(b) Represents adjustment to net periodic pension cost resulting from remeasurements of the Hewlett Packard Enterprise pension plans in connection with the spin-off of the software business, Seattle SpinCo, Inc., and the merger of Seattle SpinCo, Inc. with Micro Focus International plc and the spin-off of the enterprise services business, Everett SpinCo, Inc., and the merger of Everett SpinCo, Inc. with Computer Sciences Corporation.
(c) Represents the settlement of certain pre-separation Hewlett-Packard Company income tax liabilities indemnified through the Tax Matters Agreement with HP Inc.
(d) Represents the amortization of basis difference adjustments related to the H3C divestiture.
(e) Includes tax amounts in connection with the spin-off of the enterprise services business, Everett SpinCo, Inc. and the software business, Seattle SpinCo, Inc., tax amounts related to U.S. tax reform, tax amounts related to the settlement of certain pre-separation Hewlett-Packard Company income tax liabilities indemnified through the Tax Matters Agreement with HP Inc., and excess tax benefits associated with stock-based compensation, following the adoption of ASU 2016-09 in the first quarter of fiscal 2018.
For the three months ended April 30, 2018, this amount primarily includes a $1.1 billion benefit following the closure of pre-separation Hewlett-Packard Company audits for fiscal years 2009 through 2012 in connection with the settlement of certain pre-separation Hewlett-Packard Company income tax liabilities indemnified through the Tax Matters Agreement with HP Inc., and $28 million of excess tax benefits from stock-based compensation, partially offset by $140 million of tax expense as a result of U.S. tax reform.
In connection with the spin-off of the enterprise services business, Everett SpinCo, Inc., for the three months ended July 31, 2017, this amount includes a $189 million benefit primarily from income tax benefits on deferred losses.
|
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
ADJUSTMENTS TO GAAP NET EARNINGS, EARNINGS FROM OPERATIONS, OPERATING MARGIN AND DILUTED NET EARNINGS PER SHARE (Unaudited) (In millions, except percentages and per share amounts) | |||||||||||||||
|
Nine months
ended July 31, 2018 |
Diluted net
earnings per share |
Nine months
ended July 31, 2017 |
Diluted net
earnings per share | ||||||||||||
| GAAP net earnings from continuing operations | $ | 2,784 | $ | 1.76 | $ | 58 | $ | 0.03 | |||||||
| Non-GAAP adjustments: | |||||||||||||||
| Amortization of intangible assets | 222 | 0.14 | 235 | 0.14 | |||||||||||
| Restructuring charges | 14 | 0.01 | 304 | 0.18 | |||||||||||
| Transformation costs(a) | 499 | 0.32 | 31 | 0.02 | |||||||||||
| Acquisition and other related charges | 70 | 0.04 | 150 | 0.09 | |||||||||||
| Separation costs | — | — | 46 | 0.03 | |||||||||||
| Defined benefit plan settlement charges and remeasurement (benefit)(b) | — | — | (38 | ) | (0.02 | ) | |||||||||
| Tax indemnification adjustments(c) | 1,342 | 0.85 | 1 | — | |||||||||||
| Loss from equity interests(d) | 113 | 0.07 | 112 | 0.07 | |||||||||||
| Adjustments for taxes(e) | (3,291 | ) | (2.08 | ) | 236 | 0.13 | |||||||||
| Non-GAAP net earnings from continuing operations | $ | 1,753 | $ | 1.11 | $ | 1,135 | $ | 0.67 | |||||||
| GAAP earnings from continuing operations | $ | 1,174 | $ | 849 | |||||||||||
| Non-GAAP adjustments related to continuing operations: | |||||||||||||||
| Amortization of intangible assets | 222 | 235 | |||||||||||||
| Restructuring charges | 14 | 304 | |||||||||||||
| Transformation costs (a) | 499 | 31 | |||||||||||||
| Acquisition and other related charges | 70 | 150 | |||||||||||||
| Separation costs | — | 46 | |||||||||||||
| Defined benefit plan settlement charges and remeasurement (benefit) (b) | — | (38 | ) | ||||||||||||
| Non-GAAP earnings from continuing operations | $ | 1,979 | $ | 1,577 | |||||||||||
| GAAP operating margin from continuing operations | 5 | % | 4 | % | |||||||||||
| Non-GAAP adjustments from continuing operations | 4 | % | 3 | % | |||||||||||
| Non-GAAP operating margin from continuing operations | 9 | % | 7 | % | |||||||||||
| GAAP net loss from discontinued operations | $ | (119 | ) | $ | (0.07 | ) | $ | (238 | ) | $ | (0.14 | ) | |||
| Non-GAAP adjustments related to discontinued operations: | |||||||||||||||
| Amortization of intangible assets | — | — | 106 | 0.06 | |||||||||||
| Restructuring charges | — | — | 253 | 0.15 | |||||||||||
| Acquisition and other related charges | — | — | 1 | — | |||||||||||
| Separation costs | 51 | 0.03 | 967 | 0.57 | |||||||||||
| Defined benefit plan settlement charges and remeasurement (benefit) (b) | — | — | (8 | ) | — | ||||||||||
| Interest expense on Seattle debt | — | — | 11 | 0.01 | |||||||||||
| Tax indemnification adjustments (c) | 68 | 0.04 | — | — | |||||||||||
| Adjustments for taxes | — | — | (371 | ) | (0.22 | ) | |||||||||
| Non-GAAP net earnings from discontinued operations | $ | — | $ | — | $ | 721 | $ | 0.43 | |||||||
| Total GAAP net earnings (loss) | $ | 2,665 | $ | 1.69 | $ | (180 | ) | $ | (0.11 | ) | |||||
| Total Non-GAAP net earnings | $ | 1,753 | $ | 1.11 | $ | 1,856 | $ | 1.10 | |||||||
(a) Represents amounts in connection with the HPE Next initiative and primarily includes costs related to labor and non-labor restructuring, program management and IT charges, partially offset by the gain on sale of real estate.
