(b) Represents amounts in connection with damages sustained by the Company as a result of Hurricane Harvey.
(c) Represents adjustment to net periodic pension cost resulting from remeasurements of the Hewlett Packard Enterprise pension plans in connection with the spin-off of the software business, Seattle SpinCo, Inc., and the merger of Seattle SpinCo, Inc. with Micro Focus International plc and the spin-off of the enterprise services business, Everett SpinCo, Inc., and the merger of Everett SpinCo, Inc. with Computer Sciences Corporation.
(d) Represents the settlement of certain pre-separation Hewlett-Packard Company income tax liabilities indemnified through the Tax Matters Agreement with HP Inc.
(e) Includes tax amounts in connection with the spin-off of the enterprise services business, Everett SpinCo, Inc. and the software business, Seattle SpinCo, Inc., tax amounts related to the recently enacted U.S. tax reform, tax amounts related to the settlement of certain pre-separation Hewlett-Packard Company income tax liabilities indemnified through the Tax Matters Agreement with HP Inc. and excess tax benefits associated with stock-based compensation.
For the three months ended January 31, 2018, this amount includes a $920 million benefit following the resolution of certain pre-separation Hewlett-Packard Company income tax liabilities and a $244 million benefit primarily from foreign tax credits and from the release of non U.S. valuation allowances on deferred taxes established in connection with the Everett Transaction, following changes in foreign tax laws.
Further, as a result of the recently enacted U.S. tax reform, for the three months ended January 31, 2018, this amount includes an estimated tax benefit of $1.8 billion from the provisional application of the new tax rules including a lower federal tax rate to deferred tax assets and liabilities, partially offset by a provisional estimate of $1.0 billion of transition tax expense on accumulated non U.S. earnings, and a $203 million benefit as a result of the liquidation of an insolvent non U.S. subsidiary.
During the first quarter of fiscal 2018, the Company adopted ASU 2016-09 on a prospective basis, except for the statement of cash flows for which it was retrospectively adopted for the prior comparative periods, which requires the excess tax benefits or tax deficiencies associated with stock-based compensation to be recognized as a component of the provision for income taxes in the Statement of Earnings rather than additional paid-in capital in the Balance Sheet. For the three months ended January 31, 2018, this amount includes $14 million, which represents the net excess tax benefits from stock-based compensation.
For the three months ended October 31, 2017, this amount primarily includes $619 million of income tax benefit related to U.S. foreign tax credits generated.
|
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
ADJUSTMENTS TO GAAP NET EARNINGS, EARNINGS FROM OPERATIONS, OPERATING MARGIN AND DILUTED NET EARNINGS PER SHARE (Unaudited) (In millions, except percentages and per share amounts) | |||||||||||||||||||||||
|
Three months
ended January 31, 2018 |
Diluted net
earnings per share |
Three months
ended October 31, 2017 |
Diluted net
earnings per share |
Three months
ended January 31, 2017 |
Diluted net
earnings per share | ||||||||||||||||||
| GAAP net earnings from continuing operations | $ | 1,482 | $ | 0.92 | $ | 378 | $ | 0.23 | $ | 251 | $ | 0.15 | |||||||||||
| Non-GAAP adjustments: | |||||||||||||||||||||||
| Amortization of intangible assets | 78 | 0.05 | 86 | 0.05 | 66 | 0.04 | |||||||||||||||||
| Restructuring charges | 3 | — | 113 | 0.07 | 83 | 0.05 | |||||||||||||||||
| Transformation costs(a) | 245 | 0.15 | 328 | 0.20 | — | — | |||||||||||||||||
| Disaster charges(b) | — | — | 93 | 0.06 | — | — | |||||||||||||||||
| Acquisition and other related charges | 30 | 0.02 | 53 | 0.03 | 44 | 0.03 | |||||||||||||||||
| Separation costs | (24 | ) | (0.01 | ) | 202 | 0.12 | 11 | 0.01 | |||||||||||||||
| Defined benefit plan settlement charges and remeasurement (benefit) (c) | — | — | (26 | ) | (0.02 | ) | (4 | ) | — | ||||||||||||||
| Tax indemnification adjustments (d) | 919 | 0.57 | 2 | — | 18 | 0.01 | |||||||||||||||||
| Loss from equity interests (e) | 37 | 0.02 | 43 | 0.03 | 35 | 0.02 | |||||||||||||||||
| Adjustments for taxes (f) | (2,223 | ) | (1.38 | ) | (799 | ) | (0.48 | ) | (31 | ) | (0.03 | ) | |||||||||||
| Non-GAAP net earnings from continuing operations | $ | 547 | $ | 0.34 | $ | 473 | $ | 0.29 | $ | 473 | $ | 0.28 | |||||||||||
| GAAP earnings (loss) from continuing operations | $ | 261 | $ | (224 | ) | $ | 453 | ||||||||||||||||
| Non-GAAP adjustments related to continuing operations: | |||||||||||||||||||||||
| Amortization of intangible assets | 78 | 86 | 66 | ||||||||||||||||||||
| Restructuring charges | 3 | 113 | 83 | ||||||||||||||||||||
| Transformation costs (a) | 245 | 328 | — | ||||||||||||||||||||
| Disaster charges (b) | — | 93 | — | ||||||||||||||||||||
| Acquisition and other related charges | 30 | 53 | 44 | ||||||||||||||||||||
| Separation costs | (24 | ) | 202 | 11 | |||||||||||||||||||
| Defined benefit plan settlement charges and remeasurement (benefit) (c) | — | (26 | ) | (4 | ) | ||||||||||||||||||
| Non-GAAP earnings from continuing operations | $ | 593 | $ | 625 | $ | 653 | |||||||||||||||||
| GAAP operating margin from continuing operations | 3 | % | (3 | )% | 7 | % | |||||||||||||||||
| Non-GAAP adjustments from continuing operations | 5 | % | 11 | % | 2 | % | |||||||||||||||||
| Non-GAAP operating margin from continuing operations | 8 | % | 8 | % | 9 | % | |||||||||||||||||
| GAAP net (loss) earnings from discontinued operations | $ | (46 | ) | $ | (0.03 | ) | $ | 146 | $ | 0.09 | $ | 16 | $ | 0.01 | |||||||||
| Non-GAAP adjustments related to discontinued operations: | |||||||||||||||||||||||
| Amortization of intangible assets | — | — | 10 | 0.01 | 35 | 0.02 | |||||||||||||||||
| Restructuring charges | — | — | (2 | ) | — | 94 | 0.06 | ||||||||||||||||
| Separation costs | 51 | 0.03 | 70 | 0.04 | 265 | 0.16 | |||||||||||||||||
| Defined benefit plan settlement charges and remeasurement (benefit) (c) | — | — | (1 | ) | — | (2 | ) | — | |||||||||||||||
| Interest expense on Seattle debt | — | — | 8 | — | — | — | |||||||||||||||||
| Tax indemnification adjustments (d) | (4 | ) | — | 15 | 0.01 | — | — | ||||||||||||||||
| Adjustments for taxes | (1 | ) | — | (216 | ) | (0.13 | ) | (109 | ) | (0.08 | ) | ||||||||||||
| Non-GAAP net earnings from discontinued operations | $ | — | $ | — | $ | 30 | $ | 0.02 | $ | 299 | $ | 0.17 | |||||||||||
| Total GAAP net earnings | $ | 1,436 | $ | 0.89 | $ | 524 | $ | 0.32 | $ | 267 | $ | 0.16 | |||||||||||
| Total Non-GAAP net earnings | $ | 547 | $ | 0.34 | $ | 503 | $ | 0.31 | $ | 772 | $ | 0.45 | |||||||||||
