Hp Inc 10-Q for FY2022 Q1

Hp Inc (HPQ)

10-Q 2022-03-07 For: 2022-01-31

Added on April 09, 2026

About this 10-Q

Hp Inc filed this 10-Q on March 7, 2022, covering the quarter ended January 31, 2022 (FY2022 Q1).

Headline figures

Quarter ended January 31, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $17.03B; up 8.8% from $15.65B a year earlier
Net income: $1.09B; up 1.7% from net income of $1.07B a year earlier
Diluted EPS: $0.99; up 19.3% from $0.83 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, 2022
Or
☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number
1-4423


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	50
Item 4.	Controls and Procedures	50
Part II. Other Information
Item 1.	Legal Proceedings	51
Item 1A.	Risk Factors	51
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	52
Item 3.	Defaults Upon Senior Securities	52
Item 4.	Mine Safety Disclosures	52
Item 5.	Other Information	52
Item 6.	Exhibits	52

Exhibit Index		53
Signature		59


			Page
Consolidated Condensed Statements of Earnings for the three months ended J an u ary 31, 202 2 and 202 1 (Unaudited)			5
Consolidated Condensed Statements of Comprehensive Income for the three months ended J anuary 31, 202 2 and 202 1 (Unaudited)			6
Consolidated Condensed Balance Sheets as of J anua ry 31, 202 2 and October 31, 202 1 (Unaudited)			7
Consolidated Condensed Statements of Cash Flows for the three months ended J an uary 31, 202 2 and 202 1 (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
	2022		2021
	In millions, except per share amounts
Net revenue	$	17,028	$	15,646
Costs and expenses:
Cost of revenue	13,643		12,322
Research and development	418		471
Selling, general and administrative	1,468		1,376
Restructuring and other charges	68		121
Acquisition-related charges	20		6
Amortization of intangible assets	52		29
Total costs and expenses	15,669		14,325
Earnings from operations	1,359		1,321
Interest and other, net	(32)		(25)
Earnings before taxes	1,327		1,296
Provision for taxes	(241)		(228)
Net earnings	$	1,086	$	1,068

Net earnings per share:
Basic	$	1.00	$	0.83
Diluted	$	0.99	$	0.83

Weighted-average shares used to compute net earnings per share:
Basic	1,081		1,285
Diluted	1,094		1,293


	As of
	January 31, 2022		October 31, 2021
	In millions, except par value
ASSETS
Current assets:
Cash and cash equivalents	$	3,394	$	4,299
Accounts receivable, net of allowance for credit losses of $103 and $111, respectively	5,180		5,511
Inventory	9,018		7,930
Other current assets	4,840		4,430
Total current assets	22,432		22,170
Property, plant and equipment, net	2,619		2,546
Goodwill	6,821		6,803
Other non-current assets	7,040		7,091
Total assets	$	38,912	$	38,610
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Notes payable and short-term borrowings	$	689	$	1,106
Accounts payable	18,070		16,075
Other current liabilities	11,440		11,915
Total current liabilities	30,199		29,096
Long-term debt	6,368		6,386
Other non-current liabilities	4,673		4,778
Stockholders’ deficit:
Preferred stock, $0.01 par value (300 shares authorized; none issued)	—		—
Common stock, $0.01 par value (9,600 shares authorized; 1,060 and 1,092 shares issued and outstanding at January 31, 2022 and October 31, 2021, respectively)	11		11
Additional paid-in capital	1,046		1,060
Accumulated deficit	(3,369)		(2,461)
Accumulated other comprehensive loss	(16)		(260)
Total stockholders’ deficit	(2,328)		(1,650)
Total liabilities and stockholders’ deficit	$	38,912	$	38,610


	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, 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)

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)


	Fiscal 2020 Plan
	Severance and EER		Non-labor		Other prior-year plan		Total
	In millions
Accrued balance as of October 31, 2021	$	75	$	—	$	—	$	75
Charges	53		11		3		67
Cash payments	(91)		(4)		(3)		(98)
Non-cash and other adjustments	—		(7)		—		(7)
Accrued balance as of January 31, 2022	$	37	$	—	$	—	$	37
Total costs incurred to date as of January 31, 2022	$	662	$	59	$	507	$	1,228

Reflected in Consolidated Condensed Balance Sheets
Other current liabilities	$	37	$	—	$	—	$	37



Accrued balance as of October 31, 2020	$	55	$	—	$	12	$	67
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


	Three months ended January 31
	U.S. Defined Benefit Plans				Non-U.S. Defined Benefit Plans				Post-Retirement Benefit Plans
	2022		2021		2022		2021		2022		2021
	In millions
Service cost	$	—	$	—	$	14	$	17	$	—	$	—
Interest cost	40		76		6		5		2		2
Expected return on plan assets	(74)		(127)		(13)		(12)		(2)		(6)
Amortization and deferrals:
Actuarial loss (gain)	1		15		10		13		(4)		(4)
Prior service cost (credit)	—		—		2		—		(3)		(3)
Net periodic benefit (credit) cost	(33)		(36)		19		23		(7)		(11)

Settlement loss	—		1		—		—		—		—

Total benefit (credit) cost	$	(33)	$	(35)	$	19	$	23	$	(7)	$	(11)


	Three months ended January 31, 2022
	In millions
Balance at beginning of period	$	111
Benefit of allowance for credit losses	(7)
Deductions, net of recoveries	(1)
Balance at end of period	$	103


	As of January 31, 2022								As of October 31, 2021
	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	$	—	$	1,047	$	—	$	1,047	$	—	$	1,112	$	—	$	1,112

Government debt(1)	927		—		—		927		1,931		—		—		1,931
Available-for-Sale Investments:

Financial institution instruments	—		5		—		5		—		5		—		5

Marketable equity securities and mutual funds	11		53		—		64		15		56		—		71
Derivative Instruments:
Interest rate contracts	—		13		—		13		—		—		—		—
Foreign currency contracts	—		477		—		477		—		277		—		277
Other derivatives	—		—		—		—		—		5		—		5
Total assets	$	938	$	1,595	$	—	$	2,533	$	1,946	$	1,455	$	—	$	3,401
Liabilities:
Derivative Instruments:
Interest rate contracts	$	—	$	29	$	—	$	29	$	—	$	24	$	—	$	24
Foreign currency contracts	—		159		—		159		—		203		—		203
Other derivatives	—		6		—		6		—		—		—		—
Total liabilities	$	—	$	194	$	—	$	194	$	—	$	227	$	—	$	227


	As of January 31, 2022								As of October 31, 2021
	Cost		Gross Unrealized Gain		Gross Unrealized Loss		Fair Value		Cost		Gross Unrealized Gain		Gross Unrealized Loss		Fair Value
	In millions
Cash Equivalents:
Corporate debt	$	1,047	$	—	$	—	$	1,047	$	1,112	$	—	$	—	$	1,112

Government debt	927		—		—		927		1,931		—		—		1,931
Total cash equivalents	1,974		—		—		1,974		3,043		—		—		3,043
Available-for-Sale Investments:

Financial institution instruments	5		—		—		5		5		—		—		5

Marketable equity securities and mutual funds	42		22		—		64		42		29		—		71
Total available-for-sale investments	47		22		—		69		47		29		—		76
Total cash equivalents and available-for-sale investments	$	2,021	$	22	$	—	$	2,043	$	3,090	$	29	$	—	$	3,119


	As of January 31, 2022
	Amortized Cost		Fair Value
	In millions
Due in one year	$	5	$	5


	As of January 31, 2022										As of October 31, 2021
	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	$	—	$	—	$	—	$	27	$	750	$	—	$	—	$	—	$	16
Cash flow hedges:
Foreign currency contracts	18,015		346		116		117		28		17,137		198		69		148		42
Interest rate contracts	1,500		—		13		—		2		1,500		—		—		—		8
Total derivatives designated as hedging instruments	20,265		346		129		117		57		19,387		198		69		148		66
Derivatives not designated as hedging instruments
Foreign currency contracts	4,124		15		—		14		—		6,293		10		—		13		—
Other derivatives	144		—		—		6		—		103		5		—		—		—
Total derivatives not designated as hedging instruments	4,268		15		—		20		—		6,396		15		—		13		—
Total derivatives	$	24,533	$	361	$	129	$	137	$	57	$	25,783	$	213	$	69	$	161	$	66


	As of
	January 31, 2022		October 31, 2021
	In millions
Finished goods	$	5,695	$	4,532
Purchased parts and fabricated assemblies	3,323		3,398
	$	9,018	$	7,930


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


	As of
	January 31, 2022		October 31, 2021
	In millions
Deferred tax assets	$	2,886	$	2,917
Right-of-use assets from operating leases, net	1,174		1,192
Prepaid pension asset	804		766
Intangible assets	716		784
Deposits and prepaid	690		734
Other	770		698
	$	7,040	$	7,091


	As of
	January 31, 2022		October 31, 2021
	In millions
Sales and marketing programs	$	3,187	$	3,179
Other accrued taxes	1,244		1,227
Deferred revenue	1,234		1,277
Employee compensation and benefit	1,103		1,627
Warranty	677		731
Operating lease liabilities	358		350
Tax liability	277		296
Other	3,360		3,228
	$	11,440	$	11,915


	In the Consolidated Condensed Balance Sheets
	(i)		(ii)		(iii) = (i)–(ii)		(iv)		(v)			(vi) = (iii)–(iv)–(v)
							Gross Amounts Not Offset
	Gross Amount Recognized		Gross Amount Offset		Net Amount Presented		Derivatives		Financial Collateral			Net Amount
	In millions
As of January 31, 2022
Derivative assets	$	490	$	—	$	490	$	153	$	321	(1)	$	16
Derivative liabilities	$	194	$	—	$	194	$	153	$	33	(2)	$	8
As of October 31, 2021
Derivative assets	$	282	$	—	$	282	$	160	$	65	(1)	$	57
Derivative liabilities	$	227	$	—	$	227	$	160	$	64	(2)	$	3


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	2022	$	(32)	$	(11)	$	11
			2021	$	(25)	$	(3)	$	3


	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					Three months ended January 31
	2022		2021				2022		2021
	In millions
Net revenue	$	17,028	$	15,646			$	57	$	(43)
Cost of revenue	(13,643)		(12,322)				(14)		(6)
Other operating expenses	(2,026)		(2,003)				1		—

Total							$	44	$	(49)


	As of January 31, 2022				As of October 31, 2021
	Amount Outstanding		Weighted-Average Interest Rate		Amount Outstanding		Weighted-Average Interest Rate
	In millions
Commercial paper	$	—	—	%	$	400	0.2	%
Current portion of long-term debt	662		3.9	%	672		3.8	%
Notes payable to banks, lines of credit and other	27		1.5	%	34		1.2	%
	$	689			$	1,106


	Three months ended January 31, 2022
	Net unrealized gains on available-for-sale debt securities		Net unrealized (losses) gains on cash flow hedges		Unrealized components of defined benefit plans		Change in cumulative translation adjustment		Accumulated other comprehensive loss
	In millions
Balance at beginning of period	$	15	$	19	$	(323)	$	29	$	(260)
Other comprehensive income (loss) before reclassifications	(2)		267		15		(9)		271
Reclassifications of losses into earnings	—		(32)		5		—		(27)

Balance at end of period	$	13	$	254	$	(303)	$	20	$	(16)


	Three months ended January 31
	Net Revenue				Weighted Net Revenue Change(1)
	2022		2021
	Dollars in millions				Percentage Points
Notebooks	$	8,421	$	7,366	10.0
Desktops	2,807		2,400		3.8
Workstations	534		382		1.4
Other	434		455		(0.2)
Total Personal Systems	$	12,196	$	10,603	15.0


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 2021	12,922	$	31.72	12,922	6,022,658
December 2021	18,777	$	36.77	18,777	5,332,180
January 2022	10,895	$	37.54	10,895	4,923,155
Total	42,594			42,594


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