Document and Entity Information
Document and Entity Information | 9 Months Ended |
Jul. 31, 2017shares | |
Document and Entity Information | |
Entity Registrant Name | HP Inc. |
Entity Central Index Key | 47,217 |
Document Type | 10-Q |
Document Period End Date | Jul. 31, 2017 |
Amendment Flag | false |
Current Fiscal Year End Date | --10-31 |
Entity Filer Category | Large Accelerated Filer |
Entity Common Stock, Shares Outstanding | 1,670,254,371 |
Document Fiscal Year Focus | 2,017 |
Document Fiscal Period Focus | Q3 |
Consolidated Condensed Statemen
Consolidated Condensed Statements of Earnings (Unaudited) - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jul. 31, 2017 | Jul. 31, 2016 | Jul. 31, 2017 | Jul. 31, 2016 | |
Income Statement [Abstract] | ||||
Net revenue | $ 13,060 | $ 11,892 | $ 38,129 | $ 35,726 |
Costs and expenses: | ||||
Cost of revenue | 10,633 | 9,720 | 31,071 | 29,019 |
Research and development | 289 | 298 | 899 | 891 |
Selling, general and administrative | 1,096 | 719 | 3,200 | 2,758 |
Restructuring and other charges | 46 | 36 | 249 | 156 |
Acquisition-related charges | 40 | 0 | 76 | 0 |
Amortization of intangible assets | 0 | 2 | 1 | 16 |
Defined benefit plan settlement charges | 1 | 0 | 4 | 0 |
Total costs and expenses | 12,105 | 10,775 | 35,500 | 32,840 |
Earnings from continuing operations | 955 | 1,117 | 2,629 | 2,886 |
Interest and other, net | (56) | (36) | (201) | (135) |
Earnings from continuing operations before taxes | 899 | 1,081 | 2,428 | 2,751 |
Provision for taxes | (203) | (238) | (562) | (598) |
Net earnings from continuing operations | 696 | 843 | 1,866 | 2,153 |
Net loss from discontinued operations, net of taxes | 0 | (60) | 0 | (149) |
Net earnings | $ 696 | $ 783 | $ 1,866 | $ 2,004 |
Basic | ||||
Continuing operations (usd per share) | $ 0.41 | $ 0.49 | $ 1.10 | $ 1.24 |
Discontinued operations (usd per share) | 0 | (0.03) | 0 | (0.08) |
Total basic net earnings per share (usd per share) | 0.41 | 0.46 | 1.10 | 1.16 |
Diluted | ||||
Continuing operations (usd per share) | 0.41 | 0.49 | 1.09 | 1.23 |
Discontinued operations (usd per share) | 0 | (0.04) | 0 | (0.08) |
Total diluted net earnings per share (usd per share) | 0.41 | 0.45 | 1.09 | 1.15 |
Cash dividends declared per share (usd per share) | $ 0.26 | $ 0.25 | $ 0.53 | $ 0.50 |
Weighted-average shares used to compute net earnings (loss) per share: | ||||
Basic (shares) | 1,681 | 1,711 | 1,694 | 1,735 |
Diluted (shares) | 1,695 | 1,725 | 1,705 | 1,747 |
Consolidated Condensed Stateme3
Consolidated Condensed Statements of Comprehensive Income (Unaudited) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jul. 31, 2017 | Jul. 31, 2016 | Jul. 31, 2017 | Jul. 31, 2016 | |
Statement of Comprehensive Income [Abstract] | ||||
Net earnings | $ 696 | $ 783 | $ 1,866 | $ 2,004 |
Change in unrealized gains on available-for-sale securities: | ||||
Gains arising during the period | 1 | 1 | 5 | 2 |
Change in unrealized components of cash flow hedges: | ||||
(Losses) gains arising during the period | (519) | 175 | (758) | 135 |
Losses (gains) reclassified into earnings | 38 | 159 | (49) | 63 |
Change in unrealized components of cash flow hedges | (481) | 334 | (807) | 198 |
Change in unrealized components of defined benefit plans: | ||||
Gains (losses) arising during the period | 0 | 0 | 13 | (4) |
Amortization of actuarial loss and prior service benefit | 19 | 12 | 56 | 36 |
Settlements and other | 0 | 0 | 3 | 1 |
Change in unrealized components of defined benefit plans | 19 | 12 | 72 | 33 |
Other comprehensive (loss) income before taxes | (461) | 347 | (730) | 233 |
Benefit (provision) for taxes | 57 | (28) | 50 | 41 |
Other comprehensive (loss) income, net of taxes | (404) | 319 | (680) | 274 |
Comprehensive income | $ 292 | $ 1,102 | $ 1,186 | $ 2,278 |
Consolidated Condensed Balance
Consolidated Condensed Balance Sheets (Unaudited) - USD ($) $ in Millions | Jul. 31, 2017 | Oct. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 6,967 | $ 6,288 |
Accounts receivable | 4,233 | 4,114 |
Inventory | 5,184 | 4,484 |
Other current assets | 5,059 | 3,582 |
Total current assets | 21,443 | 18,468 |
Property, plant and equipment | 1,707 | 1,736 |
Goodwill | 5,622 | 5,622 |
Other non-current assets | 3,162 | 3,161 |
Total assets | 31,934 | 28,987 |
Current liabilities: | ||
Notes payable and short-term borrowings | 1,062 | 78 |
Accounts payable | 12,804 | 11,103 |
Employee compensation and benefits | 766 | 759 |
Taxes on earnings | 199 | 231 |
Deferred revenue | 997 | 919 |
Other accrued liabilities | 6,232 | 5,718 |
Total current liabilities | 22,060 | 18,808 |
Long-term debt | 6,744 | 6,735 |
Other non-current liabilities | 7,469 | 7,333 |
Commitments and contingencies | ||
Stockholders’ deficit: | ||
Preferred stock, $0.01 par value (300 shares authorized; none issued) | 0 | 0 |
Common stock, $0.01 par value (9,600 shares authorized; 1,670 and 1,712 shares issued and outstanding at July 31, 2017 and October 31, 2016, respectively) | 17 | 17 |
Additional paid in capital | 288 | 1,030 |
Retained deficit | (2,526) | (3,498) |
Accumulated other comprehensive loss | (2,118) | (1,438) |
Total stockholders’ deficit | (4,339) | (3,889) |
Total liabilities and stockholders’ deficit | $ 31,934 | $ 28,987 |
Consolidated Condensed Balance5
Consolidated Condensed Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Jul. 31, 2017 | Oct. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (usd per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 300,000,000 | 300,000,000 |
Preferred stock, shares issued | 0 | 0 |
Common stock, par value (usd per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 9,600,000,000 | 9,600,000,000 |
Common stock, shares issued | 1,670,000,000 | 1,712,000,000 |
Common stock, shares outstanding | 1,670,000,000 | 1,712,000,000 |
Consolidated Condensed Stateme6
Consolidated Condensed Statements of Cash Flows (Unaudited) - USD ($) $ in Millions | 9 Months Ended | |
Jul. 31, 2017 | Jul. 31, 2016 | |
Cash flows from operating activities: | ||
Net earnings | $ 1,866 | $ 2,004 |
Adjustments to reconcile net earnings to net cash provided by operating activities: | ||
Depreciation and amortization | 263 | 249 |
Stock-based compensation expense | 169 | 140 |
Restructuring and other charges | 249 | 151 |
Deferred taxes on earnings | 412 | 978 |
Other, net | 69 | (290) |
Changes in operating assets and liabilities: | ||
Accounts receivable | (215) | 728 |
Inventory | (731) | 251 |
Accounts payable | 1,738 | 238 |
Taxes on earnings | (245) | (877) |
Restructuring and other | (155) | (114) |
Other assets and liabilities | (423) | (910) |
Net cash provided by operating activities | 2,997 | 2,548 |
Cash flows from investing activities: | ||
Investment in property, plant and equipment | (237) | (287) |
Proceeds from sale of property, plant and equipment | 69 | 0 |
Purchases of available-for-sale securities and other investments | (1,557) | (122) |
Maturities and sales of available-for-sale securities and other investments | 2 | 133 |
Proceeds from business divestitures | 0 | 160 |
Net cash used in investing activities | (1,723) | (116) |
Cash flows from financing activities: | ||
Short-term borrowings with original maturities less than 90 days, net | 1,046 | 72 |
Proceeds from debt, net of issuance costs | 5 | 4 |
Payment of debt | (65) | (2,158) |
Settlement of cash flow hedges | (9) | 4 |
Net transfer of cash and cash equivalents to Hewlett Packard Enterprise Company | 0 | (10,375) |
Net proceeds related to stock-based award activities | 12 | 29 |
Repurchase of common stock | (911) | (1,159) |
Cash dividends paid | (673) | (646) |
Net cash used in financing activities | (595) | (14,229) |
Increase (decrease) in cash and cash equivalents | 679 | (11,797) |
Cash and cash equivalents at beginning of period | 6,288 | 17,433 |
Cash and cash equivalents at end of period | 6,967 | 5,636 |
Supplemental schedule of non-cash activities: | ||
Net assets transferred to Hewlett Packard Enterprise Company | 0 | 22,144 |
Purchase of assets under capital leases | $ 147 | $ 118 |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
Jul. 31, 2017 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentati on Separation Transaction On November 1, 2015, Hewlett-Packard Company completed the separation of Hewlett Packard Enterprise Company (“Hewlett Packard Enterprise”), Hewlett-Packard Company’s former enterprise technology infrastructure, software, services and financing businesses (the “Separation”). In connection with the Separation, Hewlett-Packard Company changed its name to HP Inc. (“HP”) and entered into a separation and distribution agreement as well as various other agreements with Hewlett Packard Enterprise that provide a framework for the relationships between the parties, including among others a tax matters agreement, an employee matters agreement, a transition service agreement, a real estate matters agreement, a master commercial agreement and an information technology service agreement. For more information on the impacts of these agreements, see Note 6, “Taxes on Earnings”, Note 13, “Litigation and Contingencies” and Note 14, “Guarantees, Indemnifications and Warranties”. Basis of Presentation The accompanying Consolidated Condensed Financial Statements of HP and its wholly-owned subsidiaries are prepared in conformity with United States (“U.S.”) generally accepted accounting principles (“GAAP”). The interim financial information is unaudited, but reflects all normal adjustments that are necessary to provide a fair statement of results for the interim periods presented. This interim information should be read in conjunction with the Consolidated Financial Statements for the fiscal year ended October 31, 2016 in the Annual Report on Form 10-K filed on December 15, 2016 . The Consolidated Condensed Balance Sheet for October 31, 2016 was derived from audited financial statements. Principles of Consolidation The Consolidated Condensed Financial Statements include the accounts of HP and its subsidiaries and affiliates in which HP has a controlling financial interest or is the primary beneficiary. All intercompany balances and transactions have been eliminated. Reclassifications HP has made changes to the alignment of its business units in order to align its business unit financial reporting more closely with its current business structure. HP made these changes to its business unit information in prior reporting periods on an as-is basis. The reporting changes had no impact to previously reported segment net revenue, consolidated net revenue, earnings from continuing operations, net earnings or net earnings per share (“EPS”). See Note 2, “Segment Information”, for a further discussion of HP’s business unit realignments. HP has reclassified certain prior-year amounts to conform to the current-year presentation as a result of the adoption of Accounting Standards Update (“ASU”) 2015-03, “Simplifying the Presentation of Debt Issuance Costs” and ASU 2016-09, “Improvements to Employee Share-Based Payment Accounting”. Use of Estimates The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in HP’s Consolidated Condensed Financial Statements and accompanying notes. Actual results could differ materially from those estimates. Recently Adopted Accounting Pronouncements In March 2016, the Financial Accounting Standard Board (“FASB”) issued guidance, which amends the existing accounting standards for share-based payments, including the accounting for income taxes and forfeitures, as well as the classifications on the statements of cash flows. HP early adopted the amendments in the first quarter of fiscal year 2017. Beginning November 1, 2016, stock-based compensation excess tax benefits or tax deficiencies are reflected in the Consolidated Condensed Statements of Earnings as a component of the provision for taxes, whereas they previously were recognized as additional paid in capital in the stockholders’ deficit in the Consolidated Condensed Balance Sheets. HP has elected to continue to estimate forfeitures expected to occur to determine the stock-based compensation expense. Additionally, the Consolidated Condensed Statements of Cash Flows now present excess tax benefits as an operating activity rather than as a financing activity, while the payment of withholding taxes on the settlement of stock-based compensation awards is presented as a financing activity rather than as an operating activity, with prior periods adjusted accordingly. The implementation of this guidance did not have a material impact on the Consolidated Condensed Statements of Cash Flows for the nine months ended July 31, 2016 . See Note 6, “Taxes on Earnings”, for additional impact on the Consolidated Condensed Financial Statements. In May 2015, the FASB issued guidance, which amends the existing disclosures for investments measured at net asset value (“NAV”) per share (or its equivalent), as a practical expedient for fair value. This amendment removes the requirement to categorize these investments within the fair value hierarchy. The amendment also removes the requirement to make certain disclosures for all investments that are eligible to be measured at fair value using the NAV as a practical expedient. HP adopted the guidance in the first quarter of fiscal year 2017. Other than the change in presentation of certain pension-related assets that use NAV as a practical expedient, which requires retrospective application, the adoption of this new guidance did not have an impact on the Consolidated Condensed Financial Statements. In April 2015, the FASB amended the existing accounting standards for intangible assets. The amendments provide explicit guidance to customers in determining the accounting for fees paid in a cloud computing arrangement. HP adopted the guidance prospectively in the first quarter of fiscal year 2017. The implementation of this guidance did not have an impact on the Consolidated Condensed Financial Statements. In April 2015, the FASB amended the existing accounting standards for the presentation of debt issuance costs. The amendments require that debt issuance costs related to a recognized debt liability be presented on the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by these amendments. HP adopted the guidance in the first quarter of fiscal year 2017. The adoption resulted in the reclassification of unamortized debt issuance costs related to HP’s U.S. Dollar Global Notes from “Other non-current assets” to “Long-term debt” within the Consolidated Condensed Balance Sheets of $23 million as of October 31, 2016. Recently Issued Accounting Pronouncements Not Yet Adopted In January 2017, the FASB issued guidance which simplifies the accounting for goodwill impairment. The updated guidance eliminates Step 2 of the impairment test, which requires entities to calculate the implied fair value of goodwill to measure a goodwill impairment charge. Instead, entities will record an impairment charge based on the excess of a reporting unit’s carrying amount over its fair value, determined in Step 1. HP is required to adopt the guidance in the first quarter of fiscal year 2021 using a prospective approach. Earlier adoption is permitted. HP currently expects to early adopt this guidance in the fourth quarter of fiscal year 2017. HP expects that the implementation of this guidance will not have an effect on its Consolidated Condensed Financial Statements. In January 2017, the FASB amended the existing accounting standards for business combinations. The amendments clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. HP is required to adopt the guidance in the first quarter of fiscal year 2019. Earlier adoption is permitted. HP is currently evaluating the timing and the impact of this guidance on the Consolidated Condensed Financial Statements. In November 2016, the FASB issued guidance, which addresses the presentation of restricted cash in the statement of cash flows. The guidance requires entities to show the changes in the total of cash, cash equivalents, restricted cash, and restricted cash equivalents in the statement of cash flows. As a result, entities will no longer present transfers between cash and cash equivalents and restricted cash and restricted cash equivalents in the statement of cash flows. HP is required to adopt the guidance retrospectively in the first quarter of fiscal year 2019. Earlier adoption is permitted. HP is currently evaluating the timing and the impact of this guidance on the Consolidated Condensed Financial Statements. In October 2016, the FASB issued guidance, which amends the existing accounting for Intra-Entity Transfers of Assets Other Than Inventory. The guidance requires an entity to recognize the income tax consequences of intra-entity transfers, other than inventory, when the transfer occurs. It also requires modified retrospective transition with a cumulative catch-up adjustment to opening retained earnings in the period of adoption. Earlier adoption is permitted. HP is required to adopt the guidance in the first quarter of fiscal year 2019. HP is currently evaluating the timing and the impact of this guidance on the Consolidated Condensed Financial Statements. In August 2016, the FASB issued guidance, which amends the existing accounting standards for the classification of certain cash receipts and cash payments on the statement of cash flows. HP is required to adopt the guidance in the first quarter of fiscal year 2019. Earlier adoption is permitted. HP is currently evaluating the timing and the impact of this guidance on the Consolidated Condensed Financial Statements. In June 2016, the FASB issued guidance, which requires credit losses on financial assets measured at amortized cost basis to be presented at the net amount expected to be collected, not based on incurred losses. Further, credit losses on available-for-sale debt securities should be recorded through an allowance for credit losses limited to the amount by which fair value is below amortized cost. HP is required to adopt the guidance in the first quarter of fiscal year 2021. Earlier adoption is permitted. HP is currently evaluating the timing and the impact of this guidance on the Consolidated Condensed Financial Statements. In February 2016, the FASB issued guidance, which amends the existing accounting standards for leases. Consistent with current guidance, the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification. Under the new guidance, a lessee will be required to recognize assets and liabilities for all leases with lease terms of more than twelve months. HP is required to adopt the guidance in the first quarter of fiscal year 2020 using a modified retrospective approach. Earlier adoption is permitted. HP is currently evaluating the timing and the impact of this guidance on the Consolidated Condensed Financial Statements. In January 2016, the FASB issued guidance, which amends the existing accounting standards for the recognition and measurement of financial assets and financial liabilities. The updated guidance primarily addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. HP is required to adopt the guidance in the first quarter of fiscal year 2019. The amendments should be applied by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption, with other amendments related specifically to equity securities without readily determinable fair values applied prospectively. HP is currently evaluating the timing and the impact of this guidance on the Consolidated Condensed Financial Statements. In May 2014, the FASB amended the existing accounting standards for revenue recognition. The amendments (Topic 606) are based on the principle that revenue should be recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The amendments may be applied retrospectively to each prior period presented (“full retrospective method”) or retrospectively with the cumulative effect recognized as of the date of initial application (“modified retrospective method”). HP will adopt the new revenue standard in the first quarter of fiscal 2019 and intends to apply the modified retrospective method. HP is continuing to evaluate the impact of this guidance on the Consolidated Condensed Financial Statements and disclosures. |
Segment Information
Segment Information | 9 Months Ended |
Jul. 31, 2017 | |
Segment Reporting [Abstract] | |
Segment Information | Segment Information HP is a leading global provider of personal computing and other access devices, imaging and printing products, and related technologies, solutions and services. HP sells to individual consumers, small and medium-sized businesses (“SMBs”) and large enterprises, including customers in the government, health and education sectors. HP’s operations are organized into three segments for financial reporting purposes: Personal Systems, Printing and Corporate Investments. HP’s organizational structure is based on a number of factors that the chief operating decision maker uses to evaluate, view and run its business operations, which include, but are not limited to, customer base and homogeneity of products and technology. The segments are based on this organizational structure and information reviewed by HP’s chief operating decision maker to evaluate segment results. The chief operating decision maker uses several metrics to evaluate the performance of the overall business, including earnings from operations, and uses these results to allocate resources to each of the segments. A summary description of each segment is as follows: Personal Systems provides Commercial and Consumer personal computers (“PCs”), Workstations, thin clients, Commercial tablets and mobility devices, retail point-of-sale systems, displays and other related accessories, software, support and services for the commercial and consumer markets. HP groups Commercial notebooks, Commercial desktops, Commercial services, Commercial tablets and mobility devices, Commercial detachables, Workstations, retail point-of-sale systems and thin clients into commercial clients and Consumer notebooks, Consumer desktops, Consumer services and Consumer detachables into consumer clients when describing performance in these markets. Described below are HP’s global business capabilities within Personal Systems: • Commercial PCs are optimized for use by customers, including enterprise and SMBs, with a focus on robust designs, security, serviceability, connectivity, reliability and manageability in networked environments. Additionally, HP offers a range of services and solutions to enterprise and SMBs to help them manage the lifecycle of their PC and mobility installed base. • Consumer PCs are Notebooks, Desktops and hybrids that are optimized for consumer usage, focusing on multi-media consumption, online browsing, gaming and light productivity. Printing provides Consumer and Commercial printer hardware, supplies, solutions and services, as well as scanning devices. Printing is also focused on imaging solutions in the commercial markets. Described below are HP’s global business capabilities within Printing: • Office Printing Solutions delivers HP’s office printers, supplies, services, and solutions to SMBs and large enterprises. HP goes to market through its extensive channel network and directly with HP sales. Ongoing key initiatives include design and deployment of A3 products and solutions for the copier and multifunction printer market, printer security solutions, PageWide solutions and award-winning JetIntelligence LaserJet products. • Home Printing Solution s delivers a compelling set of innovative printing products and solutions for the home and home business or small office customers utilizing both HP’s Ink and Laser technologies. Initiatives such as Instant Ink and Continuous Ink Supply System provide business model innovation to benefit and expand HP’s existing customer base, while new innovations like Sprocket drive print relevance for a mobile generation. • Graphics Solutions is reinventing the graphics industry by offering large-format, commercial and industrial solutions to print service providers and packaging converters through the largest portfolio of printers and presses (HP DesignJet, HP Latex Printers, HP Scitex, HP Indigo and HP PageWide Presses). • 3D Printing delivers HP’s Multi-Jet Fusion 3D Printing Solution designed for prototyping and production of functional parts and functioning on an open platform facilitating the development of new 3D printing materials. Printing groups its global business capabilities into the following business units when reporting business performance: • Commercial Hardware consists of Office Printing Solutions, Graphics Solutions and 3D Printing, excluding supplies; • Consumer Hardware includes Home Printing Solutions, excluding supplies; and • Supplies comprises a set of highly innovative consumable products, ranging from Ink and Laser cartridges, media to graphics supplies and 3D supplies, for recurring use in Consumer and Commercial printer hardware and solutions Corporate Investments include HP Labs and certain business incubation projects. The accounting policies HP uses to derive segment results are substantially the same as those used by HP in preparing these financial statements. HP derives the results of the business segments directly from its internal management reporting system. Segment net revenue includes revenues from sales to external customers and certain revenues related to Managed Print Services arrangements, which are eliminated for the purposes of reporting HP’s consolidated net revenue. HP does not allocate certain operating expenses, which it manages at the corporate level, to its segments. These unallocated amounts include certain corporate governance costs and market-related retirement credits, stock-based compensation expense, restructuring and other charges, acquisition-related charges, amortization of intangible assets, defined benefit plan settlement charges and net revenue eliminations, primarily related to Managed Print Services. Business Unit Realignment Effective at the beginning of its first quarter of fiscal year 2017, HP implemented an organizational change to align its business unit financial reporting more closely with its current business structure. The organizational change resulted in the transfer of a portion of LaserJet printers from Commercial to Consumer within the Printing segment. HP reflected this change to its business unit information in prior reporting periods on an as-is basis that resulted in the reclassification of revenues between the Commercial and Consumer business units of Printing. The reporting change had no impact to previously reported segment net revenue, consolidated net revenue, earnings from continuing operations, net earnings or net earnings per share. Segment Operating Results from Continuing Operations Personal Printing Corporate Total Eliminations Total In millions Three months ended July 31, 2017 Net revenue $ 8,404 $ 4,698 $ 2 $ 13,104 $ (44 ) $ 13,060 Earnings (loss) from operations $ 313 $ 813 $ (20 ) $ 1,106 Three months ended July 31, 2016 Net revenue $ 7,512 $ 4,423 $ — $ 11,935 $ (43 ) $ 11,892 Earnings (loss) from operations $ 333 $ 903 $ (35 ) $ 1,201 Nine months ended July 31, 2017 Net revenue $ 24,290 $ 13,924 $ 7 $ 38,221 $ (92 ) $ 38,129 Earnings (loss) from operations $ 870 $ 2,354 $ (69 ) $ 3,155 Nine months ended July 31, 2016 Net revenue $ 21,969 $ 13,702 $ 6 $ 35,677 $ 49 (1) $ 35,726 Earnings (loss) from operations $ 804 $ 2,491 $ (66 ) $ 3,229 (1) For the nine months ended July 31, 2016 , the amount includes the recognition of revenue previously deferred in relation to sales to the pre-Separation finance entity. The reconciliation of segment operating results to HP consolidated results was as follows: Three months ended July 31 Nine months ended July 31 2017 2016 2017 2016 In millions Net Revenue: Total segments $ 13,104 $ 11,935 $ 38,221 $ 35,677 Net revenue eliminations and other (44 ) (43 ) (92 ) 49 Total net revenue $ 13,060 $ 11,892 $ 38,129 $ 35,726 Earnings from continuing operations before taxes: Total segment earnings from operations $ 1,106 $ 1,201 $ 3,155 $ 3,229 Corporate and unallocated costs and eliminations (18 ) (7 ) (27 ) (31 ) Stock-based compensation expense (46 ) (39 ) (169 ) (140 ) Restructuring and other charges (46 ) (36 ) (249 ) (156 ) Acquisition-related charges (40 ) — (76 ) — Amortization of intangible assets — (2 ) (1 ) (16 ) Defined benefit plan settlement charges (1 ) — (4 ) — Interest and other, net (56 ) (36 ) (201 ) (135 ) Total earnings from continuing operations before taxes $ 899 $ 1,081 $ 2,428 $ 2,751 Net revenue by segment and business unit was as follows: Three months ended July 31 Nine months ended July 31 2017 2016 2017 2016 In millions Notebooks $ 5,008 $ 4,303 $ 14,391 $ 12,346 Desktops 2,566 2,455 7,477 7,384 Workstations 530 476 1,516 1,381 Other 300 278 906 858 Personal Systems 8,404 7,512 24,290 21,969 Supplies 3,120 2,840 9,284 9,040 Commercial Hardware 986 1,007 2,854 2,928 Consumer Hardware 592 576 1,786 1,734 Printing 4,698 4,423 13,924 13,702 Corporate Investments 2 — 7 6 Total segment net revenue 13,104 11,935 38,221 35,677 Net revenue eliminations and other (44 ) (43 ) (92 ) 49 Total net revenue $ 13,060 $ 11,892 $ 38,129 $ 35,726 |
Restructuring and Other Charges
Restructuring and Other Charges | 9 Months Ended |
Jul. 31, 2017 | |
Restructuring and Related Activities [Abstract] | |
Restructuring and Other Charges | Restructuring and Other Charges Summary of Restructuring Plans HP’s restructuring activities for the nine months ended July 31, 2017 and 2016 summarized by plan were as follows: Fiscal 2017 Plan Fiscal 2015 Plan Fiscal 2012 Plan Severance Infrastructure and other (1) Severance and PRP (2) Infrastructure and other Severance and EER (3) Infrastructure and other Total In millions Accrued balance as of October 31, 2016 $ 24 $ — $ 21 $ 4 $ 7 $ 2 $ 58 Charges 95 60 15 — 1 — 171 Cash payments (46 ) (6 ) (35 ) (2 ) (4 ) — (93 ) Non-cash and other adjustments 4 (52 ) 6 — — — (42 ) Accrued balance as of July 31, 2017 $ 77 $ 2 $ 7 $ 2 $ 4 $ 2 $ 94 Total costs incurred to date as of July 31, 2017 $ 119 $ 60 $ 171 $ 27 $ 1,075 $ 44 $ 1,496 Reflected in Consolidated Condensed Balance Sheets Other accrued liabilities $ 77 $ 2 $ 7 $ 2 $ 4 $ 1 $ 93 Other non-current liabilities — — — — — 1 1 Accrued balance as of October 31, 2015 $ — $ — $ 39 $ — $ 21 $ 3 $ 63 Charges — — 107 27 4 1 139 Cash payments — — (83 ) (3 ) (28 ) — (114 ) Non-cash and other adjustments — — (12 ) (19 ) 9 — (22 ) Accrued balance as of July 31, 2016 $ — $ — $ 51 $ 5 $ 6 $ 4 $ 66 HP’s restructuring charges for the three months ended July 31, 2017 summarized by plan were as follows: Fiscal 2017 Plan Fiscal 2015 Plan Fiscal 2012 Plan Severance Infrastructure and other Severance and PRP (2) Infrastructure and other Severance and EER (3) Infrastructure and other Total In millions For the three months ended July 31, 2017 $ 14 $ 2 $ 5 $ — $ — $ — $ 21 (1) Infrastructure and other includes asset impairment charges of $52 million for the nine months ended July 31, 2017 associated with the consolidation of manufacturing into global hubs. (2) PRP represents Phased Retirement Program. (3) EER represents Enhanced Early Retirement. Fiscal 2017 Plan On October 10, 2016, HP’s Board of Directors approved a restructuring plan (the “Fiscal 2017 Plan”), which it expects will be implemented through fiscal year 2019 . HP estimates that it will incur aggregate pre-tax charges between $350 million and $500 million relating to labor and non-labor actions. HP estimates that approximately half of the expected cumulative pre-tax costs will relate to severance and the remaining will relate to infrastructure, non-labor actions and other charges, as described below. HP expects between 3,000 and 4,000 employees to exit by the end of fiscal year 2019. Fiscal 2015 Plan In connection with the Separation, on September 14, 2015, HP’s Board of Directors approved a cost savings plan (the “Fiscal 2015 Plan”), which includes labor and non-labor actions. The Fiscal 2015 Plan was considered substantially complete as of October 31, 2016 and HP does not expect any further activity associated with this plan. Approximately 3,000 employees exited by the end of fiscal year 2016. Fiscal 2012 Plan HP initiated a restructuring plan in fiscal year 2012 (the “Fiscal 2012 Plan”), which includes severance and infrastructure costs. The Fiscal 2012 Plan is considered substantially complete as of October 31, 2016 and HP does not expect any further activity associated with this plan. Other Charges Other charges include non-recurring costs, including those as a result of Separation, and are distinct from ongoing operational costs. These costs primarily relate to information technology costs such as advisory, consulting and non-recurring labor costs. For the three months and nine months ended July 31, 2017, HP incurred $25 million and $78 million of other charges, respectively. For the three and nine months ended July 31, 2016, HP incurred $5 million and $17 million of other charges, respectively. |
Retirement and Post-Retirement
Retirement and Post-Retirement Benefit Plans | 9 Months Ended |
Jul. 31, 2017 | |
Retirement Benefits [Abstract] | |
Retirement and Post-Retirement Benefit Plans | Retirement and Post-Retirement Benefit Plans The components of HP’s pension and post-retirement benefit (credit) cost recognized in the Consolidated Condensed Statements of Earnings were as follows: Three months ended July 31 U.S. Defined Benefit Plans Non-U.S. Defined Benefit Plans Post-Retirement Benefit Plans 2017 2016 2017 2016 2017 2016 In millions Service cost $ — $ — $ 12 $ 12 $ 1 $ — Interest cost 117 136 4 6 4 5 Expected return on plan assets (168 ) (183 ) (8 ) (12 ) (7 ) (8 ) Amortization and deferrals: Actuarial loss (gain) 19 14 10 6 (5 ) (3 ) Prior service benefit — — (1 ) (1 ) (4 ) (4 ) Net periodic benefit (credit) cost (32 ) (33 ) 17 11 (11 ) (10 ) Settlement loss — — 1 — — — Total periodic benefit (credit) cost $ (32 ) $ (33 ) $ 18 $ 11 $ (11 ) $ (10 ) Nine months ended July 31 U.S. Defined Benefit Plans Non-U.S. Defined Benefit Plans Post- Retirement Benefit Plans 2017 2016 2017 2016 2017 2016 In millions Service cost $ — $ — $ 36 $ 35 $ 1 $ — Interest cost 351 408 12 18 13 15 Expected return on plan assets (507 ) (549 ) (24 ) (36 ) (19 ) (24 ) Amortization and deferrals: Actuarial loss (gain) 55 42 30 18 (12 ) (9 ) Prior service benefit — — (3 ) (3 ) (14 ) (12 ) Net periodic benefit (credit) cost (101 ) (99 ) 51 32 (31 ) (30 ) Settlement loss 3 1 1 1 — — Special termination benefits — — — — — 9 Total periodic benefit (credit) cost $ (98 ) $ (98 ) $ 52 $ 33 $ (31 ) $ (21 ) Employer Contributions and Funding Policy HP’s policy is to fund its pension plans so that it makes at least the minimum contribution required by local government, funding and taxing authorities. During fiscal year 2017 , HP anticipates making contributions of approximately $26 million to its non-U.S. pension plans, approximately $33 million to its U.S. non-qualified plan participants and approximately $9 million to cover benefit claims under HP’s post-retirement benefit plans. During the nine months ended July 31, 2017 , HP contributed $21 million to its non-U.S. pension plans, paid $27 million to cover benefit payments to U.S. non-qualified plan participants, and paid $7 million to cover benefit claims under HP’s post-retirement benefit plans. HP’s pension and other post-retirement benefit costs and obligations depend on various assumptions. Differences between expected and actual returns on investments and changes in discount rates and other actuarial assumptions are reflected as unrecognized gains or losses, and such gains or losses are amortized to earnings in future periods. A deterioration in the funded status of a plan could result in a need for additional company contributions or an increase in net pension and post-retirement benefit costs in future periods. Actuarial gains or losses are determined at the measurement date and amortized over the remaining service life for active plans or the life expectancy of plan participants for frozen plans. |
Stock-Based Compensation
Stock-Based Compensation | 9 Months Ended |
Jul. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation HP’s stock-based compensation plans permit the issuance of restricted stock awards, stock options and performance-based awards. Stock-based compensation expense and the resulting tax benefits were as follows: Three months ended July 31 Nine months ended July 31 2017 2016 2017 2016 In millions Stock-based compensation expense $ 46 $ 39 $ 169 $ 140 Income tax benefit (15 ) (13 ) (54 ) (48 ) Stock-based compensation expense, net of tax $ 31 $ 26 $ 115 $ 92 Restricted Stock Awards Restricted stock awards are non-vested stock awards that may include grants of restricted stock or restricted stock units. For the three and nine months ended July 31, 2017 and 2016 , HP granted only restricted stock units. HP uses the closing stock price on the grant date to estimate the fair value of service-based restricted stock units. HP estimates the fair value of restricted stock units subject to performance-adjusted vesting conditions using a combination of the closing stock price on the grant date and the Monte Carlo simulation model. For the three months ended July 31, 2017 and 2016, HP did not grant any restricted stock units subject to performance-adjusted vesting conditions. The weighted-average fair value and the assumptions used to measure the fair value of restricted stock units subject to performance-adjusted vesting conditions in the Monte Carlo simulation model were as follows: Nine months ended July 31 2017 2016 Weighted-average fair value (1) $ 20 $ 13 Expected volatility (2) 30.5 % 32.5 % Risk-free interest rate (3) 1.4 % 1.2 % Expected performance period in years (4) 2.9 2.9 (1) The weighted-average fair value was based on performance-adjusted restricted stock units granted during the period. (2) The expected volatility was estimated using the historical volatility derived from HP’s common stock. (3) The risk-free interest rate was estimated based on the yield on U.S. Treasury zero-coupon issues. (4) The expected performance period was estimated based on the length of the remaining performance period from the grant date. A summary of restricted stock award activity was as follows: Nine months ended July 31, 2017 Shares Weighted-Average In thousands Outstanding at beginning of period 28,710 $ 13 Granted 14,618 $ 16 Vested (11,114 ) $ 14 Forfeited (624 ) $ 14 Outstanding at end of period 31,590 $ 14 As at July 31, 2017 , there was $227 million of unrecognized pre-tax stock-based compensation expense related to non-vested restricted stock awards, which HP expects to recognize over the remaining weighted-average vesting period of 1.4 years. Stock Options HP utilizes the Black-Scholes-Merton option pricing formula to estimate the fair value of stock options subject to service-based vesting conditions. HP estimates the fair value of stock options subject to performance-contingent vesting conditions using a combination of the Monte Carlo simulation model and a lattice model, as these awards contain market conditions. The weighted-average fair value and the assumptions used to measure fair value for the three and nine months ended July 31, 2017 and 2016 were as follows: Three months ended July 31 Nine months ended July 31 2017 2016 2017 2016 Weighted-average fair value (1) $ 4 $ 2 $ 4 $ 4 Expected volatility (2) 28.0 % 31.6 % 28.0 % 36.2 % Risk-free interest rate (3) 1.9 % 1.3 % 1.9 % 1.8 % Expected dividend yield (4) 2.8 % 4.3 % 2.8 % 3.5 % Expected term in years (5) 5.5 5.5 5.5 6 (1) The weighted-average fair value was based on stock options granted during the period. (2) The expected volatility was estimated using the leverage-adjusted average of the term-matching volatilities of peer companies due to the lack of volume of forward traded options, which precluded the use of implied volatility. (3) The risk-free interest rate was estimated based on the yield on U.S. Treasury zero-coupon issues. (4) The expected dividend yield represents a constant dividend yield applied for the duration of the expected term of the award. (5) Due to the lack of historical exercise and post-vesting termination patterns of the post-Separation employee base, the expected term was estimated using the simplified method; and for performance-contingent awards, the expected term represents an output from the lattice model. A summary of stock option activity was as follows: Nine months ended July 31, 2017 Shares Weighted- Weighted- Aggregate In thousands In years In millions Outstanding at beginning of period 28,218 $ 12 Granted 104 $ 19 Exercised (4,863 ) $ 10 Forfeited and expired (766 ) $ 17 Outstanding at end of period 22,693 $ 13 4.2 $ 145 Vested and expected to vest at end of period 22,152 $ 13 4.2 $ 142 Exercisable at end of period 14,923 $ 12 3.3 $ 108 The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value that option holders would have realized had all option holders exercised their options on the last trading day of the third quarter of fiscal year 2017 . The aggregate intrinsic value is the difference between HP’s closing stock price on the last trading day of the third quarter of fiscal year 2017 and the exercise price, multiplied by the number of in-the-money options. The total intrinsic value of options exercised for the three and nine months ended July 31, 2017 was $20 million and $37 million , respectively. As at July 31, 2017 , there was $9 million of unrecognized pre-tax, stock-based compensation expense related to unvested stock options, which HP expects to recognize over the remaining weighted-average vesting period of 1.1 years. |
Taxes on Earnings
Taxes on Earnings | 9 Months Ended |
Jul. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Taxes on Earnings | Taxes on Earnings Tax Matters Agreement and Other Income Tax Matters In connection with the Separation, HP entered into the tax matters agreement (“TMA”) with Hewlett Packard Enterprise, effective on November 1, 2015, that governs the rights and obligations of HP and Hewlett Packard Enterprise for certain pre-Separation tax liabilities. The TMA provides that HP and Hewlett Packard Enterprise will share certain pre-Separation income tax liabilities. In certain jurisdictions, HP and Hewlett Packard Enterprise have joint and several liability for past income tax liabilities and accordingly, HP could be legally liable under applicable tax law for such liabilities and required to make additional tax payments. In addition, if the distribution of Hewlett Packard Enterprise’s common shares to the HP stockholders is determined to be taxable, Hewlett Packard Enterprise and HP would share the tax liability equally, unless the taxability of the distribution is the direct result of action taken by either Hewlett Packard Enterprise or HP subsequent to the distribution, in which case the party causing the distribution to be taxable would be responsible for any taxes imposed on the distribution. Upon completion of the Separation on November 1, 2015, HP recorded income tax indemnification receivables from Hewlett Packard Enterprise for certain income tax liabilities that HP is jointly and severally liable for, but for which it is indemnified by Hewlett Packard Enterprise under the TMA. The actual amount that Hewlett Packard Enterprise may be obligated to pay HP could vary depending on the outcome of certain unresolved tax matters, which may not be resolved for several years. The net receivable as of July 31, 2017 was $1.6 billion . In connection with the TMA, Interest and other, net for the nine months ended July 31, 2017 includes income of $24 million for changes in the tax indemnifications amounts. Provision for Taxes HP’s effective tax rate for continuing operations was 22.5% and 22.0% for the three months ended July 31, 2017 and 2016 , respectively and 23.1% and 21.7% for the nine months ended July 31, 2017 and 2016 , respectively. HP’s effective tax rate generally differs from the U.S. federal statutory rate of 35% due to favorable tax rates associated with certain earnings from HP’s operations in lower-tax jurisdictions throughout the world. HP has not provided U.S. taxes for all foreign earnings because HP plans to reinvest some of those earnings indefinitely outside the United States. During the three and nine months ended July 31, 2017 , HP recorded $27 million and $31 million , respectively, of net tax benefits related to discrete items in the provision for income taxes for continuing operations. These amounts included a tax benefit of $14 million and $45 million related to restructuring and other charges, and a tax benefit of $15 million and $28 million related to acquisition-related charges, offset by uncertain tax position charges of $19 million and $25 million , for the three and nine months ended July 31, 2017 , respectively. The three months and nine months ended July 31, 2017 included a net tax benefit of $12 million related to provision to return adjustments due to the filing of the U.S. Federal tax return. The nine months ended July 31, 2017 also included a tax charge of $26 million related to state provision to return adjustments. During the three and nine months ended July 31, 2016 , HP recorded discrete items resulting in net tax expense of $14 million and net tax benefit of $72 million , respectively, for continuing operations. These amounts included a tax benefit of $8 million and $46 million for the three and nine months ended July 31, 2016 , respectively, related to restructuring and other charges. The nine months ended July 31, 2016 also included a tax benefit of $41 million arising from the retroactive research and development credit provided by the Consolidated Appropriations Act of 2016 signed into law in December 2015. During the three and nine months ended July 31, 2017 , HP recorded excess tax benefits of $2 million and $14 million , respectively, on stock options, restricted stock and performance share units, which are reflected in the Consolidated Condensed Statements of Earnings as a component of the provision for income taxes as a result of the early adoption of ASU 2016-09 -“Improvements to Employee Share- Based Payment Accounting”. See Note 1, “Basis of Presentation”, for more details regarding the guidance. Uncertain Tax Positions As of July 31, 2017 , the amount of unrecognized tax benefits was $10.9 billion , of which up to $3.9 billion would affect HP’s effective tax rate if realized. The amount of unrecognized tax benefits did not significantly change for the nine months ended July 31, 2017 . HP continues to record its tax liabilities related to uncertain tax positions and certain liabilities for which it has joint and several liability with Hewlett Packard Enterprise. HP recognizes interest income from favorable settlements and interest expense and penalties accrued on unrecognized tax benefits in the provision for taxes in the Consolidated Condensed Statements of Earnings. As of July 31, 2017 , HP had accrued $239 million for interest and penalties. HP engages in continuous discussions and negotiations with taxing authorities regarding tax matters in various jurisdictions. HP expects to complete resolution of certain tax years with various tax authorities within the next 12 months . It is also possible that other federal, foreign and state tax issues may be concluded within the next 12 months . |
Supplementary Financial Informa
Supplementary Financial Information | 9 Months Ended |
Jul. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Supplementary Financial Information | Supplementary Financial Information Accounts Receivable As of July 31, 2017 October 31, 2016 In millions Accounts receivable $ 4,317 $ 4,221 Allowance for doubtful accounts (84 ) (107 ) $ 4,233 $ 4,114 The allowance for doubtful accounts related to accounts receivable and changes were as follows: Nine months ended July 31, 2017 In millions Balance at beginning of period $ 107 Provision for doubtful accounts 7 Deductions, net of recoveries (30 ) Balance at end of period $ 84 HP has third-party arrangements, consisting of revolving short-term financing, which provide liquidity to certain partners in order to facilitate their working capital requirements. These financing arrangements, which in certain circumstances may contain partial recourse, result in a transfer of HP’s receivables and risk to the third party. As these transfers qualify as true sales under the applicable accounting guidance, the receivables are derecognized from the Consolidated Condensed Balance Sheets upon transfer, and HP receives a payment for the receivables from the third party within a mutually agreed upon time period. For arrangements involving an element of recourse, the recourse obligation is measured using market data from the similar transactions and reported as a current liability in the Consolidated Condensed Balance Sheets. The recourse obligations as of July 31, 2017 and October 31, 2016 were not material. As of July 31, 2017 and October 31, 2016, HP had $130 million and $149 million , respectively, outstanding from the third parties, which is reported in accounts receivable in the Consolidated Condensed Balance Sheets. The costs associated with the sales of trade receivables for the three months and nine months ended July 31, 2017 and 2016 were not material. The following is a summary of the activity under these arrangements: Three months ended July 31 Nine months ended July 31 2017 2016 2017 2016 In millions Balance at beginning of period $ 123 $ 71 $ 149 $ 93 Trade receivables sold 2,268 2,126 6,969 5,896 Cash receipts (2,269 ) (2,080 ) (6,997 ) (5,873 ) Foreign currency and other 8 (3 ) 9 (2 ) Balance at end of period $ 130 $ 114 $ 130 $ 114 Inventory As of July 31, 2017 October 31, 2016 In millions Finished goods $ 3,384 $ 3,103 Purchased parts and fabricated assemblies 1,800 1,381 $ 5,184 $ 4,484 Other Current Assets As of July 31, 2017 October 31, 2016 In millions Value-added taxes receivable $ 772 $ 795 Available-for-sale investments (1) 1,020 — Supplier and other receivables 1,940 1,700 Prepaid and other current assets 1,327 1,087 $ 5,059 $ 3,582 _________________________ (1) See Note 8, “Fair Value” and Note 9, “Financial Instruments” for detailed information. Property, Plant and Equipment As of July 31, 2017 October 31, 2016 In millions Land, buildings and leasehold improvements $ 2,065 $ 2,421 Machinery and equipment, including equipment held for lease 3,914 3,663 5,979 6,084 Accumulated depreciation (4,272 ) (4,348 ) $ 1,707 $ 1,736 Other Non-Current Assets As of July 31, 2017 October 31, 2016 In millions Tax indemnifications receivable (1) $ 1,662 $ 1,591 Deferred tax assets 372 254 Other 1,128 1,316 $ 3,162 $ 3,161 _________________________ (1) In connection with the TMA discussed in Note 6, “Taxes on Earnings”. Other Accrued Liabilities As of July 31, 2017 October 31, 2016 In millions Other accrued taxes $ 815 $ 755 Warranty 658 729 Sales and marketing programs 2,341 2,312 Other 2,418 1,922 $ 6,232 $ 5,718 Other Non-Current Liabilities As of July 31, 2017 October 31, 2016 In millions Pension, post-retirement, and post-employment liabilities $ 2,506 $ 2,705 Deferred tax liability 1,586 1,116 Tax liability 1,649 1,910 Deferred revenue 894 865 Other 834 737 $ 7,469 $ 7,333 |
Fair Value
Fair Value | 9 Months Ended |
Jul. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value | Fair Value Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. Fair Value Hierarchy HP uses valuation techniques that are based upon observable and unobservable inputs. Observable inputs are developed using market data such as publicly available information and reflect the assumptions market participants would use, while unobservable inputs are developed using the best information available about the assumptions market participants would use. Assets and liabilities are classified in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement: Level 1—Quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2—Quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability and market-corroborated inputs. Level 3—Unobservable inputs for the asset or liability. The fair value hierarchy gives the highest priority to observable inputs and lowest priority to unobservable inputs. The following table presents HP’s assets and liabilities that are measured at fair value on a recurring basis: As of July 31, 2017 As of October 31, 2016 Fair Value Measured Using Fair Value Measured Using Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total In millions Assets: Cash Equivalents: Corporate debt $ — $ 1,929 $ — $ 1,929 $ — $ 2,092 $ — $ 2,092 Financial institution instruments — 5 — 5 — — — — Government debt (1) 3,436 46 — 3,482 2,568 — — 2,568 Available-for-Sale Investments: Corporate debt — 506 — 506 — — — — Financial institution instruments — 50 — 50 — 2 — 2 Government debt (1) 224 240 — 464 — — — — Mutual funds 49 — — 49 44 — — 44 Marketable equity securities 6 6 — 12 5 4 — 9 Derivative Instruments: Interest rate contracts — 5 — 5 — 48 — 48 Foreign currency contracts — 56 2 58 — 266 11 277 Other derivatives — 3 — 3 — — — — Total Assets $ 3,715 $ 2,846 $ 2 $ 6,563 $ 2,617 $ 2,412 $ 11 $ 5,040 Liabilities: Derivative Instruments: Foreign currency contracts $ — $ 657 $ 1 $ 658 $ — $ 94 $ 1 $ 95 Other derivatives — — — — — 2 — 2 Total Liabilities $ — $ 657 $ 1 $ 658 $ — $ 96 $ 1 $ 97 __________________ (1) Government debt includes instruments such as U.S. treasury notes, U.S agency securities and non-U.S. government bonds. There were no transfers between levels within the fair value hierarchy during the nine months ended July 31, 2017 . Valuation Techniques Cash Equivalents and Investments: HP holds time deposits, money market funds, mutual funds, other debt securities primarily consisting of corporate and government notes and bonds, and common stock and equivalents. HP values cash equivalents and equity investments using quoted market prices, alternative pricing sources, including net asset value, or models utilizing market observable inputs. The fair value of debt investments was based on quoted market prices or model-driven valuations using inputs primarily derived from or corroborated by observable market data, and, in certain instances, valuation models that utilize assumptions which cannot be corroborated with observable market data. Derivative Instruments: From time to time, HP uses forward contracts, interest rate and total return swaps and option contracts to hedge certain foreign currency and interest rate exposures. HP uses industry standard valuation models to measure fair value. Where applicable, these models project future cash flows and discount the future amounts to present value using market-based observable inputs, including interest rate curves, HP and counterparty credit risk, foreign currency rates, and forward and spot prices for currencies and interest rates. See Note 9, “Financial Instruments” for a further discussion of HP’s use of derivative instruments. Other Fair Value Disclosures Short- and Long-Term Debt: HP estimates the fair value of its debt primarily using an expected present value technique, which is based on observable market inputs using interest rates currently available to companies of similar credit standing for similar terms and remaining maturities, and considering its own credit risk. The portion of HP’s debt that is hedged is reflected in the Consolidated Condensed Balance Sheets as an amount equal to the debt’s carrying amount and a fair value adjustment representing changes in the fair value of the hedged debt obligations arising from movements in benchmark interest rates. The fair value of HP’s short- and long-term debt was $8.1 billion as of July 31, 2017 , compared to its carrying amount of $7.8 billion at that date. The fair value of HP’s short- and long-term debt was $7.1 billion as of October 31, 2016, compared to its carrying value of $6.8 billion at that date. If measured at fair value in the Consolidated Condensed Balance Sheets, short- and long-term debt would be classified in Level 2 of the fair value hierarchy. Other Financial Instruments: For the balance of HP’s financial instruments, primarily accounts receivable, accounts payable and financial liabilities included in Other accrued liabilities on the Consolidated Condensed Balance Sheets, the carrying amounts approximate fair value due to their short maturities. If measured at fair value in the Consolidated Condensed Balance Sheets, other financial instruments would be classified in Level 2 or Level 3 of the fair value hierarchy. Non-Marketable Equity Investments and Non-Financial Assets: HP’s non-marketable equity investments and non-financial assets, such as goodwill, intangible assets and property, plant and equipment, are recorded at fair value in the period of acquisition and a subsequent impairment charge is recognized. If measured at fair value in the Consolidated Condensed Balance Sheets, non-marketable equity investments and non-financial assets would generally be classified within Level 3 of the fair value hierarchy. |
Financial Instruments
Financial Instruments | 9 Months Ended |
Jul. 31, 2017 | |
Investments, All Other Investments [Abstract] | |
Financial Instruments | Financial Instruments Cash Equivalents and Available-for-Sale Investments As of July 31, 2017 As of October 31, 2016 Cost Gross Unrealized Gain Gross Unrealized Loss Fair Value Cost Gross Unrealized Gain Gross Unrealized Loss Fair Value In millions Cash Equivalents: Corporate debt $ 1,929 $ — $ — $ 1,929 $ 2,092 $ — $ — $ 2,092 Financial institution instruments 5 — — 5 — — — — Government debt 3,482 — — 3,482 2,568 — — 2,568 Total cash equivalents 5,416 — — 5,416 4,660 — — 4,660 Available-for-Sale Investments: Corporate debt 506 — — 506 — — — — Financial institution instruments 50 — — 50 2 — — 2 Government debt 464 — — 464 — — — — Marketable equity securities 1 7 — 8 1 3 — 4 Mutual funds 39 10 — 49 35 9 — 44 Total available-for-sale investments 1,060 17 — 1,077 38 12 — 50 Total cash equivalents and available-for-sale investments $ 6,476 $ 17 $ — $ 6,493 $ 4,698 $ 12 $ — $ 4,710 All highly liquid investments with original maturities of three months or less at the date of acquisition are considered cash equivalents. As of July 31, 2017 and October 31, 2016 , the carrying amount of cash equivalents approximated fair value due to the short period of time to maturity. The estimated fair value of the available-for-sale investments may not be representative of values that will be realized in the future. HP classifies its marketable debt securities as available-for-sale investments within Other current assets on the Consolidated Condensed Balance Sheets, including those with maturity dates beyond one year, based on their highly liquid nature and availability for use in current operations. Contractual maturities of investments in available-for-sale debt securities were as follows: As of July 31, 2017 Amortized Fair Value In millions Due in one year $ 414 $ 414 Due in one to five years $ 606 $ 606 Equity securities in privately held companies include cost basis and equity method investments and are included in Other non-current assets on the Consolidated Condensed Balance Sheets. These amounted to $34 million and $16 million as of July 31, 2017 and October 31, 2016, respectively. Derivative Instruments HP uses derivatives to offset business exposure to foreign currency and interest rate risk on expected future cash flows and on certain existing assets and liabilities. As part of its risk management strategy, HP uses derivative instruments, primarily forward contracts, interest rate swaps, total return swaps and, at times, option contracts to hedge certain foreign currency, interest rate and, to a lesser extent, equity exposures. HP may designate its derivative contracts as fair value hedges or cash flow hedges. HP classifies cash flows from its designated derivative contracts with the activities that correspond to the underlying hedged items on the Consolidated Condensed Statements of Cash Flows. For derivatives not designated as hedging instruments, HP categorizes those economic hedges as other derivatives. HP recognizes all derivative instruments at fair value in the Consolidated Condensed Balance Sheets. As a result of its use of derivative instruments, HP is exposed to the risk that its counterparties will fail to meet their contractual obligations. Master netting agreements mitigate credit exposure to counterparties by permitting HP to net amounts due from HP to counterparty against amounts due to HP from the same counterparty under certain conditions. To further limit credit risk, HP has collateral security agreements that allow HP to hold collateral from, or require HP to post collateral to, counterparties when aggregate derivative fair values exceed contractually established thresholds which are generally based on the credit ratings of HP and its counterparties. If HP’s or the counterparty’s credit rating falls below a specified credit rating, either party has the right to request full collateralization of the derivatives’ net liability position. The fair value of derivatives with credit contingent features in a net liability position was $583 million and $2 million as of July 31, 2017 and October 31, 2016 , respectively, all of which were fully collateralized within two business days of the related request. Under HP’s derivative contracts, the counterparty can terminate all outstanding trades following a covered change of control event affecting HP that results in the surviving entity being rated below a specified credit rating. This credit contingent provision did not affect HP’s financial position or cash flows as of July 31, 2017 and October 31, 2016 . Fair Value Hedges HP enters into fair value hedges, such as interest rate swaps, to reduce the exposure of its debt portfolio to changes in fair value resulting from changes in interest rates by achieving a primarily U.S. dollar London Interbank Offered Rate (“LIBOR”)-based floating interest expense. For derivative instruments that are designated and qualify as fair value hedges, HP recognizes the change in fair value of the derivative instrument, as well as the offsetting change in the fair value of the hedged item, in Interest and other, net on the Consolidated Condensed Statements of Earnings in the period of change. Cash Flow Hedges HP uses forward contracts and at times, option contracts designated as cash flow hedges to protect against the foreign currency exchange rate risks inherent in its forecasted net revenue and, to a lesser extent, cost of revenue, operating expenses, and intercompany loans denominated in currencies other than the U.S. dollar. HP’s foreign currency cash flow hedges mature generally within twelve months. However, hedges related to longer term procurement arrangements extend several years and forward contracts associated with intercompany loans extend for the duration of the loan term, which typically range from two to five years. For derivative instruments that are designated and qualify as cash flow hedges, HP initially records changes in fair value for the effective portion of the derivative instrument in accumulated other comprehensive loss as a separate component of stockholders’ deficit on the Consolidated Condensed Balance Sheets and subsequently reclassifies these amounts into earnings in the period during which the hedged transaction is recognized in earnings. HP reports the effective portion of its cash flow hedges in the same financial statement line item as changes in the fair value of the hedged item. Other Derivatives Other derivatives not designated as hedging instruments consist primarily of forward contracts used to hedge foreign currency-denominated balance sheet exposures. HP uses total return swaps to hedge its executive deferred compensation plan liability. For derivative instruments not designated as hedging instruments, HP recognizes changes in fair value of the derivative instrument, as well as the offsetting change in the fair value of the hedged item, in Interest and other, net in the Consolidated Condensed Statements of Earnings in the period of change. Hedge Effectiveness For interest rate swaps designated as fair value hedges, HP measures hedge effectiveness by offsetting the change in fair value of the hedged item with the change in fair value of the derivative. For foreign currency options and forward contracts designated as cash flow hedges, HP measures hedge effectiveness by comparing the cumulative change in fair value of the hedge contract with the cumulative change in fair value of the hedged item, both of which are based on forward rates. HP recognizes any ineffective portion of the hedge in the Consolidated Condensed Statements of Earnings in the same period in which ineffectiveness occurs. Amounts excluded from the assessment of effectiveness are recognized in the Consolidated Condensed Statements of Earnings in the period they arise. The hedge ineffectiveness of fair value and cash flow hedges recognized in earnings were not material for the three and nine months ended July 31, 2017 and 2016. Fair Value of Derivative Instruments The gross notional and fair value of derivative instruments in the Consolidated Condensed Balance Sheets were as follows: As of July 31, 2017 As of October 31, 2016 Outstanding Other Current Assets Other Other Other Outstanding Other Other Other Other In millions Derivatives designated as hedging instruments Fair value hedges: Interest rate contracts $ 2,500 $ — $ 5 $ — $ — $ 2,000 $ — $ 48 $ — $ — Cash flow hedges: Foreign currency contracts 16,127 33 9 522 122 11,852 203 63 52 12 Total derivatives designated as hedging instruments 18,627 33 14 522 122 13,852 203 111 52 12 Derivatives not designated as hedging instruments Foreign currency contracts 4,572 16 — 14 — 3,934 11 — 31 — Other derivatives 119 3 — — — 150 — — 2 — Total derivatives not designated as hedging instruments 4,691 19 — 14 — 4,084 11 — 33 — Total derivatives $ 23,318 $ 52 $ 14 $ 536 $ 122 $ 17,936 $ 214 $ 111 $ 85 $ 12 Offsetting of Derivative Instruments HP recognizes all derivative instruments on a gross basis in the Consolidated Condensed Balance Sheets. HP does not offset the fair value of its derivative instruments against the fair value of cash collateral posted under its collateral security agreements. As of July 31, 2017 and October 31, 2016 , information related to the potential effect of HP’s master netting agreements and collateral security agreements was as follows: In the Consolidated Condensed Balance Sheets Gross Amounts Not Offset Gross Amount Recognized (i) Gross Amount Offset (ii) Net Amount Presented (iii) = (i)–(ii) Derivatives (iv) Financial Collateral (v) Net Amount (vi) = (iii)–(iv)–(v) In millions As of July 31, 2017 Derivative assets $ 66 $ — $ 66 $ 63 $ — (1) $ 3 Derivative liabilities $ 658 $ — $ 658 $ 63 $ 519 (2) $ 76 As of October 31, 2016 Derivative assets $ 325 $ — $ 325 $ 88 $ 189 (1) $ 48 Derivative liabilities $ 97 $ — $ 97 $ 88 $ 2 (2) $ 7 _______________________________________________________________________________ (1) Represents the cash collateral posted by counterparties as of the respective reporting date for HP’s asset position, net of derivative amounts that could be offset, as of, generally, two business days prior to the respective reporting date. (2) Represents the collateral posted by HP through re-use of counterparty cash collateral as of the respective reporting date for HP’s liability position, net of derivative amounts that could be offset, as of, generally, two business days prior to the respective reporting date. Effect of Derivative Instruments in the Consolidated Condensed Statements of Earnings The pre-tax effect of derivative instruments and related hedged items in a fair value hedging relationship for the three and nine months ended July 31, 2017 and 2016 were as follows: Gain (Loss) Recognized in Earnings on Derivative and Related Hedged Item Derivative Instrument Location Three months ended July 31, 2017 Nine months ended July 31, 2017 Hedged Item Location Three months ended July 31, 2017 Nine months ended July 31, 2017 In millions In millions Interest rate contracts Interest and other, net $ 5 $ (43 ) Fixed-rate debt Interest and other, net $ (5 ) $ 43 Gain (Loss) Recognized in Earnings on Derivative and Related Hedged Item Derivative Instrument Location Three months ended July 31, 2016 Nine months ended July 31, 2016 Hedged Item Location Three months ended July 31, 2016 Nine months ended July 31, 2016 In millions In millions Interest rate contracts Interest and other, net $ 20 $ 38 Fixed-rate debt Interest and other, net $ (20 ) $ (38 ) The pre-tax effect of derivative instruments in cash flow hedging relationships for the three and nine months ended July 31, 2017 was as follows: Loss Recognized in (Loss) Gain Reclassified from Accumulated OCI Into Earnings (Effective Portion) Three months ended July 31, 2017 Nine months ended July 31, 2017 Location Three months ended July 31, 2017 Nine months ended July 31, 2017 In millions In millions Cash flow hedges: Foreign currency contracts $ (519 ) $ (758 ) Net revenue $ (26 ) $ 89 Cost of revenue (13 ) (32 ) Operating expenses 1 1 Interest and other, net — (9 ) Total $ (519 ) $ (758 ) $ (38 ) $ 49 The pre-tax effect of derivative instruments in cash flow hedging relationships for the three and nine months ended July 31, 2016 was as follows: Gain Recognized in Other Comprehensive Income ("OCI") on Derivatives (Effective Portion) (Loss) Gain Reclassified from Accumulated OCI Into Three months ended July 31, 2016 Nine months ended July 31, 2016 Location Three months ended July 31, 2016 Nine months ended July 31, 2016 In millions In millions Cash flow hedges: $ 175 $ 135 Net revenue $ (140 ) $ 26 Cost of revenue (18 ) (90 ) Operating expenses 1 1 Interest and other, net (2 ) — Total $ 175 $ 135 Total $ (159 ) $ (63 ) As of July 31, 2017 , HP expects to reclassify an estimated accumulated other comprehensive loss (“AOCI”) of $442 million , net of taxes, to earnings within the next twelve months associated with cash flow hedges along with the earnings effects of the related forecasted transactions. The amounts ultimately reclassified into earnings could be different from the amounts previously included in AOCI based on the change of market rate, and therefore could have a different impact on earnings. The pre-tax effect of derivative instruments not designated as hedging instruments in the Consolidated Condensed Statements of Earnings for the three and nine months ended July 31, 2017 and 2016 was as follows: Gain (Loss) Recognized in Earnings on Derivatives Location Three months ended July 31, 2017 Three months ended July 31, 2016 Nine months ended July 31, 2017 Nine months ended July 31, 2016 In millions Foreign currency contracts Interest and other, net $ 16 $ (12 ) $ (33 ) $ (20 ) Other derivatives Interest and other, net 1 2 5 1 Total $ 17 $ (10 ) $ (28 ) $ (19 ) |
Borrowings
Borrowings | 9 Months Ended |
Jul. 31, 2017 | |
Debt Disclosure [Abstract] | |
Borrowings | Borrowings Notes Payable and Short-Term Borrowings As of July 31, 2017 As of October 31, 2016 Amount Weighted-Average Amount Weighted-Average In millions In millions Commercial paper $ 936 1.6 % $ — — Current portion of long-term debt 92 3.5 % 51 4.1 % Notes payable to banks, lines of credit and other 34 1.4 % 27 2.0 % $ 1,062 $ 78 Long-Term Debt As of July 31, 2017 October 31, 2016 In millions U.S. Dollar Global Notes (1) 2009 Shelf Registration Statement: $1,350 issued at discount to par at a price of 99.827% in December 2010 at 3.75%, due December 2020 $ 648 $ 648 $1,250 issued at discount to par at a price of 99.799% in May 2011 at 4.3%, due June 2021 1,249 1,248 $1,000 issued at discount to par at a price of 99.816% in September 2011 at 4.375%, due September 2021 999 999 $1,500 issued at discount to par at a price of 99.707% in December 2011 at 4.65%, due December 2021 1,498 1,498 $500 issued at discount to par at a price of 99.771% in March 2012 at 4.05%, due September 2022 499 499 $1,200 issued at discount to par at a price of 99.863% in September 2011 at 6.0%, due September 2041 1,199 1,199 2012 Shelf Registration Statement: $750 issued at par in January 2014 at three-month USD LIBOR plus 0.94%, due January 2019 102 102 $1,250 issued at discount to par at a price of 99.954% in January 2014 at 2.75%, due January 2019 300 300 6,494 6,493 Other, including capital lease obligations, at 0.51%-8.50%, due in calendar years 2017-2025 336 244 Fair value adjustment related to hedged debt 26 72 Less: unamortized debt issuance cost (2) (20 ) (23 ) Less: current portion of long-term debt (92 ) (51 ) Total long-term debt $ 6,744 $ 6,735 (1) HP may redeem some or all of the fixed-rate U.S. Dollar Global Notes at any time in accordance with the terms thereof. The U.S. Dollar Global Notes are senior unsecured debt. (2) Effective November 1, 2016, HP adopted ASU 2015-03, “Simplifying the Presentation of Debt Issuance Costs”, which amended the presentation of debt issuance costs as a direct deduction from the carrying amount of debt liability. In December 2016, HP filed a shelf registration statement (the “2016 Shelf Registration Statement”) with the SEC to enable the company to offer for sale, from time to time, in one or more offerings, an unspecified amount of debt securities, common stock, preferred stock, depositary shares and warrants. As disclosed in Note 9, “Financial Instruments”, HP uses interest rate swaps to mitigate some of the exposure of its debt portfolio to changes in fair value resulting from changes in interest rates by achieving a primarily U.S. dollar LIBOR-based floating interest expense. Interest rates shown in the table of long-term debt have not been adjusted to reflect the impact of any interest rate swaps. Interest expense on borrowings recognized as “Interest and other, net” in the Consolidated Condensed Statements of Earnings during the three months ended July 31, 2017 and 2016 was $79 million and $71 million , respectively, and during the nine months ended July 31, 2017 and 2016 was $225 million and $203 million , respectively. Commercial Paper On November 1, 2015, HP’s Board of Directors authorized HP to borrow up to a total outstanding principal balance of $4.0 billion , or the equivalent in foreign currencies, for the use and benefit of HP and HP’s subsidiaries, by the issuance of commercial paper or through the execution of promissory notes, loan agreements, letters of credit, agreements for lines of credit or overdraft facilities. Credit Facility As of July 31, 2017 , HP maintains a $4.0 billion , senior unsecured committed revolving credit facility to support the issuance of commercial paper or for general corporate purposes. Commitments under the revolving credit facility will be available until April 2, 2019. Commitment fees, interest rates and other terms of borrowing under the credit facility vary based on HP’s external credit ratings. As of July 31, 2017 , HP was in compliance with the financial covenants in the credit agreement governing the revolving credit facility. Available Borrowing Resources As of July 31, 2017 , HP and HP’s subsidiaries had available borrowing resources of $832 million from uncommitted lines of credit in addition to the senior unsecured committed revolving credit facility discussed above. |
Stockholders' Deficit
Stockholders' Deficit | 9 Months Ended |
Jul. 31, 2017 | |
Stockholders' Equity Note [Abstract] | |
Stockholders' Deficit | Stockholders’ Deficit Share Repurchase Program HP’s share repurchase program authorizes both open market and private repurchase transactions. During the three and nine months ended July 31, 2017 , HP executed share repurchases of 16 million shares and 55 million shares, respectively. Share repurchases executed during the three months ended July 31, 2017 included 0.4 million shares settled in August 2017. During the three and nine months ended July 31, 2017 , HP settled total shares for $0.3 billion and $0.9 billion , respectively. During the three and nine months ended July 31, 2016 , HP executed share repurchases of 4 million shares and 100 million shares and settled total shares for $0.1 billion and for $1.2 billion , respectively. The shares repurchased during the nine months ended July 31, 2017 and 2016 were all open market repurchase transactions. As of July 31, 2017 , HP had approximately $3.0 billion remaining under the share repurchase authorizations approved by HP’s Board of Directors. Tax effects related to Other Comprehensive (Loss) Income Three months ended July 31 Nine months ended July 31 2017 2016 2017 2016 In millions Tax effects on change in unrealized gains on available-for-sale securities: Tax provision on gains arising during the period $ — $ — $ (1 ) $ — — — (1 ) — Tax effects on change in unrealized components of cash flow hedges: Tax benefit (provision) on (losses) gains arising during the period 63 (5 ) 70 46 Tax (benefit) provision on losses (gains) reclassified into earnings (2 ) (20 ) 9 3 61 (25 ) 79 49 Tax effects on change in unrealized components of defined benefit plans: Tax (provision) benefit on gains (losses) arising during the period — — (4 ) 2 Tax provision on amortization of actuarial loss and prior service benefit (5 ) (3 ) (16 ) (9 ) Tax benefit (provision) on settlements and other 1 — (8 ) (1 ) (4 ) (3 ) (28 ) (8 ) Tax benefit (provision) on other comprehensive (loss) income $ 57 $ (28 ) $ 50 $ 41 Changes and reclassifications related to Other Comprehensive (Loss) Income, net of taxes Three months ended July 31 Nine months ended July 31 2017 2016 2017 2016 In millions Other comprehensive (loss) income, net of taxes: Change in unrealized gains on available-for-sale securities: Gains arising during the period $ 1 $ 1 $ 4 $ 2 1 1 4 2 Change in unrealized components of cash flow hedges: (Losses) gains arising during the period (456 ) 170 (688 ) 181 Gains (losses) reclassified into earnings (1) 36 139 (40 ) 66 (420 ) 309 (728 ) 247 Change in unrealized components of defined benefit plans: Gains (losses) arising during the period — — 9 (2 ) Amortization of actuarial loss and prior service benefit (2) 14 9 40 27 Settlements and other 1 — (5 ) — 15 9 44 25 Other comprehensive (loss) income, net of taxes $ (404 ) $ 319 $ (680 ) $ 274 (1) Reclassification of pre-tax gains on cash flow hedges into the Consolidated Condensed Statements of Earnings was as follows: Three months ended July 31 Nine months ended July 31 2017 2016 2017 2016 In millions Net revenue $ 26 $ 140 $ (89 ) $ (26 ) Cost of revenue 13 18 32 90 Operating expenses (1 ) (1 ) (1 ) (1 ) Interest and other, net — 2 9 — Total $ 38 $ 159 $ (49 ) $ 63 (2) These components are included in the computation of net pension and post-retirement benefit (credit) charges in Note 4, “Retirement and Post-Retirement Benefit Plans”. The components of accumulated other comprehensive loss, net of taxes and changes were as follows: Nine months ended July 31, 2017 Net unrealized Net unrealized Unrealized Accumulated In millions Balance at beginning of period $ 9 $ 186 $ (1,633 ) $ (1,438 ) Other comprehensive income (loss) before reclassifications 4 (688 ) 4 (680 ) Reclassifications of (income) loss into earnings — (40 ) 40 — Balance at end of period $ 13 $ (542 ) $ (1,589 ) $ (2,118 ) |
Net Earnings Per Share
Net Earnings Per Share | 9 Months Ended |
Jul. 31, 2017 | |
Earnings Per Share [Abstract] | |
Net Earnings Per Share | Net Earnings Per Share HP calculates basic net EPS using net earnings and the weighted-average number of shares outstanding during the reporting period. Diluted net EPS includes any dilutive effect of restricted stock awards, stock options, performance-based awards and shares purchased under the employee stock purchase plan. A reconciliation of the number of shares used for basic and diluted net EPS calculations was as follows: Three months ended July 31 Nine months ended July 31 2017 2016 2017 2016 In millions, except per share amounts Numerator: Net earnings from continuing operations $ 696 $ 843 $ 1,866 $ 2,153 Net loss from discontinued operations — (60 ) — (149 ) Net earnings $ 696 $ 783 $ 1,866 $ 2,004 Denominator: Weighted-average shares used to compute basic net EPS 1,681 1,711 1,694 1,735 Dilutive effect of employee stock plans 14 14 11 12 Weighted-average shares used to compute diluted net EPS 1,695 1,725 1,705 1,747 Basic net earnings (loss) per share: Continuing operations $ 0.41 $ 0.49 $ 1.10 $ 1.24 Discontinued operations — (0.03 ) — (0.08 ) Basic net earnings per share $ 0.41 $ 0.46 $ 1.10 $ 1.16 Diluted net earnings (loss) per share: Continuing operations $ 0.41 $ 0.49 $ 1.09 $ 1.23 Discontinued operations — (0.04 ) — (0.08 ) Diluted net earnings per share $ 0.41 $ 0.45 $ 1.09 $ 1.15 Anti-dilutive weighted average stock-based compensation awards (1) 1 13 3 26 (1) HP excludes stock options and restricted stock units where the assumed proceeds exceed the average market price from the calculation of diluted net EPS, because their effect would be anti-dilutive. The assumed proceeds of a stock option include the sum of its exercise price and average unrecognized compensation cost. The assumed proceeds of a restricted stock unit represents average unrecognized compensation. |
Litigation and Contingencies
Litigation and Contingencies | 9 Months Ended |
Jul. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Litigation and Contingencies | Litigation and Contingencies HP is involved in lawsuits, claims, investigations and proceedings, including those identified below, consisting of intellectual property, commercial, securities, employment, employee benefits, regulatory and environmental matters that arise in the ordinary course of business. These litigations or proceedings may be against HP and/or current and former HP executive officers or current and former members of HP’s Board of Directors. HP accrues a liability when management believes that it is both probable that a liability has been incurred and the amount of loss can be reasonably estimated. HP believes it has recorded adequate provisions for any such matters and, as of July 31, 2017, it was not reasonably possible that a material loss had been incurred in excess of the amounts recognized in HP’s financial statements. HP reviews these matters at least quarterly and adjusts its accruals to reflect the impact of negotiations, settlements, rulings, advice of legal counsel, and other information and events pertaining to a particular case. Pursuant to the separation and distribution agreement, HP shares responsibility with Hewlett Packard Enterprise for certain matters, as indicated below, and Hewlett Packard Enterprise has agreed to indemnify HP in whole or in part with respect to certain matters. Based on its experience, HP believes that any damage amounts claimed in the specific matters discussed below are not a meaningful indicator of HP’s potential liability. Litigation is inherently unpredictable. However, HP believes it has valid defenses with respect to legal matters pending against it. Nevertheless, cash flows or results of operations could be materially affected in any particular period by the resolution of one or more of these contingencies. Litigation, Proceedings and Investigations Copyright Levies . Proceedings are ongoing or have been concluded involving HP in certain European countries, including litigation in Belgium and other countries, seeking to impose or modify levies upon equipment (such as multifunction devices (“MFDs”) and PCs), alleging that these devices enable the production of private copies of copyrighted materials. The levies are generally based upon the number of products sold and the per-product amounts of the levies, which vary. Some European countries that do not yet have levies on digital devices are expected to implement similar legislation to enable them to extend existing levy schemes, while other European countries have phased out levies or are expected to limit the scope of levy schemes and applicability in the digital hardware environment, particularly with respect to sales to business users. HP, other companies and various industry associations have opposed the extension of levies to the digital environment and have advocated alternative models of compensation to rights holders. Reprobel, a cooperative society with the authority to collect and distribute the remuneration for reprography to Belgian copyright holders, requested by extrajudicial means that HP amend certain copyright levy declarations submitted for inkjet MFDs sold in Belgium from January 2005 to December 2009 to enable it to collect copyright levies calculated based on the generally higher copying speed when the MFDs are operated in draft print mode rather than when operated in normal print mode. In March 2010, HP filed a lawsuit against Reprobel in the French-speaking chambers of the Court of First Instance of Brussels seeking a declaratory judgment that no copyright levies are payable on sales of MFDs in Belgium or, alternatively, that copyright levies payable on such MFDs must be assessed based on the copying speed when operated in the normal print mode set by default in the device. On November 16, 2012, the court issued a decision holding that Belgium law is not in conformity with European Union (“EU”) law in a number of respects and ordered that, by November 2013, Reprobel substantiate that the amounts claimed by Reprobel are commensurate with the harm resulting from legitimate copying under the reprographic exception. HP subsequently appealed that court decision to the Courts of Appeal in Brussels seeking to confirm that the Belgian law is not in conformity with EU law and that, if Belgian law is interpreted in a manner consistent with EU law, no payments by HP are required or, alternatively, the payments already made by HP are sufficient to comply with its obligations under Belgian law. On October 23, 2013, the Court of Appeal in Brussels stayed the proceedings and referred several questions to the Court of Justice of the European Union (the “CJEU”) relating to whether the Belgian reprographic copyright levies system is in conformity with EU law. The case was heard by the CJEU on January 29, 2015 and on November 12, 2015, the CJEU published its judgment providing that a national legislation such as the Belgian one at issue in the main proceedings is incompatible with EU law on multiple legal points, as argued by HP. The Court of Appeal issued an appealable decision on May 12, 2017 providing that Belgian reprographic copyright levies are due notwithstanding the lack of conformity of the system with EU law in certain aspects. Applicable levies are to be calculated based on the objective speed of each MFD as established by an expert appointed by the Court of Appeal. Based on industry opposition to the extension of levies to digital products, HP’s assessments of the merits of various proceedings and HP’s estimates of the number of units impacted and the amounts of the levies, HP has accrued amounts that it believes are adequate to address the ongoing disputes. Hewlett-Packard Company v. Oracle Corporation . On June 15, 2011, HP filed suit against Oracle Corporation (“Oracle”) in California Superior Court in Santa Clara County in connection with Oracle’s March 2011 announcement that it was discontinuing software support for HP’s Itanium-based line of mission critical servers. HP asserted, among other things, that Oracle’s actions breached the contract that was signed by the parties as part of the settlement of the litigation relating to Oracle’s hiring of Mark Hurd. The matter eventually progressed to trial, which was bifurcated into two phases. HP prevailed in the first phase of the trial, in which the court ruled that the contract at issue required Oracle to continue to offer its software products on HP’s Itanium-based servers for as long as HP decided to sell such servers. The second phase of the trial was then postponed by Oracle’s appeal of the trial court’s denial of Oracle’s “anti-SLAPP” motion, in which Oracle argued that HP’s damages claim infringed on Oracle’s First Amendment rights. On August 27, 2015, the California Court of Appeals rejected Oracle’s appeal. The matter was remanded to the trial court for the second phase of the trial, which began on May 23, 2016 and was submitted to the jury on June 29, 2016. On June 30, 2016, the jury returned a verdict in favor of HP, awarding HP approximately $3.0 billion in damages, which included approximately $1.7 billion for past lost profits and $1.3 billion for future lost profits. On October 20, 2016, the court entered judgment for HP for this amount with interest accruing until the judgment is paid. Oracle’s motion for a new trial was denied on December 19, 2016, and Oracle filed its notice of appeal from the trial court’s judgment on January 17, 2017. On February 2, 2017, HP filed a notice of cross-appeal challenging the trial court’s denial of prejudgment interest. The schedule for appellate briefing and argument has not yet been established. HP expects that the appeals process could take several years to complete. Litigation is unpredictable, and there can be no assurance that HP will recover damages, or that any award of damages will be for the amount awarded by the jury’s verdict. The amount ultimately awarded, if any, would be recorded in the period received. No adjustment has been recorded in the financial statements in relation to this potential award. Pursuant to the terms of the separation and distribution agreement, HP and Hewlett Packard Enterprise will share equally in any recovery from Oracle once Hewlett Packard Enterprise has been reimbursed for all costs incurred in the prosecution of the action prior to the Separation. Forsyth, et al. vs. HP Inc. and Hewlett Packard Enterprise . This is a purported class and collective action filed on August 18, 2016 in the United States District Court, Northern District of California, against HP and Hewlett Packard Enterprise alleging the defendants violated the Federal Age Discrimination in Employment Act (“ADEA”), the California Fair Employment and Housing Act, California public policy and the California Business and Professions Code by terminating older workers and replacing them with younger workers. Plaintiffs seek to certify a nationwide collective class action under the ADEA comprised of all U.S. residents employed by defendants who had their employment terminated pursuant to a workforce reduction (“WFR”) plan on or after May 23, 2012 and who were 40 years of age or older. Plaintiffs also seek to represent a Rule 23 class under California law comprised of all persons 40 years or older employed by defendants in the state of California and terminated pursuant to a WFR plan on or after May 23, 2012. Following a partial motion to dismiss, a motion to strike and a motion to compel arbitration that the defendants filed in November 2016, the plaintiffs amended their complaint. New plaintiffs were added, but the plaintiffs agreed that the class period for the nationwide collective action should be shortened and now starts on December 9, 2014. On January 30, 2017, the defendants filed another partial motion to dismiss and motions to compel arbitration as to several of the plaintiffs. On March 20, 2017, the defendants filed additional motions to compel arbitration as to a number of the opt-in plaintiffs. India Directorate of Revenue Intelligence Proceedings . On April 30 and May 10, 2010, the India Directorate of Revenue Intelligence (the “DRI”) issued show cause notices to Hewlett-Packard India Sales Private Limited (“HP India”), a subsidiary of HP, seven HP India employees and one former HP India employee alleging that HP India underpaid customs duties while importing products and spare parts into India and seeking to recover an aggregate of approximately $370 million , plus penalties. Prior to the issuance of the show cause notices, HP India deposited approximately $16 million with the DRI and agreed to post a provisional bond in exchange for the DRI’s agreement to not seize HP India products and spare parts and to not interrupt the transaction of business by HP India. On April 11, 2012, the Bangalore Commissioner of Customs issued an order on the products-related show cause notice affirming certain duties and penalties against HP India and the named individuals of approximately $386 million , of which HP India had already deposited $9 million . On December 11, 2012, HP India voluntarily deposited an additional $10 million in connection with the products-related show cause notice. The differential duty demand is subject to interest. On April 20, 2012, the Commissioner issued an order on the parts-related show cause notice affirming certain duties and penalties against HP India and certain of the named individuals of approximately $17 million , of which HP India had already deposited $7 million . After the order, HP India deposited an additional $3 million in connection with the parts-related show cause notice so as to avoid certain penalties. HP India filed appeals of the Commissioner’s orders before the Customs Tribunal along with applications for waiver of the pre-deposit of remaining demand amounts as a condition for hearing the appeals. The Customs Department has also filed cross-appeals before the Customs Tribunal. On January 24, 2013, the Customs Tribunal ordered HP India to deposit an additional $24 million against the products order, which HP India deposited in March 2013. The Customs Tribunal did not order any additional deposit to be made under the parts order. In December 2013, HP India filed applications before the Customs Tribunal seeking early hearing of the appeals as well as an extension of the stay of deposit as to HP India and the individuals already granted until final disposition of the appeals. On February 7, 2014, the application for extension of the stay of deposit was granted by the Customs Tribunal until disposal of the appeals. On October 27, 2014, the Customs Tribunal commenced hearings on the cross-appeals of the Commissioner’s orders. The Customs Tribunal rejected HP India’s request to remand the matter to the Commissioner on procedural grounds. The hearings scheduled to reconvene on April 6, 2015 and again on November 3, 2015 and April 11, 2016 were canceled at the request of the Customs Tribunal. Pursuant to the separation and distribution agreement, Hewlett Packard Enterprise has agreed to indemnify HP in part, based on the extent to which any liability arises from the products and spare parts of Hewlett Packard Enterprise’s businesses. Russia GPO Anti-Corruption Investigation . The German Public Prosecutor’s Office (“German PPO”) has been conducting an investigation into allegations that current and former employees of HP engaged in bribery, embezzlement and tax evasion relating to a transaction between Hewlett-Packard ISE GmbH in Germany, a former subsidiary of HP, and the General Prosecutor’s Office of the Russian Federation. The approximately $35 million transaction, which was referred to as the Russia GPO deal, spanned the years 2001 to 2006 and was for the delivery and installation of an IT network. The German PPO issued an indictment of four individuals, including one current and two former HP employees, on charges including bribery, breach of trust and tax evasion. The German PPO also requested that HP be made an associated party to the case, and, if that request is granted, HP would participate in any portion of the court proceedings that could ultimately bear on the question of whether HP should be subject to potential disgorgement of profits based on the conduct of the indicted current and former employees. The Regional Court of Leipzig will determine whether the matter should be admitted to trial. Class Actions re Authentication of Supplies Five purported consumer class actions were filed against HP, arising out of the supplies authentication protocol in certain OfficeJet printers. This authentication protocol rejects some third-party ink cartridges that use non-HP security chips. Two of the cases were dismissed, and the remaining cases have been consolidated in the United States District Court for the Northern District of California, captioned In re HP Printer Firmware Update Litigation . The remaining plaintiffs’ operative consolidated complaint was filed on March 22, 2017, alleging eleven causes of action: (1) unfair and unlawful business practices in violation of the Unfair Competition Law, Cal. Bus. & Prof. Code § 17200, et seq. ; (2) fraudulent business practices in violation of the Unfair Competition Law, Cal. Bus. & Prof. Code § 17200, et seq. ; (3) violations of the False Advertising Law, Cal. Bus. & Prof. Code § 17500, et seq. ; (4) violations of the Consumer Legal Remedies Act, Cal. Civ. Code § 1750, et seq. ; (5) violations of the Texas Deceptive Trade Practices ‒ Consumer Protection Act, Tex. Bus. & Com. Code Ann. § 17.01, et seq. ; (6) violations of the Washington Consumer Protection Act, Wash. Rev. Code Ann. § 19.86.010, et seq. ; (7) violations of the New Jersey Consumer Fraud Act, New Jersey Statutes Ann. 56:8-1, et seq. ; (8) violations of the Computer Fraud and Abuse Act, 18 U.S.C. § 1030, et seq. ; (9) violations of the California Computer Data Access and Fraud Act, Cal. Penal Code § 502; (10) Trespass to Chattels; and (11) Tortious Interference with Contractual Relations and/or Prospective Economic Advantage. The plaintiffs seek to certify a primary class of all persons in the United States who purchased or owned the OfficeJet printers in question, and they alternatively seek to certify subclasses of all such printer purchasers or owners in California, Texas, Washington, and/or New Jersey. On April 21, 2017, HP filed a motion to dismiss the consolidated complaint. The court held a hearing on July 14, 2017. HP’s motion to dismiss remains pending. Autonomy-Related Legal Matters Investigations . As a result of the findings of an ongoing investigation, HP has provided information to the United Kingdom (“U.K.”) Serious Fraud Office, the U.S. Department of Justice (“DOJ”) and the SEC related to the accounting improprieties, disclosure failures and misrepresentations at Autonomy that occurred prior to and in connection with HP’s acquisition of Autonomy. On January 19, 2015, the U.K. Serious Fraud Office notified HP that it was closing its investigation and had decided to cede jurisdiction of the investigation to the U.S. authorities. On November 14, 2016, the DOJ announced that a federal grand jury indicted Sushovan Hussain, the former CFO of Autonomy, on charges of conspiracy to commit wire fraud and multiple counts of wire fraud. The indictment alleges that Hussain engaged in a scheme to defraud purchasers and sellers of securities of Autonomy and HP about the true performance of Autonomy’s business, its financial condition, and its prospects for growth. Trial in this matter is scheduled to begin on February 26, 2018. On November 15, 2016, the SEC announced that Stouffer Egan, the former CEO of Autonomy’s U.S.-based operations, settled charges relating to his participation in an accounting scheme to meet internal sales targets and analyst revenue expectations. HP is continuing to cooperate with the ongoing enforcement actions. Litigation . As described below, HP is involved in various stockholder litigation relating to, among other things, its October 2011 acquisition of Autonomy and its November 20, 2012 announcement that it recorded a non-cash charge for the impairment of goodwill and intangible assets within Hewlett Packard Enterprise’s software segment of approximately $8.8 billion in the fourth quarter of its 2012 fiscal year and HP’s statements that, based on HP’s findings from an ongoing investigation, the majority of this impairment charge related to accounting improprieties, misrepresentations to the market and disclosure failures at Autonomy that occurred prior to and in connection with HP’s acquisition of Autonomy and the impact of those improprieties, failures and misrepresentations on the expected future financial performance of the Autonomy business over the long-term. This stockholder litigation was commenced against, among others, certain current and former HP executive officers, certain current and former members of HP’s Board of Directors and certain advisors to HP. The plaintiffs in these litigation matters are seeking to recover certain compensation paid by HP to the defendants and/or other damages. Pursuant to the separation and distribution agreement, HP and Hewlett Packard Enterprise share equally the cost and any damages arising from these litigation matters. These matters include the following: • In re Hewlett-Packard Shareholder Derivative Litigation (the “Federal Court Derivative Action”) consists of seven consolidated lawsuits filed beginning on November 26, 2012 in the United States District Court for the Northern District of California alleging, among other things, that the defendants violated Sections 10 (b) and 20 (a) of the Exchange Act by concealing material information and making false statements related to HP’s acquisition of Autonomy and the financial performance of HP’s enterprise services business. The lawsuits also allege that the defendants breached their fiduciary duties, wasted corporate assets and were unjustly enriched in connection with HP’s acquisition of Autonomy and by causing HP to repurchase its own stock at allegedly inflated prices between August 2011 and October 2012. One lawsuit further alleges that certain individual defendants engaged in or assisted insider trading and thereby breached their fiduciary duties, were unjustly enriched and violated Sections 25402 and 25403 of the California Corporations Code. On May 3, 2013, the lead plaintiff filed a consolidated complaint alleging, among other things, that the defendants concealed material information and made false statements related to HP’s acquisition of Autonomy and Autonomy’s Intelligent Data Operating Layer technology and thereby violated Sections 10(b) and 20(a) of the Exchange Act, breached their fiduciary duties, engaged in “abuse of control” over HP, corporate waste and were unjustly enriched. The litigation was stayed until June 2014. The lead plaintiff filed a stipulation of proposed settlement on June 30, 2014. The court declined to grant preliminary approval to this settlement, and, on December 19, 2014, also declined to grant preliminary approval to a revised version of the settlement. On January 22, 2015, the lead plaintiff moved for preliminary approval of a further revised version of the settlement. On March 13, 2015, the court issued an order granting preliminary approval to the settlement. On July 24, 2015, the court held a hearing to entertain any remaining objections to the settlement and decide whether to grant final approval of the settlement. On July 30, 2015, the court granted final approval to the settlement and denied all remaining objections to the settlement. Three objectors to the settlement appealed the court’s final approval order to United States Court of Appeals for the Ninth Circuit. Plaintiffs-appellants filed their opening briefs on December 30, 2015. HP’s response brief was filed on February 29, 2016, and the reply briefs were filed on May 12, 2016. Oral argument occurred on May 15, 2017. • Autonomy Corporation Limited v. Michael Lynch and Sushovan Hussain . On April 17, 2015, four former-HP subsidiaries that became subsidiaries of Hewlett Packard Enterprise at the time of the Separation (Autonomy Corporation Limited, Hewlett Packard Vision BV, Autonomy Systems, Limited, and Autonomy, Inc.) initiated civil proceedings in the U.K. High Court of Justice against two members of Autonomy’s former management, Michael Lynch and Sushovan Hussain. The Particulars of Claim seek damages in excess of $5 billion from Messrs. Lynch and Hussain for breach of their fiduciary duties by causing Autonomy group companies to engage in improper transactions and accounting practices. On October 1, 2015, Messrs. Lynch and Hussain filed their defenses. Mr. Lynch also filed a counterclaim against Autonomy Corporation Limited seeking $160 million in damages, among other things, for alleged misstatements regarding Lynch. The Hewlett Packard Enterprise subsidiary claimants filed their replies to the defenses and the asserted counter-claim on March 11, 2016. The parties are actively engaged in the disclosure process. A six -month trial is scheduled to begin on January 28, 2019. • In re HP ERISA Litigation consists of three consolidated putative class actions filed beginning on December 6, 2012 in the United States District Court for the Northern District of California alleging, among other things, that from August 18, 2011 to November 22, 2012, the defendants breached their fiduciary obligations to HP’s 401 (k) Plan and its participants and thereby violated Sections 404 (a) (1) and 405 (a) of the Employee Retirement Income Security Act of 1974, as amended, by concealing negative information regarding the financial performance of Autonomy and HP’s enterprise services business and by failing to restrict participants from investing in HP stock. On August 16, 2013, HP filed a motion to dismiss the lawsuit. On March 31, 2014, the court granted HP’s motion to dismiss this action with leave to amend. On July 16, 2014, the plaintiffs filed a second amended complaint containing substantially similar allegations and seeking substantially similar relief as the first amended complaint. On June 15, 2015, the court granted HP’s motion to dismiss the second amended complaint in its entirety and denied plaintiffs leave to file another amended complaint. On July 2, 2015, plaintiffs appealed the court’s order to the United States Court of Appeals for the Ninth Circuit. Oral argument occurred on May 15, 2017. Environmental HP’s operations and products are subject to various federal, state, local and foreign laws and regulations concerning environmental protection, including laws addressing the discharge of pollutants into the air and water, the management and disposal of hazardous substances and wastes, the cleanup of contaminated sites, the content of HP’s products and the recycling, treatment and disposal of those products. In particular, HP faces increasing complexity in its product design and procurement operations as it adjusts to new and future requirements relating to the chemical and materials composition of its products, their safe use, and the energy consumption associated with those products, including requirements relating to climate change. HP is also subject to legislation in an increasing number of jurisdictions that makes producers of electrical goods, including computers and printers, financially responsible for specified collection, recycling, treatment and disposal of past and future covered products (sometimes referred to as “product take-back legislation”). HP could incur substantial costs, its products could be restricted from entering certain jurisdictions, and it could face other sanctions, if it were to violate or become liable under environmental laws or if its products become noncompliant with environmental laws. HP’s potential exposure includes fines and civil or criminal sanctions, third-party property damage or personal injury claims and clean-up costs. The amount and timing of costs to comply with environmental laws are difficult to predict. HP is party to, or otherwise involved in, proceedings brought by U.S. or state environmental agencies under the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”), known as “Superfund,” or state laws similar to CERCLA, and may become a party to, or otherwise involved in, proceedings brought by private parties for contribution towards clean-up costs. HP is also conducting environmental investigations or remediations at several current or former operating sites pursuant to administrative orders or consent agreements with state environmental agencies. The separation and distribution agreement includes provisions that provide for the allocation of environmental liabilities between HP and Hewlett Packard Enterprise including certain remediation obligations; responsibilities arising from the chemical and materials composition of their respective products, their safe use and their energy consumption; obligations under product take back legislation that addresses the collection, recycling, treatment and disposal of products; and other environmental matters. HP will generally be responsible for environmental liabilities related to the properties and other assets, including products, allocated to HP under the separation and distribution agreement and other ancillary agreements. Under these agreements, HP will indemnify Hewlett Packard Enterprise for liabilities for specified ongoing remediation projects, subject to certain limitations, and Hewlett Packard Enterprise has a payment obligation for a specified portion of the cost of those remediation projects. In addition, HP will share with Hewlett Packard Enterprise other environmental liabilities as set forth in the separation and distribution agreement. HP is indemnified in whole or in part by Hewlett Packard Enterprise for liabilities arising from the assets assigned to Hewlett Packard Enterprise and for certain environmental matters as detailed in the separation and distribution agreement. |
Guarantees, Indemnifications, a
Guarantees, Indemnifications, and Warranties | 9 Months Ended |
Jul. 31, 2017 | |
Guarantees [Abstract] | |
Guarantees, Indemnifications and Warranties | Guarantees, Indemnifications and Warranties Guarantees In the ordinary course of business, HP may issue performance guarantees to certain of its clients, customers and other parties pursuant to which HP has guaranteed the performance obligations of third parties. Some of those guarantees may be backed by standby letters of credit or surety bonds. In general, HP would be obligated to perform over the term of the guarantee in the event a specified triggering event occurs as defined by the guarantee. HP believes the likelihood of having to perform under a material guarantee is remote. Indemnifications In the ordinary course of business, HP enters into contractual arrangements under which HP may agree to indemnify a third party to such arrangement from any losses incurred relating to the services they perform on behalf of HP or for losses arising from certain events as defined within the particular contract, which may include, for example, litigation or claims relating to past performance. HP also provides indemnifications to certain vendors and customers against claims of IP infringement made by third parties arising from the vendors’ and customers’ use of HP’s software products and services and certain other matters. Some indemnifications may not be subject to maximum loss clauses. Historically, payments made related to these indemnifications have been immaterial. Cross-Indemnifications with Hewlett Packard Enterprise Under the separation and distribution agreement, HP agreed to indemnify Hewlett Packard Enterprise, each of its subsidiaries and each of their respective directors, officers and employees from and against all liabilities relating to, arising out of or resulting from, among other matters, the liabilities allocated to HP as part of the Separation. Hewlett Packard Enterprise similarly agreed to indemnify HP, each of its subsidiaries and each of their respective directors, officers and employees from and against all liabilities relating to, arising out of or resulting from, among other matters, the liabilities allocated to Hewlett Packard Enterprise as part of the Separation. HP expects Hewlett Packard Enterprise to fully perform under the terms of the separation and distribution agreement. For information on the cross-indemnifications related to the tax matter agreements and litigations effective upon the Separation on November 1, 2015, see Note 6, “Taxes on Earnings”, and Note 13, “Litigation and Contingencies”, respectively. Warranty HP accrues the estimated cost of product warranties at the time it recognizes revenue. HP engages in extensive product quality programs and processes, including actively monitoring and evaluating the quality of its component suppliers; however, contractual warranty terms, repair costs, product call rates, average cost per call, current period product shipments and ongoing product failure rates, as well as specific product class failures outside of HP’s baseline experience, affect the estimated warranty obligation. HP’s aggregate product warranty liabilities and changes were as follows: Nine months ended July 31, 2017 In millions Balance at beginning of period $ 980 Accruals for warranties issued 678 Adjustments related to pre-existing warranties (including changes in estimates) (16 ) Settlements made (in cash or in kind) (749 ) Balance at end of period $ 893 |
Discontinued Operations
Discontinued Operations | 9 Months Ended |
Jul. 31, 2017 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Discontinued Operations | Discontinued Operations On November 1, 2015, HP completed the Separation of Hewlett Packard Enterprise. After the Separation, HP does not beneficially own any shares of Hewlett Packard Enterprise common stock. The following table presents the financial results of HP’s discontinued operations: Three months ended July 31 Nine months ended July 31 2017 2016 2017 2016 In millions Expenses (1) $ — $ 30 $ — $ 158 Interest and other, net (2) (9 ) (174 ) (38 ) (157 ) Earnings (Loss) from discontinued operations before taxes 9 144 38 (1 ) (Provision for) Benefit from taxes (2) (9 ) (204 ) (38 ) (148 ) Loss from discontinued operations, net of taxes $ — $ (60 ) $ — $ (149 ) (1) Expenses for the three and nine months ended July 31, 2016 were primarily related to separation costs. (2) In connection with the TMA, Interest and other, net for the three and nine months ended July 31, 2017 includes $9 million and $38 million , respectively, of net tax indemnification amounts and Provision for taxes for the three and nine months ended July 31, 2017 includes $9 million and $38 million , respectively, of the tax impact relating to the above amounts. For more information on tax indemnifications and the TMA, see Note 6, “Taxes on Earnings”. Divestitures During fiscal 2016, HP entered into agreements to divest certain technology assets, including licensing and distribution rights, for certain software offerings to Open Text Corporation, an enterprise information management company for $475 million . The technology assets sold were previously reported within the Commercial Hardware business unit within the Printing segment. The gain recognized from the divestiture was $336 million and $383 million for the three and nine months ended July 31, 2016, respectively. The gains associated with these divestitures were included in Selling, general and administrative expenses in the Consolidated Condensed Statements of Earnings. |
Divestitures
Divestitures | 9 Months Ended |
Jul. 31, 2017 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Divestitures | Discontinued Operations On November 1, 2015, HP completed the Separation of Hewlett Packard Enterprise. After the Separation, HP does not beneficially own any shares of Hewlett Packard Enterprise common stock. The following table presents the financial results of HP’s discontinued operations: Three months ended July 31 Nine months ended July 31 2017 2016 2017 2016 In millions Expenses (1) $ — $ 30 $ — $ 158 Interest and other, net (2) (9 ) (174 ) (38 ) (157 ) Earnings (Loss) from discontinued operations before taxes 9 144 38 (1 ) (Provision for) Benefit from taxes (2) (9 ) (204 ) (38 ) (148 ) Loss from discontinued operations, net of taxes $ — $ (60 ) $ — $ (149 ) (1) Expenses for the three and nine months ended July 31, 2016 were primarily related to separation costs. (2) In connection with the TMA, Interest and other, net for the three and nine months ended July 31, 2017 includes $9 million and $38 million , respectively, of net tax indemnification amounts and Provision for taxes for the three and nine months ended July 31, 2017 includes $9 million and $38 million , respectively, of the tax impact relating to the above amounts. For more information on tax indemnifications and the TMA, see Note 6, “Taxes on Earnings”. Divestitures During fiscal 2016, HP entered into agreements to divest certain technology assets, including licensing and distribution rights, for certain software offerings to Open Text Corporation, an enterprise information management company for $475 million . The technology assets sold were previously reported within the Commercial Hardware business unit within the Printing segment. The gain recognized from the divestiture was $336 million and $383 million for the three and nine months ended July 31, 2016, respectively. The gains associated with these divestitures were included in Selling, general and administrative expenses in the Consolidated Condensed Statements of Earnings. |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 9 Months Ended |
Jul. 31, 2017 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying Consolidated Condensed Financial Statements of HP and its wholly-owned subsidiaries are prepared in conformity with United States (“U.S.”) generally accepted accounting principles (“GAAP”). The interim financial information is unaudited, but reflects all normal adjustments that are necessary to provide a fair statement of results for the interim periods presented. This interim information should be read in conjunction with the Consolidated Financial Statements for the fiscal year ended October 31, 2016 in the Annual Report on Form 10-K filed on December 15, 2016 . The Consolidated Condensed Balance Sheet for October 31, 2016 was derived from audited financial statements. |
Principles of Consolidation | Principles of Consolidation The Consolidated Condensed Financial Statements include the accounts of HP and its subsidiaries and affiliates in which HP has a controlling financial interest or is the primary beneficiary. All intercompany balances and transactions have been eliminated. |
Reclassifications | Reclassifications HP has made changes to the alignment of its business units in order to align its business unit financial reporting more closely with its current business structure. HP made these changes to its business unit information in prior reporting periods on an as-is basis. The reporting changes had no impact to previously reported segment net revenue, consolidated net revenue, earnings from continuing operations, net earnings or net earnings per share (“EPS”). See Note 2, “Segment Information”, for a further discussion of HP’s business unit realignments. HP has reclassified certain prior-year amounts to conform to the current-year presentation as a result of the adoption of Accounting Standards Update (“ASU”) 2015-03, “Simplifying the Presentation of Debt Issuance Costs” and ASU 2016-09, “Improvements to Employee Share-Based Payment Accounting”. |
Use of Estimates | Use of Estimates The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in HP’s Consolidated Condensed Financial Statements and accompanying notes. Actual results could differ materially from those estimates. |
Recently Adopted Accounting Pronouncements and Recently Issued Accounting Pronouncements Not Yet Adopted | Recently Adopted Accounting Pronouncements In March 2016, the Financial Accounting Standard Board (“FASB”) issued guidance, which amends the existing accounting standards for share-based payments, including the accounting for income taxes and forfeitures, as well as the classifications on the statements of cash flows. HP early adopted the amendments in the first quarter of fiscal year 2017. Beginning November 1, 2016, stock-based compensation excess tax benefits or tax deficiencies are reflected in the Consolidated Condensed Statements of Earnings as a component of the provision for taxes, whereas they previously were recognized as additional paid in capital in the stockholders’ deficit in the Consolidated Condensed Balance Sheets. HP has elected to continue to estimate forfeitures expected to occur to determine the stock-based compensation expense. Additionally, the Consolidated Condensed Statements of Cash Flows now present excess tax benefits as an operating activity rather than as a financing activity, while the payment of withholding taxes on the settlement of stock-based compensation awards is presented as a financing activity rather than as an operating activity, with prior periods adjusted accordingly. The implementation of this guidance did not have a material impact on the Consolidated Condensed Statements of Cash Flows for the nine months ended July 31, 2016 . See Note 6, “Taxes on Earnings”, for additional impact on the Consolidated Condensed Financial Statements. In May 2015, the FASB issued guidance, which amends the existing disclosures for investments measured at net asset value (“NAV”) per share (or its equivalent), as a practical expedient for fair value. This amendment removes the requirement to categorize these investments within the fair value hierarchy. The amendment also removes the requirement to make certain disclosures for all investments that are eligible to be measured at fair value using the NAV as a practical expedient. HP adopted the guidance in the first quarter of fiscal year 2017. Other than the change in presentation of certain pension-related assets that use NAV as a practical expedient, which requires retrospective application, the adoption of this new guidance did not have an impact on the Consolidated Condensed Financial Statements. In April 2015, the FASB amended the existing accounting standards for intangible assets. The amendments provide explicit guidance to customers in determining the accounting for fees paid in a cloud computing arrangement. HP adopted the guidance prospectively in the first quarter of fiscal year 2017. The implementation of this guidance did not have an impact on the Consolidated Condensed Financial Statements. In April 2015, the FASB amended the existing accounting standards for the presentation of debt issuance costs. The amendments require that debt issuance costs related to a recognized debt liability be presented on the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by these amendments. HP adopted the guidance in the first quarter of fiscal year 2017. The adoption resulted in the reclassification of unamortized debt issuance costs related to HP’s U.S. Dollar Global Notes from “Other non-current assets” to “Long-term debt” within the Consolidated Condensed Balance Sheets of $23 million as of October 31, 2016. Recently Issued Accounting Pronouncements Not Yet Adopted In January 2017, the FASB issued guidance which simplifies the accounting for goodwill impairment. The updated guidance eliminates Step 2 of the impairment test, which requires entities to calculate the implied fair value of goodwill to measure a goodwill impairment charge. Instead, entities will record an impairment charge based on the excess of a reporting unit’s carrying amount over its fair value, determined in Step 1. HP is required to adopt the guidance in the first quarter of fiscal year 2021 using a prospective approach. Earlier adoption is permitted. HP currently expects to early adopt this guidance in the fourth quarter of fiscal year 2017. HP expects that the implementation of this guidance will not have an effect on its Consolidated Condensed Financial Statements. In January 2017, the FASB amended the existing accounting standards for business combinations. The amendments clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. HP is required to adopt the guidance in the first quarter of fiscal year 2019. Earlier adoption is permitted. HP is currently evaluating the timing and the impact of this guidance on the Consolidated Condensed Financial Statements. In November 2016, the FASB issued guidance, which addresses the presentation of restricted cash in the statement of cash flows. The guidance requires entities to show the changes in the total of cash, cash equivalents, restricted cash, and restricted cash equivalents in the statement of cash flows. As a result, entities will no longer present transfers between cash and cash equivalents and restricted cash and restricted cash equivalents in the statement of cash flows. HP is required to adopt the guidance retrospectively in the first quarter of fiscal year 2019. Earlier adoption is permitted. HP is currently evaluating the timing and the impact of this guidance on the Consolidated Condensed Financial Statements. In October 2016, the FASB issued guidance, which amends the existing accounting for Intra-Entity Transfers of Assets Other Than Inventory. The guidance requires an entity to recognize the income tax consequences of intra-entity transfers, other than inventory, when the transfer occurs. It also requires modified retrospective transition with a cumulative catch-up adjustment to opening retained earnings in the period of adoption. Earlier adoption is permitted. HP is required to adopt the guidance in the first quarter of fiscal year 2019. HP is currently evaluating the timing and the impact of this guidance on the Consolidated Condensed Financial Statements. In August 2016, the FASB issued guidance, which amends the existing accounting standards for the classification of certain cash receipts and cash payments on the statement of cash flows. HP is required to adopt the guidance in the first quarter of fiscal year 2019. Earlier adoption is permitted. HP is currently evaluating the timing and the impact of this guidance on the Consolidated Condensed Financial Statements. In June 2016, the FASB issued guidance, which requires credit losses on financial assets measured at amortized cost basis to be presented at the net amount expected to be collected, not based on incurred losses. Further, credit losses on available-for-sale debt securities should be recorded through an allowance for credit losses limited to the amount by which fair value is below amortized cost. HP is required to adopt the guidance in the first quarter of fiscal year 2021. Earlier adoption is permitted. HP is currently evaluating the timing and the impact of this guidance on the Consolidated Condensed Financial Statements. In February 2016, the FASB issued guidance, which amends the existing accounting standards for leases. Consistent with current guidance, the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification. Under the new guidance, a lessee will be required to recognize assets and liabilities for all leases with lease terms of more than twelve months. HP is required to adopt the guidance in the first quarter of fiscal year 2020 using a modified retrospective approach. Earlier adoption is permitted. HP is currently evaluating the timing and the impact of this guidance on the Consolidated Condensed Financial Statements. In January 2016, the FASB issued guidance, which amends the existing accounting standards for the recognition and measurement of financial assets and financial liabilities. The updated guidance primarily addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. HP is required to adopt the guidance in the first quarter of fiscal year 2019. The amendments should be applied by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption, with other amendments related specifically to equity securities without readily determinable fair values applied prospectively. HP is currently evaluating the timing and the impact of this guidance on the Consolidated Condensed Financial Statements. In May 2014, the FASB amended the existing accounting standards for revenue recognition. The amendments (Topic 606) are based on the principle that revenue should be recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The amendments may be applied retrospectively to each prior period presented (“full retrospective method”) or retrospectively with the cumulative effect recognized as of the date of initial application (“modified retrospective method”). HP will adopt the new revenue standard in the first quarter of fiscal 2019 and intends to apply the modified retrospective method. HP is continuing to evaluate the impact of this guidance on the Consolidated Condensed Financial Statements and disclosures. |
Segment Information | The accounting policies HP uses to derive segment results are substantially the same as those used by HP in preparing these financial statements. HP derives the results of the business segments directly from its internal management reporting system. Segment net revenue includes revenues from sales to external customers and certain revenues related to Managed Print Services arrangements, which are eliminated for the purposes of reporting HP’s consolidated net revenue. HP does not allocate certain operating expenses, which it manages at the corporate level, to its segments. These unallocated amounts include certain corporate governance costs and market-related retirement credits, stock-based compensation expense, restructuring and other charges, acquisition-related charges, amortization of intangible assets, defined benefit plan settlement charges and net revenue eliminations, primarily related to Managed Print Services. |
Employer Contributions and Funding Policy | Employer Contributions and Funding Policy HP’s policy is to fund its pension plans so that it makes at least the minimum contribution required by local government, funding and taxing authorities. |
Stock-Based Compensation | HP uses the closing stock price on the grant date to estimate the fair value of service-based restricted stock units. HP estimates the fair value of restricted stock units subject to performance-adjusted vesting conditions using a combination of the closing stock price on the grant date and the Monte Carlo simulation model. HP utilizes the Black-Scholes-Merton option pricing formula to estimate the fair value of stock options subject to service-based vesting conditions. HP estimates the fair value of stock options subject to performance-contingent vesting conditions using a combination of the Monte Carlo simulation model and a lattice model, as these awards contain market conditions. |
Taxes on Earnings | HP continues to record its tax liabilities related to uncertain tax positions and certain liabilities for which it has joint and several liability with Hewlett Packard Enterprise. HP recognizes interest income from favorable settlements and interest expense and penalties accrued on unrecognized tax benefits in the provision for taxes in the Consolidated Condensed Statements of Earnings. |
Transfers and Servicing Trade Receivables Policy | HP has third-party arrangements, consisting of revolving short-term financing, which provide liquidity to certain partners in order to facilitate their working capital requirements. These financing arrangements, which in certain circumstances may contain partial recourse, result in a transfer of HP’s receivables and risk to the third party. As these transfers qualify as true sales under the applicable accounting guidance, the receivables are derecognized from the Consolidated Condensed Balance Sheets upon transfer, and HP receives a payment for the receivables from the third party within a mutually agreed upon time period. For arrangements involving an element of recourse, the recourse obligation is measured using market data from the similar transactions and reported as a current liability in the Consolidated Condensed Balance Sheets. |
Fair Value | Valuation Techniques Cash Equivalents and Investments: HP holds time deposits, money market funds, mutual funds, other debt securities primarily consisting of corporate and government notes and bonds, and common stock and equivalents. HP values cash equivalents and equity investments using quoted market prices, alternative pricing sources, including net asset value, or models utilizing market observable inputs. The fair value of debt investments was based on quoted market prices or model-driven valuations using inputs primarily derived from or corroborated by observable market data, and, in certain instances, valuation models that utilize assumptions which cannot be corroborated with observable market data. Derivative Instruments: From time to time, HP uses forward contracts, interest rate and total return swaps and option contracts to hedge certain foreign currency and interest rate exposures. HP uses industry standard valuation models to measure fair value. Where applicable, these models project future cash flows and discount the future amounts to present value using market-based observable inputs, including interest rate curves, HP and counterparty credit risk, foreign currency rates, and forward and spot prices for currencies and interest rates. See Note 9, “Financial Instruments” for a further discussion of HP’s use of derivative instruments. Other Fair Value Disclosures Short- and Long-Term Debt: HP estimates the fair value of its debt primarily using an expected present value technique, which is based on observable market inputs using interest rates currently available to companies of similar credit standing for similar terms and remaining maturities, and considering its own credit risk. The portion of HP’s debt that is hedged is reflected in the Consolidated Condensed Balance Sheets as an amount equal to the debt’s carrying amount and a fair value adjustment representing changes in the fair value of the hedged debt obligations arising from movements in benchmark interest rates. The fair value of HP’s short- and long-term debt was $8.1 billion as of July 31, 2017 , compared to its carrying amount of $7.8 billion at that date. The fair value of HP’s short- and long-term debt was $7.1 billion as of October 31, 2016, compared to its carrying value of $6.8 billion at that date. If measured at fair value in the Consolidated Condensed Balance Sheets, short- and long-term debt would be classified in Level 2 of the fair value hierarchy. Other Financial Instruments: For the balance of HP’s financial instruments, primarily accounts receivable, accounts payable and financial liabilities included in Other accrued liabilities on the Consolidated Condensed Balance Sheets, the carrying amounts approximate fair value due to their short maturities. If measured at fair value in the Consolidated Condensed Balance Sheets, other financial instruments would be classified in Level 2 or Level 3 of the fair value hierarchy. Non-Marketable Equity Investments and Non-Financial Assets: HP’s non-marketable equity investments and non-financial assets, such as goodwill, intangible assets and property, plant and equipment, are recorded at fair value in the period of acquisition and a subsequent impairment charge is recognized. If measured at fair value in the Consolidated Condensed Balance Sheets, non-marketable equity investments and non-financial assets would generally be classified within Level 3 of the fair value hierarchy. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. Fair Value Hierarchy HP uses valuation techniques that are based upon observable and unobservable inputs. Observable inputs are developed using market data such as publicly available information and reflect the assumptions market participants would use, while unobservable inputs are developed using the best information available about the assumptions market participants would use. Assets and liabilities are classified in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement: Level 1—Quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2—Quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability and market-corroborated inputs. Level 3—Unobservable inputs for the asset or liability. The fair value hierarchy gives the highest priority to observable inputs and lowest priority to unobservable inputs. |
Cash Equivalents and Available-for-Sale Investments | All highly liquid investments with original maturities of three months or less at the date of acquisition are considered cash equivalents. |
Debt and Marketable Equity Securities | Equity securities in privately held companies include cost basis and equity method investments and are included in Other non-current assets on the Consolidated Condensed Balance Sheets. |
Financial Instruments | Derivative Instruments HP uses derivatives to offset business exposure to foreign currency and interest rate risk on expected future cash flows and on certain existing assets and liabilities. As part of its risk management strategy, HP uses derivative instruments, primarily forward contracts, interest rate swaps, total return swaps and, at times, option contracts to hedge certain foreign currency, interest rate and, to a lesser extent, equity exposures. HP may designate its derivative contracts as fair value hedges or cash flow hedges. HP classifies cash flows from its designated derivative contracts with the activities that correspond to the underlying hedged items on the Consolidated Condensed Statements of Cash Flows. For derivatives not designated as hedging instruments, HP categorizes those economic hedges as other derivatives. HP recognizes all derivative instruments at fair value in the Consolidated Condensed Balance Sheets. As a result of its use of derivative instruments, HP is exposed to the risk that its counterparties will fail to meet their contractual obligations. Master netting agreements mitigate credit exposure to counterparties by permitting HP to net amounts due from HP to counterparty against amounts due to HP from the same counterparty under certain conditions. To further limit credit risk, HP has collateral security agreements that allow HP to hold collateral from, or require HP to post collateral to, counterparties when aggregate derivative fair values exceed contractually established thresholds which are generally based on the credit ratings of HP and its counterparties. If HP’s or the counterparty’s credit rating falls below a specified credit rating, either party has the right to request full collateralization of the derivatives’ net liability position. The fair value of derivatives with credit contingent features in a net liability position was $583 million and $2 million as of July 31, 2017 and October 31, 2016 , respectively, all of which were fully collateralized within two business days of the related request. Under HP’s derivative contracts, the counterparty can terminate all outstanding trades following a covered change of control event affecting HP that results in the surviving entity being rated below a specified credit rating. This credit contingent provision did not affect HP’s financial position or cash flows as of July 31, 2017 and October 31, 2016 . Fair Value Hedges HP enters into fair value hedges, such as interest rate swaps, to reduce the exposure of its debt portfolio to changes in fair value resulting from changes in interest rates by achieving a primarily U.S. dollar London Interbank Offered Rate (“LIBOR”)-based floating interest expense. For derivative instruments that are designated and qualify as fair value hedges, HP recognizes the change in fair value of the derivative instrument, as well as the offsetting change in the fair value of the hedged item, in Interest and other, net on the Consolidated Condensed Statements of Earnings in the period of change. Cash Flow Hedges HP uses forward contracts and at times, option contracts designated as cash flow hedges to protect against the foreign currency exchange rate risks inherent in its forecasted net revenue and, to a lesser extent, cost of revenue, operating expenses, and intercompany loans denominated in currencies other than the U.S. dollar. HP’s foreign currency cash flow hedges mature generally within twelve months. However, hedges related to longer term procurement arrangements extend several years and forward contracts associated with intercompany loans extend for the duration of the loan term, which typically range from two to five years. For derivative instruments that are designated and qualify as cash flow hedges, HP initially records changes in fair value for the effective portion of the derivative instrument in accumulated other comprehensive loss as a separate component of stockholders’ deficit on the Consolidated Condensed Balance Sheets and subsequently reclassifies these amounts into earnings in the period during which the hedged transaction is recognized in earnings. HP reports the effective portion of its cash flow hedges in the same financial statement line item as changes in the fair value of the hedged item. Other Derivatives Other derivatives not designated as hedging instruments consist primarily of forward contracts used to hedge foreign currency-denominated balance sheet exposures. HP uses total return swaps to hedge its executive deferred compensation plan liability. For derivative instruments not designated as hedging instruments, HP recognizes changes in fair value of the derivative instrument, as well as the offsetting change in the fair value of the hedged item, in Interest and other, net in the Consolidated Condensed Statements of Earnings in the period of change. Hedge Effectiveness For interest rate swaps designated as fair value hedges, HP measures hedge effectiveness by offsetting the change in fair value of the hedged item with the change in fair value of the derivative. For foreign currency options and forward contracts designated as cash flow hedges, HP measures hedge effectiveness by comparing the cumulative change in fair value of the hedge contract with the cumulative change in fair value of the hedged item, both of which are based on forward rates. HP recognizes any ineffective portion of the hedge in the Consolidated Condensed Statements of Earnings in the same period in which ineffectiveness occurs. Amounts excluded from the assessment of effectiveness are recognized in the Consolidated Condensed Statements of Earnings in the period they arise. |
Offsetting of Derivatives Instruments | Offsetting of Derivative Instruments HP recognizes all derivative instruments on a gross basis in the Consolidated Condensed Balance Sheets. HP does not offset the fair value of its derivative instruments against the fair value of cash collateral posted under its collateral security agreements. |
Net Earnings Per Share | HP calculates basic net EPS using net earnings and the weighted-average number of shares outstanding during the reporting period. Diluted net EPS includes any dilutive effect of restricted stock awards, stock options, performance-based awards and shares purchased under the employee stock purchase plan. |
Litigation and Contingencies | HP is involved in lawsuits, claims, investigations and proceedings, including those identified below, consisting of intellectual property, commercial, securities, employment, employee benefits, regulatory and environmental matters that arise in the ordinary course of business. These litigations or proceedings may be against HP and/or current and former HP executive officers or current and former members of HP’s Board of Directors. HP accrues a liability when management believes that it is both probable that a liability has been incurred and the amount of loss can be reasonably estimated. HP believes it has recorded adequate provisions for any such matters and, as of July 31, 2017, it was not reasonably possible that a material loss had been incurred in excess of the amounts recognized in HP’s financial statements. HP reviews these matters at least quarterly and adjusts its accruals to reflect the impact of negotiations, settlements, rulings, advice of legal counsel, and other information and events pertaining to a particular case. Pursuant to the separation and distribution agreement, HP shares responsibility with Hewlett Packard Enterprise for certain matters, as indicated below, and Hewlett Packard Enterprise has agreed to indemnify HP in whole or in part with respect to certain matters. Based on its experience, HP believes that any damage amounts claimed in the specific matters discussed below are not a meaningful indicator of HP’s potential liability. Litigation is inherently unpredictable. However, HP believes it has valid defenses with respect to legal matters pending against it. Nevertheless, cash flows or results of operations could be materially affected in any particular period by the resolution of one or more of these contingencies. |
Warranty | Warranty HP accrues the estimated cost of product warranties at the time it recognizes revenue. HP engages in extensive product quality programs and processes, including actively monitoring and evaluating the quality of its component suppliers; however, contractual warranty terms, repair costs, product call rates, average cost per call, current period product shipments and ongoing product failure rates, as well as specific product class failures outside of HP’s baseline experience, affect the estimated warranty obligation. |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Jul. 31, 2017 | |
Segment Reporting [Abstract] | |
Segment Operating Results from Continuing Operations | Segment Operating Results from Continuing Operations Personal Printing Corporate Total Eliminations Total In millions Three months ended July 31, 2017 Net revenue $ 8,404 $ 4,698 $ 2 $ 13,104 $ (44 ) $ 13,060 Earnings (loss) from operations $ 313 $ 813 $ (20 ) $ 1,106 Three months ended July 31, 2016 Net revenue $ 7,512 $ 4,423 $ — $ 11,935 $ (43 ) $ 11,892 Earnings (loss) from operations $ 333 $ 903 $ (35 ) $ 1,201 Nine months ended July 31, 2017 Net revenue $ 24,290 $ 13,924 $ 7 $ 38,221 $ (92 ) $ 38,129 Earnings (loss) from operations $ 870 $ 2,354 $ (69 ) $ 3,155 Nine months ended July 31, 2016 Net revenue $ 21,969 $ 13,702 $ 6 $ 35,677 $ 49 (1) $ 35,726 Earnings (loss) from operations $ 804 $ 2,491 $ (66 ) $ 3,229 (1) For the nine months ended July 31, 2016 , the amount includes the recognition of revenue previously deferred in relation to sales to the pre-Separation finance entity. |
Schedule of Reconciliation of Segment Operating Results to HP Consolidated Results | The reconciliation of segment operating results to HP consolidated results was as follows: Three months ended July 31 Nine months ended July 31 2017 2016 2017 2016 In millions Net Revenue: Total segments $ 13,104 $ 11,935 $ 38,221 $ 35,677 Net revenue eliminations and other (44 ) (43 ) (92 ) 49 Total net revenue $ 13,060 $ 11,892 $ 38,129 $ 35,726 Earnings from continuing operations before taxes: Total segment earnings from operations $ 1,106 $ 1,201 $ 3,155 $ 3,229 Corporate and unallocated costs and eliminations (18 ) (7 ) (27 ) (31 ) Stock-based compensation expense (46 ) (39 ) (169 ) (140 ) Restructuring and other charges (46 ) (36 ) (249 ) (156 ) Acquisition-related charges (40 ) — (76 ) — Amortization of intangible assets — (2 ) (1 ) (16 ) Defined benefit plan settlement charges (1 ) — (4 ) — Interest and other, net (56 ) (36 ) (201 ) (135 ) Total earnings from continuing operations before taxes $ 899 $ 1,081 $ 2,428 $ 2,751 |
Schedule of Net Revenue by Segment and Business Unit | Net revenue by segment and business unit was as follows: Three months ended July 31 Nine months ended July 31 2017 2016 2017 2016 In millions Notebooks $ 5,008 $ 4,303 $ 14,391 $ 12,346 Desktops 2,566 2,455 7,477 7,384 Workstations 530 476 1,516 1,381 Other 300 278 906 858 Personal Systems 8,404 7,512 24,290 21,969 Supplies 3,120 2,840 9,284 9,040 Commercial Hardware 986 1,007 2,854 2,928 Consumer Hardware 592 576 1,786 1,734 Printing 4,698 4,423 13,924 13,702 Corporate Investments 2 — 7 6 Total segment net revenue 13,104 11,935 38,221 35,677 Net revenue eliminations and other (44 ) (43 ) (92 ) 49 Total net revenue $ 13,060 $ 11,892 $ 38,129 $ 35,726 |
Restructuring and Other Charg25
Restructuring and Other Charges (Tables) | 9 Months Ended |
Jul. 31, 2017 | |
Restructuring and Related Activities [Abstract] | |
Summary of Restructuring Plans | HP’s restructuring activities for the nine months ended July 31, 2017 and 2016 summarized by plan were as follows: Fiscal 2017 Plan Fiscal 2015 Plan Fiscal 2012 Plan Severance Infrastructure and other (1) Severance and PRP (2) Infrastructure and other Severance and EER (3) Infrastructure and other Total In millions Accrued balance as of October 31, 2016 $ 24 $ — $ 21 $ 4 $ 7 $ 2 $ 58 Charges 95 60 15 — 1 — 171 Cash payments (46 ) (6 ) (35 ) (2 ) (4 ) — (93 ) Non-cash and other adjustments 4 (52 ) 6 — — — (42 ) Accrued balance as of July 31, 2017 $ 77 $ 2 $ 7 $ 2 $ 4 $ 2 $ 94 Total costs incurred to date as of July 31, 2017 $ 119 $ 60 $ 171 $ 27 $ 1,075 $ 44 $ 1,496 Reflected in Consolidated Condensed Balance Sheets Other accrued liabilities $ 77 $ 2 $ 7 $ 2 $ 4 $ 1 $ 93 Other non-current liabilities — — — — — 1 1 Accrued balance as of October 31, 2015 $ — $ — $ 39 $ — $ 21 $ 3 $ 63 Charges — — 107 27 4 1 139 Cash payments — — (83 ) (3 ) (28 ) — (114 ) Non-cash and other adjustments — — (12 ) (19 ) 9 — (22 ) Accrued balance as of July 31, 2016 $ — $ — $ 51 $ 5 $ 6 $ 4 $ 66 |
Restructuring Charges | HP’s restructuring charges for the three months ended July 31, 2017 summarized by plan were as follows: Fiscal 2017 Plan Fiscal 2015 Plan Fiscal 2012 Plan Severance Infrastructure and other Severance and PRP (2) Infrastructure and other Severance and EER (3) Infrastructure and other Total In millions For the three months ended July 31, 2017 $ 14 $ 2 $ 5 $ — $ — $ — $ 21 (1) Infrastructure and other includes asset impairment charges of $52 million for the nine months ended July 31, 2017 associated with the consolidation of manufacturing into global hubs. (2) PRP represents Phased Retirement Program. (3) EER represents Enhanced Early Retirement. |
Retirement and Post-Retiremen26
Retirement and Post-Retirement Benefit Plans (Tables) | 9 Months Ended |
Jul. 31, 2017 | |
Retirement Benefits [Abstract] | |
Schedule of Pension and Post-Retirement Benefit (Credit) Cost | The components of HP’s pension and post-retirement benefit (credit) cost recognized in the Consolidated Condensed Statements of Earnings were as follows: Three months ended July 31 U.S. Defined Benefit Plans Non-U.S. Defined Benefit Plans Post-Retirement Benefit Plans 2017 2016 2017 2016 2017 2016 In millions Service cost $ — $ — $ 12 $ 12 $ 1 $ — Interest cost 117 136 4 6 4 5 Expected return on plan assets (168 ) (183 ) (8 ) (12 ) (7 ) (8 ) Amortization and deferrals: Actuarial loss (gain) 19 14 10 6 (5 ) (3 ) Prior service benefit — — (1 ) (1 ) (4 ) (4 ) Net periodic benefit (credit) cost (32 ) (33 ) 17 11 (11 ) (10 ) Settlement loss — — 1 — — — Total periodic benefit (credit) cost $ (32 ) $ (33 ) $ 18 $ 11 $ (11 ) $ (10 ) Nine months ended July 31 U.S. Defined Benefit Plans Non-U.S. Defined Benefit Plans Post- Retirement Benefit Plans 2017 2016 2017 2016 2017 2016 In millions Service cost $ — $ — $ 36 $ 35 $ 1 $ — Interest cost 351 408 12 18 13 15 Expected return on plan assets (507 ) (549 ) (24 ) (36 ) (19 ) (24 ) Amortization and deferrals: Actuarial loss (gain) 55 42 30 18 (12 ) (9 ) Prior service benefit — — (3 ) (3 ) (14 ) (12 ) Net periodic benefit (credit) cost (101 ) (99 ) 51 32 (31 ) (30 ) Settlement loss 3 1 1 1 — — Special termination benefits — — — — — 9 Total periodic benefit (credit) cost $ (98 ) $ (98 ) $ 52 $ 33 $ (31 ) $ (21 ) |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 9 Months Ended |
Jul. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of Stock Based Compensation Expense and the Resulting Tax Benefits from Continuing Operations | Stock-based compensation expense and the resulting tax benefits were as follows: Three months ended July 31 Nine months ended July 31 2017 2016 2017 2016 In millions Stock-based compensation expense $ 46 $ 39 $ 169 $ 140 Income tax benefit (15 ) (13 ) (54 ) (48 ) Stock-based compensation expense, net of tax $ 31 $ 26 $ 115 $ 92 |
Schedule of Weighted-Average Fair Value and the Assumptions Used to Measure Fair Value | The weighted-average fair value and the assumptions used to measure fair value for the three and nine months ended July 31, 2017 and 2016 were as follows: Three months ended July 31 Nine months ended July 31 2017 2016 2017 2016 Weighted-average fair value (1) $ 4 $ 2 $ 4 $ 4 Expected volatility (2) 28.0 % 31.6 % 28.0 % 36.2 % Risk-free interest rate (3) 1.9 % 1.3 % 1.9 % 1.8 % Expected dividend yield (4) 2.8 % 4.3 % 2.8 % 3.5 % Expected term in years (5) 5.5 5.5 5.5 6 (1) The weighted-average fair value was based on stock options granted during the period. (2) The expected volatility was estimated using the leverage-adjusted average of the term-matching volatilities of peer companies due to the lack of volume of forward traded options, which precluded the use of implied volatility. (3) The risk-free interest rate was estimated based on the yield on U.S. Treasury zero-coupon issues. (4) The expected dividend yield represents a constant dividend yield applied for the duration of the expected term of the award. (5) Due to the lack of historical exercise and post-vesting termination patterns of the post-Separation employee base, the expected term was estimated using the simplified method; and for performance-contingent awards, the expected term represents an output from the lattice model. The weighted-average fair value and the assumptions used to measure the fair value of restricted stock units subject to performance-adjusted vesting conditions in the Monte Carlo simulation model were as follows: Nine months ended July 31 2017 2016 Weighted-average fair value (1) $ 20 $ 13 Expected volatility (2) 30.5 % 32.5 % Risk-free interest rate (3) 1.4 % 1.2 % Expected performance period in years (4) 2.9 2.9 (1) The weighted-average fair value was based on performance-adjusted restricted stock units granted during the period. (2) The expected volatility was estimated using the historical volatility derived from HP’s common stock. (3) The risk-free interest rate was estimated based on the yield on U.S. Treasury zero-coupon issues. (4) The expected performance period was estimated based on the length of the remaining performance period from the grant date. |
Schedule of Restricted Stock Award Activity | A summary of restricted stock award activity was as follows: Nine months ended July 31, 2017 Shares Weighted-Average In thousands Outstanding at beginning of period 28,710 $ 13 Granted 14,618 $ 16 Vested (11,114 ) $ 14 Forfeited (624 ) $ 14 Outstanding at end of period 31,590 $ 14 |
Schedule of Stock Option Activity | A summary of stock option activity was as follows: Nine months ended July 31, 2017 Shares Weighted- Weighted- Aggregate In thousands In years In millions Outstanding at beginning of period 28,218 $ 12 Granted 104 $ 19 Exercised (4,863 ) $ 10 Forfeited and expired (766 ) $ 17 Outstanding at end of period 22,693 $ 13 4.2 $ 145 Vested and expected to vest at end of period 22,152 $ 13 4.2 $ 142 Exercisable at end of period 14,923 $ 12 3.3 $ 108 |
Supplementary Financial Infor28
Supplementary Financial Information (Tables) | 9 Months Ended |
Jul. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Accounts Receivable | Accounts Receivable As of July 31, 2017 October 31, 2016 In millions Accounts receivable $ 4,317 $ 4,221 Allowance for doubtful accounts (84 ) (107 ) $ 4,233 $ 4,114 |
Schedule of Allowance for Doubtful Accounts Related to Accounts Receivable | The allowance for doubtful accounts related to accounts receivable and changes were as follows: Nine months ended July 31, 2017 In millions Balance at beginning of period $ 107 Provision for doubtful accounts 7 Deductions, net of recoveries (30 ) Balance at end of period $ 84 |
Schedule of Transferred Trade Receivables Not Collected from Third Parties | The following is a summary of the activity under these arrangements: Three months ended July 31 Nine months ended July 31 2017 2016 2017 2016 In millions Balance at beginning of period $ 123 $ 71 $ 149 $ 93 Trade receivables sold 2,268 2,126 6,969 5,896 Cash receipts (2,269 ) (2,080 ) (6,997 ) (5,873 ) Foreign currency and other 8 (3 ) 9 (2 ) Balance at end of period $ 130 $ 114 $ 130 $ 114 |
Inventory | Inventory As of July 31, 2017 October 31, 2016 In millions Finished goods $ 3,384 $ 3,103 Purchased parts and fabricated assemblies 1,800 1,381 $ 5,184 $ 4,484 |
Other Current Assets | Other Current Assets As of July 31, 2017 October 31, 2016 In millions Value-added taxes receivable $ 772 $ 795 Available-for-sale investments (1) 1,020 — Supplier and other receivables 1,940 1,700 Prepaid and other current assets 1,327 1,087 $ 5,059 $ 3,582 _________________________ (1) See Note 8, “Fair Value” and Note 9, “Financial Instruments” for detailed information. |
Property, Plant and Equipment | Property, Plant and Equipment As of July 31, 2017 October 31, 2016 In millions Land, buildings and leasehold improvements $ 2,065 $ 2,421 Machinery and equipment, including equipment held for lease 3,914 3,663 5,979 6,084 Accumulated depreciation (4,272 ) (4,348 ) $ 1,707 $ 1,736 |
Other Non-Current Assets | Other Non-Current Assets As of July 31, 2017 October 31, 2016 In millions Tax indemnifications receivable (1) $ 1,662 $ 1,591 Deferred tax assets 372 254 Other 1,128 1,316 $ 3,162 $ 3,161 _________________________ (1) In connection with the TMA discussed in Note 6, “Taxes on Earnings”. |
Other Accrued Liabilities | Other Accrued Liabilities As of July 31, 2017 October 31, 2016 In millions Other accrued taxes $ 815 $ 755 Warranty 658 729 Sales and marketing programs 2,341 2,312 Other 2,418 1,922 $ 6,232 $ 5,718 |
Other Non-Current Liabilities | Other Non-Current Liabilities As of July 31, 2017 October 31, 2016 In millions Pension, post-retirement, and post-employment liabilities $ 2,506 $ 2,705 Deferred tax liability 1,586 1,116 Tax liability 1,649 1,910 Deferred revenue 894 865 Other 834 737 $ 7,469 $ 7,333 |
Fair Value (Tables)
Fair Value (Tables) | 9 Months Ended |
Jul. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
Assets and Liabilities Measured and Recorded at Fair Value on a Recurring Basis | The following table presents HP’s assets and liabilities that are measured at fair value on a recurring basis: As of July 31, 2017 As of October 31, 2016 Fair Value Measured Using Fair Value Measured Using Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total In millions Assets: Cash Equivalents: Corporate debt $ — $ 1,929 $ — $ 1,929 $ — $ 2,092 $ — $ 2,092 Financial institution instruments — 5 — 5 — — — — Government debt (1) 3,436 46 — 3,482 2,568 — — 2,568 Available-for-Sale Investments: Corporate debt — 506 — 506 — — — — Financial institution instruments — 50 — 50 — 2 — 2 Government debt (1) 224 240 — 464 — — — — Mutual funds 49 — — 49 44 — — 44 Marketable equity securities 6 6 — 12 5 4 — 9 Derivative Instruments: Interest rate contracts — 5 — 5 — 48 — 48 Foreign currency contracts — 56 2 58 — 266 11 277 Other derivatives — 3 — 3 — — — — Total Assets $ 3,715 $ 2,846 $ 2 $ 6,563 $ 2,617 $ 2,412 $ 11 $ 5,040 Liabilities: Derivative Instruments: Foreign currency contracts $ — $ 657 $ 1 $ 658 $ — $ 94 $ 1 $ 95 Other derivatives — — — — — 2 — 2 Total Liabilities $ — $ 657 $ 1 $ 658 $ — $ 96 $ 1 $ 97 __________________ (1) Government debt includes instruments such as U.S. treasury notes, U.S agency securities and non-U.S. government bonds. |
Financial Instruments (Tables)
Financial Instruments (Tables) | 9 Months Ended |
Jul. 31, 2017 | |
Investments, All Other Investments [Abstract] | |
Schedule of Cash Equivalents and Available-for-Sale Investments | Cash Equivalents and Available-for-Sale Investments As of July 31, 2017 As of October 31, 2016 Cost Gross Unrealized Gain Gross Unrealized Loss Fair Value Cost Gross Unrealized Gain Gross Unrealized Loss Fair Value In millions Cash Equivalents: Corporate debt $ 1,929 $ — $ — $ 1,929 $ 2,092 $ — $ — $ 2,092 Financial institution instruments 5 — — 5 — — — — Government debt 3,482 — — 3,482 2,568 — — 2,568 Total cash equivalents 5,416 — — 5,416 4,660 — — 4,660 Available-for-Sale Investments: Corporate debt 506 — — 506 — — — — Financial institution instruments 50 — — 50 2 — — 2 Government debt 464 — — 464 — — — — Marketable equity securities 1 7 — 8 1 3 — 4 Mutual funds 39 10 — 49 35 9 — 44 Total available-for-sale investments 1,060 17 — 1,077 38 12 — 50 Total cash equivalents and available-for-sale investments $ 6,476 $ 17 $ — $ 6,493 $ 4,698 $ 12 $ — $ 4,710 |
Schedule of Contractual Maturities of Available for-sale Debt Securities | Contractual maturities of investments in available-for-sale debt securities were as follows: As of July 31, 2017 Amortized Fair Value In millions Due in one year $ 414 $ 414 Due in one to five years $ 606 $ 606 |
Schedule of Gross Notional and Fair Value of Derivative Financial Instruments in the Consolidated Condensed Balance Sheets | The gross notional and fair value of derivative instruments in the Consolidated Condensed Balance Sheets were as follows: As of July 31, 2017 As of October 31, 2016 Outstanding Other Current Assets Other Other Other Outstanding Other Other Other Other In millions Derivatives designated as hedging instruments Fair value hedges: Interest rate contracts $ 2,500 $ — $ 5 $ — $ — $ 2,000 $ — $ 48 $ — $ — Cash flow hedges: Foreign currency contracts 16,127 33 9 522 122 11,852 203 63 52 12 Total derivatives designated as hedging instruments 18,627 33 14 522 122 13,852 203 111 52 12 Derivatives not designated as hedging instruments Foreign currency contracts 4,572 16 — 14 — 3,934 11 — 31 — Other derivatives 119 3 — — — 150 — — 2 — Total derivatives not designated as hedging instruments 4,691 19 — 14 — 4,084 11 — 33 — Total derivatives $ 23,318 $ 52 $ 14 $ 536 $ 122 $ 17,936 $ 214 $ 111 $ 85 $ 12 |
Schedule of Offsetting Assets | As of July 31, 2017 and October 31, 2016 , information related to the potential effect of HP’s master netting agreements and collateral security agreements was as follows: In the Consolidated Condensed Balance Sheets Gross Amounts Not Offset Gross Amount Recognized (i) Gross Amount Offset (ii) Net Amount Presented (iii) = (i)–(ii) Derivatives (iv) Financial Collateral (v) Net Amount (vi) = (iii)–(iv)–(v) In millions As of July 31, 2017 Derivative assets $ 66 $ — $ 66 $ 63 $ — (1) $ 3 Derivative liabilities $ 658 $ — $ 658 $ 63 $ 519 (2) $ 76 As of October 31, 2016 Derivative assets $ 325 $ — $ 325 $ 88 $ 189 (1) $ 48 Derivative liabilities $ 97 $ — $ 97 $ 88 $ 2 (2) $ 7 _______________________________________________________________________________ (1) Represents the cash collateral posted by counterparties as of the respective reporting date for HP’s asset position, net of derivative amounts that could be offset, as of, generally, two business days prior to the respective reporting date. (2) Represents the collateral posted by HP through re-use of counterparty cash collateral as of the respective reporting date for HP’s liability position, net of derivative amounts that could be offset, as of, generally, two business days prior to the respective reporting date. |
Schedule of Offsetting Liabilities | As of July 31, 2017 and October 31, 2016 , information related to the potential effect of HP’s master netting agreements and collateral security agreements was as follows: In the Consolidated Condensed Balance Sheets Gross Amounts Not Offset Gross Amount Recognized (i) Gross Amount Offset (ii) Net Amount Presented (iii) = (i)–(ii) Derivatives (iv) Financial Collateral (v) Net Amount (vi) = (iii)–(iv)–(v) In millions As of July 31, 2017 Derivative assets $ 66 $ — $ 66 $ 63 $ — (1) $ 3 Derivative liabilities $ 658 $ — $ 658 $ 63 $ 519 (2) $ 76 As of October 31, 2016 Derivative assets $ 325 $ — $ 325 $ 88 $ 189 (1) $ 48 Derivative liabilities $ 97 $ — $ 97 $ 88 $ 2 (2) $ 7 _______________________________________________________________________________ (1) Represents the cash collateral posted by counterparties as of the respective reporting date for HP’s asset position, net of derivative amounts that could be offset, as of, generally, two business days prior to the respective reporting date. (2) Represents the collateral posted by HP through re-use of counterparty cash collateral as of the respective reporting date for HP’s liability position, net of derivative amounts that could be offset, as of, generally, two business days prior to the respective reporting date. |
Schedule of Pre-Tax Effect of Derivative Instruments and Related Hedged Items in a Fair Value Hedging Relationship | The pre-tax effect of derivative instruments and related hedged items in a fair value hedging relationship for the three and nine months ended July 31, 2017 and 2016 were as follows: Gain (Loss) Recognized in Earnings on Derivative and Related Hedged Item Derivative Instrument Location Three months ended July 31, 2017 Nine months ended July 31, 2017 Hedged Item Location Three months ended July 31, 2017 Nine months ended July 31, 2017 In millions In millions Interest rate contracts Interest and other, net $ 5 $ (43 ) Fixed-rate debt Interest and other, net $ (5 ) $ 43 Gain (Loss) Recognized in Earnings on Derivative and Related Hedged Item Derivative Instrument Location Three months ended July 31, 2016 Nine months ended July 31, 2016 Hedged Item Location Three months ended July 31, 2016 Nine months ended July 31, 2016 In millions In millions Interest rate contracts Interest and other, net $ 20 $ 38 Fixed-rate debt Interest and other, net $ (20 ) $ (38 ) |
Schedule of Pre-Tax Effect of Derivative Instruments in Cash Flow Hedging Relationships | The pre-tax effect of derivative instruments in cash flow hedging relationships for the three and nine months ended July 31, 2017 was as follows: Loss Recognized in (Loss) Gain Reclassified from Accumulated OCI Into Earnings (Effective Portion) Three months ended July 31, 2017 Nine months ended July 31, 2017 Location Three months ended July 31, 2017 Nine months ended July 31, 2017 In millions In millions Cash flow hedges: Foreign currency contracts $ (519 ) $ (758 ) Net revenue $ (26 ) $ 89 Cost of revenue (13 ) (32 ) Operating expenses 1 1 Interest and other, net — (9 ) Total $ (519 ) $ (758 ) $ (38 ) $ 49 The pre-tax effect of derivative instruments in cash flow hedging relationships for the three and nine months ended July 31, 2016 was as follows: Gain Recognized in Other Comprehensive Income ("OCI") on Derivatives (Effective Portion) (Loss) Gain Reclassified from Accumulated OCI Into Three months ended July 31, 2016 Nine months ended July 31, 2016 Location Three months ended July 31, 2016 Nine months ended July 31, 2016 In millions In millions Cash flow hedges: $ 175 $ 135 Net revenue $ (140 ) $ 26 Cost of revenue (18 ) (90 ) Operating expenses 1 1 Interest and other, net (2 ) — Total $ 175 $ 135 Total $ (159 ) $ (63 ) |
Schedule of Pre-Tax Effect of Derivative Instruments not Designated as Hedging Instruments on the Consolidated Condensed Statements of Earnings | The pre-tax effect of derivative instruments not designated as hedging instruments in the Consolidated Condensed Statements of Earnings for the three and nine months ended July 31, 2017 and 2016 was as follows: Gain (Loss) Recognized in Earnings on Derivatives Location Three months ended July 31, 2017 Three months ended July 31, 2016 Nine months ended July 31, 2017 Nine months ended July 31, 2016 In millions Foreign currency contracts Interest and other, net $ 16 $ (12 ) $ (33 ) $ (20 ) Other derivatives Interest and other, net 1 2 5 1 Total $ 17 $ (10 ) $ (28 ) $ (19 ) |
Borrowings (Tables)
Borrowings (Tables) | 9 Months Ended |
Jul. 31, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of Notes Payable and Short-Term Borrowings | Notes Payable and Short-Term Borrowings As of July 31, 2017 As of October 31, 2016 Amount Weighted-Average Amount Weighted-Average In millions In millions Commercial paper $ 936 1.6 % $ — — Current portion of long-term debt 92 3.5 % 51 4.1 % Notes payable to banks, lines of credit and other 34 1.4 % 27 2.0 % $ 1,062 $ 78 |
Schedule of Long-Term Debt | Long-Term Debt As of July 31, 2017 October 31, 2016 In millions U.S. Dollar Global Notes (1) 2009 Shelf Registration Statement: $1,350 issued at discount to par at a price of 99.827% in December 2010 at 3.75%, due December 2020 $ 648 $ 648 $1,250 issued at discount to par at a price of 99.799% in May 2011 at 4.3%, due June 2021 1,249 1,248 $1,000 issued at discount to par at a price of 99.816% in September 2011 at 4.375%, due September 2021 999 999 $1,500 issued at discount to par at a price of 99.707% in December 2011 at 4.65%, due December 2021 1,498 1,498 $500 issued at discount to par at a price of 99.771% in March 2012 at 4.05%, due September 2022 499 499 $1,200 issued at discount to par at a price of 99.863% in September 2011 at 6.0%, due September 2041 1,199 1,199 2012 Shelf Registration Statement: $750 issued at par in January 2014 at three-month USD LIBOR plus 0.94%, due January 2019 102 102 $1,250 issued at discount to par at a price of 99.954% in January 2014 at 2.75%, due January 2019 300 300 6,494 6,493 Other, including capital lease obligations, at 0.51%-8.50%, due in calendar years 2017-2025 336 244 Fair value adjustment related to hedged debt 26 72 Less: unamortized debt issuance cost (2) (20 ) (23 ) Less: current portion of long-term debt (92 ) (51 ) Total long-term debt $ 6,744 $ 6,735 (1) HP may redeem some or all of the fixed-rate U.S. Dollar Global Notes at any time in accordance with the terms thereof. The U.S. Dollar Global Notes are senior unsecured debt. (2) Effective November 1, 2016, HP adopted ASU 2015-03, “Simplifying the Presentation of Debt Issuance Costs”, which amended the presentation of debt issuance costs as a direct deduction from the carrying amount of debt liability. |
Stockholders' Deficit (Tables)
Stockholders' Deficit (Tables) | 9 Months Ended |
Jul. 31, 2017 | |
Stockholders' Equity Note [Abstract] | |
Schedule of Tax Effects Related to Other Comprehensive (Loss) Income | Tax effects related to Other Comprehensive (Loss) Income Three months ended July 31 Nine months ended July 31 2017 2016 2017 2016 In millions Tax effects on change in unrealized gains on available-for-sale securities: Tax provision on gains arising during the period $ — $ — $ (1 ) $ — — — (1 ) — Tax effects on change in unrealized components of cash flow hedges: Tax benefit (provision) on (losses) gains arising during the period 63 (5 ) 70 46 Tax (benefit) provision on losses (gains) reclassified into earnings (2 ) (20 ) 9 3 61 (25 ) 79 49 Tax effects on change in unrealized components of defined benefit plans: Tax (provision) benefit on gains (losses) arising during the period — — (4 ) 2 Tax provision on amortization of actuarial loss and prior service benefit (5 ) (3 ) (16 ) (9 ) Tax benefit (provision) on settlements and other 1 — (8 ) (1 ) (4 ) (3 ) (28 ) (8 ) Tax benefit (provision) on other comprehensive (loss) income $ 57 $ (28 ) $ 50 $ 41 |
Schedule of Changes and Reclassifications Related to Other Comprehensive Income, Net of Taxes | Changes and reclassifications related to Other Comprehensive (Loss) Income, net of taxes Three months ended July 31 Nine months ended July 31 2017 2016 2017 2016 In millions Other comprehensive (loss) income, net of taxes: Change in unrealized gains on available-for-sale securities: Gains arising during the period $ 1 $ 1 $ 4 $ 2 1 1 4 2 Change in unrealized components of cash flow hedges: (Losses) gains arising during the period (456 ) 170 (688 ) 181 Gains (losses) reclassified into earnings (1) 36 139 (40 ) 66 (420 ) 309 (728 ) 247 Change in unrealized components of defined benefit plans: Gains (losses) arising during the period — — 9 (2 ) Amortization of actuarial loss and prior service benefit (2) 14 9 40 27 Settlements and other 1 — (5 ) — 15 9 44 25 Other comprehensive (loss) income, net of taxes $ (404 ) $ 319 $ (680 ) $ 274 (1) Reclassification of pre-tax gains on cash flow hedges into the Consolidated Condensed Statements of Earnings was as follows: Three months ended July 31 Nine months ended July 31 2017 2016 2017 2016 In millions Net revenue $ 26 $ 140 $ (89 ) $ (26 ) Cost of revenue 13 18 32 90 Operating expenses (1 ) (1 ) (1 ) (1 ) Interest and other, net — 2 9 — Total $ 38 $ 159 $ (49 ) $ 63 (2) These components are included in the computation of net pension and post-retirement benefit (credit) charges in Note 4, “Retirement and Post-Retirement Benefit Plans”. |
Schedule of Accumulated Other Comprehensive Loss, Net of Taxes | The components of accumulated other comprehensive loss, net of taxes and changes were as follows: Nine months ended July 31, 2017 Net unrealized Net unrealized Unrealized Accumulated In millions Balance at beginning of period $ 9 $ 186 $ (1,633 ) $ (1,438 ) Other comprehensive income (loss) before reclassifications 4 (688 ) 4 (680 ) Reclassifications of (income) loss into earnings — (40 ) 40 — Balance at end of period $ 13 $ (542 ) $ (1,589 ) $ (2,118 ) |
Net Earnings Per Share (Tables)
Net Earnings Per Share (Tables) | 9 Months Ended |
Jul. 31, 2017 | |
Earnings Per Share [Abstract] | |
Basic and Diluted Net Earnings Per Share Calculations | A reconciliation of the number of shares used for basic and diluted net EPS calculations was as follows: Three months ended July 31 Nine months ended July 31 2017 2016 2017 2016 In millions, except per share amounts Numerator: Net earnings from continuing operations $ 696 $ 843 $ 1,866 $ 2,153 Net loss from discontinued operations — (60 ) — (149 ) Net earnings $ 696 $ 783 $ 1,866 $ 2,004 Denominator: Weighted-average shares used to compute basic net EPS 1,681 1,711 1,694 1,735 Dilutive effect of employee stock plans 14 14 11 12 Weighted-average shares used to compute diluted net EPS 1,695 1,725 1,705 1,747 Basic net earnings (loss) per share: Continuing operations $ 0.41 $ 0.49 $ 1.10 $ 1.24 Discontinued operations — (0.03 ) — (0.08 ) Basic net earnings per share $ 0.41 $ 0.46 $ 1.10 $ 1.16 Diluted net earnings (loss) per share: Continuing operations $ 0.41 $ 0.49 $ 1.09 $ 1.23 Discontinued operations — (0.04 ) — (0.08 ) Diluted net earnings per share $ 0.41 $ 0.45 $ 1.09 $ 1.15 Anti-dilutive weighted average stock-based compensation awards (1) 1 13 3 26 (1) HP excludes stock options and restricted stock units where the assumed proceeds exceed the average market price from the calculation of diluted net EPS, because their effect would be anti-dilutive. The assumed proceeds of a stock option include the sum of its exercise price and average unrecognized compensation cost. The assumed proceeds of a restricted stock unit represents average unrecognized compensation. |
Guarantees, Indemnifications,34
Guarantees, Indemnifications, and Warranties (Tables) | 9 Months Ended |
Jul. 31, 2017 | |
Guarantees [Abstract] | |
Changes in Aggregate Product Warranty Liabilities and Changes | HP’s aggregate product warranty liabilities and changes were as follows: Nine months ended July 31, 2017 In millions Balance at beginning of period $ 980 Accruals for warranties issued 678 Adjustments related to pre-existing warranties (including changes in estimates) (16 ) Settlements made (in cash or in kind) (749 ) Balance at end of period $ 893 |
Discontinued Operations (Tables
Discontinued Operations (Tables) | 9 Months Ended |
Jul. 31, 2017 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Schedule of Operating Results of Discontinued Operations | The following table presents the financial results of HP’s discontinued operations: Three months ended July 31 Nine months ended July 31 2017 2016 2017 2016 In millions Expenses (1) $ — $ 30 $ — $ 158 Interest and other, net (2) (9 ) (174 ) (38 ) (157 ) Earnings (Loss) from discontinued operations before taxes 9 144 38 (1 ) (Provision for) Benefit from taxes (2) (9 ) (204 ) (38 ) (148 ) Loss from discontinued operations, net of taxes $ — $ (60 ) $ — $ (149 ) (1) Expenses for the three and nine months ended July 31, 2016 were primarily related to separation costs. (2) In connection with the TMA, Interest and other, net for the three and nine months ended July 31, 2017 includes $9 million and $38 million , respectively, of net tax indemnification amounts and Provision for taxes for the three and nine months ended July 31, 2017 includes $9 million and $38 million , respectively, of the tax impact relating to the above amounts. For more information on tax indemnifications and the TMA, see Note 6, “Taxes on Earnings”. |
Basis of Presentation (Details)
Basis of Presentation (Details) - USD ($) $ in Millions | Jul. 31, 2017 | Oct. 31, 2016 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Unamortized debt issuance costs | $ 20 | $ 23 |
Accounting Standards Update 2015-03 | Other Non-Current Assets | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Unamortized debt issuance costs | (23) | |
Accounting Standards Update 2015-03 | Long-term debt | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Unamortized debt issuance costs | $ 23 |
Segment Information - Narrative
Segment Information - Narrative (Details) | 9 Months Ended |
Jul. 31, 2017segment | |
Segment Reporting [Abstract] | |
Number of reportable segments | 3 |
Segment Information - Segment O
Segment Information - Segment Operating Results from Continuing Operations (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jul. 31, 2017 | Jul. 31, 2016 | Jul. 31, 2017 | Jul. 31, 2016 | |
Segment Information | ||||
Net revenue | $ 13,060 | $ 11,892 | $ 38,129 | $ 35,726 |
Earnings (loss) from operations | 955 | 1,117 | 2,629 | 2,886 |
Operating segments | ||||
Segment Information | ||||
Net revenue | 13,104 | 11,935 | 38,221 | 35,677 |
Earnings (loss) from operations | 1,106 | 1,201 | 3,155 | 3,229 |
Operating segments | Personal Systems | ||||
Segment Information | ||||
Net revenue | 8,404 | 7,512 | 24,290 | 21,969 |
Earnings (loss) from operations | 313 | 333 | 870 | 804 |
Operating segments | Printing | ||||
Segment Information | ||||
Net revenue | 4,698 | 4,423 | 13,924 | 13,702 |
Earnings (loss) from operations | 813 | 903 | 2,354 | 2,491 |
Operating segments | Corporate Investments | ||||
Segment Information | ||||
Net revenue | 2 | 0 | 7 | 6 |
Earnings (loss) from operations | (20) | (35) | (69) | (66) |
Eliminations and Other | ||||
Segment Information | ||||
Net revenue | $ (44) | $ (43) | $ (92) | $ 49 |
Segment Information - Schedule
Segment Information - Schedule of Reconciliation of Segment Operating Results to HP Consolidated Results (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jul. 31, 2017 | Jul. 31, 2016 | Jul. 31, 2017 | Jul. 31, 2016 | |
Segment Information | ||||
Net revenue | $ 13,060 | $ 11,892 | $ 38,129 | $ 35,726 |
Total segment earnings from operations | 955 | 1,117 | 2,629 | 2,886 |
Stock-based compensation expense | (46) | (39) | (169) | (140) |
Restructuring and other charges | (46) | (36) | (249) | (156) |
Acquisition-related charges | (40) | 0 | (76) | 0 |
Amortization of intangible assets | 0 | (2) | (1) | (16) |
Defined benefit plan settlement charges | (1) | 0 | (4) | 0 |
Interest and other, net | (56) | (36) | (201) | (135) |
Earnings from continuing operations before taxes | 899 | 1,081 | 2,428 | 2,751 |
Operating segments | ||||
Segment Information | ||||
Net revenue | 13,104 | 11,935 | 38,221 | 35,677 |
Total segment earnings from operations | 1,106 | 1,201 | 3,155 | 3,229 |
Net revenue eliminations and other | ||||
Segment Information | ||||
Net revenue | (44) | (43) | (92) | 49 |
Corporate and unallocated costs and eliminations | ||||
Segment Information | ||||
Corporate and unallocated costs and eliminations | (18) | (7) | (27) | (31) |
Segment reconciling items | ||||
Segment Information | ||||
Stock-based compensation expense | (46) | (39) | (169) | (140) |
Restructuring and other charges | (46) | (36) | (249) | (156) |
Acquisition-related charges | (40) | 0 | (76) | 0 |
Amortization of intangible assets | 0 | (2) | (1) | (16) |
Defined benefit plan settlement charges | (1) | 0 | (4) | 0 |
Interest and other, net | $ (56) | $ (36) | $ (201) | $ (135) |
Segment Information - Schedul40
Segment Information - Schedule of Net Revenue by Segment and Business Unit (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jul. 31, 2017 | Jul. 31, 2016 | Jul. 31, 2017 | Jul. 31, 2016 | |
Segment Information | ||||
Total net revenue | $ 13,060 | $ 11,892 | $ 38,129 | $ 35,726 |
Total segment net revenue | ||||
Segment Information | ||||
Total net revenue | 13,104 | 11,935 | 38,221 | 35,677 |
Total segment net revenue | Personal Systems | ||||
Segment Information | ||||
Total net revenue | 8,404 | 7,512 | 24,290 | 21,969 |
Total segment net revenue | Personal Systems | Notebooks | ||||
Segment Information | ||||
Total net revenue | 5,008 | 4,303 | 14,391 | 12,346 |
Total segment net revenue | Personal Systems | Desktops | ||||
Segment Information | ||||
Total net revenue | 2,566 | 2,455 | 7,477 | 7,384 |
Total segment net revenue | Personal Systems | Workstations | ||||
Segment Information | ||||
Total net revenue | 530 | 476 | 1,516 | 1,381 |
Total segment net revenue | Personal Systems | Other | ||||
Segment Information | ||||
Total net revenue | 300 | 278 | 906 | 858 |
Total segment net revenue | Printing | ||||
Segment Information | ||||
Total net revenue | 4,698 | 4,423 | 13,924 | 13,702 |
Total segment net revenue | Printing | Supplies | ||||
Segment Information | ||||
Total net revenue | 3,120 | 2,840 | 9,284 | 9,040 |
Total segment net revenue | Printing | Commercial Hardware | ||||
Segment Information | ||||
Total net revenue | 986 | 1,007 | 2,854 | 2,928 |
Total segment net revenue | Printing | Consumer Hardware | ||||
Segment Information | ||||
Total net revenue | 592 | 576 | 1,786 | 1,734 |
Total segment net revenue | Corporate Investments | ||||
Segment Information | ||||
Total net revenue | 2 | 0 | 7 | 6 |
Net revenue eliminations and other | ||||
Segment Information | ||||
Total net revenue | $ (44) | $ (43) | $ (92) | $ 49 |
Restructuring and Other Charg41
Restructuring and Other Charges - Summary of Cost Saving Plan Activities (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |
Jul. 31, 2017 | Jul. 31, 2017 | Jul. 31, 2016 | |
Restructuring Reserve [Roll Forward] | |||
Accrued balance, beginning of the period | $ 58 | $ 63 | |
Charges | 171 | 139 | |
Cash payments | (93) | (114) | |
Non-cash and other adjustments | (42) | (22) | |
Accrued balance, beginning of the period | $ 94 | 94 | 66 |
Total costs incurred to date as of July 31, 2017 | 1,496 | 1,496 | |
Reflected in Consolidated Condensed Balance Sheets | |||
Other accrued liabilities | 93 | 93 | |
Other non-current liabilities | 1 | 1 | |
Restructuring Costs [Abstract] | |||
Restructuring charges | 21 | ||
Fiscal 2017 Plan | Severance | |||
Restructuring Reserve [Roll Forward] | |||
Accrued balance, beginning of the period | 24 | 0 | |
Charges | 95 | 0 | |
Cash payments | (46) | 0 | |
Non-cash and other adjustments | 4 | 0 | |
Accrued balance, beginning of the period | 77 | 77 | 0 |
Total costs incurred to date as of July 31, 2017 | 119 | 119 | |
Reflected in Consolidated Condensed Balance Sheets | |||
Other accrued liabilities | 77 | 77 | |
Other non-current liabilities | 0 | 0 | |
Restructuring Costs [Abstract] | |||
Restructuring charges | 14 | ||
Fiscal 2017 Plan | Infrastructure and other | |||
Restructuring Reserve [Roll Forward] | |||
Accrued balance, beginning of the period | 0 | 0 | |
Charges | 60 | 0 | |
Cash payments | (6) | 0 | |
Non-cash and other adjustments | (52) | 0 | |
Accrued balance, beginning of the period | 2 | 2 | 0 |
Total costs incurred to date as of July 31, 2017 | 60 | 60 | |
Reflected in Consolidated Condensed Balance Sheets | |||
Other accrued liabilities | 2 | 2 | |
Other non-current liabilities | 0 | 0 | |
Restructuring Costs [Abstract] | |||
Restructuring charges | 2 | ||
Impairment of asset | 52 | ||
Fiscal 2015 Plan | Infrastructure and other | |||
Restructuring Reserve [Roll Forward] | |||
Accrued balance, beginning of the period | 4 | 0 | |
Charges | 0 | 27 | |
Cash payments | (2) | (3) | |
Non-cash and other adjustments | 0 | (19) | |
Accrued balance, beginning of the period | 2 | 2 | 5 |
Total costs incurred to date as of July 31, 2017 | 27 | 27 | |
Reflected in Consolidated Condensed Balance Sheets | |||
Other accrued liabilities | 2 | 2 | |
Other non-current liabilities | 0 | 0 | |
Restructuring Costs [Abstract] | |||
Restructuring charges | 0 | ||
Fiscal 2015 Plan | Severance and PRP | |||
Restructuring Reserve [Roll Forward] | |||
Accrued balance, beginning of the period | 21 | 39 | |
Charges | 15 | 107 | |
Cash payments | (35) | (83) | |
Non-cash and other adjustments | 6 | (12) | |
Accrued balance, beginning of the period | 7 | 7 | 51 |
Total costs incurred to date as of July 31, 2017 | 171 | 171 | |
Reflected in Consolidated Condensed Balance Sheets | |||
Other accrued liabilities | 7 | 7 | |
Other non-current liabilities | 0 | 0 | |
Restructuring Costs [Abstract] | |||
Restructuring charges | 5 | ||
Fiscal 2012 Plan | Infrastructure and other | |||
Restructuring Reserve [Roll Forward] | |||
Accrued balance, beginning of the period | 2 | 3 | |
Charges | 0 | 1 | |
Cash payments | 0 | 0 | |
Non-cash and other adjustments | 0 | 0 | |
Accrued balance, beginning of the period | 2 | 2 | 4 |
Total costs incurred to date as of July 31, 2017 | 44 | 44 | |
Reflected in Consolidated Condensed Balance Sheets | |||
Other accrued liabilities | 1 | 1 | |
Other non-current liabilities | 1 | 1 | |
Restructuring Costs [Abstract] | |||
Restructuring charges | 0 | ||
Fiscal 2012 Plan | Severance and EER | |||
Restructuring Reserve [Roll Forward] | |||
Accrued balance, beginning of the period | 7 | 21 | |
Charges | 1 | 4 | |
Cash payments | (4) | (28) | |
Non-cash and other adjustments | 0 | 9 | |
Accrued balance, beginning of the period | 4 | 4 | $ 6 |
Total costs incurred to date as of July 31, 2017 | 1,075 | 1,075 | |
Reflected in Consolidated Condensed Balance Sheets | |||
Other accrued liabilities | 4 | 4 | |
Other non-current liabilities | 0 | $ 0 | |
Restructuring Costs [Abstract] | |||
Restructuring charges | $ 0 |
Restructuring and Other Charg42
Restructuring and Other Charges - Fiscal 2017 Plan (Details) - Fiscal 2017 Plan | Oct. 10, 2016USD ($)employee |
Minimum | |
Restructuring Cost and Reserve [Line Items] | |
Expected aggregate pre-tax charges | $ | $ 350,000,000 |
Expected positions to be eliminated | employee | 3,000 |
Maximum | |
Restructuring Cost and Reserve [Line Items] | |
Expected aggregate pre-tax charges | $ | $ 500,000,000 |
Expected positions to be eliminated | employee | 4,000 |
Restructuring and Other Charg43
Restructuring and Other Charges - Fiscal 2015 Plan (Details) employee in Thousands | Oct. 31, 2016employee |
Fiscal 2015 Plan | |
Restructuring Cost and Reserve [Line Items] | |
Number of employees exited by the end of fiscal year 2016 | 3 |
Restructuring and Other Charg44
Restructuring and Other Charges - Other Charges (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jul. 31, 2017 | Jul. 31, 2016 | Jul. 31, 2017 | Jul. 31, 2016 | |
Restructuring and Related Activities [Abstract] | ||||
Other charges | $ 25 | $ 5 | $ 78 | $ 17 |
Retirement and Post-Retiremen45
Retirement and Post-Retirement Benefit Plans - Schedule of Pension and Post-Retirement Benefit (Credit) Cost (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jul. 31, 2017 | Jul. 31, 2016 | Jul. 31, 2017 | Jul. 31, 2016 | |
Amortization and deferrals: | ||||
Settlement loss | $ 1 | $ 0 | $ 4 | $ 0 |
Post-Retirement Benefit Plans | ||||
Retirement and post-retirement benefit plans | ||||
Service cost | 1 | 0 | 1 | 0 |
Interest cost | 4 | 5 | 13 | 15 |
Expected return on plan assets | (7) | (8) | (19) | (24) |
Amortization and deferrals: | ||||
Actuarial loss (gain) | (5) | (3) | (12) | (9) |
Prior service benefit | (4) | (4) | (14) | (12) |
Net periodic benefit (credit) cost | (11) | (10) | (31) | (30) |
Settlement loss | 0 | 0 | 0 | 0 |
Special termination benefits | 0 | 9 | ||
Total periodic benefit (credit) cost | (11) | (10) | (31) | (21) |
U.S. | ||||
Retirement and post-retirement benefit plans | ||||
Service cost | 0 | 0 | ||
Interest cost | 351 | 408 | ||
Expected return on plan assets | (507) | (549) | ||
Amortization and deferrals: | ||||
Actuarial loss (gain) | 55 | 42 | ||
Prior service benefit | 0 | 0 | ||
Net periodic benefit (credit) cost | (101) | (99) | ||
Settlement loss | 3 | 1 | ||
Special termination benefits | 0 | 0 | ||
Total periodic benefit (credit) cost | (98) | (98) | ||
U.S. | Defined Benefit Plans | ||||
Retirement and post-retirement benefit plans | ||||
Service cost | 0 | 0 | ||
Interest cost | 117 | 136 | ||
Expected return on plan assets | (168) | (183) | ||
Amortization and deferrals: | ||||
Actuarial loss (gain) | 19 | 14 | ||
Prior service benefit | 0 | 0 | ||
Net periodic benefit (credit) cost | (32) | (33) | ||
Settlement loss | 0 | 0 | ||
Total periodic benefit (credit) cost | (32) | (33) | ||
Non-U.S. | ||||
Retirement and post-retirement benefit plans | ||||
Service cost | 36 | 35 | ||
Interest cost | 12 | 18 | ||
Expected return on plan assets | (24) | (36) | ||
Amortization and deferrals: | ||||
Actuarial loss (gain) | 30 | 18 | ||
Prior service benefit | (3) | (3) | ||
Net periodic benefit (credit) cost | 51 | 32 | ||
Settlement loss | 1 | 1 | ||
Special termination benefits | 0 | 0 | ||
Total periodic benefit (credit) cost | $ 52 | $ 33 | ||
Non-U.S. | Defined Benefit Plans | ||||
Retirement and post-retirement benefit plans | ||||
Service cost | 12 | 12 | ||
Interest cost | 4 | 6 | ||
Expected return on plan assets | (8) | (12) | ||
Amortization and deferrals: | ||||
Actuarial loss (gain) | 10 | 6 | ||
Prior service benefit | (1) | (1) | ||
Net periodic benefit (credit) cost | 17 | 11 | ||
Settlement loss | 1 | 0 | ||
Total periodic benefit (credit) cost | $ 18 | $ 11 |
Retirement and Post-Retiremen46
Retirement and Post-Retirement Benefit Plans - Narrative (Details) $ in Millions | 9 Months Ended |
Jul. 31, 2017USD ($) | |
Post-Retirement Benefit Plans | |
Retirement and post-retirement benefit plans | |
Anticipated contributions | $ 9 |
Contributions to benefit plans | 7 |
Non-U.S. | Defined Benefit Plans | |
Retirement and post-retirement benefit plans | |
Anticipated contributions | 26 |
Contributions to benefit plans | 21 |
U.S. | Non-qualified plan | |
Retirement and post-retirement benefit plans | |
Anticipated contributions | 33 |
Contributions to benefit plans | $ 27 |
Stock-Based Compensation - Sche
Stock-Based Compensation - Schedule of Stock-Based Compensation Expense and the Resulting Tax Benefits from Continuing Operations (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jul. 31, 2017 | Jul. 31, 2016 | Jul. 31, 2017 | Jul. 31, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||
Stock-based compensation expense | $ 46 | $ 39 | $ 169 | $ 140 |
Income tax benefit | (15) | (13) | (54) | (48) |
Stock-based compensation expense, net of tax | $ 31 | $ 26 | $ 115 | $ 92 |
Stock-Based Compensation - Sc48
Stock-Based Compensation - Schedule of Weighted-Average Fair Value and the Assumptions Used to Measure Fair Value (Details) - $ / shares | 3 Months Ended | 9 Months Ended | ||
Jul. 31, 2017 | Jul. 31, 2016 | Jul. 31, 2017 | Jul. 31, 2016 | |
Restricted Stock Awards | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Weighted-average fair value (usd per share) | $ 20 | $ 13 | ||
Expected volatility (percent) | 30.50% | 32.50% | ||
Risk-free interest rate (percent) | 1.40% | 1.20% | ||
Expected performance period in years | 2 years 10 months 24 days | 2 years 10 months 24 days | ||
Stock Options | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Weighted-average fair value (usd per share) | $ 4 | $ 2 | $ 4 | $ 4 |
Expected volatility (percent) | 28.00% | 31.60% | 28.00% | 36.20% |
Risk-free interest rate (percent) | 1.90% | 1.30% | 1.90% | 1.80% |
Expected dividend yield (percent) | 2.80% | 4.30% | 2.80% | 3.50% |
Expected term in years | 5 years 6 months | 5 years 6 months | 5 years 6 months | 6 years |
Stock-Based Compensation - Sc49
Stock-Based Compensation - Schedule of Restricted Stock Award Activity (Details) - Restricted Stock Awards shares in Thousands | 9 Months Ended |
Jul. 31, 2017$ / sharesshares | |
Shares | |
Outstanding at beginning of period (shares) | shares | 28,710 |
Granted (shares) | shares | 14,618 |
Vested (shares) | shares | (11,114) |
Forfeited (shares) | shares | (624) |
Outstanding at end of period (shares) | shares | 31,590 |
Weighted-Average Grant Date Fair Value Per Share | |
Outstanding at beginning of period (usd per share) | $ / shares | $ 13 |
Granted (usd per share) | $ / shares | 16 |
Vested (usd per share) | $ / shares | 14 |
Forfeited (usd per share) | $ / shares | 14 |
Outstanding at end of period (usd per share) | $ / shares | $ 14 |
Stock-Based Compensation - Narr
Stock-Based Compensation - Narrative (Details) $ in Millions | 3 Months Ended | 9 Months Ended |
Jul. 31, 2017USD ($) | Jul. 31, 2017USD ($) | |
Stock-Based Compensation | ||
Intrinsic value of options exercised | $ 20 | $ 37 |
Unrecognized pre-tax, stock-based compensation expense | 9 | 9 |
Restricted Stock Awards | ||
Stock-Based Compensation | ||
Unrecognized pre-tax stock-based compensation expense | $ 227 | $ 227 |
Remaining weighted-average vesting period over which pre-tax stock-based compensation expense is expected to be recognized | 1 year 4 months 24 days | |
Stock Options | ||
Stock-Based Compensation | ||
Remaining weighted-average vesting period over which pre-tax stock-based compensation expense is expected to be recognized | 1 year 1 month 6 days |
Stock-Based Compensation - Sc51
Stock-Based Compensation - Schedule of Stock Options Activity (Details) $ / shares in Units, shares in Thousands, $ in Millions | 9 Months Ended |
Jul. 31, 2017USD ($)$ / sharesshares | |
Shares | |
Outstanding at beginning of period (shares) | shares | 28,218 |
Granted (shares) | shares | 104 |
Exercised (shares) | shares | (4,863) |
Forfeited and expired (shares) | shares | (766) |
Outstanding at end of period (shares) | shares | 22,693 |
Vested and expected to vest at end of period (shares) | shares | 22,152 |
Exercisable at end of period (shares) | shares | 14,923 |
Weighted- Average Exercise Price | |
Outstanding at beginning of period (usd per share) | $ / shares | $ 12 |
Granted (usd per share) | $ / shares | 19 |
Exercised (usd per share) | $ / shares | 10 |
Forfeited and expired (usd per share) | $ / shares | 17 |
Outstanding at end of period (usd per share) | $ / shares | 13 |
Vested and expected to vest at end of period (usd per share) | $ / shares | 13 |
Exercisable at end of period (usd per share) | $ / shares | $ 12 |
Weighted- Average Remaining Contractual Term | |
Outstanding at end of period | 4 years 2 months 12 days |
Vested and expected to vest at end of period | 4 years 2 months 12 days |
Exercisable at end of period | 3 years 3 months 18 days |
Aggregate Intrinsic Value | |
Outstanding at end of period | $ | $ 145 |
Vested and expected to vest at end of period | $ | 142 |
Exercisable at end of period | $ | $ 108 |
Taxes on Earnings (Details)
Taxes on Earnings (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jul. 31, 2017 | Jul. 31, 2016 | Jul. 31, 2017 | Jul. 31, 2016 | |
Major components of assets and liabilities included in distribution | ||||
Changes in tax indemnifications amounts | $ (56) | $ (36) | $ (201) | $ (135) |
Effective tax rate (percent) | 22.50% | 22.00% | 23.10% | 21.70% |
U.S. federal statutory income tax rate (percent) | 35.00% | |||
Net tax benefit related to discrete items | $ 27 | $ 14 | $ 31 | $ 72 |
Tax benefits from restructuring charges | 14 | $ 8 | 45 | 46 |
Tax benefits from acquisition charges | 15 | 28 | ||
Uncertain tax position charges | 19 | 25 | ||
Various other items | 12 | |||
State tax provision | 26 | |||
Tax benefit arising from retroactive research and development credit | $ 41 | |||
Excess tax benefits from stock options, restricted stock and performance share units | 2 | 14 | ||
Unrecognized tax benefits | 10,900 | 10,900 | ||
Unrecognized tax benefits that would affect effective tax rate if realized | 3,900 | 3,900 | ||
Accrued income tax payable for interest and penalties | 239 | 239 | ||
Hewlett-Packard Enterprise | ||||
Major components of assets and liabilities included in distribution | ||||
Net receivable for certain tax liabilities under the Tax Matters Agreement | $ 1,600 | 1,600 | ||
Changes in tax indemnifications amounts | $ 24 |
Supplementary Financial Infor53
Supplementary Financial Information - Accounts Receivable (Details) - USD ($) $ in Millions | Jul. 31, 2017 | Oct. 31, 2016 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Accounts receivable | $ 4,317 | $ 4,221 |
Allowance for doubtful accounts | (84) | (107) |
Accounts receivable | $ 4,233 | $ 4,114 |
Supplementary Financial Infor54
Supplementary Financial Information - Allowance for Doubtful Accounts (Details) $ in Millions | 9 Months Ended |
Jul. 31, 2017USD ($) | |
Allowance for Doubtful Accounts Receivable [Roll Forward] | |
Balance at beginning of period | $ 107 |
Provision for doubtful accounts | 7 |
Deductions, net of recoveries | (30) |
Balance at end of period | $ 84 |
Supplementary Financial Infor55
Supplementary Financial Information - Schedule of Transferred Trade Receivables Not Collected from Third Parties (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jul. 31, 2017 | Jul. 31, 2016 | Jul. 31, 2017 | Jul. 31, 2016 | |
Trade Receivables Sold and Cash Received Roll Forward | ||||
Balance at beginning of period | $ 123 | $ 71 | $ 149 | $ 93 |
Trade receivables sold | 2,268 | 2,126 | 6,969 | 5,896 |
Cash receipts | (2,269) | (2,080) | (6,997) | (5,873) |
Foreign currency and other | 8 | (3) | 9 | (2) |
Balance at end of period | $ 130 | $ 114 | $ 130 | $ 114 |
Supplementary Financial Infor56
Supplementary Financial Information - Inventory (Details) - USD ($) $ in Millions | Jul. 31, 2017 | Oct. 31, 2016 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Finished goods | $ 3,384 | $ 3,103 |
Purchased parts and fabricated assemblies | 1,800 | 1,381 |
Inventory | $ 5,184 | $ 4,484 |
Supplementary Financial Infor57
Supplementary Financial Information - Other Current Assets (Details) - USD ($) $ in Millions | Jul. 31, 2017 | Oct. 31, 2016 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Value-added taxes receivable | $ 772 | $ 795 |
Available-for-sale-investments | 1,020 | 0 |
Supplier and other receivables | 1,940 | 1,700 |
Prepaid and other current assets | 1,327 | 1,087 |
Other current assets | $ 5,059 | $ 3,582 |
Supplementary Financial Infor58
Supplementary Financial Information - Property Plant & Equipment (Details) - USD ($) $ in Millions | Jul. 31, 2017 | Oct. 31, 2016 |
Property, Plant and Equipment, Net | ||
Property, plant and equipment, gross | $ 5,979 | $ 6,084 |
Accumulated depreciation | (4,272) | (4,348) |
Property, plant and equipment, net | 1,707 | 1,736 |
Land, buildings and leasehold improvements | ||
Property, Plant and Equipment, Net | ||
Property, plant and equipment, gross | 2,065 | 2,421 |
Machinery and equipment, including equipment held for lease | ||
Property, Plant and Equipment, Net | ||
Property, plant and equipment, gross | $ 3,914 | $ 3,663 |
Supplementary Financial Infor59
Supplementary Financial Information - Other Non-Current Assets (Details) - USD ($) $ in Millions | Jul. 31, 2017 | Oct. 31, 2016 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Tax indemnifications receivable | $ 1,662 | $ 1,591 |
Deferred tax assets | 372 | 254 |
Other | 1,128 | 1,316 |
Other non-current assets | $ 3,162 | $ 3,161 |
Supplementary Financial Infor60
Supplementary Financial Information - Other Accrued Liabilities (Details) - USD ($) $ in Millions | Jul. 31, 2017 | Oct. 31, 2016 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Other accrued taxes | $ 815 | $ 755 |
Warranty | 658 | 729 |
Sales and marketing programs | 2,341 | 2,312 |
Other | 2,418 | 1,922 |
Other accrued liabilities | $ 6,232 | $ 5,718 |
Supplementary Financial Infor61
Supplementary Financial Information - Other Non-Current Liabilities (Details) - USD ($) $ in Millions | Jul. 31, 2017 | Oct. 31, 2016 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Pension, post-retirement, and post-employment liabilities | $ 2,506 | $ 2,705 |
Deferred tax liability | 1,586 | 1,116 |
Tax liability | 1,649 | 1,910 |
Deferred revenue | 894 | 865 |
Other | 834 | 737 |
Other non-current liabilities | $ 7,469 | $ 7,333 |
Fair Value (Details)
Fair Value (Details) - USD ($) $ in Millions | Jul. 31, 2017 | Oct. 31, 2016 |
Assets: | ||
Cash Equivalents | $ 5,416 | $ 4,660 |
Derivative Instruments | 66 | 325 |
Liabilities: | ||
Derivative Instruments | 658 | 97 |
Fair value, short- and long-term debt | 8,100 | 7,100 |
Carrying value, short- and long-term debt | 7,800 | 6,800 |
Fair Value Measured on a Recurring Basis | ||
Assets: | ||
Total Assets | 6,563 | 5,040 |
Liabilities: | ||
Total Liabilities | 658 | 97 |
Fair Value Measured on a Recurring Basis | Corporate debt | ||
Assets: | ||
Cash Equivalents | 1,929 | 2,092 |
Available-for-Sale Investments | 506 | 0 |
Fair Value Measured on a Recurring Basis | Financial institution instruments | ||
Assets: | ||
Cash Equivalents | 5 | 0 |
Available-for-Sale Investments | 50 | 2 |
Fair Value Measured on a Recurring Basis | Government debt | ||
Assets: | ||
Cash Equivalents | 3,482 | 2,568 |
Available-for-Sale Investments | 464 | 0 |
Fair Value Measured on a Recurring Basis | Mutual funds | ||
Assets: | ||
Available-for-Sale Investments | 49 | 44 |
Fair Value Measured on a Recurring Basis | Marketable equity securities | ||
Assets: | ||
Available-for-Sale Investments | 12 | 9 |
Fair Value Measured on a Recurring Basis | Interest rate contracts | ||
Assets: | ||
Derivative Instruments | 5 | 48 |
Fair Value Measured on a Recurring Basis | Foreign currency contracts | ||
Assets: | ||
Derivative Instruments | 58 | 277 |
Liabilities: | ||
Derivative Instruments | 658 | 95 |
Fair Value Measured on a Recurring Basis | Other derivatives | ||
Assets: | ||
Derivative Instruments | 3 | 0 |
Liabilities: | ||
Derivative Instruments | 0 | 2 |
Fair Value Measured on a Recurring Basis | Level 1 | ||
Assets: | ||
Total Assets | 3,715 | 2,617 |
Liabilities: | ||
Total Liabilities | 0 | 0 |
Fair Value Measured on a Recurring Basis | Level 1 | Corporate debt | ||
Assets: | ||
Cash Equivalents | 0 | 0 |
Available-for-Sale Investments | 0 | 0 |
Fair Value Measured on a Recurring Basis | Level 1 | Financial institution instruments | ||
Assets: | ||
Cash Equivalents | 0 | 0 |
Available-for-Sale Investments | 0 | 0 |
Fair Value Measured on a Recurring Basis | Level 1 | Government debt | ||
Assets: | ||
Cash Equivalents | 3,436 | 2,568 |
Available-for-Sale Investments | 224 | 0 |
Fair Value Measured on a Recurring Basis | Level 1 | Mutual funds | ||
Assets: | ||
Available-for-Sale Investments | 49 | 44 |
Fair Value Measured on a Recurring Basis | Level 1 | Marketable equity securities | ||
Assets: | ||
Available-for-Sale Investments | 6 | 5 |
Fair Value Measured on a Recurring Basis | Level 1 | Interest rate contracts | ||
Assets: | ||
Derivative Instruments | 0 | 0 |
Fair Value Measured on a Recurring Basis | Level 1 | Foreign currency contracts | ||
Assets: | ||
Derivative Instruments | 0 | 0 |
Liabilities: | ||
Derivative Instruments | 0 | 0 |
Fair Value Measured on a Recurring Basis | Level 1 | Other derivatives | ||
Assets: | ||
Derivative Instruments | 0 | 0 |
Liabilities: | ||
Derivative Instruments | 0 | 0 |
Fair Value Measured on a Recurring Basis | Level 2 | ||
Assets: | ||
Total Assets | 2,846 | 2,412 |
Liabilities: | ||
Total Liabilities | 657 | 96 |
Fair Value Measured on a Recurring Basis | Level 2 | Corporate debt | ||
Assets: | ||
Cash Equivalents | 1,929 | 2,092 |
Available-for-Sale Investments | 506 | 0 |
Fair Value Measured on a Recurring Basis | Level 2 | Financial institution instruments | ||
Assets: | ||
Cash Equivalents | 5 | 0 |
Available-for-Sale Investments | 50 | 2 |
Fair Value Measured on a Recurring Basis | Level 2 | Government debt | ||
Assets: | ||
Cash Equivalents | 46 | 0 |
Available-for-Sale Investments | 240 | 0 |
Fair Value Measured on a Recurring Basis | Level 2 | Mutual funds | ||
Assets: | ||
Available-for-Sale Investments | 0 | 0 |
Fair Value Measured on a Recurring Basis | Level 2 | Marketable equity securities | ||
Assets: | ||
Available-for-Sale Investments | 6 | 4 |
Fair Value Measured on a Recurring Basis | Level 2 | Interest rate contracts | ||
Assets: | ||
Derivative Instruments | 5 | 48 |
Fair Value Measured on a Recurring Basis | Level 2 | Foreign currency contracts | ||
Assets: | ||
Derivative Instruments | 56 | 266 |
Liabilities: | ||
Derivative Instruments | 657 | 94 |
Fair Value Measured on a Recurring Basis | Level 2 | Other derivatives | ||
Assets: | ||
Derivative Instruments | 3 | 0 |
Liabilities: | ||
Derivative Instruments | 0 | 2 |
Fair Value Measured on a Recurring Basis | Level 3 | ||
Assets: | ||
Total Assets | 2 | 11 |
Liabilities: | ||
Total Liabilities | 1 | 1 |
Fair Value Measured on a Recurring Basis | Level 3 | Corporate debt | ||
Assets: | ||
Cash Equivalents | 0 | 0 |
Available-for-Sale Investments | 0 | 0 |
Fair Value Measured on a Recurring Basis | Level 3 | Financial institution instruments | ||
Assets: | ||
Cash Equivalents | 0 | 0 |
Available-for-Sale Investments | 0 | 0 |
Fair Value Measured on a Recurring Basis | Level 3 | Government debt | ||
Assets: | ||
Cash Equivalents | 0 | 0 |
Available-for-Sale Investments | 0 | 0 |
Fair Value Measured on a Recurring Basis | Level 3 | Mutual funds | ||
Assets: | ||
Available-for-Sale Investments | 0 | 0 |
Fair Value Measured on a Recurring Basis | Level 3 | Marketable equity securities | ||
Assets: | ||
Available-for-Sale Investments | 0 | 0 |
Fair Value Measured on a Recurring Basis | Level 3 | Interest rate contracts | ||
Assets: | ||
Derivative Instruments | 0 | 0 |
Fair Value Measured on a Recurring Basis | Level 3 | Foreign currency contracts | ||
Assets: | ||
Derivative Instruments | 2 | 11 |
Liabilities: | ||
Derivative Instruments | 1 | 1 |
Fair Value Measured on a Recurring Basis | Level 3 | Other derivatives | ||
Assets: | ||
Derivative Instruments | 0 | 0 |
Liabilities: | ||
Derivative Instruments | $ 0 | $ 0 |
Financial Instruments - Schedul
Financial Instruments - Schedule of Cash Equivalents and Available-for-Sale Investments (Details) - USD ($) $ in Millions | Jul. 31, 2017 | Oct. 31, 2016 |
Cash Equivalents: | ||
Cost | $ 5,416 | $ 4,660 |
Fair Value | 5,416 | 4,660 |
Available-for-Sale Investments: | ||
Cost | 1,060 | 38 |
Gross Unrealized Gain | 17 | 12 |
Gross Unrealized Loss | 0 | 0 |
Fair Value | 1,077 | 50 |
Total cash equivalents and available-for-sale investments, Cost | 6,476 | 4,698 |
Total cash equivalents and available-for-sale investments, Fair Value | 6,493 | 4,710 |
Corporate debt | ||
Cash Equivalents: | ||
Cost | 1,929 | 2,092 |
Fair Value | 1,929 | 2,092 |
Available-for-Sale Investments: | ||
Cost | 506 | 0 |
Gross Unrealized Gain | 0 | 0 |
Gross Unrealized Loss | 0 | 0 |
Fair Value | 506 | 0 |
Financial institution instruments | ||
Cash Equivalents: | ||
Cost | 5 | 0 |
Fair Value | 5 | 0 |
Available-for-Sale Investments: | ||
Cost | 50 | 2 |
Gross Unrealized Gain | 0 | 0 |
Gross Unrealized Loss | 0 | 0 |
Fair Value | 50 | 2 |
Government debt | ||
Cash Equivalents: | ||
Cost | 3,482 | 2,568 |
Fair Value | 3,482 | 2,568 |
Available-for-Sale Investments: | ||
Cost | 464 | 0 |
Gross Unrealized Gain | 0 | 0 |
Gross Unrealized Loss | 0 | 0 |
Fair Value | 464 | 0 |
Marketable equity securities | ||
Available-for-Sale Investments: | ||
Cost | 1 | 1 |
Gross Unrealized Gain | 7 | 3 |
Gross Unrealized Loss | 0 | 0 |
Fair Value | 8 | 4 |
Mutual funds | ||
Available-for-Sale Investments: | ||
Cost | 39 | 35 |
Gross Unrealized Gain | 10 | 9 |
Gross Unrealized Loss | 0 | 0 |
Fair Value | $ 49 | $ 44 |
Financial Instruments - Narrati
Financial Instruments - Narrative (Details) - USD ($) $ in Millions | 9 Months Ended | 12 Months Ended |
Jul. 31, 2017 | Oct. 31, 2016 | |
Investments, All Other Investments [Abstract] | ||
Carrying value of equity securities in privately-held companies | $ 34 | $ 16 |
Fair value of derivatives with credit contingent features in a net liability position | $ 583 | $ 2 |
Period to collateralize | 2 days | 2 days |
Derivatives, Fair Value | ||
Loss expected to be reclassified from Accumulated OCI into earnings in next 12 months | $ 442 | |
Cash flow hedges | Minimum | ||
Derivatives, Fair Value | ||
Duration of the loan term (period) | 2 years | |
Cash flow hedges | Maximum | ||
Derivatives, Fair Value | ||
Duration of the loan term (period) | 5 years |
Financial Instruments - Sched65
Financial Instruments - Schedule of Contractual Maturities of Available for-sale Debt Securities (Details) $ in Millions | Jul. 31, 2017USD ($) |
Amortized Cost | |
Due in one year | $ 414 |
Due in one to five years | 606 |
Fair Value | |
Due in one year | 414 |
Due in one to five years | $ 606 |
Financial Instruments - Sched66
Financial Instruments - Schedule of Gross Notional and Fair Value of Derivative Financial Instruments in the Consolidated Condensed Balance Sheets (Details) - USD ($) $ in Millions | Jul. 31, 2017 | Oct. 31, 2016 |
Derivatives, Fair Value | ||
Outstanding Gross Notional | $ 23,318 | $ 17,936 |
Gross Amount Recognized | 66 | 325 |
Derivative Liabilities | 658 | 97 |
Other Current Assets | ||
Derivatives, Fair Value | ||
Gross Amount Recognized | 52 | 214 |
Other Non-Current Assets | ||
Derivatives, Fair Value | ||
Gross Amount Recognized | 14 | 111 |
Other Accrued Liabilities | ||
Derivatives, Fair Value | ||
Derivative Liabilities | 536 | 85 |
Other Non-Current Liabilities | ||
Derivatives, Fair Value | ||
Derivative Liabilities | 122 | 12 |
Derivatives designated as hedging instruments | ||
Derivatives, Fair Value | ||
Outstanding Gross Notional | 18,627 | 13,852 |
Derivatives designated as hedging instruments | Other Current Assets | ||
Derivatives, Fair Value | ||
Gross Amount Recognized | 33 | 203 |
Derivatives designated as hedging instruments | Other Non-Current Assets | ||
Derivatives, Fair Value | ||
Gross Amount Recognized | 14 | 111 |
Derivatives designated as hedging instruments | Other Accrued Liabilities | ||
Derivatives, Fair Value | ||
Derivative Liabilities | 522 | 52 |
Derivatives designated as hedging instruments | Other Non-Current Liabilities | ||
Derivatives, Fair Value | ||
Derivative Liabilities | 122 | 12 |
Derivatives designated as hedging instruments | Fair value hedges | Interest rate contracts | ||
Derivatives, Fair Value | ||
Outstanding Gross Notional | 2,500 | 2,000 |
Derivatives designated as hedging instruments | Fair value hedges | Interest rate contracts | Other Current Assets | ||
Derivatives, Fair Value | ||
Gross Amount Recognized | 0 | 0 |
Derivatives designated as hedging instruments | Fair value hedges | Interest rate contracts | Other Non-Current Assets | ||
Derivatives, Fair Value | ||
Gross Amount Recognized | 5 | 48 |
Derivatives designated as hedging instruments | Fair value hedges | Interest rate contracts | Other Accrued Liabilities | ||
Derivatives, Fair Value | ||
Derivative Liabilities | 0 | 0 |
Derivatives designated as hedging instruments | Fair value hedges | Interest rate contracts | Other Non-Current Liabilities | ||
Derivatives, Fair Value | ||
Derivative Liabilities | 0 | 0 |
Derivatives designated as hedging instruments | Cash flow hedges | Foreign currency contracts | ||
Derivatives, Fair Value | ||
Outstanding Gross Notional | 16,127 | 11,852 |
Derivatives designated as hedging instruments | Cash flow hedges | Foreign currency contracts | Other Current Assets | ||
Derivatives, Fair Value | ||
Gross Amount Recognized | 33 | 203 |
Derivatives designated as hedging instruments | Cash flow hedges | Foreign currency contracts | Other Non-Current Assets | ||
Derivatives, Fair Value | ||
Gross Amount Recognized | 9 | 63 |
Derivatives designated as hedging instruments | Cash flow hedges | Foreign currency contracts | Other Accrued Liabilities | ||
Derivatives, Fair Value | ||
Derivative Liabilities | 522 | 52 |
Derivatives designated as hedging instruments | Cash flow hedges | Foreign currency contracts | Other Non-Current Liabilities | ||
Derivatives, Fair Value | ||
Derivative Liabilities | 122 | 12 |
Derivatives not designated as hedging instruments | ||
Derivatives, Fair Value | ||
Outstanding Gross Notional | 4,691 | 4,084 |
Derivatives not designated as hedging instruments | Other Current Assets | ||
Derivatives, Fair Value | ||
Gross Amount Recognized | 19 | 11 |
Derivatives not designated as hedging instruments | Other Non-Current Assets | ||
Derivatives, Fair Value | ||
Gross Amount Recognized | 0 | 0 |
Derivatives not designated as hedging instruments | Other Accrued Liabilities | ||
Derivatives, Fair Value | ||
Derivative Liabilities | 14 | 33 |
Derivatives not designated as hedging instruments | Other Non-Current Liabilities | ||
Derivatives, Fair Value | ||
Derivative Liabilities | 0 | 0 |
Derivatives not designated as hedging instruments | Foreign currency contracts | ||
Derivatives, Fair Value | ||
Outstanding Gross Notional | 4,572 | 3,934 |
Derivatives not designated as hedging instruments | Foreign currency contracts | Other Current Assets | ||
Derivatives, Fair Value | ||
Gross Amount Recognized | 16 | 11 |
Derivatives not designated as hedging instruments | Foreign currency contracts | Other Non-Current Assets | ||
Derivatives, Fair Value | ||
Gross Amount Recognized | 0 | 0 |
Derivatives not designated as hedging instruments | Foreign currency contracts | Other Accrued Liabilities | ||
Derivatives, Fair Value | ||
Derivative Liabilities | 14 | 31 |
Derivatives not designated as hedging instruments | Foreign currency contracts | Other Non-Current Liabilities | ||
Derivatives, Fair Value | ||
Derivative Liabilities | 0 | 0 |
Derivatives not designated as hedging instruments | Other derivatives | ||
Derivatives, Fair Value | ||
Outstanding Gross Notional | 119 | 150 |
Derivatives not designated as hedging instruments | Other derivatives | Other Current Assets | ||
Derivatives, Fair Value | ||
Gross Amount Recognized | 3 | 0 |
Derivatives not designated as hedging instruments | Other derivatives | Other Non-Current Assets | ||
Derivatives, Fair Value | ||
Gross Amount Recognized | 0 | 0 |
Derivatives not designated as hedging instruments | Other derivatives | Other Accrued Liabilities | ||
Derivatives, Fair Value | ||
Derivative Liabilities | 0 | 2 |
Derivatives not designated as hedging instruments | Other derivatives | Other Non-Current Liabilities | ||
Derivatives, Fair Value | ||
Derivative Liabilities | $ 0 | $ 0 |
Financial Instruments - Sched67
Financial Instruments - Schedule of Information Related to the Potential Effect of Entity's Master Netting Agreements and Collateral Security Agreements (Details) - USD ($) $ in Millions | 9 Months Ended | 12 Months Ended |
Jul. 31, 2017 | Oct. 31, 2016 | |
Derivative assets | ||
Gross Amount Recognized | $ 66 | $ 325 |
Gross Amount Offset | 0 | 0 |
Net Amount Presented | 66 | 325 |
Gross Amounts Not Offset | ||
Derivatives | 63 | 88 |
Financial Collateral | 0 | 189 |
Net Amount | 3 | 48 |
Derivative liabilities | ||
Gross Amount Recognized | 658 | 97 |
Gross Amount Offset | 0 | 0 |
Net Amount Presented | 658 | 97 |
Gross Amounts Not Offset | ||
Derivatives | 63 | 88 |
Financial Collateral | 519 | 2 |
Net Amount | $ 76 | $ 7 |
Period to collateralize | 2 days | 2 days |
Financial Instruments - Sched68
Financial Instruments - Schedule of Pre-Tax Effect of Derivative Instruments and Related Hedged Items in a Fair Value Hedging Relationship (Details) - Interest rate contracts - Interest and other, net - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jul. 31, 2017 | Jul. 31, 2016 | Jul. 31, 2017 | Jul. 31, 2016 | |
Derivative Instruments, Gain (Loss) | ||||
Gain (Loss) Recognized in Earnings on Derivative | $ 5 | $ 20 | $ (43) | $ 38 |
Gain (Loss) Recognized on Related Hedged Item | $ (5) | $ (20) | $ 43 | $ (38) |
Financial Instruments - Sched69
Financial Instruments - Schedule of Pre-Tax Effect of Derivative Instruments in Cash Flow Hedging Relationships (Details) - Foreign currency contracts - Cash flow hedges - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jul. 31, 2017 | Jul. 31, 2016 | Jul. 31, 2017 | Jul. 31, 2016 | |
Pre-tax effect of derivative instruments in cash flow hedging relationships | ||||
Gain Recognized in Other Comprehensive Income (OCI) on Derivatives (Effective Portion) | $ (519) | $ 175 | $ (758) | $ 135 |
(Loss) Gain Reclassified from Accumulated OCI Into Earnings (Effective Portion) | (38) | (159) | 49 | (63) |
Net revenue | ||||
Pre-tax effect of derivative instruments in cash flow hedging relationships | ||||
(Loss) Gain Reclassified from Accumulated OCI Into Earnings (Effective Portion) | (26) | (140) | 89 | 26 |
Cost of revenue | ||||
Pre-tax effect of derivative instruments in cash flow hedging relationships | ||||
(Loss) Gain Reclassified from Accumulated OCI Into Earnings (Effective Portion) | (13) | (18) | (32) | (90) |
Operating expenses | ||||
Pre-tax effect of derivative instruments in cash flow hedging relationships | ||||
(Loss) Gain Reclassified from Accumulated OCI Into Earnings (Effective Portion) | 1 | 1 | ||
Interest and other, net | ||||
Pre-tax effect of derivative instruments in cash flow hedging relationships | ||||
(Loss) Gain Reclassified from Accumulated OCI Into Earnings (Effective Portion) | $ 0 | $ (2) | $ (9) | $ 0 |
Financial Instruments - Sched70
Financial Instruments - Schedule of Pre-Tax Effect of Derivative Instruments not Designated as Hedging Instruments on the Consolidated Condensed Statements of Earnings (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jul. 31, 2017 | Jul. 31, 2016 | Jul. 31, 2017 | Jul. 31, 2016 | |
Derivative Instruments, Gain (Loss) | ||||
Gain (Loss) Recognized in Earnings on Derivatives | $ 17 | $ (10) | $ (28) | $ (19) |
Interest and other, net | Foreign currency contracts | ||||
Derivative Instruments, Gain (Loss) | ||||
Gain (Loss) Recognized in Earnings on Derivatives | 16 | (12) | (33) | (20) |
Interest and other, net | Other derivatives | ||||
Derivative Instruments, Gain (Loss) | ||||
Gain (Loss) Recognized in Earnings on Derivatives | $ 1 | $ 2 | $ 5 | $ 1 |
Borrowings - Schedule of Notes
Borrowings - Schedule of Notes Payable and Short-Term Borrowings (Details) - USD ($) $ in Millions | Jul. 31, 2017 | Oct. 31, 2016 |
Amount Outstanding | ||
Current portion of long-term debt | $ 92 | $ 51 |
Amount outstanding | $ 1,062 | $ 78 |
Weighted-Average Interest Rate | ||
Current portion of long-term debt | 3.50% | 4.10% |
Commercial paper | ||
Amount Outstanding | ||
Commercial paper | $ 936 | $ 0 |
Weighted-Average Interest Rate | ||
Notes payable to banks, lines of credit and other | 1.60% | 0.00% |
Notes payable to banks, lines of credit and other | ||
Amount Outstanding | ||
Amount outstanding | $ 34 | $ 27 |
Weighted-Average Interest Rate | ||
Notes payable to banks, lines of credit and other | 1.40% | 2.00% |
Borrowings - Schedule of Long-T
Borrowings - Schedule of Long-Term Debt (Details) - USD ($) | 1 Months Ended | |||||||
Jan. 31, 2014 | Jul. 31, 2017 | Oct. 31, 2016 | Mar. 31, 2012 | Dec. 31, 2011 | Sep. 30, 2011 | May 31, 2011 | Dec. 31, 2010 | |
Long-term debt | ||||||||
Fair value adjustment related to hedged debt | $ 26,000,000 | $ 72,000,000 | ||||||
Less: unamortized debt issuance cost | (20,000,000) | (23,000,000) | ||||||
Less: current portion of long-term debt | (92,000,000) | (51,000,000) | ||||||
Total long-term debt | 6,744,000,000 | 6,735,000,000 | ||||||
U.S. Dollar Global Notes | ||||||||
Long-term debt | ||||||||
Long-term debt | 6,494,000,000 | 6,493,000,000 | ||||||
2009 Shelf Registration Statement- $1,350 issued at discount to par at a price of 99.827% in December 2010 at 3.75%, due December 2020 | ||||||||
Long-term debt | ||||||||
Long-term debt | 648,000,000 | 648,000,000 | ||||||
Face amount of debt instrument | $ 1,350,000,000 | |||||||
Discount to par (percent) | 99.827% | |||||||
Interest rate (percent) | 3.75% | |||||||
2009 Shelf Registration Statement- $1,250 issued at discount to par at a price of 99.799% in May 2011 at 4.3%, due June 2021 | ||||||||
Long-term debt | ||||||||
Long-term debt | 1,249,000,000 | 1,248,000,000 | ||||||
Face amount of debt instrument | $ 1,250,000,000 | |||||||
Discount to par (percent) | 99.799% | |||||||
Interest rate (percent) | 4.30% | |||||||
2009 Shelf Registration Statement- $1,000 issued at discount to par at a price of 99.816% in September 2011 at 4.375%, due September 2021 | ||||||||
Long-term debt | ||||||||
Long-term debt | 999,000,000 | 999,000,000 | ||||||
Face amount of debt instrument | $ 1,000,000,000 | |||||||
Discount to par (percent) | 99.816% | |||||||
Interest rate (percent) | 4.375% | |||||||
2009 Shelf Registration Statement- $1,500 issued at discount to par at a price of 99.707% in December 2011 at 4.65%, due December 2021 | ||||||||
Long-term debt | ||||||||
Long-term debt | 1,498,000,000 | 1,498,000,000 | ||||||
Face amount of debt instrument | $ 1,500,000,000 | |||||||
Discount to par (percent) | 99.707% | |||||||
Interest rate (percent) | 4.65% | |||||||
2009 Shelf Registration Statement- $500 issued at discount to par at a price of 99.771% in March 2012 at 4.05%, due September 2022 | ||||||||
Long-term debt | ||||||||
Long-term debt | 499,000,000 | 499,000,000 | ||||||
Face amount of debt instrument | $ 500,000,000 | |||||||
Discount to par (percent) | 99.771% | |||||||
Interest rate (percent) | 4.05% | |||||||
2009 Shelf Registration Statement- $1,200 issued at discount to par at a price of 99.863% in September 2011 at 6.0%, due September 2041 | ||||||||
Long-term debt | ||||||||
Long-term debt | 1,199,000,000 | 1,199,000,000 | ||||||
Face amount of debt instrument | $ 1,200,000,000 | |||||||
Discount to par (percent) | 99.863% | |||||||
Interest rate (percent) | 6.00% | |||||||
2012 Shelf Registration Statement- $750 issued at par in January 2014 at three-month USD LIBOR plus 0.94%, due January 2019 | ||||||||
Long-term debt | ||||||||
Long-term debt | 102,000,000 | 102,000,000 | ||||||
Face amount of debt instrument | $ 750,000,000 | |||||||
Spread on reference interest rate (percent) | 0.94% | |||||||
2012 Shelf Registration Statement- $1,250 issued at discount to par at a price of 99.954% in January 2014 at 2.75%, due January 2019 | ||||||||
Long-term debt | ||||||||
Long-term debt | 300,000,000 | 300,000,000 | ||||||
Face amount of debt instrument | $ 1,250,000,000 | |||||||
Discount to par (percent) | 99.954% | |||||||
Interest rate (percent) | 2.75% | |||||||
Other, including capital lease obligations, at 0.51%-8.50%, due in calendar years 2017-2025 | ||||||||
Long-term debt | ||||||||
Other, including capital lease obligations, at 0.51%-8.50%, due in calendar years 2017-2025 | $ 336,000,000 | $ 244,000,000 | ||||||
Minimum | Other, including capital lease obligations, at 0.51%-8.50%, due in calendar years 2017-2025 | ||||||||
Long-term debt | ||||||||
Interest rate (percent) | 0.51% | |||||||
Maximum | Other, including capital lease obligations, at 0.51%-8.50%, due in calendar years 2017-2025 | ||||||||
Long-term debt | ||||||||
Interest rate (percent) | 8.50% |
Borrowings - Narrative (Details
Borrowings - Narrative (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Jul. 31, 2017 | Jul. 31, 2016 | Jul. 31, 2017 | Jul. 31, 2016 | Nov. 01, 2015 | |
Debt Disclosure [Abstract] | |||||
Interest expense | $ 79,000,000 | $ 71,000,000 | $ 225,000,000 | $ 203,000,000 | |
Commercial paper | |||||
Line of Credit Facility [Line Items] | |||||
Maximum borrowing capacity under credit facility | $ 4,000,000,000 | ||||
Revolving credit facility | |||||
Line of Credit Facility [Line Items] | |||||
Maximum borrowing capacity under credit facility | 4,000,000,000 | 4,000,000,000 | |||
Credit facilities | |||||
Line of Credit Facility [Line Items] | |||||
Available borrowing resources | $ 832,000,000 | $ 832,000,000 |
Stockholders' Deficit - Narrati
Stockholders' Deficit - Narrative (Details) - USD ($) shares in Millions, $ in Millions | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||
Aug. 31, 2017 | Jul. 31, 2017 | Jul. 31, 2016 | Jul. 31, 2017 | Jul. 31, 2016 | |
Stockholders' Equity Note [Abstract] | |||||
Repurchases of common stock (shares) | 16 | 4 | 55 | 100 | |
Subsequent Event [Line Items] | |||||
Payment in connection with repurchases of shares | $ 300 | $ 100 | $ 911 | $ 1,159 | |
Share repurchase authorization remaining | $ 3,000 | $ 3,000 | |||
Subsequent event | |||||
Subsequent Event [Line Items] | |||||
Share repurchases that will be settled in subsequent period (shares) | 0 |
Stockholders' Deficit - Schedul
Stockholders' Deficit - Schedule of Tax Effects Related to Other Comprehensive (Loss) Income (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jul. 31, 2017 | Jul. 31, 2016 | Jul. 31, 2017 | Jul. 31, 2016 | |
Components of accumulated other comprehensive income, net of taxes | ||||
Tax benefit (provision) on other comprehensive (loss) income | $ 57 | $ (28) | $ 50 | $ 41 |
Tax effects on change in unrealized gains on available-for-sale securities | ||||
Components of accumulated other comprehensive income, net of taxes | ||||
Tax effects on change arising during the period | 0 | 0 | (1) | 0 |
Tax benefit (provision) on other comprehensive (loss) income | 0 | 0 | (1) | 0 |
Tax effects on change in unrealized components of cash flow hedges | ||||
Components of accumulated other comprehensive income, net of taxes | ||||
Tax effects on change arising during the period | 63 | (5) | 70 | 46 |
Tax effects on reclassification into earnings | (2) | (20) | 9 | 3 |
Tax benefit (provision) on other comprehensive (loss) income | 61 | (25) | 79 | 49 |
Tax (provision) benefit on gains (losses) arising during the period | ||||
Components of accumulated other comprehensive income, net of taxes | ||||
Tax effects on change arising during the period | 0 | 0 | (4) | 2 |
Tax provision on amortization of actuarial loss and prior service benefit | ||||
Components of accumulated other comprehensive income, net of taxes | ||||
Tax effects on reclassification into earnings | (5) | (3) | (16) | (9) |
Tax benefit (provision) on settlements and other | ||||
Components of accumulated other comprehensive income, net of taxes | ||||
Tax effects on reclassification into earnings | 1 | 0 | (8) | (1) |
Tax effects on change in unrealized components of defined benefit plans | ||||
Components of accumulated other comprehensive income, net of taxes | ||||
Tax benefit (provision) on other comprehensive (loss) income | $ (4) | $ (3) | $ (28) | $ (8) |
Stockholders' Deficit - Sched76
Stockholders' Deficit - Schedule of Changes and Reclassifications Related to Other Comprehensive Income, Net of Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jul. 31, 2017 | Jul. 31, 2016 | Jul. 31, 2017 | Jul. 31, 2016 | |
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||
Gains (losses) arising during the period | $ (680) | |||
Reclassifications of (gains) losses into earnings | 0 | |||
Other comprehensive (loss) income, net of taxes | $ (404) | $ 319 | (680) | $ 274 |
Change in unrealized gains (losses) on available-for-sale securities | ||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||
Gains (losses) arising during the period | 1 | 1 | 4 | 2 |
Reclassifications of (gains) losses into earnings | 0 | |||
Change in unrealized components of cash flow hedges | ||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||
Gains (losses) arising during the period | (456) | 170 | (688) | 181 |
Reclassifications of (gains) losses into earnings | 36 | 139 | (40) | 66 |
Other comprehensive (loss) income, net of taxes | (420) | 309 | (728) | 247 |
Gains (losses) arising during the period | ||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||
Gains (losses) arising during the period | 0 | 0 | 9 | (2) |
Tax provision on amortization of actuarial loss and prior service benefit | ||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||
Reclassifications of (gains) losses into earnings | 14 | 9 | 40 | 27 |
Settlements and other | ||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||
Reclassifications of (gains) losses into earnings | 1 | 0 | (5) | 0 |
Change in unrealized components of defined benefit plans | ||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||
Gains (losses) arising during the period | 4 | |||
Reclassifications of (gains) losses into earnings | 40 | |||
Other comprehensive (loss) income, net of taxes | $ 15 | $ 9 | $ 44 | $ 25 |
Stockholders' Deficit - Sched77
Stockholders' Deficit - Schedule of Changes and Reclassifications Related to Other Comprehensive Income, Net of Taxes Footnotes (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jul. 31, 2017 | Jul. 31, 2016 | Jul. 31, 2017 | Jul. 31, 2016 | |
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||
Net revenue | $ 13,060 | $ 11,892 | $ 38,129 | $ 35,726 |
Cost of revenue | 10,633 | 9,720 | 31,071 | 29,019 |
Interest and other, net | (56) | (36) | (201) | (135) |
Net earnings | 696 | 783 | 1,866 | 2,004 |
Net unrealized gains (losses) on cash flow hedges | Reclassifications of losses (gains) into earnings | ||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||
Net revenue | 26 | 140 | (89) | (26) |
Cost of revenue | 13 | 18 | 32 | 90 |
Operating expenses | (1) | (1) | (1) | (1) |
Interest and other, net | 0 | 2 | 9 | 0 |
Net earnings | $ 38 | $ 159 | $ (49) | $ 63 |
Stockholders' Deficit - Sched78
Stockholders' Deficit - Schedule of Accumulated Other Comprehensive Loss, Net of Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jul. 31, 2017 | Jul. 31, 2016 | Jul. 31, 2017 | Jul. 31, 2016 | |
Components of accumulated other comprehensive income, net of taxes | ||||
Balance at beginning of period | $ (3,889) | |||
Other comprehensive income (loss) before reclassifications | (680) | |||
Reclassifications of (income) loss into earnings | 0 | |||
Balance at end of period | $ (4,339) | (4,339) | ||
Accumulated other comprehensive loss | ||||
Components of accumulated other comprehensive income, net of taxes | ||||
Balance at beginning of period | (1,438) | |||
Balance at end of period | (2,118) | (2,118) | ||
Net unrealized gains on available-for-sale securities | ||||
Components of accumulated other comprehensive income, net of taxes | ||||
Balance at beginning of period | 9 | |||
Other comprehensive income (loss) before reclassifications | 1 | $ 1 | 4 | $ 2 |
Reclassifications of (income) loss into earnings | 0 | |||
Balance at end of period | 13 | 13 | ||
Net unrealized gains (losses) on cash flow hedges | ||||
Components of accumulated other comprehensive income, net of taxes | ||||
Balance at beginning of period | 186 | |||
Other comprehensive income (loss) before reclassifications | (456) | 170 | (688) | 181 |
Reclassifications of (income) loss into earnings | 36 | $ 139 | (40) | $ 66 |
Balance at end of period | (542) | (542) | ||
Unrealized components of defined benefit plans | ||||
Components of accumulated other comprehensive income, net of taxes | ||||
Balance at beginning of period | (1,633) | |||
Other comprehensive income (loss) before reclassifications | 4 | |||
Reclassifications of (income) loss into earnings | 40 | |||
Balance at end of period | $ (1,589) | $ (1,589) |
Net Earnings Per Share (Details
Net Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jul. 31, 2017 | Jul. 31, 2016 | Jul. 31, 2017 | Jul. 31, 2016 | |
Numerator: | ||||
Net earnings from continuing operations | $ 696 | $ 843 | $ 1,866 | $ 2,153 |
Net loss from discontinued operations | 0 | (60) | 0 | (149) |
Net earnings | $ 696 | $ 783 | $ 1,866 | $ 2,004 |
Denominator: | ||||
Weighted-average shares used to compute basic net EPS (shares) | 1,681 | 1,711 | 1,694 | 1,735 |
Dilutive effect of employee stock plans (shares) | 14 | 14 | 11 | 12 |
Weighted-average shares used to compute diluted net EPS (shares) | 1,695 | 1,725 | 1,705 | 1,747 |
Basic net earnings (loss) per share: | ||||
Continuing operations (usd per share) | $ 0.41 | $ 0.49 | $ 1.10 | $ 1.24 |
Discontinued operations (usd per share) | 0 | (0.03) | 0 | (0.08) |
Total basic net earnings per share (usd per share) | 0.41 | 0.46 | 1.10 | 1.16 |
Diluted net earnings (loss) per share: | ||||
Continuing operations (usd per share) | 0.41 | 0.49 | 1.09 | 1.23 |
Discontinued operations (usd per share) | 0 | (0.04) | 0 | (0.08) |
Total diluted net earnings per share (usd per share) | $ 0.41 | $ 0.45 | $ 1.09 | $ 1.15 |
Anti-dilutive weighted average stock-based compensation awards (shares) | 1 | 13 | 3 | 26 |
Litigation and Contingencies (D
Litigation and Contingencies (Details) | Jun. 30, 2016USD ($) | Oct. 01, 2015USD ($) | Apr. 17, 2015USD ($)employeesubsidiary | Jan. 24, 2013USD ($) | Dec. 11, 2012USD ($) | Dec. 06, 2012lawsuit | Nov. 26, 2012lawsuit | May 23, 2012 | Apr. 21, 2012USD ($) | May 10, 2010USD ($)employee | Oct. 31, 2012USD ($) | Jul. 31, 2017caseobjector | Oct. 31, 2012lawsuit | Dec. 31, 2006USD ($)employee | Apr. 20, 2012USD ($) | Apr. 11, 2012USD ($) |
Litigation and Contingencies | ||||||||||||||||
Minimum age of plaintiff | 40 years | |||||||||||||||
Consumer class actions | case | 5 | |||||||||||||||
India Directorate of Revenue Intelligence Proceedings | ||||||||||||||||
Litigation and Contingencies | ||||||||||||||||
Number of current employees | employee | 7 | |||||||||||||||
Number of former employee | employee | 1 | |||||||||||||||
Aggregate damages sought | $ 370,000,000 | |||||||||||||||
Loss contingency deposit to prevent interruption of business | $ 16,000,000 | |||||||||||||||
Bangalore Commissioner of Customs | ||||||||||||||||
Litigation and Contingencies | ||||||||||||||||
Duties and penalties under show cause notices | $ 17,000,000 | $ 386,000,000 | ||||||||||||||
Amount deposited under show cause notice prior to order | $ 7,000,000 | $ 9,000,000 | ||||||||||||||
Additional amount deposited against products-related show cause notice | $ 10,000,000 | |||||||||||||||
Additional amount deposited against parts-related show cause notice | $ 3,000,000 | |||||||||||||||
Additional amount deposited against product order | $ 24,000,000 | |||||||||||||||
Russia GPO and Other Anti-Corruption Investigations | ||||||||||||||||
Litigation and Contingencies | ||||||||||||||||
Number of current employees | employee | 1 | |||||||||||||||
Number of former employee | employee | 2 | |||||||||||||||
Transaction of former subsidiary under investigation | $ 35,000,000 | |||||||||||||||
Indictment, number of defendants | employee | 4 | |||||||||||||||
Autonomy-Related Legal Matters | ||||||||||||||||
Litigation and Contingencies | ||||||||||||||||
Number of lawsuits filed | lawsuit | 3 | 7 | 1 | |||||||||||||
Number of objectors appealed to the settlement | objector | 3 | |||||||||||||||
Autonomy-Related Legal Matters | Autonomy | ||||||||||||||||
Litigation and Contingencies | ||||||||||||||||
Aggregate damages sought | $ 5,000,000,000 | |||||||||||||||
Number of subsidiaries | subsidiary | 4 | |||||||||||||||
Number of members | employee | 2 | |||||||||||||||
Autonomy-Related Legal Matters | Autonomy | Mr. Lynch | ||||||||||||||||
Litigation and Contingencies | ||||||||||||||||
Aggregate damages sought | $ 160,000,000 | |||||||||||||||
Expected trial period | 6 months | |||||||||||||||
Autonomy-Related Legal Matters | Hewlett-Packard Enterprise | Software | ||||||||||||||||
Litigation and Contingencies | ||||||||||||||||
Impairment of goodwill and intangible assets | $ 8,800,000,000 | |||||||||||||||
Oracle Corporation v. HP | ||||||||||||||||
Litigation and Contingencies | ||||||||||||||||
Damages awarded | $ 3,000,000,000 | |||||||||||||||
Adjustment recorded | 0 | |||||||||||||||
Oracle Corporation v. HP | Past lost profits | ||||||||||||||||
Litigation and Contingencies | ||||||||||||||||
Damages awarded | 1,700,000,000 | |||||||||||||||
Oracle Corporation v. HP | Future lost profits | ||||||||||||||||
Litigation and Contingencies | ||||||||||||||||
Damages awarded | $ 1,300,000,000 |
Guarantees, Indemnifications,81
Guarantees, Indemnifications, and Warranties (Details) $ in Millions | 9 Months Ended |
Jul. 31, 2017USD ($) | |
Changes in aggregated product warranty liabilities | |
Balance at beginning of period | $ 980 |
Accruals for warranties issued | 678 |
Adjustments related to pre-existing warranties (including changes in estimates) | (16) |
Settlements made (in cash or in kind) | (749) |
Balance at end of period | $ 893 |
Discontinued Operations (Detail
Discontinued Operations (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jul. 31, 2017 | Jul. 31, 2016 | Jul. 31, 2017 | Jul. 31, 2016 | |
Major components of assets and liabilities included in distribution | ||||
Loss from discontinued operations, net of taxes | $ 0 | $ (60) | $ 0 | $ (149) |
Hewlett-Packard Enterprise | Spinoff | ||||
Major components of assets and liabilities included in distribution | ||||
Expenses | 0 | 30 | 0 | 158 |
Interest and other, net | 9 | 174 | 38 | 157 |
Earnings (Loss) from discontinued operations before taxes | 9 | 144 | 38 | (1) |
(Provision for) Benefit from taxes(2) | (9) | (204) | (38) | (148) |
Loss from discontinued operations, net of taxes | $ 0 | $ (60) | $ 0 | $ (149) |
Divestitures (Details)
Divestitures (Details) - Disposal Group, Disposed of by Sale, Not Discontinued Operations [Member] - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended |
Jul. 31, 2016 | Jul. 31, 2016 | Oct. 31, 2016 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Proceeds from divestiture of certain technology assets, including licensing and distribution rights | $ 475 | ||
Selling, general and administrative expenses | |||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Gain on divestiture of technology assets, including licensing and distribution rights | $ 336 | $ 383 |