Cover Page
Cover Page | 3 Months Ended |
Jan. 31, 2020shares | |
Entity Listings [Line Items] | |
Document Type | 10-Q |
Document Quarterly Report | true |
Document Period End Date | Jan. 31, 2020 |
Document Transition Report | false |
Entity File Number | 1-4423 |
Entity Registrant Name | HP INC. |
Entity Incorporation, State or Country Code | DE |
Entity Tax Identification Number | 94-1081436 |
Entity Address, Address Line One | 1501 Page Mill Road |
Entity Address, City or Town | Palo Alto, |
Entity Address, State or Province | CA |
Entity Address, Postal Zip Code | 94304 |
City Area Code | 650 |
Local Phone Number | 857-1501 |
Entity Current Reporting Status | Yes |
Entity Interactive Data Current | Yes |
Entity Filer Category | Large Accelerated Filer |
Entity Small Business | false |
Entity Emerging Growth Company | false |
Entity Shell Company | false |
Entity Common Stock, Shares Outstanding | 1,433,345,730 |
Entity Central Index Key | 0000047217 |
Amendment Flag | false |
Current Fiscal Year End Date | --10-31 |
Document Fiscal Year Focus | 2020 |
Document Fiscal Period Focus | Q1 |
Common Stock | |
Entity Listings [Line Items] | |
Title of 12(b) Security | Common stock, par value $0.01 per share |
Trading Symbol | HPQ |
Security Exchange Name | NYSE |
Preferred Share Purchase Rights | |
Entity Listings [Line Items] | |
Title of 12(b) Security | Preferred Share Purchase Rights |
Security Exchange Name | NYSE |
No Trading Symbol Flag | false |
Consolidated Condensed Statemen
Consolidated Condensed Statements of Earnings (Unaudited) - USD ($) shares in Millions, $ in Millions | 3 Months Ended | |
Jan. 31, 2020 | Jan. 31, 2019 | |
Income Statement [Abstract] | ||
Net revenue | $ 14,618 | $ 14,710 |
Costs and expenses: | ||
Cost of revenue | 11,746 | 12,098 |
Research and development | 400 | 344 |
Selling, general and administrative | 1,290 | 1,248 |
Restructuring and other charges | 291 | 55 |
Acquisition-related charges | 0 | 10 |
Amortization of intangible assets | 26 | 29 |
Total costs and expenses | 13,753 | 13,784 |
Earnings from operations | 865 | 926 |
Interest and other, net | 13 | (26) |
Earnings before taxes | 878 | 900 |
Provision for taxes | (200) | (97) |
Net earnings | $ 678 | $ 803 |
Net earnings per share: | ||
Basic (usd per share) | $ 0.47 | $ 0.52 |
Diluted (usd per share) | $ 0.46 | $ 0.51 |
Weighted-average shares used to compute net earnings per share: | ||
Basic (shares) | 1,454 | 1,556 |
Diluted (shares) | 1,460 | 1,567 |
Consolidated Condensed Statem_2
Consolidated Condensed Statements of Comprehensive Income (Unaudited) - USD ($) $ in Millions | 3 Months Ended | |
Jan. 31, 2020 | Jan. 31, 2019 | |
Statement of Comprehensive Income [Abstract] | ||
Net earnings | $ 678 | $ 803 |
Change in unrealized components of available-for-sale debt securities: | ||
Unrealized gain arising during the period | 1 | 0 |
Change in unrealized components of available-for-sale securities | 1 | 0 |
Change in unrealized components of cash flow hedges: | ||
Unrealized gains (losses) arising during the period | 60 | |
Unrealized gains (losses) arising during the period | (107) | |
(Gains) losses reclassified into earnings | (59) | |
(Gains) losses reclassified into earnings | (179) | |
Change in unrealized components of cash flow hedges | 1 | |
Change in unrealized components of cash flow hedges | (286) | |
Change in unrealized components of defined benefit plans: | ||
Amortization of actuarial loss and prior service benefit | 20 | 11 |
Curtailments, settlements and other | 0 | (2) |
Change in unrealized components of defined benefit plans | 20 | 9 |
Change in cumulative translation adjustment | 6 | (5) |
Other comprehensive income (loss) before taxes | 28 | (282) |
(Provision for) benefit from taxes | (11) | 40 |
Other comprehensive income (loss), net of taxes | 17 | (242) |
Comprehensive income | $ 695 | $ 561 |
Consolidated Condensed Balance
Consolidated Condensed Balance Sheets (Unaudited) - USD ($) $ in Millions | Jan. 31, 2020 | Oct. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 4,205 | $ 4,537 |
Accounts receivable, net | 4,857 | 6,031 |
Inventory | 4,946 | 5,734 |
Other current assets | 3,469 | 3,875 |
Total current assets | 17,477 | 20,177 |
Property, plant and equipment, net | 2,756 | 2,794 |
Goodwill | 6,387 | 6,372 |
Other non-current assets | 5,036 | 4,124 |
Total assets | 31,656 | 33,467 |
Current liabilities: | ||
Notes payable and short-term borrowings | 923 | 357 |
Accounts payable | 12,808 | 14,793 |
Other current liabilities | 10,136 | 10,143 |
Total current liabilities | 23,867 | 25,293 |
Long-term debt | 3,932 | 4,780 |
Other non-current liabilities | 5,491 | 4,587 |
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; 1,433 and 1,458 shares issued and outstanding at January 31, 2020 and October 31, 2019, respectively) | 14 | 15 |
Additional paid-in capital | 866 | 835 |
Accumulated deficit | (1,306) | (818) |
Accumulated other comprehensive loss | (1,208) | (1,225) |
Total stockholders’ deficit | (1,634) | (1,193) |
Total liabilities and stockholders’ deficit | $ 31,656 | $ 33,467 |
Consolidated Condensed Balanc_2
Consolidated Condensed Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Jan. 31, 2020 | Oct. 31, 2019 |
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 | 1,433,000,000 | 1,458,000,000 |
Common stock, shares outstanding | 1,433,000,000 | 1,458,000,000 |
Consolidated Condensed Statem_3
Consolidated Condensed Statements of Cash Flows (Unaudited) - USD ($) $ in Millions | 3 Months Ended | |
Jan. 31, 2020 | Jan. 31, 2019 | |
Cash flows from operating activities: | ||
Net earnings | $ 678 | $ 803 |
Adjustments to reconcile net earnings to net cash provided by operating activities: | ||
Depreciation and amortization | 198 | 168 |
Stock-based compensation expense | 109 | 107 |
Restructuring and other charges | 291 | 55 |
Deferred taxes on earnings | 117 | 103 |
Other, net | 54 | (5) |
Changes in operating assets and liabilities, net of acquisitions: | ||
Accounts receivable | 1,167 | 211 |
Inventory | 761 | 191 |
Accounts payable | (1,919) | (184) |
Net investment in leases | (34) | |
Taxes on earnings | (27) | 11 |
Restructuring and other | (109) | (46) |
Other assets and liabilities | (1) | (552) |
Net cash provided by operating activities | 1,285 | 862 |
Cash flows from investing activities: | ||
Investment in property, plant and equipment | (198) | (189) |
Purchases of available-for-sale securities and other investments | (311) | (69) |
Maturities and sales of available-for-sale securities and other investments | 11 | 344 |
Collateral posted for derivative instruments | 0 | (30) |
Collateral returned for derivative instruments | 0 | 30 |
Payment made in connection with business acquisitions, net of cash acquired | 0 | (404) |
Net cash used in investing activities | (498) | (318) |
Cash flows from financing activities: | ||
Payments of short-term borrowings with original maturities less than 90 days, net | 0 | (855) |
Proceeds from short-term borrowings with original maturities greater than 90 days | 2 | 0 |
Proceeds from debt, net of issuance costs | 9 | 40 |
Payment of debt | (67) | (476) |
Stock-based award activities | (116) | (83) |
Repurchase of common stock | (691) | (720) |
Cash dividends paid | (256) | (249) |
Net cash used in financing activities | (1,119) | (2,343) |
Decrease in cash and cash equivalents | (332) | (1,799) |
Cash and cash equivalents at beginning of period | 4,537 | 5,166 |
Cash and cash equivalents at end of period | 4,205 | 3,367 |
Supplemental schedule of non-cash activities: | ||
Purchase of assets under finance leases | $ 8 | $ 75 |
Consolidated Condensed Statem_4
Consolidated Condensed Statements of Stockholders’ Deficit - USD ($) shares in Thousands, $ in Millions | Total | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss |
Balance (in shares) at Oct. 31, 2018 | 1,560,270 | ||||
Balance at Oct. 31, 2018 | $ (639) | $ 16 | $ 663 | $ (473) | $ (845) |
Increase (Decrease) in Stockholders' Equity | |||||
Net earnings | 803 | 803 | |||
Other comprehensive income (loss), net of taxes | (242) | (242) | |||
Comprehensive income | 561 | ||||
Issuance of common stock in connection with employee stock plans and other (in shares) | 11,379 | ||||
Issuance of common stock in connection with employee stock plans and other | $ (91) | (91) | |||
Repurchases of common stock (in shares) | (32,000) | (32,277) | |||
Repurchases of common stock | $ (716) | $ (1) | (13) | (702) | |
Cash dividends declared | (496) | (496) | |||
Stock-based compensation expense | 107 | 107 | |||
Balance (in shares) at Jan. 31, 2019 | 1,539,372 | ||||
Balance at Jan. 31, 2019 | $ (1,837) | $ 15 | 666 | (1,431) | (1,087) |
Balance (in shares) at Oct. 31, 2019 | 1,458,000 | 1,457,719 | |||
Balance at Oct. 31, 2019 | $ (1,193) | $ 15 | 835 | (818) | (1,225) |
Increase (Decrease) in Stockholders' Equity | |||||
Net earnings | 678 | 678 | |||
Other comprehensive income (loss), net of taxes | 17 | 17 | |||
Comprehensive income | 695 | ||||
Issuance of common stock in connection with employee stock plans and other (in shares) | 9,809 | ||||
Issuance of common stock in connection with employee stock plans and other | $ (58) | (58) | |||
Repurchases of common stock (in shares) | (34,000) | (34,182) | |||
Repurchases of common stock | $ (703) | $ (1) | (20) | (682) | |
Cash dividends declared | (511) | (511) | |||
Stock-based compensation expense | $ 109 | 109 | |||
Balance (in shares) at Jan. 31, 2020 | 1,433,000 | 1,433,346 | |||
Balance at Jan. 31, 2020 | $ (1,634) | $ 14 | $ 866 | $ (1,306) | $ (1,208) |
Consolidated Condensed Statem_5
Consolidated Condensed Statements of Stockholders’ Deficit (Parenthetical) - $ / shares | 3 Months Ended | |
Jan. 31, 2020 | Jan. 31, 2019 | |
Statement of Stockholders' Equity [Abstract] | ||
Cash dividends per share (usd per share) | $ 0.35 | $ 0.32 |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Jan. 31, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentati on 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, 2019 in the Annual Report on Form 10-K, filed on December 12, 2019 . The Consolidated Condensed Balance Sheet for October 31, 2019 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. 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 may differ materially from those estimates. 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, HP and Hewlett Packard Enterprise entered into a separation and distribution agreement, an employee matters agreement and various other agreements which remain enforceable and provide a framework for the continuing relationships between the parties. For more information on the impacts of these agreements, see Note 6, “Supplementary Financial Information”, Note 12, “Litigation and Contingencies” and Note 13, “Guarantees, Indemnifications and Warranties”. Recently Adopted Accounting Pronouncements In August 2017, the FASB issued guidance, which amends the existing accounting standards for derivatives and hedging. The amendment improves the financial reporting of hedging relationships to better represent the economic results of an entity’s risk management activities in its financial statements and made certain targeted improvements to simplify the application of the hedge accounting guidance in current U.S. GAAP. HP adopted this guidance in the first quarter of fiscal year 2020. The implementation of this guidance did not have a material impact on its Consolidated Condensed Financial Statements. In February 2016, the FASB issued amended guidance on the accounting for leasing transactions. The primary objective of this update is to increase transparency and comparability among organizations by requiring lessees to recognize a lease liability for the obligation to make lease payments and a right-of-use (“ROU”) asset for the right to use the underlying asset over the lease term. The guidance also results in some changes to lessor accounting and requires additional disclosures about all leasing arrangements. HP adopted the standard (the “new lease standard”) as of November 1, 2019 using a modified retrospective approach, with the cumulative effect adjustment to the opening balance of accumulated deficit as of the adoption date. HP elected to apply the practical expedient using the transition option whereby prior comparative periods were not retrospectively adjusted in the Consolidated Condensed Financial Statements. HP also elected the package of practical expedients, which does not require reassessment of initial direct costs, classification of a lease, and definition of a lease. The Company has elected not to record leases with an initial term of 12 months or less on the Consolidated Condensed Balance Sheets. Lease expense on such leases is recognized on a straight-line basis over the lease term. HP has also elected the lessee practical expedient to combine lease and non-lease components for certain asset classes. The adoption of the new lease standard resulted in the recognition of $1.2 billion in operating lease liabilities and $1.2 billion of related ROU assets on the Consolidated Condensed Balance Sheets. The net impact of adoption to accumulated deficit as on November 1, 2019 is not considered material. As of November 1, 2019, there were no material finance leases for which HP was a lessee. The new lease standard also made some changes to lessor accounting, including alignment with the new revenue recognition standard. HP now records revenue upfront on certain aspects of its as-a-service offerings and will reflect the financing of these offerings as cash flows from financing activities on the Consolidated Condensed Statements of Cash Flows. These changes did not have a material impact on the Consolidated Condensed Financial Statements. Refer to Note 14 “Leases” for additional disclosures related to leases. Recently Issued Accounting Pronouncements Not Yet Adopted 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. Revenue Recognition General HP recognizes revenues at a point in time or over time depicting the transfer of promised goods or services to customers in an amount that reflects the consideration to which HP expects to be entitled in exchange for those goods or services. HP follows the five-step model for revenue recognition as summarized below: 1 . Identify the contract with a customer - A contract with customer exists when (i) it is approved and signed by all parties, (ii) each party’s rights and obligations can be identified, (iii) payment terms are defined, (iv) it has commercial substance and (v) the customer has the ability and intent to pay. HP evaluates customers’ ability to pay based on various factors like historical payment experience, financial metrics and customer credit scores. While the majority of our sales contracts contain standard terms and conditions, there are certain contracts with non-standard terms and conditions. 2. Identify the performance obligations in the contract - HP evaluates each performance obligation in an arrangement to determine whether it is distinct, such as hardware and/or service. A performance obligation constitutes distinct goods or services when the customer can benefit from such goods or services either on its own or together with other resources that are readily available to the customer and the performance obligation is distinct within the context of the contract. 3. Determine the transaction price - Transaction price is the amount of consideration to which HP expects to be entitled in exchange for transferring goods or services to the customer. If the transaction price includes a variable amount, HP estimates the amount it expects to be entitled to using either the expected value or the most likely amount method. HP reduces the transaction price at the time of revenue recognition for customer and distributor programs and incentive offerings, rebates, promotions, other volume-based incentives and expected returns. HP uses estimates to determine the expected variable consideration for such programs based on factors like historical experience, expected consumer behavior and market conditions. HP has elected the practical expedient of not accounting for significant financing components if the period between revenue recognition and when the customer pays for the product or service is one year or less. 4. Allocate the transaction price to performance obligations in the contract - When a sales arrangement contains multiple performance obligations, such as hardware and/or services, HP allocates revenue to each performance obligation in proportion to their selling price. The selling price for each performance obligation is based on its Standalone Selling Price (“SSP”). HP establishes SSP using the price charged for a performance obligation when sold separately (“observable price”) and, in some instances, using the price established by management having the relevant authority. When observable price is not available, HP establishes SSP based on management judgment considering internal factors such as margin objectives, pricing practices and controls, customer segment pricing strategies and the product life-cycle. Consideration is also given to market conditions such as competitor pricing strategies and technology industry life cycles. 5. Recognize revenue when (or as) the performance obligation is satisfied - Revenue is recognized when, or as, a performance obligation is satisfied by transferring control of a promised good or service to a customer. HP generally invoices the customer upon delivery of the goods or services and the payments are due as per contract terms. For fixed price support or maintenance contracts that are in the nature of stand-ready obligations, payments are generally received in advance from customers and revenue is recognized on a straight-line basis over the duration of the contract. HP reports revenue net of any taxes collected from customers and remitted to government authorities, and the collected taxes are recorded as other current liabilities until remitted to the relevant government authority. HP includes costs related to shipping and handling in cost of revenue. HP records revenue on a gross basis when HP is a principal in the transaction and on a net basis when HP is acting as an agent between the customer and the vendor. HP considers several factors to determine whether it is acting as a principal or an agent, most notably whether HP is the primary obligor to the customer, has established its own pricing and has inventory and credit risks. Hardware HP transfers control of the products to the customer at the time the product is delivered to the customer and recognizes revenue accordingly, unless customer acceptance is uncertain or significant obligations to the customer remain unfulfilled. HP records revenue from the sale of equipment under sales-type leases as revenue at the commencement of the lease. Services HP recognizes revenue from fixed-price support, maintenance and other service contracts over time depicting the pattern of service delivery and recognizes the costs associated with these contracts as incurred. Contract Assets and Liabilities Contract assets are rights to consideration in exchange for goods or services that HP has transferred to a customer when such right is conditional on something other than the passage of time. Such contract assets are not material to HP’s Consolidated Financial Statements. Contract liabilities are recorded as deferred revenues when amounts invoiced to customers are more than the revenues recognized or when payments are received in advance for fixed price support or maintenance contracts. The short-term and long-term deferred revenues are reported within the other current liabilities and other non-current liabilities respectively. Cost to obtain a contract and fulfillment cost Incremental direct costs of obtaining a contract primarily consist of sales commissions. HP has elected the practical expedient to expense as incurred the costs to obtain a contract with a benefit period equal to or less than one year. For contracts with a period of benefit greater than one year, HP capitalizes incremental costs of obtaining a contract with a customer and amortizes these costs over their expected period of benefit provided such costs are recoverable. Fulfillment costs consist of set-up and transition costs related to other service contracts. These costs generate or enhance resources of HP that will be used in satisfying the performance obligation in the future and are capitalized and amortized over the expected period of the benefit, provided such costs are recoverable. See Note 6, “Supplementary Financial Information” for details on net revenue by region, cost to obtain a contract and fulfillment cost, contract liabilities and value of remaining performance obligations. Leases At the inception of a contract, HP assesses whether the contract is, or contains, a lease. The assessment is based on (1) whether the contract involves the use of a distinct identified asset, (2) whether HP obtains the right to substantially all the economic benefit from the use of the asset throughout the period, and (3) whether HP has the right to direct the use of the asset. All significant lease arrangements are recognized at lease commencement. Leases with a lease term of 12 months or less at inception are not recorded on the Consolidated Condensed Balance Sheets and are expensed on a straight-line basis over the lease term in the Consolidated Condensed Statement of Earnings. HP determines the lease term by assuming the exercise of renewal options that are reasonably certain. As most of the leases do not provide an implicit interest rate, HP uses the unsecured borrowing rate and risk-adjusts that rate to approximate a collateralized rate at the commencement date to determine the present value of future payments that are reasonably certain. |
Segment Information
Segment Information | 3 Months Ended |
Jan. 31, 2020 | |
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 reportable segments: Personal Systems, Printing and Corporate Investments. HP’s organizational structure is based on many factors that the chief operating decision maker (“CODM”) 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 CODM to evaluate segment results. The CODM 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 offers commercial and consumer desktop and notebook personal computers (“PCs”), workstations, thin clients, commercial mobility devices, retail point-of-sale (“POS”) systems, displays and other related accessories, software, support and services. HP groups commercial notebooks, commercial desktops, commercial services, commercial mobility devices, commercial detachables and convertibles, workstations, retail POS systems and thin clients into commercial PCs and consumer notebooks, consumer desktops, consumer services and consumer detachables into consumer PCs when describing performance in these markets. Described below are HP’s global business capabilities within Personal Systems: • Commercial PCs are optimized for use by enterprise, public sector and SMB customers, with a focus on robust designs, security, serviceability, connectivity, reliability and manageability in networked and cloud-based environments. Additionally, HP offers a range of services and solutions to enterprise, public sector and SMB customers to help them manage the lifecycle of their PC and mobility installed base. • Consumer PCs are optimized for consumer usage, focusing on gaming, consuming multi-media for entertainment, managing personal life activities, staying connected, sharing information, getting things done for work including creating content, staying informed and security. Personal Systems groups its global business capabilities into the following business units when reporting business performance: • Notebooks consists of consumer notebooks, commercial notebooks, mobile workstations and commercial mobility devices; • Desktops includes consumer desktops, commercial desktops, thin clients, and retail POS systems; • Workstations consists of desktop workstations and accessories; and • Other consists of consumer and commercial services as well as other Personal Systems capabilities. Printing provides consumer and commercial printer hardware, supplies, services and solutions, as well as scanning devices. Printing is also focused on imaging solutions in the commercial and industrial 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. It also includes OEM hardware and solutions, and some Samsung-branded supplies. HP goes to market through its extensive channel network and directly with HP sales. • Home Printing Solutions delivers innovative printing products, supplies, services and solutions for the home, home business and micro business customers utilizing both HP’s Ink and Laser technologies. It also includes some Samsung-branded supplies. • Graphics Solutions delivers large-format, commercial and industrial solutions and supplies to print service providers and packaging converters through a wide portfolio of printers and presses (HP DesignJet, HP Latex, HP Stitch, HP Indigo and HP PageWide Web Presses). • 3D Printing & Digital Manufacturing offers a portfolio of additive manufacturing solutions and supplies to help customers succeed in their additive and digital manufacturing journey. HP offers complete solutions in collaboration with an ecosystem of partners. 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 & digital manufacturing, excluding supplies; • Consumer Hardware consists of home printing solutions, excluding supplies; and • Supplies comprises a set of highly innovative consumable products, ranging from ink and laser cartridges to media, graphics supplies and 3D printing & digital manufacturing supplies, for recurring use in consumer and commercial hardware. Corporate Investments includes HP Labs and certain business incubation and investment 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. 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 infrastructure investments, stock-based compensation expense, restructuring and other charges, acquisition-related charges and amortization of intangible assets. Segment Operating Results from Operations and the reconciliation to HP consolidated results were as follows: Three months ended January 31 2020 2019 In millions Net revenue: Notebooks $ 5,974 $ 5,919 Desktops 2,923 2,857 Workstations 594 562 Other 401 319 Personal Systems 9,892 9,657 Supplies 3,041 3,267 Commercial Hardware 1,076 1,090 Consumer Hardware 607 699 Printing 4,724 5,056 Corporate Investments 1 1 Total segment net revenue 14,617 14,714 Other 1 (4 ) Total net revenue $ 14,618 $ 14,710 Earnings before taxes: Personal Systems $ 662 $ 410 Printing 754 821 Corporate Investments (13 ) (24 ) Total segment earnings from operations $ 1,403 $ 1,207 Corporate and unallocated costs and other (112 ) (80 ) Stock-based compensation expense (109 ) (107 ) Restructuring and other charges (291 ) (55 ) Acquisition-related charges — (10 ) Amortization of intangible assets (26 ) (29 ) Interest and other, net 13 (26 ) Total earnings before taxes $ 878 $ 900 |
Restructuring and Other Charges
Restructuring and Other Charges | 3 Months Ended |
Jan. 31, 2020 | |
Restructuring and Related Activities [Abstract] | |
Restructuring and Other Charges | Restructuring and Other Charges Summary of Restructuring Plans HP’s restructuring activities for the three months ended January 31, 2020 and 2019 summarized by plan were as follows: Fiscal 2020 Plan Severance and EER Non-labor Other prior-year Plans (1) Total In millions Accrued balance as of October 31, 2019 $ 76 $ — $ 66 $ 142 Charges 256 1 — 257 Cash payments (82 ) (1 ) (25 ) (108 ) Non-cash and other adjustments (48 ) (2 ) — (1 ) (49 ) Accrued balance as of January 31, 2020 $ 202 $ — $ 40 $ 242 Total costs incurred to date as of January 31, 2020 $ 338 $ 1 $ 1,816 $ 2,155 Reflected in Consolidated Condensed Balance Sheets Other current liabilities $ 202 $ — $ 39 $ 241 Other non-current liabilities $ — $ — $ 1 $ 1 Accrued balance as of October 31, 2018 $ — $ — $ 59 $ 59 Charges — — 53 53 Cash payments — — (44 ) (44 ) Non-cash and other adjustments — — (3 ) (3 ) Accrued balance as of January 31, 2019 $ — $ — $ 65 $ 65 (1) Primarily includes the fiscal 2017 plan along with other legacy plans, all of which are substantially complete. HP does not expect any further material activity associated with these plans. (2) Includes reclassification of liability related to the Enhanced Early Retirement (“EER”) plan of $44 million for certain healthcare and medical savings account benefits to pension and post-retirement plans. See Note 4 “Retirement and Post -Retirement Benefit Plans” for further information. Fiscal 2020 Plan On September 30, 2019, HP’s Board of Directors approved the Fiscal 2020 Plan intended to optimize and simplify its operating model and cost structure that HP expects will be implemented through fiscal 2022. HP expects to reduce global headcount by approximately 7,000 to 9,000 employees through a combination of employee exits and voluntary EER. HP estimates that it will incur pre-tax charges of approximately $1.0 billion relating to labor and non-labor actions. HP expects to incur approximately $0.9 billion primarily in labor costs related to workforce reductions and the remaining costs will relate to non-labor actions and other charges. Other charges Other charges include non-recurring costs, including those as a result of Separation, information technology rationalization efforts and proxy contest activities, and are distinct from ongoing operational costs. These costs primarily relate to third-party legal, professional services and other non-recurring costs. For the three months ended January 31, 2020 and 2019 , HP incurred $34 million and $2 million of other charges, respectively. |
Retirement and Post-Retirement
Retirement and Post-Retirement Benefit Plans | 3 Months Ended |
Jan. 31, 2020 | |
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 January 31 U.S. Defined Benefit Plans Non-U.S. Defined Benefit Plans Post-Retirement Benefit Plans 2020 2019 2020 2019 2020 2019 In millions Service cost $ — $ — $ 16 $ 14 $ — $ — Interest cost 103 123 5 6 3 4 Expected return on plan assets (175 ) (145 ) (11 ) (10 ) (6 ) (5 ) Amortization and deferrals: Actuarial loss (gain) 16 15 10 8 (2 ) (8 ) Prior service benefit — — (1 ) (1 ) (3 ) (3 ) Net periodic (credit) benefit cost (56 ) (7 ) 19 17 (8 ) (12 ) Special termination benefit cost — — — — 44 — Total periodic (credit) benefit cost $ (56 ) $ (7 ) $ 19 $ 17 $ 36 $ (12 ) 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 2020 , HP anticipates making contributions of approximately $76 million to its non-U.S. pension plans, approximately $36 million to its U.S. non-qualified plan participants and approximately $6 million to cover benefit claims under HP’s post-retirement benefit plans. During the three months ended January 31, 2020 , HP contributed $13 million to its non-U.S. pension plans, paid $7 million to cover benefit payments to U.S. non-qualified plan participants and paid $1 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. Retirement Incentive Program As part of the Fiscal 2020 Plan, HP announced the voluntary EER program for its U.S. employees in October 2019. Voluntary participation in the EER program was limited to those employees who are at least 50 years old with 20 or more years of service at HP. Employees accepted into the EER program will leave HP on dates ranging from December 31, 2019 to September 30, 2020. The EER benefit will be a cash lump sum payment which is calculated based on years of service at HP at the time of the retirement and ranging from 13 to 52 weeks of pay. All employees participating in the EER program were offered the opportunity to continue health care coverage at the active employee contribution rates for up to 36 months following retirement. In addition, HP provided up to $12,000 in employer credits under the Retirement Medical Savings Account (“RMSA”) program. In relation to the continued health care coverage and employer credits under the RMSA program, HP recognized a special termination benefit cost of $44 million as restructuring and other charges for the three months ended January 31, 2020 . |
Taxes on Earnings
Taxes on Earnings | 3 Months Ended |
Jan. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Taxes on Earnings | Taxes on Earnings Provision for Taxes HP’s effective tax rate was 22.8% and 10.8% for the three months ended January 31, 2020 and 2019 , respectively. The difference between the U.S. federal statutory tax rate of 21% and HP’s effective tax rate for the three months ended January 31, 2020 is primarily due to the accrual of uncertain tax positions in various jurisdictions, partially offset by favorable tax rates associated with certain earnings from HP’s operations in lower-tax jurisdictions throughout the world. For the three months ended January 31, 2019 , HP’s effective tax rate generally differs from the U.S. federal statutory rate of 21% due to favorable tax rates associated with certain earnings from HP’s operations in lower-tax jurisdictions throughout the world. During the three months ended January 31, 2020, HP recorded $7 million of net income tax benefits related to discrete items in the provision for taxes. This amount included tax benefits of $48 million and $7 million related to restructuring and other net tax benefits, respectively. These benefits were partially offset by uncertain tax position charges of $48 million . For the period ended January 31, 2020, excess tax benefits associated with stock options, restricted stock units and performance-adjusted restricted stock units were immaterial. During the three months ended January 31, 2019, HP recorded $9 million of net tax benefits related to discrete items in the provision for taxes. HP completed its analysis of the full impact of The Tax Cuts and Jobs Act (“TCJA”) as of January 31, 2019 and recorded tax benefit of $21 million related to final tax reform adjustments and recorded a tax benefit of $12 million related to restructuring. These benefits were partially offset by uncertain tax position charges of $20 million and other tax charges of $4 million . In addition to the discrete items mentioned above, HP recorded excess tax benefits of $27 million associated with stock options, restricted stock units and performance-adjusted restricted stock units. Uncertain Tax Positions As of January 31, 2020 , the amount of gross unrecognized tax benefits was $975 million , of which up to $836 million would affect HP’s effective tax rate if realized. Total gross unrecognized tax benefits increased by $46 million for the three months ended January 31, 2020 . 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 January 31, 2020 and 2019, HP had accrued $61 million and $181 million , respectively, 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 . HP believes it is reasonably possible that its existing gross unrecognized tax benefits may be reduced by $145 million within the next 12 months of which up to $116 million would affect HP’s effective tax rate if realized. HP is subject to income tax in the United States and approximately 58 other countries and is subject to routine corporate income tax audits in many of these jurisdictions. In addition, HP is subject to numerous ongoing audits by federal, state and foreign tax authorities. The U.S. Internal Revenue Service (“IRS”) is conducting an audit of HP’s 2016 income tax return. |
Supplementary Financial Informa
Supplementary Financial Information | 3 Months Ended |
Jan. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Supplementary Financial Information | Supplementary Financial Information Accounts Receivable, net As of January 31, 2020 October 31, 2019 In millions Accounts receivable $ 4,955 $ 6,142 Allowance for doubtful accounts (98 ) (111 ) $ 4,857 $ 6,031 The allowance for doubtful accounts related to accounts receivable and changes were as follows: Three months ended January 31, 2020 In millions Balance at beginning of period $ 111 Provision for doubtful accounts (2 ) Deductions, net of recoveries (11 ) Balance at end of period $ 98 HP has third-party arrangements, consisting of revolving short-term financing, which provide liquidity to certain partners 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 de-recognized 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 January 31, 2020 and October 31, 2019 were not material. The costs associated with the sales of trade receivables for the three months ended January 31, 2020 and 2019 were not material. The following is a summary of the activity under these arrangements: Three months ended January 31 2020 2019 In millions Balance at beginning of period (1) $ 235 $ 165 Trade receivables sold 2,857 3,036 Cash receipts (3,004 ) (3,010 ) Foreign currency and other — 3 Balance at end of period (1) $ 88 $ 194 (1) Amounts outstanding from third parties reported in Accounts Receivable in the Consolidated Condensed Balance Sheets. Inventory As of January 31, 2020 October 31, 2019 In millions Finished goods $ 3,061 $ 3,855 Purchased parts and fabricated assemblies 1,885 1,879 $ 4,946 $ 5,734 Other Current Assets As of January 31, 2020 October 31, 2019 In millions Supplier and other receivables $ 1,272 $ 1,951 Prepaid and other current assets 1,022 967 Value-added taxes receivable 887 957 Available-for-sale investments (1) 288 — $ 3,469 $ 3,875 (1) See Note 8, “Financial Instruments” for detailed information. Property, Plant and Equipment, net As of January 31, 2020 October 31, 2019 In millions Land, buildings and leasehold improvements $ 1,988 $ 1,977 Machinery and equipment, including equipment held for lease 5,161 5,060 7,149 7,037 Accumulated depreciation (4,393 ) (4,243 ) $ 2,756 $ 2,794 Other Non-Current Assets As of January 31, 2020 October 31, 2019 In millions Deferred tax assets $ 2,477 $ 2,620 Right-of-use assets from operating leases, net (1) 1,112 — Intangible assets 632 661 Tax indemnifications receivable 40 42 Other (2) 775 801 $ 5,036 $ 4,124 (1) See Note 1, “Basis of Presentation” and Note 14, “Leases” for detailed information. (2) Includes marketable equity securities and mutual funds classified as available-for-sale investments of $60 million and $56 million as of January 31, 2020 and October 31, 2019, respectively. See Note 8, “Financial Instruments” for detailed information. Other Current Liabilities As of January 31, 2020 October 31, 2019 In millions Sales and marketing programs $ 3,215 $ 3,361 Deferred revenue 1,148 1,178 Other accrued taxes 829 1,060 Employee compensation and benefit 739 1,103 Warranty 655 663 Operating lease liabilities (1) 255 — Tax liability 241 237 Other 3,054 2,541 $ 10,136 $ 10,143 (1) See Note 1, “Basis of Presentation” and Note 14, “Leases” for detailed information. Other Non-Current Liabilities As of January 31, 2020 October 31, 2019 In millions Pension, post-retirement, and post-employment liabilities $ 1,682 $ 1,762 Operating lease liabilities (1) 920 — Deferred revenue 1,058 1,069 Tax liability 853 848 Deferred tax liability 59 60 Other 919 848 $ 5,491 $ 4,587 (1) See Note 1, “Basis of Presentation” and Note 14, “Leases” for detailed information. Interest and other, net Three months ended January 31 2020 2019 In millions Interest expense on borrowings $ (58 ) $ (64 ) Other, net 71 38 $ 13 $ (26 ) Net revenue by region Three months ended January 31 2020 2019 In millions Americas $ 5,959 $ 6,032 Europe, Middle East and Africa 5,232 5,358 Asia-Pacific and Japan 3,427 3,320 Total net revenue $ 14,618 $ 14,710 Value of Remaining Performance Obligations As of January 31, 2020, the estimated value of transaction price allocated to remaining performance obligations was $4.5 billion . HP expects to recognize approximately $1.9 billion of the unearned amount in next 12 months and $2.6 billion thereafter. HP has elected the practical expedients and accordingly does not disclose the aggregate amount of the transaction price allocated to remaining performance obligations if: • the contract has an original expected duration of one year or less; or • the revenue from the performance obligation is recognized over time on an as-invoiced basis when the amount corresponds directly with the value to the customer; or • the portion of the transaction price that is variable in nature is allocated entirely to a wholly unsatisfied performance obligation. The remaining performance obligations are subject to change and may be affected by various factors, such as termination of contracts, contract modifications and adjustment for currency. Costs of Obtaining Contracts As of January 31, 2020, deferred contract fulfillment and acquisition costs balances were $51 million and $32 million , respectively, included in Other Current Assets and Other Non-Current Assets in the Consolidated Condensed Balance Sheet. During the three months ended January 31, 2020, the Company amortized $24 million of these costs. Contract Liabilities As of January 31, 2020 and October 31, 2019, HP’s contract liabilities balances were $2.2 billion and $2.1 billion , respectively, included in Other Current Liabilities and Other Non-Current Liabilities in the Consolidated Condensed Balance Sheet. The increase in the contract liabilities balance for the three months ended January 31, 2020 is primarily driven by sales of fixed price support and maintenance services, partially offset by $361 million |
Fair Value
Fair Value | 3 Months Ended |
Jan. 31, 2020 | |
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 January 31, 2020 As of October 31, 2019 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 $ — $ 1,001 $ — $ 1,001 $ — $ 1,283 $ — $ 1,283 Government debt (1) 2,050 112 — 2,162 2,422 — — 2,422 Available-for-Sale Investments: Corporate debt — 242 — 242 — — — — Financial institution instruments — 31 — 31 — — — — Government debt (1) — 15 — 15 — — — — Marketable equity securities and Mutual funds 10 50 — 60 6 50 — 56 Derivative Instruments: Interest rate contracts — 4 — 4 — 4 — 4 Foreign currency contracts — 374 — 374 — 381 — 381 Other derivatives — 13 — 13 — 7 — 7 Total Assets $ 2,060 $ 1,842 $ — $ 3,902 $ 2,428 $ 1,725 $ — $ 4,153 Liabilities: Derivative Instruments: Foreign currency contracts — 149 — 149 — 165 — 165 Other derivatives — 2 — 2 — 1 — 1 Total Liabilities $ — $ 151 $ — $ 151 $ — $ 166 $ — $ 166 (1) Government debt includes instruments such as U.S. treasury notes, U.S agency securities and non-U.S. government bonds. Money market funds invested in government debt and traded in active markets are included in Level 1. Valuation Techniques Cash Equivalents and Investments: HP holds time deposits, money market funds, mutual funds, other debt securities primarily consisting of corporate and foreign 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, at times, option contracts to hedge certain foreign currency interest rate and return on certain investment 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 exchange rates, and forward and spot prices for currencies and interest rates. See Note 8, “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 $5.1 billion as of January 31, 2020 , compared to its carrying amount of $4.9 billion at that date. The fair value of HP’s short- and long-term debt was $5.4 billion as of October 31, 2019, compared to its carrying value of $5.1 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 current 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, these 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 are measured at cost less impairment, adjusted for observable price changes. HP’s non-financial assets, such as intangible assets, goodwill and property, plant and equipment, are recorded at fair value in the period an impairment charge is recognized. If measured at fair value in the Consolidated Condensed Balance Sheets these would generally be classified within Level 3 of the fair value hierarchy. |
Financial Instruments
Financial Instruments | 3 Months Ended |
Jan. 31, 2020 | |
Investments, All Other Investments [Abstract] | |
Financial Instruments | Financial Instruments Cash Equivalents and Available-for-Sale Investments As of January 31, 2020 As of October 31, 2019 Cost Gross Unrealized Gain Gross Unrealized Loss Fair Value Cost Gross Unrealized Gain Gross Unrealized Loss Fair Value In millions Cash Equivalents: Corporate debt $ 1,001 $ — $ — $ 1,001 $ 1,283 $ — $ — $ 1,283 Government debt 2,162 — — 2,162 2,422 — — 2,422 Total cash equivalents 3,163 — — 3,163 3,705 — — 3,705 Available-for-Sale Investments: Corporate debt (1) 242 — — 242 — — — — Financial institution instruments (1) 31 — — 31 — — — — Government debt (1) 15 — — 15 — — — — Marketable equity securities and Mutual funds 40 20 — 60 40 16 — 56 Total available-for-sale investments 328 20 — 348 40 16 — 56 Total cash equivalents and available-for-sale investments $ 3,491 $ 20 $ — $ 3,511 $ 3,745 $ 16 $ — $ 3,761 (1) 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. All highly liquid investments with original maturities of three months or less at the date of acquisition are considered cash equivalents. As of January 31, 2020 and October 31, 2019 , 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. Contractual maturities of investments in available-for-sale debt securities were as follows: As of January 31, 2020 Amortized Fair Value In millions Due in one year or less $ 288 $ 288 Equity securities in privately held companies are included in Other non-current assets in the Consolidated Condensed Balance Sheets. These amounted to $46 million and $46 million as of January 31, 2020 and October 31, 2019, 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, return on certain investment exposures. HP may designate its derivative contracts as fair value hedges or cash flow hedges and classifies the cash flows with the activities that correspond to the underlying hedged items. Additionally, 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’s custodian 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 $43 million and $45 million as of January 31, 2020 and as of October 31, 2019 , respectively, all of which were fully collateralized within two business days. 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 January 31, 2020 and October 31, 2019 . 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 in 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 and operating expenses. HP’s foreign currency cash flow hedges mature predominantly within twelve months ; however, hedges related to long-term procurement arrangements extend several years. For derivative instruments that are designated and qualify as cash flow hedges, HP initially records changes in fair value of the derivative instrument in Accumulated other comprehensive loss as a separate component of stockholders’ deficit in 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 changes in the fair value of the derivative instrument 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. As of January 31, 2020 and 2019, no portion of the hedging instruments’ gain or loss was excluded from the assessment of effectiveness for fair value and cash flow hedges. Fair Value of Derivative 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 January 31, 2020 As of October 31, 2019 Outstanding Gross Notional Other Current Assets Other Non-Current Assets Other Current Liabilities Other Non-Current Liabilities Outstanding Gross Notional Other Current Assets Other Non-Current Assets Other Current Liabilities Other Non-Current Liabilities In millions Derivatives designated as hedging instruments Fair value hedges: Interest rate contracts $ 750 $ — $ 4 $ — $ — $ 750 $ — $ 4 $ — $ — Cash flow hedges: Foreign currency contracts 15,980 258 99 104 26 15,639 260 111 123 28 Total derivatives designated as hedging instruments 16,730 258 103 104 26 16,389 260 115 123 28 Derivatives not designated as hedging instruments Foreign currency contracts 5,406 17 — 19 — 7,146 10 — 14 — Other derivatives 151 13 — 2 — 134 7 — 1 — Total derivatives not designated as hedging instruments 5,557 30 — 21 — 7,280 17 — 15 — Total derivatives $ 22,287 $ 288 $ 103 $ 125 $ 26 $ 23,669 $ 277 $ 115 $ 138 $ 28 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 January 31, 2020 and October 31, 2019 , 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 January 31, 2020 Derivative assets $ 391 $ — $ 391 $ 104 $ 247 (1) $ 40 Derivative liabilities $ 151 $ — $ 151 $ 104 $ 42 (2) $ 5 As of October 31, 2019 Derivative assets $ 392 $ — $ 392 $ 113 $ 259 (1) $ 20 Derivative liabilities $ 166 $ — $ 166 $ 113 $ 43 (2) $ 10 (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 months ended January 31, 2020 and 2019 were as follows: Total amounts of income/ (expense) line items presented in the statement of financial performance in which the effects of fair value hedges are recorded Gain/(Loss) Recognized in Earnings on Derivative Instrument Gain/(Loss) Recognized in Earnings on Derivative and Related Hedged Item Derivative Instrument Location Three months ended January 31, 2020 Three months ended January 31, 2020 Hedged Item Location Three months ended January 31, 2020 In millions In millions Interest rate contracts Interest and other, net $ 13 $ — Fixed-rate debt Interest and other, net $ — Total amounts of income/ (expense) line items presented in the statement of financial performance in which the effects of fair value hedges are recorded Gain/(Loss) Recognized in Earnings on Derivative Instrument Gain/(Loss) Recognized in Earnings on Derivative and Related Hedged Item Derivative Instrument Location Three months ended January 31, 2019 Three months ended January 31, 2019 Hedged Item Location Three months ended January 31, 2019 In millions In millions Interest rate contracts Interest and other, net $ (26 ) $ (12 ) Fixed-rate debt Interest and other, net $ 12 The pre-tax effect of derivative instruments in cash flow hedging relationships for the three months ended January 31, 2020 and 2019 was as follows: Gain/(Loss) Recognized in Other Comprehensive Income ("OCI") on Derivatives Total amounts of income and expense line items presented in the statement of financial performance in which the effects of cash flow hedges are recorded Gain /(Loss) Reclassified from Accumulated OCI Into Three months ended January 31, 2020 Location Three months ended January 31, 2020 In millions In millions Cash flow hedges: Foreign currency contracts $ 60 Net revenue $ 14,618 $ 61 Cost of revenue (11,746 ) (1 ) Operating expenses (2,007 ) (1 ) Total $ 60 $ 59 Gain/(Loss) Recognized in Other Comprehensive Income ("OCI") on Derivatives Total amounts of income and expense line items presented in the statement of financial performance in which the effects of cash flow hedges are recorded Gain /(Loss) Reclassified from Accumulated OCI Into Three months ended January 31, 2019 Location Three months ended January 31, 2019 In millions In millions Cash flow hedges: Foreign currency contracts $ (107 ) Net revenue $ 14,710 $ 191 Cost of revenue (12,098 ) (10 ) Operating expenses (1,686 ) (2 ) Total $ (107 ) $ 179 As of January 31, 2020 , HP expects to reclassify an estimated accumulated other comprehensive gain of $108 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 Accumulated other comprehensive loss based on the change of market rate, and therefore could have different impact on earnings. The pre-tax effect of derivative instruments not designated as hedging instruments recognized in the Consolidated Condensed Statements of Earnings for the three months ended January 31, 2020 and 2019 was as follows: (Loss) /Gain Recognized in Earnings on Derivatives Location Three months ended January 31, 2020 Three months ended January 31, 2019 In millions Foreign currency contracts Interest and other, net $ (8 ) $ (40 ) Other derivatives Interest and other, net 5 14 Total $ (3 ) $ (26 ) |
Borrowings
Borrowings | 3 Months Ended |
Jan. 31, 2020 | |
Debt Disclosure [Abstract] | |
Borrowings | Borrowings Notes Payable and Short-Term Borrowings As of January 31, 2020 As of October 31, 2019 Amount Weighted-Average Amount Weighted-Average In millions In millions Current portion of long-term debt $ 878 3.7 % $ 307 3.6 % Notes payable to banks, lines of credit and other 45 0.7 % 50 2.0 % $ 923 $ 357 Long-Term Debt As of January 31, 2020 October 31, 2019 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 $ 649 $ 648 $1,250 issued at discount to par at a price of 99.799% in May 2011 at 4.3%, due June 2021 667 667 $1,000 issued at discount to par at a price of 99.816% in September 2011 at 4.375%, due September 2021 538 538 $1,500 issued at discount to par at a price of 99.707% in December 2011 at 4.65%, due December 2021 695 695 $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 4,247 4,246 Other borrowings at 0.51%-8.42%, due in calendar years 2020-2027 574 853 Fair value adjustment related to hedged debt 4 4 Unamortized debt issuance cost (15 ) (16 ) Current portion of long-term debt (878 ) (307 ) Total long-term debt $ 3,932 $ 4,780 (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. In December 2019, HP filed a shelf registration statement (the “2019 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 8, “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. Commercial Paper As of January 31, 2020 , HP maintained two commercial paper programs. HP’s U.S. program provides for the issuance of U.S. dollar-denominated commercial paper up to a maximum aggregate principal amount of $6.0 billion . HP’s euro commercial paper program provides for the issuance of commercial paper outside of the United States denominated in U.S. dollars, euros or British pounds up to a maximum aggregate principal amount of $6.0 billion or the equivalent in those alternative currencies. The combined aggregate principal amount of commercial paper outstanding under those programs at any one time cannot exceed the $6.0 billion authorized by HP’s Board of Directors. Credit Facility As of January 31, 2020 , HP maintained 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 March 30, 2023. Commitment fees, interest rates and other terms of borrowing under the credit facilities vary based on HP’s external credit ratings. As of January 31, 2020 , HP was in compliance with the financial covenants in the credit agreement governing the revolving credit facility. Available Borrowing Resources As of January 31, 2020 , HP had available borrowing resources of $701 million from uncommitted lines of credit in addition to the senior unsecured committed revolving credit facility discussed above. |
Stockholders' Deficit
Stockholders' Deficit | 3 Months Ended |
Jan. 31, 2020 | |
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 months ended January 31, 2020 , HP executed share repurchases of 34 million shares and settled total shares for $0.7 billion . During the three months ended January 31, 2019 , HP executed share repurchases of 32 million shares and settled total shares for $0.7 billion . Share repurchases executed during the three months ended January 31, 2020 and 2019 included 1.3 million and 0.9 million shares settled in February 2020 and February 2019, respectively. The shares repurchased during the three months ended January 31, 2020 and 2019 were all open market repurchase transactions. On June 19, 2018 and September 30, 2019, HP’s Board of Directors authorized additional $4.0 billion and $5.0 billion , respectively, for future repurchases of its outstanding shares of common stock. As of January 31, 2020 , HP had approximately $5.8 billion remaining under the share repurchase authorizations approved by HP’s Board of Directors. On February 22, 2020, HP’s Board of Directors increased HP’s share repurchase authorization to $15.0 billion in total. Tax effects related to Other Comprehensive Loss Three months ended January 31 2020 2019 In millions Tax effect on change in unrealized components of available-for-sale debt securities: Tax benefit on unrealized losses arising during the period $ — $ — Tax effect on change in unrealized components of cash flow hedges: Tax (provision) benefit on unrealized losses arising during the period (16 ) 20 Tax provision on gains reclassified into earnings 10 22 (6 ) 42 Tax effect on change in unrealized components of defined benefit plans: Tax provision on amortization of actuarial loss and prior service benefit (5 ) (3 ) Tax provision on curtailments, settlements and other — 1 (5 ) (2 ) Tax effect on change in cumulative translation adjustment — — Tax (provision) benefit on other comprehensive loss $ (11 ) $ 40 Changes and reclassifications related to Other Comprehensive Loss, net of taxes Three months ended January 31 2020 2019 In millions Other comprehensive loss, net of taxes: Change in unrealized components of available-for-sale debt securities: Unrealized gains arising during the period $ 1 $ — Change in unrealized components of cash flow hedges: Unrealized gain (losses) arising during the period 44 (87 ) Gains reclassified into earnings (49 ) (157 ) (5 ) (244 ) Change in unrealized components of defined benefit plans: Amortization of actuarial loss and prior service benefit (1) 15 8 Curtailments, settlements and other — (1 ) 15 7 Change in cumulative translation adjustment 6 (5 ) Other comprehensive gain (loss), net of taxes $ 17 $ (242 ) (1) 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: Three months ended January 31, 2020 Net unrealized Net unrealized Unrealized Change in cumulative Accumulated In millions Balance at beginning of period $ 9 $ 172 $ (1,410 ) $ 4 $ (1,225 ) Other comprehensive gain before reclassifications 1 44 — 6 51 Reclassifications of (gain) loss into earnings — (49 ) 15 — (34 ) Balance at end of period $ 10 $ 167 $ (1,395 ) $ 10 $ (1,208 ) |
Net Earnings Per Share
Net Earnings Per Share | 3 Months Ended |
Jan. 31, 2020 | |
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 units, stock options, performance-based awards and shares purchased under the 2011 employee stock purchase plan. A reconciliation of the number of shares used for basic and diluted net EPS calculations is as follows: Three months ended January 31 2020 2019 In millions, except per share amounts Numerator: Net earnings $ 678 $ 803 Denominator: Weighted-average shares used to compute basic net EPS 1,454 1,556 Dilutive effect of employee stock plans 6 11 Weighted-average shares used to compute diluted net EPS 1,460 1,567 Net earnings per share: Basic $ 0.47 $ 0.52 Diluted $ 0.46 $ 0.51 Anti-dilutive weighted-average stock-based compensation awards (1) 9 5 (1) HP excludes from the calculation of diluted net EPS stock options and restricted stock units where the assumed proceeds exceed the average market price, 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 represent unrecognized compensation cost. |
Litigation and Contingencies
Litigation and Contingencies | 3 Months Ended |
Jan. 31, 2020 | |
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 IP, commercial, securities, employment, employee benefits and environmental matters that arise in the ordinary course of business. 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 January 31, 2020, 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 IT 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 collecting society administering 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 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 payments already made by HP are sufficient to comply with its obligations. The Court of Appeal in Brussels (the “Court of Appeal”) stayed the proceedings and referred several questions to the Court of Justice of the European Union (“CJEU”). 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, and returned the proceedings to the referring court. On May 12, 2017, the Court of Appeal held that (1) reprographic copyright levies are due notwithstanding the lack of conformity of the Belgian system with EU law in certain aspects and (2) the 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. HP appealed this decision before the Belgian Supreme Court on January 18, 2018. 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 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 case is fully briefed and awaiting the Court of Appeals to schedule oral argument. 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. v. 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. In their initial complaint, Plaintiffs sought 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 sought 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. In November 2016, the plaintiffs amended their complaint, adding new plaintiffs and narrowing the class period for the nationwide collective action to a period that started on December 9, 2014. On September 20, 2017, the Court granted defendants’ motions to compel arbitration as to the party plaintiffs who signed WFR release agreements, and also stayed the entire case until the arbitrations were completed. In October 2018, the claims of all 16 arbitration claimants were resolved. Between November 2018 and April 2019, an additional 154 individuals filed consents to opt‐in to the action as party‐plaintiffs, which brought the total number of named and opt-in plaintiffs to 193 . Of the new opt-ins, 145 signed separation agreements that included class waivers and mandatory arbitration provisions. The parties have resolved the claims of 142 of those 145 opt-ins, and the remaining three opt-ins who signed separation agreements dismissed their claims without prejudice. In February 2020, the claims of thirteen additional party plaintiffs were dismissed voluntarily without prejudice, leaving the total number of named and opt-in plaintiffs at 35 . On January 7, 2020, the plaintiffs filed a Third Amended Complaint that seeks to represent (1) a putative nationwide ADEA collective comprised of all individuals 40 years of age and older who had their employment terminated pursuant to a WFR plan on or after December 9, 2014 and did not sign a Waiver and General Release Agreement in connection with their selection for WFR; and (2) a putative Rule 23 class under California law comprised of all individuals 40 years of age and older who had their employment terminated pursuant to a WFR plan on or after August 18, 2012 and did not sign a Waiver and General Release Agreement in connection with their selection for WFR. On February 6, 2020, Defendants moved to dismiss the complaint in its entirety. The stay of the litigation otherwise remains in place. Jackson, et al. v. HP Inc. and Hewlett Packard Enterprise. This putative nationwide class action was filed on July 24, 2017 in federal district court in San Jose, California. The plaintiffs purport to bring the lawsuit on behalf of themselves and other similarly situated African-Americans and individuals over the age of forty . The plaintiffs allege that the defendants engaged in a pattern and practice of racial and age discrimination in lay-offs and promotions. The plaintiffs filed an amended complaint on September 29, 2017. On January 12, 2018, the defendants moved to transfer the matter to the federal district court in the Northern District of Georgia. The defendants also moved to dismiss the claims on various grounds and to strike certain aspects of the proposed class definition. The Court dismissed the action on the basis of improper venue. On July 23, 2018, the plaintiffs refiled the case in the Northern District of Georgia. On August 9, 2018, the plaintiffs also filed a notice of appeal of the dismissal order with the United States Court of Appeals for the Ninth Circuit. On October 1, 2018, the Georgia court granted the plaintiffs’ unopposed motion to stay and administratively close the Georgia action until the Ninth Circuit appeal is decided. On February 4, 2020, the parties resolved their claims, and by February 11, 2020, dismissals with prejudice were entered in the Northern District of Georgia action, the Northern District of California action, and the Ninth Circuit appeal. 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. A hearing on the merits of the appeal scheduled for January 15, 2019 has been cancelled. 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. Neodron Patent Litigation . United States. On May 21, 2019, Neodron Ltd. (“Neodron”) filed a patent infringement lawsuit against Hewlett Packard Enterprise in U.S. District Court for the Western District of Texas. On the same day, Neodron filed a companion complaint with the U.S. International Trade Commission (“ITC”) pursuant to Section 337 of the Tariff Act of 1930 against seven sets of respondents, including Hewlett Packard Enterprise. On May 23 and June 14, 2019, Neodron filed amended complaints in the ITC and the Western District of Texas, respectively, to replace Hewlett Packard Enterprise with HP. Both complaints allege that certain touch-controlled devices infringe four patents owned by Neodron. On June 19, 2019, the ITC instituted an investigation. The ITC hearing is scheduled to begin on March 23, 2020, and the ITC’s target date for completion of the investigation is October 26, 2020. The district court action is stayed pending resolution of the ITC proceedings. In the ITC proceeding, Neodron seeks an order enjoining HP from importing, selling for importation, or selling after importation certain touch-controlled notebook computers and tablets. On June 28, 2019, Neodron filed a second lawsuit in the Western District of Texas, asserting four additional patents against HP touch-controlled devices. Neodron amended its complaint in the second lawsuit to assert a total of eight patents against HP touch-controlled devices. Neodron seeks unspecified damages and a permanent injunction, among other remedies. Germany. On October 29, 2019, Neodron served HP with a claim of patent infringement at the Munich State Court in Germany. The patent asserted in the German case is related to a patent asserted in the ITC. This case will consist of an initial hearing in March 2020 and formal hearing in late 2020. If the German court finds infringement of a valid patent, the court may issue an injunction as part of any remedy. Slingshot Printing LLC Litigation . On June 11, 2019, Slingshot Printing LLC filed three complaints in U.S. District Court in the Western District of Texas alleging HP infringes or has infringed sixteen patents. On September 20, 2019, Slingshot filed a four th complaint and amended the three earlier complaints, alleging that HP infringes or has infringed thirty-two patents. On December 12, 2019, Slingshot voluntarily dismissed its allegations as to one patent because it did not own a related patent. On January 23, 2020, Slingshot filed a fifth complaint, re-asserting the dismissed patent as well as the related patent. On February 13, 2020, Slingshot voluntarily dismissed its allegations as to another patent, which was asserted in its third complaint. Slingshot is currently asserting a total of 32 patents. The accused products include inkjet printers, cartridges, and printheads. The complaints seek monetary damages. Parziale v. HP, Inc . On August 27, 2019, a purported consumer class action was filed against HP arising out of the supplies authentication protocol in certain OfficeJet printers. The complaint, which was filed in the United States District Court for the Northern District of California, captioned Parziale v. HP, Inc., alleges two causes of action under Florida Consumer Protection statutes: (1) violation of the Florida Deceptive and Unfair Trade Practices Act, F.S.A. §§ 501.201 et seq., and (2) violation of the Florida Misleading Advertisement Law, F.S.A. §§ 817.41 et seq. The named plaintiff, a Florida resident who purchased OfficeJet printers in Florida, seeks to represent a nationwide class of “[a]ll United States Citizens who, between the applicable statute of limitations and the present, had an HP Printer that was modified to reject third party ink cartridges or refilled HP ink cartridges.” On October 30, 2019, HP moved to dismiss the complaint. On November 13, 2019, plaintiff filed an amended complaint, adding the following new causes of action to the case: (1) violation of the Computer Fraud and Abuse Act, 18 U.S.C. § 1030 et seq., (2) trespass to chattels, and (3) tortious interference with business relations. Plaintiff seeks certain class relief regarding its complaint, injunctive relief, damages, including punitive damages, and attorneys’ fees. On December 30, 2019, HP moved to dismiss plaintiff’s amended complaint. Electrical Workers Pension Fund, Local 103, I.B.E.W. v. HP Inc., et al . This is a putative securities class action filed on February 19, 2020 in federal court for the Northern District of California alleging, among other things, that from February 23, 2017 to October 3, 2019 the defendants violated Sections 10(b) and 20(a) of the Exchange Act by concealing material information and making false statements about HP’s printing supplies business, including the accuracy and reliability of HP’s four-box model to determine the demand for supplies. Plaintiff seeks compensatory damages and other relief. Autonomy-Related Legal Matters Investigations . As a result of the findings of an ongoing investigation, HP has provided information to the 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. Mr. Hussain was charged with conspiracy to commit wire fraud, securities fraud, and multiple counts of wire fraud. The indictment alleged that Mr. 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. A jury trial commenced on February 26, 2018. On April 30, 2018, the jury found Mr. Hussain guilty of all charges against him. 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. On November 29, 2018, the DOJ announced that a federal grand jury indicted Michael Lynch, former CEO of Autonomy, and Stephen Chamberlain, former VP of Finance of Autonomy. Dr. Lynch and Mr. Chamberlain were charged with conspiracy to commit wire fraud and multiple counts of wire fraud. HP is continuing to cooperate with the ongoing enforcement actions. 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. Trial began on March 25, 2019 and was completed in January 2020. The parties are awaiting a ruling from the Court. Environmental HP’s business is subject to various federal, state, local and foreign laws and regulations that could result in costs or other sanctions that adversely affect our business and results of operations. For example, HP is subject to 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 clean-up of contaminated sites, the content of HP’s products and the recycling, treatment and disposal of those products, including batteries. 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, the energy consumption associated with those products, climate change laws and regulations, and product repairability, reuse and 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 an
Guarantees, Indemnifications and Warranties | 3 Months Ended |
Jan. 31, 2020 | |
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. 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 cross-indemnifications with Hewlett Packard Enterprise for litigation matters, see Note 12, “Litigation and Contingencies.” In connection with the Separation, HP entered into the Tax Matters Agreement (“TMA”) with Hewlett Packard Enterprise, effective on November 1, 2015. The TMA provided that HP and Hewlett Packard Enterprise will share certain pre-Separation income tax liabilities. The TMA was terminated during the fourth quarter of fiscal year 2019. 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 intellectual property 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. HP records tax indemnification receivables from various third parties for certain tax liabilities that HP is jointly and severally liable for, but for which it is indemnified by those same third parties under existing legal agreements. HP records a tax indemnification payable to various third parties under these agreements when management believes that it is both probable that a liability has been incurred and the amount can be reasonably estimated. The actual amount that the third parties pay or 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 payable as of January 31, 2020 and October 31, 2019 were $59 million and $57 million , respectively. Warranties 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: Three months ended January 31, 2020 In millions Balance at beginning of period $ 922 Accruals for warranties issued 245 Adjustments related to pre-existing warranties (including changes in estimates) (9 ) Settlements made (in cash or in kind) (243 ) Balance at end of period $ 915 |
Leases
Leases | 3 Months Ended |
Jan. 31, 2020 | |
Leases [Abstract] | |
Leases | Leases HP determines, at lease inception, whether or not an arrangement contains a lease. A significant portion of the operating lease portfolio includes real estate leases. Additionally, HP has identified embedded operating leases within certain outsourced supply chain contracts. Leasing arrangements typically range in terms from 1 to 21 years with varying renewal and termination options. Substantially all of HP’s leases are considered operating leases. Finance leases, short-term leases and sub-lease income were not material as of January 31, 2020 or for the three months ended January 31, 2020. Lease terms include options to extend or terminate the lease when it is reasonably certain that HP will exercise such options. HP generally considers the economic life of the ROU assets to be comparable to the useful life of similar owned assets. HP’s leases generally do not provide a residual guarantee. Operating leases are included in Other non-current assets, Other current liabilities and Other non-current liabilities. Finance leases are included in Property, plant and equipment, net, Notes payable and short-term borrowings and Long-term debt in the Condensed Consolidated Balance Sheets. As most of the leases do not provide an implicit interest rate, HP uses the incremental borrowing rate based on the information available at the commencement date of a lease in determining the present value of lease payments. The incremental borrowing rate is determined based on the rate of interest that HP would have to pay to borrow an amount equal to the lease payments on a collateralized basis over a similar term. HP uses the unsecured borrowing rate and risk-adjusts that rate to approximate a collateralized rate. HP has elected the practical expedient to combine lease and non-lease components as a single lease element for its real estate leases and certain outsourced supply chain contracts in calculating the ROU assets and lease liabilities. Where HP chooses not to combine the lease and non-lease components, HP allocates contract consideration to the lease and non-lease components based on relative standalone prices. HP reviews the impairment of the ROU assets consistent with the approach applied for other long-lived assets. The components of lease expense are as follows: Three months ended January 31, 2020 In millions Operating lease cost $ 67 Variable cost 27 Total lease expense $ 94 All lease expenses, including variable lease costs, are primarily included in Cost of revenue and Selling, general and administrative expenses in the Consolidated Condensed Statements of Earnings based on the use of the facility. Variable lease expense relates primarily to leased real estate utilized for office space and outsourced warehousing. These costs primarily include adjustments for inflation, payments dependent on a rate or index or usage of asset and common area maintenance charges. These costs are not included in the lease liability and are recognized in the period in which they are incurred. The following table presents supplemental information relating to the cash flows arising from lease transactions. Cash payments made from variable lease costs and short-term leases are not included in the measurement of operating lease liabilities, and, as such, are excluded from the amounts below: Three months ended January 31, 2020 In millions Cash paid for amount included in the measurement of lease liabilities: $ 63 Right-of-use assets obtained in exchange of lease liabilities (1) : $ 27 (1) Includes the impact of new leases as well as remeasurements and modifications to existing leases. Weighted-average information associated with the measurement of our remaining operating lease liabilities is as follows: As of January 31, 2020 Weighted-average remaining lease term in years: 7 Weighted-average discount rate 2.3 % The following maturity analysis presents expected undiscounted cash outflows for operating leases on an annual basis for the next five years, with the exception of 2020, which presents the expected undiscounted cash outflows for operating leases for the remaining nine months of the year. Fiscal year In millions 2020 $ 218 2021 219 2022 175 2023 140 2024 113 Thereafter 425 Total lease payments 1,290 Less: Imputed interest (115 ) Total lease liabilities $ 1,175 The following table, which was included in our Annual Report on Form 10-K for the fiscal year ended October 31, 2019, depicts gross minimum rental commitments under non-cancelable leases for real estate, personal property leases, sublease income commitments and operating lease commitments at October 31, 2019. Fiscal year In millions Less than 1 year $ 284 1-3 years 399 3-5 years 262 More than 5 years 395 Total (1) $ 1,340 (1) Amount represents operating lease obligations, net of total sublease income of $130 million . There were no material operating leases that HP had entered into and that were yet to commence as of January 31, 2020. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Jan. 31, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events On February 20, 2020, HP’s Board of Directors adopted a shareholder rights plan and declared a dividend of one preferred share purchase right for each outstanding share of our common stock to shareholders of record on March 2, 2020. The dividend distribution was made on March 2, 2020. Each right will allow its holder to purchase from HP one one-hundredth of a share of Series A Junior Participating Preferred stock, par value $0.01 per share, for an exercise price of $100 , once the rights become exercisable. In the event that a person or group acquires beneficial ownership of 20% or more of our then outstanding common stock, subject to certain exceptions, each right would entitle its holder (other than such person or members of such group) to purchase additional shares of our common stock at a substantial discount to the public market price. In addition, at any time after a person or group acquires 20% or more of our outstanding common stock (unless such person or group acquires 50% or more), The Board may exchange one share of our common stock for each outstanding right (other than rights owned by such person or group, which would have become void). If HP is acquired in a merger or other business combination after an acquiring person acquires 20% or more of HP’s common stock, each holder of the rights would thereafter have the right to purchase, at a substantial discount to the public market price, a number of shares of common stock of the acquiring corporation. The Board may redeem the rights for $0.01 |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 3 Months Ended |
Jan. 31, 2020 | |
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, 2019 in the Annual Report on Form 10-K, filed on December 12, 2019 . The Consolidated Condensed Balance Sheet for October 31, 2019 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. |
Use of Estimates | Use of Estimates |
Recently Adopted Accounting Pronouncements and Recently Issued Accounting Pronouncements Not Yet Adopted | Recently Adopted Accounting Pronouncements In August 2017, the FASB issued guidance, which amends the existing accounting standards for derivatives and hedging. The amendment improves the financial reporting of hedging relationships to better represent the economic results of an entity’s risk management activities in its financial statements and made certain targeted improvements to simplify the application of the hedge accounting guidance in current U.S. GAAP. HP adopted this guidance in the first quarter of fiscal year 2020. The implementation of this guidance did not have a material impact on its Consolidated Condensed Financial Statements. In February 2016, the FASB issued amended guidance on the accounting for leasing transactions. The primary objective of this update is to increase transparency and comparability among organizations by requiring lessees to recognize a lease liability for the obligation to make lease payments and a right-of-use (“ROU”) asset for the right to use the underlying asset over the lease term. The guidance also results in some changes to lessor accounting and requires additional disclosures about all leasing arrangements. HP adopted the standard (the “new lease standard”) as of November 1, 2019 using a modified retrospective approach, with the cumulative effect adjustment to the opening balance of accumulated deficit as of the adoption date. HP elected to apply the practical expedient using the transition option whereby prior comparative periods were not retrospectively adjusted in the Consolidated Condensed Financial Statements. HP also elected the package of practical expedients, which does not require reassessment of initial direct costs, classification of a lease, and definition of a lease. The Company has elected not to record leases with an initial term of 12 months or less on the Consolidated Condensed Balance Sheets. Lease expense on such leases is recognized on a straight-line basis over the lease term. HP has also elected the lessee practical expedient to combine lease and non-lease components for certain asset classes. The adoption of the new lease standard resulted in the recognition of $1.2 billion in operating lease liabilities and $1.2 billion of related ROU assets on the Consolidated Condensed Balance Sheets. The net impact of adoption to accumulated deficit as on November 1, 2019 is not considered material. As of November 1, 2019, there were no material finance leases for which HP was a lessee. The new lease standard also made some changes to lessor accounting, including alignment with the new revenue recognition standard. HP now records revenue upfront on certain aspects of its as-a-service offerings and will reflect the financing of these offerings as cash flows from financing activities on the Consolidated Condensed Statements of Cash Flows. These changes did not have a material impact on the Consolidated Condensed Financial Statements. Refer to Note 14 “Leases” for additional disclosures related to leases. Recently Issued Accounting Pronouncements Not Yet Adopted 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. |
Revenue Recognition | Revenue Recognition General HP recognizes revenues at a point in time or over time depicting the transfer of promised goods or services to customers in an amount that reflects the consideration to which HP expects to be entitled in exchange for those goods or services. HP follows the five-step model for revenue recognition as summarized below: 1 . Identify the contract with a customer - A contract with customer exists when (i) it is approved and signed by all parties, (ii) each party’s rights and obligations can be identified, (iii) payment terms are defined, (iv) it has commercial substance and (v) the customer has the ability and intent to pay. HP evaluates customers’ ability to pay based on various factors like historical payment experience, financial metrics and customer credit scores. While the majority of our sales contracts contain standard terms and conditions, there are certain contracts with non-standard terms and conditions. 2. Identify the performance obligations in the contract - HP evaluates each performance obligation in an arrangement to determine whether it is distinct, such as hardware and/or service. A performance obligation constitutes distinct goods or services when the customer can benefit from such goods or services either on its own or together with other resources that are readily available to the customer and the performance obligation is distinct within the context of the contract. 3. Determine the transaction price - Transaction price is the amount of consideration to which HP expects to be entitled in exchange for transferring goods or services to the customer. If the transaction price includes a variable amount, HP estimates the amount it expects to be entitled to using either the expected value or the most likely amount method. HP reduces the transaction price at the time of revenue recognition for customer and distributor programs and incentive offerings, rebates, promotions, other volume-based incentives and expected returns. HP uses estimates to determine the expected variable consideration for such programs based on factors like historical experience, expected consumer behavior and market conditions. HP has elected the practical expedient of not accounting for significant financing components if the period between revenue recognition and when the customer pays for the product or service is one year or less. 4. Allocate the transaction price to performance obligations in the contract - When a sales arrangement contains multiple performance obligations, such as hardware and/or services, HP allocates revenue to each performance obligation in proportion to their selling price. The selling price for each performance obligation is based on its Standalone Selling Price (“SSP”). HP establishes SSP using the price charged for a performance obligation when sold separately (“observable price”) and, in some instances, using the price established by management having the relevant authority. When observable price is not available, HP establishes SSP based on management judgment considering internal factors such as margin objectives, pricing practices and controls, customer segment pricing strategies and the product life-cycle. Consideration is also given to market conditions such as competitor pricing strategies and technology industry life cycles. 5. Recognize revenue when (or as) the performance obligation is satisfied - Revenue is recognized when, or as, a performance obligation is satisfied by transferring control of a promised good or service to a customer. HP generally invoices the customer upon delivery of the goods or services and the payments are due as per contract terms. For fixed price support or maintenance contracts that are in the nature of stand-ready obligations, payments are generally received in advance from customers and revenue is recognized on a straight-line basis over the duration of the contract. HP reports revenue net of any taxes collected from customers and remitted to government authorities, and the collected taxes are recorded as other current liabilities until remitted to the relevant government authority. HP includes costs related to shipping and handling in cost of revenue. HP records revenue on a gross basis when HP is a principal in the transaction and on a net basis when HP is acting as an agent between the customer and the vendor. HP considers several factors to determine whether it is acting as a principal or an agent, most notably whether HP is the primary obligor to the customer, has established its own pricing and has inventory and credit risks. Hardware HP transfers control of the products to the customer at the time the product is delivered to the customer and recognizes revenue accordingly, unless customer acceptance is uncertain or significant obligations to the customer remain unfulfilled. HP records revenue from the sale of equipment under sales-type leases as revenue at the commencement of the lease. Services HP recognizes revenue from fixed-price support, maintenance and other service contracts over time depicting the pattern of service delivery and recognizes the costs associated with these contracts as incurred. Contract Assets and Liabilities Contract assets are rights to consideration in exchange for goods or services that HP has transferred to a customer when such right is conditional on something other than the passage of time. Such contract assets are not material to HP’s Consolidated Financial Statements. Contract liabilities are recorded as deferred revenues when amounts invoiced to customers are more than the revenues recognized or when payments are received in advance for fixed price support or maintenance contracts. The short-term and long-term deferred revenues are reported within the other current liabilities and other non-current liabilities respectively. Cost to obtain a contract and fulfillment cost Incremental direct costs of obtaining a contract primarily consist of sales commissions. HP has elected the practical expedient to expense as incurred the costs to obtain a contract with a benefit period equal to or less than one year. For contracts with a period of benefit greater than one year, HP capitalizes incremental costs of obtaining a contract with a customer and amortizes these costs over their expected period of benefit provided such costs are recoverable. Fulfillment costs consist of set-up and transition costs related to other service contracts. These costs generate or enhance resources of HP that will be used in satisfying the performance obligation in the future and are capitalized and amortized over the expected period of the benefit, provided such costs are recoverable. See Note 6, “Supplementary Financial Information” for details on net revenue by region, cost to obtain a contract and fulfillment cost, contract liabilities and value of remaining performance obligations. |
Leases | Leases At the inception of a contract, HP assesses whether the contract is, or contains, a lease. The assessment is based on (1) whether the contract involves the use of a distinct identified asset, (2) whether HP obtains the right to substantially all the economic benefit from the use of the asset throughout the period, and (3) whether HP has the right to direct the use of the asset. All significant lease arrangements are recognized at lease commencement. Leases with a lease term of 12 months or less at inception are not recorded on the Consolidated Condensed Balance Sheets and are expensed on a straight-line basis over the lease term in the Consolidated Condensed Statement of Earnings. HP determines the lease term by assuming the exercise of renewal options that are reasonably certain. As most of the leases do not provide an implicit interest rate, HP uses the unsecured borrowing rate and risk-adjusts that rate to approximate a collateralized rate at the commencement date to determine the present value of future payments that are reasonably certain. |
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. 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 infrastructure investments, stock-based compensation expense, restructuring and other charges, acquisition-related charges and amortization of intangible assets. |
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. |
Taxes on Earnings | 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 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 de-recognized 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 January 31, 2020 and October 31, 2019 were not material. The costs associated with the sales of trade receivables for the three months ended January 31, 2020 and 2019 were not material. |
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 foreign 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, at times, option contracts to hedge certain foreign currency interest rate and return on certain investment 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 exchange rates, and forward and spot prices for currencies and interest rates. See Note 8, “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 $5.1 billion as of January 31, 2020 , compared to its carrying amount of $4.9 billion at that date. The fair value of HP’s short- and long-term debt was $5.4 billion as of October 31, 2019, compared to its carrying value of $5.1 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 current 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, these 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 are measured at cost less impairment, adjusted for observable price changes. HP’s non-financial assets, such as intangible assets, goodwill and property, plant and equipment, are recorded at fair value in the period an impairment charge is recognized. If measured at fair value in the Consolidated Condensed Balance Sheets these 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 are included in Other non-current assets in the Consolidated Condensed Balance Sheets. |
Derivative 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, return on certain investment exposures. HP may designate its derivative contracts as fair value hedges or cash flow hedges and classifies the cash flows with the activities that correspond to the underlying hedged items. Additionally, 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’s custodian 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 $43 million and $45 million as of January 31, 2020 and as of October 31, 2019 , respectively, all of which were fully collateralized within two business days. 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 January 31, 2020 and October 31, 2019 . 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 in 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 and operating expenses. HP’s foreign currency cash flow hedges mature predominantly within twelve months ; however, hedges related to long-term procurement arrangements extend several years. For derivative instruments that are designated and qualify as cash flow hedges, HP initially records changes in fair value of the derivative instrument in Accumulated other comprehensive loss as a separate component of stockholders’ deficit in 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 changes in the fair value of the derivative instrument 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. |
Offsetting of Derivatives Instruments | Offsetting of Derivative Instruments |
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 units, stock options, performance-based awards and shares purchased under the 2011 employee stock purchase plan. |
Litigation and Contingencies | HP is involved in lawsuits, claims, investigations and proceedings, including those identified below, consisting of IP, commercial, securities, employment, employee benefits and environmental matters that arise in the ordinary course of business. 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 January 31, 2020, 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. |
Warranties | Warranties 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) | 3 Months Ended |
Jan. 31, 2020 | |
Segment Reporting [Abstract] | |
Reconciliation of Segment Operating Results to Consolidated Results | Segment Operating Results from Operations and the reconciliation to HP consolidated results were as follows: Three months ended January 31 2020 2019 In millions Net revenue: Notebooks $ 5,974 $ 5,919 Desktops 2,923 2,857 Workstations 594 562 Other 401 319 Personal Systems 9,892 9,657 Supplies 3,041 3,267 Commercial Hardware 1,076 1,090 Consumer Hardware 607 699 Printing 4,724 5,056 Corporate Investments 1 1 Total segment net revenue 14,617 14,714 Other 1 (4 ) Total net revenue $ 14,618 $ 14,710 Earnings before taxes: Personal Systems $ 662 $ 410 Printing 754 821 Corporate Investments (13 ) (24 ) Total segment earnings from operations $ 1,403 $ 1,207 Corporate and unallocated costs and other (112 ) (80 ) Stock-based compensation expense (109 ) (107 ) Restructuring and other charges (291 ) (55 ) Acquisition-related charges — (10 ) Amortization of intangible assets (26 ) (29 ) Interest and other, net 13 (26 ) Total earnings before taxes $ 878 $ 900 |
Schedule of Reconciliation of Segment Operating Results to HP Consolidated Results | Segment Operating Results from Operations and the reconciliation to HP consolidated results were as follows: Three months ended January 31 2020 2019 In millions Net revenue: Notebooks $ 5,974 $ 5,919 Desktops 2,923 2,857 Workstations 594 562 Other 401 319 Personal Systems 9,892 9,657 Supplies 3,041 3,267 Commercial Hardware 1,076 1,090 Consumer Hardware 607 699 Printing 4,724 5,056 Corporate Investments 1 1 Total segment net revenue 14,617 14,714 Other 1 (4 ) Total net revenue $ 14,618 $ 14,710 Earnings before taxes: Personal Systems $ 662 $ 410 Printing 754 821 Corporate Investments (13 ) (24 ) Total segment earnings from operations $ 1,403 $ 1,207 Corporate and unallocated costs and other (112 ) (80 ) Stock-based compensation expense (109 ) (107 ) Restructuring and other charges (291 ) (55 ) Acquisition-related charges — (10 ) Amortization of intangible assets (26 ) (29 ) Interest and other, net 13 (26 ) Total earnings before taxes $ 878 $ 900 |
Restructuring and Other Charg_2
Restructuring and Other Charges (Tables) | 3 Months Ended |
Jan. 31, 2020 | |
Restructuring and Related Activities [Abstract] | |
Summary of Restructuring Plans | HP’s restructuring activities for the three months ended January 31, 2020 and 2019 summarized by plan were as follows: Fiscal 2020 Plan Severance and EER Non-labor Other prior-year Plans (1) Total In millions Accrued balance as of October 31, 2019 $ 76 $ — $ 66 $ 142 Charges 256 1 — 257 Cash payments (82 ) (1 ) (25 ) (108 ) Non-cash and other adjustments (48 ) (2 ) — (1 ) (49 ) Accrued balance as of January 31, 2020 $ 202 $ — $ 40 $ 242 Total costs incurred to date as of January 31, 2020 $ 338 $ 1 $ 1,816 $ 2,155 Reflected in Consolidated Condensed Balance Sheets Other current liabilities $ 202 $ — $ 39 $ 241 Other non-current liabilities $ — $ — $ 1 $ 1 Accrued balance as of October 31, 2018 $ — $ — $ 59 $ 59 Charges — — 53 53 Cash payments — — (44 ) (44 ) Non-cash and other adjustments — — (3 ) (3 ) Accrued balance as of January 31, 2019 $ — $ — $ 65 $ 65 (1) Primarily includes the fiscal 2017 plan along with other legacy plans, all of which are substantially complete. HP does not expect any further material activity associated with these plans. (2) Includes reclassification of liability related to the Enhanced Early Retirement (“EER”) plan of $44 million |
Retirement and Post-Retiremen_2
Retirement and Post-Retirement Benefit Plans (Tables) | 3 Months Ended |
Jan. 31, 2020 | |
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 January 31 U.S. Defined Benefit Plans Non-U.S. Defined Benefit Plans Post-Retirement Benefit Plans 2020 2019 2020 2019 2020 2019 In millions Service cost $ — $ — $ 16 $ 14 $ — $ — Interest cost 103 123 5 6 3 4 Expected return on plan assets (175 ) (145 ) (11 ) (10 ) (6 ) (5 ) Amortization and deferrals: Actuarial loss (gain) 16 15 10 8 (2 ) (8 ) Prior service benefit — — (1 ) (1 ) (3 ) (3 ) Net periodic (credit) benefit cost (56 ) (7 ) 19 17 (8 ) (12 ) Special termination benefit cost — — — — 44 — Total periodic (credit) benefit cost $ (56 ) $ (7 ) $ 19 $ 17 $ 36 $ (12 ) |
Supplementary Financial Infor_2
Supplementary Financial Information (Tables) | 3 Months Ended |
Jan. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Accounts Receivable | Accounts Receivable, net As of January 31, 2020 October 31, 2019 In millions Accounts receivable $ 4,955 $ 6,142 Allowance for doubtful accounts (98 ) (111 ) $ 4,857 $ 6,031 |
Schedule of Allowance for Doubtful Accounts Related to Accounts Receivable | The allowance for doubtful accounts related to accounts receivable and changes were as follows: Three months ended January 31, 2020 In millions Balance at beginning of period $ 111 Provision for doubtful accounts (2 ) Deductions, net of recoveries (11 ) Balance at end of period $ 98 |
Schedule of Transferred Trade Receivables Not Collected from Third Parties | The following is a summary of the activity under these arrangements: Three months ended January 31 2020 2019 In millions Balance at beginning of period (1) $ 235 $ 165 Trade receivables sold 2,857 3,036 Cash receipts (3,004 ) (3,010 ) Foreign currency and other — 3 Balance at end of period (1) $ 88 $ 194 (1) Amounts outstanding from third parties reported in Accounts Receivable in the Consolidated Condensed Balance Sheets. |
Inventory | Inventory As of January 31, 2020 October 31, 2019 In millions Finished goods $ 3,061 $ 3,855 Purchased parts and fabricated assemblies 1,885 1,879 $ 4,946 $ 5,734 |
Other Current Assets | Other Current Assets As of January 31, 2020 October 31, 2019 In millions Supplier and other receivables $ 1,272 $ 1,951 Prepaid and other current assets 1,022 967 Value-added taxes receivable 887 957 Available-for-sale investments (1) 288 — $ 3,469 $ 3,875 (1) See Note 8, “Financial Instruments” for detailed information. |
Property, Plant and Equipment | Property, Plant and Equipment, net As of January 31, 2020 October 31, 2019 In millions Land, buildings and leasehold improvements $ 1,988 $ 1,977 Machinery and equipment, including equipment held for lease 5,161 5,060 7,149 7,037 Accumulated depreciation (4,393 ) (4,243 ) $ 2,756 $ 2,794 |
Other Non-Current Assets | Other Non-Current Assets As of January 31, 2020 October 31, 2019 In millions Deferred tax assets $ 2,477 $ 2,620 Right-of-use assets from operating leases, net (1) 1,112 — Intangible assets 632 661 Tax indemnifications receivable 40 42 Other (2) 775 801 $ 5,036 $ 4,124 (1) See Note 1, “Basis of Presentation” and Note 14, “Leases” for detailed information. (2) Includes marketable equity securities and mutual funds classified as available-for-sale investments of $60 million and $56 million as of January 31, 2020 and October 31, 2019, respectively. See Note 8, “Financial Instruments” for detailed information. |
Other Current Liabilities | Other Current Liabilities As of January 31, 2020 October 31, 2019 In millions Sales and marketing programs $ 3,215 $ 3,361 Deferred revenue 1,148 1,178 Other accrued taxes 829 1,060 Employee compensation and benefit 739 1,103 Warranty 655 663 Operating lease liabilities (1) 255 — Tax liability 241 237 Other 3,054 2,541 $ 10,136 $ 10,143 (1) See Note 1, “Basis of Presentation” and Note 14, “Leases” for detailed information. |
Other Non-Current Liabilities | Other Non-Current Liabilities As of January 31, 2020 October 31, 2019 In millions Pension, post-retirement, and post-employment liabilities $ 1,682 $ 1,762 Operating lease liabilities (1) 920 — Deferred revenue 1,058 1,069 Tax liability 853 848 Deferred tax liability 59 60 Other 919 848 $ 5,491 $ 4,587 (1) See Note 1, “Basis of Presentation” and Note 14, “Leases” for detailed information. |
Interest and Other, Net | Interest and other, net Three months ended January 31 2020 2019 In millions Interest expense on borrowings $ (58 ) $ (64 ) Other, net 71 38 $ 13 $ (26 ) |
Disaggregation of Revenue | Net revenue by region Three months ended January 31 2020 2019 In millions Americas $ 5,959 $ 6,032 Europe, Middle East and Africa 5,232 5,358 Asia-Pacific and Japan 3,427 3,320 Total net revenue $ 14,618 $ 14,710 |
Fair Value (Tables)
Fair Value (Tables) | 3 Months Ended |
Jan. 31, 2020 | |
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 January 31, 2020 As of October 31, 2019 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 $ — $ 1,001 $ — $ 1,001 $ — $ 1,283 $ — $ 1,283 Government debt (1) 2,050 112 — 2,162 2,422 — — 2,422 Available-for-Sale Investments: Corporate debt — 242 — 242 — — — — Financial institution instruments — 31 — 31 — — — — Government debt (1) — 15 — 15 — — — — Marketable equity securities and Mutual funds 10 50 — 60 6 50 — 56 Derivative Instruments: Interest rate contracts — 4 — 4 — 4 — 4 Foreign currency contracts — 374 — 374 — 381 — 381 Other derivatives — 13 — 13 — 7 — 7 Total Assets $ 2,060 $ 1,842 $ — $ 3,902 $ 2,428 $ 1,725 $ — $ 4,153 Liabilities: Derivative Instruments: Foreign currency contracts — 149 — 149 — 165 — 165 Other derivatives — 2 — 2 — 1 — 1 Total Liabilities $ — $ 151 $ — $ 151 $ — $ 166 $ — $ 166 (1) Government debt includes instruments such as U.S. treasury notes, U.S agency securities and non-U.S. government bonds. Money market funds invested in government debt and traded in active markets are included in Level 1. |
Financial Instruments (Tables)
Financial Instruments (Tables) | 3 Months Ended |
Jan. 31, 2020 | |
Investments, All Other Investments [Abstract] | |
Schedule of Cash Equivalents and Available-for-Sale Investments | Cash Equivalents and Available-for-Sale Investments As of January 31, 2020 As of October 31, 2019 Cost Gross Unrealized Gain Gross Unrealized Loss Fair Value Cost Gross Unrealized Gain Gross Unrealized Loss Fair Value In millions Cash Equivalents: Corporate debt $ 1,001 $ — $ — $ 1,001 $ 1,283 $ — $ — $ 1,283 Government debt 2,162 — — 2,162 2,422 — — 2,422 Total cash equivalents 3,163 — — 3,163 3,705 — — 3,705 Available-for-Sale Investments: Corporate debt (1) 242 — — 242 — — — — Financial institution instruments (1) 31 — — 31 — — — — Government debt (1) 15 — — 15 — — — — Marketable equity securities and Mutual funds 40 20 — 60 40 16 — 56 Total available-for-sale investments 328 20 — 348 40 16 — 56 Total cash equivalents and available-for-sale investments $ 3,491 $ 20 $ — $ 3,511 $ 3,745 $ 16 $ — $ 3,761 (1) 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. |
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 January 31, 2020 Amortized Fair Value In millions Due in one year or less $ 288 $ 288 |
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 January 31, 2020 As of October 31, 2019 Outstanding Gross Notional Other Current Assets Other Non-Current Assets Other Current Liabilities Other Non-Current Liabilities Outstanding Gross Notional Other Current Assets Other Non-Current Assets Other Current Liabilities Other Non-Current Liabilities In millions Derivatives designated as hedging instruments Fair value hedges: Interest rate contracts $ 750 $ — $ 4 $ — $ — $ 750 $ — $ 4 $ — $ — Cash flow hedges: Foreign currency contracts 15,980 258 99 104 26 15,639 260 111 123 28 Total derivatives designated as hedging instruments 16,730 258 103 104 26 16,389 260 115 123 28 Derivatives not designated as hedging instruments Foreign currency contracts 5,406 17 — 19 — 7,146 10 — 14 — Other derivatives 151 13 — 2 — 134 7 — 1 — Total derivatives not designated as hedging instruments 5,557 30 — 21 — 7,280 17 — 15 — Total derivatives $ 22,287 $ 288 $ 103 $ 125 $ 26 $ 23,669 $ 277 $ 115 $ 138 $ 28 |
Schedule of Offsetting Assets | As of January 31, 2020 and October 31, 2019 , 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 January 31, 2020 Derivative assets $ 391 $ — $ 391 $ 104 $ 247 (1) $ 40 Derivative liabilities $ 151 $ — $ 151 $ 104 $ 42 (2) $ 5 As of October 31, 2019 Derivative assets $ 392 $ — $ 392 $ 113 $ 259 (1) $ 20 Derivative liabilities $ 166 $ — $ 166 $ 113 $ 43 (2) $ 10 (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 January 31, 2020 and October 31, 2019 , 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 January 31, 2020 Derivative assets $ 391 $ — $ 391 $ 104 $ 247 (1) $ 40 Derivative liabilities $ 151 $ — $ 151 $ 104 $ 42 (2) $ 5 As of October 31, 2019 Derivative assets $ 392 $ — $ 392 $ 113 $ 259 (1) $ 20 Derivative liabilities $ 166 $ — $ 166 $ 113 $ 43 (2) $ 10 (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 months ended January 31, 2020 and 2019 were as follows: Total amounts of income/ (expense) line items presented in the statement of financial performance in which the effects of fair value hedges are recorded Gain/(Loss) Recognized in Earnings on Derivative Instrument Gain/(Loss) Recognized in Earnings on Derivative and Related Hedged Item Derivative Instrument Location Three months ended January 31, 2020 Three months ended January 31, 2020 Hedged Item Location Three months ended January 31, 2020 In millions In millions Interest rate contracts Interest and other, net $ 13 $ — Fixed-rate debt Interest and other, net $ — Total amounts of income/ (expense) line items presented in the statement of financial performance in which the effects of fair value hedges are recorded Gain/(Loss) Recognized in Earnings on Derivative Instrument Gain/(Loss) Recognized in Earnings on Derivative and Related Hedged Item Derivative Instrument Location Three months ended January 31, 2019 Three months ended January 31, 2019 Hedged Item Location Three months ended January 31, 2019 In millions In millions Interest rate contracts Interest and other, net $ (26 ) $ (12 ) Fixed-rate debt Interest and other, net $ 12 |
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 months ended January 31, 2020 and 2019 was as follows: Gain/(Loss) Recognized in Other Comprehensive Income ("OCI") on Derivatives Total amounts of income and expense line items presented in the statement of financial performance in which the effects of cash flow hedges are recorded Gain /(Loss) Reclassified from Accumulated OCI Into Three months ended January 31, 2020 Location Three months ended January 31, 2020 In millions In millions Cash flow hedges: Foreign currency contracts $ 60 Net revenue $ 14,618 $ 61 Cost of revenue (11,746 ) (1 ) Operating expenses (2,007 ) (1 ) Total $ 60 $ 59 Gain/(Loss) Recognized in Other Comprehensive Income ("OCI") on Derivatives Total amounts of income and expense line items presented in the statement of financial performance in which the effects of cash flow hedges are recorded Gain /(Loss) Reclassified from Accumulated OCI Into Three months ended January 31, 2019 Location Three months ended January 31, 2019 In millions In millions Cash flow hedges: Foreign currency contracts $ (107 ) Net revenue $ 14,710 $ 191 Cost of revenue (12,098 ) (10 ) Operating expenses (1,686 ) (2 ) Total $ (107 ) $ 179 |
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 recognized in the Consolidated Condensed Statements of Earnings for the three months ended January 31, 2020 and 2019 was as follows: (Loss) /Gain Recognized in Earnings on Derivatives Location Three months ended January 31, 2020 Three months ended January 31, 2019 In millions Foreign currency contracts Interest and other, net $ (8 ) $ (40 ) Other derivatives Interest and other, net 5 14 Total $ (3 ) $ (26 ) |
Borrowings (Tables)
Borrowings (Tables) | 3 Months Ended |
Jan. 31, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of Notes Payable and Short-Term Borrowings | Notes Payable and Short-Term Borrowings As of January 31, 2020 As of October 31, 2019 Amount Weighted-Average Amount Weighted-Average In millions In millions Current portion of long-term debt $ 878 3.7 % $ 307 3.6 % Notes payable to banks, lines of credit and other 45 0.7 % 50 2.0 % $ 923 $ 357 |
Schedule of Long-Term Debt | Long-Term Debt As of January 31, 2020 October 31, 2019 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 $ 649 $ 648 $1,250 issued at discount to par at a price of 99.799% in May 2011 at 4.3%, due June 2021 667 667 $1,000 issued at discount to par at a price of 99.816% in September 2011 at 4.375%, due September 2021 538 538 $1,500 issued at discount to par at a price of 99.707% in December 2011 at 4.65%, due December 2021 695 695 $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 4,247 4,246 Other borrowings at 0.51%-8.42%, due in calendar years 2020-2027 574 853 Fair value adjustment related to hedged debt 4 4 Unamortized debt issuance cost (15 ) (16 ) Current portion of long-term debt (878 ) (307 ) Total long-term debt $ 3,932 $ 4,780 (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. |
Stockholders' Deficit (Tables)
Stockholders' Deficit (Tables) | 3 Months Ended |
Jan. 31, 2020 | |
Stockholders' Equity Note [Abstract] | |
Schedule of Tax Effects Related to Other Comprehensive (Loss) Income | Tax effects related to Other Comprehensive Loss Three months ended January 31 2020 2019 In millions Tax effect on change in unrealized components of available-for-sale debt securities: Tax benefit on unrealized losses arising during the period $ — $ — Tax effect on change in unrealized components of cash flow hedges: Tax (provision) benefit on unrealized losses arising during the period (16 ) 20 Tax provision on gains reclassified into earnings 10 22 (6 ) 42 Tax effect on change in unrealized components of defined benefit plans: Tax provision on amortization of actuarial loss and prior service benefit (5 ) (3 ) Tax provision on curtailments, settlements and other — 1 (5 ) (2 ) Tax effect on change in cumulative translation adjustment — — Tax (provision) benefit on other comprehensive loss $ (11 ) $ 40 |
Schedule of Changes and Reclassifications Related to Other Comprehensive Income, Net of Taxes | Changes and reclassifications related to Other Comprehensive Loss, net of taxes Three months ended January 31 2020 2019 In millions Other comprehensive loss, net of taxes: Change in unrealized components of available-for-sale debt securities: Unrealized gains arising during the period $ 1 $ — Change in unrealized components of cash flow hedges: Unrealized gain (losses) arising during the period 44 (87 ) Gains reclassified into earnings (49 ) (157 ) (5 ) (244 ) Change in unrealized components of defined benefit plans: Amortization of actuarial loss and prior service benefit (1) 15 8 Curtailments, settlements and other — (1 ) 15 7 Change in cumulative translation adjustment 6 (5 ) Other comprehensive gain (loss), net of taxes $ 17 $ (242 ) (1) 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: Three months ended January 31, 2020 Net unrealized Net unrealized Unrealized Change in cumulative Accumulated In millions Balance at beginning of period $ 9 $ 172 $ (1,410 ) $ 4 $ (1,225 ) Other comprehensive gain before reclassifications 1 44 — 6 51 Reclassifications of (gain) loss into earnings — (49 ) 15 — (34 ) Balance at end of period $ 10 $ 167 $ (1,395 ) $ 10 $ (1,208 ) |
Net Earnings Per Share (Tables)
Net Earnings Per Share (Tables) | 3 Months Ended |
Jan. 31, 2020 | |
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 is as follows: Three months ended January 31 2020 2019 In millions, except per share amounts Numerator: Net earnings $ 678 $ 803 Denominator: Weighted-average shares used to compute basic net EPS 1,454 1,556 Dilutive effect of employee stock plans 6 11 Weighted-average shares used to compute diluted net EPS 1,460 1,567 Net earnings per share: Basic $ 0.47 $ 0.52 Diluted $ 0.46 $ 0.51 Anti-dilutive weighted-average stock-based compensation awards (1) 9 5 (1) HP excludes from the calculation of diluted net EPS stock options and restricted stock units where the assumed proceeds exceed the average market price, 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 represent unrecognized compensation cost. |
Guarantees, Indemnifications _2
Guarantees, Indemnifications and Warranties (Tables) | 3 Months Ended |
Jan. 31, 2020 | |
Guarantees [Abstract] | |
Changes in Aggregate Product Warranty Liabilities and Changes | HP’s aggregate product warranty liabilities and changes were as follows: Three months ended January 31, 2020 In millions Balance at beginning of period $ 922 Accruals for warranties issued 245 Adjustments related to pre-existing warranties (including changes in estimates) (9 ) Settlements made (in cash or in kind) (243 ) Balance at end of period $ 915 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Jan. 31, 2020 | |
Leases [Abstract] | |
Components of Lease Expense and Supplemental Cash Flow Information | The components of lease expense are as follows: Three months ended January 31, 2020 In millions Operating lease cost $ 67 Variable cost 27 Total lease expense $ 94 The following table presents supplemental information relating to the cash flows arising from lease transactions. Cash payments made from variable lease costs and short-term leases are not included in the measurement of operating lease liabilities, and, as such, are excluded from the amounts below: Three months ended January 31, 2020 In millions Cash paid for amount included in the measurement of lease liabilities: $ 63 Right-of-use assets obtained in exchange of lease liabilities (1) : $ 27 (1) Includes the impact of new leases as well as remeasurements and modifications to existing leases. Weighted-average information associated with the measurement of our remaining operating lease liabilities is as follows: As of January 31, 2020 Weighted-average remaining lease term in years: 7 Weighted-average discount rate 2.3 % |
Future Operating Lease Payments | The following maturity analysis presents expected undiscounted cash outflows for operating leases on an annual basis for the next five years, with the exception of 2020, which presents the expected undiscounted cash outflows for operating leases for the remaining nine months of the year. Fiscal year In millions 2020 $ 218 2021 219 2022 175 2023 140 2024 113 Thereafter 425 Total lease payments 1,290 Less: Imputed interest (115 ) Total lease liabilities $ 1,175 The following table, which was included in our Annual Report on Form 10-K for the fiscal year ended October 31, 2019, depicts gross minimum rental commitments under non-cancelable leases for real estate, personal property leases, sublease income commitments and operating lease commitments at October 31, 2019. Fiscal year In millions Less than 1 year $ 284 1-3 years 399 3-5 years 262 More than 5 years 395 Total (1) $ 1,340 (1) Amount represents operating lease obligations, net of total sublease income of $130 million . |
Basis of Presentation - Narrati
Basis of Presentation - Narrative (Details) - USD ($) $ in Millions | Jan. 31, 2020 | Nov. 01, 2019 |
Retained Earnings Adjustments [Line Items] | ||
Total lease liabilities | $ 1,175 | |
Other non-current assets | $ 1,112 | |
ASU 2016-02 | ||
Retained Earnings Adjustments [Line Items] | ||
Total lease liabilities | $ 1,200 | |
Other non-current assets | $ 1,200 |
Segment Information - Narrative
Segment Information - Narrative (Details) | 3 Months Ended |
Jan. 31, 2020segment | |
Segment Reporting [Abstract] | |
Number of reportable segments | 3 |
Segment Information - Schedule
Segment Information - Schedule of Reconciliation of Segment Operating Results to HP Consolidated Results (Details) - USD ($) $ in Millions | 3 Months Ended | |
Jan. 31, 2020 | Jan. 31, 2019 | |
Segment Information | ||
Net revenue | $ 14,618 | $ 14,710 |
Total segment earnings from operations | 865 | 926 |
Restructuring and other charges | (291) | (55) |
Acquisition-related charges | 0 | (10) |
Amortization of intangible assets | (26) | (29) |
Interest and other, net | 13 | (26) |
Earnings before taxes | 878 | 900 |
Operating segments | ||
Segment Information | ||
Net revenue | 14,617 | 14,714 |
Total segment earnings from operations | 1,403 | 1,207 |
Other | ||
Segment Information | ||
Net revenue | 1 | (4) |
Corporate and unallocated costs and other | (112) | (80) |
Stock-based compensation expense | (109) | (107) |
Restructuring and other charges | (291) | (55) |
Acquisition-related charges | 0 | (10) |
Amortization of intangible assets | (26) | (29) |
Interest and other, net | 13 | (26) |
Personal Systems | Operating segments | ||
Segment Information | ||
Net revenue | 9,892 | 9,657 |
Total segment earnings from operations | 662 | 410 |
Printing | Operating segments | ||
Segment Information | ||
Net revenue | 4,724 | 5,056 |
Total segment earnings from operations | 754 | 821 |
Corporate Investments | Operating segments | ||
Segment Information | ||
Net revenue | 1 | 1 |
Total segment earnings from operations | (13) | (24) |
Notebooks | Personal Systems | Operating segments | ||
Segment Information | ||
Net revenue | 5,974 | 5,919 |
Desktops | Personal Systems | Operating segments | ||
Segment Information | ||
Net revenue | 2,923 | 2,857 |
Workstations | Personal Systems | Operating segments | ||
Segment Information | ||
Net revenue | 594 | 562 |
Other | Personal Systems | Operating segments | ||
Segment Information | ||
Net revenue | 401 | 319 |
Supplies | Printing | Operating segments | ||
Segment Information | ||
Net revenue | 3,041 | 3,267 |
Commercial Hardware | Printing | Operating segments | ||
Segment Information | ||
Net revenue | 1,076 | 1,090 |
Consumer Hardware | Printing | Operating segments | ||
Segment Information | ||
Net revenue | $ 607 | $ 699 |
Restructuring and Other Charg_3
Restructuring and Other Charges - Summary of Cost Saving Plan Activities (Details) - USD ($) $ in Millions | 3 Months Ended | |
Jan. 31, 2020 | Jan. 31, 2019 | |
Restructuring Reserve [Roll Forward] | ||
Accrued balance, beginning of the period | $ 142 | $ 59 |
Charges | 257 | 53 |
Cash payments | (108) | (44) |
Non-cash and other adjustments | (49) | (3) |
Accrued balance, beginning of the period | 242 | 65 |
Total costs incurred to date as of January 31, 2020 | 2,155 | |
Reflected in Consolidated Condensed Balance Sheets | ||
Other current liabilities | 241 | |
Other non-current liabilities | 1 | |
Fiscal 2020 Plan | Severance and EER | ||
Restructuring Reserve [Roll Forward] | ||
Accrued balance, beginning of the period | 76 | 0 |
Charges | 256 | 0 |
Cash payments | (82) | 0 |
Non-cash and other adjustments | (48) | 0 |
Accrued balance, beginning of the period | 202 | 0 |
Total costs incurred to date as of January 31, 2020 | 338 | |
Reflected in Consolidated Condensed Balance Sheets | ||
Other current liabilities | 202 | |
Other non-current liabilities | 0 | |
Fiscal 2020 Plan | Non-labor | ||
Restructuring Reserve [Roll Forward] | ||
Accrued balance, beginning of the period | 0 | 0 |
Charges | 1 | 0 |
Cash payments | (1) | 0 |
Non-cash and other adjustments | 0 | 0 |
Accrued balance, beginning of the period | 0 | 0 |
Total costs incurred to date as of January 31, 2020 | 1 | |
Reflected in Consolidated Condensed Balance Sheets | ||
Other current liabilities | 0 | |
Other non-current liabilities | 0 | |
Fiscal 2020 Plan | Healthcare and medical savings account benefits | ||
Restructuring Reserve [Roll Forward] | ||
Non-cash and other adjustments | 44 | |
Other prior-year Plans | ||
Restructuring Reserve [Roll Forward] | ||
Accrued balance, beginning of the period | 66 | 59 |
Charges | 0 | 53 |
Cash payments | (25) | (44) |
Non-cash and other adjustments | (1) | (3) |
Accrued balance, beginning of the period | 40 | $ 65 |
Total costs incurred to date as of January 31, 2020 | 1,816 | |
Reflected in Consolidated Condensed Balance Sheets | ||
Other current liabilities | 39 | |
Other non-current liabilities | $ 1 |
Restructuring and Other Charg_4
Restructuring and Other Charges - Fiscal 2020 Plan (Details) - Fiscal 2020 Plan employee in Thousands, $ in Billions | Sep. 30, 2019USD ($)employee |
Restructuring Cost and Reserve [Line Items] | |
Estimated pre-tax charges | $ | $ 1 |
Minimum | |
Restructuring Cost and Reserve [Line Items] | |
Expected positions to be eliminated | employee | 7 |
Maximum | |
Restructuring Cost and Reserve [Line Items] | |
Expected positions to be eliminated | employee | 9 |
Severance and EER | |
Restructuring Cost and Reserve [Line Items] | |
Estimated pre-tax charges | $ | $ 0.9 |
Restructuring and Other Charg_5
Restructuring and Other Charges - Other Charges (Details) - USD ($) $ in Millions | 3 Months Ended | |
Jan. 31, 2020 | Jan. 31, 2019 | |
Restructuring and Related Activities [Abstract] | ||
Other charges | $ 34 | $ 2 |
Retirement and Post-Retiremen_3
Retirement and Post-Retirement Benefit Plans - Schedule of Pension and Post-Retirement Benefit (Credit) Cost (Details) - USD ($) $ in Millions | 3 Months Ended | |
Jan. 31, 2020 | Jan. 31, 2019 | |
Post-Retirement Benefit Plans | ||
Retirement and post-retirement benefit plans | ||
Service cost | $ 0 | $ 0 |
Interest cost | 3 | 4 |
Expected return on plan assets | (6) | (5) |
Amortization and deferrals: | ||
Actuarial loss (gain) | (2) | (8) |
Prior service benefit | (3) | (3) |
Net periodic (credit) benefit cost | (8) | (12) |
Special termination benefit cost | 44 | 0 |
Total periodic benefit (credit) cost | 36 | (12) |
U.S. | Defined Benefit Plans | ||
Retirement and post-retirement benefit plans | ||
Service cost | 0 | 0 |
Interest cost | 103 | 123 |
Expected return on plan assets | (175) | (145) |
Amortization and deferrals: | ||
Actuarial loss (gain) | 16 | 15 |
Prior service benefit | 0 | 0 |
Net periodic (credit) benefit cost | (56) | (7) |
Special termination benefit cost | 0 | 0 |
Total periodic benefit (credit) cost | (56) | (7) |
Non-U.S. | Defined Benefit Plans | ||
Retirement and post-retirement benefit plans | ||
Service cost | 16 | 14 |
Interest cost | 5 | 6 |
Expected return on plan assets | (11) | (10) |
Amortization and deferrals: | ||
Actuarial loss (gain) | 10 | 8 |
Prior service benefit | (1) | (1) |
Net periodic (credit) benefit cost | 19 | 17 |
Special termination benefit cost | 0 | 0 |
Total periodic benefit (credit) cost | $ 19 | $ 17 |
Retirement and Post-Retiremen_4
Retirement and Post-Retirement Benefit Plans - Narrative (Details) - USD ($) | 1 Months Ended | 3 Months Ended | |
Oct. 31, 2019 | Jan. 31, 2020 | Jan. 31, 2019 | |
Retirement and post-retirement benefit plans | |||
Eligible age with 20 years of service | 50 years | ||
EER benefit, minimum | 91 days | ||
ERR benefit, maximum | 364 days | ||
Health care coverage extension period | 36 months | ||
Maximum employer credits | $ 12,000 | ||
Restructuring and other charges | $ 257,000,000 | $ 53,000,000 | |
Post-Retirement Benefit Plans | |||
Retirement and post-retirement benefit plans | |||
Anticipated contributions | 6,000,000 | ||
Contributions to benefit plans | 1,000,000 | ||
Non-U.S. | Defined Benefit Plans | |||
Retirement and post-retirement benefit plans | |||
Anticipated contributions | 76,000,000 | ||
Contributions to benefit plans | 13,000,000 | ||
U.S. | Non-qualified plan | |||
Retirement and post-retirement benefit plans | |||
Anticipated contributions | 36,000,000 | ||
Contributions to benefit plans | 7,000,000 | ||
Fiscal 2020 Plan | Special Termination Benefits | |||
Retirement and post-retirement benefit plans | |||
Restructuring and other charges | $ 44,000,000 |
Taxes on Earnings (Details)
Taxes on Earnings (Details) $ in Millions | 3 Months Ended | |
Jan. 31, 2020USD ($)country | Jan. 31, 2019USD ($) | |
Income Tax Disclosure [Abstract] | ||
Effective tax rate (percent) | 22.80% | 10.80% |
Net tax benefit | $ 7 | $ 9 |
Tax benefits related to restructuring and other charges | 48 | 12 |
Tax benefits related other tax charges | 7 | 4 |
Uncertain tax position charges | 48 | 20 |
Tax Cuts and Jobs Act, tax benefit | 21 | |
Excess tax benefits | 27 | |
Unrecognized tax benefits | 975 | |
Unrecognized tax benefits that would affect effective tax rate if realized | 836 | |
Unrecognized tax benefits change | 46 | |
Accrued income tax payable for interest and penalties | $ 61 | $ 181 |
Likelihood of no resolution period | 12 months | |
Reasonably possible decrease in existing unrecognized tax benefits within the next 12 months | $ 145 | |
Unrecognized tax benefits that would affect effective tax rate if realized, current | $ 116 | |
Other countries with income tax jurisdiction | country | 58 |
Supplementary Financial Infor_3
Supplementary Financial Information - Accounts Receivable (Details) - USD ($) $ in Millions | Jan. 31, 2020 | Oct. 31, 2019 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Accounts receivable | $ 4,955 | $ 6,142 |
Allowance for doubtful accounts | (98) | (111) |
Accounts receivable | $ 4,857 | $ 6,031 |
Supplementary Financial Infor_4
Supplementary Financial Information - Allowance for Doubtful Accounts (Details) $ in Millions | 3 Months Ended |
Jan. 31, 2020USD ($) | |
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | |
Balance at beginning of period | $ 111 |
Provision for doubtful accounts | (2) |
Deductions, net of recoveries | (11) |
Balance at end of period | $ 98 |
Supplementary Financial Infor_5
Supplementary Financial Information - Schedule of Transferred Trade Receivables Not Collected from Third Parties (Details) - USD ($) $ in Millions | 3 Months Ended | |
Jan. 31, 2020 | Jan. 31, 2019 | |
Trade Receivables Sold and Cash Received Roll Forward | ||
Balance at beginning of period | $ 235 | $ 165 |
Trade receivables sold | 2,857 | 3,036 |
Cash receipts | (3,004) | (3,010) |
Foreign currency and other | 0 | 3 |
Balance at end of period | $ 88 | $ 194 |
Supplementary Financial Infor_6
Supplementary Financial Information - Inventory (Details) - USD ($) $ in Millions | Jan. 31, 2020 | Oct. 31, 2019 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Finished goods | $ 3,061 | $ 3,855 |
Purchased parts and fabricated assemblies | 1,885 | 1,879 |
Inventory | $ 4,946 | $ 5,734 |
Supplementary Financial Infor_7
Supplementary Financial Information - Other Current Assets (Details) - USD ($) $ in Millions | Jan. 31, 2020 | Oct. 31, 2019 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Supplier and other receivables | $ 1,272 | $ 1,951 |
Prepaid and other current assets | 1,022 | 967 |
Value-added taxes receivable | 887 | 957 |
Available-for-sale investments | 288 | 0 |
Other current assets | $ 3,469 | $ 3,875 |
Supplementary Financial Infor_8
Supplementary Financial Information - Property Plant & Equipment (Details) - USD ($) $ in Millions | Jan. 31, 2020 | Oct. 31, 2019 |
Property, Plant and Equipment, Net | ||
Property, plant and equipment, gross | $ 7,149 | $ 7,037 |
Accumulated depreciation | (4,393) | (4,243) |
Property, plant and equipment, net | 2,756 | 2,794 |
Land, buildings and leasehold improvements | ||
Property, Plant and Equipment, Net | ||
Property, plant and equipment, gross | 1,988 | 1,977 |
Machinery and equipment, including equipment held for lease | ||
Property, Plant and Equipment, Net | ||
Property, plant and equipment, gross | $ 5,161 | $ 5,060 |
Supplementary Financial Infor_9
Supplementary Financial Information - Other Non-Current Assets (Details) - USD ($) $ in Millions | Jan. 31, 2020 | Oct. 31, 2019 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Deferred tax assets | $ 2,477 | $ 2,620 |
Right-of-use assets from operating leases, net | 1,112 | |
Intangible assets | 632 | 661 |
Tax indemnifications receivable | 40 | 42 |
Other | 775 | 801 |
Other non-current assets | 5,036 | 4,124 |
Equity securities | $ 60 | $ 56 |
Supplementary Financial Info_10
Supplementary Financial Information - Other Current Liabilities (Details) - USD ($) $ in Millions | Jan. 31, 2020 | Oct. 31, 2019 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Sales and marketing programs | $ 3,215 | $ 3,361 |
Deferred revenue | 1,148 | 1,178 |
Other accrued taxes | 829 | 1,060 |
Employee compensation and benefit | 739 | 1,103 |
Warranty | 655 | 663 |
Operating lease liabilities | 255 | |
Tax liability | 241 | 237 |
Other | 3,054 | 2,541 |
Other accrued liabilities | $ 10,136 | $ 10,143 |
Supplementary Financial Info_11
Supplementary Financial Information - Other Non-Current Liabilities (Details) - USD ($) $ in Millions | Jan. 31, 2020 | Oct. 31, 2019 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Pension, post-retirement, and post-employment liabilities | $ 1,682 | $ 1,762 |
Operating lease liabilities | 920 | |
Deferred revenue | 1,058 | 1,069 |
Tax liability | 853 | 848 |
Deferred tax liability | 59 | 60 |
Other | 919 | 848 |
Other non-current liabilities | $ 5,491 | $ 4,587 |
Supplementary Financial Info_12
Supplementary Financial Information - Interest and Other, Net (Details) - USD ($) $ in Millions | 3 Months Ended | |
Jan. 31, 2020 | Jan. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Interest expense on borrowings | $ (58) | $ (64) |
Other, net | 71 | 38 |
Interest and other, net | $ 13 | $ (26) |
Supplementary Financial Info_13
Supplementary Financial Information - Disaggregation of revenue (Details) - USD ($) $ in Millions | 3 Months Ended | |
Jan. 31, 2020 | Jan. 31, 2019 | |
Disaggregation of Revenue [Line Items] | ||
Total net revenue | $ 14,618 | $ 14,710 |
Americas | ||
Disaggregation of Revenue [Line Items] | ||
Total net revenue | 5,959 | 6,032 |
Europe, Middle East and Africa | ||
Disaggregation of Revenue [Line Items] | ||
Total net revenue | 5,232 | 5,358 |
Asia-Pacific and Japan | ||
Disaggregation of Revenue [Line Items] | ||
Total net revenue | $ 3,427 | $ 3,320 |
Supplementary Financial Info_14
Supplementary Financial Information - Value of Remaining Performance Obligations (Details) $ in Billions | Jan. 31, 2020USD ($) |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Remaining performance obligations | $ 4.5 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-02-01 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Remaining performance obligations | $ 1.9 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligations period | 12 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-02-01 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Remaining performance obligations | $ 2.6 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligations period |
Supplementary Financial Info_15
Supplementary Financial Information - Costs of Obtaining Contracts (Details) - USD ($) $ in Millions | 3 Months Ended | |
Jan. 31, 2020 | Oct. 31, 2019 | |
Capitalized Contract Cost [Line Items] | ||
Contract cost amortization | $ 24 | |
Contract liability | 2,200 | $ 2,100 |
Revenue recognized | 361 | |
Deferred Contract Fulfillment | ||
Capitalized Contract Cost [Line Items] | ||
Capitalized contract costs | 51 | |
Contract Acquisition Costs | ||
Capitalized Contract Cost [Line Items] | ||
Capitalized contract costs | $ 32 |
Fair Value (Details)
Fair Value (Details) - USD ($) $ in Millions | Jan. 31, 2020 | Oct. 31, 2019 |
Assets: | ||
Cash Equivalents | $ 3,163 | $ 3,705 |
Derivative Instruments | 391 | 392 |
Liabilities: | ||
Derivative Instruments | 151 | 166 |
Fair value, short- and long-term debt | 5,100 | 5,400 |
Carrying value, short- and long-term debt | 4,900 | 5,100 |
Corporate debt | ||
Assets: | ||
Cash Equivalents | 1,001 | 1,283 |
Government debt | ||
Assets: | ||
Cash Equivalents | 2,162 | 2,422 |
Fair Value Measured on a Recurring Basis | ||
Assets: | ||
Total Assets | 3,902 | 4,153 |
Liabilities: | ||
Total Liabilities | 151 | 166 |
Fair Value Measured on a Recurring Basis | Corporate debt | ||
Assets: | ||
Cash Equivalents | 1,001 | 1,283 |
Available-for-Sale Investments | 242 | 0 |
Fair Value Measured on a Recurring Basis | Government debt | ||
Assets: | ||
Cash Equivalents | 2,162 | 2,422 |
Available-for-Sale Investments | 15 | 0 |
Fair Value Measured on a Recurring Basis | Financial institution instruments | ||
Assets: | ||
Available-for-Sale Investments | 31 | 0 |
Fair Value Measured on a Recurring Basis | Marketable equity securities and Mutual funds | ||
Assets: | ||
Available-for-Sale Investments | 60 | 56 |
Fair Value Measured on a Recurring Basis | Interest rate contracts | ||
Assets: | ||
Derivative Instruments | 4 | 4 |
Fair Value Measured on a Recurring Basis | Foreign currency contracts | ||
Assets: | ||
Derivative Instruments | 374 | 381 |
Liabilities: | ||
Derivative Instruments | 149 | 165 |
Fair Value Measured on a Recurring Basis | Other derivatives | ||
Assets: | ||
Derivative Instruments | 13 | 7 |
Liabilities: | ||
Derivative Instruments | 2 | 1 |
Fair Value Measured on a Recurring Basis | Level 1 | ||
Assets: | ||
Total Assets | 2,060 | 2,428 |
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 | Government debt | ||
Assets: | ||
Cash Equivalents | 2,050 | 2,422 |
Available-for-Sale Investments | 0 | 0 |
Fair Value Measured on a Recurring Basis | Level 1 | Financial institution instruments | ||
Assets: | ||
Available-for-Sale Investments | 0 | 0 |
Fair Value Measured on a Recurring Basis | Level 1 | Marketable equity securities and Mutual funds | ||
Assets: | ||
Available-for-Sale Investments | 10 | 6 |
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 | 1,842 | 1,725 |
Liabilities: | ||
Total Liabilities | 151 | 166 |
Fair Value Measured on a Recurring Basis | Level 2 | Corporate debt | ||
Assets: | ||
Cash Equivalents | 1,001 | 1,283 |
Available-for-Sale Investments | 242 | 0 |
Fair Value Measured on a Recurring Basis | Level 2 | Government debt | ||
Assets: | ||
Cash Equivalents | 112 | 0 |
Available-for-Sale Investments | 15 | 0 |
Fair Value Measured on a Recurring Basis | Level 2 | Financial institution instruments | ||
Assets: | ||
Available-for-Sale Investments | 31 | 0 |
Fair Value Measured on a Recurring Basis | Level 2 | Marketable equity securities and Mutual funds | ||
Assets: | ||
Available-for-Sale Investments | 50 | 50 |
Fair Value Measured on a Recurring Basis | Level 2 | Interest rate contracts | ||
Assets: | ||
Derivative Instruments | 4 | 4 |
Fair Value Measured on a Recurring Basis | Level 2 | Foreign currency contracts | ||
Assets: | ||
Derivative Instruments | 374 | 381 |
Liabilities: | ||
Derivative Instruments | 149 | 165 |
Fair Value Measured on a Recurring Basis | Level 2 | Other derivatives | ||
Assets: | ||
Derivative Instruments | 13 | 7 |
Liabilities: | ||
Derivative Instruments | 2 | 1 |
Fair Value Measured on a Recurring Basis | Level 3 | ||
Assets: | ||
Total Assets | 0 | 0 |
Liabilities: | ||
Total Liabilities | 0 | 0 |
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 | Government 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: | ||
Available-for-Sale Investments | 0 | 0 |
Fair Value Measured on a Recurring Basis | Level 3 | Marketable equity securities and Mutual funds | ||
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 | 0 | 0 |
Liabilities: | ||
Derivative Instruments | 0 | 0 |
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 | Jan. 31, 2020 | Oct. 31, 2019 |
Cash Equivalents: | ||
Cost | $ 3,163 | $ 3,705 |
Gross Unrealized Gain | 0 | 0 |
Gross Unrealized Loss | 0 | 0 |
Fair Value | 3,163 | 3,705 |
Available-for-Sale Investments: | ||
Equity securities, Fair Value | 60 | 56 |
Total available-for-sale investments, Cost | 328 | 40 |
Total available-for-sale investments, Gross Unrealized Gain | 20 | 16 |
Total available-for-sale investments, Gross Unrealized Loss | 0 | 0 |
Total available-for-sale investments, Fair Value | 348 | 56 |
Total cash equivalents and available-for-sale investments, Cost | 3,491 | 3,745 |
Total cash equivalents and available-for-sale investments, Gross Unrealized Gain | 20 | 16 |
Total cash equivalents and available-for-sale investments, Gross Unrealized Loss | 0 | 0 |
Total cash equivalents and available-for-sale investments, Fair Value | 3,511 | 3,761 |
Corporate debt | ||
Cash Equivalents: | ||
Cost | 1,001 | 1,283 |
Gross Unrealized Gain | 0 | 0 |
Gross Unrealized Loss | 0 | 0 |
Fair Value | 1,001 | 1,283 |
Available-for-Sale Investments: | ||
Cost | 242 | 0 |
Gross Unrealized Gain | 0 | 0 |
Gross Unrealized Loss | 0 | 0 |
Fair Value | 242 | 0 |
Government debt | ||
Cash Equivalents: | ||
Cost | 2,162 | 2,422 |
Gross Unrealized Gain | 0 | 0 |
Gross Unrealized Loss | 0 | 0 |
Fair Value | 2,162 | 2,422 |
Available-for-Sale Investments: | ||
Cost | 15 | 0 |
Gross Unrealized Gain | 0 | 0 |
Gross Unrealized Loss | 0 | 0 |
Fair Value | 15 | 0 |
Financial institution instruments | ||
Available-for-Sale Investments: | ||
Cost | 31 | 0 |
Gross Unrealized Gain | 0 | 0 |
Gross Unrealized Loss | 0 | 0 |
Fair Value | 31 | 0 |
Marketable equity securities and Mutual funds | ||
Available-for-Sale Investments: | ||
Equity securities, Cost | 40 | 40 |
Equity securities, Gross Unrealized Gain | 20 | 16 |
Equity securities, Gross Unrealized Loss | 0 | 0 |
Equity securities, Fair Value | $ 60 | $ 56 |
Financial Instruments - Sched_2
Financial Instruments - Schedule of Contractual Maturities of Available for-sale Debt Securities (Details) $ in Millions | Jan. 31, 2020USD ($) |
Amortized Cost | |
Due in one year or less | $ 288 |
Fair Value | |
Due in one year or less | $ 288 |
Financial Instruments - Narrati
Financial Instruments - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | |
Jan. 31, 2020 | Oct. 31, 2019 | |
Derivatives, Fair Value | ||
Fair value of derivatives with credit contingent features in a net liability position | $ 43 | $ 45 |
Period to collateralize | 2 days | |
Loss expected to be reclassified from Accumulated OCI into earnings in next 12 months | $ 108 | |
Cash flow hedges | ||
Derivatives, Fair Value | ||
Foreign currency maturity | 12 months | |
Other Non-Current Assets | Equity securities in privately held companies | ||
Derivatives, Fair Value | ||
Cost method and other equity investments | $ 46 | $ 46 |
Financial Instruments - Sched_3
Financial Instruments - Schedule of Gross Notional and Fair Value of Derivative Financial Instruments in the Consolidated Condensed Balance Sheets (Details) - USD ($) $ in Millions | Jan. 31, 2020 | Oct. 31, 2019 |
Derivatives, Fair Value | ||
Outstanding Gross Notional | $ 22,287 | $ 23,669 |
Gross Amount Recognized | 391 | 392 |
Derivative Liabilities | 151 | 166 |
Other Current Assets | ||
Derivatives, Fair Value | ||
Gross Amount Recognized | 288 | 277 |
Other Non-Current Assets | ||
Derivatives, Fair Value | ||
Gross Amount Recognized | 103 | 115 |
Other Current Liabilities | ||
Derivatives, Fair Value | ||
Derivative Liabilities | 125 | 138 |
Other Non-Current Liabilities | ||
Derivatives, Fair Value | ||
Derivative Liabilities | 26 | 28 |
Derivatives designated as hedging instruments | ||
Derivatives, Fair Value | ||
Outstanding Gross Notional | 16,730 | 16,389 |
Derivatives designated as hedging instruments | Other Current Assets | ||
Derivatives, Fair Value | ||
Gross Amount Recognized | 258 | 260 |
Derivatives designated as hedging instruments | Other Non-Current Assets | ||
Derivatives, Fair Value | ||
Gross Amount Recognized | 103 | 115 |
Derivatives designated as hedging instruments | Other Current Liabilities | ||
Derivatives, Fair Value | ||
Derivative Liabilities | 104 | 123 |
Derivatives designated as hedging instruments | Other Non-Current Liabilities | ||
Derivatives, Fair Value | ||
Derivative Liabilities | 26 | 28 |
Derivatives designated as hedging instruments | Fair value hedges | Interest rate contracts | ||
Derivatives, Fair Value | ||
Outstanding Gross Notional | 750 | 750 |
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 | 4 | 4 |
Derivatives designated as hedging instruments | Fair value hedges | Interest rate contracts | Other Current 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 | 15,980 | 15,639 |
Derivatives designated as hedging instruments | Cash flow hedges | Foreign currency contracts | Other Current Assets | ||
Derivatives, Fair Value | ||
Gross Amount Recognized | 258 | 260 |
Derivatives designated as hedging instruments | Cash flow hedges | Foreign currency contracts | Other Non-Current Assets | ||
Derivatives, Fair Value | ||
Gross Amount Recognized | 99 | 111 |
Derivatives designated as hedging instruments | Cash flow hedges | Foreign currency contracts | Other Current Liabilities | ||
Derivatives, Fair Value | ||
Derivative Liabilities | 104 | 123 |
Derivatives designated as hedging instruments | Cash flow hedges | Foreign currency contracts | Other Non-Current Liabilities | ||
Derivatives, Fair Value | ||
Derivative Liabilities | 26 | 28 |
Derivatives not designated as hedging instruments | ||
Derivatives, Fair Value | ||
Outstanding Gross Notional | 5,557 | 7,280 |
Derivatives not designated as hedging instruments | Other Current Assets | ||
Derivatives, Fair Value | ||
Gross Amount Recognized | 30 | 17 |
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 Current Liabilities | ||
Derivatives, Fair Value | ||
Derivative Liabilities | 21 | 15 |
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 | 5,406 | 7,146 |
Derivatives not designated as hedging instruments | Foreign currency contracts | Other Current Assets | ||
Derivatives, Fair Value | ||
Gross Amount Recognized | 17 | 10 |
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 Current Liabilities | ||
Derivatives, Fair Value | ||
Derivative Liabilities | 19 | 14 |
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 | 151 | 134 |
Derivatives not designated as hedging instruments | Other derivatives | Other Current Assets | ||
Derivatives, Fair Value | ||
Gross Amount Recognized | 13 | 7 |
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 Current Liabilities | ||
Derivatives, Fair Value | ||
Derivative Liabilities | 2 | 1 |
Derivatives not designated as hedging instruments | Other derivatives | Other Non-Current Liabilities | ||
Derivatives, Fair Value | ||
Derivative Liabilities | $ 0 | $ 0 |
Financial Instruments - Sched_4
Financial Instruments - Schedule of Information Related to the Potential Effect of Entity's Master Netting Agreements and Collateral Security Agreements (Details) - USD ($) $ in Millions | 3 Months Ended | |
Jan. 31, 2020 | Oct. 31, 2019 | |
Derivative assets | ||
Gross Amount Recognized | $ 391 | $ 392 |
Gross Amount Offset | 0 | 0 |
Net Amount Presented | 391 | 392 |
Gross Amounts Not Offset | ||
Derivatives | 104 | 113 |
Financial Collateral | 247 | 259 |
Net Amount | 40 | 20 |
Derivative liabilities | ||
Gross Amount Recognized | 151 | 166 |
Gross Amount Offset | 0 | 0 |
Net Amount Presented | 151 | 166 |
Gross Amounts Not Offset | ||
Derivatives | 104 | 113 |
Financial Collateral | 42 | 43 |
Net Amount | $ 5 | $ 10 |
Period to collateralize | 2 days |
Financial Instruments - Sched_5
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 | |
Jan. 31, 2020 | Jan. 31, 2019 | |
Derivative Instruments, Gain (Loss) | ||
Total amounts of income/ (expense) line items presented in the statement of financial performance in which the effects of fair value hedges are recorded | $ 13 | $ (26) |
Gain/(Loss) Recognized in Earnings on Derivative Instrument | 0 | (12) |
Gain/(Loss) Recognized in Earnings on Derivative and Related Hedged Item | $ 0 | $ 12 |
Financial Instruments - Sched_6
Financial Instruments - Schedule of Pre-Tax Effect of Derivative Instruments in Cash Flow Hedging Relationships (Details) - USD ($) $ in Millions | 3 Months Ended | |
Jan. 31, 2020 | Jan. 31, 2019 | |
Pre-tax effect of derivative instruments in cash flow hedging relationships | ||
Gain/(Loss) Recognized in Other Comprehensive Income (OCI) on Derivatives | $ 60 | |
Total amounts of income and expense line items presented in the statement of financial performance in which the effects of cash flow hedges are recorded | 865 | $ 926 |
Gain /(Loss) Reclassified from Accumulated OCI Into Earnings | 59 | |
Gain/(Loss) Recognized in Other Comprehensive Income (OCI) on Derivatives | (107) | |
Foreign currency contracts | ||
Pre-tax effect of derivative instruments in cash flow hedging relationships | ||
Gain/(Loss) Recognized in Other Comprehensive Income (OCI) on Derivatives | 60 | |
Gain /(Loss) Reclassified from Accumulated OCI Into Earnings | 59 | |
Foreign currency contracts | Net revenue | ||
Pre-tax effect of derivative instruments in cash flow hedging relationships | ||
Gain /(Loss) Reclassified from Accumulated OCI Into Earnings | 61 | |
Foreign currency contracts | Cost of revenue | ||
Pre-tax effect of derivative instruments in cash flow hedging relationships | ||
Gain /(Loss) Reclassified from Accumulated OCI Into Earnings | (1) | |
Foreign currency contracts | Operating expenses | ||
Pre-tax effect of derivative instruments in cash flow hedging relationships | ||
Gain /(Loss) Reclassified from Accumulated OCI Into Earnings | (1) | |
Foreign currency contracts | Cash flow hedges | ||
Pre-tax effect of derivative instruments in cash flow hedging relationships | ||
Gain/(Loss) Recognized in Other Comprehensive Income (OCI) on Derivatives | (107) | |
Gain /(Loss) Reclassified from Accumulated OCI Into Earnings | 179 | |
Foreign currency contracts | Cash flow hedges | Net revenue | ||
Pre-tax effect of derivative instruments in cash flow hedging relationships | ||
Total amounts of income and expense line items presented in the statement of financial performance in which the effects of cash flow hedges are recorded | 14,618 | 14,710 |
Gain /(Loss) Reclassified from Accumulated OCI Into Earnings | 191 | |
Foreign currency contracts | Cash flow hedges | Cost of revenue | ||
Pre-tax effect of derivative instruments in cash flow hedging relationships | ||
Total amounts of income and expense line items presented in the statement of financial performance in which the effects of cash flow hedges are recorded | (11,746) | (12,098) |
Gain /(Loss) Reclassified from Accumulated OCI Into Earnings | (10) | |
Foreign currency contracts | Cash flow hedges | Operating expenses | ||
Pre-tax effect of derivative instruments in cash flow hedging relationships | ||
Total amounts of income and expense line items presented in the statement of financial performance in which the effects of cash flow hedges are recorded | $ (2,007) | (1,686) |
Gain /(Loss) Reclassified from Accumulated OCI Into Earnings | $ (2) |
Financial Instruments - Sched_7
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 | |
Jan. 31, 2020 | Jan. 31, 2019 | |
Derivative Instruments, Gain (Loss) | ||
(Loss) /Gain Recognized in Earnings on Derivatives | $ (3) | $ (26) |
Interest and other, net | Foreign currency contracts | ||
Derivative Instruments, Gain (Loss) | ||
(Loss) /Gain Recognized in Earnings on Derivatives | (8) | (40) |
Interest and other, net | Other derivatives | ||
Derivative Instruments, Gain (Loss) | ||
(Loss) /Gain Recognized in Earnings on Derivatives | $ 5 | $ 14 |
Borrowings - Schedule of Notes
Borrowings - Schedule of Notes Payable and Short-Term Borrowings (Details) - USD ($) $ in Millions | Jan. 31, 2020 | Oct. 31, 2019 |
Amount Outstanding | ||
Current portion of long-term debt | $ 878 | $ 307 |
Amount outstanding | $ 923 | $ 357 |
Weighted-Average Interest Rate | ||
Current portion of long-term debt | 3.70% | 3.60% |
Notes payable to banks, lines of credit and other | ||
Amount Outstanding | ||
Amount outstanding | $ 45 | $ 50 |
Weighted-Average Interest Rate | ||
Notes payable to banks, lines of credit and other | 0.70% | 2.00% |
Borrowings - Schedule of Long-T
Borrowings - Schedule of Long-Term Debt (Details) - USD ($) | Jan. 31, 2020 | Oct. 31, 2019 | 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 | $ 4,000,000 | $ 4,000,000 | |||||
Unamortized debt issuance cost | (15,000,000) | (16,000,000) | |||||
Current portion of long-term debt | (878,000,000) | (307,000,000) | |||||
Total long-term debt | 3,932,000,000 | 4,780,000,000 | |||||
U.S. Dollar Global Notes | |||||||
Long-term debt | |||||||
Long-term debt | 4,247,000,000 | 4,246,000,000 | |||||
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 | 649,000,000 | 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 | 667,000,000 | 667,000,000 | |||||
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 | 538,000,000 | 538,000,000 | |||||
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 | 695,000,000 | 695,000,000 | |||||
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% | ||||||
Other borrowings at 0.51%-8.42%, due in calendar years 2020-2027 | |||||||
Long-term debt | |||||||
Other borrowings at 0.51%-8.42%, due in calendar years 2020-2027 | $ 574,000,000 | $ 853,000,000 | |||||
Other borrowings at 0.51%-8.42%, due in calendar years 2020-2027 | Minimum | |||||||
Long-term debt | |||||||
Interest rate (percent) | 0.51% | ||||||
Other borrowings at 0.51%-8.42%, due in calendar years 2020-2027 | Maximum | |||||||
Long-term debt | |||||||
Interest rate (percent) | 8.42% |
Borrowings - Narrative (Details
Borrowings - Narrative (Details) | 3 Months Ended |
Jan. 31, 2020USD ($)commercial_paper_program | |
Line of Credit Facility [Line Items] | |
Number of commercial paper programs | commercial_paper_program | 2 |
Commercial paper | |
Line of Credit Facility [Line Items] | |
Maximum borrowing capacity under credit facility | $ 6,000,000,000 |
Revolving credit facility | |
Line of Credit Facility [Line Items] | |
Maximum borrowing capacity under credit facility | 4,000,000,000 |
Credit facilities | |
Line of Credit Facility [Line Items] | |
Available borrowing resources | $ 701,000,000 |
Stockholders' Deficit - Narrati
Stockholders' Deficit - Narrative (Details) - USD ($) shares in Millions | Sep. 30, 2019 | Jun. 19, 2018 | Feb. 29, 2020 | Feb. 28, 2019 | Jan. 31, 2020 | Jan. 31, 2019 | Feb. 22, 2020 |
Stockholders' Equity Note [Abstract] | |||||||
Repurchases of common stock (shares) | 34 | 32 | |||||
Payment in connection with repurchases of shares | $ 691,000,000 | $ 720,000,000 | |||||
Subsequent Event [Line Items] | |||||||
Share repurchases that will be settled in subsequent period (shares) | 0.9 | ||||||
Share repurchase increase in authorization | $ 5,000,000,000 | $ 4,000,000,000 | |||||
Share repurchase authorization remaining | $ 5,800,000,000 | ||||||
Subsequent event | |||||||
Subsequent Event [Line Items] | |||||||
Share repurchases that will be settled in subsequent period (shares) | 1.3 | ||||||
Authorized repurchase amount | $ 15,000,000,000 |
Stockholders' Deficit - Schedul
Stockholders' Deficit - Schedule of Tax Effects Related to Other Comprehensive (Loss) Income (Details) - USD ($) $ in Millions | 3 Months Ended | |
Jan. 31, 2020 | Jan. 31, 2019 | |
Components of accumulated other comprehensive income, net of taxes | ||
Tax (provision) benefit on other comprehensive loss | $ (11) | $ 40 |
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 |
Net unrealized gains (losses) on cash flow hedges | ||
Components of accumulated other comprehensive income, net of taxes | ||
Tax effects on change arising during the period | 20 | |
Tax effects on reclassification into earnings | 22 | |
Tax (provision) benefit on other comprehensive loss | 42 | |
Net unrealized gains (losses) on cash flow hedges | ||
Components of accumulated other comprehensive income, net of taxes | ||
Tax effects on change arising during the period | (16) | |
Tax effects on reclassification into earnings | 10 | |
Tax (provision) benefit on other comprehensive loss | (6) | |
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) |
Tax provision on curtailments, settlements and other | ||
Components of accumulated other comprehensive income, net of taxes | ||
Tax effects on reclassification into earnings | 0 | 1 |
Tax effects on change in unrealized components of defined benefit plans | ||
Components of accumulated other comprehensive income, net of taxes | ||
Tax (provision) benefit on other comprehensive loss | (5) | (2) |
Change in cumulative translation adjustment | ||
Components of accumulated other comprehensive income, net of taxes | ||
Tax (provision) benefit on other comprehensive loss | $ 0 | $ 0 |
Stockholders' Deficit - Sched_2
Stockholders' Deficit - Schedule of Changes and Reclassifications Related to Other Comprehensive Income, Net of Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | |
Jan. 31, 2020 | Jan. 31, 2019 | |
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Unrealized gains arising during the period | $ 51 | |
Gains reclassified into earnings | (34) | |
Other comprehensive income (loss), net of taxes | 17 | $ (242) |
Change in unrealized gains (losses) on available-for-sale securities | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Unrealized gains arising during the period | 1 | 0 |
Gains reclassified into earnings | 0 | |
Net unrealized gains (losses) on cash flow hedges | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Unrealized gains arising during the period | 44 | |
Gains reclassified into earnings | (49) | |
Other comprehensive income (loss), net of taxes | (5) | |
Net unrealized gains (losses) on cash flow hedges | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Unrealized gains arising during the period | (87) | |
Gains reclassified into earnings | (157) | |
Other comprehensive income (loss), net of taxes | (244) | |
Tax provision on amortization of actuarial loss and prior service benefit | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Gains reclassified into earnings | 15 | 8 |
Curtailments, settlements and other | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Gains reclassified into earnings | 0 | (1) |
Change in unrealized components of defined benefit plans | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Unrealized gains arising during the period | 0 | |
Gains reclassified into earnings | 15 | |
Other comprehensive income (loss), net of taxes | 15 | 7 |
Change in cumulative translation adjustment | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Unrealized gains arising during the period | 6 | |
Gains reclassified into earnings | 0 | |
Change in cumulative translation adjustment | $ 6 | $ (5) |
Stockholders' Deficit - Sched_3
Stockholders' Deficit - Schedule of Accumulated Other Comprehensive Loss, Net of Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | |
Jan. 31, 2020 | Jan. 31, 2019 | |
Components of accumulated other comprehensive income, net of taxes | ||
Balance at beginning of period | $ (1,193) | |
Other comprehensive gain before reclassifications | 51 | |
Reclassifications of (gain) loss into earnings | (34) | |
Balance at end of period | (1,634) | |
Accumulated other comprehensive loss | ||
Components of accumulated other comprehensive income, net of taxes | ||
Balance at beginning of period | (1,225) | |
Balance at end of period | (1,208) | |
Net unrealized gains on available-for-sale debt securities | ||
Components of accumulated other comprehensive income, net of taxes | ||
Balance at beginning of period | 9 | |
Other comprehensive gain before reclassifications | 1 | $ 0 |
Reclassifications of (gain) loss into earnings | 0 | |
Balance at end of period | 10 | |
Net unrealized gains (losses) on cash flow hedges | ||
Components of accumulated other comprehensive income, net of taxes | ||
Other comprehensive gain before reclassifications | 44 | |
Reclassifications of (gain) loss into earnings | (49) | |
Balance at end of period | 167 | |
Net unrealized gains (losses) on cash flow hedges | ||
Components of accumulated other comprehensive income, net of taxes | ||
Balance at beginning of period | 172 | |
Other comprehensive gain before reclassifications | (87) | |
Reclassifications of (gain) loss into earnings | $ (157) | |
Unrealized components of defined benefit plans | ||
Components of accumulated other comprehensive income, net of taxes | ||
Balance at beginning of period | (1,410) | |
Other comprehensive gain before reclassifications | 0 | |
Reclassifications of (gain) loss into earnings | 15 | |
Balance at end of period | (1,395) | |
Change in cumulative translation adjustment | ||
Components of accumulated other comprehensive income, net of taxes | ||
Balance at beginning of period | 4 | |
Other comprehensive gain before reclassifications | 6 | |
Reclassifications of (gain) loss into earnings | 0 | |
Balance at end of period | $ 10 |
Net Earnings Per Share (Details
Net Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | |
Jan. 31, 2020 | Jan. 31, 2019 | |
Numerator: | ||
Net earnings | $ 678 | $ 803 |
Denominator: | ||
Weighted-average shares used to compute basic net EPS (shares) | 1,454 | 1,556 |
Dilutive effect of employee stock plans (shares) | 6 | 11 |
Weighted-average shares used to compute diluted net EPS (shares) | 1,460 | 1,567 |
Net earnings per share: | ||
Basic (usd per share) | $ 0.47 | $ 0.52 |
Diluted (usd per share) | $ 0.46 | $ 0.51 |
Anti-dilutive weighted average stock-based compensation awards (shares) | 9 | 5 |
Litigation and Contingencies (D
Litigation and Contingencies (Details) $ in Millions | Jan. 07, 2020age | Dec. 12, 2019patent | Sep. 20, 2019patentcase | Jun. 28, 2019patent | Jun. 11, 2019patentcase | Jul. 24, 2017age | Jun. 30, 2016USD ($) | Oct. 01, 2015USD ($) | Apr. 17, 2015USD ($)employeesubsidiary | Jan. 24, 2013USD ($) | Dec. 11, 2012USD ($) | May 23, 2012age | Apr. 21, 2012USD ($) | May 10, 2010USD ($)employee | Feb. 29, 2020plaintiff | Jun. 14, 2019patent | Oct. 31, 2018plaintiff | Jan. 31, 2020patentplaintiff | Apr. 30, 2019plaintiff | Jan. 23, 2020case | Apr. 20, 2012USD ($) | Apr. 11, 2012USD ($) |
Forsyth, et al. v. HP Inc. and Hewlett Packard Enterprise | ||||||||||||||||||||||
Litigation and Contingencies | ||||||||||||||||||||||
Minimum age of plaintiff | age | 40 | 40 | ||||||||||||||||||||
Number of opt-in plaintiffs | plaintiff | 193 | 154 | ||||||||||||||||||||
Number of additional plaintiffs | plaintiff | 145 | |||||||||||||||||||||
Jackson, et al. v. HP Inc. and Hewlett Packard Enterprise | ||||||||||||||||||||||
Litigation and Contingencies | ||||||||||||||||||||||
Minimum age of plaintiff | age | 40 | |||||||||||||||||||||
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 | |||||||||||||||||||||
Loss contingency deposit to prevent interruption of business | $ 16 | |||||||||||||||||||||
Duties and penalties under show cause notices | $ 17 | $ 386 | ||||||||||||||||||||
Amount deposited under show cause notice prior to order | $ 7 | $ 9 | ||||||||||||||||||||
Additional amount deposited against products-related show cause notice | $ 10 | |||||||||||||||||||||
Additional amount deposited against parts-related show cause notice | $ 3 | |||||||||||||||||||||
Additional amount deposited against product order | $ 24 | |||||||||||||||||||||
Autonomy-Related Legal Matters | Autonomy | ||||||||||||||||||||||
Litigation and Contingencies | ||||||||||||||||||||||
Aggregate damages sought | $ 5,000 | |||||||||||||||||||||
Number of subsidiaries | subsidiary | 4 | |||||||||||||||||||||
Number of members | employee | 2 | |||||||||||||||||||||
Autonomy-Related Legal Matters | Autonomy | Mr. Lynch | ||||||||||||||||||||||
Litigation and Contingencies | ||||||||||||||||||||||
Aggregate damages sought | $ 160 | |||||||||||||||||||||
Oracle Corporation v. HP | ||||||||||||||||||||||
Litigation and Contingencies | ||||||||||||||||||||||
Damages awarded | $ 3,000 | |||||||||||||||||||||
Oracle Corporation v. HP | Past lost profits | ||||||||||||||||||||||
Litigation and Contingencies | ||||||||||||||||||||||
Damages awarded | 1,700 | |||||||||||||||||||||
Oracle Corporation v. HP | Future lost profits | ||||||||||||||||||||||
Litigation and Contingencies | ||||||||||||||||||||||
Damages awarded | $ 1,300 | |||||||||||||||||||||
Neodron Patent Litigation | ||||||||||||||||||||||
Litigation and Contingencies | ||||||||||||||||||||||
Patents allegedly infringed | patent | 8 | 4 | ||||||||||||||||||||
Additional patents allegedly infringed | patent | 4 | |||||||||||||||||||||
Slingshot Printing LLC Litigation | ||||||||||||||||||||||
Litigation and Contingencies | ||||||||||||||||||||||
Patents allegedly infringed | patent | 32 | 16 | 32 | |||||||||||||||||||
Purported consumer class actions filed | case | 4 | 3 | 5 | |||||||||||||||||||
Amended claims | case | 3 | |||||||||||||||||||||
Cases dismissed | patent | 1 | |||||||||||||||||||||
Subsequent event | Forsyth, et al. v. HP Inc. and Hewlett Packard Enterprise | ||||||||||||||||||||||
Litigation and Contingencies | ||||||||||||||||||||||
Number of opt-in plaintiffs | plaintiff | 35 | |||||||||||||||||||||
Resolved | Forsyth, et al. v. HP Inc. and Hewlett Packard Enterprise | ||||||||||||||||||||||
Litigation and Contingencies | ||||||||||||||||||||||
Number of plaintiffs | plaintiff | 16 | |||||||||||||||||||||
Number of additional plaintiffs | plaintiff | 142 | |||||||||||||||||||||
Dismissed | Forsyth, et al. v. HP Inc. and Hewlett Packard Enterprise | ||||||||||||||||||||||
Litigation and Contingencies | ||||||||||||||||||||||
Number of additional plaintiffs | plaintiff | 3 | |||||||||||||||||||||
Dismissed | Subsequent event | Forsyth, et al. v. HP Inc. and Hewlett Packard Enterprise | ||||||||||||||||||||||
Litigation and Contingencies | ||||||||||||||||||||||
Number of plaintiffs | plaintiff | 13 |
Guarantees, Indemnifications _3
Guarantees, Indemnifications and Warranties (Details) - USD ($) $ in Millions | Jan. 31, 2020 | Oct. 31, 2019 | Jan. 31, 2020 |
Guarantees [Abstract] | |||
Tax indemnifications receivable | $ 59 | $ 57 | |
Changes in aggregated product warranty liabilities | |||
Balance at beginning of period | $ 922 | ||
Accruals for warranties issued | 245 | ||
Adjustments related to pre-existing warranties (including changes in estimates) | (9) | ||
Settlements made (in cash or in kind) | (243) | ||
Balance at end of period | $ 915 | $ 922 | $ 915 |
Leases - Narrative (Details)
Leases - Narrative (Details) | Jan. 31, 2020 |
Minimum | |
Lessee, Lease, Description [Line Items] | |
Operating lease term | 1 year |
Maximum | |
Lessee, Lease, Description [Line Items] | |
Operating lease term | 21 years |
Leases - Components of Lease Ex
Leases - Components of Lease Expense (Details) $ in Millions | 3 Months Ended |
Jan. 31, 2020USD ($) | |
Leases [Abstract] | |
Operating lease cost | $ 67 |
Variable cost | 27 |
Total lease expense | $ 94 |
Leases - Supplemental Cash Flow
Leases - Supplemental Cash Flow Information (Details) $ in Millions | 3 Months Ended |
Jan. 31, 2020USD ($) | |
Leases [Abstract] | |
Cash paid for amount included in the measurement of lease liabilities: | $ 63 |
Right-of-use assets obtained in exchange of lease liabilities | $ 27 |
Weighted-average remaining lease term in years: | 7 years |
Weighted-average discount rate | 2.30% |
Leases - Operating Lease Paymen
Leases - Operating Lease Payments (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Jan. 31, 2019 | Jan. 31, 2020 | Oct. 31, 2019 | |
Lessee, Operating Lease, Liability, Payment, Due [Abstract] | |||
2020 | $ 218 | ||
2021 | 219 | ||
2022 | 175 | ||
2023 | 140 | ||
2024 | 113 | ||
Thereafter | 425 | ||
Total lease payments | 1,290 | ||
Less: Imputed interest | (115) | ||
Total lease liabilities | $ 1,175 | ||
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | |||
Less than 1 year | $ 284 | ||
1-3 years | 399 | ||
3-5 years | 262 | ||
More than 5 years | 395 | ||
Total | $ 1,340 | ||
Sublease income | $ 130 |
Subsequent Events (Details)
Subsequent Events (Details) - $ / shares | Feb. 20, 2020 | Jan. 31, 2020 | Oct. 31, 2019 |
Subsequent Event [Line Items] | |||
Preferred stock, par value (usd per share) | $ 0.01 | $ 0.01 | |
Subsequent event | |||
Subsequent Event [Line Items] | |||
Common stock dividends, preferred share purchase right declared (in shares) | 1 | ||
Exercise price per right (usd per share) | $ 100 | ||
Common stock ownership percentage required to purchase additional shares | 20.00% | ||
Maximum common stock ownership percentage that can be acquired for rights to be exchangeable | 50.00% | ||
Redemption price per right (usd per share) | $ 0.01 | ||
Series A Junior Participating Preferred Stock | Subsequent event | |||
Subsequent Event [Line Items] | |||
Number of preferred stock called by each right (in shares) | 0.01 | ||
Preferred stock, par value (usd per share) | $ 0.01 | ||
Common Stock | Subsequent event | |||
Subsequent Event [Line Items] | |||
Number of shares exchanged for each outstanding right (in shares) | 1 |
Uncategorized Items - hp-13120x
Label | Element | Value |
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ (563,000,000) |
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | 27,000,000 |
Retained Earnings [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | 27,000,000 |
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ (563,000,000) |