HP Reports Fiscal 2014 First Quarter Results
PALO ALTO, CA--(Marketwired - Feb 20, 2014) - HP (NYSE: HPQ)
- First quarter non-GAAP diluted net earnings per share of $0.90,
up 10% from the prior-year period, versus the previously provided
outlook of $0.82 to $0.86 per share
- First quarter GAAP diluted net earnings per share of $0.74, up
17% from the prior-year period, versus the previously provided
outlook of $0.60 to $0.64 per share
- First quarter net revenue of $28.2 billion, down 1% from the
prior-year period and flat on a constant currency basis
- First quarter cash flow from operations of $3.0 billion, up 17%
from the prior-year period
- Returned $843 million to shareholders in the form of dividends
and share repurchases in the first quarter
- Improved operating company net cash position by $1.6 billion,
the eighth consecutive quarterly improvement of over $1
billion
HP fiscal 2014 first quarter financial performance
|
|
|
|
|
|
|
|
|
|
|
|
Q1 FY14 |
|
|
Q1 FY13 |
|
|
Y/Y |
|
GAAP
net revenue ($B) |
|
$ |
28.2 |
|
|
$ |
28.4 |
|
|
(1 |
%) |
GAAP
operating margin |
|
|
7.1 |
% |
|
|
6.2 |
% |
|
0.9 pts. |
|
GAAP
net earnings ($B) |
|
$ |
1.4 |
|
|
$ |
1.2 |
|
|
16 |
% |
GAAP
diluted net earnings per share |
|
$ |
0.74 |
|
|
$ |
0.63 |
|
|
17 |
% |
Non-GAAP operating margin |
|
|
8.5 |
% |
|
|
7.9 |
% |
|
0.6 pts. |
|
Non-GAAP net earnings ($B) |
|
$ |
1.7 |
|
|
$ |
1.6 |
|
|
9 |
% |
Non-GAAP diluted net earnings per share |
|
$ |
0.90 |
|
|
$ |
0.82 |
|
|
10 |
% |
Cash
flow from operations ($B) |
|
$ |
3.0 |
|
|
$ |
2.6 |
|
|
17 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Information about HP's use of non-GAAP financial information is
provided under "Use of non-GAAP financial information" below.
HP today announced financial results for its fiscal 2014 first
quarter ended Jan. 31, 2014.
First quarter GAAP diluted net earnings per share (EPS) was
$0.74, up from $0.63 in the prior-year period and above the
previously provided outlook of $0.60 to $0.64. First quarter
non-GAAP diluted net EPS was $0.90, up from $0.82 in the prior-year
period and above the previously provided outlook of $0.82 to $0.86.
First quarter non-GAAP net earnings and non-GAAP diluted net EPS
exclude after-tax costs of $317 million and $0.16 per diluted
share, respectively, related to the amortization of intangible
assets, restructuring charges and acquisition-related charges.
First quarter net revenue of $28.2 billion was down 1% from the
prior-year period and flat on a constant currency basis.
"HP is in a stronger position today than we've been in quite
some time," said Meg Whitman, HP president and chief executive
officer. "The progress we're making is reflected in growth
across several parts of our portfolio, the growing strength of our
balance sheet, and the strong support we're receiving from
customers and channel partners. Innovation is igniting our
comeback, and at a time when many of our competitors are
confronting new challenges, two years of turnaround work is setting
us up for an exciting future."
Outlook For the fiscal 2014 second quarter, HP estimates
non-GAAP diluted net EPS to be in the range of $0.85 to $0.89 and
GAAP diluted net EPS to be in the range of $0.62 to $0.66. Fiscal
2014 second quarter non-GAAP diluted net EPS estimates exclude
after-tax costs of approximately $0.23 per share, related primarily
to the amortization of intangible assets and restructuring
charges.
For fiscal 2014, HP estimates non-GAAP diluted net EPS to be in
the range of $3.60 to $3.75 and GAAP diluted net EPS to be in the
range of $2.85 to $3.00. Fiscal 2014 non-GAAP diluted net EPS
estimates exclude after-tax costs of approximately $0.75 per share,
related primarily to the amortization of intangible assets and
restructuring charges.
Asset management HP generated $3.0 billion in cash flow from
operations in the first quarter, up 17% from the prior-year period.
Inventory ended the quarter at $6.0 billion, down 1 day year over
year to 25 days. Accounts receivable ended the quarter at $13.5
billion, down 2 days year over year at 43 days. Accounts payable
ended the quarter at $12.6 billion, up 4 days year over year to 52
days. HP's dividend payment of $0.1452 per share in the first
quarter resulted in cash usage of $278 million. HP also utilized
$565 million of cash during the quarter to repurchase approximately
20.4 million shares of common stock in the open market. HP exited
the quarter with $16.4 billion in gross cash.
Fiscal 2014 first quarter segment results
- Personal
Systems revenue was up 4% year over year with a 3.3%
operating margin. Commercial revenue increased 8% and Consumer
revenue declined 3%. Total units were up 6% with Desktops units
down 3% and Notebooks units up 5%.
- Printing
revenue was down 2% year over year with a 16.8% operating margin.
Total hardware units were up 5% with Commercial hardware units up
6% and Consumer hardware units up 4%. Supplies revenue was down
3%.
- Enterprise
Group revenue was up 1% year over year with a 14.4%
operating margin. Industry Standard Servers revenue was up 6%,
Storage revenue was flat, Business Critical Systems revenue was
down 25%, Networking revenue was up 4% and Technology Services
revenue was down 4%.
- Enterprise
Services revenue was down 7% year over year with a 1%
operating margin. Application and Business Services revenue
was down 4%, and Infrastructure Technology Outsourcing revenue
declined 9%.
- Software
revenue was down 4% year over year with a 15.8% operating margin.
Support revenue was down 2%, license revenue was down 6%,
professional services revenue was down 12% and
software-as-a-service (SaaS) revenue was up 6%.
- HP Financial
Services revenue was down 9% year over year with a 6%
decrease in net portfolio assets and an 18% increase in financing
volume. The business delivered an operating margin of 11.6%.
- Corporate
Investments revenue increased due to the sale of a portfolio
of mobile computing intellectual property.
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 Q1 FY14 earnings conference call is accessible via an audio
webcast at www.hp.com/investor/2014Q1webcast.
About HP HP creates new possibilities for technology to have a
meaningful impact on people, businesses, governments and
society. With the broadest technology portfolio spanning
printing, personal systems, software, services and IT
infrastructure, HP delivers solutions for customers' most complex
challenges in every region of the world. More information
about HP 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
revenue on a constant currency basis, non-GAAP operating profit,
non-GAAP operating margin, non-GAAP net earnings, non-GAAP diluted
net earnings per share, gross cash, free cash flow, net debt, net
cash, operating company net debt and operating company net cash. HP
also provides forecasts of non-GAAP diluted net earnings per share.
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 management'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 revenue, operating profit, operating margin, net
earnings, diluted net earnings per share, cash and cash
equivalents, cash flow from operations or total company debt
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
revenue, margins, expenses, HP's effective tax rate, net earnings,
net earnings per share, cash flows, benefit plan funding, share
repurchases, currency exchange rates or other financial items; any
projections of the amount, timing or impact of cost savings or
restructuring charges; any statements of the plans, strategies and
objectives of management for future operations, including the
execution of restructuring plans and any resulting cost savings or
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 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 and partners; the
hiring and retention of key employees; integration and other risks
associated with business combination and investment transactions;
the execution, timing and results of restructuring plans, including
estimates and assumptions related to the cost and the anticipated
benefits of implementing those 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, 2013 and HP's other filings with the Securities
and Exchange Commission. As in prior periods, the financial
information set forth in this release, including tax-related items,
reflects estimates based on information available at this time.
While HP believes these estimates to be reasonable, these amounts
could differ materially from actual reported amounts in HP's
Quarterly Report on Form 10-Q for the fiscal quarter ended January
31, 2014. HP assumes no obligation and does not intend to update
these forward-looking statements.
|
|
|
|
HEWLETT-PACKARD COMPANY AND SUBSIDIARIES |
|
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS |
|
(Unaudited) |
|
(In millions except per share amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
Jan 31, 2014 |
|
|
Oct 31, 2013 |
|
|
Jan 31, 2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenue |
$ |
28,154 |
|
|
$ |
29,131 |
|
|
$ |
28,359 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales |
|
21,736 |
|
|
|
22,437 |
|
|
|
22,029 |
|
|
Research and development |
|
811 |
|
|
|
729 |
|
|
|
794 |
|
|
Selling, general and administrative |
|
3,210 |
|
|
|
3,351 |
|
|
|
3,300 |
|
|
Amortization of intangible assets |
|
283 |
|
|
|
317 |
|
|
|
350 |
|
|
Restructuring charges |
|
114 |
|
|
|
371 |
|
|
|
130 |
|
|
Acquisition-related charges |
|
3 |
|
|
|
3 |
|
|
|
4 |
|
|
|
Total
costs and expenses |
|
26,157 |
|
|
|
27,208 |
|
|
|
26,607 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings from operations |
|
1,997 |
|
|
|
1,923 |
|
|
|
1,752 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and other, net |
|
(163 |
) |
|
|
(103 |
) |
|
|
(179 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Earnings before taxes |
|
1,834 |
|
|
|
1,820 |
|
|
|
1,573 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for taxes |
|
(409 |
) |
|
|
(406 |
) |
|
|
(341 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings |
$ |
1,425 |
|
|
$ |
1,414 |
|
|
$ |
1,232 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
0.75 |
|
|
$ |
0.74 |
|
|
$ |
0.63 |
|
|
Diluted |
$ |
0.74 |
|
|
$ |
0.73 |
|
|
$ |
0.63 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends declared per share |
$ |
0.29 |
|
|
$ |
- |
|
|
$ |
0.26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares used to compute net earnings
per share: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
1,907 |
|
|
|
1,918 |
|
|
|
1,953 |
|
|
Diluted |
|
1,935 |
|
|
|
1,940 |
|
|
|
1,956 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HEWLETT-PACKARD COMPANY AND SUBSIDIARIES |
|
ADJUSTMENTS TO GAAP NET EARNINGS, EARNINGS FROM
OPERATIONS, |
|
OPERATING MARGIN AND DILUTED NET EARNINGS PER
SHARE |
|
(Unaudited) |
|
(In millions except per share amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended Jan 31, 2014 |
|
|
Diluted net earnings per share |
|
|
Three months ended Oct 31, 2013 |
|
|
Diluted net earnings per share |
|
|
Three months ended Jan 31, 2013 |
|
|
Diluted net earnings per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net earnings |
$ |
1,425 |
|
|
$ |
0.74 |
|
|
$ |
1,414 |
|
|
$ |
0.73 |
|
|
$ |
1,232 |
|
|
$ |
0.63 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets |
|
283 |
|
|
|
0.15 |
|
|
|
317 |
|
|
|
0.16 |
|
|
|
350 |
|
|
|
0.18 |
|
|
Restructuring charges |
|
114 |
|
|
|
0.06 |
|
|
|
371 |
|
|
|
0.19 |
|
|
|
130 |
|
|
|
0.07 |
|
|
Acquisition-related charges |
|
3 |
|
|
|
- |
|
|
|
3 |
|
|
|
- |
|
|
|
4 |
|
|
|
- |
|
|
Adjustments for taxes |
|
(83 |
) |
|
|
(0.05 |
) |
|
|
(146 |
) |
|
|
(0.07 |
) |
|
|
(111 |
) |
|
|
(0.06 |
) |
Non-GAAP net earnings |
$ |
1,742 |
|
|
$ |
0.90 |
|
|
$ |
1,959 |
|
|
$ |
1.01 |
|
|
$ |
1,605 |
|
|
$ |
0.82 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP earnings from operations |
$ |
1,997 |
|
|
|
|
|
|
$ |
1,923 |
|
|
|
|
|
|
$ |
1,752 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets |
|
283 |
|
|
|
|
|
|
|
317 |
|
|
|
|
|
|
|
350 |
|
|
|
|
|
|
Restructuring charges |
|
114 |
|
|
|
|
|
|
|
371 |
|
|
|
|
|
|
|
130 |
|
|
|
|
|
|
Acquisition-related charges |
|
3 |
|
|
|
|
|
|
|
3 |
|
|
|
|
|
|
|
4 |
|
|
|
|
|
Non-GAAP earnings from operations |
$ |
2,397 |
|
|
|
|
|
|
$ |
2,614 |
|
|
|
|
|
|
$ |
2,236 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP operating margin |
|
7 |
% |
|
|
|
|
|
|
7 |
% |
|
|
|
|
|
|
6 |
% |
|
|
|
|
Non-GAAP adjustments |
|
2 |
% |
|
|
|
|
|
|
2 |
% |
|
|
|
|
|
|
2 |
% |
|
|
|
|
Non-GAAP operating margin |
|
9 |
% |
|
|
|
|
|
|
9 |
% |
|
|
|
|
|
|
8 |
% |
|
|
|
|
|
|
|
HEWLETT-PACKARD COMPANY AND SUBSIDIARIES |
CONSOLIDATED CONDENSED BALANCE SHEETS |
(In millions) |
|
|
|
|
|
|
|
|
|
January 31, 2014 |
|
October 31, 2013 |
|
(Unaudited) |
|
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
Cash and cash equivalents |
$ |
16,165 |
|
$ |
12,163 |
|
Accounts receivable |
|
13,492 |
|
|
15,876 |
|
Financing receivables |
|
3,054 |
|
|
3,144 |
|
Inventory |
|
6,004 |
|
|
6,046 |
|
Other current assets |
|
11,969 |
|
|
13,135 |
|
|
|
|
|
|
|
|
Total
current assets |
|
50,684 |
|
|
50,364 |
|
|
|
|
|
|
Property, plant and equipment |
|
11,259 |
|
|
11,463 |
|
|
|
|
|
|
Long-term financing receivables and other assets |
|
9,131 |
|
|
9,556 |
|
|
|
|
|
|
Goodwill and intangible assets |
|
33,951 |
|
|
34,293 |
|
|
|
|
|
|
Total assets |
$ |
105,025 |
|
$ |
105,676 |
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
Notes payable and short-term borrowings |
$ |
6,621 |
|
$ |
5,979 |
|
Accounts payable |
|
12,640 |
|
|
14,019 |
|
Employee compensation and benefits |
|
3,171 |
|
|
4,436 |
|
Taxes on earnings |
|
1,224 |
|
|
1,203 |
|
Deferred revenue |
|
6,754 |
|
|
6,477 |
|
Other accrued liabilities |
|
13,201 |
|
|
13,407 |
|
|
|
|
|
|
|
|
Total
current liabilities |
|
43,611 |
|
|
45,521 |
|
|
|
|
|
|
Long-term debt |
|
17,971 |
|
|
16,608 |
|
|
|
|
|
|
Other liabilities |
|
15,294 |
|
|
15,891 |
|
|
|
|
|
|
Stockholders' equity: |
|
|
|
|
|
|
HP stockholders' equity |
|
27,754 |
|
|
27,269 |
|
Non-controlling interests |
|
395 |
|
|
387 |
|
|
|
|
|
|
|
|
Total
stockholders' equity |
|
28,149 |
|
|
27,656 |
|
|
|
|
|
|
Total liabilities and stockholders' equity |
$ |
105,025 |
|
$ |
105,676 |
|
|
|
|
|
|
HEWLETT-PACKARD COMPANY AND SUBSIDIARIES |
|
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS |
|
(Unaudited) |
|
(In millions) |
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
|
January 31, 2014 |
|
|
January 31, 2013 |
|
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
|
Net earnings |
|
$ |
1,425 |
|
|
$ |
1,232 |
|
|
Adjustments to reconcile net earnings to net cash
provided by operating activities: |
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
1,117 |
|
|
|
1,163 |
|
|
|
Stock-based compensation expense |
|
|
170 |
|
|
|
184 |
|
|
|
Provision for doubtful accounts and inventory |
|
|
57 |
|
|
|
124 |
|
|
|
Restructuring charges |
|
|
114 |
|
|
|
130 |
|
|
|
Deferred taxes on earnings |
|
|
9 |
|
|
|
500 |
|
|
|
Excess tax benefit from stock-based compensation |
|
|
(27 |
) |
|
|
- |
|
|
|
Other, net |
|
|
(33 |
) |
|
|
167 |
|
|
|
|
|
|
|
|
|
|
|
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
2,391 |
|
|
|
2,148 |
|
|
|
|
Financing receivables |
|
|
296 |
|
|
|
98 |
|
|
|
|
Inventory |
|
|
(19 |
) |
|
|
(149 |
) |
|
|
|
Accounts payable |
|
|
(1,165 |
) |
|
|
(1,690 |
) |
|
|
|
Taxes on earnings |
|
|
170 |
|
|
|
(423 |
) |
|
|
|
Restructuring |
|
|
(381 |
) |
|
|
(237 |
) |
|
|
|
Other assets and liabilities |
|
|
(1,134 |
) |
|
|
(685 |
) |
|
|
|
|
Net
cash provided by operating activities |
|
|
2,990 |
|
|
|
2,562 |
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
|
Investment in property, plant and equipment |
|
|
(997 |
) |
|
|
(633 |
) |
|
|
Proceeds from sale of property, plant and
equipment |
|
|
450 |
|
|
|
127 |
|
|
|
Purchases of available-for-sale securities and other
investments |
|
|
(135 |
) |
|
|
(299 |
) |
|
|
Maturities and sales of available-for-sale securities
and other investments |
|
|
465 |
|
|
|
161 |
|
|
|
|
|
Net
cash used in investing activities |
|
|
(217 |
) |
|
|
(644 |
) |
|
|
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
|
|
Issuance (repayment) of commercial paper and notes
payable, net |
|
|
2 |
|
|
|
(105 |
) |
|
|
Issuance of debt |
|
|
2,005 |
|
|
|
45 |
|
|
|
Payment of debt |
|
|
(45 |
) |
|
|
(114 |
) |
|
|
Issuance of common stock under employee stock
plans |
|
|
83 |
|
|
|
55 |
|
|
|
Repurchase of common stock |
|
|
(565 |
) |
|
|
(253 |
) |
|
|
Excess tax benefit from stock-based compensation |
|
|
27 |
|
|
|
- |
|
|
|
Cash dividends paid |
|
|
(278 |
) |
|
|
(258 |
) |
|
|
|
|
Net
cash provided by (used in) financing activities |
|
|
1,229 |
|
|
|
(630 |
) |
|
|
|
|
|
|
|
|
|
Increase in cash and cash equivalents |
|
|
4,002 |
|
|
|
1,288 |
|
Cash and cash equivalents at beginning of period |
|
|
12,163 |
|
|
|
11,301 |
|
Cash and cash equivalents at end of period |
|
$ |
16,165 |
|
|
$ |
12,589 |
|
|
|
|
|
|
|
HEWLETT-PACKARD COMPANY AND SUBSIDIARIES |
|
SEGMENT INFORMATION |
|
(Unaudited) |
|
(In millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
|
January 31, 2014 |
|
|
October 31, 2013 |
|
|
January 31, 2013 |
|
Net revenue:(a) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Personal Systems |
|
$ |
8,530 |
|
|
$ |
8,604 |
|
|
$ |
8,232 |
|
|
Printing |
|
|
5,815 |
|
|
|
6,047 |
|
|
|
5,946 |
|
|
|
Total
Printing and Personal Systems Group |
|
|
14,345 |
|
|
|
14,651 |
|
|
|
14,178 |
|
|
Enterprise Group |
|
|
6,993 |
|
|
|
7,575 |
|
|
|
6,948 |
|
|
Enterprise Services |
|
|
5,595 |
|
|
|
5,918 |
|
|
|
6,038 |
|
|
Software |
|
|
916 |
|
|
|
1,093 |
|
|
|
951 |
|
|
HP Financial Services |
|
|
870 |
|
|
|
912 |
|
|
|
957 |
|
|
Corporate Investments |
|
|
288 |
|
|
|
5 |
|
|
|
4 |
|
|
|
Total
segments |
|
|
29,007 |
|
|
|
30,154 |
|
|
|
29,076 |
|
|
Elimination of intersegment net revenue and other |
|
|
(853 |
) |
|
|
(1,023 |
) |
|
|
(717 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
HP consolidated net revenue |
|
$ |
28,154 |
|
|
$ |
29,131 |
|
|
$ |
28,359 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings before taxes:(a) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Personal Systems |
|
$ |
279 |
|
|
$ |
265 |
|
|
$ |
233 |
|
|
Printing |
|
|
979 |
|
|
|
1,081 |
|
|
|
967 |
|
|
|
Total
Printing and Personal Systems Group |
|
|
1,258 |
|
|
|
1,346 |
|
|
|
1,200 |
|
|
Enterprise Group |
|
|
1,006 |
|
|
|
1,092 |
|
|
|
1,070 |
|
|
Enterprise Services |
|
|
57 |
|
|
|
255 |
|
|
|
76 |
|
|
Software |
|
|
145 |
|
|
|
330 |
|
|
|
155 |
|
|
HP Financial Services |
|
|
101 |
|
|
|
102 |
|
|
|
101 |
|
|
Corporate Investments |
|
|
121 |
|
|
|
(86 |
) |
|
|
(73 |
) |
|
|
Total
segment earnings from operations |
|
|
2,688 |
|
|
|
3,039 |
|
|
|
2,529 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate and unallocated costs and eliminations |
|
|
(121 |
) |
|
|
(323 |
) |
|
|
(109 |
) |
|
Unallocated costs related to stock-based compensation
expense |
|
|
(170 |
) |
|
|
(102 |
) |
|
|
(184 |
) |
|
Amortization of intangible assets |
|
|
(283 |
) |
|
|
(317 |
) |
|
|
(350 |
) |
|
Restructuring charges |
|
|
(114 |
) |
|
|
(371 |
) |
|
|
(130 |
) |
|
Acquisition-related charges |
|
|
(3 |
) |
|
|
(3 |
) |
|
|
(4 |
) |
|
Interest and other, net |
|
|
(163 |
) |
|
|
(103 |
) |
|
|
(179 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
HP consolidated earnings before taxes |
|
$ |
1,834 |
|
|
$ |
1,820 |
|
|
$ |
1,573 |
|
|
|
(a) |
Effective at the beginning of its first quarter of fiscal 2014, HP
implemented certain organizational changes to align its segment
financial reporting more closely with its current business
structure. These organizational changes include (i) transferring
the HP Exstream business from the Commercial Hardware business unit
within the Printing segment to the Software segment; (ii)
transferring the Personal Systems trade and warranty support
business from the Technology Services business unit within the
Enterprise Group segment to the Other business unit within the
Personal Systems segment; (iii) transferring the spare and
replacement parts business supporting the Personal Systems and
Printing segments from the Technology Services business unit within
the Enterprise Group segment to the Other business unit within the
Personal Systems segment and the Commercial Hardware business unit
within the Printing segment, respectively; and (iv) transferring
certain cloud-related incubation activities previously reported in
Corporate and unallocated costs and eliminations and in the
Enterprise Group segment to the Corporate Investments segment. In
addition, HP transferred certain intrasegment eliminations from the
Enterprise Services segment and the Enterprise Group segment to
corporate intersegment revenue eliminations. |
|
|
|
HP
reflected these changes to its segment information in prior
reporting periods on an as-if basis, which resulted in the transfer
of revenue among the Personal Systems, Printing, the Enterprise
Group, Enterprise Services and Software segments. These changes
also resulted in the transfer of operating profit among the
Personal Systems, Printing, the Enterprise Group, Software and
Corporate Investments segments. These changes had no impact on HP's
previously reported consolidated net revenue, earnings from
operations, net earnings or net earnings per share. |
|
|
|
|
|
|
HEWLETT-PACKARD COMPANY AND SUBSIDIARIES |
|
SEGMENT / BUSINESS UNIT INFORMATION |
|
(Unaudited) |
|
(In millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
Growth rate (%) |
|
|
|
January 31, 2014 |
|
|
October 31, 2013 |
|
|
January 31, 2013 |
|
|
Q/Q |
|
|
Y/Y |
|
Net revenue:(a) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Printing and Personal Systems Group |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Personal Systems |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notebooks |
|
$ |
4,335 |
|
|
$ |
4,461 |
|
|
$ |
4,128 |
|
|
(3 |
%) |
|
5 |
% |
|
|
|
Desktops |
|
|
3,274 |
|
|
|
3,273 |
|
|
|
3,321 |
|
|
0 |
% |
|
(1 |
%) |
|
|
|
Workstations |
|
|
533 |
|
|
|
554 |
|
|
|
535 |
|
|
(4 |
%) |
|
0 |
% |
|
|
|
Other |
|
|
388 |
|
|
|
316 |
|
|
|
248 |
|
|
23 |
% |
|
56 |
% |
|
|
|
|
Total Personal Systems |
|
|
8,530 |
|
|
|
8,604 |
|
|
|
8,232 |
|
|
(1 |
%) |
|
4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Printing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplies |
|
|
3,795 |
|
|
|
3,862 |
|
|
|
3,893 |
|
|
(2 |
%) |
|
(3 |
%) |
|
|
|
Commercial Hardware |
|
|
1,347 |
|
|
|
1,554 |
|
|
|
1,374 |
|
|
(13 |
%) |
|
(2 |
%) |
|
|
|
Consumer Hardware |
|
|
673 |
|
|
|
631 |
|
|
|
679 |
|
|
7 |
% |
|
(1 |
%) |
|
|
|
|
Total Printing |
|
|
5,815 |
|
|
|
6,047 |
|
|
|
5,946 |
|
|
(4 |
%) |
|
(2 |
%) |
|
|
|
|
|
Total
Printing and Personal Systems Group |
|
|
14,345 |
|
|
|
14,651 |
|
|
|
14,178 |
|
|
(2 |
%) |
|
1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Enterprise Group |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Industry Standard Servers |
|
|
3,178 |
|
|
|
3,451 |
|
|
|
2,994 |
|
|
(8 |
%) |
|
6 |
% |
|
|
|
Technology Services |
|
|
2,123 |
|
|
|
2,182 |
|
|
|
2,207 |
|
|
(3 |
%) |
|
(4 |
%) |
|
|
|
Storage |
|
|
834 |
|
|
|
952 |
|
|
|
833 |
|
|
(12 |
%) |
|
0 |
% |
|
|
|
Networking |
|
|
630 |
|
|
|
656 |
|
|
|
608 |
|
|
(4 |
%) |
|
4 |
% |
|
|
|
Business Critical Systems |
|
|
228 |
|
|
|
334 |
|
|
|
306 |
|
|
(32 |
%) |
|
(25 |
%) |
|
|
|
|
Total Enterprise Group |
|
|
6,993 |
|
|
|
7,575 |
|
|
|
6,948 |
|
|
(8 |
%) |
|
1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Enterprise Services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Infrastructure Technology Outsourcing |
|
|
3,501 |
|
|
|
3,722 |
|
|
|
3,855 |
|
|
(6 |
%) |
|
(9 |
%) |
|
|
|
Application and Business Services |
|
|
2,094 |
|
|
|
2,196 |
|
|
|
2,183 |
|
|
(5 |
%) |
|
(4 |
%) |
|
|
|
|
Total Enterprise Services |
|
|
5,595 |
|
|
|
5,918 |
|
|
|
6,038 |
|
|
(5 |
%) |
|
(7 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Software |
|
|
916 |
|
|
|
1,093 |
|
|
|
951 |
|
|
(16 |
%) |
|
(4 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HP Financial Services |
|
|
870 |
|
|
|
912 |
|
|
|
957 |
|
|
(5 |
%) |
|
(9 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate Investments |
|
|
288 |
|
|
|
5 |
|
|
|
4 |
|
|
NM |
|
|
NM |
|
|
|
|
|
Total segments |
|
|
29,007 |
|
|
|
30,154 |
|
|
|
29,076 |
|
|
(4 |
%) |
|
0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Elimination of intersegment net revenue and other |
|
|
(853 |
) |
|
|
(1,023 |
) |
|
|
(717 |
) |
|
(17 |
%) |
|
19 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total HP consolidated net revenue |
|
$ |
28,154 |
|
|
$ |
29,131 |
|
|
$ |
28,359 |
|
|
(3 |
%) |
|
(1 |
%) |
|
|
(a) |
Effective at the beginning of its first quarter of fiscal 2014, HP
implemented certain organizational changes to align its segment
financial reporting more closely with its current business
structure. These organizational changes include (i) transferring
the HP Exstream business from the Commercial Hardware business unit
within the Printing segment to the Software segment; (ii)
transferring the Personal Systems trade and warranty support
business from the Technology Services business unit within the
Enterprise Group segment to the Other business unit within the
Personal Systems segment; (iii) transferring the spare and
replacement parts business supporting the Personal Systems and
Printing segments from the Technology Services business unit within
the Enterprise Group segment to the Other business unit within the
Personal Systems segment and the Commercial Hardware business unit
within the Printing segment, respectively; and (iv) transferring
certain cloud-related incubation activities previously reported in
Corporate and unallocated costs and eliminations and in the
Enterprise Group segment to the Corporate Investments segment. In
addition, HP transferred certain intrasegment eliminations from the
Enterprise Services segment and the Enterprise Group segment to
corporate intersegment revenue eliminations. |
|
|
|
HP reflected these changes to its segment
information in prior reporting periods on an as-if basis, which
resulted in the transfer of revenue among the Personal Systems,
Printing, the Enterprise Group, Enterprise Services and Software
segments. These changes had no impact on HP's previously reported
consolidated net revenue, earnings from operations, net earnings or
net earnings per share. |
|
|
|
|
|
|
HEWLETT-PACKARD COMPANY AND SUBSIDIARIES |
|
SEGMENT OPERATING MARGIN SUMMARY DATA |
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
Change in Operating Margin (pts) |
|
|
January 31, 2014 |
|
|
Q/Q |
|
|
Y/Y |
|
|
|
|
|
|
|
|
|
|
Segment operating margin:(a) |
|
|
|
|
|
|
|
|
|
Personal Systems |
3.3 |
% |
|
0.2 pts |
|
|
0.5 pts |
|
|
Printing |
16.8 |
% |
|
(1.1 pts |
) |
|
0.5 pts |
|
|
|
Printing and Personal Systems Group |
8.8 |
% |
|
(0.4 pts |
) |
|
0.3 pts |
|
|
|
|
|
|
|
|
|
|
|
Enterprise Group |
14.4 |
% |
|
- |
|
|
(1.0 pts |
) |
|
Enterprise Services |
1.0 |
% |
|
(3.3 pts |
) |
|
(0.3 pts |
) |
|
Software |
15.8 |
% |
|
(14.4 pts |
) |
|
(0.5 pts |
) |
|
HP Financial Services |
11.6 |
% |
|
0.4 pts |
|
|
1.0 pts |
|
|
Corporate Investments |
42.0 |
% |
|
NM |
|
|
NM |
|
|
|
Total
segments |
9.3 |
% |
|
(0.8 pts |
) |
|
0.6 pts |
|
|
|
(a) |
Effective at the beginning of its first quarter of fiscal 2014, HP
implemented certain organizational changes to align its segment
financial reporting more closely with its current business
structure. These organizational changes include (i) transferring
the HP Exstream business from the Commercial Hardware business unit
within the Printing segment to the Software segment; (ii)
transferring the Personal Systems trade and warranty support
business from the Technology Services business unit within the
Enterprise Group segment to the Other business unit within the
Personal Systems segment; (iii) transferring the spare and
replacement parts business supporting the Personal Systems and
Printing segments from the Technology Services business unit within
the Enterprise Group segment to the Other business unit within the
Personal Systems segment and the Commercial Hardware business unit
within the Printing segment, respectively; and (iv) transferring
certain cloud-related incubation activities previously reported in
Corporate and unallocated costs and eliminations and in the
Enterprise Group segment to the Corporate Investments segment. In
addition, HP transferred certain intrasegment eliminations from the
Enterprise Services segment and the Enterprise Group segment to
corporate intersegment revenue eliminations. |
|
|
|
HP reflected these changes to its segment
information in prior reporting periods on an as-if basis, which
resulted in the transfer of revenue among the Personal Systems,
Printing, the Enterprise Group, Enterprise Services and Software
segments. These changes also resulted in the transfer of operating
profit among the Personal Systems, Printing, the Enterprise Group,
Software and Corporate Investments segments. These changes had no
impact on HP's previously reported consolidated net revenue,
earnings from operations, net earnings or net earnings per
share. |
|
|
|
|
|
|
HEWLETT-PACKARD COMPANY AND SUBSIDIARIES |
CALCULATION OF DILUTED NET EARNINGS PER SHARE |
(Unaudited) |
(In millions except per share amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
January 31, 2014 |
|
October 31, 2013 |
|
January 31, 2013 |
|
|
|
|
|
|
|
|
|
|
Numerator: |
|
|
|
|
|
|
|
|
|
|
GAAP net earnings |
|
$ |
1,425 |
|
$ |
1,414 |
|
$ |
1,232 |
|
Non-GAAP net earnings |
|
$ |
1,742 |
|
$ |
1,959 |
|
$ |
1,605 |
|
|
|
|
|
|
|
|
|
|
Denominator: |
|
|
|
|
|
|
|
|
|
|
Weighted-average number of shares outstanding duirng
the reporting period |
|
|
1,907 |
|
|
1,918 |
|
|
1,953 |
|
Dilutive effect of employee stock plans(a) |
|
|
28 |
|
|
22 |
|
|
3 |
|
|
Weighted-average number of shares used to compute diluted net
earnings per share |
|
|
1,935 |
|
|
1,940 |
|
|
1,956 |
|
|
|
|
|
|
|
|
|
|
GAAP diluted net earnings per share |
|
$ |
0.74 |
|
$ |
0.73 |
|
$ |
0.63 |
Non-GAAP diluted net earnings per share |
|
$ |
0.90 |
|
$ |
1.01 |
|
$ |
0.82 |
|
|
|
|
|
|
|
|
|
|
(a) |
Includes any dilutive effect of outstanding stock options,
performance-based restricted units, restricted stock units and
restricted stock. |
|
|
Use of non-GAAP financial measures To supplement HP's
consolidated condensed financial statements presented on a GAAP
basis, HP provides revenue on a constant currency basis, non-GAAP
operating profit, non-GAAP operating margin, non-GAAP net earnings,
non-GAAP diluted net earnings per share, gross cash, free cash
flow, net debt, net cash, operating company net debt and operating
company net cash. HP also provides forecasts of non-GAAP diluted
net earnings per share. These non-GAAP financial measures are not
computed in accordance with, or as an alternative to, generally
accepted accounting principles in the United States. The GAAP
measure most directly comparable to revenue on a constant currency
basis is revenue. The GAAP measure most directly comparable to
non-GAAP operating profit is earnings from operations. The GAAP
measure most directly comparable to non-GAAP operating margin is
operating margin. The GAAP measure most directly comparable to
non-GAAP net earnings is net earnings. The GAAP measure most
directly comparable to non-GAAP diluted net earnings per share is
diluted net earnings per share. The GAAP measure most directly
comparable to gross cash is cash and cash equivalents. The GAAP
measure most directly comparable to free cash flow is cash flow
from operations. The GAAP measure most directly comparable to net
debt and operating company net debt is total company debt. The GAAP
measure most directly comparable to net cash and operating company
net cash is cash and cash equivalents. 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 used
by HP Revenue on a constant currency basis assumes no change in the
foreign exchange rate from the prior-year period. Non-GAAP
operating profit and non-GAAP operating margin are defined to
exclude the effects of any restructuring charges, charges relating
to the impairment of goodwill and intangible assets, charges
relating to the amortization of intangible assets,
acquisition-related charges and charges related to the wind-down of
HP businesses recorded during the relevant period. Non-GAAP net
earnings and non-GAAP diluted net earnings per share consist of net
earnings or diluted net earnings per share excluding those same
charges. In addition, non-GAAP net earnings and non-GAAP diluted
net earnings per share are adjusted by the amount of additional
taxes or tax benefit associated with each non-GAAP item. 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:
- HP incurs charges relating to the amortization of intangible
assets, including acquired research and development projects. Those
charges are included in HP's GAAP presentation of earnings from
operations, operating margin, net earnings and diluted net earnings
per share. Such charges are significantly impacted by the timing
and magnitude of HP's acquisitions and any related impairment
charges. Consequently, HP excludes these charges for purposes of
calculating these non-GAAP measures to facilitate a more meaningful
evaluation of HP's current operating performance and comparisons to
HP's operating performance in other periods.
- Restructuring charges are costs associated with a formal
restructuring plan and are primarily related to (i) employee
termination costs and benefits and (ii) costs to vacate duplicative
facilities. HP excludes these restructuring costs (and any
reversals of charges recorded in prior periods) for purposes of
calculating these non-GAAP measures because it believes that these
historical costs do not reflect expected future operating expenses
and do not contribute to a meaningful evaluation of HP's current
operating performance or comparisons to HP's operating performance
in other periods.
- HP incurs costs related to its acquisitions. As
acquisition-related expenses are inconsistent in amount and
frequency and are significantly impacted by the timing and nature
of HP's acquisitions, HP believes that eliminating these expenses
for purposes of calculating these non-GAAP measures facilitates a
more meaningful evaluation of HP's current operating performance
and comparisons to HP's operating performance in other
periods.
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. Free cash flow is
defined as cash flow from operations less net capital expenditures.
HP's management uses gross cash and free cash flow for the purpose
of determining the amount of cash available for investment in HP's
businesses, funding acquisitions, repurchasing stock and other
purposes. HP's management also uses gross cash and free cash flow
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
more accurate and complete assessment of HP's liquidity. Because
free cash flow includes the effect of capital expenditures that are
not reflected in GAAP cash flow from operations, HP believes that
free cash flow provides a more accurate and complete assessment of
HP's liquidity and capital resources.
Total company net debt consists of total debt (including the
effects of hedging) less gross cash, which includes cash and cash
equivalents, short-term investments, and certain liquid long-term
investments. Total company net cash consists of gross cash less
total debt. HP Financial Services (HPFS) net debt consists of HPFS
debt, which includes primarily intercompany equity that is treated
as debt for segment reporting purposes, intercompany debt, and
borrowing and funding related activity associated with HPFS and its
subsidiaries, less HPFS cash. Total company net debt and total
company net cash provide useful information to HP's management
about the state of HP's consolidated balance sheet. Operating
company net debt is a non-GAAP measure that is defined as total
company net debt less HPFS net debt. Operating company net cash is
a non-GAAP measure that is defined as total company net cash less
HPFS cash less HPFS debt. Operating company net debt and operating
company net cash provide additional useful information to HP's
management about the state of HP's consolidated condensed balance
sheet by providing more transparency into the financial components
of the operating company separate from HP's financing business,
which has different capital structure requirements and requires
much greater leverage to run effectively.
Material limitations associated with use of non-GAAP financial
measures These non-GAAP financial measures 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:
- Items such as amortization of intangible assets, though not
directly affecting HP's cash position, represent the loss in value
of intangible assets over time. The expense associated with this
loss in value is not included in non-GAAP operating profit,
non-GAAP operating margin, non-GAAP net earnings or non-GAAP
diluted net earnings per share, and therefore does not reflect the
full economic effect of the loss in value of those intangible
assets.
- Items such as restructuring charges that are excluded from
non-GAAP operating profit, non-GAAP operating margin, non-GAAP net
earnings and non-GAAP diluted net earnings per share can have a
material impact on cash flows and earnings per share.
- HP may not be able to liquidate immediately the long-term
investments included in gross cash, which may limit the usefulness
of gross cash as a liquidity measure.
- Other companies may calculate revenue on a constant currency
basis, non-GAAP operating profit, non-GAAP operating margin,
non-GAAP net earnings, non-GAAP diluted net earnings per share,
gross cash, free cash flow, net debt, net cash, operating company
net debt and operating company net cash differently than HP does,
limiting the usefulness of those measures for comparative
purposes.
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 carefully those reconciliations.
Usefulness of non-GAAP financial measures to investors HP
believes that providing revenue on a constant currency basis,
non-GAAP operating profit, non-GAAP operating margin, non-GAAP net
earnings, non-GAAP diluted net earnings per share, gross cash, free
cash flow, net debt, net cash, operating company net debt and
operating company net 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 to evaluate the efficacy
of the methodology and information used by HP's management to
evaluate and measure such performance. 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.
© 2014 Hewlett-Packard Development Company, L.P. The information
contained herein is subject to change without notice. HP shall not
be liable for technical or editorial errors or omissions contained
herein.
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