HPE Reports Fiscal 2018 Full-Year and Fourth Quarter Results

(a) Represents the settlement of certain pre-separation Hewlett-Packard Company income tax liabilities indemnified through the Tax Matters Agreement with HP Inc.

(b) For the twelve months ended October 31, 2018, the amount primarily includes $2.0 billion benefit in connection with the settlement of certain pre-separation Hewlett-Packard Company income tax liabilities indemnified through the Tax Matters Agreement with HP Inc. Further, as a result of the impact of U.S. Tax Reform, it also includes $2.0 billion tax benefit from the application of the new tax rules including a lower federal tax rate to deferred tax assets and liabilities, partially offset by a provisional estimate of $1.7 billion of transition tax expense on accumulated non U.S. earnings, and a provisional estimate of $687 million of tax expense on valuation allowance on foreign tax credits. In connection with the Everett Transaction, for the twelve months ended October 31, 2018, this amount also includes $208 million benefit primarily from foreign tax credits and from the release of non U.S. valuation allowances on deferred taxes established in connection with the Everett Transaction, following changes in foreign tax laws.

For the twelve months ended October 31, 2017, the amount primarily includes the income tax benefit related to the U.S. foreign tax credits generated as a result of the Everett and Seattle Transactions, partially offset by income tax expense as a result of recording valuation allowance on certain U.S. deferred tax assets.


HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
ADJUSTMENTS TO GAAP NET EARNINGS, EARNINGS FROM OPERATIONS,
OPERATING MARGIN AND DILUTED NET EARNINGS PER SHARE
(Unaudited)
(In millions, except percentages and per share amounts)
            
  Three months
ended
October 31, 2018
  Diluted net
earnings
per share
  Three months
ended
July 31, 2018
  Diluted net
earnings
per share
  Three months
ended
October 31, 2017
  Diluted net
earnings
per share
GAAP net (loss) earnings from continuing operations$(772) $(0.53) $452  $0.29  $378  $0.23 
            
Non-GAAP adjustments:           
Amortization of intangible assets72  0.05  72  0.05  86  0.05 
Impairment of goodwill88  0.06         
Restructuring charges5    2    113  0.07 
Transformation costs(a)(54) (0.04) 131  0.09  328  0.20 
Disaster Charges        93  0.06 
Acquisition and other related charges12  0.01  24  0.02  53  0.03 
Separation costs12  0.01   (2 )       202     0.12  
Defined benefit plan settlement charges and remeasurement (benefit)                 (26 )   (0.02 )
Tax indemnification adjustments (b) 12     0.01     (2 )       2      
Loss from equity interests (c) 38     0.03     38     0.02     43     0.03  
Adjustments for taxes (d) 1,252     0.85     (45 )   (0.03 )   (799 )   (0.48 )
Non-GAAP net earnings from continuing operations $ 665     $ 0.45     $ 670     $ 0.44     $ 473     $ 0.29  
                       
GAAP earnings (loss) from continuing operations $ 684         $ 516         $ (224 )    
                       
Non-GAAP adjustments related to continuing operations:                      
Amortization of intangible assets 72         72         86      
Impairment of goodwill 88                      
Restructuring charges 5         2         113      
Transformation costs (74 )       131         328      
Disaster Charges                 93      
Acquisition and other related charges 12         24         53      
Separation costs 12         (2 )       202      
Defined benefit plan settlement charges and remeasurement (benefit)                 (26 )    
Non-GAAP earnings from continuing operations $ 799         $ 743         $ 625      
                       
GAAP operating margin from continuing operations 9 %       7 %       (3 )%    
Non-GAAP adjustments from continuing operations 1 %       3 %       11 %    
Non-GAAP operating margin from continuing operations 10 %       10 %       8 %    
                       
GAAP net earnings (loss) from discontinued operations $ 15     $ 0.01     $ (1 )   $     $ 146     $ 0.09  
                       
Non-GAAP adjustments related to discontinued operations:                      
Amortization of intangible assets                 10     0.01  
Restructuring charges                 (2 )    
Separation costs                 70     0.04  
Defined benefit plan settlement charges and remeasurement (benefit)                 (1 )    
Interest expense on Seattle debt                 8      
Tax indemnification adjustments (11 )   (0.01 )           15     0.01  
Adjustments for taxes (e) (4 )       1         (216 )   (0.13 )
Non-GAAP net earnings from discontinued operations $     $     $     $     $ 30     $ 0.02  
                       
Total GAAP net (loss) earnings $ (757 )   $ (0.52 )   $ 451     $ 0.29     $ 524     $ 0.32  
Total Non-GAAP net earnings $ 665     $ 0.45     $ 670     $ 0.44     $ 503     $ 0.31  

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