2018 Q4 Form 10-K Financial Statement

#000004721718000052 Filed on December 13, 2018

View on sec.gov

Income Statement

Concept 2018 Q4 2017 Q4 2017
Revenue $15.37B $13.93B $52.06B
YoY Change 10.33% 11.31% 7.91%
Cost Of Revenue $12.67B $11.41B $42.48B
YoY Change 11.06% 11.6% 8.25%
Gross Profit $2.697B $2.520B $9.578B
YoY Change 7.02% 10.0% 6.45%
Gross Profit Margin 17.55% 18.09% 18.4%
Selling, General & Admin $1.263B $1.332B $4.532B
YoY Change -5.18% 23.11% 18.24%
% of Gross Profit 46.83% 52.86% 47.32%
Research & Development $354.0M $291.0M $1.190B
YoY Change 21.65% -8.49% -1.57%
% of Gross Profit 13.13% 11.55% 12.42%
Depreciation & Amortization $140.0M $91.00M $354.0M
YoY Change 53.85% 9.64% 6.63%
% of Gross Profit 5.19% 3.61% 3.7%
Operating Expenses $1.637B $1.623B $5.722B
YoY Change 0.86% 15.93% 13.49%
Operating Profit $1.060B $897.0M $3.368B
YoY Change 18.17% 0.67% -5.1%
Interest Expense -$42.00M -$1.000M -$338.0M
YoY Change 4100.0% -95.24% 7.99%
% of Operating Profit -3.96% -0.11% -10.04%
Other Income/Expense, Net $55.00M $114.0M -$92.00M
YoY Change -51.75% -69.02% -143.4%
Pretax Income $1.007B $848.0M $3.276B
YoY Change 18.75% -16.04% -12.9%
Income Tax -$544.0M $188.0M $750.0M
% Of Pretax Income -54.02% 22.17% 22.89%
Net Earnings $1.451B $660.0M $2.526B
YoY Change 119.85% 34.15% 1.2%
Net Earnings / Revenue 9.44% 4.74% 4.85%
Basic Earnings Per Share $1.50
Diluted Earnings Per Share $906.3K $389.8K $1.48
COMMON SHARES
Basic Shares Outstanding 1.553B shares 1.688B shares
Diluted Shares Outstanding 1.702B shares

Balance Sheet

Concept 2018 Q4 2017 Q4 2017
SHORT-TERM ASSETS
Cash & Short-Term Investments $5.877B $8.146B $8.146B
YoY Change -27.85% 29.55% 29.55%
Cash & Equivalents $5.166B $6.997B $6.997B
Short-Term Investments $711.0M $1.149B $1.149B
Other Short-Term Assets $5.046B $5.121B $1.224B
YoY Change -1.46% 42.96% 12.6%
Inventory $6.062B $5.786B $5.786B
Prepaid Expenses
Receivables $5.113B $4.414B $4.414B
Other Receivables $2.890B $2.748B $2.748B
Total Short-Term Assets $21.39B $22.32B $22.32B
YoY Change -4.17% 20.85% 20.85%
LONG-TERM ASSETS
Property, Plant & Equipment $2.198B $1.878B $1.878B
YoY Change 17.04% 8.18% 8.18%
Goodwill $5.968B $5.622B
YoY Change 6.15% 0.0%
Intangibles
YoY Change
Long-Term Investments $36.00M $37.00M $98.00M
YoY Change -2.7%
Other Assets $5.069B $3.095B $1.302B
YoY Change 63.78% -2.09% -17.07%
Total Long-Term Assets $13.24B $10.60B $10.60B
YoY Change 24.92% 0.72% 0.72%
TOTAL ASSETS
Total Short-Term Assets $21.39B $22.32B $22.32B
Total Long-Term Assets $13.24B $10.60B $10.60B
Total Assets $34.62B $32.91B $32.91B
YoY Change 5.19% 13.54% 13.54%
SHORT-TERM LIABILITIES
YoY Change
Accounts Payable $14.82B $13.28B $13.28B
YoY Change 11.57% 19.6% 19.6%
Accrued Expenses $7.297B $6.575B $6.575B
YoY Change 10.98% 2.86% 2.86%
Deferred Revenue $1.095B $1.012B
YoY Change 8.2%
Short-Term Debt $898.0M $976.0M $976.0M
YoY Change -7.99% 3514.81% 3514.81%
Long-Term Debt Due $565.0M $96.00M $96.00M
YoY Change 488.54% 88.24% 88.24%
Total Short-Term Liabilities $25.13B $22.41B $22.41B
YoY Change 12.13% 19.16% 19.16%
LONG-TERM LIABILITIES
Long-Term Debt $4.524B $6.747B $6.747B
YoY Change -32.95% 0.18% 0.18%
Other Long-Term Liabilities $5.606B $7.162B $5.752B
YoY Change -21.73% -2.33% -7.48%
Total Long-Term Liabilities $5.606B $7.162B $12.50B
YoY Change -21.73% -2.33% -3.5%
TOTAL LIABILITIES
Total Short-Term Liabilities $25.13B $22.41B $22.41B
Total Long-Term Liabilities $5.606B $7.162B $12.50B
Total Liabilities $30.74B $29.57B $36.32B
YoY Change 3.93% 13.13% 10.48%
SHAREHOLDERS EQUITY
Retained Earnings -$730.0M -$2.386B
YoY Change -69.4% -31.79%
Common Stock $663.0M $380.0M
YoY Change 74.47% -63.11%
Preferred Stock
YoY Change
Treasury Stock (at cost)
YoY Change
Treasury Stock Shares
Shareholders Equity -$639.0M -$3.408B -$3.408B
YoY Change
Total Liabilities & Shareholders Equity $34.62B $32.91B $32.91B
YoY Change 5.19% 13.54% 13.54%

Cashflow Statement

Concept 2018 Q4 2017 Q4 2017
OPERATING ACTIVITIES
Net Income $1.451B $660.0M $2.526B
YoY Change 119.85% 34.15% 1.2%
Depreciation, Depletion And Amortization $140.0M $91.00M $354.0M
YoY Change 53.85% 9.64% 6.63%
Cash From Operating Activities $968.0M $680.0M $3.677B
YoY Change 42.35% -5.56% 13.07%
INVESTING ACTIVITIES
Capital Expenditures -$187.0M -$165.0M -$402.0M
YoY Change 13.33% 13.01% -7.16%
Acquisitions $0.00
YoY Change -100.0%
Other Investing Activities $274.0M $171.0M -$1.315B
YoY Change 60.23% -44.84% -373.39%
Cash From Investing Activities $87.00M $6.000M -$1.717B
YoY Change 1350.0% -96.34% -3677.08%
FINANCING ACTIVITIES
Cash Dividend Paid
YoY Change
Common Stock Issuance & Retirement, Net $1.400B
YoY Change 16.67%
Debt Paid & Issued, Net
YoY Change
Cash From Financing Activities -2.084B -656.0M -$1.251B
YoY Change 217.68% 182.76% -91.34%
NET CHANGE
Cash From Operating Activities 968.0M 680.0M $3.677B
Cash From Investing Activities 87.00M 6.000M -$1.717B
Cash From Financing Activities -2.084B -656.0M -$1.251B
Net Change In Cash -1.029B 30.00M $709.0M
YoY Change -3530.0% -95.4% -106.36%
FREE CASH FLOW
Cash From Operating Activities $968.0M $680.0M $3.677B
Capital Expenditures -$187.0M -$165.0M -$402.0M
Free Cash Flow $1.155B $845.0M $4.079B
YoY Change 36.69% -2.42% 10.69%

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52000000 USD
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70000000 USD
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308000000 USD
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262000000 USD
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183000000 USD
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3000000 USD
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3000000 USD
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20000000 USD
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573000000 USD
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20000000 USD
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573000000 USD
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525000000 USD
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CY2018 us-gaap Other Comprehensive Income Loss Pension And Other Postretirement Benefit Plans Adjustment Before Tax
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455000000 USD
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11000000 USD
CY2016 us-gaap Other Comprehensive Income Loss Reclassification Adjustment From Aoci For Sale Of Securities Before Tax
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0 USD
CY2017 us-gaap Other Comprehensive Income Loss Reclassification Adjustment From Aoci For Sale Of Securities Before Tax
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0 USD
CY2018 us-gaap Other Comprehensive Income Loss Reclassification Adjustment From Aoci For Sale Of Securities Before Tax
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5000000 USD
CY2016 us-gaap Other Comprehensive Income Loss Reclassification Adjustment From Aoci On Derivatives Before Tax
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-63000000 USD
CY2017 us-gaap Other Comprehensive Income Loss Reclassification Adjustment From Aoci On Derivatives Before Tax
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CY2018Q4 us-gaap Product Warranty Accrual Classified Current
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CY2018Q4 us-gaap Property Plant And Equipment Gross
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CY2016 us-gaap Repayments Of Short Term Debt Maturing In More Than Three Months
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CY2017 us-gaap Repayments Of Short Term Debt Maturing In More Than Three Months
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CY2018 us-gaap Repayments Of Short Term Debt Maturing In More Than Three Months
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1190000000 USD
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CY2018Q4 us-gaap Restructuring Reserve
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CY2018 us-gaap Restructuring Reserve Accrual Adjustment1
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-233000000 USD
CY2018 us-gaap Restructuring Reserve Period Increase Decrease
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CY2017Q4 us-gaap Retained Earnings Accumulated Deficit
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182000000 USD
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224000000 USD
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268000000 USD
CY2016Q4 us-gaap Share Based Compensation Arrangement By Share Based Payment Award Number Of Shares Available For Grant
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453865000 shares
CY2017Q4 us-gaap Share Based Compensation Arrangement By Share Based Payment Award Number Of Shares Available For Grant
ShareBasedCompensationArrangementByShareBasedPaymentAwardNumberOfSharesAvailableForGrant
419071000 shares
CY2018Q4 us-gaap Share Based Compensation Arrangement By Share Based Payment Award Number Of Shares Available For Grant
ShareBasedCompensationArrangementByShareBasedPaymentAwardNumberOfSharesAvailableForGrant
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100000000 shares
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80000000 shares
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CY2017Q4 us-gaap Unrecognized Tax Benefits
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CY2018Q4 us-gaap Unrecognized Tax Benefits
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CY2018 us-gaap Unrecognized Tax Benefits Increases Resulting From Prior Period Tax Positions
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CY2018Q4 us-gaap Unrecognized Tax Benefits That Would Impact Effective Tax Rate
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1500000000 USD
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CY2018 us-gaap Comparability Of Prior Year Financial Data
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<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;padding-bottom:4px;padding-top:4px;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-style:italic;">Reclassifications</font></div><div style="line-height:120%;padding-bottom:4px;padding-top:4px;text-align:left;text-indent:29px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">HP implemented an organizational change to align&#160;its segment and business unit financial reporting more closely with its current business structure. HP reflected this change to its segment and business unit information in prior reporting periods on an as-if basis. The reporting changes had no impact on previously reported consolidated net revenue, earnings from operations, net earnings or net EPS. See Note 2, &#8220;Segment Information&#8221;, for a further discussion of HP&#8217;s segment and business unit realignments.</font></div><div style="line-height:120%;padding-bottom:4px;padding-top:4px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-style:italic;"></font></div></div>
CY2018 us-gaap Concentration Risk Credit Risk
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<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;padding-bottom:4px;padding-top:4px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-style:italic;">Concentrations of Risk</font></div><div style="line-height:120%;padding-bottom:4px;padding-top:4px;text-indent:30px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">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 and derivatives.</font></div><div style="line-height:120%;padding-bottom:4px;padding-top:4px;text-indent:30px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">HP maintains cash and cash equivalents, investments, derivatives and certain other financial instruments with various financial institutions. These financial institutions are located in many different geographic regions, and HP&#8217;s policy is designed to limit exposure from any particular institution. As part of its risk management processes, HP performs periodic evaluations of the relative credit standing of these financial institutions. HP has not sustained material credit losses from instruments held at these financial institutions. HP utilizes derivative contracts to protect against the effects of foreign currency and interest rate exposures. Such contracts involve the risk of non-performance by the counterparty, which could result in a material loss. The likelihood of which HP deems to be remote.</font></div><div style="line-height:120%;padding-bottom:4px;padding-top:4px;text-indent:30px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">HP sells a significant portion of its products through third-party distributors and resellers and, as a result, maintains individually significant receivable balances with these parties. If the financial condition or operations of these distributors&#8217; and resellers&#8217; aggregated business deteriorates substantially, HP&#8217;s operating results could be adversely affected. The </font><font style="font-family:inherit;font-size:10pt;">ten</font><font style="font-family:inherit;font-size:10pt;"> largest distributor and reseller receivable balances, which were concentrated primarily in North America and Europe, collectively represented approximately </font><font style="font-family:inherit;font-size:10pt;">39%</font><font style="font-family:inherit;font-size:10pt;"> and </font><font style="font-family:inherit;font-size:10pt;">34%</font><font style="font-family:inherit;font-size:10pt;"> of gross accounts receivable as of October&#160;31, 2018 and 2017, respectively. No single customer accounts for more than </font><font style="font-family:inherit;font-size:10pt;">10%</font><font style="font-family:inherit;font-size:10pt;"> of gross accounts receivable as of October 31, 2018 or 2017. Credit risk with respect to other accounts receivable is generally diversified due to HP&#8217;s large customer base and their dispersion across many different industries and geographic regions. HP performs ongoing credit evaluations of the financial condition of its third-party distributors, resellers and other customers and may require collateral, such as letters of credit and bank guarantees, in certain circumstances.&#160;</font></div><div style="line-height:120%;padding-bottom:4px;padding-top:4px;text-indent:30px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">HP utilizes outsourced manufacturers around the world to manufacture HP-designed products. HP may purchase product components from suppliers and sell those components to its outsourced manufacturers thereby creating receivable balances from the outsourced manufacturers. The </font><font style="font-family:inherit;font-size:10pt;">three</font><font style="font-family:inherit;font-size:10pt;"> largest outsourced manufacturer receivable balances collectively represented </font><font style="font-family:inherit;font-size:10pt;">72%</font><font style="font-family:inherit;font-size:10pt;"> and </font><font style="font-family:inherit;font-size:10pt;">70%</font><font style="font-family:inherit;font-size:10pt;"> of HP&#8217;s supplier receivables of </font><font style="font-family:inherit;font-size:10pt;">$1,074 million</font><font style="font-family:inherit;font-size:10pt;"> and </font><font style="font-family:inherit;font-size:10pt;">$951 million</font><font style="font-family:inherit;font-size:10pt;"> as of October&#160;31, 2018 and 2017, respectively. HP includes the supplier receivables in Other current assets in the Consolidated Balance Sheets on a gross basis. HP&#8217;s credit risk associated with these receivables is mitigated wholly or in part, by the amount HP owes to these outsourced manufacturers, as HP generally has the legal right to offset its payables to the outsourced manufacturers against these receivables. HP does not reflect the sale of these components in net revenue and does not recognize any profit on these component sales until the related products are sold by HP, at which time any profit is recognized as a reduction to cost of revenue.&#160;</font></div><div style="line-height:120%;padding-bottom:4px;padding-top:4px;text-indent:30px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">HP obtains a significant number of components from single source suppliers due to technology, availability, price, quality or other considerations. The loss of a single source supplier, the deterioration of HP&#8217;s relationship with a single source supplier, or any unilateral modification to the contractual terms under which HP is supplied components by a single source supplier could adversely affect HP&#8217;s net revenue and gross margins.</font></div></div>
CY2018 us-gaap Guarantees Indemnifications And Warranties Policies
GuaranteesIndemnificationsAndWarrantiesPolicies
<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;padding-bottom:4px;padding-top:4px;text-indent:30px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-style:italic;">Guarantees</font><font style="font-family:inherit;font-size:10pt;">&#160;</font></div><div style="line-height:120%;padding-bottom:4px;padding-top:4px;text-indent:30px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">In the ordinary course of business, HP may issue performance guarantees to certain of its clients, customers and other parties pursuant to which HP has guaranteed the performance obligations of third parties. Some of those guarantees may be backed by standby letters of credit or surety bonds. In general, HP would be obligated to perform over the term of the guarantee in the event a specified triggering event occurs as defined by the guarantee. HP believes the likelihood of having to perform under a material guarantee is remote.</font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:9pt;font-style:italic;"> </font><font style="font-family:inherit;font-size:10pt;font-style:italic;">Cross-Indemnifications with Hewlett Packard Enterprise</font></div><div style="line-height:120%;padding-top:4px;text-align:left;text-indent:29px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Under the separation and distribution agreement, HP agreed to indemnify Hewlett Packard Enterprise, each of its subsidiaries and each of their respective directors, officers and employees from and against all liabilities relating to, arising out of or resulting from, among other matters, the liabilities allocated to HP as part of the Separation. Hewlett Packard Enterprise similarly agreed to indemnify HP, each of its subsidiaries and each of their respective directors, officers and employees from and against all liabilities relating to, arising out of or resulting from, among other matters, the liabilities allocated to Hewlett Packard Enterprise as part of the Separation. HP expects Hewlett Packard Enterprise to fully perform under the terms of the separation and distribution agreement.</font></div><div style="line-height:120%;text-indent:30px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">In connection with the Separation, HP entered into the tax matters agreement (&#8220;TMA&#8221;) with Hewlett Packard Enterprise, effective on November 1, 2015. The TMA provides that HP and Hewlett Packard Enterprise will share certain pre-Separation income tax liabilities. In addition, if the distribution of Hewlett Packard Enterprise&#8217;s common shares to the HP stockholders is determined to be taxable, Hewlett Packard Enterprise and HP would share the tax liability equally, unless the taxability of the distribution is the direct result of action taken by either Hewlett Packard Enterprise or HP subsequent to the distribution, in which case the party causing the distribution to be taxable would be responsible for any taxes imposed on the distribution.</font></div><div style="line-height:120%;padding-bottom:4px;padding-top:4px;text-align:left;text-indent:29px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">For information on the cross indemnifications related to litigations effective upon the Separation on November&#160;1, 2015, see Note&#160;14, &#8220;Litigation and Contingencies&#8221;, respectively.</font></div><div style="line-height:120%;padding-bottom:4px;padding-top:4px;text-indent:30px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-style:italic;">Indemnifications</font><font style="font-family:inherit;font-size:10pt;">&#160;</font></div><div style="line-height:120%;padding-bottom:4px;padding-top:4px;text-align:left;text-indent:29px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">In the ordinary course of business, HP enters into contractual arrangements under which HP may agree to indemnify a third party to such arrangement from any losses incurred relating to the services they perform on behalf of HP or for losses arising from certain events as defined within the particular contract, which may include, for example, litigation or claims relating to past performance. HP also provides indemnifications to certain vendors and customers against claims of intellectual property infringement made by third parties arising from the vendors&#8217; and customers&#8217; use of HP&#8217;s software products and services and certain other matters. Some indemnifications may not be subject to maximum loss clauses. Historically, payments made related to these indemnifications have been immaterial.</font></div><div style="line-height:120%;padding-bottom:4px;padding-top:4px;text-align:left;text-indent:29px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">HP records tax indemnification receivables from various third parties for certain tax liabilities that HP is jointly and severally liable for, but for which it is indemnified by those same third parties under existing legal agreements. The actual amount that the third parties pay may be obligated to pay HP could vary depending on the outcome of certain unresolved tax matters, which may not be resolved for several years. The net receivable as of October&#160;31, 2018 was </font><font style="font-family:inherit;font-size:10pt;">$1.0 billion</font><font style="font-family:inherit;font-size:10pt;">.</font></div><div style="line-height:120%;padding-bottom:4px;padding-top:4px;text-indent:30px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-style:italic;">Warranties</font></div><div style="line-height:120%;padding-bottom:4px;padding-top:4px;text-indent:30px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">HP accrues the estimated cost of product warranties at the time it recognizes revenue. HP engages in extensive product quality programs and processes, including actively monitoring and evaluating the quality of its component suppliers; however, contractual warranty terms, repair costs, product call rates, average cost per call, current period product shipments and ongoing product failure rates, as well as specific product class failures outside of HP&#8217;s baseline experience, affect the estimated warranty obligation.</font></div></div>
CY2018 us-gaap Use Of Estimates
UseOfEstimates
<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;padding-bottom:4px;padding-top:4px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-style:italic;">Use of Estimates</font></div><div style="line-height:120%;padding-bottom:4px;padding-top:4px;text-indent:30px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">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&#8217;s Consolidated Financial Statements and accompanying notes. Actual results may differ materially from those estimates.</font></div></div>

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