(b) For the twelve months ended October 31, 2018, the amount primarily includes $2.0 billion benefit in connection with the settlement of certain pre-separation Hewlett-Packard Company income tax liabilities indemnified through the Tax Matters Agreement with HP Inc. Further, as a result of the impact of U.S. Tax Reform, it also includes $2.0 billion tax benefit from the application of the new tax rules including a lower federal tax rate to deferred tax assets and liabilities, partially offset by a provisional estimate of $1.7 billion of transition tax expense on accumulated non U.S. earnings, and a provisional estimate of $687 million of tax expense on valuation allowance on foreign tax credits. In connection with the Everett Transaction, for the twelve months ended October 31, 2018, this amount also includes $208 million benefit primarily from foreign tax credits and from the release of non U.S. valuation allowances on deferred taxes established in connection with the Everett Transaction, following changes in foreign tax laws.
For the twelve months ended October 31, 2017, the amount primarily includes the income tax benefit related to the U.S. foreign tax credits generated as a result of the Everett and Seattle Transactions, partially offset by income tax expense as a result of recording valuation allowance on certain U.S. deferred tax assets.
|
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
ADJUSTMENTS TO GAAP NET EARNINGS, EARNINGS FROM OPERATIONS, OPERATING MARGIN AND DILUTED NET EARNINGS PER SHARE (Unaudited) (In millions, except percentages and per share amounts) | |||||||||||||||||||||||
|
Three months
ended October 31, 2018 |
Diluted net
earnings per share |
Three months
ended July 31, 2018 |
Diluted net
earnings per share |
Three months
ended October 31, 2017 |
Diluted net
earnings per share | ||||||||||||||||||
| GAAP net (loss) earnings from continuing operations | $ | (772 | ) | $ | (0.53 | ) | $ | 452 | $ | 0.29 | $ | 378 | $ | 0.23 | |||||||||
| Non-GAAP adjustments: | |||||||||||||||||||||||
| Amortization of intangible assets | 72 | 0.05 | 72 | 0.05 | 86 | 0.05 | |||||||||||||||||
| Impairment of goodwill | 88 | 0.06 | — | — | — | — | |||||||||||||||||
| Restructuring charges | 5 | — | 2 | — | 113 | 0.07 | |||||||||||||||||
| Transformation costs(a) | (54 | ) | (0.04 | ) | 131 | 0.09 | 328 | 0.20 | |||||||||||||||
| Disaster Charges | — | — | — | — | 93 | 0.06 | |||||||||||||||||
| Acquisition and other related charges | 12 | 0.01 | 24 | 0.02 | 53 | 0.03 | |||||||||||||||||
| Separation costs | 12 | 0.01 | (2 | ) | — | 202 | 0.12 | ||||||||||||||||
| Defined benefit plan settlement charges and remeasurement (benefit) | — | — | — | — | (26 | ) | (0.02 | ) | |||||||||||||||
| Tax indemnification adjustments (b) | 12 | 0.01 | (2 | ) | — | 2 | — | ||||||||||||||||
| Loss from equity interests (c) | 38 | 0.03 | 38 | 0.02 | 43 | 0.03 | |||||||||||||||||
| Adjustments for taxes (d) | 1,252 | 0.85 | (45 | ) | (0.03 | ) | (799 | ) | (0.48 | ) | |||||||||||||
| Non-GAAP net earnings from continuing operations | $ | 665 | $ | 0.45 | $ | 670 | $ | 0.44 | $ | 473 | $ | 0.29 | |||||||||||
| GAAP earnings (loss) from continuing operations | $ | 684 | $ | 516 | $ | (224 | ) | ||||||||||||||||
| Non-GAAP adjustments related to continuing operations: | |||||||||||||||||||||||
| Amortization of intangible assets | 72 | 72 | 86 | ||||||||||||||||||||
| Impairment of goodwill | 88 | — | — | ||||||||||||||||||||
| Restructuring charges | 5 | 2 | 113 | ||||||||||||||||||||
| Transformation costs | (74 | ) | 131 | 328 | |||||||||||||||||||
| Disaster Charges | — | — | 93 | ||||||||||||||||||||
| Acquisition and other related charges | 12 | 24 | 53 | ||||||||||||||||||||
| Separation costs | 12 | (2 | ) | 202 | |||||||||||||||||||
| Defined benefit plan settlement charges and remeasurement (benefit) | — | — | (26 | ) | |||||||||||||||||||
| Non-GAAP earnings from continuing operations | $ | 799 | $ | 743 | $ | 625 | |||||||||||||||||
| GAAP operating margin from continuing operations | 9 | % | 7 | % | (3 | )% | |||||||||||||||||
| Non-GAAP adjustments from continuing operations | 1 | % | 3 | % | 11 | % | |||||||||||||||||
| Non-GAAP operating margin from continuing operations | 10 | % | 10 | % | 8 | % | |||||||||||||||||
| GAAP net earnings (loss) from discontinued operations | $ | 15 | $ | 0.01 | $ | (1 | ) | $ | — | $ | 146 | $ | 0.09 | ||||||||||
| Non-GAAP adjustments related to discontinued operations: | |||||||||||||||||||||||
| Amortization of intangible assets | — | — | — | — | 10 | 0.01 | |||||||||||||||||
| Restructuring charges | — | — | — | — | (2 | ) | — | ||||||||||||||||
| Separation costs | — | — | — | — | 70 | 0.04 | |||||||||||||||||
| Defined benefit plan settlement charges and remeasurement (benefit) | — | — | — | — | (1 | ) | — | ||||||||||||||||
| Interest expense on Seattle debt | — | — | — | — | 8 | — | |||||||||||||||||
| Tax indemnification adjustments | (11 | ) | (0.01 | ) | — | — | 15 | 0.01 | |||||||||||||||
| Adjustments for taxes (e) | (4 | ) | — | 1 | — | (216 | ) | (0.13 | ) | ||||||||||||||
| Non-GAAP net earnings from discontinued operations | $ | — | $ | — | $ | — | $ | — | $ | 30 | $ | 0.02 | |||||||||||
| Total GAAP net (loss) earnings | $ | (757 | ) | $ | (0.52 | ) | $ | 451 | $ | 0.29 | $ | 524 | $ | 0.32 | |||||||||
| Total Non-GAAP net earnings | $ | 665 | $ | 0.45 | $ | 670 | $ | 0.44 | $ | 503 | $ | 0.31 | |||||||||||
