What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2023-12-22 compared with 2022-12-08 · 464 added, 512 removed, 1864 unchanged (34% of the section changed)

25 unchanged sentences

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of Hewlett Packard Enterprise Company

To the Stockholders and Board of Directors of Hewlett Packard Enterprise Company

Opinion on the Financial Statements

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(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing a separate opinion on the critical audit matters or on the accounts or disclosures to which they relate .

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Valuation of goodwill

Description of the matter At October 31, 2022, the Company’s goodwill was $17.4 billion, of which $2.9 billion related to the High Performance Computing and Artificial Intelligence (HPC & AI) reporting unit.

Description of the matter At October 31, 2023, the Company’s goodwill was $18 billion, of which $7.7 billion related to the Compute reporting unit and $2.9 billion related to the High Performance Computing and Artificial Intelligence (“HPC & AI”) reporting unit.

As discussed in Note 11 to the consolidated financial statements, goodwill is tested for impairment at least annually at the reporting unit level and more frequently when warranted based on indicators of impairment.

Auditing management’s goodwill impairment test for the HPC & AI reporting unit was complex and highly judgmental due to the significant estimation required to determine the fair value of the reporting unit.

In particular, the fair value estimate of the HPC & AI reporting unit was sensitive to significant assumptions, such as changes in the weighted average cost of capital, revenue growth rate, operating margin and terminal value, which are affected by expectations about future market or economic conditions.

How we addressed the matter in our audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s goodwill impairment review process, including controls over management’s review of the significant assumptions described above.

To test the estimated fair value of the Company’s HPC & AI reporting unit, we performed audit procedures that included, among others, assessing methodologies and testing the significant assumptions discussed above and the underlying data used by the Company in its analysis.

Auditing management’s goodwill impairment test for the Compute and HPC & AI reporting units was complex and highly judgmental due to the significant estimation required to determine the fair value of the reporting units.

In particular, the fair value estimates of the Compute and HPC & AI reporting units were sensitive to significant assumptions, such as changes in the weighted average cost of capital, revenue growth rate, operating margin and terminal value, which are affected by expectations about future market or economic conditions.

To test the estimated fair value of the Company’s Compute and HPC & AI reporting units, we performed audit procedures that included, among others, assessing methodologies and testing the significant assumptions discussed above and the underlying data used by the Company in its analysis.

We compared the significant assumptions used by management to current industry and economic trends and evaluated whether changes to the Company’s business model, product mix and other factors would affect the significant assumptions.

We assessed the historical accuracy of management’s estimates and performed sensitivity analyses of significant assumptions to evaluate the changes in the fair value of the reporting units that would result from changes in the assumptions.

In addition, we tested management’s reconciliation of the fair value of all of the reporting units to the market capitalization of the Company.

In addition, we tested management’s reconciliation of the fair value of all the reporting units to the market capitalization of the Company.

We involved our valuation professionals to evaluate the application of valuation methodologies in the Company’s annual impairment test.

Estimation of variable consideration

Description of the matter As described in Note 1 to the consolidated financial statements, the Company recognizes revenue for sales to its customers after deducting management’s estimates of variable consideration which may include various rebates, volume-based discounts, cooperative marketing, price protection, and other incentive programs that are offered to customers, partners and distributors.

Description of the matter As described in Note 1 to the consolidated financial statements, the Company recognizes revenue for sales to its customers after deducting management’s estimates of variable consideration which may include various rebates, volume-based discounts, price protection, and other incentive programs that are offered to customers, partners, and distributors.

Estimated variable consideration is presented within other accrued liabilities on the consolidated balance sheet and totaled $1.1 billion at October 31, 2023.

Auditing the estimates of variable consideration was complex and judgmental due to the level of uncertainty involved in management’s estimate of expected usage of these programs.

Auditing the estimates of variable consideration associated with rebates was complex and judgmental due to the level of uncertainty involved in management’s estimate of expected usage of these programs.

How we addressed

the matter in our audit

We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s process for estimating variable consideration, including controls over management’s review of the significant assumptions described above.

We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s process for estimating rebates, including controls over the significant assumptions described above.

To test the Company’s determination of variable consideration we performed audit procedures that included, among others, evaluating the methodologies, testing the significant assumptions discussed above and testing the completeness and accuracy of the underlying data used by the Company in its analyses.

We compared the significant assumptions to historical experience of the Company to develop an expectation of the variable consideration associated with product remaining in the distribution channel at October 31, 2022, which we compared to management’s recorded amount.

We compared the significant assumptions to historical experience of the Company to develop an expectation of the rebates associated with product remaining in the distribution channel at October 31, 2023, which we compared to management’s recorded amount.

In addition, we inspected the underlying agreements and compared the incentive rates used in the Company’s analyses with contractual rates.

We assessed the historical accuracy of management’s estimates by comparing previous estimates of variable consideration to the amount of actual payments in subsequent periods.

We assessed the historical accuracy of management’s estimates by comparing previous estimates of rebate liabilities to the amount of actual payments in subsequent periods.

/s/ Ernst & Young LLP

We have served as the Company's auditor since 2014.

San Jose, California

Houston, Texas

December 22, 2023

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of Hewlett Packard Enterprise Company

To the Stockholders and Board of Directors of Hewlett Packard Enterprise Company

Opinion on Internal Control over Financial Reporting

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/s/ Ernst & Young LLP

San Jose, California

Houston, Texas

December 22, 2023

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/s/ ANTONIO F.

NERI /s/ TAREK A.

NERI /s/ JEREMY K.

President and Chief Executive Officer

Executive Vice President and Chief Financial Officer

December 8, 2022 December 8, 2022

Senior Vice President,

Chief Financial Officer, Corporate Controller, Chief Tax Officer, and Principal Accounting Officer

December 22, 2023

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

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Total costs and expenses 27,046 27,714 26,652

Earnings (loss) from operations 782 1,132 ( 329 )

Earnings from operations 2,089 782 1,132

Interest and other, net ( 156 ) ( 188 ) ( 211 )

Tax indemnification and related adjustments ( 67 ) 65 ( 101 )

Non-service net periodic benefit credit 134 70 136

Tax indemnification and other adjustments 55 ( 67 ) 65

Non-service net periodic benefit (cost) credit ( 3 ) 134 70

Litigation judgment — — 2,351

Earnings from equity interests 245 215 180

Earnings (loss) before (provision) benefit for taxes 876 3,587 ( 442 )

(Provision) benefit for taxes ( 8 ) ( 160 ) 120

Net earnings (loss) $ 868 $ 3,427 $ ( 322 )

Net earnings (loss) per share:

Earnings before provision for taxes 2,230 876 3,587

Provision for taxes ( 205 ) ( 8 ) ( 160 )

Net earnings $ 2,025 $ 868 $ 3,427

Net Earnings Per Share:

Basic $ 1.56 $ 0.67 $ 2.62

Diluted $ 1.54 $ 0.66 $ 2.58

Weighted-average shares used to compute net earnings (loss) per share:

Weighted-average Shares Used to Compute Net Earnings Per Share:

Basic 1,299 1,303 1,309

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2023 2022 2021

Net earnings (loss) $ 868 $ 3,427 $ ( 322 )

Net earnings $ 2,025 $ 868 $ 3,427

Other Comprehensive (Loss) Income Before Taxes

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

Net unrealized losses arising during the period ( 16 ) ( 3 ) ( 1 )

Gains reclassified into earnings — — ( 4 )

( 16 ) ( 3 ) ( 5 )

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

Change in Net Unrealized Gains (Losses) on Available-for-sale Securities:

Net unrealized gains (losses) arising during the period 1 ( 16 ) ( 3 )

Net (gains) losses reclassified into earnings ( 978 ) 156 ( 21 )

1 ( 16 ) ( 3 )

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

Net unrealized (losses) gains arising during the period ( 177 ) 1,025 ( 50 )

Net losses (gains) reclassified into earnings 116 ( 978 ) 156

( 61 ) 47 106

Change in Unrealized Components of Defined Benefit Plans:

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Benefit (Provision) for Taxes 58 87 ( 143 )

Other comprehensive (loss) income, net of taxes ( 183 ) 1,024 ( 169 )

Comprehensive income (loss) $ 685 $ 4,451 $ ( 491 )

Other Comprehensive Income (Loss), Net of Taxes 14 ( 183 ) 1,024

Comprehensive Income $ 2,039 $ 685 $ 4,451

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

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Total current assets 18,948 20,506

Property, plant and equipment 5,784 5,613

Property, plant and equipment, net 5,989 5,784

Long-term financing receivables and other assets 11,377 10,537

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Goodwill 17,988 17,403

Intangible assets 733 1,022

Intangible assets, net 654 733

Total assets $ 57,153 $ 57,123

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Cash Flows from Operating Activities:

Net earnings (loss) $ 868 $ 3,427 $ ( 322 )

Adjustments to reconcile net earnings (loss) to net cash provided by operating activities:

Net earnings $ 2,025 $ 868 $ 3,427

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

Depreciation and amortization 2,616 2,480 2,597

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Payment of debt ( 4,887 ) ( 3,992 ) ( 5,465 )

Settlement of cash flow hedge ( 8 ) — —

Cash settlement for derivative hedging debt ( 7 ) ( 8 ) —

Net payments related to stock-based award activities ( 106 ) ( 53 ) ( 29 )

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Cash dividends paid to shareholders ( 619 ) ( 621 ) ( 625 )

Net cash (used in) provided by financing activities ( 1,796 ) ( 3,364 ) 883

Net cash used in financing activities ( 1,362 ) ( 1,796 ) ( 3,364 )

Effect of exchange rate changes on cash, cash equivalents, and restricted cash 36 ( 279 ) —

Increase (decrease) in cash, cash equivalents and restricted cash 431 ( 289 ) 545

(Decrease) increase in cash, cash equivalents and restricted cash ( 182 ) 431 ( 289 )

Cash, cash equivalents and restricted cash at beginning of period 4,763 4,332 4,621

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Consolidated Statements of Stockholders' Equity

Number of Shares Par Value Additional Paid-in Capital (Accumulated Deficit) Retained Earnings Accumulated

Number of Shares Par Value Additional Paid-in Capital Accumulated Deficit Accumulated

Comprehensive

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Balance at October 31, 2020 1,287,010 $ 13 $ 28,350 $ ( 8,375 ) $ ( 3,939 ) $ 16,049 $ 47 $ 16,096

Net (loss) earnings ( 322 ) ( 322 ) 11 ( 311 )

Other comprehensive loss ( 169 ) ( 169 ) — ( 169 )

Comprehensive (loss) income ( 491 ) 11 ( 480 )

Net earnings 3,427 3,427 9 3,436

Other comprehensive income 1,024 1,024 — 1,024

Comprehensive income 4,451 9 4,460

Stock-based compensation expense 382 382 382

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( 625 ) ( 625 ) ( 10 ) ( 635 )

Effects of adoption of accounting standard updates relating to the reclassification of stranded tax effects 43 ( 43 ) — —

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

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

Net earnings 868 868 5 873

Other comprehensive income 1,024 1,024 — 1,024

Other comprehensive loss ( 183 ) ( 183 ) — ( 183 )

Comprehensive income 685 5 690

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( 621 ) ( 621 ) ( 8 ) ( 629 )

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

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

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Hewlett Packard Enterprise enables customers to accelerate business outcomes by driving new business models, creating new customer and employee experiences, and increasing operational efficiency today and into the future.

Hewlett Packard Enterprise's customers range from small- and medium-sized businesses ("SMBs") to large global enterprises and governmental entities.

Russia/Ukraine Conflict

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

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

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

During fiscal 2022, the Company recorded total pre-tax charges of $ 161 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 $ 50 million in Disaster charges in the Consolidated Statements of Earnings.

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

Hewlett Packard Enterprise's customers range from small- and medium-sized businesses to large global enterprises and governmental entities.

Basis of Presentation and Principles of Consolidation

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Net earnings attributable to non-controlling interests are recorded within Interest and other, net in the Consolidated Statements of Earnings and are not presented separately, as they were not material for any periods presented.

Segment Realignment

Effective as of the beginning of the first quarter of fiscal 2023, in order 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.

These changes had no impact on Hewlett Packard Enterprise’s previously reported consolidated net revenue, net earnings, net earnings per share (“EPS”) or total assets.

Russia/Ukraine Conflict

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

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

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

Use of Estimates

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Estimates are assessed each period and updated to reflect current information, including those related to revenue recognition, stock-based compensation, net periodic benefit costs, restructuring accruals, provision for taxes, valuation allowance for deferred taxes, provision for expected credit losses, inventory reserves, and impairment assessments of goodwill, intangible assets and other long-lived assets.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

believes that these estimates, judgments and assumptions are reasonable under the circumstances, and are subject to significant uncertainties, some of which are beyond the Company's control.

The Company believes that these estimates, judgments and assumptions are reasonable under the circumstances, and are subject to significant uncertainties, some of which are beyond the Company's control.

Should any of these estimates change, it could adversely affect the Company's results of operations.

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dollars at the balance sheet date as translation adjustments and includes them as a component of Accumulated other comprehensive loss in the Consolidated Balance Sheets.

The effect of foreign currency exchange rates on cash, cash equivalents and restricted cash was $ 279 million for fiscal 2022 and was not material for the prior years presented.

Revenue Recognition

The Company accounts for a contract with a customer when both parties have provided written approval and are committed to perform, each party's rights including payment terms are identified, the contract has commercial substance, and collection of consideration is probable.

The Company enters into contracts with customers that may include combinations of products and services, resulting in arrangements containing multiple performance obligations for hardware and software products and/or various services.

The Company enters into contracts with customers that typically include combinations of products and services, resulting in arrangements containing multiple performance obligations for hardware and software products and/or various services.

The Company determines whether each product or service is distinct in order to identify the performance obligations in the contract and allocate the contract transaction price among the distinct performance obligations.

Arrangements are distinct based on whether the customer can benefit from the product or service on its own or together with other resources that are readily available and whether the commitment to transfer the product or service to the customer is separately identifiable from other obligations in the contract.

The Company classifies its hardware, perpetual software licenses, and software-as-a-service ("SaaS") as distinct performance obligations.

The Company classifies its hardware, perpetual software licenses, service arrangements and software-as-a-service (“SaaS”) as distinct performance obligations.

Term software licenses represent multiple obligations, which include software licenses and software maintenance.

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The majority of the Company's revenue is derived from sales of products and services and the associated support and maintenance, and such revenue is recognized when, or as, control of promised products or services is transferred to the customer, in an amount that reflects the consideration to which the Company expects to be entitled, in exchange for those products or services.

Variable consideration offered in contracts with customers, partners and distributors may include rebates, volume-based discounts, cooperative marketing, price protection, and other incentive programs.

Variable consideration offered in contracts with customers, partners and distributors may include rebates, volume-based discounts, price protection, and other incentive programs.

Variable consideration is estimated at contract inception and updated at the end of each reporting period as additional information becomes available and recognized only to the extent that it is probable that a significant reversal of revenue will not occur.

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Revenue is recorded net of any associated sales taxes.

The Company allocates the transaction price for the contract among the performance obligations on a relative standalone selling price basis.

The standalone selling price ("SSP") is the price at which an entity would sell a promised product or service separately to a customer.

The Company establishes SSP for most of its products and services based on the observable price of the products or services when sold separately in similar circumstances to similar customers.

When the SSP is not directly observable, the Company estimates SSP based on management judgment by considering available data such as internal margin

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

objectives, pricing strategies, market/competitive conditions, historical profitability data, as well as other observable inputs.

The Company allocates the transaction price for the contract among the performance obligations on a relative standalone selling price basis.

The standalone selling price (“SSP”) is the price at which an entity would sell a promised product or service separately to a customer.

For products and services sold as a bundle, the SSP is generally not directly observable and requires the Company to estimate SSP based on management judgment by considering available data such as internal margin objectives, pricing strategies, market/competitive conditions, historical profitability data, as well as other observable inputs.

For certain products and services, the Company establishes SSP based on the observable price when sold separately in similar circumstances to similar customers.

The Company establishes SSP ranges for its products and services and reassesses them periodically.

Judgment is applied in determining the transaction price as the Company may be required to estimate variable consideration when determining the amount of revenue to recognize.

Variable consideration may include various rebates, volume-based discounts, cooperative marketing, price protection, and other incentive programs that are offered to customers, partners and distributors.

Variable consideration may include various rebates, volume-based discounts, price protection, and other incentive programs that are offered to customers, partners and distributors.

When determining the amount of revenue to recognize, the Company estimates the expected usage of these programs, applying the expected value or most likely estimate and updates the estimate at each reporting period as actual utilization becomes available.

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For stock options and restricted stock units with both a service condition and a performance or market condition, the expense is recognized on a graded vesting basis over the requisite service period of the award.

Stock-based compensation expense is determined at the aggregate grant level for service-based awards and at the individual vesting tranche level for awards with performance and/or market conditions.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

compensation expense is determined at the aggregate grant level for service-based awards and at the individual vesting tranche level for awards with performance and/or market conditions.

The forfeiture rate is estimated based on historical experience.

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The costs and obligations for these plans depend on various assumptions.

Major assumptions relate primarily to discount rates,

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

mortality rates, expected increases in compensation levels and the expected long-term return on plan assets.

Major assumptions relate primarily to discount rates, mortality rates, expected increases in compensation levels and the expected long-term return on plan assets.

These assumptions vary by plan, and the weighted-average rates used are set forth in Note 4, “Retirement and Post-Retirement Benefit Plans.”

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Costs to communicate advertising are expensed when the advertising is first run.

Advertising expense totaled approximately $ 179 million in fiscal 2022, $ 188 million in fiscal 2021, and $ 143 million in fiscal 2020.

Advertising expense totaled approximately $ 173 million, $ 179 million, and $ 188 million in fiscal 2023, 2022, and 2021, respectively.

Restructuring

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For a full description of the Company's restructuring actions, refer to the discussions in Note 3, “Transformation Programs.”

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

Taxes on Earnings

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The Company records a valuation allowance to reduce deferred tax assets to the amount that is more likely than not to be realized.

In determining the need for a valuation allowance, the Company considers future market growth, forecasted earnings, future sources of taxable income, the mix of earnings in the jurisdictions in which the Company operates, and prudent and

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

feasible tax planning strategies.

In the event the Company were to determine that it is more likely than not that the Company will be unable to realize all or part of its deferred tax assets in the future, the Company would increase the valuation allowance and recognize a corresponding charge to earnings in the period in which such a determination was made.

Likewise, if the Company later determines that the deferred tax assets are more likely than not to be realized, the Company would reverse the applicable portion of the previously recognized valuation allowance.

In order for the Company to realize deferred tax assets, the Company must be able to generate sufficient taxable income in the jurisdictions in which the deferred tax assets are located.

In order for the Company to realize deferred tax assets, the Company must be able to generate sufficient taxable income, of the appropriate character, in the jurisdictions in which the deferred tax assets are located, prior to their expiration under applicable tax laws.

The Company records accruals for uncertain tax positions when the Company believes that it is not more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position.

The provision for income taxes includes the effects of adjustments for uncertain tax positions as well as any related interest and penalties.

The Company recognizes interest income from favorable settlements and interest expense and penalties accrued on unrecognized tax benefits in (Provision) benefit for taxes in the Consolidated Statements of Earnings.

The Company recognizes interest income from favorable settlements and interest expense and penalties accrued on unrecognized tax benefits in Provision for taxes in the Consolidated Statements of Earnings.

The Company is subject to the Global Intangible Low Taxed Income (“GILTI”) tax in the U.S.

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The Company considers a financing receivable to be past due when the minimum payment is not received by the contractually specified due date.

The Company generally places financing receivables on non-accrual status, which is the suspension of interest accrual, and considers such receivables to be non-performing at the earlier of the time at which full payment of principal and interest becomes doubtful or the receivable becomes 90 days past due.

The Company generally places financing receivables on non-accrual status, which is the

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

suspension of interest accrual, and considers such receivables to be non-performing at the earlier of the time at which full payment of principal and interest becomes doubtful or the receivable becomes 90 days past due.

Subsequently, the Company may recognize revenue on non-accrual financing receivables as payments are received, which is on a cash basis, if the Company deems the recorded financing receivable to be fully collectible;

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After all of a customer's delinquent principal and interest balances are settled, the Company may return the related financing receivable to accrual status.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

Concentrations of Risk

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As of October 31, 2023 and 2022 no single customer accounted for more than 10% of the Company's receivable from trade customers and financing receivables.

The Company utilizes outsourced manufacturers around the world to manufacture company-designed products.

The Company may purchase product components from suppliers and sell those components to its outsourced manufacturers thereby creating receivable balances from the outsourced manufacturers.

The three largest outsourced manufacturer receivable balances collectively represented 94 % and 92 % of the Company's manufacturer receivables of $ 1.0 billion and $ 0.9 billion at October 31, 2022 and 2021, respectively.

The Company includes the manufacturer receivables in Other current assets in the Consolidated Balance Sheets on a gross basis.

The Company's credit risk associated with these receivables is mitigated wholly or in part by the amount the Company owes to these outsourced manufacturers, as the Company generally has the legal right to offset its payables to the outsourced manufacturers against these receivables.

The Company does not reflect the sale of these components in revenue and does not recognize any profit on these component sales until the manufactured products are sold by the Company, at which time any profit is recognized as a reduction to cost of sales.

The Company obtains certain components from single source suppliers due to technology, availability, price, quality or other considerations.

The loss of a single source supplier, the deterioration of the Company's relationship with a single source supplier, or any unilateral modification to the contractual terms under which the Company is supplied components by a single source supplier could adversely affect the Company's revenue and gross margins.

Restricted Cash

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Factors influencing these adjustments include changes in future demand forecasts, market conditions, technological changes, product life-cycle and development plans, component cost trends, product pricing, physical deterioration, and quality issues.

The write down for excess or obsolescence is charged to the provision of inventory, which is a component of Cost of Products and Cost of Services in the Consolidated Statement of Earnings.

The write down for excess or obsolescence is charged to the provision of inventory, which is a component of Cost of Products and Cost of Services in the Consolidated Statements of Earnings.

At the point of the loss recognition, a new, lower cost basis for that inventory is established, and subsequent changes in facts and circumstances do not result in the restoration or increase in that newly established cost basis.

Property, Plant and Equipment

Property, Plant and Equipment, net

The Company states property, plant and equipment at cost less accumulated depreciation.

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Depreciation expense is recognized on a straight-line basis over the estimated useful lives of the assets.

Estimated useful lives are five to 40 years for buildings and

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

improvements and three to 15 years for machinery and equipment.

Estimated useful lives are five to 40 years for buildings and improvements and three to 15 years for machinery and equipment.

The Company depreciates leasehold improvements over the life of the lease or the asset, whichever is shorter.

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The estimated useful lives of assets used solely to support a customer services contract generally do not exceed the term of the customer contract.

On retirement or disposition, the asset cost and related accumulated depreciation are removed from the Consolidated Balance Sheets with any gain or loss recognized in the Consolidated Statements of Earnings.

As of November 1, 2021, the Company increased its expected useful life of new servers and storage equipment assets from four years to five years.

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

The effects of this change in estimate reduced depreciation expense and increased net income and basic and diluted earnings per share by immaterial amounts for fiscal 2022.

On retirement or disposition, the asset cost and related

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

accumulated depreciation are removed from the Consolidated Balance Sheets with any gain or loss recognized in the Consolidated Statements of Earnings.

The Company capitalizes certain internal and external costs incurred to acquire or create internal use software, principally related to software coding, designing system interfaces and installation and testing of the software.

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An arrangement contains a lease when the arrangement conveys the right to control the use of an identified asset over the lease term.

Upon lease commencement, the Company records a lease liability for the obligation to make lease payments and right-of-use ("ROU") asset for the right to use the underlying asset for the lease term in the Consolidated Balance Sheet.

Upon lease commencement, the Company records a lease liability for the obligation to make lease payments and right-of-use (“ROU”) asset for the right to use the underlying asset for the lease term in the Consolidated Balance Sheets.

The lease liability is measured at commencement date based on the present value of lease payments not yet paid over the lease term and the Company's incremental borrowing rate.

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The Company allocates consideration to the lease and non-lease components using their relative standalone values.

The lease term may include options to extend or to terminate the lease that the Company is reasonably certain to exercise.

The Company has elected not to record leases with an initial term of twelve months or less on the Consolidated Balance Sheets.

For finance leases, the ROU asset is amortized on a straight-line basis over the shorter of the useful life of the asset or the lease term.

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The contractual lease agreement also identifies return conditions that ensures the leased equipment will be in good operating condition upon return minus any normal wear and tear.

During the residual review process, product changes, product updates, as well as market conditions are reviewed and adjustments if other than temporary are made to

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

residual values in accordance with the impact of any such changes.

During the residual review process, product changes, product updates, as well as market conditions are reviewed and adjustments if other than temporary are made to residual values in accordance with the impact of any such changes.

The remarketing sales organization closely manages the sale of equipment lease returns to optimize the recovery of outstanding residual by product.

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The Company includes the results of operations of acquired businesses in the Company's consolidated results prospectively from the date of acquisition.

The Company allocates the fair value of purchase consideration to the assets acquired including in-process research and development ("IPR&D"), liabilities assumed, and non-controlling interests in the acquired entity based on their fair values at the acquisition date.

The Company allocates the fair value of purchase consideration to the assets acquired including in-process research and development (“IPR&D”), liabilities assumed, and non-controlling interests in the

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

acquired entity based on their fair values at the acquisition date.

IPR&D is initially capitalized at fair value as an intangible asset with an indefinite life and assessed for impairment thereafter.

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The Company reviews goodwill for impairment annually and whenever events or changes in circumstances indicate the carrying amount of goodwill may not be recoverable.

The Company performs a quantitative test for all of its reporting units as part of its annual goodwill impairment test in the fourth quarter of each fiscal year.

The Company estimates the fair value of its reporting units using a weighting of fair values derived most significantly from the income approach, and to a lesser extent, the market approach with the exception of the Software reporting unit which uses a weighting derived most significantly from the market approach.

In evaluating goodwill for impairment, the Company has the option to first perform a qualitative test to determine whether further impairment testing is necessary or to perform a qualitative assessment by comparing the fair value of the reporting unit to its carrying amount.

Under the qualitative assessment, the Company is not required to calculate the fair value of a reporting unit unless it determines that it is more likely than not that the fair value of a reporting unit is less than its carrying amount.

Qualitative factors include, but are not limited to, the macroeconomic and industry environment as well as Company-specific factors.

The Company used the qualitative assessment for the Athonet and OpsRamp reporting units.

For, all other reporting units, the Company elects to perform a quantitative test as part of its annual goodwill impairment assessment in the fourth quarter of each fiscal year.

In the quantitative assessment, the Company estimates the fair value of its reporting units using a weighting of fair values derived most significantly from the income approach, and to a lesser extent, the market approach with the exception of the Software reporting unit which uses a weighting derived solely from the market approach.

Under the income approach, the Company estimates the fair value of a reporting unit based on the present value of estimated future cash flows covering discrete forecast periods as well as terminal value determinations.

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The Company amortizes intangible assets with finite lives using the straight-line method over the estimated economic lives of the assets, ranging from one to ten years .

Intangible assets purchased as part of an acquisition are included in Intangible assets, net in the Consolidated Balance Sheets.

All other separately purchased intangible assets are included in Long-term financing receivables and other assets in the Consolidated Balance Sheets.

Equity Method Investments

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The Company records its interest in the net earnings of its equity method investees, along with adjustments for unrealized profits or losses on intra-entity transactions and amortization of basis differences, within Earnings from equity interests in the Consolidated Statements of Earnings.

Profits or losses related to intra-entity sales with its equity method investees are eliminated until realized by the investor or investee.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

losses related to intra-entity sales with its equity method investees are eliminated until realized by the investor or investee.

Basis differences represent differences between the cost of the investment and the underlying equity in net assets of the investment and are generally amortized over the lives of the related assets that gave rise to them.

differences represent differences between the cost of the investment and the underlying equity in net assets of the investment and are generally amortized over the lives of the related assets that gave rise to them.

Equity method goodwill is not amortized or tested for impairment;

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The Company reviews for impairment whenever factors indicate that the carrying amount of the investment might not be recoverable.

In such a case, the decrease in value is recognized in the period the impairment occurs in the Consolidated Statement of Earnings.

In such a case, the decrease in value is recognized in the period the impairment occurs in the Consolidated Statements of Earnings.

Equity Securities Investments

Equity securities investments with readily determinable fair values (other than those accounted for under the equity method or those that result in consolidation of the investee) are measured at fair value and any changes in fair value are recognized in Interest and other, net in the Consolidated Statement of Earnings.

For equity investments without readily determinable fair values, the Company has elected to use the fair value option or apply the measurement alternative, under which investments are measured at cost, less impairment, and adjusted for qualifying observable price changes on a prospective basis.

For equity investments without readily determinable fair values, the Company may elect to apply the measurement alternative or the fair value option.

Under the measurement alternative investments are measured at cost, less impairment, and adjusted for qualifying observable price changes on a prospective basis.

The Company reviews for impairment at each reporting period, assessing factors such as deterioration of earnings, adverse change in market/industry conditions, the ability to operate as a going concern, and other factors which indicate that the carrying amount of the investment might not be recoverable.

In such a case, the decrease in value is recognized in the period the impairment occurs in the Consolidated Statement of Earnings.

In such a case, the decrease in value is recognized in the period the impairment occurs in the Consolidated Statements of Earnings.

The Company elects the fair value option when it believes that it best reflects the underlying economics of the investment.

These investments may be valued using third-party pricing services at each reporting date with changes in fair value recorded as a component of Interest and other, net in the Consolidated Statements of Earnings.

Debt Securities Investments

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Refer to Note 18, “Guarantees, Indemnifications and Warranties” for additional information.

Recently Adopted Accounting Pronouncements

In July 2021, the Financial Accounting Standards Board ("FASB") issued guidance that requires lessors to classify and account for a lease with variable lease payments that do not depend on a reference index or a rate as an operating lease, if the lease would have been classified as a sales-type lease or a direct financing lease and the lessor would have otherwise recognized a day-one loss.

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

In January 2020, the FASB issued guidance to clarify certain interactions between the guidance to account for equity securities, the guidance to account for investments under the equity method of accounting, and the guidance to account for derivatives and hedging.

The new guidance clarifies the application of measurement alternatives and the accounting for certain forward contracts and purchased options to acquire investments.

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

Recently Enacted Accounting Pronouncements

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

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

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

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 Consolidated Financial Statements.

In November 2023, the FASB issued guidance to improve the disclosures about a public entity’s reportable segments and address requests from investors for additional, more detailed information about a reportable segment’s expenses.

The Company is required to adopt the guidance in the first quarter of fiscal 2025, though early adoption is permitted.

The Company does not expect the guidance to have a material impact on its Consolidated Financial Statements.

The Company is currently evaluating the impact of this amendment on its Consolidated Financial Statements.

In December 2023, the FASB issued guidance to provide disaggregated income tax disclosures on the rate reconciliation and income taxes paid.

The Company is required to adopt the guidance in the first quarter of fiscal 2026, though early adoption is permitted.

The Company is currently evaluating the impact of this amendment on its Consolidated Financial Statements.

Segment Information

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Compute includes both general purpose servers for multi-workload computing and workload optimized servers to deliver the best performance and value for demanding applications.

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

This portfolio of products includes the HPE ProLiant Compute rack and tower servers and HPE Synergy servers.

Compute offerings also include operational and support services and HPE GreenLake for Compute that provides flexible compute as-a-service (“aaS”) IT infrastructure on a consumption basis through the HPE GreenLake edge-to-cloud platform.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

HPC & AI offers integrated systems comprised of software and hardware designed to address High-Performance Computing (“HPC”), Artificial Intelligence (“AI”), Data Analytics, and Transaction Processing workloads for government and commercial customers globally.

The solutions are segmented into several categories:

HPC and Data Solutions.

The HPC portfolio of products includes HPE Cray, 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 solutions are segmented into HPC and Data Solutions.

The HPC portfolio of products includes HPE Cray EX, 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.

The mission critical compute portfolio includes the HPE Superdome Flex and HPE Integrity product lines for critical applications including large enterprise software applications and data analytics platforms.

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 as-a-service through the HPE GreenLake edge-to-cloud platform.

Storag e provides primary storage product and service offerings, which include software-powered HCI with HPE Nimble Storage Disaggregated HCI and HPE SimpliVity;

cloud native primary storage with HPE Primera and HPE Alletra, first storage as-a-service with HPE GreenLake for Block Storage, and disaster recovery and ransomware recovery with Zerto, backup as-a-service with HPE Backup and Recovery Service, and big data solutions running on HPE Apollo servers.

Storage also provides solutions for secondary 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 as-a-service through the HPE GreenLake edge-to-cloud platform.

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

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

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

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

The HPE NonStop portfolio includes high-

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

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 as aaS through the HPE GreenLake edge-to-cloud platform.

Storag e provides data storage and data 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 data 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 the family of HPE Alletra 4000 Data Storage Servers.

Storage also provides solutions for unstructured data and analytics workloads along with traditional tape, disk products and storage networking.

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, campus, branch, 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, software-defined wide-area networking, network security, 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.

Intelligent Edge offerings are consolidated in the edge service platform which takes a cloud-native approach that provides customers with 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.

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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 Container Platform and HPE Ezmeral Data Fabric;

the Communications and Media Solutions business (“CMS”), which primarily offers software and related services to the telecommunications industry and includes 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.

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Financing cost in the Consolidated Statements of Earnings reflects interest expense on borrowing and funding-related activity associated with FS and its subsidiaries, and debt issued by Hewlett Packard Enterprise for which a portion of the proceeds benefited FS.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

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, impairment of goodwill, t ransformation costs, disaster charges and acquisition, disposition and other related charges.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

Effective November 1, 2023, in order to align the Company’s segment financial reporting more closely with its current business structure, the Company established a new reportable segment, Hybrid Cloud which includes its historical Storage segment, HPE GreenLake Flex Solutions (which provides flexible as-a-service IT infrastructure through the HPE GreenLake edge-to-cloud platform and was previously reported under Compute and HPC & AI segments), Private Cloud, and Software (previously reported under Corporate Investments and Other segment).

Additionally, certain products and services reported in the financial results for the HPC & AI segment through the end of fiscal 2023 will be reported in the Compute and Hybrid Cloud segments, and the recently acquired Athonet business and certain components of the CMS business reported in the financial results for Corporate Investments and Other through the end of fiscal 2023 will be reported in the Intelligent Edge segment.

Beginning in the first quarter of fiscal 2024, the Company will report its results under the realigned six reportable segments.

Segment Operating Results

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Segment earnings (loss) from operations $ 1,382 $ 231 $ 716 $ 509 $ 390 $ ( 95 ) $ 3,133

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

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

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

For the fiscal years ended October 31,

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Transformation costs ( 283 ) ( 473 ) ( 930 )

Disaster charges (1)

( 159 ) ( 16 ) ( 26 )

Disaster recovery (charges) 12 ( 159 ) ( 16 )

Acquisition, disposition and other related charges ( 69 ) ( 19 ) ( 36 )

Interest and other, net ( 156 ) ( 188 ) ( 211 )

Tax indemnification adjustments ( 67 ) 65 ( 101 )

Non-service net periodic benefit credit 134 70 136

Tax indemnification and other adjustments 55 ( 67 ) 65

Non-service net periodic (cost) benefit credit ( 3 ) 134 70

Litigation judgment — — 2,351

Earnings from equity interests 245 215 180

Total earnings (loss) before benefit (provision) for taxes $ 876 $ 3,587 $ ( 442 )

(1) During fiscal year ended 2022, the Company recorded total pre-tax charges of $ 161 million, primarily related to the Company's exit from its Russia and Belarus businesses.

Additionally, in fiscal 2022, Disaster charges included a recovery of $ 2 million related to COVID-19.

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

Total earnings before provision for taxes $ 2,230 $ 876 $ 3,587

Segment Assets

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Major Customers

No single customer represented 10% or more of the Company's total net revenue in any fiscal year presented.

The Company has one customer which represented 11 % of the Company's total net revenue in fiscal 2023, primarily within the Intelligent Edge and Compute segments.

No single customer represented 10% or more of the Company's total net revenue in fiscal years 2022 and 2021.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

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For each of the fiscal years of 2023, 2022 and 2021, other than the U.S., no country represented more than 10% of the Company's net revenue.

Net revenue by country was as follows:

Net revenue by geographic region was as follows:

For the fiscal years ended October 31,

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Total consolidated net revenue $ 29,135 $ 28,496 $ 27,784

Property, plant and equipment by country in which the Company's operates was as follows:

Property, plant and equipment, net by country in which the Company's operates was as follows:

As of October 31

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Other countries 3,186 2,749

Total property, plant and equipment $ 5,784 $ 5,613

Total property, plant and equipment, net $ 5,989 $ 5,784

Transformation Programs

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

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 the Company's product portfolio strategy.

The implementation period of the cost optimization and prioritization plan is primarily through fiscal 2023.

During the remaining implementation period, 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.

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

The implementation period of the HPE Next initiative is primarily 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.

These costs are expected to be offset by gains from real estate sales and sublease income from inactive office space.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

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.

The transformation costs predominantly related to labor restructuring, non-labor restructuring, IT investments, design and execution charges and real estate initiatives.

The primary elements of the Cost Optimization and Prioritization Plan have been substantially completed by the end of fiscal 2023.

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.

The primary elements of the HPE Next Plan have been substantially completed by the end of fiscal 2023.

Cost Optimization and Prioritization Plan

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

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

For the fiscal years ended October 31,

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Total $ 261 $ 254 $ 695

During fiscal 2022, 2021 and 2020, $ 253 million, $ 690 million and $ 384 million, respectively, were recorded within Transformation costs, and $ 1 million and $ 5 million in fiscal 2022 and 2021, respectively, were recorded within Non-service net periodic benefit credit in the Consolidated Statements of Earnings.

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

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

HPE Next Plan

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

For the fiscal years ended October 31,

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Total $ 25 $ 220 $ 240

During fiscal 2022, 2021 and 2020, $ 220 million, $ 240 million and $ 566 million, respectively, were recorded within Transformation costs, and $ 3 million was recorded within Non-service net periodic benefit credit in the Consolidated Statements of Earnings for fiscal 2020.

Restructuring Plan

On May 19, 2020, the Company's Board of Directors approved a restructuring plan in connection with the cost optimization and prioritization plan.

As of October 31, 2022, the Company estimates that it will incur aggregate charges of approximately $ 1.3 billion primarily through fiscal 2023 in connection with the cost optimization and prioritization plan which relates to labor restructuring and non-labor restructuring, mostly relating to real estate site exits.

The changes to the workforce will vary by country, based on business needs, local legal requirements and consultations with employee works councils and other employee representatives, as appropriate.

On October 16, 2017, the Company's Board of Directors approved a restructuring plan in connection with the HPE Next (the "HPE Next Plan"), and on September 20, 2018, the Company's Board of Directors approved a revision to that restructuring plan.

Restructuring Plans

On May 19, 2020, the Company's Board of Directors approved a restructuring plan in connection with the Cost Optimization and Prioritization Plan which primarily related to labor restructuring and real estate site exits under non-labor restructuring.

The changes to the workforce varied by country, based on business needs, local legal requirements and consultations with employee works councils and other employee representatives, as appropriate.

On October 16, 2017, the Company's Board of Directors approved a restructuring plan in connection with the HPE Next Plan, and on September 20, 2018, the Company's Board of Directors approved a revision to that restructuring plan.

Headcount exits under the HPE Next Plan were substantially complete as of October 31, 2020.

Other restructuring actions primarily related to infrastructure were substantially complete as of October 31, 2022.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

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:

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Severance Infrastructure

In millions In millions

Liability as of October 31, 2022

$ 185 $ 122 $ 11 $ 25

Charges 148 78 6 10

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Liability as of October 31, 2023

$ 152 $ 127 $ 6 $ 27

Total costs incurred to date as of October 31, 2023

$ 793 $ 561 $ 1,267 $ 270

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

$ 820 $ 575 $ 1,267 $ 275

The current restructuring liability related to the transformation programs, reported in the Consolidated Balance Sheets as of October 31, 2023 and 2022, was $ 180 million and $ 191 million, respectively, in Accrued restructuring, and $ 22 million and $ 28 million, respectively, in Other accrued liabilities.

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This plan provides benefits based on final pay and years of service and generally requires contributions from members.

The German pension program that is open to new hires consists of cash balance plans that provide employer credits as a percentage of pay, certain employee pay deferrals and employer matching contributions.

The German pension program that is open to new hires consists of cash balance plans that provide employer credits

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

as a percentage of pay, certain employee pay deferrals and employer matching contributions.

There also are previously closed German pension programs that include cash balance and final average pay plans.

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The Company offers various defined contribution plans for U.S.

The Company's defined contribution expense was approximately $ 196 million in fiscal 2022, $ 170 million in fiscal 2021 and $ 160 million in fiscal 2020.

The Company’s defined contribution expense was approximately $ 206 million, $ 196 million and $ 170 million in fiscal 2023, 2022 and 2021, respectively.

employees are automatically enrolled in the Hewlett Packard Enterprise Company 401(k) Plan (“HPE 401(k) Plan”), when they meet eligibility requirements, unless they decline participation.

The HPE 401(k) Plan’s quarterly employer matching contributions are 100 % of an employee’s contributions, up to a maximum of 4 % of eligible compensation.

Due to cost containment measures put in place in response to COVID-19, the Company suspended the employer match for U.S.

employees from July 1, 2020 through the end of the calendar year 2020.

Pension Benefit Expense

The Company's net pension and post-retirement benefit costs that were directly attributable to the eligible employees, retirees and other former employees of Hewlett Packard Enterprise and recognized in the Consolidated Statements of Earnings for fiscal 2023, 2022 and 2021 are presented in the table below.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

For the fiscal years ended October 31,

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Prior service benefit ( 10 ) ( 10 ) ( 13 ) — — —

Net periodic benefit cost ( 61 ) 19 ( 57 ) 1 2 4

Net periodic benefit cost (credit) 50 ( 61 ) 19 1 1 2

Settlement loss and special termination benefits (1)

Total net benefit (credit) cost $ ( 56 ) $ 26 $ ( 45 ) $ 1 $ 2 $ 4

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

Total net benefit cost (credit) $ 56 $ ( 56 ) $ 26 $ 1 $ 1 $ 2

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

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

The weighted-average assumptions used to calculate the net benefit cost (credit) in the table above for fiscal 2023, 2022 and 2021 were as follows:

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Transfers — ( 6 ) — —

Addition/deletion of plans (1)

Reimbursement of benefit payments (1)

Actual return on plan assets ( 315 ) ( 3,176 ) 4 ( 3 )

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Plan amendments — ( 1 ) — —

Curtailment — ( 5 ) — —

Settlement ( 29 ) ( 54 ) — —

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Accumulated benefit obligation $ 9,233 $ 9,376 $ — $ —

(1) For fiscal 2023, the German Contractual Trust Arrangements reimbursed HPE for benefit payments of approximately $ 82 million.

(2) Includes the addition/deletion of plans resulting from acquisitions.

For the year ended October 31, 2022, the benefit obligation decreased sharply from $ 14.9 billion to $ 9.5 billion primarily due to the effects of materially increasing discount rates and the strengthening of the US dollar offset by increases in long-term inflation assumptions for various plans.

Pension assets decreased from $ 15.4 billion to $ 9.9 billion as interest rates increased and equities underperformed.

For the year ended October 31, 2023, the benefit obligation decreased from $ 9.5 billion to $ 9.4 billion primarily due to the effects of increasing discount rates and payments of benefits reducing the obligation offset by the interest on the benefit obligation along with the weakening of the U.S.

Pension assets remained flat at $ 9.9 billion as the reduction due to less than expected asset returns and benefits paid from plan assets was partially offset by the weakening of the U.S.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

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— 3,883 — 3,883 — 4,853 — 4,853

Government at NAV (2)

— 661 799 1,460 — 131 932 1,063

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Due to the short-term nature of the agreements, the outstanding balance of the obligation approximates fair value.

(2) Includes a fund that invests in various government bonds issued by worldwide governments, interest rate swaps, and cash, to match or slightly outperform the benchmark of the future liabilities of the fund.

While the fund is not publicly traded, the custodian strikes a net asset value daily.

There are no redemption restrictions or future commitments on these investments.

(2) Includes funds that invest primarily in asset-backed securities, mortgage-backed securities, collateralized loan obligations, and/or private debt investments.

Primary valuation techniques for level 3 investments include discounted cash flows and broker quotes and/or 3rd party pricing services.

Significant unobservable inputs include yields which are determined by considering the market yield of comparable public debt instruments adjusted for estimated losses to reflect where the expected recovery rate would be less than 100 %, and discount rates.

The yields ranged from 6 % to 22 %, with the weighted average around 10 %.

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The discount rates ranged from 4 % to 5 %, with the weighted average around 4 %.

In the prior year, the discount rates ranged from 1 % to 5 %, with the weighted average around 3 %.

The IRR ranged from 5 % to 21 %, with the main weighted average around 10 %.

In the prior year, the IRR ranged from 4 % to 11 %, with the main weighted average around 8 %.

Generally, an increase in yield and discounted rates may result in a decrease in the fair value of certain investments.

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There are no redemption restrictions or future commitments on these investments.

(6) HPE Invest Common Contractual Funds (CCFs) are investment arrangements in which institutional investors pool their assets.

(5) Common Contractual Funds (“CCFs”) are investment arrangements in which institutional investors pool their assets.

Units may be acquired in four different sub-funds focused on equities, fixed income, alternative investments, and emerging markets.

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Primary valuation techniques for level 3 investments include the income capitalization approach and cost approach.

Significant unobservable inputs include rental yield.

Significant unobservable inputs include rental yield and IRR.

The rental yield rates ranged from 4 % to 6 %, with the weighted average around 4 %.

In the prior year, the rental yield rates ranged from 3 % to 6 %, with the weighted average around 4 %.

The IRR ranged from 5 % to 8 %, with the main weighted average around 7 %.

In the prior year, the IRR ranged from 4 % to 7 %, with the main weighted average around 6 %.

Generally, an increase in rental yield rates may result in a decrease in the fair value of certain investments.

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Balance at end of year $ 932 $ 46 $ 182 $ 164 $ 21 $ 1 $ 1,346

The following is a description of the valuation methodologies used to measure plan assets at fair value.

Investments in publicly traded equity securities are valued using the closing price on the measurement date as reported on the stock exchange on which the individual securities are traded.

For corporate, government backed debt securities, and some

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

other investments, fair value is based on observable inputs of comparable market transactions.

The following is a description of the valuation methodologies used to measure plan assets at fair value.

Investments in publicly traded equity securities are valued using the closing price on the measurement date as reported on the stock exchange on which the individual securities are traded.

For corporate, government backed debt securities, and some other investments, fair value is based on observable inputs of comparable market transactions.

The valuation of certain real estate funds, insurance group annuity contracts and alternative investments, such as limited partnerships and joint ventures, may require significant management judgment and involves a level of uncertainty.

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The Company reviews the investment strategy and provides a recommended list of investment managers for each country plan, with final decisions on asset allocation and investment managers made by the board of trustees or investment committees for the specific plan.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

Basis for Expected Long-Term Rate of Return on Plan Assets

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Expected asset returns reflect the current yield on government bonds, risk premiums for each asset class and expected real returns, which considers each country’s specific inflation outlook.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

Because the Company’s investment policy is to employ primarily active investment managers who seek to outperform the broader market, the expected returns are adjusted to reflect the expected additional returns, net of fees.

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Outstanding at beginning of year 51,902 $ 14

Granted and replacement awards for acquisition

Granted and replacement awards for acquisitions

Vested ( 24,473 ) 14

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The Company did not issue stock options in fiscal 2023 and 2022.

The expenses associated with these stock options were not material for any of the periods presented.

Stock options assumed through acquisitions were not material for fiscal 2023.

The expenses associated with stock options were not material for any of the periods presented.

The Company utilizes the Black-Scholes-Merton option pricing formula to estimate the fair value of stock options subject to service-based vesting conditions.

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Provision for Taxes

The domestic and foreign components of Net earnings (loss) from operations before taxes were as follows:

The domestic and foreign components of Net earnings from operations before taxes were as follows:

For the fiscal years ended October 31,

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Foreign earnings in fiscal 2021 were higher as compared to fiscal 2023 and 2022, primarily as a result of the income from the Itanium litigation judgment.

The (Provision) benefit for taxes on Net earnings (loss) from operations were as follows:

The Provision for taxes on Net earnings from operations were as follows:

For the fiscal years ended October 31,

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9.2 % 0.9 % 4.5 %

(1) Positive percentages represent tax benefits and negative percentages represent tax expense as the Company recorded income tax benefit on a pretax loss.

The jurisdictions with favorable tax rates that had the most significant impact on the Company's effective tax rate in the periods presented include Puerto Rico and Singapore.

In fiscal 2023, the Company recorded $ 131 million of net income tax benefits related to various items discrete to the year.

These amounts primarily included $ 104 million of income tax benefits related to transformation costs, and acquisition, disposition and other related charges and $ 19 million of net excess tax benefits related to stock-based compensation.

In fiscal 2022, the Company recorded $ 454 million of net income tax benefits related to various items discrete to the year.

These amounts primarily included $ 150 million of income tax benefits related to releases of foreign valuation allowances, $ 99 million of income tax benefits related to transformation costs, and acquisition, disposition and other related charges, $ 43 million of income tax benefits related to the settlement of U.S.

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tax return filing primarily from the decrease in GILTI, and $ 11 million of net income tax benefits related to settlements and ongoing discussions in foreign tax audit matters.

In fiscal 2021, the Company recorded $ 294 million of net income tax benefits related to items discrete to the year.

In fiscal 2021, the Company recorded $ 294 million of net income tax benefits related to various items discrete to the year.

These amounts primarily included $ 180 million of income tax benefits related to transformation costs, and acquisition, disposition and other related charges, $ 157 million of income tax benefits related to releases of foreign valuation allowances, $ 39 million of income tax benefits related to tax rate changes on deferred taxes, and $ 32 million of income tax benefits related to the change in pre-separation tax liabilities, primarily those for which the Company shared joint and several liability with HP Inc.

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These benefits were partially offset by $ 337 million of net income tax charges associated with income from the Itanium litigation judgment, against which $ 244 million of income tax attributes previously subject to a valuation allowance were utilized, resulting in a net tax expense of $ 93 million.

In fiscal 2020, the Company recorded $ 362 million of net income tax benefits related to items discrete to the year.

These amounts primarily included $ 174 million of income tax benefits related to transformation costs, and acquisition, disposition and other related charges, $ 66 million of income tax benefits related to the change in pre-separation tax liabilities, primarily those for which the Company shared joint and several liability with HP Inc.

and for which the Company was indemnified by HP Inc., $ 57 million of income tax benefits related to Indian distribution tax rate changes, and $ 40 million of income tax benefits related to tax rate changes on deferred taxes.

As a result of certain employment actions and capital investments the Company has undertaken, income from manufacturing and services in certain countries is subject to reduced tax rates through 2039.

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Settlements with taxing authorities ( 83 ) ( 1,491 ) ( 15 )

Settlements related to joint and several positions of former Parent ( 28 ) ( 26 ) ( 36 )

Settlements related to joint and several positions indemnified by HP Inc.

— ( 28 ) ( 26 )

Balance at end of year $ 672 $ 674 $ 2,131

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

The Company recognized $ 55 million of interest income, $ 17 million of interest expense, and $ 10 million of interest income in fiscal 2022, 2021, and 2020, respectively.

The Company recognized $ 25 million and $ 55 million of interest income and $ 17 million of interest expense in fiscal 2023, 2022, and 2021, respectively.

As of October 31, 2023 and 2022, the Company had accrued $ 56 million and $ 81 million, respectively, for interest and penalties in the Consolidated Balance Sheets.

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federal tax audits for years prior to 2017.

The IRS is conducting audits of the Company's fiscal 2017 through 2022 U.S.

federal income tax returns.

During the fourth quarter of fiscal 2023, the IRS issued notices of proposed adjustments (“NOPAs”) for fiscal 2017, 2018, and 2019 relating to HPE’s intercompany transfer pricing.

After the close of fiscal 2023, the IRS issued a Revenue Agent Report (“RAR”) finalizing their position on the NOPAs for the same issues and same fiscal years.

The IRS is seeking to increase taxable income across the three fiscal years by $ 904 million.

As of the balance sheet date, HPE has sufficient tax credit carryforwards to offset any incremental tax liability from the adjustments in the RAR.

However, HPE disagrees with the IRS’ adjustments and believes the positions taken on its tax returns are more likely than not to prevail on technical merits, and the Company will defend these positions through the IRS administrative processes, as necessary.

Accordingly, no changes have been made to the Company’s reserves for uncertain tax positions in fiscal 2023 relating to the IRS’ adjustments.

With respect to major state and foreign tax jurisdictions, the Company is no longer subject to tax authority examinations for years prior to 2005.

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

However, it is reasonably possible that certain federal, foreign and state tax issues may be concluded in the next 12 months, including issues involving resolution of certain intercompany transactions, 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 $ 21 million within the next 12 months.

However, 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.

The Company believes it is reasonably possible that its existing unrecognized tax benefits may be reduced by an amount up to $ 16 million within the next 12 months.

The Company believes it has provided adequate reserves for all tax deficiencies or reductions in tax benefits that could result from federal, state and foreign tax audits.

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However, income tax audits are inherently unpredictable and there can be no assurance that the Company will accurately predict the outcome of these audits.

The amounts ultimately paid on resolution of an audit could be materially different from the amounts previously included in the (Provision) benefit for taxes and therefore the resolution of one or more of these uncertainties in any particular period could have a material impact on net earnings or cash flows.

The amounts ultimately paid on resolution of an audit could be materially different from the

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

amounts previously included in the Provision for taxes and therefore the resolution of one or more of these uncertainties in any particular period could have a material impact on net earnings or cash flows.

The Company has not provided for U.S.

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subsidiaries for which deferred U.S.

state income and foreign withholding taxes have been provided where

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

excess cash has accumulated and the Company determines that it is advantageous for business operations, tax or cash management reasons.

state income and foreign withholding taxes have been provided where excess cash has accumulated and the Company determines that it is advantageous for business operations, tax or cash management reasons.

Deferred Income Taxes

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Intercompany prepayments 325 321

Other intercompany transactions 10 13

Warranty 49 61

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Intangible assets 107 113

Capitalized R&D 44 —

Lease liabilities 209 185

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Deferred tax assets net of deferred tax liabilities $ 1,938 $ 1,807

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

As of October 31, 2023, the Company had $ 386 million, $ 3.1 billion and $ 20.2 billion of federal, state and foreign net operating loss carryforwards, respectively.

Amounts included in federal, state and foreign net operating loss carryforwards will begin to expire in years 2030, 2023, and 2023, respectively.

Amounts included in state and foreign net operating loss carryforwards will begin to expire in 2024;

federal net operating losses can carry forward indefinitely.

The Company has provided a valuation allowance of $ 147 million and $ 3.9 billion for deferred tax assets related to state and foreign net operating losses carryforwards, respectively.

As of October 31, 2022, the Company also had $ 5.5 billion, $ 5.5 billion, and $ 96 million of federal, state, and foreign capital loss carryforwards, respectively.

As of October 31, 2023, the Company also had $ 13 million, $ 5.6 billion, and $ 85 million of federal, state, and foreign capital loss carryforwards, respectively.

Amounts included in federal and state capital loss carryforwards will begin to expire in 2028;

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

foreign capital losses can carry forward indefinitely.

The Company has provided a valuation allowance of $ 1.2 billion, $ 184 million, and $ 28 million for deferred tax assets related to federal, state, and foreign capital loss carryforwards, respectively.

The Company has provided a valuation allowance of $ 7 million and $ 25 million for deferred tax assets related to state and foreign capital loss carryforwards, respectively.

As of October 31, 2023 , the Company had recorded deferred tax assets for various tax credit carryforwards as follows:

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Balance at end of year $ 1,283 $ ( 989 )

Total valuation allowances decreased by $ 551 million in fiscal 2022, primarily from decreases to the value of foreign deferred taxes following changes in foreign exchange rates and remeasurement of pension obligations, the release of certain foreign valuation allowances, and the release of valuation allowances on U.S.

passive foreign tax credits.

Total valuation allowances decreased by $ 1.5 billion in fiscal 2023, primarily from the expiration of U.S.

federal capital loss carryforwards.

Tax Matters Agreement and Other Income Tax Matters

In connection with the Everett and Seattle Transactions, the Company entered into a DXC Tax Matters Agreement with DXC and a Micro Focus Tax Matters Agreement with Micro Focus, respectively.

In connection with the completed separations and mergers of the former Enterprise Services business with DXC Technology Company (“DXC”) (the “Everett Transaction” or “Everett”) and the Software Segment with Micro Focus International plc (“Micro Focus”) (the “Seattle Transaction” or “Seattle”), the Company entered into a DXC Tax Matters Agreement with DXC and a Micro Focus Tax Matters Agreement with Micro Focus, respectively.

See Note 18, “Guarantees, Indemnifications and Warranties,” for a description of the DXC Tax Matters Agreement and Micro Focus Tax Matters Agreement.

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As of October 31,

Unbilled receivable $ 245 $ 206

Accounts receivable $ 3,254 $ 3,881

Unbilled receivable 264 245

Allowances ( 37 ) ( 25 )

Total $ 3,481 $ 4,101

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

The allowance for doubtful accounts related to accounts receivable and changes therein were as follows:

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Balance at end of year $ 37 $ 25 $ 23

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

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

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As of October 31,

Finished goods $ 2,187 $ 1,593

Purchased parts and fabricated assemblies $ 2,940 $ 2,974

Finished goods 1,667 2,187

Total $ 4,607 $ 5,161

Property, Plant and Equipment

Property, Plant and Equipment, net

As of October 31,

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Accumulated depreciation ( 5,980 ) ( 5,522 )

Net property, plant and equipment $ 5,784 $ 5,613

Depreciation expense was $ 2.2 billion, in fiscal 2022, 2021 and 2020.

Property, plant and equipment, net (1)

$ 5,989 $ 5,784

(1) This balance includes $ 606 million and $ 534 million of internal use software, net as of October 31, 2023 and 2022, respectively.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

Depreciation expense was $ 2.3 billion, $ 2.2 billion, and $ 2.2 billion in fiscal 2023, 2022 and 2021, respectively.

Long-Term Financing Receivables and Other Assets

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Financing receivables, net $ 5,028 $ 4,512

ROU assets 854 884

Deferred tax assets 2,264 2,127

Prepaid pension 1,313 1,287

ROU assets 980 854

Other 1,792 1,757

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As of October 31,

Value-added and property taxes $ 902 $ 782

Warranty 192 163

Sales and marketing programs $ 1,070 $ 1,052

Value-added and property taxes 786 902

Collateral payable 207 508

Operating lease liabilities 194 168

Warranty 167 192

Contract manufacturer liabilities 71 332

Collateral payable 508 173

Other 1,666 1,471

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As of October 31,

Pension, post-retirement, and post-employment $ 944 $ 1,496

Deferred revenue $ 3,281 $ 2,955

Taxes on earnings 271 365

Operating lease liabilities 966 851

Pension, post-retirement, and post-employment 841 944

Deferred tax liabilities 326 320

Taxes on earnings 233 271

Other 899 846

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Total lease cost $ 181 $ 175 $ 177

In fiscal 2023, the Company recorded $ 85 million of net gain from sale and leaseback transactions.

The ROU assets and lease liabilities for operating and finance leases included in the Consolidated Balance Sheets were as follows:

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Finance lease ROU Assets:

Property, plant and equipment

Property, plant and equipment, net

Gross finance lease ROU assets $ 26 $ 32

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Total lease liabilities $ 1,160 $ 43

As of October 31, 2022, the Company entered into $ 153 million of operating leases that have not yet commenced and are not yet recorded on the Consolidated Balance Sheet.

As of October 31, 2023, the Company entered into $ 516 million of operating leases that have not yet commenced and are not yet recorded on the Consolidated Balance Sheets.

These operating leases are scheduled to commence during fiscal 2024 and contain lease terms from 5 to 10 years.

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As of October 31,

Current and past due 1-30 days $ 372 $ 410

Current 1-30 days $ 320 $ 372

Past due 31-60 days 30 32

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Operating Leases

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

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

As of October 31,

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Notes to Consolidated Financial Statements (Continued)

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

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

For the fiscal years ended October 31,

2022 2021 2020

Sales-type leases and direct financing leases:

Interest income $ 483 $ 494 $ 469

Lease income - operating leases 2,296 2,383 2,431

Location 2023 2022 2021

Interest income from sales-type leases and direct financing leases Financing income $ 547 $ 483 $ 494

Lease income from operating leases Services 2,407 2,296 2,383

Total lease income $ 2,954 $ 2,779 $ 2,877

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As of October 31,

Assets held by VIE In millions

Assets held by VIE:

Other current assets $ 145 $ 203

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Long-term $ 983 $ 1,085

Property, plant and equipment $ 1,323 $ 854

Property, plant and equipment, net $ 1,214 $ 1,323

Liabilities held by VIE:

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Long-term debt, net of unamortized debt issuance costs $ 1,082 $ 1,415

Financing receivables transferred via securitization through the SPE were $ 1.6 billion and $ 1.1 billion for the fiscal years ended October 31, 2022 and 2021, respectively.

Leased equipment transferred via securitization through the SPE was $ 1.2 billion and $ 720 million for the fiscal years ended October 31, 2022 and 2021, respectively.

The Company did not have any acquisitions during fiscal 2022.

For the year ended October 31, 2023, financing receivables and leased equipment transferred via securitization through the SPE were $ 0.8 billion and $ 0.7 billion, 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.

Acquisitions in fiscal 2023

During fiscal 2021, the Company completed four acquisitions, none of which were material, both individually and in the aggregate, to the Company's Consolidated Financial Statements.

The following table presents the aggregate final purchase price allocation as of October 31, 2022 for the Company's acquisitions in fiscal 2021:

During fiscal 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, 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.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

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 fiscal 2023:

Goodwill $ 585

Amortizable intangible assets 209

Net tangible assets assumed 46

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 $ 217 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 5 years.

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 solution to meet the increasing demand for integrated networking and security solutions delivered aaS.

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 $ 311 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 5 years.

Acquisitions in fiscal 2022

The Company did not have any acquisitions during fiscal 2022.

Acquisitions in fiscal 2021

During fiscal 2021, the Company completed four acquisitions, none of which were material, both individually and in the aggregate, to the Company's Consolidated Financial Statements.

The following table presents the aggregate final purchase price allocation for the Company's acquisitions during fiscal 2021:

Goodwill $ 302

Amortizable intangible assets 277

Net tangible liabilities assumed ( 11 )

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

Acquisitions in fiscal 2020

During fiscal 2020, the Company completed two acquisitions.

The following table presents the aggregate final purchase price allocation for the Company's acquisitions for the fiscal year ended October 31, 2020:

Goodwill $ 561

Amortizable intangible assets 354

Net tangible liabilities assumed ( 29 )

Total fair value consideration $ 886

On September 21, 2020, the Company completed the acquisition of Silver Peak, a Software-Defined Wide Area Network leader.

Silver Peak's results of operations were included within the Intelligent Edge segment.

The acquisition date fair value consideration of $ 879 million consisted of cash paid for outstanding common stock, pre-acquisition service of the replacement awards, and vested in-the-money stock awards.

In connection with this acquisition, the Company recorded approximately $ 561 million of goodwill, and $ 348 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 .

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

Goodwill and Intangible Assets

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

Impairment of goodwill — ( 815 ) — — — ( 90 ) ( 905 )

Goodwill adjustments — 2 — — — — 2

Goodwill from acquisitions — 15 — 311 — 259 585

Balance at October 31, 2023 (1)

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(1) Goodwill is net of accumulated impairment losses of $ 1.9 billion.

Of this amount, $ 1.7 billion relates to HPC & AI of which $ 815 million was recorded during the fourth quarter of fiscal 2022 and $ 865 million was recorded during the second quarter of fiscal 2020.

Of this amount, $ 1.7 billion relates to HPC & AI of which $ 815 million was recorded during the fourth quarter of fiscal 2022.

The Software reporting unit within Corporate Investments and Other, has an accumulated impairment loss of $ 90 million which was also recorded during the fourth quarter of fiscal 2022.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(2) As a result of the organizational realignments which were effective as of November 1, 2022, (described in Note 1, "Overview and Summary of Significant Accounting Policies"), $ 160 million of goodwill was reallocated from the Storage segment to the Compute segment as of the beginning of the period using a relative fair value approach.

Goodwill Impairments

Goodwill is tested annually for impairment, as of the first day of the fourth quarter, at the reporting unit level.

As of October 31, 2022, the Company's reporting units with goodwill are consistent with the reportable segments identified in Note 2, "Segment Information" to the Consolidated Financial Statements, with the exception of Corporate Investments and Other which contains three reporting units, Software, CMS and A & PS.

The Company’s annual goodwill impairment analysis resulted in impairment charges for the HPC & AI and Software reporting units of $ 815 million and $ 90 million, respectively.

There was no impairment of goodwill for the other reporting units.

The decline in the fair value of the HPC & AI reporting unit below its carrying value resulted from changes in expected future cash flows as compared to the Company's fiscal 2021 long-term plan due to the continuation of supply chain constraints, and other operational challenges, as well as an increase in the cost of capital.

The fair value estimate of the HPC & AI reporting unit was derived primarily from the income approach, and to a lesser extent, the market approach as described in Note 1, “Overview and Summary of Significant Accounting Policies.” Under the income approach, the Company estimates the fair value of a reporting unit based on the present value of estimated future cash flows which the Company considers to be a level 3 unobservable input in the fair value hierarchy.

The Company prepared multiple cash flow projections based on management's estimates of revenue growth rates and operating margins, taking into consideration the historical performance and the current macroeconomic, industry, and market conditions.

These multiple cash flow projections were probability weighted to determine a fair value estimate under the income approach.

The Company bases the discount rate on the weighted-average cost of capital adjusted for the relevant risk associated with business-specific characteristics and the uncertainty related to the reporting unit's ability to execute on the projected cash flows.

Under the market approach, the Company estimates fair value based on market multiple earnings derived from comparable publicly traded companies with similar operating and investment characteristics as the reporting unit.

Prior to the quantitative goodwill impairment test, the Company tested the recoverability of long-lived assets and other assets of the HPC & AI reporting unit and concluded that such assets were not impaired.

As a result, the Company recorded a goodwill impairment charge of $ 815 million in the fourth quarter of fiscal 2022.

The HPC & AI reporting unit has remaining goodwill allocated of $ 2.9 billion as of October 31, 2022, and an excess of fair value over carrying value of net assets of 0 % as of the annual test date.

The HPC & AI business is facing challenges reflected in the results for the year ended October 31, 2022.

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

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

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.

The decline in the fair value of the Software reporting unit below its carrying value resulted primarily from a decline in market multiples.

The fair value of the Software reporting unit was based on the market approach described in Note 1.

Prior to the quantitative goodwill impairment test, the Company tested the recoverability of long-lived assets and other assets of the Software reporting unit and concluded that such assets were not impaired.

As a result, The Company recorded a goodwill impairment charge of $ 90 million in the fourth quarter of fiscal 2022.

The Software reporting unit has remaining goodwill allocated of $ 123 million as of October 31, 2022, and an excess of fair value over carrying value of net assets of 0 % as of the annual test date.

As noted above, the fair value of the Software reporting unit is derived from the market approach, which is impacted by market volatility.

If global macroeconomic or geopolitical conditions worsen and cause a further decline in the equity market or if revenue expectations are not met, this could result in the carrying value of the Software reporting unit exceeding its estimated fair value and potential impairment charges.

The excess of fair value over carrying amount for the Company’s reporting units, excluding HPC & AI and Software, ranged from approximately 22 % to 142 % of the respective carrying amounts.

In order to evaluate the sensitivity of the estimated fair value of the Company’s other reporting units in the goodwill impairment test, the Company applied a hypothetical 10 % decrease to the fair value of each reporting unit.

Based on the results of this hypothetical 10 % decrease all of the other reporting units had an excess of fair value over carrying amount.

As of October 31, 2023, the Company's reporting units with goodwill are consistent with the reportable segments identified in Note 2, “Segment Information” to the Consolidated Financial Statements, with the exception of Corporate Investments and Other which contains five reporting units:

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

The Company’s fiscal 2023 annual goodwill impairment analysis did not result in any impairment.

The excess of fair value over carrying amount for our reporting units ranged from approximately 5 % to 218 % of the respective carrying amounts.

The Compute reporting unit has goodwill of $ 7.7 billion as of October 31, 2023, and excess of fair value over carrying value of 5 % as of the annual test date.

The Compute business is facing challenges reflected in the results for October 31, 2023.

The Compute business is cyclical in nature.

Over the last several years, digital transformation drove increased investment to modernize infrastructure.

However, in the current macroeconomic and inflationary environment, customers have slowed their investments resulting in lower server demand and competitive pricing.

These dynamics are further compounded by higher supply chain costs.

During this cycle, the Compute business continues to focus on capturing market share while maintaining operating margin.

The HPC & AI reporting unit has goodwill of $ 2.9 billion as of October 31, 2023, and excess of fair value over carrying value of 12 % as of the annual test date.

The HPC & AI business continues to face challenges related to supply chain constraints of key components and other operational challenges impacting our 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.

We currently believe these challenges will be successfully addressed as the supply chain constraints continue to improve.

The Company’s fiscal 2022 annual goodwill impairment analysis resulted in impairment charges for goodwill related to the HPC & AI and Software reporting units.

There was no impairment of goodwill for our other reporting units.

The decline in the fair value of the HPC & AI reporting unit below its carrying value resulted from changes in expected future cash flows due to the continuation of supply chain constraints, and other operational challenges as well as an increase in cost of capital.

As a result, a goodwill impairment charge of $ 815 million was recorded in the fourth quarter of fiscal 2022.

The decline in the fair value of the Software reporting unit resulted primarily from a decline in market multiples.

As a result, a goodwill impairment charge of $ 90 million was recorded in the fourth quarter of fiscal 2022.

Based on the results of the Company's interim and annual impairment tests in fiscal 2021, the Company determined that no impairment of goodwill existed.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

Based on the results of the Company's interim and annual impairment tests in fiscal 2021 and the annual impairment test in fiscal 2020, the Company determined that no impairment of goodwill existed.

The macroeconomic impacts of COVID-19 which lowered the projected revenue growth rates and profitability levels for the Company resulted in the Company performing an interim impairment test in the second quarter of fiscal 2020.

The interim impairment test concluded that the fair value of the HPC & AI reporting unit was below the carrying value and the Company recorded a goodwill impairment charge of $ 865 million.

Intangible Assets

Intangible assets comprise:

Intangible assets from acquisitions comprise:

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

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Trade name and trademarks 146 ( 123 ) 23 144 ( 98 ) 46

In-process research and development — — — 4 — 4

Total intangible assets $ 1,665 $ ( 1,011 ) $ 654 $ 1,782 $ ( 1,049 ) $ 733

For fiscal 2022, the decrease in gross intangible assets was due primarily to $ 29 million of intangible assets which became fully amortized and were eliminated from gross intangible assets and accumulated amortization, partially offset by $ 4 million of purchase accounting adjustments related to acquisitions.

For fiscal 2022, the Company reclassified in-process research and development assets acquired of $ 4 million to developed and core technology and patents, as the projects were completed, and began amortization.

For fiscal 2021, the Company reclassified in-process research and development assets acquired of $ 113 million to developed and core technology and patents as the projects were completed, and began amortization.

For fiscal 2023, the decrease in gross intangible assets was due primarily to $ 326 million of intangible assets which became fully amortized and were eliminated from gross intangible assets and accumulated amortization, partially offset by $ 209 million of intangible assets related to acquisitions.

As of October 31, 2023, the weighted-average remaining useful lives of the Company's finite-lived intangible assets were as follows:

Finite-Lived Intangible Assets Weighted-Average

Weighted-Average

Remaining Useful Lives

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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.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

Fair Value Hierarchy

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Level 2—Quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability and market-corroborated inputs.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

Level 3—Unobservable inputs for assets or liabilities.

The fair value hierarchy gives the highest priority to observable inputs and lowest priority to unobservable inputs.

For the fiscal years ended October 31, 2023 and 2022, there were no transfers between levels within the fair value hierarchy.

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

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Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total

In millions In millions

Cash equivalents and investments:

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Money market funds 1,672 — — 1,672 744 — — 744

Equity securities — — 126 126 57 — 129 186

Equity investments — — 135 135 — — 126 126

Foreign bonds 1 95 1 97 — 91 — 91

Other debt securities (1)

— — 22 22 — — 33 33

Derivative instruments:

Interest rate contracts — — — — — 95 — 95

Foreign exchange contracts — 464 — 464 — 840 — 840

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Total liabilities $ — $ 305 $ — $ 305 $ — $ 307 $ — $ 307

For the fiscal years ended October 31, 2022 and 2021, there were no transfers between levels within the fair value hierarchy.

(1) Available-for-sale debt securities with carrying values that approximate fair value.

Valuation Techniques

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The fair value of debt and equity investments was based on quoted market prices or model-driven valuations using inputs primarily derived from or corroborated by observable market data, and, in certain instances, valuation models that utilize assumptions which cannot be corroborated with observable market data.

Equity and other securities include investments in marketable and non-marketable

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

Equity and other securities include investments in marketable and non-marketable securities.

In evaluating non-marketable securities for impairment or observable price changes, the Company uses valuation techniques using the best information available, and may include quoted market prices, market comparables and discounted cash flow projections.

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Other Fair Value Disclosures

Short- and Long-Term Debt:

The Company estimates the fair value of its debt primarily using an expected present value technique, which is based on observable market inputs using interest rates currently available to companies of similar credit standing for similar terms and remaining maturities, and considering its own credit risk.

The portion of the Company's debt that is hedged is reflected in the Consolidated Balance Sheets as an amount equal to the debt's carrying amount and a fair value adjustment representing changes in the fair value of the hedged debt obligations arising from movements in benchmark interest rates.

As of October 31, 2022, the estimated fair value of the Company's short-term and long-term debt was $ 12.2 billion and the carrying value was $ 12.5 billion.

Short-Term and Long-Term Debt:

T he Company estimates the fair value of its debt primarily using an expected present value technique, which is based on observable market inputs using interest rates currently available to companies of similar credit standing for similar terms and remaining maturities, and considering its own credit risk.

The portion of the Company's

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

debt that is hedged is reflected in the Consolidated Balance Sheets as an amount equal to the debt's carrying amount and a fair value adjustment representing changes in the fair value of the hedged debt obligations arising from movements in benchmark interest rates.

As of October 31, 2023, the estimated fair value of the Company's short-term and long-term de bt was $ 12.2 billion and the carrying value was $ 12.4 billion.

As of October 31, 2022, the estimated fair value of the Company's short-term and long-term debt was $ 12.2 billion and the carrying value was $ 12.5 billion.

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Other Financial Instruments:

For the balance of the Company's financial instruments, primarily accounts receivable, accounts payable and financial liabilities included in other accrued liabilities, the carrying amounts approximate fair value due to their short maturities.

If measured at fair value in the Consolidated Balance Sheets, these other financial instruments would be classified in Level 2 or Level 3 of the fair value hierarchy.

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 fiscal years ended October 31, 2022, 2021 and 2020, the Company recognized an unrealized net loss of $ 17 million, which included a $ 24 million impairment charge, and unrealized gains of $ 64 million and $ 19 million, respectively, in Interest and other, net in the Consolidated Statements of Earnings.

For the fiscal years ended October 31, 2021 and 2020, there were no material impairment charges relating to equity investments.

For fiscal 2023 and 2022, the Company recorded a net unrealized loss of $ 45 million and $ 17 million, respectively, which included impairments of $ 50 million and $ 24 million for the same respective periods.

For fiscal 2021, the Company recorded an unrealized gain of $ 64 million and no impairment charges on these investments.

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

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

These adjustments are based on observable price changes for certain equity investments without readily determinable fair value.

For investments still held as of October 31, 2023, the cumulative upward adjustments for observable price changes was $ 33 million and cumulative downward adjustments for observable price changes and impairments was $ 72 million.

Refer to Note 13 “Financial Instruments,” for further information about equity investments.

Non-Financial Assets:

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In the fourth quarter of fiscal 2022, the Company recorded a goodwill impairment charge of $ 905 million associated with the HPC & AI reporting unit and the Software reporting unit within the Corporate Investments and Other segment.

In the second quarter of fiscal 2020, the Company recorded a goodwill impairment charge of $ 865 million associated with the HPC & AI reporting unit.

The fair value of the Company's reporting units was classified in Level 3 of the fair value hierarchy due to the significance of unobservable inputs developed using company-specific information.

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

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

as of October 31, 2023 and 2022.

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

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Due in one year $ 3 $ 3

Due in one to five years 5 5

Due in more than five years 111 111

Equity Investments

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

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The carrying amount of those non-marketable equity investments accounted for under the measurement alternative was $ 145 million and $ 175 million as of October 31, 2023 and 2022, respectively.

During the twelve months ended October 31, 2022, 2021 and 2020, the Company recorded an unrealized net loss of $ 17 million, which included a $ 24 million impairment charge, and unrealized gains of $ 64 million and $ 19 million respectively, on these investments.

During the twelve months ended October 31, 2021 and 2020, there were no material impairment charges relating to equity investments.

For fiscal 2021, the Company recorded an unrealized gain of $ 64 million and no impairment charges on these investments.

The carrying amount of those non-marketable equity investments accounted for under the fair value option was $ 135 million and $ 126 million as of October 31, 2023 and 2022, respectively.

During the twelve months ended October 31, 2022, 2021, the Company recorded unrealized gains of $ 86 million and $ 50 million respectively, on these investments.

During the twelve months ended October 31, 2022, the Company sold $ 165 million of these investments.

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

There were no such equity investments as of October 31, 2022 as the Company completed the sale of these investments.

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

For fiscal 2023 and 2022, the Company recorded net unrealized gains of $ 9 million and $ 86 million, respectively, on these investments.

In fiscal 2022, the Company sold $ 165 million of these investments.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

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

These amounted to $ 2.2 billion at October 31, 2022 and 2021.

For additional information, see Note 20, "Equity Method Investments."

Derivative Instruments

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Collateral is generally posted within two business days.

The fair value of the Company's derivatives with credit contingent features in a net liability position was $ 106 million and $ 3 million at October 31, 2022 and 2021, respectively, all of which were fully collateralized within two business days.

The fair value of the Company's derivatives with credit contingent features in a net liability position was $ 108 million and $ 106 million at October 31, 2023 and 2022, respectively, most of which were fully collateralized within two business days.

Under the Company's derivative contracts, the counterparty can terminate all outstanding trades following a covered change of control event affecting the Company that results in the surviving entity being rated below a specified credit rating.

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The Company may enter into fair value hedges, such as interest rate swaps, to reduce the exposure of its debt portfolio to changes in fair value resulting from changes in interest rates by achieving a primarily U.S.

dollar LIBOR-based floating interest rate.

dollar LIBOR-based floating interest rate which was replaced with SOFR starting in July of fiscal 2023.

The swap transactions generally involve principal and interest obligations for U.S.

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For derivative instruments that are designated and qualify as fair value hedges, the Company recognizes the change in fair value of the derivative instrument, as well as the offsetting change in the fair value of the hedged item, in Interest and other, net in the Consolidated Statements of Earnings in the period of change.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

Cash Flow Hedges

The Company uses forward contracts designated as cash flow hedges to protect against the foreign currency exchange rate risks inherent in its forecasted net revenue and, to a lesser extent, cost of sales, operating expenses, and intercompany loans denominated in currencies other than the U.S.

The Company's foreign currency cash flow hedges mature generally within twelve months ;

The Company's foreign currency cash flow hedges mature generally

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

within twelve months ;

however, forward contracts associated with sales-type and direct-financing leases and intercompany loans extend for the duration of the lease or loan term, which can extend up to five years .

The Company used interest rate contracts designated as cash flow hedges to hedge the variability of cash flows in the interest payments associated with its variable-rate debt due to changes in the U.S.

dollar LIBOR-based floating interest rate.

The swap transactions generally involved principal and interest obligations for U.S.

dollar-denominated amounts.

There were no cash flow hedges related to interest rate contracts in fiscal 2022.

For derivative instruments that are designated and qualify as cash flow hedges, and as long as they remain highly effective, the Company records the changes in fair value of the derivative instrument in Accumulated other comprehensive loss as a separate component of equity in the Consolidated Balance Sheets and subsequently reclassifies these amounts into earnings in the same financial statement line item when the hedged transaction is recognized.

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Derivative assets $ 842 $ — $ 842 $ 199 $ 508 (1) $ 135

Derivative liabilities $ 127 $ — $ 127 $ 123 $ 5 (2) $ ( 1 )

Derivative liabilities $ 307 $ — $ 307 $ 199 $ 113 (2) N/A

(1) Represents the cash collateral posted by counterparties as of the respective reporting date for the Company's asset position, net of derivative amounts that could be offset, as of, generally, two business days prior to the respective reporting date.

(2) Represents the collateral posted by the Company in cash or through 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 October 31, 2022 and 2021 the entire amount of the collateral posted of $ 113 million and $ 5 million, respectively, was through re-use of counterparty collateral.

As of October 31, 2023, of the $ 103 million of collateral posted, $ 56 million was in cash and $ 47 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 re-use of counterparty collateral.

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

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As of October 31, As of October 31,

Balance Sheet Line Item of Hedged Item 2022 2021 2022 2021

2023 2022 2023 2022

In millions In millions

Notes payable and short-term borrowings $ — $ ( 1,365 ) $ — $ ( 15 )

Long-term debt $ ( 2,345 ) $ ( 2,317 ) $ 151 $ 178

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Gains (Losses) Recognized in OCI on Derivatives

For the twelve months ended October 31,

For the fiscal years ended October 31,

2023 2022 2021

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Foreign exchange contracts $ ( 177 ) $ 1,025 $ ( 50 )

Interest rate contracts — — ( 6 )

Derivatives in Net Investment Hedging Relationship

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Effect of Derivative Instruments on the Consolidated Statements of Earnings

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

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

Gains (Losses) Recognized in Income

For the twelve months ended October 31,

For the fiscal years ended October 31,

2023 2022 2021

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 Consolidated Statements of Earnings in which the effects of fair value hedges, cash flow hedges and derivatives not designated as hedging instruments are recorded $ 28,496 $ ( 188 ) $ 27,784 $ ( 211 ) $ 26,982 $ ( 215 )

Total net revenue and interest and other, net $ 29,135 $ ( 156 ) $ 28,496 $ ( 188 ) $ 27,784 $ ( 211 )

Gains (losses) on derivatives in fair value hedging relationships

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Hewlett Packard Enterprise Unsecured Senior Notes

$ 250 issued at premium to par at a price of 100.452 % in June 2023 at 5.90 %, due October 1, 2024, interest payable semi-annually on April 1 and October 1 of each year

$ 550 issued at discount to par at a price of 99.887 % in June 2023 at 5.25 %, due July 1, 2028, interest payable semi-annually on January 1 and July 1 of each year

$ 400 issued at discount to par at a price of 99.997 % in March 2023 at 6.102 %, due April 1, 2026, interest payable semi-annually on April 1 and October 1 of each year

$ 1,300 issued at discount to par at a price of 99.934 % in March 2023 at 5.90 %, due October 1, 2024, interest payable semi-annually on April 1 and October 1 of each year

$ 1,000 issued at discount to par at a price of 99.883 % in July 2020 at 1.45 %, due April 1, 2024, interest payable semi-annually on April 1 and October 1 of each year

$ 1,000 $ 999

$ 750 issued at discount to par at a price of 99.820 % in July 2020 at 1.75 %, due April 1, 2026, interest payable semi-annually on April 1 and October 1 of each year

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$ 1,500 issued at discount to par at a price of 99.932 % in October 2015 at 6.35 %, due October 15, 2045, interest payable semi-annually on April 15 and October 15 of each year

Hewlett Packard Enterprise Asset-Backed Debt Securities

$ 612 issued in September 2023, in six tranches at a weighted average price of 99.99 % and a weighted average interest rate of 6.40 %, payable monthly from October 2023 with a stated final maturity of July 2031

$ 643 issued in March 2023 and April 2023, in five tranches at a weighted average price of 99.99 % and a weighted average interest rate of 5.59 %, payable monthly from April 2023 with a stated final maturity of April 2028

$ 651 issued in October 2022, in five tranches at a weighted average price of 99.99 % and a weighted average interest rate of 5.55 %, payable monthly from November 2022 with a stated final maturity date of August 2029

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$ 755 issued in February 2020 of in six tranches at a weighted average price of 99.99 % and a weighted average interest rate of 1.87 %, payable monthly from April 2020 with a stated final maturity date of February 2030

$ 763 issued in September 2019, in six tranches at a discount to par, at a weighted average price of 99.99 % and a weighted average interest rate of 2.31 %, payable monthly from November 2019 with a stated final

maturity date of September 2029

Other, including finance lease obligations, at 1.1 %- 6.3 %, due in calendar years 2023-2030 (1)

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For both the periods presented, the carrying amount of the assets approximated the carrying amount of the borrowings.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

Interest expense on borrowings recognized in the Consolidated Statements of Earnings was as follows:

For the fiscal years ended October 31,

Expense Location 2022 2021 2020

Financing interest Financing interest $ 211 $ 212 $ 271

Location 2023 2022 2021

Financing interest Financing cost $ 383 $ 211 $ 212

Interest expense Interest and other, net 326 260 289

Total interest expense $ 709 $ 471 $ 501

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

Hewlett Packard Enterprise Unsecured Senior Notes

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

In October 2021, the Company redeemed $ 1 billion of 4.65 % Senior Notes with an original maturity date of October 1, 2024.

The Company recognized $ 100 million as early debt redemption costs within Interest and other, net in the Consolidated Statements of Earnings.

In September 2021, the Company redeemed $ 500 million of 3.5 % Senior Notes with an original maturity date of October 5, 2021, and $ 800 million of its outstanding Floating Rate Senior Notes at three-month USD LIBOR plus 0.72 % due October 5, 2021.

In March 2021, the Company repaid $ 500 million of Floating Rate Senior Notes at three-month USD LIBOR plus 0.68 % on their original maturity date.

Asset-Backed Debt Securities

In September 2022, the Company redeemed $ 763 million asset-backed debt securities with a weighted average price of 99.99 % and a weighted average interest rate of 2.31 %, and an original maturity date of September 20, 2029.

As disclosed in Note 13, “Financial Instruments,” the Company used interest rate swaps to mitigate the exposure of its fixed rate debt to changes in fair value resulting from changes in interest rates, or hedge the variability of cash flows in the interest payments associated with its variable-rate debt.

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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 October 31, 2022 and 2021, no borrowings were outstanding under the Parent Programs, and $ 542 million and $ 705 million, respectively, were outstanding under the subsidiary's program.

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

As of October 31, 2023 and 2022, $ 679 million and $ 542 million, respectively, were outstanding under the subsidiary’s program.

Revolving Credit Facility

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

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

Uncommitted Credit facility

On September 21, 2023, the Company entered into a five-year agreement with Societe Generale for an uncommitted short-term cash advance facility in the principal amount of up to $ 500 million.

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

Future Maturities of Borrowings

As of October 31, 2022, aggregate future maturities of the Company's borrowings at face value (excluding a fair value adjustment related to hedged debt of $ 178 million, a net discount of $ 5 million and debt issuance costs of $ 31 million), including finance lease obligations were as follows:

As of October 31, 2023, aggregate future maturities of the Company's borrowings at face value (excluding a fair value adjustment related to hedged debt of $ 151 million, a net discount of $ 4 million and unamortized debt issuance costs of $ 30 million), including finance lease obligations were as follows:

Fiscal year In millions

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Balance at beginning of period $ ( 1 ) $ 109 $ ( 2,596 ) $ ( 610 ) $ ( 3,098 )

Other comprehensive (loss) income before reclassifications ( 16 ) 1025 ( 315 ) ( 146 ) 548

Reclassifications of (gains) losses into earnings — ( 978 ) 160 — ( 818 )

Tax (provision) benefit — ( 19 ) 104 2 87

Other comprehensive income (loss) before reclassifications 1 ( 177 ) ( 99 ) ( 32 ) ( 307 )

Reclassifications of losses into earnings — 116 147 — 263

Tax benefit — 13 41 4 58

Balance at end of period $ — $ 61 $ ( 2,507 ) $ ( 638 ) $ ( 3,084 )

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Net unrealized

gains (losses) on

available-for-sale

securities Net unrealized

gains (losses)

flow hedges Unrealized

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Other comprehensive (loss) income before reclassifications ( 16 ) 1025 ( 315 ) ( 146 ) 548

Reclassifications of losses into earnings — 156 285 — 441

Tax provision — ( 18 ) ( 120 ) ( 5 ) ( 143 )

Reclassifications of (gains) losses into earnings — ( 978 ) 160 — ( 818 )

Tax (provision) benefit — ( 19 ) 104 2 87

Balance at end of period $ ( 1 ) $ 109 $ ( 2,596 ) $ ( 610 ) $ ( 3,098 )

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

Effect of change in accounting principle (1)

— $ ( 10 ) $ — ( 33 ) $ ( 43 )

Other comprehensive loss before reclassifications ( 1 ) ( 40 ) ( 358 ) ( 12 ) ( 411 )

Reclassifications of (gains) losses into earnings ( 4 ) ( 21 ) 259 — 234

Tax benefit (provision) — 11 ( 8 ) 5 8

Other comprehensive (loss) income before reclassifications ( 3 ) ( 50 ) 763 16 726

Reclassifications of losses into earnings — 156 285 — 441

Tax provision — ( 18 ) ( 120 ) ( 5 ) ( 143 )

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

(1) Reflects the adoption of the FASB guidance on stranded tax effects.

The stockholders of HPE common stock are entitled to receive dividends when and as declared by HPE's Board of Directors.

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On November 28, 2023, the Company declared a regular cash dividend of $ 0.13 per share on the Company's common stock, payable on January 11, 2024, to the stockholders of record as of the close of business on December 13, 2023.

Share Repurchase Program

On October 13, 2015, the Company's Board of Directors approved a share repurchase program with a $ 3.0 billion authorization, which was refreshed with additional share repurchase authorizations of $ 3.0 billion, $ 5.0 billion and $ 2.5 billion

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

Share Repurchase Program

on May 24, 2016, October 16, 2017 and February 21, 2018, respectively.

This program, which does not have a specific expiration date, authorizes repurchases in the open market or in private transactions.

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Shares repurchased during the fiscal 2023 were recorded as a $ 0.4 billion reduction to stockholders' equity.

As of October 31, 2022, the Company had a remaining authorization of $ 1.4 billion for future share repurchases.

In fiscal 2021, the Company repurchased and settled a total of 14.7 million shares under its share repurchase program through open market repurchases and there were no unsettled open market repurchases outstanding as of October 31, 2020.

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

In fiscal 2022, the Company repurchased and settled a total of 35.4 million shares under its share repurchase program through open market repurchases, which included 0.8 million shares that were unsettled open market repurchases as of October 31, 2021.

Additionally, the Company had unsettled open market repurchases of 0.3 million shares as of October 31, 2022.

Shares repurchased during the fiscal 2022 were recorded as a $ 0.5 billion reduction to stockholders' equity.

As of October 31, 2021, the Company had a remaining authorization of $ 1.9 billion for future share repurchases.

Net Earnings (Loss) Per Share

The Company calculates basic net earnings per share ("EPS") using net earnings and the weighted-average number of shares outstanding during the reporting period.

Net Earnings Per Share

The Company calculates basic net EPS using net earnings and the weighted-average number of shares outstanding during the reporting period.

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

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In millions, except per share amounts

Net earnings (loss) $ 868 $ 3,427 $ ( 322 )

Net earnings $ 2,025 $ 868 $ 3,427

Weighted-average shares used to compute basic net EPS 1,299 1,303 1,309

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Weighted-average shares used to compute diluted net EPS 1,316 1,322 1,330

Net earnings (loss) per share:

Net earnings per share:

Basic $ 1.56 $ 0.67 $ 2.62

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Anti-dilutive weighted-average stock awards (1)

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

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

Litigation and Contingencies

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The Separation and Distribution Agreement included provisions that allocate liability and financial responsibility for pending litigation involving the parties, as well as provide for cross-indemnification of the parties against liabilities to one party arising out of liabilities allocated to the other party.

The Separation and Distribution Agreement also included provisions that assign to the parties responsibility for managing

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

pending and future litigation related to the general corporate matters of HP Inc.

The Separation and Distribution Agreement also included provisions that assign to the parties responsibility for managing pending and future litigation related to the general corporate matters of HP Inc.

arising prior to the Separation.

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Significant judgment is required to determine both the probability of having incurred a liability and the estimated amount of the liability.

Hewlett Packard Enterprise reviews these matters at least quarterly and adjusts these liabilities to reflect the impact of negotiations, settlements, rulings, advice of legal counsel, and other updated information and events pertaining to a particular matter.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

events pertaining to a particular matter.

Litigation is inherently unpredictable.

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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 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 February 8, 2024, to assess the distribution of the settlement fund to the class members and resolve any final issues.

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,

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

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 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.

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.

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.

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.

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

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

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 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.

1 unchanged sentence

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

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

Hewlett-Packard Company v.

Oracle (Itanium).

On June 15, 2011, HP Inc.

filed suit against Oracle in the Superior Court of California, County of Santa Clara in connection with Oracle's March 2011 announcement that it was discontinuing software support for HP Inc.'s Itanium-based line of mission critical servers.

asserted, among other things, that Oracle's actions breached the contract that was signed by the parties as part of the settlement of the litigation relating to Oracle's hiring of Mark Hurd.

Trial was bifurcated into two phases.

prevailed in the first phase of the trial, in which the court ruled that the contract at issue required Oracle to continue to offer its software products on HP Inc.'s Itanium-based servers for as long as HP Inc.

decided to sell such servers.

Phase 2 of the trial was then postponed by Oracle's appeal of the trial court's denial of Oracle's "anti-SLAPP" motion, in which Oracle argued that HP Inc.'s damages claim infringed on Oracle's First Amendment rights.

On August 27, 2015, the California Court of Appeal rejected Oracle's appeal.

The matter was remanded to the trial court for Phase 2 of the trial, which began on May 23, 2016, and was submitted to the jury on June 29, 2016.

On June 30, 2016, the jury returned a verdict in favor of HP Inc., awarding HP Inc.

approximately $ 3.0 billion in damages:

$ 1.7 billion for past lost profits and $ 1.3 billion for future lost profits.

On October 20, 2016, the court entered judgment for this amount with interest accruing until the judgment is paid.

Oracle's motion for a new trial was denied on December 19, 2016, and Oracle filed its notice of appeal from the trial court's judgment on January 17, 2017.

On February 2, 2017, HP Inc.

filed a notice of cross-appeal challenging the trial court's denial of prejudgment interest.

On May 16, 2019, HP Inc.

filed its application to renew the judgment.

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

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

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

Oracle filed a Petition for Rehearing with the California Court of Appeal, which was denied on July 8, 2021.

On July 26, 2021, Oracle filed a Petition for Review with the California Supreme Court.

The California Supreme Court denied the petition on September 29, 2021, and the California Court of Appeal issued the remittitur on September 30, 2021.

On October 12, 2021, Oracle paid $ 4.66 billion, reflecting all amounts owed on the judgment plus accrued interest.

Pursuant to the

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

terms of the Separation and Distribution Agreement between HP Inc.

and HPE, this amount was split evenly between the parties following the reimbursement of approximately $ 48 million in pre-separation legal costs incurred by HPE in prosecution of the litigation.

In total, HPE has received payment of approximately $ 2.35 billion, which was recognized as a gain from litigation judgment during the year ended October 31, 2021.

On October 27, 2021, HP Inc.

filed an acknowledgement of full satisfaction of judgment.

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

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

The matter is now closed.

The parties have reached an agreement to resolve this matter.

Plaintiffs filed a Motion for Preliminary Approval of the Class Action and Collective Action Settlement on September 21, 2023.

On November 3, 2023, the Court issued an order granting preliminary approval to the Class Action and Collective Action Settlement.

The Court has scheduled a Fairness Hearing to address the parties’ Motion for Final Approval for March 28, 2024.

Oracle America, Inc., et al.

3 unchanged sentences

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.

Pursuant to the terms of the settlement, the case will be dismissed, and the matter closed.

Pursuant to the terms of the settlement, the case has been dismissed and the matter is closed.

Q3 Networking Litigation.

2 unchanged sentences

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.

6 unchanged sentences

Environmental

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

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

The Company's operations and products are or may in the future become subject to various federal, state, local and foreign laws and regulations concerning the environment, including laws addressing the discharge of pollutants into the air and water;

supply chain due diligence, and sustainability, environment, and emissions-related reporting;

the management, movement, and disposal of hazardous substances and wastes;

the clean-up of contaminated sites;

product compliance and safety;

the energy consumption of products, services, and operations;

and the operational or financial responsibility for recycling, treatment, and disposal of those products.

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

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

legislation").

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

related to addressing climate change and other environmental related issues, or if its products become non-compliant with such environmental laws.

The Company's potential exposure includes impacts on revenue, fines and civil or criminal sanctions, third-party property damage or personal injury claims and clean-up costs.

13 unchanged sentences

In the ordinary course of business, the Company enters into contractual arrangements under which the Company may agree to indemnify a third party to such arrangement from any losses incurred relating to the services they perform on behalf of the Company or for losses arising from certain events as defined within the particular contract, which may include, for example, litigation or claims relating to past performance.

The Company also provides indemnifications to certain vendors and customers against claims of IP infringement made by third parties arising from the use by such vendors and customers of the Company's software products and support services and certain other matters.

The Company also provides indemnifications to certain vendors and customers against claims of intellectual property infringement made by third parties arising from the use by such vendors and customers of the Company's software products and support services and certain other matters.

Some indemnifications may not be subject to maximum loss clauses.

6 unchanged sentences

The DXC Tax Matters Agreement and the Micro Focus Tax Matters Agreement govern the rights and obligations of the Company and DXC/Micro Focus for certain pre-divestiture tax liabilities and tax receivables.

The DXC Tax Matters Agreement and the Micro Focus Tax Matters Agreement generally provide that the Company will be responsible for pre-divestiture tax liabilities and will be entitled to pre-divestiture tax receivables that arise from adjustments made by tax

and certain non-U.S.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

authorities to the Company's and DXC's, or Micro Focus', as applicable, U.S.

and certain non-U.S.

In certain jurisdictions, the Company and DXC/Micro Focus have joint and several liability for past tax liabilities and accordingly, the Company could be legally liable under applicable tax law for such liabilities and required to make additional tax payments.

jurisdictions, the Company and DXC/Micro Focus have joint and several liability for past tax liabilities and accordingly, the Company could be legally liable under applicable tax law for such liabilities and required to make additional tax payments.

In addition, if the distribution of Everett's or Seattle's common shares to Hewlett Packard Enterprise's stockholders is determined to be taxable, the Company would generally bear the tax liability, unless the taxability of the distribution is the direct result of actions taken by DXC/Micro Focus, in which case DXC/Micro Focus would be responsible for any taxes imposed on the distribution.

26 unchanged sentences

The Company includes investments which are accounted for using the equity method, under Investments in equity interests on the Company's Consolidated Balance Sheets.

As of October 31, 2022 and 2021, the Company's Investments in equity interests was $ 2.2 billion and primarily related to a 49 % equity interest in H3C Technologies ("H3C").

In the periods presented, the Company recorded its interest in the net earnings of H3C, prepared in accordance with U.S.

As of October 31, 2023 and 2022, the Company's Investments in equity interests was $ 2.2 billion and primarily related to a 49 % equity interest in H3C Technologies Co., Limited (“H3C”).

Pursuant to the Shareholders' Agreement among the Company’s relevant subsidiaries, Unisplendour International Technology Limited (“UNIS”), and 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.

For the periods presented, the Company recorded its interest in the net earnings of H3C, prepared in accordance with U.S.

GAAP on a one-month lag, along with an adjustment to eliminate unrealized profits on intra-entity sales, and the amortization of basis difference, within Earnings from equity interests in the Consolidated Statements of Earnings.

7 unchanged sentences

The weighted-average life of the H3C intangible assets is five years and is being amortized using the straight-line method.

As of October 31, 2023, the difference between the cost of the investment and the underlying equity in the net assets of the investment is $ 1,677 million.

As of October 31, 2023 and 2022, the Company determined that no impairment of its equity method investments existed.

Earnings from equity interest

Earnings from equity interests

The Company recorded earnings from equity interests of $ 245 million, $ 215 million and $ 180 million in fiscal 2023, 2022 and 2021, respectively, in the Consolidated Statements of Earnings, the components of which are as follows:

4 unchanged sentences

Basis difference amortization ( 9 ) ( 45 ) ( 109 )

Elimination of profit on intra-entity sales adjustment

Adjustment of profit on intra-entity sales

12 ( 10 ) ( 3 )

Earnings from equity interests $ 245 $ 215 $ 180

(1) In fiscal 2022 and 2021, earnings from equity interests, net of taxes included $ 275 million and $ 260 million from H3C and ($ 5 ) million and $ 32 million from other venture investments, respectively.

In fiscal 2022 and 2021, the Company received a cash dividend of $ 197 million and $ 184 million, respectively, from H3C.

(1) For fiscal 2023, earnings (loss) from equity interests, net of taxes include $ 244 million, which reflected the Company’s portion of intangible asset impairment charges of $( 8 ) million, from H3C and $( 2 ) million from other venture investments.

For fiscal 2022, and 2021 earnings (loss) from equity interests, net of taxes included $ 275 million and $ 260 million from H3C and $( 5 ) million and $ 32 million from other venture investments, respectively.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

For fiscal 2023 and 2022, the Company received a cash dividend of $ 200 million and $ 197 million, respectively, from H3C.

This amount was accounted for as a return on investment and reflected as a reduction in the carrying balance of the Company's Investments in equity interests in its Consolidated Balance Sheets.

The Company also has commercial arrangements with H3C to buy and sell HPE branded servers, storage and networking products and services.

During fiscal 2022, 2021 and 2020, HPE recorded approximately $ 848 million, $ 794 million and $ 737 million of sales to H3C and $ 148 million, $ 150 million and $ 215 million of purchases from H3C, respectively.

For fiscal 2023, 2022 and 2021, HPE recorded approximately $ 383 million, $ 848 million and $ 794 million of sales to H3C and $ 125 million, $ 148 million and $ 150 million of purchases from H3C, respectively.

Payables due to H3C as of October 31, 2023 and 2022 were approximately $ 10 million and $ 22 million, respectively.

1 unchanged sentence

A summary of H3C’s statements of operations for the twelve-month periods ended September 30, 2023, 2022 and 2021 and balance sheets as of September 30, 2023 and 2022 are as follows:

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

For the twelve months ended September 30,

3 unchanged sentences

Gross profit 1,790 2,014 1,676

$ 498 $ 561 $ 530

As of September 30,

6 unchanged sentences

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data