What changed in this filing

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Item 1. Financial Statements

2022-09-01 compared with 2022-06-03 · 222 added, 207 removed, 955 unchanged (31% of the section changed)

Financial Statements

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)

Condensed Consolidated Statements of Earnings for the three and nine months ended July 3 1 , 2022 and 2021 (Unaudited)

Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended July 3 1 , 2022 and 2021 (Unaudited)

Condensed Consolidated Balance Sheets as of July 3 1 , 2022 (Unaudited) and October 31, 2021 (Audited)

Condensed Consolidated Statements of Cash Flows for the nine months ended July 3 1 , 2022 and 2021 (Unaudited)

Condensed Consolidated Statements of Stockholders' Equity for the three and nine months ended July 3 1 , 2022 and 2021 (Unaudited)

Notes to Condensed Consolidated Financial Statements (Unaudited)

13 unchanged sentences

Condensed Consolidated Statements of Earnings

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

For the three months ended July 31, For the nine months ended July 31,

2022 2021 2022 2021

8 unchanged sentences

Financing cost 54 51 248 164

148 54 194 113

Research and development 509 506 1,530 1,477

19 unchanged sentences

Diluted 1,323 1,338 1,326 1,328

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

For the three months ended July 31, For the nine months ended July 31,

2022 2021 2022 2021

Net earnings $ 409 $ 392 $ 1,172 $ 874

Other comprehensive income before taxes:

Change in net unrealized gains (losses) on available-for-sale securities:

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

Other comprehensive (loss) income before taxes:

Change in net unrealized (losses) gains on available-for-sale securities:

Net unrealized (losses) gains arising during the period ( 3 ) 1 ( 11 ) ( 1 )

( 3 ) 1 ( 11 ) ( 1 )

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

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

Net unrealized gains (losses) arising during the period 163 101 723 ( 183 )

Net (gains) losses reclassified into earnings ( 215 ) ( 36 ) ( 680 ) 262

( 52 ) 65 43 79

Change in unrealized components of defined benefit plans:

Net unrealized gains (losses) arising during the period — 23 6 23

Net unrealized gains arising during the period — 6 6 29

Amortization of net actuarial loss and prior service benefit 39 70 120 212

Curtailments, settlements and other 1 1 2 2

Settlements and other — — 2 2

39 76 128 243

Change in cumulative translation adjustment ( 45 ) 2 ( 81 ) 20

Other comprehensive income before taxes 90 152 140 197

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

Other comprehensive income, net of taxes 69 134 106 177

Other comprehensive (loss) income before taxes ( 61 ) 144 79 341

Benefit (provision) for taxes 8 ( 13 ) ( 26 ) ( 33 )

Other comprehensive (loss) income, net of taxes ( 53 ) 131 53 308

Comprehensive income $ 356 $ 523 $ 1,225 $ 1,182

3 unchanged sentences

Condensed Consolidated Balance Sheets

April 30, 2022 October 31, 2021

July 31, 2022 October 31, 2021

(Unaudited) (Audited)

29 unchanged sentences

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

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

1,288 and 1,295 shares issued and outstanding at July 31, 2022 and October 31, 2021, respectively)

Additional paid-in capital 28,351 28,470

9 unchanged sentences

Condensed Consolidated Statements of Cash Flows (Unaudited)

For the six months ended April 30,

For the nine months ended July 31,

Cash flows from operating activities:

7 unchanged sentences

Earnings from equity interests ( 132 ) ( 109 )

Dividends received from equity investees 38 38

Other, net ( 6 ) 117

26 unchanged sentences

Net cash used in financing activities ( 216 ) ( 167 )

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

Increase in cash, cash equivalents and restricted cash 117 1,031

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

4 unchanged sentences

Condensed Consolidated Statements of Stockholders' Equity (Unaudited)

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

For the three months ended July 31, 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

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

Net earnings 409 409 3 412

Other comprehensive income 69 69 69

Other comprehensive loss ( 53 ) ( 53 ) ( 53 )

Comprehensive income 356 3 359

5 unchanged sentences

( 156 ) ( 156 ) ( 156 )

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

Balance at July 31, 2022 1,288,219 $ 13 $ 28,351 $ ( 4,891 ) $ ( 2,862 ) $ 20,611 $ 53 $ 20,664

) 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

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

Comprehensive

11 unchanged sentences

( 467 ) ( 467 ) ( 467 )

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

Balance at July 31, 2022 1,288,219 $ 13 $ 28,351 $ ( 4,891 ) $ ( 2,862 ) $ 20,611 $ 53 $ 20,664

Table of Content

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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

For the three months ended July 31, 2021 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, 2021 1,300,496 $ 13 $ 28,427 $ ( 8,332 ) $ ( 3,896 ) $ 16,212 $ 47 $ 16,259

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

Net earnings 392 392 2 394

6 unchanged sentences

( 157 ) ( 157 ) ( 157 )

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

Balance at July 31, 2021 1,307,063 $ 13 $ 28,632 $ ( 7,994 ) $ ( 3,631 ) $ 17,020 $ 53 $ 17,073

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

Comprehensive

11 unchanged sentences

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

Balance at July 31, 2021 1,307,063 $ 13 $ 28,632 $ ( 7,994 ) $ ( 3,631 ) $ 17,020 $ 53 $ 17,073

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

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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 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.

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 July 31, 2022 and October 31, 2021, its results of operations for the three and nine months ended July 31, 2022 and 2021, its cash flows for the nine months ended July 31, 2022 and 2021, and its statements of stockholders' equity for the three and nine months ended July 31, 2022 and 2021.

The results of operations for the three and nine months ended July 31, 2022 and the cash flows for the nine months ended July 31, 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.

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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 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.

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 nine months ended July 31, 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.

On August 15, 2022, the Company redeemed $ 1.35 billion of 4.40 % Senior Notes with an original maturity date of October 15, 2022, utilizing the par call option on the debt, with no redemption penalties.

Russia/Ukraine Conflict

1 unchanged sentence

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

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 is proceeding with an orderly, managed exit of its remaining business in these countries.

Table of Content

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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.

During the three months ended July 31, 2022, the Company recorded total pre-tax charges of $ 36 million primarily related to employee severance and abandoned assets, $ 6 million of which was included in Cost of services and $ 30 million in Disaster charges in the Condensed Consolidated Statement of Earnings.

The Company recorded $ 16 million of net income tax charges, primarily as a result of recording a valuation allowance on deferred taxes, in the Provision for taxes in the Condensed Consolidated Statement of Earnings in connection with these charges.

During the nine months ended July 31, 2022, the Company recorded total pre-tax charges of $ 162 million primarily related to expected credit losses of financing and trade receivables, employee severance and abandoned assets, $ 99 million of which was included in Financing cost, $ 12 million in Cost of services and $ 51 million in Disaster charges in the Condensed Consolidated Statements of Earnings.

The Company recorded $ 9 million of net income tax benefit in the Provision for taxes in the Condensed Consolidated Statement of Earnings related to these charges.

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

11 unchanged sentences

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

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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 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;

HPC & AI offerings also include operational and support services and solutions delivered as-a-service through the 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 Disaggregated HCI and HPE SimpliVity;

primary storage with HPE Alletra, HPE Primera, HPE Nimble Storage, and HPE 3PAR Storage for mission-critical and general-purpose workloads;

data protection services and software with HPE Backup and Recovery Service;

data protection services and software with HPE Backup and Recovery Service, including Zerto.

The portfolio also includes HPE Recovery Manager Central, HPE StoreOnce, HPE Cloud Volumes Backup and Big Data solutions running on Apollo servers.

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 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 edge-to-cloud platform 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.

Storage offerings also include operational and support services, software subscription services, and solutions delivered as-a-service through the 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, network security, and associated services to enable secure connectivity for businesses of any size.

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

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 the HPE GreenLake edge-to-cloud platform for the Intelligent Edge portfolio of products.

Intelligence Edge offerings are consolidated in the Edge Service Platform ("Aruba ESP") which provides customers a unified framework to meet their connectivity and security requirements across campus, branch, data center, and remote worker environments.

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 platform.

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

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;

13 unchanged sentences

Investments and Other Total

Three months ended April 30, 2022

Three months ended July 31, 2022

Net revenue $ 2,955 $ 806 $ 1,137 $ 940 $ 813 $ 300 $ 6,951

2 unchanged sentences

Segment earnings (loss) from operations $ 400 $ 28 $ 169 $ 155 $ 96 $ ( 31 ) $ 817

Three months ended April 30, 2021

Three months ended July 31, 2021

Net revenue (1)

4 unchanged sentences

$ 346 $ 28 $ 177 $ 140 $ 94 $ ( 28 ) $ 757

Six months ended April 30, 2022

Nine months ended July 31, 2022

Net revenue $ 8,864 $ 2,269 $ 3,363 $ 2,704 $ 2,474 $ 951 $ 20,625

2 unchanged sentences

Segment earnings (loss) from operations $ 1,231 $ ( 19 ) $ 475 $ 421 $ 304 $ ( 66 ) $ 2,346

Six months ended April 30, 2021

Nine months ended July 31, 2021

Net revenue (1)

10 unchanged sentences

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

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

For the three months ended July 31, For the nine months ended July 31,

2022 2021 2022 2021

17 unchanged sentences

Total earnings before provision for taxes $ 464 $ 406 $ 1,233 $ 899

(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.

(1) During the three and nine months ended July 31, 2022, the Company recorded total pre-tax charges of $ 36 million and $ 162 million, respectively, primarily related to the Company's exit from its Russia and Belarus businesses.

During the nine months ended July 31, 2022, Disaster charges also included a recovery of $ 2 million, related to COVID-19.

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 .

2 unchanged sentences

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

July 31, 2022 October 31, 2021

Compute $ 16,699 $ 16,000

11 unchanged sentences

Net revenue by geographic region was as follows:

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

For the three months ended July 31, For the nine months ended July 31,

2022 2021 2022 2021

17 unchanged sentences

Cost Optimization and Prioritization Plan

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,

For the three months ended July 31, For the nine months ended July 31,

2022 2021 2022 2021

6 unchanged sentences

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,

During the three and nine months ended July 31, 2022, $ 43 million and $ 131 million, respectively, were recorded within Transformation costs and no Non-service net periodic benefit credit related to Cost Optimization and Prioritization Plan was recorded in the Condensed Consolidated Statements of Earnings.

During the three and nine months ended July 31, 2021, $ 146 million and $ 549 million, respectively, were recorded within Transformation costs, and $ 1 million and $ 3 million, respectively, were recorded within Non-service net periodic benefit credit in the Condensed Consolidated Statements of Earnings.

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

For the three months ended July 31, For the nine months ended July 31,

2022 2021 2022 2021

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Non-cash items ( 18 ) ( 10 ) ( 2 ) —

Liability as of April 30, 2022

Liability as of July 31, 2022

$ 139 $ 124 $ 16 $ 23

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

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

$ 559 $ 462 $ 1,261 $ 255

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

Total expected costs to be incurred as of July 31, 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.

As of July 31, 2022, restructuring actions related to employee severance, infrastructure and other under the HPE Next plan are substantially complete.

The current restructuring liability related to the transformation programs, reported in Condensed Consolidated Balance Sheets as of July 31, 2022 and October 31, 2021, was $ 158 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 July 31, 2022 and October 31, 2021, was $ 119 million and $ 180 million, respectively.

Table of Content

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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 April 30, For the six months ended April 30,

For the three months ended July 31, For the nine months ended July 31,

2022 2021 2022 2021

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Provision for Taxes

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.

For the three months ended July 31, 2022 and 2021, the Company recorded income tax expense of $ 55 million and $ 14 million, respectively, which reflects an effective tax rate of 11.9 % and 3.4 %, respectively.

For the nine months ended July 31, 2022 and 2021, the Company recorded income tax expense of $ 61 million and $ 25 million, respectively, which reflects an effective tax rate of 5.0 % and 2.8 %, 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 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.

For the three and nine months ended July 31, 2022, the Company recorded $ 71 million and $ 192 million of net income tax benefits, respectively, related to various items discrete to the period.

For the three months ended July 31, 2022, this amount primarily included $ 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., $ 18 million of income tax benefits related to transformation costs, acquisition, disposition and other related charges, $ 12 million of income tax benefits as a result of the fiscal 2021 U.S.

tax return filing primarily from the decrease in Global Intangible Low Taxed Income ("GILTI"), and $ 6 million of net income tax benefits related to the settlement of foreign tax audit matters, partially offset by $ 16 million of net income tax charges related to the Company's exit from its Russia business, primarily as a result of recording a valuation allowance on deferred taxes.

For the nine months ended July 31, 2022, this amount primarily included $ 64 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, $ 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., $ 12 million of net income tax benefits related to the settlement of foreign tax audit matters, $ 12 million of income tax benefits as a result of the fiscal 2021 U.S.

tax return filing primarily from the decrease in GILTI, and $ 9 million of net income tax benefits on pre-tax charges incurred related to the Russia/Ukraine conflict.

For the three and nine months ended July 31, 2021, the Company recorded $ 99 million and $ 222 million of net income tax benefits, respectively, related to various items discrete to the period.

For the three months ended July 31, 2021, this amount primarily included $ 88 million of deferred income tax benefits related to tax law changes and $ 31 million of income tax benefits related to transformation costs, and acquisition, disposition and other related charges, partially offset by income tax charges related to the recovery of social contribution taxes in Brazil of $ 28 million.

For the nine months ended July 31, 2021, this amount primarily included $ 138 million of income tax benefits related to transformation costs, and acquisition, disposition and other related charges, $ 88 million of deferred income tax benefits related to tax law changes, and $ 30 million of income tax benefits related to the change in tax liabilities, primarily those for which the Company shared joint and several liability with HP

Table of Content

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Notes to Condensed Consolidated Financial Statements (Continued)

and for which the Company was indemnified by HP Inc., partially offset by income tax charges related to the recovery of social contribution taxes in Brazil of $ 28 million.

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.

As of July 31, 2022 and October 31, 2021, the amount of unrecognized tax benefits was $ 600 million and $ 2.1 billion, respectively, of which up to $ 350 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.

1 unchanged sentence

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 Company recognized interest income of $ 4 million and interest expense of $ 5 million for the three months ended July 31, 2022 and 2021, respectively, and interest income of $ 41 million and interest expense of $ 17 million for the nine months ended July 31, 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.

As of July 31, 2022 and October 31, 2021, the Company had accrued $ 95 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.

The Company does not expect complete resolution of any IRS audit cycle within the next 12 months.

However, it is reasonably possible that certain federal, foreign, and state tax issues may be concluded in the next 12 months, including issues involving resolution of certain intercompany transactions, joint and several tax liabilities, and other matters.

Accordingly, the Company believes it is reasonably possible that its existing unrecognized tax benefits may be reduced by an amount up to $ 17 million within the next 12 months.

1 unchanged sentence

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

April 30, 2022 October 31, 2021

July 31, 2022 October 31, 2021

Deferred tax assets $ 1,990 $ 2,023

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Cash, cash equivalents and restricted cash

April 30, 2022 October 31, 2021

July 31, 2022 October 31, 2021

Cash and cash equivalents $ 3,762 $ 3,996

5 unchanged sentences

Notes to Condensed Consolidated Financial Statements (Continued)

April 30, 2022 October 31, 2021

July 31, 2022 October 31, 2021

Finished goods $ 1,950 $ 1,593

2 unchanged sentences

Property, Plant and Equipment

April 30, 2022 October 31, 2021

July 31, 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 six months ended April 30, 2022

For the nine months ended July 31, 2022

Balance at beginning of period $ 327

6 unchanged sentences

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

April 30, 2022 October 31, 2021

July 31, 2022 October 31, 2021

Accounts receivable $ 3,157 $ 3,796

5 unchanged sentences

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

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

July 31, 2022 October 31, 2021

Balance at beginning of period $ 23 $ 46

4 unchanged sentences

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 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.

During the three months ended July 31, 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 $ 123 million and $ 65 million within Notes payable and short-term borrowings in its Condensed Consolidated Balance Sheets as of July 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.

Contract Liabilities

Contract liabilities consist of deferred 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.

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

During the nine months ended July 31, 2022, approximately $ 2.6 billion of the deferred revenue as of October 31, 2021 was recognized as revenue.

Remaining Performance Obligations

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Remaining performance obligations consist of deferred revenue.

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

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

The Company expects to recognize approximately 21 % of this amount as revenue over the remainder of the fiscal year.

Costs to Obtain a Contract

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 July 31, 2022, the current and non-current portions of the capitalized costs to obtain a contract were $ 72 million and $ 115 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 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.

For the three and nine months ended July 31, 2022, the Company amortized $ 21 million and $ 62 million respectively, of capitalized costs to obtain a contract.

For the three and nine months ended July 31, 2021 the Company amortized $ 16 million and $ 48 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.

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Notes to Condensed Consolidated Financial Statements (Continued)

April 30, 2022 October 31, 2021

July 31, 2022 October 31, 2021

Minimum lease payments receivable $ 8,861 $ 9,526

7 unchanged sentences

Amounts due after one year, net $ 4,609 $ 5,038

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

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

July 31, 2022 October 31, 2021

Fiscal year In millions

9 unchanged sentences

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

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.

During the nine months ended July 31, 2022 and the fiscal year ended October 31, 2021, the Company sold $ 31 million and $ 142 million of financing receivables, respectively.

Credit Quality Indicators

7 unchanged sentences

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

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

As of July 31, 2022

Low Moderate High

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Allowance for Credit Losses

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

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

July 31, 2022 October 31, 2021

Balance at beginning of period $ 228 $ 154

4 unchanged sentences

Balance at end of period $ 335 $ 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.

(1) The nine months ended July 31, 2022, includes a provision of $ 99 million related to expected credit losses due to the Company's exit from its Russia and Belarus businesses.

Table of Content

3 unchanged sentences

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

April 30, 2022 October 31, 2021

July 31, 2022 October 31, 2021

Current and past due 1-30 days $ 358 $ 410

10 unchanged sentences

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

April 30, 2022 October 31, 2021

July 31, 2022 October 31, 2021

Equipment leased to customers $ 6,755 $ 7,039

2 unchanged sentences

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

April 30, 2022

July 31, 2022

Fiscal year In millions

7 unchanged sentences

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

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

For the three months ended July 31, For the nine months ended July 31,

2022 2021 2022 2021

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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.

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 following table presents the assets and liabilities held by the consolidated VIE as of July 31, 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.

April 30, 2022 October 31, 2021

July 31, 2022 October 31, 2021

Assets held by VIE In millions

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Long-term debt, net of unamortized debt issuance costs $ 1,264 $ 950

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.

Financing receivables transferred via securitization through the SPE were $ 1.2 billion for the nine months ended July 31, 2022 and $ 1.1 billion for the fiscal year ended October 31, 2021.

Leased equipment transferred via securitization through the SPE was $ 761 million for the nine months ended July 31, 2022 and $ 720 million for the fiscal year ended October 31, 2021.

Table of Content

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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:

As of July 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:

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.

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

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 April 30, 2022 and October 31, 2021

Balance at October 31, 2021

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

Goodwill adjustments — 2 — — — — 2

Balance at July 31, 2022

$ 7,532 $ 3,704 $ 4,160 $ 2,555 $ 144 $ 213 $ 18,308

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.

The HPC & AI reporting unit relies significantly on the income approach which estimates the fair value based on the present value of future cash flows.

The HPC & AI business is facing challenges reflected in the results for the nine months ended July 31, 2022.

The challenges are primarily related to supply chain constraints and other operational challenges impacting the Company’s ability to achieve certain customer acceptance milestones required for revenue recognition and resulting cost increases associated with fulfilling contracts over longer than originally anticipated timelines.

The Company currently believes these challenges will be successfully addressed when supply chain constraints ease.

Our annual goodwill impairment test is performed during the fourth quarter in conjunction with completion of our annual long-term business plan.

If the global macroeconomic or geopolitical conditions worsen, projected revenue growth rates or operating margins decline, weighted average cost of capital increases, or if the Company has significant or sustained decline in its stock price, it is possible its estimates about the HPC & AI reporting unit's ability to successfully address the current challenges may change, which could result in the carrying value of the HPC & AI reporting unit exceeding its estimated fair value and a potentially material impairment charge.

As of the annual test date in fiscal 2021, the Software reporting unit had goodwill of $ 213 million and an excess of fair value over carrying value of net assets of 62 %.

The Software reporting unit relies significantly on the market approach, which is impacted by market volatility.

Since our last annual test, the equity market valuations impacting this test have decreased.

If global macroeconomic or geopolitical conditions worsen and cause a further significant equity market downturn, it is possible we may determine the carrying value of the Software reporting unit exceeds its estimated fair value.

Such a determination could result in a potentially material impairment charge.

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.

5 unchanged sentences

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

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

As of July 31, 2022 As of October 31, 2021

Measured Using Fair Value

20 unchanged sentences

Foreign exchange contracts — 121 — 121 — 127 — 127

Other derivatives — 7 — 7 — — — —

Total liabilities $ — $ 195 $ — $ 195 $ — $ 127 $ — $ 127

1 unchanged sentence

Short-Term and Long-Term Debt:

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.

As of July 31, 2022 and October 31, 2021, the estimated fair value of the Company's short-term and long-term debt was $ 14.0 billion and $ 14.6 billion, respectively.

As of July 31, 2022 and October 31, 2021, the carrying value of the Company's short-term and long-term debt was $ 13.9 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 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.

The Company recognized a gain of $ 25 million in Interest and other, net in the Condensed Consolidated Statements of Earnings, for the nine months ended July 31, 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.

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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.

During the three months ended July 31, 2022, the Company recorded a ROU asset impairment charge of $ 8 million.

During the nine months ended July 31, 2022, the Company recorded a net gain of $ 4 million primarily due to a lease termination.

During the three and nine months ended July 31, 2021, the Company recorded a ROU asset impairment charge of $ 4 million and $ 72 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.

3 unchanged sentences

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

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

As of July 31, 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 96 3 99 108 14 122

2 unchanged sentences

Total cash equivalents and available-for-sale debt investments $ 1,970 $ 4 $ 1,974 $ 2,450 $ 15 $ 2,465

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.

As of July 31, 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 April 30, 2022 and October 31, 2021.

as of July 31, 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 April 30, 2022

As of July 31, 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 $ 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.

The carrying amount of those non-marketable equity investments accounted for under the measurement alternative was $ 187 million and $ 253 million as of July 31, 2022 and October 31, 2021, respectively.

During the nine months ended July 31, 2021, the Company recorded an unrealized gain of $ 25 million on these investments.

The carrying amount of those non-marketable equity investments accounted for under the fair value option was $ 137 million and $ 129 million as of July 31, 2022 and October 31, 2021, respectively.

During the three and nine months ended July 31, 2022, the Company recorded an unrealized loss of $ 7 million and unrealized gain of $ 97 million, respectively, on these investments.

During the three and nine months ended July 31, 2022, the Company completed the sale of an equity investment

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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.

accounted for under the fair value option for $ 165 million.

During the nine months ended July 31, 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 $ 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.

There were no equity investments with readily determinable fair values as of July 31, 2022 as the Company completed the sale of these investments.

The carrying amount of these investments was $ 57 million as of October 31, 2021.

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 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.

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

During the three and nine months ended July 31, 2022, the Company recorded earnings from equity interests of $ 68 million and $ 132 million, respectively, on these investments.

During the three and nine months ended July 31, 2021, the Company recorded earnings from equity interests of $ 79 million and $ 109 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 April 30, 2022 As of October 31, 2021

As of July 31, 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

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:

Table of Content

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements (Continued)

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

As of July 31, 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 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.

As of July 31, 2022 and October 31, 2021, the entire amount of the collateral posted of $ 22 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)

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

July 31, 2022 October 31, 2021 July 31, 2022 October 31, 2021

In millions In millions

1 unchanged sentence

Long-term debt $ ( 2,423 ) $ ( 2,573 ) $ 71 $ ( 80 )

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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

The pre-tax effect of derivative instruments in cash flow and net investment hedging relationships recognized in Other Comprehensive Income ("OCI") were as follows:

Gains (Losses) Recognized in OCI on Derivatives

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

For the three months ended July 31, For the nine months ended July 31,

2022 2021 2022 2021

4 unchanged sentences

Total $ 193 $ 117 $ 776 $ ( 244 )

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

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements (Continued)

As of July 31, 2022, the Company expects to reclassify an estimated net accumulated other comprehensive gain of approximately $ 124 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.

Effect of Derivative Instruments on the Condensed Consolidated Statements of Earnings

1 unchanged sentence

Gains (Losses) Recognized in Income

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

For the three months ended July 31, For the nine months ended July 31,

2022 2021 2022 2021

19 unchanged sentences

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

April 30, 2022 October 31, 2021

July 31, 2022 October 31, 2021

Current portion of long-term debt (1)

5 unchanged sentences

Total Debt $ 13,880 $ 13,448

(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.

(1) As of July 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

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 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.

As of July 31, 2022 and October 31, 2021, no borrowings were outstanding under the Parent Programs, and $ 635 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 April 30, 2022 and October 31, 2021, no borrowings were outstanding under this credit facility.

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

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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

Stockholders' Equity

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:

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

Net unrealized

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Balance at beginning of period $ 15 $ 81 $ ( 2,545 ) $ ( 466 ) $ ( 2,915 )

Other comprehensive income (loss) before reclassifications ( 8 ) 560 6 ( 36 ) 522

Other comprehensive (loss) income before reclassifications ( 11 ) 723 6 ( 81 ) 637

Reclassifications of (gains) losses into earnings — ( 680 ) 122 — ( 558 )

1 unchanged sentence

Balance at end of period $ 4 $ 113 $ ( 2,430 ) $ ( 549 ) $ ( 2,862 )

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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:

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

Net unrealized

8 unchanged sentences

Balance at beginning of period $ 18 $ ( 7 ) $ ( 3,473 ) $ ( 477 ) $ ( 3,939 )

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

Other comprehensive (loss) income before reclassifications ( 1 ) ( 183 ) 29 20 ( 135 )

Reclassifications of losses into earnings — 262 214 — 476

2 unchanged sentences

Share Repurchase Program

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.

For the nine months ended July 31, 2022, the Company repurchased and settled a total of 25.9 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 July 31, 2022, the Company had unsettled open market repurchases of 0.3 million shares.

Shares repurchased during the nine months ended July 31, 2022 were recorded as a $ 377 million reduction to stockholders' equity.

As of July 31, 2022, the Company had a remaining authorization of $ 1.5 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.

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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 April 30, For the six months ended April 30,

For the three months ended July 31, For the nine months ended July 31,

2022 2021 2022 2021

9 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.

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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 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.

Hewlett Packard Enterprise believes it has recorded adequate provisions for any such matters and, as of July 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.

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.

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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

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of deposit was granted by the Customs Tribunal until disposal 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 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 December 30, 2020.

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

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December 30, 2020.

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

23 unchanged sentences

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

Daily interest on the renewed judgment is

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

Daily interest on the renewed judgment is 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.

23 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.

Trial is scheduled to begin on May 23, 2022.

Trial began on May 23, 2022.

On June 15, 2022, the jury returned its verdict, awarding $ 30 million in compensatory damages to Oracle and rejecting Oracle’s request for punitive damages.

Judgment has not yet been entered by the Court as the parties are engaged in post-verdict motion practice on multiple issues, including HPE’s Motion for Judgment as a Matter of Law and Oracle’s request for an award of prejudgment interest and attorneys’ fees.

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Notes to Condensed Consolidated Financial Statements (Continued)

Q3 Networking Litigation.

5 unchanged sentences

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

On June 18, 2022, Q3 Networking filed a petition for review of the ITC ruling with the United States Court of Appeals for the Federal Circuit.

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

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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 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.

4 unchanged sentences

The Company is also contractually obligated to make financial contributions to address actions related to certain environmental liabilities, both ongoing and arising in the future, pursuant to its Separation and Distribution Agreement with HP Inc.

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Unconditional Purchase Obligations

As of July 31, 2022, the Company had unconditional purchase obligations of approximately $ 1.7 billion.

These unconditional purchase obligations include agreements to purchase goods or services that are enforceable and legally binding on the Company and that specify all significant terms, including fixed or minimum quantities to be purchased, fixed, minimum or variable price provisions and the approximate timing of the transaction, as well as settlements that the Company has reached with third parties, requiring it to pay determined amounts over a specified period of time.

These unconditional purchase obligations are related principally to inventory purchases, software maintenance and support services and other items.

Unconditional purchase obligations exclude agreements that are cancellable without penalty.

The Company expects the commitments to total $ 208 million, $ 377 million, $ 167 million, $ 261 million, $ 301 million, and $ 342 million for the remainder of fiscal year 2022, fiscal years 2023, 2024, 2025, 2026, and thereafter, respectively.

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