What changed in this filing

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Item 1. Financial Statements

2023-06-02 compared with 2023-03-07 · 336 added, 252 removed, 767 unchanged (43% of the section changed)

Financial Statements.

Condensed Consolidated Statements of Earnings for the three months ended January 31, 202 3 and 202 2 (Unaudited)

Condensed Consolidated Statements of Comprehensive Income for the three months ended J anuary 31, 202 3 and 202 2 (Unaudited)

Condensed Consolidated Balance Sheets as of J anuary 31, 202 3 (Unaudited) and October 31, 202 2 (Audited)

Condensed Consolidated Statements of Cash Flows for the three months ended J anuary 31, 202 3 and 202 2 (Unaudited)

Condensed Consolidated Statements of Stockholders' Equity for the three months ended J anuary 31, 202 3 and 202 2 (Unaudited)

Condensed Consolidated Statements of Earnings for the three and six months ended April 30, 2023 and 2022 (Unaudited)

Condensed Consolidated Statements of Comprehensive Income for the three and six months ended April 3 0 , 2023 and 2022 (Unaudited)

Condensed Consolidated Balance Sheets as of April 3 0 , 2023 (Unaudited) and October 31, 2022 (Audited)

Condensed Consolidated Statements of Cash Flows for the six months ended Apri l 3 0 , 2023 and 2022 (Unaudited)

Condensed Consolidated Statements of Stockholders' Equity for the three and six months ended April 3 0 , 2023 and 2022 (Unaudited)

Notes to Condensed Consolidated Financial Statements (Unaudited)

10 unchanged sentences

Litigation, Contingencies, and Commitments

E quity Method Investment s

Equity Method Investments

Subsequent Events

2 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,

2023 2022 2023 2022

In millions, except per share amounts

6 unchanged sentences

Cost of services (1)

1,633 1,558 3,246 3,113

Financing cost (1)

90 148 168 194

Research and development 570 517 1,193 1,021

2 unchanged sentences

Transformation costs 60 98 162 209

Disaster charges (recovery) 1 ( 1 )

Disaster charges (1)

Acquisition, disposition and other related charges 19 8 30 16

5 unchanged sentences

Earnings from equity interests 49 33 107 64

Earnings before (provision) benefit for taxes 623 493

(Provision) benefit for taxes ( 122 ) 20

Earnings before provision for taxes 522 276 1,145 769

Provision for taxes ( 104 ) ( 26 ) ( 226 ) ( 6 )

Net earnings $ 418 $ 250 $ 919 $ 763

5 unchanged sentences

Diluted 1,318 1,329 1,317 1,327

(1) The three and six months ended April 30, 2022 include amounts for expected credit loss reserves due to the Company's exit from its Russia and Belarus businesses.

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,

2023 2022 2023 2022

Net earnings $ 418 $ 250 $ 919 $ 763

Other comprehensive (loss) income before taxes:

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

Net unrealized gains (losses) arising during the period 5 ( 1 )

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

Other comprehensive income (loss) before taxes:

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

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

— ( 7 ) 5 ( 8 )

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

Net unrealized gains (losses) arising during the period 18 345 ( 500 ) 560

Net losses (gains) reclassified into earnings 39 ( 264 ) 286 ( 465 )

57 81 ( 214 ) 95

Change in unrealized components of defined benefit plans:

3 unchanged sentences

Change in cumulative translation adjustment ( 1 ) ( 25 ) 19 ( 36 )

Other comprehensive (loss) income before taxes ( 211 ) 50

Benefit (provision) for taxes 53 ( 13 )

Other comprehensive (loss) income, net of taxes ( 158 ) 37

Other comprehensive income (loss) before taxes 92 90 ( 119 ) 140

(Provision) benefit for taxes ( 14 ) ( 21 ) 39 ( 34 )

Other comprehensive income (loss), net of taxes 78 69 ( 80 ) 106

Comprehensive income $ 496 $ 319 $ 839 $ 869

3 unchanged sentences

Condensed Consolidated Balance Sheets

January 31, 2023 October 31, 2022

April 30, 2023 October 31, 2022

(Unaudited) (Audited)

29 unchanged sentences

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

1,297 and 1,281 shares issued and outstanding at January 31, 2023 and October 31, 2022, respectively)

1,292 and 1,281 shares issued and outstanding at April 30, 2023 and October 31, 2022, respectively)

Additional paid-in capital 28,274 28,299

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:

3 unchanged sentences

Stock-based compensation expense 266 242

Provision for inventory and doubtful accounts 45 46

Provision for inventory and credit losses 97 213

Restructuring charges 95 68

10 unchanged sentences

Other assets and liabilities 307 ( 1,002 )

Net cash used in operating activities ( 829 ) ( 76 )

Net cash provided by operating activities 60 303

Cash flows from investing activities:

11 unchanged sentences

Payment of debt ( 2,428 ) ( 1,340 )

Settlement of cash flow hedge ( 2 ) —

Net payments related to stock-based award activities ( 106 ) ( 60 )

1 unchanged sentence

Cash dividends paid to shareholders ( 311 ) ( 311 )

Net cash provided by financing activities 9 355

Net cash provided by (used in) financing activities 163 ( 260 )

Effect of exchange rate changes on cash, cash equivalents, and restricted cash 139 —

6 unchanged sentences

Condensed Consolidated Statements of Stockholders' Equity (Unaudited)

For the three months ended January 31, 2023 Number of Shares Par Value Additional Paid-in Capital Accumulated Deficit Accumulated

For the three months ended April 30, 2023 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, 2023 1,296,884 $ 13 $ 28,259 $ ( 5,005 ) $ ( 3,256 ) $ 20,011 $ 52 $ 20,063

Net earnings 418 418 3 421

Other comprehensive gain 78 78 78

Comprehensive income 496 3 499

Stock-based compensation expense 126 126 126

Tax withholding related to vesting of employee stock plans ( 6 ) ( 6 ) ( 6 )

Issuance of common stock in connection with employee stock plans and other 1,783 2 ( 1 ) 1 1

Repurchases of common stock ( 7,164 ) ( 107 ) ( 107 ) ( 107 )

Cash dividends declared ($ 0.12 per share)

( 155 ) ( 155 ) ( 155 )

Balance at April 30, 2023 1,291,503 $ 13 $ 28,274 $ ( 4,743 ) $ ( 3,178 ) $ 20,366 $ 55 $ 20,421

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

For the six months ended April 30, 2023 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, 2022 1,281,037 $ 13 $ 28,299 $ ( 5,350 ) $ ( 3,098 ) $ 19,864 $ 45 $ 19,909

8 unchanged sentences

( 311 ) ( 311 ) ( 311 )

Balance at April 30, 2023 1,291,503 $ 13 $ 28,274 $ ( 4,743 ) $ ( 3,178 ) $ 20,366 $ 55 $ 20,421

Table of Content

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

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

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

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

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

Comprehensive

11 unchanged sentences

( 311 ) ( 311 ) ( 311 )

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

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 January 31, 2023 and October 31, 2022, its results of operations for the three months ended January 31, 2023 and 2022, its cash flows for the three months ended January 31, 2023 and 2022, and its statements of stockholders' equity for the three months ended January 31, 2023 and 2022.

The results of operations and the cash flows for the three months ended January 31, 2023 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, 2023 and October 31, 2022, its results of operations for the three and six months ended April 30, 2023 and 2022, its cash flows for the six months ended April 30, 2023 and 2022, and its statements of stockholders' equity for the three and six months ended April 30, 2023 and 2022.

The results of operations for the three and six months ended April 30, 2023 and the cash flows for the six months ended April 30, 2023 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, 2022, as filed with the U.S.

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There have been no 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, 2022.

Russia/Ukraine Conflict

In June 2022, the Company determined that it is no longer tenable to maintain its operations in Russia and Belarus and announced its decision to execute 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 Cost of services and $ 21 million in Disaster charges in the Condensed Consolidated Statements of Earnings.

Recently Enacted Accounting Pronouncements

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Compute, High Performance Computing & Artificial Intelligence ("HPC & AI"), Storage, Intelligent Edge, Financial Services ("FS"), and Corporate Investments and Other.

Hewlett Packard Enterprise's organizational structure is based on a number of factors that the Chief Operating Decision Maker, who is the Chief Executive Officer, uses to evaluate, view, and run the Company's business operations, which include, but are not limited to, customer base and homogeneity of products and technology.

The six segments are based on this organizational structure and information reviewed by Hewlett Packard Enterprise's management to evaluate segment results.

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The solutions are segmented into HPC and Data Solutions.

The HPC portfolio of products includes HPE Cray Supercomputing, HPE Apollo and Converged Edge Systems (formerly known as Edge Compute) hardware, software, and data management appliances that are often sold as supercomputing systems, including exascale supercomputers.

The HPC portfolio of products includes HPE Cray Supercomputing, HPE Cray XD (formerly known as HPE Apollo) and Converged Edge Systems (formerly known as Edge Compute) hardware, software, and data management appliances that are often sold as supercomputing systems, including exascale supercomputers.

The Data Solutions portfolio includes the mission critical compute portfolio and HPE NonStop.

1 unchanged sentence

The HPE Nonstop portfolio includes high-availability, fault-tolerant, software and appliances that power applications such as credit-card transaction processing that require large scale and high availability.

HPC & AI offerings also include operational and support services sold with its systems and as standalone services, and also offers most of its solutions aaS on a consumption basis through the HPE GreenLake edge-to-cloud platform.

Storage provides primary storage product and service offerings, which include software-powered hyperconverged infrastructure ("HCI") with HPE Nimble Storage Disaggregated HCI and HPE SimpliVity, cloud-native primary storage with HPE Primera and HPE Alletra Storage, storage aaS with HPE GreenLake for Block Storage, disaster recovery and ransomware recovery with Zerto, backup aaS with HPE Backup and Recovery Service, and big data solutions running on HPE Alletra 4000 Data Storage Servers.

HPC & AI offerings also include operational and support services sold with its systems and as standalone services, and also offers various of its solutions aaS on a consumption basis through the HPE GreenLake edge-to-cloud platform.

Storage provides data storage and management offerings, which include cloud-native primary storage with HPE Alletra Storage, software-powered hyperconverged infrastructure with HPE Alletra dHCI and HPE SimpliVity, data storage and management services with HPE GreenLake for Block Storage and HPE GreenLake for File Storage, disaster recovery and ransomware recovery with Zerto, data protection services with HPE GreenLake for Backup and Recovery, and big data solutions running on HPE Alletra 4000 Data Storage Servers.

Storage also provides solutions for unstructured data and analytics workloads and traditional tape, storage networking, and disk products, such as HPE MSA and HPE XP.

Storage also provides data-driven intelligence with HPE InfoSight and HPE CloudPhysics along with operational and support services, software subscription services, and data infrastructure portfolio and solutions delivered aaS on a consumption basis through the HPE GreenLake edge-to-cloud platform.

Storage also provides data-driven intelligence with HPE InfoSight and HPE CloudPhysics along with operational and support services and data management solutions delivered 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.

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

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.

Segment Operating Results

3 unchanged sentences

Investments and Other Total

Three months ended January 31, 2023

Three months ended April 30, 2023:

Net revenue $ 2,676 $ 827 $ 1,021 $ 1,301 $ 852 $ 296 $ 6,973

2 unchanged sentences

Segment earnings (loss) from operations $ 420 $ ( 2 ) $ 82 $ 351 $ 84 $ ( 47 ) $ 888

Three months ended January 31, 2022

Three months ended April 30, 2022:

Net revenue $ 2,959 $ 687 $ 1,056 $ 864 $ 821 $ 326 $ 6,713

2 unchanged sentences

Segment earnings (loss) from operations $ 426 $ ( 40 ) $ 127 $ 109 $ 104 $ ( 24 ) $ 702

Six months ended April 30, 2023:

Net revenue $ 6,043 $ 1,820 $ 2,189 $ 2,422 $ 1,719 $ 589 $ 14,782

Intersegment net revenue 174 76 41 9 12 — 312

Total segment net revenue $ 6,217 $ 1,896 $ 2,230 $ 2,431 $ 1,731 $ 589 $ 15,094

Segment earnings (loss) from operations $ 1,029 $ ( 1 ) $ 224 $ 598 $ 166 $ ( 102 ) $ 1,914

Six months ended April 30, 2022:

Net revenue $ 5,963 $ 1,463 $ 2,172 $ 1,764 $ 1,661 $ 651 $ 13,674

Intersegment net revenue 92 37 28 4 4 1 166

Total segment net revenue $ 6,055 $ 1,500 $ 2,200 $ 1,768 $ 1,665 $ 652 $ 13,840

Segment earnings (loss) from operations $ 853 $ ( 47 ) $ 284 $ 266 $ 208 $ ( 35 ) $ 1,529

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The reconciliation of segment operating results to 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,

2023 2022 2023 2022

Total segments $ 7,102 $ 6,810 $ 15,094 $ 13,840

8 unchanged sentences

Transformation costs ( 60 ) ( 98 ) ( 162 ) ( 209 )

Disaster (charges) recovery ( 1 ) 1

Disaster charges (1)

( 3 ) ( 125 ) ( 4 ) ( 124 )

Acquisition, disposition and other related charges ( 19 ) ( 8 ) ( 30 ) ( 16 )

4 unchanged sentences

Total earnings before provision for taxes $ 522 $ 276 $ 1,145 $ 769

(1) The three and six months ended April 30, 2022 include amounts for expected credit loss reserves due to the Company's exit from its Russia and Belarus businesses.

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

1 unchanged sentence

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

January 31, 2023 October 31, 2022

April 30, 2023 October 31, 2022

Compute $ 15,304 $ 16,881

11 unchanged sentences

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,

2023 2022 2023 2022

United States $ 2,395 $ 2,159 $ 5,280 $ 4,476

Americas excluding U.S.

520 466 1,089 928

Total Americas 2,915 2,625 6,369 5,404

3 unchanged sentences

Transformation Programs

Transformation programs are comprised of the cost optimization and prioritization plan and the HPE Next initiative.

Transformation programs are comprised of the Cost Optimization and Prioritization Plan and the HPE Next Plan.

During the third quarter of fiscal 2020, the Company launched the Cost Optimization and Prioritization Plan, which focuses on realigning the workforce to areas of growth, a new hybrid workforce model called Edge-to-Office, real estate strategies, and simplifying and evolving our product portfolio strategy.

1 unchanged sentence

During the remaining implementation period, the Company expects to incur transformation costs predominantly related to labor restructuring, non-labor restructuring, IT investments, design and execution charges and real estate initiatives.

During the third quarter of fiscal 2017, the Company launched an initiative called HPE Next to put in place a purpose-built company designed to compete and win in the markets where it participates.

During the third quarter of fiscal 2017, the Company launched an initiative called HPE Next Plan to put in place a purpose-built company designed to compete and win in the markets where it participates.

Through this program, the Company is simplifying the operating model, and streamlining its offerings, business processes and business systems to improve its strategy execution.

The implementation period of primary elements of the HPE Next initiative is anticipated to be through fiscal 2023.

The implementation period of the primary elements of the HPE Next Plan is anticipated to be through fiscal 2023.

During the remaining implementation period, the Company expects to incur predominantly IT infrastructure costs for streamlining, upgrading, and simplifying back-end operations, and real estate initiatives.

2 unchanged sentences

The components of transformation costs relating to the Cost Optimization and Prioritization Plan were as follows:

For the three months ended January 31,

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

2023 2022 2023 2022

Program management $ 1 $ 1 $ 2 $ 9

IT costs 8 10 16 18

Restructuring charges 18 24 89 61

3 unchanged sentences

Notes to Condensed Consolidated Financial Statements (Continued)

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

For the three months ended January 31,

HPE Next Plan

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

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

2023 2022 2023 2022

Program management $ — $ 2 $ — $ 5

3 unchanged sentences

Impairment of real estate assets — — — 11

Other 1 3 1 8

Total $ 34 $ 63 $ 56 $ 121

10 unchanged sentences

Non-cash items 13 ( 1 ) 1 —

Liability as of January 31, 2023

Liability as of April 30, 2023

$ 157 $ 116 $ 8 $ 23

Total costs incurred to date, as of January 31, 2023

Total costs incurred to date, as of April 30, 2023

$ 705 $ 512 $ 1,265 $ 262

Total expected costs to be incurred as of January 31, 2023

Total expected costs to be incurred as of April 30, 2023

$ 750 $ 550 $ 1,265 $ 265

The current restructuring liability related to the transformation programs, reported in the Condensed Consolidated Balance Sheets as of January 31, 2023 and October 31, 2022, was $ 184 million and $ 191 million, respectively, in Accrued restructuring, and $ 25 million and $ 28 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, 2023 and October 31, 2022, was $ 125 million and $ 124 million, respectively.

The current restructuring liability related to the transformation programs, reported in the Condensed Consolidated Balance Sheets as of April 30, 2023 and October 31, 2022, was $ 166 million and $ 191 million, respectively, in Accrued restructuring, and $ 24 million and $ 28 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, 2023 and October 31, 2022, was $ 114 million and $ 124 million, respectively.

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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,

The Company's net pension benefit cost (credit) 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,

2023 2022 2023 2022

Service cost $ 13 $ 21 $ 26 $ 41

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Prior service benefit ( 2 ) ( 2 ) ( 5 ) ( 5 )

Net periodic benefit (credit) cost 12 ( 17 )

Net periodic benefit cost (credit) 14 ( 16 ) 26 ( 33 )

Settlement loss and special termination benefits (1)

Total net benefit (credit) cost $ 12 $ ( 16 )

(1) These non-service components of net periodic benefit cost were included in Non-service net periodic benefit credit in the Condensed Consolidated Statements of Earnings.

Total net benefit cost (credit) $ 15 $ ( 15 ) $ 27 $ ( 31 )

(1) These non-service components of net periodic benefit cost (credit) were included in Non-service net periodic benefit credit in the Condensed Consolidated Statements of Earnings.

Taxes on Earnings

Provision for Taxes

For the three months ended January 31, 2023 and 2022, the Company recorded income tax expense of $ 122 million and income tax benefit of $ 20 million, respectively, which reflects an effective tax rate of 19.6 % and ( 4.1 )%, respectively.

For the three months ended April 30, 2023 and 2022, the Company recorded income tax expense of $ 104 million and $ 26 million, respectively, which reflects an effective tax rate of 19.9 % and 9.4 %, respectively.

For the six months ended April 30, 2023 and 2022, the Company recorded income tax expense of $ 226 million and $ 6 million, respectively, which reflects an effective tax rate of 19.7 % and 0.8 %, 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 months ended January 31, 2023, the Company recorded $ 11 million of net income tax benefits related to various items discrete to the period.

The amount primarily included $ 22 million of income tax benefits related to transformation costs, acquisition, disposition and other related charges and $ 13 million of net excess tax benefits related to stock-based compensation, partially offset by $ 23 million of net income tax charges related to tax audit settlements and changes in uncertain tax positions.

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 tax 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 and six months ended April 30, 2023, the Company recorded $ 14 million and $ 25 million, respectively, of net income tax benefits related to various items discrete to the period.

For the three months ended April 30, 2023, this amount primarily included $ 14 million of income tax benefits related to transformation costs, and acquisition, disposition and other related charges.

For the six months ended April 30, 2023, this amount primarily included $ 36 million of net income tax benefits related to transformation costs, acquisition, disposition and other related charges and $ 13 million of net excess tax benefits related to stock-based compensation, partially offset by $ 23 million of net income tax charges related to tax audit settlements and changes in uncertain tax positions.

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

Uncertain Tax Positions

As of January 31, 2023 and October 31, 2022, the amount of unrecognized tax benefits was $ 720 million and $ 674 million, respectively, of which up to $ 419 million and $ 386 million, respectively, would affect the Company's effective tax rate if realized as of their respective periods.

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 expense of $ 1 million and interest income of $ 40 million for the three months ended January 31, 2023 and 2022, respectively.

The Company recognized interest income in the first quarter of fiscal 2022 due to the release of reserves as a result of the effective settlement of the IRS audit for fiscal 2016.

As of January 31, 2023 and October 31, 2022, the Company had accrued $ 82 million and $ 81 million, respectively, for interest and penalties in the Condensed Consolidated Balance Sheets.

As of April 30, 2023 and October 31, 2022, the amount of unrecognized tax benefits was $ 708 million and $ 674 million, respectively, of which up to $ 419 million and $ 386 million, respectively, would affect the Company's effective tax rate if realized as of their respective periods.

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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 for taxes in the Condensed Consolidated Statements of Earnings.

The Company recognized interest income of $ 11 million and interest expense of $ 3 million for the three months ended April 30, 2023 and 2022, respectively.

The Company recognized interest income of $ 10 million and $ 37 million for the six months ended April 30, 2023 and 2022, respectively.

The Company recognized interest income in the first quarter of fiscal 2022 due to the release of reserves as a result of the effective settlement of the Internal Revenue Service (“IRS”) audit for fiscal 2016.

As of April 30, 2023 and October 31, 2022, the Company had accrued $ 71 million and $ 81 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 Internal Revenue Service is conducting an audit of the Company's fiscal 2017, 2018, and 2019 U.S.

The IRS is conducting an audit of the Company's fiscal 2017 , 2018 , and 2019 U.S.

federal income tax returns.

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 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 $ 44 million within the next 12 months.

The IRS may conclude its examination in the coming quarters and issue notices of proposed adjustments, the effect of which we would evaluate for financial statement purposes when received.

Additionally, it is reasonably possible that certain foreign and state tax issues may be concluded in the next 12 months, including issues involving resolution of certain intercompany transactions and other matters;

accordingly, the Company believes it is reasonably possible that its existing unrecognized tax benefits for these matters may be reduced by an amount up to $ 55 million within the next 12 months.

Deferred Tax Assets and Liabilities

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

January 31, 2023 October 31, 2022

April 30, 2023 October 31, 2022

Deferred tax assets $ 2,179 $ 2,127

3 unchanged sentences

Cash, cash equivalents and restricted cash

January 31, 2023 October 31, 2022

April 30, 2023 October 31, 2022

Cash and cash equivalents $ 2,781 $ 4,163

2 unchanged sentences

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

January 31, 2023 October 31, 2022

April 30, 2023 October 31, 2022

Finished goods $ 1,350 $ 2,187

1 unchanged sentence

Total $ 4,317 $ 5,161

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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

Property, Plant and Equipment

January 31, 2023 October 31, 2022

April 30, 2023 October 31, 2022

Land $ 74 $ 74

4 unchanged sentences

Net property, plant and equipment $ 6,013 $ 5,784

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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

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

For the three months ended January 31, 2023

Balance at beginning of period $ 360

Balance as of October 31, 2022

Adjustments related to pre-existing warranties ( 3 )

Settlements made ( 103 )

Balance at end of period $ 355

Balance as of April 30, 2023

Contract balances

2 unchanged sentences

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

January 31, 2023 October 31, 2022

April 30, 2023 October 31, 2022

Unbilled receivables $ 292 $ 245

2 unchanged sentences

Total $ 3,711 $ 4,101

The allowances for credit losses related to accounts receivable and changes during the three months ended January 31, 2023 and the year ended October 31, 2022 were as follows:

January 31, 2023 October 31, 2022

The allowances for credit losses related to accounts receivable and changes during the six months ended April 30, 2023 and the fiscal year ended October 31, 2022 were as follows:

April 30, 2023 October 31, 2022

Balance at beginning of period $ 25 $ 23

2 unchanged sentences

Balance at end of period $ 27 $ 25

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, 2023 and the fiscal year ended October 31, 2022, the Company sold $ 1.1 billion and $ 4.1 billion of trade receivables, respectively.

The Company recorded an obligation of $ 95 million and $ 88 million within Notes payable and short-term borrowings in its Condensed Consolidated Balance Sheets as of January 31, 2023 and October 31, 2022 respectively, related to the trade receivables sold and collected from the third-party for which the revenue recognition was deferred.

Contract Liabilities and Remaining Performance Obligations

As of January 31, 2023 and October 31, 2022, current deferred revenue of $ 3.5 billion and $ 3.4 billion, respectively, were recorded in Deferred revenue, and non-current deferred revenue of $ 3.1 billion and $ 3.0 billion, respectively, were recorded in Other non-current liabilities in the Condensed Consolidated Balance Sheets.

During the three months ended January 31, 2023, approximately $ 1.2 billion of revenue was recognized relating to contract liabilities recorded as of October 31, 2022.

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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 and six months ended April 30, 2023, the Company sold $ 1.0 billion and $ 2.1 billion of trade receivables, respectively.

During the fiscal year ended October 31, 2022, the Company sold $ 4.1 billion of trade receivables.

The Company recorded an obligation of $ 87 million and $ 88 million within Notes payable and short-term borrowings in its Condensed Consolidated Balance Sheets as of April 30, 2023 and October 31, 2022 respectively, related to the trade receivables sold and collected from the third-party for which the revenue recognition was deferred.

Contract Liabilities and Remaining Performance Obligations

As of April 30, 2023 and October 31, 2022, current deferred revenue of $ 3.6 billion and $ 3.4 billion, respectively, were recorded in Deferred revenue, and non-current deferred revenue of $ 3.1 billion and $ 3.0 billion, respectively, were recorded in Other non-current liabilities in the Condensed Consolidated Balance Sheets.

During the six months ended April 30, 2023, approximately $ 2.1 billion of revenue was recognized relating to contract liabilities recorded as of October 31, 2022.

Revenue allocated to remaining performance obligations represents contract work that has not yet been performed and does not include contracts where the customer is not committed.

Remaining performance obligations estimates are subject to change and are affected by several factors, including contract terminations, changes in the scope of contracts, adjustments for revenue that has not materialized and adjustments for currency.

As of January 31, 2023, the aggregate amount of remaining performance obligations, or deferred revenue, was $ 6.6 billion.

As of April 30, 2023, the aggregate amount of remaining performance obligations, or deferred revenue, was $ 6.7 billion.

The Company expects to recognize approximately 50 % of this balance over fiscal 2023 with the remainder to be recognized thereafter.

Costs to Obtain a Contract

As of January 31, 2023, the current and non-current portions of the capitalized costs to obtain a contract were $ 77 million and $ 126 million, respectively.

As of April 30, 2023, the current and non-current portions of the capitalized costs to obtain a contract were $ 80 million and $ 128 million, respectively.

As of October 31, 2022, the current and non-current portions of the capitalized costs to obtain a contract were $ 76 million and $ 124 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, 2023 and 2022 the Company amortized $ 22 million and $ 20 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.

For the three and six months ended April 30, 2023 the Company amortized $ 23 million and $ 45 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.

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

Accounting for Leases as a Lessor

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The components of financing receivables were as follows:

January 31, 2023 October 31, 2022

April 30, 2023 October 31, 2022

Minimum lease payments receivable $ 9,407 $ 8,686

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Amounts due after one year, net $ 4,938 $ 4,512

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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

Sale of Financing Receivables

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, 2023 and the fiscal year ended October 31, 2022, the Company sold $ 39 million and $ 183 million of financing receivables, respectively.

During the six months ended April 30, 2023 and the fiscal year ended October 31, 2022, the Company sold $ 147 million and $ 183 million of financing receivables, respectively.

Credit Quality Indicators

4 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.

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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 January 31, 2023, presented on amortized cost basis by year of origination was as follows:

As of January 31, 2023

The credit risk profile of gross financing receivables, based on internal risk ratings as of April 30, 2023, presented on amortized cost basis by year of origination was as follows:

As of April 30, 2023

Low Moderate High

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The credit quality indicators do not reflect any mitigation actions taken to transfer credit risk to third parties.

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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

Allowance for Credit Losses

The allowance for credit losses for financing receivables as of January 31, 2023 and October 31, 2022 and the respective changes during the three and twelve months then ended were as follows.

January 31, 2023 October 31, 2022

The allowance for credit losses for financing receivables as of April 30, 2023 and October 31, 2022 and the respective changes during the six and twelve months then ended were as follows.

April 30, 2023 October 31, 2022

Balance at beginning of period $ 325 $ 228

4 unchanged sentences

(1) Fiscal 2022 included a provision of $ 99 million related to expected credit losses due to the Company's exit from its Russia and Belarus businesses.

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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, 2023 October 31, 2022

April 30, 2023 October 31, 2022

Current and past due 1-30 days $ 427 $ 372

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

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

For the three months ended January 31,

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

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

2023 2022 2023 2022

Interest income from sales-type leases and direct financing leases $ 130 $ 122 $ 253 $ 244

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fixed-term financing receivables and leased equipment in the offering, which is held by a Special Purpose Entity ("SPE").

The SPE meets the definition of a Variable Interest Entity ("VIE") and is consolidated, along with the associated debt, into the Condensed Consolidated Financial Statements as the Company is the primary beneficiary of the VIE.

The SPE is a bankruptcy-remote legal entity with separate assets and liabilities.

The purpose of the SPE is to facilitate the funding of customer receivables and leased equipment in the capital markets.

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 SPE meets the definition of a Variable Interest Entity ("VIE") and is consolidated, along with the associated debt, into the Condensed Consolidated Financial Statements as the Company is the

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Notes to Condensed Consolidated Financial Statements (Continued)

The following table presents the assets and liabilities held by the consolidated VIE as of January 31, 2023 and October 31, 2022, which are included in the Condensed Consolidated Balance Sheets.

primary beneficiary of the VIE.

The SPE is a bankruptcy-remote legal entity with separate assets and liabilities.

The purpose of the SPE is to facilitate the funding of customer receivables and leased equipment in the capital markets.

The following table presents the assets and liabilities held by the consolidated VIE as of April 30, 2023 and October 31, 2022, 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, 2023 October 31, 2022

April 30, 2023 October 31, 2022

Assets held by VIE:

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Long-term debt, net of unamortized debt issuance costs $ 1,229 $ 1,415

For the three months ended January 31, 2023, no financing receivables and leased equipment were transferred via securitization through the SPE.

For the six months ended April 30, 2023, financing receivables and leased equipment transferred via securitization through the SPE were $ 417 million and $ 391 million, respectively.

For the fiscal year ended October 31, 2022, financing receivables and leased equipment transferred via securitization through the SPE were $ 1.6 billion and $ 1.2 billion, respectively.

During the six months ended April 30, 2023, the Company completed three acquisitions.

The purchase price allocations for the acquisitions described below reflect various preliminary fair value estimates and analysis, including preliminary work performed by third-party valuation specialists, of certain tangible assets and liabilities acquired, the valuation of intangible assets acquired, certain legal matters, income and non-income based taxes, and residual goodwill, which are subject to change within the measurement period.

Measurement period adjustments are recorded in the reporting period in which the estimates are finalized and adjustment amounts are determined.

The pro forma results of operations, the revenue and net income subsequent to the acquisition dates have not been presented as they are not material to the Company's consolidated results of operations, either individually or in the aggregate.

Goodwill, which represents the excess of the purchase price over the net tangible and intangible assets acquired, is not deductible for tax purposes.

The following table presents the aggregate estimated fair value of the assets acquired and liabilities assumed, including those items that are still pending allocations, for the acquisitions completed during the first six months of fiscal 2023:

Goodwill $ 330

Amortizable intangible assets 85

Net tangible liabilities assumed 39

Total fair value consideration $ 454

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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

On March 15, 2023, the Company completed the acquisition of Axis Security, a cloud security provider, enabling the Company to expand its edge-to-cloud security capabilities by offering a unified Secure Access Services Edge (“SASE”) solution to meet the increasing demand for integrated networking and security solutions delivered as-a-service.

Axis Security's results of operations were included within the Intelligent Edge segment.

The acquisition date fair value consideration of $ 412 million primarily consisted of cash paid for outstanding common stock.

In connection with this acquisition, the Company recorded approximately $ 312 million of goodwill, and $ 71 million of intangible assets.

The Company is amortizing the intangible assets on a straight-line basis over an estimated weighted-average useful life of five years .

Goodwill is tested for impairment at the reporting unit level.

As of January 31, 2023, 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 April 30, 2023, 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 January 31, 2023 and October 31, 2022.

The following table represents the carrying value of goodwill, by reportable segment as of April 30, 2023 and October 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, 2022.

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Goodwill acquired during the period — 18 — 312 — — 330

Balance at January 31, 2023

Balance at April 30, 2023

$ 7,692 $ 2,907 $ 4,000 $ 2,867 $ 144 $ 123 $ 17,733

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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 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 as the supply chain constraints are improving.

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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

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 potential impairment charges.

The HPC & AI business continues to face challenges related to supply chain constraints of key components 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 as the supply chain constraints continue to improve.

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 potential impairment charges.

As of the annual test date in fiscal 2022, the Software reporting unit had goodwill of $ 123 million and an excess of fair value over carrying value of net assets of 0 %.

2 unchanged sentences

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.

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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

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

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

As of January 31, 2023 As of October 31, 2022

As of April 30, 2023 As of October 31, 2022

Measured Using Fair Value

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Total liabilities $ — $ 430 $ — $ 430 $ — $ 307 $ — $ 307

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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

Other Fair Value Disclosures

Short-Term and Long-Term Debt

As of January 31, 2023 and October 31, 2022, the estimated fair value of the Company's short-term and long-term debt was $ 13.0 billion and $ 12.2 billion, respectively.

As of January 31, 2023 and October 31, 2022, the carrying value of the Company's short-term and long-term debt was $ 12.9 billion and $ 12.5 billion, respectively.

As of April 30, 2023 and October 31, 2022, the estimated fair value of the Company's short-term and long-term debt was $ 13.5 billion and $ 12.2 billion, respectively.

As of April 30, 2023 and October 31, 2022, the carrying value of the Company's short-term and long-term debt was $ 13.4 billion and $ 12.5 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.

For the three months ended January 31, 2023, the Company recognized an impairment of $ 10 million on these investments.

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

For the three and six months ended April 30, 2023, the Company recognized an unrealized net gain of $ 4 million and an unrealized net loss of $ 6 million, respectively, on these investments.

For the six months ended April 30, 2023 this included an impairment of $ 10 million.

The Company recognized an immaterial impairment on these equity investments during the three and six months ended April 30, 2022.

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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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.

1 unchanged sentence

The Company's non-financial assets, such as intangible assets, goodwill, and property, plant and equipment, are recorded at cost.

The Company records right-of-use assets based on the lease liability, adjusted for lease prepayments, lease incentives received, and the lessee's initial direct costs.

The Company records right-of-use assets (“ROU”) based on the lease liability, adjusted for lease prepayments, lease incentives received, and the lessee's initial direct costs.

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

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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

During the three and six months ended April 30, 2023, the Company recorded immaterial ROU asset impairment charges, as the carrying value of certain ROU assets exceeded their fair value.

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.

These amounts 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.

Financial Instruments

1 unchanged sentence

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

As of January 31, 2023 As of October 31, 2022

As of April 30, 2023 As of October 31, 2022

Cost Gross Unrealized Gains Fair

5 unchanged sentences

Available-for-Sale Debt Investments:

Time Deposits 3 — 3 — — —

Foreign bonds 104 2 106 93 ( 2 ) 91

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Total cash equivalents and available-for-sale debt investments $ 1,412 $ 4 $ 1,416 $ 2,385 $ ( 1 ) $ 2,384

As of January 31, 2023 and October 31, 2022, the carrying amount of cash equivalents approximated fair value due to the short period of time to maturity.

Time deposits were primarily issued by institu tions outside o f the U.S.

as of January 31, 2023 and October 31, 2022.

As of April 30, 2023 and October 31, 2022, the carrying amount of cash equivalents approximated fair value due to the short period of time to maturity.

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

as of April 30, 2023 and October 31, 2022.

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, 2023

As of April 30, 2023

Amortized Cost Fair Value

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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 $ 160 million and $ 175 million as of January 31, 2023 and October 31, 2022, respectively.

For the three months ended January 31, 2023, the Company recognized an impairment of $ 10 million on these investments.

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

The carrying amount of those non-marketable equity investments accounted for under the fair value option was $ 126 million as of January 31, 2023 and October 31, 2022.

During the three months ended January 31, 2022, the Company recorded an unrealized gain of $ 59 million 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 $ 2.2 billion as of January 31, 2023 and October 31, 2022.

For the three months ended January 31, 2023 and 2022, the Company recorded earnings from equity interests of $ 58 million and $ 31 million, respectively, on these investments.

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Notes to Condensed Consolidated Financial Statements (Continued)

The carrying amount of those non-marketable equity investments accounted for under the measurement alternative was $ 169 million and $ 175 million as of April 30, 2023 and October 31, 2022, respectively.

For the three and six months ended April 30, 2023, the Company recognized an unrealized net gain of $ 4 million and an unrealized net loss of $ 6 million, respectively, on these investments.

For the six months ended, April 30, 2023, this included an impairment of $ 10 million.

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

The carrying amount of those non-marketable equity investments accounted for under the fair value option was $ 129 million and $ 126 million as of April 30, 2023 and October 31, 2022, respectively.

During the three and six months ended April 30, 2023, the Company recorded an unrealized gain of $ 3 million on these investments.

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.

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, 2023 and October 31, 2022, respectively.

For the three and six months ended April 30, 2023, the Company recorded earnings from equity interests of $ 49 million and $ 107 million, respectively, on these investments.

For 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.

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, 2023 As of October 31, 2022

As of April 30, 2023 As of October 31, 2022

Fair Value Fair Value

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

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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

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 January 31, 2023

As of April 30, 2023

In the Condensed Consolidated Balance Sheets

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Derivative liabilities $ 430 $ — $ 430 $ 175 $ 232 (2)

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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

As of October 31, 2022

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(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, 2023, of the $ 319 million of collateral posted, $ 313 million was in cash and $ 6 million was through the re-use of counterparty collateral.

As of April 30, 2023, of the $ 232 million of collateral posted, $ 225 million was in cash and $ 7 million was through the re-use of counterparty collateral.

As of October 31, 2022, the entire amount of the collateral posted of $ 113 million was through the re-use of counterparty collateral.

1 unchanged sentence

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

January 31, 2023 October 31, 2022 January 31, 2023 October 31, 2022

In millions In millions

April 30, 2023 October 31, 2022 April 30, 2023 October 31, 2022

Long-term debt $ ( 2,372 ) $ ( 2,317 ) $ 124 $ 178

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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 January 31,

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

2023 2022 2023 2022

Derivatives in Cash Flow Hedging relationship

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Total $ 26 $ 357 $ ( 599 ) $ 583

As of January 31, 2023, the Company expects to reclassify an estimated net accumulated other comprehensive loss of approximately $ 104 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.

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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

As of April 30, 2023, the Company expects to reclassify an estimated net accumulated other comprehensive loss of approximately $ 66 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

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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,

2023 2022 2023 2022

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:

Total $ 6,973 $ ( 54 ) $ 6,713 $ — $ 14,782 $ ( 79 ) $ 13,674 $ ( 5 )

Gains (losses) on derivatives in fair value hedging relationships:

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Other derivatives — ( 1 ) — ( 2 ) — ( 1 ) — ( 11 )

Total gains (losses) $ 50 $ ( 491 ) $ 65 $ 87

Total (losses) gains $ ( 23 ) $ ( 13 ) $ 57 $ 347 $ 27 $ ( 504 ) $ 122 $ 434

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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

Notes Payable, Short-Term Borrowings and Long-Term Debt

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

January 31, 2023 October 31, 2022

April 30, 2023 October 31, 2022

Current portion of long-term debt (1)

5 unchanged sentences

Total $ 13,376 $ 12,465

(1) As of January 31, 2023, 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.

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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

(1) As of April 30, 2023, the Current portion of long-term debt, net of discount and issuance costs, includes $ 1.4 billion associated with the asset-backed debt securities issued by the Company.

Unsecured Senior Notes

In March 2023, the Company completed its offering of $ 1.3 billion of 5.9 % Senior Notes due October 1, 2024 and $ 400 million of 6.102 % Senior Notes due April 1, 2026.

The net proceeds from these offerings will be used to refinance upcoming debt maturities and for general corporate purposes.

In April 2023, the Company repaid $ 1.0 billion of 2.25 % fixed rate Senior Notes on their original maturity date of April 1, 2023.

Asset-backed Debt Securities

In March and April 2023, the Company issued $ 643 million of asset-backed debt securities in five tranches at a weighted average price of 99.99 % and a weighted average interest rate of 5.593 %, payable monthly from April 2023 with a stated final maturity date of April 2028.

In April 2023, the Company redeemed at par the outstanding $ 35 million of asset-backed debt securities on a transaction, with an interest rate of 2.26 % and an original maturity date of February 2030.

At deal inception, in February 2020, $ 755 million of asset-backed debt securities were issued, with a weighted average price of 99.99 %, a weighted average interest rate of 1.87 %, and an original maturity date of February 2030.

Commercial Paper

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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, 2023, $ 759 million was outstanding under the Parent Programs.

As of April 30, 2023, $ 399 million was outstanding under the Parent Programs.

As of October 31, 2022, no borrowings were outstanding under the Parent Programs.

As of January 31, 2023 and October 31, 2022, $ 680 million and $ 542 million, respectively, were outstanding under the subsidiary’s program.

As of April 30, 2023 and October 31, 2022, $ 629 million and $ 542 million, respectively, were outstanding under the subsidiary’s program.

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Revolving Credit Facility

The Company maintains a senior unsecured revolving credit facility that was entered into in December 2021 with an aggregate lending commitment of $ 4.75 billion for a period of five years .

As of January 31, 2023 and October 31, 2022, no borrowings were outstanding under this credit facility.

As of April 30, 2023 and October 31, 2022, no borrowings were outstanding under this credit facility.

Stockholders' Equity

The components of accumulated other comprehensive loss, net of taxes as of January 31, 2023, and changes during the three months ended January 31, 2023 were as follows:

The components of accumulated other comprehensive loss, net of taxes as of April 30, 2023, and changes during the six months ended April 30, 2023 were as follows:

Net unrealized

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Balance at end of period $ 4 $ ( 63 ) $ ( 2,531 ) $ ( 588 ) $ ( 3,178 )

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

13 unchanged sentences

Share Repurchase Program

For the three months ended January 31, 2023, the Company repurchased and settled a total of 4.7 million shares under its share repurchase program through open market repurchases, which included 0.3 million shares that were unsettled open market repurchases as of October 31, 2022.

Additionally, as of January 31, 2023, the Company had unsettled open market repurchases

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of 0.1 million shares.

Shares repurchased during the three months ended January 31, 2023 were recorded as a $ 70 million reduction to stockholders' equity.

As of January 31, 2023, the Company had a remaining authorization of $ 1.3 billion for future share repurchases.

For the six months ended April 30, 2023, the Company repurchased and settled a total of 11.7 million shares under its share repurchase program through open market repurchases, which included 0.3 million shares that were unsettled open market repurchases as of October 31, 2022.

Additionally, as of April 30, 2023, the Company had unsettled open market repurchases of 0.2 million shares.

Shares repurchased during the six months ended April 30, 2023 were recorded as a $ 177 million reduction to stockholders' equity.

As of April 30, 2023, the Company had a remaining authorization of $ 1.2 billion for future share repurchases.

Net Earnings Per Share

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

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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,

2023 2022 2023 2022

In millions, except per share amounts

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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, 2023, 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.

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Hewlett Packard Enterprise believes it has recorded adequate provisions for any such matters and, as of April 30, 2023, 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

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On November 8, 2018, a putative class action complaint was filed in the Superior Court of California, County of Santa Clara alleging that HPE pays its California-based female employees “systemically lower compensation” than HPE pays male employees performing substantially similar work.

The complaint alleges various California state law claims, including California’s Equal Pay Act, Fair Employment and Housing Act, and Unfair Competition Law, and seeks certification of a California-only class of female employees employed in certain “Covered Positions.” The complaint seeks damages, statutory and civil penalties, attorneys’ fees and costs.

On April 2, 2019, HPE filed a demurrer to all causes of action and an alternative motion to strike portions of the complaint.

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.

The parties have reached an agreement to resolve this litigation.

The terms of the class settlement are reflected in Plaintiff’s Motion for Preliminary Approval of Class Action Settlement and Certification of Settlement Class, which was filed with the Court on September 26, 2022.

The complaint alleges various California state law claims, including California’s Equal Pay Act, Fair Employment and Housing Act, and Unfair Competition Law, and seeks certification of a California-only class of female employees employed in certain “Covered Positions.” The parties subsequently reached an agreement to resolve this class action.

The terms of the settlement are reflected in Plaintiff’s Motion for Preliminary Approval of Class Action Settlement and Certification of Settlement Class, which was

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filed with the Court on September 26, 2022.

On November 3, 2022, the Court granted Plaintiff’s motion and preliminarily approved the terms of the class settlement, which defines the settlement class as all “[w]omen actively employed in California by Defendant at any point from November 1, 2015, through the date of Preliminary Approval” who were employed in a covered job code.

The settlement class excludes certain individuals, including those who previously executed an arbitration agreement with HPE or an agreement that resulted in a release or waiver of claims.

The hearing on final approval of the class settlement is scheduled for April 27, 2023.

On April 28, 2023, the Court granted Plaintiffs’ Motion for Final Approval of the Class Action Settlement and Certification of the Settlement Class.

The Court has scheduled a compliance hearing for September 28, 2023, to assess the distribution of the settlement fund to the class members.

India Directorate of Revenue Intelligence Proceedings .

On April 30 and May 10, 2010, the India Directorate of Revenue Intelligence (the "DRI") issued show cause notices to Hewlett-Packard India Sales Private Ltd ("HP India"), a subsidiary of HP Inc., seven HP India employees and one former HP India employee alleging that HP India underpaid customs duties while importing products and spare parts into India and seeking to recover an aggregate of approximately $ 370 million, plus penalties.

Prior to the issuance of the show cause notices, HP India deposited approximately $ 16 million with the DRI and agreed to post a provisional bond in exchange for the DRI's agreement to not seize HP India products and spare parts and to not interrupt the transaction of business by HP India.

On April 11, 2012, the Bangalore Commissioner of Customs issued an order on the products-related show cause notice affirming certain duties and penalties against HP India and the named individuals of approximately $ 386 million, of which HP India had already deposited $ 9 million.

On December 11, 2012, HP India voluntarily deposited an additional $ 10 million in connection with the products-related show cause notice.

On April 20, 2012, the Commissioner issued an order on the parts-related show cause notice affirming certain duties and penalties against HP India and certain of the named individuals of approximately $ 17 million, of which HP India had already deposited $ 7 million.

After the order, HP India deposited an additional $ 3 million in connection with the parts-related show cause notice to avoid certain penalties.

HP India filed appeals of the Commissioner's orders before the Customs Tribunal along with applications for waiver of the pre-deposit of remaining demand amounts as a condition for hearing the appeals.

The Customs Department has also filed cross-appeals before the Customs Tribunal.

On January 24, 2013, the Customs Tribunal ordered HP India to deposit an additional $ 24 million against the products order, which HP India deposited in March 2013.

The Customs Tribunal did not order any additional deposit to be made under the parts order.

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 April 30 and May 10, 2010, the India Directorate of Revenue Intelligence (the "DRI") issued notices to Hewlett-Packard India Sales Private Ltd ("HP India"), a subsidiary of HP Inc., seven HP India employees and one former HP India employee alleging that HP India underpaid customs duties while importing products and spare parts into India and seeking to recover an aggregate of approximately $ 370 million, plus penalties.

On April 11, 2012, the Bangalore Commissioner of Customs issued an order on the products-related notices affirming duties and penalties against HP India and the named individuals for approximately $ 386 million.

On April 20, 2012, the Commissioner issued an order on the spare parts-related notice affirming duties and penalties against HP India and certain of the named individuals for approximately $ 17 million.

HP India filed appeals of the Commissioner's orders before the Customs Tribunal.

The Customs Department filed cross-appeals before the Customs Tribunal.

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

The Customs Tribunal rejected HP India's request to remand the matter to the Commissioner on procedural grounds.

The hearings were scheduled to reconvene on April 6, 2015, and again on November 3, 2015, April 11, 2016, and January 15, 2019, but were canceled at the request of the Customs Tribunal.

The hearing was again rescheduled for January 20, 2021 but was postponed and has not yet been rescheduled.

The Customs Tribunal rejected HP India's request to return the matter to the Commissioner on procedural grounds.

The hearings before the Customs Tribunal were subsequently delayed, have been postponed on several occasions since 2014, and have not yet been rescheduled.

ECT Proceedings .

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In April 2013, ECT rejected HP Brazil's appeal, and the administrative proceedings were closed with the penalties against HP Brazil remaining in place.

In parallel, in September 2011,

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HP Brazil filed a civil action against ECT seeking to have ECT's decision revoked.

HP Brazil also requested an injunction suspending the application of the penalties until a final ruling on the merits of the case.

The court of first instance has not issued a decision on the merits of the case, but it has denied HP Brazil's request for injunctive relief.

In parallel, in September 2011, HP Brazil filed a civil action against ECT seeking to have ECT's decision revoked.

HP Brazil also requested an injunction suspending the application of the penalties until a final ruling on the merits of the case, which was denied.

HP Brazil appealed the denial of its request for injunctive relief to the intermediate appellate court, which issued a preliminary ruling denying the request for injunctive relief but reducing the length of the sanctions from five to two years .

HP Brazil appealed that decision and, in December 2011, obtained a ruling staying enforcement of ECT's sanctions until a final ruling on the merits of the case.

HP Brazil expects any appeal of the decision on the merits to last several years.

HP Brazil expects a resolution of the decision on the merits to take several years.

Forsyth, et al.

and Hewlett Packard Enterprise.

This purported class and collective action was filed on August 18, 2016 and an amended complaint was filed on December 19, 2016 in the United States District Court for the Northern District of California, against HP Inc.

This purported class and collective action was filed on August 18, 2016 in the United States District Court for the Northern District of California, against HP Inc.

and Hewlett Packard Enterprise (collectively, “Defendants”) alleging Defendants violated the Federal Age Discrimination in Employment Act (“ADEA”), the California Fair Employment and Housing Act, California public policy and the California Business and Professions Code by terminating older workers and replacing them with younger workers.

Plaintiffs seek to certify a nationwide collective action under the ADEA comprised of all individuals age 40 years and older who had their employment terminated by an HP entity pursuant to a work force reduction (“WFR”) plan on or after December 9, 2014 for individuals terminated in deferral states and on or after April 8, 2015 in non-deferral states.

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.

Plaintiffs seek to certify a nationwide collective action under the ADEA comprised of individuals aged 40 years and older who had their employment terminated by an HP entity pursuant to a work force reduction (“WFR”) plan.

Plaintiffs also seek to certify a class under California law consisting 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.

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

4 unchanged sentences

Hewlett Packard Enterprise Company (Terix copyright matter).

On March 22, 2016, Oracle filed a complaint against HPE in the United States District Court for the Northern District of California, alleging copyright infringement, interference with contract, intentional interference with prospective economic relations, and unfair competition.

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Oracle’s claims arise out of HPE’s prior use of a third-party maintenance provider named Terix Computer Company, Inc.

Oracle contends that in connection with HPE’s use of Terix as a subcontractor for certain customers of HPE’s multivendor support business, Oracle’s copyrights were infringed, and HPE is liable for vicarious and contributory infringement and related claims.

The lawsuit against HPE follows a prior lawsuit brought by Oracle against Terix in 2013 relating to Terix’s alleged unauthorized provision of Solaris patches to customers on Oracle hardware.

On January 29, 2019, the court granted HPE’s Motion for Summary Judgment as to all of Oracle’s claims.

On February 20, 2019, the court entered judgment in favor of HPE, dismissing Oracle’s claims in their entirety.

Oracle appealed the trial court’s ruling to the United States Court of Appeals for the Ninth Circuit.

On August 20, 2020, the United States Court of Appeals for the Ninth Circuit issued its ruling, affirming in part and reversing in part the trial court’s decision granting summary judgment in favor of HPE.

On October 6, 2020, the matter was remanded to the United States District Court for the Northern District of California.

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 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.

The parties have since reached an agreement to resolve this dispute.

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

The evidentiary hearing before the ITC has been completed.

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

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

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terminating the investigation.

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.

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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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In the ordinary course of business, the Company may issue performance guarantees to certain of its clients, customers, and other parties pursuant to which the Company has guaranteed the performance obligations of third parties.

5 unchanged sentences

The Company believes the likelihood of having to acquire a material amount of assets under these arrangements is remote.

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Indemnifications

4 unchanged sentences

Equity Method Investments

Pursuant to the Shareholders' Agreement among the Company, Unisplendor International Technology Limited ("UNIS"), and H3C Technologies Co Limited ("H3C") dated as of May 1, 2016, as amended from time to time, and most recently on October 28, 2022, the Company delivered a notice to UNIS on December 30, 2022, to exercise its right to put to UNIS, for cash consideration, all of the H3C shares held by the Company, which represent 49 % of the total issued share capital of H3C, at a price per share of 15.0 times the last twelve months’ post-tax profit of H3C (measured as of the period ending April 30, 2022) divided by the total number of H3C shares outstanding as of December 30, 2022.

The determination of the purchase price remains subject to agreement among the parties, taking into account certain adjustments to the post-tax profit of H3C pursuant to the terms of the Shareholders’ Agreement and the availability of the necessary information to make such determination.

The disposition is also subject to obtaining required regulatory approvals.

Pursuant to the Shareholders' Agreement among the Company’s relevant subsidiaries, Unisplendour International Technology Limited ("UNIS"), and H3C Technologies Co., Limited ("H3C") dated as of May 1, 2016, as amended from time to time, and most recently on October 28, 2022, the Company delivered a notice to UNIS on December 30, 2022, to exercise its right to put to UNIS, for cash consideration, all of the H3C shares held by the Company, which represent 49 % of the total issued share capital of H3C.

On May 26, 2023, the Company’s relevant subsidiaries entered into a Put Share Purchase Agreement with UNIS, whereby UNIS has agreed to purchase all of the H3C shares held by the Company, through its subsidiaries, for total pre-tax cash consideration of $ 3.5 billion.

The disposition remains subject to obtaining required regulatory approvals and completion of certain conditions necessary for closing.

Subsequent Events

Subsequent to January 31, 2023, the Company announced and entered into definitive agreements to acquire Athonet and Axis Security.

Athonet is a private cellular network technology provider that delivers mobile core networks to enterprises and communication service providers.

Axis Security is a cloud security provider, which will allow the Company to expand its edge-to-cloud security capabilities by offering a Security Access Services Edge solution.

The total expected cash purchase price of the acquisitions is approximately $ 490 million, subject to normal working capital and other closing adjustments.

The Company expects both transactions to close during fiscal 2023.

On May 2, 2023, the Company completed the acquisition of OpsRamp, an IT operations management company that monitors, observes, automates and manages IT infrastructure, cloud resources, workloads and applications for hybrid and multi-cloud environments, including the leading hyperscalers, for a purchase price of approximately $ 300 million.

OpsRamp’s technology will be integrated with the Company's HPE GreenLake edge-to-cloud platform and made available as a standalone aaS offering.

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