What changed in this filing

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Item 1. Financial Statements

2023-09-01 compared with 2023-06-02 · 238 added, 224 removed, 879 unchanged (34% of the section changed)

Financial Statements.

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)

Condensed Consolidated Statements of Earnings for the three and nine months ended July 31 , 2023 and 2022 (Unaudited)

Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended July 31 , 2023 and 2022 (Unaudited)

Condensed Consolidated Balance Sheets as of July 3 1 , 2023 (Unaudited) and October 31, 2022 (Audited)

Condensed Consolidated Statements of Cash Flows for the nine months ended July 31 , 2023 and 2022 (Unaudited)

Condensed Consolidated Statements of Stockholders' Equity for the thr ee and nine months ended July 31 , 2023 and 2022 (Unaudited)

Notes to Condensed Consolidated Financial Statements (Unaudited)

11 unchanged sentences

Equity Method Investments

Subsequent Events

Table of Content

1 unchanged sentence

Condensed Consolidated Statements of Earnings

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

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

2023 2022 2023 2022

7 unchanged sentences

Cost of services 1,646 1,535 4,892 4,648

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

Financing cost 102 54 270 248

90 148 168 194

Research and development 578 509 1,771 1,530

8 unchanged sentences

Tax indemnification and related adjustments 45 ( 30 ) 50 ( 47 )

Non-service net periodic benefit credit 1 36 1 72

Non-service net periodic benefit (cost) credit ( 3 ) 34 ( 2 ) 106

Earnings from equity interests 73 68 180 132

8 unchanged sentences

Diluted 1,316 1,323 1,317 1,326

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

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

2023 2022 2023 2022

5 unchanged sentences

Change in Net Unrealized Gains (Losses) on Cash Flow Hedges:

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

Net unrealized (losses) gains arising during the period ( 25 ) 163 ( 525 ) 723

Net losses (gains) reclassified into earnings 60 ( 215 ) 346 ( 680 )

1 unchanged sentence

Change in Unrealized Components of Defined Benefit Plans:

Net unrealized gains arising during the period — — — 6

Net unrealized (losses) gains arising during the period ( 2 ) — ( 2 ) 6

Amortization of net actuarial loss and prior service benefit 37 39 108 120

Curtailments, settlements and other 3 — 3 2

38 39 109 128

Change in Cumulative Translation Adjustment ( 30 ) ( 45 ) ( 11 ) ( 81 )

7 unchanged sentences

Condensed Consolidated Balance Sheets

April 30, 2023 October 31, 2022

July 31, 2023 October 31, 2022

(Unaudited) (Audited)

29 unchanged sentences

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

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

1,283 and 1,281 shares issued and outstanding as of July 31, 2023 and October 31, 2022, respectively)

Additional paid-in capital 28,191 28,299

9 unchanged sentences

Condensed Consolidated Statements of Cash Flows (Unaudited)

For the six months ended April 30,

For the nine months ended July 31,

Cash Flows from Operating Activities:

Net earnings $ 1,383 $ 1,172

Adjustments to reconcile net earnings to net cash used in operating activities:

Adjustments to Reconcile Net Earnings to Net Cash Provided by Operating Activities:

Depreciation and amortization 1,961 1,862

4 unchanged sentences

Earnings from equity interests ( 180 ) ( 132 )

Dividends received from equity investees 34 38

Other, net ( 7 ) ( 6 )

21 unchanged sentences

Payment of debt ( 3,062 ) ( 1,941 )

Settlement of cash flow hedge ( 2 ) —

Cash settlement for derivative hedging debt ( 7 ) —

Net payments related to stock-based award activities ( 100 ) ( 46 )

1 unchanged sentence

Cash dividends paid to shareholders ( 465 ) ( 467 )

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

Net cash used in financing activities ( 168 ) ( 216 )

Effect of exchange rate changes on cash, cash equivalents, and restricted cash 138 —

Decrease in cash, cash equivalents and restricted cash ( 1,808 ) ( 784 )

(Decrease) increase in cash, cash equivalents and restricted cash ( 1,631 ) 117

Cash, cash equivalents and restricted cash at beginning of period 4,763 4,332

4 unchanged sentences

Condensed Consolidated Statements of Stockholders' Equity (Unaudited)

For the three months ended April 30, 2023 Number of Shares Par Value Additional Paid-in Capital Accumulated Deficit Accumulated

For the three months ended July 31, 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

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

Net earnings 464 464 — 464

Other comprehensive gain 78 78 78

Other comprehensive income 29 29 29

Comprehensive income 493 — 493

5 unchanged sentences

( 154 ) ( 154 ) ( 154 )

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

Balance as of July 31, 2023 1,282,738 $ 13 $ 28,191 $ ( 4,433 ) $ ( 3,149 ) $ 20,622 $ 55 $ 20,677

) 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

For the nine months ended July 31, 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 October 31, 2022 1,281,037 $ 13 $ 28,299 $ ( 5,350 ) $ ( 3,098 ) $ 19,864 $ 45 $ 19,909

Balance as of October 31, 2022 1,281,037 $ 13 $ 28,299 $ ( 5,350 ) $ ( 3,098 ) $ 19,864 $ 45 $ 19,909

Net earnings 1,383 1,383 10 1,393

7 unchanged sentences

( 465 ) ( 465 ) ( 465 )

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

Balance as of July 31, 2023 1,282,738 $ 13 $ 28,191 $ ( 4,433 ) $ ( 3,149 ) $ 20,622 $ 55 $ 20,677

Table of Content

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

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

Comprehensive

1 unchanged sentence

In millions, except number of shares in thousands

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

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

Net earnings 409 409 3 412

Other comprehensive income 69 69 69

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

Comprehensive income 356 3 359

5 unchanged sentences

( 156 ) ( 156 ) ( 156 )

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

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

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

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

Comprehensive

1 unchanged sentence

In millions, except number of shares in thousands

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

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

Net earnings 1,172 1,172 7 1,179

7 unchanged sentences

( 467 ) ( 467 ) ( 467 )

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

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

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

10 unchanged sentences

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

In the opinion of management, the accompanying unaudited Condensed Consolidated Financial Statements of Hewlett Packard Enterprise contain all adjustments, including normal recurring adjustments, necessary to present fairly the Company's financial position as of 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.

In the opinion of management, the accompanying unaudited Condensed Consolidated Financial Statements of Hewlett Packard Enterprise contain all adjustments, including normal recurring adjustments, necessary to present fairly the Company's financial position as of July 31, 2023 and October 31, 2022, its results of operations for the three and nine months ended July 31, 2023 and 2022, its cash flows for the nine months ended July 31, 2023 and 2022, and its statements of stockholders' equity for the three and nine months ended July 31, 2023 and 2022.

The results of operations for the three and nine months ended July 31, 2023 and the cash flows for the nine months ended July 31, 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.

1 unchanged sentence

Segment Realignment

Effective at the beginning of the first quarter of fiscal 2023, in orde r to align its segment financial reporting more closely with its current business structure, the Company implemented an organizational change with the transfer of certain storage networking products, previously reported within the Storage reportable segment, to the Compute reportable segment.

Effective as of the beginning of the first quarter of fiscal 2023, in orde r to align its segment financial reporting more closely with its current business structure, the Company implemented an organizational change with the transfer of certain storage networking products, previously reported within the Storage reportable segment, to the Compute reportable segment.

The Company reflected these changes to its segment information retrospectively to the earliest period presented, which primarily resulted in the realignment of net revenue and operating profit for each of the segments as described above.

4 unchanged sentences

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

Although there are new accounting pronouncements issued by the Financial Accounting Standards Board ("FASB") that the Company will adopt, as applicable, the Company does not believe any of these accounting pronouncements will have a material impact on its Condensed Consolidated Financial Statements.

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

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

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

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

Table of Content

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements (Continued)

Recently Enacted Accounting Pronouncements

Segment Information

14 unchanged sentences

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 provides data storage and management offerings, which include cloud-native primary storage with the HPE Alletra Storage portfolio, self-service private cloud on-demand with HPE GreenLake for Private Cloud Business Edition, 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 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.

Intelligent Edge offers wired and wireless local area network, campus and data center switching, software-defined wide-area-network, network security, and associated services to enable secure connectivity for businesses of any size.

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

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

Intelligence Edge offerings are consolidated in the Edge Service Platform which takes a cloud-native approach that provides customers a unified framework to meet their connectivity, security, and financial needs across campus, branch, data center, and remote worker environments .

Intelligent Edge offerings are consolidated in the edge service platform which takes a cloud-native approach that provides customers a unified framework to meet their connectivity, security, and financial needs across campus, branch, data center, and remote worker environments .

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

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

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

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

the HPE Software business, which offers the HPE Ezmeral Software

Table of Content

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements (Continued)

Container Platform and HPE Ezmeral Software Data Fabric;

the Communications and Media Solutions business ("CMS"), which primarily offers software and related services to the telecommunications industry and Athonet, which provides private mobile core networks to enterprises and communication services providers;

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

OpsRamp which provides a SaaS platform for managed service providers and enterprise IT teams to monitor and manage their cloud and on-premises (“hybrid”) infrastructure;

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

1 unchanged sentence

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, 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 recovery (charges), and acquisition, disposition and other related charges.

Segment Operating Results

3 unchanged sentences

Investments and Other Total

Three months ended April 30, 2023:

Three months ended July 31, 2023:

Net revenue $ 2,557 $ 804 $ 1,040 $ 1,412 $ 871 $ 318 $ 7,002

2 unchanged sentences

Segment earnings (loss) from operations $ 285 $ ( 7 ) $ 115 $ 420 $ 73 $ ( 38 ) $ 848

Three months ended April 30, 2022:

Three months ended July 31, 2022:

Net revenue $ 2,978 $ 806 $ 1,114 $ 940 $ 813 $ 300 $ 6,951

2 unchanged sentences

Segment earnings (loss) from operations $ 408 $ 28 $ 161 $ 155 $ 96 $ ( 31 ) $ 817

Six months ended April 30, 2023:

Nine months ended July 31, 2023:

Net revenue $ 8,600 $ 2,624 $ 3,229 $ 3,834 $ 2,590 $ 907 $ 21,784

2 unchanged sentences

Segment earnings (loss) from operations $ 1,314 $ ( 8 ) $ 339 $ 1,018 $ 239 $ ( 140 ) $ 2,762

Six months ended April 30, 2022:

Nine months ended July 31, 2022:

Net revenue $ 8,941 $ 2,269 $ 3,286 $ 2,704 $ 2,474 $ 951 $ 20,625

6 unchanged sentences

The reconciliation of segment operating results to Condensed Consolidated Statements of Earnings was as follows:

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

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

2023 2022 2023 2022

9 unchanged sentences

Transformation costs ( 65 ) ( 80 ) ( 227 ) ( 289 )

Disaster charges (1)

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

Disaster recovery (charges) 2 ( 36 ) ( 2 ) ( 160 )

Acquisition, disposition and other related charges ( 21 ) ( 9 ) ( 51 ) ( 25 )

1 unchanged sentence

Tax indemnification and related adjustments 45 ( 30 ) 50 ( 47 )

Non-service net periodic benefit credit 1 36 1 72

Non-service net periodic benefit (cost) credit ( 3 ) 34 ( 2 ) 106

Earnings from equity interests 73 68 180 132

Total earnings before provision for taxes $ 536 $ 464 $ 1,681 $ 1,233

(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:

April 30, 2023 October 31, 2022

July 31, 2023 October 31, 2022

Compute $ 15,334 $ 16,881

11 unchanged sentences

Net revenue by geographic region was as follows:

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

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

2023 2022 2023 2022

11 unchanged sentences

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 Plan 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 the 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.

4 unchanged sentences

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

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

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

2023 2022 2023 2022

8 unchanged sentences

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,

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

2023 2022 2023 2022

6 unchanged sentences

Total $ 25 $ 37 $ 81 $ 158

Restructuring Plan

R estructuring Plan

Restructuring activities related to the Company's employees and infrastructure under the Cost Optimization and Prioritization Plan and HPE Next Plan are presented in the table below:

8 unchanged sentences

Non-cash items 11 ( 7 ) 1 —

Liability as of April 30, 2023

Liability as of July 31, 2023

$ 136 $ 119 $ 6 $ 20

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

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

$ 720 $ 535 $ 1,265 $ 262

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

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

$ 750 $ 550 $ 1,265 $ 265

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.

The current restructuring liability related to the transformation programs, reported in the Condensed Consolidated Balance Sheets as of July 31, 2023 and October 31, 2022, was $ 149 million and $ 191 million, respectively, in Accrued restructuring, and $ 26 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 July 31, 2023 and October 31, 2022, was $ 106 million and $ 124 million, respectively.

Table of Content

3 unchanged sentences

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,

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

2023 2022 2023 2022

1 unchanged sentence

Interest cost (1)

98 38 288 118

Expected return on plan assets (1)

6 unchanged sentences

Total net benefit cost (credit) $ 14 $ ( 15 ) $ 41 $ ( 46 )

(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.

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

Taxes on Earnings

Provision for Taxes

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.

For the three months ended July 31, 2023 and 2022, the Company recorded income tax expense of $ 72 million and $ 55 million, respectively, which reflects an effective tax rate of 13.4 % and 11.9 %, respectively.

For the nine months ended July 31, 2023 and 2022, the Company recorded income tax expense of $ 298 million and $ 61 million, respectively, which reflects an effective tax rate of 17.7 % and 5.0 %, respectively.

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

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

For the three and six months ended April 30, 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 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.

For the three and nine months ended July 31, 2023, the Company recorded $ 8 million of net income tax charges and $ 17 million of net income tax benefits, respectively, related to various items discrete to the period.

For the three months ended July 31, 2023, this amount primarily included $ 15 million of net income tax charges related to U.S.

and foreign provision to tax return changes and $ 11 million of net income tax charges related to tax audit settlements and changes in uncertain tax positions, partially offset by $ 19 million of net income tax benefits related to transformation costs, and acquisition, disposition and other related charges.

For the nine months ended July 31, 2023, this amount primarily included $ 55 million of income tax benefits related to transformation costs, and acquisition, disposition and other related charges and $ 15 million of net excess tax benefits related to stock-based compensation, partially offset by $ 32 million of net income tax charges related to tax audit settlements and changes in uncertain tax positions and $ 20 million of net income tax charges related to U.S.

and foreign provision to tax return changes.

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

For the three months ended July 31, 2022, this amount primarily included $ 30 million of income tax benefits related to tax liabilities for which the Company shared joint and several liability with HP Inc.

and for which the Company was indemnified by HP Inc., $ 18 million of income tax benefits related to transformation costs, and acquisition, disposition and other related charges, $ 12 million of income tax benefits as a result of the fiscal 2021 U.S.

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

For the nine months ended July 31, 2022, this amount primarily included $ 64 million of income tax benefits related to transformation costs, and acquisition, disposition and other related charges, $ 43 million of net income tax benefits related to the settlement of U.S.

tax audit matters, $ 30 million of income tax benefits related to tax liabilities for which the Company shared joint and several liability with HP Inc.

and for which the Company was indemnified

Table of Content

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements (Continued)

by HP Inc., $ 12 million of net income tax benefits related to the settlement of foreign tax audit matters, $ 12 million of income tax benefits as a result of the fiscal 2021 U.S.

tax return filing primarily from the decrease in GILTI, and $ 9 million of net income tax benefits on pre-tax charges incurred related to the Company’s exit from its Russia and Belarus businesses.

Uncertain Tax Positions

As of July 31, 2023 and October 31, 2022, the amount of unrecognized tax benefits was $ 711 million and $ 674 million, respectively, of which up to $ 421 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 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 expense of $ 5 million and interest income of $ 4 million for the three months ended July 31, 2023 and 2022, respectively.

The Company recognized interest income of $ 5 million and $ 41 million for the nine months ended July 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 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.

As of July 31, 2023 and October 31, 2022, the Company had accrued $ 76 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.

6 unchanged sentences

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

April 30, 2023 October 31, 2022

July 31, 2023 October 31, 2022

Deferred tax assets $ 2,251 $ 2,127

3 unchanged sentences

Cash, Cash Equivalents and Restricted Cash

April 30, 2023 October 31, 2022

July 31, 2023 October 31, 2022

Cash and cash equivalents $ 2,919 $ 4,163

2 unchanged sentences

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

April 30, 2023 October 31, 2022

Finished goods $ 1,350 $ 2,187

Purchased parts and fabricated assemblies 2,967 2,974

Total $ 4,317 $ 5,161

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1 unchanged sentence

Notes to Condensed Consolidated Financial Statements (Continued)

July 31, 2023 October 31, 2022

Finished goods $ 2,001 $ 2,187

Purchased parts and fabricated assemblies 2,540 2,974

Total $ 4,541 $ 5,161

Property, Plant and Equipment

April 30, 2023 October 31, 2022

July 31, 2023 October 31, 2022

Land $ 74 $ 74

8 unchanged sentences

Settlements made ( 157 )

Balance as of April 30, 2023

Balance as of July 31, 2023

Contract Balances

2 unchanged sentences

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

April 30, 2023 October 31, 2022

July 31, 2023 October 31, 2022

Unbilled receivables $ 306 $ 245

2 unchanged sentences

Total $ 3,448 $ 4,101

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

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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

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

July 31, 2023 October 31, 2022

Balance at beginning of period $ 25 $ 23

2 unchanged sentences

Balance at end of period $ 30 $ 25

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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

Sale of Trade Receivables

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

During the three 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.

For the three and nine months ended July 31, 2023, the Company sold $ 1.0 billion and $ 3.1 billion of trade receivables, respectively.

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

The Company recorded an obligation of $ 90 million and $ 88 million within Notes payable and short-term borrowings in its Condensed Consolidated Balance Sheets as of July 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 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.

As of July 31, 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 $ 3.2 billion and $ 3.0 billion, respectively, were recorded in Other non-current liabilities in the Condensed Consolidated Balance Sheets.

For the nine months ended July 31, 2023, approximately $ 2.8 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 April 30, 2023, the aggregate amount of remaining performance obligations, or deferred revenue, was $ 6.7 billion.

As of July 31, 2023, the aggregate amount of remaining performance obligations, or deferred revenue, was $ 6.8 billion.

The Company expects to recognize approximately 23 % of this balance over fiscal 2023 with the remainder to be recognized thereafter.

Costs to Obtain a Contract

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 July 31, 2023, the current and non-current portions of the capitalized costs to obtain a contract were $ 82 million and $ 131 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 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.

For the three and nine months ended July 31, 2023 the Company amortized $ 24 million and $ 69 million respectively, of capitalized costs to obtain a contract.

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

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

5 unchanged sentences

The components of financing receivables were as follows:

April 30, 2023 October 31, 2022

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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

July 31, 2023 October 31, 2022

Minimum lease payments receivable $ 9,575 $ 8,686

7 unchanged sentences

Amounts due after one year, net $ 5,084 $ 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 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.

For the nine months ended July 31, 2023 and the fiscal year ended October 31, 2022, the Company sold $ 179 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.

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

The credit risk profile of gross financing receivables, based on internal risk ratings as of July 31, 2023, presented on amortized cost basis by year of origination was as follows:

As of July 31, 2023

Low Moderate High

6 unchanged sentences

Total $ 5,188 $ 3,574 $ 308

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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 October 31, 2022, presented on amortized cost basis by year of origination was as follows:

11 unchanged sentences

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 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

The allowance for credit losses for financing receivables as of July 31, 2023 and October 31, 2022 and the respective changes for the nine and twelve months then ended were as follows:

July 31, 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:

April 30, 2023 October 31, 2022

July 31, 2023 October 31, 2022

Current and past due 1-30 days $ 400 $ 372

9 unchanged sentences

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,

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

2023 2022 2023 2022

6 unchanged sentences

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

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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

primary beneficiary of the VIE.

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.

1 unchanged sentence

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

The following table presents the assets and liabilities held by the consolidated VIE as of April 30, 2023 and October 31, 2022, which are included in the Condensed Consolidated Balance Sheets.

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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

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

April 30, 2023 October 31, 2022

July 31, 2023 October 31, 2022

Assets held by VIE:

7 unchanged sentences

Long-term debt, net of unamortized debt issuance costs $ 984 $ 1,415

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 nine months ended July 31, 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.

For the nine months ended July 31, 2023, the Company completed five 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.

The pro forma results of operations, 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 $ 591

Amortizable intangible assets 208

Net tangible liabilities assumed 39

Net tangible assets assumed 41

Total fair value consideration $ 840

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.

OpsRamp’s results of operations were included within the Corporate Investments and Other segment.

The acquisition date fair value consideration of $ 307 million primarily consisted of cash paid for outstanding common stock.

In connection with this acquisition, the Company recorded approximately $ 220 million of goodwill, and $ 84 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 .

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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.

3 unchanged sentences

Goodwill is tested for impairment at the reporting unit level.

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 April 30, 2023 and October 31, 2022.

As of July 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 five reporting units:

A & PS, Athonet, legacy CMS, OpsRamp and Software.

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

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

Balance at October 31, 2022 (1)

Balance as of October 31, 2022 (1)

$ 7,692 $ 2,889 $ 4,000 $ 2,555 $ 144 $ 123 $ 17,403

Goodwill acquired during the period — 18 — 311 — 262 591

Balance at April 30, 2023

Balance as of July 31, 2023

$ 7,692 $ 2,907 $ 4,000 $ 2,866 $ 144 $ 385 $ 17,994

16 unchanged sentences

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

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

As of July 31, 2023 As of October 31, 2022

Measured Using Fair Value

9 unchanged sentences

Money market funds 366 — — 366 744 — — 744

Equity securities — — 129 129 — — 126 126

Equity investments — — 131 131 — — 126 126

Foreign bonds 1 103 — 104 — 91 — 91

9 unchanged sentences

Total liabilities $ — $ 508 $ — $ 508 $ — $ 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 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.

As of July 31, 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 July 31, 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.

Other Financial Instruments

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

Non-Recurring Fair Value Measurements

Equity Investments without Readily Determinable Fair Value

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 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.

For the three months ended July 31, 2023 and 2022, the Company recognized an immaterial unrealized net gain on these investments.

For the nine months ended July 31, 2023, the Company recognized an unrealized net loss of $ 6 million on these investments which included an impairment of $ 10 million.

For the nine months ended July 31, 2022, the Company recorded an immaterial impairment on these investments.

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.

For investments still held as of July 31, 2023, the cumulative upward adjustments for observable price changes was $ 33 million and cumulative downward adjustments for observable price changes and impairments was $ 40 million.

Refer to Note 11 “Financial Instruments,” for further information about equity investments.

Non-Financial Assets

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 (“ROU”) 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 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.

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.

There are no material impairment charges for three and nine months ended July 31, 2023 and 2022.

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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

Financial Instruments

1 unchanged sentence

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

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

As of July 31, 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 — 104 93 ( 2 ) 91

2 unchanged sentences

Total cash equivalents and available-for-sale debt investments $ 1,626 $ 3 $ 1,629 $ 2,385 $ ( 1 ) $ 2,384

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.

As of July 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 t ions outside of the U.S.

as of July 31, 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 April 30, 2023

As of July 31, 2023

Amortized Cost Fair Value

2 unchanged sentences

Total $ 117 $ 120

Equity Investments

Non-marketable equity investments in privately held companies are included in Long-term financing receivables and other assets in the Condensed Consolidated Balance Sheets.

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

Measurement alternative equity investments are recorded at cost and measured at fair value when they are deemed to be impaired or when there is an adjustment from observable price changes.

The carrying amount of those non-marketable equity investments accounted for under the fair value option was $ 131 million and $ 126 million as of July 31, 2023 and October 31, 2022, respectively.

For the three and nine months ended July 31, 2023, the Company recorded an unrealized gain of $ 2 million and $ 5 million, respectively, on these investments.

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

These amounts are reflected in Interest and other, net in the Condensed Consolidated Statement of Earnings.

The carrying amount of those non-marketable equity investments accounted for under the measurement alternative was $ 185 million and $ 175 million as of July 31, 2023 and October 31, 2022, respectively.

For the three months ended July 31, 2023 and 2022, the Company recognized an immaterial unrealized net gain on these investments.

For the nine months ended July 31, 2023, the Company recognized an unrealized net loss of $ 6 million, which included an impairment of $ 10 million.

For the nine months ended July 31, 2022, the Company recorded an immaterial impairment on these investments.

These amounts are reflected in Interest and other, net in the Condensed Consolidated Statement of Earnings.

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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 April 30, 2023 As of October 31, 2022

As of July 31, 2023 As of October 31, 2022

Fair Value Fair Value

22 unchanged sentences

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

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

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

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

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Notes to Condensed Consolidated Financial Statements (Continued)

collateral security agreements.

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

As of April 30, 2023

As of July 31, 2023

In the Condensed Consolidated Balance Sheets

19 unchanged sentences

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

As of April 30, 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 July 31, 2023, of the $ 277 million of collateral posted, $ 263 million was in cash and $ 14 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)

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

July 31, 2023 October 31, 2022 July 31, 2023 October 31, 2022

Long-term debt $ ( 2,339 ) $ ( 2,317 ) $ 157 $ 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 April 30, For the six months ended April 30,

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

2023 2022 2023 2022

4 unchanged sentences

Total $ ( 69 ) $ 193 $ ( 668 ) $ 776

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.

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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

As of July 31, 2023, the Company expects to reclassify an estimated net accumulated other comprehensive loss of approximately $ 34 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

The pre-tax effect of derivative instruments on the Condensed Consolidated Statements of Earnings were as follows:

The following table represents the pre-tax effect of derivative instruments on total amounts of income and expense line items presented in the Condensed Consolidated Statements of Earnings in which the effects of fair value hedges and derivatives not designated as hedging instruments are recorded:

Gains (Losses) Recognized in Income

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

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

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 )

Total net revenue and interest and other, net $ 7,002 $ ( 50 ) $ 6,951 $ ( 74 ) $ 21,784 $ ( 129 ) $ 20,625 $ ( 79 )

Gains (Losses) on Derivatives in Fair Value Hedging Relationships:

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Total (losses) gains $ ( 16 ) $ ( 81 ) $ 114 $ 167 $ 11 $ ( 585 ) $ 236 $ 601

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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:

April 30, 2023 October 31, 2022

July 31, 2023 October 31, 2022

Current portion of long-term debt (1)

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Total $ 13,352 $ 12,465

(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.

(1) As of July 31, 2023, the Current portion of long-term debt, net of discount and issuance costs, included $ 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)

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 June 2023, the Company completed its offering of $ 250 million of 5.9 % Senior Notes due October 1, 2024, at premium to par at a price of 100.452 %.

Interest is payable semi-annually on April 1 and October 1 of each year, beginning on October 1, 2023.

These notes constitute a further issuance of, and are consolidated with, the $ 1.3 billion aggregate principal amount of 5.9 % Senior Notes due 2024 issued on March 21, 2023.

After giving effect to this issuance, there are $ 1.6 billion aggregate principal amount of 5.9 % notes due 2024 outstanding.

In June 2023, the Company also completed its offering of $ 550 million of 5.25 % Senior Notes due July 1, 2028, at discount to par at a price of 99.887 %.

Interest is payable semi-annually on January 1 and July 1 of each year, beginning on January 1, 2024.

In March 2023, the Company completed its offering of $ 1.3 billion of 5.9 % Senior Notes due October 1, 2024, issued at discount to par at a price of 99.934 % and $ 400 million of 6.102 % Senior Notes due April 1, 2026, issued at discount to par at a price of 99.997 %.

Interest is payable semi-annually on April 1 and October 1 of each year, beginning on October 1, 2023.

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.

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

As of July 31, 2023 and October 31, 2022, no borrowings were outstanding under the Parent Programs.

As of July 31, 2023 and October 31, 2022, $ 651 million and $ 542 million, respectively, were outstanding under the subsidiary’s program.

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 July 31, 2023 and October 31, 2022, no borrowings were outstanding under this credit facility.

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Notes to Condensed Consolidated Financial Statements (Continued)

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 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 April 30, 2023, and changes during the six months ended April 30, 2023 were as follows:

The components of accumulated other comprehensive loss, net of taxes as of July 31, 2023, and changes for the nine months ended July 31, 2023 were as follows:

Net Unrealized

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Balance at end of period $ 3 $ ( 36 ) $ ( 2,497 ) $ ( 619 ) $ ( 3,149 )

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

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

Net Unrealized

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Share Repurchase Program

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.

For the nine months ended July 31, 2023, the Company repurchased and settled a total of 23.9 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 July 31, 2023, the Company had unsettled open market repurchases of 0.1 million shares.

Shares repurchased for the nine months ended July 31, 2023 were recorded as a $ 362 million reduction to stockholders' equity.

As of July 31, 2023, the Company had a remaining authorization of $ 1.0 billion for future share repurchases.

Net Earnings Per Share

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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 April 30, For the six months ended April 30,

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

2023 2022 2023 2022

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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 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.

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

Litigation, Proceedings, and Investigations

3 unchanged sentences

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

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 filed with the Court on September 26, 2022.

On November 3, 2022, the Court granted Plaintiff’s motion and preliminarily

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Notes to Condensed Consolidated Financial Statements (Continued)

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.

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.

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

The parties have reached an agreement in principle to resolve this matter.

The parties are currently working to negotiate a formal settlement agreement that, if finalized, would be submitted to the Court for approval.

Oracle America, Inc., et al.

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

On March 22, 2016, Oracle filed a complaint against HPE in the United States District Court for the Northern District of California, alleging

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Notes to Condensed Consolidated Financial Statements (Continued)

copyright infringement, interference with contract, intentional interference with prospective economic relations, and unfair competition.

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

48 unchanged sentences

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

Subsequent Events

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