HP INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(Unaudited)
(In millions, except per share amounts)
Three months ended
---------------------------------
October July 31, October
31, 2016 2016 31, 2015
---------- ---------- ---------
Net revenue $ 12,512 $ 11,892 $ 12,266
Costs and expenses:
Cost of revenue 10,221 9,720 9,900
Research and development 318 298 282
Selling, general and administrative 1,082 719 1,212
Restructuring and other charges 49 36 41
Amortization of intangible assets -- 2 26
Defined benefit plan settlement
charges 179 -- 7
---------- ---------- ---------
Total costs and expenses 11,849 10,775 11,468
---------- ---------- ---------
Earnings from continuing operations 663 1,117 798
Interest and other, net 347 (36) (99)
---------- ---------- ---------
Earnings from continuing operations
before taxes 1,010 1,081 699
(Provision for) benefit from taxes (497) (238) 816
---------- ---------- ---------
Net earnings from continuing operations 513 843 1,515
Net loss from discontinued operations (21) (60) (192)
---------- ---------- ---------
Net earnings $ 492 $ 783 $ 1,323
========== ========== =========
Net earnings (loss) per share:
Basic
Continuing operations $ 0.30 $ 0.49 $ 0.84
Discontinued operations (0.01) (0.03) (0.11)
---------- ---------- ---------
Total basic net earnings per share $ 0.29 $ 0.46 $ 0.73
========== ========== =========
Diluted
Continuing operations $ 0.30 $ 0.49 $ 0.83
Discontinued operations (0.02) (0.04) (0.10)
---------- ---------- ---------
Total diluted net earnings per
share $ 0.28 $ 0.45 $ 0.73
========== ========== =========
Cash dividends declared per share $ -- $ 0.25 $ --
Weighted-average shares used to compute
net earnings per share:
Basic 1,712 1,711 1,802
Diluted 1,729 1,725 1,821
HP INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(Unaudited)
(In millions, except per share amounts)
Twelve months ended Oct
31,
-----------------------
2016 2015
----------- -----------
Net revenue $ 48,238 $ 51,463
Costs and expenses:
Cost of revenue 39,240 41,524
Research and development 1,209 1,191
Selling, general and administrative 3,840 4,720
Restructuring and other charges 205 63
Amortization of intangible assets 16 102
Defined benefit plan settlement charges/(credits) 179 (57)
----------- -----------
Total costs and expenses 44,689 47,543
----------- -----------
Earnings from continuing operations 3,549 3,920
Interest and other, net 212 (388)
----------- -----------
Earnings from continuing operations before taxes 3,761 3,532
(Provision for) benefit from taxes (1,095) 186
----------- -----------
Net earnings from continuing operations 2,666 3,718
Net (loss) earnings from discontinued operations (170) 836
----------- -----------
Net earnings $ 2,496 $ 4,554
=========== ===========
Net earnings (loss) per share:
Basic
Continuing operations $ 1.54 $ 2.05
Discontinued operations (0.10) 0.46
----------- -----------
Total basic net earnings per share $ 1.44 $ 2.51
=========== ===========
Diluted
Continuing operations $ 1.53 $ 2.02
Discontinued operations (0.10) 0.46
----------- -----------
Total diluted net earnings per share $ 1.43 $ 2.48
=========== ===========
Cash dividends declared per share $ 0.50 $ 0.67
Weighted-average shares used to compute net
earnings per share:
Basic 1,730 1,814
Diluted 1,743 1,836
HP INC. AND SUBSIDIARIES
ADJUSTMENTS TO GAAP NET EARNINGS, EARNINGS FROM OPERATIONS,
OPERATING MARGIN AND DILUTED NET EARNINGS PER SHARE
(Unaudited)
(In millions, except per share amounts)
Three
Three Diluted Three Diluted months Diluted
months net months net ended net
ended earnings ended earnings October earnings
October per July 31, per 31, per
31, 2016 share 2016 share 2015 share
-------- -------- -------- -------- ------- --------
GAAP net earnings
from continuing
operations $ 513 $ 0.30 $ 843 $ 0.49 $ 1,515 $ 0.83
Non-GAAP
adjustments:
Restructuring
and other
charges 49 0.03 36 0.02 41 0.02
Acquisition and
other related
charges 7 -- -- -- -- --
Amortization of
intangible
assets -- -- 2 -- 26 0.01
Non-operating
retirement-
related credits (28) (0.02) (38) (0.02) (58) (0.03)
Defined benefit
plan settlement
charges 179 0.10 -- -- 7 --
Adjustments for
taxes 329 0.20 12 0.01 9 --
Tax
indemnification
credits (435) (0.25) (29) (0.02) -- --
Valuation
allowances, net -- -- -- -- (992) (0.53)
-------- -------- -------- -------- ------- --------
Non-GAAP net
earnings $ 614 $ 0.36 $ 826 $ 0.48 $ 548 $ 0.30
======== ======== ======== ======== ======= ========
GAAP earnings
from continuing
operations $ 663 $ 1,117 $ 798
Non-GAAP
adjustments:
Restructuring
and other
charges 49 36 41
Acquisition and
other related
charges 7 -- --
Amortization of
intangible
assets -- 2 26
Non-operating
retirement-
related credits (28) (38) (58)
Defined benefit
plan settlement
charges 179 -- 7
-------- -------- -------
Non-GAAP earnings $ 870 $ 1,117 $ 814
======== ======== =======
GAAP operating
margin from
continuing
operations 5% 9% 7%
======== ======== =======
Non-GAAP
adjustments 2% --% 0%
-------- -------- -------
Non-GAAP
operating margin 7% 9% 7%
======== ======== =======
HP INC. AND SUBSIDIARIES
ADJUSTMENTS TO GAAP NET EARNINGS, EARNINGS FROM OPERATIONS,
OPERATING MARGIN AND DILUTED NET EARNINGS PER SHARE
(Unaudited)
(In millions, except per share amounts)
Twelve Twelve
months Diluted months Diluted
ended net ended net
October 31, earnings October 31, earnings
2016 per share 2015 per share
----------- ----------- ----------- -----------
GAAP net earnings from
continuing operations $ 2,666 $ 1.53 $ 3,718 $ 2.02
Non-GAAP adjustments:
Restructuring and
other charges 205 0.12 63 0.03
Acquisition-related
charges 7 -- 1 --
Amortization of
intangible assets 16 0.01 102 0.06
Non-operating
retirement-related
credits (146) (0.08) (232) (0.13)
Defined benefit plan
settlement
charges/(credits) 179 0.10 (57) (0.03)
Adjustments for taxes 332 0.19 76 0.04
Valuation allowance,
net -- -- (992) (0.53)
Tax indemnification
credits (472) (0.27) -- --
----------- ----------- ----------- -----------
Non-GAAP net earnings $ 2,787 $ 1.60 $ 2,679 $ 1.46
=========== =========== =========== ===========
GAAP earnings from
continuing operations $ 3,549 $ 3,920
Non-GAAP adjustments:
Restructuring and
other charges 205 63
Acquisition-related
charges 7 1
Amortization of
intangible assets 16 102
Non-operating
retirement-related
credits (146) (232)
Defined benefit plan
settlement
charges/(credits) 179 (57)
----------- -----------
Non-GAAP earnings $ 3,810 $ 3,797
=========== ===========
GAAP operating margin
from continuing
operations 7% 8%
Non-GAAP adjustments 1% (1)%
----------- -----------
Non-GAAP operating
margin 8% 7%
=========== ===========
HP INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited)
(In millions)
As of
------------------------
October 31, October 31,
2016 2015
----------- -----------
ASSETS
Current assets:
Cash and cash equivalents $ 6,288 $ 7,584
Accounts receivable 4,114 4,825
Inventory 4,484 4,288
Other current assets 3,582 4,498
Current assets of discontinued operations -- 30,592
----------- -----------
Total current assets 18,468 51,787
----------- -----------
Property, plant and equipment 1,736 1,492
Goodwill 5,622 5,680
Other non-current assets 3,184 1,592
Non-current assets of discontinued operations -- 46,331
----------- -----------
Total assets $ 29,010 $ 106,882
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable and short-term borrowings $ 78 $ 2,194
Accounts payable 11,103 10,194
Employee compensation and benefits 759 747
Taxes on earnings 231 243
Deferred revenue 919 1,051
Other accrued liabilities 5,718 6,241
Current liabilities of discontinued operations -- 21,521
----------- -----------
Total current liabilities 18,808 42,191
----------- -----------
Long-term debt 6,758 6,677
Other non-current liabilities 7,333 7,414
Non-current liabilities of discontinued operations -- 22,449
Stockholders' equity:
HP stockholders' (deficit) equity (3,889) 27,768
Non-controlling interests of discontinued
operations -- 383
----------- -----------
Total stockholders' (deficit) equity (3,889) 28,151
----------- -----------
Total liabilities and stockholders' equity $ 29,010 $ 106,882
=========== ===========
HP INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(In millions)
Three months ended
October 31,
------------------------
2016 2015(a)
----------- -----------
Cash flows from operating activities:
Net earnings $ 492 $ 1,323
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization 83 1,007
Stock-based compensation expense 42 234
Provision for doubtful accounts 28 33
Provision for inventory 19 78
Restructuring and other charges 49 591
Deferred taxes on earnings (577) (1,598)
Excess tax benefit from stock-based
compensation (2) (21)
Other, net 210 355
Changes in operating assets and liabilities, net
of acquisitions:
Accounts receivable (163) (627)
Financing receivables -- (257)
Inventory (542) 137
Accounts payable 690 389
Taxes on earnings 983 938
Restructuring and other (43) (237)
Other assets and liabilities (571) 264
----------- -----------
Net cash provided by operating activities 698 2,609
----------- -----------
Cash flows from investing activities:
Investment in property, plant and equipment (146) (961)
Proceeds from sale of property, plant and
equipment 6 114
Purchases of available-for-sale securities and
other investments (4) (79)
Maturities and sales of available-for-sale
securities and other investments -- 56
Payments made in connection with business
acquisitions, net of cash acquired (7) (27)
Proceeds from business divestitures, net 315 90
----------- -----------
Net cash provided by (used in) investing
activities 164 (807)
----------- -----------
Cash flows from financing activities:
Short-term borrowings with original maturities
less than 90 days, net 25 (2,559)
Proceeds from debt, net of issuance costs -- 14,765
Payment of debt (30) (13,225)
Settlement of cash flow hedge -- 28
Issuance of common stock under employee stock
plans 7 68
Repurchase of common stock (2) (301)
Excess tax benefit from stock-based compensation 2 21
Cash dividends paid (212) (337)
----------- -----------
Net cash used in financing activities (210) (1,540)
----------- -----------
Net increase in cash and cash equivalents 652 262
Cash and cash equivalents at beginning of period 5,636 17,171
Cash and cash equivalents at end of period $ 6,288 $ 17,433
=========== ===========
(a) The consolidated condensed statement of cash flows for the three months
ended October 31, 2015 represents the combined cash flows of HP prior
to separation, as previously filed, and has not been adjusted to
reflect the effect of the separation of Hewlett Packard Enterprise
Company.
HP INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(In millions)
Twelve months ended
October 31,
------------------------
2016 2015(a)
----------- -----------
Cash flows from operating activities:
Net earnings $ 2,496 $ 4,554
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization 332 4,061
Stock-based compensation expense 182 709
Provision for doubtful accounts 65 71
Provision for inventory 95 305
Restructuring and other charges 200 1,017
Deferred taxes on earnings 401 (700)
Excess tax benefit from stock-based
compensation (6) (145)
Other, net (198) 1,031
Changes in operating assets and liabilities, net
of acquisitions:
Accounts receivable 565 572
Financing receivables -- (65)
Inventory (291) (330)
Accounts payable 928 31
Taxes on earnings 106 (137)
Restructuring and other (157) (1,243)
Other assets and liabilities (1,488) (3,241)
----------- -----------
Net cash provided by operating activities 3,230 6,490
----------- -----------
Cash flows from investing activities:
Investment in property, plant and equipment (433) (3,603)
Proceeds from sale of property, plant and
equipment 6 424
Purchases of available-for-sale securities and
other investments (126) (259)
Maturities and sales of available-for-sale
securities and other investments 133 302
Payments made in connection with business
acquisitions, net of cash acquired (7) (2,644)
Proceeds from business divestitures, net 475 246
----------- -----------
Net cash provided by (used in) investing
activities 48 (5,534)
----------- -----------
Cash flows from financing activities:
Short-term borrowings with original maturities
less than 90 days, net 97 74
Proceeds from debt, net of issuance costs 4 20,758
Payment of debt (2,188) (15,867)
Settlement of cash flow hedge 4 (4)
Net transfer of cash and cash equivalents to
Hewlett Packard Enterprise Company (10,375) --
Issuance of common stock under employee stock
plans 48 371
Repurchase of common stock (1,161) (2,883)
Excess tax benefit from stock-based compensation 6 145
Cash dividends paid (858) (1,250)
----------- -----------
Net cash (used in) provided by financing
activities (14,423) 1,344
----------- -----------
Net (decrease) increase in cash and cash
equivalents (11,145) 2,300
Cash and cash equivalents at beginning of
period(a) 17,433 15,133
----------- -----------
Cash and cash equivalents at end of period $ 6,288 $ 17,433
=========== ===========
(a) The consolidated condensed statement of cash flows for the twelve
months ended October 31, 2015 represents the combined cash flows of HP
prior to separation, as previously filed, and has not been adjusted to
reflect the effect of the separation of Hewlett Packard Enterprise
Company.
HP INC. AND SUBSIDIARIES
SEGMENT INFORMATION
(Unaudited)
(In millions)
Three months ended
-------------------------------------
October 31, July 31, October 31,
2016 2016 2015
----------- ----------- -----------
Net revenue:
Personal Systems $ 8,018 $ 7,512 $ 7,694
Printing 4,558 4,423 4,965
Corporate Investments 1 -- 4
----------- ----------- -----------
Total segments 12,577 11,935 12,663
Intersegment net revenue
eliminations and other (65) (43) (397)
----------- ----------- -----------
Total net revenue $ 12,512 $ 11,892 $ 12,266
=========== =========== ===========
Earnings from continuing operations
before taxes:(a)
Personal Systems $ 346 $ 333 $ 281
Printing 637 903 837
Corporate Investments (32) (35) (11)
----------- ----------- -----------
Total segment earnings from
operations 951 1,201 1,107
Corporate costs and eliminations (39) (45) (249)
Stock-based compensation expense (42) (39) (44)
Acquisition and other related
charges (7) -- --
Restructuring and other charges (49) (36) (41)
Amortization of intangible assets -- (2) (26)
Non-operating retirement-related
credits(a) 28 38 58
Defined benefit plan settlement
credits (179) -- (7)
Interest and other, net 347 (36) (99)
----------- ----------- -----------
Total earnings from continuing
operations before taxes $ 1,010 $ 1,081 $ 699
=========== =========== ===========
(a) Effective at the beginning of its first quarter of fiscal 2016, HP
implemented a reporting change to provide better transparency to its
segment operating results. This reporting change resulted in the
exclusion of certain market-related factors such as interest cost,
expected return on plan assets, amortized actuarial gains or losses,
and impacts from other market-related factors related to its defined
benefit pension and post-retirement benefit plans from its segment
operating results ("Non-operating retirement-related
credits/(charges)"). This change also resulted in the exclusion of
certain plan curtailments, settlements and special termination benefits
related to its defined benefit pension and post-retirement benefit
plans from HP's segment operating results. Segment operating results
will continue to include service costs and amortization of prior
service costs associated with HP's defined benefit pension and post-
retirement benefit plans. The reporting change had an immaterial impact
to previously reported segment net revenue and earnings from
operations. This change had no impact on HP's previously reported
consolidated net revenue, earnings from operations, net earnings or net
earnings per share.
HP INC. AND SUBSIDIARIES
SEGMENT INFORMATION
(Unaudited)
(In millions)
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