HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(Unaudited)
(In millions except per share amounts)
Three months ended
----------------------------------
Oct 31, July 31, Oct 31,
2013 2013 2012
---------- ---------- ----------
Net revenue $ 29,131 $ 27,226 $ 29,959
Costs and expenses:
Cost of sales 22,437 20,859 22,711
Research and development 729 797 909
Selling, general and administrative 3,351 3,274 3,227
Amortization of intangible assets 317 356 372
Impairment of goodwill and intangible
assets - - 8,847
Restructuring charges 371 81 378
Acquisition-related charges 3 4 3
---------- ---------- ----------
Total costs and expenses 27,208 25,371 36,447
---------- ---------- ----------
Earnings (loss) from operations 1,923 1,855 (6,488)
Interest and other, net (103) (146) (188)
---------- ---------- ----------
Earnings (loss) before taxes 1,820 1,709 (6,676)
Provision for taxes (406) (319) (178)
---------- ---------- ----------
Net earnings (loss) $ 1,414 $ 1,390 $ (6,854)
========== ========== ==========
Net earnings (loss) per share:
Basic $ 0.74 $ 0.72 $ (3.49)
Diluted $ 0.73 $ 0.71 $ (3.49)
Cash dividends declared per share $ - $ 0.29 $ -
Weighted-average shares used to compute
net earnings (loss) per share:
Basic 1,918 1,929 1,964
Diluted 1,940 1,948 1,964
HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(In millions except per share amounts)
Twelve months ended
Oct 31,
-------------------------
2013 2012
----------- -----------
(Unaudited)
Net revenue $ 112,298 $ 120,357
Costs and expenses:
Cost of sales 86,380 92,385
Research and development 3,135 3,399
Selling, general and administrative 13,267 13,500
Amortization of intangible assets 1,373 1,784
Impairment of goodwill and intangible assets - 18,035
Restructuring charges 990 2,266
Acquisition-related charges 22 45
----------- -----------
Total costs and expenses 105,167 131,414
----------- -----------
Earnings (loss) from operations 7,131 (11,057)
Interest and other, net (621) (876)
----------- -----------
Earnings (loss) before taxes 6,510 (11,933)
Provision for taxes (1,397) (717)
----------- -----------
Net earnings (loss) $ 5,113 $ (12,650)
=========== ===========
Net earnings (loss) per share:
Basic $ 2.64 $ (6.41)
Diluted $ 2.62 $ (6.41)
Cash dividends declared per share $ 0.55 $ 0.50
Weighted-average shares used to compute net
earnings (loss) per share:
Basic 1,934 1,974
Diluted 1,950 1,974
HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
ADJUSTMENTS TO GAAP NET EARNINGS, EARNINGS FROM OPERATIONS,
OPERATING MARGIN AND EARNINGS PER SHARE
(Unaudited)
(In millions except per share amounts)
Three Three Three
months months months
ended Diluted ended Diluted ended Diluted
Oct 31, earnings July 31, earnings Oct 31, earnings
2013 per share 2013 per share 2012 per share
-------- --------- -------- --------- -------- ---------
GAAP net earnings
(loss) $ 1,414 $ 0.73 $ 1,390 $ 0.71 $ (6,854) $ (3.49)
Non-GAAP
adjustments:
Amortization of
intangible
assets 317 0.16 356 0.19 372 0.19
Impairment of
goodwill and
intangible
assets(a) - - - - 8,847 4.51
Restructuring
charges 371 0.19 81 0.04 378 0.19
Acquisition-
related
charges 3 - 4 - 3 -
Adjustments for
taxes(b) (146) (0.07) (155) (0.08) (465) (0.24)
-------- --------- -------- --------- -------- ---------
Non-GAAP net
earnings $ 1,959 $ 1.01 $ 1,676 $ 0.86 $ 2,281 $ 1.16
======== ========= ======== ========= ======== =========
GAAP earnings
(loss) from
operations $ 1,923 $ 1,855 $ (6,488)
Non-GAAP
adjustments:
Amortization of
intangible
assets 317 356 372
Impairment of
goodwill and
intangible
assets(a) - - 8,847
Restructuring
charges 371 81 378
Acquisition-
related
charges 3 4 3
-------- -------- --------
Non-GAAP earnings
from operations $ 2,614 $ 2,296 $ 3,112
======== ======== ========
GAAP operating
margin 7% 7% (22%)
Non-GAAP
adjustments 2% 1% 32%
-------- -------- --------
Non-GAAP
operating margin 9% 8% 10%
======== ======== ========
(a) For the period ended October 31, 2012, represents a goodwill and
intangible asset impairment charge of $8.8 billion associated with the
Autonomy reporting unit within the Software segment.
(b) For the period ended October 31, 2012, adjustments for taxes is net of a
valuation allowance of $0.5 billion provided for certain deferred tax
assets.
HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
ADJUSTMENTS TO GAAP NET EARNINGS, EARNINGS FROM OPERATIONS,
OPERATING MARGIN AND EARNINGS PER SHARE
(Unaudited)
(In millions except per share amounts)
Twelve Twelve
months ended Diluted months ended Diluted
October 31, earnings October 31, earnings
2013 per share 2012 per share
------------ ---------- ------------ ----------
GAAP net earnings
(loss) $ 5,113 $ 2.62 $ (12,650) $ (6.41)
Non-GAAP adjustments:
Amortization of
intangible assets 1,373 0.70 1,784 0.90
Impairment of
goodwill and
intangible assets(a) - - 18,035 9.14
Restructuring charges 990 0.51 2,266 1.15
Acquisition-related
charges 22 0.01 45 0.02
Wind down of non-
strategic
businesses(b) - - 72 0.03
Adjustments for
taxes(c) (560) (0.28) (1,517) (0.78)
------------ ---------- ------------ ----------
Non-GAAP net earnings $ 6,938 $ 3.56 $ 8,035 $ 4.05
============ ========== ============ ==========
GAAP earnings (loss)
from operations $ 7,131 $ (11,057)
Non-GAAP adjustments:
Amortization of
intangible assets 1,373 1,784
Impairment of
goodwill and
intangible assets(a) - 18,035
Restructuring charges 990 2,266
Acquisition-related
charges 22 45
Wind down of non-
strategic
businesses(b) - 72
------------ ------------
Non-GAAP earnings from
operations $ 9,516 $ 11,145
============ ============
GAAP operating margin 6% (9%)
Non-GAAP adjustments 2% 18%
------------ ------------
Non-GAAP operating
margin 8% 9%
============ ============
(a) For the period ended October 31, 2012, represents a goodwill and
intangible asset impairment charge of $8.8 billion associated with the
Autonomy reporting unit within the Software segment, a goodwill
impairment charge of $8.0 billion associated with the Enterprise
Services segment and an intangible asset impairment charge of $1.2
billion associated with the "Compaq" trade name within the Personal
Systems segment.
(b) For the period ended October 31, 2012, represents primarily contract-
related charges, including inventory write-downs, related to winding
down certain retail publishing business activities within the Printing
segment, net of adjustments to expenses for supplier-related obligations
related to winding down the webOS device business.
(c) For the period ended October 31, 2012, adjustments for taxes is net of
valuation allowances of $1.3 billion provided for certain deferred tax
assets.
HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(In millions)
October 31, October 31,
2013 2012
----------- -----------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 12,163 $ 11,301
Accounts receivable 15,876 16,407
Financing receivables 3,144 3,252
Inventory 6,046 6,317
Other current assets 13,135 13,360
----------- -----------
Total current assets 50,364 50,637
----------- -----------
Property, plant and equipment 11,463 11,954
Long-term financing receivables and other assets 9,556 10,593
Goodwill and intangible assets 34,293 35,584
----------- -----------
Total assets $ 105,676 $ 108,768
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable and short-term borrowings $ 5,979 $ 6,647
Accounts payable 14,019 13,350
Employee compensation and benefits 4,436 4,058
Taxes on earnings 1,203 846
Deferred revenue 6,477 7,494
Other accrued liabilities 13,407 14,271
----------- -----------
Total current liabilities 45,521 46,666
----------- -----------
Long-term debt 16,608 21,789
Other liabilities 15,891 17,480
Stockholders' equity:
HP stockholders' equity 27,269 22,436
Non-controlling interests 387 397
----------- -----------
Total stockholders' equity 27,656 22,833
----------- -----------
Total liabilities and stockholders' equity $ 105,676 $ 108,768
=========== ===========
HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In millions)
Three months Twelve months
ended ended
October 31, October 31,
2013 2013
------------- -------------
Cash flows from operating activities:
Net earnings $ 1,414 $ 5,113
Adjustments to reconcile net earnings to
net cash provided by operating
activities:
Depreciation and amortization 1,120 4,611
Stock-based compensation expense 102 500
Provision for doubtful accounts and
inventory 71 336
Restructuring charges 371 990
Deferred taxes on earnings (952) (410)
Excess tax benefit from stock-based
compensation (1) (2)
Other, net 100 443
Changes in operating assets and
liabilities:
Accounts receivables (1,542) 530
Financing receivables (84) 484
Inventory 441 (4)
Accounts payable 611 541
Taxes on earnings 937 417
Restructuring (260) (904)
Other assets and liabilities 488 (1,037)
------------- -------------
Net cash provided by operating
activities 2,816 11,608
------------- -------------
Cash flows from investing activities:
Investment in property, plant and
equipment (919) (3,199)
Proceeds from sale of property, plant
and equipment 146 653
Purchases of available-for-sale
securities and other investments (450) (1,243)
Maturities and sales of available-for-
sale securities and other investments 279 1,153
Payments made in connection with
business acquisitions, net of cash
acquired - (167)
------------- -------------
Net cash used in investing
activities (944) (2,803)
------------- -------------
Cash flows from financing activities:
Issuance (repayment) of commercial paper
and notes payable, net 16 (154)
Issuance of debt 25 279
Payment of debt (2,248) (5,721)
Issuance of common stock under employee
stock plans 9 288
Repurchase of common stock (479) (1,532)
Excess tax benefit from stock-based
compensation 1 2
Cash dividends paid (284) (1,105)
------------- -------------
Net cash used in financing
activities (2,960) (7,943)
------------- -------------
(Decrease) increase in cash and cash
equivalents (1,088) 862
Cash and cash equivalents at beginning of
period 13,251 11,301
------------- -------------
Cash and cash equivalents at end of period $ 12,163 $ 12,163
============= =============
HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
SEGMENT INFORMATION
(Unaudited)
(In millions)
Three months ended
----------------------------------------
October 31, July 31, October 31,
2013 2013 2012
------------ ------------ ------------
Net revenue:(a)
Personal Systems $ 8,579 $ 7,704 $ 8,727
Printing 6,044 5,803 6,080
------------ ------------ ------------
Total Printing and Personal
Systems Group(b) 14,623 13,507 14,807
Enterprise Group 7,594 6,786 7,459
Enterprise Services 5,759 5,843 6,352
Software 1,064 982 1,171
HP Financial Services 912 879 966
Corporate Investments 5 5 10
------------ ------------ ------------
Total segments 29,957 28,002 30,765
Elimination of intersegment net
revenue and other (826) (776) (806)
------------ ------------ ------------
Total HP consolidated net
revenue $ 29,131 $ 27,226 $ 29,959
============ ============ ============
Earnings before taxes:(a)
Personal Systems $ 259 $ 228 $ 309
Printing 1,071 908 1,067
------------ ------------ ------------
Total Printing and Personal
Systems Group(b) 1,330 1,136 1,376
Enterprise Group 1,102 1,033 1,229
Enterprise Services 255 192 423
Software 328 201 318
HP Financial Services 102 99 104
Corporate Investments (57) (58) (78)
------------ ------------ ------------
Total segment earnings from
operations 3,060 2,603 3,372
Corporate and unallocated costs
and eliminations (344) (200) (119)
Unallocated costs related to
stock-based compensation
expense (102) (107) (141)
Amortization of intangible
assets (317) (356) (372)
Impairment of goodwill and
intangible assets - - (8,847)
Restructuring charges (371) (81) (378)
Acquisition-related charges (3) (4) (3)
Interest and other, net (103) (146) (188)
------------ ------------ ------------
Total HP consolidated earnings
(loss) before taxes $ 1,820 $ 1,709 $ (6,676)
============ ============ ============
(a) HP has implemented certain organizational realignments in the first
quarter of fiscal 2013. As a result of these realignments, HP has re-
evaluated its segment financial reporting structure and, effective in
the first quarter of fiscal 2013, created two new financial reporting
segments, the Enterprise Group segment and the Enterprise Services
segment, and eliminated two other financial reporting segments, the
Enterprise Servers, Storage and Networking ("ESSN") segment and the
Services segment. The Enterprise Group segment consists of the business
units within the former ESSN segment and most of the services offerings
of the Technology Services ("TS") business unit, which was previously a
part of the former Services segment. The Enterprise Services segment
consists of the Applications and Business Services ("ABS") and
Infrastructure Technology Outsourcing ("ITO") business units from the
former Services segment, along with the end-user workplace support
services business that was previously a part of the TS business unit.
Taking into account these changes, HP has the following seven financial
reporting segments: Personal Systems, Printing, the Enterprise Group,
Enterprise Services, Software, HP Financial Services and Corporate
Investments.
Also as a result of these realignments, the financial results of the
Personal Systems commercial products support business, which were
previously reported as part of the TS business unit, will now be
reported as part of the Other business unit within the Personal Systems
segment, and the financial results of the portion of the business
intelligence services business that had continued to be reported as part
of the Corporate Investments segment following the implementation of
prior realignment actions will now be reported as part of the ABS
business unit. In addition, the end-user workplace support services
business, which, as noted above, was previously a part of the TS
business unit and will now become a part of the Enterprise Services
segment, will be reported as part of the ITO business unit within that
segment.
To provide improved visibility and comparability, HP has reflected these
changes to its reporting structure in prior financial reporting periods
on an as-if basis, which has resulted in the transfer of revenue and
operating profit among the Personal Systems, the Enterprise Group,
Enterprise Services and Corporate Investments segments. These changes
had no impact on the previously reported financial results for the
Printing, Software or HP Financial Services segments. In addition, none
of these changes impacted HP's previously reported consolidated net
revenue, earnings from operations, net earnings or net earnings per
share.
(b) The Personal Systems segment and the Printing segment are structured
beneath a broader Printing and Personal Systems Group ("PPS"). While PPS
is not a financial reporting segment, HP provides financial data
aggregating the segments within it in order to provide a supplementary
view of its business.
HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
SEGMENT INFORMATION
(In millions)
Twelve months ended
October 31,
---------------------------
2013 2012
------------ ------------
(Unaudited)
Net revenue:(a)
Personal Systems $ 32,071 $ 35,725
Printing 23,854 24,487
------------ ------------
Total Printing and Personal Systems
Group(b) 55,925 60,212
Enterprise Group 28,183 29,779
Enterprise Services 23,520 25,609
Software 3,913 4,060
HP Financial Services 3,629 3,819
Corporate Investments 24 58
------------ ------------
Total Segments 115,194 123,537
Elimination of intersegment net revenue and
other (2,896) (3,180)
------------ ------------
Total HP consolidated net revenue $ 112,298 $ 120,357
============ ============
Earnings before taxes:(a)
Personal Systems $ 949 $ 1,689
Printing 3,890 3,585
------------ ------------
Total Printing and Personal Systems
Group(b) 4,839 5,274
Enterprise Group 4,301 5,194
Enterprise Services 679 1,045
Software 866 827
HP Financial Services 399 388
Corporate Investments (236) (233)
------------ ------------
Total segment earnings from operations 10,848 12,495
Corporate and unallocated costs and
eliminations (832) (787)
Unallocated costs related to stock-based
compensation expense (500) (635)
Amortization of intangible assets (1,373) (1,784)
Impairment of goodwill and intangible assets - (18,035)
Restructuring charges (990) (2,266)
Acquisition-related charges (22) (45)
Interest and other, net (621) (876)
------------ ------------
Total HP consolidated earnings (loss)
before taxes $ 6,510 $ (11,933)
============ ============
(a) HP has implemented certain organizational realignments in the first
quarter of fiscal 2013. As a result of these realignments, HP has re-
evaluated its segment financial reporting structure and, effective in
the first quarter of fiscal 2013, created two new financial reporting
segments, the Enterprise Group segment and the Enterprise Services
segment, and eliminated two other financial reporting segments, the
Enterprise Servers, Storage and Networking ("ESSN") segment and the
Services segment. The Enterprise Group segment consists of the business
units within the former ESSN segment and most of the services offerings
of the Technology Services ("TS") business unit, which was previously a
part of the former Services segment. The Enterprise Services segment
consists of the Applications and Business Services ("ABS") and
Infrastructure Technology Outsourcing ("ITO") business units from the
former Services segment, along with the end-user workplace support
services business that was previously a part of the TS business unit.
Taking into account these changes, HP has the following seven financial
reporting segments: Personal Systems, Printing, the Enterprise Group,
Enterprise Services, Software, HP Financial Services and Corporate
Investments.
Also as a result of these realignments, the financial results of the
Personal Systems commercial products support business, which were
previously reported as part of the TS business unit, will now be
reported as part of the Other business unit within the Personal Systems
segment, and the financial results of the portion of the business
intelligence services business that had continued to be reported as part
of the Corporate Investments segment following the implementation of
prior realignment actions will now be reported as part of the ABS
business unit. In addition, the end-user workplace support services
business, which, as noted above, was previously a part of the TS
business unit and will now become a part of the Enterprise Services
segment, will be reported as part of the ITO business unit within that
segment.
To provide improved visibility and comparability, HP has reflected these
changes to its reporting structure in prior financial reporting periods
on an as-if basis, which has resulted in the transfer of revenue and
operating profit among the Personal Systems, the Enterprise Group,
Enterprise Services and Corporate Investments segments. These changes
had no impact on the previously reported financial results for the
Printing, Software or HP Financial Services segments. In addition, none
of these changes impacted HP's previously reported consolidated net
revenue, earnings from operations, net earnings or net earnings per
share.
(b) The Personal Systems segment and the Printing segment are structured
beneath a broader Printing and Personal Systems Group ("PPS"). While PPS
is not a financial reporting segment, HP provides financial data
aggregating the segments within it in order to provide a supplementary
view of its business.
HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
SEGMENT / BUSINESS UNIT INFORMATION
(Unaudited)
(In millions)
Growth rate
Three months ended (%)
--------------------------- -------------
October July October
31, 31, 31,
2013 2013 2012 Q/Q Y/Y
-------- ------- -------- ----- -----
Net revenue:(a)
Printing and Personal Systems
Group(b)
Personal Systems
Notebooks $ 4,461 $ 3,722 $ 4,572 20% (2%)
Desktops 3,273 3,147 3,369 4% (3%)
Workstations 554 537 550 3% 1%
Other 291 298 236 (2%) 23%
-------- ------- --------
Total Personal Systems 8,579 7,704 8,727 11% (2%)
-------- ------- --------
Printing
Supplies 3,862 3,839 4,007 1% (4%)
Commercial Hardware 1,551 1,399 1,482 11% 5%
Consumer Hardware 631 565 591 12% 7%
-------- ------- --------
Total Printing 6,044 5,803 6,080 4% (1%)
-------- ------- --------
Total Printing and
Personal Systems
Group 14,623 13,507 14,807 8% (1%)
-------- ------- --------
Enterprise Group
Industry Standard Servers 3,451 2,851 3,137 21% 10%
Technology Services 2,201 2,174 2,340 1% (6%)
Storage 952 833 946 14% 1%
Networking 656 644 635 2% 3%
Business Critical Systems 334 284 401 18% (17%)
-------- ------- --------
Total Enterprise Group 7,594 6,786 7,459 12% 2%
-------- ------- --------
Enterprise Services
Infrastructure Technology
Outsourcing 3,563 3,662 3,924 (3%) (9%)
Application and Business
Services 2,196 2,181 2,428 1% (10%)
-------- ------- --------
Total Enterprise
Services 5,759 5,843 6,352 (1%) (9%)
-------- ------- --------
Software 1,064 982 1,171 8% (9%)
-------- ------- --------
HP Financial Services 912 879 966 4% (6%)
-------- ------- --------
Corporate Investments 5 5 10 0% (50%)
-------- ------- --------
Total segments 29,957 28,002 30,765 7% (3%)
-------- ------- --------
Elimination of intersegment
net revenue and other (826) (776) (806) 6% 2%
-------- ------- --------
Total HP consolidated net
revenue $ 29,131 $27,226 $ 29,959 7% (3%)
======== ======= ========
(a) HP has implemented certain organizational realignments in the first
quarter of fiscal 2013. As a result of these realignments, HP has re-
evaluated its segment financial reporting structure and, effective in
the first quarter of fiscal 2013, created two new financial reporting
segments, the Enterprise Group segment and the Enterprise Services
segment, and eliminated two other financial reporting segments, the
Enterprise Servers, Storage and Networking ("ESSN") segment and the
Services segment. The Enterprise Group segment consists of the business
units within the former ESSN segment and most of the services offerings
of the Technology Services ("TS") business unit, which was previously a
part of the former Services segment. The Enterprise Services segment
consists of the Applications and Business Services ("ABS") and
Infrastructure Technology Outsourcing ("ITO") business units from the
former Services segment, along with the end-user workplace support
services business that was previously a part of the TS business unit.
Taking into account these changes, HP has the following seven financial
reporting segments: Personal Systems, Printing, the Enterprise Group,
Enterprise Services, Software, HP Financial Services and Corporate
Investments.
Also as a result of these realignments, the financial results of the
Personal Systems commercial products support business, which were
previously reported as part of the TS business unit, will now be
reported as part of the Other business unit within the Personal Systems
segment, and the financial results of the portion of the business
intelligence services business that had continued to be reported as part
of the Corporate Investments segment following the implementation of
prior realignment actions will now be reported as part of the ABS
business unit. In addition, the end-user workplace support services
business, which, as noted above, was previously a part of the TS
business unit and will now become a part of the Enterprise Services
segment, will be reported as part of the ITO business unit within that
segment.
To provide improved visibility and comparability, HP has reflected these
changes to its reporting structure in prior financial reporting periods
on an as-if basis, which has resulted in the transfer of revenue and
operating profit among the Personal Systems, the Enterprise Group,
Enterprise Services and Corporate Investments segments. These changes
had no impact on the previously reported financial results for the
Printing, Software or HP Financial Services segments. In addition, none
of these changes impacted HP's previously reported consolidated net
revenue, earnings from operations, net earnings or net earnings per
share.
(b) The Personal Systems segment and the Printing segment are structured
beneath a broader Printing and Personal Systems Group ("PPS"). While PPS
is not a financial reporting segment, HP provides financial data
aggregating the segments within it in order to provide a supplementary
view of its business.
HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
SEGMENT / BUSINESS UNIT INFORMATION
(In millions)
Twelve months ended
October 31,
-------------------------
2013 2012
----------- -----------
(Unaudited)
Net revenue:(a)
Printing and Personal Systems Group(b)
Personal Systems
Notebooks $ 16,029 $ 18,830
Desktops 12,844 13,888
Workstations 2,147 2,148
Other 1,051 859
----------- -----------
Total Personal Systems 32,071 35,725
----------- -----------
Printing
Supplies 15,716 16,151
Commercial Hardware 5,702 5,895
Consumer Hardware 2,436 2,441
----------- -----------
Total Printing 23,854 24,487
----------- -----------
Total Printing and Personal Systems
Group 55,925 60,212
----------- -----------
Enterprise Group
Industry Standard Servers 12,102 12,582
Technology Services 8,890 9,288
Storage 3,475 3,815
Networking 2,526 2,482
Business Critical Systems 1,190 1,612
----------- -----------
Total Enterprise Group 28,183 29,779
----------- -----------
Enterprise Services
Infrastructure Technology Outsourcing 14,682 15,792
Application and Business Services 8,838 9,817
----------- -----------
Total Enterprise Services 23,520 25,609
----------- -----------
Software 3,913 4,060
----------- -----------
HP Financial Services 3,629 3,819
----------- -----------
Corporate Investments 24 58
----------- -----------
Total segments 115,194 123,537
----------- -----------
Elimination of intersegment net revenue and
other (2,896) (3,180)
----------- -----------
Total HP consolidated net revenue $ 112,298 $ 120,357
=========== ===========
(a) HP has implemented certain organizational realignments in the first
quarter of fiscal 2013. As a result of these realignments, HP has re-
evaluated its segment financial reporting structure and, effective in
the first quarter of fiscal 2013, created two new financial reporting
segments, the Enterprise Group segment and the Enterprise Services
segment, and eliminated two other financial reporting segments, the
Enterprise Servers, Storage and Networking ("ESSN") segment and the
Services segment. The Enterprise Group segment consists of the business
units within the former ESSN segment and most of the services offerings
of the Technology Services ("TS") business unit, which was previously a
part of the former Services segment. The Enterprise Services segment
consists of the Applications and Business Services ("ABS") and
Infrastructure Technology Outsourcing ("ITO") business units from the
former Services segment, along with the end-user workplace support
services business that was previously a part of the TS business unit.
Taking into account these changes, HP has the following seven financial
reporting segments: Personal Systems, Printing, the Enterprise Group,
Enterprise Services, Software, HP Financial Services and Corporate
Investments.
Also as a result of these realignments, the financial results of the
Personal Systems commercial products support business, which were
previously reported as part of the TS business unit, will now be
reported as part of the Other business unit within the Personal Systems
segment, and the financial results of the portion of the business
intelligence services business that had continued to be reported as part
of the Corporate Investments segment following the implementation of
prior realignment actions will now be reported as part of the ABS
business unit. In addition, the end-user workplace support services
business, which, as noted above, was previously a part of the TS
business unit and will now become a part of the Enterprise Services
segment, will be reported as part of the ITO business unit within that
segment.
To provide improved visibility and comparability, HP has reflected these
changes to its reporting structure in prior financial reporting periods
on an as-if basis, which has resulted in the transfer of revenue and
operating profit among the Personal Systems, the Enterprise Group,
Enterprise Services and Corporate Investments segments. These changes
had no impact on the previously reported financial results for the
Printing, Software or HP Financial Services segments. In addition, none
of these changes impacted HP's previously reported consolidated net
revenue, earnings from operations, net earnings or net earnings per
share.
(b) The Personal Systems segment and the Printing segment are structured
beneath a broader Printing and Personal Systems Group ("PPS"). While PPS
is not a financial reporting segment, HP provides financial data
aggregating the segments within it in order to provide a supplementary
view of its business.
HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
SEGMENT NON-GAAP OPERATING MARGIN SUMMARY DATA
(Unaudited)
Three months Change in Operating
ended Margin (pts)
------------ -------------------------
October 31,
2013 Q/Q Y/Y
------------ ----------- -----------
Non-GAAP operating margin:(a)
Personal Systems 3.0% - (0.5 pts)
Printing 17.7% 2.1 pts 0.2 pts
Printing and Personal Systems
Group(b) 9.1% 0.7 pts (0.2 pts)
Enterprise Group 14.5% (0.7 pts) (2.0 pts)
Enterprise Services 4.4% 1.1 pts (2.3 pts)
Software 30.8% 10.3 pts 3.6 pts
HP Financial Services 11.2% (0.1 pts) 0.4 pts
Corporate Investments NM NM NM
Total segments 10.2% 0.9 pts (0.8 pts)
Total HP consolidated non-
GAAP operating margin 9.0% 0.6 pts (1.4 pts)
(a) HP has implemented certain organizational realignments in the first
quarter of fiscal 2013. As a result of these realignments, HP has re-
evaluated its segment financial reporting structure and, effective in
the first quarter of fiscal 2013, created two new financial reporting
segments, the Enterprise Group segment and the Enterprise Services
segment, and eliminated two other financial reporting segments, the
Enterprise Servers, Storage and Networking ("ESSN") segment and the
Services segment. The Enterprise Group segment consists of the business
units within the former ESSN segment and most of the services offerings
of the Technology Services ("TS") business unit, which was previously a
part of the former Services segment. The Enterprise Services segment
consists of the Applications and Business Services ("ABS") and
Infrastructure Technology Outsourcing ("ITO") business units from the
former Services segment, along with the end-user workplace support
services business that was previously a part of the TS business unit.
Taking into account these changes, HP has the following seven financial
reporting segments: Personal Systems, Printing, the Enterprise Group,
Enterprise Services, Software, HP Financial Services and Corporate
Investments.
Also as a result of these realignments, the financial results of the
Personal Systems commercial products support business, which were
previously reported as part of the TS business unit, will now be
reported as part of the Other business unit within the Personal Systems
segment, and the financial results of the portion of the business
intelligence services business that had continued to be reported as part
of the Corporate Investments segment following the implementation of
prior realignment actions will now be reported as part of the ABS
business unit. In addition, the end-user workplace support services
business, which, as noted above, was previously a part of the TS
business unit and will now become a part of the Enterprise Services
segment, will be reported as part of the ITO business unit within that
segment.
To provide improved visibility and comparability, HP has reflected these
changes to its reporting structure in prior financial reporting periods
on an as-if basis, which has resulted in the transfer of revenue and
operating profit among the Personal Systems, the Enterprise Group,
Enterprise Services and Corporate Investments segments. These changes
had no impact on the previously reported financial results for the
Printing, Software or HP Financial Services segments. In addition, none
of these changes impacted HP's previously reported consolidated net
revenue, earnings from operations, net earnings or net earnings per
share.
(b) The Personal Systems segment and the Printing segment are structured
beneath a broader Printing and Personal Systems Group ("PPS"). While PPS
is not a financial reporting segment, HP provides financial data
aggregating the segments within it in order to provide a supplementary
view of its business.
HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
CALCULATION OF NET EARNINGS PER SHARE
(Unaudited)
(In millions except per share amounts)
Three months ended
--------------------------------------
October 31, July 31, October 31,
2013 2013 2012
------------ ---------- ------------
Numerator:
GAAP net earnings (loss) $ 1,414 $ 1,390 $ (6,854)
============ ========== ============
Non-GAAP net earnings $ 1,959 $ 1,676 $ 2,281
============ ========== ============
Denominator:
Weighted-average shares used to
compute basic net earnings
(loss) per share and diluted net
(loss) per share 1,918 1,929 1,964
Dilutive effect of employee stock
plans 22 19 3
------------ ---------- ------------
Weighted-average shares used to
compute diluted net earnings
per share 1,940 1,948 1,967
============ ========== ============
GAAP net earnings (loss) per share:
Basic $ 0.74 $ 0.72 $ (3.49)
Diluted(a) $ 0.73 $ 0.71 $ (3.49)
Non-GAAP net earnings per share:
Basic $ 1.02 $ 0.87 $ 1.16
Diluted(b) $ 1.01 $ 0.86 $ 1.16
(a) GAAP diluted net earnings per share reflects any dilutive effect of
outstanding stock options, performance-based restricted units,
restricted stock units and restricted stock, but that effect is excluded
when calculating GAAP diluted net (loss) per share because it would be
anti-dilutive.
(b) Non-GAAP diluted net earnings per share reflects any dilutive effect of
outstanding stock options, performance-based restricted units,
restricted stock units and restricted stock.
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