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, 20212022 in HP’s Annual Report on Form 10-K, filed on December 9, 2021.6, 2022. The Consolidated Condensed Balance Sheet for October 31, 20212022 was derived from audited financial statements.

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.

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 JulyJanuary 31, 2022,2023, the extent to which the COVID-19 pandemic and 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 pandemic,ongoing macroeconomic factors, our estimates may materially change in future periods.

In October 2021,September 2022, the Financial Accounting Standards Board (“FASB”)FASB issued guidance onthat enhances the recognition and measurementtransparency about the use of contract assets and contract liabilities acquired in a business combination. This guidance requires that an acquirer recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with ASC 606, Revenue from Contracts with Customers, as if the acquirer had originated the contracts.supplier finance programs. Under the new guidance, it is generally expectedcompanies that an acquireruse a supplier finance program in connection with the purchase of goods or services will recognizebe 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 measure contract assets and liabilities in a manner consistent with how they were recognized by the acquiree in its preacquisition financial statements.potential magnitude. HP is required to adopt the guidance in the first quarter of fiscal year 2024, with earlyexcept for the amendment on roll forward information which is effective one year later. Early adoption is permitted. HP has early adoptedis currently evaluating the guidance in fiscal year 2022, and the implementationimpact of this guidance did not have a material impact on the Consolidated Condensed Financial Statements.

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

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

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-relatedacquisition and divestiture charges and amortization of intangible assetsassets.

Effective first quarter of fiscal 2023, HP realigned the Personal Systems business units reporting structure into Commercial PS and Russia exit charges.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.

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

On September 30, 2019,November 18, 2022, HP’s Board of Directors approved the Fiscal 20202023 Plan intended to optimizeenable digital transformation, portfolio optimization and simplify its operating model and cost structure thatoperational efficiency which HP expects will be implemented through fiscal 2022.2025. HP expects to reduce global headcount by approximately 7,0004,000 to 9,000 employees through a combination of employee exits and voluntary EER.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 include non-recurring costs, including those as a result of information technology rationalization efforts, and are distinct from ongoing operational costs. These costs primarily relate to third-party professional services and other non-recurring costs. For the three and nine months ended JulyJanuary 31, 2023 and 2022, HP incurred $7$10 million and $12 million of other charges, respectively. For the three and nine months ended July 31, 2021, HP incurred $8 million and $17$1 million of other charges, respectively.

HP’s policy is to fund its pension plans so that it makes at least the minimum contribution amount required by local government, funding and taxing authorities.

HP’s pension and other post-retirement benefit costs and obligations depend on various assumptions. Differences between expected and actual returns on investments and changes in discount rates and other actuarial assumptions are reflected as unrecognized gains or losses, and such gains or losses are amortized to earnings in future periods. A deterioration in the funded status of a plan could result in a need for additional contributions or an increase in net pension and post-retirement benefit costs in future periods. Actuarial gains or losses are determined at the measurement date and amortized over the remaining service life for active plans or the life expectancy of plan participants for frozen plans.

HP’s effective tax rate was 7.0%16.6% and 16.5%18.2% for the three months ended JulyJanuary 31, 20222023 and 2021, respectively, and 15.0% and 14.0% for the nine months ended July 31, 2022, and 2021, respectively. The difference between the U.S. federal statutory tax rate of 21% and HP’s effective tax rate for the three and nine months ended JulyJanuary 31, 20222023 and 20212022, was primarily due to tax effects of internal reorganization and favorable tax rates associated with certain earnings from HP’s operations in lower-tax jurisdictions throughout the world.

As of JulyJanuary 31, 2022,2023, the amount of gross unrecognized tax benefits was $961 million,$1.0 billion, of which up to $777$807 million would affect HP’s effective tax rate if realized. Total gross unrecognized tax benefits increaseddecreased by $141$14 million for the ninethree months ended JulyJanuary 31, 2022.2023. HP recognizes interest income from favorable settlements and interest expense and penalties accrued on unrecognized tax benefits in the provision for taxes in the Consolidated Condensed Statements of Earnings. As of JulyJanuary 31, 20222023 and 2021,2022, HP had accrued $76$73 million and $70$75 million, respectively, for interest and penalties.

HP engages in continuous discussions and negotiations with taxing authorities regarding tax matters in various jurisdictions. HP expects complete resolution of certain tax years with various tax authorities within the next 12 months. HP believes it is reasonably possible that its existing gross unrecognized tax benefits may be reduced by $79$51 million within the next 12 months, affecting HP’s effective tax rate if realized.