10q10k10q10k.net

What changed in HP Inc.'s 10-K — 2022 vs 2023

vs

Paragraph-level year-over-year comparison of HP Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+382 added−437 removedSource: 10-K (2023-12-18) vs 10-K (2022-12-06)

Top changes in HP Inc.'s 2023 10-K

382 paragraphs added · 437 removed · 292 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

67 edited+16 added−20 removed48 unchanged
Biggest changeAmong our goals: • Achieve 50/50 gender equality in HP leadership by 2030; • Achieve greater than 30% technical women and women in engineering roles by 2030; • Meet or exceed labor market representation for racial and ethnic minorities in the U.S. by 2030; • Reach one million workers through worker empowerment programs by 2030, since the beginning of 2015; • Assure respect for labor-related human rights for 100% of our key contracted manufacturing suppliers and higher risk next-tier suppliers by 2030; • Double the number of Black/African American executives by 2025, from a 2020 baseline; Digital Equity: Lead in activating and innovating holistic solutions that break down the digital divide that prevents many from accessing the education, jobs, and healthcare needed to thrive.
Biggest changeAmong our goals: • Achieve 50/50 gender equality in HP leadership by 2030; • Achieve greater than 30% technical women and women in engineering roles by 2030; • Meet or exceed labor market representation for racial and ethnic minorities in the U.S. by 2030; • Reach one million workers through worker empowerment programs by 2030, since the beginning of 2015; • Double the number of Black/African American executives by 2025, from a 2020 baseline; Digital Equity: Accelerating equitable access to education, healthcare, and economic opportunity for those who are traditionally excluded so they can participate and thrive in a digital economy.
ITEM 1. Business. Business Overview We are a leading global provider of personal computing and other access devices, imaging and printing products, and related technologies, solutions and services. We sell to individual consumers, small- and medium-sized businesses (“SMBs”) and large enterprises, including customers in the government, health and education sectors.
ITEM 1. Business. Business Overview We are a leading global provider of personal computing and other digital access devices, imaging and printing products, and related technologies, solutions and services. We sell to individual consumers, small- and medium-sized businesses (“SMBs”) and large enterprises, including customers in the government, health and education sectors.
Moreover, we anticipate that we will have to continue to adjust prices on many of our products and services to stay competitive. We have a broad technology portfolio spanning personal computing and other access devices, imaging and printing-related products and services. We are the leader or among the leaders in each of our key business segments.
Moreover, we anticipate that we will have to continue to adjust prices on many of our products and services to stay competitive. We have a broad technology portfolio spanning personal computing and other digital access devices, imaging and printing-related products and services. We are the leader or among the leaders in each of our key business segments.
We also may acquire component inventory in anticipation of supply constraints or enter into longer-term pricing commitments with vendors to improve the priority, price and availability of supplies.
We also may acquire component inventory in anticipation of supply constraints or price increases and enter into longer-term pricing commitments with vendors to improve the priority, price and availability of supplies.
These and other competing products are often sold alongside our products through online or omnichannel resellers or distributors, or such resellers and distributors may highlight the availability of lower cost non-original supplies.
These and other competing products are often sold alongside our products through online or omnichannel resellers, retailers or distributors, or such resellers, retailers and distributors may highlight the availability of lower cost non-original supplies.
Our customers are organized by consumer and commercial groups, and purchases of HP products, solutions and services may be fulfilled directly by HP or indirectly through a variety of partners, utilizing their own physical or internet stores or an omnichannel combination of the two, including: • retailers that sell our products to the public focusing on consumers and SMBs; • resellers that sell our products and services, frequently with their own value-added products or services, to targeted customer groups; • distribution partners that supply our products and solutions to resellers; and • system integrators and other business intermediaries that provide various levels of services, including systems integration work and as-a-service solutions, and typically partner with us on client solutions that require our products and services.
Our customers are organized by consumer and commercial groups, and purchases of HP products, solutions and services may be fulfilled directly by HP or indirectly through a variety of partners, utilizing their own physical or internet stores or an omnichannel combination of the two, including: • retailers that sell our products to the public focusing on consumers and SMBs; • resellers that sell our products and services, frequently with their own value-added products or services, to targeted customer groups; • distribution partners that supply our products and solutions to resellers and retailers in certain geographies; and • system integrators and other business intermediaries that provide various levels of services, including systems integration work and as-a-service solutions, and typically partner with us on client solutions that require our products and services.
Jacobs spent over 16 years in various senior legal roles at AOL, a global internet, media and technology company, including serving as AOL’s Executive Vice President, General Counsel, and Corporate Secretary from May 2010 to June 2017. Enrique Lores; age 57; President and Chief Executive Officer Mr. Lores has served as President and Chief Executive Officer since November 2019.
Jacobs spent over 16 years in various senior legal roles at AOL, a global internet, media and technology company, including serving as AOL’s Executive Vice President, General Counsel, and Corporate Secretary from May 2010 to June 2017. Enrique Lores; age 58; President and Chief Executive Officer Mr. Lores has served as President and Chief Executive Officer since November 2019.
Throughout his over 30-year tenure with the company, Mr. Lores held leadership positions across the organization, most recently serving as President, Printing, Solutions and Services from November 2015 to November 2019, and prior to that role, leading the Separation Management Office for HP Inc. Previously, Mr. Lores was the Senior Vice President and General Manager for Business Personal Systems.
Throughout his over 30-year tenure with the company, Mr. Lores held leadership positions across the organization, serving as President, Printing, Solutions and Services from November 2015 to November 2019, and prior to that role, leading the Separation Management Office for HP Inc. Previously, Mr. Lores was the Senior Vice President and General Manager for Business Personal Systems.
Among our goals: • Accelerate digital equity for 150 million people by 2030, since the beginning of 2021; • Enable better learning outcomes for 100 million people by 2025, since the beginning of 2015; • Enroll 1.5 million HP LIFE (Learning Initiative for Entrepreneurs) users between 2016 and 2030; • Contribute 1.5 million employee volunteering hours by 2025 (cumulative since the beginning of 2016); • Contribute US$100 million in HP Foundation and employee community giving by 2025 (cumulative since the beginning of 2016); For more information on our Sustainable Impact strategy, programs, and a complete list of goals and performance, we refer you to our annual Sustainable Impact Report, available on our website (which is not incorporated by reference herein).
Among our goals: • Accelerate digital equity for 150 million people by 2030, since the beginning of 2021; 8 Table of Contents • Enable better learning outcomes for 100 million people by 2025, since the beginning of 2015; • Enroll 1.5 million HP LIFE (Learning Initiative for Entrepreneurs) users between 2016 and 2030; • Contribute 1.5 million employee volunteering hours by 2025 (cumulative since the beginning of 2016); • Contribute US$100 million in HP Foundation and employee community giving by 2025 (cumulative since the beginning of 2016); For more information on our Sustainable Impact strategy, programs, and a complete list of goals and performance, we refer you to our annual Sustainable Impact Report, available on our website (which is not incorporated by reference herein).
Ludgate served as Executive Vice President and Chief Human Resources Officer at 3M, a global technology company , from June 2018 until July 2021. Ms. Ludgate held a wide range of leadership positions during her 17 years with 3M, leading global teams in human resources, legal, compliance, and communications. David McQuarrie; age 47; Chief Commercial Officer Mr.
Ludgate served as Executive Vice President and Chief Human Resources Officer at 3M, a global technology company , from June 2018 until July 2021. Ms. Ludgate held a wide range of leadership positions during her 17 years with 3M, leading global teams in human resources, legal, compliance, and communications. David McQuarrie; age 48; Chief Commercial Officer Mr.
Myers served as Global Controller from December 2015 to December 2018 and finance lead during the separation of Hewlett-Packard Company into HP and Hewlett Packard Enterprise Company from October 2014 to August 2015, in addition to other finance-related roles at Hewlett-Packard Company. Tuan Tran; age 55; President of Imaging, Printing and Solutions Mr.
Myers served as Global Controller from December 2015 to December 2018 and finance lead during the separation of Hewlett-Packard Company into HP and Hewlett Packard Enterprise Company from October 2014 to August 2015, in addition to other finance-related roles at Hewlett-Packard Company. Tuan Tran; age 56; President of Imaging, Printing and Solutions Mr.
Julie Jacobs; age 56; Chief Legal Officer and General Counsel Ms. Jacobs has served as Chief Legal Officer and General Counsel since October 2022. Previously, Ms. Jacobs served as Senior Executive Vice President, General Counsel and Corporate Secretary of Yahoo, a leading internet, media, and technology company, from September 2021 to October 2022. Prior to Yahoo, Ms.
Julie Jacobs; age 57; Chief Legal Officer and General Counsel Ms. Jacobs has served as Chief Legal Officer and General Counsel since October 2022. Previously, Ms. Jacobs served as Senior Executive Vice President, General Counsel and Corporate Secretary of Yahoo, a leading internet, media, and technology company, from September 2021 to October 2022. Prior to Yahoo, Ms.
Historical seasonal patterns may not continue in the future and have been impacted by supply constraints, shifts in customer behavior and the evolving impacts of macroeconomic challenges and different demand dynamics. See “Risk Factors—Our uneven sales cycle makes planning and inventory management difficult and future financial results less predictable,” in Item 1A, which is incorporated herein by reference.
Historical seasonal patterns may not continue in the future and may be impacted by supply constraints, shifts in customer behavior and the evolving impacts of macroeconomic challenges and different demand dynamics. See “Risk Factors—Our uneven sales cycle makes planning and inventory management difficult and future financial results less predictable,” in Item 1A, which is incorporated herein by reference.
Before his Business Personal Systems role, Mr. Lores was Senior Vice President of Customer Support and Services. Kristen Ludgate; age 59; Chief People Officer Ms. Ludgate has served as Chief People Officer since July 2021. Previously, Ms.
Before his Business Personal Systems role, Mr. Lores was Senior Vice President of Customer Support and Services. Kristen Ludgate; age 61; Chief People Officer Ms. Ludgate has served as Chief People Officer since July 2021. Previously, Ms.
For a discussion of risks attendant to these competitive factors, see “Risk Factors—We operate in an intensely competitive industry and competitive pressures could harm our business and financial performance,” in Item 1A, which is incorporated herein by reference. 8 Table of Contents Sustainability At HP, we believe how we do things is just as important as what we do.
For a discussion of risks attendant to these competitive factors, see “Risk Factors—We operate in an intensely competitive industry and competitive pressures could harm our business and financial performance,” in Item 1A, which is incorporated herein by reference. Sustainability At HP, we believe how we do things is just as important as what we do.
Our competitive advantages include our broad product portfolio, our innovation, and research and development capabilities including security features, our innovative design work, our brand and procurement leverage, our ability to cross-sell our portfolio of offerings, our extensive service and support offerings and the accessibility of our products through a broad-based distribution strategy from retail and commercial channels to direct sales.
Our competitive advantages include our broad product portfolio, our innovation, and research and development capabilities including security features, our innovative design work, our brand and procurement leverage, our ability to cross-sell our portfolio of offerings, our extensive service and support offerings and the accessibility of our products and execution of our broad-based distribution strategy from retail and commercial channels to direct sales.
Any decision by either 6 Table of Contents party not to renew our agreement with Canon or to limit or reduce the scope of the agreement could adversely affect our net revenue from LaserJet products; however, we have a long-standing business relationship with Canon and anticipate renewal of this agreement.
Any decision by either party not to renew our agreement with Canon or to limit or reduce the scope of the agreement could adversely affect our net revenue from LaserJet products; however, we have a long-standing business relationship with Canon and anticipate renewal of this agreement.
We are committed to complying with all environmental laws applicable to our operations, products and services and to reducing our environmental impact across all aspects of our business. This commitment is reflected and outlined in our sustainability policy, our comprehensive environmental, health and safety policy, strict environmental management of our operations and worldwide environmental programs and services.
We are committed to complying with all environmental laws applicable to our operations, products and services and to reducing our environmental impact across all aspects of our business. This commitment is reflected and outlined in our sustainable impact goals, our comprehensive environmental, health and safety policy, strict environmental management of our operations and worldwide environmental programs and services.
Our primary competitors are Lenovo Group Limited, Dell Inc., Huawei Technologies Co., Ltd., Acer Inc., ASUSTeK Computer Inc., Apple Inc., Toshiba Corporation, Microsoft Corporation, and Samsung Electronics Co., Ltd. In particular geographies, we also experience competition from local companies and from generically-branded or “white box” manufacturers.
Our primary competitors are Lenovo Group Limited, Dell Inc., Huawei Technologies Co., Ltd., Acer Inc., ASUSTeK Computer Inc., Apple Inc., Toshiba Corporation, Microsoft Corporation, Samsung Electronics Co., Ltd and Logitech International S.A. In particular geographies, we also experience competition from local companies and from generically-branded or “white box” manufacturers.
See “Risk Factors—We are heavily dependent on third-party suppliers and supply chain issues have adversely affected, and could continue to adversely affect, our financial results” in Item 1A, which is incorporated herein by reference, for additional information on our reliance on single-source suppliers.
See “Risk Factors—We are heavily dependent on third-party suppliers and supply chain issues have adversely affected, and could adversely affect in the future, our financial results” in Item 1A, which is incorporated herein by reference, for additional information on our reliance on single-source suppliers.
Google™ and Google Chrome™ are trademarks of Google LLC. All other trademarks are the property of their respective owners. 13 Table of Contents
Google™ and Google Chrome™ are trademarks of Google LLC. All other trademarks are the property of their respective owners. 12 Table of Contents
See “Risk Factors—We are heavily dependent on third-party suppliers and supply chain issues have adversely affected, and could continue to adversely affect, our financial results” in Item 1A, which is incorporated herein by reference. Sustainability also plays an important role in the manufacturing and sourcing of materials and components for our products.
See “Risk Factors—We are heavily dependent on third-party suppliers and supply chain issues have adversely affected, and could adversely affect in the future, our financial results” in Item 1A, which is incorporated herein by reference. 6 Table of Contents Sustainability also plays an important role in the manufacturing and sourcing of materials and components for our products.
Faust served as Head of Finance Transformation & Corporate Services from August 2021 to April 2022. Prior to joining HP, he served as Chief Financial Officer of Aruba, a Hewlett Packard Enterprise company, a provider of network solutions, from February 2020 to July 2021. Prior to that role, Mr.
Faust has served as Global Controller since April 2022. Previously, Mr. Faust served as Head of Finance Transformation & Corporate Services from August 2021 to April 2022. Prior to joining HP, he served as Chief Financial Officer of Aruba, a Hewlett Packard Enterprise company, a provider of network solutions, from February 2020 to July 2021. Prior to that role, Mr.
Pay Equity We believe people should be paid equitably for what they do and how they do it, regardless of their gender, race, or other protected characteristics. To deliver on that commitment, we benchmark and set pay ranges based on relevant market data and consider factors such as an employee’s role and experience, and their performance.
Pay Equity People should be paid equitably for what they do and how they do it, regardless of their gender, race, or other protected characteristics. We benchmark and set pay ranges based on relevant market data and consider factors such as an employee’s role, experience, skills, and performance.
McQuarrie served in various sales leadership positions at global personal computer and technology companies Lenovo (2008 to 2016) and Dell (1998 to 2007). Marie Myers; age 54; Chief Financial Officer Ms. Myers has served as Chief Financial Officer since February 2021, previously serving as acting Chief Financial Officer from October 2020 to February 2021.
Prior to joining HP, Mr. McQuarrie served in various sales leadership positions at global personal computer and technology companies Lenovo (2008 to 2016) and Dell (1998 to 2007). Marie Myers; age 55; Chief Financial Officer Ms. Myers has served as Chief Financial Officer since February 2021, previously serving as acting Chief Financial Officer from October 2020 to February 2021.
We group commercial notebooks, commercial desktops, commercial services, commercial mobility devices, commercial detachables and convertibles, workstations, retail POS systems and thin clients into commercial PCs and consumer notebooks, consumer desktops, consumer services and consumer detachables into consumer PCs when describing performance in these markets.
We group commercial notebooks, commercial desktops, commercial services, commercial mobility devices, commercial detachables and convertibles, workstations, retail POS systems and thin clients into commercial (“Commercial PS”) and consumer notebooks, consumer desktops, consumer services and consumer detachables into consumer (“Consumer PS”) when describing performance in these markets.
McQuarrie has served as Chief Commercial Officer since November 2022. Previously, Mr. McQuarrie served as Senior Vice President & General Manager, Personal Systems Category, from November 2021 to November 2022, Global Head of Customer Support from November 2019 to November 2021, and Global Head of Print Business Management from January 2017 to October 2019. Prior to joining HP, Mr.
McQuarrie has served as Chief Commercial Officer since November 2022. Previously, Mr. McQuarrie served as Senior Vice President & General Manager, Personal Systems Category, from November 2021 to November 2022, Global Head of Customer Support from November 2019 to November 2021, and Global Head of Print Business Management from January 2017 to October 11 Table of Contents 2019.
From 2014 to 2018, Mr. Cho served as Global Head and General Manager of Commercial Personal Systems. Prior to that role, Mr. Cho served as the Vice President and General Manager of the LaserJet Supplies team from 2010 to 2014. Jon Faust; age 45; Global Controller Mr. Faust has served as Global Controller since April 2022. Previously, Mr.
Cho has served as President, Personal Systems since June 2018. From 2014 to 2018, Mr. Cho served as Global Head and General Manager of Commercial Personal Systems. Prior to that role, Mr. Cho served as the Vice President and General Manager of the LaserJet Supplies team from 2010 to 2014. Jon Faust; age 46; Global Controller Mr.
For more information on our sustainability goals, programs, and performance, we refer you to our annual Sustainable Impact Report, available on our website (which is not incorporated by reference herein). International Our products and services are available worldwide.
For more information on our sustainability goals, programs, and performance, including our methodology for calculating progress towards our GHG and other sustainability goals, we refer you to our annual Sustainable Impact Report, available on our website (which is not incorporated by reference herein). International Our products and services are available worldwide.
HP Labs is part of our Corporate Investments segment. We anticipate that we will continue to have significant research and development expenditures in the future to support the design and development of innovative, high-quality products and services to maintain and enhance our competitive position.
We anticipate that we will continue to have significant research and development expenditures in the future to support the design and development of innovative, high-quality products and services to maintain and enhance our competitive position.
Health, Safety, and Wellness The physical health, financial wellbeing, life balance, and mental health of our employees are vital to HP’s success. Our environmental, health, and safety leadership team uses our global injury and illness reporting system to assess worldwide and regional trends as a part of quarterly reviews.
Health, Safety, and Wellness The holistic wellbeing of our employees is vital to HP’s success. Our environmental, health, and safety leadership team uses our global injury and illness reporting system to assess worldwide and regional trends as a part of quarterly reviews.
Our efforts also are focused on identifying the areas where we believe we can make a unique contribution and the areas where partnering with other leading technology companies will leverage our cost structure and maximize our customers’ experiences. HP Labs, together with the various research and development groups within our business segments, is responsible for our research and development efforts.
Our efforts also are focused on identifying the areas where we believe we can make a unique contribution and the areas where partnering with other leading technology companies will leverage our cost structure and maximize our customers’ experiences. Our research and development efforts are supported by various groups across our business segments.
Commercial PCs include HP ProBook and HP EliteBook lines of notebooks, convertibles, and detachables, HP Pro and HP Elite lines of business desktops and all-in-ones, retail POS systems, HP Thin Clients, HP Pro Tablet PCs and the HP notebook, desktop and Chromebook systems.
Commercial PS includes HP Dragonfly, HP ProBook and HP EliteBook lines of notebooks, convertibles, and detachables, HP Pro and HP Elite lines of business desktops and all-in-ones, retail POS systems, HP Thin Clients, HP Pro Tablet personal computers (“PCs”) and the HP notebook, desktop and Chromebook systems.
Printing groups its global business capabilities into the following business units when reporting business performance: • Commercial consists of office printing solutions, graphics solutions and 3D printing and digital manufacturing, excluding supplies; • Consumer 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, graphics supplies and 3D printing and digital manufacturing supplies, for recurring use in consumer and commercial hardware.
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. 5 Table of Contents Corporate Investments Corporate Investments includes certain business incubation and investment projects.
Both commercial and consumer PCs maintain multi-operating system, multi-architecture strategies using Microsoft Windows and Google Chrome operating systems, and predominantly use processors from Intel Corporation (“Intel”) and Advanced Micro Devices, Inc. (“AMD”).
Both Commercial PS and Consumer PS services include support and deployment, configurations and extended warranty services and maintain multi-operating system and multi-architecture strategies using Microsoft Windows and Google Chrome operating systems, and predominantly use processors from Intel Corporation (“Intel”) and Advanced Micro Devices, Inc. (“AMD”).
We believe that our broad geographic presence as well as our focus on diversity and inclusion, gives us a solid base on which to build future growth.
We believe that our broad geographic presence gives us a solid base on which to build future growth.
Competition We encounter strong competition in all areas of our business activity. We compete on the basis of technology, innovation, performance, price, quality, reliability, brand, reputation, distribution, range of products and services, ease of use of our products, account relationships, customer training, service, support and solutions including subscription-based offerings and financing, security, availability of application software, and our sustainability performance.
We compete on the basis of technology, innovation, performance, price, quality, reliability, brand, reputation, distribution, range of products and services, ease of use of our products, 7 Table of Contents account relationships, customer training, service, support and solutions including subscription-based offerings and financing, security, availability of application software, and our sustainable impact.
Previously, he served as Global Head & General Manager of the Office Printing Solutions business from 2016 to November 2019, and Global Head & General Manager of the LaserJet and Enterprise Solutions business from 2014 to 2016. 12 Table of Contents Available Information Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to reports filed or furnished pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended, are available free of charge on our website at http://investor.hp.com, as soon as reasonably practicable after HP electronically files such reports with, or furnishes those reports to, the Securities and Exchange Commission.
Available Information Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to reports filed or furnished pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended, are available free of charge on our website at http://investor.hp.com, as soon as reasonably practicable after HP electronically files such reports with, or furnishes those reports to, the Securities and Exchange Commission.
We strive to continually improve the energy and carbon efficiency of our operations, supply chain and product portfolio and deliver more cost-effective and lower carbon technology solutions to our customers.
We strive to continually improve the energy and carbon efficiency of our operations, supply chain and product portfolio and deliver more cost-effective and lower carbon technology solutions to our customers. We believe that technology will be fundamental to finding solutions to achieve compliance with and manage those requirements.
We intend for our products to be easily reused and recycled, and we provide many of our customers with reuse and recycling programs. 9 Table of Contents In the event our products become non-compliant with these laws or standards, our products could be restricted from entering certain jurisdictions or from being procured by certain governments or private companies, and we could face other sanctions, including fines.
In the event our products become non-compliant with these laws or standards, our products could be restricted from entering certain jurisdictions or from being procured by certain governments or private companies, and we could face other sanctions, including fines.
Among our goals: • Achieve net zero greenhouse gas (“GHG”) emissions across HP’s value chain (scope 1, 2 and 3) by 2040, with a 50% reduction in absolute value chain GHG emissions by 2030 compared to 2019; • Reach 75% circularity for products and packaging by 2030; • Maintain zero deforestation for HP paper and paper-based packaging and counteract deforestation for non-HP paper used in our products and print services; Human Rights: Create a powerful culture of diversity, equity, and inclusion.
Among our goals: • Achieve net zero greenhouse gas (“GHG”) emissions across HP’s value chain (scope 1, 2 and 3) by 2040, with a 50% reduction in absolute value chain GHG emissions by 2030 compared to 2019; • Reach 75% circularity for products and packaging by 2030; • Continue to source only sustainable fiber for all HP-brand paper and paper-based packaging and counteract deforestation for non-HP paper used in our products and print services; Human Rights: Building a culture of equality and empowerment within HP and beyond, where diversity is sought out and celebrated, and where universal human rights are understood and respected.
Corporate Investments Corporate Investments includes HP Labs and certain business incubation and investment projects. Sales, Marketing and Distribution We manage our business and report our financial results based on the business segments described above.
Sales, Marketing and Distribution We manage our business and report our financial results based on the business segments described above.
Patents Our general policy has been to seek patent protection for those inventions likely to be incorporated into our products and services or where obtaining such proprietary rights will improve our competitive position. At October 31, 2022, our worldwide patent portfolio included over 28,000 patents, including patents acquired as a result of our acquisition of Plantronics, Inc.
Patents Our general policy has been to seek patent protection for those inventions likely to be incorporated into our products and services or where obtaining such proprietary rights will improve our competitive position. At October 31, 2023, our worldwide patent portfolio included over 23,000 patents. Patents generally have a term of twenty years from the date they are filed.
We are also subject to standards set by public and private entities related to sustainability issues such as energy consumption, carbon emissions, reusing or recycling.
We are also subject to standards set by public and private entities related to sustainability issues such as energy consumption, carbon emissions, reusing or recycling. We intend for our products to be easily reused and recycled, and we provide many of our customers with reuse and recycling programs.
It also includes some Samsung-branded supplies. 5 Table of Contents 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 (HP DesignJet, HP Latex, HP Indigo and HP PageWide Web Presses). 3D Printing and Digital Manufacturing offers a portfolio of additive manufacturing solutions and supplies to help customers succeed in their additive and digital manufacturing journey.
It also includes Original Equipment Manufacturer (“OEM”) hardware and solutions. • Home Printing Solution s delivers innovative 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 (HP DesignJet, HP Latex, HP Indigo and HP PageWide Web Presses). • 3D Printing and Personalization offers a portfolio of additive manufacturing solutions and supplies to help customers succeed in their additive and digital manufacturing journey.
We also regularly review our compensation practices, both in terms of our overall workforce and individual employees, to make sure our pay is fair and equitable.
We also regularly review our compensation practices, both in terms of our overall workforce and individual employees, to make sure our pay is fair and equitable. For the past seven years, we have reviewed employees’ compensation with the support of independent third-party experts to ensure consistent pay practices.
No single patent is essential to HP as a whole or to any of HP’s business segments. 7 Table of Contents In addition to developing our patent portfolio, we license intellectual property (“IP”) from third parties.
No single patent is essential to HP as a whole or to any of HP’s business segments. In addition to developing our patent portfolio, we license intellectual property (“IP”) from third parties. We have also granted and continue to grant to others licenses, and other rights, under our patents when we consider these arrangements to be in our interest.
In addition, for a discussion of our environmental contingencies see Note 14, “Litigation and Contingencies” to the Consolidated Financial Statements in Item 8, which is also incorporated herein by reference. Human Capital Approximately 58,000 employees worldwide (including employees from the recent Poly acquisition), power HP’s innovation, contributing unique perspectives and a growth mindset to create breakthrough technologies and transformative solutions.
In addition, for a discussion of our environmental contingencies see Note 14, “Litigation and Contingencies” to the Consolidated Financial Statements in Item 8, which is also incorporated herein by reference. Human Capital HP employs about 58,000 employees in 59 countries.
In fiscal year 2022, 46.4% of our U.S. hires were ethnically diverse. We continue to work on removing barriers for underrepresented employees by creating equitable programs, training and development opportunities to grow and promote our employees.
For example in fiscal year 2023, 45% of our external U.S. hires were racially or ethnically diverse. We continue to work on removing barriers for underrepresented employees, providing internal programs and development opportunities as well as training for managers on inclusive leadership.
The account manager is supported by a team of specialists with product and services expertise and drives both direct and indirect sales to their assigned customers. For other customers and for consumers, we typically manage both direct online sales as well as channel relationships with retailers mainly targeting consumers and SMBs and commercial resellers mainly targeting SMBs and mid-market accounts.
The account manager is supported by a team of specialists with product and services expertise and drives both direct and indirect sales to their assigned customers.
Printing Printing provides consumer and commercial printer hardware, supplies, services and solutions. Printing is also focused on Graphics and 3D imaging solutions in the commercial and industrial markets. Our global business capabilities within Printing are described below: Office Printing Solutions delivers HP’s office printers, supplies, services, and solutions to SMBs and large enterprises.
Our global business capabilities within Printing are described below: • Office Printing Solutions delivers HP’s office printers, supplies, services, and solutions to SMBs, public sector and large enterprises.
Our manufacturing facilities continue to represent our most significant health and safety risks, due to higher potential exposure to chemicals and machinery-related hazards. Reducing and effectively managing risks at these facilities remains a focus, and injury rates continue to be low. We also sponsor a global wellness program designed to enhance wellbeing for all HP employees.
We continue to focus on reducing and effectively managing risks at HP-owned and partner-owned manufacturing facilities, and injury rates continue to be low. 10 Table of Contents We sponsor a global wellness program designed to enhance wellbeing for all HP employees.
Consumer PCs are optimized for consumer usage, focusing on gaming, learning and working remotely, consuming multi-media for entertainment, managing personal life activities, staying connected, sharing information, getting things done for work including creating content, and staying informed and secure.
Additionally, HP offers a range of services and solutions to enterprise, public sector (which includes education), and SMB customers to help them manage the lifecycle of their PCs and mobility installed base. • Consumer PS consist 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, staying connected, sharing information, getting things done for work including creating content and staying informed and secure.
(“Poly”) in August 2022. Patents generally have a term of twenty years from the date they are filed. As our patent portfolio has been built over time, the remaining terms of the individual patents across our patent portfolio vary.
As our patent portfolio has been built over time, the remaining terms of the individual patents across our patent portfolio vary.
Our commitment to DEI starts at the top with a highly knowledgeable, skilled and diverse board of directors. We are among the top technology companies for women in executive positions. Women represent 33.3% of HP’s full-time executive positions globally. We are committed to improving representation of women at HP overall, with an intentional focus on leadership and technical roles globally.
We are also among the top technology companies for women in executive positions. Globally, women hold 32.7% of HP’s full-time leadership positions. We are committed to improving representation of women at HP overall, with a focus on leadership and technical roles worldwide. We also strive to ensure equal opportunities and access for employees from underrepresented groups.
Commercial PCs are optimized for use by enterprise, public sector (which includes education), and SMBs customers, with a focus on robust design, security, serviceability, connectivity, reliability and manageability in the customer’s environment and working remotely.
Personal Systems groups its global business capabilities into the following business units when reporting business performance: • Commercial PS consist of endpoint computing devices and hybrid systems, for use by enterprise, public sector (which includes education), and SMB customers, with a focus on robust designs, security, serviceability, connectivity, reliability and manageability in the customer’s environment.
These systems include HP Spectre, HP Envy, HP Pavilion, HP Chromebook, HP Stream, Omen by HP lines of notebooks, desktops and hybrids, HP Envy, HP Pavilion desktops and all-in-one lines.
These systems include HP Spectre, HP Envy, HP Pavilion, HP Chromebook, Omen and Victus by HP lines of notebooks and desktops, HP Envy, HP Pavilion desktops and all-in-one lines. Printing 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 Sustainable Impact goals reflect our efforts to tackle key issues in Climate, Human Rights, and Digital Equity as follows: Climate Action: Drive toward a net zero carbon, fully regenerative economy while engineering the industry’s most sustainable portfolio of products and solutions.
Our Sustainable Impact goals reflect our efforts to tackle key issues in Climate, Human Rights, and Digital Equity as follows: Climate Action: Taking urgent and decisive action to achieve net zero carbon emissions across our entire value chain, give back more to forests than we take, and innovate our products and services for a more circular economy.
Tran served as President of Imaging, Printing and Solutions since November 2019.
Tran served as President of Imaging, Printing and Solutions since November 2019. Previously, he served as Global Head & General Manager of the Office Printing Solutions business from 2016 to November 2019, and Global Head & General Manager of the LaserJet and Enterprise Solutions business from 2014 to 2016.
On November 1, 2015, we completed the separation (the “Separation”) of Hewlett Packard Enterprise Company (“Hewlett Packard Enterprise”), Hewlett-Packard Company’s former enterprise technology infrastructure, software, services and financing businesses. HP Products and Services; Segment Information We have three reportable segments: Personal Systems, Printing and Corporate Investments.
HP Products and Services; Segment Information We have three reportable segments: Personal Systems, Printing and Corporate Investments.
Our goal is to provide the ability to work seamlessly across a diverse ecosystem of workplaces, enabled by enhanced tools and technology designed to optimize productivity and collaboration. Overall, we aim to cultivate a healthy, supportive, and inclusive environment that enables employees to do their best work, while developing themselves and reaching their full potential.
At HP, hybrid work balances workplace flexibility with time working together to collaborate and connect in person at our sites. Our goal is to provide the ability to work seamlessly across a diverse ecosystem of workplaces, enabled by enhanced tools and technology designed to optimize productivity and collaboration.
Because we are in the process of integrating Poly, the following metrics do not include Poly employees. Diversity, Equity, and Inclusion (DEI) Innovation at HP comes from the diverse perspectives, backgrounds, knowledge, and unique experiences of our employees. We strive to create an inclusive workplace where people bring their authentic selves to work and can reach their full potential.
Our data show that 80% of employees have specific development actions they are working on in collaboration with their managers. Diversity, Equity, and Inclusion (DEI) We strive to create an inclusive, equitable workplace where everyone can bring their authentic selves to work and reach their full potential.
Commercial PCs also include workstations that are designed and optimized for high-performance and demanding application environments including Z desktop workstations, Z all-in-ones and Z mobile workstations. Additionally, we offer a range of services and solutions to enterprise, public sector (which includes education), and SMBs customers to help them manage the lifecycle of their PC and mobility installed base.
It also includes workstations that are designed and optimized for high-performance and demanding application environments including Z desktop workstations, Z all-in-ones and Z mobile workstations.
The independent analysis did not reveal any systemic issues. Any areas of potential concern, considering what we would expect employees to be paid when evaluating their skills, qualifications, and experience, were reviewed and addressed as part of our off-cycle compensation process.
In fiscal year 2023, we expanded our annual pay equity assessment to include 17 countries with our largest employee populations, representing approximately 85% of our global workforce. The independent analysis did not reveal any systemic issues and we addressed areas of potential concern as part of our off-cycle compensation process.
We have also granted and continue to grant to others licenses, and other rights, under our patents when we consider these arrangements to be in our interest. These license arrangements include a number of cross-licenses with third parties.
These license arrangements include a number of cross-licenses with third parties.
The Personal Systems segment offers commercial and consumer desktop and notebook personal computers (“PCs”), workstations, thin clients, commercial mobility devices, retail point-of-sale (“POS”) systems, displays and peripherals, software, support and services. The Printing segment provides consumer and commercial printer hardware, supplies, services and solutions. Corporate Investments includes HP Labs and certain business incubation and investment projects.
Personal Systems Personal Systems offers commercial and consumer desktops and notebooks, workstations, thin clients, commercial mobility devices, retail point-of-sale (“POS”) systems, displays, hybrid systems (includes video conferencing cameras and solutions, headsets, voice, and related software capabilities including all products and solutions acquired from Poly), software, support and services.
The 2022 annual employee engagement survey revealed that 85% of employees felt HP actively supported their learning and development, with 81% believing that they have what is needed to build new skills and/or stretch beyond current capabilities.
The 2023 annual employee engagement survey revealed that 83% of employees felt HP actively supported their learning and development, with 82% believing that they are given a real opportunity to improve their skills at HP. Finally, HP encourages ongoing collaboration between people managers and employees to create personalized plans that accelerate skill development and prepare employees for additional opportunities.
Removed
Personal Systems Personal Systems offers commercial and consumer desktop and notebook PCs, workstations, thin clients, commercial mobility devices, retail POS systems, displays and peripherals, software, support and services.
Added
For other customers and for consumers, we typically manage both direct online sales as well as channel relationships with retailers mainly targeting consumers and SMBs and commercial resellers mainly targeting SMBs, mid-market accounts, public sector and large enterprises.
Removed
Personal Systems groups its global business capabilities into the following business units when reporting business performance: • Notebooks consists of consumer notebooks, commercial notebooks, mobile workstations, peripherals, and commercial mobility devices; • Desktops includes consumer desktops, commercial desktops, thin clients, displays, peripherals, and retail POS systems; • Workstations consists of desktop workstations, displays and peripherals; and • Other consists of consumer and commercial services, Poly products and services as well as other Personal Systems capabilities.
Added
Competition We encounter strong competition in all areas of our business activity.
Removed
It also includes Original Equipment Manufacturer (“OEM”) hardware and solutions, and some Samsung-branded supplies. Home Printing Solution s delivers innovative printing products, supplies, services and solutions for the home, home business and micro business customers utilizing both HP’s Ink and Laser technologies.
Added
Together, they power HP innovation by applying their diverse skills and perspectives to create transformative solutions for our partners and customers worldwide. Our aim is to attract and retain exceptional talent by providing engaging work experiences that help our employees thrive.
Removed
Advance human rights, social justice, and racial and gender equality across our ecosystem, raising the bar for all.
Added
We promote ongoing learning and development, offer comprehensive compensation and benefits, and focus on health, safety, and well-being to set employees up to do their best work and 9 Table of Contents achieve their career aspirations.
Removed
Drive digital inclusion to transform lives and communities.
Added
To deliver on these priorities, HP senior leaders are accountable for meeting management by objective (MBO) goals for employee engagement, diversity and inclusion, and leadership development. Employee Engagement We regularly collect feedback from employees to better understand and improve their workplace experiences and to identify ways to strengthen our culture.
Removed
We believe that technology will be fundamental to finding solutions to achieve compliance with and manage those requirements, and we are collaborating with industry, business groups and governments to find and promote ways that HP technology can be used to address climate change and to facilitate compliance with related laws, regulations and treaties.
Added
In fiscal year 2023, 91% of employees participated in our annual survey, and we continued to see strong overall engagement, exceeding top quartile benchmarks for most of the external comparisons we track. We saw similar strength on our internal inclusion index, and employees demonstrated their engagement by providing a high volume of written comments in this year’s survey.
Removed
We are committed to fostering a diverse, equitable, and inclusive workplace that attracts, retains, and advances exceptional talent. Through ongoing employee development, comprehensive compensation and benefits, and a focus on health, safety, and employee well-being, we strive to support our employees in all aspects of their lives so they can do their best work—while learning, growing, and feeling engaged.

… 23 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

117 edited+48 added−25 removed122 unchanged
Biggest changeOur future business and financial performance could suffer due to a variety of international factors, including: • ongoing instability or changes in a country’s or region’s economic, regulatory or political conditions, including inflation, recession, interest rate fluctuations, changes or uncertainty in fiscal or monetary policy, actual or anticipated military or political conflicts (including the Russian invasion of Ukraine and its regional and global ramifications and tensions across the Taiwan Strait), health emergencies or pandemics (such as the COVID-19 pandemic) or Brexit and its impact; • the imposition by governments of additional taxes, tariffs or other restrictions on foreign trade or changes in restrictions on trade between the United States and other countries, including China and Russia; • trade (including trade embargoes) and other policies, laws and regulations affecting production, shipping, pricing and marketing of products, including policies adopted by the United States or other countries that may champion or otherwise favor domestic companies and technologies over foreign competitors or other country localization requirements; • political or nationalist sentiment impacting global trade, including the willingness of non-U.S. consumers to purchase goods or services from U.S. corporations; 14 Table of Contents • managing a geographically dispersed workforce and local labor conditions and regulations, including labor issues faced by specific suppliers and Original Equipment Manufacturers (“OEMs”), or changes to immigration and labor law which may adversely impact our access to technical and professional talent; • changes or uncertainty in the international, national or local regulatory and legal environments, including tax laws and antitrust laws; • differing technology standards, customer requirements or levels of protection of intellectual property; • import, export or other business licensing requirements or requirements relating to making foreign direct investments, which could increase our cost of doing business in certain jurisdictions, prevent us from shipping products to particular countries or markets, affect our ability to obtain favorable terms for components, increase our operating costs or lead to penalties or restrictions; • compliance with the U.S.
Biggest changeOur future business and financial performance could suffer due to a variety of international factors, including: • instability in a country’s or region’s economic, regulatory or political conditions, including inflation, recession, interest rate fluctuations, changes or uncertainty in fiscal or monetary policy, actual or anticipated military or political conflicts (including the Russian invasion of Ukraine, tensions across the Taiwan Strait, the Israel-Hamas conflict and other hostilities in the Middle East), health emergencies or pandemics; • the imposition by governments of additional taxes, tariffs or other restrictions on foreign trade or changes in restrictions on trade between the United States and other countries, including China and Russia; • trade sanctions, embargoes, country localization requirements and other policies and regulations affecting production, shipping, pricing and marketing of products, including policies adopted by any country that may favor domestic companies and technologies over foreign competitors; • political sentiment impacting global trade, including the willingness of non-U.S. consumers to purchase from U.S. corporations; • local labor conditions and regulations, including labor issues faced by suppliers and Original Equipment Manufacturers (“OEMs”), or immigration and labor laws which may adversely impact our access to technical and professional talent; • changes or uncertainty in international, national or local legal environments, including tax, data handling, privacy, intellectual property, consumer protection, environmental and antitrust laws; 13 Table of Contents • import, export or other business licensing requirements or requirements relating to making foreign direct investments, which could increase our cost of doing business, prevent us from shipping products, affect our ability to obtain favorable terms for components, increase our operating costs or lead to penalties or restrictions; • compliance with the U.S.
While we have developed and implemented security measures and internal controls designed to protect against cyber and other security threats, such measures cannot provide absolute security and may not be successful in preventing future security breaches. Moreover, these threats are constantly evolving, thereby making it more difficult to successfully defend against them or to implement adequate preventative measures.
While we have implemented security measures and internal controls designed to protect against cyber and other security threats, such measures cannot provide absolute security and may not be successful in preventing future security breaches. Moreover, these threats are constantly evolving, thereby making it more difficult to successfully defend against them or to implement adequate preventative measures.
Other supplier problems that we could face include component shortages, excess supply, risks related to the terms of our contracts with suppliers, risks associated with contingent workers, risks related to supply chain working conditions, human rights and materials sourcing, and risks related to our relationships with single-source suppliers, each of which is described below. • Component shortages.
Other supplier problems that we could face include component shortages, excess supply, risks related to the terms of our contracts with suppliers, contingent workers, supply chain working conditions, human rights and materials sourcing, and our relationships with single-source suppliers, each of which is described below. • Component shortages.
In particular, we face increasing complexity in our product design and procurement operations as we adjust to new and future requirements relating to the composition of our products, their safe use, the energy consumption associated with those products, climate change laws and regulations, and product repairability, reuse and take-back legislation.
In particular, we face increasing complexity in our product design and procurement operations as we adjust to new and future requirements relating to the composition of our products, their safe use, the energy consumption associated with those products, climate change laws and regulations, and product repairability, reuse, recyclability and take-back legislation.
Such extreme events are driving changes in market dynamics, stakeholder expectations, local, national and international climate change policies and regulations could result in disruptions to us, our suppliers, vendors, customers and logistics hubs and impact employees’ abilities to commute or to work from home effectively.
Such extreme climate related events are driving changes in market dynamics, stakeholder expectations, local, national and international climate change policies and regulations could result in disruptions to us, our suppliers, vendors, customers and logistics hubs and impact employees’ abilities to commute or to work from home effectively.
Risks associated with these transactions include the following: • We may not fully realize the anticipated benefits of any particular transaction, in the timeframe we expected or at all, such transaction may be less profitable than anticipated or unprofitable, we may not identify all factors to estimate accurately our costs, timing or other matters, and realizing the benefits of a particular transaction may depend upon competition, market trends, additional costs or investments and the actions of advisors, suppliers or other third parties. • Certain transactions have resulted, and in the future may result, in significant costs and expenses, including those related to compensation and benefit costs, goodwill and impairment charges, charges from elimination of duplicative facilities and contracts, inventory adjustments, assumed litigation and other liabilities, advisory fees, and payments to executive officers and key employees under retention plans. • Our due diligence process may fail to identify significant issues with the target’s product quality, financial disclosures, accounting practices or internal controls, including as a result of being dependent on the veracity and completeness of statements and disclosures made or actions taken by third parties. • In order to finance a transaction, we may issue common stock (potentially creating dilution) or take on additional debt. • These transactions could adversely impact our effective tax rate. • An acquisition target may have differing or inadequate cybersecurity and data protection controls. • These transactions may lead to litigation.
Risks associated with these transactions include the following: 21 Table of Contents • We may not fully realize the anticipated benefits of any particular transaction, in the timeframe we expected or at all, such transaction may be less profitable than anticipated or unprofitable, we may not identify all factors to estimate accurately our costs, timing or other matters, and realizing the benefits of a particular transaction may depend upon competition, market trends, additional costs or investments and the actions of advisors, suppliers or other third parties. • Certain transactions have resulted, and in the future may result, in significant costs and expenses, including those related to compensation and benefit costs, goodwill and impairment charges, charges from elimination of duplicative facilities and contracts, inventory adjustments, assumed litigation and other liabilities, advisory fees, and payments to executive officers and key employees under retention plans. • Our due diligence may fail to identify significant issues with the target’s product quality, financial disclosures, accounting practices or internal controls, including as a result of being dependent on the veracity and completeness of statements and disclosures made or actions taken by third parties. • In order to finance a transaction, we may issue common stock (potentially creating dilution) or take on additional debt. • These transactions could adversely impact our effective tax rate. • An acquisition target may have differing or inadequate cybersecurity and data protection controls. • These transactions may lead to litigation.
In addition, our ability to successfully offer our products, services and solutions in this rapidly evolving market requires an effective planning, forecasting, and management process to enable us to effectively calibrate and adjust our business and business models in response to fluctuating market opportunities and conditions.
Our ability to successfully offer our products, services and solutions in this rapidly evolving market requires an effective planning, forecasting, and management process to enable us to effectively calibrate and adjust our business and business models in response to fluctuating market opportunities and conditions.
In addition, sophisticated hardware and operating system software and applications that we produce or procure from third parties may contain defects or vulnerabilities in design or manufacture, including “bugs” that could unexpectedly interfere with the operation of the product.
In addition, hardware and operating system software and applications that we produce or procure from third parties may contain defects or vulnerabilities in design or manufacture, including “bugs” that could unexpectedly interfere with the operation of the product.
We are heavily dependent on third-party suppliers and their ability to deliver sufficient quantities of key components, products and services at reasonable prices and in time for us to meet schedules for the delivery of our products and services.
We are heavily dependent on third-party suppliers and their ability to deliver sufficient key components, products and services at reasonable prices and in time for us to meet schedules for the delivery of our products and services.
For example, a market shortage of integrated circuits and panels and other component supply has affected, and may affect in the future, lead times, the cost of that supply, and our ability to meet customer demand for our products.
For example, a market shortage of integrated circuits and panels and other component supply has at times affected, and may affect in the future, lead times, the cost of that supply, and our ability to meet customer demand for our products.
We have a large portfolio of products and must allocate our financial, personnel and other resources across all of our products while competing with companies that have smaller portfolios or specialize in one or more of our product lines.
We have a large portfolio of products and must allocate our financial, personnel and other resources across our products while competing with companies that have smaller portfolios or specialize in one or more of our product lines.
Alternatively, if orders substantially exceed predicted demand, we may not be able to fulfill all of the orders received in each quarter and such orders may be canceled by the customer.
Alternatively, if orders exceed predicted demand, we may not be able to fulfill all of the orders received in each quarter and such orders may be canceled by the customer.
We encounter aggressive competition from competitors in all areas of our business, and our competitors have targeted and are expected to continue targeting our key market segments.
We encounter aggressive competition in all areas of our business, and our competitors have targeted and are expected to continue targeting our key market segments.
There are inherent climate-related risks wherever our business is conducted. Global climate change is resulting, and is projected to continue to result, in certain natural disasters and adverse weather, such as drought, wildfires, storms, sea-level rise, flooding, heat waves, and cold waves, occurring more frequently or with greater intensity.
There are climate-related risks wherever our business is conducted. Global climate change is resulting, and is projected to continue to result, in natural disasters and adverse weather, such as drought, wildfires, storms, sea-level rise, flooding, heat waves, and cold waves, occurring more frequently or with greater intensity.
For example, we make significant estimates and assumptions when accounting for revenue recognition, taxes on earnings and restructuring and other charges, and when including decisions related to provisions for legal proceedings and other contingencies. We also estimate sales and marketing program incentives based on a number of factors including historical experience, expected customer behavior and market conditions.
For example, we make significant estimates and assumptions when accounting for revenue recognition and taxes on earnings, and when including decisions related to provisions for legal proceedings and other contingencies. We also estimate sales and marketing program incentives based on a number of factors including historical experience, expected customer behavior and market conditions.
Our business may be disrupted if we are unable to obtain equipment, parts or components from our suppliers—and our suppliers from their 17 Table of Contents suppliers—due to the insolvency of key suppliers or the inability of key suppliers to obtain credit, or if any of our distributors lack sufficient financial resources to withstand economic weakness.
Our business may be disrupted if we are unable to obtain equipment, parts or components from our suppliers—and our suppliers from their suppliers—due to the insolvency of 16 Table of Contents key suppliers or the inability of key suppliers to obtain credit, or if any of our distributors lack sufficient financial resources to withstand economic weakness.
Such attacks may involve the deployment of viruses, worms, ransomware and other malicious software programs that attack our products or otherwise exploit security vulnerabilities, or attempt to fraudulently induce our employees, customers, or others to disclose passwords, other sensitive information or provide access to our systems or data.
Such attacks may involve the deployment of ransomware and other malicious software programs that attack our products or otherwise exploit security vulnerabilities, or attempt to fraudulently induce our employees, customers, or others to disclose passwords, other sensitive information or provide access to our systems or data.
The loss of, deterioration of our relationship with, or limits in allocation by, a single-source supplier, or any unilateral modification to the contractual terms under which we are supplied components by a single-source supplier could adversely affect our business and financial performance.
The loss of, deterioration of our relationship with, or limits in allocation by, a single-source supplier, or any unilateral modification to the contractual terms under which we are supplied components by a single-source supplier could adversely affect our business and financial performance. • Geographic concentration .
Our effective tax rate could also be materially affected by the Organization for Economic Co-operation and Development’s, the European Commission’s and other certain major jurisdictions’ heightened interest in and taxation of large multi-national companies.
In addition, our effective tax rate could also be materially affected by the Organization for Economic Co-operation and Development’s (the “OECD”), the European Commission’s and other certain major jurisdictions’ heightened interest in and taxation of large multi-national companies.
Portions of our IT infrastructure, including those provided by third parties, may experience interruptions, outages, delays or cessations of service or may produce errors in connection with systems integrations, migration work or other causes, which could result in business disruptions and the process of remediating them could be more expensive, time-consuming, disruptive and resource intensive than planned.
Portions of our IT infrastructure, including those provided by third parties, may experience interruptions, outages, delays or cessations of service or may produce errors in connection with systems integrations, migration work or other causes, which could result in business disruptions. The process of remediating these issues could be more expensive, time-consuming, disruptive and resource intensive than planned.
Our brand perception, customer loyalty and legal compliance could be adversely impacted by a supplier’s improper practices or failure to comply with our requirements for environmentally, socially or legally responsible practices and sourcing. 18 Table of Contents • Single-source suppliers. We obtain a significant number of components from a single source due to technology, availability, price, quality or other considerations.
Our brand perception, customer loyalty and legal compliance could be adversely impacted by a supplier’s improper practices or failure to comply with our requirements for environmentally, socially or legally responsible practices and sourcing. • Single-source suppliers. We obtain a significant number of components from a single source due to technology, availability, price, quality or other considerations.
Therefore, in certain jurisdictions we may be unable to protect our proprietary technology adequately against unauthorized third-party copying or use, which could adversely affect our ability to sell products or services and our competitive position. In addition, certain of our businesses and products rely on key technologies developed or licensed by third parties.
Therefore, in certain jurisdictions we may be unable to protect our proprietary technology 22 Table of Contents adequately against unauthorized third-party copying or use, which could adversely affect our ability to sell products or services and our competitive position. In addition, certain of our businesses and products rely on key technologies developed or licensed by third parties.
In addition, regardless of the outcome, litigation and regulatory proceedings can be costly, time-consuming, disruptive to our operations, and distracting to management. 26 Table of Contents Failure to comply with our customer and partner contracts or government contracting regulations could adversely affect our business and financial performance. Our contracts with our customers may include unique and specialized performance requirements.
In addition, regardless of the outcome, litigation and regulatory proceedings can be costly, time-consuming, disruptive to our operations, and distracting to management. Failure to comply with our customer and partner contracts or government contracting regulations could adversely affect our business and financial performance. Our contracts with our customers may include unique and specialized performance requirements.
We also have experienced, and may experience in the future, gross margin declines in certain businesses, reflecting the effect of items such as competitive pricing pressures and increases in component and manufacturing costs resulting from higher labor and material costs borne by our manufacturers and suppliers that we are unable to pass on to our customers.
We also have experienced, and may experience in the future, gross margin declines in certain businesses, reflecting the effect of competitive pricing pressures and increases in component and manufacturing costs resulting from higher labor and material costs borne by our manufacturers and suppliers that we are unable to pass on to our customers.
In addition, many of our competitors obtain products or components from the same OMs and suppliers that we utilize. Our competitors may obtain better pricing, more favorable contractual terms and conditions, or more favorable allocations of products and components during periods of limited supply, and our ability to engage in relationships with certain OMs and suppliers could be limited.
In addition, many of our competitors obtain products or components from the same OMs and suppliers that we utilize. Our competitors may obtain better pricing, more favorable contractual terms and conditions, or more favorable allocations of products and components, and our ability to engage in relationships with certain OMs and suppliers could be limited.
Media or other reports of perceived security vulnerabilities in our network security, regardless of their immediacy or accuracy, could adversely impact our brand and reputation and materially affect our business.
Media or other reports of perceived vulnerabilities in our network security, regardless of their immediacy or accuracy, could adversely impact our brand and reputation and materially affect our business and financial results.
In addition, our operations depend on our ability to anticipate and our suppliers’ ability to fulfill, our needs for sufficient quantities of key components, products and services (including sourcing matched sets).
In addition, our operations depend on our ability to anticipate and our suppliers’ ability to fulfill, our needs for sufficient key components, products and services (including sourcing matched sets).
The success of our services business (such as our managed print services, digital services and other workforce solutions in both Printing and Personal Systems) depends to a significant degree on attracting, retaining, and maintaining or increasing the level of revenues from our customers.
The success of our services business (such as our managed print services, digital services, consumer subscriptions and other workforce services in both Printing and Personal Systems) depends to a significant degree on attracting, retaining, and maintaining or increasing the level of revenues from our customers.
Additionally, our Personal Systems business relies heavily upon OMs to manufacture our products and we are therefore dependent upon the continuing operations of those OMs to manufacture our products to fulfill demand.
Additionally, our Personal Systems business relies heavily upon OMs to manufacture our products and we are therefore dependent upon the continuing operations of those OMs.
From time to time, we may use derivative contracts designated as cash flow hedges to protect against foreign 15 Table of Contents currency exchange rate risks. Our hedging strategies may be ineffective, may not offset any or more than a portion of the adverse financial impact resulting from currency variations, or may result in losses.
From time to time, we may use derivative contracts designated as cash flow hedges to protect against foreign currency exchange rate risks. However, our hedging strategies may be ineffective, may not offset any or more than a portion of the adverse financial impact resulting from currency variations, or may result in losses.
In addition, factors in different markets may cause differential discounting among the geographies where our products are sold, which makes it difficult to achieve 21 Table of Contents global consistency in pricing and creates the opportunity for grey marketing. In addition, our global channel partners may fail to comply with applicable legal and regulatory requirements.
In addition, factors in different markets may cause differential discounting among the geographies where our products are sold, which makes it difficult to achieve global consistency in pricing and creates the opportunity for grey marketing. In addition, our global channel partners may fail to comply with applicable legal and regulatory requirements.
These laws and regulations continue to evolve, are increasing in complexity and number and increasingly conflict 24 Table of Contents among the various countries in which we operate, which has resulted in greater compliance risk and cost for us. In addition, the cost and operational consequences of implementing new data protection measures could be significant.
These laws and regulations continue to evolve, are increasing in complexity and number and increasingly conflict among the various countries in which we operate, which has resulted in greater compliance risk and cost for us. In addition, the cost and operational consequences of implementing new privacy and data protection measures could be significant.
Competitors who have a greater presence in some of the lower-cost markets in which we compete, or who can obtain better pricing, more favorable contractual terms and conditions, and/or more favorable allocations of products and components during periods of limited supply, have been able to offer and may continue to be able to offer lower prices than we are able to offer.
Competitors who have a greater presence in some of the lower-cost markets in which we compete, or who can obtain better pricing, more favorable contractual terms and conditions, and/or more favorable allocations of products and components, have been able to offer and may continue to be able to offer lower prices than we are able to offer.
These provisions could deter or delay hostile takeovers, proxy contests and changes in control or our management or limit the opportunity for our stockholders to receive a premium for their shares of our stock.
These provisions could deter or 24 Table of Contents delay hostile takeovers, proxy contests and changes in control or our management or limit the opportunity for our stockholders to receive a premium for their shares of our stock.
Our operations and those of our significant suppliers and distributors could be adversely affected if manufacturing, logistics, or other operations in key locations, including logistics hubs in Asia, are disrupted for any reason, such as those described above or other economic, business, labor, environmental, public health, regulatory or political reasons.
Our operations and those of our suppliers and distributors could be adversely affected if manufacturing, logistics, or other operations in key locations, are disrupted for any reason, such as those described above or other economic, business, labor, environmental, public health, regulatory or political reasons.
Our aspirations and disclosures related to environmental, social and governance (“ESG”) matters expose us to risks that could adversely affect our reputation and performance. 25 Table of Contents We have established and publicly announced ESG goals, including our commitments to address climate change, human rights, and digital equity.
Our aspirations and disclosures related to environmental, social and governance (“ESG”) matters expose us to risks that could adversely affect our reputation and performance. We have established and publicly announced ESG goals, including our commitments to address climate change, human rights, and digital equity.
In addition, there are existing and proposed legislation related to environmental and social responsibility (including forced labor tracing requirements) for our operations, supply chain partners, and our products and services.
In addition, there are existing and proposed legislation related to human rights, environmental and social responsibility (including tracing requirements related to forced labor prohibitions) for our operations, supply chain partners, and our products and services.
Moreover, we are expected to become increasingly subject to laws, regulations and international treaties relating to climate change, such as carbon pricing or product energy efficiency requirements or more prescriptive reporting requirements.
Moreover, we expect to become increasingly subject to laws, regulations and international treaties relating to climate change, such as carbon pricing or product energy efficiency requirements or more prescriptive reporting requirements.
We represent a substantial portion of the business for certain OMs, and any changes to the nature or volume of our business transactions with a particular OM could adversely affect the operations and financial condition of the OM and lead to shortages or delays in receiving component products from that OM.
We represent a substantial portion of the business for certain OMs, and changes to the nature or volume of our business transactions with a particular OM could adversely affect the OM and lead to shortages or delays in receiving component products from that OM.
We may also be required to raise additional financing for working capital, capital expenditures, debt service obligations, debt refinancing, future acquisitions or for other general corporate purposes, which will depend on, among other factors, our financial position and performance, as well as prevailing market conditions and other factors beyond our control, and could be adversely impacted by our debt level.
We may also be required to raise additional financing for working capital, capital expenditures, debt service obligations, debt refinancing, future acquisitions or for other general corporate purposes, which will depend on, among other factors, our financial position and performance, as well as prevailing market conditions and other factors beyond our control.
Foreign Corrupt Practices Act, U.S. export control and trade sanction laws, and similar anti-corruption and international trade laws, and adverse consequences, such as fines or other penalties, for any failure to comply, including compliance by Poly or other acquired companies, which may have less robust internal compliance procedures; and • fluctuations in freight costs, limitations on shipping and receiving capacity, and other disruptions in the transportation and shipping infrastructure at important geographic points for our products and shipments.
Foreign Corrupt Practices Act, U.S. export control and trade sanction laws, and similar anti-corruption and international trade laws, and adverse consequences, for any failure to comply, including compliance by recently acquired companies, which may have less robust internal compliance procedures; and • fluctuations in freight costs, limitations on shipping and receiving capacity, and other disruptions in the transportation and shipping infrastructure at important geographic points for our products and shipments.
If shortages or delays in component products persist, the price of certain components may increase further, we may be exposed to quality issues, or the components may not be available at all.
If shortages or delays in component products occur, the price of certain components may increase, we may be exposed to quality issues, or the components may not be available at all.
We have experienced and may continue to experience delays or reductions in spending by our customers or potential customers, which could have a material adverse effect on demand for our products and services and could result in a significant decline in net revenue.
We have experienced and may in the future experience delays or reductions in spending by our customers or potential customers, which could have a material adverse effect on demand for our products and services and could result in a significant decline in net revenue.
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.
The separation and distribution agreement provides for cross-indemnities between HP and Hewlett Packard 26 Table of Contents Enterprise for liabilities allocated to the respective party pursuant to the terms of such agreement.
Even if we 23 Table of Contents believe that IP claims are without merit, they can be time-consuming and costly to defend against and may divert management’s attention and resources away from our business.
Even if we believe that IP claims are without merit, they can be time-consuming and costly to defend against and may divert management’s attention and resources away from our business.
Additionally, further indebtedness may increase the risk of a future downgrade in our credit ratings, which could increase future debt costs and limit the future availability of debt financing. The amount and frequency of our share repurchases and dividends are affected by a number of factors and may fluctuate.
Additionally, further indebtedness may increase the risk of a future downgrade in our credit ratings, which could increase future debt costs, limit the future availability of debt financing and adversely affect our subscription based business. The amount and frequency of our share repurchases and dividends are affected by a number of factors and may fluctuate.
For example, we rely on Canon for certain laser printer engines and laser toner cartridges and certain key suppliers for application specific integrated circuits (“ASICs”). We also rely on both Intel and AMD to provide us with a sufficient supply of processors for the majority of our PCs and workstations. Some of those processors may be customized for our products.
For example, we rely on Canon for certain laser printer engines and laser toner cartridges and certain key suppliers for application specific integrated circuits (“ASICs”). We also rely on both Intel and AMD to provide us with a sufficient supply of processors for the majority of our PCs and workstations.
Because a majority of our revenues are generated outside the United States, fluctuations in foreign currency exchange rates have adversely affected, and could in the future adversely affect, our net revenue growth.
Because most of our revenues are generated outside the United States, fluctuations in currency exchange rates have adversely affected, and could in the future adversely affect, our net revenue growth.
Given the wide variety of products and services we offer, the large and diverse distribution of our suppliers and contract manufacturers, and the long lead times required to manufacture, assemble and deliver certain components and products, problems have and could continue to arise in production, planning and inventory management, and regulatory compliance that could seriously harm our business.
Given the wide variety of products and services we offer, the large and diverse distribution of our suppliers and contract manufacturers, and the long lead times required to manufacture, assemble and deliver certain components and products, problems have and could continue to arise in production, planning and inventory management.
In addition, currency variations can adversely affect margins on sales of our products in countries outside of the United States and products that include components obtained from suppliers located outside of the United States, as well as our ability to implement price increases.
In addition, currency variations can adversely affect margins on sales of our products in countries outside of the United States and products that include components obtained from suppliers located outside of the United States, as well as our ability to increase prices.
As a result of this continuing shared use of the legacy branding there is a risk that conduct or events adversely affecting the reputation of Hewlett Packard Enterprise could also adversely affect our reputation. 28 Table of Contents ITEM 1B. Unresolved Staff Comments. None.
As a result of this continuing shared use of the legacy branding there is a risk that conduct or events adversely affecting the reputation of Hewlett Packard Enterprise could also adversely affect our reputation. 27 Table of Contents ITEM 1B. Unresolved Staff Comments. None. Item 1C. Cybersecurity Not applicable.
Furthermore, non-original supplies (including imitation, refill or remanufactured alternatives), which are often available at lower prices, compete with our Printing Supplies business and we may not be able to prevent the use of imitation print supplies with our printers using technological protection measures.
Furthermore, non-original supplies (including imitation, refill or remanufactured alternatives), which are often available at lower prices, compete with our Printing Supplies business. We may not be able to prevent the use of imitation print supplies with our printers using technological protection measures, including due to regulatory issues or other legal challenges.
Factors that may influence contract termination, non-renewal or reduction include business downturns, dissatisfaction with our services or products, our retirement or lack of support for our services, our customers selecting alternative technologies, the cost of our services as compared to our competitors, general market conditions, or other reasons.
Factors that may influence contract termination, non-renewal or reduction include business downturns, dissatisfaction with our services or products, our retirement or lack of support for our services, our customers selecting alternative technologies, the cost of our services as compared to our competitors, general market conditions, a lower than investment grade credit rating or other reasons.
Failure to maintain our credit ratings could adversely affect our liquidity, capital position, borrowing costs and access to capital markets. Our credit risk is evaluated by the major independent rating agencies.
Failure to maintain our credit ratings could adversely affect our liquidity, capital position, borrowing costs and access to capital markets, as well as our subscription based offerings. Our credit risk is evaluated by the major independent rating agencies.
This uneven sales pattern makes predicting net revenue, earnings, cash flow from operations and working capital for each financial period difficult, increases the risk of unanticipated variations in our quarterly results and financial condition, and places pressure on our inventory management and logistics systems. If predicted demand is substantially greater than orders, there may be excess inventory.
This uneven sales pattern makes predicting net revenue, earnings, cash flow from operations and working capital for each financial period difficult, increases the risk of unanticipated variations in our quarterly results and financial condition, and places pressure on our inventory management and logistics systems. If orders fall short of predicted demand, this results in excess inventory.
We may also dispose of a business at a price or on terms that are less desirable than we had anticipated. In 22 Table of Contents addition, we may experience fewer benefits than expected, and the impact of the divestiture on our revenue growth may be larger than projected.
We may also dispose of a business at a price or on terms that are less desirable than we had anticipated. In addition, we may experience fewer benefits than expected, and the impact of the divestiture on our financial performance may be larger than projected.
A breach could also damage our brand and reputation or otherwise harm our business, and could result in government enforcement actions, litigation and potential liability for us.
A breach could also damage our brand and reputation or otherwise harm our business, and could result in government enforcement actions, litigation, civil monetary penalties or fines and other potential liability for us.
Because we process proprietary information and sensitive or confidential data relating to our business and our customers, breaches of our security measures or accidental loss, inadvertent disclosure or unapproved dissemination of such data can expose us, our customers, or the individuals affected to a risk of loss, alteration or misuse of such information.
Because we process proprietary information and sensitive or confidential data relating to our business (including data relating to employees, independent contractors and other personnel), our customers and third parties, breaches of our security measures or accidental loss, inadvertent disclosure or unapproved dissemination of such data can expose us, our customers, third parties and the individuals affected to a risk of loss, alteration or misuse of such information.
As a result, we may invest less in certain areas of our business than our competitors, and our competitors may have greater financial, technical and marketing resources available for their products and services compared to the resources allocated to our competing products and services or greater economies of scale, which could in turn result in our inability to maintain market leadership in certain of our products, such as commercial PCs and notebooks.
As a result, we may invest less in certain areas of our business than our competitors, and our competitors may have greater financial, technical and marketing resources available for their products and services compared to the resources allocated to our competing products and services or greater economies of scale, which could in turn result in our loss of market share.
Global events, including the Russian invasion of Ukraine, trade disputes, economic sanctions, inflation, increasing interest rates and emerging market volatility, and the resulting uncertainty, may cause currencies to fluctuate, which may contribute to variations in sales of our products and services in impacted jurisdictions.
Global events, trade disputes, economic sanctions, inflation, increasing interest rates and emerging market volatility, and the resulting uncertainty, may cause currencies to fluctuate, which may contribute to variations in our sales in impacted jurisdictions.
If we fail to anticipate customer demand properly, a temporary oversupply could result in excess or obsolete components. • Contractual terms.
If we fail to anticipate customer demand, an oversupply could result in excess or obsolete components. • Contractual terms.
Our standard services agreements are generally renewable at a customer’s option and/or subject to cancellation rights, with or without penalties for early termination. We may not be able to retain or renew services contracts with our customers, or our customers may reduce the scope of the services they contract for.
Our standard services agreements are generally renewable at a customer’s option and/or subject to cancellation rights. We may not be able to retain or renew services contracts with our customers, or our customers 18 Table of Contents may reduce the scope of the services for which they contract.
Ongoing economic weakness, including an economic slowdown or recession, uncertainty in markets throughout the world and other adverse economic conditions, including inflation, changes in monetary policy and increased interest rates, have resulted, and may result in the future, in decreased demand for our products and services and increased expenses and difficulty in managing inventory levels and accurately forecasting revenue, gross margin, cash flows and expenses.
Ongoing economic weakness, including an economic slowdown or recession, uncertainty in markets throughout the world and other adverse economic conditions, including inflation, changes in monetary policy, increased interest rates, tariffs, exchange rates and an evolving global trade environment, have resulted in, and may continue to result in, decreased demand for our products and services and challenges in managing inventory levels and accurately forecasting revenue, gross margin, cash flows and expenses.
The occurrence of any of these business disruptions could result in significant losses, adversely affect our competitive position, increase our costs and expenses, require substantial expenditures and recovery time in order to fully resume operations, make it difficult or impossible to provide services or deliver products to our customers or to receive components from our suppliers, create delays and inefficiencies in our supply chain and/or result in the need to impose employee travel restrictions.
These events could result in significant losses, adversely affect our competitive position, increase our costs, require substantial expenditures and recovery time, make it difficult or impossible to provide services or deliver products to our customers or to receive components from our suppliers, create delays and inefficiencies in our supply chain and result in the need to impose employee travel restrictions.
We have and may continue to experience a shortage of, or a delay in receiving, certain components as a result of strong demand, capacity constraints, supplier financial weaknesses, the inability of suppliers to borrow funds, disputes with suppliers (some of whom are also our customers), disruptions in the operations of component suppliers, other problems experienced by suppliers or problems we face during the transition to new suppliers.
We have at times experienced and may in the future experience a shortage of, or a delay in receiving, certain components as a result of strong demand, capacity constraints, supplier financial weaknesses, disputes with suppliers (some of whom are also our customers), disruptions in the operations of component suppliers, supplier ability to demonstrate regulatory compliance, other problems experienced by suppliers or problems we face during the transition to new suppliers.
Examples of such risks include the availability and cost of low- or non-carbon-based energy sources, the evolving regulatory requirements affecting product circularity, ESG standards or disclosures, the evolving consumer protection laws applicable to ESG matters and the availability of materials and suppliers that can meet our sustainability, diversity and other ESG goals.
Examples of such risks include the availability and cost of low- or non-carbon-based energy sources, the evolving regulatory requirements affecting product circularity, ESG standards or disclosures, the evolving consumer protection laws applicable to ESG matters, the availability of materials and suppliers that can meet our sustainability, diversity and other ESG goals and the availability of funds to invest in ESG initiatives in times where we are seeking to reduce costs.
However, historical seasonal patterns may not continue in the future and such patterns have been and may continue to be impacted by supply constraints, macroeconomic conditions, such as an economic slowdown or inflationary pressures, shifts in customer behavior and the evolving impacts of the COVID-19 pandemic.
However, historical seasonal patterns may not continue in the future and such patterns have been and may be impacted by supply constraints, macroeconomic conditions, such as an economic slowdown or inflationary pressures, shifts in customer behavior and the impacts of pandemics or other public health crises.
We may be unable to successfully execute our strategy, sufficiently invest in, prioritize research and development, or market and scale strategic growth areas, accurately predict technological or business trends or control costs.
In addition, we may be unable to successfully execute our strategy, sufficiently invest in, prioritize research and development, market and scale, or accurately project the financial performance of our key growth areas or other strategic growth initiatives, accurately predict technological or business trends or control costs.
The factors described above also could disrupt our product and component manufacturing and key suppliers located outside of the United States and our supply chain. For example, we rely on manufacturers in Taiwan for the production of notebook computers and other suppliers in Asia for product assembly and manufacture.
The factors described above also could disrupt our product and component manufacturing and key suppliers located outside of the United States and our supply chain. For example, we rely on manufacturers in Taiwan to produce notebook computers and other suppliers in Asia for product assembly and manufacture and have manufacturing operations in Israel which support our Industrial Graphics business.
As a result, we could fail to maintain market leadership in certain of our products, such as commercial PCs and notebooks, and any of our products and technologies may be rendered uneconomical or obsolete. After we develop a product, we must be able to quickly manufacture appropriate volumes while also managing costs and preserving or improving margins.
As a result, we could lose market share and certain of our products and technologies may be rendered uneconomical or obsolete. After we develop a product, we must be able to quickly manufacture appropriate volumes while also managing costs and preserving or improving margins.
In the past, we have experienced data security incidents resulting from unauthorized access to or use of our systems or those of third parties, which to date, have not had a material impact on our operations; however, there is no assurance that such impact will not be material in the future.
In the past, we have experienced data security incidents resulting from unauthorized access to or use of our systems or those of third parties, which to date, have not had a material impact on our operations; however, there remains the possibility of a future data security incident that results in a material impact to the Company.
We cannot be assured that we will be able to maintain our current credit ratings, and any additional actual or anticipated changes or downgrades in our credit ratings, including any announcement that our ratings are under further review for a downgrade, may impact us in a similar manner and may have a negative impact on our liquidity, capital position and access to capital markets. 16 Table of Contents Our debt obligations could adversely affect our business and financial condition.
We cannot be assured that we will be able to maintain our current credit ratings, and any additional actual or anticipated changes or downgrades in our credit ratings, including any announcement that our ratings are under further review for a downgrade, may impact us in a similar manner and have a negative impact on our liquidity, capital position, access to capital markets and our subscription based offerings.
Our net revenue, gross margin, profit and cash flow generation vary among our portfolio of products and services, customer groups and geographic markets and therefore will likely vary in future periods.
Our operating results have historically varied and may not be indicative of future results. Our net revenue, gross margin, profit and cash flow generation vary among our portfolio of products and services, customer groups and geographic markets and therefore will likely vary in future periods.
Third-party claims of IP infringement are commonplace in our industry and may limit or disrupt our ability to sell our products and services. Third parties have in the past claimed, and may in the future claim, that we or customers indemnified by us are infringing upon their IP rights.
Third-party claims of IP infringement are commonplace in our industry and may limit or disrupt our ability to sell our products and services. We are subject to third party claims that we or customers indemnified by us are infringing upon such parties’ IP rights.
In addition to our current total debt, we may also incur additional indebtedness in the future. Our debt level and related debt service obligations could have the effect, among other things, of reducing our flexibility to respond to changing business and economic conditions, and reducing funds available for working capital, capital expenditures, dividends, acquisitions, and other general corporate purposes.
Our debt level and related debt service obligations could have the effect, among other things, of reducing our flexibility to respond to changing business and economic conditions, and reducing funds available for working capital, capital expenditures, dividends, stock repurchases, acquisitions, and other general corporate purposes.
We compete on the basis of our technology, innovation, performance, price, quality, reliability, brand, reputation, distribution, range of products and services, ease of use, account relationships, customer training, service and support, security, availability of application software and internet infrastructure 19 Table of Contents offerings, and our sustainability performance.
We compete on the basis of our technology, innovation, performance, price, quality, reliability, brand, reputation, distribution, range of products and services, ease of use, account relationships, customer training, service and support, security, availability of application software and internet infrastructure offerings, and our sustainability performance. We have faced, and may continue to face, declines in market share for our products.
The level of dividends and amount, timing, and purchases under our share repurchase program, if any, are influenced by many factors and may fluctuate based on our operating results, cash flows, and priorities for the use of cash and because of changes in tax laws, and the market price of our common stock .
The level of dividends and amount, timing, and purchases under our share repurchase program, if any, are influenced by many factors and may fluctuate based on our operating results, cash flows, and priorities for the use of cash, the market price of our common stock, and, with respect to share repurchases, our possession of potentially material nonpublic information .
In addition, even if our operations are unaffected or recover quickly, if our customers cannot timely resume their own operations due to a catastrophic event, they may reduce or cancel their orders, or these events could otherwise result in a decrease in demand for our products. Climate change may have a long-term impact on our business.
In addition, even if our operations are unaffected or recover quickly, if our customers cannot timely resume their own operations, they may reduce or cancel their orders, or these events could otherwise result in a decrease in demand for our products. Climate change and associated regulatory and market impacts may have an adverse effect on our business.
Moreover, the process of developing new high-technology products, services and solutions and enhancing existing products, services and solutions is complex, costly and uncertain, and we may be unable to anticipate or respond to customers’ changing needs (or the timing of those needs) or accurately identify emerging technological trends.
Moreover, the process of developing new high-technology products, services and solutions and enhancing existing products, services and solutions, including through the introduction of AI capabilities, is complex, costly and uncertain, and we may be unable to anticipate or respond to customers’ changing needs, accurately identify emerging technological trends or accurately project the demand, pricing, or other market dynamics of such trends.
We are subject to federal, state, and international laws relating to data protection, particularly in the U.S., European Union, and China (such as the European Union’s General Data Protection Regulation (“GDPR”)), and governmental agencies are increasingly proposing regulatory requirements relating to data protection.
We are subject to federal, state, and international laws relating to privacy and data protection, particularly in the U.S., European Union (such as the General Data Protection Regulation (“GDPR”)) and China, and other countries’ legislative and regulatory bodies are increasingly proposing new or more stringent requirements relating to privacy and data protection.

… 110 more changes not shown on this page.

Item 2. Properties

Properties — owned and leased real estate

4 edited+0 added−1 removed1 unchanged
Biggest changeFiscal year ended October 31, 2022 Owned Leased Total (square feet in millions) Administration and support 1.7 6.2 7.9 (Percentage) 22 % 78 % 100 % Manufacturing plants, research and development facilities and warehouse operations 2.5 5.3 7.8 (Percentage) 32 % 68 % 100 % Total (1)(2) 4.2 11.5 15.7 (Percentage) 27 % 73 % 100 % (1) Poly acquisition is included in all space categories, accounts for 1.2 million square feet of usable space.
Biggest changeFiscal year ended October 31, 2023 Owned Leased Total (square feet in millions) Administration and support 2.3 5.4 7.7 (Percentage) 30 % 70 % 100 % Manufacturing plants, research and development facilities and warehouse operations 2.5 5.0 7.5 (Percentage) 33 % 67 % 100 % Total (1) 4.8 10.4 15.2 (Percentage) 32 % 68 % 100 % (1) Excludes 2.6 million square feet of vacated space, of which 2.3 million square feet is leased to third parties.
Headquarters of Geographic Operations The locations of our geographic headquarters are as follows: Americas Europe, Middle East, Africa Asia Pacific Palo Alto, United States Geneva, Switzerland Singapore Product Development and Manufacturing The locations of our major product development, manufacturing, and HP Labs facilities are as follows: Americas United States —Corvallis, San Diego, Boise, Vancouver, Spring, Fort Collins, Fountain Valley, Santa Cruz Mexico— Tijuana Europe, Middle East, Africa Israel— Kiryat-Gat, Rehovot, Netanya Spain— Barcelona Asia Pacific China— Chongqing, Shanghai India —Bangalore Malaysia— Penang Singapore— Singapore South Korea— Pangyo Taiwan— Taipei Technology office (HP Labs) United Kingdom— Bristol United States— Palo Alto United States— Corvallis 29 Table of Contents
Headquarters of Geographic Operations The locations of our geographic headquarters are as follows: Americas Europe, Middle East, Africa Asia Pacific Palo Alto, United States Geneva, Switzerland Singapore 28 Table of Contents Product Development and Manufacturing The locations of our major product development and manufacturing facilities are as follows: Americas United States —Corvallis, San Diego, Boise, Vancouver, Spring, Fort Collins, Fountain Valley Mexico— Tijuana Europe, Middle East, Africa Israel— Kiryat-Gat, Rehovot, Netanya Spain— Barcelona Asia Pacific China— Chongqing, Shanghai India —Bangalore Malaysia— Penang Singapore— Singapore South Korea— Pangyo Taiwan— Taipei Technology office Spain— Barcelona United Kingdom— Bristol United States— Corvallis, Palo Alto
ITEM 2. Properties. As of October 31, 2022, we owned or leased approximately 18.3 million square feet of space worldwide, a summary of which is provided below.
ITEM 2. Properties. As of October 31, 2023, we owned or leased approximately 17.8 million square feet of space worldwide, a summary of which is provided below.
Each of our segments Personal Systems, Printing and Corporate Investments uses each of the properties at least in part, and we retain the flexibility to use each of the properties in whole or in part for each of the segments.
We believe that our existing properties are in good condition and are suitable for the conduct of our business. Each of our segments Personal Systems, Printing and Corporate Investments uses each of the properties at least in part, and we retain the flexibility to use each of the properties in whole or in part for each of the segments.
Removed
(2) Excludes 2.6 million square feet of vacated space, of which 1.8 million square feet is leased to third parties. We believe that our existing properties are in good condition and are suitable for the conduct of our business.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

4 edited+0 added−1 removed2 unchanged
Biggest changeAs of November 30, 2022, there were approximately 50,256 stockholders of record. Recent Sales of Unregistered Securities There were no unregistered sales of equity securities in fiscal year 2022.
Biggest changeAs of November 30, 2023, there were approximately 47,954 stockholders of record. Recent Sales of Unregistered Securities There were no unregistered sales of equity securities in fiscal year 2023. Issuer Purchases of Equity Securities The Company’s share repurchase program, which does not have a specific expiration date, authorizes repurchases in the open market or in private transactions.
Stock Performance Graph and Cumulative Total Return The graph below shows the cumulative total stockholder return assuming the investment of $100 at the market close on October 31, 2017 (and the reinvestment of dividends thereafter) in each of HP common stock, the S&P 500 Index, and the S&P 31 Table of Contents Information Technology Index.
Stock Performance Graph and Cumulative Total Return The graph below shows the cumulative total stockholder return assuming the investment of $100 at the market close on October 31, 2018 (and the reinvestment of dividends thereafter) in each of HP common stock, the S&P 500 Index, and the S&P Information Technology Index.
On February 22, 2020, HP’s Board of Directors increased HP’s remaining share repurchase authorization to $15.0 billion in total. All share repurchases settled in the fourth quarter of fiscal year 2022 were open market transactions. As of October 31, 2022, HP had approximately $2.1 billion remaining under the share repurchase authorizations.
On February 22, 2020, HP’s Board of Directors increased HP’s remaining share repurchase authorization to $15.0 billion in total. There were no share repurchases in the fourth quarter of fiscal 2023. As of October 31, 2023, HP had approximately $2.0 billion remaining under the share repurchase authorizations.
The comparisons in the graph below are based on historical data and are not indicative of, or intended to forecast, future performance of our common stock. 10/17 10/18 10/19 10/20 10/21 10/22 HP Inc. $ 100.00 $ 114.74 $ 85.24 $ 91.42 $ 158.72 $ 148.82 S&P 500 Index $ 100.00 $ 107.33 $ 122.70 $ 134.60 $ 192.33 $ 164.18 S&P Information Technology Index $ 100.00 $ 112.29 $ 137.63 $ 185.07 $ 271.91 $ 216.82 32 Table of Contents
The comparisons in the graph below are based on historical data and are not indicative of, or intended to forecast, future performance of our common stock. 30 Table of Contents 10/18 10/19 10/20 10/21 10/22 10/23 HP Inc. $ 100.00 $ 74.29 $ 79.67 $ 138.33 $ 129.70 $ 128.18 S&P 500 Index $ 100.00 $ 114.32 $ 125.40 $ 179.19 $ 152.98 $ 168.46 S&P Information Technology Index $ 100.00 $ 122.57 $ 164.82 $ 242.15 $ 193.09 $ 252.65 31 Table of Contents
Removed
Issuer Purchases of Equity Securities 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 Period August 2022 6,797 $ 33.58 6,797 $ 2,656,307 September 2022 10,572 $ 27.02 10,572 $ 2,370,697 October 2022 9,199 $ 25.67 9,199 $ 2,134,564 Total 26,568 26,568 The Company’s share repurchase program, which does not have a specific expiration date, authorizes repurchases in the open market or in private transactions.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

91 edited+26 added−98 removed45 unchanged
Biggest changeResults of operations in dollars and as a percentage of net revenue were as follows: For the fiscal years ended October 31 2022 2021 2020 Dollars % of Net Revenue Dollars % of Net Revenue Dollars % of Net Revenue Dollars in millions Net revenue $ 62,983 100.0 % $ 63,487 100.0 % $ 56,639 100.0 % Cost of revenue 50,648 80.4 % 50,070 78.9 % 46,202 81.6 % Gross profit 12,335 19.6 % 13,417 21.1 % 10,437 18.4 % Research and development 1,593 2.5 % 1,907 3.0 % 1,478 2.6 % Selling, general and administrative 5,264 8.4 % 5,741 9.0 % 4,906 8.6 % Restructuring and other charges 233 0.4 % 245 0.4 % 462 0.9 % Acquisition and divestiture charges 318 0.5 % 68 0.1 % 16 — % Amortization of intangible assets 228 0.4 % 154 0.2 % 113 0.2 % Russia exit charges 23 — % — — % — — % Earnings from operations 4,676 7.4 % 5,302 8.4 % 3,462 6.1 % Interest and other, net (235) (0.3) % 2,209 3.4 % (231) (0.4) % Earnings before taxes 4,441 7.1 % 7,511 11.8 % 3,231 5.7 % Provision for taxes (1,238) (2.0) % (1,008) (1.6) % (387) (0.7) % Net earnings $ 3,203 5.1 % $ 6,503 10.2 % $ 2,844 5.0 % Net Revenue In fiscal year 2022, total net revenue decreased 0.8% (increased 0.7% on a constant currency basis) as compared to the prior-year period.
Biggest changeResults of operations in dollars and as a percentage of net revenue were as follows: For the fiscal years ended October 31 2023 2022 2021 Dollars % of Net Revenue Dollars % of Net Revenue Dollars % of Net Revenue Dollars in millions Net revenue $ 53,718 100.0 % $ 62,910 100.0 % $ 63,460 100.0 % Cost of revenue 42,210 78.6 % 50,647 80.5 % 50,053 78.9 % Gross profit 11,508 21.4 % 12,263 19.5 % 13,407 21.1 % Research and development 1,578 2.9 % 1,653 2.6 % 1,848 2.9 % Selling, general and administrative 5,357 10.0 % 5,264 8.4 % 5,727 9.0 % Restructuring and other charges 527 1.0 % 218 0.3 % 251 0.4 % Acquisition and divestiture charges 240 0.4 % 318 0.5 % 68 0.1 % Amortization of intangible assets 350 0.7 % 228 0.4 % 154 0.2 % Russia exit charges — — % 23 — % — — % Earnings from operations 3,456 6.4 % 4,559 7.2 % 5,359 8.4 % Interest and other, net (519) (1.0) % (235) (0.4) % 2,209 3.5 % Earnings before taxes 2,937 5.4 % 4,324 6.8 % 7,568 11.9 % Benefit from (provision for) taxes 326 0.6 % (1,192) (1.9) % (1,027) (1.6) % Net earnings $ 3,263 6.0 % $ 3,132 4.9 % $ 6,541 10.3 % Net Revenue In fiscal year 2023, total net revenue decreased 14.6% (decreased 11.7% on a constant currency basis) as compared to the prior-year period.
In Personalization & 3D, we are creating end-to-end solutions that can capture more value with our differentiated technology. We continue to experience challenges that are representative of the trends and uncertainties that may affect our industry, generally, and our business and financial results, specifically, and we expect these challenges to continue in the short-term.
In 3D and Personalization, we are creating end-to-end solutions that can capture more value with our differentiated technology. We continue to experience challenges that are representative of the trends and uncertainties that may affect our industry, generally, and our business and financial results, specifically, and we expect these challenges to continue in the short-term.
For more information on our retirement and post-retirement benefit plans, see Note 4, “Retirement and Post-Retirement Benefit Plans”, to the Consolidated Financial Statements in Item 8, which is incorporated herein by reference. (5) Cost Savings Plans. As a result of our approved restructuring plans, we expect to make future cash payments of approximately $0.8 billion.
For more information on our retirement and post-retirement benefit plans, see Note 4, “Retirement and Post-Retirement Benefit Plans”, to the Consolidated Financial Statements in Item 8, which is incorporated herein by reference. (5) Cost Savings Plans. As a result of our approved restructuring plans, we expect to make future cash payments of approximately $0.5 billion.
AND SUBSIDIARIES Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued) OVERVIEW We are a leading global provider of personal computing and other access devices, imaging and printing products, and related technologies, solutions, and services. We sell to individual consumers, SMBs and large enterprises, including customers in the government, health, and education sectors.
AND SUBSIDIARIES Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued) OVERVIEW We are a leading global provider of personal computing and other digital access devices, imaging and printing products, and related technologies, solutions, and services. We sell to individual consumers, SMBs and large enterprises, including customers in the government, health, and education sectors.
(3) Purchase obligations include agreements to purchase goods or services that are enforceable and legally binding on us and that specify all significant terms, including fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction. These purchase obligations are related principally to inventory and other items.
(3) Purchase obligations include agreements to purchase goods or services that are enforceable and legally binding on us and that specify all significant terms, including fixed or minimum quantities to be purchased; fixed, minimum or variable price and volume provisions; and the approximate timing of the transaction. These purchase obligations are related principally to inventory and other items.
For a further discussion on taxes on earnings, refer to Note 6, “Taxes on Earnings” to the Consolidated Financial Statements in Item 8, which is incorporated herein by reference. Inventory We state our inventory at the lower of cost or market on a first-in, first-out basis.
For a further discussion on taxes on earnings, refer to Note 6, “Taxes on Earnings” to the Consolidated Financial Statements in Item 8, which is incorporated herein by reference. Product Inventory We state our inventory at the lower of cost or market on a first-in, first-out basis.
For more information on our Fiscal 2020 Plan and Fiscal 2023 Plan, see Note 3, “Restructuring and Other Charges,” to the Consolidated Financial Statements in Item 1 of Part I of this report, which is incorporated herein by reference.
For more information on our Fiscal 2023 Plan, see Note 3, “Restructuring and Other Charges,” to the Consolidated Financial Statements in Item 1 of Part I of this report, which is incorporated herein by reference.
For a reconciliation of our effective tax rate to the U.S. federal statutory rate of 21% in fiscal year 2022, and further explanation of our provision for income taxes, see Note 6, “Taxes on Earnings” to the Consolidated Financial Statements in Item 8, which is incorporated herein by reference.
For a reconciliation of our effective tax rate to the U.S. federal statutory rate of 21% in fiscal year 2023, and further explanation of our provision for income taxes, see Note 6, “Taxes on Earnings” to the Consolidated Financial Statements in Item 8, which is incorporated herein by reference.
We believe we have recorded adequate provisions for any such matters and, as of October 31, 2022, it was not reasonably possible that a material loss had been incurred in excess of the amounts recognized in our financial statements.
We believe we have recorded adequate provisions for any such matters and, as of October 31, 2023, it was not reasonably possible that a material loss had been incurred in excess of the amounts recognized in our financial statements.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES General The Consolidated Financial Statements of HP are prepared in accordance with United States (“U.S.”) generally accepted accounting principles (“GAAP”), which require management to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, net revenue and expenses, and the disclosure of contingent liabilities.
CRITICAL ACCOUNTING ESTIMATES General Our Consolidated Financial Statements are prepared in accordance with United States (“U.S.”) generally accepted accounting principles (“GAAP”), which require management to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, net revenue and expenses, and the disclosure of contingent liabilities.
One set of challenges relates to the current macroeconomic environment and the adverse impact on demand for certain of our products and product mix. A second set of challenges relates to changes in the competitive landscape.
One set of challenges relates to the current macroeconomic environment and the adverse impact on demand for certain of our products. A second set of challenges relates to changes in the competitive landscape.
Corporate Investments include HP Labs and certain business incubation and investment projects. • In Personal Systems, our strategic focus is on: ◦ profitable growth through innovation, market segmentation and simplification of our portfolio ◦ enhanced innovation in multi-operating systems, multi-architecture, geography, customer segments and other key attributes; ◦ investing in endpoint services and solutions.
Corporate Investments include certain business incubation and investment projects. • In Personal Systems, our long-term strategic focus is on: ◦ profitable growth through innovation, market segmentation and simplification of our portfolio ◦ enhanced innovation in multi-operating systems, multi-architecture, geography, customer segments and other key attributes; ◦ investing in endpoint services and solutions.
The impact of our outstanding interest rate swaps at October 31, 2022 was factored into the calculation of the future interest payments on debt.
The impact of our outstanding interest rate swaps at October 31, 2023 was factored into the calculation of the future interest payments on debt.
We expect to make future cash payments of $0.4 billion in fiscal year 2023 with remaining cash payments through fiscal year 2025. These payments have been excluded from the contractual obligations table because they do not represent contractual cash outflows and there is uncertainty as to the timing of these payments.
We expect to make future cash payments of $0.3 billion in fiscal year 2024 with remaining cash payments through fiscal year 2025. These payments have been excluded from the contractual obligations table because they do not represent contractual cash outflows and there is uncertainty as to the timing of these payments.
As of October 31, 2022, we had approximately $605 million of recorded liabilities and related interest and penalties pertaining to uncertain tax positions. We are unable to make a reasonable estimate as to when cash settlement with the tax authorities might occur due to the uncertainties related to these tax matters.
As of October 31, 2023, we had approximately $102 million of recorded liabilities and related interest and penalties pertaining to uncertain tax positions. We are unable to make a reasonable estimate as to when cash settlement with the tax authorities might occur due to the uncertainties related to these tax matters.
While we currently do not have any rating downgrade triggers that would accelerate the maturity of a material amount of our debt, a downgrade from our current credit rating may increase the cost of borrowing under our credit facility, reduce market capacity for our commercial paper, require the posting of additional collateral under some of our derivative contracts and may have a negative impact on our liquidity and capital position, depending on the extent of such downgrade.
While we currently do not have any rating downgrade triggers that would accelerate the maturity of a material amount of our debt, a downgrade from our current credit rating may increase the cost of borrowing under our credit facilities, reduce market capacity for our commercial paper, require the posting of additional collateral under some of our derivative contracts and may have a negative impact on our liquidity and capital position and our contractual business going forward, depending on the extent of such downgrade.
Payments of these obligations would result from settlements with taxing authorities. For more information on our uncertain tax positions, see Note 6, “Taxes on Earnings”, to the Consolidated Financial Statements in Item 8, which is incorporated herein by reference. 50 Table of Contents HP INC.
Payments of these obligations would result from settlements with taxing authorities. For more information on our uncertain tax positions, see Note 6, “Taxes on Earnings”, to the Consolidated Financial Statements in Item 8, which is incorporated herein by reference.
We can access alternative sources of funding, including drawdowns under our credit facility, if necessary, to offset potential reductions in the market capacity for our commercial paper. 49 Table of Contents HP INC.
We can access alternative sources of funding, including drawdowns under our credit facilities, if necessary, to offset potential reductions in the market capacity for our commercial paper. 44 Table of Contents HP INC.
The table below presents the cash conversion cycle: As of October 31 2022 2021 2020 Days of sales outstanding in accounts receivable (“DSO”) 28 30 32 Days of supply in inventory (“DOS”) 57 53 43 Days of purchases outstanding in accounts payable (“DPO”) (114) (108) (105) Cash conversion cycle (29) (25) (30) The cash conversion cycle is the sum of days of DSO and DOS less DPO.
The table below presents the cash conversion cycle: As of October 31 2023 2022 2021 Days of sales outstanding in accounts receivable (“DSO”) 28 28 30 Days of supply in inventory (“DOS”) 57 57 53 Days of purchases outstanding in accounts payable (“DPO”) (117) (114) (108) Cash conversion cycle (32) (29) (25) 42 The cash conversion cycle is the sum of days of DSO and DOS less DPO.
We believe that we are well positioned due to our competitive product lineup along with our recent acquisitions in peripherals and remote-computing solutions. • In Printing, our strategic focus is on: ◦ offering innovative printing solutions and contractual solutions to serve consumers, SMBs and large enterprises through our Instant Ink Services, HP+ and Managed Print Services solutions; ◦ providing digital printing solutions for graphics segments and applications including commercial publishing, labels, packaging, and textiles; and ◦ expanding our footprint in 3D printing across digital manufacturing and strategic applications.
We believe that we are well positioned due to our competitive product lineup along with our recent acquisitions enhancing our portfolio of hybrid systems and remote-computing solutions. • In Printing, our long-term strategic focus is on: ◦ offering innovative printing solutions and contractual solutions to serve consumers, SMBs and large enterprises through our Instant Ink Services, HP+ and Managed Print Services solutions; ◦ providing digital printing solutions for industrial graphics segments and applications including commercial publishing, labels, packaging, and textiles; and ◦ expanding our footprint in 3D printing across digital manufacturing and strategic applications.
In November 2022, we announced our Future Ready Plan (the “Fiscal 2023 Plan”) to become a more digitally enabled company, focus investments on key growth opportunities and simplify our operating model. The new Fiscal 2023 plan is expected to run for three years through end of fiscal 2025.
Transformation Update In November 2022, we announced our Future Ready Plan (the “Fiscal 2023 Plan”) to become a more digitally enabled company, focus investments on key growth opportunities and simplify our operating model. The Fiscal 2023 plan is expected to run through end of fiscal 2025.
Our ability to innovate is helping us gain momentum in growth areas like gaming and peripherals, and we see significant opportunities to drive greater recurring revenues across Personal Systems and Printing. Our acquisition of Poly adds to our growth portfolio by bringing industry-leading video conferencing solutions, cameras, headsets, voice and software capabilities.
We believe our ability to innovate will help us gain momentum in growth areas like hybrid systems and gaming, and we see significant opportunities to drive greater recurring revenues across Personal Systems and Printing. Our acquisition of Poly adds to our growth portfolio by bringing industry-leading video conferencing cameras and solutions, headsets, voice and software capabilities.
The effective tax rate differs from the U.S. federal statutory rate of 21% primarily due to impacts of internal reorganization and favorable tax rates associated with certain earnings in lower-tax jurisdictions throughout the world.
The effective tax rate differs from the U.S. federal statutory rate of 21% primarily due to impacts of internal reorganization, changes in valuation allowances, and favorable tax rates associated with certain earnings from HP’s operations in lower-tax jurisdictions throughout the world.
To drive more integration across our commercial services, software and security portfolio, we have created a new Workforce Services and Solutions organization. We continue to build on strong portfolios like Instant Ink to grow our Consumer Subscription business. In Industrial Graphics, we are driving the shift from analog to digital in segments like labels and packaging.
Our Workforce Solutions organization drives integration across our commercial services, software and security portfolio. We continue to build on strong portfolios like Instant Ink to grow our Consumer Subscription business. In Industrial Graphics, we are driving the shift from analog to digital in segments like labels and packaging.
Share repurchases and dividends In fiscal year 2022, HP returned total $5.3 billion to the shareholders in the form of share repurchases of $4.3 billion and cash dividends of $1.0 billion. As of October 31, 2022, HP had approximately $2.1 billion remaining under the share repurchase authorizations approved by HP’s Board of Directors.
Share repurchases and dividends In fiscal year 2023, HP returned $1.1 billion to shareholders in the form of cash dividends of $1.0 billion and share repurchases of $0.1 billion. As of October 31, 2023, HP had approximately $2.0 billion remaining under the share repurchase authorizations approved by HP’s Board of Directors.
It is calculated by dividing the change in revenue of each business unit from the prior period by total segment revenue for the prior-year period. Fiscal year 2022 compared with fiscal year 2021 Printing net revenue decreased 6.1% (decreased 5.5% on a constant currency basis) for fiscal year 2022 as compared to the prior-year period.
It is calculated by dividing the change in revenue of each business unit from the prior period by total segment revenue for the prior-year period. Fiscal year 2023 compared with fiscal year 2022 Printing net revenue decreased 4.6% (decreased 2.9% on a constant currency basis) for fiscal year 2023 as compared to the prior-year period.
We are focused on services, including Device as a Service, as the market begins to shift to contractual solutions, and accelerating in attractive adjacencies such as peripherals; and ◦ driving innovation to enable productivity and collaboration with the PC becoming essential for hybrid work, learn and play.
We are focused on services, including Device as a Service, as the market shifts to contractual solutions, and accelerating in attractive adjacencies such as hybrid systems; and ◦ driving innovation to enable productivity and collaboration with the PCs becoming essential for hybrid work, learn and play.
Items which may cause the cash conversion cycle in a particular period to differ from a long-term sustainable rate include, but are not limited to, changes in business mix, changes in payment terms and timing, extent of receivables factoring, macro-economic factors, seasonal trends and the timing of revenue recognition and inventory purchases within the period.
Items which may cause the cash conversion cycle in a particular period to differ from historical trends include, but are not limited to, changes in business mix, changes in payment terms, timing and extent of receivables factoring, seasonal trends and the timing of revenue recognition and inventory purchases within the period.
For more information, see Note 3, “Restructuring and Other Charges”, to the Consolidated Financial Statements in Item 8 of Part II of this report, which is incorporated herein by reference.
Restructuring and other charges Restructuring and other charges relate primarily to the Fiscal 2023 Plan. For more information, see Note 3, “Restructuring and Other Charges”, to the Consolidated Financial Statements in Item 8 of Part II of this report, which is incorporated herein by reference.
Acquisition and divestiture charges increased by $250 million in the fiscal year 2022, primarily due to the Poly acquisition. Amortization of intangible assets Amortization of intangible assets relates primarily to intangible assets resulting from acquisitions.
Acquisition and divestiture charges decreased by $78 million in the fiscal year 2023, primarily due to the Poly acquisition. Amortization of intangible assets Amortization of intangible assets relates primarily to intangible assets resulting from acquisitions. Amortization of Intangible assets increased by $122 million in the fiscal year 2023, primarily due to the Poly acquisition.
A detailed discussion of the factors contributing to the changes in segment net revenue is included under “Segment Information” below. 42 Table of Contents HP INC.
A detailed discussion of the factors contributing to the changes in segment net revenue is included under “Segment Information” below.
In fiscal year 2023, we expect to contribute approximately $36 million to non-U.S. pension plans, $32 million to cover benefit payments to U.S. non-qualified plan participants and $4 million to cover benefit claims for our post-retirement benefit plans.
In fiscal year 2024, we expect to contribute approximately $45 million to non-U.S. pension plans, $31 million to cover benefit payments to U.S. non-qualified plan participants and $3 million to cover benefit claims for our post-retirement benefit plans.
Repatriations of amounts held outside the U.S. generally will not be taxable from a U.S. federal tax perspective but may be subject to state income or foreign withholding tax upon repatriation.
Amounts held outside of the U.S. are generally utilized to support non-U.S. liquidity needs and may from time to time be distributed to the U.S. Repatriations of amounts held outside the U.S. generally will not be taxable from a U.S. federal tax perspective but may be subject to state income or foreign withholding tax upon repatriation.
We have third-party short-term financing arrangements intended to facilitate the working capital requirements of certain customers and HP. For more information on our third-party short-term financing arrangements, see Note 7 “Supplementary Financial Information” to the Consolidated Financial Statements in Item 8, which is incorporated herein by reference. 51 Table of Contents
For more information on our third-party short-term financing arrangements, see Note 7 “Supplementary Financial Information” to the Consolidated Financial Statements in Item 8, which is incorporated herein by reference. 46 Table of Contents
AND SUBSIDIARIES Management’s Discussion and Analysis of Financial Condition and Results of Operations Printing For the fiscal years ended October 31 2022 2021 2020 Dollars in millions Net revenue $ 18,902 $ 20,128 $ 17,641 Earnings from operations $ 3,651 $ 3,636 $ 2,495 Earnings from operations as a % of net revenue 19.3% 18.1% 14.1% The components of the net revenue and weighted net revenue change by business unit were as follows: For the fiscal years ended October 31 Net Revenue Weighted Net Revenue Change Percentage Points (1) 2022 2021 2020 2022 2021 In millions Supplies $ 11,761 $ 12,632 $ 11,586 (4.3) 5.9 Commercial 4,225 4,209 3,539 — 3.8 Consumer 2,916 3,287 2,516 (1.8) 4.4 Total Printing $ 18,902 $ 20,128 $ 17,641 (6.1) 14.1 (1) Weighted Net Revenue Change Percentage Points measures the contribution of each business unit towards overall segment revenue growth.
Printing For the fiscal years ended October 31 2023 2022 2021 Dollars in millions Net revenue $ 18,029 $ 18,902 $ 20,128 Earnings from operations $ 3,399 $ 3,619 $ 3,647 Earnings from operations as a % of net revenue 18.9% 19.1% 18.1% 40 The components of the net revenue and weighted net revenue change by business unit were as follows: For the fiscal years ended October 31 Net Revenue Weighted Net Revenue Change Percentage Points (1) 2023 2022 2021 2023 2022 In millions Supplies $ 11,452 $ 11,761 $ 12,632 (1.6) (4.3) Commercial Printing 4,183 4,225 4,209 (0.2) 0.1 Consumer Printing 2,394 2,916 3,287 (2.8) (1.8) Total Printing $ 18,029 $ 18,902 $ 20,128 (4.6) (6.0) (1) Weighted Net Revenue Change Percentage Points measures the contribution of each business unit towards overall segment revenue growth.
AND SUBSIDIARIES Management’s Discussion and Analysis of Financial Condition and Results of Operations Off-balance sheet arrangements As part of our ongoing business, we have not participated in transactions that generate material relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.
Off-balance sheet arrangements As part of our ongoing business, we have not participated in transactions that generate material relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. 45 We have third-party short-term financing arrangements intended to facilitate the working capital requirements of certain customers and HP.
The amendment to our 2019 Shelf Registration Statement to convert to a non-automatic shelf registration statement was declared effective by the SEC on February 25, 2021 and, as of October 31, 2022, enables us to offer for sale, from time to time, in one or more offerings, $1.0 billion, in the aggregate, of debt securities, common stock, preferred stock, depository shares and warrants.
The 2022 Shelf Registration Statement was declared effective by the SEC on March 1, 2023 and enables us to offer for sale, from time to time, in one or more offerings, up to $3.0 billion, in the aggregate, of debt securities, common stock, preferred stock, depository shares and warrants.
AND SUBSIDIARIES Management’s Discussion and Analysis of Financial Condition and Results of Operations rate, expected increase in compensation levels and expected long-term return on plan assets would have had on our net periodic benefit (credit) cost for fiscal year 2022: Change in Net Periodic Benefit Cost in millions Assumptions: Discount rate $ 7 Expected increase in compensation levels $ 2 Expected long-term return on plan assets $ 19 Taxes on Earnings As a result of certain employment actions and capital investments we have undertaken, income from manufacturing activities in certain jurisdictions is subject to reduced tax rates and, in some cases, is wholly exempt from taxes for fiscal years through 2029.
The following table provides the impact a change of 25 basis points in each of the weighted-average assumptions of the discount rate, expected increase in compensation levels and expected long-term return on plan assets would have had on our net periodic benefit (credit) cost for fiscal year 2023: Change in Net Periodic Benefit Cost in millions Assumptions: Discount rate $ 5 Expected increase in compensation levels $ 1 Expected long-term return on plan assets $ 14 Taxes on Earnings As a result of certain employment actions and capital investments we have undertaken, income from manufacturing activities in certain jurisdictions is subject to reduced tax rates and, in some cases, is wholly exempt from taxes for fiscal years through 2029.
Segment Information A description of the products and services for each segment can be found in Note 2, “Segment Information,” to the Consolidated Financial Statements in Item 8, which is incorporated herein by reference. Future changes to this organizational structure may result in changes to the segments disclosed. 44 Table of Contents HP INC.
Segment Information A description of the products and services for each segment can be found in Note 2, “Segment Information,” to the Consolidated Financial Statements in Item 8, which is incorporated herein by reference.
If we determine the carrying amount exceeds fair value, goodwill is impaired and the excess is recognized as an impairment loss. Loss Contingencies We are involved in various lawsuits, claims, investigations and proceedings including those consisting of intellectual property (“IP”), commercial, securities, employment, employee benefits and environmental matters that arise in the ordinary course of business.
Loss Contingencies We are involved in various lawsuits, claims, investigations and proceedings including those consisting of intellectual property (“IP”), commercial, securities, employment, employee benefits and environmental matters that arise in the ordinary course of business.
In fiscal year 2022, we recorded $470 million of net income tax charges related to discrete items in the provision for taxes.
In fiscal year 2023, we recorded $1.1 billion of net income tax benefits related to discrete items in the provision for taxes.
We review these matters at least quarterly and adjust these liabilities to reflect the impact of negotiations, settlements, rulings, advice of legal counsel and other updated information and events, pertaining to a particular case.
We review these matters at least quarterly and adjust these liabilities to reflect the impact of negotiations, settlements, rulings, advice of legal counsel and other updated information and events, pertaining to a particular case. Litigation is inherently unpredictable. However, we believe we have valid defenses with respect to legal matters pending against us.
Judgment in the assessment of qualitative factors of impairment may include changes in business climate, market conditions, or other events impacting the reporting unit. If we determine an impairment is more likely than not based on our qualitative assessment, a quantitative assessment of impairment is performed.
A qualitative assessment may first be performed to determine if the fair value of a reporting unit is more likely than not to be less than its carrying amount. Judgment in the assessment of qualitative factors of impairment may include changes in business climate, market conditions, or other events impacting the reporting unit.
The Inflation Reduction Act includes a new corporate alternative minimum tax (the "Corporate AMT") of 15% on the adjusted financial statement income ("AFSI") of corporations with average AFSI exceeding $1.0 billion over a three-year period.
On August 16, 2022, the U.S. government enacted the Inflation Reduction Act of 2022 (the “Inflation Reduction Act”) into law. The Inflation Reduction Act includes a new corporate alternative minimum tax (the “Corporate AMT”) of 15% on the adjusted financial statement income (“AFSI”) of corporations with average AFSI exceeding $1.0 billion over a three-year period.
Net revenue for Commercial increased by 0.4%, primarily due to a 7.7% increase in ASPs, partially offset by an 8.0% decrease in printer unit volume. The increase in ASPs was primarily driven by disciplined pricing and mix shifts, partially offset by unfavorable foreign currency impacts.
The increase in ASPs was primarily driven by mix shifts, partially offset by unfavorable foreign currency impacts and competitive pricing. Net revenue for Consumer Printing decreased 17.9%, primarily due to a 10.1% decrease in printer unit volume and an 8.8% decrease in ASP’s.
Management bases its estimates on historical experience and on various other assumptions that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying amount of assets and liabilities that are not readily apparent from other sources.
Management bases its estimates on historical experience and on various other assumptions that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying amount of assets and liabilities. Management has discussed the development, selection and disclosure of these estimates with the Audit Committee of HP’s Board of Directors.
To address these challenges, we continue to pursue innovation with a view towards developing new products and services aligned with generating market demand and meeting the needs of our customers and partners.
We also obtain many Printing components from single source suppliers due to technology, availability, price, quality, or other considerations. To address these challenges, we continue to pursue innovation with a view towards developing new products and services aligned with generating market demand and meeting the needs of our customers and partners.
DSO measures the average number of days our receivables are outstanding. DSO is calculated by dividing ending accounts receivable, net of allowance for credit losses, by a 90-day average of net revenue. The decrease in DSO as compared to prior-year period, was due to higher factoring, partially offset by unfavorable revenue linearity.
DSO measures the average number of days our receivables are outstanding. DSO is calculated by dividing ending accounts receivable, net of allowance for credit losses, by a 90-day average of net revenue. The DSO remained flat compared to the prior year. DOS measures the average number of days from procurement to sale of our product.
Investing activities Net cash used in investing activities increased $2.5 billion for fiscal year 2022 as compared to the prior-year period, primarily due to Poly’s acquisition, lower proceeds from sale of investments of $0.3 billion and higher investments in property, plant and equipment of $0.2 billion.
The increase in DPO as compared to prior-year period, was primarily due working capital management activities. Investing activities Net cash used in investing activities decreased $3.0 billion for fiscal year 2023 as compared to the prior-year period, primarily due to the $2.8 billion Poly acquisition in the prior-year period and lower investments in property, plant and equipment of $0.2 billion.
DPO measures the average number of days our accounts payable balances are outstanding. DPO is calculated by dividing ending accounts payable by a 90-day average of cost of goods sold. The increase in DPO as compared to prior-year period, was primarily due to payment timing partially offset by lower purchasing volumes.
DOS is calculated by dividing ending inventory by a 90-day average of cost of goods sold. The DOS remained flat compared to the prior year. DPO measures the average number of days our accounts payable balances are outstanding. DPO is calculated by dividing ending accounts payable by a 90-day average of cost of goods sold.
Performing a quantitative goodwill impairment test includes the determination of the fair value of a reporting unit and involves significant estimates and assumptions. These estimates and assumptions include, among others, revenue growth rates and operating margins used to calculate projected future cash flows, risk-adjusted discount rates, future economic and market conditions, and the determination of appropriate market comparables.
These estimates and assumptions include, among others, revenue growth rates and operating margins used to calculate projected future cash flows, risk-adjusted discount rates, future economic and market conditions, and the determination of appropriate market comparables. If we determine the carrying amount exceeds fair value, goodwill is impaired and the excess is recognized as an impairment loss.
We are subject to income taxes in the United States and approximately 60 other countries, and we are subject to routine corporate income tax audits in many of these jurisdictions.
In order for us to realize our deferred tax assets, we must be able to generate sufficient taxable income in the jurisdictions in which the deferred tax assets are located. We are subject to income taxes in the United States and approximately 60 other countries, and we are subject to routine corporate income tax audits in many of these jurisdictions.
A summary of significant accounting policies is included in Note 1, “Overview and Summary of Significant Accounting Policies” to the Consolidated Financial Statements in Item 8, which is incorporated herein by reference.
Management believes that the accounting estimates employed and the resulting amounts are reasonable; however, actual results may differ from these estimates. A summary of our significant accounting policies is included in Note 1, “Overview and Summary of Significant Accounting Policies” to the Consolidated Financial Statements in Item 8, which is incorporated herein by reference.
We have three reportable segments: Personal Systems, Printing and Corporate Investments. The Personal Systems segment offers commercial and consumer desktop and notebook PCs, workstations, thin clients, commercial mobility devices, retail POS systems, displays and peripherals, software, support, and services. The Printing segment provides consumer and commercial printer hardware, supplies, solutions and services.
We have three reportable segments: Personal Systems, Printing, and Corporate Investments. The Personal Systems segment offers commercial and consumer desktops and notebooks, workstations, thin clients, commercial mobility devices, retail POS systems, displays, hybrid systems (includes video conferencing cameras and solutions, headsets, voice, and related software capabilities), software, support, and services.
AND SUBSIDIARIES Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued) CONTRACTUAL AND OTHER OBLIGATIONS Our contractual and other obligations as of October 31, 2022, were as follows: Payments Due by Period Total Short-term Long-term In millions Principal payments on debt (1) $ 11,190 $ 218 $ 10,972 Interest payments on debt (2) 3,721 415 3,306 Purchase obligations (3) 3,262 1,854 1,408 Operating lease obligations 1,399 443 956 Finance lease obligations 18 10 8 Total (4)(5)(6) $ 19,590 $ 2,940 $ 16,650 (1) Amounts represent the principal cash payments relating to our short-term and long-term debt and do not include any fair value adjustments, discounts or premiums.
AND SUBSIDIARIES Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued) CONTRACTUAL AND OTHER OBLIGATIONS Our contractual and other obligations as of October 31, 2023, were as follows: Payments Due by Period Total Short-term Long-term In millions Principal payments on debt (1) $ 9,585 $ 216 $ 9,369 Interest payments on debt (2) 3,059 397 2,662 Purchase obligations (3) 1,861 758 1,103 Operating lease obligations 1,389 485 904 Finance lease obligations 27 14 13 Total (4)(5)(6) $ 15,921 $ 1,870 $ 14,051 (1) Amounts represent the principal cash payments relating to our short-term and long-term debt and do not include any fair value adjustments, discounts or premiums.
For more information on the new notes and the redemption of existing notes, see Note 11, “Borrowings”, to the Consolidated Financial Statements in Item 8 of Part II of this report, which is incorporated herein by reference.
For more information on the new notes and the redemption of existing notes, see Note 11, “Borrowings”, to the Consolidated Financial Statements in Item 8 of Part II of this report, which is incorporated herein by reference. As of October 31, 2023, we maintained a $5.0 billion sustainability-linked senior unsecured committed revolving credit facility available until May 26, 2026.
We also continue to work on optimizing our sales coverage models, aligning our sales incentives with our strategic goals, improving channel execution and inventory, production and backlog management, strengthening our capabilities in our areas of strategic focus, effective cost management, strengthening our pricing discipline, and developing and capitalizing on market opportunities.
We also continue to work on optimizing our sales coverage models, aligning our sales incentives with our strategic goals, improving channel execution and inventory, production and backlog management, 34 Table of Contents HP INC.
As a result, our financial results can be, and particularly in recent periods have been, impacted by fluctuations in foreign currency exchange rates. We expect foreign currency fluctuations to continue to negatively impact our financial results in the fiscal 2023.
We have a large global presence, with approximately 65% of our net revenue coming from outside the United States. As a result, our financial results can be, and particularly in recent periods have been, negatively impacted by fluctuations in foreign currency exchange rates.
Liquidity Our cash and cash equivalents, marketable debt securities and total debt were as follows: As of October 31 2022 2021 In billions Cash and cash equivalents $ 3.1 $ 4.3 Total debt $ 11.0 $ 7.5 Our key cash flow metrics were as follows: For the fiscal years ended October 31 2022 2021 2020 In millions Net cash provided by operating activities $ 4,463 $ 6,409 $ 4,316 Net cash used in investing activities (3,549) (1,012) (1,016) Net cash used in financing activities (2,068) (5,962) (2,973) Net (decrease) increase in cash and cash equivalents $ (1,154) $ (565) $ 327 Operating activities Net cash provided by operating activities decreased by $1.9 billion for fiscal year 2022 due to lower net earnings as compared to the prior-year period, which included the one-time Oracle litigation proceeds of $1.8 billion partially offset by 47 Table of Contents HP INC.
Liquidity Our cash, cash equivalents and restricted cash and total debt were as follows: As of October 31 2023 2022 In millions Cash and cash equivalents $ 3,107 $ 3,145 Restricted cash $ 125 $ — Total debt $ 9,484 $ 11,014 Our key cash flow metrics were as follows: For the fiscal years ended October 31 2023 2022 2021 In millions Net cash provided by operating activities $ 3,571 $ 4,463 $ 6,409 Net cash used in investing activities (590) (3,549) (1,012) Net cash used in financing activities (2,894) (2,068) (5,962) Net increase (decrease) in cash and cash equivalents $ 87 $ (1,154) $ (565) Operating activities Net cash provided by operating activities decreased by $0.9 billion for fiscal year 2023 due to lower earnings before taxes, working capital management activities, and changes in receivables from contract manufacturers.
Printing earnings from operations as a percentage of net revenue increased by 1.2 percentage points for fiscal year 2022, primarily due to lower operating expense as a percentage of revenue, partially offset by a decrease in gross margin.
Printing earnings from operations as a percentage of net revenue decreased by 0.2 percentage points for fiscal year 2023, primarily due to a decline in gross margin, partially offset by lower operating expenses as a percentage of revenue. The decline in gross margin was primarily driven by competitive pricing and foreign currency impacts, partially offset by favorable mix shift.
Credit ratings Our credit risk is evaluated by major independent rating agencies based upon publicly available information as well as information they obtain during our ongoing discussions.
For more information on our borrowings, see Note 11, “Borrowings”, to the Consolidated Financial Statements in Item 8, which is incorporated herein by reference. Credit ratings Our credit risk is evaluated by major independent rating agencies based upon publicly available information as well as information they obtain during our ongoing discussions.
In order to provide a framework for assessing performance excluding the impact of foreign currency fluctuations, we supplement the year-over-year percentage change in net revenue with the year-over-year percentage change in net revenue on a constant currency basis, which excludes the effect of foreign currency 41 Table of Contents HP INC.
In order to provide a framework for assessing performance excluding the impact of 37 foreign currency fluctuations, we supplement the year-over-year percentage change in net revenue with the year-over-year percentage change in net revenue on a constant currency basis, which excludes the effect of foreign currency exchange fluctuations calculated by translating current period revenues using monthly exchange rates from the comparative period and excluding any hedging impact, and without adjusting for any repricing or demand impacts from changes in foreign currency exchange rates.
For a discussion of the fiscal year ended October 31, 2021 compared to the fiscal year ended October 31, 2020, please refer to Part II, Item 7, "Management’s Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the fiscal year ended October 31, 2021. • Liquidity and Capital Resources.
For a discussion of fiscal year ended October 31, 2022 compared to the fiscal year ended October 31, 2021, please refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended October 31, 2022, which also should be read in conjunction with our Annual Report on Form 10-K/A for the fiscal year ended October 31, 2022 as it contained certain revisions to our Consolidated Financial Statements for the fiscal years ended 2022 and 2021. 33 Table of Contents HP INC.
This discussion should be read in conjunction with our Consolidated Financial Statements and the related notes that appear elsewhere in this document. 34 Table of Contents HP INC.
This discussion should be read in conjunction with our Consolidated Financial Statements and the related notes that appear elsewhere in this document. This section generally discusses the results of operations for the fiscal year ended October 31, 2023 compared to the fiscal year ended October 31, 2022.
We also plan to use some of these savings to partially offset headwinds we expect to see across our businesses in fiscal 2023 as a result of macroeconomic factors.
The three key elements of our Fiscal 2023 plan are digital transformation, portfolio optimization, and operational efficiency. We expect to continue to invest some of the savings from these efforts across our businesses as well as partially use them to offset headwinds as a result of macroeconomic factors.
We reduce the transaction price at the time of revenue recognition for customer and distributor programs and incentive offerings, rebates, promotions, other volume-based incentives and expected returns. We use estimates to determine the expected variable consideration for such programs based on historical experience, expected consumer behavior and market conditions.
When the transaction price includes a variable amount, we estimate the amount using either the expected value or most likely amount method. We reduce the transaction price at the time of revenue recognition for customer and distributor programs and incentive offerings, rebates, promotions, other volume-based incentives and expected returns.
Factors influencing these adjustments include changes in demand, ageing of inventory, technological changes, supply constraints, product life cycle and development plans, component cost trends, product pricing, physical deterioration and quality issues. 40 Table of Contents HP INC.
Factors influencing these adjustments include changes in demand, ageing of inventory, technological changes, supply constraints, product life cycle and development plans, component cost trends, product pricing, physical deterioration and quality issues. Goodwill We review goodwill for impairment annually during our fourth quarter and whenever events or changes in circumstances indicate the carrying amount of goodwill may not be recoverable.
Macroeconomic Environment Our business and financial performance also depend significantly on worldwide economic conditions. We face global macroeconomic challenges, particularly in light of the effects of the ongoing geopolitical conflicts in Ukraine, tensions across the Taiwan Strait, the COVID-19 pandemic, tariff-driven headwinds, uncertainty in the markets, volatility in exchange rates, inflationary trends and evolving dynamics in the global trade environment.
We face global macroeconomic challenges including ongoing effects of geopolitical conflicts (including the Russian invasion of Ukraine, tensions across the Taiwan Strait, the Israel-Hamas conflict and other hostilities in the Middle East), uncertainty in the markets, volatility in exchange rates, inflationary trends and evolving dynamics in the global trade environment.
AND SUBSIDIARIES Management’s Discussion and Analysis of Financial Condition and Results of Operations We maintain debt levels that we establish through consideration of a number of factors, including cash flow expectations, cash requirements for operations, investment plans (including acquisitions), share repurchase activities, our cost of capital and targeted capital structure.
Capital resources Debt Levels As of October 31 2023 2022 Dollars in millions Short-term debt $ 230 $ 218 Long-term debt $ 9,254 $ 10,796 Weighted-average interest rate 4.2 % 3.7 % We maintain debt levels that we establish through consideration of a number of factors, including cash flow expectations, cash requirements for operations, investment plans (including acquisitions), share repurchase activities, our cost of capital and targeted capital structure.
Financing activities Net cash used in financing activities decreased by $3.9 billion in fiscal year 2022 compared to the prior-year period, primarily due to higher proceeds from debt issuance of $2.1 billion, lower share repurchases of $2.0 billion and lower payment of debt of $0.6 billion, partially offset by commercial paper activity of $0.8 billion.
Financing activities Net cash used in financing activities increased by $0.8 billion in fiscal year 2023 compared to the prior-year period, primarily due to net debt repayment of $1.5 billion and repayment of $0.2 billion of collateral withdrawn for derivative instruments in the current year period, compared to issuance of senior unsecured notes net of payments of $3.1 billion, share repurchases of $4.2 billion and $0.2 billion withdrawal of collateral for derivative instruments in the prior year period.
Available borrowing resources As of October 31, 2022, we had available borrowing resources of $937 million from uncommitted lines of credit in addition to the revolving credit facility.
Funds borrowed under the revolving credit facilities may be used for general corporate purposes. 43 Available borrowing resources As of October 31, 2023, we had available borrowing resources of $1.2 billion from uncommitted lines of credit in addition to the revolving credit facilities.
Likewise, if we later determine that we are more likely than not to realize the deferred tax assets, we would reverse the applicable portion of the previously recognized valuation allowance. In order for us to realize our deferred tax assets, we must be able to generate sufficient taxable income in the jurisdictions in which the deferred tax assets are located.
Likewise, if we later determine that we are more likely than not to realize the deferred tax assets, we would 36 Table of Contents HP INC. AND SUBSIDIARIES Management’s Discussion and Analysis of Financial Condition and Results of Operations reverse the applicable portion of the previously recognized valuation allowance.
The net revenue increase was driven by 22.4% increase in ASPs, partially offset by 16.9% decrease in unit volume. The increase in ASPs was primarily due to disciplined pricing and mix shifts to premium, partially offset by unfavorable foreign currency impacts.
The net revenue decrease was primarily due to a 14.5% decrease in commercial and consumer client PCs unit volume due to demand softness and a decline in ASPs by 8.0%, partially offset by the Poly acquisition. The decline in ASPs was due to foreign currency impacts, unfavorable mix shift and competitive pricing.
We are also experiencing softness in demand resulting in overall decline in Personal Systems market. • In Printing, we face challenges from a competitive environment, including non-original supplies (which includes imitation, refill, or remanufactured alternatives), and we face component constraints which we expect to continue to negatively impact our financial performance in the short term.
Additional challenges we face at the segment level are set forth below. • In Personal Systems, we face challenges with a competitive pricing environment and demand softness. • In Printing, we face challenges from our competitors with a favorable foreign currency environment and non-original supplies (which includes imitation, refill, or remanufactured alternatives).
It is calculated by dividing the change in revenue of each business unit from the prior-year period by total segment revenue for the prior-year period. (2) Includes net revenue of Poly since acquisition date (August 29, 2022).
It is calculated by dividing the change in revenue of each business unit from the prior-year period by total segment revenue for the prior-year period. Fiscal year 2023 compared with fiscal year 2022 Personal Systems net revenue decreased 18.9% (decreased 15.5% on a constant currency basis) in the fiscal year 2023, as compared to the prior-year period.
AND SUBSIDIARIES Management’s Discussion and Analysis of Financial Condition and Results of Operations Personal Systems For the fiscal years ended October 31 2022 2021 2020 Dollars in millions Net revenue $ 44,084 $ 43,359 $ 38,997 Earnings from operations $ 2,908 $ 3,101 $ 2,312 Earnings from operations as a % of net revenue 6.6% 7.2 % 5.9% The components of net revenue and the weighted net revenue change by business unit were as follows: For the fiscal years ended October 31 Net Revenue Weighted Net Revenue Change Percentage Points (1) 2022 2021 2020 2022 2021 In millions Notebooks $ 29,183 $ 30,522 $ 25,766 (3.1) 12.2 Desktops 10,736 9,381 9,806 3.1 (1.1) Workstations 2,100 1,669 1,816 1.0 (0.4) Other (2) 2,065 1,787 1,609 0.7 0.5 Total Personal Systems $ 44,084 $ 43,359 $ 38,997 1.7 11.2 (1) Weighted Net Revenue Change Percentage Points measures contribution of each business unit towards overall segment revenue growth.
Future changes to this organizational structure may result in changes to the segments disclosed. 39 Personal Systems For the fiscal years ended October 31 2023 2022 2021 Dollars in millions Net revenue $ 35,684 $ 44,011 $ 43,332 Earnings from operations $ 2,129 $ 2,761 $ 3,152 Earnings from operations as a % of net revenue 6.0% 6.3 % 7.3% The components of net revenue and the weighted net revenue change by business unit were as follows: For the fiscal years ended October 31 Net Revenue Weighted Net Revenue Change Percentage Points (1) 2023 2022 2021 2023 2022 In millions Commercial PS $ 24,712 $ 29,616 $ 26,822 (11.1) 6.3 Consumer PS 10,972 14,395 16,510 (7.8) (4.8) Total Personal Systems $ 35,684 $ 44,011 $ 43,332 (18.9) 1.5 (1) Weighted Net Revenue Change Percentage Points measures contribution of each business unit towards overall segment revenue growth.
Operating expenses as a percentage of revenue decreased primarily due to lower variable compensation and go-to-market initiative expenses. Corporate Investments The loss from operations in Corporate Investments for the fiscal year 2022 was primarily due to expenses associated with our incubation projects and investments in digital enablement. 46 Table of Contents HP INC.
Corporate Investments The loss from operations in Corporate Investments for the fiscal year 2023 was primarily due to expenses associated with our incubation projects. 41 LIQUIDITY AND CAPITAL RESOURCES We use cash generated by operations as our primary source of liquidity.
The decrease in printer unit volume was primarily driven by decreases in both Consumer and Commercial due to component availability and supply chain disruptions. Printer ASPs increased primarily due to disciplined pricing and mix shifts, partially offset by unfavorable foreign currency impacts.
The decrease in ASPs was primarily driven by competitive pricing, especially by our Japanese competitors benefiting from a favorable foreign currency environment, and unfavorable foreign currency impacts, partially offset by favorable mix shifts.
The Corporate AMT is effective for the Company beginning in fiscal 2024 and we have elected to treat any future Corporate AMT as period costs in the period they arise. Additionally, the Inflation Reduction Act imposes an excise tax of 1% tax on the fair market value of net stock repurchases made after December 31, 2022.
The Corporate AMT is effective for the Company beginning in fiscal 2024 and we have elected to treat any future Corporate AMT as period costs in the period they arise. If we pay the Corporate AMT it will result in a Corporate AMT credit that can be carried forward indefinitely.
The decline in net revenue was primarily driven by a decline in Supplies, Consumer and unfavorable foreign currency impacts, partially offset by growth in Commercial.
The decline in net revenue was primarily driven by a decline in Consumer Printing, Supplies, and unfavorable foreign currency impacts. Net revenue for Supplies decreased 2.6%, primarily due to decline in the installed base, usage, and foreign currency. Printer unit volume decreased 10.1% due to demand weakness and ASPs remained flat for the period.

… 135 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

9 edited+0 added−0 removed10 unchanged
Biggest changeIn addition, when debt is denominated in a foreign currency, we may use swaps to exchange the foreign currency principal and interest obligations for U.S. dollar-denominated amounts to manage the exposure to changes in foreign currency exchange rates. We also use other derivatives not designated as hedging instruments consisting primarily of forward contracts to hedge foreign currency balance sheet exposures.
Biggest changeWe also use other derivatives not designated as hedging instruments consisting primarily of forward contracts to hedge foreign currency balance sheet exposures.
We have performed sensitivity analyses as of October 31, 2022 and 2021, using a modeling technique that measures the change in the fair values arising from a hypothetical 10% adverse movement in the levels of interest rates across the entire yield curve, with all other variables held constant. The analyses cover our debt, investments and interest rate swaps.
We have performed sensitivity analyses as of October 31, 2023 and 2022, using a modeling technique that measures the change in the fair values arising from a hypothetical 10% adverse movement in the levels of interest rates across the entire yield curve, with all other variables held constant. The analyses cover our debt, investments and interest rate swaps.
We have performed sensitivity analyses as of October 31, 2022 and 2021, using a modeling technique that measures the change in the fair values arising from a hypothetical 10% adverse movement in the levels of foreign currency exchange rates relative to the U.S. dollar, with all other variables held constant.
We have performed sensitivity analyses as of October 31, 2023 and 2022, using a modeling technique that measures the change in the fair values arising from a hypothetical 10% adverse movement in the levels of foreign currency exchange rates relative to the U.S. dollar, with all other variables held constant.
ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk. In the normal course of business, we are exposed to foreign currency exchange rate and interest rate risks that could impact our financial position and results of operations. Our risk management strategy with respect to these market risks may include the use of derivative instruments.
ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk. In the normal course of business, we are exposed to foreign currency exchange rate and interest rate risks that could impact our financial position, cash flows and results of operations. Our risk management strategy with respect to these market risks may include the use of derivative instruments.
The analyses cover all of our foreign currency derivative contracts offset by underlying exposures. The foreign currency exchange rates we used in performing the sensitivity analysis were based on market rates in effect at October 31, 2022 and 2021.
The analyses cover all of our foreign currency derivative contracts offset by underlying exposures. The foreign currency exchange rates we used in performing the sensitivity analysis were based on market rates in effect at October 31, 2023 and 2022.
We transact business in over 40 currencies worldwide, of which the most significant foreign currencies to our operations for fiscal year 2022 were Euro, Chinese yuan renminbi, Japanese yen and British pound.
We transact business in over 40 currencies worldwide, of which the most significant foreign currencies to our operations for fiscal year 2023 were Euro, Chinese yuan renminbi, Japanese yen and British pound.
The analyses use actual or approximate maturities for the debt, investments and interest rate swaps. The discount rates used were based on the market interest rates in effect at October 31, 2022 and 2021.
The analyses use actual or approximate maturities for the debt, investments and interest rate swaps. The discount rates used were based on the market interest rates in effect at October 31, 2023 and 2022.
The sensitivity analyses indicated that a hypothetical 10% adverse movement in foreign currency exchange rates would result in a foreign exchang e l oss of $134 million and $168 million at October 31, 2022 and October 31, 2021, respectively. Interest rate risk We also are exposed to interest rate risk related to debt we have issued and our investment portfolio.
The sensitivity analyses indicated that a hypothetical 10% adverse movement in foreign currency exchange rates would result in a foreign exchang e l oss of $133 million and $134 million at October 31, 2023 and October 31, 2022, respectively. Interest rate risk We also are exposed to interest rate risk related to debt we have issued and our investment portfolio.
The sensitivity analyses indicated that a hypothetical 10% adverse movement in interest rates would have resulted in a loss in the fair values of our debt and investments, net of interest rate swaps, of $210 million at October 31, 2022 and $73 million at October 31, 2021. 52 Table of Contents
The sensitivity analyses indicated that a hypothetical 10% adverse movement in interest rates would have resulted in a loss in the fair values of our debt and investments, net of interest rate swaps, of $196 million at October 31, 2023 and $210 million at October 31, 2022. 47 Table of Contents

Other HPQ 10-K year-over-year comparisons