What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-06-03 compared with 2022-03-03 · 339 added, 221 removed, 823 unchanged (40% of the section changed)

Financial Statements

Condensed Consolidated Statements of Earnings for the three months ended January 31, 2022 and 2021 (Unaudited)

Condensed Consolidated Statements of Comprehensive Income for the three months ended January 31, 2022 and 2021 (Unaudited)

Condensed Consolidated Balance Sheets as of January 31, 2022 (Unaudited) and October 31, 2021 (Audited)

Condensed Consolidated Statements of Cash Flows for the three months ended January 31, 2022 and 2021 (Unaudited)

Condensed Consolidated Statements of Stockholders' Equity for the three months ended January 31, 2022 and 2021 (Unaudited)

Condensed Consolidated Statements of Earnings for the three and six months ended April 30, 2022 and 2021 (Unaudited)

Condensed Consolidated Statements of Comprehensive Income for the three and six months ended April 30, 2022 and 2021 (Unaudited)

Condensed Consolidated Balance Sheets as of April 30, 2022 (Unaudited) and October 31, 2021 (Audited)

Condensed Consolidated Statements of Cash Flows for the six months ended April 30, 2022 and 2021 (Unaudited)

Condensed Consolidated Statements of Stockholders' Equity for the three and six months ended April 30, 2022 and 2021 (Unaudited)

Notes to Condensed Consolidated Financial Statements (Unaudited)

13 unchanged sentences

Condensed Consolidated Statements of Earnings

For the three months ended January 31,

For the three months ended April 30, For the six months ended April 30,

2022 2021 2022 2021

In millions, except per share amounts

6 unchanged sentences

Cost of services 1,558 1,590 3,113 3,186

Financing interest 46 59

Financing cost (1)

148 54 194 113

Research and development 517 503 1,021 971

2 unchanged sentences

Transformation costs 98 209 209 520

Disaster charges 20 1 19 1

Acquisition, disposition and other related charges 8 13 16 31

5 unchanged sentences

Earnings from equity interests 33 4 64 30

Earnings before benefit for taxes 493 205

Benefit for taxes 20 18

Earnings before provision for taxes 276 288 769 493

Provision for taxes ( 26 ) ( 29 ) ( 6 ) ( 11 )

Net earnings $ 250 $ 259 $ 763 $ 482

5 unchanged sentences

Diluted 1,329 1,331 1,327 1,323

(1) The three and six months ended April 30, 2022 include $ 99 million of expected credit loss reserves.

Refer to Note 1, "Overview and Summary of Significant Accounting Policies", for further information.

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

2 unchanged sentences

Condensed Consolidated Statements of Comprehensive Income

For the three months ended January 31,

For the three months ended April 30, For the six months ended April 30,

2022 2021 2022 2021

Net earnings $ 250 $ 259 $ 763 $ 482

2 unchanged sentences

Net unrealized gains (losses) arising during the period ( 7 ) ( 5 ) ( 8 ) ( 2 )

( 7 ) ( 5 ) ( 8 ) ( 2 )

Change in net unrealized gains (losses) on cash flow hedges:

7 unchanged sentences

Other comprehensive income before taxes 90 152 140 197

(Provision) benefit for taxes ( 13 ) ( 2 )

Provision for taxes ( 21 ) ( 18 ) ( 34 ) ( 20 )

Other comprehensive income, net of taxes 69 134 106 177

4 unchanged sentences

Condensed Consolidated Balance Sheets

January 31, 2022 October 31, 2021

April 30, 2022 October 31, 2021

(Unaudited) (Audited)

29 unchanged sentences

Common stock, $ 0.01 par value ( 9,600 shares authorized;

1,300 and 1,295 shares issued and outstanding at January 31, 2022 and October 31, 2021, respectively)

1,299 and 1,295 shares issued and outstanding at April 30, 2022 and October 31, 2021, respectively)

Additional paid-in capital 28,473 28,470

9 unchanged sentences

Condensed Consolidated Statements of Cash Flows (Unaudited)

For the three months ended January 31,

For the six months ended April 30,

Cash flows from operating activities:

16 unchanged sentences

Other assets and liabilities ( 1,002 ) ( 270 )

Net cash (used in) provided by operating activities ( 76 ) 963

Net cash provided by operating activities 303 1,785

Cash flows from investing activities:

5 unchanged sentences

Financial collateral received 272 297

Payments made in connection with business acquisitions, net of cash acquired — ( 34 )

Net cash used in investing activities ( 827 ) ( 1,231 )

7 unchanged sentences

Cash dividends paid to shareholders ( 311 ) ( 311 )

Net cash provided by (used in) financing activities 355 ( 459 )

Decrease in cash, cash equivalents and restricted cash ( 56 ) ( 148 )

Net cash used in financing activities ( 260 ) ( 419 )

(Decrease) increase in cash, cash equivalents and restricted cash ( 784 ) 135

Cash, cash equivalents and restricted cash at beginning of period 4,332 4,621

2 unchanged sentences

Table of Content

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Condensed Consolidated Statements of Stockholders' Equity (Unaudited)

For the three months ended January 31, 2022 Number of Shares Par Value Additional Paid-in Capital Accumulated Deficit Accumulated

For the three months ended April 30, 2022 Number of Shares Par Value Additional Paid-in Capital Accumulated Deficit Accumulated

Comprehensive

1 unchanged sentence

In millions, except number of shares in thousands

Balance at January 31, 2022 1,300,259 $ 13 $ 28,422 $ ( 5,239 ) $ ( 2,878 ) $ 20,318 $ 47 $ 20,365

Net earnings 250 250 3 253

Other comprehensive income 69 69 69

Comprehensive income 319 3 322

Stock-based compensation expense 114 114 114

Tax withholding related to vesting of employee stock plans ( 8 ) ( 8 ) ( 8 )

Issuance of common stock in connection with employee stock plans and other 2,195 3 3 3

Repurchases of common stock ( 3,530 ) ( 58 ) ( 58 ) ( 58 )

Cash dividends declared ($ 0.12 per share)

( 156 ) ( 156 ) ( 156 )

Balance at April 30, 2022 1,298,924 $ 13 $ 28,473 $ ( 5,145 ) $ ( 2,809 ) $ 20,532 $ 50 $ 20,582

) Represents the impact of the adoption of the accounting standard on the s on financial instruments.

For the six months ended April 30, 2022 Number of Shares Par Value Additional Paid-in Capital Accumulated Deficit Accumulated

Comprehensive

Interests Total

In millions, except number of shares in thousands

Balance at October 31, 2021 1,294,634 $ 13 $ 28,470 $ ( 5,597 ) $ ( 2,915 ) $ 19,971 $ 46 $ 20,017

8 unchanged sentences

( 311 ) ( 311 ) ( 311 )

Balance at April 30, 2022 1,298,924 $ 13 $ 28,473 $ ( 5,145 ) $ ( 2,809 ) $ 20,532 $ 50 $ 20,582

Table of Content

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Condensed Consolidated Statements of Stockholders' Equity (Unaudited)

For the three months ended April 30, 2021 Number of Shares Par Value Additional Paid-in Capital Accumulated Deficit Accumulated

Comprehensive

Interests Total

In millions, except number of shares in thousands

Balance at January 31, 2021 1,300,496 $ 13 $ 28,427 $ ( 8,332 ) $ ( 3,896 ) $ 16,212 $ 47 $ 16,259

) Represents the impact of the adoption of the accounting standard on the measurement of credit losses on financial instruments.

For the three months ended January 31, 2021 Number of Shares Par Value Additional Paid-in Capital Accumulated Deficit Accumulated

Net earnings 259 259 4 263

Other comprehensive income 134 134 134

Comprehensive income 393 4 397

Stock-based compensation expense 105 105 105

Tax withholding related to vesting of employee stock plans ( 4 ) ( 4 ) ( 4 )

Issuance of common stock in connection with employee stock plans and other 3,642 10 10 10

Cash dividends declared ($ 0.12 per share)

( 156 ) ( 156 ) ( 156 )

Balance at April 30, 2021 1,304,138 $ 13 $ 28,538 $ ( 8,229 ) $ ( 3,762 ) $ 16,560 $ 51 $ 16,611

For the six months ended April 30, 2021 Number of Shares Par Value Additional Paid-in Capital Accumulated Deficit Accumulated

Comprehensive

10 unchanged sentences

( 311 ) ( 311 ) ( 311 )

Effects of adoption of accounting standard updates (1)

( 25 ) ( 25 ) ( 25 )

Balance at January 31, 2021 1,300,496 $ 13 $ 28,427 $ ( 8,332 ) $ ( 3,896 ) $ 16,212 $ 47 $ 16,259

(1) Represents the impact of the adoption of the accounting standard on the measurement of credit losses on financial instruments.

Effects of adoption of ASC 326, Current expected credit losses ( 25 ) ( 25 ) ( 25 )

Balance at April 30, 2021 1,304,138 $ 13 $ 28,538 $ ( 8,229 ) $ ( 3,762 ) $ 16,560 $ 51 $ 16,611

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

10 unchanged sentences

All intercompany transactions and accounts within the consolidated businesses of the Company have been eliminated.

In the opinion of management, the accompanying unaudited Condensed Consolidated Financial Statements of Hewlett Packard Enterprise contain all adjustments, including normal recurring adjustments, necessary to present fairly the Company's financial position as of January 31, 2022 and October 31, 2021, its results of operations for the three months ended January 31, 2022 and 2021, its cash flows for the three months ended January 31, 2022 and 2021, and its statements of stockholders' equity for the three months ended January 31, 2022 and 2021.

The results of operations for the three months ended January 31, 2022 and the cash flows for the three months ended January 31, 2022 are not necessarily indicative of the results to be expected for the full year.

In the opinion of management, the accompanying unaudited Condensed Consolidated Financial Statements of Hewlett Packard Enterprise contain all adjustments, including normal recurring adjustments, necessary to present fairly the Company's financial position as of April 30, 2022 and October 31, 2021, its results of operations for the three and six months ended April 30, 2022 and 2021, its cash flows for the six months ended April 30, 2022 and 2021, and its statements of stockholders' equity for the three and six months ended April 30, 2022 and 2021.

The results of operations for the three and six months ended April 30, 2022 and the cash flows for the six months ended April 30, 2022 are not necessarily indicative of the results to be expected for the full year.

The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the Company's Annual Report on Form 10-K for the fiscal year ended October 31, 2021, as filed with the U.S.

3 unchanged sentences

Concurrently, the Company completed an assessment of its existing server and storage equipment assets and extended the remaining useful lives of such assets by one year .

The effects of this change in estimate reduced depreciation expense and increased net income and basic and diluted earnings per share by immaterial amounts for the three months ended January 31, 2022, and are expected to have an immaterial impact on net income and basic and diluted earnings per share for fiscal 2022.

The effects of this change in estimate reduced depreciation expense and increased net income and basic and diluted earnings per share by immaterial amounts for the six months ended April 30, 2022, and is expected to have an immaterial impact on net income and basic and diluted earnings per share for fiscal 2022.

There have been no other changes to the Company's significant accounting policies described in PART II, Item 8, Note 1, "Overview and Summary of Significant Accounting Policies", of the Company's Annual Report on Form 10-K for the fiscal year ended October 31, 2021.

Subsequent Event

In May 2022, the Company issued $ 747 million of asset-backed debt securities in six tranches at a weighted average price of 99.99 % and a weighted average interest rate of 3.68 %, payable monthly from July 2022 with a stated final maturity date of March 2030.

Russia/Ukraine Conflict

The conflict between Russia and Ukraine and the related sanctions imposed by the U.S., European Union (E.U.) and other countries in response have negatively impacted the Company's operations in both countries and increased economic and political uncertainty across the world.

In response to the sanctions imposed, in February 2022, the Company suspended all new sales and shipments to Russia and Belarus and implemented compliance measures to address the continuously changing regulatory landscape.

Based on a further assessment of business risks and needs, in June 2022, the Company determined that it is no longer tenable to maintain its operations in Russia and Belarus and announced it is proceeding with an orderly, managed exit of its remaining business in these countries.

In the second quarter of fiscal 2022, the Company recorded total pre-tax charges of $ 126 million primarily related to expected credit losses of financing and trade receivables, $ 99 million of which was included in Financing cost, $ 6 million in

Table of Content

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

Cost of services and $ 21 million in Disaster charges in the Condensed Consolidated Statements of Earnings.

Due to the decision to exit Russia and Belarus, the Company expects to incur additional charges related to a deferred tax asset valuation allowance, abandoned assets and employee severance in the third quarter of fiscal 2022.

The Company continues to monitor the social, political, regulatory and economic environment in Russia and Ukraine, and will consider further actions as appropriate.

Recently Adopted Accounting Pronouncements

4 unchanged sentences

The Company adopted the guidance in the first quarter of fiscal 2022, and there was no material impact on the Company's Condensed Consolidated Financial Statements.

Table of Content

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

Recently Enacted Accounting Pronouncements

In March 2022, the FASB issued guidance related to troubled debt restructurings (“TDRs”) and vintage disclosures for financing receivables.

The amendments eliminate current recognition and measurement guidance for TDRs by creditors while enhancing disclosure requirements for certain loan refinancing and restructurings by creditors when a borrower is experiencing financial difficulty.

The amendments also require disclosure of current-period gross write-offs by year of origination for financing receivables and net investments in leases.

The Company is required to adopt the guidance in the first quarter of fiscal 2024, though early adoption is permitted.

The Company is currently evaluating the impact of these amendments on its Condensed Consolidated Financial Statements.

In November 2021, the FASB issued guidance to increase the transparency of government assistance received by an entity by requiring disclosures relating to accounting policy, nature of the assistance, and the effect of the assistance on the financial statements.

The Company is required to adopt the guidance in the first quarter of fiscal 2023, though early adoption is permitted.

The Company is currently evaluating the impact of these amendments on its Condensed Consolidated Financial Statements.

Segment Information

6 unchanged sentences

This portfolio of products includes the HPE Proliant rack and tower servers, HPE Synergy, and HPE BladeSystems.

Compute offerings also include operational and support services and HPE GreenLake for Compute as-a-service.

Compute offerings also include operational and support services and HPE GreenLake for Compute.

High Performance Computing & Artificial Intelligence offers standard and custom hardware and software solutions designed to address customer workloads to power innovation.

The HPC hardware solutions are segmented into several categories:

High Performance Computing (“HPC”), Data Solutions, and Edge Compute.

The HPC portfolio of products includes the HPE Apollo and Cray products that are often sold as supercomputing systems, including exascale supercomputers.

The Data Solutions portfolio (formerly named Mission Critical Solutions) includes the HPE Superdome Flex, HPE Nonstop, and HPE Integrity product lines.

HPC, Data Solutions, and Edge Compute.

The HPC portfolio of products includes the HPE Apollo and HPE Cray products that are often sold as supercomputing systems, including exascale supercomputers.

The Data Solutions portfolio (formerly named Mission Critical Solutions) includes the HPE Superdome Flex, HPE NonStop, and HPE Integrity product

Table of Content

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

Edge compute primarily offers HPE Edgeline products.

HPC & AI offerings also include operational and support services and solutions delivered as-a-service through HPE GreenLake.

HPC & AI offerings also include operational and support services and solutions delivered as-a-service through HPE GreenLake edge-to-cloud platform.

Storage provides workload optimized storage product and service offerings, which include an intelligent hyperconverged infrastructure ("HCI") with HPE Nimble Storage dHCI and HPE SimpliVity;

3 unchanged sentences

Storage also provides solutions for secondary workloads and traditional tape, storage networking and disk products, such as HPE Modular Storage Arrays ("MSA") and HPE XP.

Storage offerings also include operational and support services, software subscription services, and solutions delivered as-a-service through HPE GreenLake.

Storage offerings also include operational and support services, software subscription services, and solutions delivered as-a-service through HPE GreenLake edge-to-cloud platform.

Intelligent Edge offers wired and wireless local area network ("LAN"), campus and data center switching, software-defined wide-area-network (from the Silver Peak acquisition), network security, and associated services to enable secure connectivity for businesses of any size.

The HPE Aruba product portfolio includes products such as Wi-Fi access points, switches, routers, and sensors.

The HPE Aruba software and services portfolio includes cloud-based management, network management, network access control, analytics and assurance, location services software, and professional and support services, as well as as-a-service and consumption models through HPE GreenLake for the Intelligent Edge portfolio of products.

Intelligence Edge also offers an Edge Service Platform ("Aruba ESP") to help customers meet their connectivity, security, and financial requirements across campus, branch, data center, and remote worker environments, covering all aspects of wired, wireless LAN, and wide area networking.

Financial Services provides flexible investment solutions, such as leasing, financing, IT consumption, utility programs, and asset management services, for customers that facilitate unique technology deployment models and the acquisition of complete IT solutions, including hardware, software, and services from Hewlett Packard Enterprise and others.

FS also supports financial solutions for on-premise flexible consumption models, such as HPE GreenLake.

FS also supports financial solutions for on-premise flexible consumption models, such as HPE GreenLake platform.

Corporate Investments and Other includes the Advisory and Professional Services ("A & PS") business which primarily offers consultative-led services, HPE and partner technology expertise and advice, implementation services as well as complex solution engagement capabilities;

the Communications and Media Solutions business ("CMS"), which primarily offers software and related services to the telecommunications industry;

the HPE Software business which offers HPE Ezmeral Container Platform and HPE Ezmeral Data Fabric;

the HPE Software business which offers the HPE Ezmeral container platform and HPE Ezmeral Data Fabric;

and Hewlett Packard Labs which is responsible for research and development.

Segment Policy

Hewlett Packard Enterprise does not allocate to its segments certain operating expenses, which it manages at the corporate level.

These unallocated operating costs include certain corporate costs and eliminations, stock-based compensation

Hewlett Packard Enterprise does not allocate certain operating expenses to its segments, which it manages at the corporate level.

These unallocated operating costs include certain corporate costs and eliminations, stock-based compensation expense, amortization of initial direct costs, amortization of intangible assets, transformation costs, disaster charges and acquisition, disposition and other related charges.

Table of Content

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements (Continued)

expense, amortization of initial direct costs, amortization of intangible assets, transformation costs, acquisition, disposition and other related charges.

Segment Operating Results

3 unchanged sentences

Investments and Other Total

Three months ended January 31, 2022

Three months ended April 30, 2022

Net revenue $ 2,933 $ 687 $ 1,082 $ 864 $ 821 $ 326 $ 6,713

2 unchanged sentences

Segment earnings (loss) from operations $ 415 $ ( 40 ) $ 138 $ 109 $ 104 $ ( 24 ) $ 702

Three months ended January 31, 2021

Three months ended April 30, 2021

Net revenue (1)

4 unchanged sentences

$ 334 $ 18 $ 191 $ 126 $ 91 $ ( 25 ) $ 735

(1) Effective at the beginning of the first quarter of fiscal 2022, the Company’s implemented minor organizational changes to align its segment financial reporting more closely with its current business structure resulting in immaterial changes to certain prior period segment revenue and segment earnings (loss) from operations amounts.

These changes had no impact to the Company’s previously reported consolidated GAAP results.

Six months ended April 30, 2022

Net revenue $ 5,909 $ 1,463 $ 2,226 $ 1,764 $ 1,661 $ 651 $ 13,674

Intersegment net revenue 92 37 28 4 4 1 166

Total segment net revenue $ 6,001 $ 1,500 $ 2,254 $ 1,768 $ 1,665 $ 652 $ 13,840

Segment earnings (loss) from operations $ 831 $ ( 47 ) $ 306 $ 266 $ 208 $ ( 35 ) $ 1,529

Six months ended April 30, 2021

Net revenue (1)

$ 5,852 $ 1,408 $ 2,300 $ 1,608 $ 1,694 $ 671 $ 13,533

Intersegment net revenue 106 37 28 5 5 — 181

Total segment net revenue $ 5,958 $ 1,445 $ 2,328 $ 1,613 $ 1,699 $ 671 $ 13,714

Segment earnings (loss) from operations (1)

$ 675 $ 61 $ 425 $ 280 $ 175 $ ( 56 ) $ 1,560

(1) Effective at the beginning of the first quarter of fiscal 2022, the Company implemented minor organizational changes to align its segment financial reporting more closely with its current business structure resulting in immaterial changes to certain prior period segment revenue and segment earnings (loss) from operations amounts.

These changes had no impact to the Company’s previously reported consolidated earnings from operations.

Table of Content

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

The reconciliation of segment operating results to Condensed Consolidated Financial statements was as follows:

For the three months ended January 31,

For the three months ended April 30, For the six months ended April 30,

2022 2021 2022 2021

Total segments $ 6,810 $ 6,786 $ 13,840 $ 13,714

8 unchanged sentences

Transformation costs ( 98 ) ( 209 ) ( 209 ) ( 520 )

Disaster charges (1)

( 125 ) ( 1 ) ( 124 ) ( 1 )

Acquisition, disposition and other related charges ( 8 ) ( 13 ) ( 16 ) ( 31 )

3 unchanged sentences

Earnings from equity interests 33 4 64 30

Total earnings before benefit for taxes $ 493 $ 205

Table of Content

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

Total earnings before provision for taxes $ 276 $ 288 $ 769 $ 493

(1) In the second quarter of fiscal 2022, the Company recorded total pre-tax charges of $ 126 million primarily related to expected credit losses of financing and trade receivables, $ 99 million of which was included in Financing cost, $ 6 million in Cost of sales and $ 21 million in Disaster charges in the Condensed Consolidated Statements of Earnings.

Refer to Note 1, "Overview and Summary of Significant Accounting Policies", for further information.

During the three and six months ended April 30, 2022, Disaster charges also included a recovery of $ 1 million and $ 2 million, respectively, related to COVID-19.

Disaster charges were excluded from segment operating results.

Segment Assets

Hewlett Packard Enterprise allocates assets to its business segments based on the segments primarily benefiting from the assets.

Total assets by segment and the reconciliation of segment assets to total assets as per Consolidated Balance Sheets were as follows:

January 31, 2022 October 31, 2021

Total assets by segment and the reconciliation of segment assets to total assets as per Condensed Consolidated Balance Sheets were as follows:

April 30, 2022 October 31, 2021

Compute $ 15,885 $ 16,000

6 unchanged sentences

Total assets $ 56,324 $ 57,699

Table of Content

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

Geographic Information

Net revenue by geographic region was as follows:

For the three months ended January 31,

For the three months ended April 30, For the six months ended April 30,

2022 2021 2022 2021

United States $ 2,159 $ 2,018 $ 4,476 $ 4,196

Americas excluding U.S.

466 461 928 896

Total Americas 2,625 2,479 5,404 5,092

12 unchanged sentences

These costs are expected to be partially offset by gains from real estate sales.

Table of Content

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

Cost Optimization and Prioritization Plan

During the three months ended January 31, 2022 and 2021, the Company incurred $ 53 million and $ 252 million, respectively, of charges related to the cost optimization and prioritization plan, which was recorded within Transformation costs in the Condensed Consolidated Statements of Earnings, the components of which were as follows:

For the three months ended January 31,

During the three and six months ended April 30, 2021, $ 151 million and $ 403 million were recorded within Transformation costs, and $ 2 million and $ 2 million, respectively, were recorded within Non-service net periodic benefit credit in the Condensed Consolidated Statements of Earnings.

The components of the expense relating to the cost optimization and prioritization plan were as follows:

For the three months ended April 30, For the six months ended April 30,

2022 2021 2022 2021

Program management $ 1 $ 18 $ 9 $ 55

IT costs 10 3 18 3

Restructuring charges 24 132 61 347

Total $ 35 $ 153 $ 88 $ 405

During the three months ended January 31, 2022 and 2021, the Company incurred $ 58 million and $ 59 million, respectively, in net charges associated with HPE Next, which were recorded within Transformation costs in the Condensed Consolidated Statements of Earnings.

The components of Transformation costs relating to HPE Next were as follows:

For the three months ended January 31,

Table of Content

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

The components of transformation costs relating to HPE Next during the three and six months ended April 30, 2022 and 2021 were as follows:

For the three months ended April 30, For the six months ended April 30,

2022 2021 2022 2021

Program management $ 2 $ 3 $ 5 $ 5

3 unchanged sentences

Impairment of real estate assets — 4 11 4

Other 3 5 8 20

Total $ 63 $ 58 $ 121 $ 117

Restructuring Plan

Restructuring activities related to the Company's employees and infrastructure under the cost optimization and prioritization plan and HPE Next plan were presented in the table below:

Restructuring activities related to the Company's employees and infrastructure under the cost optimization and prioritization plan and HPE Next plan are presented in the table below:

Cost Optimization and Prioritization Plan HPE Next Plan

6 unchanged sentences

Non-cash items ( 13 ) ( 8 ) ( 2 ) —

Liability as of January 31, 2022

Liability as of April 30, 2022

$ 163 $ 133 $ 22 $ 26

Total costs incurred to date, as of January 31, 2022

Total costs incurred to date, as of April 30, 2022

$ 547 $ 441 $ 1,261 $ 253

Total expected costs to be incurred as of January 31, 2022

Total expected costs to be incurred as of April 30, 2022

$ 700 $ 600 $ 1,261 $ 255

The current restructuring liability related to the transformation programs, reported in Condensed Consolidated Balance Sheets as of April 30, 2022 and October 31, 2021, was $ 181 million and $ 287 million, respectively, in accrued restructuring, and $ 25 million and $ 27 million, respectively, in Other accrued liabilities.

The non-current restructuring liability related to the transformation programs, reported in Other non-current liabilities in the Condensed Consolidated Balance Sheets as of April 30, 2022 and October 31, 2021, was $ 138 million and $ 180 million, respectively.

Table of Content

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements (Continued)

The current restructuring liability related to the transformation programs, reported in Condensed Consolidated Balance Sheets as of January 31, 2022 and October 31, 2021, was $ 223 million and $ 287 million, respectively, in accrued restructuring, and $ 30 million and $ 27 million, respectively, in Other accrued liabilities.

The non-current restructuring liability related to the transformation programs, reported in Other non-current liabilities in the Condensed Consolidated Balance Sheets as of January 31, 2022 and October 31, 2021, was $ 155 million and $ 180 million, respectively.

Retirement Benefit Plans

The Company's net pension benefit (credit) cost for defined benefit plans recognized in the Condensed Consolidated Statements of Earnings was as follows:

For the three months ended January 31,

For the three months ended April 30, For the six months ended April 30,

2022 2021 2022 2021

Service cost $ 21 $ 25 $ 41 $ 49

6 unchanged sentences

Net periodic benefit (credit) cost ( 16 ) 6 ( 33 ) 11

Settlement loss (1)

Settlement loss and special termination benefits (1)

Total net benefit (credit) cost $ ( 15 ) $ 8 $ ( 31 ) $ 14

2 unchanged sentences

Provision for Taxes

For the three months ended January 31, 2022 and 2021, the Company recorded income tax benefit of $ 20 million and $ 18 million, respectively, which reflects an effective tax rate of ( 4.1 )% and ( 8.8 )%, respectively.

For the three months ended April 30, 2022 and 2021, the Company recorded income tax expense of $ 26 million and $ 29 million, respectively, which reflect an effective tax rate of 9.4 % and 10.1 %, respectively.

For the six months ended April 30, 2022 and 2021, the Company recorded income tax expense of $ 6 million and $ 11 million, respectively, which reflects an effective tax rate of 0.8 % and 2.2 %, respectively.

The effective tax rate generally differs from the U.S.

federal statutory rate of 21% due to favorable tax rates associated with certain earnings from the Company’s operations in lower tax jurisdictions throughout the world but are also impacted by discrete tax adjustments during each fiscal period.

For the three months ended January 31, 2022, the Company recorded $ 83 million of net income tax benefits related to various items discrete to the period.

The amount primarily included $ 43 million of net income benefits related to the settlement of U.S.

tax audit matters, $ 24 million of income tax benefits related to transformation costs and acquisition, disposition and other related charges, and $ 16 million of net income tax benefits related to the settlement of foreign tax audit matters.

For the three months ended January 31, 2021, the Company recorded $ 90 million of net income tax benefits related to various items discrete to the period.

The amount primarily included $ 66 million of income tax benefits related to transformation costs, and acquisition, disposition and other related charges, and $ 30 million of income tax benefits related to tax liabilities for which the Company shared joint and several liability with HP Inc.

For the three and six months ended April 30, 2022, the Company recorded $ 38 million and $ 121 million of net income tax benefits, respectively, related to various items discrete to the period.

For the three months ended April 30, 2022, this amount primarily included $ 25 million of income tax benefits on pre-tax charges incurred related to the Russia/Ukraine conflict and $ 22 million of income tax benefits related to transformation costs and acquisition, disposition and other related charges, partially offset by $ 10 million of net income tax charges related to the settlement of foreign tax audit matters.

For the six months ended April 30, 2022, this amount primarily included $ 46 million of income tax benefits related to transformation costs and acquisition, disposition and other related charges, $ 43 million of net income tax benefits related to the settlement of U.S.

tax audit matters, $ 25 million of income tax benefits on pre-tax charges incurred related to the Russia/Ukraine conflict, and $ 6 million of net income tax benefits related to the settlement of foreign tax audit matters.

In the third quarter of fiscal 2022, the Company determined it will make an orderly, managed exit from Russia and Belarus.

As a result, the Company expects to record a full valuation allowance against the $ 20 million deferred tax asset recorded in connection with the Russia charges incurred during the second quarter of fiscal 2022.

Other income tax adjustments could be necessary as the Company reviews the overall impacts of the exit process.

For the three and six months ended April 30, 2021, the Company recorded $ 33 million and $ 124 million of net income tax benefits, respectively, related to various items discrete to the period.

For the three months ended April 30, 2021, this amount primarily included $ 41 million of income tax benefits related to transformation costs, and acquisition, disposition and other related charges.

For the six months ended April 30, 2021, this amount primarily included $ 107 million of income tax benefits related to transformation costs, and acquisition, disposition and other related charges and $ 30 million of income tax benefits related to tax liabilities for which the Company shared joint and several liability with HP Inc.

and for which the Company was indemnified by HP Inc.

Uncertain Tax Positions

As of January 31, 2022 and October 31, 2021, the amount of unrecognized tax benefits was $ 597 million and $ 2.1 billion, respectively, of which up to $ 331 million and $ 688 million, respectively, would affect the Company's effective tax rate if realized as of their respective periods.

During the three months ended January 31, 2022, the Company effectively settled with the U.S.

Internal Revenue Service ("IRS") for fiscal 2016, primarily contributing to the reduction in the Company's unrecognized tax benefits of $ 1.5 billion, which was predominantly related to the timing of intercompany royalty revenue recognition which does not affect the Company’s effective tax rate.

Table of Content

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements (Continued)

For tax liabilities pertaining to unrecognized tax benefits, the Company recognizes interest income from favorable settlements and interest expense and penalties in (Provision) benefit for taxes in the Condensed Consolidated Statements of Earnings.

The Company recognized interest income of $ 40 million and $ 8 million for the three months ended January 31, 2022 and 2021, respectively.

The increase in interest income resulted from the release of reserves as a result of the effective settlement of the IRS audit for fiscal 2016.

As of January 31, 2022 and October 31, 2021, the Company had accrued $ 96 million and $ 136 million, respectively, for interest and penalties in the Condensed Consolidated Balance Sheets.

Uncertain Tax Positions

As of April 30, 2022 and October 31, 2021, the amount of unrecognized tax benefits was $ 590 million and $ 2.1 billion, respectively, of which up to $ 332 million and $ 688 million, respectively, would affect the Company's effective tax rate if realized as of their respective periods.

During the first quarter of the current year, the Company effectively settled with the U.S.

For tax liabilities pertaining to unrecognized tax benefits, the Company recognizes interest income from favorable settlements and interest expense and penalties in Provision for taxes in the Condensed Consolidated Statements of Earnings.

The Company recognized interest expense of $ 3 million and $ 10 million for the three months ended April 30, 2022 and 2021, respectively, and interest income of $ 37 million and interest expense of $ 2 million for the six months ended April 30, 2022 and 2021, respectively.

The increase in interest income in the current year resulted from the release of reserves as a result of the effective settlement of the IRS audit for fiscal 2016 during the first fiscal quarter.

As of April 30, 2022 and October 31, 2021, the Company had accrued $ 99 million and $ 136 million, respectively, for interest and penalties in the Condensed Consolidated Balance Sheets.

The Company engages in continuous discussion and negotiation with tax authorities regarding tax matters in various jurisdictions.

4 unchanged sentences

Deferred tax assets and liabilities included in the Condensed Consolidated Balance Sheets were as follows:

January 31, 2022 October 31, 2021

April 30, 2022 October 31, 2021

Deferred tax assets $ 1,974 $ 2,023

4 unchanged sentences

Cash, cash equivalents and restricted cash

January 31, 2022 October 31, 2021

April 30, 2022 October 31, 2021

Cash and cash equivalents $ 3,027 $ 3,996

2 unchanged sentences

(1) The Company includes restricted cash in Other current assets in the accompanying Condensed Consolidated Balance Sheets.

January 31, 2022 October 31, 2021

Finished goods $ 1,825 $ 1,684

Purchased parts and fabricated assemblies 3,496 2,827

Total $ 5,321 $ 4,511

Table of Content

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements (Continued)

April 30, 2022 October 31, 2021

Finished goods $ 2,024 $ 1,684

Purchased parts and fabricated assemblies 3,298 2,827

Total $ 5,322 $ 4,511

Property, Plant and Equipment

January 31, 2022 October 31, 2021

April 30, 2022 October 31, 2021

Land $ 74 $ 76

5 unchanged sentences

The Company's aggregate product warranty liability and changes thereto were as follows:

For the three months ended January 31, 2022

For the six months ended April 30, 2022

Balance at beginning of period $ 327

6 unchanged sentences

A summary of accounts receivable, net, including unbilled receivables was as follows:

January 31, 2022 October 31, 2021

April 30, 2022 October 31, 2021

Accounts receivable $ 2,932 $ 3,796

2 unchanged sentences

Total $ 3,122 $ 3,979

The allowances for credit losses related to accounts receivable and changes therein were as follows:

January 31, 2022 October 31, 2021

Table of Content

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

The allowances for credit losses related to accounts receivable and changes during the six months ended April 30, 2022 and the year ended October 31, 2021 were as follows:

April 30, 2022 October 31, 2021

Balance at beginning of period $ 23 $ 46

2 unchanged sentences

Balance at end of period $ 29 $ 23

Table of Content

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

Sale of Trade Receivables

The Company has third-party revolving short-term financing arrangements intended to facilitate the working capital requirements of certain customers.

During the three months ended January 31, 2022, the Company sold $ 1 billion of trade receivables.

During the fiscal year ended October 31, 2021, the Company sold $ 4.2 billion of trade receivables.

The Company recorded an obligation of $ 97 million and $ 65 million in Notes payable and short-term borrowings in its Condensed Consolidated Balance Sheets as of January 31, 2022 and October 31, 2021 respectively, related to the trade receivables sold and collected from the third-party for which the revenue recognition was deferred.

During the three months ended April 30, 2022 and the fiscal year ended October 31, 2021, the Company sold $ 1 billion and $ 4.2 billion of trade receivables, respectively.

The Company recorded an obligation of $ 108 million and $ 65 million within Notes payable and short-term borrowings in its Condensed Consolidated Balance Sheets as of April 30, 2022 and October 31, 2021 respectively, related to the trade receivables sold and collected from the third-party for which the revenue recognition was deferred.

Contract Liabilities

Contract liabilities consist of deferred revenue.

The aggregate balance of current and non-current deferred revenue was $ 6.4 billion as of January 31, 2022 and October 31, 2021.

During the three months ended January 31, 2022, approximately $ 1.2 billion of the deferred revenue as of October 31, 2021 was recognized as revenue.

The aggregate balance of current and non-current deferred revenue was $ 6.3 billion and $ 6.4 billion as of April 30, 2022 and October 31, 2021, respectively.

During the six months ended April 30, 2022, approximately $ 1.9 billion of the deferred revenue as of October 31, 2021 was recognized as revenue.

Remaining Performance Obligations

2 unchanged sentences

Remaining performance obligations consist of deferred revenue.

As of January 31, 2022, the aggregate amount of remaining performance obligations was $ 6.4 billion.

As of April 30, 2022, the aggregate amount of remaining performance obligations was $ 6.3 billion.

The Company expects to recognize approximately 32 % of this amount as revenue over the remainder of the fiscal year.

Costs to Obtain a Contract

As of January 31, 2022, the current and non-current portions of the capitalized costs to obtain a contract were $ 67 million and $ 102 million, respectively.

As of April 30, 2022, the current and non-current portions of the capitalized costs to obtain a contract were $ 69 million and $ 106 million, respectively.

As of October 31, 2021, the current and non-current portions of the capitalized costs to obtain a contract were $ 64 million and $ 95 million, respectively.

The current and non-current portions of the capitalized costs to obtain a contract were included in Other current assets, and Long-term financing receivables and other assets, respectively, in the Condensed Consolidated Balance Sheet.

For the three months ended January 31, 2022, and 2021, the Company amortized $ 20 million and $ 15 million respectively, of capitalized costs to obtain a contract.

For the three and six months ended April 30, 2022, the Company amortized $ 21 million and $ 41 million respectively, of capitalized costs to obtain a contract.

For the three and six months ended April 30, 2021 the Company amortized $ 16 million and $ 32 million respectively, of capitalized costs to obtain a contract.

The amortized capitalized costs to obtain a contract are included in Selling, general and administrative expense in the Condensed Consolidated Statement of Earnings.

5 unchanged sentences

The components of financing receivables were as follows:

January 31, 2022 October 31, 2021

Table of Content

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

April 30, 2022 October 31, 2021

Minimum lease payments receivable $ 8,974 $ 9,526

7 unchanged sentences

Amounts due after one year, net $ 4,682 $ 5,038

Table of Content

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

As of January 31, 2022 and October 31, 2021, scheduled maturities of the Company's minimum lease payments receivable were as follows:

January 31, 2022 October 31, 2021

As of April 30, 2022 and October 31, 2021, scheduled maturities of the Company's minimum lease payments receivable were as follows:

April 30, 2022 October 31, 2021

Fiscal year In millions

2 unchanged sentences

2024 1,930 1,567

2025 1,042 747

Thereafter 173 84

4 unchanged sentences

The Company enters into arrangements to transfer the contractual payments due under certain financing receivables to third party financial institutions.

During the three months ended January 31, 2022, the Company did no t sell any financing receivables.

During the six months ended April 30, 2022, the Company sold $ 31 million of financing receivables.

During the fiscal year ended October 31, 2021, the Company sold $ 142 million of financing receivables.

5 unchanged sentences

Such variables include the underlying value and liquidity of the collateral, the essential use of the equipment, the term of the lease, and the inclusion of credit enhancements, such as guarantees, letters of credit or security deposits.

The credit risk profile of gross financing receivables, based on internal risk ratings as of January 31, 2022, presented on amortized cost basis by year of origination was as follows:

As of January 31, 2022

Table of Content

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

The credit risk profile of gross financing receivables, based on internal risk ratings as of April 30, 2022, presented on amortized cost basis by year of origination was as follows:

As of April 30, 2022

Low Moderate High

6 unchanged sentences

Total $ 4,618 $ 3,713 $ 335

Table of Content

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

The credit risk profile of gross financing receivables, based on internal risk ratings as of October 31, 2021, presented on amortized cost basis by year of origination was as follows:

12 unchanged sentences

Allowance for Credit Losses

The allowance for credit losses for financing receivables as of January 31, 2022 and October 31, 2021 and the respective changes during the three and twelve months then ended were as follows:

January 31, 2022 October 31, 2021

The allowance for credit losses for financing receivables as of April 30, 2022 and October 31, 2021 and the respective changes during the six and twelve months then ended were as follows.

April 30, 2022 October 31, 2021

Balance at beginning of period $ 228 $ 154

4 unchanged sentences

Balance at end of period $ 329 $ 228

In the second quarter of fiscal 2022, the Company recorded a provision of $ 99 million related to expected credit losses due to the Russia/Ukraine conflict.

Table of Content

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

Non-Accrual and Past-Due Financing Receivables

The following table summarizes the aging and non-accrual status of gross financing receivables:

January 31, 2022 October 31, 2021

April 30, 2022 October 31, 2021

Current and past due 1-30 days $ 369 $ 410

8 unchanged sentences

(2) Includes billed operating lease receivables and billed and unbilled sales-type and direct-financing lease receivables.

Table of Content

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

Operating Leases

Operating lease assets included in Property, plant and equipment in the Condensed Consolidated Balance Sheets were as follows:

January 31, 2022 October 31, 2021

April 30, 2022 October 31, 2021

Equipment leased to customers $ 6,752 $ 7,039

2 unchanged sentences

Minimum future rentals on non-cancelable operating leases related to leased equipment were as follows:

January 31, 2022

April 30, 2022

Fiscal year In millions

3 unchanged sentences

At commencement of an operating lease, initial direct costs are deferred and are expensed over the lease term on the same basis as the lease revenue is recorded.

Table of Content

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

The following table presents amounts included in the Condensed Consolidated Statement of Earnings related to lessor activity:

For the three months ended January 31,

For the three months ended April 30, For the six months ended April 30,

2022 2021 2022 2021

Interest income from sales-type leases and direct financing leases $ 122 $ 124 $ 244 $ 246

9 unchanged sentences

The Company’s risk of loss related to securitized receivables and leased equipment is limited to the amount by which the Company’s right to receive collections for assets securitized exceeds the amount required to pay interest, principal, and fees and expenses related to the asset-backed securities.

Table of Content

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

The following table presents the assets and liabilities held by the consolidated VIE as of January 31, 2022 and October 31, 2021, which are included in the Condensed Consolidated Balance Sheets.

The following table presents the assets and liabilities held by the consolidated VIE as of April 30, 2022 and October 31, 2021, which are included in the Condensed Consolidated Balance Sheets.

The assets in the table below include those that can be used to settle the obligations of the VIE.

Additionally, general creditors do not have recourse to the assets of the VIE.

January 31, 2022 October 31, 2021

April 30, 2022 October 31, 2021

Assets held by VIE In millions

7 unchanged sentences

Long-term debt, net of unamortized debt issuance costs $ 1,080 $ 950

Financing receivables transferred via securitization through the SPE were $ 664 million for the three months ended January 31, 2022 and $ 1.1 billion for the fiscal year ended October 31, 2021.

Leased equipment transferred via securitization through the SPE was $ 445 million for the three months ended January 31, 2022 and $ 720 million for the fiscal year ended October 31, 2021.

The following table represents the carrying value of goodwill, by reportable segment as of October 31, 2021 and January 31, 2022:

Financing receivables transferred via securitization through the SPE were $ 664 million for the six months ended April 30, 2022 and $ 1.1 billion for the fiscal year ended October 31, 2021.

Leased equipment transferred via securitization through the SPE was $ 445 million for the six months ended April 30, 2022 and $ 720 million for the fiscal year ended October 31, 2021.

Table of Content

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

Goodwill is tested for impairment at the reporting unit level.

As of April 30, 2022, the Company's reporting units are consistent with the reportable segments identified in Note 2, with the exception of Corporate Investments and Other, which contains three reporting units:

A & PS, CMS, and Software.

The following table represents the carrying value of goodwill, by reportable segment as of April 30, 2022 and October 31, 2021.

There has been no change to the accumulated impairment loss from the Company's Annual Report on Form 10-K for the fiscal year ended October 31, 2021.

Compute HPC & AI Storage Intelligent Edge Financial Services Corporate Investments and Other Total

Balance at October 31, 2021 (1)

$ 7,532 $ 3,702 $ 4,160 $ 2,555 $ 144 $ 213 $ 18,306

Goodwill adjustments — — ( 3 ) — — — ( 3 )

Balance at January 31, 2022 (1)

Balance at April 30, 2022 and October 31, 2021

$ 7,532 $ 3,702 $ 4,160 $ 2,555 $ 144 $ 213 $ 18,306

(1) Goodwill is net of accumulated impairment losses of $ 953 million.

Of this amount, $ 865 million related to the HPC & AI reporting unit was recorded during fiscal 2020 and $ 88 million related to the CMS reporting unit within Corporate Investments and Other was recorded during fiscal 2018.

There is no goodwill remaining in the CMS reporting unit.

Goodwill is tested for impairment at the reporting unit level.

As of January 31, 2022, the Company's reporting units are consistent with the reportable segments identified in Note 2, with the exception of Corporate Investments and Other, which contains three reporting units:

Software, CMS, and A & PS.

As of the annual test date in fiscal 2021, the HPC & AI reporting unit had a goodwill of $ 3.7 billion and an excess of fair value over carrying value of net assets of 8 %.

The HPC & AI business is facing challenges on the current and projected future results as the revenue growth is dependent on timing of delivery and related achievement of customer acceptance milestones.

If the Company is not successful in addressing these challenges, or additional emerging global macroeconomic and geopolitical challenges intensify these challenges, the projected revenue growth rates or operating margins could decline resulting in a decrease in the fair value of the HPC & AI reporting unit.

The fair value of the HPC & AI reporting unit could also be negatively impacted by changes in its weighted average cost of capital, changes in management's business strategy or significant and sustained declines in the stock price, which could result in an indicator of impairment.

The Company will continue to evaluate the recoverability of goodwill on an annual basis as of the beginning of its fourth fiscal quarter and whenever events or changes in circumstances indicate there may be a potential impairment.

Further impairment charges, if any, may be material to our results of operations and financial position.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date.

The Company uses valuation techniques that are based upon observable and unobservable inputs.

Observable inputs are developed using market data such as publicly available information and reflect the assumptions market participants would use, while unobservable inputs are developed using the best information available about the assumptions market participants would use.

Table of Content

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements (Continued)

The following table presents the Company's assets and liabilities that are measured at fair value on a recurring basis:

As of January 31, 2022 As of October 31, 2021

As of April 30, 2022 As of October 31, 2021

Measured Using Fair Value

18 unchanged sentences

Derivative Instruments:

Interest rate contracts $ — $ 92 $ — $ 92 $ — $ — $ — $ —

Foreign exchange contracts — 98 — 98 — 127 — 127

1 unchanged sentence

Total liabilities $ — $ 197 $ — $ 197 $ — $ 127 $ — $ 127

The Company uses valuation techniques that are based upon observable and unobservable inputs.

Other Fair Value Disclosures

Short-Term and Long-Term Debt:

As of January 31, 2022 and October 31, 2021, the estimated fair value of the Company's short-term and long-term debt was $ 14.9 billion and $ 14.6 billion, respectively.

As of January 31, 2022 and October 31, 2021, the carrying value of the Company's short-term and long-term debt was $ 14.1 billion and $ 13.4 billion, respectively.

As of April 30, 2022 and October 31, 2021, the estimated fair value of the Company's short-term and long-term debt was $ 13.7 billion and $ 14.6 billion, respectively.

As of April 30, 2022 and October 31, 2021, the carrying value of the Company's short-term and long-term debt was $ 13.5 billion and $ 13.4 billion, respectively.

If measured at fair value in the Condensed Consolidated Balance Sheets, short-term and long-term debt would be classified in Level 2 of the fair value hierarchy.

1 unchanged sentence

Equity Investments are recorded at cost and measured at fair value, when they are deemed to be impaired or when there is an adjustment from observable price changes.

The Company did not recognize any impairments on these equity investments during the three months ended January 31, 2022 and 2021.

The Company recognized a gain of $ 25 million in Interest and other, net in the Condensed Consolidated Statements of Earnings, for the three and six months ended April 30, 2021.

If measured at fair value in the Condensed Consolidated Balance Sheets, these would generally be classified in Level 3 of the fair value hierarchy.

Table of Content

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

Other financial instruments, including accounts receivable and accounts payable, are carried at cost, which approximates their fair value due to their short term nature.

Non-Financial Assets:

2 unchanged sentences

Fair value adjustments are made to these non-financial assets in the period an impairment charge is recognized.

During the three months ended January 31, 2022 and 2021, the Company recorded a ROU asset impairment charge of $ 6 million and $ 49 million, respectively, in Transformation costs in the Condensed Consolidated Statements of Earnings as the carrying value of certain ROU assets exceeded its fair value.

Table of Content

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

During the three and six months ended April 30, 2022, the Company recorded a net gain of $ 18 million and $ 12 million, respectively, primarily due to a lease termination.

During the three and six months ended April 30, 2021, the Company recorded a ROU asset impairment charge of $ 19 million and $ 68 million, respectively.

These charges were recorded as the carrying value of certain ROU assets exceeded their fair value and are reflected in Transformation costs in the Condensed Consolidated Statements of Earnings.

If measured at fair value in the Condensed Consolidated Balance Sheets, these would generally be classified in Level 3 of the fair value hierarchy.

2 unchanged sentences

Cash equivalents and available-for-sale debt investments were as follows:

As of January 31, 2022 As of October 31, 2021

As of April 30, 2022 As of October 31, 2021

Cost Gross Unrealized Gain Fair

5 unchanged sentences

Available-for-Sale Debt Investments:

Time Deposits 1 — 1 — — —

Foreign bonds 99 6 105 108 14 122

2 unchanged sentences

Total cash equivalents and available-for-sale debt investments $ 1,195 $ 7 $ 1,202 $ 2,450 $ 15 $ 2,465

As of January 31, 2022 and October 31, 2021, the carrying amount of cash equivalents approximated fair value due to the short period of time to maturity.

As of April 30, 2022 and October 31, 2021, the carrying amount of cash equivalents approximated fair value due to the short period of time to maturity.

Time deposits were primarily issued by institutions outside of the U.S.

as of January 31, 2022 and October 31, 2021.

as of April 30, 2022 and October 31, 2021.

The estimated fair value of the available-for-sale debt investments may not be representative of values that will be realized in the future.

Contractual maturities of available-for-sale debt investments were as follows:

As of January 31, 2022

As of April 30, 2022

Amortized Cost Fair Value

Due in one year $ 1 $ 1

Due in one to five years 29 29

2 unchanged sentences

These non-marketable equity investments are carried either at fair value or under the measurement alternative.

The carrying amount of those non-marketable equity investments accounted for under the measurement alternative was $ 166 million and $ 253 million as of January 31, 2022 and October 31, 2021, respectively.

The carrying amount of those non-marketable equity investments accounted for under the fair value option was $ 264 million and $ 129 million as of January 31, 2022 and October 31, 2021, respectively.

During the three months ended January 31, 2022, the Company recorded an unrealized gain of $ 59 million on these investments.

The carrying amount of those non-marketable equity investments accounted for under the measurement alternative was $ 172 million and $ 253 million as of April 30, 2022 and October 31, 2021, respectively.

During the three and six months ended April 30, 2022, the Company recorded an immaterial impairment on these investments.

During the three and six months ended April 30, 2021, the Company recorded an unrealized gain of $ 25 million on these investments.

Table of Content

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements (Continued)

The carrying amount of those non-marketable equity investments accounted for under the fair value option was $ 309 million and $ 129 million as of April 30, 2022 and October 31, 2021, respectively.

During the three and six months ended April 30, 2022, the Company recorded an unrealized gain of $ 45 million and $ 104 million, respectively, on these investments.

During the three and six months ended April 30, 2021, the Company recorded an unrealized gain of $ 34 million on these investments.

Equity investments with readily determinable fair values are included in Long-term financing receivables and other assets in the Condensed Consolidated Balance Sheets.

The carrying amount of these investments was $ 42 million as of January 31, 2022 and $ 57 million as of October 31, 2021, respectively.

During the three months ended January 31, 2022, the Company recorded an unrealized loss of $ 14 million on these investments.

The carrying amount of these investments was $ 13 million as of April 30, 2022 and $ 57 million as of October 31, 2021, respectively.

During the three and six months ended April 30, 2022, the Company recorded an unrealized loss of $ 9 million and $ 23 million, respectively, on these investments.

During the three and six months ended April 30, 2021, the Company recognized an immaterial unrealized loss on these investments.

Investments in equity securities that are accounted for using the equity method are included in Investments in equity interests in the Condensed Consolidated Balance Sheets.

The carrying amount of these investments was $ 2.3 billion and $ 2.2 billion as of January 31, 2022 and October 31, 2021, respectively.

For the three months ended January 31, 2022 and 2021, the Company recorded earnings from equity interests of $ 31 million and $ 26 million on these investments, respectively.

The carrying amount of these investments was $ 2.3 billion and $ 2.2 billion as of April 30, 2022 and October 31, 2021, respectively.

During the three and six months ended April 30, 2022, the Company recorded earnings from equity interests of $ 33 million and $ 64 million, respectively, on these investments.

During the three and six months ended April 30, 2021, the Company recorded earnings from equity interests of $ 4 million and $ 30 million, respectively, on these investments.

Fair Value of Derivative Instruments in the Condensed Consolidated Balance Sheets

The gross notional and fair value of derivative instruments in the Condensed Consolidated Balance Sheets were as follows:

As of January 31, 2022 As of October 31, 2021

As of April 30, 2022 As of October 31, 2021

Fair Value Fair Value

22 unchanged sentences

The Company's derivative instruments are subject to master netting arrangements and collateral security arrangements.

The Company does not offset the fair value of its derivative instruments against the fair value of cash collateral posted under collateral security agreements.

The information related to the potential effect of the Company's use of the master netting agreements and collateral security agreements were as follows:

The Company does not offset the fair value of its derivative instruments against the fair value of cash collateral posted under

Table of Content

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements (Continued)

As of January 31, 2022

collateral security agreements.

The information related to the potential effect of the Company's use of the master netting agreements and collateral security agreements were as follows:

As of April 30, 2022

In the Condensed Consolidated Balance Sheets

19 unchanged sentences

(2) Represents the collateral posted by the Company in cash or through the re-use of counterparty cash collateral as of the respective reporting date for the Company's liability position, net of derivative amounts that could be offset, as of, generally, two business days prior to the respective reporting date.

As of January 31, 2022 and October 31, 2021, the entire amount of the collateral posted of $ 5 million was through the re-use of counterparty collateral.

As of April 30, 2022 and October 31, 2021, the entire amount of the collateral posted of $ 35 million and $ 5 million, respectively, was through the re-use of counterparty collateral.

The amounts recorded on the Condensed Consolidated Balance Sheets related to cumulative basis adjustments for fair value hedges were as follows:

Carrying amount of the hedged assets/ (liabilities) Cumulative amount of fair value hedging adjustment included in the carrying amount of the hedged assets/ (liabilities)

January 31, 2022 October 31, 2021 January 31, 2022 October 31, 2021

April 30, 2022 October 31, 2021 April 30, 2022 October 31, 2021

In millions In millions

6 unchanged sentences

Gains (Losses) Recognized in OCI on Derivatives

For the three months ended January 31,

For the three months ended April 30, For the six months ended April 30,

2022 2021 2022 2021

Derivatives in Cash Flow Hedging relationship

3 unchanged sentences

Total $ 357 $ 42 $ 583 $ ( 361 )

As of January 31, 2022, the Company expects to reclassify an estimated net accumulated other comprehensive gain of approximately $ 88 million, net of taxes, to earnings in the next twelve months along with the earnings effects of the related forecasted transactions associated with cash flow hedges.

As of April 30, 2022, the Company expects to reclassify an estimated net accumulated other comprehensive gain of approximately $ 167 million, net of taxes, to earnings in the next twelve months along with the earnings effects of the related forecasted transactions associated with cash flow hedges.

Table of Content

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

Effect of Derivative Instruments on the Condensed Consolidated Statements of Earnings

1 unchanged sentence

Gains (Losses) Recognized in Income

For the three months ended January 31,

Net revenue Interest and other, net Net revenue Interest and other, net

For the three months ended April 30, For the six months ended April 30,

2022 2021 2022 2021

Net revenue Interest and other, net Net revenue Interest and other, net Net revenue Interest and other, net Net revenue Interest and other, net

Total amounts of income and expense line items presented in the Condensed Consolidated Statements of Earnings in which the effects of fair value hedges, cash flow hedges and derivatives not designated as hedging instruments are recorded $ 6,713 $ — $ 6,700 $ ( 11 ) $ 13,674 $ ( 5 ) $ 13,533 $ ( 55 )

17 unchanged sentences

Notes payable, short-term borrowings, including the current portion of long-term debt, and long-terms debt were as follows:

January 31, 2022 October 31, 2021

April 30, 2022 October 31, 2021

Current portion of long-term debt (1)

5 unchanged sentences

Total Debt $ 13,501 $ 13,448

(1) As of January 31, 2022, the Current portion of long-term debt, net of discount and issuance costs, includes $ 1.5 billion associated with the asset-backed debt securities issued by the Company.

Asset-backed Debt Securities

In January 2022, the Company issued $ 1.0 billion of asset-backed debt securities in six tranches at a weighted average price of 99.99 % and a weighted average interest rate of 1.51 %, payable monthly from March 2022 with a stated final maturity date of November 2029.

(1) As of April 30, 2022, the Current portion of long-term debt, net of discount and issuance costs, includes $ 1.3 billion associated with the asset-backed debt securities issued by the Company.

Commercial Paper

8 unchanged sentences

In addition, the Hewlett Packard Enterprise subsidiary's euro Commercial Paper/Certificate of Deposit Program provides for the issuance of commercial paper in various currencies of up to a maximum aggregate principal amount of $ 1.0 billion.

As of January 31, 2022 and October 31, 2021, no borrowings were outstanding under the Parent Programs, and $ 693 million and $ 705 million, respectively, were outstanding under the subsidiary’s program.

As of April 30, 2022 and October 31, 2021, no borrowings were outstanding under the Parent Programs, and $ 630 million and $ 705 million, respectively, were outstanding under the subsidiary’s program.

Revolving Credit Facility

In December 2021, the Company terminated its prior senior unsecured revolving credit facility and entered into a new senior unsecured revolving credit facility with an aggregate lending commitment of $ 4.75 billion for a period of five years .

As of January 31, 2022 and October 31, 2021, no borrowings were outstanding under this credit facility.

Table of Content

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

As of April 30, 2022 and October 31, 2021, no borrowings were outstanding under this credit facility.

Stockholders' Equity

The components of Accumulated other comprehensive loss, net of taxes as of January 31, 2022, and changes during the three months ended January 31, 2022 were as follows:

The components of Accumulated other comprehensive loss, net of taxes as of April 30, 2022, and changes during the six months ended April 30, 2022 were as follows:

Net unrealized

10 unchanged sentences

Reclassifications of (gains) losses into earnings — ( 465 ) 83 — ( 382 )

Tax (provision) benefit — ( 2 ) ( 11 ) — ( 13 )

Tax provision — ( 21 ) ( 12 ) ( 1 ) ( 34 )

Balance at end of period $ 7 $ 155 $ ( 2,468 ) $ ( 503 ) $ ( 2,809 )

The components of Accumulated other comprehensive loss, net of taxes as of January 31, 2021, and changes during the three months ended January 31, 2021 were as follows:

Table of Content

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

The components of Accumulated other comprehensive loss, net of taxes as of April 30, 2021, and changes during the six months ended April 30, 2021 were as follows:

Net unrealized

9 unchanged sentences

Other comprehensive income (loss) before reclassifications ( 2 ) ( 284 ) 23 18 ( 245 )

Reclassifications of (gains) losses into earnings — 278 72 — 350

Tax (provision) benefit — 5 ( 5 ) ( 2 ) ( 2 )

Reclassifications of losses into earnings — 298 144 — 442

Tax provision — ( 5 ) ( 11 ) ( 4 ) ( 20 )

Balance at end of period $ 16 $ 2 $ ( 3,317 ) $ ( 463 ) $ ( 3,762 )

Share Repurchase Program

For the three months ended January 31, 2022, the Company repurchased and settled a total of 8.5 million shares under its share repurchase program through open market repurchases, which included 0.8 million shares that were unsettled open market repurchases as of October 31, 2021.

Additionally, as of January 31, 2022, the Company had unsettled open market repurchases of 0.1 million shares.

Shares repurchased during the three months ended January 31, 2022 were recorded as a $ 120 million reduction to stockholders' equity.

As of January 31, 2022, the Company had a remaining authorization of $ 1.8 billion for future share repurchases.

For the six months ended April 30, 2022, the Company repurchased and settled a total of 12 million shares under its share repurchase program through open market repurchases, which included 0.8 million shares that were unsettled open market repurchases as of October 31, 2021.

Additionally, as of April 30, 2022, the Company had unsettled open market repurchases of 0.1 million shares.

Shares repurchased during the six months ended April 30, 2022 were recorded as a $ 178 million reduction to stockholders' equity.

As of April 30, 2022, the Company had a remaining authorization of $ 1.7 billion for future share repurchases.

Net Earnings Per Share

1 unchanged sentence

Diluted net EPS includes the weighted-average dilutive effect of outstanding restricted stock units, stock options, and performance-based awards.

Table of Content

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

The reconciliations of the numerators and denominators of each of the basic and diluted net EPS calculations were as follows:

For the three months ended January 31,

For the three months ended April 30, For the six months ended April 30,

2022 2021 2022 2021

In millions, except per share amounts

8 unchanged sentences

(1) The Company excludes shares potentially issuable under employee stock plans that could dilute basic net EPS in the future from the calculation of diluted net earnings per share, as their effect, if included, would have been anti-dilutive for the periods presented.

Table of Content

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

Litigation and Contingencies

12 unchanged sentences

Nevertheless, cash flows or results of operations could be materially affected in any particular period by the resolution of one or more of these contingencies.

Hewlett Packard Enterprise believes it has recorded adequate provisions for any such matters and, as of January 31, 2022, it was not reasonably possible that a material loss had been incurred in connection with such matters in excess of the amounts recognized in its financial statements.

Hewlett Packard Enterprise believes it has recorded adequate provisions for any such matters and, as of April 30, 2022, it was not reasonably possible that a material loss had been incurred in connection with such matters in excess of the amounts recognized in its financial statements.

Litigation, Proceedings and Investigations

5 unchanged sentences

On July 2, 2019, the court denied HPE’s demurrer as to the claims of the putative class and granted HPE’s demurrer as to the claims of the individual plaintiffs.

Table of Content

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

India Directorate of Revenue Intelligence Proceedings .

10 unchanged sentences

In December 2013, HP India filed applications before the Customs Tribunal seeking early hearing of the appeals as well as an extension of the stay of deposit as to HP India and the individuals already granted until final disposition of the appeals.

On February 7, 2014, the application for extension of the stay of deposit was granted by the Customs Tribunal until disposal of the appeals.

On February 7, 2014, the application for extension of the stay

Table of Content

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

of deposit was granted by the Customs Tribunal until disposal of the appeals.

On October 27, 2014, the Customs Tribunal commenced hearings on the cross-appeals of the Commissioner's orders.

20 unchanged sentences

Plaintiffs also seek to certify a Rule 23 class under California law comprised of all persons 40 years or older employed by Defendants in the state of California and terminated pursuant to a WFR plan on or after August 18, 2012.

Following the filing of Plaintiffs' Fourth Amended Complaint, Plaintiffs filed a Motion for Preliminary Class Certification on

Table of Content

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

December 30, 2020.

Following the filing of Plaintiffs' Fourth Amended Complaint, Plaintiffs filed a Motion for Preliminary Class Certification on December 30, 2020.

On April 14, 2021, Plaintiffs’ Motion for Conditional Class Certification was granted.

1 unchanged sentence

The collective action excludes all individuals who signed a Waiver and General Release Agreement or an Agreement to Arbitrate Claims.

The Court-approved notice has been issued to potential class members.

The Court-approved notice was issued to potential class members and the opt-in period is now closed.

Hewlett-Packard Company v.

19 unchanged sentences

As of May 16, 2019, the renewed judgment is approximately $ 3.8 billion.

Daily interest on the renewed judgment is now accruing at $ 1 million and will be recorded upon receipt.

Daily interest on the renewed judgment is

Table of Content

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

now accruing at $ 1 million and will be recorded upon receipt.

On June 14, 2021, the California Court of Appeal affirmed the judgment of the trial court.

9 unchanged sentences

On January 27, 2022, Oracle filed a Petition for Writ of Certiorari asking the United States Supreme Court to grant review.

HPE's response to the petition is due April 1, 2022.

Review by the United States Supreme Court is discretionary, and we believe the likelihood the award of damages will be reduced or reversed is remote.

On May 16, 2022, the United States Supreme Court denied Oracle's Petition.

The matter is now closed.

Oracle America, Inc., et al.

10 unchanged sentences

On June 4, 2021, the Court issued an order denying HPE’s motion for summary judgment and granting-in-part Oracle’s motion for partial summary judgment as to a certain of HPE’s defenses.

The Court has rescheduled the start of trial to May 23, 2022.

Trial is scheduled to begin on May 23, 2022.

Q3 Networking Litigation.

On September 21 and September 22, 2020, Q3 Networking LLC filed complaints against HPE, Aruba Networks, Commscope and Netgear in the United States District Court for the District of Delaware and the United States International Trade Commission (“ITC”).

Table of Content

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

and hardware and software components thereof.” The ITC action was instituted on October 23, 2020.

Both complaints allege infringement of four patents, and the ITC complaint defines the “accused products” as “routers, access points, controllers, network management servers, other networking products, and hardware and software components thereof.” The ITC action was instituted on October 23, 2020.

The District of Delaware action has been stayed pending resolution of the ITC action.

1 unchanged sentence

On December 7, 2021, the Administrative Law Judge issued his initial determination finding no violation of section 337 of the Tariff Act.

The ITC must decide whether to adopt the Administrative Law Judge’s findings or grant review of the initial determination no later than March 15, 2022.

On May 3, 2022, the ITC issued its Notice of Final Determination, affirming the initial determination and terminating the investigation.

Shared Litigation with HP Inc., DXC and Micro Focus

4 unchanged sentences

The Company's operations and products are or may in the future become subject to various federal, state, local and foreign laws and regulations concerning environmental protection, including laws addressing the discharge of pollutants into the air and water, the management and disposal of hazardous substances and wastes, the clean-up of contaminated sites, the substances and materials used in the Company's products, the energy consumption of products, services and operations and the operational or financial responsibility for recycling, treatment and disposal of those products.

This includes legislation that makes producers of electrical goods, including servers and networking equipment, financially responsible for specified collection, recycling, treatment and disposal of past and future covered products (sometimes referred to as "product take-back legislation").

This includes legislation that

Table of Content

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

makes producers of electrical goods, including servers and networking equipment, financially responsible for specified collection, recycling, treatment and disposal of past and future covered products (sometimes referred to as "product take-back legislation").

The Company could incur substantial costs, its products could be restricted from entering certain jurisdictions, and it could face other sanctions, if it were to violate or become liable under environmental laws, including those related to addressing climate change and other environmental, social, and governance-related issues, or if its products become non-compliant with such environmental laws.

5 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements