What changed in this filing

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Item 1. Financial Statements

2024-03-05 compared with 2023-09-01 · 333 added, 408 removed, 709 unchanged (51% of the section changed)

Financial Statements.

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

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

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

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

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

Condensed Consolidated Statements of Earnings for the three months ended January 31, 202 4 and 202 3 (Unaudited)

Condensed Consolidated Statements of Comprehensive Income for the three months ended January 31, 202 4 and 202 3 (Unaudited)

Condensed Consolidated Balance Sheets as of January 31, 202 4 (Unaudited) and October 31, 202 3 (Audited)

Condensed Consolidated Statements of Cash Flows for the three months ended January 31, 202 4 and 202 3 (Unaudited)

Condensed Consolidated Statements of Stockholders' Equity for the three months ended January 31, 202 4 and 202 3 (Unaudited)

Notes to Condensed Consolidated Financial Statements (Unaudited)

14 unchanged sentences

Condensed Consolidated Statements of Earnings

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

2023 2022 2023 2022

For the three months ended January 31,

In millions, except per share amounts

16 unchanged sentences

Interest and other, net ( 88 ) ( 26 )

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

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

Earnings from equity interests 46 58

12 unchanged sentences

Condensed Consolidated Statements of Comprehensive Income

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

2023 2022 2023 2022

For the three months ended January 31,

Net earnings $ 387 $ 501

Other Comprehensive Income (Loss) Before Taxes:

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

Net unrealized (losses) gains arising during the period ( 1 ) ( 3 ) 4 ( 11 )

( 1 ) ( 3 ) 4 ( 11 )

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

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

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

Other Comprehensive Loss Before Taxes

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

Net unrealized gains arising during the period 6 5

Change in Net Unrealized Losses on Cash Flow Hedges:

Net unrealized losses arising during the period ( 204 ) ( 518 )

Net losses reclassified into earnings 114 247

( 90 ) ( 271 )

Change in Unrealized Components of Defined Benefit Plans:

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

Amortization of net actuarial loss and prior service benefit 34 35

Curtailments, settlements and other 3 — 3 2

38 39 109 128

Change in Cumulative Translation Adjustment 13 20

Other Comprehensive Income (Loss) Before Taxes 42 ( 61 ) ( 77 ) 79

(Provision) Benefit for Taxes ( 13 ) 8 26 ( 26 )

Other Comprehensive Income (Loss), Net of Taxes 29 ( 53 ) ( 51 ) 53

Other Comprehensive Loss Before Taxes ( 37 ) ( 211 )

Benefit for Taxes 13 53

Other Comprehensive Loss, Net of Taxes ( 24 ) ( 158 )

Comprehensive Income $ 363 $ 343

3 unchanged sentences

Condensed Consolidated Balance Sheets

July 31, 2023 October 31, 2022

January 31, 2024 October 31, 2023

(Unaudited) (Audited)

7 unchanged sentences

Total current assets 20,244 18,948

Property, plant and equipment 6,089 5,784

Property, plant and equipment, net 5,997 5,989

Long-term financing receivables and other assets 11,542 11,377

19 unchanged sentences

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

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

1,300 and 1,283 shares issued and outstanding as of January 31, 2024 and October 31, 2023, respectively)

Additional paid-in capital 28,239 28,199

9 unchanged sentences

Condensed Consolidated Statements of Cash Flows (Unaudited)

For the nine months ended July 31,

For the three months ended January 31,

Cash Flows from Operating Activities:

Net earnings $ 387 $ 501

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

Adjustments to Reconcile Net Earnings to Net Cash Provided by (Used in) Operating Activities:

Depreciation and amortization 657 656

4 unchanged sentences

Earnings from equity interests ( 46 ) ( 58 )

Dividends received from equity investees 34 38

Other, net 72 ( 60 )

7 unchanged sentences

Other assets and liabilities ( 233 ) 240

Net cash provided by operating activities 1,585 1,557

Net cash provided by (used in) operating activities 64 ( 829 )

Cash Flows from Investing Activities:

11 unchanged sentences

Payment of debt ( 515 ) ( 661 )

Cash settlement for derivative hedging debt ( 7 ) —

Net payments related to stock-based award activities ( 94 ) ( 107 )

Repurchase of common stock ( 3 ) ( 73 )

Cash dividends paid to non-controlling interests, net of contributions ( 8 ) —

Cash dividends paid to shareholders ( 169 ) ( 156 )

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

Net cash provided by financing activities 53 9

Effect of exchange rate changes on cash, cash equivalents, and restricted cash 14 138

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

Decrease in cash, cash equivalents and restricted cash ( 609 ) ( 1,919 )

Cash, cash equivalents and restricted cash at beginning of period 4,581 4,763

4 unchanged sentences

Condensed Consolidated Statements of Stockholders' Equity (Unaudited)

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

Comprehensive

Interests Total

In millions, except number of shares in thousands

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

Net earnings 464 464 — 464

Other comprehensive income 29 29 29

Comprehensive income 493 — 493

Stock-based compensation expense 91 91 91

Tax withholding related to vesting of employee stock plans ( 11 ) ( 11 ) ( 11 )

Issuance of common stock in connection with employee stock plans and other 3,288 22 22 22

Repurchases of common stock ( 12,053 ) ( 185 ) ( 185 ) ( 185 )

Cash dividends declared ($ 0.12 per share)

( 154 ) ( 154 ) ( 154 )

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

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

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

For the three months ended January 31, 2024 Number of Shares Par Value Additional Paid-in Capital Accumulated Deficit Accumulated

Comprehensive

11 unchanged sentences

( 169 ) ( 169 ) ( 8 ) ( 177 )

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

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

Comprehensive

Interests Total

In millions, except number of shares in thousands

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

Net earnings 409 409 3 412

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

Comprehensive income 356 3 359

Stock-based compensation expense 64 64 64

Tax withholding related to vesting of employee stock plans ( 10 ) ( 10 ) ( 10 )

Issuance of common stock in connection with employee stock plans and other 3,370 23 1 24 24

Repurchases of common stock ( 14,075 ) ( 199 ) ( 199 ) ( 199 )

Cash dividends declared ($ 0.12 per share)

( 156 ) ( 156 ) ( 156 )

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

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

Balance as of January 31, 2024 1,299,768 $ 13 $ 28,239 $ ( 3,728 ) $ ( 3,108 ) $ 21,416 $ 52 $ 21,468

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

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

Comprehensive

3 unchanged sentences

Net earnings 501 501 7 508

Other comprehensive income 53 53 53

Other comprehensive loss ( 158 ) ( 158 ) ( 158 )

Comprehensive income 343 7 350

5 unchanged sentences

( 156 ) ( 156 ) ( 156 )

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

Balance as of January 31, 2023 1,296,884 $ 13 $ 28,259 $ ( 5,005 ) $ ( 3,256 ) $ 20,011 $ 52 $ 20,063

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

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

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

The results of operations for the three and nine months ended July 31, 2023 and the cash flows for the nine months ended July 31, 2023 are not necessarily indicative of the results to be expected for the full year.

In the opinion of management, the accompanying unaudited Condensed Consolidated Financial Statements of Hewlett Packard Enterprise contain all adjustments, including normal recurring adjustments, necessary to present fairly the Company's financial position as of January 31, 2024 and October 31, 2023, its results of operations for the three months ended January 31, 2024 and 2023, its cash flows for the three months ended January 31, 2024 and 2023, and its statements of stockholders' equity for the three months ended January 31, 2024 and 2023.

The results of operations and the cash flows for the three months ended January 31, 2024 are not necessarily indicative of the results to be expected for the full year.

The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the Company's Annual Report on Form 10-K for the fiscal year ended October 31, 2023, as filed with the U.S.

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Segment Realignment

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

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

As previously disclosed, effective as of the beginning of the first quarter of fiscal 2024, in order to align the segment financial reporting more closely with its business structure, the Company established two new reportable segments, Hybrid Cloud and Server.

Hybrid Cloud includes the 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 the Compute and the High Performance Computing & Artificial Intelligence ("HPC & AI") segments), Private Cloud, and Software (previously reported under the Corporate Investments and Other segment).

The Server segment combines the previously separately reported Compute and HPC & AI segments, with adjustments for certain product lines that are now reported in Hybrid Cloud.

Additionally, certain products and services previously reported in the financial results for the HPC & AI segment were moved to be reported in the Hybrid Cloud segment, and the Athonet business and certain components of the Communications and Media Solutions (“CMS”) business, both previously reported in the financial results for Corporate Investments and Other, moved to be reported in the Intelligent Edge segment.

As a result, the Company’s new organizational structure consists of the following segments:

(ii) Hybrid Cloud;

(iii) Intelligent Edge;

(iv) Financial Services;

and (v) Corporate Investments and Other.

The Company is reporting under this re-aligned segment structure beginning with the results of the first quarter of fiscal 2024 included in this Quarterly Report.

The Company has 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.

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There have been no changes to the Company's significant accounting policies described in Part II, Item 8, Note 1, "Overview and Summary of Significant Accounting Policies," of the Company's Annual Report on Form 10-K for the fiscal year ended October 31, 2023.

Russia/Ukraine Conflict

In June 2022, the Company determined that it is no longer tenable to maintain its operations in Russia and Belarus and announced its decision to execute an orderly, managed exit of its remaining business in these countries.

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

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

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

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

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Notes to Condensed Consolidated Financial Statements (Continued)

Recently Adopted Accounting Pronouncements

In September 2022, FASB issued guidance to enhance the transparency of supplier finance programs.

The amendments require the disclosure of sufficient information about the program to allow a user of the financial statements to understand the program’s nature, activity during the period, changes from period to period and potential magnitude.

The Company adopted this guidance in the first quarter of fiscal 2024 except for the disclosure on the roll forward information, which is effective for fiscal 2025.

The Company enters into supplier financing arrangements with external financial institutions.

Under these arrangements, suppliers can choose to settle outstanding payment obligations at a discount.

The Company holds no economic interest in suppliers' participation, nor does it provide guarantees or pledge assets under these arrangements.

Invoices are settled with the financial institutions based on the original supplier payment terms.

These arrangements do not alter the Company's rights and obligations towards suppliers, including scheduled payment terms.

Liabilities associated with the funded participation in these arrangements, as presented within Accounts Payable on the Condensed Consolidated Balance Sheets, amounted to $ 387 million, and $ 295 million as of January 31, 2024 and October 31, 2023, respectively.

Recently Enacted Accounting Pronouncements

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

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

In March 2023, the FASB issued a guidance which amends certain provisions of ASC 842 that apply to arrangements between related parties under common control.

It requires that leasehold improvements associated with common control leases be amortized by the lessee over the useful life of the leasehold improvements to the common control group as long as the lessee controls the use of the underlying asset through a lease.

In addition, leasehold improvements associated with common control leases should be accounted for as a transfer between entities under common control through an adjustment to equity if, and when, the lessee no longer controls the use of the underlying asset.

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

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

Segment Information

Hewlett Packard Enterprise's operations are organized into six segments for financial reporting purposes:

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

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

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

Hewlett Packard Enterprise's operations are organized into five segments for financial reporting purposes:

Server, Hybrid Cloud, Intelligent Edge, Financial Services ("FS"), and Corporate Investments and Other.

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

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

Effective as of the beginning of the first quarter of fiscal 2024, in order to align the Company’s segment financial reporting more closely with its current business structure, the Company realigned its’ reportable segments, see Note 1, "Overview and Summary of Significant Accounting Policies" to the Condensed Consolidated Financial Statements for additional information.

A summary description of each segment follows:

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 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.

HPC & AI offers integrated systems comprised of software and hardware designed to address HPC, AI, data analytics, and transaction processing workloads for government and commercial customers globally.

The solutions are segmented into HPC and data solutions.

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

The data solutions portfolio includes the mission critical compute portfolio and HPE NonStop.

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 various of its solutions aaS on a consumption basis through the HPE GreenLake edge-to-cloud platform.

Storage provides data storage and management offerings, which include cloud-native primary storage with the HPE Alletra Storage portfolio, self-service private cloud on-demand with HPE GreenLake for Private Cloud Business Edition, data storage and management services with HPE GreenLake for Block Storage and HPE GreenLake for File Storage, disaster recovery and ransomware recovery with Zerto, data protection services with HPE GreenLake for Backup and Recovery, and big data solutions running on HPE Alletra 4000 Data Storage Servers.

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

Storage also provides data-driven intelligence with HPE InfoSight and HPE CloudPhysics along with operational and support services and data management solutions delivered through the HPE GreenLake edge-to-cloud platform.

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

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

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

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

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

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

Server consists of general-purpose servers for multi-workload computing and workload-optimized servers to deliver the best performance and value for demanding applications, and integrated systems comprised of software and hardware designed to address High-Performance Computing and Supercomputing (including exascale applications), Artificial Intelligence (“AI”), Data Analytics, and Transaction Processing workloads for government and commercial customers globally.

This portfolio of products includes our secure and versatile HPE ProLiant Rack and Tower servers;

HPE Synergy, a composable infrastructure for traditional and cloud-native applications;

HPE Scale Up Servers product lines for critical applications, including large

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Notes to Condensed Consolidated Financial Statements (Continued)

enterprise software applications and data analytics platforms;

HPE Edgeline servers;

HPE Cray XD (formerly known as HPE Apollo);

and HPE NonStop.

Server offerings also include operational and support services sold with systems and as standalone services.

Hybrid Cloud offers a wide variety of cloud-native and hybrid solutions across storage, private cloud and the infrastructure software-as-a-service space.

Storage includes data storage and data management offerings with the HPE Alletra Storage portfolio;

unstructured data solutions and analytics for AI;

data protection and archiving;

and storage networking.

It also includes AIOps-driven intelligence with HPE InfoSight and HPE CloudPhysics.

In private cloud, our HPE GreenLake offerings include new cloud-native offerings and capabilities for virtual machines, containers, and bare metal;

a full suite of private cloud offerings that enable customers to self-manage or choose a fully managed experience;

and a portfolio of world-class AI infrastructure delivered as-a-service.

This segment also provides self-service private cloud on-demand with HPE GreenLake for Private Cloud Business Edition.

Infrastructure software includes monitoring and observability for day two operations and beyond through our acquisition of OpsRamp and unified data access through our HPE Ezmeral Data Fabric and analytics suite, which helps move and transform data for use in AI and other applications.

Hybrid Cloud segment also includes data lifecycle management and protection through our suite of offerings, including Zerto Disaster Recovery.

Intelligent Edge offers wired and wireless local area networks, campus, branch, and data center switching, software-defined wide-area-networks, private and public cellular network software, network security, and associated services that 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, private and public cellular core 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.

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.

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

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

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

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

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

CMS, which primarily offers software and related services to the telecommunications industry;

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

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

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

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

Total assets by segment are not presented as that information is not used to allocate resources or assess performance at the segment level and is not reviewed by our CODM.

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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

Segment Operating Results

Segment net revenue and operating results were as follows:

Compute HPC & AI Storage Intelligent Edge Financial

Server Hybrid Cloud Intelligent Edge Financial

Services Corporate

Investments and Other Total

Three months ended July 31, 2023:

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

Intersegment net revenue 67 32 34 3 2 — 138

Total segment net revenue $ 2,624 $ 836 $ 1,074 $ 1,415 $ 873 $ 318 $ 7,140

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

Three months ended July 31, 2022:

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

Intersegment net revenue 49 24 15 1 4 — 93

Total segment net revenue $ 3,027 $ 830 $ 1,129 $ 941 $ 817 $ 300 $ 7,044

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

Nine months ended July 31, 2023:

Three months ended January 31, 2024:

Net revenue $ 3,246 $ 1,206 $ 1,193 $ 872 $ 238 $ 6,755

2 unchanged sentences

Segment earnings (loss) from operations $ 383 $ 47 $ 353 $ 74 $ ( 10 ) $ 847

Nine months ended July 31, 2022:

Three months ended January 31, 2023:

Net revenue $ 4,184 $ 1,361 $ 1,163 $ 867 $ 234 $ 7,809

2 unchanged sentences

Segment earnings (loss) from operations $ 678 $ 80 $ 227 $ 63 $ ( 22 ) $ 1,026

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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

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

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

2023 2022 2023 2022

For the three months ended January 31,

Total segments $ 6,912 $ 7,992

5 unchanged sentences

Stock-based compensation expense ( 141 ) ( 140 )

Amortization of initial direct costs — ( 1 ) — ( 3 )

Amortization of intangible assets ( 71 ) ( 73 )

3 unchanged sentences

Interest and other, net ( 88 ) ( 26 )

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

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

Earnings from equity interests 46 58

Total earnings before provision for taxes $ 483 $ 623

Segment Assets

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

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

July 31, 2023 October 31, 2022

Compute $ 15,334 $ 16,881

HPC & AI 5,536 5,997

Storage 7,023 7,484

Intelligent Edge 5,113 4,594

Financial Services 14,804 14,837

Corporate Investments and Other 1,327 1,110

Corporate and unallocated assets 7,278 6,220

Total assets $ 56,415 $ 57,123

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Net revenue by geographic region was as follows:

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

2023 2022 2023 2022

For the three months ended January 31,

United States $ 2,294 $ 2,885

Americas excluding U.S.

539 481 1,628 1,409

Total Americas 2,801 3,454

4 unchanged sentences

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 implementation period of the primary elements of the Cost Optimization and Prioritization Plan is anticipated to be through fiscal 2023.

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

During the third quarter of fiscal 2020, the Company launched the Cost Optimization and Prioritization Plan, which focuses on realigning the workforce to areas of growth, 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 implementation period of the primary elements of the HPE Next Plan is anticipated to be through fiscal 2023.

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

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

Through this program, the Company has been 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 transformation costs relating to the Cost Optimization and Prioritization Plan were as follows:

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

2023 2022 2023 2022

For the three months ended January 31,

Program management $ 1 $ 1

IT costs — 1 16 19

Restructuring charges 8 71

Total $ 13 $ 80

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Notes to Condensed Consolidated Financial Statements (Continued)

HPE Next Plan

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

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

2023 2022 2023 2022

Program management $ — $ 1 $ — $ 6

For the three months ended January 31,

IT costs 9 21

Restructuring charges — 2 6 8

Gain on real estate sales — — — ( 8 )

Impairment of real estate assets — — — 11

Other — 3 1 11

Restructuring (credits) charges ( 1 ) 1

Total $ 8 $ 22

R estructuring Plan

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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

Restructuring Plan

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

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$ 152 $ 127 $ 6 $ 27

Charges 75 52 4 2

Charges (credits) 10 ( 2 ) — ( 1 )

Cash payments ( 64 ) ( 12 ) ( 1 ) ( 1 )

Non-cash items 1 1 1 ( 1 )

Liability as of July 31, 2023

Liability as of January 31, 2024

$ 99 $ 114 $ 6 $ 24

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

Total costs incurred to date, as of January 31, 2024

$ 803 $ 559 $ 1,267 $ 270

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

Total expected costs to be incurred as of January 31, 2024

$ 820 $ 560 $ 1,267 $ 270

The current restructuring liability related to the transformation programs, reported in the Condensed Consolidated Balance Sheets as of July 31, 2023 and October 31, 2022, was $ 149 million and $ 191 million, respectively, in Accrued restructuring, and $ 26 million and $ 28 million, respectively, in Other accrued liabilities.

The non-current restructuring liability related to the transformation programs, reported in Other non-current liabilities in the Condensed Consolidated Balance Sheets as of July 31, 2023 and October 31, 2022, was $ 106 million and $ 124 million, respectively.

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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

The current restructuring liability related to the transformation programs, reported in the Condensed Consolidated Balance Sheets as of January 31, 2024 and October 31, 2023, was $ 121 million and $ 180 million, respectively, in accrued restructuring, and $ 20 million and $ 22 million, respectively, in Other accrued liabilities.

The non-current restructuring liability related to the transformation programs, reported in Other non-current liabilities in the Condensed Consolidated Balance Sheets as of January 31, 2024 and October 31, 2023, was $ 102 million and $ 110 million, respectively.

Retirement Benefit Plans

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

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

2023 2022 2023 2022

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

For the three months ended January 31,

Service cost $ 12 $ 13

Interest cost (1)

98 38 288 118

Expected return on plan assets (1)

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Prior service benefit ( 2 ) ( 3 )

Net periodic benefit cost (credit) 11 ( 15 ) 37 ( 48 )

Net periodic benefit cost 12 12

Settlement loss and special termination benefits (1)

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

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

Total net benefit cost $ 13 $ 12

(1) These non-service components were included in Interest and other, net in the Condensed Consolidated Statements of Earnings.

Taxes on Earnings

Provision for Taxes

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

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

For the three months ended January 31, 2024 and 2023, the Company recorded income tax expense of $ 96 million and $ 122 million, respectively, which reflects an effective tax rate of 19.9 % and 19.6 %, respectively.

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

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

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

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

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

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

and foreign provision to tax return changes.

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

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

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

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

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

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

and for which the Company was indemnified

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Notes to Condensed Consolidated Financial Statements (Continued)

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

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

For the three months ended January 31, 2024, the Company recorded immaterial net income tax charges related to various items discrete to the period.

For the three months ended January 31, 2023, the Company recorded $ 11 million of net income tax benefits related to various items discrete to the period.

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

Uncertain Tax Positions

As of July 31, 2023 and October 31, 2022, the amount of unrecognized tax benefits was $ 711 million and $ 674 million, respectively, of which up to $ 421 million and $ 386 million, respectively, would affect the Company's effective tax rate if realized as of their respective periods.

As of January 31, 2024 and October 31, 2023, the amount of unrecognized tax benefits was $ 674 million and $ 672 million, respectively, of which up to $ 372 million and $ 354 million, respectively, would affect the Company's effective tax rate if realized as of their respective periods.

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

The Company recognized interest expense of $ 5 million and interest income of $ 4 million for the three months ended July 31, 2023 and 2022, respectively.

The Company recognized interest income of $ 5 million and $ 41 million for the nine months ended July 31, 2023 and 2022, respectively.

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

As of July 31, 2023 and October 31, 2022, the Company had accrued $ 76 million and $ 81 million, respectively, for interest and penalties in the Condensed Consolidated Balance Sheets.

As of January 31, 2024 and October 31, 2023, the Company had accrued $ 57 million and $ 56 million, respectively, for interest and penalties in the Condensed Consolidated Balance Sheets.

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

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

The Company is no longer subject to U.S.

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.

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

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

During the fiscal quarter, 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 as of January 31, 2024 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.

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

2 unchanged sentences

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

July 31, 2023 October 31, 2022

January 31, 2024 October 31, 2023

Deferred tax assets $ 2,328 $ 2,264

1 unchanged sentence

Deferred tax assets net of deferred tax liabilities $ 1,997 $ 1,938

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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

Balance Sheet Details

Cash, Cash Equivalents and Restricted Cash

July 31, 2023 October 31, 2022

January 31, 2024 October 31, 2023

Cash and cash equivalents $ 3,758 $ 4,270

2 unchanged sentences

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

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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

July 31, 2023 October 31, 2022

Finished goods $ 2,001 $ 2,187

January 31, 2024 October 31, 2023

Purchased parts and fabricated assemblies $ 4,733 $ 2,940

Finished goods 1,316 1,667

Total $ 6,049 $ 4,607

Property, Plant and Equipment

July 31, 2023 October 31, 2022

Property, Plant and Equipment, net

January 31, 2024 October 31, 2023

Land $ 66 $ 66

3 unchanged sentences

Accumulated depreciation ( 6,180 ) ( 5,980 )

Net property, plant and equipment $ 6,089 $ 5,784

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

Balance as of October 31, 2022

Property, plant and equipment, net $ 5,997 $ 5,989

The Company's aggregate product warranty liabilities and changes for the three months ended January 31, 2024, and the fiscal year ended October 31, 2023 were as follows:

January 31, 2024 October 31, 2023

Balance at beginning of period $ 318 $ 360

Charges 38 184

Adjustments related to pre-existing warranties 2 ( 18 )

Settlements made ( 46 ) ( 208 )

Balance as of July 31, 2023

Balance at end of period $ 312 $ 318

Contract Balances

The Company’s contract balances consist of contract assets, contract liabilities, and costs to obtain a contract with a customer.

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Notes to Condensed Consolidated Financial Statements (Continued)

Contract Assets

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

July 31, 2023 October 31, 2022

Unbilled receivables $ 306 $ 245

January 31, 2024 October 31, 2023

Accounts receivable $ 3,540 $ 3,254

Unbilled receivables 277 264

Allowances ( 36 ) ( 37 )

Total $ 3,781 $ 3,481

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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

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

July 31, 2023 October 31, 2022

The allowances for credit losses related to accounts receivable and changes for the three months ended January 31, 2024, and the fiscal year ended October 31, 2023 were as follows:

January 31, 2024 October 31, 2023

Balance at beginning of period $ 37 $ 25

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

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

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

The Company recorded an obligation of $ 90 million and $ 88 million within Notes payable and short-term borrowings in its Condensed Consolidated Balance Sheets as of July 31, 2023 and October 31, 2022 respectively, related to the trade receivables sold and collected from the third-party for which the revenue recognition was deferred.

For the three months ended January 31, 2024, the Company sold $ 0.8 billion and for the fiscal year ended October 31, 2023, the Company sold $ 4.1 billion of trade receivables.

The Company recorded an obligation of $ 50 million and $ 80 million within Notes payable and short-term borrowings in its Condensed Consolidated Balance Sheets as of January 31, 2024 and October 31, 2023, respectively, related to the trade receivables sold and collected from the third-party for which the revenue recognition was deferred.

Contract Liabilities and Remaining Performance Obligations

As of July 31, 2023 and October 31, 2022, current deferred revenue of $ 3.6 billion and $ 3.4 billion, respectively, were recorded in Deferred revenue, and non-current deferred revenue of $ 3.2 billion and $ 3.0 billion, respectively, were recorded in Other non-current liabilities in the Condensed Consolidated Balance Sheets.

For the nine months ended July 31, 2023, approximately $ 2.8 billion of revenue was recognized relating to contract liabilities recorded as of October 31, 2022.

As of January 31, 2024 and October 31, 2023, current deferred revenue of $ 3.7 billion and $ 3.6 billion, respectively, were recorded in Deferred revenue, and non-current deferred revenue of $ 3.4 billion and $ 3.3 billion, respectively, were recorded in Other non-current liabilities in the Condensed Consolidated Balance Sheets.

For the three months ended January 31, 2024, approximately $ 1.3 billion of revenue was recognized relating to contract liabilities recorded as of October 31, 2023.

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

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

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

As of January 31, 2024, the aggregate amount of remaining performance obligations, or deferred revenue, was $ 7.1 billion.

The Company expects to recognize approximately 45 % of this balance over fiscal 2024 with the remainder to be recognized thereafter.

Costs to Obtain a Contract

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

As of January 31, 2024, the current and non-current portions of the capitalized costs to obtain a contract were $ 87 million and $ 138 million, respectively.

As of October 31, 2023, the current and non-current portions of the capitalized costs to obtain a contract were $ 86 million and $ 138 million, respectively.

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

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

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

For the three months ended January 31, 2024 and 2023, the Company amortized $ 26 million and $ 22 million respectively, of capitalized costs to obtain a contract.

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

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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

Accounting for Leases as a Lessor

4 unchanged sentences

The components of financing receivables were as follows:

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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

July 31, 2023 October 31, 2022

January 31, 2024 October 31, 2023

Minimum lease payments receivable $ 9,535 $ 9,363

9 unchanged sentences

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

For the nine months ended July 31, 2023 and the fiscal year ended October 31, 2022, the Company sold $ 179 million and $ 183 million of financing receivables, respectively.

For the three months ended January 31, 2024 and the fiscal year ended October 31, 2023, the Company sold $ 23 million and $ 237 million of financing receivables, respectively.

Credit Quality Indicators

4 unchanged sentences

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

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

As of July 31, 2023

The credit risk profile of gross financing receivables, based on internal risk ratings as of January 31, 2024, presented on amortized cost basis by year of origination was as follows:

As of January 31, 2024

Low Moderate High

23 unchanged sentences

Allowance for Credit Losses

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

July 31, 2023 October 31, 2022

The allowance for credit losses for financing receivables as of January 31, 2024 and October 31, 2023 and the respective changes for the three and twelve months then ended were as follows:

January 31, 2024 October 31, 2023

Balance at beginning of period $ 243 $ 325

Provision for credit losses 11 58

Adjustment to the existing allowance — ( 10 )

Write-offs ( 28 ) ( 140 )

Balance at end of period $ 226 $ 243

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

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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

Non-Accrual and Past-Due Financing Receivables

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

July 31, 2023 October 31, 2022

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

January 31, 2024 October 31, 2023

Current 1-30 days $ 374 $ 320

Past due 31-60 days 38 30

7 unchanged sentences

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

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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

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

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

2023 2022 2023 2022

Interest income from sales-type leases and direct financing leases $ 142 $ 121 $ 395 $ 365

Lease income from operating leases 606 570 1,800 1,719

For the three months ended January 31,

Location 2024 2023

Interest income from sales-type leases and direct financing leases Financing Income $ 156 $ 123

Lease income from operating leases Services 599 589

Total lease income $ 755 $ 712

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

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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

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

The following table presents the assets and liabilities held by the consolidated VIE as of January 31, 2024 and October 31, 2023, which are included in the Condensed Consolidated Balance Sheets.

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

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

July 31, 2023 October 31, 2022

January 31, 2024 October 31, 2023

Assets held by VIE:

3 unchanged sentences

Long-term 1,219 983

Property, plant and equipment 1,123 1,323

Property, plant and equipment, net 1,355 1,214

Liabilities held by VIE:

1 unchanged sentence

Long-term debt, net of unamortized debt issuance costs $ 1,369 $ 1,082

For the nine months ended July 31, 2023, financing receivables and leased equipment transferred via securitization through the SPE were $ 417 million and $ 391 million, respectively.

For the three months ended January 31, 2024, financing receivables and leased equipment transferred via securitization through the SPE were $ 0.6 billion and $ 0.3 billion, respectively.

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

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

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

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

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

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

Goodwill $ 591

Amortizable intangible assets 208

Net tangible assets assumed 41

Total fair value consideration $ 840

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

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

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

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

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

Pending Merger with Juniper Networks, Inc.

On January 9, 2024, the Company entered into a definitive merger agreement under which HPE will acquire Juniper Networks, Inc.

(“Juniper Networks”) in an all-cash transaction for $ 40.00 per share, representing an equity value of approximately $ 14 billion.

The transaction was unanimously approved by the boards of directors of both companies.

The transaction is expected to be funded based on financing commitments for $ 14 billion in term loans.

Such financing will ultimately be replaced, in part, with a combination of new debt, mandatory convertible preferred securities, and cash on the

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Notes to Condensed Consolidated Financial Statements (Continued)

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

balance sheet.

The closing of the transaction remains subject to receipt of regulatory approvals, approval of the transaction by Juniper Networks shareholders, and satisfaction of other customary closing conditions .

Goodwill is tested for impairment at the reporting unit level.

As of July 31, 2023, the Company's reporting units are consistent with the reportable segments identified in Note 2, with the exception of Corporate Investments and Other, which contains five reporting units:

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

The following table represents the carrying value of goodwill, by reportable segment as of July 31, 2023 and October 31, 2022.

There has been no change to the accumulated impairment loss from the Company's Annual Report on Form 10-K for the fiscal year ended October 31, 2022.

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

Balance as of October 31, 2022 (1)

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

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

Balance as of July 31, 2023

As of January 31, 2024, the Company's reporting units are consistent with the reportable segments identified in Note 2, “Segment Information”, with the exception of Server and Corporate Investments and Other.

The Server segment contains two reporting units, Compute and HPC & AI.

The Corporate Investments and Other segment contains two reporting units, A & PS and CMS.

The following table represents the carrying value of goodwill, by reportable segment as of January 31, 2024 and October 31, 2023.

Server Hybrid Cloud Intelligent Edge Financial Services Corporate Investments and Other Total

Balance as of October 31, 2023 and

January 31, 2024

$ 10,220 $ 4,716 $ 2,908 $ 144 $ — $ 17,988

(1) 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.

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

As of the annual test date in fiscal 2022, the HPC & AI reporting unit had goodwill of $ 2.9 billion and an excess of fair value over carrying value of net assets of 0 %.

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

The HPC & AI business continues to face challenges related to supply chain constraints of key components and other operational challenges impacting the Company’s ability to achieve certain customer acceptance milestones required for revenue recognition and resulting cost increases associated with fulfilling contracts over longer than originally anticipated timelines.

The Company currently believes these challenges will be successfully addressed as the supply chain constraints continue to improve.

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

As a result of the realignment, the Company performed an interim quantitative goodwill impairment test for all of its reporting units as of November 1, 2023, which did not result in any goodwill impairment charges.

There has been no change to the accumulated impairment loss from the Company's Annual Report on Form 10-K for the fiscal year ended October 31, 2023.

The fair value of all reporting units continued to exceed the carrying amount of their net assets.

The excess of fair value over carrying amount for our reporting units ranged from approximately 4 % to 184 % of the respective carrying amounts.

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

Based on the results of this hypothetical 10 % decrease, all of the reporting units had an excess of fair value over carrying value with the exception of the Compute and HPC & AI reporting units.

The Compute reporting unit has goodwill of $ 8.2 billion as of January 31, 2024, and excess of fair value over carrying value of 4 % as of the interim test date.

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.

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 Compute reporting unit's ability to successfully address the current challenges may change, which could result in the carrying value of the Compute reporting unit exceeding its estimated fair value and potential impairment charges.

The HPC & AI reporting unit has goodwill of $ 2.0 billion as of January 31, 2024, and excess of fair value over carrying value of 4 % as of the interim 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.

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

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

The Software reporting unit relies significantly on 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.

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

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

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

As of January 31, 2024 As of October 31, 2023

Measured Using Fair Value

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Other debt securities (1)

— — 19 19 — — 22 22

Derivative Instruments:

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Total liabilities $ — $ 333 $ — $ 333 $ — $ 305 $ — $ 305

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Notes to Condensed Consolidated Financial Statements (Continued)

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

Other Fair Value Disclosures

Short-Term and Long-Term Debt:

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

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

As of January 31, 2024 and October 31, 2023, the estimated fair value of the Company's short-term and long-term debt was $ 13.0 billion and $ 12.2 billion, respectively.

As of January 31, 2024 and October 31, 2023, the carrying value of the Company's short-term and long-term debt was $ 12.8 billion and $ 12.4 billion, respectively.

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

Other Financial Instruments:

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

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 nature.

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

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Non-Recurring Fair Value Measurements

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

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

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

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

For the three months ended January 31, 2024 the Company recognized a $ 7 million unrealized net loss on these investments.

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

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

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

For investments still held as of January 31, 2024, the cumulative upward adjustments for observable price changes was $ 39 million and cumulative downward adjustments for observable price changes and impairments was $ 84 million.

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

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

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

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Financial Instruments

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

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

As of January 31, 2024 As of October 31, 2023

Cost Gross Unrealized Gains Fair

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Total cash equivalents and available-for-sale debt investments $ 2,783 $ 6 $ 2,789 $ 2,696 $ — $ 2,696

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

As of January 31, 2024 and October 31, 2023, the carrying amount of cash equivalents approximated fair value due to the short period of time to maturity.

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

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

as of January 31, 2024 and October 31, 2023.

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

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

As of July 31, 2023

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

As of January 31, 2024

Amortized Cost Fair Value

Due in one year $ 2 $ 2

Due in one to five years 5 5

Due in more than five years 112 118

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

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

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

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

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

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

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

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

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

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

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

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

These non-marketable equity investments are carried either at fair

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Notes to Condensed Consolidated Financial Statements (Continued)

value or under the measurement alternative.

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

The carrying amount of those non-marketable equity investments accounted for under the fair value option was $ 81 million and $ 135 million as of January 31, 2024 and October 31, 2023, respectively.

For the three months ended January 31, 2024, the Company recorded an unrealized loss of $ 54 million on these investments.

The Company did not recognize any unrealized gains or losses on these equity investments during the three months ended January 31, 2023.

This amount is reflected in Interest and other, net in the Condensed Consolidated Statements of Earnings.

The carrying amount of those non-marketable equity investments accounted for under the measurement alternative was $ 154 million and $ 145 million as of January 31, 2024 and October 31, 2023, respectively.

For the three months ended January 31, 2024 the Company recognized a $ 7 million unrealized net loss on these investments.

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

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

Fair Value of Derivative Instruments in the Condensed Consolidated Balance Sheets

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

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

As of January 31, 2024 As of October 31, 2023

Fair Value Fair Value

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Notes to Condensed Consolidated Financial Statements (Continued)

As of July 31, 2023

As of January 31, 2024

In the Condensed Consolidated Balance Sheets

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

As of July 31, 2023, of the $ 277 million of collateral posted, $ 263 million was in cash and $ 14 million was through the re-use of counterparty collateral.

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

As of January 31, 2024, of the $ 118 million of collateral posted, $ 108 million was in cash and $ 10 million was through the 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.

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

Carrying Amount of the Hedged Liabilities Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Assets/ (Liabilities)

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

January 31, 2024 October 31, 2023 January 31, 2024 October 31, 2023

Long-term debt $ ( 2,393 ) $ ( 2,345 ) $ 104 $ 151

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Gains (Losses) Recognized in OCI on Derivatives

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

2023 2022 2023 2022

For the three months ended January 31,

Derivatives in Cash Flow Hedging Relationship:

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Notes to Condensed Consolidated Financial Statements (Continued)

As of July 31, 2023, the Company expects to reclassify an estimated net accumulated other comprehensive loss of approximately $ 34 million, net of taxes, to earnings in the next twelve months along with the earnings effects of the related forecasted transactions associated with cash flow hedges.

As of January 31, 2024, the Company expects to reclassify an estimated net accumulated other comprehensive loss of approximately $ 8 million, net of taxes, to earnings in the next twelve months along with the earnings effects of the related forecasted transactions associated with cash flow hedges.

Effect of Derivative Instruments on the Condensed Consolidated Statements of Earnings

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Gains (Losses) Recognized in Income

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

2023 2022 2023 2022

Net Revenue Interest and Other, net Net Revenue Interest and Other, net Net Revenue Interest and Other, net Net Revenue Interest and Other, net

For the three months ended January 31,

Net Revenue Interest and Other, net Net Revenue Interest and Other, net

Total net revenue and interest and other, net $ 6,755 $ ( 88 ) $ 7,809 $ ( 26 )

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Other derivatives — 4 — —

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

Total gains (losses) $ 24 $ ( 178 ) $ 50 $ ( 491 )

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

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

July 31, 2023 October 31, 2022

January 31, 2024 October 31, 2023

Current portion of long-term debt (1)

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Total $ 12,797 $ 12,355

(1) As of July 31, 2023, the Current portion of long-term debt, net of discount and issuance costs, included $ 1.3 billion associated with the asset-backed debt securities issued by the Company.

(1) As of January 31, 2024, the Current portion of long-term debt, net of discount and issuance costs, included $ 1.5 billion associated with the asset-backed debt securities issued by the Company.

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Notes to Condensed Consolidated Financial Statements (Continued)

Unsecured Senior Notes

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

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

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

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

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

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

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

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

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

Asset-backed Debt Securities

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

In January 2024, the Company issued $ 796 million of asset-backed debt securities in six tranches at a weighted average price of 99.99 % and a weighted average interest rate of 5.476 %, payable monthly from February 2024 with a stated final maturity date of November 2031.

Commercial Paper

Hewlett Packard Enterprise maintains two commercial paper programs, "the Parent Programs", and a wholly-owned subsidiary maintains a third program.

The Parent Program in the U.S.

Hewlett Packard Enterprise maintains two commercial paper programs, collectively "the Parent Programs", and a wholly-owned subsidiary maintains a third program.

The commercial paper program in the U.S.

provides for the issuance of U.S.

dollar-denominated commercial paper up to a maximum aggregate principal amount of $ 4.75 billion.

The Parent Program outside the U.S.

The commercial paper program outside the U.S.

provides for the issuance of commercial paper denominated in U.S.

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

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

As of January 31, 2024 and October 31, 2023, no borrowings were outstanding under the Parent Programs.

As of January 31, 2024 and October 31, 2023, $ 674 million and $ 679 million, respectively, were outstanding under the subsidiary’s program.

Revolving Credit Facility

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

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

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As of January 31, 2024 and October 31, 2023, no borrowings were outstanding under this credit facility.

Uncommitted Credit Facility

The Company maintains an uncommitted short-term advance facility with Societe Generale that was entered into in September 2023 with a principal amount of up to $ 500 million for a period of five years .

As of January 31, 2024 and October 31, 2023, no borrowings were outstanding under this credit facility.

Juniper Acquisition Committed Financing

In connection with HPE’s signing a definitive agreement to acquire Juniper Networks in January 2024, HPE obtained a commitment from Citigroup Global Markets Inc., JPMorgan Chase Bank, N.A.

and Mizuho Bank, Ltd.

for a $ 14 billion senior unsecured delayed draw term loan facility, comprised of an $ 11 billion 364-day tranche and a $ 3 billion three-year tranche, subject to customary conditions.

As of January 31, 2024, no borrowings were outstanding and HPE paid $ 42 million of financing fees.

Stockholders' Equity

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

The components of accumulated other comprehensive loss, net of taxes as of January 31, 2024, and changes for the three months ended January 31, 2024 were as follows:

Net unrealized

Gains (Losses) on

available-for-sale

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Balance at end of period $ 6 $ ( 11 ) $ ( 2,477 ) $ ( 626 ) $ ( 3,108 )

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

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

Net unrealized

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

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

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

Tax provision — ( 11 ) ( 13 ) ( 2 ) ( 26 )

Other comprehensive income (loss) before reclassifications 5 ( 518 ) — 20 ( 493 )

Reclassifications of losses into earnings — 247 35 — 282

Tax benefit (provision) — 55 ( 3 ) 1 53

Balance at end of period $ 4 $ ( 107 ) $ ( 2,564 ) $ ( 589 ) $ ( 3,256 )

Share Repurchase Program

For the nine months ended July 31, 2023, the Company repurchased and settled a total of 23.9 million shares under its share repurchase program through open market repurchases, which included 0.3 million shares that were unsettled open market repurchases as of October 31, 2022.

Additionally, as of July 31, 2023, the Company had unsettled open market repurchases of 0.1 million shares.

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

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

For the three months ended January 31, 2024, the Company settled 0.2 million shares that were unsettled open market repurchases under its share repurchase program as of October 31, 2023.

The Company did not repurchase or settle any additional shares during the three months ended January 31, 2024.

As of January 31, 2024, the Company had a remaining authorization of approximately $ 1.0 billion for future share repurchases.

Net Earnings Per Share

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

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

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

2023 2022 2023 2022

For the three months ended January 31,

In millions, except per share amounts

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Litigation, Contingencies, and Commitments

Hewlett Packard Enterprise is involved in various lawsuits, claims, investigations and proceedings including those consisting of intellectual property, commercial, securities, employment, employee benefits, and environmental matters, which arise in the ordinary course of business.

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arise in the ordinary course of business.

In addition, as part of the Separation and Distribution Agreement (the "Separation and Distribution Agreement") entered into in connection with Hewlett Packard Enterprise's spin-off from HP Inc.

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

Hewlett Packard Enterprise believes it has recorded adequate provisions for any such matters and, as of July 31, 2023, it was not reasonably possible that a material loss had been incurred in connection with such matters in excess of the amounts recognized in its financial statements.

Hewlett Packard Enterprise believes it has recorded adequate provisions for any such matters and, as of January 31, 2024, it was not reasonably possible that a material loss had been incurred in connection with such matters in excess of the amounts recognized in its financial statements.

Litigation, Proceedings, and Investigations

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

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

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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.

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.

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

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

On February 6, 2024, the Court entered final judgment, approving the settlement and dismissing the action.

India Directorate of Revenue Intelligence Proceedings .

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In January 2011, the postal service of Brazil, Empresa Brasileira de Correios e Telégrafos (“ECT”), notified a former subsidiary of HP Inc.

in Brazil ("HP Brazil") that it had initiated administrative proceedings to consider whether to suspend HP Brazil's right to bid and contract with ECT related to alleged improprieties in the bidding and contracting processes whereby employees of HP Brazil and employees of several other companies allegedly coordinated their bids and fixed results for three ECT contracts in 2007 and 2008.

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bids and fixed results for three ECT contracts in 2007 and 2008.

In late July 2011, ECT notified HP Brazil it had decided to apply the penalties against HP Brazil and suspend HP Brazil's right to bid and contract with ECT for five years , based upon the evidence before it.

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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.

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

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

Oracle America, Inc., et al.

Hewlett Packard Enterprise Company (Terix copyright matter).

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

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

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

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.

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.

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

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

Q3 Networking Litigation.

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

R2 Semiconductor Patent Litigation.

In November 2022, R2 Semiconductor, Inc.

(“R2”) filed a lawsuit in the Dusseldorf Regional Court in Germany against Intel Deutschland GmbH, Hewlett-Packard GmbH, and other Intel customers.

R2 asserts that one European patent is infringed by certain Intel processors and the HPE products that contain those Intel processors.

On February 7, 2024, the Dusseldorf Regional Court ruled in R2’s favor, issuing an injunction that, if enforced by R2, would prevent the sale in Germany of any products with infringing Intel processors, and require HPE to correspond with its direct customers in Germany requesting return of the products with infringing Intel processors.

The injunction would remain in place unless the ruling is overturned on appeal, the patent is invalidated by the German Federal Patent Court, or the matter is resolved by the parties.

On February 8, 2024, HPE filed an appeal and request for a stay of the judgement pending appeal.

Intel is indemnifying HPE pursuant to the terms of the parties’ agreement regarding patent indemnification.

Given the procedural posture and nature of the case, HPE is currently unable to make a reasonable estimate of the potential loss or range of losses, if any, that may arise from this lawsuit and that would not be indemnifiable by Intel.

Shared Litigation with HP Inc., DXC and Micro Focus

As part of the Separation and Distribution Agreements between Hewlett Packard Enterprise and HP Inc., Hewlett Packard Enterprise and DXC, and Hewlett Packard Enterprise and Seattle SpinCo, the parties to each agreement agreed to cooperate with each other in managing certain existing litigation related to both parties' businesses.

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

The Separation and Distribution

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

(in the case of the separation of Hewlett Packard Enterprise from HP Inc.) or of Hewlett Packard Enterprise (in the case of the separation of DXC from Hewlett Packard Enterprise and the separation of Seattle SpinCo from Hewlett Packard Enterprise), in each case arising prior to the applicable separation.

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

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

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Historically, payments made related to these indemnifications have been immaterial.

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Equity Method Investments

3 unchanged sentences

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

What changed 10-Q

Item 1. Financial Statements