Hp Inc 10-Q for FY2023 Q2

Hp Inc (HPQ)

10-Q 2023-05-31 For: 2023-04-30

Added on April 09, 2026

About this 10-Q

Hp Inc filed this 10-Q on May 31, 2023, covering the quarter ended April 30, 2023 (FY2023 Q2).

Headline figures

Quarter ended April 30, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $12.91B; down 21.7% from $16.49B a year earlier
Net income: $1.07B; up 6.6% from net income of $1B a year earlier
Diluted EPS: $1.07; up 13.8% from $0.94 a year earlier

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(Mark One)
☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
April 30, 2023
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


Delaware		94-1081436
(State or other jurisdiction of incorporation or organization)		(I.R.S. employer identification no.)
1501 Page Mill Road		94304
Palo Alto,	California	(Zip code)
(Address of principal executive offices)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, par value $0.01 per share	HPQ	New York Stock Exchange


		Page
Forward-Looking Statements		3
Part I. Financial Information
Item 1.	Financial Statements and Supplementary Data	4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	39
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	53
Item 4.	Controls and Procedures	53
Part II. Other Information
Item 1.	Legal Proceedings	54
Item 1A.	Risk Factors	54
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	55
Item 3.	Defaults Upon Senior Securities	55
Item 4.	Mine Safety Disclosures	55
Item 5.	Other Information	55
Item 6.	Exhibits	55

Exhibit Index		56
Signature		64


			Page
Consolidated Condensed Statements of Earnings for the three and six months ended April 30, 202 3 and 202 2 (Unaudited)			5
Consolidated Condensed Statements of Comprehensive Income for the three and six months ended April 30, 202 3 and 202 2 (Unaudited)			6
Consolidated Condensed Balance Sheets as of April 30, 202 3 and October 31, 202 2 (Unaudited)			7
Consolidated Condensed Statements of Cash Flows for the six months ended April 30, 202 3 and 202 2 (Unaudited)			8
Consolidated Condensed Statements of Stockholders’ Deficit (Unaudited)			9
Notes to Consolidated Condensed Financial Statements (Unaudited)			10
Note 1: Basis of Presentation			10
Note 2: Segment Information			11
Note 3: Restructuring and Other Charges			14
Note 4: Retirement and Post-Retirement Benefit Plans			16
Note 5: Taxes on Earnings			18
Note 6: Supplementary Financial Information			19
Note 7: Fair Value			23
Note 8: Financial Instruments			25
Note 9: Borrowings			30
Note 10: Stockholders’ Deficit			31
Note 11: Net Earnings Per Share			33
Note 12: Litigation and Contingencies			33
Note 13: Guarantees, Indemnifications and Warranties			38


	Three months ended April 30				Six months ended April 30
	2023		2022		2023		2022
	In millions, except per share amounts
Net revenue	$	12,913	$	16,490	$	26,741	$	33,518
Costs and expenses:
Cost of revenue	9,984		13,157		21,003		26,800
Research and development	410		425		813		843
Selling, general and administrative	1,398		1,464		2,729		2,932
Restructuring and other charges	200		82		341		150
Acquisition and divestiture charges	73		32		157		52
Amortization of intangible assets	86		52		171		104
Total costs and expenses	12,151		15,212		25,214		30,881
Earnings from operations	762		1,278		1,527		2,637
Interest and other, net	(160)		(39)		(341)		(71)
Earnings before taxes	602		1,239		1,186		2,566
Benefit from (provision for) taxes	464		(239)		367		(480)
Net earnings	$	1,066	$	1,000	$	1,553	$	2,086

Net earnings per share:
Basic	$	1.08	$	0.95	$	1.57	$	1.96
Diluted	$	1.07	$	0.94	$	1.56	$	1.94

Weighted-average shares used to compute net earnings per share:
Basic	991		1,050		990		1,066
Diluted	998		1,062		997		1,078


	As of
	April 30, 2023		October 31, 2022
	In millions, except par value
ASSETS
Current assets:
Cash, cash equivalents and restricted cash	$	1,940	$	3,145
Accounts receivable, net of allowance for credit losses of $92 and $107, respectively	4,137		4,546
Inventory	7,221		7,595
Other current assets	3,725		4,515
Total current assets	17,023		19,801
Property, plant and equipment, net	2,771		2,774
Goodwill	8,618		8,541
Other non-current assets	7,954		7,471
Total assets	$	36,366	$	38,587
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Notes payable and short-term borrowings	$	240	$	218
Accounts payable	13,317		15,284
Other current liabilities	10,477		10,651
Total current liabilities	24,034		26,153
Long-term debt	10,360		10,796
Other non-current liabilities	4,456		4,556
Stockholders’ deficit:
Preferred stock, $0.01 par value (300 shares authorized; none issued)	—		—
Common stock, $0.01 par value (9,600 shares authorized; 986 and 980 shares issued and outstanding at April 30, 2023 and October 31, 2022, respectively)	10		10
Additional paid-in capital	1,344		1,172
Accumulated deficit	(3,470)		(4,413)
Accumulated other comprehensive (loss) income	(368)		313
Total stockholders’ deficit	(2,484)		(2,918)
Total liabilities and stockholders’ deficit	$	36,366	$	38,587


	Common Stock			Additional Paid-in Capital				Accumulated Other Comprehensive Income (Loss)		Total Stockholders’ Deficit
	Number of Shares	Par Value				Accumulated Deficit
	In millions, except number of shares in thousands
Balance January 31, 2022	1,059,900	$	11	$	1,046	$	(3,369)	$	(16)	$	(2,328)
Net earnings						1,000				1,000
Other comprehensive income, net of taxes								363		363
Comprehensive income										1,363
Issuance of common stock in connection with employee stock plans and other	608			(7)						(7)
Repurchases of common stock (Note 10)	(27,116)	(1)		(28)		(970)				(999)
Cash dividends						3				3
Stock-based compensation expense				70						70

Balance April 30, 2022	1,033,392	$	10	$	1,081	$	(3,336)	$	347	$	(1,898)

Balance January 31, 2023	985,089	$	10	$	1,256	$	(4,540)	$	(456)	$	(3,730)
Net earnings						1,066				1,066
Other comprehensive income, net of taxes								88		88
Comprehensive income										1,154
Issuance of common stock in connection with employee stock plans and other	787			(7)						(7)

Cash dividends						4				4
Stock-based compensation expense				95						95

Balance April 30, 2023	985,876	$	10	$	1,344	$	(3,470)	$	(368)	$	(2,484)

	Common Stock			Additional Paid-in Capital				Accumulated Other Comprehensive Income (Loss)		Total Stockholders’ Deficit
	Number of Shares	Par Value				Accumulated Deficit
	In millions, except number of shares in thousands
Balance October 31, 2021	1,092,205	$	11	$	1,060	$	(2,461)	$	(260)	$	(1,650)
Net earnings						2,086				2,086
Other comprehensive income, net of taxes								607		607
Comprehensive income										2,693
Issuance of common stock in connection with employee stock plans and other	10,384			(113)						(113)
Repurchases of common stock (Note 10)	(69,197)	(1)		(69)		(2,428)				(2,498)
Cash dividends ($0.50 per common share)						(533)				(533)
Stock-based compensation expense				203						203

Balance April 30, 2022	1,033,392	$	10	$	1,081	$	(3,336)	$	347	$	(1,898)

Balance October 31, 2022	979,869	$	10	$	1,172	$	(4,413)	$	313	$	(2,918)
Net earnings						1,553				1,553
Other comprehensive loss, net of taxes								(681)		(681)
Comprehensive income										872
Issuance of common stock in connection with employee stock plans and other	9,631			(86)						(86)
Repurchases of common stock (Note 10)	(3,624)			(4)		(96)				(100)
Cash dividends ($0.53 per common share)						(514)				(514)
Stock-based compensation expense				262						262

Balance April 30, 2023	985,876	$	10	$	1,344	$	(3,470)	$	(368)	$	(2,484)


	Fiscal 2023 Plan
	Severance and EER			Non-labor		Other prior-year plans(1)		Total
	In millions
Accrued balance as of October 31, 2022	$	—		$	—	$	32	$	32
Charges	294			13		2		309
Cash payments	(92)			(8)		(35)		(135)
Non-cash and other adjustments	(141)		(2)	(5)		3		(143)
Accrued balance as of April 30, 2023	$	61		$	—	$	2	$	63
Total costs incurred to date as of April 30, 2023	$	294		$	13	$	867	$	1,174

Reflected in Consolidated Condensed Balance Sheets
Other current liabilities	$	61		$	—	$	2	$	63



Accrued balance as of October 31, 2021	$	—		$	—	$	75	$	75
Charges	—			—		145		145
Cash payments	—			—		(141)		(141)
Non-cash and other adjustments	—			—		(32)		(32)
Accrued balance as of April 30, 2022	$	—		$	—	$	47	$	47


	Three months ended April 30
	U.S. Defined Benefit Plans				Non-U.S. Defined Benefit Plans				Post-Retirement Benefit Plans
	2023		2022		2023		2022		2023		2022
	In millions
Service cost	$	—	$	—	$	11	$	14	$	—	$	—
Interest cost	55		40		10		5		3		2
Expected return on plan assets	(64)		(75)		(13)		(12)		(3)		(2)
Amortization and deferrals:
Actuarial loss (gain)	4		2		1		9		(4)		(4)
Prior service cost (credit)	—		—		2		1		(3)		(3)
Net periodic benefit (credit) cost	(5)		(33)		11		17		(7)		(7)

Settlement loss	—		—		(1)		—		—		—
Special termination benefit cost	105		—		—		—		34		—
Total periodic benefit (credit) cost	$	100	$	(33)	$	10	$	17	$	27	$	(7)

	Six months ended April 30
	U.S. Defined Benefit Plans				Non-U.S. Defined Benefit Plans				Post- Retirement Benefit Plans
	2023		2022		2023		2022		2023		2022
	In millions
Service cost	$	—	$	—	$	20	$	28	$	—	$	—
Interest cost	109		80		20		11		7		4
Expected return on plan assets	(129)		(149)		(26)		(25)		(6)		(4)
Amortization and deferrals:
Actuarial loss (gain)	9		3		2		19		(8)		(8)
Prior service cost (credit)	—		—		3		3		(6)		(6)
Net periodic benefit (credit) cost	(11)		(66)		19		36		(13)		(14)


Special termination benefit cost	105		—		—		—		34		—
Total periodic benefit (credit) cost	$	94	$	(66)	$	19	$	36	$	21	$	(14)


	Six months ended April 30, 2023
	In millions
Balance at beginning of period	$	107
Benefit of allowance for credit losses	(10)
Deductions, net of recoveries	(5)
Balance at end of period	$	92


	As of April 30, 2023								As of October 31, 2022
	Fair Value Measured Using								Fair Value Measured Using
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
	In millions
Assets:
Cash Equivalents:
Corporate debt	$	—	$	607	$	—	$	607	$	—	$	904	$	—	$	904

Government debt(1)	374		—		—		374		1,289		—		—		1,289
Available-for-Sale Investments:

Financial institution instruments	—		3		—		3		—		5		—		5

Marketable securities and mutual funds	5		48		—		53		17		41		—		58
Derivative Instruments:

Foreign currency contracts	—		287		—		287		—		1,088		—		1,088
Other derivatives	—		1		—		1		—		2		—		2
Total assets	$	379	$	946	$	—	$	1,325	$	1,306	$	2,040	$	—	$	3,346
Liabilities:
Derivative Instruments:
Interest rate contracts	$	—	$	57	$	—	$	57	$	—	$	78	$	—	$	78
Foreign currency contracts	—		368		—		368		—		295		—		295
Other derivatives	—		—		—		—		—		1		—		1
Total liabilities	$	—	$	425	$	—	$	425	$	—	$	374	$	—	$	374


	As of April 30, 2023								As of October 31, 2022
	Cost		Gross Unrealized Gain		Gross Unrealized Loss		Fair Value		Cost		Gross Unrealized Gain		Gross Unrealized Loss		Fair Value
	In millions
Cash Equivalents:
Corporate debt	$	607	$	—	$	—	$	607	$	904	$	—	$	—	$	904

Government debt	374		—		—		374		1,289		—		—		1,289
Total cash equivalents	981		—		—		981		2,193		—		—		2,193
Available-for-Sale Investments:

Financial institution instruments	3		—		—		3		5		—		—		5

Marketable securities and mutual funds	41		12		—		53		50		8		—		58
Total available-for-sale investments	44		12		—		56		55		8		—		63
Total cash equivalents and available-for-sale investments	$	1,025	$	12	$	—	$	1,037	$	2,248	$	8	$	—	$	2,256


	As of April 30, 2023
	Amortized Cost		Fair Value
	In millions
Due in one year	$	3	$	3


	As of April 30, 2023										As of October 31, 2022
	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	$	—	$	—	$	—	$	57	$	750	$	—	$	—	$	—	$	78
Cash flow hedges:
Foreign currency contracts	15,254		213		58		284		70		16,014		820		256		206		72

Total derivatives designated as hedging instruments	16,004		213		58		284		127		16,764		820		256		206		150
Derivatives not designated as hedging instruments
Foreign currency contracts	4,538		16		—		14		—		4,554		12		—		17		—
Other derivatives	128		1		—		—		—		122		2		—		1		—
Total derivatives not designated as hedging instruments	4,666		17		—		14		—		4,676		14		—		18		—
Total derivatives	$	20,670	$	230	$	58	$	298	$	127	$	21,440	$	834	$	256	$	224	$	150


	Three months ended April 30				Six months ended April 30
	2023		2022		2023		2022
	In millions
Net revenue:
Commercial PS	$	5,922	$	7,817	$	12,351	$	15,674
Consumer PS	2,254		3,715		5,040		8,054
Personal Systems	8,176		11,532		17,391		23,728
Supplies	3,006		3,131		5,863		6,199
Commercial Printing	1,089		1,042		2,145		2,081
Consumer Printing	641		790		1,340		1,514
Printing	4,736		4,963		9,348		9,794
Corporate Investments	3		—		4		1
Total segment net revenue	12,915		16,495		26,743		33,523
Other	(2)		(5)		(2)		(5)
Total net revenue	$	12,913	$	16,490	$	26,741	$	33,518

Earnings before taxes:
Personal Systems	$	445	$	794	$	942	$	1,748
Printing	899		949		1,769		1,821
Corporate Investments	(38)		(52)		(71)		(126)
Total segment earnings from operations	1,306		1,691		2,640		3,443
Corporate and unallocated costs and other	(90)		(177)		(182)		(297)
Stock-based compensation expense	(95)		(70)		(262)		(203)
Restructuring and other charges	(200)		(82)		(341)		(150)
Acquisition and divestiture charges	(73)		(32)		(157)		(52)
Amortization of intangible assets	(86)		(52)		(171)		(104)

Interest and other, net	(160)		(39)		(341)		(71)
Total earnings before taxes	$	602	$	1,239	$	1,186	$	2,566


	As of
	April 30, 2023		October 31, 2022
	In millions
Finished goods	$	3,986	$	4,885
Purchased parts and fabricated assemblies	3,235		2,710
	$	7,221	$	7,595


	As of
	April 30, 2023		October 31, 2022
	In millions
Land, buildings and leasehold improvements	$	2,273	$	2,255
Machinery and equipment, including equipment held for lease	5,361		5,337
	7,634		7,592
Accumulated depreciation	(4,863)		(4,818)
	$	2,771	$	2,774


	As of
	April 30, 2023		October 31, 2022
	In millions
Deferred tax assets	$	3,092	$	2,159
Intangible assets	1,776		1,933
Right-of-use assets	1,241		1,236
Prepaid pension and post-retirement benefit assets	541		679
Deposits and prepaids	504		474
Other	800		990
	$	7,954	$	7,471


	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 April 30, 2023
Derivative assets	$	288	$	—	$	288	$	242	$	39	(1)	$	7
Derivative liabilities	$	425	$	—	$	425	$	242	$	165	(2)	$	18
As of October 31, 2022
Derivative assets	$	1,090	$	—	$	1,090	$	290	$	616	(1)	$	184
Derivative liabilities	$	374	$	—	$	374	$	290	$	86	(2)	$	(2)


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 April 30
Interest rate contract	Fixed-rate debt	Interest and other, net	2023	$	(160)	$	7	$	(7)
			2022	$	(39)	$	(31)	$	31
Six months ended April 30
Interest rate contract	Fixed-rate debt	Interest and other, net	2023	$	(341)	$	21	$	(21)
			2022	$	(71)	$	(42)	$	42


	Total amounts of income/(expense) line items in the statement of financial performance in which the effects of cash flow hedges are recorded								Gain/(loss) reclassified from Accumulated other comprehensive (loss) income into earnings
	Three months ended April 30				Six months ended April 30				Three months ended April 30				Six months ended April 30
	2023		2022		2023		2022		2023		2022		2023		2022
	In millions
Net revenue	$	12,913	$	16,490	$	26,741	$	33,518	$	(109)	$	142	$	277	$	199
Cost of revenue	(9,984)		(13,157)		(21,003)		(26,800)		(55)		(21)		(109)		(35)
Other operating expenses	(2,167)		(2,055)		(4,211)		(4,081)		(1)		—		(2)		1
Interest and other, net	(160)		(39)		(341)		(71)		3		(1)		6		(1)
Total									$	(162)	$	120	$	172	$	164


	As of April 30, 2023				As of October 31, 2022
	Amount Outstanding		Weighted-Average Interest Rate		Amount Outstanding		Weighted-Average Interest Rate
	In millions
Current portion of long-term debt	$	166	6.1	%	$	165	5.4	%
Notes payable to banks, lines of credit and other	74		1.0	%	53		0.6	%
	$	240			$	218


	Six months ended April 30, 2023
	Net unrealized gains (losses) on available-for-sale debt securities		Net unrealized gains (losses) on cash flow hedges		Unrealized components of defined benefit plans		Change in cumulative translation adjustment		Accumulated other comprehensive income (loss)
	In millions
Balance at beginning of period	$	6	$	648	$	(295)	$	(46)	$	313
Other comprehensive gain (loss) before reclassifications	3		(563)		(24)		38		(546)
Reclassifications of gain into earnings	—		(135)		—		—		(135)

Balance at end of period	$	9	$	(50)	$	(319)	$	(8)	$	(368)


Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet Be Purchased under the Plans or Programs
	In thousands, except per share amounts
February 2023	—	$	—	—	2,034,564
March 2023	—	$	—	—	2,034,564
April 2023	—	$	—	—	2,034,564
Total	—			—


			HP INC.
			/s/ MARIE MYERS
			Marie Myers Chief Financial Officer (Principal Financial Officer and Authorized Signatory)


						/s/ ENRIQUE LORES
						Enrique Lores President and Chief Executive Officer