HP INC. AND SUBSIDIARIES
CALCULATION OF DILUTED NET EARNINGS PER SHARE
(Unaudited)
(In millions, except per share amounts)
| Nine months ended | ||||||||
| July 31, 2021 | July 31, 2020 | |||||||
| Numerator: | ||||||||
| GAAP net earnings | $ | 3,404 | $ | 2,176 | ||||
| Non-GAAP net earnings | $ | 3,544 | $ | 2,399 | ||||
| Denominator: | ||||||||
| Weighted-average shares used to compute basic net earnings per share | 1,235 | 1,435 | ||||||
| Dilutive effect of employee stock plans(a) | 12 | 6 | ||||||
| Weighted-average shares used to compute diluted net earnings per share | 1,247 | 1,441 | ||||||
| GAAP diluted net earnings per share | $ | 2.73 | $ | 1.51 | ||||
| Non-GAAP diluted net earnings per share | $ | 2.84 | $ | 1.66 | ||||
(a) Includes any dilutive effect of restricted stock units, stock options and performance-based awards.
Use of non-GAAP financial measures
To supplement HP’s consolidated condensed financial statements presented on a GAAP basis, HP provides net revenue on a constant currency basis, non-GAAP total operating expense, non-GAAP operating profit, non-GAAP operating margin, non-GAAP tax rate, non-GAAP net earnings, non-GAAP diluted net EPS, free cash flow, gross cash and net cash (debt). HP also provides forecasts of non-GAAP diluted net EPS and free cash flow.
These non-GAAP financial measures are not computed in accordance with, or as an alternative to, GAAP in the United States. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the tables above or elsewhere in the materials accompanying this news release.
Use and economic substance of non-GAAP financial measures
Net revenue on a constant currency basis excludes the effect of foreign currency exchange fluctuations calculated by translating current period revenues using monthly average exchange rates from the comparative period and excluding any hedging impact recognized in the current period. Non-GAAP operating margin is defined to exclude the effects of any amounts relating to restructuring and other charges, acquisition-related charges, and amortization of intangible assets. Non-GAAP net earnings and non-GAAP diluted net EPS consist of net earnings or diluted net EPS excluding those same charges, defined benefit plan settlement charges, non-operating retirement related (credits)/charges, debt extinguishment costs, tax adjustments and the amount of additional taxes or tax benefits associated with each non-GAAP item.
