HP INC. AND SUBSIDIARIES


                    Management's Discussion and Analysis of
                 Financial Condition and Results of Operations

This Management's Discussion and Analysis of Financial Condition and Results of
Operations ("MD&A") is organized as follows:
•Overview. A discussion of our business and other highlights affecting the
Company to provide context for the remainder of this MD&A.
•Critical Accounting Policies and Estimates. A discussion of accounting policies
and estimates that we believe are important to understanding the assumptions and
judgments incorporated in our reported financial results.
•Results of Operations. An analysis of our operations financial results
comparing the three and six months ended April 30, 2021 to the prior-year
period. A discussion of the results of operations is followed by a more detailed
discussion of the results of operations by segment.
•Liquidity and Capital Resources. An analysis of changes in our cash flows and a
discussion of our liquidity and financial condition.
•Contractual and Other Obligations. An overview of contractual obligations,
retirement and post-retirement benefit plan contributions, cost-saving plans,
uncertain tax positions and off-balance sheet arrangements of our operations.
The discussion of financial condition and results of our operations that follows
provides information that will assist the reader in understanding our
Consolidated Condensed Financial Statements, the changes in certain key items in
those financial statements from year to year, and the primary factors that
accounted for those changes, as well as how certain accounting principles,
policies and estimates affect our Consolidated Condensed Financial Statements.
This discussion should be read in conjunction with our Consolidated Condensed
Financial Statements and the related notes that appear elsewhere in this
document.

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HP INC. AND SUBSIDIARIES
                    Management's Discussion and Analysis of
           Financial Condition and Results of Operations (Continued)

OVERVIEW


We are a leading global provider of personal computing and other access devices,
imaging and printing products, and related technologies, solutions, and
services. We sell to individual consumers, SMBs and large enterprises, including
customers in the government, health, and education sectors. We have three
reportable segments: Personal Systems, Printing, and Corporate Investments. The
Personal Systems segment offers commercial and consumer desktop and notebook
PCs, workstations, thin clients, commercial mobility devices, retail POS
systems, displays and peripherals, software, support, and services. The Printing
segment provides consumer and commercial printer hardware, supplies, solutions
and services. Corporate Investments include HP Labs and certain business
incubation and investment projects.
•In Personal Systems, our strategic focus is on profitable growth through
innovation and market segmentation. This focus is with respect to enhanced
innovation in multi-operating systems, multi-architecture, geography, customer
segments and other key attributes. Additionally, we are investing in endpoint
services and solutions. We are focused on services, including Device as a
Service, as the market begins to shift to contractual solutions, and
accelerating in attractive adjacencies such as peripherals. We are driving
innovation to enable productivity and collaboration as near-term demand
continues for work from home and remote learning as the PC has become an
essential tool to create, consume and collaborate. We believe that we are well
positioned due to our competitive product lineup.
•In Printing, our strategic focus is on offering contractual solutions to serve
consumers, SMBs and large enterprises through our Instant Ink Services and
Managed Print Services ("MPS") solutions, providing digital printing solutions
for graphics segments and applications including commercial publishing, labels,
packaging and textiles; as well as expanding our footprint in 3D printing across
digital manufacturing and strategic applications.
We continue to experience challenges that are representative of trends and
uncertainties that may affect our business and results of operations. One set of
challenges relates to dynamic market trends that may adversely impact our
product mix. A second set of challenges relates to changes in the competitive
landscape. Our primary competitors are exerting competitive pressure in targeted
areas and are entering new markets, our emerging competitors are introducing new
technologies and business models, and our alliance partners in some businesses
are increasingly becoming our competitors in others. A third set of challenges
relates to business model changes and our go-to-market execution in an evolving
distribution and reseller landscape, with increasing online and omnichannel
presence. Additional challenges we face at the segment level are set forth
below.
•In Personal Systems, we face challenges with industry component availability
which may negatively impact our ability to meet demand, and a competitive
environment.
•In Printing, we face challenges from a competitive environment, including
non-original supplies (which includes imitation, refill, or remanufactured
alternatives) and in the short-term we face component constraints particularly
in printer hardware which may negatively impact our ability to meet demand. We
also obtain many Printing components from single sources due to technology,
availability, price, quality, or other considerations. For instance, we source
the majority of our A4 and a portion of our A3 portfolio of laser printer
engines and laser toner cartridges from Canon. Any decision by either party to
not renew our agreement with Canon or to limit or reduce the scope of the
agreement could adversely affect our net revenue from LaserJet products;
however, we have a long-standing business relationship with Canon and anticipate
renewal of this agreement.
Our business and financial performance also depend significantly on worldwide
economic conditions. Accordingly, we face global macroeconomic challenges,
particularly in light of the effects of the COVID-19 pandemic as discussed
below, tariff-driven headwinds, uncertainty in the markets, volatility in
exchange rates and evolving dynamics in the global trade environment. The full
impact of these and other global macroeconomic challenges on our business cannot
be known at this time.
To address these challenges, we continue to pursue innovation with a view
towards developing new products and services aligned with generating market
demand and meeting the needs of our customers and partners. In addition, we
continue to work on improving our operations and adapting our business models,
with a particular focus on enhancing our end-to-end processes, analytics and
efficiencies. We also continue to work on optimizing our sales coverage models,
aligning our sales incentives with our strategic goals, improving channel
execution and inventory management, strengthening our capabilities in our areas
of strategic focus, strengthening our pricing discipline and developing and
capitalizing on market opportunities.
Specifically, in October 2019, we announced cost-reduction and operational
efficiency initiatives intended to simplify the way we work, move closer to our
customers and facilitate specific investment in our business. These were further
updated in February 2020. These efforts included transforming our operating
model to integrate our sales force into a single commercial organization and
reducing structural costs across the Company through our restructuring plan
approved in September 2019 (the
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HP INC. AND SUBSIDIARIES
                    Management's Discussion and Analysis of
           Financial Condition and Results of Operations (Continued)
"Fiscal 2020 Plan"). We expect to invest some of the savings from these efforts
across our businesses, including investing to build our digital capabilities.
Over time, we expect these investments will make us more efficient and allow us
to advance our positions in Personal Systems and Printing, while also disrupting
new industries where we see attractive medium to long-term growth opportunities.
However, the rate at which we are able to invest in our business and the returns
that we are able to achieve from these investments will be affected by many
factors, including the efforts to address the execution, industry and
macroeconomic challenges facing our business as discussed above. As a result, we
may experience delays in the anticipated timing of activities related to these
efforts, and the anticipated benefits of these efforts may not materialize.
We typically experience higher net revenues in our fourth quarter compared to
other quarters in our fiscal year due in part to seasonal holiday demand.
Historical seasonal patterns should not be considered reliable indicators of our
future net revenues or financial performance.
Our COVID-19 Response
We continue to closely monitor the COVID-19 pandemic, including its resurgence
in key markets. We will continue promoting the health, safety, and well-being of
workers and their loved ones. In response to the COVID-19 pandemic, we have
established a cross-functional COVID-19 program management office that meets
regularly to review the latest data from our business and site leaders, identify
and address emerging risks, and formulate response to actions taken by
governments and public policy organizations. We have put in place global
policies and protocols based on guidance from healthcare experts and public
health leaders, and we regularly review and update them to reflect current
information and the requirements and recommendations of national, federal,
state, and local authorities. We balance our company-wide approach by assessing
risk and adjusting our response at the site level, taking into consideration
each country's or area's COVID-19 case trends and related measures.
The business impact of the COVID-19 pandemic has created new and different
demand dynamics in the market. We have seen a higher mix of Consumer PCs and
shift from Desktops to Notebooks including Chromebooks. Our Personal Systems
business benefited from the remote working and learning environment, including
growth in gaming. In Printing, we have seen strong demand for Consumer print,
Supplies and solutions, and some improvement in Commercial print as the demand
in the SMBs continues to improve. However, the recovery in Commercial print may
be uneven given the varying pace of economic recovery and the resurgence of
COVID-19 cases in some countries. Except in Southeast Asia, manufacturing
capacity has operated at normal levels, although we continue to see logistics
challenges globally.
The COVID-19 pandemic continues and we are seeing a resurgence of the pandemic
in key markets like India and Southeast Asia. We have and may experience future
disruptions in supply and manufacturing, including those in Southeast Asia, and
with our suppliers and outsourcing partners. The full extent of the impact of
the COVID-19 pandemic on our business, results of operations, cash flows and
financial position will depend on many factors that are not within our control,
including, but not limited to: the severity, duration and scope of the pandemic,
including the impact of coronavirus mutations and resurgences; the effectiveness
of actions taken to contain or mitigate the pandemic and prevent or limit any
reoccurrence; the development, availability and public acceptance of effective
treatments or vaccines; governmental, business and individuals' actions that
have been and continue to be taken in response to the pandemic; general economic
uncertainty in key global markets and financial market volatility; global
economic conditions and levels of economic growth; and the pace of recovery when
the COVID-19 pandemic subsides.
Unsolicited Exchange Offer in Fiscal Year 2020
On March 2, 2020, Xerox Holdings Corporation ("Xerox") commenced an unsolicited
exchange offer for all outstanding shares of HP's common stock (the "Offer").
Xerox had also previously nominated candidates for election to HP's Board of
Directors at HP's 2020 annual meeting of stockholders. On March 31, 2020, Xerox
announced that the Offer had been terminated and subsequently withdrew its slate
of director nominees. In order to respond to Xerox's actions, HP incurred
certain costs during the three and six months ended April 30, 2020.
For a further discussion of trends, uncertainties and other factors that could
impact our operating results, see the section entitled "Risk Factors" in Item 1A
of Part I in our Annual Report on Form 10-K for the fiscal year ended October
31, 2020.

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HP INC. AND SUBSIDIARIES
                    Management's Discussion and Analysis of
           Financial Condition and Results of Operations (Continued)
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
MD&A is based on our Consolidated Condensed Financial Statements, which have
been prepared in accordance with U.S. GAAP. The preparation of these financial
statements requires management to make estimates, judgments and assumptions that
affect the reported amounts of assets, liabilities, net revenues and expenses,
and the disclosure of contingent liabilities. As of April 30, 2021, the impact
of COVID-19 on our business continued to unfold. As a result, many of our
estimates and assumptions required increased judgment and may carry a higher
degree of variability and volatility. As events continue to evolve and
additional information becomes available, our estimates may change in future
periods. Our management believes that there have been no significant changes
during the six months ended April 30, 2021 to the items that we disclosed as our
critical accounting policies and estimates in MD&A in our Annual Report on
Form 10-K for the fiscal year ended October 31, 2020, except as mentioned
previously in Note 1, "Basis of Presentation".

ACCOUNTING PRONOUNCEMENTS
For a summary of recent accounting pronouncements applicable to our Consolidated
Condensed Financial Statements see Note 1, "Basis of Presentation", to the
Consolidated Condensed Financial Statements in Item 1 of Part I of this report,
which is incorporated herein by reference.

RESULTS OF OPERATIONS
Revenue from our international operations has historically represented, and we
expect will continue to represent, a majority of our overall net revenue. As a
result, our net revenue growth has been impacted, and we expect it will continue
to be impacted, by fluctuations in foreign currency exchange rates. In order to
provide a framework for assessing performance excluding the impact of foreign
currency fluctuations, we supplement the year-over-year percentage change in net
revenue with the year-over-year percentage change in net revenue on a constant
currency basis, which excludes the effect of foreign currency exchange
fluctuations calculated by translating current period revenues using monthly
average exchange rates from the comparative period and excluding any hedging
impact recognized in the current period, and does not adjust for any repricing
or demand impacts from changes in foreign currency exchange rates. This
information is provided so that net revenue can be viewed with and without the
effect of fluctuations in foreign currency exchange rates, which is consistent
with how management evaluates our net revenue results and trends, as management
does not believe that the excluded items are reflective of ongoing operating
results. The constant currency measures are provided in addition to, and not as
a substitute for, the year-over-year percentage change in net 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.
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HP INC. AND SUBSIDIARIES
                    Management's Discussion and Analysis of
           Financial Condition and Results of Operations (Continued)
Results of operations in dollars and as a percentage of net revenue were as
follows:
                                                               Three months ended April 30                                                       Six months ended April 30
                                                        2021                                    2020                                    2021                                    2020
                                                                 % of Net                              % of Net                                  % of Net                              % of Net
                                            Dollars               Revenue            Dollars            Revenue              Dollars              Revenue            Dollars            Revenue
                                                                                                           Dollars in millions
Net revenue                             $      15,877               100.0  %       $ 12,469               100.0  %       $     31,523               100.0  %       $ 27,087               100.0  %
Cost of revenue                                12,437                78.3  %          9,976                80.0  %             24,759                78.5  %         21,722                80.2  %
Gross profit                                    3,440                21.7  %          2,493                20.0  %              6,764                21.5  %          5,365                19.8  %
Research and development                          514                 3.2  %            338                 2.7  %                985                 3.1  %            738                 2.7  %
Selling, general and administrative             1,483                 9.4  %          1,216                 9.8  %              2,859                 9.1  %          2,506                 9.3  %
Restructuring and other charges                    39                 0.2  %             81                 0.7  %                160                 0.5  %            372                 1.4  %
Acquisition-related charges                        10                 0.1  %              3                   -  %                 16                 0.1  %              3                   -  %
Amortization of intangible assets                  32                 0.2  %             29                 0.2  %                 61                 0.2  %             55                 0.2  %
Earnings from operations                        1,362                 8.6  %            826                 6.6  %              2,683                 8.5  %          1,691                 6.2  %
Interest and other, net                           (26)               (0.2) %              -                   -  %                (51)               (0.2) %             13                 0.1  %
Earnings before taxes                           1,336                 8.4  %            826                 6.6  %              2,632                 8.3  %          1,704                 6.3  %
Provision for taxes                              (108)               (0.7) %            (62)               (0.5) %               (336)               (1.0) %           (262)               (1.0) %
Net earnings                            $       1,228                 7.7  %       $    764                 6.1  %       $      2,296                 7.3  %       $  1,442                 5.3  %


Net Revenue
For the three months ended April 30, 2021, net revenue increased 27.3%
(increased 25.4% on a constant currency basis) as compared to the prior-year
period. U.S. net revenue increased 30.0% to $5.5 billion, while net revenue from
international operations increased 26.0% to $10.4 billion. The increase in net
revenue was primarily driven by growth in Notebooks, Supplies, Consumer Printing
and Commercial Printing, partially offset by decline in Desktops. The increase
in net revenue was driven by strong demand from work from home and remote
learning, and some improvement in Commercial Printing. Also, net revenue, for
the three months ended April 30, 2020, was negatively impacted by supply chain
disruptions and demand weakness resulting from COVID-19.
For the six months ended April 30, 2021, total net revenue increased 16.4%
(increased 15.3% on a constant currency basis) as compared to the prior-year
period. U.S. net revenue increased 22.3% to $11.2 billion, while net revenue
from international operations increased 13.4% to $20.3 billion. The increase in
net revenue was primarily driven by growth in Notebooks, Supplies, and Consumer
Printing, partially offset by decline in Desktops. The increase in net revenue
was driven by strong demand from work from home and remote learning. Also, net
revenue for the six months ended April 30, 2020, was negatively impacted by
supply chain disruptions and demand weakness resulting from COVID-19.
A detailed discussion of the factors contributing to the changes in segment net
revenue is included in "Segment Information" below.
Gross Margin
For the three months and six ended April 30, 2021, gross margin increased by 1.7
percentage points, primarily driven by favorable pricing including lower
promotions, and favorable foreign currency impacts, partially offset by higher
costs.
A detailed discussion of the factors contributing to the changes in segment
gross margins is included under "Segment Information" below.
Operating Expenses
Research and Development ("R&D")
R&D expense increased 52.0% and 33.5% for the three and six months ended
April 30, 2021, respectively, primarily due to continuing investments
in innovation and key growth initiatives and higher variable compensation.
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HP INC. AND SUBSIDIARIES
                    Management's Discussion and Analysis of
           Financial Condition and Results of Operations (Continued)
Selling, General and Administrative ("SG&A")
SG&A expense increased 22.0% and 14.1% for the three and six months ended
April 30, 2021, respectively, primarily due to higher variable compensation and
go-to-market initiatives.
Restructuring and Other Charges
Restructuring and other charges for the three and six months ended April 30,
2021 relate primarily to the Fiscal 2020 Plan. For more information, see Note 3,
"Restructuring and other charges", to the Consolidated Condensed Financial
Statements in Item 1 of Part I of this report, which is incorporated herein by
reference.
Amortization of Intangible Assets
Amortization of intangible assets for the three and six months ended April 30,
2021 relates primarily to intangible assets resulting from prior acquisitions.
Interest and Other, Net
Interest and other, net expense increased $26 million and $64 million for the
three and six months ended April 30, 2021, respectively, primarily due to lower
Net Periodic Post-retirement Benefit Credit and lower interest income on
investment and deposits.
Provision for taxes
Our effective tax rate was 8.1% and 7.6% for the three months ended April 30,
2021 and 2020, respectively, and 12.7% and 15.4% for the six months ended April
30, 2021 and 2020, respectively. The difference between the U.S. federal
statutory tax rate of 21% and our effective tax rate for the three and six
months ended April 30, 2021 was primarily due to tax effects of internal
reorganization and by favorable tax rates associated with certain earnings from
our operations in lower-tax jurisdictions throughout the world. For the three
and six months ended April 30, 2020, our effective tax rate differed from the
U.S. federal statutory rate of 21% primarily due to audit settlements in various
jurisdictions and favorable tax rates associated with certain earnings from our
operations in lower-tax jurisdictions throughout the world.
During the three and six months ended April 30, 2021, we recorded $128 million
and $129 million, respectively, of net income tax benefits related to discrete
items in the provision for taxes. These amounts included tax benefits of $89
million related to tax effects of internal reorganization, $8 million and $36
million related to restructuring charges, $23 million and $11 million related to
audit settlements in various jurisdictions, and $12 million and $5 million
related to other tax benefits for the three and six months ended April 30, 2021,
respectively. These benefits were partially offset by $4 million and $12 million
of uncertain tax position charges for the three and six months ended April 30,
2021, respectively. For the three and six months ended April 30, 2021, excess
tax benefits associated with stock options, restricted stock units and
performance-adjusted restricted stock units were immaterial.
During the three and six months ended April 30, 2020, we recorded $59 million
and $66 million respectively, of net tax benefits related to discrete items in
the provision for taxes. These amounts included tax benefits of $42 million and
$40 million related to audit settlements in various jurisdictions, $11 million
and $17 million related to acquisition charges, and $7 million and $55 million
related to restructuring charges for the three and six months ended April 30,
2020, respectively. These benefits were partially offset by uncertain tax
position charges of $3 million and $51 million for the three and six months
ended April 30, 2020, respectively. For the three and six months ended April 30,
2020, excess tax benefits associated with stock options, restricted stock units
and performance-adjusted restricted stock units were immaterial.

Segment Information
A description of the products and services for each segment can be found in
Note 2, "Segment Information" to the Consolidated Condensed Financial Statements
in Item 1 of Part I of this report, which is incorporated herein by reference.
Future changes to this organizational structure may result in changes to the
segments disclosed.

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HP INC. AND SUBSIDIARIES
                    Management's Discussion and Analysis of
           Financial Condition and Results of Operations (Continued)

Personal Systems
                                                     Three months ended April 30                                  Six months ended April 30
                                             2021               2020             % Change               2021               2020              % Change
                                                                                       Dollars in millions
Net revenue                             $       10,555       $    8,313               27.0  %       $      21,158       $    18,205               16.2  %
Earnings from operations                $          710       $      552               28.6  %       $       1,468       $     1,214               20.9  %
Earnings from operations as a % of net          6.7  %           6.6  %                                    6.9  %           6.7   %

revenue




The components of net revenue and the weighted net revenue change by business
unit were as follows:
                                                    Three months ended April 30                                      Six months ended April 30
                                               Net Revenue                   Weighted Net                      Net Revenue                      Weighted Net
                                          2021              2020           Revenue Change(1)              2021                2020            Revenue Change(1)
                                           Dollars in millions             Percentage Points               Dollars in millions                Percentage Points
Notebooks                             $   7,489          $ 5,083                    28.9            $      14,855          $ 11,057                    20.9
Desktops                                  2,225            2,409                    (2.2)                   4,625             5,332                    (3.9)
Workstations                                407              439                    (0.4)                     789             1,033                    (1.3)
Other                                       434              382                     0.7                      889               783                     0.5
Total Personal Systems                $  10,555          $ 8,313                    27.0            $      21,158          $ 18,205                    16.2


(1)Weighted Net Revenue Change Percentage Points measures contribution of each
business unit towards overall segment revenue growth. It is calculated by
dividing the change in revenue of each business unit from the prior-year period
by total segment revenue for the prior-year period.

Three months ended April 30, 2021 compared with three months ended April 30, 2020


  Personal Systems net revenue increased 27.0% (increased 24.6% on a constant
currency basis) for the three months ended April 30, 2021 as compared to the
prior-year period. The net revenue increase was primarily due to growth in
Notebooks and favorable foreign currency impacts, partially offset by decline in
Desktops. The net revenue increase was driven by a 43.7% growth in unit volume,
partially offset by a 11.7% decline in average selling prices ("ASPs"). The
increase in unit volume was driven by an increase in Notebooks due to strong
demand driven by work from home, remote learning and gaming, partially offset by
decline is Desktops. Also, for the three months ended April 30, 2020, unit
shipments were negatively impacted by supply chain disruptions resulting from
COVID-19. The decrease in ASPs was primarily due to mix shifts across Personal
Systems, partially offset by favorable pricing including lower promotions, and
favorable foreign currency impacts.
Consumer PCs revenue increased 71.8%, driven by unit growth in Notebooks and
Desktops and higher ASPs. Commercial PCs revenue increased 9.8% primarily driven
by unit growth in Notebooks, partially offset by lower ASPs and decline in
Desktops.
Net revenue increased 47.3% in Notebooks and decreased 7.6% in Desktops and 7.3%
in Workstations as compared to the prior-year period.
  Personal Systems earnings from operations as a percentage of net revenue
increased by 0.1 percentage points. The increase was primarily due to an
increase in gross margin, partially offset by an increase in operating expenses
as a percentage of net revenue. The increase in gross margin was primarily due
to favorable pricing including lower promotions, and foreign currency impacts,
partially offset by mix shifts. Operating expenses as a percentage of revenue
increased by 0.5 percentage points as compared to prior-year period primarily
due to higher variable compensation and R&D spend in innovation and key growth
initiatives, partially offset by less variability in expenses as some expenses
are fixed or semi-variable.
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HP INC. AND SUBSIDIARIES
                    Management's Discussion and Analysis of
           Financial Condition and Results of Operations (Continued)

Six months ended April 30, 2021 compared with six months ended April 30, 2020


  Personal Systems net revenue increased 16.2% (increased 14.7% on a constant
currency basis) for the six months ended April 30, 2021 as compared to the
prior-year period. The net revenue increase was primarily due to growth in
Notebooks and favorable foreign currency impacts, partially offset by decline in
Desktops and Workstations. The net revenue increase was driven by a 28.1% growth
in unit volume, partially offset by a 9.2% decline in ASPs. The increase in unit
volume was driven by an increase in Notebooks due to strong demand driven by
work from home, remote learning and gaming, partially offset by decline is
Desktops and Workstations. Also, for the six months ended April 30, 2020, unit
shipments were negatively impacted by supply chain disruptions resulting from
COVID-19. The decrease in ASPs was primarily due to mix shifts across Personal
Systems, partially offset by favorable pricing including lower promotions, and
favorable foreign currency impacts.
Consumer PCs revenue increased 49.7% driven by unit growth in Notebooks and
Desktops and higher ASPs. Commercial PCs revenue increased 1.5%, primarily
driven by unit growth in Notebooks, partially offset by lower ASPs and decline
in unit volumes of Desktops and Workstations.
Net revenue increased 34.3% in Notebooks and decreased 13.3% in Desktops and
23.6% in Workstations as compared to the prior-year period.
  Personal Systems earnings from operations as a percentage of net revenue
increased by 0.2 percentage points. The increase was primarily due to an
increase in gross margin, partially offset by an increase in operating expenses
as a percentage of net revenue. The increase in gross margin was primarily due
to favorable pricing including lower promotions, and foreign currency impacts,
partially offset by mix shifts. Operating expenses as a percentage of revenue
increased by 0.4 percentage points as compared to prior-year period primarily
due to higher variable compensation and R&D spend in innovation and key growth
initiatives, partially offset by less variability in expenses as some expenses
are fixed or semi-variable.

Printing
                                                    Three months ended April 30                                 Six months ended April 30
                                            2021               2020             % Change               2021               2020             % Change
                                                                                     Dollars in millions
Net revenue                            $        5,323       $    4,158               28.0  %       $      10,367       $    8,882               16.7  %
Earnings from operations               $          951       $      548               73.5  %       $       1,949       $    1,302               49.7  %

Earnings from operations as a % of net 17.9 % 13.2 %

                              18.8  %          14.7  %

revenue




The components of net revenue and the weighted net revenue change by business
unit were as follows:
                                                        Three months ended April 30                                      Six months ended April 30
                                                   Net Revenue                   Weighted Net                      Net Revenue                      Weighted Net
                                              2021              2020           Revenue Change(1)              2021                 2020           Revenue Change(1)
                                               Dollars in millions             Percentage Points               Dollars in millions                Percentage Points
Supplies                                   $  3,337          $ 2,841                    11.9            $        6,483          $ 5,882                     6.8
Commercial                                    1,085              808                     6.7                     2,042            1,884                     1.8
Consumer                                        901              509                     9.4                     1,842            1,116                     8.1

Total Printing                             $  5,323          $ 4,158                    28.0            $       10,367          $ 8,882                    16.7


(1)Weighted Net Revenue Change Percentage Points measures contribution of each
business unit towards overall segment revenue growth. It is calculated by
dividing the change in revenue of each business unit from the prior-year period
by total segment revenue for the prior-year period.

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HP INC. AND SUBSIDIARIES
                    Management's Discussion and Analysis of
           Financial Condition and Results of Operations (Continued)
Three months ended April 30, 2021 compared with three months ended April 30,
2020
Printing net revenue increased 28.0% (increased 26.9% on a constant currency
basis) for the three months ended April 30, 2021. The increase in net revenue
was driven by growth in Supplies, Consumer and Commercial. Net revenue for
Supplies increased 17.5%, primarily driven by favorable pricing including lower
promotions and improved demand. Also, for the three months ended April 30, 2020,
Supplies net revenue was impacted by COVID-19. Printer unit volume increased
41.8% and ASPs increased 20.2%. The increase in printer unit volume was
primarily driven by unit increase in both Consumer and Commercial. Printer ASPs
increased primarily due to favorable pricing including lower promotions,
partially offset by mix shifts.
Net revenue for Commercial increased by 34.3%, primarily due to 33.3% increase
in ASPs and a 21.8% increase in printer unit volume. The increase in ASPs was
primarily driven by favorable mix shift and pricing including lower promotions.
The printer unit volume increased due to improved demand as compared to
prior-year period which was impacted by COVID-19.
Net revenue for Consumer increased 77.0%, primarily due to a 45.1% increase in
printer unit volume and 22.3% increase in ASPs. The printer unit volume
increased due to strong demand from remote working and learning and supply chain
disruption in prior-year period due to COVID-19. The increase in ASPs was
primarily driven by favorable pricing including lower promotions, partially
offset by mix shifts.
Printing earnings from operations as a percentage of net revenue increased by
4.7 percentage points for the three months ended April 30, 2021, primarily due
to increase in gross margin and lower operating expense as a percentage of
revenue. The increase in gross margin is primarily due to favorable pricing
including lower promotions, partially offset by unfavorable mix shifts.
Operating expenses as a percentage of revenue decreased primarily due to less
variability in expenses as some expenses are fixed or semi-variable, partially
offset by higher variable compensation.

Six months ended April 30, 2021 compared with six months ended April 30, 2020
Printing net revenue increased 16.7% (increased 16.4% on a constant currency
basis) for the six months ended April 30, 2021. The increase in net revenue was
driven by growth in Consumer, Supplies and Commercial. Net revenue for Supplies
increased 10.2%, primarily driven by favorable pricing including lower
promotions and improved demand. Also, for the six months ended April 30, 2020,
Supplies net revenue was impacted by COVID-19. Printer unit volume increased
27.1% and ASPs increased 9.8%. The increase in printer unit volume was primarily
driven by unit increase in both Consumer and Commercial. Printer ASPs increased
primarily due to favorable pricing including lower promotions, partially offset
by mix shifts.
Net revenue for Commercial increased by 8.4%, primarily due to a 9.9% increase
in printer unit volume and 4.2% increase in ASPs. The printer unit volume
increased due to improved demand as compared to prior-year period which was
impacted by COVID-19. The increase in ASPs was primarily driven by favorable
pricing including lower promotions and mix shifts.
Net revenue for Consumer increased 65.1%, primarily due to a 29.8% increase in
printer unit volume and 27.5% increase in ASPs. The printer unit volume
increased due to strong demand from remote working and learning and supply chain
disruption in prior-year period due to COVID-19. The increase in ASPs was
primarily driven by favorable pricing including lower promotions.
Printing earnings from operations as a percentage of net revenue increased by
4.1 percentage points for the six months ended April 30, 2021, primarily due to
increase in gross margin and lower operating expense as a percentage of revenue.
The increase in gross margin is primarily due to favorable pricing including
lower promotions, partially offset by mix shifts. Operating expenses as a
percentage of revenue decreased primarily due to less variability in expenses as
some expenses are fixed or semi-variable, partially offset by higher variable
compensation.

Corporate Investments
The loss from operations in Corporate Investments for the three and six months
ended April 30, 2021, was primarily due to expenses associated with our
incubation projects and investments in digital enablement.
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                            HP INC. AND SUBSIDIARIES
                    Management's Discussion and Analysis of
           Financial Condition and Results of Operations (Continued)

LIQUIDITY AND CAPITAL RESOURCES
We use cash generated by operations as our primary source of liquidity. While
the impacts from the COVID-19 pandemic are currently expected to be temporary,
there is uncertainty around its extent and duration and our liquidity and
working capital needs may be impacted in the future periods. We believe that
current cash, cash flow from operating activities, new borrowings, available
commercial paper authorization and the credit facilities will be sufficient to
meet HP's operating cash requirements, planned capital expenditures, interest
and principal payments on all borrowings, pension and post-retirement funding
requirements, authorized share repurchases and annual dividend payments for the
foreseeable future. Additionally, if suitable acquisition opportunities arise,
the Company may obtain all or a portion of the required financing through
additional borrowings. While our access to capital markets may be constrained
and our cost of borrowing may increase under certain business, market and
economic conditions, our access to a variety of funding sources to meet our
liquidity needs is designed to facilitate continued access to capital resources
under all such conditions. Our liquidity is subject to various risks including
the risks identified in the section entitled "Risk Factors" in Item 1A of Part I
in our Annual Report on Form 10-K for the fiscal year ended October 31, 2020 and
the market risks identified in the section entitled "Quantitative and
Qualitative Disclosures about Market Risk" in Item 3 of Part I of this report.
During the three months ended April 30, 2021, HP completed two acquisitions with
a combined purchase price of $170 million, net of cash acquired, of which $117
million was recorded as goodwill and $78 million as intangible assets related to
these acquisitions.
On June 1, 2021, HP made a cash payment of $411 million in connection with the
acquisition of HyperX, the gaming division of Kingston Technology Company. The
cash payment is subject to customary closing and other adjustments and will be
finalized in future periods.
Our cash and cash equivalents balances are held in numerous locations throughout
the world. We utilize a variety of planning and financing strategies in an
effort to ensure that our worldwide cash is available when and where it is
needed. Amounts held outside of the United States are generally utilized to
support non-U.S. liquidity needs and may from time to time be distributed to the
United States. The Tax Cuts and Jobs Act ("TCJA") made significant changes to
the U.S. tax law, including a one-time transition tax on accumulated foreign
earnings. The payments associated with this one-time transition tax will be paid
over eight years and began in fiscal year 2019. We expect a significant portion
of the cash and cash equivalents held by our foreign subsidiaries will no longer
be subject to U.S. income tax consequences upon a subsequent repatriation to the
United States as a result of the transition tax on accumulated foreign earnings.
However, a portion of this cash may still be subject to foreign income tax or
withholding tax consequences upon repatriation. As we evaluate the future cash
needs of our operations, we may revise the amount of foreign earnings considered
to be permanently reinvested in our foreign subsidiaries and how to utilize such
funds, including reducing our gross debt level, or other uses.
Liquidity
Our key cash flow metrics were as follows:
                                                   Six months ended April 30
                                                        2021                  2020
                                                          In millions
Net cash provided by operating activities   $         2,468                 $  775
Net cash used in investing activities                  (315)                

(380)


Net cash used in financing activities                (3,593)                

(878)


Net decrease in cash and cash equivalents   $        (1,440)

$ (483)




Operating Activities
Compared to the corresponding period in fiscal year 2020, net cash provided by
operating activities increased by $1.7 billion for the six months ended
April 30, 2021, primarily due to higher earnings from operations and favorable
working capital changes.
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HP INC. AND SUBSIDIARIES
                    Management's Discussion and Analysis of
           Financial Condition and Results of Operations (Continued)
Key Working Capital Metrics
Management utilizes current cash conversion cycle information to manage our
working capital level. Our working capital metrics and cash conversion cycle
impacts were as follows:
                                                                As of                                                               As of
                                     April 30, 2021           October 31, 2020           Change          April 30, 2020           October 31, 2019           Change           Y/Y Change
Days of sales outstanding in                28                        32                   (4)                  37                        35                    2                 (9)
accounts receivable ("DSO")
Days of supply in inventory ("DOS")         54                        43                   11                   57                        41                   16                 (3)
Days of purchases outstanding in          (110)                     (105)                  (5)                (128)                     (107)                 (21)                18
accounts payable ("DPO")
Cash conversion cycle                      (28)                      (30)                   2                  (34)                      (31)                  (3)                 6


April 30, 2021 as compared to April 30, 2020
The cash conversion cycle is the sum of days of DSO and DOS less DPO. Items
which may cause the cash conversion cycle in a particular period to differ from
a long-term sustainable rate include, but are not limited to, changes in
business mix, changes in payment terms, extent of receivables factoring,
seasonal trends and the timing of revenue recognition and inventory purchases
within the period.
DSO measures the average number of days our receivables are outstanding. DSO is
calculated by dividing ending accounts receivable, net of allowance for credit
losses, by a 90-day average net revenue. The decrease in DSO was primarily due
to favorable revenue linearity and strong collections.
DOS measures the average number of days from procurement to sale of our product.
DOS is calculated by dividing ending inventory by a 90-day average cost of
revenue. The decrease in DOS was primarily due to higher cost of revenue driven
by strong demand, as compared to prior-year period, partially offset by
strategic buys in Personal Systems.
DPO measures the average number of days our accounts payable balances are
outstanding. DPO is calculated by dividing ending accounts payable by a 90-day
average cost of revenue. The decrease in DPO was primarily due to working
capital management activities.
Investing Activities
Compared to the corresponding period in fiscal year 2020, net cash used in
investing activities decreased by $0.1 billion for the six months ended
April 30, 2021, primarily due to decrease in investments of $0.3 billion,
partially offset by collateral posted for derivative instruments of $0.2 billion
and higher net payments for acquisitions of $0.1 billion.
Financing Activities
Compared to the corresponding period in fiscal year 2020, net cash used in
financing activities increased by $2.8 billion for the six months ended
April 30, 2021, primarily due to higher share repurchases of $2.2 billion and
lower commercial paper activity of $0.6 billion.
Share Repurchases and Dividends
During the six months ended April 30, 2021, HP returned $3.5 billion to the
shareholders in the form of share repurchases of $3.0 billion and cash dividends
of $0.5 billion. As of April 30, 2021, HP had approximately $9.7 billion
remaining under the share repurchase authorizations approved by HP's Board of
Directors.
For more information on our share repurchases, see Note 10, "Stockholders'
Deficit", to the Consolidated Condensed Financial Statements in Item 1 of Part I
of this report, which is incorporated herein by reference.
Capital Resources
Debt Levels
We maintain debt levels that we establish through consideration 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. Depending on these factors, we may,
from time to time, incur additional indebtedness or refinance existing
indebtedness. Outstanding borrowings decreased to $6.1 billion as of April 30,
2021 as compared to $6.2 billion as of October 31, 2020, bearing
weighted-average interest rates of 3.9% for April 30, 2021 and October 31, 2020.
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HP INC. AND SUBSIDIARIES
                    Management's Discussion and Analysis of
           Financial Condition and Results of Operations (Continued)
Our weighted-average interest rate reflects the effective rate on our borrowings
prevailing during the period and reflects the effect of interest rate swaps. For
more information on our interest rate swaps, see Note 8, "Financial
Instruments", to the Consolidated Condensed Financial Statements in Item 1 of
Part I of this report, which is incorporated herein by reference.
As of April 30, 2021, we maintained a 5-year senior unsecured committed
revolving credit facility and a 364-day revolving credit facility with aggregate
lending commitments of $4.0 billion and $1.0 billion, respectively. Commitments
under the $4.0 billion and $1.0 billion revolving credit facilities would have
been available until March 30, 2023, and May 28, 2021, respectively.
On May 26, 2021, we entered into a new $5.0 billion 5-year sustainability-linked
senior unsecured committed revolving credit facility (the 'New Revolving
Facility"). Commitment fees, interest rates and other terms of borrowing under
the New Revolving Facility vary based on HP's external credit ratings and
certain sustainability metrics. Funds borrowed under the New Revolving Facility
may be used for general corporate purposes. Commitments under the $4.0 billion
revolving credit facility and the $1.0 billion revolving credit facility were
terminated concurrently with the execution of the New Revolving Facility.
Available Borrowing Resources
As of April 30, 2021, we had available borrowing resources of $634 million from
uncommitted lines of credit in addition to the senior unsecured committed
revolving credit facilities.
In December 2020, we filed a post-effective amendment to convert the shelf
registration statement we initially filed in December 2019 (the "2019 Shelf
Registration Statement") to a non-automatic shelf registration statement because
we are no longer a "well-known seasoned issuer". The 2019 Shelf Registration
Statement was declared effective by the SEC on February 25, 2021 and enables us
to offer for sale, from time to time, in one or more offerings, $5.0 billion, in
the aggregate, of debt securities, common stock, preferred stock, depository
shares and warrants.
For more information on our borrowings, see Note 9, "Borrowings", to the
Consolidated Condensed Financial Statements in Item 1 of Part I of this report,
which is incorporated herein by reference.
Credit Ratings
Our credit risk is evaluated by major independent rating agencies based upon
publicly available information as well as information obtained in our ongoing
discussions with them. While we do not have any rating downgrade triggers that
would accelerate the maturity of a material amount of our debt, previous
downgrades have increased the cost of borrowing under our credit facilities,
have reduced market capacity for our commercial paper and have required the
posting of additional collateral under some of our derivative contracts. In
addition, any further downgrade to our credit ratings by any rating agencies may
further impact us in a similar manner, and, depending on the extent of any such
downgrade, could have a negative impact on our liquidity and capital position.
We can access alternative sources of funding, including drawdowns under our
credit facilities, if necessary, to offset potential reductions in the market
capacity for our commercial paper.

CONTRACTUAL AND OTHER OBLIGATIONS
Unconditional Purchase Obligation
Purchase obligations include agreements to purchase goods or services that are
enforceable and legally binding on HP and that specify all significant terms,
including fixed or minimum quantities to be purchased; fixed, minimum or
variable price provisions; and the approximate timing of the transaction. These
unconditional purchase obligations are primarily related to inventory and
service support. Unconditional purchase obligations exclude agreements that are
cancellable without penalty. As of April 30, 2021, the Company had outstanding
purchase commitments of $6.5 billion. The majority of these commitments are due
within five years, see Note 14, "Commitments", to the Consolidated Condensed
Financial Statements in Item 1 of Part I of this report, which is incorporated
herein by reference.
Retirement and Post-Retirement Benefit Plan Contributions
As of April 30, 2021, we anticipate making contributions for the remainder of
fiscal year 2021 of approximately $34 million to our non-U.S. pension plans,
$19 million to cover benefit payments to U.S. non-qualified pension plan
participants and $3 million to cover benefit claims for our post-retirement
benefit plans. Our policy is to fund our pension plans so that we meet at least
the minimum contribution required by local government, funding and taxing
authorities. For more information on our retirement and post-retirement benefit
plans, see Note 4, "Retirement and Post-Retirement Benefit Plans", to the
Consolidated Condensed Financial Statements in Item 1 of Part I of this report,
which is incorporated herein by reference.
Cost Savings Plan
As a result of our approved restructuring plans, we expect to make future cash
payments of approximately $0.4 billion. We expect to make future cash payments
of $0.1 billion in fiscal year 2021 with remaining cash payments through fiscal
year
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HP INC. AND SUBSIDIARIES
                    Management's Discussion and Analysis of
           Financial Condition and Results of Operations (Continued)
2023. For more information on our restructuring activities that are part of our
cost improvements, see Note 3, "Restructuring and Other Charges", to the
Consolidated Condensed Financial Statements in Item 1 of Part I of this report,
which is incorporated herein by reference.
Uncertain Tax Positions
As of April 30, 2021, we had approximately $553 million of recorded liabilities
and related interest and penalties pertaining to uncertain tax positions. We are
unable to make a reasonable estimate as to when cash settlement with the tax
authorities might occur due to the uncertainties related to these tax matters.
Payments of these obligations would result from settlements with taxing
authorities. For more information on our uncertain tax positions, see Note 5,
"Taxes on Earnings", to the Consolidated Condensed Financial Statements in
Item 1 of Part I of this report, which is incorporated herein by reference.

OFF-BALANCE SHEET ARRANGEMENTS
As part of our ongoing business, we have not participated in transactions that
generate material relationships with unconsolidated entities or financial
partnerships, such as entities often referred to as structured finance or
special purpose entities, which would have been established for the purpose of
facilitating off-balance sheet arrangements or other contractually narrow or
limited purposes.
We have third-party short-term financing arrangements intended to facilitate the
working capital requirements of certain customers. For more information on our
third-party short-term financing arrangements, see Note 6, "Supplementary
Financial Information", to the Consolidated Condensed Financial Statements in
Item 1 of Part I of this report, which is incorporated herein by reference.
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