	$	1,602	$	—	$	2,086	$	1,386	$	1,374	$	—	$	2,760
Liabilities:
Derivative Instruments:
Interest rate contracts	$	—	$	14	$	—	$	14	$	—	$	22	$	—	$	22
Foreign currency contracts	—		122		—		122		—		158		—		158
Other derivatives	—		—		—		—		—		2		—		2
Total liabilities	$	—	$	136	$	—	$	136	$	—	$	182	$	—	$	182

(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.

(2) As of January 31, 2025 and October 31, 2024, $74 million and $78 million, respectively, of debt securities were restricted to fund benefits received by qualifying employees under a sponsored defined benefit plan.

HP INC. AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements (Continued)

(Unaudited)

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 $9.4 billion as compared to its carrying amount of $9.7 billion at January 31, 2025. The fair value of HP’s short- and long-term debt was $9.4 billion as compared to its carrying value of $9.7 billion at October 31, 2024. 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 of the fair value hierarchy.

Non-Marketable Equity Investments and Non-Financial Assets: HP’s non-marketable equity investments are measured at cost less impairment, adjusted for observable price changes. HP’s non-financial assets, such as intangible assets, goodwill and property, plant and equipment, are recorded at fair value in the period an impairment charge is recognized. If measured at fair value in the Consolidated Condensed Balance Sheets these would generally be classified within Level 3 of the fair value hierarchy.

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, 2025								As of October 31, 2024
	Cost		Gross Unrealized Gain		Gross Unrealized Loss		Fair Value		Cost		Gross Unrealized Gain		Gross Unrealized Loss		Fair Value
	In millions
Cash Equivalents:
Time deposits	$	1,011	$	—	$	—	$	1,011	$	1,012	$	—	$	—	$	1,012

Government debt	426		—		—		426		1,332		—		—		1,332
Total cash equivalents	1,437		—		—		1,437		2,344		—		—		2,344
Available-for-Sale Investments:

Financial institution instruments	3		—		—		3		3		—		—		3

Marketable securities and mutual funds(1)	113		69		—		182		115		69		—		184

Total available-for-sale investments	116		69		—		185		118		69		—		187
Total cash equivalents and available-for-sale investments	$	1,553	$	69	$	—	$	1,622	$	2,462	$	69	$	—	$	2,531

(1) As of January 31, 2025 and October 31, 2024, $74 million and $78 million, respectively, of debt securities were restricted to fund benefits received by qualifying employees under a sponsored defined benefit plan.

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, 2025 and October 31, 2024, 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, 2025
	Amortized Cost		Fair Value
	In millions
Due in one year	$	18	$	18
Due in one to five years	59		59
	$	77	$	77

Non-marketable equity securities in privately held companies are included in Other current and non-current assets in the Consolidated Condensed Balance Sheets. These amounted to $109 million and $107 million as of January 31, 2025 and October 31, 2024, 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, 2025.

Derivative Instruments

HP uses derivative instruments, primarily forward contracts, interest rate swaps, total return swaps, treasury rate locks, forward starting swaps and option contracts to offset business exposure to foreign currency and interest rate risk on expected future cash flows and on certain existing assets and liabilities. HP may designate its derivative contracts as fair value hedges or cash flow hedges and classifies the cash flows with the activities that correspond to the underlying hedged items. 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.

HP INC. AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements (Continued)

(Unaudited)

As a result of its use of derivative instruments, HP is exposed to the risk that its counterparties will fail to meet their contractual obligations. Master netting agreements mitigate credit exposure to counterparties by permitting HP to net amounts due from HP to counterparty against amounts due to HP from the same counterparty under certain conditions. To further limit credit risk, HP has collateral security agreements that allow HP’s custodian to hold collateral from, or require HP to post collateral to, counterparties when the net fair value of financial instruments fluctuates from contractually established thresholds. The Company includes gross collateral posted and received in other current assets and other current liabilities in the Consolidated Condensed Balance Sheets, respectively. The fair value of derivatives with credit contingent features in a net liability position was $35 million and $59 million as of January 31, 2025 and as of October 31, 2024, 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, 2025 and October 31, 2024.

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, option contracts, treasury rate locks and forward starting swaps designated as cash flow hedges to protect against the foreign currency exchange and interest rate risks inherent in its forecasted products net revenue, cost of products net 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, contractual pricing and/or business unit specific exposures may 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, 2025 and 2024, 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:

HP INC. AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements (Continued)

(Unaudited)


	As of January 31, 2025										As of October 31, 2024
	Outstanding Gross Notional		Other Current Assets		Other Non-Current Assets		Other Current Liabilities		Other Non-Current Liabilities		Outstanding Gross Notional		Other Current Assets		Other Non-Current Assets		Other Current Liabilities		Other Non-Current Liabilities
	In millions
Derivatives designated as hedging instruments
Fair value hedges:
Interest rate contracts	$	750	$	—	$	—	$	14	$	—	$	750	$	—	$	—	$	11	$	10
Cash flow hedges:
Foreign currency contracts	15,625		355		88		82		23		14,563		169		36		117		34
Interest rate contracts	500		—		11		—		—		500		—		4		—		1
Total derivatives designated as hedging instruments	16,875		355		99		96		23		15,813		169		40		128		45
Derivatives not designated as hedging instruments
Foreign currency contracts	4,235		8		—		17		—		4,284		20		—		7		—
Other derivatives	170		2		—		—		—		156		—		—		2		—
Total derivatives not designated as hedging instruments	4,405		10		—		17		—		4,440		20		—		9		—
Total derivatives	$	21,280	$	365	$	99	$	113	$	23	$	20,253	$	189	$	40	$	137	$	45

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, 2025 and October 31, 2024, 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, 2025
Derivative assets	$	464		$	—	$	464	$	98	$	337	(1)	$	29
Derivative liabilities	$	136		$	—	$	136	$	98	$	35	(2)	$	3
As of October 31, 2024
Derivative assets	$	229		$	—	$	229	$	113	$	88	(1)	$	28
Derivative liabilities	$	182		$	—	$	182	$	113	$	61	(2)	$	8

(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.

(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

HP INC. AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements (Continued)

(Unaudited)

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


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



Three months ended January 31
Interest rate contract	Fixed-rate debt	Interest and other, net	2025	$	(141)	$	7	$	(7)
			2024	$	(142)	$	15	$	(15)

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


	Three months ended January 31
		2025		2024
		In millions
Gain/(loss) recognized in Accumulated other comprehensive (loss) income on derivatives:
Foreign currency contracts		$	324	$	(162)
Interest rate contracts		8		—
Total		$	332	$	(162)

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


	Gain/(loss) reclassified from Accumulated other comprehensive (loss) income into earnings
		Three months ended January 31
				2025		2024
			In millions
Products net revenue				$	67	$	199
Cost of products net revenue				(27)		(40)
Operating expenses				—		(3)
Interest and other, net				3		3
Total				$	43	$	159

As of January 31, 2025, HP expects to reclassify an estimated accumulated other comprehensive gain of $209 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) income based on the change of market rate, and therefore could have different impact on earnings.

HP INC. AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements (Continued)

(Unaudited)

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 as follows:


	Gain/(loss) recognized in earnings on derivative instrument
		Three months ended January 31
			2025		2024
			In millions
Foreign currency contracts			$	(3)	$	1
Other derivatives			4		4
Total			$	1	$	5

HP INC. AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements (Continued)

(Unaudited)

Note 9: Borrowings

Notes Payable and Short-Term Borrowings


	As of January 31, 2025				As of October 31, 2024
	Amount Outstanding		Weighted-Average Interest Rate		Amount Outstanding		Weighted-Average Interest Rate
	In millions

Current portion of long-term debt	$	1,363	5.0	%	$	1,358	5.0	%
Notes payable to banks, lines of credit and other	55		—	%	48		—	%
Total notes payable and short-term borrowings	$	1,418			$	1,406

Long-Term Debt


	As of
	January 31, 2025		October 31, 2024
	In millions
U.S. Dollar Global Notes(1)
$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 2.20%, due June 2025	1,150		1,150
$1,000 issued at discount to par at a price of 99.718% at 3.00%, due June 2027	999		999
$850 issued at discount to par at a price of 99.790% at 3.40%, due June 2030	503		503
$1,000 issued at discount to par at a price of 99.808% at 1.45%, due June 2026	521		521
$1,000 issued at discount to par at a price of 99.573% at 2.65%, due June 2031(2)	997		997
$1,000 issued at discount to par at a price of 99.767% at 4.00%, due April 2029	999		999
$1,000 issued at discount to par at a price of 99.966% at 4.20%, due April 2032	676		676
$900 issued at discount to par at a price of 99.841% at 4.75%, due January 2028	899		899
$1,100 issued at discount to par at a price of 99.725% at 5.50%, due January 2033	1,098		1,098
$500 issued at par at a price of 100% at 4.75%, due March 2029	3		3
	9,044		9,044
Other borrowings at 1.46%-7.98%, due in fiscal years 2025-2031	650		645
Fair value adjustment related to hedged debt	(14)		(21)
Unamortized debt issuance cost	(44)		(47)
Current portion of long-term debt	(1,363)		(1,358)
Total long-term debt	$	8,273	$	8,263

(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 allocated 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, 2025, HP maintained a U.S. commercial paper program for the issuance of U.S. dollar-denominated commercial paper up to a maximum aggregate principal amount of $6.0 billion. The principal amount outstanding under this program and certain short-term borrowings at any time cannot exceed a $6.0 billion authorization by HP’s Board of Directors.

HP INC. AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements (Continued)

(Unaudited)

Credit Facility

As of January 31, 2025, HP maintained a $5.0 billion 5-year sustainability-linked senior unsecured committed revolving credit facility, which HP entered into on August 1, 2024. Commitments under the revolving credit facility will be available until August 1, 2029. 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, 2025, HP was in compliance with the covenants in the credit agreement governing the revolving credit facility.

Available Borrowing Resources

As of January 31, 2025, HP had available borrowing resources of $1.0 billion from uncommitted lines of credit in addition to funds available under the revolving credit facility.

HP INC. AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements (Continued)

(Unaudited)

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, 2025, HP executed share repurchases of 2.7 million shares and settled total shares for $0.1 billion. Share repurchases executed during the three months ended January 31, 2025 included 0.2 million shares settled in February 2025. During the three months ended January 31, 2024, HP executed share repurchases of 17.1 million shares and settled total shares for $0.5 billion.

The shares repurchased during the three months ended January 31, 2025 and 2024 were all open market repurchase transactions. As of January 31, 2025, HP had approximately $9.2 billion remaining under the share repurchase authorizations approved by HP’s Board of Directors.

HP INC. AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements (Continued)

(Unaudited)

Changes and reclassifications related to Accumulated Other Comprehensive Loss, net of taxes


	Three months ended January 31
	2025		2024
	In millions
Other comprehensive (loss) income, net of taxes:
Unrealized components of available-for-sale debt securities
Balance at the beginning of period	$	14	$	7
Unrealized gains arising during the period	4		4


Unrealized components of available-for-sale debt securities, net of taxes	4		4
Balance at the end of period	$	18	$	11

Unrealized components of cash flow hedges
Balance at the beginning of period	$	47	$	230
Unrealized gains (losses) arising during the period	332		(162)
Gains reclassified into earnings	(43)		(159)
Tax effects on change in unrealized components of cash flow hedges	(54)		68
Unrealized components of cash flow hedges, net of taxes	235		(253)
Balance at the end of period	$	282	$	(23)

Unrealized components of defined benefit plans
Balance at the beginning of period	$	(496)	$	(437)
Unrealized gains (losses) arising during the period	1		(10)
Amortization of actuarial loss and prior service benefit(1)	5		2
Curtailments, settlements and other	(1)		—
Tax effects on change in unrealized components of defined benefit plans	(1)		2
Unrealized components of defined benefit plans, net of taxes	4		(6)
Balance at the end of period	$	(492)	$	(443)

Cumulative translation adjustment
Balance at the beginning of period	$	1	$	(23)
Change in cumulative translation adjustment	(13)		20

Cumulative translation adjustment, net of taxes	(13)		20
Balance at the end of period	$	(12)	$	(3)

Other comprehensive income (loss)	$	230	$	(235)
Accumulated other comprehensive loss	$	(204)	$	(458)

(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”.

HP INC. AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements (Continued)

(Unaudited)

Note 11: 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
			2025		2024
		In millions, except per share amounts
Numerator:
Net earnings			$	565	$	622
Denominator:
Weighted-average shares used to compute basic net EPS			948		995
Dilutive effect of employee stock plans			9		7
Weighted-average shares used to compute diluted net EPS			957		1,002
Net earnings per share:
Basic			$	0.60	$	0.63
Diluted			$	0.59	$	0.62
Anti-dilutive weighted-average stock-based compensation awards(1)			4		6

(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, 2025, 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 product and certain requirements for business sales exemptions and have advocated alternative models of compensation to rights holders.

HP INC. AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements (Continued)

(Unaudited)

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

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, 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. In unrelated, third-party proceedings, the Supreme Court of India has resolved certain jurisdictional questions to the authority of the Directorate of Revenue Intelligence, issues which HP also raised in its appeal to the Customs Tribunal. In late 2024, those jurisdictional questions were resolved. A hearing on the merits of HP’s appeal before the Customs Tribunal has been scheduled before the Customs Tribunal for April 21-25, 2025. 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.

Media Content Protection LLC Patent Litigation (formerly 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 March 23, 2022, the ITC rendered a final determination that no violation of Section 337 has occurred. Philips did not appeal and elected to resume litigation with its case in federal court. Philips seeks unspecified damages and an injunction against HP, and the prior stay has been lifted. On August 10, 2023, HP filed a motion for summary judgment of indefiniteness for all asserted claims. On July 1, 2024, the district court denied the motion without prejudice to renew. Philips conveyed the patents asserted in the district court action to Media Content Protection LLC (“MCP”), and MCP was substituted as plaintiff in place of Philips.

HP INC. AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements (Continued)

(Unaudited)

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 (“Securities Class Action”). Plaintiffs seek compensatory damages and other relief. HP and the named officers filed a motion to dismiss the complaint for failure to state a claim upon which relief can be granted. On March 3, 2022, the court granted the motion to dismiss with prejudice. Plaintiffs appealed the decision. On April 11, 2023, the appellate court reversed the district court’s decision and remanded the case to the district court for further proceedings consistent with the appellate opinion, including consideration of HP’s other arguments for dismissal. On July 21, 2023, HP and the named officers filed a renewed motion to dismiss. On March 27, 2024, the district court issued an order granting in part and denying in part the motion to dismiss. On August 8, 2024, the Court of Appeals for the Ninth Circuit granted HP’s petition for permission to appeal. On October 28, 2024, HP filed its appeal, which is awaiting appellate court oral argument that has not yet been scheduled. 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 he makes substantially the same factual allegations as in the York County securities complaint, bringing claims for breach of fiduciary duty and violations of securities laws. The derivative plaintiff seeks compensatory damages, governance reforms, and other relief. By court order following stipulations by the parties, the case was transferred to the Northern District of California, and the case was stayed pending a ruling on the motion to dismiss in York County and exhaustion of all related appeals. 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 and exhaustion of all related appeals. On May 31, 2024, the court adopted a stipulation in which the derivative plaintiffs and defendants agreed to consolidate the derivative proceedings, close the Lovoi action, and extend the current stay through summary judgment in the Securities Class Action.

HP INC. AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements (Continued)

(Unaudited)

Legal Proceedings re Authentication of Supplies. Since 2016, HP has from time to time been named in civil litigation, or been the subject of government investigations, involving supplies authentication protocols used in certain HP printers in multiple geographies, including but not limited to the United States, Italy, Israel, the Netherlands, Australia and New Zealand. 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 installation of firmware updates, or the potential inability of cartridges with clone chips or circuitry to work in HP printers with Dynamic Security. Plaintiffs base or have based their claims on various legal theories, including but not limited to unfair competition, computer trespass, and similar statutory claims. Among other relief, Plaintiffs have sought or seek money damages and in certain cases have or may seek injunctive relief against the use or operation of Dynamic Security or relief requiring interoperability. If HP is not successful in its defense of these cases or investigations, it could be subject to damages, penalties, significant settlement demands, or injunctive relief that may be costly or may disrupt operations. Certain of these proceedings in the United States, Italy, the Netherlands, Israel, Australia and New Zealand have been resolved, have concluded, or have concluded subject only to HP’s pending appeal. Digital Revolution B.V. (trading as 123Inkt) filed civil litigation, including competition claims, against HP Nederlands B.V., et al. (Netherlands) in March 2020. HP substantially prevailed before the trial court, and both parties appealed. On November 19, 2024, the court of appeal issued a decision rejecting competition claims against HP and providing that use of Dynamic Security by HP is not unlawful. On February 18, 2025, Digital Revolution filed a cassation appeal against the decision before the Dutch Supreme Court. In addition, two putative class actions have been filed against HP, one in federal court in California, in December 2020, and one in federal court in Illinois, in January 2024, arising out of the use of Dynamic Security firmware updates in HP printers. Plaintiffs in these cases seek compensatory damages, restitution, injunctive relief against alleged unfair and anticompetitive business practices, and other relief. In the December 2020 case, the parties have finalized a settlement agreement, which the court preliminarily approved on December 10, 2024. The court has presently set a hearing for March 18, 2025 to consider final approval of the settlement. The January 2024 case is in its early stages.

Autonomy-Related Legal Proceedings. In 2015, four former Hewlett Packard Company 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., hereinafter the “Claimants”) initiated civil proceedings in the U.K. High Court of Justice against two members of Autonomy’s former management, Michael Lynch and Sushovan Hussain, for breach of their fiduciary duties in causing Autonomy group companies to engage in improper transactions and accounting practices before and in connection with the 2011 acquisition of Autonomy. Trial concluded in January 2020. In May 2022, the court issued its liability judgment, finding that the Claimants had succeeded on substantially all claims and that Messrs. Lynch and Hussein engaged in fraud, and dismissing a counterclaim filed by Mr. Lynch. The court deferred the issue of damages to further proceedings, but indicated that damages awarded may be substantially less than was claimed. In February 2024, the court held a two-week trial on damages, the Claimants sought recovery for $4 billion in losses, and the court took the issue under advisement. Litigation is unpredictable, and there can be no assurance of a recovery of 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.

Litigation with Wilus Institute of Standards and Technology, Inc. and Sisvel International S.A. Since September 13, 2024, Wilus Institute of Standards and Technology, Inc. (“Wilus”) has filed three patent infringement lawsuits against HP in the Eastern District of Texas seeking monetary damages, injunctions and other relief. The complaints allege that HP products that are compliant with the Wi-Fi 6 (801.11.ax) standard infringe patents owned by Wilus. Wilus is a member of the Wi-Fi 6 patent pool administered by Sisvel International S.A. (“Sisvel”), and the patents at issue in the lawsuits are in the Sisvel Wi-Fi 6 patent pool. In December 2024, HP answered the complaints and filed counterclaims against Wilus and Sisvel, alleging that Wilus and Sisvel violated their obligations to license standard-essential patents on fair, reasonable and non-discrimination (“FRAND”) terms, and seeking a court determination of the proper FRAND rate.

Environmental

HP is, and may become a party to, proceedings brought by U.S., state, or other governmental entities or private third parties under federal, state, local, or foreign environmental laws, including the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”), known as “Superfund,” or state laws similar to CERCLA. HP is also conducting environmental investigations or remediation at several current or former operating sites and former disposal sites pursuant to administrative orders or consent agreements with environmental agencies.

HP INC. AND SUBSIDIARIES

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, 2025
	In millions
Balance at beginning of period	$	550
Accruals for warranties issued	158
Adjustments related to pre-existing warranties (including changes in estimates)	(4)
Settlements made (in cash or in kind)	(188)
Balance at end of period	$	516

Previous: Cover and table of contents · Next: Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.