Hp Inc 10-Q for FY2021 Q1

Hp Inc (HPQ)

10-Q 2021-03-05 For: 2021-01-31

Added on April 09, 2026

About this 10-Q

Hp Inc filed this 10-Q on March 5, 2021, covering the quarter ended January 31, 2021 (FY2021 Q1).

Headline figures

Quarter ended January 31, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $15.65B; up 7.0% from $14.62B a year earlier
Net income: $1.07B; up 57.5% from net income of $678M a year earlier
Diluted EPS: $0.83; up 80.4% from $0.46 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, 2021
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	41
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 months ended J an uary 31, 202 1 and 20 20 (Unaudited)			5
Consolidated Condensed Statements of Comprehensive Income for the three months ended J anuary 31, 202 1 and 20 20 (Unaudited)			6
Consolidated Condensed Balance Sheets as of J anuary 31, 202 1 and as of October 31, 20 20 (Unaudited)			7
Consolidated Condensed Statements of Cash Flows for the three months ended J anuary 31, 202 1 and 20 20 (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			12
Note 3: Restructuring and Other Charges			15
Note 4: Retirement and Post-Retirement Benefit Plans			16
Note 5: Taxes on Earnings			17
Note 6: Supplementary Financial Information			18
Note 7: Fair Value			22
Note 8: Financial Instruments			24
Note 9: Borrowings			29
Note 10: Stockholders’ Deficit			30
Note 11: Net Earnings Per Share			32
Note 12: Litigation and Contingencies			32
Note 13: Guarantees, Indemnifications and Warranties			38
Note 14: Commitments			39


	Three months ended January 31
	2021		2020
	In millions, except per share amounts
Net revenue	$	15,646	$	14,618
Costs and expenses:
Cost of revenue	12,322		11,746
Research and development	471		400
Selling, general and administrative	1,376		1,290
Restructuring and other charges	121		291
Acquisition-related charges	6		—
Amortization of intangible assets	29		26
Total costs and expenses	14,325		13,753
Earnings from operations	1,321		865
Interest and other, net	(25)		13
Earnings before taxes	1,296		878
Provision for taxes	(228)		(200)
Net earnings	$	1,068	$	678

Net earnings per share:
Basic	$	0.83	$	0.47
Diluted	$	0.83	$	0.46

Weighted-average shares used to compute net earnings per share:
Basic	1,285		1,454
Diluted	1,293		1,460


	As of
	January 31, 2021		October 31, 2020
	In millions, except par value
ASSETS
Current assets:
Cash and cash equivalents	$	4,160	$	4,864
Accounts receivable, net of allowance for credit losses of $117 and $122 respectively	5,273		5,381
Inventory	6,668		5,963
Other current assets	4,337		4,440
Total current assets	20,438		20,648
Property, plant and equipment, net	2,546		2,627
Goodwill	6,404		6,380
Other non-current assets	5,349		5,026
Total assets	$	34,737	$	34,681
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Notes payable and short-term borrowings	$	1,238	$	674
Accounts payable	14,960		14,704
Other current liabilities	11,682		10,842
Total current liabilities	27,880		26,220
Long-term debt	4,939		5,543
Other non-current liabilities	5,153		5,146
Stockholders’ deficit:
Preferred stock, $0.01 par value (300 shares authorized; none issued)	—		—
Common stock, $0.01 par value (9,600 shares authorized; 1,253 and 1,304 shares issued and outstanding at January 31, 2021 and October 31, 2020, respectively)	13		13
Additional paid-in capital	984		963
Accumulated deficit	(2,759)		(1,961)
Accumulated other comprehensive loss	(1,473)		(1,243)
Total stockholders’ deficit	(3,235)		(2,228)
Total liabilities and stockholders’ deficit	$	34,737	$	34,681


	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, 2019	1,457,719	$	15	$	835	$	(818)	$	(1,225)	$	(1,193)
Net earnings						678				678
Other comprehensive income, net of taxes								17		17
Comprehensive income										695
Issuance of common stock in connection with employee stock plans and other	9,809			(58)						(58)
Repurchases of common stock (Note 10)	(34,182)	(1)		(20)		(682)				(703)
Cash dividends ($0.35 per common share)						(511)				(511)
Stock-based compensation expense				109						109
Adjustment for adoption of accounting standards						27				27
Balance January 31, 2020	1,433,346	$	14	$	866	$	(1,306)	$	(1,208)	$	(1,634)

Balance October 31, 2020	1,303,927	$	13	$	963	$	(1,961)	$	(1,243)	$	(2,228)
Net earnings						1,068				1,068
Other comprehensive loss, net of taxes								(230)		(230)
Comprehensive income										838
Issuance of common stock in connection with employee stock plans and other	9,700			(48)						(48)
Repurchases of common stock (Note 10)	(61,095)			(46)		(1,369)				(1,415)
Cash dividends ($0.39 per common share)						(497)				(497)
Stock-based compensation expense				115						115

Balance January 31, 2021	1,252,532	$	13	$	984	$	(2,759)	$	(1,473)	$	(3,235)


	Fiscal 2020 Plan
	Severance and EER			Non-labor		Other prior-year Plans		Total
	In millions
Accrued balance as of October 31, 2020	$	55		$	—	$	12	$	67
Charges	106			11		—		117
Cash payments	(54)			(3)		(8)		(65)
Non-cash and other adjustments	1			(8)		—		(7)
Accrued balance as of January 31, 2021	$	108		$	—	$	4	$	112
Total costs incurred to date as of January 31, 2021	$	534		$	21	$	1,817	$	2,372

Reflected in Consolidated Condensed Balance Sheets
Other current liabilities	$	108		$	—	$	4	$	112



Accrued balance as of October 31, 2019	$	76		$	—	$	66	$	142
Charges	256			1		—		257
Cash payments	(82)			(1)		(25)		(108)
Non-cash and other adjustments	(48)		(1)	—		(1)		(49)
Accrued balance as of January 31, 2020	$	202		$	—	$	40	$	242


	Three months ended January 31
	U.S. Defined Benefit Plans				Non-U.S. Defined Benefit Plans				Post-Retirement Benefit Plans
	2021		2020		2021		2020		2021		2020
	In millions
Service cost	$	—	$	—	$	17	$	16	$	—	$	—
Interest cost	76		103		5		5		2		3
Expected return on plan assets	(127)		(175)		(12)		(11)		(6)		(6)
Amortization and deferrals:
Actuarial loss (gain)	15		16		13		10		(4)		(2)
Prior service benefit	—		—		—		(1)		(3)		(3)
Net periodic benefit (credit) cost	(36)		(56)		23		19		(11)		(8)

Settlement loss	1		—		—		—		—		—
Special termination benefit cost	—		—		—		—		—		44
Total periodic benefit (credit) cost	$	(35)	$	(56)	$	23	$	19	$	(11)	$	36


	Three months ended January 31, 2021
	In millions
Balance at beginning of period	$	122
Current-period allowance for credit losses	24
Deductions, net of recoveries	(29)
Balance at end of period	$	117


	As of January 31, 2021								As of October 31, 2020
	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	$	—	$	1,373	$	—	$	1,373	$	—	$	1,700	$	—	$	1,700
Financial institution instruments	—		—		—		—		—		59		—		59
Government debt(1)	1,799		—		—		1,799		1,992		181		—		2,173
Available-for-Sale Investments:
Corporate debt	—		—		—		—		—		169		—		169
Financial institution instruments	—		—		—		—		—		32		—		32
Government debt(1)	—		—		—		—		—		73		—		73
Mutual funds	6		58		—		64		5		53		—		58
Derivative Instruments:
Interest rate contracts	—		3		—		3		—		4		—		4
Foreign currency contracts	—		66		—		66		—		191		—		191
Other derivatives	—		1		—		1		—		—		—		—
Total assets	$	1,805	$	1,501	$	—	$	3,306	$	1,997	$	2,462	$	—	$	4,459
Liabilities:
Derivative Instruments:
Interest rate contracts	$	—	$	5	$	—	$	5	$	—	$	3	$	—	$	3
Foreign currency contracts	—		435		—		435		—		256		—		256
Other derivatives	—		1		—		1		—		3		—		3
Total liabilities	$	—	$	441	$	—	$	441	$	—	$	262	$	—	$	262


	As of January 31, 2021								As of October 31, 2020
	Cost		Gross Unrealized Gain		Gross Unrealized Loss		Fair Value		Cost		Gross Unrealized Gain		Gross Unrealized Loss		Fair Value
	In millions
Cash Equivalents:
Corporate debt	$	1,373	$	—	$	—	$	1,373	$	1,700	$	—	$	—	$	1,700
Financial institution instruments	—		—		—		—		59		—		—		59
Government debt	1,799		—		—		1,799		2,173		—		—		2,173
Total cash equivalents	3,172		—		—		3,172		3,932		—		—		3,932
Available-for-Sale Investments:
Corporate debt(1)	—		—		—		—		169		—		—		169
Financial institution instruments(1)	—		—		—		—		32		—		—		32
Government debt(1)	—		—		—		—		73		—		—		73
Mutual funds	44		20		—		64		42		16		—		58
Total available-for-sale investments	44		20		—		64		316		16		—		332
Total cash equivalents and available-for-sale investments	$	3,216	$	20	$	—	$	3,236	$	4,248	$	16	$	—	$	4,264


	As of January 31, 2021										As of October 31, 2020
	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	$	1,000	$	3	$	—	$	—	$	5	$	875	$	4	$	—	$	—	$	3
Cash flow hedges:
Foreign currency contracts	16,035		45		5		327		99		15,661		148		30		199		37

Total derivatives designated as hedging instruments	17,035		48		5		327		104		16,536		152		30		199		40
Derivatives not designated as hedging instruments
Foreign currency contracts	5,989		16		—		9		—		5,319		13		—		20		—
Other derivatives	135		1		—		1		—		142		—		—		3		—
Total derivatives not designated as hedging instruments	6,124		17		—		10		—		5,461		13		—		23		—
Total derivatives	$	23,159	$	65	$	5	$	337	$	104	$	21,997	$	165	$	30	$	222	$	40


	In the Consolidated Condensed Balance Sheets
							Gross Amounts Not Offset
	Gross Amount Recognized (i)		Gross Amount Offset (ii)		Net Amount Presented (iii) = (i)–(ii)		Derivatives (iv)		Financial Collateral (v)			Net Amount (vi) = (iii)–(iv)–(v)
	In millions
As of January 31, 2021
Derivative assets	$	70	$	—	$	70	$	62	$	—	(1)	$	8
Derivative liabilities	$	441	$	—	$	441	$	62	$	307	(2)	$	72
As of October 31, 2020
Derivative assets	$	195	$	—	$	195	$	156	$	4	(1)	$	35
Derivative liabilities	$	262	$	—	$	262	$	156	$	130	(2)	$	(24)


	As of
	January 31, 2021		October 31, 2020
	In millions
Finished goods	$	3,868	$	3,662
Purchased parts and fabricated assemblies	2,800		2,301
	$	6,668	$	5,963


	As of
	January 31, 2021		October 31, 2020
	In millions
Land, buildings and leasehold improvements	$	2,087	$	2,066
Machinery and equipment, including equipment held for lease	5,314		5,275
	7,401		7,341
Accumulated depreciation	(4,855)		(4,714)
	$	2,546	$	2,627


	As of
	January 31, 2021		October 31, 2020
	In millions
Deferred tax assets	$	2,497	$	2,515
Right-of-use assets from operating leases, net	1,105		1,107
Intangible assets	525		540
Deposits and prepaid	705		337
Other	517		527
	$	5,349	$	5,026


	As of
	January 31, 2021		October 31, 2020
	In millions
Sales and marketing programs	$	3,338	$	3,185
Deferred revenue	1,292		1,208
Other accrued taxes	1,078		1,051
Employee compensation and benefit	926		1,194
Warranty	749		746
Operating lease liabilities	296		275
Tax liability	257		223
Other	3,746		2,960
	$	11,682	$	10,842


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	2021	$	(25)	$	(3)	$	3
			2020	$	13	$	—	$	—


	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 into earnings
	Three months ended January 31
	2021		2020		2021		2020
	In millions
Net revenue	$	15,646	$	14,618	$	(43)	$	61
Cost of revenue	(12,322)		(11,746)		(6)		(1)
Other operating expenses	(2,003)		(2,007)		—		(1)
Total	$	1,321	$	865	$	(49)	$	59


	As of January 31, 2021				As of October 31, 2020
	Amount Outstanding		Weighted-Average Interest Rate		Amount Outstanding		Weighted-Average Interest Rate
	In millions

Current portion of long-term debt	$	1,205	4.2	%	$	633	4.0	%
Notes payable to banks, lines of credit and other	33		1.7	%	41		1.6	%
	$	1,238			$	674


	Three months ended January 31, 2021
	Net unrealized gains on available-for-sale debt securities		Net unrealized (losses) gains on cash flow hedges		Unrealized components of defined benefit plans		Change in cumulative translation adjustment		Accumulated other comprehensive loss
	In millions
Balance at beginning of period	$	11	$	(66)	$	(1,190)	$	2	$	(1,243)
Other comprehensive income (loss) before reclassifications	3		(319)		(1)		25		(292)
Reclassifications of losses into earnings	—		45		16		—		61
Reclassifications of settlements into earnings	—		—		1		—		1
Balance at end of period	$	14	$	(340)	$	(1,174)	$	27	$	(1,473)


Fiscal year	In millions
2021(1)	$	954
2022	1,088
2023	995
2024	1,029
2025	30
Thereafter	6
Total	$	4,102


	Three months ended January 31
	Net Revenue				Weighted Net Revenue Change(1)
	2021		2020
	Dollars in millions				Percentage Points
Notebooks	$	7,366	$	5,974	14.1
Desktops	2,400		2,923		(5.3)
Workstations	382		594		(2.1)
Other	455		401		0.5
Total Personal Systems	$	10,603	$	9,892	7.2


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 2020	17,112	$	19.60	17,112	12,344,109
December 2020	24,669	$	23.59	24,669	11,762,071
January 2021	18,410	$	25.01	18,410	11,301,604
Total	60,191			60,191


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