HP INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(In millions)
Six months ended April 30,
--------------------------
2016 2015(a)
------------ ------------
Cash flows from operating activities:
Net earnings $ 1,221 $ 2,377
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization 164 2,031
Stock-based compensation expense 101 316
Provision for doubtful accounts and inventory 45 164
Restructuring charges 120 401
Deferred taxes on earnings 600 -
Excess tax benefit from stock-based
compensation (2) (118)
Other, net (95) 297
Changes in operating assets and liabilities
(net of acquisitions):
Accounts receivable 894 1,494
Financing receivables - 245
Inventory 722 53
Accounts payable (1,063) (892)
Taxes on earnings (505) 85
Restructuring (68) (703)
Other assets and liabilities (667) (3,542)
------------ ------------
Net cash provided by operating activities 1,467 2,208
------------ ------------
Cash flows from investing activities:
Investment in property, plant and equipment (206) (1,726)
Proceeds from sale of property, plant and
equipment - 211
Purchases of available-for-sale securities and
other investments (122) (108)
Maturities and sales of available-for-sale
securities and other investments 12 123
Proceeds from business divestiture 61 -
Payments made in connection with business
acquisitions - (139)
------------ ------------
Net cash used in investing activities (255) (1,639)
------------ ------------
Cash flows from financing activities:
Short-term borrowings with original maturities
less than 90 days, net 39 1,858
Proceeds from debt, net of issuance costs 4 1,587
Payment of debt (2,158) (1,895)
Settlement of cash flow hedge 6 -
Net transfer of cash and cash equivalents to
Hewlett Packard Enterprise Company (10,375) -
Issuance of common stock under employee stock
plans 9 223
Repurchase of common stock (1,102) (2,230)
Excess tax benefit from stock-based
compensation 2 118
Cash dividends paid (434) (595)
------------ ------------
Net cash used in financing activities (14,009) (934)
------------ ------------
Decrease in cash and cash equivalents (12,797) (365)
Cash and cash equivalents at beginning of
period(a) 17,433 15,133
------------ ------------
Cash and cash equivalents at end of period $ 4,636 $ 14,768
============ ============
(a) The consolidated condensed statement of cash flows for the six months
ended April 30, 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
-------------------------------------
April 30, January 31, April 30,
2016 2016 2015
----------- ----------- -----------
Net revenue:(a)
Personal Systems $ 6,990 $ 7,467 $ 7,759
Printing 4,637 4,642 5,508
Corporate Investments 3 3 2
----------- ----------- -----------
Total segments 11,630 12,112 13,269
Intersegment net revenue
eliminations and other (42) 134 (292)
----------- ----------- -----------
Total net revenue $ 11,588 $ 12,246 $ 12,977
=========== =========== ===========
Earnings from continuing operations
before taxes:(a)
Personal Systems $ 242 $ 229 $ 227
Printing 801 787 982
Corporate Investments (8) (23) (15)
----------- ----------- -----------
Total segment earnings from
operations 1,035 993 1,194
Corporate and unallocated costs and
eliminations (88) (16) (164)
Stock-based compensation expense (40) (61) (59)
Restructuring charges (100) (20) (7)
Amortization of intangible assets (6) (8) (25)
Non-operating retirement-related
credits(a) 40 40 58
Interest and other, net (5) (94) (78)
----------- ----------- -----------
Total earnings from continuing
operations before taxes $ 836 $ 834 $ 919
=========== =========== ===========
(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/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"). 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)
Six months ended April 30,
--------------------------
2016 2015
------------ ------------
Net revenue:(a)
Personal Systems $ 14,457 $ 16,321
Printing 9,279 11,104
Corporate Investments 6 14
------------ ------------
Total segments 23,742 27,439
Intersegment net revenue eliminations and other 92 (604)
------------ ------------
Total net revenue $ 23,834 $ 26,835
============ ============
Earnings from continuing operations before
taxes:(a)
Personal Systems $ 471 $ 530
Printing 1,588 2,032
Corporate Investments (31) (20)
------------ ------------
Total segment earnings from operations 2,028 2,542
Corporate and unallocated costs and
eliminations (104) (360)
Stock-based compensation expense (101) (110)
Restructuring charges (120) (21)
Amortization of intangible assets (14) (52)
Impairment of goodwill and intangible assets - -
Non-operating retirement-related credits(a) 80 116
Interest and other, net (99) (199)
------------ ------------
Total earnings from continuing operations
before taxes $ 1,670 $ 1,916
============ ============
(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/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"). 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/BUSINESS UNIT INFORMATION
(Unaudited)
(In millions)
Three months ended Change (%)
----------------------------------- -----------------
April 30, January 31, April 30,
2016 2016 2015 Q/Q Y/Y
---------- ----------- ---------- ------- -------
Net revenue:(a)
Personal Systems
Notebooks $ 3,838 $ 4,205 $ 4,170 (9%) (8%)
Desktops 2,402 2,527 2,762 (5%) (13%)
Workstations 461 444 513 4% (10%)
Other 289 291 314 (1%) (8%)
---------- ----------- ----------
Total
Personal
Systems 6,990 7,467 7,759 (6%) (10%)
---------- ----------- ----------
Printing
Supplies 3,099 3,101 3,684 (0%) (16%)
Commercial
Hardware 1,227 1,219 1,376 1% (11%)
Consumer
Hardware 311 322 448 (3%) (31%)
---------- ----------- ----------
Total
Printing 4,637 4,642 5,508 (0%) (16%)
---------- ----------- ----------
Corporate
Investments 3 3 2 0% 50%
---------- ----------- ----------
Total
segments 11,630 12,112 13,269 (4%) (12%)
---------- ----------- ----------
Intersegment net
revenue
eliminations and
other(b) (42) 134 (292) NM NM
---------- ----------- ----------
Total net
revenue $ 11,588 $ 12,246 $ 12,977 (5%) (11%)
========== =========== ==========
(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/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"). 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.
(b) "NM" represents not meaningful.
HP INC. AND SUBSIDIARIES
SEGMENT/BUSINESS UNIT INFORMATION
(Unaudited)
(In millions)
Six months ended April 30, Change (%)
-------------------------- ----------
2016 2015 Y/Y
------------ ------------ ----------
Net revenue:(a)
Personal Systems
Notebooks $ 8,043 $ 8,894 (10%)
Desktops 4,929 5,711 (14%)
Workstations 905 1,039 (13%)
Other 580 677 (14%)
------------ ------------
Total Personal Systems 14,457 16,321 (11%)
------------ ------------
Printing
Supplies 6,200 7,285 (15%)
Commercial Hardware 2,446 2,770 (12%)
Consumer Hardware 633 1,049 (40%)
------------ ------------
Total Printing 9,279 11,104 (16%)
------------ ------------
Corporate Investments 6 14 (57%)
------------ ------------
Total segments 23,742 27,439 (13%)
------------ ------------
Intersegment net revenue
eliminations and other(b) 92 (604) NM
------------ ------------
Total net revenue $ 23,834 $ 26,835 (11%)
============ ============
(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/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"). 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.
(b) "NM" represents not meaningful.
HP INC. AND SUBSIDIARIES
SEGMENT OPERATING MARGIN SUMMARY DATA
(Unaudited)
Change in
Operating Margin
Three months ended (pts)
--------------------------------- -----------------
April 30, January 31, April 30,
2016 2016 2015 Q/Q Y/Y
--------- ----------- --------- ------- --------
Segment operating
margin:(a)
Personal Systems 3.5% 3.1% 2.9% 0.4 pts 0.6 pts
Printing 17.3% 17.0% 17.8% 0.3 pts (0.5 pts)
Corporate
Investments(b) NM NM NM NM NM
Total segments 8.9% 8.2% 9.0% 0.7 pts (0.1 pts)
(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/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"). 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.
(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
-------------------------------------
April 30, January 31, April 30,
2016 2016 2015
----------- ----------- -----------
Numerator:
GAAP net earnings from continuing
operations $ 660 $ 650 $ 733
=========== =========== ===========
Non-GAAP net earnings $ 702 $ 645 $ 720
=========== =========== ===========
Denominator:
Weighted-average shares outstanding
during the reporting period 1,720 1,776 1,814
Dilutive effect of employee stock
plans(a) 11 9 22
----------- ----------- -----------
Weighted-average shares used to
compute diluted net earnings per
share 1,731 1,785 1,836
=========== =========== ===========
GAAP diluted net earnings per share
from continuing operations $ 0.38 $ 0.36 $ 0.40
=========== =========== ===========
Non-GAAP diluted net earnings per
share $ 0.41 $ 0.36 $ 0.39
=========== =========== ===========
(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)
Six months ended April 30,
--------------------------
2016 2015
------------ ------------
Numerator:
GAAP net earnings from continuing operations $ 1,310 $ 1,503
============ ============
Non-GAAP net earnings $ 1,347 $ 1,485
============ ============
Denominator:
Weighted-average shares outstanding during the
reporting period 1,748 1,824
Dilutive effect of employee stock plans(a) 10 24
------------ ------------
Weighted-average shares used to compute
diluted net earnings per share 1,758 1,848
============ ============
GAAP diluted net earnings per share from
continuing operations $ 0.75 $ 0.81
============ ============
Non-GAAP diluted net earnings per share $ 0.77 $ 0.80
============ ============
(a) Includes any dilutive effect of restricted stock units, stock options
and performance-based awards.
HP Inc. Reports Second Quarter Fiscal 2016 Results
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