What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2024-12-19 compared with 2023-12-22 · 523 added, 422 removed, 1906 unchanged (33% of the section changed)

17 unchanged sentences

Accounting for Leases as a Lessor

Acquisitions and Dispositions

Goodwill and Intangible Assets

2 unchanged sentences

Net Earnings Per Share

Litigation and Contingencies

Guarantees, Indemnifications and Warranties

Equity Method Investments

Litigation, Contingencies, and Commitments

Guarantees and Indemnifications

Equity Interests

Unless otherwise stated or the context otherwise indicates, all references in this Annual Report on Form 10-K to “HPE,” or “the Company” mean Hewlett Packard Enterprise Company and its consolidated subsidiaries.

Report of Independent Registered Public Accounting Firm

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

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

Opinion on the Financial Statements

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Valuation of goodwill

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

Description of the matter At October 31, 2024, the Company’s goodwill was $18 billion, of which $4.8 billion related to the Hybrid Cloud reporting unit.

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

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

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

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

In particular, the fair value estimates of the Hybrid Cloud reporting unit was sensitive to significant assumptions, such as the terminal revenue growth rate and operating margin, which are affected by expectations about future market or economic conditions.

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

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

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

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

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

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

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

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Estimated variable consideration is presented within other accrued liabilities on the consolidated balance sheet and totaled $1.0 billion at October 31, 2024.

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

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

How we addressed

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Report of Independent Registered Public Accounting Firm

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

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

Opinion on Internal Control Over Financial Reporting

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/s/ Antonio F.

NERI /s/ JEREMY K.

Neri /s/ Marie Myers

President and Chief Executive Officer

Senior Vice President,

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

(Principal Executive Officer)

Executive Vice President and Chief Financial Officer

(Principal Financial Officer)

December 19, 2024

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Costs and Expenses:

Cost of products 11,958 12,463 11,892

Cost of services 6,555 6,217 6,304

Cost of products (exclusive of amortization shown separately below) 12,961 11,958 12,463

Cost of services (exclusive of amortization shown separately below) 6,793 6,555 6,217

Financing cost 495 383 310

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Interest and other, net ( 117 ) ( 104 ) ( 121 )

Tax indemnification and other adjustments 55 ( 67 ) 65

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

Litigation judgment — — 2,351

Gain on sale of equity interest 733 — —

Earnings from equity interests 147 245 215

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Provision for taxes ( 374 ) ( 205 ) ( 8 )

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

Net Earnings Per Share:

Net earnings attributable to HPE 2,579 2,025 868

Preferred stock dividends ( 25 ) — —

Net earnings attributable to common stockholders $ 2,554 $ 2,025 $ 868

Net Earnings Per Share Attributable to Common Stockholders:

Basic $ 1.95 $ 1.56 $ 0.67

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2024 2023 2022

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

Other Comprehensive (Loss) Income Before Taxes

Net earnings attributable to HPE $ 2,579 $ 2,025 $ 868

Other Comprehensive Income (Loss) Before Taxes

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

Net unrealized gains (losses) arising during the period 8 1 ( 16 )

1 ( 16 ) ( 3 )

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

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Change in Unrealized Components of Defined Benefit Plans:

Net unrealized (losses) gains arising during the period ( 99 ) ( 315 ) 763

Net unrealized gains (losses) arising during the period 34 ( 99 ) ( 315 )

Amortization of net actuarial loss and prior service benefit 136 144 155

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Change in Cumulative Translation Adjustment:

Other Comprehensive (Loss) Income Before Taxes ( 44 ) ( 270 ) 1,167

Benefit (Provision) for Taxes 58 87 ( 143 )

Net losses arising during the period ( 23 ) ( 32 ) ( 146 )

Net loss reclassified into earnings 32 — —

9 ( 32 ) ( 146 )

Other Comprehensive Income (Loss) Before Taxes 90 ( 44 ) ( 270 )

Benefit for Taxes 17 58 87

Other Comprehensive Income (Loss), Net of Taxes 107 14 ( 183 )

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As of October 31

In millions, except par value

In millions, except par value and shares

Current Assets:

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Inventory 7,810 4,607

Assets held for sale 1 —

Other current assets 3,380 3,047

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Accrued restructuring 61 180

Liabilities held for sale 32 —

Other accrued liabilities 4,530 4,161

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HPE stockholders' Equity:

7.625 % Series C mandatory convertible preferred stock, $ 0.01 par value ( 30,000,000 issued and outstanding at October 31, 2024)

Common stock, $ 0.01 par value ( 9,600,000,000 shares authorized;

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Cash Flows from Operating Activities:

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

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

Net earnings attributable to HPE $ 2,579 $ 2,025 $ 868

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

Depreciation and amortization 2,564 2,616 2,480

1 unchanged sentence

Stock-based compensation expense 430 428 391

Provision for inventory and doubtful accounts 230 262 176

Provision for inventory and credit losses 175 230 262

Restructuring charges 33 242 214

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Earnings from equity interests ( 147 ) ( 245 ) ( 215 )

Gain on sale of equity interest ( 733 ) — —

Dividends received from equity investees 43 200 197

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Cash Flows from Investing Activities:

Investment in property, plant and equipment ( 2,828 ) ( 3,122 ) ( 2,502 )

Investment in property, plant and equipment and software assets ( 2,367 ) ( 2,828 ) ( 3,122 )

Proceeds from sale of property, plant and equipment 370 602 602

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Net payments related to stock-based award activities ( 84 ) ( 106 ) ( 53 )

Proceeds from issuance of 7.625 % Series C mandatory convertible preferred stock, net of issuance costs

Repurchase of common stock ( 150 ) ( 421 ) ( 512 )

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Cash dividends paid to shareholders ( 676 ) ( 619 ) ( 621 )

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

Net cash provided by (used in) financing activities 6,283 ( 1,362 ) ( 1,796 )

Effect of exchange rate changes on cash, cash equivalents, and restricted cash ( 47 ) 36 ( 279 )

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

Change in cash, cash equivalents and restricted cash 10,524 ( 182 ) 431

Cash, cash equivalents and restricted cash at beginning of period 4,581 4,763 4,332

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Consolidated Statements of Stockholders' Equity

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

Common Stock Preferred Stock

In millions, except number of shares in thousands

Number of Shares Par Value Number of 7.625 % Series C Mandatory Convertible

Additional Paid-in Capital Accumulated Deficit Accumulated

Comprehensive

Interests Total

In millions, except number of shares in thousands

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

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

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

Net earnings attributable to HPE 868 868 5 873

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

Comprehensive income 685 5 690

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

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

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

Net earnings 868 868 5 873

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

Net earnings attributable to HPE 2,025 2,025 11 2,036

Other comprehensive income 14 14 — 14

Comprehensive income 2,039 11 2,050

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Balance at October 31, 2023 1,282,630 $ 13 — $ 28,199 $ ( 3,946 ) $ ( 3,084 ) $ 21,182 $ 56 $ 21,238

Net earnings 2,025 2,025 11 2,036

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Common Stock Preferred Stock

In millions, except number of shares in thousands

Number of Shares Par Value Number of 7.625 % Series C Mandatory Convertible

Additional Paid-in Capital Accumulated Deficit Accumulated

Comprehensive

Interests Total

Balance at October 31, 2023 1,282,630 $ 13 — $ 28,199 $ ( 3,946 ) $ ( 3,084 ) $ 21,182 $ 56 $ 21,238

Net earnings attributable to HPE 2,579 2,579 16 2,595

Other comprehensive income 107 107 — 107

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Tax withholding related to vesting of employee stock plans ( 145 ) ( 145 ) ( 145 )

Equity issued in connection with the 7.625% Series C mandatory convertible preferred stock 30,000 1,462 1,462 1,462

Issuance of common stock in connection with employee stock plans and other 22,385 52 — 52 52

Repurchases of common stock ( 7,757 ) ( 150 ) ( 150 ) ( 150 )

Dividend on preferred stock accrued / declared ($ 0.83 per preferred share)

( 25 ) ( 25 ) ( 25 )

Cash dividends declared ($ 0.52 per common share)

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Segment Realignment

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

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

Effective as of the beginning 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 (“aaS”) IT infrastructure through the HPE GreenLake cloud 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 organizational structure for fiscal 2024 consisted of the following segments:

(ii) Hybrid Cloud;

(iii) Intelligent Edge;

(iv) Financial Services;

and (v) Corporate Investments and Other.

The Company began reporting under this re-aligned segment structure beginning with the results of the first quarter of fiscal 2024 included in the Quarterly Report on Form 10-Q for the fiscal quarter ended January 31, 2024.

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

Russia/Ukraine Conflict

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

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

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

During fiscal 2022, the Company recorded total pre-tax charges of $ 161 million primarily related to expected credit losses of financing and trade receivables, employee severance and abandoned assets, $ 99 million of which was included in Financing cost, $ 12 million in Cost of services and $ 50 million in Disaster charges in the Consolidated Statements of Earnings.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

Russia/Ukraine Conflict

In response to the conflict between Russia and Ukraine and the related sanctions imposed by the U.S., European Union and other countries, the Company determined that it was no longer tenable to maintain its operations in Russia and Belarus and has been proceeding with an orderly, managed exit of its remaining business in these countries.

Use of Estimates

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

Transfer of control occurs once the customer has the contractual right to use the product, generally upon shipment or once delivery and risk of loss has transferred to the customer.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

Transfer of control occurs once the customer has the contractual right to use the product, generally upon delivery once title and risk of loss has transferred to the customer.

Transfer of control can also occur over time for maintenance and services as the customer receives the benefit over the contract term.

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Revenue is recorded net of any associated sales taxes.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

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

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

The Company allocates the transaction price for the contract among the performance obligations on a relative standalone selling price basis (“SSP”).

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

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A contract liability is an obligation to transfer products or services to a customer for which the Company has received consideration, or the amount is due, from the customer.

The Company's contract liabilities primarily consist of deferred revenue.

The Company's contract liabilities primarily consist of deferred revenue and customer deposits.

Deferred revenue is recorded when amounts invoiced to customers are in excess of revenue that can be recognized because performance obligations have not been satisfied and control of the promised products or services has not transferred to the customer.

Deferred revenue largely represents amounts invoiced in advance for product (hardware/software) support contracts, consulting projects and product sales where revenue cannot be recognized yet.

Customer deposits largely represent payments received from customers in advance of the Company’s completion of its contractual obligations.

As customer acceptance milestones are met, the Company will recognize revenue and reduce the amount of contract liabilities.

Costs to obtain a contract with a customer

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Refer to Note 7, “Balance Sheet Details” for additional information.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

Shipping and Handling

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

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

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

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

The forfeiture rate is estimated based on historical experience.

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Advertising expense totaled approximately $ 117 million, $ 173 million, and $ 179 million in fiscal 2024, 2023, and 2022, respectively.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

Restructuring

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

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

Taxes on Earnings

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If there are additional changes in circumstances related to the specific customer, the Company further adjusts estimates of the recoverability of receivables.

The Company maintains an allowance for credit losses for all other customers based on a variety of factors, including the use of third-party credit risk models that generate quantitative measures of default probabilities based on market factors, the financial condition of customers and the length of time receivables are past due.

The Company maintains an allowance for credit losses for all other customers based on a variety of factors, including the financial condition of customers and the length of time receivables are past due.

These qualitative factors are subjective and require a degree of management judgment.

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The Company establishes an allowance for expected credit losses related to accounts receivable, including unbilled receivables.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

Financing Receivable

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

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

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

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

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

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

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Cost is computed using standard cost which approximates actual cost on a first-in, first-out basis.

At each reporting period, the Company assesses the value of its inventory and writes down the cost of inventory to its net realizable value if required, for estimated excess or obsolescence.

At each reporting period, the Company assesses the value of its inventory

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

and writes down the cost of inventory to its net realizable value if required, for estimated excess or obsolescence.

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

If in any period the Company anticipates a change in those factors to be less favorable than its previous estimates, additional inventory write-downs may be required and could materially impact gross margin.

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

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

On retirement or disposition, the asset cost and related

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

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

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

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

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At the end of the lease term, the Company allows the client to either return the equipment, purchase the equipment or renew the lease based on mutually agreed upon terms.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

The Company retains a residual position in equipment through lease and finance agreements which is equivalent to an estimated market value.

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

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

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

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

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

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

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

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

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

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

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

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The goodwill impairment loss is measured as the excess of the reporting unit's carrying value over its fair value (not to exceed the total goodwill allocated to that reporting unit).

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

Intangible Assets and Long-Lived Assets

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

Software development costs related to the development of new product offerings are capitalized subsequent to the establishment of technological feasibility, which is demonstrated by the completion of a detail program design or working model.

Software development costs are included in Intangible assets, net in the Consolidated Balance Sheets.

The Company amortizes capitalized costs on a straight-line basis over the estimated useful life of products, which is generally three years.

Equity Method Investments

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

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

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

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

Equity method goodwill is not amortized or tested for impairment;

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The Company monitors its investment portfolio for potential impairment on a quarterly basis.

When the carrying amount of an investment in debt securities exceeds its fair value and the decline in value is determined to be due to credit-related factors, the Company recognizes the impairment using an allowance for credit loss in Interest and other, net, in the Consolidated Statements of Earnings, while the impairment that is not credit related is recorded in Accumulated other comprehensive loss in the Consolidated Balance Sheets.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

Interest and other, net, in the Consolidated Statements of Earnings, while the impairment that is not credit related is recorded in Accumulated other comprehensive loss in the Consolidated Balance Sheets.

The Company uses derivative financial instruments, primarily forwards, swaps, and, at times, options, to manage a variety of risks, including risks related to foreign currency and interest rate exposures.

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For a further discussion of fair value measurements and derivative instruments, refer to Note 12, “Fair Value” and Note 13, “Financial Instruments,” respectively.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

Contingencies

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The Company does not record gain contingencies until realized.

See Note 17, “Litigation and Contingencies,” for a full description of the Company's contingencies.

See Note 17, “Litigation, Contingencies, and Commitments,” for a full description of the Company's contingencies.

The Company accrues the estimated cost of product warranties at the time of recognizing revenue.

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Over the last three fiscal years, the annual warranty expense has averaged approximately 1.1 % of annual net product revenue.

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

Refer to Note 7, “Balance Sheet Details,” for additional information.

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 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.

In November 2024, the FASB issued guidance to provide disaggregated expense disclosures in the Consolidated Financial Statements.

The Company is required to adopt the guidance for its annual period ending October 31, 2028 and all interim periods thereafter, though early adoption is permitted.

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

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The Company is currently evaluating the impact of this amendment on its 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 (“CODM”), who is the Chief Executive Officer (“CEO”), uses to evaluate, view and run the Company's business operations, which include, but are not limited to, customer base and homogeneity of products and technology.

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

A summary of the types of products and services within each segment is as 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 High-Performance Computing (“HPC”), Artificial Intelligence (“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 EX, HPE Cray XD (formerly known as HPE Apollo) and Converged Edge Systems (formerly known as Edge Compute) hardware, software, and data management appliances that are often sold as supercomputing systems, including exascale supercomputers.

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

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

The HPE NonStop portfolio includes high-

The Company will adopt this guidance for its annual period ending October 31, 2025 and all interim periods thereafter.

The Company does not expect the adoption of this guidance to have a significant impact on its Consolidated Financial Statements.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

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

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

Storag e provides data storage and data management offerings, which include cloud-native primary storage with the HPE Alletra Storage portfolio;

self-service private cloud on-demand with HPE GreenLake for Private Cloud Business Edition;

data storage and data management services with HPE GreenLake for Block Storage and HPE GreenLake for File Storage;

disaster recovery and ransomware recovery with Zerto;

data protection services with HPE GreenLake for Backup and Recovery;

and big data solutions running on the family of HPE Alletra 4000 Data Storage Servers.

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

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

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

Segment Information

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 and technology.

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

A summary of the types of products and services within each segment is as follows:

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 the 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 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 SaaS 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, the 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 aaS.

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 the Company’s acquisition of OpsRamp and unified data access through 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 its 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, 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.

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 aaS and consumption models through the HPE GreenLake cloud for the Intelligent Edge portfolio of products.

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

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

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

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

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 includes Athonet, which provides private mobile core networks to enterprises and communication services providers;

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

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

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

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

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

Segment Policy

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

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

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

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

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

These unallocated operating costs include certain corporate costs and eliminations, stock-based compensation expense, amortization of intangible assets, impairment of goodwill, transformation costs, disaster recovery/charges, divestiture related exit costs, 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 the CODM.

Segment Operating Results

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

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

Net revenue $ 15,931 $ 5,172 $ 4,501 $ 3,509 $ 1,014 $ 30,127

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Segment earnings (loss) from operations $ 1,958 $ 468 $ 542 $ 387 $ ( 26 ) $ 3,329

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

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

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

For the fiscal years ended October 31,

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Disaster recovery (charges) 51 12 ( 159 )

Divestiture related exit costs ( 35 ) — —

Acquisition, disposition and other related charges ( 204 ) ( 69 ) ( 19 )

Interest and other, net ( 117 ) ( 104 ) ( 121 )

Tax indemnification and other adjustments 55 ( 67 ) 65

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

Litigation judgment — — 2,351

Gain on sale of equity interest 733 — —

Earnings from equity interests 147 245 215

Total earnings before provision for taxes $ 2,953 $ 2,230 $ 876

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 Consolidated Balance Sheets were as follows:

As of October 31

Compute $ 16,120 $ 16,881

HPC & AI 5,787 5,997

Storage 7,195 7,484

Intelligent Edge 5,352 4,594

Financial Services 14,539 14,837

Corporate Investments and Other 1,401 1,110

Corporate and unallocated assets 6,759 6,220

Total assets $ 57,153 $ 57,123

Major Customers

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

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

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

The Company had two distributors which represented approximately 14 % and 11 % of the Company's total net revenue in fiscal 2024, primarily within the Intelligent Edge and Server segments.

The Company had one customer, which is a distributor, that represented 11 % of the Company's total net revenue in fiscal 2023, primarily within the Intelligent Edge and Server segments.

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

Geographic Information

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Total consolidated net revenue $ 30,127 $ 29,135 $ 28,496

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

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

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

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

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

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

The primary elements of the Cost Optimization and Prioritization Plan were completed by the end of fiscal 2024.

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

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

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

The primary elements of the HPE Next Plan were completed by the end of fiscal 2024.

Cost Optimization and Prioritization Plan

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Total $ 47 $ 261 $ 254

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

HPE Next Plan

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Impairment on real estate assets — — 11

Other 3 13 29

Total $ 49 $ 25 $ 220

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

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

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

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The Company sponsors defined benefit pension plans worldwide, the most significant of which are the United Kingdom (“UK”) and Germany plans.

The pension plan in the UK is closed to new entrants, however, members continue to earn benefit accruals.

The pension plan in the UK is closed to new entrants, and the plan was frozen October 31, 2024.

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

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

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

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

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

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

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

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

The Company’s defined contribution expense was approximately $ 206 million in fiscal 2024 and 2023, and $ 196 million in fiscal 2022.

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

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

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

Pension Benefit Expense

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Total net benefit cost (credit) $ 51 $ 56 $ ( 56 ) $ 2 $ 1 $ 1

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

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

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

The weighted-average assumptions used to calculate the net benefit cost (credit) in the table above for fiscal 2024, 2023 and 2022 were as follows:

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2.4 % 2.4 % 2.5 % 5.3 % 4.3 % 2.7 %

(1) The average assumed interest credited for HPE's cash balance plans and postretirement plans, as applicable.

(1) The average assumed interest credited for HPE's cash balance plans and post-retirement plans, as applicable.

To estimate the service and interest cost components of net periodic benefit cost for defined benefit plans that use the yield curve approach, which represent substantially all of the Company's defined benefit plans, the Company has elected to use a full yield curve approach in the estimation of these components of benefit cost by applying the specific spot rates along the yield curve used in the determination of the benefit obligation to the relevant projected cash flows.

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Fair value—beginning of year $ 9,879 $ 9,915 $ 68 $ 60

Transfers — ( 6 ) — —

Reimbursement of benefit payments (1)

( 90 ) ( 82 ) — —

Actual return on plan assets 1,207 ( 315 ) 5 4

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Participant contributions 26 24 6 7

Actuarial (gain) loss ( 756 ) ( 3,253 ) 3 ( 24 )

Actuarial loss (gain) 613 ( 756 ) 7 3

Benefits paid ( 509 ) ( 449 ) ( 7 ) ( 9 )

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Projected benefit obligation—end of year (3)

$ 10,256 $ 9,362 $ 162 $ 148

Funded status at end of year $ 751 $ 517 $ ( 86 ) $ ( 80 )

Accumulated benefit obligation $ 10,130 $ 9,233 $ — $ —

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

(1) For benefit payments reimbursed to HPE from the German Contractual Trust Arrangements.

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

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

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

(3) HPE divested $ 13 million in projected benefit obligation and $ 7 million in assets due to the Communications Technology Group (“CTG”) divestiture that occurred on December 1, 2024.

For the year ended October 31, 2024, the benefit obligation increased from $ 9.4 billion to $ 10.3 billion primarily due to the effects of decreasing discount rates.

The increase was partially offset by benefits paid which reduced benefit obligations.

Pension assets increased from $ 9.9 billion to $ 11.0 billion as assets performed better than expected.

The increase was partially offset by benefits paid from plan assets.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

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Funded status at end of year $ 751 $ 517 $ ( 86 ) $ ( 80 )

The following table summarizes the pre-tax net actuarial loss and prior service benefit recognized in accumulated other comprehensive loss for the defined benefit plans:

The following table summarizes the pre-tax net actuarial loss and prior service benefit recognized in accumulated other comprehensive loss for the defined benefit plans, activity for the post-retirement benefit plans were immaterial:

As of October 31, 2024

Benefit Plans Post-Retirement

Benefit Plans

Net actuarial loss (gain) $ 2,669 $ ( 11 )

Net actuarial loss $ 2,478

Prior service benefit 14

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— 6 276 282 — 5 41 46

— 365 197 562 — 358 177 535

Hybrids at NAV (5)

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

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

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

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

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

(3) Includes funds, primarily in the UK, held in non-marketable, limited partnership interests which invest in a broad range of infrastructure and infrastructure-related assets.

Primary valuation techniques for level 3 investments include the market, income or cost approach.

Significant unobservable inputs include discount rate and EV/EBITDA multiples.

Discount rates ranged from 8 % to 13 %, with the weighted average around 10 %.

The EV/EBITDA multiples ranged from 6.5 x to 37.9 x, with the weighted average ranging from 9.2 x to 36.3 x.

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

The EV/EBITDA ratio generally indicates the number of times investors are willing to pay for a company's EBITDA valuation.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(4) Includes funds, primarily in the UK, that invest in both private and public equities, as well as emerging markets across all sectors.

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

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(5) Includes a pooled fund in the UK, that seeks a rate of return with direct or indirect linkage to UK inflation by investing in vehicles including bonds, long lease property, income strips, asset-backed securities, and index linked assets.

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

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

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

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

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

A higher IRR generally signifies a greater fair value as it implies a greater potential rate of return over the life of an investment.

(8) Includes life insurance investment policies, unsettled transactions, and derivative instruments.

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Funds Insurance

Annuities Other Total

Annuities Total

Balance at beginning of year $ 799 $ 41 $ 177 $ 237 $ 20 $ 1,274

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Balance at end of year $ 745 $ 276 $ 197 $ 264 $ 21 $ 1,503

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

For the fiscal year ended October 31, 2023

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Balance at end of year $ 799 $ 41 $ 177 $ 237 $ 20 $ — $ 1,274

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

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

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For the Company's post-retirement benefit plans, approximately 80 % of the plan assets are invested in cash and cash equivalents and approximately 20 % in multi-asset credit investments which consists primarily of investment grade credit, emerging market debt and high yield bonds.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

Investment Policy

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

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

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

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These awards generally vest over 3 years from the grant date.

The maximum number of shares as of the Approval Date that may be delivered to the participants under the 2021 Plan shall not exceed 7 million shares, plus 35.8 million shares that were available for grant under the 2015 Plan and any awards granted under the 2015 Plan prior to the Approval Date that were cash-settled, forfeited, terminated, or lapsed after the Approval Date.

On April 5, 2022, shareholders of the Company approved an amendment to the 2021 Plan thereby increasing the overall number of shares available for issuance by 15 million shares.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

Approval Date that were cash-settled, forfeited, terminated, or lapsed after the Approval Date.

On April 5, 2022, April 5, 2023 and April 10, 2024, shareholders of the Company approved amendments to the 2021 Plan thereby increasing the overall number of shares available for issuance by 15 million shares, 18 million shares, and 22 million shares, respectively.

As of October 31, 2024, the Company had remaining authorization of 38.5 million shares under the 2021 Plan.

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Stock-based compensation expense, net of tax $ 334 $ 336 $ 316

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

Stock-based compensation expense as presented in the table above is recorded within the following cost and expense lines in the Consolidated Statements of Earnings.

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Selling, general and administrative 223 220 202

Acquisition, disposition and other related charges — — 10

Stock-based compensation expense $ 430 $ 428 $ 391

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The Company expenses the fair value of restricted stock units ratably over the period during which the restrictions lapse.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

The following table summarizes restricted stock unit activity for the year ended October 31, 2024:

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The expenses associated with these performance restricted units were not material for any of the periods presented.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

Stock Options

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The Company did not issue stock options in fiscal 2024, 2023, and 2022.

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

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

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Provision for Taxes

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

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

For the fiscal years ended October 31,

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$ 2,953 $ 2,230 $ 876

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

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

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

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$ 374 $ 205 $ 8

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

The differences between the U.S.

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Goodwill impairment — % — % 21.5 %

Tax law changes — % — % ( 1.1 ) %

Other, net — % 0.1 % 2.7 %

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

In fiscal 2024, the Company recorded $ 43 million of net income tax charges related to various items discrete to the year.

These amounts primarily included $ 104 million of income tax charges resulting from the gain on the partial disposition of H3C Technologies Co., Limited (“H3C”), which included $ 215 million of U.S.

and foreign income tax charges offset by $ 111 million of income tax benefit for the release of an uncertain tax benefit related to the prior divestiture, partially offset by $ 54 million of income tax benefits related to transformation costs, and acquisition, disposition and other related charges and $ 11 million of net excess tax benefits related to stock-based compensation.

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

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and for which the Company was indemnified by HP Inc., $ 27 million of income tax benefits related to the utilization of capital losses which had a full valuation allowance, $ 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 $ 11 million of net income tax benefits related to settlements and ongoing discussions in foreign tax audit matters.

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

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

and for which the Company was indemnified by HP Inc.

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

tax return filing primarily

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

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

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

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Refer to Note 16, “Net Earnings Per Share” for details on shares used to compute diluted net EPS.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

Uncertain Tax Positions

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

— ( 28 ) ( 26 )

Balance at end of year $ 724 $ 672 $ 674

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

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

The Company recognized $ 2 million of interest expense and $ 25 million and $ 55 million of interest income in fiscal 2024, 2023, and 2022, respectively.

As of October 31, 2024 and 2023, the Company had accrued $ 58 million and $ 56 million, respectively, for interest and penalties in the Consolidated Balance Sheets.

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federal income tax returns.

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

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

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

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

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

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

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

During the first quarter of fiscal 2024, the IRS issued a Revenue Agent Report (“RAR”) finalizing their position on the NOPAs for the same issues and same fiscal years.

However, HPE disagreed with the IRS’ adjustments and believes the positions taken on its tax returns are more likely than not to prevail on technical merits, and has continued with settlement discussions with the IRS.

During the third quarter of fiscal 2024, the Company submitted a formal settlement offer to the IRS to facilitate the closing of the audit and recorded increased reserves for unrecognized tax benefits of $ 122 million.

The impact of the increase in reserves is almost entirely offset with a valuation allowance release, and the net impact to income tax expense for fiscal 2024 was not material.

It is reasonably possible that the IRS audit for fiscal 2017 through 2019 may be concluded in the next 12 months, and it is reasonably possible that existing unrecognized tax benefits related to these years may be reduced by an amount up to $ 358 million within the next 12 months, the majority of which relates to adjustments to foreign tax credits that carry a full valuation

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

allowance or to the timing of intercompany royalty revenue recognition, neither of which affects the Company’s effective tax rate.

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

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

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

The Company believes it is reasonably possible that its existing unrecognized tax benefits may be reduced by an amount up to $ 6 million within the next 12 months.

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

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

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

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

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

The Company has not provided for U.S.

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Deferred income taxes result from temporary differences between the amount of assets and liabilities recognized for financial reporting and tax purposes.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

The significant components of deferred tax assets and deferred tax liabilities were as follows:

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Loss and credit carryforwards (1)

$ 5,692 $ 5,936

Inventory valuation 78 90

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Valuation allowance (1)

( 5,204 ) ( 5,428 )

Total deferred tax assets net of valuation allowance 2,638 2,422

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Net deferred tax assets and liabilities $ 2,023 $ 1,938

(1) Fiscal 2023 amounts have been reclassified to conform to the current period presentation.

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

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Deferred tax assets net of deferred tax liabilities $ 2,023 $ 1,938

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

As of October 31, 2024, the Company had $ 269 million, $ 2.9 billion and $ 20.1 billion of federal, state and foreign net operating loss carryforwards, respectively.

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The Company has provided a valuation allowance of $ 145 million and $ 3.8 billion for deferred tax assets related to state and foreign net operating losses carryforwards, respectively.

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

As of October 31, 2024, the Company also had $ 20 million, $ 81 million, and $ 91 million of federal, state, and foreign capital loss carryforwards, respectively.

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

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The Company has provided a valuation allowance of $ 5 million and $ 27 million for deferred tax assets related to state and foreign capital loss carryforwards, respectively.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

As of October 31, 2024 , the Company had recorded deferred tax assets for various tax credit carryforwards as follows:

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Balance at end of year $ 1,075 $ ( 825 )

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

federal capital loss carryforwards.

Total valuation allowances decreased by $ 224 million in fiscal 2024, primarily as a result of the utilization of certain non-U.S.

loss carryforwards which had full valuation allowances, the impact on fully valued U.S.

foreign tax credits as a result of the change in uncertain tax benefits, the recording of valuation allowances on certain non-U.S.

tax credits, and the release of certain foreign valuation allowances.

Tax Matters Agreement and Other Income Tax Matters

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

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

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

Balance Sheet Details

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Total $ 3,550 $ 3,481

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

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

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Balance at end of year $ 10 $ 37 $ 25

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

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

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(1) This balance includes $ 593 million and $ 606 million of internal use software, net as of October 31, 2024 and 2023, respectively.

Depreciation expense was $ 2.3 billion in fiscal 2024 and 2023, respectively, and $ 2.2 billion in 2022.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

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

Long-Term Financing Receivables and Other Assets

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Total $ 12,616 $ 11,377

Supplier Financing Arrangements

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, are presented within Accounts Payable on the Consolidated Balance Sheets, amounted to $ 466 million, and $ 295 million as of October 31, 2024 and October 31, 2023, respectively.

Other Accrued Liabilities

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Value-added and property taxes 922 786

Collateral payable 207 508

Contract manufacturer liabilities 505 71

Customer deposits 289 392

Operating lease liabilities 261 194

Warranty 150 167

Contract manufacturer liabilities 71 332

Collateral payable 90 207

Other 1,281 1,274

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Total $ 6,905 $ 6,546

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

The Company's aggregate product warranty liabilities and changes therein were as follows:

As of October 31,

2024 2023 2022

Balance at beginning of year $ 318 $ 360 $ 327

Charges 173 184 238

Adjustments related to pre-existing warranties ( 5 ) ( 18 ) ( 2 )

Settlements made ( 185 ) ( 208 ) ( 203 )

Balance at end of year (1)

$ 301 $ 318 $ 360

(1) The Company included the current portion in Other accrued liabilities, and amounts due after one year in Other non-current liabilities in the accompanying Consolidated Balance Sheets.

Contract Liabilities and Remaining Performance Obligations

As of October 31, 2023 and 2022, current deferred revenue of $ 3.6 billion and $ 3.4 billion, respectively, were recorded in Deferred revenue, and non-current deferred revenue of $ 3.3 billion and $ 3.0 billion, respectively, were recorded in Other non-current liabilities in the Consolidated Balance Sheets.

During fiscal 2023, approximately $ 3.4 billion of d eferred revenue as of October 31, 2022 was recognized as revenue.

Contract liabilities consist of deferred revenue and customer deposits.

A summary of contract liabilities were as follows:

As of October 31,

Location In millions

Customer deposits Other accrued liabilities $ 289 $ 392

Customer deposits - non-current Other non-current liabilities 7 144

Total customer deposits $ 296 $ 536

Deferred revenue Deferred revenue $ 3,904 $ 3,658

Deferred revenue - non-current Other non-current liabilities 3,578 3,281

Total deferred revenue $ 7,482 $ 6,939

In fiscal 2024, approximately $ 3.5 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 October 31, 2023, the Company expects to recognize

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

approximately 49 % of the aggregate amount of remaining performance obligations, or deferred revenue, of $ 6.9 billion revenue over the next twelve months with the remainder to be recognized thereafter.

As of October 31, 2024, the aggregate amount of deferred revenue, was $ 7.5 billion.

The Company expects to recognize approximately 50 % of this balance over fiscal 2025 with the remainder to be recognized thereafter.

The Company receives payments in advance of completion of its contractual obligations, these payments are considered customer deposits.

As customer acceptance milestones are met, the Company will recognize revenue and reduce the amount of contract liabilities.

As of October 31, 2024, the aggregate amount of customer deposits was $ 296 million.

The Company expects to recognize $ 289 million over fiscal 2025 and the remaining balance thereafter.

Costs to obtain a Contract

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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 Consolidated Balance Sheets.

In fiscal 2023 and 2022, the Company amortized $ 94 million and $ 83 million, respectively, of the capitalized costs to obtain a contract which are included in Selling, general and administrative expense in the Consolidated Statements of Earnings.

In fiscal 2024, 2023, and 2022 the Company amortized $ 106 million, $ 94 million, and $ 83 million, respectively, of the capitalized costs to obtain a contract which are included in Selling, general and administrative expense in the Consolidated Statements of Earnings.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

Accounting for Leases as a Lessee

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Total lease cost $ 236 $ 181 $ 175

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

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

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Total lease liabilities $ 1,570 $ 38

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

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

Accounting for Leases as a Lessor

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Sale of Financing Receivables

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

During the fiscal years ended October 31, 2023 and 2022, the Company sold $ 237 million and $ 183 million, respectively, of financing receivables.

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

For the fiscal years ended October 31, 2024 and 2023, the Company sold $ 93 million and $ 237 million, respectively, of financing receivables.

Credit Quality Indicators

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Notes to Consolidated Financial Statements (Continued)

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

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

As of October 31, 2024

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Total $ 6,160 $ 3,243 $ 244

The credit risk profile of gross financing receivables, based on internal risk ratings as of October 31, 2022, was as follows:

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

As of October 31, 2023

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Allowance for Credit Losses

The allowance for credit losses for financing receivables and changes therein were as follows:

The allowance for credit losses for financing receivables as of October 31, 2024, 2023, and 2022, and the respective changes for the twelve months then ended were as follows:

As of October 31,

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Balance at beginning of period $ 243 $ 325 $ 228

Adjustment for adoption of the new credit loss standard — — 28

Provision for credit losses (1)

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

The SPE meets the definition of a VIE and is consolidated, along with the associated debt, into the Consolidated Financial Statements as the Company is the primary beneficiary of the VIE.

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

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

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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.

Acquisitions and Dispositions

Acquisitions and Disposition in fiscal 2024

On August 30, 2024, the Company completed the acquisition of Morpheus Data, a pioneer in software for hybrid cloud management and platform operations.

Morpheus Data’s results of operations were included within the Hybrid Cloud segment.

The acquisition date fair value consideration of $ 147 million primarily consisted of cash paid for outstanding common stock.

The Company is amortizing the intangible assets on a straight-line basis over an estimated weighted-average useful life of 4 years.

The purchase price allocations for the Morpheus Data acquisition, described below, reflect various preliminary fair value estimates and analysis, including preliminary work performed by third-party valuation specialists, of certain tangible assets and

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

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.

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 acquisition completed during fiscal 2024:

Goodwill $ 98

Amortizable intangible assets 68

Net liabilities assumed ( 19 )

Total fair value consideration $ 147

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.

On April 2, 2024, Juniper Networks shareholders approved the transaction.

The transaction is expected to be funded based on senior unsecured delayed draw term loans from a syndicate of banks, the post-tax proceeds from the Company’s sale to UNIS of 30 % of the total issued share capital of H3C, the net proceeds (including after repayments of maturing debt) of its September 2024 issuances of senior unsecured notes and 7.625 % Series C Mandatory Convertible Preferred Stock (the “Preferred Stock”), and cash on the balance sheet.

Refer to Note 14, “Borrowings,” and Note 15, “Stockholders' Equity,” for additional information.

The closing of the transaction remains subject to receipt of regulatory approvals and satisfaction of other customary closing conditions.

Disposition of CTG

On May 23, 2024, HPE announced plans to divest the CTG business to HCLTech.

CTG is included in the Communications and Media Solutions business, which is reported in the Corporate Investments and Other segment.

This divestiture includes the platform-based software solutions portions of the CTG portfolio, including systems integration, network applications, data intelligence, and the business support systems groups.

As of October 31, 2024, assets and liabilities to be sold have been presented in the Consolidated Balance Sheets as assets and liabilities held for sale.

On December 1, 2024, the Company completed the disposition of CTG.

The Company received net proceeds of $ 210 million and expect to recognize a gain of approximately $ 230 million.

Acquisitions in fiscal 2023

During fiscal 2023, the Company completed five acquisitions.

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

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

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

The purchase price allocations for the acquisitions described below reflect various fair value estimates and analysis, including 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 were subject to change within the measurement period.

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

The pro forma results of operations, revenue and net income subsequent to the acquisition dates have not been presented as they were 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, was not deductible for tax purposes.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

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

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The Company did not have any acquisitions during fiscal 2022.

Acquisitions in fiscal 2021

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

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

Goodwill $ 302

Amortizable intangible assets 277

Net tangible liabilities assumed ( 11 )

Total fair value consideration $ 568

On August 31, 2021, the Company completed the acquisition of Zerto, an industry leader in cloud data management and protection.

Zerto's results of operations were included within the Storage segment.

The acquisition date fair value consideration of $ 416 million primarily consisted of cash paid for outstanding common stock and vested in-the-money stock awards.

In connection with this acquisition, the Company recorded approximately $ 214 million of goodwill, and $ 212 million of intangible assets after considering the measurement period adjustments.

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

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

Goodwill and Intangible Assets

Goodwill and related changes in the carrying amount by reportable segment were as follows:

HPC & AI Storage Intelligent Edge Financial

Hybrid Cloud Intelligent Edge Financial

Services Corporate Investments & Other Total

2 unchanged sentences

Goodwill from acquisitions — 98 — — — 98

Goodwill adjustments — ( 1 ) 1 — — —

Balance at October 31, 2024 (1)

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

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

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

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

Goodwill Impairments

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

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

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

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

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

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

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

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

The Hybrid Cloud reporting unit has an accumulated impairment loss of $ 90 million related to the former Software reporting unit which was also recorded during the fourth quarter of fiscal 2022.

2024 Interim and Annual Goodwill Impairment Reviews

As of October 31, 2024, the Company’s reporting units with goodwill are consistent with the reportable segments identified in Note 2, “Segment Information” to the Consolidated Financial Statements in Item 8 of Part II, with the exception of Server, which contains two reporting units:

Compute and HPC & AI, and Corporate Investments and Other which contains two reporting units:

Advisory and Professional Services, and legacy Communications and Media Solutions.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

During fiscal 2024, the Company performed the following goodwill impairment tests, none of which resulted in goodwill impairment:

• Impairment test performed as of November 1, 2023 based on organizational changes impacting the composition of reporting units as of that date;

• Annual goodwill impairment test, which was performed as of the first day of the fourth quarter of fiscal 2024.

The excess of fair value over carrying amount for the reporting units ranged from approximately 8 % to 198 % of the respective carrying amounts and;

• Interim goodwill impairment test as of September 30, 2024 for Compute and Hybrid Cloud reporting units.

In September 2024, HPE sold 30 % of the total issued share capital of H3C.

The equity investment in H3C primarily benefits the Compute and Hybrid Cloud reporting units.

Subsequent to the sale, on September 30, 2024, the Company performed an interim impairment analysis for Compute and Hybrid Cloud reporting units.

The excess of fair value over carrying amount for these reporting units was 6 % for Compute and 5 % for Hybrid Cloud.

The Compute reporting unit has goodwill of $ 8.2 billion as of October 31, 2024, and excess of fair value over carrying value of 6 % as of the September 30, 2024 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.

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

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

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

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

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

However, in the current macroeconomic and inflationary environment, customers have invested selectively resulting in moderate unit growth and competitive pricing.

The Compute business continues to focus on capturing market share while maintaining operating margin, leveraging its strong portfolio of ProLiant Gen11 products.

The Hybrid Cloud reporting unit has goodwill of $ 4.8 billion as of October 31, 2024, and excess of fair value of 5 % as of the September 30, 2024 interim test date.

Although the Hybrid Cloud business is on a positive trajectory, the Company is managing both a sales model transition and product transition within this business.

The Company’s product model transition is to a more cloud-native, software-defined platform with HPE Alletra.

Translating this growth to revenue and operating income will take time because a greater mix of high margin business such as ratable software and services, are deferred and recognized in future periods.

2023 and 2022 Annual Goodwill Impairment Reviews

The Company’s fiscal 2023 annual impairment test did not result in any impairment charges.

The Company’s fiscal 2022 annual goodwill impairment analysis resulted in impairment charges for goodwill related to the HPC & AI reporting unit and former Software reporting unit (which is now part of the Hybrid Cloud reporting unit).

There was no impairment of goodwill for other reporting units.

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

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

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

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

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

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

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

Intangible Assets

Intangible assets from acquisitions comprise:

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

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Trade name and trademarks 6 ( 5 ) 1 146 ( 123 ) 23

Capitalized software development costs 56 — 56 — — —

Total intangible assets $ 1,028 $ ( 518 ) $ 510 $ 1,665 $ ( 1,011 ) $ 654

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

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

For fiscal 2024, the decrease in gross intangible assets was primarily due to $ 761 million of intangible assets which became fully amortized and were eliminated from gross intangible assets and accumulated amortization, partially offset by $ 68 million of intangible assets related to acquisitions and $ 56 million related to capitalized software development costs.

As of October 31, 2024, the weighted-average remaining useful lives of the Company's finite-lived intangible assets were as follows:

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Trade name and trademarks 1

Capitalized software development costs 3

As of October 31, 2024, estimated future amortization expense related to finite-lived intangible assets was as follows:

Fiscal year In millions

Thereafter 21

(1) This table does not include $ 50 million of software development costs that are in-progress and not amortizable.

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

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

Level 3—Unobservable inputs for assets or liabilities.

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For the fiscal years ended October 31, 2024 and 2023, there were no transfers between levels within the fair value hierarchy.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

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

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Foreign exchange contracts — 299 — 299 — 464 — 464

Other derivatives — — — — — 2 — 2

Total assets $ 12,639 $ 1,002 $ 103 $ 13,744 $ 1,673 $ 1,464 $ 158 $ 3,295

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Short-Term and Long-Term Debt:

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

The portion of the Company's

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

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

As of October 31, 2024, the estimated fair value of the Company's short-term and long-term de bt was $ 18.3 billion and the carrying value was $ 18.2 billion.

As of October 31, 2023, the estimated fair value of the Company's short-term

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

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

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

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

and long-term debt was $ 12.2 billion and the carrying value was $ 12.4 billion.

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

Other Financial Instruments:

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

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

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

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

For fiscal 2024, the Company recorded a net unrealized gain of $ 34 million.

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

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

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

In fiscal 2023, 2022 and 2021, the Company recorded a ROU asset impairment charge of $ 18 million, $ 5 million and $ 89 million, respectively, in Transformation costs in the Consolidated Statements of Earnings as the carrying value of certain ROU assets exceeded its fair value.

In fiscal 2023 and 2022, the Company recorded a net ROU asset impairment charge of $ 18 million and $ 5 million, respectively, in Transformation costs in the Consolidated Statements of Earnings as the carrying value of certain ROU assets exceeded its fair value.

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

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Financial Instruments

Cash Equivalents and Available-for-Sale Investments

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

Cash Equivalents and Available-for-Sale Debt Investments

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

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

6 unchanged sentences

Total cash equivalents 13,240 — 13,240 2,577 — 2,577

Available-for-Sale Investments:

Available-for-sale Debt Investments:

Foreign bonds 101 2 103 100 ( 3 ) 97

Other debt securities 8 6 14 19 3 22

Total available-for-sale investments 119 — 119 125 ( 1 ) 124

Total cash equivalents and available-for-sale investments $ 2,696 $ — $ 2,696 $ 2,385 $ ( 1 ) $ 2,384

Total available-for-sale debt investments 109 8 117 119 — 119

Total cash equivalents and available-for-sale debt investments $ 13,349 $ 8 $ 13,357 $ 2,696 $ — $ 2,696

All highly liquid investments with original maturities of three months or less at the date of acquisition are considered cash equivalents.

3 unchanged sentences

as of October 31, 2024 and 2023.

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

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

1 unchanged sentence

Amortized Cost Fair Value

Due in one year $ 3 $ 3

Due in one to five years 5 5

Due in more than five years 109 117

1 unchanged sentence

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

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

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

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

These non-marketable equity investments are carried either at fair value or under 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 $ 88 million and $ 135 million as of October 31, 2024 and 2023, respectively.

For fiscal 2024, he Company recorded a net unrealized loss of $ 47 million on these investments.

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

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

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

The carrying amount of those non-marketable equity investments accounted for under the measurement alternative was $ 200 million and $ 145 million as of October 31, 2024 and 2023, respectively.

For fiscal 2024, the Company recorded a net unrealized gain of $ 34 million.

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

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

39 unchanged sentences

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

In connection with the Company’s pending acquisition of Juniper Networks and related debt issuances, the Company entered into interest rate locks for an aggregate notional amount of $ 2.6 billion.

These contracts were settled in fiscal 2024, the Company recognized a loss of $ 42 million in accumulated other comprehensive income.

Net Investment Hedges

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Fair Value of Derivative Instruments in the Consolidated Balance Sheets

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

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

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

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

As of October 31, 2023 and 2022, information related to the potential effect of the Company's use of the master netting agreements and collateral security agreements was as follows:

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

As of October 31, 2024

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Derivative assets $ 299 $ — $ 299 $ 138 $ 90 (1) $ 71

Derivative liabilities $ 305 $ — $ 305 $ 196 $ 103 (2) $ 6

Derivative liabilities $ 163 $ — $ 163 $ 138 $ 27 (2) N/A

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

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Derivative assets $ 464 $ — $ 464 $ 196 $ 207 (1) $ 61

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

Derivative liabilities $ 305 $ — $ 305 $ 196 $ 103 (2) $ 6

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

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

(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 October 31, 2024, $ 27 million of collateral posted was entirely 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.

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

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

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In millions In millions

Notes payable and short-term borrowings $ ( 2,440 ) $ — $ 58 $ —

Long-term debt $ — $ ( 2,345 ) $ — $ 151

5 unchanged sentences

Foreign exchange contracts $ ( 73 ) $ ( 177 ) $ 1,025

Interest rate locks ( 42 ) — —

Derivatives in Net Investment Hedging Relationship

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Effect of Derivative Instruments on the Consolidated Statements of Earnings

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

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

Gains (Losses) Recognized in Income

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Amount of gains (losses) reclassified from accumulated other comprehensive income into income 59 ( 75 ) 28 ( 144 ) 388 590

Interest rate contracts

Amount of gains (losses) reclassified from accumulated other comprehensive income into income — — — — — ( 2 )

Gains (Losses) on Derivatives not Designated as Hedging Instruments:

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Hewlett Packard Enterprise Unsecured Senior Notes

$ 1,250 issued at discount to par at a price of 99.996 % in September 2024 at 4.45 %, due September 25, 2026, interest payable semi-annually on March 25 and September 25 of each year

$ 1,250 issued at discount to par at a price of 99.953 % in September 2024 at 4.40 %, due September 25, 2027, interest payable semi-annually on March 25 and September 25 of each year

$ 1,750 issued at discount to par at a price of 99.894 % in September 2024 at 4.55 %, due October 15, 2029, interest payable semi-annually on April 15 and October 15 of each year

$ 1,250 issued at discount to par at a price of 99.908 % in September 2024 at 4.85 %, due October 15, 2031, interest payable semi-annually on April 15 and October 15 of each year

$ 2,000 issued at discount to par at a price of 99.078 % in September 2024 at 5.00 %, due October 15, 2034, interest payable semi-annually on April 15 and October 15 of each year

$ 1,500 issued at discount to par at a price of 98.086 % in September 2024 at 5.60 %, due October 15, 2054, interest payable semi-annually on April 15 and October 15 of each year

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

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

$ 1,250 issued at discount to par at a price of 99.956 % in April 2020 at 4.45 %, due October 2, 2023, interest payable semi-annually on April 2 and October 2 of each year

$ 1,000 issued at discount to par at a price of 99.979 % in September 2019 at 2.25 %, due April 1, 2023, interest payable semi-annually on April 1 and October 1 of each year

$ 2,500 issued at discount to par at a price of 99.725 % in October 2015 at 4.90 %, due October 15, 2025, interest payable semi-annually on April 15 and October 15 of each year

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Hewlett Packard Enterprise Asset-Backed Debt Securities

$ 818 issued in June 2024, in six tranches at a weighted average price of 99.99 % and a weighted average interest rate of 5.59 %, payable monthly from July 2024

$ 796 issued in January 2024, in six tranches at a weighted average price of 99.99 % and a weighted average interest rate of 5.48 %, payable monthly from February 2024

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

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$ 1,000 issued in March 2021, in six tranches at a weighted average price of 99.99 % and a weighted average interest rate of 0.49 %, payable monthly from April 2021 with a stated final maturity date of March 2031

$ 1,000 issued in June 2020, in six tranches at a weighted average price of 99.99 % and a weighted average interest rate of 1.19 %, payable monthly from August 2020 with a stated final maturity date of July 2030

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

Other, including finance lease obligations, at 1.6 %- 6.3 %, due in calendar years 2024-2030 (1)

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Total long-term debt $ 13,504 $ 7,487

(1) Other, including finance lease obligations included $ 36 million and $ 86 million as of October 31, 2023 and 2022, respectively, of borrowing- and funding-related activity associated with FS and its subsidiaries that are collateralized by receivables and underlying assets associated with the related finance and operating leases.

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

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(1) Other, including finance lease obligations included $ 14 million and $ 36 million as of October 31, 2024 and 2023, respectively, of borrowing- and funding-related activity associated with FS and its subsidiaries that are collateralized by receivables and underlying assets associated with the related finance and operating leases.

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

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

19 unchanged sentences

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

In September 2024, the Company terminated its prior senior unsecured revolving credit facility that was entered into in December 2021, and entered into a new senior unsecured revolving credit facility with an aggregate lending commitment of $ 5.25 billion for a period of five years .

The commitment comprised of (i) $ 4.75 billion of commitments available immediately and (ii) $ 500 million of commitments available from and subject to the closing of the Juniper Networks acquisition and refinancing of Juniper Networks’ credit agreement in connection with the closing of the Juniper Networks acquisition.

As of October 31, 2024 and 2023, no borrowings were outstanding under either credit facilities.

Uncommitted Credit facility

1 unchanged sentence

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

Juniper Networks Acquisition Committed Financing

In connection with HPE’s signing a definitive agreement to acquire Juniper Networks in January 2024 (the “Merger Agreement”), HPE entered into a commitment letter whereby HPE obtained a commitment from Citigroup Global Markets Inc., JPMorgan Chase Bank, N.A.

and Mizuho Bank, Ltd.

for a $ 14.0 billion senior unsecured delayed draw term loan facility, comprised of an $ 11.0 billion 364-day tranche and a $ 3.0 billion three-year tranche, subject to customary conditions (the “Term Loan Commitment Letter”).

In September 2024, HPE issued $ 9.0 billion of senior unsecured notes.

In addition, in furtherance of the Term Loan Commitment Letter, the Company entered into term loan agreements with JPMorgan Chase Bank, N.A, Citibank, N.A., and

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

Mizuho Bank, Ltd.

for approximately $ 12.0 billion of senior unsecured delayed draw term loan facilities, comprised of an approximately $ 9.0 billion 364-day tranche and a $ 3.0 billion three-year tranche, subject to customary conditions.

The Company has since further reduced the commitments under the 364-day term loan to $ 1.0 billion.

Unless previously terminated, commitments under both the 364-day term loan and the three-year term loan will terminate upon the earliest of (i) five business days after the Juniper Outside Date (as defined in such term loan agreements), (ii) the occurrence of the closing of the acquisition of Juniper Networks without the funding of any borrowings under either of the term loan agreements, and (iii) the termination of the Merger Agreement by HPE in writing in accordance with its terms.

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

In connection with the entry into the aforementioned 364-day term loan and the three-year term loan, on September 12, 2024, HPE terminated the Term Loan Commitment Letter.

Future Maturities of Borrowings

3 unchanged sentences

Total $ 17,660

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

Stockholders' Equity

1 unchanged sentence

Net unrealized

gains (losses) on

available-for-sale

8 unchanged sentences

Reclassifications of losses into earnings — 16 138 32 186

Tax benefit — 13 41 4 58

Tax benefit (provision) — 22 ( 7 ) 2 17

Balance at end of period $ 8 $ ( 16 ) $ ( 2,342 ) $ ( 627 ) $ ( 2,977 )

1 unchanged sentence

Net unrealized

(losses) gains on

available-for-sale

securities Net unrealized

gains (losses)

flow hedges Unrealized

3 unchanged sentences

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

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

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

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

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

Reclassifications of losses into earnings — 116 147 — 263

Tax benefit — 13 41 4 58

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

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

The components of accumulated other comprehensive loss, net of taxes as of October 31, 2022 and changes during fiscal 2022 were as follows:

10 unchanged sentences

Other comprehensive (loss) income before reclassifications ( 16 ) 1,025 ( 315 ) ( 146 ) 548

Reclassifications of losses into earnings — 156 285 — 441

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

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

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

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

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

Dividends declared were $ 0.48 per common share in both fiscal 2023 and 2022.

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

Share Repurchase Program

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

7.625 % Series C Mandatory Convertible Preferred Stock

In September 2024, the Company issued 30 million shares of 7.625 % Series C Mandatory Convertible Preferred Stock, par value $ 0.01 per share (the “Preferred Stock”), for an aggregate purchase price of $ 1.5 billion, less issuance costs of $ 38 million.

As of October 31, 2024, 30 million shares of the Preferred Stock were outstanding.

Unless converted earlier in accordance with its terms, each share of Preferred Stock will automatically convert on the mandatory conversion date, which is expected to be September 1, 2027, into between 2.5352 shares and 3.1056 shares of common stock, in each case, subject to customary anti-dilution adjustments described in the certificate of designations related to the Preferred Stock (the “Certificate of Designations”).

The number of shares of common stock issuable upon conversion will be determined based on the average volume weighted average price per share of common stock over the 20 consecutive trading day period beginning on, and including, the 21st scheduled trading day immediately prior to September 1, 2027.

Holders of shares of Preferred Stock have the option to convert all or any portion of their shares of Preferred Stock at any time.

The conversion rate applicable to any early conversion may, in certain circumstances, be increased to compensate holders of the Preferred Stock for unpaid accumulated dividends as described in the Certificate of Designations.

If a Fundamental Change, as defined in the Certificate of Designations, occurs on or prior to September 1, 2027, then holders of the Preferred Stock will be entitled to convert all or any portion of their Preferred Stock at the Fundamental Change Conversion Rate, into between 1.9200 shares and 3.1056 shares of common stock, in all cases, subject to customary anti-dilution adjustments described in the Certificate of Designations, for a specified period of time and to also receive an amount to compensate them for unpaid accumulated dividends and any remaining future scheduled dividend payments.

The Preferred Stock is not subject to redemption at the Company’s option.

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

The Company’s ability to pay dividends will depend on many factors, such as its financial condition, earnings, capital requirements, debt service obligations, restrictive covenants in its debt, industry practice, legal requirements, regulatory constraints, and other factors that the Board of Directors deems relevant.

Furthermore, so long as any share of its Preferred Stock remains outstanding, no dividend on shares of common stock (or any other class of stock junior to the Preferred Stock) shall be declared or paid unless all accumulated and unpaid dividends for all preceding dividend periods for the Preferred Stock have been declared and paid in full in cash, shares of the Company’s common stock or a combination thereof, or a sufficient sum of cash or number of shares of its common stock has been set apart for the payment of such dividends, on all outstanding shares of the Preferred Stock.

Dividends declared were $ 0.52 and $ 0.48 per common share in fiscal 2024 and 2023, respectively.

On December 05, 2024, the Company declared a regular cash dividend of $ 0.13 per share on the Company's common stock, payable on January 16, 2025, to the stockholders of record as of the close of business on December 20, 2024.

Dividends on the Preferred Stock will be payable on a cumulative basis when, as and if declared by the Board of Directors, or an authorized committee thereof, at an annual rate of 7.625 % on the liquidation of preference of $ 50.00 per share.

The Company may pay declared dividends in cash or, subject to certain limitations, in shares of its common stock or in any combination of cash and shares of its common stock on March 1, June 1, September 1 and December 1 of each year,

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

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

commencing on December 1, 2024, and ending on, and including, September 1, 2027.

The Company has declared a cash dividend of $ 0.82604167 per share of its 7.625 % Series C Mandatory Convertible Preferred Stock, which was paid on December 1, 2024, to holders of record as of the close of business on November 15, 2024.

Share Repurchase Program

On October 13, 2015, the Board of Directors approved a share repurchase program with a $ 3.0 billion authorization, which was refreshed with additional share repurchase authorizations of $ 3.0 billion, $ 5.0 billion and $ 2.5 billion on May 24, 2016, October 16, 2017 and February 21, 2018, respectively.

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

1 unchanged sentence

Additionally, the Company had unsettled open market repurchases of 0.1 million shares as of October 31, 2024.

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

Shares repurchased during the fiscal 2024 were recorded as a $ 150 million reduction to stockholders' equity.

As of October 31, 2024, the Company had a remaining authorization of approximately $ 0.8 billion for future share repurchases.

4 unchanged sentences

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

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

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

2 unchanged sentences

In millions, except per share amounts

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

Net earnings attributable to common stockholders - Basic $ 2,554 $ 2,025 $ 868

7.625 % Series C mandatory convertible preferred stock dividends

Net earnings - Diluted $ 2,579 $ 2,025 $ 868

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

Dilutive effect of employee stock plans (1)

Dilutive effect of 7.625 % Series C mandatory convertible preferred stock (1)

Weighted-average shares used to compute diluted net EPS 1,337 1,316 1,322

Net earnings per share:

Net earnings per share attributable to common stockholders:

Basic $ 1.95 $ 1.56 $ 0.67

1 unchanged sentence

Anti-dilutive weighted-average stock awards (2)

(1) The impact of dilutive effect of employee stock plans is calculated under the treasury stock method, and the impact of dilutive effect of the 7.625 % Series C Mandatory Convertible Preferred Stock is calculated under the if-converted method.

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

Litigation and Contingencies

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

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.

7 unchanged sentences

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

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

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

events pertaining to a particular matter.

Litigation is inherently unpredictable.

11 unchanged sentences

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

The Court has scheduled a compliance hearing for February 8, 2024, to assess the distribution of the settlement fund to the class members and resolve any final issues.

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

India Directorate of Revenue Intelligence Proceedings .

10 unchanged sentences

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.

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.

In late July 2011, ECT notified HP Brazil it had decided to

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

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.

In August 2011, HP Brazil appealed ECT's decision.

8 unchanged sentences

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

and Hewlett Packard

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

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

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

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

6 unchanged sentences

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

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

Oracle America, Inc., et al.

Hewlett Packard Enterprise Company (Terix copyright matter) .

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

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.

On March 29, 2024, the Court granted Final Approval to the settlement following a Fairness Hearing on the parties’ Motion for Final Approval.

Judgment has been entered by the Court and the matter is now closed.

Q3 Networking Litigation.

5 unchanged sentences

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.

On May 10, 2024, the United States Court of Appeals for the Federal Circuit affirmed the ITC’s ruling in favor of HPE and Aruba Networks.

Q3 Networking has not sought further review of the Federal Circuit’s ruling and HPE considers the matter closed.

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, Intel, HP Inc., and Dell filed an appeal and request for a stay of the judgment pending appeal.

On April 9, 2024 the request for a stay pending appeal was denied.

On April 3, 2024, R2 filed a lawsuit in France in the first instance court in Paris (Tribunal judiciare de Paris) against Intel Corporation, Intel Corporation SAS, Intel Deutschland GmbH, HP France SAS and certain other Intel customers.

In May 2024, R2 filed suit in Milan against Intel Corporation Italia S.P.A., Hewlett-Packard Italiana S.r.l., and certain other Intel customers.

R2 asserts the same European patent is infringed in both the French and Italian actions.

On August 30, 2024, Intel and R2 publicly announced an agreement to dismiss all litigation between the two companies that would include dismissal of all litigation against all subsidiaries of HPE in the foregoing actions.

Pursuant to that agreement, the Italian lawsuit was dismissed on September 2, 2024, the German lawsuit was dismissed on September 4, 2024, and the French Lawsuit was dismissed on September 6, 2024.

These matters are now

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

Shared Litigation with HP Inc., DXC and Micro Focus

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

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

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

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

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

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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.

Guarantees, Indemnifications and Warranties

Unconditional Purchase Obligations

As of October 31, 2024, the Company had unconditional purchase obligations of approximately $ 1.3 billion.

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

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

Unconditional purchase obligations exclude agreements that are cancellable without penalty.

The Company expects the commitments to total $ 556 million, $ 368 million, $ 278 million, $ 68 million, and $ 13 million, for fiscal years 2025, 2026, 2027, 2028, and 2029, respectively.

There are no unconditional purchase obligations subsequent to fiscal year 2029.

Guarantees and Indemnifications

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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The Company believes the likelihood of having to perform under a material guarantee is remote.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

The Company has entered into service contracts with certain of its clients that are supported by financing arrangements.

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

The maximum potential future payments under performance guarantees and financing arrangements was $ 298 million as of October 31, 2024.

Indemnifications

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and certain non-U.S.

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

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

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

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

As of October 31, 2024 and 2023, the Company's receivable and payable balances related to indemnified litigation matters and other contingencies, and income tax-related indemnification covered by these agreements were as follows:

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(1) The actual amount that the Company may receive or pay could vary depending upon the outcome of certain unresolved tax matters, which may not be resolved for several years.

The Company's aggregate product warranty liabilities and changes therein were as follows:

For the fiscal years ended October 31,

Balance at beginning of year $ 360 $ 327

Charges 184 238

Adjustments related to pre-existing warranties ( 18 ) ( 2 )

Settlements made ( 208 ) ( 203 )

Balance at end of year (1)

(1) The Company included the current portion in Other accrued liabilities, and amounts due after one year in Other non-current liabilities in the accompanying Consolidated Balance Sheets.

Unconditional Purchase Obligations

As of October 31, 2023, the Company had unconditional purchase obligations of approximately $ 1.6 billion.

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

Unconditional purchase obligations exclude agreements that are cancellable without penalty.

The Company expects the commitments to total $ 580 million, $ 293 million, $ 317 million, $ 310 million, $ 46 million, and $ 5 million for fiscal years 2024, 2025, 2026, 2027, 2028 and thereafter, respectively.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

Equity Method Investments

Equity Interests

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

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

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

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

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

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

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

The difference between the sale date carrying value of the Company's investment in H3C and its proportionate share of the net assets fair value of H3C, created a basis difference of $ 2.5 billion, which was allocated as follows:

Equity method goodwill $ 1,674

Intangible assets 749

In-process research and development 188

Deferred tax liabilities ( 152 )

Basis difference $ 2,534

The Company amortizes the basis difference over the estimated useful lives of the assets that gave rise to this difference.

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

On May 24, 2024, the Company’s relevant subsidiaries entered into (i) an Amended and Restated Put Share Purchase Agreement with UNIS, whereby its relevant subsidiaries shall sell to UNIS 30 % of the total issued share capital of H3C for pre-tax cash consideration of approximately $ 2.1 billion by August 31, 2024 (the “Sale Transaction”), and (ii) an Agreement on Subsequent Arrangements with UNIS, whereby upon closing of the Sale Transaction, the Company’s relevant subsidiary shall have a put option to sell to UNIS and UNIS shall have a call option to purchase from the Company’s relevant subsidiary 19 % of the total issued share capital of H3C for pre-tax cash consideration of approximately $ 1.4 billion between the 16 th month and until the 36 th month after the Sale Transaction.

The transactions referenced in clauses (i) and (ii) above, taken together, revise the arrangements governing the aforementioned sale of all of the H3C shares held by the Company, through its subsidiaries and are subject to certain grace periods and regulatory approvals.

On September 4, 2024, pursuant to the Amended and Restated Put Share Purchase Agreement with UNIS (as described above), the Company received $ 2.1 billion of pre-tax consideration ($ 2.0 billion post-tax), in connection with the sale to UNIS of 30 % of the total issued share capital of H3C resulting in a gain of $ 733 million.

As of October 31, 2024, the Company's Investments in equity interests was $ 929 million and primarily related to a 19 % equity interest in H3C.

As of October 31, 2023, the Company's Investments in equity interests was $ 2.2 billion and primarily related to a 49 % equity interest in H3C.

As of October 31, 2024, the difference between the cost of the investment and the underlying equity in the net assets of the investment is $ 649 million.

As of October 31, 2024 and 2023, the Company determined that no impairment of its equity method investments existed.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

Earnings from equity interests

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Earnings from equity interests, net of taxes $ 154 $ 242 $ 270

$ 242 $ 270 $ 292

Basis difference amortization ( 3 ) ( 9 ) ( 45 )

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Earnings from equity interests $ 147 $ 245 $ 215

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

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

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

For fiscal 2024 and 2023, the Company received a cash dividend of $ 43 million and $ 200 million, respectively, from H3C.

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

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

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

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Receivables due from H3C as of October 31, 2024 and 2023 were approximately $ 7 million and $ 12 million, respectively.

A summary of H3C’s statements of operations for the twelve-month periods ended September 30, 2023, 2022 and 2021 and balance sheets as of September 30, 2023 and 2022 are as follows:

For the twelve months ended September 30,

2023 2022 2021

Statement of Operations:

Revenue $ 7,161 $ 7,633 $ 6,377

Gross profit 1,790 2,014 1,676

$ 498 $ 561 $ 530

As of September 30,

Balance Sheets:

Current assets $ 5,073 $ 4,341

Non-current assets 677 631

Current liabilities

Non-current liabilities $ 489 $ 203

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data