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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

________________________________

FORM 10-Q


(Mark One)
☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
April 30, 2023
Or
☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number
1-4423

_________________________________________

HP INC.

(Exact name of registrant as specified in its charter)


Delaware		94-1081436
(State or other jurisdiction of incorporation or organization)		(I.R.S. employer identification no.)
1501 Page Mill Road		94304
Palo Alto,	California	(Zip code)
(Address of principal executive offices)

(650) 857-1501

(Registrant’s telephone number, including area code)

_______________________________________

Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, par value $0.01 per share	HPQ	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒ Accelerated filer ☐

Non-accelerated filer ☐ Smaller reporting company ☐

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares of HP Inc. common stock outstanding as of April 30, 2023 was 985,956,114 shares.

HP INC. AND SUBSIDIARIES

Form 10-Q

For the Quarterly Period ended April 30, 2023

Table of Contents


		Page
Forward-Looking Statements		3
Part I. Financial Information
Item 1.	Financial Statements and Supplementary Data	4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	39
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	53
Item 4.	Controls and Procedures	53
Part II. Other Information
Item 1.	Legal Proceedings	54
Item 1A.	Risk Factors	54
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	55
Item 3.	Defaults Upon Senior Securities	55
Item 4.	Mine Safety Disclosures	55
Item 5.	Other Information	55
Item 6.	Exhibits	55

Exhibit Index		56
Signature		64

In this report on Form 10-Q, for all periods presented, “we”, “us”, “our”, the “company”, the “Company”, “HP” and “HP Inc.” refer to HP Inc. (formerly Hewlett-Packard Company) and its consolidated subsidiaries.

Table of Contents

Forward-Looking Statements

This Quarterly Report on Form 10-Q, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 2 of Part I, contains forward-looking statements based on current expectations and assumptions that involve risks and uncertainties. If the risks or uncertainties ever materialize or the assumptions prove incorrect, they could affect the business and results of operations of HP Inc. and its consolidated subsidiaries (“HP”) which may differ materially from those expressed or implied by such forward-looking statements and assumptions. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including, but not limited to, any statements regarding the impact of the COVID-19 pandemic; projections of net revenue, margins, expenses, effective tax rates, net earnings, net earnings per share, cash flows, benefit plan funding, deferred taxes, share repurchases, foreign currency exchange rates or other financial items; any projections of the amount, timing or impact of cost savings or restructuring and other charges, planned structural cost reductions and productivity initiatives; any statements of the plans, strategies and objectives of management for future operations, including, but not limited to, our business model and transformation, our sustainability goals, our go-to-market strategy, the execution of restructuring plans and any resulting cost savings (including the Fiscal 2023 Plan (as defined below)), net revenue or profitability improvements or other financial impacts; any statements concerning the expected development, demand, performance, market share or competitive performance relating to products or services; any statements concerning potential supply constraints, component shortages, manufacturing disruptions or logistics challenges; any statements regarding current or future macroeconomic trends or events and the impact of those trends and events on HP and its financial performance; any statements regarding pending investigations, claims, disputes or other litigation matters; any statements of expectation or belief as to the timing and expected benefits of acquisitions and other business combination and investment transactions (including the recent acquisition of Plantronics, Inc. (“Poly”)); and any statements of assumptions underlying any of the foregoing. Forward-looking statements can also generally be identified by words such as “future,” “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “projects,” “will,” “would,” “could,” “can,” “may,” and similar terms. Risks, uncertainties and assumptions that could affect our business and results of operations include factors relating to the impact of macroeconomic and geopolitical trends, changes and events, including the Russian invasion of Ukraine and tension across the Taiwan Strait and the regional and global ramifications of these events; recent volatility in global capital markets, increases in benchmark interest rates, the effects of inflation and instability of financial institutions; risks associated with HP’s international operations; the effects of the COVID-19 pandemic; the execution and performance of contracts by HP and its suppliers, customers, clients and partners, including logistical challenges with respect to such execution and performance; changes in estimates and assumptions HP makes in connection with the preparation of its financial statements; the need to manage (and reliance on) third-party suppliers, including with respect to component shortages, and the need to manage HP’s global, multi-tier distribution network, limit potential misuse of pricing programs by HP’s channel partners, adapt to new or changing marketplaces and effectively deliver HP’s services; HP’s ability to execute on its strategic plans, including the previously announced initiatives, business model changes and transformation; execution of planned structural cost reductions and productivity initiatives; HP’s ability to complete any contemplated share repurchases, other capital return programs or other strategic transactions; the competitive pressures faced by HP’s businesses; risks associated with executing HP’s strategy and business model changes and transformation; successfully innovating, developing and executing HP’s go-to-market strategy, including online, omnichannel and contractual sales, in an evolving distribution, reseller and customer landscape; the development and transition of new products and services and the enhancement of existing products and services to meet evolving customer needs and respond to emerging technological trends; successfully competing and maintaining the value proposition of HP’s products, including supplies; challenges to HP’s ability to accurately forecast inventories, demand and pricing, which may be due to HP’s multi-tiered channel, sales of HP’s products to unauthorized resellers or unauthorized resale of HP’s products or our uneven sales cycle; integration and other risks associated with business combination and investment transactions; the results of our restructuring plans (including the Fiscal 2023 Plan), including estimates and assumptions related to the cost (including any possible disruption of HP’s business) and the anticipated benefits of our restructuring plans; the protection of HP’s intellectual property assets, including intellectual property licensed from third parties; the hiring and retention of key employees; disruptions in operations from system security risks, data protection breaches, cyberattacks, extreme weather conditions or other effects of climate change, medical epidemics or pandemics such as the COVID-19 pandemic, and other natural or manmade disasters or catastrophic events; the impact of changes to federal, state, local and foreign laws and regulations, including environmental regulations and tax laws; our aspirations related to environmental, social and governance matters; potential impacts, liabilities and costs from pending or potential investigations, claims and disputes; and other risks that are described herein, as well as the risks discussed in Item 1A “Risk Factors” of Part I in our Annual Report on Form 10-K for the fiscal year ended October 31, 2022 and that are otherwise described or updated from time to time in HP’s other filings with the Securities and Exchange Commission (the “SEC”). The forward-looking statements in this report are made as of the date of this filing and HP assumes no obligation and does not intend to update these forward-looking statements.

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Part I. Financial Information

ITEM 1. Financial Statements and Supplementary Data.

Index


			Page
Consolidated Condensed Statements of Earnings for the three and six months ended April 30, 202 3 and 202 2 (Unaudited)			5
Consolidated Condensed Statements of Comprehensive Income for the three and six months ended April 30, 202 3 and 202 2 (Unaudited)			6
Consolidated Condensed Balance Sheets as of April 30, 202 3 and October 31, 202 2 (Unaudited)			7
Consolidated Condensed Statements of Cash Flows for the six months ended April 30, 202 3 and 202 2 (Unaudited)			8
Consolidated Condensed Statements of Stockholders’ Deficit (Unaudited)			9
Notes to Consolidated Condensed Financial Statements (Unaudited)			10
Note 1: Basis of Presentation			10
Note 2: Segment Information			11
Note 3: Restructuring and Other Charges			14
Note 4: Retirement and Post-Retirement Benefit Plans			16
Note 5: Taxes on Earnings			18
Note 6: Supplementary Financial Information			19
Note 7: Fair Value			23
Note 8: Financial Instruments			25
Note 9: Borrowings			30
Note 10: Stockholders’ Deficit			31
Note 11: Net Earnings Per Share			33
Note 12: Litigation and Contingencies			33
Note 13: Guarantees, Indemnifications and Warranties			38

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HP INC. AND SUBSIDIARIES

Consolidated Condensed Statements of Earnings

(Unaudited)


	Three months ended April 30				Six months ended April 30
	2023		2022		2023		2022
	In millions, except per share amounts
Net revenue	$	12,913	$	16,490	$	26,741	$	33,518
Costs and expenses:
Cost of revenue	9,984		13,157		21,003		26,800
Research and development	410		425		813		843
Selling, general and administrative	1,398		1,464		2,729		2,932
Restructuring and other charges	200		82		341		150
Acquisition and divestiture charges	73		32		157		52
Amortization of intangible assets	86		52		171		104
Total costs and expenses	12,151		15,212		25,214		30,881
Earnings from operations	762		1,278		1,527		2,637
Interest and other, net	(160)		(39)		(341)		(71)
Earnings before taxes	602		1,239		1,186		2,566
Benefit from (provision for) taxes	464		(239)		367		(480)
Net earnings	$	1,066	$	1,000	$	1,553	$	2,086

Net earnings per share:
Basic	$	1.08	$	0.95	$	1.57	$	1.96
Diluted	$	1.07	$	0.94	$	1.56	$	1.94

Weighted-average shares used to compute net earnings per share:
Basic	991		1,050		990		1,066
Diluted	998		1,062		997		1,078

The accompanying notes are an integral part of these Consolidated Condensed Financial Statements.

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HP INC. AND SUBSIDIARIES

Consolidated Condensed Statements of Comprehensive Income

(Unaudited)


	Three months ended April 30				Six months ended April 30
	2023		2022		2023		2022
	In millions
Net earnings	$	1,066	$	1,000	$	1,553	$	2,086
Other comprehensive income before taxes:
Change in unrealized components of available-for-sale debt securities:
Unrealized (loss) gains arising during the period	—		(4)		4		(6)



Change in unrealized components of cash flow hedges:
Unrealized (losses) gains arising during the period	(66)		603		(689)		902
Losses (gains) reclassified into earnings	162		(120)		(172)		(164)
	96		483		(861)		738
Change in unrealized components of defined benefit plans:
Gains (losses) arising during the period	6		1		(32)		22
Amortization of actuarial loss and prior service benefit	—		5		—		11
Curtailments, settlements and other	(1)		—		—		—
	5		6		(32)		33

Change in cumulative translation adjustment	9		(32)		38		(42)
Other comprehensive income (loss) before taxes	110		453		(851)		723
(Provision for) benefit from taxes	(22)		(90)		170		(116)
Other comprehensive income (loss), net of taxes	88		363		(681)		607
Comprehensive income	$	1,154	$	1,363	$	872	$	2,693

The accompanying notes are an integral part of these Consolidated Condensed Financial Statements.

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HP INC. AND SUBSIDIARIES

Consolidated Condensed Balance Sheets

(Unaudited)


	As of
	April 30, 2023		October 31, 2022
	In millions, except par value
ASSETS
Current assets:
Cash, cash equivalents and restricted cash	$	1,940	$	3,145
Accounts receivable, net of allowance for credit losses of $92 and $107, respectively	4,137		4,546
Inventory	7,221		7,595
Other current assets	3,725		4,515
Total current assets	17,023		19,801
Property, plant and equipment, net	2,771		2,774
Goodwill	8,618		8,541
Other non-current assets	7,954		7,471
Total assets	$	36,366	$	38,587
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Notes payable and short-term borrowings	$	240	$	218
Accounts payable	13,317		15,284
Other current liabilities	10,477		10,651
Total current liabilities	24,034		26,153
Long-term debt	10,360		10,796
Other non-current liabilities	4,456		4,556
Stockholders’ deficit:
Preferred stock, $0.01 par value (300 shares authorized; none issued)	—		—
Common stock, $0.01 par value (9,600 shares authorized; 986 and 980 shares issued and outstanding at April 30, 2023 and October 31, 2022, respectively)	10		10
Additional paid-in capital	1,344		1,172
Accumulated deficit	(3,470)		(4,413)
Accumulated other comprehensive (loss) income	(368)		313
Total stockholders’ deficit	(2,484)		(2,918)
Total liabilities and stockholders’ deficit	$	36,366	$	38,587

The accompanying notes are an integral part of these Consolidated Condensed Financial Statements.

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HP INC. AND SUBSIDIARIES

Consolidated Condensed Statements of Cash Flows

(Unaudited)


	Six months ended April 30
	2023		2022
	In millions
Cash flows from operating activities:
Net earnings	$	1,553	$	2,086
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	421		390
Stock-based compensation expense	262		203
Restructuring and other charges	341		150
Deferred taxes on earnings	(817)		(5)
Other, net	36		304
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable	426		91
Inventory	354		(1,270)
Accounts payable	(1,914)		981
Net investment in leases	(51)		(41)
Taxes on earnings	329		(23)
Restructuring and other	(167)		(146)
Other assets and liabilities	(153)		(555)
Net cash provided by operating activities	620		2,165
Cash flows from investing activities:
Investment in property, plant and equipment, net	(322)		(451)

Purchases of available-for-sale securities and other investments	(5)		(8)
Maturities and sales of available-for-sale securities and other investments	18		7
Collateral (posted) returned for derivative instruments	(127)		14

Payment made in connection with business acquisitions, net of cash acquired	(5)		(24)
Net cash used in investing activities	(441)		(462)
Cash flows from financing activities:
Payment of short-term borrowings with original maturities less than 90 days, net	(10)		(400)

Proceeds from debt, net of issuance costs	117		2,060

Payment of debt	(587)		(96)
Stock-based award activities and others	(86)		(97)
Repurchase of common stock	(100)		(2,518)
Cash dividends paid	(518)		(533)
Collateral returned for derivative instruments	(200)		—
Settlement of cash flow hedges	—		59
Net cash used in financing activities	(1,384)		(1,525)
(Decrease) increase in cash, cash equivalents and restricted cash	(1,205)		178
Cash, cash equivalents and restricted cash at beginning of period	3,145		4,299
Cash, cash equivalents and restricted cash at end of period	$	1,940	$	4,477

The accompanying notes are an integral part of these Consolidated Condensed Financial Statements.

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HP INC. AND SUBSIDIARIES

Consolidated Condensed Statements of Stockholders’ Deficit

(Unaudited)


	Common Stock			Additional Paid-in Capital				Accumulated Other Comprehensive Income (Loss)		Total Stockholders’ Deficit
	Number of Shares	Par Value				Accumulated Deficit
	In millions, except number of shares in thousands
Balance January 31, 2022	1,059,900	$	11	$	1,046	$	(3,369)	$	(16)	$	(2,328)
Net earnings						1,000				1,000
Other comprehensive income, net of taxes								363		363
Comprehensive income										1,363
Issuance of common stock in connection with employee stock plans and other	608			(7)						(7)
Repurchases of common stock (Note 10)	(27,116)	(1)		(28)		(970)				(999)
Cash dividends						3				3
Stock-based compensation expense				70						70

Balance April 30, 2022	1,033,392	$	10	$	1,081	$	(3,336)	$	347	$	(1,898)

Balance January 31, 2023	985,089	$	10	$	1,256	$	(4,540)	$	(456)	$	(3,730)
Net earnings						1,066				1,066
Other comprehensive income, net of taxes								88		88
Comprehensive income										1,154
Issuance of common stock in connection with employee stock plans and other	787			(7)						(7)

Cash dividends						4				4
Stock-based compensation expense				95						95

Balance April 30, 2023	985,876	$	10	$	1,344	$	(3,470)	$	(368)	$	(2,484)

	Common Stock			Additional Paid-in Capital				Accumulated Other Comprehensive Income (Loss)		Total Stockholders’ Deficit
	Number of Shares	Par Value				Accumulated Deficit
	In millions, except number of shares in thousands
Balance October 31, 2021	1,092,205	$	11	$	1,060	$	(2,461)	$	(260)	$	(1,650)
Net earnings						2,086				2,086
Other comprehensive income, net of taxes								607		607
Comprehensive income										2,693
Issuance of common stock in connection with employee stock plans and other	10,384			(113)						(113)
Repurchases of common stock (Note 10)	(69,197)	(1)		(69)		(2,428)				(2,498)
Cash dividends ($0.50 per common share)						(533)				(533)
Stock-based compensation expense				203						203

Balance April 30, 2022	1,033,392	$	10	$	1,081	$	(3,336)	$	347	$	(1,898)

Balance October 31, 2022	979,869	$	10	$	1,172	$	(4,413)	$	313	$	(2,918)
Net earnings						1,553				1,553
Other comprehensive loss, net of taxes								(681)		(681)
Comprehensive income										872
Issuance of common stock in connection with employee stock plans and other	9,631			(86)						(86)
Repurchases of common stock (Note 10)	(3,624)			(4)		(96)				(100)
Cash dividends ($0.53 per common share)						(514)				(514)
Stock-based compensation expense				262						262

Balance April 30, 2023	985,876	$	10	$	1,344	$	(3,470)	$	(368)	$	(2,484)

The accompanying notes are an integral part of these Consolidated Condensed Financial Statements.

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HP INC. AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements

(Unaudited)

Note 1: 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, 2022 in HP’s Annual Report on Form 10-K, filed on December 6, 2022. The Consolidated Condensed Balance Sheet for October 31, 2022 was derived from audited financial statements.

Principles of Consolidation

The Consolidated Condensed Financial Statements include the accounts of HP and its subsidiaries and affiliates in which HP has a controlling financial interest or is the primary beneficiary. All intercompany balances and transactions have been eliminated.

Reclassifications

HP has reclassified certain prior-year amounts to conform to the current-year presentation.

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. As of April 30, 2023, the extent to which the current macroeconomic factors will impact our business going forward depends on numerous dynamic factors which we cannot reliably predict. As a result, many of our estimates and assumptions required increased judgment and may carry a higher degree of variability and volatility. As the events continue to evolve with respect to the ongoing macroeconomic factors, our estimates may materially change in future periods.

Recently Issued Accounting Pronouncements Not Yet Adopted

In November 2021, the FASB issued guidance that enhances the transparency of government assistance by requiring annual disclosure of the types of assistance received, an entity’s accounting for the assistance, and the effect of the assistance on the entity’s financial statements. HP is required to adopt the guidance for its annual period ending on October 31, 2023. Early adoption is permitted. HP is currently evaluating the impact of this guidance on its disclosures.

In September 2022, the FASB issued guidance that enhances the transparency about the use of supplier finance programs. Under the new guidance, companies that use a supplier finance program in connection with the purchase of goods or services will be required to disclose information about the program to allow users of financial statements to understand the program’s nature, activity during the period, changes from period to period, and potential magnitude. HP is required to adopt the guidance in the first quarter of fiscal year 2024, except for the amendment on roll forward information which is effective one year later. Early adoption is permitted. HP is currently evaluating the impact of this guidance on its disclosures.

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HP INC. AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements (Continued)

(Unaudited)

Note 2: 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 goes to market through its extensive channel network and direct sales.

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 the 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 customers desktops and notebooks, workstations, thin clients, commercial mobility devices, retail point-of-sale (“POS”) systems, displays, hybrid systems (includes video conferencing solutions, cameras, headsets, voice, and related software capabilities including all products and solutions acquired from Poly), 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 (“Commercial PS”), and consumer notebooks, consumer desktops, consumer services and consumer detachables into consumer (“Consumer PS”) when describing performance in these markets. Commercial and Consumer services include support and deployment, configurations and extended warranty services.

Personal Systems groups its global business capabilities into the following business units when reporting business performance:

•Commercial PS consist of endpoint computing devices and hybrid systems, for use by enterprise, public sector (which includes education), and SMB customers, with a focus on robust designs, security, serviceability, connectivity, reliability and manageability in the customer’s environment. Additionally, HP offers a range of services and solutions to enterprise, public sector (which includes education), and SMB customers to help them manage the lifecycle of their personal computers (“PCs”) and mobility installed base.

•Consumer PS consist of devices, accessories and services which are optimized for consumer usage, focusing on gaming, learning and working remotely, consuming multi-media for entertainment, managing personal life activities, staying connected, sharing information, getting things done for work including creating content and staying informed and secure.

Printing provides consumer and commercial printer hardware, supplies, services and solutions. 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.

•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.

•Graphics Solutions delivers large-format, commercial and industrial solutions and supplies to print service providers and packaging converters through a wide portfolio of printers and presses (HP DesignJet, HP Latex, HP Indigo and HP PageWide Web Presses).

•3D Printing & 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.

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HP INC. AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements (Continued)

(Unaudited)

Note 2: Segment Information (Continued)

Printing groups its global business capabilities into the following business units when reporting business performance:

•Commercial Printing consists of office printing solutions, graphics solutions and 3D printing and digital manufacturing, excluding supplies;

•Consumer Printing consists of home printing solutions, excluding supplies; and

•Supplies comprises a set of highly innovative consumable products, ranging from ink and laser cartridges to media, graphics supplies, and 3D printing and digital manufacturing supplies, for recurring use in consumer and commercial hardware.

Corporate Investments includes 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 expenses such as certain corporate governance costs and infrastructure investments, stock-based compensation expense, restructuring and other charges, acquisition and divestiture charges and amortization of intangible assets.

Realignment

Effective the first quarter of fiscal 2023, HP realigned the Personal Systems business units reporting structure into Commercial PS and Consumer PS to align with its customer market segmentation. Additionally, in connection with certain other organizational realignments, some costs which were earlier reflected under “Corporate and unallocated cost and other” have now been reclassified to the Personal Systems and Printing segments.

HP has reflected these changes to its prior reporting periods on an as-if basis. The reporting change had no impact to previously reported segment net revenue, consolidated net revenue, net earnings or net earnings per share (“EPS”).

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HP INC. AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements (Continued)

(Unaudited)

Note 2: Segment Information (Continued)

Segment Operating Results from Operations and the reconciliation to HP consolidated results were as follows:


	Three months ended April 30				Six months ended April 30
	2023		2022		2023		2022
	In millions
Net revenue:
Commercial PS	$	5,922	$	7,817	$	12,351	$	15,674
Consumer PS	2,254		3,715		5,040		8,054
Personal Systems	8,176		11,532		17,391		23,728
Supplies	3,006		3,131		5,863		6,199
Commercial Printing	1,089		1,042		2,145		2,081
Consumer Printing	641		790		1,340		1,514
Printing	4,736		4,963		9,348		9,794
Corporate Investments	3		—		4		1
Total segment net revenue	12,915		16,495		26,743		33,523
Other	(2)		(5)		(2)		(5)
Total net revenue	$	12,913	$	16,490	$	26,741	$	33,518

Earnings before taxes:
Personal Systems	$	445	$	794	$	942	$	1,748
Printing	899		949		1,769		1,821
Corporate Investments	(38)		(52)		(71)		(126)
Total segment earnings from operations	1,306		1,691		2,640		3,443
Corporate and unallocated costs and other	(90)		(177)		(182)		(297)
Stock-based compensation expense	(95)		(70)		(262)		(203)
Restructuring and other charges	(200)		(82)		(341)		(150)
Acquisition and divestiture charges	(73)		(32)		(157)		(52)
Amortization of intangible assets	(86)		(52)		(171)		(104)

Interest and other, net	(160)		(39)		(341)		(71)
Total earnings before taxes	$	602	$	1,239	$	1,186	$	2,566

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HP INC. AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements

(Unaudited)

Note 3: Restructuring and Other Charges

Summary of Restructuring Plans

HP’s restructuring activities for the six months ended April 30, 2023 and 2022 summarized by plan were as follows:


	Fiscal 2023 Plan
	Severance and EER			Non-labor		Other prior-year plans(1)		Total
	In millions
Accrued balance as of October 31, 2022	$	—		$	—	$	32	$	32
Charges	294			13		2		309
Cash payments	(92)			(8)		(35)		(135)
Non-cash and other adjustments	(141)		(2)	(5)		3		(143)
Accrued balance as of April 30, 2023	$	61		$	—	$	2	$	63
Total costs incurred to date as of April 30, 2023	$	294		$	13	$	867	$	1,174

Reflected in Consolidated Condensed Balance Sheets
Other current liabilities	$	61		$	—	$	2	$	63



Accrued balance as of October 31, 2021	$	—		$	—	$	75	$	75
Charges	—			—		145		145
Cash payments	—			—		(141)		(141)
Non-cash and other adjustments	—			—		(32)		(32)
Accrued balance as of April 30, 2022	$	—		$	—	$	47	$	47

HP’s restructuring charges for the three months ended April 30, 2023 summarized by the plans outlined below were as follows:


	Fiscal 2023 Plan
	Severance and EER		Non-labor		Other prior-year plans(1)		Total
	In millions
For the three months ended April 30, 2023	$	172	$	4	$	2	$	178

(1) Primarily includes the fiscal 2020 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”) program of $139 million for pension and post-retirement plan special termination benefits. See Note 4 “Retirement and Post-Retirement Benefit Plans” for further information.

Fiscal 2023 Plan

On November 18, 2022, HP’s Board of Directors approved the Future Ready Plan (the “Fiscal 2023 Plan”) intended to enable digital transformation, portfolio optimization and operational efficiency which HP expects will be implemented through fiscal 2025. HP expects to reduce global headcount by approximately 4,000 to 6,000 employees. 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 $0.7 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 information technology rationalization efforts and transformation program management costs, and are distinct from ongoing operational costs. These costs primarily relate to third-party professional services and other costs. For the three and six months ended April 30, 2023, HP incurred $22 million

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HP INC. AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements (Continued)

(Unaudited)

Note 3: Restructuring and Other Charges (Continued)

and $32 million of other charges, respectively. For the three and six months ended April 30, 2022, HP incurred $4 million and $5 million of other charges, respectively.

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HP INC. AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements

(Unaudited)

Note 4: 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 April 30
	U.S. Defined Benefit Plans				Non-U.S. Defined Benefit Plans				Post-Retirement Benefit Plans
	2023		2022		2023		2022		2023		2022
	In millions
Service cost	$	—	$	—	$	11	$	14	$	—	$	—
Interest cost	55		40		10		5		3		2
Expected return on plan assets	(64)		(75)		(13)		(12)		(3)		(2)
Amortization and deferrals:
Actuarial loss (gain)	4		2		1		9		(4)		(4)