As in prior periods, the financial information set forth in this release, including tax-related items, reflects estimates based on information available at this time. While HP believes these estimates to be reasonable, these amounts could differ materially from reported amounts in HP's Annual Report on Form 10-K for the fiscal year ended October 31, 2015. HP assumes no obligation and does not intend to update these forward-looking statements.
HP INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS (Unaudited) (In millions, except per share amounts) Three months ended ------------------------------------- October 31, July 31, October 31, 2015 2015 2014 ----------- ----------- ----------- Net revenue $ 25,714 $ 25,349 $ 28,406 Costs and expenses: Cost of sales 19,363 19,317 21,425 Research and development 934 893 876 Selling, general and administrative 3,089 2,962 3,364 Amortization of intangible assets 246 242 226 Restructuring charges 591 25 604 Acquisition and other related charges 20 47 3 Separation costs 509 401 - Defined benefit plan settlement charges 54 114 - Impairment of data center assets - 136 - ----------- ----------- ----------- Total costs and expenses 24,806 24,137 26,498 ----------- ----------- ----------- Earnings from operations 908 1,212 1,908 Interest and other, net (318) (108) (146) Earnings before taxes 590 1,104 1,762 Valuation allowances, net, and separation taxes 803 - - Provision for taxes (70) (250) (432) ----------- ----------- ----------- Net earnings $ 1,323 $ 854 $ 1,330 =========== =========== =========== Net earnings per share: Basic $ 0.73 $ 0.47 $ 0.71 Diluted $ 0.73 $ 0.47 $ 0.70 Cash dividends declared per share $ - $ 0.35 $ - Weighted-average shares used to compute net earnings per share: Basic 1,802 1,805 1,862 Diluted 1,821 1,828 1,896 HP INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS (In millions, except per share amounts) Twelve months ended October 31, ------------------------ 2015 2014 ----------- ----------- (Unaudited) Net revenue $ 103,355 $ 111,454 Costs and expenses: Cost of sales 78,596 84,839 Research and development 3,502 3,447 Selling, general and administrative 12,185 13,353 Amortization of intangible assets 931 1,000 Restructuring charges 1,017 1,619 Acquisition and other related charges 90 11 Separation costs 1,259 - Defined benefit plan settlement charges 168 - Impairment of data center assets 136 - ----------- ----------- Total costs and expenses 97,884 104,269 ----------- ----------- Earnings from operations 5,471 7,185 Interest and other, net (739) (628) Earnings before taxes 4,732 6,557 Valuation allowances, net, and separation taxes 803 - Provision for taxes (981) (1,544) ----------- ----------- Net earnings $ 4,554 $ 5,013 =========== =========== Net earnings per share: Basic $ 2.51 $ 2.66 Diluted $ 2.48 $ 2.62 Cash dividends declared per share $ 0.67 $ 0.61 Weighted-average shares used to compute net earnings per share: Basic 1,814 1,882 Diluted 1,836 1,912 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 Diluted Three Diluted Three Diluted months net months net months net ended earnings ended earnings ended earnings October per July 31, per October per 31, 2015 share 2015 share 31, 2014 share -------- -------- -------- -------- -------- -------- GAAP net earnings $ 1,323 $ 0.73 $ 854 $ 0.47 $ 1,330 $ 0.70 Non-GAAP adjustments: Amortization of intangible assets 246 0.14 242 0.13 226 0.12 Restructuring charges 591 0.33 25 0.01 604 0.32 Acquisition and other related charges 20 0.01 47 0.03 3 - Separation costs 509 0.28 401 0.22 - - Defined benefit plan settlement charges 54 0.03 114 0.06 - - Impairment of data center assets - - 136 0.07 - - Separation costs in interest and other, net(a) 167 0.09 - - - - Adjustments for taxes (420) (0.23) (215) (0.11) (149) (0.08) Valuation allowances, net, and separation taxes (803) (0.45) - - - - -------- -------- -------- -------- -------- -------- Non-GAAP net earnings $ 1,687 $ 0.93 $ 1,604 $ 0.88 $ 2,014 $ 1.06 ======== ======== ======== ======== ======== ======== GAAP earnings from operations $ 908 $ 1,212 $ 1,908 Non-GAAP adjustments: Amortization of intangible assets 246 242 226 Restructuring charges 591 25 604 Acquisition and other related charges 20 47 3 Separation costs 509 401 - Defined benefit plan settlement charges 54 114 - Impairment of data center assets - 136 - -------- -------- -------- Non-GAAP earnings from operations $ 2,328 $ 2,177 $ 2,741 ======== ======== ======== GAAP operating margin 4% 5% 7% Non-GAAP adjustments 5% 4% 3% -------- -------- -------- Non-GAAP operating margin 9% 9% 10% ======== ======== ======== (a) Includes costs related to early debt settlement 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 2015 per share 2014 per share ----------- ----------- ----------- ----------- GAAP net earnings $ 4,554 $ 2.48 $ 5,013 $ 2.62 Non-GAAP adjustments: Amortization of intangible assets 931 0.51 1,000 0.52 Restructuring charges 1,017 0.55 1,619 0.85 Acquisition and other related charges 90 0.05 11 0.01 Separation costs 1,259 0.69 - - Defined benefit plan settlement charges 168 0.09 - - Impairment of data center assets 136 0.07 - - Separation costs in interest and other, net(a) 167 0.09 - - Valuation allowances, net, and separation taxes (803) (0.44) - - Adjustments for taxes (927) (0.50) (498) (0.26) ----------- ----------- ----------- ----------- Non-GAAP net earnings $ 6,592 $ 3.59 $ 7,145 $ 3.74 =========== =========== =========== =========== GAAP earnings from operations $ 5,471 $ 7,185 Non-GAAP adjustments: Amortization of intangible assets 931 1,000 Restructuring charges 1,017 1,619 Acquisition and other related charges 90 11 Separation costs 1,259 - Defined benefit plan settlement charges 168 - Impairment of data center assets 136 - ----------- ----------- Non-GAAP earnings from operations $ 9,072 $ 9,815 =========== =========== GAAP operating margin 5% 6% Non-GAAP adjustments 4% 3% ----------- ----------- Non-GAAP operating margin 9% 9% =========== =========== (a) Includes costs related to early debt settlement HP INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (In millions) As of October 31, ------------------------- 2015 2014 ------------ ------------ (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 17,433 $ 15,133 Accounts receivable 13,363 13,832 Financing receivables 2,918 2,946 Inventory 6,485 6,415 Other current assets 11,588 11,819 ------------ ------------ Total current assets 51,787 50,145 ------------ ------------ Property, plant and equipment 11,090 11,340 Long-term financing receivables and other assets 9,050 8,454 Goodwill and intangible assets 34,955 33,267 ------------ ------------ Total assets $ 106,882 $ 103,206 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Notes payable and short-term borrowings $ 2,885 $ 3,486 Accounts payable 15,956 15,903 Employee compensation and benefits 3,608 4,209 Taxes on earnings 830 1,017 Deferred revenue 6,199 6,143 Other accrued liabilities 12,713 12,977 ------------ ------------ Total current liabilities 42,191 43,735 ------------ ------------ Long-term debt 21,780 16,039 Other liabilities 14,760 16,305 Stockholders' equity: HP stockholders' equity 27,768 26,731 Non-controlling interests 383 396 ------------ ------------ Total stockholders' equity 28,151 27,127 ------------ ------------ Total liabilities and stockholders' equity $ 106,882 $ 103,206 ============ ============ HP INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) (In millions) Three months ended October 31, ------------------------ 2015 2014 ----------- ----------- Cash flows from operating activities: Net earnings $ 1,323 $ 1,330 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 1,007 1,075 Stock-based compensation expense 234 128 Provision for doubtful accounts and inventory 111 62 Restructuring charges 591 604 Deferred taxes on earnings (1,598) 95 Excess tax benefit from stock-based compensation (21) (9) Other, net 355 16 Changes in operating assets and liabilities (net of acquisitions): Accounts receivable (627) 355 Financing receivables (257) 80 Inventory 137 (211) Accounts payable 389 716 Taxes on earnings 938 18 Restructuring (237) (456) Other assets and liabilities 264 (1,102) ----------- ----------- Net cash provided by operating activities 2,609 2,701 ----------- ----------- Cash flows from investing activities: Investment in property, plant and equipment (961) (956) Proceeds from sale of property, plant and equipment 114 141 Purchases of available-for-sale securities and other investments (79) (79) Maturities and sales of available-for-sale securities and other investments 56 123 Payments made in connection with business acquisitions, net of cash acquired (27) (29) Proceeds from business divestitures, net 90 6 ----------- ----------- Net cash used in investing activities (807) (794) ----------- ----------- Cash flows from financing activities: Short-term borrowings with original maturities less than 90 days, net (2,559) 59 Proceeds from debt, net of issuance costs 14,765 272 Payment of debt (13,225) (583) Settlement of cash flow hedge 28 - Issuance of common stock under employee stock plans 68 54 Repurchase of common stock (301) (750) Excess tax benefit from stock-based compensation 21 9 Cash dividends paid (337) (309) ----------- ----------- Net cash used in financing activities (1,540) (1,248) ----------- ----------- Increase in cash and cash equivalents 262 659 Cash and cash equivalents at beginning of period 17,171 14,474 ----------- ----------- Cash and cash equivalents at end of period $ 17,433 $ 15,133 =========== =========== HP INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (In millions) Twelve months ended October 31, ------------------------ 2015 2014 ----------- ----------- Cash flows from operating activities: (Unaudited) Net earnings $ 4,554 $ 5,013 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 4,061 4,334 Stock-based compensation expense 709 560 Provision for doubtful accounts and inventory 376 266 Restructuring charges 1,017 1,619 Deferred taxes on earnings (700) (34) Excess tax benefit from stock-based compensation (145) (58) Other, net 1,031 81 Changes in operating assets and liabilities (net of acquisitions): Accounts receivable 572 2,017 Financing receivables (65) 420 Inventory (330) (580) Accounts payable 31 1,912 Taxes on earnings (137) 310 Restructuring (1,243) (1,506) Other assets and liabilities (3,241) (2,021) ----------- ----------- Net cash provided by operating activities 6,490 12,333 ----------- ----------- Cash flows from investing activities: Investment in property, plant and equipment (3,603) (3,853) Proceeds from sale of property, plant and equipment 424 843 Purchases of available-for-sale securities and other investments (259) (1,086) Maturities and sales of available-for-sale securities and other investments 302 1,347 Payments made in connection with business acquisitions, net of cash acquired (2,644) (49) Proceeds from business divestitures, net 246 6 ----------- ----------- Net cash used in investing activities (5,534) (2,792) ----------- ----------- Cash flows from financing activities: Short-term borrowings with original maturities less than 90 days, net 74 148 Proceeds from debt, net of issuance costs 20,758 2,875 Payment of debt (15,867) (6,037) Settlement of cash flow hedge (4) - Issuance of common stock under employee stock plans 371 297 Repurchase of common stock (2,883) (2,728) Excess tax benefit from stock-based compensation 145 58 Cash dividends paid (1,250) (1,184) ----------- ----------- Net cash provided by (used in) financing activities 1,344 (6,571) ----------- ----------- Increase in cash and cash equivalents 2,300 2,970 Cash and cash equivalents at beginning of period 15,133 12,163 ----------- ----------- Cash and cash equivalents at end of period $ 17,433 $ 15,133 =========== =========== HP INC. AND SUBSIDIARIES SEGMENT INFORMATION (Unaudited) (In millions) Three months ended ------------------------------------- October 31, July 31, October 31, 2015 2015 2014 ----------- ----------- ----------- Net revenue:(a)(b) Personal Systems $ 7,694 $ 7,491 $ 8,948 Printing 4,965 5,163 5,801 ----------- ----------- ----------- Total Printing and Personal Systems Group 12,659 12,654 14,749 Enterprise Group 7,358 7,007 7,248 Enterprise Services 5,020 4,976 5,511 Software 958 845 1,026 HP Financial Services 802 806 906 Corporate Investments 5 4 5 ----------- ----------- ----------- Total segments 26,802 26,292 29,445 Elimination of intersegment net revenue and other (1,088) (943) (1,039) ----------- ----------- ----------- Total HP consolidated net revenue $ 25,714 $ 25,349 $ 28,406 =========== =========== =========== Earnings before taxes:(a)(b) Personal Systems $ 294 $ 222 $ 355 Printing 862 921 1,056 ----------- ----------- ----------- Total Printing and Personal Systems Group 1,156 1,143 1,411 Enterprise Group 1,029 912 1,072 Enterprise Services 412 297 377 Software 288 174 322 HP Financial Services 87 87 110 Corporate Investments (149) (148) (107) ----------- ----------- ----------- Total segment earnings from operations 2,823 2,465 3,185 Corporate and unallocated costs and eliminations (261) (129) (316) Stock-based compensation expense (234) (159) (128) Amortization of intangible assets (246) (242) (226) Restructuring charges (591) (25) (604) Acquisition and other related charges (20) (47) (3) Separation costs (509) (401) - Defined benefit plan settlement charges (54) (114) - Impairment of data center assets - (136) - Interest and other, net (151) (108) (146) Separation costs - early debt settlement (167) - - ----------- ----------- ----------- Total HP consolidated earnings before taxes $ 590 $ 1,104 $ 1,762 =========== =========== =========== (a) Effective at the beginning of its first quarter of fiscal 2015, HP implemented an organizational change to align its segment financial reporting more closely with its current business structure. This organizational change resulted in the transfer of third party multi- vendor support arrangements from the Technology Services business unit within the Enterprise Group segment to the Infrastructure Technology Outsourcing business unit within the Enterprise Services segment. HP reflected this change to its segment information in prior reporting periods on an as-if basis, which resulted in the removal of intersegment revenue from the Technology Services business unit within the Enterprise Group segment and the related corporate intersegment revenue eliminations, and the transfer of operating profit from the Technology Services business unit within the Enterprise Group segment to the Infrastructure Technology Outsourcing business unit within the Enterprise Services segment. This change had no impact on HP's previously reported consolidated net revenue, earnings from operations, net earnings or net earnings per share. (b) In connection with the separation, effective at the beginning of its fourth quarter of fiscal 2015, HP implemented an organizational change which resulted in the transfer of marketing optimization solutions business from the Software segment to the Commercial Hardware business unit within the Commercial Hardware business unit within the Printing segment. HP reflected this change to its segment information in prior reporting periods on an as-if basis, which resulted in the transfer of net revenue from the Software segment to the Commercial Hardware business unit within the Printing segment. This change also resulted in the transfer of operating profit from the Software segment to the Printing segment. 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) Twelve months ended October 31, ------------------------ 2015 2014 ----------- ----------- Net revenue:(a)(b) Personal Systems $ 31,469 $ 34,303 Printing 21,232 23,211 ----------- ----------- Total Printing and Personal Systems Group 52,701 57,514 Enterprise Group 27,907 27,723 Enterprise Services 19,806 22,398 Software 3,458 3,701 HP Financial Services 3,216 3,498 Corporate Investments 27 302 ----------- ----------- Total segments 107,115 115,136 Elimination of intersegment net revenue and other (3,760) (3,682) ----------- ----------- Total HP consolidated net revenue $ 103,355 $ 111,454 =========== =========== Earnings before taxes:(a)(b) Personal Systems $ 1,064 $ 1,270 Printing 3,865 4,229 ----------- ----------- Total Printing and Personal Systems Group 4,929 5,499 Enterprise Group 3,981 3,995 Enterprise Services 1,051 816 Software 760 828 HP Financial Services 349 389 Corporate Investments (565) (199) ----------- ----------- Total segment earnings from operations 10,505 11,328 Corporate and unallocated costs and eliminations (724) (953) Stock-based compensation expense (709) (560) Amortization of intangible assets (931) (1,000) Restructuring charges (1,017) (1,619) Acquisition and other related charges (90) (11) Separation costs (1,259) - Defined benefit plan settlement charges (168) - Impairment of data center assets (136) - Interest and other, net (572) (628) Separation costs - early debt settlement (167) - ----------- ----------- Total HP consolidated earnings before taxes $ 4,732 $ 6,557 =========== =========== (a) Effective at the beginning of its first quarter of fiscal 2015, HP implemented an organizational change to align its segment financial reporting more closely with its current business structure. This organizational change resulted in the transfer of third party multi- vendor support arrangements from the Technology Services business unit within the Enterprise Group segment to the Infrastructure Technology Outsourcing business unit within the Enterprise Services segment. HP reflected this change to its segment information in prior reporting periods on an as-if basis, which resulted in the removal of intersegment revenue from the Technology Services business unit within the Enterprise Group segment and the related corporate intersegment revenue eliminations, and the transfer of operating profit from the Technology Services business unit within the Enterprise Group segment to the Infrastructure Technology Outsourcing business unit within the Enterprise Services segment. This change had no impact on HP's previously reported consolidated net revenue, earnings from operations, net earnings or net earnings per share. (b) In connection with the separation, effective at the beginning of its fourth quarter of fiscal 2015, HP implemented an organizational change which resulted in the transfer of marketing optimization solutions business from the Software segment to the Commercial Hardware business unit within the Commercial Hardware business unit within the Printing segment. HP reflected this change to its segment information in prior reporting periods on an as-if basis, which resulted in the transfer of net revenue from the Software segment to the Commercial Hardware business unit within the Printing segment. This change also resulted in the transfer of operating profit from the Software segment to the Printing segment. 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/BUSINESS UNIT INFORMATION (Unaudited) (In millions) Three months ended Change (%) ------------------------------------- ----------- October 31, July 31, October 31, 2015 2015 2014 Q/Q Y/Y ----------- ----------- ----------- ---- ---- Net revenue:(a)(b) Printing and Personal Systems Group Personal Systems Notebooks $ 4,384 $ 3,993 $ 4,869 10% (10%) Desktops 2,530 2,700 3,185 (6%) (21%) Workstations 472 507 558 (7%) (15%) Other 308 291 336 6% (8%) ----------- ----------- ----------- Total Personal Systems 7,694 7,491 8,948 3% (14%) ----------- ----------- ----------- Printing Supplies 3,239 3,455 3,596 (6%) (10%) Commercial Hardware 1,345 1,305 1,628 3% (17%) Consumer Hardware 381 403 577 (5%) (34%) ----------- ----------- ----------- Total Printing 4,965 5,163 5,801 (4%) (14%) ----------- ----------- ----------- Total Printing and Personal Systems Group 12,659 12,654 14,749 0% (14%) ----------- ----------- ----------- Enterprise Group Industry Standard Servers 3,552 3,335 3,370 7% 5% Technology Services 1,862 1,881 2,093 (1%) (11%) Storage 819 784 878 4% (7%) Networking 905 823 669 10% 35% Business Critical Systems 220 184 238 20% (8%) ----------- ----------- ----------- Total Enterprise Group 7,358 7,007 7,248 5% 2% ----------- ----------- ----------- Enterprise Services Infrastructure Technology Outsourcing 3,068 3,036 3,446 1% (11%) Application and Business Services 1,952 1,940 2,065 1% (5%) ----------- ----------- ----------- Total Enterprise Services 5,020 4,976 5,511 1% (9%) ----------- ----------- ----------- Software 958 845 1,026 13% (7%) ----------- ----------- ----------- HP Financial Services 802 806 906 0% (11%) ----------- ----------- ----------- Corporate Investments 5 4 5 25% 0% ----------- ----------- ----------- Total segments 26,802 26,292 29,445 2% (9%) ----------- ----------- ----------- Elimination of intersegment net revenue and other (1,088) (943) (1,039) 15% 5% ----------- ----------- ----------- Total HP consolidated net revenue $ 25,714 $ 25,349 $ 28,406 1% (9%) =========== =========== =========== (a) Effective at the beginning of its first quarter of fiscal 2015, HP implemented an organizational change to align its segment financial reporting more closely with its current business structure. This organizational change resulted in the transfer of third party multi- vendor support arrangements from the Technology Services business unit within the Enterprise Group segment to the Infrastructure Technology Outsourcing business unit within the Enterprise Services segment. HP reflected this change to its segment information in prior reporting periods on an as-if basis, which resulted in the removal of intersegment revenue from the Technology Services business unit within the Enterprise Group segment and the related corporate intersegment revenue eliminations. This change had no impact on HP's previously reported consolidated net revenue, earnings from operations, net earnings or net earnings per share. (b) In connection with the separation, effective at the beginning of its fourth quarter of fiscal 2015, HP implemented an organizational change which resulted in the transfer of marketing optimization solutions business from the Software segment to the Commercial Hardware business unit within the Printing segment. HP reflected this change to its segment information in prior reporting periods on an as-if basis, which resulted in the transfer of net revenue from the Software segment to the Commercial Hardware business unit within the Printing segment. 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/BUSINESS UNIT INFORMATION (Unaudited) (In millions) Twelve months ended October 31, ------------------------ 2015 2014 ----------- ----------- Net revenue:(a)(b) Printing and Personal Systems Group Personal Systems Notebooks $ 17,271 $ 17,540 Desktops 10,941 13,197 Workstations 2,018 2,218 Other 1,239 1,348 ----------- ----------- Total Personal Systems 31,469 34,303 ----------- ----------- Printing Supplies 13,979 14,917 Commercial Hardware 5,378 5,949 Consumer Hardware 1,875 2,345 ----------- ----------- Total Printing 21,232 23,211 ----------- ----------- Total Printing and Personal Systems Group 52,701 57,514 ----------- ----------- Enterprise Group Industry Standard Servers 13,412 12,474 Technology Services 7,662 8,375 Storage 3,180 3,316 Networking 2,846 2,629 Business Critical Systems 807 929 ----------- ----------- Total Enterprise Group 27,907 27,723 ----------- ----------- Enterprise Services Infrastructure Technology Outsourcing 12,107 14,038 Application and Business Services 7,699 8,360 ----------- ----------- Total Enterprise Services 19,806 22,398 ----------- ----------- Software 3,458 3,701 ----------- ----------- HP Financial Services 3,216 3,498 ----------- ----------- Corporate Investments 27 302 ----------- ----------- Total segments 107,115 115,136 ----------- ----------- Elimination of intersegment net revenue and other (3,760) (3,682) ----------- ----------- Total HP consolidated net revenue $ 103,355 $ 111,454 =========== =========== (a) Effective at the beginning of its first quarter of fiscal 2015, HP implemented an organizational change to align its segment financial reporting more closely with its current business structure. This organizational change resulted in the transfer of third party multi- vendor support arrangements from the Technology Services business unit within the Enterprise Group segment to the Infrastructure Technology Outsourcing business unit within the Enterprise Services segment. HP reflected this change to its segment information in prior reporting periods on an as-if basis, which resulted in the removal of intersegment revenue from the Technology Services business unit within the Enterprise Group segment and the related corporate intersegment revenue eliminations. This change had no impact on HP's previously reported consolidated net revenue, earnings from operations, net earnings or net earnings per share. (b) In connection with the separation, effective at the beginning of its fourth quarter of fiscal 2015, HP implemented an organizational change which resulted in the transfer of marketing optimization solutions business from the Software segment to the Commercial Hardware business unit within the Printing segment. HP reflected this change to its segment information in prior reporting periods on an as-if basis, which resulted in the transfer of net revenue from the Software segment to the Commerical Hardware business unit within the Printing segment. 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 OPERATING MARGIN SUMMARY DATA (Unaudited) Three months Change in Operating ended Margin (pts) ----------- ----------------------- October 31, 2015 Q/Q Y/Y ----------- ----------- ----------- Segment operating margin:(a)(b) Personal Systems 3.8% 0.8 pts (0.2 pts) Printing 17.4% (0.4 pts) (0.8 pts) Total Printing & Personal Systems Group 9.1% 0.1 pts (0.4 pts) Enterprise Group 14.0% 1.0 pts (0.8 pts) Enterprise Services 8.2% 2.2 pts 1.4 pts Software 30.1% 9.5 pts (1.3 pts) HP Financial Services 10.8% 0.0 pts (1.3 pts) Corporate Investments(c) NM NM NM Total segments 10.5% 1.1 pts (0.3 pts) (a) Effective at the beginning of its first quarter of fiscal 2015, HP implemented an organizational change to align its segment financial reporting more closely with its current business structure. This organizational change resulted in the transfer of third party multi- vendor support arrangements from the Technology Services business unit within the Enterprise Group segment to the Infrastructure Technology Outsourcing business unit within the Enterprise Services segment. HP reflected this change to its segment information in prior reporting periods on an as-if basis, which resulted in the removal of intersegment revenue from the Technology Services business unit within the Enterprise Group segment and the related corporate intersegment revenue eliminations, and the transfer of operating profit from the Technology Services business unit within the Enterprise Group segment to the Infrastructure Technology Outsourcing business unit within the Enterprise Services segment. This change had no impact on HP's previously reported consolidated net revenue, earnings from operations, net earnings or net earnings per share. (b) In connection with the separation, effective at the beginning of its fourth quarter of fiscal 2015, HP also implemented an organizational change which resulted in the transfer of marketing optimization solutions business from the Software segment to the Commercial Hardware business unit within the Printing segment. HP reflected this change to its segment information in prior reporting periods on an as-if basis, which resulted in the transfer of net revenue from the Software segment to the Printing segment. This change also resulted in the transfer of operating profit from the Software segment to the Printing segment. This change had no impact on HP's previously reported consolidated net revenue, earnings from operations, net earnings or net earnings per share. (c) "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 ----------------------------------- October 31, July 31, October 31, 2015 2015 2014 ----------- ----------- ----------- Numerator: GAAP net earnings $ 1,323 $ 854 $ 1,330 =========== =========== =========== Non-GAAP net earnings $ 1,687 $ 1,604 $ 2,014 =========== =========== =========== Denominator: Weighted-average shares outstanding during the reporting period 1,802 1,805 1,862 Dilutive effect of employee stock plans(a) 19 23 34 ----------- ----------- ----------- Weighted-average shares used to compute diluted net earnings per share 1,821 1,828 1,896 =========== =========== =========== GAAP diluted net earnings per share $ 0.73 $ 0.47 $ 0.70 =========== =========== =========== Non-GAAP diluted net earnings per share $ 0.93 $ 0.88 $ 1.06 =========== =========== =========== (a) Includes any dilutive effect of restricted stock units, restricted stock, stock options and performance-based awards. HP INC. AND SUBSIDIARIES CALCULATION OF DILUTED NET EARNINGS PER SHARE (In millions, except per share amounts) Twelve months ended October 31, ----------------------- 2015 2014 ----------- ----------- (Unaudited) Numerator: GAAP net earnings $ 4,554 $ 5,013 =========== =========== Non-GAAP net earnings $ 6,592 $ 7,145 =========== =========== Denominator: Weighted-average shares outstanding during the reporting period 1,814 1,882 Dilutive effect of employee stock plans(a) 22 30 ----------- ----------- Weighted-average shares used to compute diluted net earnings per share 1,836 1,912 =========== =========== GAAP diluted net earnings per share $ 2.48 $ 2.62 =========== =========== Non-GAAP diluted net earnings per share $ 3.59 $ 3.74 =========== =========== (a) Includes any dilutive effect of restricted stock units, restricted stock, stock options and performance-based restricted stock awards.