HP's FY17 Q2 earnings conference call is accessible via an audio webcast at
www.hp.com/investor/2017Q2Webcast.
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. (
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, non-GAAP operating margin, non-GAAP tax rate, non-GAAP net earnings, non-GAAP diluted net earnings per share and gross cash financial measures. 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 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 taxes, share repurchases, foreign 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, net 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, including with respect to the timing and expected benefits of acquisitions and other business combination and investment transactions; 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, 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 April 30, 2017 and HP's other filings with the Securities and Exchange Commission. 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.
HP INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS (Unaudited) (In millions, except per share amounts) Three months ended ----------------------------------- April 30, January 31, April 30, 2017 2017 2016 ---------- ----------- ---------- Net revenue $ 12,385 $ 12,684 $ 11,588 Costs and expenses: Cost of revenue 10,002 10,436 9,338 Research and development 314 296 301 Selling, general and administrative 1,087 1,017 1,002 Restructuring and other charges 140 63 100 Acquisition-related charges 20 16 -- Amortization of intangible assets 1 -- 6 Defined benefit plan settlement charges 3 -- -- ---------- ----------- ---------- Total costs and expenses 11,567 11,828 10,747 ---------- ----------- ---------- Earnings from continuing operations 818 856 841 Interest and other, net (64) (81) (5) ---------- ----------- ---------- Earnings from continuing operations before taxes 754 775 836 Provision for taxes (195) (164) (176) ---------- ----------- ---------- Net earnings from continuing operations 559 611 660 Net loss from discontinued operations, net of taxes -- -- (31) ---------- ----------- ---------- Net earnings $ 559 $ 611 $ 629 ========== =========== ========== Net earnings (loss) per share: Basic Continuing operations $ 0.33 $ 0.36 $ 0.38 Discontinued operations -- -- (0.01) ---------- ----------- ---------- Total basic net earnings per share $ 0.33 $ 0.36 $ 0.37 ========== =========== ========== Diluted Continuing operations $ 0.33 $ 0.36 $ 0.38 Discontinued operations -- -- (0.02) ---------- ----------- ---------- Total diluted net earnings per share $ 0.33 $ 0.36 $ 0.36 ========== =========== ========== Cash dividends declared per share $ -- $ 0.27 $ -- Weighted-average shares used to compute net earnings (loss) per share: Basic 1,688 1,704 1,720 Diluted 1,709 1,721 1,731 HP INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS (Unaudited) (In millions, except per share amounts) Six months ended April 30, -------------------------- 2017 2016 ------------ ------------ Net revenue $ 25,069 $ 23,834 Costs and expenses: Cost of revenue 20,438 19,299 Research and development 610 593 Selling, general and administrative 2,104 2,039 Restructuring and other charges 203 120 Acquisition-related charges 36 -- Amortization of intangible assets 1 14 Defined benefit plan settlement charges 3 -- ------------ ------------ Total costs and expenses 23,395 22,065 ------------ ------------ Earnings from continuing operations 1,674 1,769 Interest and other, net (145) (99) ------------ ------------ Earnings from continuing operations before taxes 1,529 1,670 Provision for taxes (359) (360) ------------ ------------ Net earnings from continuing operations 1,170 1,310 Net loss from discontinued operations, net of taxes -- (89) ------------ ------------ Net earnings $ 1,170 $ 1,221 ============ ============ Net earnings (loss) per share: Basic Continuing operations $ 0.69 $ 0.75 Discontinued operations -- (0.05) ------------ ------------ Total basic net earnings per share $ 0.69 $ 0.70 ============ ============ Diluted Continuing operations $ 0.68 $ 0.75 Discontinued operations -- (0.06) ------------ ------------ Total diluted net earnings per share $ 0.68 $ 0.69 ============ ============ Cash dividends declared per share $ 0.27 $ 0.25 Weighted-average shares used to compute net earnings (loss) per share: Basic 1,696 1,748 Diluted 1,716 1,758 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) --------------------------------------------------------- Three Diluted Three Diluted Three Diluted months net months net months net ended earnings ended earnings ended earnings April 30, per January per April 30, per 2017 share 31, 2017 share 2016 share --------- -------- -------- -------- --------- -------- GAAP net earnings from continuing operations $ 559 $ 0.33 $ 611 $ 0.36 $ 660 $ 0.38 Non-GAAP adjustments: Restructuring and other charges 140 0.08 63 0.04 100 0.06 Acquisition- related charges 20 0.01 16 0.01 -- -- Amortization of intangible assets 1 -- -- -- 6 -- Defined benefit plan settlement charges 3 -- -- -- -- -- Non-operating retirement- related credits (35) (0.02) (32) (0.02) (40) (0.02) Tax indemnification credits (5) -- (9) (0.01) (8) -- Adjustments for taxes 2 -- (3) -- (16) (0.01) --------- -------- -------- -------- --------- -------- Non-GAAP net earnings $ 685 $ 0.40 $ 646 $ 0.38 $ 702 $ 0.41 ========= ======== ======== ======== ========= ======== GAAP earnings from continuing operations $ 818 $ 856 $ 841 Non-GAAP adjustments: Restructuring and other charges 140 63 100 Acquisition- related charges 20 16 -- Amortization of intangible assets 1 -- 6 Defined benefit plan settlement charges 3 -- -- Non-operating retirement- related credits (35) (32) (40) --------- -------- --------- Non-GAAP earnings $ 947 $ 903 $ 907 ========= ======== ========= GAAP operating margin from continuing operations 7% 7% 7% Non-GAAP adjustments 1% -- 1% --------- -------- --------- Non-GAAP operating margin 8% 7% 8% ========= ======== ========= 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) ------------------------------------------ Six Six months Diluted months Diluted ended net ended net April 30, earnings April 30, earnings 2017 per share 2016 per share --------- --------- --------- --------- GAAP net earnings from continuing operations $ 1,170 $ 0.68 1,310 $ 0.75 Non-GAAP adjustments: Restructuring and other charges 203 0.12 120 0.07 Acquisition-related charges 36 0.02 -- -- Amortization of intangible assets 1 -- 14 0.01 Non-operating retirement- related credits (67) (0.04) (80) (0.05) Defined benefit plan settlement charges 3 -- -- -- Tax indemnification credits (14) -- (8) -- Adjustments for taxes (1) -- (9) (0.01) --------- --------- --------- --------- Non-GAAP net earnings $ 1,331 $ 0.78 $ 1,347 $ 0.77 ========= ========= ========= ========= GAAP earnings from continuing operations $ 1,674 $ 1,769 Non-GAAP adjustments: Restructuring and other charges 203 120 Acquisition-related charges 36 -- Amortization of intangible assets 1 14 Non-operating retirement- related credits (67) (80) Defined benefit plan settlement charges 3 -- --------- --------- Non-GAAP earnings $ 1,850 $ 1,823 ========= ========= GAAP operating margin from continuing operations 6% 7% Non-GAAP adjustments 1% 1% --------- --------- Non-GAAP operating margin 7% 8% ========= ========= HP INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (Unaudited) (In millions) As of -------------------------- April 30, October 31, 2017 2016 ------------ ------------ ASSETS Current assets: Cash and cash equivalents $ 6,223 $ 6,288 Accounts receivable 3,771 4,114 Inventory 4,756 4,484 Other current assets 3,552 3,582 ------------ ------------ Total current assets 18,302 18,468 ------------ ------------ Property, plant and equipment 1,661 1,736 Goodwill 5,622 5,622 Other non-current assets(a) 3,101 3,161 ------------ ------------ Total assets $ 28,686 $ 28,987 ============ ============ LIABILITIES AND STOCKHOLDERS' DEFICIT Current liabilities: Notes payable and short-term borrowings $ 110 $ 78 Accounts payable 11,079 11,103 Employee compensation and benefits 665 759 Taxes on earnings 221 231 Deferred revenue 980 919 Other accrued liabilities 5,549 5,718 ------------ ------------ Total current liabilities 18,604 18,808 ------------ ------------ Long-term debt(a) 6,710 6,735 Other non-current liabilities 7,327 7,333 Stockholders' deficit (3,955) (3,889) ------------ ------------ Total liabilities and stockholders' deficit $ 28,686 $ 28,987 ============ ============ (a) Pursuant to the adoption of Accounting Standard Update 2015-03 "Simplifying the Presentation of Debt Issuance Costs" in Q1 FY17, debt issuance costs has been reclassified from other non-current assets to long-term debt. The change has been adopted including prior comparative periods. HP INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) (In millions) Three months ended April 30, ---------------------------- 2017 2016 ------------- ------------- Cash flows from operating activities:(a) Net earnings $ 559 $ 629 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 89 85 Stock-based compensation expense 48 40 Restructuring and other charges 140 100 Deferred taxes on earnings 138 74 Other, net 2 (76) Changes in operating assets and liabilities, net of acquisitions: Accounts receivable (325) 190 Inventory (203) 520 Accounts payable 142 41 Taxes on earnings (102) 29 Restructuring and other (46) (37) Other assets and liabilities 13 (16) ------------- ------------- Net cash provided by operating activities 455 1,579 ------------- ------------- Cash flows from investing activities: Investment in property, plant and equipment (75) (86) Purchases of available-for-sale securities and other investments (80) (122) Maturities and sales of available-for-sale securities and other investments -- 3 Proceeds from business divestiture -- 61 ------------- ------------- Net cash used in investing activities (155) (144) ------------- ------------- Cash flows from financing activities: Short-term borrowings with original maturities less than 90 days, net 39 13 Payment of debt (17) (3) Settlement of cash flow hedges (5) 17 Net payments related to stock-based award activities 22 4 Repurchase of common stock (223) (305) Cash dividends paid (224) (213) ------------- ------------- Net cash used in financing activities (408) (487) ------------- ------------- (Decrease) increase in cash and cash equivalents (108) 948 Cash and cash equivalents at beginning of period 6,331 3,688 ------------- ------------- Cash and cash equivalents at end of period $ 6,223 $ 4,636 ============= ============= (a) Pursuant to the adoption of Accounting Standard Update 2016-09 "Improvements to Employee Share-Based Payment Accounting" in Q1 FY17, excess income tax benefit from stock-based compensation expense is no longer separated from operating income tax cash flows and reported as financing activity. In addition, income taxes paid on shares withheld is now required to be presented as financing activity as opposed to operating activity. The change has been adopted including prior comparative periods. HP INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) (In millions) Six months ended April 30, -------------------------- 2017 2016 ------------ ------------ Cash flows from operating activities:(a) Net earnings $ 1,170 $ 1,221 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 173 164 Stock-based compensation expense 123 101 Restructuring and other charges 203 120 Deferred taxes on earnings 205 600 Other, net 21 (46) Changes in operating assets and liabilities, net of acquisitions: Accounts receivable 289 894 Inventory (272) 722 Accounts payable 26 (1,063) Taxes on earnings (177) (505) Restructuring and other (97) (68) Other assets and liabilities (442) (663) ------------ ------------ Net cash provided by operating activities 1,222 1,477 ------------ ------------ Cash flows from investing activities: Investment in property, plant and equipment (176) (206) Proceeds from sale of property, plant and equipment 69 -- Purchases of available-for-sale securities and other investments (136) (122) Maturities and sales of available-for-sale securities and other investments 2 12 Proceeds from business divestiture -- 61 ------------ ------------ Net cash used in investing activities (241) (255) ------------ ------------ Cash flows from financing activities: Short-term borrowings with original maturities less than 90 days, net 74 39 Proceeds from debt, net of issuance costs 5 4 Payment of debt (44) (2,158) Settlement of cash flow hedges (9) 6 Net transfer of cash and cash equivalents to Hewlett Packard Enterprise Company -- (10,375) Net payments related to stock-based award activities (12) 1 Repurchase of common stock (609) (1,102) Cash dividends paid (451) (434) ------------ ------------ Net cash used in financing activities (1,046) (14,019) ------------ ------------ Decrease in cash and cash equivalents (65) (12,797) Cash and cash equivalents at beginning of period 6,288 17,433 ------------ ------------ Cash and cash equivalents at end of period $ 6,223 $ 4,636 ============ ============ (a) Pursuant to the adoption of Accounting Standard Update 2016-09 "Improvements to Employee Share-Based Payment Accounting" in Q1 FY17, excess income tax benefit from stock-based compensation expense is no longer separated from operating income tax cash flows and reported as financing activity. In addition, income taxes paid on shares withheld is now required to be presented as financing activity as opposed to operating activity. The change has been adopted including prior comparative periods. HP INC. AND SUBSIDIARIES SEGMENT INFORMATION (Unaudited) (In millions) Three months ended ----------------------------------- April 30, January 31, April 30, 2017 2017 2016 ---------- ----------- ---------- Net revenue:(a) Personal Systems $ 7,662 $ 8,224 $ 6,990 Printing 4,743 4,483 4,637 Corporate Investments 3 2 3 ---------- ----------- ---------- Total segments 12,408 12,709 11,630 Intersegment net revenue eliminations and other (23) (25) (42) ---------- ----------- ---------- Total net revenue $ 12,385 $ 12,684 $ 11,588 ========== =========== ========== Earnings from continuing operations before taxes:(a) Personal Systems $ 244 $ 313 $ 242 Printing 825 716 801 Corporate Investments (26) (23) (8) ---------- ----------- ---------- Total segment earnings from operations 1,043 1,006 1,035 Corporate costs and eliminations (48) (28) (88) Stock-based compensation expense (48) (75) (40) Restructuring and other charges (140) (63) (100) Acquisition-related charges (20) (16) -- Amortization of intangible assets (1) -- (6) Defined benefit plan settlement charges (3) -- -- Non-operating retirement-related credits 35 32 40 Interest and other, net (64) (81) (5) ---------- ----------- ---------- Total earnings from continuing operations before taxes $ 754 $ 775 $ 836 ========== =========== ========== (a) Effective at the beginning of its first quarter of fiscal year 2017, HP implemented an organizational change to align its business unit financial reporting more closely with its current business structure. The organizational change resulted in transfer of a portion of LaserJet printers from Commercial to Consumer within the Printing segment. HP reflected this change to its business unit information in prior reporting periods on an as-if basis which resulted in reclassification of revenues between the Commercial and Consumer business units of Printing. The reporting change had no impact to previously reported segment net revenue, consolidated net revenue, earnings from continuing operations, net earnings or net earnings per share. HP INC. AND SUBSIDIARIES SEGMENT INFORMATION (Unaudited) (In millions) Six months ended April 30, -------------------------- 2017 2016 ------------ ------------ Net revenue:(a) Personal Systems $ 15,886 $ 14,457 Printing 9,226 9,279 Corporate Investments 5 6 ------------ ------------ Total segments 25,117 23,742 Intersegment net revenue eliminations and other (48) 92 ------------ ------------ Total net revenue $ 25,069 $ 23,834 ============ ============ Earnings from continuing operations before taxes:(a) Personal Systems $ 557 $ 471 Printing 1,541 1,588 Corporate Investments (49) (31) ------------ ------------ Total segment earnings from operations 2,049 2,028 Corporate costs and eliminations (76) (104) Stock-based compensation expense (123) (101) Restructuring and other charges (203) (120) Acquisition-related charges (36) -- Amortization of intangible assets (1) (14) Defined benefit plan settlement charges (3) -- Non-operating retirement-related credits 67 80 Interest and other, net (145) (99) ------------ ------------ Total earnings from continuing operations before taxes $ 1,529 $ 1,670 ============ ============ (a) Effective at the beginning of its first quarter of fiscal year 2017, HP implemented an organizational change to align its business unit financial reporting more closely with its current business structure. The organizational change resulted in transfer of a portion of LaserJet printers from Commercial to Consumer within the Printing segment. HP reflected this change to its business unit information in prior reporting periods on an as-if basis which resulted in reclassification of revenues between the Commercial and Consumer business units of Printing. The reporting change had no impact to previously reported segment net revenue, consolidated net revenue, earnings from continuing operations, net earnings or net earnings per share. HP INC. AND SUBSIDIARIES SEGMENT/BUSINESS UNIT INFORMATION (Unaudited) (In millions) Three months ended Change (%) --------------------------------- ------------- April 30, January 31, April 30, 2017 2017 2016 Q/Q Y/Y --------- ----------- --------- ----- ----- Net revenue:(a) Personal Systems Notebooks $ 4,493 $ 4,890 $ 3,838 (8)% 17% Desktops 2,377 2,534 2,402 (6)% (1)% Workstations 495 491 461 1% 7% Other 297 309 289 (4)% 3% --------- ----------- --------- Total Personal Systems 7,662 8,224 6,990 (7)% 10% --------- ----------- --------- Printing Supplies 3,157 3,007 3,099 5% 2% Commercial Hardware 982 886 957 11% 3% Consumer Hardware 604 590 581 2% 4% --------- ----------- --------- Total Printing 4,743 4,483 4,637 6% 2% --------- ----------- --------- Corporate Investments 3 2 3 50% -- --------- ----------- --------- Total segments 12,408 12,709 11,630 (2)% 7% --------- ----------- --------- Intersegment net revenue eliminations and other(b) (23) (25) (42) NM NM --------- ----------- --------- Total net revenue $ 12,385 $ 12,684 $ 11,588 (2)% 7% ========= =========== ========= (a) Effective at the beginning of its first quarter of fiscal year 2017, HP implemented an organizational change to align its business unit financial reporting more closely with its current business structure. The organizational change resulted in transfer of a portion of LaserJet printers from Commercial to Consumer within the Printing segment. HP reflected this change to its business unit information in prior reporting periods on an as-if basis which resulted in reclassification of revenues between the Commercial and Consumer business units of Printing. The reporting change had no impact to previously reported segment net revenue, consolidated net revenue, earnings from continuing operations, net earnings or net earnings per share. (b) "NM"- Not Meaningful. HP INC. AND SUBSIDIARIES SEGMENT/BUSINESS UNIT INFORMATION (Unaudited) (In millions) Six months ended April 30, Change (%) -------------------------------- 2017 2016 Y/Y --------- ---------- ---------- Net revenue:(a) Personal Systems Notebooks $ 9,383 $ 8,043 17% Desktops 4,911 4,929 --% Workstations 986 905 9% Other 606 580 4% --------- ---------- Total Personal Systems 15,886 14,457 10% --------- ---------- Printing Supplies 6,164 6,200 (1)% Commercial Hardware 1,868 1,921 (3)% Consumer Hardware 1,194 1,158 3% --------- ---------- Total Printing 9,226 9,279 (1)% --------- ---------- Corporate Investments 5 6 (17)% --------- ---------- Total segments 25,117 23,742 6% --------- ---------- Intersegment net revenue eliminations and other(b) (48) 92 NM --------- ---------- Total net revenue $ 25,069 $ 23,834 5% ========= ========== (a) Effective at the beginning of its first quarter of fiscal year 2017, HP implemented an organizational change to align its business unit financial reporting more closely with its current business structure. The organizational change resulted in transfer of a portion of LaserJet printers from Commercial to Consumer within the Printing segment. HP reflected this change to its business unit information in prior reporting periods on an as-if basis which resulted in reclassification of revenues between the Commercial and Consumer business units of Printing. The reporting change had no impact to previously reported segment net revenue, consolidated net revenue, earnings from continuing operations, net earnings or net earnings per share. (b) "NM"- Not Meaningful. HP INC. AND SUBSIDIARIES SEGMENT OPERATING MARGIN SUMMARY DATA (Unaudited) Change in Operating Three months ended Margin (pts) ------------------------------- ----------------- April 30, January 31, April 30, 2017 2017 2016 Q/Q Y/Y --------- ----------- --------- -------- -------- Segment operating margin:(a) (0.6) (0.3) Personal Systems 3.2% 3.8% 3.5% pts pts Printing 17.4% 16.0% 17.3% 1.4 pts 0.1 pts Corporate Investments(b) NM NM NM NM NM (0.5) Total segments 8.4% 7.9% 8.9% 0.5 pts pts (a) Effective at the beginning of its first quarter of fiscal year 2017, HP implemented an organizational change to align its business unit financial reporting more closely with its current business structure. The organizational change resulted in transfer of a portion of LaserJet printers from Commercial to Consumer within the Printing segment. HP reflected this change to its business unit information in prior reporting periods on an as-if basis which resulted in reclassification of revenues between the Commercial and Consumer business units of Printing. The reporting change had no impact to previously reported segment net revenue, consolidated net revenue, earnings from continuing operations, net earnings or net earnings per share. (b) "NM"- Not Meaningful. HP INC. AND SUBSIDIARIES CALCULATION OF DILUTED NET EARNINGS PER SHARE (Unaudited) (In millions, except per share amounts) Three months ended ----------------------------------- April 30, January 31, April 30, 2017 2017 2016 ----------- ----------- ----------- Numerator: GAAP net earnings from continuing operations $ 559 $ 611 $ 660 =========== =========== =========== Non-GAAP net earnings $ 685 $ 646 $ 702 =========== =========== =========== Denominator: Weighted-average shares used to compute basic net earnings per share 1,688 1,704 1,720 Dilutive effect of employee stock plans(a) 21 17 11 ----------- ----------- ----------- Weighted-average shares used to compute diluted net earnings per share 1,709 1,721 1,731 =========== =========== =========== GAAP diluted net earnings per share from continuing operations $ 0.33 $ 0.36 $ 0.38 =========== =========== =========== Non-GAAP diluted net earnings per share $ 0.40 $ 0.38 $ 0.41 =========== =========== =========== (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) Six months ended April 30, --------------------------- 2017 2016 ------------- ------------- Numerator: GAAP net earnings from continuing operations $ 1,170 $ 1,310 ============= ============= Non-GAAP net earnings $ 1,331 $ 1,347 ============= ============= Denominator: Weighted-average shares used to compute basic net earnings per share 1,696 1,748 Dilutive effect of employee stock plans(a) 20 10 ------------- ------------- Weighted-average shares used to compute diluted net earnings per share 1,716 1,758 ============= ============= GAAP diluted net earnings per share from continuing operations $ 0.68 $ 0.75 ============= ============= Non-GAAP diluted net earnings per share $ 0.78 $ 0.77 ============= ============= (a) Includes any dilutive effect of restricted stock units, stock options and performance-based awards.