Material limitations associated with use of non-GAAP financial measures
These non-GAAP financial measures may have limitations as analytical tools, and these measures should not be considered in isolation or as a substitute for analysis of HP's results as reported under GAAP. Some of the limitations in relying on these non-GAAP financial measures are:
- 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 from continuing operations, non-GAAP net earnings from continuing operations and non-GAAP diluted net earnings per share from continuing operations, 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, non-operating retirement-related credits/(charges), tax indemnifications, defined benefit plan settlement charges and net valuation allowance, separation taxes and adjustments that are excluded from non-GAAP operating margin from continuing operations, non-GAAP net earnings from continuing operations and non-GAAP diluted net earnings per share from continuing operations 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 long-term investments included in gross cash, which may limit the usefulness of gross cash as a liquidity measure.
- Other companies may calculate the non-GAAP financial measures differently than HP, limiting the usefulness of those measures for comparative purposes.
Compensation for limitations associated with use of non-GAAP financial measures
HP compensates for the limitations on its use of non-GAAP financial measures by relying primarily on its GAAP results and using non-GAAP financial measures only supplementally. HP also provides robust and detailed reconciliations of each non-GAAP financial measure to its most directly comparable GAAP measure within this news release and in other written materials that include these non-GAAP financial measures, and HP encourages investors to review those reconciliations carefully.
Usefulness of non-GAAP financial measures to investors
HP believes that providing net revenue on a constant currency basis, non-GAAP operating margin from continuing operations, non-GAAP net earnings from continuing operations, non-GAAP diluted net earnings per share from continuing operations and gross cash to investors in addition to the related GAAP measures provides investors with greater transparency to the information used by HP's management in its financial and operational decision making and allows investors to see HP's results "through the eyes" of management. HP further believes that providing this information better enables HP's investors to understand HP's operating performance and financial condition and to evaluate the efficacy of the methodology and information used by HP's management to evaluate and measure such performance and financial condition. Disclosure of these non-GAAP financial measures also facilitates comparisons of HP's operating performance with the performance of other companies in HP's industry that supplement their GAAP results with non-GAAP financial measures that may be calculated in a similar manner.
© Copyright 2016 HP Development Company, L.P. The information contained herein is subject to change without notice. The only warranties for HP Inc. products and services are set forth in the express warranty statements accompanying such products and services. Nothing herein should be construed as constituting an additional warranty. HP Inc. shall not be liable for technical or editorial errors or omissions contained herein.
HP INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(Unaudited)
(In millions, except per share amounts)
Three months ended
-------------------------------------
July 31, April 30, July 31,
2016 2016 2015
----------- ----------- -----------
Net revenue $ 11,892 $ 11,588 $ 12,362
Costs and expenses:
Cost of revenue 9,720 9,338 10,036
Research and development 298 301 300
Selling, general and administrative 719 1,002 1,058
Restructuring and other charges 36 100 1
Amortization of intangible assets 2 6 24
Defined benefit plan settlement
credits - - (64)
----------- ----------- -----------
Total costs and expenses 10,775 10,747 11,355
----------- ----------- -----------
Earnings from continuing operations 1,117 841 1,007
Interest and other, net (36) (5) (90)
----------- ----------- -----------
Earnings from continuing operations
before taxes 1,081 836 917
Provision for taxes (238) (176) (217)
----------- ----------- -----------
Net earnings from continuing
operations 843 660 700
Net (loss) earnings from discontinued
operations (60) (31) 154
----------- ----------- -----------
Net earnings $ 783 $ 629 $ 854
=========== =========== ===========
Net earnings (loss) per share:
Basic
Continuing operations $ 0.49 $ 0.38 $ 0.39
Discontinued operations (0.03) (0.01) 0.08
----------- ----------- -----------
Total basic net earnings per
share $ 0.46 $ 0.37 $ 0.47
=========== =========== ===========
Diluted
Continuing operations $ 0.49 $ 0.38 $ 0.39
Discontinued operations (0.04) (0.02) 0.08
----------- ----------- -----------
Total diluted net earnings per
share $ 0.45 $ 0.36 $ 0.47
=========== =========== ===========
Cash dividends declared per share $ 0.25 $ - $ 0.35
Weighted-average shares used to
compute net earnings per share:
Basic 1,711 1,720 1,805
Diluted 1,725 1,731 1,828
