Hp Inc 10-Q for FY2023 Q1

Hp Inc (HPQ)

10-Q 2023-03-01 For: 2023-01-31

Added on April 09, 2026

About this 10-Q

Hp Inc filed this 10-Q on March 1, 2023, covering the quarter ended January 31, 2023 (FY2023 Q1).

Headline figures

Quarter ended January 31, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $13.83B; down 18.8% from $17.03B a year earlier
Net income: $487M; down 55.2% from net income of $1.09B a year earlier
Diluted EPS: $0.49; down 50.5% from $0.99 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
January 31, 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	38
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	49
Item 4.	Controls and Procedures	49
Part II. Other Information
Item 1.	Legal Proceedings	50
Item 1A.	Risk Factors	50
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	51
Item 3.	Defaults Upon Senior Securities	51
Item 4.	Mine Safety Disclosures	51
Item 5.	Other Information	51
Item 6.	Exhibits	51

Exhibit Index		52
Signature		59


			Page
Consolidated Condensed Statements of Earnings for the three months ended January 31, 2023 and 2022 (Unaudited)			5
Consolidated Condensed Statements of Comprehensive Income for the three months ended January 31, 2023 and 2022 (Unaudited)			6
Consolidated Condensed Balance Sheets as of January 31, 2023 and October 31, 2022 (Unaudited)			7
Consolidated Condensed Statements of Cash Flows for the three months ended January 31, 2023 and 2022 (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			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			29
Note 11: Net Earnings Per Share			32
Note 12: Litigation and Contingencies			32
Note 13: Guarantees, Indemnifications and Warranties			37


	Three months ended January 31
	2023		2022
	In millions, except per share amounts
Net revenue	$	13,828	$	17,028
Costs and expenses:
Cost of revenue	11,019		13,643
Research and development	403		418
Selling, general and administrative	1,331		1,468
Restructuring and other charges	141		68
Acquisition and divestiture charges	84		20
Amortization of intangible assets	85		52
Total costs and expenses	13,063		15,669
Earnings from operations	765		1,359
Interest and other, net	(181)		(32)
Earnings before taxes	584		1,327
Provision for taxes	(97)		(241)
Net earnings	$	487	$	1,086

Net earnings per share:
Basic	$	0.49	$	1.00
Diluted	$	0.49	$	0.99

Weighted-average shares used to compute net earnings per share:
Basic	989		1,081
Diluted	996		1,094


	As of
	January 31, 2023		October 31, 2022
	In millions, except par value
ASSETS
Current assets:
Cash, cash equivalents and restricted cash	$	1,769	$	3,145
Accounts receivable, net of allowance for credit losses of $89 and $107, respectively	4,312		4,546
Inventory	7,344		7,595
Other current assets	3,880		4,515
Total current assets	17,305		19,801
Property, plant and equipment, net	2,764		2,774
Goodwill	8,592		8,541
Other non-current assets	7,487		7,471
Total assets	$	36,148	$	38,587
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Notes payable and short-term borrowings	$	422	$	218
Accounts payable	13,512		15,284
Other current liabilities	11,119		10,651
Total current liabilities	25,053		26,153
Long-term debt	10,337		10,796
Other non-current liabilities	4,488		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; 985 and 980 shares issued and outstanding at January 31, 2023 and October 31, 2022, respectively)	10		10
Additional paid-in capital	1,256		1,172
Accumulated deficit	(4,540)		(4,413)
Accumulated other comprehensive (loss) income	(456)		313
Total stockholders’ deficit	(3,730)		(2,918)
Total liabilities and stockholders’ deficit	$	36,148	$	38,587


	Common Stock			Additional Paid-in Capital				Accumulated Other Comprehensive Loss		Total Stockholders’ Deficit
	Number of Shares	Par Value				Accumulated Deficit
	In millions, except number of shares in thousands
Balance October 31, 2021	1,092,205	$	11	$	1,060	$	(2,461)	$	(260)	$	(1,650)
Net earnings						1,086				1,086
Other comprehensive income, net of taxes								244		244
Comprehensive income										1,330
Issuance of common stock in connection with employee stock plans and other	9,777			(106)						(106)
Repurchases of common stock (Note 10)	(42,082)			(41)		(1,458)				(1,499)
Cash dividends ($0.50 per common share)						(536)				(536)
Stock-based compensation expense				133						133

Balance January 31, 2022	1,059,900	$	11	$	1,046	$	(3,369)	$	(16)	$	(2,328)

Balance October 31, 2022	979,869	$	10	$	1,172	$	(4,413)	$	313	$	(2,918)
Net earnings						487				487
Other comprehensive loss, net of taxes								(769)		(769)
Comprehensive loss										(282)
Issuance of common stock in connection with employee stock plans and other	8,844			(79)						(79)
Repurchases of common stock (Note 10)	(3,624)			(4)		(96)				(100)
Cash dividends ($0.53 per common share)						(518)				(518)
Stock-based compensation expense				167						167

Balance January 31, 2023	985,089	$	10	$	1,256	$	(4,540)	$	(456)	$	(3,730)


	Fiscal 2023 Plan
	Severance		Non-labor		Other prior-year Plans(1)		Total
	In millions
Accrued balance as of October 31, 2022	$	—	$	—	$	32	$	32
Charges	122		9		—		131
Cash payments	(53)		(4)		(25)		(82)
Non-cash and other adjustments	(2)		(5)		1		(6)
Accrued balance as of January 31, 2023	$	67	$	—	$	8	$	75
Total costs incurred to date as of January 31, 2023	$	122	$	9	$	865	$	996

Reflected in Consolidated Condensed Balance Sheets
Other current liabilities	$	67	$	—	$	8	$	75



Accrued balance as of October 31, 2021	$	—	$	—	$	75	$	75
Charges	—		—		67		67
Cash payments	—		—		(98)		(98)
Non-cash and other adjustments	—		—		(7)		(7)
Accrued balance as of January 31, 2022	$	—	$	—	$	37	$	37


	Three months ended January 31
	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	$	—	$	—	$	9	$	14	$	—	$	—
Interest cost	54		40		10		6		4		2
Expected return on plan assets	(65)		(74)		(13)		(13)		(3)		(2)
Amortization and deferrals:
Actuarial loss (gain)	5		1		1		10		(4)		(4)
Prior service cost (credit)	—		—		1		2		(3)		(3)
Net periodic benefit (credit) cost	(6)		(33)		8		19		(6)		(7)

Settlement loss	—		—		1		—		—		—

Total periodic benefit (credit) cost	$	(6)	$	(33)	$	9	$	19	$	(6)	$	(7)


	Three months ended January 31, 2023
	In millions
Balance at beginning of period	$	107
Benefit of allowance for credit losses	(16)
Deductions, net of recoveries	(2)
Balance at end of period	$	89


	As of January 31, 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	$	—	$	520	$	—	$	520	$	—	$	904	$	—	$	904

Government debt(1)	292		—		—		292		1,289		—		—		1,289
Available-for-Sale Investments:

Financial institution instruments	—		5		—		5		—		5		—		5

Marketable securities and mutual funds	18		47		—		65		17		41		—		58
Derivative Instruments:

Foreign currency contracts	—		330		—		330		—		1,088		—		1,088
Other derivatives	—		8		—		8		—		2		—		2
Total assets	$	310	$	910	$	—	$	1,220	$	1,306	$	2,040	$	—	$	3,346
Liabilities:
Derivative Instruments:
Interest rate contracts	$	—	$	64	$	—	$	64	$	—	$	78	$	—	$	78
Foreign currency contracts	—		496		—		496		—		295		—		295
Other derivatives	—		—		—		—		—		1		—		1
Total liabilities	$	—	$	560	$	—	$	560	$	—	$	374	$	—	$	374


	As of January 31, 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	$	520	$	—	$	—	$	520	$	904	$	—	$	—	$	904

Government debt	292		—		—		292		1,289		—		—		1,289
Total cash equivalents	812		—		—		812		2,193		—		—		2,193
Available-for-Sale Investments:

Financial institution instruments	5		—		—		5		5		—		—		5

Marketable securities and mutual funds	53		12		—		65		50		8		—		58
Total available-for-sale investments	58		12		—		70		55		8		—		63
Total cash equivalents and available-for-sale investments	$	870	$	12	$	—	$	882	$	2,248	$	8	$	—	$	2,256


	As of January 31, 2023
	Amortized Cost		Fair Value
	In millions
Due in one year	$	18	$	18


	As of January 31, 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	$	—	$	—	$	—	$	64	$	750	$	—	$	—	$	—	$	78
Cash flow hedges:
Foreign currency contracts	16,314		230		93		412		69		16,014		820		256		206		72

Total derivatives designated as hedging instruments	17,064		230		93		412		133		16,764		820		256		206		150
Derivatives not designated as hedging instruments
Foreign currency contracts	4,594		7		—		15		—		4,554		12		—		17		—
Other derivatives	123		8		—		—		—		122		2		—		1		—
Total derivatives not designated as hedging instruments	4,717		15		—		15		—		4,676		14		—		18		—
Total derivatives	$	21,781	$	245	$	93	$	427	$	133	$	21,440	$	834	$	256	$	224	$	150


	As of
	January 31, 2023		October 31, 2022
	In millions
Finished goods	$	4,146	$	4,885
Purchased parts and fabricated assemblies	3,198		2,710
	$	7,344	$	7,595


	As of
	January 31, 2023		October 31, 2022
	In millions
Land, buildings and leasehold improvements	$	2,259	$	2,255
Machinery and equipment, including equipment held for lease	5,381		5,337
	7,640		7,592
Accumulated depreciation	(4,876)		(4,818)
	$	2,764	$	2,774


	As of
	January 31, 2023		October 31, 2022
	In millions
Deferred tax assets	$	2,453	$	2,159
Intangible assets	1,858		1,933
Right-of-use assets	1,242		1,236
Deposits and prepaid	564		588
Prepaid pension asset	548		565
Other	822		990
	$	7,487	$	7,471


	As of
	January 31, 2023		October 31, 2022
	In millions
Sales and marketing programs	$	3,022	$	2,967
Deferred revenue	1,379		1,393
Other accrued taxes	1,059		1,064
Employee compensation and benefit	803		954
Warranty	609		619
Operating lease liabilities	431		405
Tax liability	270		286
Other	3,546		2,963
	$	11,119	$	10,651


	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, 2023
Derivative assets	$	338	$	—	$	338	$	288	$	24	(1)	$	26
Derivative liabilities	$	560	$	—	$	560	$	288	$	264	(2)	$	8
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 January 31
Interest rate contract	Fixed-rate debt	Interest and other, net	2023	$	(181)	$	14	$	(14)
			2022	$	(32)	$	(11)	$	11


	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 January 31					Three months ended January 31
	2023		2022				2023		2022
	In millions
Net revenue	$	13,828	$	17,028			$	386	$	57
Cost of revenue	(11,019)		(13,643)				(54)		(14)
Other operating expenses	(2,044)		(2,026)				(1)		1
Interest and other, net	(181)		(32)				3		—
Total							$	334	$	44


	As of January 31, 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	$	171	5.5	%	$	165	5.4	%
Notes payable to banks, lines of credit and other	251		4.2	%	53		0.6	%
	$	422			$	218


	Three months ended January 31, 2023
	Net unrealized gains on available-for-sale debt securities		Net unrealized (losses) gains on cash flow hedges		Unrealized components of defined benefit plans		Change in cumulative translation adjustment		Accumulated other comprehensive (loss) income
	In millions
Balance at beginning of period	$	6	$	648	$	(295)	$	(46)	$	313
Other comprehensive income (loss) before reclassifications	3		(517)		(29)		29		(514)
Reclassifications of gains into earnings	—		(256)		—		—		(256)
Reclassifications of settlements into earnings	—		—		1		—		1
Balance at end of period	$	9	$	(125)	$	(323)	$	(17)	$	(456)


	Three months ended January 31
	Net Revenue				Weighted Net Revenue Change(1)
	2023		2022
	Dollars in millions				Percentage Points
Commercial PS	$	6,429	$	7,857	(11.7)	%
Consumer PS	2,786		4,339		(12.7)	%
Total Personal Systems	$	9,215	$	12,196	(24.4)	%


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
November 2022	—	$	—	—	2,134,564
December 2022	3,624	$	27.60	3,624	2,034,564
January 2023	—	$	—	—	2,034,564
Total	3,624			3,624


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


Grant Date:			expGRANT_DATE
Grant ID:			fld_GRANT_NBR
Amount:			0
Plan:			fld_DESCR
Vesting Schedule:			fld_HTMLAREA1


Target Amount			0 Shares
Performance Period			01 November 2022 – 31 October 2025
Year 1 EPS			01 November 2022 – 31 October 2023
Year 2 EPS			01 November 2023 – 31 October 2024
Year 3 EPS			01 November 2024 – 31 October 2025
3-year TSR			01 November 2022 – 31 October 2025


Company’s Relative TSR Performance Rank			Payout Modifier or Adjustment
<25th percentile of the TSR Peer Group			-50% to the final 3-year average EPS performance
25th to 75th percentile of the TSR Peer Group			No adjustment to the final 3-year average EPS performance
>75th percentile of the TSR Peer Group			+50% to the final 3-year average EPS performance



Grant Date:			expGRANT_DATE
Grant Number:			Fld_GRANT_NBR
Grant Price:			$fld_GRANT_PRICE1fld_NAME1_AC
Award Amount:			0


Plan:			Fld_DESCR


Termination of Employment			Number of Option Shares Vested
6 months after the Grant Date			2,000 PCSOs become vested: 6/36 x 12,000 PCSOs =2,000.
12 months after the Grant Date			4,000 PCSOs automatically became vested on the first anniversary of the grant date because the 15% Tranche service and share price components were met. The proration formula (12/36 x 12,000 = 4,000) does not result in the vesting of any additional PCSOs.
18 months after the Grant Date			2,000 PCSOs become vested, in addition to the 4,000 that had vested on the first anniversary of the grant date: 18/36 x 12,000 PCSOs = 6,000 minus the 4,000 that vested on the first anniversary of the grant date (6,000 – 4,000 = 2,000).
21 months after the Grant Date			3,000 PCSOs become vested, in addition to the 4,000 that had vested on the first anniversary of the grant date: 21/36 x 12,000 = 7,000 minus the 4,000 that vested on the first anniversary of the grant date (7,000 – 4,000 = 3,000).
24 months after the Grant Date			4,000 PCSOs automatically became vested on the second anniversary of the grant date because the 20% Tranche service and share price components were met. The proration formula (24/36 x 12,000 = 8,000) does not result in the vesting of any additional PCSOs. (4,000 shares had already vested on the first anniversary of the grant date.)
30 months after the Grant Date			2,000 PCSOs become vested, in addition to the 8,000 that had vested on the first and second anniversaries of the grant date: 30/36 x 12,000 = 10,000 minus the 8,000 that vested on the first and second anniversaries of the grant date (4,000 on each anniversary) (10,000 – 8,000 = 2,000).


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