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℠
FORM 10-K
HP INC - HPQ
Filed: December 16, 2015 (period: October 31, 2015)
Annual report with a comprehensive overview of the company
The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user
assumes all risks for any damages or losses arising from any use of this information, except to the extent such damages or losses cannot be
limited or excluded by applicable law. Past financial performance is no guarantee of future results.

Table of contents

  • Page 1
    ...® Document Research℠FORM 10-K HP INC - HPQ Filed: December 16, 2015 (period: October 31, 2015) Annual report with a comprehensive overview of the company The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The...

  • Page 2
    ... Interactive Data File required to be submitted and posted pursuant to Rule 405 Source: HP INC, 10-K, December 16, 2015 Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely...

  • Page 3
    ... the last sale price of common stock on April 30, 2015. The number of shares of HP Inc. common stock outstanding as of November 30, 2015 was 1,791,848,366 shares. DOCUMENTS INCORPORTTED BY REFERENCE DOCUMENT DESCRIPTION Portions of the Registrant's proxy statement related to its 2015 Annual Meeting...

  • Page 4
    ... Certain Relationships and Related Transactions, and Director Independence Principal Accounting Fees and Services PART IV Item 15. Exhibits and Financial Statement Schedules 185 In this report on Form 10-K, for all periods presented, "we", "us", "our", "company", "HP" and "HP Inc." refer to HP Inc...

  • Page 5
    ...not limited to any projections of revenue, margins, expenses, effective tax rates, net earnings, net earnings per share, cash flows, benefit plan funding, deferred tax assets, share repurchases, currency exchange rates or other financial items; any projections of the amount, timing or impact of cost...

  • Page 6
    ... close of business on October 21, 2015 (the "Record Date") received one share of Hewlett Packard Enterprise common stock for every one share of our common stock held as of the Record Date. Hewlett Packard Enterprise is now an independent public company trading on the New York Stock Exchange ("NYSE...

  • Page 7
    ...Personal Systems; Printing; the Enterprise Group ("EG"); Enterprise Services ("ES"); Software; HP Financial Services ("HPFS"); and Corporate Investments. As a result of the Separation, effective November 1, 2015 EG, ES, Software, HPFS and certain parts of Corporate Investments are no longer reported...

  • Page 8
    ... focused on imaging solutions in the commercial markets. These solutions range from managed print services to areas such as industrial applications, outdoor signage and the graphic arts business. HP groups LaserJet, large format printers and commercial inkjet printers into Commercial Hardware and...

  • Page 9
    ...software support services; HP Proactive Care, which combines remote support technology for real time monitoring with rapid access to our technical experts; HP Datacenter Care, comprehensive, flexible end-to-end support that enables customers to build, operate or consume IT in private or hybrid cloud...

  • Page 10
    ... big data analytics and applications, enterprise security, application testing and delivery management and IT Operations Management solutions for businesses and other enterprises of all sizes. Our Software offerings include licenses, support, professional services and software-asa-service ("SaaS...

  • Page 11
    ... minority investments, among others. Sales, Marketing and Distribution We manage our business and report our financial results based on the business segments described above. Our customers are organized by consumer and commercial groups, and purchases of HP products, solutions and services may...

  • Page 12
    ... hardware and software customization requirements. Our inventory management and distribution practices in both building products to order and configuring products to order seek to minimize inventory holding periods by taking delivery of the inventory and manufacturing shortly before the sale...

  • Page 13
    ... partnering with other leading technology companies will leverage our cost structure and maximize our customers' experiences. HP Labs, together with the various research and development groups within our business segments, are responsible for our research and development efforts. HP Labs is part...

  • Page 14
    ... competitive. We have a broad technology portfolio spanning personal computing and other access devices, imaging and printing-related products and services, enterprise IT infrastructure products and solutions, 12 Source: HP INC, 10-K, December 16, 2015 Powered by Morningstar® Document Research...

  • Page 15
    ... extensive service and support offerings and the accessibility of our products through a broad-based distribution strategy from retail and commercial channels to direct sales. Printing. The markets for printer hardware and associated supplies are highly competitive. Printing's key customer segments...

  • Page 16
    .... Our operations, and ultimately our products, are expected to become increasingly subject to federal, state, local and foreign laws, regulations and international treaties relating to climate change. 14 Source: HP INC, 10-K, December 16, 2015 Powered by Morningstar® Document Research℠The...

  • Page 17
    ..., Personal Systems since November 2015. Mr. Coughlin joined Hewlett-Packard Company from PepsiCo in June 2007 as the senior vice president of the Imaging and Printing Group Worldwide Strategy and Marketing team. In 2010, Mr. Coughlin transitioned to lead the LaserJet and Enterprise Solutions global...

  • Page 18
    ... Hewlett-Packard Company from June 2013 to November 2015 and as Senior Vice President and Managing Director, Printing and Personal Systems, Asia Pacific and Japan from January 2012 to June 2013. Prior to joining 16 Source: HP INC, 10-K, December 16, 2015 Powered by Morningstar® Document Research...

  • Page 19
    ...Contents Hewlett-Packard Company, he was Vice President and Chief Operating Officer of the Product and Mobile Internet Digital Home Groups at Lenovo Group Ltd., a technology company, from January 2008 to December 2011. Employees We had approximately 287,000 employees worldwide as of October 31, 2015...

  • Page 20
    ... targeting our key market segments. We compete primarily on the basis of our technology, innovation, performance, price, quality, reliability, brand, reputation, distribution, range of products and services, ease of use of our products, account relationships, customer training, service and support...

  • Page 21
    ...for some of our LaserJet toner and inkjet cartridges compete with our printing supplies business. If we cannot successfully execute our go-to-market strategy and continue to develop, manufacture and market innovative products, services and solutions, our business and financial performance may suffer...

  • Page 22
    ... existing hardware and software products, services and solutions is complex, costly and uncertain, and any failure by us to anticipate customers' changing needs and emerging technological trends accurately could significantly harm our market share, results of operations and financial condition. For...

  • Page 23
    ... countries outside of the United States and margins on sales of products that include components obtained from suppliers located outside of the United States. From time to time, we may use forward contracts and options designated as cash flow hedges to protect against foreign currency exchange rate...

  • Page 24
    ... partners. Revenue from indirect sales could suffer, and we could experience disruptions in distribution, if our distributors' financial conditions, abilities to borrow funds in the credit markets or operations weaken. 22 Source: HP INC, 10-K, December 16, 2015 Powered by Morningstar® Document...

  • Page 25
    ... for our products or services, at times we may make advance payments to suppliers or enter into non-cancelable commitments with vendors. In addition, we may purchase components strategically in advance of demand to take advantage of 23 • Source: HP INC, 10-K, December 16, 2015 Powered by...

  • Page 26
    ... to engage in relationships with certain OMs and suppliers could be limited. The practice employed by our PC business of purchasing product components and transferring those components to its OMs may create large supplier receivables with the OMs that, depending on the financial condition of the OMs...

  • Page 27
    ... revenue, profitability and financial condition, adversely affect our competitive position, increase our costs and expenses, and require substantial expenditures and recovery time in order to fully resume operations. Our corporate headquarters and a portion of our research and development activities...

  • Page 28
    ...; longer collection cycles and financial instability among customers; trade regulations and procedures and actions affecting production, pricing and marketing of products, including policies adopted by countries that may champion or otherwise favor domestic companies and technologies over foreign...

  • Page 29
    ...business combination and investment transactions entered into by Hewlett-Packard Company resulted, and in the future any such transactions by us may result, in significant costs and expenses, including those related to severance pay, early retirement costs, employee benefit costs, goodwill and asset...

  • Page 30
    ... acquired companies, products or services into our overall business in a timely manner could harm our financial results, business and prospects. In order to pursue our strategy successfully, we must identify candidates for and successfully complete business combination and investment transactions...

  • Page 31
    ..., trademark, trade secret and other intellectual property laws in the United States, similar laws in other countries, and agreements with our employees, customers, suppliers and other parties, to establish and maintain intellectual property rights in the products and services we sell, provide or...

  • Page 32
    ... applicable countries, and could be substantial. Consequently, the ultimate impact of these copyright levies or similar fees, and our ability to recover such amounts through increased prices, remains uncertain. 30 Source: HP INC, 10-K, December 16, 2015 Powered by Morningstar® Document Research...

  • Page 33
    ... position and options relating to patent enforcement, patent licensing and cross-licensing, our ability to sell our products or services, our competitive position in the industry and our ability to enter new product markets. Our business and financial performance could suffer if we do not manage the...

  • Page 34
    ... of new, planned or contemplated products, services, technological innovations, acquisitions, divestitures or other significant transactions by us or our competitors; quarterly increases or decreases in revenue, gross margin, earnings or cash flows, changes in estimates by the investment community...

  • Page 35
    ...diversion of management time and resources. Failure to maintain our credit ratings could adversely affect our liquidity, capital position, borrowing costs and access to capital markets. Our credit risk is evaluated by the major independent rating agencies. Fitch Ratings, Moody's Investor Service and...

  • Page 36
    ...management team may be disruptive to our business, and any failure to successfully transition and assimilate key new hires or promoted employees could adversely affect our business and results of operations. System security risks, data protection breaches, cyberattacks and systems integration issues...

  • Page 37
    ...financial condition and stock price. Terrorist acts, conflicts or wars (wherever located around the world) may cause damage or disruption to our business, our employees, facilities, partners, suppliers, distributors, resellers or customers or adversely affect our ability to manage logistics, operate...

  • Page 38
    ...limit the opportunity for our stockholders to receive a premium for their shares of our stock and also could affect the price that some investors are willing to pay for our stock. Risks Related to the Separation The separation of Hewlett-Packard Company into two independent publicly-traded companies...

  • Page 39
    ... Separation for those respective areas and include any necessary indemnifications related to liabilities and obligations. The commercial agreement establishes a bilateral relationship between Hewlett Packard Enterprise and us for the purchase and sale of commercially available products and services...

  • Page 40
    ... of space worldwide, a summary of which is provided below. Fisgal year ended Ogtober 31, 2015 Owned Leased Total (square feet in millions) Administration and support (Percentage) Core data centers, manufacturing plants, research and development facilities and warehouse operations (Percentage) Total...

  • Page 41
    ... the Consolidated Financial Statements in Item 8, which is incorporated herein by reference. ITEM 4. Mine Safety Disglosures. Not applicable. 39 HP Labs Israel- Haifa United Kingdom- Bristol United States- Palo Alto Source: HP INC, 10-K, December 16, 2015 Powered by Morningstar® Document Research...

  • Page 42
    ... Separation, on November 1, 2015, we completed the distribution of the outstanding common stock of Hewlett Packard Enterprise to our stockholders as of the close of business on October 21, 2015, the record date for the distribution. Our stockholders received one share of Hewlett Packard Enterprise...

  • Page 43
    ... 10/15 Hewlett-Packard Company S&P 500 Index S&P Information Technology Index 100.00 100.00 100.00 41 64.10 108.08 108.76 34.14 124.51 120.42 61.77 158.33 144.39 92.71 185.66 181.5 71.13 195.3 201.82 Source: HP INC, 10-K, December 16, 2015 Powered by Morningstar® Document Research℠The...

  • Page 44
    ...trade name within the Personal Systems segment. Total debt increased in fiscal 2015 due primarily to the Separation and business acquisitions. In fiscal 2014 and 2013, total debt decreased due to maturities. 42 (3) Source: HP INC, 10-K, December 16, 2015 Powered by Morningstar® Document Research...

  • Page 45
    .... Hewlett Packard Enterprise is now an independent public company trading on the New York Stock Exchange ("NYSE") under the symbol "HPE". After the Separation, we do not beneficially own any shares of Hewlett Packard Enterprise common stock. 43 Source: HP INC, 10-K, December 16, 2015 Powered...

  • Page 46
    ...enterprises, including customers in the government, health and education sectors. Our offerings span the following: • • personal computing and other access devices; imaging- and printing-related products and services; 44 Source: HP INC, 10-K, December 16, 2015 Powered by Morningstar® Document...

  • Page 47
    ...; and software products and solutions, including application testing and delivery, big data analytics, enterprise security, information governance and IT Operations Management. • • As of October 31, 2015, we had seven segments for financial reporting purposes: Personal Systems, Printing, the...

  • Page 48
    ...product and service offerings with integrated products and solutions, our business-specific competitors are exerting increased competitive pressure in targeted areas and are entering new markets, our emerging competitors are introducing new technologies and business models, and our alliance partners...

  • Page 49
    ... cloud and data center computing, software-defined networking, storage, blade servers and wireless networking. In ES, we are facing challenges, including managing the revenue runoff from several large contracts, pressured public sector spending, a competitive pricing environment and market pressures...

  • Page 50
    ... carrying amount of assets and liabilities that are not readily apparent from other sources. Management has discussed the development, selection and disclosure of these estimates with the Audit Committee of HP's Board of Directors. Management believes that the accounting estimates employed and the...

  • Page 51
    ...obligations related to the sale. For the various software products we sell (e.g., big data analytics and applications, application delivery management, enterprise security and IT Operations Management), we assess whether the software products were sold on a standalone basis or with hardware products...

  • Page 52
    ... recorded as a component of cost of sales. Warranty We accrue the estimated cost of product warranties at the time we recognize revenue. We evaluate our warranty obligations on a product group basis. Our standard product warranty terms generally include post-sales support and repairs or replacement...

  • Page 53
    ...-retirement benefit costs and obligations depend on various assumptions. Our major assumptions relate primarily to discount rates, mortality rates, expected increases in compensation levels and the expected long-term return on plan assets. The discount rate assumption is based on current investment...

  • Page 54
    ...Operations (Continued) expected increase in compensation levels and the expected long-term return on plan assets would have had on our net periodic benefit cost for fiscal 2015: Change in Net Periodig Benefit Cost in millions Change in pergentage points Assumptions: Discount rate Expected increase...

  • Page 55
    ..., technological changes, product life cycle and development plans, component cost trends, product pricing, physical deterioration and quality issues. Business Combinations We allocate the fair value of purchase consideration to the assets acquired, including in-process research and development ("IPR...

  • Page 56
    ... a reporting unit based on the present value of estimated future cash flows. Cash flow projections are based on management's estimates of revenue growth rates and operating margins, taking into consideration industry and market conditions. The discount rate used is based on the weighted-average cost...

  • Page 57
    ... unit. The fair value of the Software reporting unit could also be negatively impacted by declines in market multiples of revenue for comparable publicly-traded companies, changes in management's business strategy or significant and sustained declines in our stock price, which could result in an...

  • Page 58
    ... year-over-year percentage change in revenue on a GAAP basis. Other companies may calculate and define similarly labeled items differently, which may limit the usefulness of this measure for comparative purposes. 56 Source: HP INC, 10-K, December 16, 2015 Powered by Morningstar® Document Research...

  • Page 59
    ... 2013 Net revenue Cost of sales(1) Gross profit Research and development Selling, general and administrative Amortization of intangible assets Restructuring charges Acquisition and other related charges Separation costs Defined benefit plan settlement charges Impairment of data center assets...

  • Page 60
    ... Operations (Continued) The components of the weighted net revenue change by segment were as follows: For the fisgal years ended Ogtober 31 2015 2014 Pergentage Points Personal Systems Enterprise Services Printing HP Financial Services Corporate Investments/Other Software Enterprise Group Total HP...

  • Page 61
    ... products, partially offset by favorable component costs and operational cost improvements; and Software gross margin decreased due to a lower mix of license revenue. • • • • uiscal 2014 compared with uiscal 2013 HP's gross margin increased by 0.8 percentage points for fiscal year 2014...

  • Page 62
    ... from lower bad debt expense, a lower cost of funds and improved margins in remarketing sales; Personal Systems gross margin increased due primarily to operational cost improvements, a favorable mix of commercial products and the sale of IP; and EG gross margin decreased due primarily to the impact...

  • Page 63
    ... costs. Defined Benefit Plan Settlement Charges Defined benefit plan settlement charges for fiscal 2015 were related to U.S. defined benefit plan settlement expense and net periodic benefit cost resulting from the voluntary lump sum program announced in January 2015. Impairment of Data Center Assets...

  • Page 64
    ... with the Separation, effective at the beginning of its fourth quarter of fiscal 2015, we implemented an organizational change which resulted in the transfer of marketing optimization solutions business from the Software segment to the Commercial Hardware business unit within the 62 Source: HP INC...

  • Page 65
    ...are structured beneath a broader Printing and Personal Systems Group ("PPS"). We describe the results of the business segments within PPS below. Personal Systems For the fisgal years ended Ogtober 31 2015 2014 2013 Dollars in millions Net revenue Earnings from operations Earnings from operations as...

  • Page 66
    ...impacts and operational cost improvements. uiscal 2014 compared with uiscal 2013 Personal Systems net revenue increased 6.6% (increased 7.2% on a constant currency basis) in fiscal 2014. While the Personal Systems business continued to be challenged by the market shift towards mobility products, the...

  • Page 67
    ... in mobility products, primarily consumer tablets which were introduced in the second half of fiscal 2013. Personal Systems earnings from operations as a percentage of net revenue increased 0.7 percentage points for fiscal 2014. The increase was driven by an increase in gross margin and a decline...

  • Page 68
    ... Management's Disgussion and Tnalysis of Finangial Condition and Results of Operations (Continued) For the fisgal years ended Ogtober 31 Weighted Net Revenue Net Revenue Change Pergentage 2014 2013 Points Dollars in millions Supplies Consumer Hardware Commercial Hardware Total Printing uiscal 2015...

  • Page 69
    ... of our investments in enterprise products and 3-D printing, the effects of which were partially offset by reduced marketing expenses. Enterprise Group For the fisgal years ended Ogtober 31 2015 2014 2013 Dollars in millions Net revenue Earnings from operations Earnings from operations as a % of...

  • Page 70
    ...unit were as follows: For the fisgal years ended Ogtober 31 Weighted Net Revenue Net Revenue Change Pergentage 2015 2014 Points Dollars in millions Technology Services Storage Business Critical Systems Networking Industry Standard Servers Total Enterprise Group $ 7,662 $ 8,375 3,180 3,316 807 929...

  • Page 71
    ... lower revenue from consulting services, the effects of which were partially offset by growth in HP Data Center Care and HP Proactive Care support solutions. In fiscal 2015, EG earnings from operations as a percentage of net revenue decreased by 0.1 percentage point due to a decrease in gross margin...

  • Page 72
    ... (3.0) (11.6) For the fisgal years ended Ogtober 31 Weighted Net Revenue Net Revenue Change Pergentage 2014 2013 Points Dollars in millions Infrastructure Technology Outsourcing Application and Business Services Total Enterprise Services uiscal 2015 compared with uiscal 2014 $ 14,038 $ 15,223...

  • Page 73
    ... as a percentage of net revenue. Gross margin increased due primarily to service delivery efficiencies and improving profit performance in underperforming contracts. The decrease in operating expenses as a percentage of net revenue was primarily driven by lower field selling costs, which was due to...

  • Page 74
    ... revenue was due primarily to investments in R&D partially offset by lower SG&A expenses due to cost savings associated with our ongoing restructuring efforts and improved operational expense management. 72 Source: HP INC, 10-K, December 16, 2015 Powered by Morningstar® Document Research℠The...

  • Page 75
    ... a lower cost of funds and improved margins in remarketing sales. The increase in operating expenses as a percentage of net revenue was due primarily to higher go-to-market investments. uinancing Volume For the fisgal years ended Ogtober 31 2015 2014 2013 Dollars in millions Total financing volume...

  • Page 76
    ... balances are eliminated in our Consolidated Financial Statements. The portfolio assets and ratios derived from the segment balance sheet for HPFS were as follows: Ts of Ogtober 31 2015 2014 Dollars in millions Financing receivables, gross Net equipment under operating leases Capitalized profit...

  • Page 77
    ... expect that our cash balances, anticipated cash flow generated from operations and access to capital markets will be sufficient to cover our expected near-term cash outlays. 75 Source: HP INC, 10-K, December 16, 2015 Powered by Morningstar® Document Research℠The information contained herein...

  • Page 78
    ...financial condition or results of operations. In connection with the Separation, we reviewed our capital structure during fiscal 2015 to ensure that each company, HP Inc. and Hewlett Packard Enterprise, would be well capitalized after the Separation. In October 2015, prior to the Separation, Hewlett...

  • Page 79
    ...of goods sold. For fiscal 2015, the increase in DOS was due to higher inventory balance to support future sales levels. For fiscal 2014, the increase in DOS was due to a higher inventory balance in Personal Systems due in part to strategic and advanced buys. Days of purchases outstanding in accounts...

  • Page 80
    ... of a number of factors, including cash flow expectations, cash requirements for operations, investment plans (including acquisitions), share repurchase activities, our cost of capital and targeted capital structure. Short-term debt decreased by $601 million and long-term debt increased by...

  • Page 81
    ... Contents HP INC. TND SUBSIDITRIES Management's Disgussion and Tnalysis of Finangial Condition and Results of Operations (Continued) Our debt-to-equity ratio is calculated as the carrying amount of debt divided by total stockholders' equity. Our debt-to-equity ratio increased by 0.16x in fiscal 2015...

  • Page 82
    ...delivery of goods or performance of services. Subsequent to the Separation, HP Inc. expects the total remaining future unconditional purchase obligations to be approximately $915 million. Retirement and Post-Retirement Benefit Plan Contributions. As of October 31, 2015, HP (including Hewlett Packard...

  • Page 83
    ... timing of these payments. For more information on our restructuring activities, see Note 3 to the Consolidated Financial Statements in Item 8, which is incorporated herein by reference. Separation Costs. As of October 31, 2015, HP (including Hewlett Packard Enterprise) expects future cash payments...

  • Page 84
    ... on our third-party revolving short-term financing arrangements, see Note 7 to the Consolidated Financial Statements in Item 8, which is incorporated herein by reference. 82 Source: HP INC, 10-K, December 16, 2015 Powered by Morningstar® Document Research℠The information contained herein may...

  • Page 85
    ...taken alone. We use a combination of forward contracts and at times, options designated as cash flow hedges to protect against the foreign currency exchange rate risks inherent in our forecasted net revenue and, to a lesser extent, cost of sales and intercompany loans denominated in currencies other...

  • Page 86
    ... fair values of our debt, investments and financing receivables, net of interest rate swaps, of $119 million at October 31, 2015 and $80 million at October 31, 2014. 84 Source: HP INC, 10-K, December 16, 2015 Powered by Morningstar® Document Research℠The information contained herein may not...

  • Page 87
    ... Data. Table of Contents Page Reports of Independent Registered Public Accounting Firm Management's Report on Internal Control Over Financial Reporting Consolidated Statements of Earnings Consolidated Statements of Comprehensive Income Consolidated Balance Sheets Consolidated Statements of Cash...

  • Page 88
    ... consolidated balance sheets of HP Inc. and subsidiaries as of October 31, 2015 and 2014, and the related consolidated statements of earnings, comprehensive income, stockholders' equity, and cash flows for each of the three years in the period ended October 31, 2015. These financial statements...

  • Page 89
    ... Company Accounting Oversight Board (United States), the accompanying consolidated balance sheets of HP Inc. and subsidiaries as of October 31, 2015 and 2014, and the related consolidated statements of earnings, comprehensive income, stockholders' equity and cash flows for each of the three years...

  • Page 90
    ... of management and directors of HP; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of HP's assets that could have a material effect on the financial statements. Because of its inherent limitations, internal...

  • Page 91
    ... Consolidated Statements of Earnings For the fisgal years ended Ogtober 31 2015 2014 2013 In millions, exgept per share amounts Net revenue: Products Services Financing income Total net revenue Costs and expenses: Cost of products Cost of services Financing interest Research and development Selling...

  • Page 92
    ... are an integral part of these Consolidated Financial Statements. 90 Source: HP INC, 10-K, December 16, 2015 Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user...

  • Page 93
    ... are an integral part of these Consolidated Financial Statements. 91 Source: HP INC, 10-K, December 16, 2015 Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user...

  • Page 94
    ... costs Payment of debt Settlement of cash flow hedges Issuance of common stock under employee stock plans Repurchase of common stock Excess tax benefit from stock-based compensation Cash dividends paid Net cash provided by (used in) financing activities Increase in cash and cash equivalents Cash...

  • Page 95
    Table of Contents HP INC. TND SUBSIDITRIES Consolidated Statements of Stogkholders' Equity Common Stogk Number of Shares Balance October 31, 2012 Net earnings Other comprehensive income, net of taxes Comprehensive income Issuance of common stock in connection with employee stock plans and other ...

  • Page 96
    ... close of business on October 21, 2015 (the "Record Date") received one share of Hewlett Packard Enterprise common stock for every one share of HP's common stock held as of the Record Date. Hewlett Packard Enterprise is now an independent public company trading on the New York Stock Exchange ("NYSE...

  • Page 97
    ... Consolidated Balance Sheets. Accounting Pronouncements In November 2015, the Financial Accounting Standards Board ("FASB") issued an accounting standards update for income taxes, which requires deferred tax assets and liabilities to be classified as noncurrent in a classified statement of financial...

  • Page 98
    ... with the adjusted balance sheet of each individual period presented, in order to reflect the period-specific effects of applying the new guidance. HP is currently evaluating the timing and the impact of these amendments on its Consolidated Financial Statements. In May 2014, the FASB amended...

  • Page 99
    ... 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. In most arrangements with multiple elements, HP allocates...

  • Page 100
    .... Services revenue HP recognizes revenue from fixed-price support or maintenance contracts, including extended warranty contracts and software post-contract customer support agreements, ratably over the contract period and recognizes the costs associated with these contracts as incurred. For time...

  • Page 101
    ... on services contracts as trade receivables. Deferred revenue represents amounts invoiced in advance for product support contracts, software customer support contracts, outsourcing startup services work, consulting and integration projects, product sales or leasing income. HP recognizes costs...

  • Page 102
    ... costs at the aggregate grant level for service-based awards and at the individual vesting tranche level for awards with performance and/or market conditions. HP estimates the forfeiture rate based on its historical experience. Retirement and Post-Retirement Plans HP has various defined benefit...

  • Page 103
    ... as a current liability in the Consolidated Balance Sheets. Concentrations of Risk Financial instruments that potentially subject HP to significant concentrations of credit risk consist principally of cash and cash equivalents, investments, receivables from trade customers and contract manufacturers...

  • Page 104
    ... to support a customer services contract generally do not exceed the term of the customer contract. On retirement or disposition, the asset cost and related accumulated depreciation are removed from the Consolidated Balance Sheets with any gain or loss recognized in the Consolidated Statements of...

  • Page 105
    ... of a reporting unit based on the present value of estimated future cash flows. HP bases cash flow projections on management's estimates of revenue growth rates and operating margins, taking into consideration industry and market conditions. HP bases the discount rate on the weighted-average cost of...

  • Page 106
    ... in the Consolidated Balance Sheets. Derivatives HP uses derivative instruments, primarily forwards, swaps, and at times, options, to hedge certain foreign currency and interest rate exposures. HP also may use other derivative instruments not 104 Source: HP INC, 10-K, December 16, 2015 Powered by...

  • Page 107
    ... consulting, outsourcing and support services across infrastructure, applications and business process domains; and software products and solutions, including application testing and delivery, big data analytics, enterprise security, information governance and IT Operations Management. • • HP...

  • Page 108
    ... solutions, enable customers to manage applications across public cloud, virtual private cloud, private cloud and traditional IT environments. Described below are HP's business units and capabilities within EG. 106 Source: HP INC, 10-K, December 16, 2015 Powered by Morningstar® Document Research...

  • Page 109
    ..., application testing and delivery management and IT Operations Management solutions for businesses and other enterprises of all sizes. These software offerings include licenses, support, professional services and software-as-a-service. HP uinancial Services provides flexible investment solutions...

  • Page 110
    ... related charges, separation costs, defined benefit plan settlement charges and impairment of data center assets. Segment Realignment Effective at the beginning of the first quarter of fiscal 2015, HP implemented an organizational change to align its segment financial reporting more closely with...

  • Page 111
    ... HP's previously reported consolidated net revenue, earnings from operations, net earnings or net EPS. Segment Operating Results Printing and Personal Systems Personal Systems Printing 2015 Net revenue Intersegment net revenue and other Total segment net revenue Earnings (loss) from operations 2014...

  • Page 112
    ...benefiting from the assets. Total assets by segment and the reconciliation of segment assets to HP consolidated assets were as follows: Ts of Ogtober 31 2015 2014 In millions Personal Systems Printing Printing and Personal Systems Group Enterprise Group (1) Enterprise Services Software HP Financial...

  • Page 113
    ... more of HP's total net revenue in any fiscal year presented. Geographic Information Net revenue by country is based upon the sales location that predominately represents the customer location. For each of the fiscal years of 2015, 2014 and 2013, other than the U.S., no country represented more than...

  • Page 114
    ... Hardware Consumer Hardware Printing Total Printing and Personal Systems Group Industry Standard Servers Technology Services Storage Networking Business Critical Systems Enterprise Group Infrastructure Technology Outsourcing Application and Business Services Enterprise Services Software HP Financial...

  • Page 115
    ... on September 14, 2015, HP's Board of Directors approved a cost saving and investment proposal which includes a restructuring plan (the "2015 Plan") which will be implemented through fiscal 2018. As part of the 2015 Plan, HP expects up to approximately 33,300 employees to exit the company by the end...

  • Page 116
    ... defined benefit plans are in the U.S. The HP Pension Plan ("Pension Plan") includes the former HP Retirement Plan and the former HP Company Cash Account Pension Plan ("Cash Account Pension Plan"). Under the HP Retirement Plan, benefits are based on pay and years of service, and under the Cash...

  • Page 117
    ... Post-Retirement Benefit Plans (Continued) calculates its defined benefit pension cost and obligations. The fair value of plan assets and projected benefit obligations for the U.S. defined benefit plans combined with the DPSP were as follows: For the fisgal years ended Ogtober 31 2015 2014 Projegted...

  • Page 118
    ... (credit) cost were as follows: 2015 2014 2013 U.S. Defined Benefit Plans For the fisgal years ended Ogtober 31 2015 2014 2013 2015 2014 2013 Non-U.S. Defined Post-Retirement Benefit Plans Benefit Plans Discount rate Expected increase in compensation levels Expected long-term return on plan assets...

  • Page 119
    ...funded status of the defined benefit and post-retirement benefit plans was as follows: 2015 2014 U.S. Defined Benefit Plans Ts of Ogtober 31 2015 2014 Non-U.S. Defined Benefit Plans In millions 2015 2014 Post-Retirement Benefit Plans Change in fair value of plan assets: Fair value-beginning of year...

  • Page 120
    ...average assumptions used to calculate the projected benefit obligations were as follows: 2015 For the fisgal years ended Ogtober 31 2014 2015 2014 2015 2014 Non-U.S. Defined Post-Retirement U.S. Defined Benefit Plans Benefit Plans Benefit Plans Discount rate Expected increase in compensation levels...

  • Page 121
    ...comprehensive loss (income) and recognized as components of HP Inc.'s net periodic benefit (credit) cost during the next fiscal year. U.S. Defined Benefit Plans Non-U.S. Defined Benefit Plans In millions Post-Retirement Benefit Plans Net actuarial loss (gain) Prior service benefit Total expected to...

  • Page 122
    ... is for plan assets held by two or more unrelated employee benefit plans which includes limited partnerships and venture capital partnerships. Includes publicly and privately traded Registered Investment Entities. Includes cash and cash equivalents such as short-term marketable securities. Includes...

  • Page 123
    ... Funds Insurance Group Annuity Contracts Common Collective Trusts and 103-12 Investment Entities(5) Registered Investment Companies(6) Cash and Cash Equivalents(7) Other(8) Total Ts of Ogtober 31, 2014 Non-U.S. Defined Benefit Plans Level 1 Level 2 Level 3 Total In millions Post-Retirement Benefit...

  • Page 124
    ... is for plan assets held by two or more unrelated employee benefit plans which includes limited partnerships and venture capital partnerships. Includes publicly and privately traded Registered Investment Entities. Includes cash and cash equivalents such as short-term marketable securities. Includes...

  • Page 125
    ...Non-U.S. Defined Benefit Plans 2015 Target Tllogation Plan Tssets 2015 2014 Post-Retirement Benefit Plans 2015 Target Tllogation Plan Tssets 2015 2014 Tsset Category Public equity securities Private/other equity securities Real estate and other Equity-related investments Debt securities Cash Total...

  • Page 126
    ... reviews the investment strategy and provides a recommended list of investment managers for each country plan, with final decisions on asset allocation and investment managers made by the board of trustees for the specific plan. Basis for Expected Long-Term Rate of Return on Plan Assets The expected...

  • Page 127
    ... $76 million in fiscal year 2015. Cash received from option exercises and purchases under the Hewlett-Packard Company 2011 Employee Stock Purchase Plan (the "2011 ESPP") was $0.4 billion in fiscal 2015, $0.3 billion in fiscal 2014 and $0.3 billion in fiscal 2013. The benefit realized for the tax...

  • Page 128
    ...contingent stock options that vest only on the satisfaction of both service and market conditions prior to the expiration of the awards. In connection with the Separation and in accordance with the Employee Matters Agreement, HP will make certain adjustments to the exercise price and number of share...

  • Page 129
    ... 31, 2015, total unrecognized pre-tax stock-based compensation expense related to non-vested restricted stock awards was $652 million, which is expected to be recognized over the remaining weighted-average vesting period of 1.5 years. Stock Options HP utilizes the Black-Scholes-Merton option pricing...

  • Page 130
    ... 2015, 2014 and 2013. The aggregate intrinsic value is the difference between HP's closing stock price on the last trading day of the fiscal year and the exercise price, multiplied by the number of in-the-money options. The total intrinsic value of options exercised in fiscal 2015, 2014 and 2013...

  • Page 131
    ...37 45 52 24 As of October 31, 2015, total unrecognized pre-tax stock-based compensation expense related to stock options was $46 million, which is expected to be recognized over a weighted-average vesting period of 1.9 years. Employee Stock Purchase Plan HP sponsors the 2011 ESPP, pursuant to which...

  • Page 132
    ... the U.S. federal statutory income tax rate and HP's effective tax rate were as follows: 210 212 57 (142) (201) 167 178 $ 1,544 $ 1,397 For the fisgal years ended Ogtober 31 2015 2014 2013 U.S. federal statutory income tax rate State income taxes, net of federal tax benefit Lower rates in other...

  • Page 133
    ... year foreign income tax accruals and a tax benefit of $50 million arising from the retroactive research and development credit resulting from the American Taxpayer Relief Act of 2012, which was signed into law in January 2013. As a result of certain employment actions and capital investments HP...

  • Page 134
    ... audits by federal, state and foreign tax authorities. The IRS is conducting an audit of HP's 2009, 2010, 2011, 2012, 2013 and 2014 income tax returns. HP has received from the IRS Notices of Deficiency for its fiscal 1999, 2000, 2003, 2004 and 2005 tax years, and Revenue Agent Reports ("RAR") for...

  • Page 135
    ... advantageous for business operations, tax or cash management reasons. 133 Source: HP INC, 10-K, December 16, 2015 Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The...

  • Page 136
    ... in inventory Intercompany transactions-excluding inventory Fixed assets Warranty Employee and retiree benefits Accounts receivable allowance Intangible assets Restructuring Deferred revenue Other Gross deferred tax assets and liabilities Valuation allowances Net deferred tax assets and liabilities...

  • Page 137
    ... 15 years, respectively. Intercompany royalty revenue and the amortization expense related to the licensing rights are eliminated in consolidation. Separation costs are expenses associated with HP's plan to separate into two independent publicly-traded companies. HP recorded a deferred tax asset on...

  • Page 138
    ...joint and several liability for past income tax liabilities and accordingly, HP could be legally liable under applicable tax law for such liabilities and required to make additional tax payments. In addition, if the distribution of Hewlett Packard Enterprise's common shares to the HP stockholders is...

  • Page 139
    Table of Contents HP INC. TND SUBSIDITRIES Notes to Consolidated Finangial Statements (Continued) Note 7: Balange Sheet Details Balance sheet details were as follows: Accounts Receivable, Net Ts of Ogtober 31 2015 2014 In millions Accounts receivable Allowance for doubtful accounts $ 13,552 $ 14,...

  • Page 140
    ... for the trade receivables sold and the cash received under the short-term financing arrangements for the fiscal year ended October 31, 2013 in order to present comparable information with that period. Inventory Ts of Ogtober 31 2015 2014 In millions Finished goods Purchased parts and fabricated...

  • Page 141
    ... the assets sold and retired in fiscal 2015 was $2.5 billion. Long-Term uinancing Receivables and Other Assets Ts of Ogtober 31 2015 2014 In millions Financing receivables, net Deferred tax assets Deferred costs Other $ 3,676 $ 3,613 871 740 742 755 3,761 3,346 $ 9,050 $ 8,454 139 Source: HP INC...

  • Page 142
    ... and Operating Leases Financing receivables represent sales-type and direct-financing leases of HP and third-party products. These receivables typically have terms ranging from two to five years and are usually 140 Source: HP INC, 10-K, December 16, 2015 Powered by Morningstar® Document Research...

  • Page 143
    ... $ 3,613 HP includes the current portion in Financing receivables and amounts due after one year, net in Long-term financing receivables and other assets in the accompanying Consolidated Balance Sheets. As of October 31, 2015, scheduled maturities of HP's minimum lease payments receivable were as...

  • Page 144
    ... 31 2014 2013 In millions Balance at beginning of year Provision for doubtful accounts Deductions, net of recoveries Balance at end of year 142 $ 111 $ 131 $ 149 25 30 38 (41) (50) (56) $ 95 $ 111 $ 131 Source: HP INC, 10-K, December 16, 2015 Powered by Morningstar® Document Research℠The...

  • Page 145
    ... may not impact a customer's risk rating. After all of a customer's delinquent principal and interest balances are settled, HP may return the related financing receivable to accrual status. 143 Source: HP INC, 10-K, December 16, 2015 Powered by Morningstar® Document Research℠The information...

  • Page 146
    ... and billed and unbilled sales-type and direct-financing lease receivables. Operating Leases Operating lease assets included in machinery and equipment in the Consolidated Balance Sheets were as follows: Ts of Ogtober 31 2015 2014 In millions Equipment leased to customers Accumulated depreciation...

  • Page 147
    .... The following table presents the aggregate purchase price allocation, including those items that are still preliminary allocations, for HP's acquisitions in fiscal 2015: In millions Goodwill Amortizable intangible assets In-process research and development Net assets assumed Total fair value of...

  • Page 148
    ... Helion Cloud businesses. Once the transaction closes, the new H3C will be the exclusive provider for Hewlett Packard Enterprise's server, storage and networking portfolio, as well as Hewlett Packard Enterprise's exclusive hardware support services provider in China, customized for that market. The...

  • Page 149
    ... allocated to HP's reportable segments and changes in the carrying amount of goodwill were as follows: Personal Systems Enterprise Group Enterprise Serviges(3) Software In millions HP Finangial Serviges Corporate Investments Printing Total Balance at October 31, 2013 (1)(2) Goodwill acquired...

  • Page 150
    ...-Tverage Useful Lives In years Customer contracts, customer lists and distribution agreements Developed and core technology and patents Trade name and trade marks 148 8 7 7 Source: HP INC, 10-K, December 16, 2015 Powered by Morningstar® Document Research℠The information contained herein...

  • Page 151
    ...Fisgal year In millions 2016 2017 2018 2019 2020 Thereafter Total Note 11: Fair Value $ $ 773 353 253 213 181 82 1,855 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...

  • Page 152
    ... 2 Level 3 In millions Total Tssets Cash Equivalents and Investments: Time deposits Money market funds Mutual funds Marketable equity securities Foreign bonds Other debt securities Derivative Instruments: Interest rate contracts Foreign exchange contracts Other derivatives Total assets Liabilities...

  • Page 153
    ... of data center assets on the Consolidated Statements of Earnings. 151 Source: HP INC, 10-K, December 16, 2015 Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The...

  • Page 154
    ... Ogtober 31, 2015 Gross Gross Unrealized Unrealized Loss Gain Ts of Ogtober 31, 2014 Gross Gross Unrealized Unrealized Loss Gain Cost Fair Value Cost In millions Fair Value Cash Equivalents: Time deposits Money market funds Mutual funds Total cash equivalents Tvailable-for-Sale Investments: Debt...

  • Page 155
    ...in privately held companies include cost basis and equity method investments and are included in Long-term financing receivables and other assets in the Consolidated Balance Sheets. These amounted to $58 million and $97 million at October 31, 2015 and 2014, respectively. Derivative Instruments HP is...

  • Page 156
    ... period of change. Cash ulow 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 sales, operating expenses, and intercompany...

  • Page 157
    ... primarily of forward contracts used to hedge foreign currency-denominated balance sheet exposures. HP also uses total return swaps and, to a lesser extent, interest rate swaps, based on equity or fixed income indices, to hedge its executive deferred compensation plan liability. For derivative...

  • Page 158
    ...derivative instruments on a gross basis in the Consolidated 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 October 31, 2015 and 2014, information related to the potential...

  • Page 159
    ... Instruments on the Consolidated Statements of Earnings The pre-tax effect of derivative instruments and related hedged items in a fair value hedging relationship for fiscal years ended October 31, 2015, 2014 and 2013 was as follows: Derivative Instrument Interest rate contracts (Loss) Gain...

  • Page 160
    ... not designated as hedging instruments on the Consolidated Statements of Earnings for fiscal 2015, 2014 and 2013 was as follows: Gain (Loss) Regognized in Ingome on Derivatives Logation 2015 2014 2013 In millions Foreign currency contracts Other derivatives Interest rate contracts Total Note 13...

  • Page 161
    ... 2022 2012 Shelf Registration Statement: $750 issued at par in January 2014 at three-month USD LIBOR plus 0.94%, due January 2019 $1,250 issued at discount to par at a price of 99.954% in January 2014 at 2.75%, due January 2019 Hewlett Packard Enterprise Senior Notes $2,250 issued at discount to...

  • Page 162
    ... in calendar years 2015-2024(2) Fair value adjustment related to hedged debt Less: current portion Total long-term debt 313 519 48 (2,321) 21,780 $ 313 424 120 (2,655) 16,039 $ (1) HP may redeem some or all of the fixed-rate U.S. Dollar Global Notes and EDS Senior Notes at any time in accordance...

  • Page 163
    ..., net" on the Consolidated Statements of Earnings. On November 4, 2015, HP incrementally redeemed and repaid a total of $2.1 billion fixed-rate U.S. Dollar Global Notes which resulted in a loss of $66 million, net of realized gains from fair value hedges. Commercial Paper HP's Board of Directors has...

  • Page 164
    ...overdraft facilities. The total outstanding principal balance of such commercial paper issued by shall not exceed $4.0 billion or the equivalent in foreign currencies. Hewlett Packard Enterprise Commercial Paper and Credit Agreements Hewlett Packard Enterprise's Board of Directors has authorized the...

  • Page 165
    ...to receive dividends when and as declared by HP's Board of Directors. Dividends declared were $0.67 per common share in fiscal 2015, $0.61 per common share in fiscal 2014 and $0.55 per common share in fiscal 2013. Share Repurchase Program HP's share repurchase program authorizes both open market and...

  • Page 166
    ... of $2.0 billion for future share repurchases under the $10.0 billion repurchase authorization approved by HP's Board of Directors on July 21, 2011. Taxes related to Other Comprehensive (Loss) Income For the fisgal years ended Ogtober 31 2015 2014 2013 In millions Tax benefit (provision) on change...

  • Page 167
    ...) (125) $ (421) $ (2,103) $ 1,781 Reclassification of pre-tax (gains) losses on cash flow hedges into the Consolidated Statements of Earnings was as follows: 2015 2014 In millions 2013 Net revenue Cost of products Other operating expenses Interest and other, net $ (1,271) $ 21 $ (48) 150 71 165...

  • Page 168
    ... net of taxes as of October 31, 2015 and changes during fiscal year 2015 were as follows: Net unrealized gain on available-for-sale segurities Net unrealized gain (loss) on gash flow hedges Unrealized gomponents of defined benefit plans In millions Cumulative translation adjustment Tggumulated other...

  • Page 169
    ... these contingencies. Under the separation and distribution agreement, HP and Hewlett Packard Enterprise agreed to cooperate with each other in managing litigation and environmental matters related to both companies' businesses. The separation and distribution agreement also included provisions that...

  • Page 170
    ... scheduled a joint hearing on that matter with other cases relating to reprographic levies on printers that was held on October 31, 2013. The 168 Source: HP INC, 10-K, December 16, 2015 Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted...

  • Page 171
    ... when operated in the normal print mode set by default in the device. On November 16, 2012, the court issued a decision holding that Belgium law is not in conformity with EU law in a number of respects and ordered that, by November 2013, Reprobel substantiate that the amounts claimed by Reprobel...

  • Page 172
    ... from overtime under state law. On July 30, 2015, the court dismissed the Technology Consultant and certain Field Technical Support Consultant opt-ins from the conditionally certified FLSA collective action. Pursuant to the separation and distribution agreement, Hewlett Packard Enterprise has been...

  • Page 173
    ... December 2, 2014, plaintiffs Petroleos Mexicanos and Pemex Exploracion filed a complaint against HP and HP Mexico in the United States District Court for the Northern District of California 171 Source: HP INC, 10-K, December 16, 2015 Powered by Morningstar® Document Research℠The information...

  • Page 174
    ...last several years. Pursuant to the separation and distribution agreement, Hewlett Packard Enterprise has been assigned responsibility for this litigation. Cisco Systems. On August 21, 2015, Cisco Systems, Inc. ("Cisco Systems") and Cisco Systems Capital Corporation ("Cisco Capital") filed an action...

  • Page 175
    ..., waste of corporate assets, unjust enrichment, and breach of the duty of candor. The claims arise out of the circumstances at HP relating to its 2013 and 2014 proxy statements, the departure of Mr. Hurd as Chairman of HP's Board of Directors and HP's Chief Executive Officer, alleged violations of...

  • Page 176
    ... assets within its Software segment of approximately $8.8 billion in the fourth quarter of its 2012 fiscal year and HP's statements that, based on HP's findings from an ongoing investigation, the majority of this impairment charge related to accounting improprieties, misrepresentations to the market...

  • Page 177
    ... to compensate persons who purchased HP's shares during the period from August 19, 2011 through November 20, 2012. No individual is contributing to the settlement. HP and its current and former officers, directors, and advisors will be released from any Autonomy-related securities claims as part of...

  • Page 178
    ... HP subsidiaries (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...

  • Page 179
    ... of the Employee Retirement Income Security Act of 1974, as amended, by concealing negative information regarding the financial performance of Autonomy and HP's enterprise services business and by failing to restrict participants from investing in HP stock. On August 16, 2013, HP filed a motion to...

  • Page 180
    ... payments made related to these indemnifications have been immaterial. 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...

  • Page 181
    ... Finangial Statements (Continued) Note 17: Guarantees, Indemnifigations and Warranties (Continued) HP's aggregate product warranty liabilities and changes were as follows: Ts of Ogtober 31 2015 2014 In millions Balance at beginning of year Accruals for warranties issued Adjustments related to...

  • Page 182
    ... of Contents HP INC. TND SUBSIDITRIES Notes to Consolidated Finangial Statements (Continued) Note 18: Commitments (Continued) timing of the transaction. These unconditional purchase obligations are related principally to inventory, service support and other items. Unconditional purchase obligations...

  • Page 183
    ... 31 Net revenue Cost of sales(1) Research and development Selling, general and administrative Amortization of intangible assets Restructuring charges Acquisition and other related charges Separation costs Defined benefit plan settlement charges Impairment of data center assets Total costs and...

  • Page 184
    ... principal financial officer, we completed our preparations and implementation for a series of changes to our information technology environment, which includes our financial reporting systems, to support the separate financial reporting requirements for HP Inc. and Hewlett Packard Enterprise. There...

  • Page 185
    ... and ethics for directors, officers and employees, also known as the "Standards of Business Conduct," and on HP's Corporate Governance Guidelines is set forth under "Corporate Governance Principles and Board Matters." Information regarding Section 16(a) beneficial ownership reporting compliance is...

  • Page 186
    ... regarding principal accounting fees and services is set forth under "Principal Accounting Fees and Services" in the Proxy Statement, which information is incorporated herein by reference. 184 Source: HP INC, 10-K, December 16, 2015 Powered by Morningstar® Document Research℠The information...

  • Page 187
    ... Data." Reports of Independent Registered Public Accounting Firm Management's Report on Internal Control Over Financial Reporting Consolidated Statements of Earnings Consolidated Statements of Comprehensive Income Consolidated Balance Sheets Consolidated Statements of Cash Flows Consolidated...

  • Page 188
    ... Head of Finance Services (Principal Accounting Officer) Director December 16, 2015 December 16, 2015 Director December 16, 2015 Director December 16, 2015 Director December 16, 2015 186 Source: HP INC, 10-K, December 16, 2015 Powered by Morningstar® Document Research℠The information...

  • Page 189
    ...Director December 16, 2015 Director December 16, 2015 Director December 16, 2015 Source: HP INC, 10-K, December 16, 2015 Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely...

  • Page 190
    ... 2(g) Master Commercial Agreement, dated as of November 1, 2015, by and between Hewlett-Packard Company and Hewlett Packard Enterprise Company.** 2(h) Information Technology Service Agreement, dated as of November 1, 2015, by and between Hewlett-Packard Company and HP Enterprise Services, LLC.** 188...

  • Page 191
    ... related Officers' Certificate. 189 8-K 4.2 and 4.3 4.5 and 4.6 4.4, 4.5 and 4.6 4.3 and 4.4 4.2 and 4.3 December 2, 2010 8-K June 1, 2011 8-K September 19, 2011 8-K December 12, 2011 8-K March 12, 2012 Source: HP INC, 10-K, December 16, 2015 Powered by Morningstar® Document Research...

  • Page 192
    ...due January 14, 2019 and related Officers' Certificate. 4(i) Specimen certificate for the Registrant's common stock. 4(j) Senior Indenture, dated as of October 9, 2015, between Hewlett Packard Enterprise Company and The Bank of New York Mellon Trust Company, N.A., as Trustee. 4(k) First Supplemental...

  • Page 193
    ... Number Ingorporated by Referenge Exhibit(s) Exhibit Desgription Form File No. Filing Date 4(o) Fifth Supplemental Indenture, dated as of October 9, 2015, between Hewlett Packard Enterprise Company and The Bank of New York Mellon Trust Company, N.A., as Trustee, relating to Hewlett Packard...

  • Page 194
    ... Contents Exhibit Number Ingorporated by Referenge Exhibit(s) Exhibit Desgription Form File No. Filing Date 4(t) Guarantee Agreement, dated as of October 9, 2015, between Hewlett-Packard Company, Hewlett Packard Enterprise Company and The Bank of New York Mellon Trust Company, N.A., as Trustee...

  • Page 195
    ... and Award Agreement for awards of non-qualified stock options.* 10(s) First Amendment to the Hewlett-Packard Company Excess Benefit Retirement Plan.* 10(t) Fourth Amendment to the Registrant's 2005 Executive Deferred Compensation Plan, as amended and restated effective October 1, 2006.* 10...

  • Page 196
    ...Registrant's Severance Plan for Executive Officers, as amended and restated September 18, 2013.* 10(e)(e) Aircraft Time Sharing Agreement, dated March 16, 2012, between the Registrant and Margaret C. Whitman.* 10(f)(f) Second Amended and Restated Hewlett-Packard Company 2004 Stock Incentive Plan, as...

  • Page 197
    ... 10(c)(c)(c) 10(d)(d)(d) March 11, 2015 March 11, 2015 Source: HP INC, 10-K, December 16, 2015 Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all...

  • Page 198
    ... non-qualified stock options.* 10(z)(z) Registrant's Severance Plan for Executive Officers, as amended and restated November 19, 2014.* 10(a)(a)(a) Voting Agreement, dated as of March 2, 2015, among the Registrant and the listed stockholders of Aruba Networks, Inc. 10(b)(b)(b) Term Loan Agreement...

  • Page 199
    ... 32 Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.†197 Source: HP INC, 10-K, December 16, 2015 Powered by Morningstar® Document Research℠The information contained herein...

  • Page 200
    ... registrant and its subsidiaries on a consolidated basis and (2) any omitted schedules to any material plan of acquisition, disposition or reorganization set forth above. 198 Source: HP INC, 10-K, December 16, 2015 Powered by Morningstar® Document Research℠The information contained herein may...

  • Page 201
    Source: HP INC, 10-K, December 16, 2015 Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of ...

  • Page 202
    ... in full upon the retirement of the Employee, in accorEance with the applicable retirement policy, the Employee's total anE permanent Eisability, or upon his Eeath. 1 $ Employee ID: Source: HP INC, 10-K, December 16, 2015 Powered by Morningstar® Document Research℠The information contained...

  • Page 203
    ... employment for Cause all unvesteE Shares shall be forfeiteE by the Employee anE he or she may exercise the SAR, to the extent that it is then vesteE, before the New York Stock Exchange closes on the Eate of the Employee's termination, except to the extent a severance plan applicable to the Employee...

  • Page 204
    ...have Eifferent Eata privacy laws anE protections than the Employee's country. HP is committeE to protecting the privacy of your personal Eata in such cases. By contract with both the HP affiliate anE with HP venEors, the people anE companies that have access to your personal Eata are bounE to hanEle...

  • Page 205
    ... the UniteE States, from the Long-term Incentives website anE stockholEer information, incluEing copies of any annual report, proxy anE Form 10K, from the investor relations section of the HP website at www.hp.com. The Employee acknowleEges that copies of the Plan, Plan prospectus, Plan information...

  • Page 206
    ... of the Plan, be the mean of the highest anE lowest quoteE selling prices for the Common Shares as reporteE for New York Stock Exchange on the Eate on which Eetermination of such fair market value is to be maEe, or if no Common Shares are traEeE on that Eate, then the reporteE closing price on the...

  • Page 207
    ... splits or other change in the corporate structure or capitalization affecting the Company's present Common Shares, appropriate aEjustment shall be maEe by the BoarE of Directors of the Company in the number of stock appreciation rights granteE hereunEer anE their valuation. In the event there is...

  • Page 208
    ... unEer the Plan at any time after the aEoption of the Plan anE prior to the termination of the Plan. 11. GENDER. Wheresoever useE in this Plan, the masculine genEer shall be EeemeE to incluEe the feminine. 7 Source: HP INC, 10-K, December 16, 2015 Powered by Morningstar® Document Research℠The...

  • Page 209
    ...first Eate that the closing Share price on the New York Stock Exchange has met or exceeEeE 110% of the Grant Price set forth above for at least twenty (20) consecutive traEing Eays within two years after the Grant Date ("First Tranche Share Price Component"); anE 1 $ Employee ID: Source: HP INC, 10...

  • Page 210
    ...the first Eate that the closing Share price on the New York Stock Exchange has met or exceeEeE 130% of the Grant Price set forth above for at least twenty (20) consecutive traEing Eays within four years after the Grant Date, subject to the Employee's continueE employment on such Eate ("ThirE Tranche...

  • Page 211
    ...or vesting of Stock Options, exercise or subsequent sale of Shares acquireE pursuant to such Stock Options, or at any other time, the Employee shall make a cash payment or make aEequate arrangements satisfactory to the Company anE/or the Employer to withholE such taxes from Employee's wages or other...

  • Page 212
    ...'s country. HP is committeE to protecting the privacy of the Employee's Data in such cases. By contract with both the HP affiliate anE with HP venEors, the people anE companies that have access to the Employee's Data are bounE to hanEle such Data in a manner consistent with the HP Privacy Policy anE...

  • Page 213
    ... UniteE States, from the Long-term Incentives website referenceE above anE stockholEer information, incluEing copies of any annual report, proxy anE Form 10K, from the investor relations section of the HP website at www.hp.com. The Employee acknowleEges that copies of the Plan, Plan prospectus, Plan...

  • Page 214
    ... back unEer the Company policy as in effect from time to time. HEWLETT-PACKARD COMPANY Meg Whitman CEO anE PresiEent Tracy Keogh Executive Vice PresiEent, Human Resources RETAIN THIS GRANT AGREEMENT FOR YOUR RECORDS Important Note: Your Stock Option is subject to the terms anE conEitions of this...

  • Page 215
    ...Committee of the Board of Directors of the Company or its delegates ("Committee") has determined that the Employee shall be granted a non-qualified stock option to purchase the number of shares stated above of its $0.01 par value voting Common Stock ("Shares") upon the terms and conditions set forth...

  • Page 216
    ... by the means previously described. The Company may refuse to deliver the benefit described herein if the Employee fails to comply with the Employee's obligations in connection with the Tax-Related Items. 2 Source: HP INC, 10-K, December 16, 2015 Powered by Morningstar® Document Research℠The...

  • Page 217
    ... different data privacy laws and protections than the Employee's country. HP is committed to protecting the privacy of the Employee's personal data in such cases. By contract with both the HP affiliate and with HP vendors, the people and companies that have access to the Employee's personal data are...

  • Page 218
    ...foregoing. (h) All rights granted and/or Shares issued under this Trant Agreement are subject to claw back under the Company policy as in effect from time to time. HEWLETT-PACKARD COMPANY Meg Whitman CEO and President Tracy Keogh Executive Vice President, Human Resources RETAIN THIS GRANT AGREEMENT...

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    QuickLinks -- Click here to rapidly navigate through this document Exhibit 12 HP INC. AND SUBSIDIARIES Statements of Computation of Ratio of Earnings to Fixed Charges(1) 2015 For the fiscal years ended October 31 2014 2013 2012 In millions, except ratios 2011 Earnings (loss): Earnings (loss) before...

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    ... SUBSIDIARIES Statements of Computation of Ratio of Earnings to Fixed Charges(1) Source: HP INC, 10-K, December 16, 2015 Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely...

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    ... -Tower Software Enghneerhng Pty Ltd AUSTRIA -HP Austrha GmbH BAHRAIN -Apthtude Management Consulthng W.L.L. -Hewlett-Packard Gulf SAS, Bahrahn Branch BELGIUM -Electronhc Data Systems-Belghum BVBA -Hewlett-Packard Industrhal Prhnthng Soluthons Europe BVBA -HP Belghum BVBA BERMUDA -HP Bermuda Holdhng...

  • Page 222
    ... Branch -Palm Advantage Mobhle Computhng Technology (Shanghah) Co. Ltd. COLOMBIA -HP Colombha SAS -Palm Colombha Lhmhtada COSTA RICA -HP Inc Costa Rhca Lhmhtada -HP PPS Costa Rhca Lhmhtada Source: HP INC, 10-K, December 16, 2015 Powered by Morningstar® Document Research℠The information...

  • Page 223
    ... -Hewlett-Packard (Manufacturhng) Ltd. -Hewlett-Packard Ireland (Holdhngs) Ltd. Source: HP INC, 10-K, December 16, 2015 Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely...

  • Page 224
    ... de Responsabhlhdad Lhmhtada de Caphtal Varhable Source: HP INC, 10-K, December 16, 2015 Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for...

  • Page 225
    ... Products B.V. -Hewlett-Packard Products C.V. -Hewlett-Packard Sunnyvale B.V. Source: HP INC, 10-K, December 16, 2015 Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely...

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    ... Lhmhted PANAMA -Hewlett Packard Dhstrhbuthon Center Panama S. de R.L -HP Panama S. de R.L. PERU -HP Inc. Perú SRL PHILIPPINES -HP PPS Phhlhpphnes Inc. POLAND -HP Inc Polska sp. z o.o. Source: HP INC, 10-K, December 16, 2015 Powered by Morningstar® Document Research℠The information contained...

  • Page 227
    ... Afrhca Proprhetary Lhmhted SPAIN -Hewlett-Packard Española S.L. -HP Soluthons Creathon and Development Servhces S.L.U. STATE OL LIBYA -Hewlett-Packard MENA LZ-LLC Lhbya Branch Source: HP INC, 10-K, December 16, 2015 Powered by Morningstar® Document Research℠The information contained herein...

  • Page 228
    ... Europe Lhmhted UNITED STATES -Compaq Informathon Technologhes, LLC -Computer Insurance Company -Gram, Inc. -Handsprhng Corporathon -Hewlett-Packard Company Archhves LLC -Hewlett-Packard Development Company, L.P. Source: HP INC, 10-K, December 16, 2015 Powered by Morningstar® Document Research...

  • Page 229
    .... -Palm South Amerhca, LLC -Palm Trademark Holdhng Company, LLC -Palm, Inc. -Shorelhne Investment Management Company -Tall Tree Insurance Company VIET NAM -Hewlett-Packard Vhetnam Ltd. Source: HP INC, 10-K, December 16, 2015 Powered by Morningstar® Document Research℠The information contained...

  • Page 230
    QuickLinks Exhhbht 21 Subshdharhes of HP Inc. Source: HP INC, 10-K, December 16, 2015 Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for ...

  • Page 231
    ... Executive Deferred Compensation Plan, (8) Registration Statement (Form S-8 No. 002-92331) pertaining to the Hewlett-Packard Company 401(k) Plan, (9) Registration Statement (Form S-8 No. 033-31496) pertaining to the Employee Stock Purchase Plan and Service Anniversary Stock Plan, (10) Registration...

  • Page 232
    ... Hewlett-Packard Company 2011 Employee Stock Purchase Plan, (28) Registration Statement (Form S-8 No. 333-174389) pertaining to the Stonebraker Systems, Inc. 2005 Stock Plan, (29) Registration Statement (Form S-8 No. 333-177263) pertaining to the Autonomy Corporation plc 2008 U.S. Share Option Plan...

  • Page 233
    ... Consent of Independent Registered Public Accounting Firm Source: HP INC, 10-K, December 16, 2015 Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all...

  • Page 234
    ... the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act...

  • Page 235
    QuickLinks Exhibit 31.1 CERTIFICATION Source: HP INC, 10-K, December 16, 2015 Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any ...

  • Page 236
    ... the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act...

  • Page 237
    QuickLinks Exhibit 31.2 CERTIFICATION Source: HP INC, 10-K, December 16, 2015 Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any ...

  • Page 238
    ...Securities Exchange Act of 1934 and that information contained in such Annual Report on Form 10-K fairly presents, in all material respects, the financial condition and results of operations of HP Inc. December 16, 2015 By: /s/ CATHERINE A. LESJAK Catherine A. Lesjak Chief Fieaecial Officer A signed...

  • Page 239
    ... 32 CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER PURSUANT TO 18 U.S.C. 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 Source: HP INC, 10-K, December 16, 2015 Powered by Morningstar® Document Research℠The information contained herein may...

  • Page 240
    Source: HP INC, 10-K, December 16, 2015 Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of ...