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HP Inc. Reports Third Quarter Fiscal 2016 Results

PALO ALTO, CA -- (Marketwired) -- Aug 24, 2016 -- HP (NYSE: HPQ)

HP Inc.'s fiscal 2016 third quarter financial performance

                                                                            
                                                   Q3 FY16  Q3 FY15    Y/Y  
GAAP net revenue ($B)                                $11.9    $12.4     (4%)
GAAP operating margin from continuing operations      9.4%     8.1%  1.3 pts
GAAP net earnings from continuing operations ($B)     $0.8     $0.7      20%
GAAP diluted net earnings per share from                                    
 continuing operations                               $0.49    $0.39      26%
Non-GAAP operating margin from continuing                                   
 operations                                           9.4%     7.4%  2.0 pts
Non-GAAP net earnings from continuing operations                            
 ($B)                                                 $0.8     $0.6      28%
Non-GAAP diluted net earnings per share from                                
 continuing operations                               $0.48    $0.35      37%
Net cash provided by operating activities ($B)(1)                           
                                                      $1.1     $1.7    (36%)
                                                                            

Notes to table
Information about HP Inc.'s use of non-GAAP financial information is provided under "Use of non-GAAP financial information" below.

(1)  The consolidated condensed statement of cash flows for the three months
     ended July 31, 2015 represents the combined cash flows of Hewlett-     
     Packard Company prior to the separation of Hewlett Packard Enterprise  
     Company (the "Separation"), as previously filed, and has not been      
     adjusted to reflect the effect of the Separation.                      
                                                                            

Revenue and EPS results
HP Inc. ("HP") announced third quarter net revenue of $11.9 billion, down 4% (down 1% in constant currency) from the prior-year period.

Third quarter GAAP diluted net earnings per share (EPS) from continuing operations was $0.49, up from $0.39 in the prior-year period and above the previously provided outlook of $0.40 to $0.43. Third quarter non-GAAP diluted net EPS from continuing operations was $0.48, up from $0.35 in the prior-year period and above its previously provided outlook of $0.43 to $0.46. Third quarter non-GAAP net earnings from continuing operations and non-GAAP diluted net EPS from continuing operations exclude after-tax adjustments of $17 million, or $0.01 per share, related to restructuring and other charges, amortization of intangible assets, tax indemnifications, and non-operating retirement-related credits / (charges).

"In Q3, we delivered on our financial commitments and continued to make solid progress in executing against our core, growth and future strategic framework," said Dion Weisler, President and CEO, HP Inc. "Although the markets remain challenged, we have the innovation and executional rigor needed to continue to take profitable share and invest in the right opportunities to drive long-term success for the company."

Asset management
HP's net cash provided by operating activities in the third quarter was $1.1 billion. Accounts receivable ended the quarter at $4.0 billion, unchanged quarter over quarter at 30 days. Inventory ended the quarter at $4.0 billion, up 3 days quarter over quarter to 37 days. Accounts payable ended the quarter at $10.4 billion, up 8 days quarter over quarter to 96 days. HP's dividend payment of $0.124 per share in the third quarter resulted in cash usage of $0.2 billion. HP also utilized $0.1 billion of cash during the quarter to repurchase approximately 4.5 million shares of common stock in the open market. HP exited the quarter with $5.6 billion in gross cash, which includes cash and cash equivalents, short-term investments, and certain liquid long-term investments.

Fiscal 2016 third quarter segment results

Outlook
For the fiscal 2016 fourth quarter, HP estimates GAAP diluted net EPS from continuing operations to be in the range of $0.22 to $0.25 and non-GAAP diluted net EPS from continuing operations to be in the range of $0.34 to $0.37. Fiscal 2016 fourth quarter non-GAAP diluted net EPS from continuing operations estimates exclude $0.12 per diluted share, primarily related to items such as restructuring and other charges, defined benefit plan settlement charges, non-operating retirement-related credits/(charges), tax indemnifications, net valuation allowances and separation taxes and adjustments, acquisition and other related charges and amortization of intangible assets.

For fiscal 2016, HP estimates GAAP diluted net EPS from continuing operations to be in the range of $1.46 to $1.49 and non-GAAP diluted net EPS from continuing operations to be in the range of $1.59 to $1.62. Fiscal 2016 non-GAAP diluted net EPS from continuing operations estimates exclude $0.13 per diluted share, primarily related to items such as restructuring and other charges, defined benefit plan settlement charges, non-operating retirement-related credits/(charges), tax indemnifications, net valuation allowances and separation taxes and adjustments, acquisition and other related charges and amortization of intangible assets.

More information on HP's earnings, including additional financial analysis and an earnings overview presentation, is available on HP's Investor Relations website at www.hp.com/investor/home.

HP's FY16 Q3 earnings conference call is accessible via an audio webcast at www.hp.com/investor/2016Q3Webcast.

About HP Inc.
HP Inc. creates technology that makes life better for everyone, everywhere. Through our portfolio of printers, PCs, mobile devices, solutions, and services, we engineer experiences that amaze. More information about HP Inc. is available at http://www.hp.com.

Use of non-GAAP financial information
To supplement HP's consolidated condensed financial statements presented on a generally accepted accounting principles ("GAAP") basis, HP provides net revenue on a constant currency basis, as well as 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 financial measures. HP also provides forecasts of non-GAAP diluted net earnings per share from continuing operations. A reconciliation of the adjustments to GAAP results for this quarter and prior periods is included in the tables below or elsewhere in the materials accompanying this news release. In addition, an explanation of the ways in which HP's management uses these non-GAAP measures to evaluate its business, the substance behind HP's decision to use these non-GAAP measures, the material limitations associated with the use of these non-GAAP measures, the manner in which HP's management compensates for those limitations, and the substantive reasons why HP's management believes that these non-GAAP measures provide useful information to investors is included under "Use of non-GAAP financial measures" after the tables below. This additional non-GAAP financial information is not meant to be considered in isolation or as a substitute for net revenue, operating profit, operating margin, net earnings from continuing operations, diluted net earnings per share from continuing operations or cash and cash equivalents prepared in accordance with GAAP.

Forward-looking statements
This news release contains forward-looking statements that involve risks, uncertainties and assumptions. If the risks or uncertainties ever materialize or the assumptions prove incorrect, the results of HP may differ materially from those expressed or implied by such forward-looking statements and assumptions.

All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including but not limited to any projections of net revenue, margins, expenses, effective tax rates, net earnings, net earnings per share, cash flows, benefit plan funding, deferred tax assets, share repurchases, currency exchange rates or other financial items; any projections of the amount, timing or impact of cost savings or restructuring and other charges; any statements of the plans, strategies and objectives of management for future operations, including the execution of the restructuring plans and any resulting cost savings, revenue or profitability improvements; any statements concerning the expected development, performance, market share or competitive performance relating to products or services; any statements regarding current or future macroeconomic trends or events and the impact of those trends and events on HP and its financial performance; any statements regarding pending investigations, claims or disputes; any statements of expectation or belief; and any statements of assumptions underlying any of the foregoing.

Risks, uncertainties and assumptions include the need to address the many challenges facing HP's businesses; the competitive pressures faced by HP's businesses; risks associated with executing HP's strategy; the impact of macroeconomic and geopolitical trends and events; the need to manage third-party suppliers and the distribution of HP's products and the delivery of HP's services effectively; the protection of HP's intellectual property assets, including intellectual property licensed from third parties; risks associated with HP's international operations; the development and transition of new products and services and the enhancement of existing products and services to meet customer needs and respond to emerging technological trends; the execution and performance of contracts by HP and its suppliers, customers, clients and partners; the hiring and retention of key employees; integration and other risks associated with business combination and investment transactions; the results of the restructuring plans, including estimates and assumptions related to the cost (including any possible disruption of HP's business) and the anticipated benefits of the restructuring plans; the resolution of pending investigations, claims and disputes; and other risks that are described in HP's Annual Report on Form 10-K for the fiscal year ended October 31, 2015, HP's Quarterly Reports on Form 10-Q for the fiscal quarters ended January 31, 2016 and April 30, 2016, and HP's other filings with the Securities and Exchange Commission.

As in prior periods, the financial information set forth in this release, including any 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 Quarterly Report on Form 10-Q for the fiscal quarter ended July 31, 2016. HP assumes no obligation and does not intend to update these forward-looking statements. HP's Investor Relations website at www.hp.com/investor/home contains a significant amount of information about HP, including financial and other information for investors. HP encourages investors to visit its website from time to time, as information is updated and new information is posted.

Use of non-GAAP financial measures
To supplement HP's consolidated condensed financial statements presented on a generally accepted accounting principles ("GAAP") basis, HP provides net revenue on a constant currency basis, non-GAAP operating margin from continuing operations, non-GAAP net earnings, non-GAAP diluted net earnings per share and gross cash. HP also provides forecasts of non-GAAP diluted net earnings per share from continuing operations.

These non-GAAP financial measures are not computed in accordance with, or as an alternative to, generally accepted accounting principles in the United States. Reconciliations of each of these non-GAAP financial measures to GAAP information are included in the tables above or elsewhere in the materials accompanying this news release.

Use and economic substance of non-GAAP financial measures
Net revenue on a constant currency basis assumes no change in the foreign exchange rate from the prior-year period. Non-GAAP operating margin from continuing operations is defined to exclude the effects of any charges relating to restructuring and other charges, the amortization of intangible assets, non-operating retirement-related credits/(charges) and tax indemnification amounts. Non-GAAP net earnings from continuing operations and non-GAAP diluted net earnings per share from continuing operations consist of net earnings from continuing operations or diluted net earnings per share from continuing operations excluding those same charges. In addition, non-GAAP net earnings from continuing operations and non-GAAP diluted net earnings per share from continuing operations are adjusted by the amount of additional taxes or tax benefits associated with each non-GAAP item and other tax benefits or charges as a consequence of the Separation. HP's management uses these non-GAAP financial measures for purposes of evaluating HP's historical and prospective financial performance, as well as HP's performance relative to its competitors. HP's management also uses these non-GAAP measures to further its own understanding of HP's segment operating performance. HP believes that excluding the items mentioned above from these non-GAAP financial measures allows HP's management to better understand HP's consolidated financial performance in relation to the operating results of HP's segments, as HP's management does not believe that the excluded items are reflective of ongoing operating results. More specifically, HP's management excludes each of those items mentioned above for the following reasons:

Gross cash is a non-GAAP measure that is defined as cash and cash equivalents plus short-term investments and certain long-term investments that may be liquidated within 90 days pursuant to the terms of existing put options or similar rights. HP's management uses gross cash for the purpose of determining the amount of cash available for investment in HP's businesses, repurchasing stock and other purposes. HP's management also uses gross cash to evaluate HP's historical and prospective liquidity. Because gross cash includes liquid assets that are not included in GAAP cash and cash equivalents, HP believes that gross cash provides a helpful assessment of HP's liquidity.

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:

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 
                                                                            

                                                                            
                          HP INC. AND SUBSIDIARIES                          
               CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS                
                                (Unaudited)                                 
                  (In millions, except per share amounts)                   
                                                                            
                                                Nine months ended July 31,  
                                               ---------------------------- 
                                                    2016           2015     
                                               -------------  ------------- 
                                                                            
Net revenue                                    $      35,726  $      39,197 
                                                                            
Costs and expenses:                                                         
  Cost of revenue                                     29,019         31,624 
  Research and development                               891            909 
  Selling, general and administrative                  2,758          3,508 
  Restructuring and other charges                        156             22 
  Amortization of intangible assets                       16             76 
  Defined benefit plan settlement credits                  -            (64)
                                               -------------  ------------- 
    Total costs and expenses                          32,840         36,075 
                                               -------------  ------------- 
                                                                            
Earnings from continuing operations                    2,886          3,122 
                                                                            
Interest and other, net                                 (135)          (289)
                                               -------------  ------------- 
                                                                            
Earnings from continuing operations before                                  
 taxes                                                 2,751          2,833 
                                                                            
Provision for taxes                                     (598)          (630)
                                               -------------  ------------- 
                                                                            
Net earnings from continuing operations                2,153          2,203 
Net (loss) earnings from discontinued                                       
 operations                                             (149)         1,028 
                                               -------------  ------------- 
                                                                            
Net earnings                                   $       2,004  $       3,231 
                                               =============  ============= 
                                                                            
Net earnings (loss) per share:                                              
Basic                                                                       
  Continuing operations                        $        1.24  $        1.21 
  Discontinued operations                              (0.08)          0.57 
                                               -------------  ------------- 
    Total basic net earnings per share         $        1.16  $        1.78 
                                               =============  ============= 
                                                                            
Diluted                                                                     
  Continuing operations                        $        1.23  $        1.20 
  Discontinued operations                              (0.08)          0.55 
                                               -------------  ------------- 
    Total diluted net earnings per share       $        1.15  $        1.75 
                                               =============  ============= 
                                                                            
Cash dividends declared per share              $        0.50  $        0.67 
                                                                            
Weighted-average shares used to compute net                                 
 earnings per share:                                                        
  Basic                                                1,735          1,817 
  Diluted                                              1,747          1,842 
                                                                            
                                                                            
        ADJUSTMENTS TO GAAP NET EARNINGS, EARNINGS FROM OPERATIONS,         
            OPERATING MARGIN AND DILUTED NET EARNINGS PER SHARE             
                                (Unaudited)                                 
                  (In millions, except per share amounts)                   
                                                                            
                     Three              Three              Three            
                     months   Diluted   months   Diluted   months   Diluted 
                     ended      net     ended      net     ended      net   
                      July   earnings   April   earnings    July   earnings 
                      31,       per      30,       per      31,       per   
                      2016     share     2016     share     2015     share  
                    -------  --------  -------  --------  -------  -------- 
                                                                            
GAAP net earnings                                                           
 from continuing                                                            
 operations         $   843  $   0.49  $   660  $   0.38  $   700  $   0.39 
                                                                            
Non-GAAP                                                                    
 adjustments:                                                               
  Restructuring and                                                         
   other charges         36      0.02      100      0.06        1         - 
  Aquisition-                                                               
   related charges        -         -        -         -        1         - 
  Amortization of                                                           
   intangible                                                               
   assets                 2         -        6         -       24      0.01 
  Non-operating                                                             
   retirement-                                                              
   related credits      (38)    (0.02)     (40)    (0.02)     (58)    (0.03)
  Defined benefit                                                           
   plan settlement                                                          
   credits                -         -        -         -      (64)    (0.04)
  Adjustments for                                                           
   taxes                 12      0.01      (16)    (0.01)      42      0.02 
  Tax                                                                       
   indemnification                                                          
   credits              (29)    (0.02)      (8)        -        -         - 
                    -------  --------  -------  --------  -------  -------- 
Non-GAAP net                                                                
 earnings           $   826  $   0.48  $   702  $   0.41  $   646  $   0.35 
                    =======  ========  =======  ========  =======  ======== 
                                                                            
GAAP earnings from                                                          
 continuing                                                                 
 operations         $ 1,117            $   841            $ 1,007           
                                                                            
Non-GAAP                                                                    
 adjustments:                                                               
  Restructuring and                                                         
   other charges         36                100                  1           
  Acquisition-                                                              
   related charges        -                  -                  1           
  Amortization of                                                           
   intangible                                                               
   assets                 2                  6                 24           
  Non-operating                                                             
   retirement-                                                              
   related credits      (38)               (40)               (58)          
  Defined benefit                                                           
   plan settlement                                                          
   credits                -                  -                (64)          
                    -------            -------            -------           
Non-GAAP earnings   $ 1,117            $   907            $   911           
                    =======            =======            =======           
                                                                            
GAAP operating                                                              
 margin from                                                                
 continuing                                                                 
 operations               9%                 7%                 8%          
Non-GAAP                                                                    
 adjustments              0%                 1%                (1%)         
                    -------            -------            -------           
Non-GAAP operating                                                          
 margin                   9%                 8%                 7%          
                    =======            =======            =======           
                                                                            
                                                                            
                          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    Diluted    Nine months    Diluted   
                            ended         net         ended         net     
                           July 31,     earnings     July 31,    earnings   
                             2016      per share       2015      per share  
                         -----------  -----------  -----------  ----------- 
                                                                            
GAAP net earnings from                                                      
 continuing operations   $     2,153  $      1.23  $     2,203  $      1.20 
                                                                            
Non-GAAP adjustments:                                                       
  Restructuring and                                                         
   other charges                 156         0.09           22         0.01 
  Aquisition-related                                                        
   charges                         -            -            1            - 
  Amortization of                                                           
   intangible assets              16         0.01           76         0.04 
  Non-operating                                                             
   retirement-related                                                       
   credits                      (118)       (0.07)        (174)       (0.10)
  Defined benefit plan                                                      
   settlement credits              -            -          (64)       (0.03)
  Adjustments for taxes            3            -           67         0.04 
  Tax indemnification                                                       
   credits                       (37)       (0.02)           -            - 
                         -----------  -----------  -----------  ----------- 
Non-GAAP net earnings    $     2,173  $      1.24  $     2,131  $      1.16 
                         ===========  ===========  ===========  =========== 
                                                                            
GAAP earnings from                                                          
 continuing operations   $     2,886               $     3,122              
                                                                            
Non-GAAP adjustments:                                                       
  Restructuring and                                                         
   other charges                 156                        22              
  Acquisition-related                                                       
   charges                         -                         1              
  Amortization of                                                           
   intangible assets              16                        76              
  Non-operating                                                             
   retirement-related                                                       
   credits                      (118)                     (174)             
  Defined benefit plan                                                      
   settlement credits              -                       (64)             
                         -----------               -----------              
Non-GAAP earnings        $     2,940               $     2,983              
                         ===========               ===========              
                                                                            
GAAP operating margin                                                       
 from continuing                                                            
 operations                        8%                        8%             
Non-GAAP adjustments               0%                        0%             
                         -----------               -----------              
Non-GAAP operating                                                          
 margin                            8%                        8%             
                         ===========               ===========              
                                                                            
                                                                            
                          HP INC. AND SUBSIDIARIES                          
                    CONSOLIDATED CONDENSED BALANCE SHEETS                   
                                 (Unaudited)                                
                                (In millions)                               
                                                                            
                                                            As of           
                                                ----------------------------
                                                   July 31,     October 31, 
                                                     2016           2015    
                                                -------------  -------------
                                                                            
ASSETS                                                                      
                                                                            
Current assets:                                                             
  Cash and cash equivalents                     $       5,636  $       7,584
  Accounts receivable                                   4,008          4,825
  Inventory                                             3,961          4,288
  Other current assets                                  3,797          4,498
  Current assets of discontinued operations                 -         30,592
                                                -------------  -------------
                                                                            
    Total current assets                               17,402         51,787
                                                -------------  -------------
                                                                            
Property, plant and equipment                           1,607          1,492
Goodwill                                                5,618          5,680
Other non-current assets                                2,597          1,592
Non-current assets of discontinued operations               -         46,331
                                                -------------  -------------
                                                                            
Total assets                                    $      27,224  $     106,882
                                                =============  =============
                                                                            
                                                                            
LIABILITIES AND STOCKHOLDERS' EQUITY                                        
                                                                            
Current liabilities:                                                        
  Notes payable and short-term borrowings       $          75  $       2,194
  Accounts payable                                     10,402         10,194
  Employee compensation and benefits                      712            747
  Taxes on earnings                                       162            243
  Deferred revenue                                        877          1,051
  Other accrued liabilities                             5,886          6,241
  Current liabilities of discontinued                                       
   operations                                               -         21,521
                                                -------------  -------------
                                                                            
    Total current liabilities                          18,114         42,191
                                                -------------  -------------
                                                                            
Long-term debt                                          6,760          6,677
Other non-current liabilities                           6,276          7,414
Non-current liabilities of discontinued                                     
 operations                                                 -         22,449
                                                                            
Stockholders' equity:                                                       
  HP stockholders' (deficit) equity                    (3,926)        27,768
  Non-controlling interests of discontinued                                 
   operations                                               -            383
                                                -------------  -------------
    Total stockholders' (deficit) equity               (3,926)        28,151
                                                -------------  -------------
                                                                            
Total liabilities and stockholders' equity      $      27,224  $     106,882
                                                =============  =============
                                                                            
                                                                            
                          HP INC. AND SUBSIDIARIES                          
              CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS               
                                (Unaudited)                                 
                               (In millions)                                
                                                                            
                                                Three months ended July 31, 
                                               ---------------------------- 
                                                    2016         2015(a)    
                                               -------------  ------------- 
                                                                            
Cash flows from operating activities:                                       
  Net earnings                                 $         783  $         854 
                                                                            
  Adjustments to reconcile net earnings to net                              
   cash provided by operating activities:                                   
    Depreciation and amortization                         85          1,023 
    Stock-based compensation expense                      39            160 
    Provision for doubtful accounts and                                     
     inventory                                            68            101 
    Restructuring and other charges                       31             25 
    Deferred taxes on earnings                           378            898 
    Excess tax benefit from stock-based                                     
     compensation                                         (2)            (6)
    Other, net                                          (313)           378 
                                                                            
  Changes in operating assets and liabilities,                              
   net of acquisitions:                                                     
    Accounts receivable                                 (166)          (295)
    Financing receivables                                  -            (53)
    Inventory                                           (471)          (520)
    Accounts payable                                   1,301            534 
    Taxes on earnings                                   (372)        (1,160)
    Restructuring and other                              (46)          (303)
    Other assets and liabilities                        (250)            37 
                                               -------------  ------------- 
      Net cash provided by operating                                        
       activities                                      1,065          1,673 
                                               -------------  ------------- 
                                                                            
Cash flows from investing activities:                                       
  Investment in property, plant and equipment            (81)          (916)
  Proceeds from sale of property, plant and                                 
   equipment                                               -             99 
  Purchases of available-for-sale securities                                
   and other investments                                   -            (72)
  Maturities and sales of available-for-sale                                
   securities and other investments                      121            123 
  Payments made in connection with business                                 
   acquisitions, net of cash acquired                      -         (2,478)
  Proceeds from business divestitures, net                99            156 
                                               -------------  ------------- 
    Net cash provided by (used in) investing                                
     activities                                          139         (3,088)
                                               -------------  ------------- 
                                                                            
Cash flows from financing activities:                                       
  Short-term borrowings with original                                       
   maturities less than 90 days, net                      33            775 
  Proceeds from debt, net of issuance costs                -          4,406 
  Payment of debt                                          -           (747)
  Settlement of cash flow hedge                           (2)           (32)
  Issuance of common stock under employee                                   
   stock plans                                            32             80 
  Repurchase of common stock                             (57)          (352)
  Excess tax benefit from stock-based                                       
   compensation                                            2              6 
  Cash dividends paid                                   (212)          (318)
                                               -------------  ------------- 
    Net cash (used in) provided by financing                                
     activities                                         (204)         3,818 
                                               -------------  ------------- 
                                                                            
Net increase in cash and cash equivalents              1,000          2,403 
Cash and cash equivalents at beginning of                                   
 period                                                4,636         14,768 
                                               -------------  ------------- 
Cash and cash equivalents at end of period     $       5,636  $      17,171 
                                               =============  ============= 
                                                                            
(a)  The consolidated condensed statement of cash flows for the three months
     ended July 31, 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                          
              CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS               
                                (Unaudited)                                 
                               (In millions)                                
                                                                            
                                                Nine months ended July 31,  
                                               ---------------------------- 
                                                    2016         2015(a)    
                                               -------------  ------------- 
                                                                            
Cash flows from operating activities:                                       
  Net earnings                                 $       2,004  $       3,231 
                                                                            
  Adjustments to reconcile net earnings to net                              
   cash provided by operating activities:                                   
    Depreciation and amortization                        249          3,054 
    Stock-based compensation expense                     140            476 
    Provision for doubtful accounts and                                     
     inventory                                           113            265 
    Restructuring and other charges                      151            426 
    Deferred taxes on earnings                           978            898 
    Excess tax benefit from stock-based                                     
     compensation                                         (4)          (124)
    Other, net                                          (408)           675 
                                                                            
  Changes in operating assets and liabilities,                              
   net of acquisitions:                                                     
    Accounts receivable                                  728          1,199 
    Financing receivables                                  -            192 
    Inventory                                            251           (467)
    Accounts payable                                     238           (358)
    Taxes on earnings                                   (877)        (1,075)
    Restructuring and other                             (114)        (1,006)
    Other assets and liabilities                        (917)        (3,505)
                                               -------------  ------------- 
      Net cash provided by operating                                        
       activities                                      2,532          3,881 
                                               -------------  ------------- 
                                                                            
Cash flows from investing activities:                                       
  Investment in property, plant and equipment           (287)        (2,642)
  Proceeds from sale of property, plant and                                 
   equipment                                               -            310 
  Purchases of available-for-sale securities                                
   and other investments                                (122)          (180)
  Maturities and sales of available-for-sale                                
   securities and other investments                      133            246 
  Payments made in connection with business                                 
   acquisitions, net of cash acquired                      -         (2,617)
  Proceeds from business divestitures, net               160            156 
                                               -------------  ------------- 
    Net cash used in investing activities               (116)        (4,727)
                                               -------------  ------------- 
                                                                            
Cash flows from financing activities:                                       
  Short-term borrowings with original                                       
   maturities less than 90 days, net                      72          2,633 
  Proceeds from debt, net of issuance costs                4          5,993 
  Payment of debt                                     (2,158)        (2,642)
  Settlement of cash flow hedge                            4            (32)
  Net transfer of cash and cash equivalents to                              
   Hewlett Packard Enterprise Company                (10,375)             - 
  Issuance of common stock under employee                                   
   stock plans                                            41            303 
  Repurchase of common stock                          (1,159)        (2,582)
  Excess tax benefit from stock-based                                       
   compensation                                            4            124 
  Cash dividends paid                                   (646)          (913)
                                               -------------  ------------- 
    Net cash (used in) provided by financing                                
     activities                                      (14,213)         2,884 
                                               -------------  ------------- 
                                                                            
Net (decrease) increase in cash and cash                                    
 equivalents                                         (11,797)         2,038 
Cash and cash equivalents at beginning of                                   
 period(a)                                            17,433         15,133 
                                               -------------  ------------- 
Cash and cash equivalents at end of period     $       5,636  $      17,171 
                                               =============  ============= 
                                                                            
(a)  The consolidated condensed statement of cash flows for the nine months 
     ended July 31, 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          
                                      ------------------------------------- 
                                        July 31,    April 30,     July 31,  
                                          2016         2016         2015    
                                      -----------  -----------  ----------- 
                                                                            
Net revenue:(a)                                                             
                                                                            
  Personal Systems                    $     7,512  $     6,990  $     7,505 
  Printing                                  4,423        4,637        5,163 
  Corporate Investments                         -            3            2 
                                      -----------  -----------  ----------- 
    Total segments                         11,935       11,630       12,670 
  Intersegment net revenue                                                  
   eliminations and other                     (43)         (42)        (308)
                                      -----------  -----------  ----------- 
    Total net revenue                 $    11,892  $    11,588  $    12,362 
                                      ===========  ===========  =========== 
                                                                            
Earnings from continuing operations                                         
 before taxes:(a)                                                           
                                                                            
  Personal Systems                    $       333  $       242  $       211 
  Printing                                    903          801          896 
  Corporate Investments                       (35)          (8)         (12)
                                      -----------  -----------  ----------- 
    Total segment earnings from                                             
     operations                             1,201        1,035        1,095 
                                                                            
  Corporate costs and eliminations            (45)         (88)        (126)
  Stock-based compensation expense            (39)         (40)         (58)
  Acquisition-related charges                   -            -           (1)
  Restructuring and other charges             (36)        (100)          (1)
  Amortization of intangible assets            (2)          (6)         (24)
  Non-operating retirement-related                                          
   credits(a)                                  38           40           58 
  Defined benefit plan settlement                                           
   credits                                      -            -           64 
  Interest and other, net                     (36)          (5)         (90)
                                      -----------  -----------  ----------- 
                                                                            
    Total earnings from continuing                                          
     operations before taxes          $     1,081  $       836  $       917 
                                      ===========  ===========  =========== 
                                                                            
(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 or 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/(charges)"). 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)                                
                                                                            
                                                Nine months ended July 31,  
                                               ---------------------------- 
                                                    2016           2015     
                                               -------------  ------------- 
                                                                            
Net revenue:(a)                                                             
                                                                            
  Personal Systems                             $      21,969  $      23,826 
  Printing                                            13,702         16,267 
  Corporate Investments                                    6             16 
                                               -------------  ------------- 
    Total segments                                    35,677         40,109 
  Intersegment net revenue eliminations and                                 
   other                                                  49           (912)
                                               -------------  ------------- 
    Total net revenue                          $      35,726  $      39,197 
                                               =============  ============= 
                                                                            
Earnings from continuing operations before                                  
 taxes:(a)                                                                  
                                                                            
  Personal Systems                             $         804  $         741 
  Printing                                             2,491          2,928 
  Corporate Investments                                  (66)           (32)
                                               -------------  ------------- 
    Total segment earnings from operations             3,229          3,637 
                                                                            
  Corporate costs and eliminations                      (149)          (486)
  Stock-based compensation expense                      (140)          (168)
  Aquisition-related charges                               -             (1)
  Restructuring and other charges                       (156)           (22)
  Amortization of intangible assets                      (16)           (76)
  Non-operating retirement-related credits(a)            118            174 
  Defined benefit plan settlement credits                  -             64 
  Interest and other, net                               (135)          (289)
                                               -------------  ------------- 
                                                                            
    Total earnings from continuing operations                               
     before taxes                              $       2,751  $       2,833 
                                               =============  ============= 
                                                                            
(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 or 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/(charges)"). 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 (%)  
                        -------------------------------------  -----------  
                          July 31,    April 30,     July 31,                
                            2016         2016         2015      Q/Q    Y/Y  
                        -----------  -----------  -----------  ----   ----  
                                                                            
Net revenue:(a)                                                             
                                                                            
  Personal Systems                                                          
    Notebooks           $     4,303  $     3,838  $     3,993    12%     8% 
    Desktops                  2,455        2,402        2,700     2%    (9%)
    Workstations                476          461          507     3%    (6%)
    Other                       278          289          305    (4%)   (9%)
                        -----------  -----------  -----------               
      Total Personal                                                        
       Systems                7,512        6,990        7,505     7%     0% 
                        -----------  -----------  -----------               
                                                                            
  Printing                                                                  
    Supplies                  2,840        3,099        3,455    (8%)  (18%)
    Commercial Hardware       1,290        1,227        1,330     5%    (3%)
    Consumer Hardware           293          311          378    (6%)  (22%)
                        -----------  -----------  -----------               
      Total Printing          4,423        4,637        5,163    (5%)  (14%)
                        -----------  -----------  -----------               
                                                                            
  Corporate Investments           -            3            2  (100%) (100%)
                        -----------  -----------  -----------               
      Total segments         11,935       11,630       12,670     3%    (6%)
                        -----------  -----------  -----------               
                                                                            
  Intersegment net                                                          
   revenue eliminations                                                     
   and other(b)                 (43)         (42)        (308)   NM     NM  
                        -----------  -----------  -----------               
                                                                            
    Total net revenue   $    11,892  $    11,588  $    12,362     3%    (4%)
                        ===========  ===========  ===========               
                                                                            
(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 or 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/(charges)"). 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)                                
                                                                            
                                    Nine months ended July 31,  Change (%)  
                                   ---------------------------  ----------  
                                        2016          2015          Y/Y     
                                   ------------- -------------  ----------  
                                                                            
Net revenue:(a)                                                             
                                                                            
  Personal Systems                                                          
    Notebooks                      $      12,346 $      12,887          (4%)
    Desktops                               7,384         8,411         (12%)
    Workstations                           1,381         1,546         (11%)
    Other                                    858           982         (13%)
                                   ------------- -------------              
      Total Personal Systems              21,969        23,826          (8%)
                                   ------------- -------------              
                                                                            
  Printing                                                                  
    Supplies                               9,040        10,740         (16%)
    Commercial Hardware                    3,736         4,100          (9%)
    Consumer Hardware                        926         1,427         (35%)
                                   ------------- -------------              
      Total Printing                      13,702        16,267         (16%)
                                   ------------- -------------              
                                                                            
  Corporate Investments                        6            16         (63%)
                                   ------------- -------------              
      Total segments                      35,677        40,109         (11%)
                                   ------------- -------------              
                                                                            
  Intersegment net revenue                                                  
   eliminations and other(b)                  49          (912)         NM  
                                   ------------- -------------              
                                                                            
    Total net revenue              $      35,726 $      39,197          (9%)
                                   ============= =============              
                                                                            
(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 or 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/(charges)"). 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 
                           Three months ended               Margin (pts)    
                   ----------------------------------  ---------------------
                    July 31,    April 30,   July 31,                        
                      2016        2016        2015         Q/Q        Y/Y   
                   ----------  ----------  ----------  ---------- ----------
                                                                            
Segment operating                                                           
 margin:(a)                                                                 
  Personal Systems        4.4%        3.5%        2.8%    0.9 pts    1.6 pts
  Printing               20.4%       17.3%       17.4%    3.1 pts    3.0 pts
  Corporate                                                                 
   Investments(b)          NM          NM          NM          NM         NM
    Total segments       10.1%        8.9%        8.6%    1.2 pts    1.5 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 or 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/(charges)"). 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        
                                          ----------------------------------
                                            July 31,   April 30,   July 31, 
                                              2016        2016       2015   
                                          ----------- ----------- ----------
                                                                            
Numerator:                                                                  
  GAAP net earnings from continuing                                         
   operations                             $       843 $       660 $      700
                                          =========== =========== ==========
  Non-GAAP net earnings                   $       826 $       702 $      646
                                          =========== =========== ==========
                                                                            
Denominator:                                                                
  Weighted-average shares outstanding                                       
   during the reporting period                  1,711       1,720      1,805
  Dilutive effect of employee stock                                         
   plans(a)                                        14          11         23
                                          ----------- ----------- ----------
    Weighted-average shares used to                                         
     compute diluted net earnings per                                       
     share                                      1,725       1,731      1,828
                                          =========== =========== ==========
                                                                            
GAAP diluted net earnings per share from                                    
 continuing operations                    $      0.49 $      0.38 $     0.39
                                          =========== =========== ==========
Non-GAAP diluted net earnings per share   $      0.48 $      0.41 $     0.35
                                          =========== =========== ==========
                                                                            
(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 July 31,
                                                 ---------------------------
                                                      2016          2015    
                                                 ------------- -------------
                                                                            
Numerator:                                                                  
  GAAP net earnings from continuing operations   $       2,153 $       2,203
                                                 ============= =============
  Non-GAAP net earnings                          $       2,173 $       2,131
                                                 ============= =============
                                                                            
Denominator:                                                                
  Weighted-average shares outstanding during the                            
   reporting period                                      1,735         1,817
  Dilutive effect of employee stock plans(a)                12            25
                                                 ------------- -------------
    Weighted-average shares used to compute                                 
     diluted net earnings per share                      1,747         1,842
                                                 ============= =============
                                                                            
GAAP diluted net earnings per share from                                    
 continuing operations                           $        1.23 $        1.20
                                                 ============= =============
Non-GAAP diluted net earnings per share          $        1.24 $        1.16
                                                 ============= =============
                                                                            
(a)  Includes any dilutive effect of restricted stock units, stock options  
     and performance-based awards.