SEC Info℠ | Home | Search | My Interests | Help | Sign In | Please Sign In | ||||||||||||||||||||
As Of Filer Filing For·On·As Docs:Size 8/22/19 HP Inc 8-K:2,9 7/31/19 2:794K |
Document/Exhibit Description Pages Size 1: 8-K Current Report HTML 19K 2: EX-99.1 Miscellaneous Exhibit HTML 290K
Exhibit |
1501 Page Mill Road hp.com Editorial
contacts HP Inc. Media Relations HP Inc. Investor Relations | EXHIBIT 99.1 |
News Release | |
HP
Inc. Reports Fiscal 2019 Third Quarter Results |
PALO ALTO, CA – (GlobeNewswire) – August 22, 2019 – HP (NYSE: HPQ) | |
● | Third quarter GAAP diluted net earnings per share ("EPS") of $0.78, above the previously provided outlook of $0.49 to $0.52 per share |
● | Third quarter non-GAAP diluted net EPS of $0.58, above the previously provided outlook of $0.53 to $0.56 per share |
● | Third
quarter net revenue of $14.6 billion, up 0.1% from the prior-year period |
● | Third quarter net cash provided by operating activities of $2.3 billion, free cash flow of $2.2 billion |
● | Third quarter returned $0.8 billion to shareholders in the form of share repurchases and dividends |
HP
Inc. fiscal 2019 third quarter financial performance | |||||||||||
Q3 FY19 | Q3 FY18 | Y/Y | |||||||||
GAAP net revenue ($B) | $ | 14.6 | $ | 14.6 | 0.1% | ||||||
GAAP
operating margin | 7.4% | 7.0% | 0.4 pts | ||||||||
GAAP net earnings ($B) | $ | 1.2 | $ | 0.9 | 34.0% | ||||||
GAAP
diluted net EPS | $ | 0.78 | $ | 0.54 | 44.4% | ||||||
Non-GAAP operating margin | 7.6% | 7.2% | 0.4
pts | ||||||||
Non-GAAP net earnings ($B) | $ | 0.9 | $ | 0.8 | 4.8% | ||||||
Non-GAAP diluted
net EPS | $ | 0.58 | $ | 0.52 | 11.5% | ||||||
Net cash provided by operating activities ($B) | $ | 2.3 | $ | 1.5 | 54.8% | ||||||
Free
cash flow ($B) | $ | 2.2 | $ | 1.4 | 55.4% |
• | Personal
Systems net revenue was up 3% year over year (up 6% in constant currency) with a 5.6% operating margin. Commercial net revenue increased 10% and Consumer net revenue decreased 11%. Total units were up 5% with Notebooks units up 2% and Desktops units up 11%. |
• | Printing net revenue was down 5% year over year (down 5% in constant currency) with a 15.6% operating margin. Total hardware units were down 9% with Commercial hardware units down 4% and Consumer hardware units down 10%. Supplies net revenue was down 7% (down 7% in constant currency). |
HP
INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS (Unaudited) (In millions, except per share amounts) |
Three months
ended | |||||||||||
Net revenue | $ | 14,603 | $ | 14,036 | $ | 14,586 | |||||
Costs
and expenses: | |||||||||||
Cost of revenue | 11,698 | 11,307 | 11,898 | ||||||||
Research
and development | 413 | 353 | 347 | ||||||||
Selling, general and administrative(a) | 1,376 | 1,339 | 1,289 | ||||||||
Restructuring
and other charges | 17 | 69 | 4 | ||||||||
Acquisition-related (credits) charges | (9 | ) | 11 | 10 | |||||||
Amortization
of intangible assets | 29 | 29 | 20 | ||||||||
Total costs and expenses | 13,524 | 13,108 | 13,568 | ||||||||
Earnings
from operations | 1,079 | 928 | 1,018 | ||||||||
Interest and other, net(a) | (831 | ) | (45 | ) | — | ||||||
Earnings
before taxes | 248 | 883 | 1,018 | ||||||||
Benefit from (provision for) taxes | 931 | (101 | ) | (138 | ) | ||||||
Net
earnings | $ | 1,179 | $ | 782 | $ | 880 | |||||
Net
earnings per share: | |||||||||||
Basic | $ | 0.79 | $ | 0.51 | $ | 0.55 | |||||
Diluted | $ | 0.78 | $ | 0.51 | $ | 0.54 | |||||
Cash
dividends declared per share | $ | 0.32 | $ | — | $ | 0.28 | |||||
Weighted-average
shares used to compute net earnings per share: | |||||||||||
Basic | 1,499 | 1,529 | 1,601 | ||||||||
Diluted | 1,508 | 1,536 | 1,618 |
(a) | Pursuant
to adoption of Accounting Standard Update ("ASU") 2017-07, “Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Post-retirement Benefit Cost”, in the first quarter of fiscal year 2019, HP now reclassifies all components (excluding service cost component) of net periodic benefit cost from Selling, general and administrative expenses to Interest and other, net. HP reflected this change in prior reporting periods on an as-if basis. |
HP
INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS (Unaudited) (In millions, except per share amounts) |
Nine months ended | |||||||
Net revenue | $ | 43,349 | $ | 43,106 | |||
Costs and expenses: | |||||||
Cost
of revenue | 35,103 | 35,134 | |||||
Research and development | 1,110 | 1,050 | |||||
Selling, general and administrative(a) | 3,963 | 3,836 | |||||
Restructuring
and other charges | 141 | 92 | |||||
Acquisition-related charges | 12 | 97 | |||||
Amortization of intangible assets | 87 | 60 | |||||
Total
costs and expenses | 40,416 | 40,269 | |||||
Earnings from operations | 2,933 | 2,837 | |||||
Interest
and other, net(a) | (902 | ) | (831 | ) | |||
Earnings before taxes | 2,031 | 2,006 | |||||
Benefit from taxes | 733 | 1,870 | |||||
Net
earnings | $ | 2,764 | $ | 3,876 | |||
Net earnings per share: | |||||||
Basic | $ | 1.81 | $ | 2.38 | |||
Diluted | $ | 1.80 | $ | 2.36 | |||
Cash
dividends declared per share | $ | 0.64 | $ | 0.56 | |||
Weighted-average
shares used to compute net earnings per share: | |||||||
Basic | 1,528 | 1,627 | |||||
Diluted | 1,537 | 1,645 |
(a) | Pursuant
to adoption of ASU 2017-07, “Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Post-retirement Benefit Cost”, in the first quarter of fiscal year 2019, HP now reclassifies all components (excluding service cost component) of net periodic benefit cost from Selling, general and administrative expenses to Interest and other, net. HP reflected this change in prior reporting periods on an as-if basis. |
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
months ended | |||||||||||||||||||||||
Amounts | Diluted net earnings per share | Amounts | Diluted net earnings per share | Amounts | Diluted net earnings per share | ||||||||||||||||||
GAAP net earnings | $ | 1,179 | $ | 0.78 | $ | 782 | $ | 0.51 | $ | 880 | $ | 0.54 | |||||||||||
Non-GAAP
adjustments: | |||||||||||||||||||||||
Restructuring
and other charges | 17 | 0.02 | 69 | 0.03 | 4 | — | |||||||||||||||||
Acquisition-related
(credits) charges | (9 | ) | (0.01 | ) | 11 | 0.01 | 10 | 0.01 | |||||||||||||||
Amortization
of intangible assets | 29 | 0.02 | 29 | 0.02 | 20 | 0.01 | |||||||||||||||||
Non-operating
retirement-related credits | (21 | ) | (0.01 | ) | (10 | ) | (0.01 | ) | (56 | ) | (0.03 | ) | |||||||||||
Defined
benefit plan settlement charges | — | — | — | — | 1 | — | |||||||||||||||||
Tax
adjustments(a) | (315 | ) | (0.22 | ) | (60 | ) | (0.03 | ) | (19 | ) | (0.01 | ) | |||||||||||
Non-GAAP
net earnings | $ | 880 | $ | 0.58 | $ | 821 | $ | 0.53 | $ | 840 | $ | 0.52 | |||||||||||
GAAP
earnings from operations(b) | $ | 1,079 | $ | 928 | $ | 1,018 | |||||||||||||||||
Non-GAAP
adjustments: | |||||||||||||||||||||||
Restructuring
and other charges | 17 | 69 | 4 | ||||||||||||||||||||
Acquisition-related
(credits) charges | (9 | ) | 11 | 10 | |||||||||||||||||||
Amortization
of intangible assets | 29 | 29 | 20 | ||||||||||||||||||||
Non-GAAP
earnings from operations | $ | 1,116 | $ | 1,037 | $ | 1,052 | |||||||||||||||||
GAAP
operating margin(b) | 7 | % | 7 | % | 7 | % | |||||||||||||||||
Non-GAAP
adjustments | 1 | % | 0 | % | 0 | % | |||||||||||||||||
Non-GAAP
operating margin | 8 | % | 7 | % | 7 | % |
(a) | Includes
tax impact on non-GAAP adjustments. |
(b) | Pursuant to adoption of ASU 2017-07, “Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Post-retirement Benefit Cost”, in the first quarter of fiscal year 2019, HP now reclassifies all components (excluding service cost component) of net periodic benefit cost from Selling, general and administrative expenses to Interest and other, net. HP reflected this change in prior reporting periods on an as-if basis. |
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) |
Nine
months ended | |||||||||||||||
Amounts | Diluted net earnings per share | Amounts | Diluted net earnings per share | ||||||||||||
GAAP net earnings | $ | 2,764 | $ | 1.80 | $ | 3,876 | $ | 2.36 | |||||||
Non-GAAP
adjustments: | |||||||||||||||
Restructuring and other charges | 141 | 0.09 | 92 | 0.06 | |||||||||||
Acquisition-related
charges | 12 | 0.01 | 97 | 0.06 | |||||||||||
Amortization of intangible assets | 87 | 0.06 | 60 | 0.04 | |||||||||||
Non-operating
retirement-related credits | (43 | ) | (0.03 | ) | (165 | ) | (0.10 | ) | |||||||
Defined benefit plan settlement charges | — | — | 2 | — | |||||||||||
Debt
extinguishment costs | — | — | 126 | 0.08 | |||||||||||
Tax adjustments(a) | (451 | ) | (0.30 | ) | (1,647 | ) | (1.02 | ) | |||||||
Non-GAAP
net earnings | $ | 2,510 | $ | 1.63 | $ | 2,441 | $ | 1.48 | |||||||
GAAP
earnings from operations(b) | $ | 2,933 | $ | 2,837 | |||||||||||
Non-GAAP
adjustments: | |||||||||||||||
Restructuring and other charges | 141 | 92 | |||||||||||||
Acquisition-related
charges | 12 | 97 | |||||||||||||
Amortization of intangible assets | 87 | 60 | |||||||||||||
Non-GAAP
earnings | $ | 3,173 | $ | 3,086 | |||||||||||
GAAP
operating margin(b) | 7 | % | 7 | % | |||||||||||
Non-GAAP adjustments | 0 | % | 0 | % | |||||||||||
Non-GAAP
operating margin | 7 | % | 7 | % |
(a) | Includes
tax impact on non-GAAP adjustments. |
(b) | Pursuant to adoption of ASU 2017-07, “Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Post-retirement Benefit Cost”, in the first quarter of fiscal year 2019, HP now reclassifies all components (excluding service cost component) of net periodic benefit cost from Selling, general and administrative expenses to Interest and other, net. HP reflected this change in prior reporting periods on an as-if basis. |
HP
INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (Unaudited) (In millions) |
As of | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 4,919 | $ | 5,166 | |||
Accounts
receivable, net | 5,295 | 5,113 | |||||
Inventory | 5,716 | 6,062 | |||||
Other current assets | 3,753 | 5,046 | |||||
Total
current assets | 19,683 | 21,387 | |||||
Property, plant and equipment, net | 2,462 | 2,198 | |||||
Goodwill | 6,330 | 5,968 | |||||
Other
non-current assets | 3,930 | 5,069 | |||||
Total assets | $ | 32,405 | $ | 34,622 | |||
LIABILITIES
AND STOCKHOLDERS' DEFICIT | |||||||
Current liabilities: | |||||||
Notes payable and short-term borrowings | $ | 328 | $ | 1,463 | |||
Accounts
payable | 14,648 | 14,816 | |||||
Employee compensation and benefits | 956 | 1,136 | |||||
Taxes on earnings | 144 | 340 | |||||
Other
accrued liabilities | 8,503 | 7,376 | |||||
Total current liabilities | 24,579 | 25,131 | |||||
Long-term debt | 4,730 | 4,524 | |||||
Other
non-current liabilities | 4,227 | 5,606 | |||||
Stockholders' deficit | (1,131 | ) | (639 | ) | |||
Total liabilities and stockholders' deficit | $ | 32,405 | $ | 34,622 |
HP
INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) (In millions) |
Three months ended | |||||||
Cash flows from operating activities: | |||||||
Net earnings | $ | 1,179 | $ | 880 | |||
Adjustments
to reconcile net earnings to net cash provided by operating activities: | |||||||
Depreciation and amortization | 190 | 132 | |||||
Stock-based compensation expense | 60 | 55 | |||||
Restructuring
and other charges | 17 | 4 | |||||
Deferred taxes on earnings | 207 | 149 | |||||
Other, net | 63 | 36 | |||||
Changes
in operating assets and liabilities, net of acquisitions: | |||||||
Accounts receivable | 81 | (15 | ) | ||||
Inventory | (386 | ) | (571 | ) | |||
Accounts
payable | 825 | 1,187 | |||||
Taxes on earnings | (1,123 | ) | (134 | ) | |||
Restructuring and other | (43 | ) | (30 | ) | |||
Other
assets and liabilities | 1,273 | (179 | ) | ||||
Net cash provided by operating activities | 2,343 | 1,514 | |||||
Cash flows from investing activities: | |||||||
Investment
in property, plant and equipment | (172 | ) | (117 | ) | |||
Purchases of available-for-sale securities and other investments | (11 | ) | (16 | ) | |||
Maturities and sales of available-for-sale
securities and other investments | 17 | 243 | |||||
Collateral posted for derivative instruments | — | (240 | ) | ||||
Collateral returned for derivative instruments | — | 445 | |||||
Payment
made in connection with business acquisitions, net of cash acquired | (23 | ) | (16 | ) | |||
Net cash (used in) provided by investing activities | (189 | ) | 299 | ||||
Cash flows
from financing activities: | |||||||
Proceeds from short-term borrowings with original maturities less than 90 days, net | — | 740 | |||||
Proceeds from short-term borrowings with original maturities greater than 90 days | — | 412 | |||||
Proceeds
from debt, net of issuance costs | 30 | — | |||||
Payment of short-term borrowings with original maturities greater than 90 days | — | (97 | ) | ||||
Payment of debt | (66 | ) | (33 | ) | |||
Stock-based
award activities | 18 | 32 | |||||
Repurchase of common stock | (533 | ) | (696 | ) | |||
Cash dividends paid | (240 | ) | (223 | ) | |||
Net
cash (used in) provided by financing activities | (791 | ) | 135 | ||||
Increase in cash and cash equivalents | 1,363 | 1,948 | |||||
Cash and cash equivalents at beginning
of period | 3,556 | 4,247 | |||||
Cash and cash equivalents at end of period | $ | 4,919 | $ | 6,195 |
HP
INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) (In millions) |
Nine months ended | |||||||
Cash flows from operating activities: | |||||||
Net earnings | $ | 2,764 | $ | 3,876 | |||
Adjustments
to reconcile net earnings to net cash provided by operating activities: | |||||||
Depreciation and amortization | 539 | 388 | |||||
Stock-based compensation
expense | 233 | 203 | |||||
Restructuring and other charges | 141 | 92 | |||||
Deferred taxes on earnings | 325 | (3,167 | ) | ||||
Other,
net | 176 | 234 | |||||
Changes in operating assets and liabilities, net of acquisitions: | |||||||
Accounts receivable | (22 | ) | 23 | ||||
Inventory | (24 | ) | (121 | ) | |||
Accounts
payable | (138 | ) | 910 | ||||
Taxes on earnings | (1,123 | ) | 801 | ||||
Restructuring and other | (122 | ) | (207 | ) | |||
Other
assets and liabilities | 1,317 | 528 | |||||
Net cash provided by operating activities | 4,066 | 3,560 | |||||
Cash flows from investing activities: | |||||||
Investment
in property, plant and equipment | (475 | ) | (359 | ) | |||
Proceeds from sale of property, plant and equipment | — | 110 | |||||
Purchases of available-for-sale securities
and other investments | (80 | ) | (320 | ) | |||
Maturities and sales of available-for-sale securities and other investments | 771 | 588 | |||||
Collateral posted for
derivative instruments | (32 | ) | (1,141 | ) | |||
Collateral returned for derivative instruments | 32 | 1,355 | |||||
Payments made in connection with business acquisitions,
net of cash acquired | (427 | ) | (1,036 | ) | |||
Net cash used in investing activities | (211 | ) | (803 | ) | |||
Cash flows from financing activities: | |||||||
(Payments
of) Proceeds from short-term borrowings with original maturities less than 90 days, net | (856 | ) | 1,577 | ||||
Proceeds from short-term borrowings with original maturities greater than 90 days | — | 712 | |||||
Proceeds
from debt, net of issuance costs | 94 | — | |||||
Payment of short-term borrowings with original maturities greater than 90 days | — | (1,184 | ) | ||||
Payment of
debt | (604 | ) | (2,059 | ) | |||
Stock-based award activities | (58 | ) | 34 | ||||
Repurchase of common stock | (1,944 | ) | (1,959 | ) | |||
Cash
dividends paid | (734 | ) | (680 | ) | |||
Net cash used in financing activities | (4,102 | ) | (3,559 | ) | |||
Decrease in cash and cash equivalents | (247 | ) | (802 | ) | |||
Cash
and cash equivalents at beginning of period | 5,166 | 6,997 | |||||
Cash and cash equivalents at end of period | $ | 4,919 | $ | 6,195 |
HP
INC. AND SUBSIDIARIES SEGMENT INFORMATION (Unaudited) (In millions) |
Three months ended | |||||||||||
Net revenue:(a) | |||||||||||
Personal
Systems | $ | 9,690 | $ | 8,921 | $ | 9,395 | |||||
Printing | 4,912 | 5,116 | 5,188 | ||||||||
Corporate
Investments | 1 | — | 1 | ||||||||
Total segments | 14,603 | 14,037 | 14,584 | ||||||||
Other | — | (1 | ) | 2 | |||||||
Total
net revenue | $ | 14,603 | $ | 14,036 | $ | 14,586 | |||||
Earnings
before taxes:(a),(b) | |||||||||||
Personal Systems | $ | 547 | $ | 385 | $ | 362 | |||||
Printing | 765 | 839 | 829 | ||||||||
Corporate
Investments | (23 | ) | (24 | ) | (22 | ) | |||||
Total segment earnings from operations | 1,289 | 1,200 | 1,169 | ||||||||
Corporate
and unallocated costs and other | (113 | ) | (97 | ) | (62 | ) | |||||
Stock-based compensation expense | (60 | ) | (66 | ) | (55 | ) | |||||
Restructuring
and other charges | (17 | ) | (69 | ) | (4 | ) | |||||
Acquisition-related credits (charges) | 9 | (11 | ) | (10 | ) | ||||||
Amortization
of intangible assets | (29 | ) | (29 | ) | (20 | ) | |||||
Interest and other, net | (831 | ) | (45 | ) | — | ||||||
Earnings
before taxes | $ | 248 | $ | 883 | $ | 1,018 |
(a) | Effective
at the beginning of its first quarter of fiscal year 2019, HP implemented an organizational change to align its business unit financial reporting more closely with its current business structure. The organizational change resulted in the transfer of certain Samsung-branded product categories from Commercial to Consumer within the Printing segment. HP reflected this change to its business unit information in prior reporting periods on an as-if basis. The reporting change had no impact to previously reported segment net revenue, consolidated net revenue, earnings from operations, net earnings or net EPS. |
(b) | Pursuant to adoption of ASU 2017-07, “Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension
Cost and Net Periodic Post-retirement Benefit Cost”, in the first quarter of fiscal year 2019, HP now reclassifies all components (excluding service cost component) of net periodic benefit cost from Selling, general and administrative expenses to Interest and other, net. HP reflected this change in prior reporting periods on an as-if basis. |
HP
INC. AND SUBSIDIARIES SEGMENT INFORMATION (Unaudited) (In millions) |
Nine months ended | |||||||
Net revenue:(a) | |||||||
Personal Systems | $ | 28,268 | $ | 27,597 | |||
Printing | 15,084 | 15,505 | |||||
Corporate
Investments | 2 | 3 | |||||
Total segments | 43,354 | 43,105 | |||||
Other | (5 | ) | 1 | ||||
Total
net revenue | $ | 43,349 | $ | 43,106 | |||
Earnings
before taxes:(a),(b) | |||||||
Personal Systems | $ | 1,342 | $ | 1,026 | |||
Printing | 2,425 | 2,465 | |||||
Corporate
Investments | (71 | ) | (62 | ) | |||
Total segment earnings from operations | 3,696 | 3,429 | |||||
Corporate and unallocated costs and other | (290 | ) | (140 | ) | |||
Stock-based
compensation expense | (233 | ) | (203 | ) | |||
Restructuring and other charges | (141 | ) | (92 | ) | |||
Acquisition-related charges | (12 | ) | (97 | ) | |||
Amortization
of intangible assets | (87 | ) | (60 | ) | |||
Interest and other, net | (902 | ) | (831 | ) | |||
Earnings before taxes | $ | 2,031 | $ | 2,006 |
(a) | Effective
at the beginning of its first quarter of fiscal year 2019, HP implemented an organizational change to align its business unit financial reporting more closely with its current business structure. The organizational change resulted in the transfer of certain Samsung-branded product categories from Commercial to Consumer within the Printing segment. HP reflected this change to its business unit information in prior reporting periods on an as-if basis. The reporting change had no impact to previously reported segment net revenue, consolidated net revenue, earnings from operations, net earnings or net EPS. |
(b) | Pursuant to adoption of ASU 2017-07, “Compensation - Retirement Benefits (Topic 715):
Improving the Presentation of Net Periodic Pension Cost and Net Periodic Post-retirement Benefit Cost”, in the first quarter of fiscal year 2019, HP now reclassifies all components (excluding service cost component) of net periodic benefit cost from Selling, general and administrative expenses to Interest and other, net. HP reflected this change in prior reporting periods on an as-if basis. |
HP
INC. AND SUBSIDIARIES SEGMENT/BUSINESS UNIT INFORMATION (Unaudited) (In millions) |
Three
months ended | Change (%) | ||||||||||||||||
Q/Q | Y/Y | ||||||||||||||||
Net
revenue:(a) | |||||||||||||||||
Personal Systems | |||||||||||||||||
Notebooks | $ | 5,630 | $ | 5,099 | $ | 5,634 | 10 | % | — | % | |||||||
Desktops | 3,111 | 2,940 | 2,869 | 6 | % | 8 | % | ||||||||||
Workstations | 609 | 569 | 588 | 7 | % | 4 | % | ||||||||||
Other | 340 | 313 | 304 | 9 | % | 12 | % | ||||||||||
Total
Personal Systems | 9,690 | 8,921 | 9,395 | 9 | % | 3 | % | ||||||||||
Printing
| |||||||||||||||||
Supplies | 3,164 | 3,331 | 3,405 | (5 | )% | (7 | )% | ||||||||||
Commercial
Hardware | 1,160 | 1,179 | 1,129 | (2 | )% | 3 | % | ||||||||||
Consumer
Hardware | 588 | 606 | 654 | (3 | )% | (10 | )% | ||||||||||
Total
Printing | 4,912 | 5,116 | 5,188 | (4 | )% | (5 | )% | ||||||||||
Corporate
Investments(b) | 1 | — | 1 | NM | NM | ||||||||||||
Total
segments | 14,603 | 14,037 | 14,584 | 4 | % | — | % | ||||||||||
Other(b) | — | (1 | ) | 2 | NM | NM | |||||||||||
Total
net revenue | $ | 14,603 | $ | 14,036 | $ | 14,586 | 4 | % | — | % |
(a) | Effective
at the beginning of its first quarter of fiscal year 2019, HP implemented an organizational change to align its business unit financial reporting more closely with its current business structure. The organizational change resulted in the transfer of certain Samsung-branded product categories from Commercial to Consumer within the Printing segment. HP reflected this change to its business unit information in prior reporting periods on an as-if basis. The reporting change had no impact to previously reported segment net revenue, consolidated net revenue, earnings from operations, net earnings or net EPS. |
(b) | "NM" represents not meaningful. |
HP
INC. AND SUBSIDIARIES SEGMENT/BUSINESS UNIT INFORMATION (Unaudited) (In millions) |
Nine months ended | Change
(%) | |||||||||
Y/Y | ||||||||||
Net revenue:(a) | ||||||||||
Personal
Systems | ||||||||||
Notebooks | $ | 16,648 | $ | 16,382 | 2 | % | ||||
Desktops | 8,908 | 8,576 | 4 | % | ||||||
Workstations | 1,740 | 1,669 | 4 | % | ||||||
Other | 972 | 970 | — | % | ||||||
Total
Personal Systems | 28,268 | 27,597 | 2 | % | ||||||
Printing | ||||||||||
Supplies | 9,762 | 10,190 | (4 | )% | ||||||
Commercial
Hardware | 3,429 | 3,311 | 4 | % | ||||||
Consumer Hardware | 1,893 | 2,004 | (6 | )% | ||||||
Total
Printing | 15,084 | 15,505 | (3 | )% | ||||||
Corporate Investments(b) | 2 | 3 | NM | |||||||
Total
segments | 43,354 | 43,105 | 1 | % | ||||||
Other(b) | (5 | ) | 1 | NM | ||||||
Total
net revenue | $ | 43,349 | $ | 43,106 | 1 | % |
(a) | Effective
at the beginning of its first quarter of fiscal year 2019, HP implemented an organizational change to align its business unit financial reporting more closely with its current business structure. The organizational change resulted in the transfer of certain Samsung-branded product categories from Commercial to Consumer within the Printing segment. HP reflected this change to its business unit information in prior reporting periods on an as-if basis. The reporting change had no impact to previously reported segment net revenue, consolidated net revenue, earnings from operations, net earnings or net EPS. |
(b) | "NM" represents not meaningful. |
HP
INC. AND SUBSIDIARIES SEGMENT OPERATING MARGIN SUMMARY (Unaudited) |
Three months ended | Change
in Operating Margin (pts) | |||||||||||||
Q/Q | Y/Y | |||||||||||||
Segment
operating margin:(a) | ||||||||||||||
Personal Systems | 5.6 | % | 4.3 | % | 3.9 | % | 1.3 | pts | 1.7 | pts | ||||
Printing | 15.6 | % | 16.4 | % | 16.0 | % | (0.8 | )pts | (0.4 | )pts | ||||
Corporate
Investments(b) | NM | NM | NM | NM | NM | |||||||||
Total
segments | 8.8 | % | 8.5 | % | 8.0 | % | 0.3 | pts | 0.8 | pts |
(a) | Effective
at the beginning of its first quarter of fiscal year 2019, HP implemented an organizational change to align its business unit financial reporting more closely with its current business structure. The organizational change resulted in the transfer of certain Samsung-branded product categories from Commercial to Consumer within the Printing segment. HP reflected this change to its business unit information in prior reporting periods on an as-if basis. The reporting change had no impact to previously reported segment net revenue, consolidated net revenue, earnings from operations, net earnings or net EPS. |
(b) | "NM" represents not meaningful. |
HP
INC. AND SUBSIDIARIES CALCULATION OF DILUTED NET EARNINGS PER SHARE (Unaudited) (In millions, except per share amounts) |
Three months
ended | |||||||||||
Numerator: | |||||||||||
GAAP
net earnings | $ | 1,179 | $ | 782 | $ | 880 | |||||
Non-GAAP net earnings | $ | 880 | $ | 821 | $ | 840 | |||||
Denominator: | |||||||||||
Weighted-average
shares used to compute basic net earnings per share | 1,499 | 1,529 | 1,601 | ||||||||
Dilutive effect of employee stock plans(a) | 9 | 7 | 17 | ||||||||
Weighted-average
shares used to compute diluted net earnings per share | 1,508 | 1,536 | 1,618 | ||||||||
GAAP
diluted net earnings per share | $ | 0.78 | $ | 0.51 | $ | 0.54 | |||||
Non-GAAP diluted net earnings per share | $ | 0.58 | $ | 0.53 | $ | 0.52 |
(a) | Includes
any dilutive effect of restricted stock units, stock options and performance-based awards. |
HP INC. AND SUBSIDIARIES CALCULATION OF DILUTED
NET EARNINGS PER SHARE (Unaudited) (In millions, except per share amounts) |
Nine months ended | |||||||
Numerator: | |||||||
GAAP net earnings | $ | 2,764 | $ | 3,876 | |||
Non-GAAP net earnings | $ | 2,510 | $ | 2,441 | |||
Denominator: | |||||||
Weighted-average
shares used to compute basic net earnings per share | 1,528 | 1,627 | |||||
Dilutive effect of employee stock plans(a) | 9 | 18 | |||||
Weighted-average
shares used to compute diluted net earnings per share | 1,537 | 1,645 | |||||
GAAP diluted net earnings per share | $ | 1.80 | $ | 2.36 | |||
Non-GAAP
diluted net earnings per share | $ | 1.63 | $ | 1.48 |
(a) | Includes any dilutive effect of restricted stock units, stock options and performance-based awards. |
• | Restructuring and other charges
are (i) costs associated with a formal restructuring plan and are primarily related to employee termination costs and benefits, costs of real estate consolidation and other non-labor charges; and (ii) other charges, which include non-recurring costs that are distinct from ongoing operational costs. HP excludes these restructuring and other charges (and any reversals of charges recorded in prior periods) for purposes of calculating these non-GAAP measures because HP believes that these costs do not reflect expected future operating expenses and do not contribute to a meaningful evaluation of HP's current operating performance or comparisons to HP's operating performance in other periods. |
• | HP incurs
cost related to its acquisitions, which it would not have otherwise incurred as part of its operations. The charges are direct expenses such as third-party professional and legal fees, and integration-related costs, as well as non-cash adjustments to the fair value of certain acquired assets such as inventory. These charges related to acquisitions are inconsistent in amount and frequency and are significantly impacted by the timing and nature of HP's acquisitions. HP believes that eliminating such expenses for purposes of calculating these non-GAAP measures facilitates a more meaningful evaluation of HP's current operating performance and comparisons to HP's past operating performance in other periods. |
• | HP
incurs charges relating to the amortization of intangible assets. Those charges are included in HP’s GAAP earnings, operating margin, net earnings and diluted net EPS. Such charges are significantly impacted by the timing and magnitude of HP’s acquisitions and any related impairment charges. Consequently, HP excludes these charges for purposes of calculating these non-GAAP measures to facilitate a more meaningful evaluation of HP’s current operating performance and comparisons to HP’s operating performance in other periods. |
• | Non-operating retirement-related (credits)/charges includes 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 associated with HP’s defined benefit pension and post-retirement benefit plans. The market-driven retirement-related adjustments are primarily due to the changes in pension plan assets and liabilities which are tied to financial market performance and HP considers these adjustments to be outside the operational performance of the business. Non-operating retirement-related (credits)/charges also include certain plan curtailments, settlements and special termination benefits related to HP’s defined benefit pension and post-retirement benefit plans. HP believes that eliminating such adjustments for purposes of calculating non-GAAP |
• | HP incurred defined benefit plan settlement charges relating to the U.S. HP pension plan. The charges are associated with the net settlement and remeasurement resulting from voluntary lump sum payments offered to certain terminated vested participants. HP excludes these charges for the purposes of calculating these non-GAAP measures to facilitate a more meaningful evaluation of HP’s current operating performance and comparisons to HP’s operating performance in other periods. |
• | Tax
adjustments include U.S. tax reform adjustment and net tax indemnification amounts. |
• | HP recorded U.S. tax reform adjustment as one-time charges relating to the enactment of the Tax Cuts and Jobs Act of 2017. These charges encompass several elements, including the reversal of previously accrued taxes on unrepatriated overseas profits, a one-time transition tax on accumulated overseas profits and the revaluation of deferred tax assets and liabilities to the new U.S. tax rate. HP has completed the accounting for the tax effects of the Tax Cuts and Jobs Act within the one year measurement period. However, additional guidance issued by regulators and new positions taken or elections made by HP may materially impact the income tax expense and effective
tax rate in the period in which the adjustments are made. |
• | As a part of the separation of Hewlett Packard Enterprise Company from HP Inc. (the “Separation”), HP evaluates all tax uncertain positions to determine the indemnification amounts under the Tax Matters Agreement with Hewlett Packard Enterprise Company and records the adjustments as net tax indemnifications amounts for the quarter. |
• | HP also recorded other tax adjustments including tax benefits and expenses primarily related to the realizability of certain
deferred tax assets. |
• | Items such as amortization of intangible assets, though not directly affecting HP’s cash position, represent the loss in value of intangible assets over time. The expense associated with this change in value is not included in non-GAAP operating margin, non-GAAP net earnings and non-GAAP diluted net EPS, and therefore does not reflect the full economic effect of the change in
value of those intangible assets. |
• | Items such as restructuring and other charges, acquisition-related charges, non-operating retirement-related (credits)/charges, defined benefit plan settlement charges, and tax adjustments that are excluded from non-GAAP operating margin, non-GAAP net earnings and non-GAAP diluted net EPS can have a material impact on the equivalent GAAP earnings measure and cash flows. |
• | HP may not be
able to immediately liquidate the short-term and certain long-term investments included in gross cash, which may limit the usefulness of gross cash as a liquidity measure. |
This ‘8-K’ Filing | Date | Other Filings | ||
---|---|---|---|---|
10/31/19 | ||||
Filed on: | 8/22/19 | |||
For Period end: | 7/31/19 | |||
4/30/19 | 10-Q | |||
10/31/18 | 10-K, 4, 5 | |||
7/31/18 | 10-Q | |||
List all Filings |