
	As of July 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	$	985	$	—	$	—	$	985	$	1,283	$	—	$	—	$	1,283
Financial institution instruments	13		—		—		13		—		—		—		—
Government debt	2,780		—		—		2,780		2,422		—		—		2,422
Total cash equivalents	3,778		—		—		3,778		3,705		—		—		3,705
Available-for-Sale Investments:
Corporate debt	135		—		—		135		—		—		—		—
Financial institution instruments	26		—		—		26		—		—		—		—
Government debt	68		—		—		68		—		—		—		—
Marketable equity securities and mutual funds	42		15		—		57		40		16		—		56
Total available-for-sale investments	271		15		—		286		40		16		—		56
Total cash equivalents and available-for-sale investments	$	4,049	$	15	$	—	$	4,064	$	3,745	$	16	$	—	$	3,761

All highly liquid investments with original maturities of three months or less at the date of acquisition are considered cash equivalents. As of July 31, 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.

Equity securities in privately held companies are included in Other non-current assets in the Consolidated Condensed Balance Sheets. These amounted to $43 million and $46 million as of July 31, 2020 and October 31, 2019, respectively.

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, treasury rate locks 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 $281 million and $45 million as of July 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 July 31, 2020 and October 31, 2019.

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 benchmark interest rates on HP’s future interest rate payments.

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.

During the quarter, HP terminated interest rate swaps with a notional amount of $0.5 billion that were de-designated as fair value hedges of certain fixed rate debt securities that were extinguished. HP also entered into $0.5 billion notional amount interest rate swaps designated as fair value hedges to convert a portion of newly issued $1.15 billion fixed-rate debt to floating.

HP uses forward contracts, treasury rate locks and, at times, option contracts designated as cash flow hedges to protect against the foreign currency exchange and interest rate risks inherent in its forecasted net revenue, cost of revenue, operating expenses and debt issuance. 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 income/loss (“AOCI”) 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.

In March 2020, HP entered into a series of treasury rate lock agreements with notional amounts totaling $750 million to hedge the exposure to variability in future cash flows resulting from changes in interest rate related to an anticipated issuance of long-term debt. These agreements were designated as cash flow hedges. These agreements were settled upon issuance of the senior notes in June 2020 resulting in an immaterial loss recognized in Other Comprehensive Income (Loss). The loss will be reclassified to Interest and other, net over the life of the related debt.

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.

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 July 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	$	—	$	6	$	—	$	—	$	750	$	—	$	4	$	—	$	—

Cash flow hedges:
Foreign currency contracts	15,010		120		24		363		63		15,639		260		111		123		28

Total derivatives designated as hedging instruments	15,760		120		30		363		63		16,389		260		115		123		28
Derivatives not designated as hedging instruments
Foreign currency contracts	4,963		27		—		18		—		7,146		10		—		14		—
Other derivatives	138		22		—		—		—		134		7		—		1		—
Total derivatives not designated as hedging instruments	5,101		49		—		18		—		7,280		17		—		15		—
Total derivatives	$	20,861	$	169	$	30	$	381	$	63	$	23,669	$	277	$	115	$	138	$	28

HP recognizes all derivative instruments on a gross basis in the Consolidated Condensed Balance Sheets. HP does not offset the fair value of its derivative instruments against the fair value of cash collateral posted under its collateral security agreements. As of July 31, 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 July 31, 2020
Derivative assets	$	199	$	—	$	199	$	154	$	9	(1)		$	36
Derivative liabilities	$	444	$	—	$	444	$	154	$	249	(2)		$	41
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.

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 July 31, 2020

Hedged Item

Location

Three months ended July 31, 2020

In millions

Interest rate contracts

Interest and other, net

(28)

Fixed-rate debt

Interest and other, net

(1)

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

Nine months ended July 31, 2020

Hedged Item

Location

Nine months ended July 31, 2020

In millions

Interest rate contracts

Interest and other, net

(15)

Fixed-rate debt

Interest and other, net

(11)

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 July 31, 2019

Hedged Item

Location

Three months ended July 31, 2019

In millions

Interest rate contracts

Interest and other, net

(831)

Fixed-rate debt

Interest and other, net

(8)

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

Nine months ended July 31, 2019

Hedged Item

Location

Nine months ended July 31, 2019

In millions

Interest rate contracts

Interest and other, net

(902)

Fixed-rate debt

Interest and other, net

(24)


	Gain/(Loss) Recognized in AOCI 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 AOCI into Earnings
	Three months ended July 31, 2020		Location	Three months ended July 31, 2020
	In millions
Cash flow hedges:
Foreign currency contracts	$	(567)	Net revenue	$	14,294		$	136
Interest rate contracts	4		Cost of revenue	(11,901)			(7)
			Operating expenses	(1,614)			1
Total	$	(563)					$	130


	Gain/(Loss) Recognized in AOCI 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 AOCI into Earnings
	Nine months ended July 31, 2020		Location	Nine months ended July 31, 2020
	In millions
Cash flow hedges:
Foreign currency contracts	$	(268)	Net revenue	$	41,381		$	259
Interest rate contracts	(4)		Cost of revenue	(33,623)			(18)
			Operating expenses	(5,288)			1
Total	$	(272)					$	242


	Gain/(Loss) Recognized in AOCI 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 AOCI into Earnings
	Three months ended July 31, 2019		Location	Three months ended July 31, 2019
	In millions
Cash flow hedges:
Foreign currency contracts	$	180	Net revenue	$	14,603		$	98
			Cost of revenue	(11,698)			(12)
			Operating expenses	(1,826)			—
Total	$	180					$	86


	Gain/(Loss) Recognized in AOCI 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 AOCI into Earnings
	Nine months ended July 31, 2019		Location	Nine months ended July 31, 2019
	In millions
Cash flow hedges:
Foreign currency contracts	$	271	Net revenue	$	43,349		$	289
			Cost of revenue	(35,103)			(28)
			Operating expenses	(5,313)			(2)
Total	$	271					$	259

As of July 31, 2020, HP expects to reclassify an estimated accumulated other comprehensive loss of $221 million, net of taxes, to earnings within the next twelve months associated with cash flow hedges along with the earnings effects of the related forecasted transactions. The amounts ultimately reclassified into earnings could be different from the amounts previously included in AOCI based on the change of market rate, and therefore could have 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 and nine months ended July 31, 2020 and 2019 was as follows:


	Three months ended July 31						Nine months ended July 31
	2020		2019		2020		2019
	In millions
Foreign currency contracts	$	46	$	(59)	$	63	$	(116)
Other derivatives	11		(3)		16		(12)
Total	$	57	$	(62)	$	79	$	(128)