Revenue is recognized when, or as, control of promised products or services is transferred to the customer in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those products or services. Variable consideration offered in contracts with customers, partners and distributors may include rebates, volume-based discounts, cooperative marketing, price protection, and other incentive programs. Variable consideration 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 any incremental 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. Transfer of control can also occur over time for maintenance and services as the customer receives the benefit over the contract term. The Company's hardware and perpetual software licenses are distinct performance obligations where revenue is recognized upfront upon transfer of control. Term software licenses include multiple performance obligations where the term licenses are recognized upfront upon transfer of control, with the associated software

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

maintenance revenue recognized ratably over the contract term as services and software updates are provided. SaaS arrangements have one distinct performance obligation which is satisfied over time with revenue recognized ratably over the contract term as the customer consumes the services. On its product sales, the Company records consideration from shipping and handling on a gross basis within net product sales. Revenue is recorded net of any associated sales taxes.

~~Significant Judgments~~

The Company allocates the transaction price for the contract among the performance obligations on a relative standalone selling price basis. The standalone selling price ("SSP") is the price at which an entity would sell a promised product or service separately to a customer. The Company establishes SSP for most of its products and services based on the observable price of the products or services when sold separately in similar circumstances to similar customers. When the SSP is not directly observable, the Company estimates SSP based on management judgment by considering available data such as internal margin objectives, pricing strategies, market/competitive conditions, historical profitability data, as well as other observable inputs. The Company establishes SSP ranges for its products and services and reassesses them periodically.

Judgment is applied in determining the transaction price as the Company may be required to estimate variable consideration when determining the amount of revenue to recognize. Variable consideration may include various rebates, volume-based discounts, cooperative marketing, price protection, and other incentive programs that are offered to customers, partners and distributors. When determining the amount of revenue to recognize, the Company estimates the expected usage of these programs, applying the expected value or most likely estimate and updates the estimate at each reporting period as actual utilization becomes available. The Company also considers the customers' right of return in determining the transaction price, where applicable.

~~Contract Balances~~

~~Accounts receivable and contract assets~~

A receivable is a right to consideration in exchange for products or services the Company has transferred to a customer that is unconditional. A contract asset is a right to consideration in exchange for products or services transferred to a customer that is conditional on something other than the passage of time. A receivable is recorded when the right to consideration becomes unconditional.

The Company’s contract assets include unbilled receivables which are recorded when the Company recognizes revenue in advance of billings. Unbilled receivables generally relate to services contracts where a service has been performed and control has transferred, but invoicing to the customer is subject to future milestone billings or other contractual payment schedules. The Company classifies unbilled receivables as Accounts receivable.

~~Contract liabilities~~

A contract liability is an obligation to transfer products or services to a customer for which the entity has received consideration, or the amount is due, from the customer. The Company’s contract liabilities primarily consist of deferred revenue. 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.

~~Costs to obtain a contract with a customer~~

The Company capitalizes the incremental costs of obtaining a contract with a customer, primarily sales commissions, if the Company expects to recover those costs. The Company has elected, as a practical expedient, to expense the costs of obtaining a contract as incurred for contracts with terms of one year or less. The typical amortization periods used range from three to six years. The Company periodically reviews the capitalized sales commission costs for possible impairment losses. Capitalized sales commission costs are included in Other current assets and Long-term financing receivables and other assets, and the related amortization expense is included in Selling, general and administrative expense.

~~Recent Tax Legislation~~

On December 22, 2017, the Tax Cuts and Jobs Act (the “Tax Act”) was enacted into law. The Tax Act included significant changes to the U.S. corporate income tax structure, including a federal corporate rate reduction from 35% to 21% effective January 1, 2018, limitations on the deductibility of interest expense and executive compensation, creation of new minimum taxes such as the Base Erosion Anti-abuse Tax (“BEAT”) and the Global Intangible Low Taxed Income (“GILTI”) tax and the transition of U.S.

~~HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES~~

~~Notes to Condensed Consolidated Financial Statements (Continued)~~

~~(Unaudited)~~

international taxation from a worldwide tax system to a modified territorial tax system, which resulted in a one-time U.S. tax liability on those earnings which had not previously been repatriated to the U.S. (the “Transition Tax”).

In December 2017, the U.S. Securities and Exchange Commission ("SEC") issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act ("SAB 118"), which allowed the Company to record provisional amounts during a measurement period not to extend beyond one year of the enactment date, which for the Company ended in the first quarter of fiscal 2019. In accordance with SAB 118, the accounting for the tax effects of the Tax Act was completed based on currently available legislative updates relating to the Tax Act. The Company has elected to treat taxes due on future GILTI inclusions in U.S. taxable income as a current period expense when incurred. For further details, see Note 6, "Taxes on Earnings".

Recently Adopted Accounting Pronouncements

In March ~~2017,~~2020, the ~~Financial Accounting Standards Board ("FASB") amended~~FASB issued guidance to provide temporary optional expedients and exceptions through December 31, 2022 to the ~~existing~~U.S. GAAP guidance on contract modifications and hedge accounting ~~standards for retirement benefits. The amendments require~~to ease the ~~presentation~~financial reporting burdens of the service cost component of net periodic benefit cost in the same income statement line items as other employee compensation costs, unless eligible for capitalization. The other components of net periodic benefit costs will be presented separatelyexpected market transition from the ~~service cost~~London Interbank Offered Rate (LIBOR) and other interbank offered rates to alternative reference rates, such as ~~non-operating costs. Effective at~~ the ~~beginning of~~Secured Overnight Financing Rate (SOFR). This guidance was effective upon issuance, as a result the first quarter of fiscal 2019, in connection with the adoption of the accounting standards update for retirement benefits, the Company reflected these changes retrospectively by transferring its non-service net periodic benefit (credit) cost from operating expense to Other (income) and expense in its Condensed Consolidated Statements of Earnings. The net periodic benefit (credit) cost transferred to Other (income) and expense during the ~~three and nine months ended July 31, 2018~~ ~~were as follows. Refer to Note 5, “Retirement and Post-Retirement Benefit Plans” for additional information.~~

Three Months Ended
July 31, 2018 Nine Months Ended
July 31, 2018
In millions
Cost of products and services $ (14 ) $ (42 )
Research and development (1 ) (3 )
Selling, general and administrative (19 ) (53 )
Restructuring charges and transformation costs 8
8
$ (26 ) $ (90 )

~~In November 2016, the FASB amended the existing accounting standards for the classification and presentation of restricted cash in the statement of cash flows. The~~ Company adopted the guidance in the ~~first~~second quarter of fiscal 2019, beginning November 1, 2018, using the retrospective method. As a result of adopting this accounting standards update, for the nine months ended July 31, 2018, the Company included $43 million of restricted cash movement during the period, which was previously reported within cash used in investing activities, and is now reported within Decrease in cash, cash equivalents and restricted cash in the Company's Condensed Consolidated Statement of Cash Flows.

In October 2016, the FASB amended the existing accounting standards for income taxes. The amendments require the recognition of the income tax consequences for intra-entity transfers of assets other than inventory when the transfer occurs. Prior to the amendments, current and deferred income taxes for intra-entity asset transfers were not recognized until the asset was sold to an outside party or amortized over time. The Company adopted the guidance in the first quarter of fiscal 2019, beginning November 1, 2018, using the modified retrospective method. The Company recognized $2.3 billion of income taxes as an adjustment to retained earnings in the first nine months of fiscal 2019, which was previously reported as prepaid income taxes and deferred tax assets within Corporate and unallocated assets in the Company's allocation of segment assets.

In August 2016, the FASB amended the existing accounting standards for the statement of cash flows. The amendments provide guidance on eight classification issues related to the statement of cash flows. The Company adopted the guidance in the first quarter of fiscal 2019, beginning November 1, 2018, using the retrospective method. For issues that are impracticable to apply retrospectively, the amendments may be applied prospectively as of the earliest date practicable. The application of this accounting standards update did not have an impact on the Condensed Consolidated Statements of Cash Flows.

In January 2016, the FASB issued guidance that requires equity investments with readily determinable fair values (other than those accounted for under the equity method or those that result in consolidation of the investee) to be measured at fair value and recognize any changes in fair value in net income. For equity investments without readily determinable fair values, the Company has elected to apply the measurement alternative, under which investments are measured at cost, less impairment, and adjusted

~~HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES~~

~~Notes to Condensed Consolidated Financial Statements (Continued)~~

~~(Unaudited)~~

~~for qualifying observable price changes on a prospective basis. The Company adopted the guidance effective November 1, 2018,~~2020 and there was no financial impact on the Condensed Consolidated Financial Statements upon adoption.

In May 2014, the FASB amended the existing accounting standards for revenue recognition. The Company adopted the new revenue standard in the first quarter of fiscal 2019 using the modified retrospective method of transition applied to contracts that were not completed as of November 1, 2018. Results and related disclosures for the reporting periods beginning after November 1, 2018 are presented under the new revenue standard, while comparative prior period results and related disclosures are not adjusted and continue to be reported in accordance with the historic accounting standard. Refer to the Revenue Recognition section above for accounting policy updates upon the adoption of the new revenue standard, and Note 7, "Balance Sheet Details" for further discussion on the impact of adoption. For disaggregation of revenue, see Note 2, "Segment Information".

~~The following table summarizes the effects of adopting the new revenue standard at November 1, 2018 on the Condensed Consolidated Balance Sheets as an adjustment to the opening balance:~~

Historical Accounting
Method Effect of Adoption As Adjusted
In millions
Assets
Accounts receivable $ 3,263
$ 38
$ 3,301
Inventory 2,447
(14)
2,433
Other current assets 3,280
50
3,330
Long-term financing receivables and other assets 11,359
44
11,403
Subtotal assets $ 20,349
$ 118
$ 20,467
Liabilities
Taxes on earnings $ 378
$ 10
$ 388
Deferred revenue 3,177
(36)
3,141
Other accrued liabilities⁽¹⁾
3,840
52
3,892
Other non-current liabilities 6,885
(30)
6,855
Subtotal liabilities $ 14,280
$ (4 ) $ 14,276
Stockholders' equity
Accumulated deficit⁽¹⁾
$ (5,899 ) $ 122
$ (5,777 )
Subtotal stockholders' equity $ (5,899 ) $ 122
$ (5,777 )
Subtotal liabilities and stockholders' equity $ 8,381
$ 118
$ 8,499


~~(1)~~	~~Includes an adjustment related to the adoption of ASC 606 that was recorded during the third quarter of fiscal 2019.~~

The application of ASC 606 increased the Company's total net revenue by $23 million and $41 million for the three and nine months ended July 31, 2019, respectively, and did not have a material impact to the Company's cost of sales or operating expenses for the three or nine months ended July 31, 2019. As of July 31, 2019, the balance sheet changes attributable to the impact of ASC 606 were immaterial.

~~Recently Enacted Accounting Pronouncements~~

In August 2018, the FASB issued guidance on a customer's accounting for implementation costs incurred in cloud-computing arrangements that are hosted by a vendor. Certain types of implementation costs should be capitalized and amortized over the term of the hosting arrangement. The Company is required to adopt the guidance in the first quarter of fiscal 2021. Early adoption is permitted. The Company is currently evaluating the timing and the impact of these amendments on its Condensed Consolidated Financial Statements.

In August 2018, the FASB issued guidance which changes the disclosure requirements for fair value measurements and defined benefit plans. The Company is required to adopt the guidance in the first quarter of fiscal 2021. Early adoption is permitted. As the guidance represents a change to disclosure only, the Company does not expect the guidance to have a material impact on its Condensed Consolidated Financial Statements.

~~HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES~~

~~Notes to Condensed Consolidated Financial Statements (Continued)~~

~~(Unaudited)~~

In February 2018, the FASB issued guidance that allows companies to reclassify stranded tax effects resulting from ~~the Tax Act,~~U.S. tax reform, from accumulated other comprehensive income (loss) to retained earnings. The guidance also ~~requires certain new disclosures regardless~~allows the reclassification of these stranded tax effects to be recorded upon adoption of the ~~election.~~guidance rather than at the actual cessation date. The Company ~~is required to adopt~~adopted the guidance in the first quarter of fiscal ~~2020. Early adoption is permitted. The Company is currently evaluating the timing~~2020 and ~~the impact~~elected not to reclassify prior periods. As a result, $43 million of ~~these amendments~~tax benefit was reclassified from accumulated other comprehensive loss into accumulated deficit, primarily comprised of amounts related to currency translation adjustments and net unrealized gains (losses) on ~~its Condensed Consolidated Financial Statements.~~cash flow hedges.

In August 2017, the FASB amended the existing accounting standards for hedge accounting. The amendments expand an entity’s ability to hedge non-financial and financial risk components and reduce complexity in fair value hedges of interest rate risk. The new guidance eliminates the requirement to separately measure and report hedge ineffectiveness and requires the entire change in the fair value of a hedging instrument to be presented in the same income statement line as the hedged item. The guidance also simplifies certain documentation and assessment requirements and modifies the accounting for components excluded from the assessment of hedge effectiveness. In April 2019, the FASB issued certain clarifications to address partial term fair value hedges, fair value hedge basis adjustments and certain transition requirements. The Company adopted the guidance effective November 1, 2019 and there was no financial impact on the Condensed Consolidated Financial Statements upon adoption.

In February 2016, with amendments in 2018 and 2019, the FASB issued guidance which changes the accounting standards for leases. The Company adopted the guidance in the first quarter of fiscal 2020, beginning November 1, 2019, using the modified retrospective transition method whereby prior comparative periods will not be restated in the Consolidated Financial Statements. Accordingly, results and related disclosures for the reporting periods beginning after November 1, 2019 are presented under the new lease standard, while comparative prior period results and related disclosures are not adjusted and continue to be reported in accordance with the historic accounting standards. The primary objective of this update is to increase transparency and comparability among organizations by requiring lessees to recognize a lease liability and a right-of-use (“ROU”) asset for the lease term. The Company elected the package of practical expedients which did not require the reassessment of prior conclusions related to contracts containing leases, lease classification and initial direct costs ("IDC"). The adoption of the new lease standard on November 1, 2019 resulted in the recognition of $1.0 billion of right-of-use assets and $1.1 billion of lease liabilities on the Company’s Condensed Consolidated Balance Sheet. As a lessor, no transition adjustments were recorded from the adoption of ASC 842.

The adoption of the accounting standard for leases had no impact on the Company's Condensed Consolidated Statements of Earnings and Condensed Consolidated Statements of Cash Flows or debt-covenant compliance under its current agreements. Refer to Note 7 “Accounting for Leases as a Lessee” for accounting policy and additional information.

Recently Enacted Accounting Pronouncements

In March 2020, the FASB issued clarifications relating to its existing guidance on financial instruments. Some clarifications included in this amendment are effective upon issuance and these do not have an impact on HPE’s current accounting practices. For those clarifications which affect the guidance as it relates to the measurement of credit losses, the Company is required to adopt them in the first quarter of fiscal 2021. The Company is currently evaluating the impact of these amendments on its Consolidated Financial Statements.

In January 2020, the FASB issued guidance to clarify certain interactions between the guidance to account for equity securities, the guidance to account for investments under the equity method of accounting, and the guidance to account for derivatives and hedging. The new guidance clarifies the application of measurement alternatives and the accounting for certain forward contracts and purchased options to acquire investments. The Company is required to adopt the guidance in the first quarter of fiscal ~~2020. Early~~2022, though early adoption is permitted. The Company is currently evaluating the timing and the impact of these amendments on its Consolidated Financial Statements.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

In December 2019, the FASB amended the existing accounting standards for income taxes. The amendments clarify and simplify the accounting for income taxes by eliminating certain exceptions to the general principles. The Company is required to adopt the guidance in the first quarter of fiscal 2022, though early adoption is permitted. The Company is currently evaluating the timing and the impact of these amendments on its Consolidated Financial Statements.

In August 2018, the FASB issued guidance on a customer's accounting for implementation costs incurred in cloud-computing arrangements that are hosted by a vendor. Certain types of implementation costs should be capitalized and amortized over the term of the hosting arrangement. The Company is required to adopt the guidance in the first quarter of fiscal 2021, though early adoption is permitted. The Company is currently evaluating the impact of these amendments on its Consolidated Financial Statements.

In August 2018, the FASB issued guidance which changes the disclosure requirements for fair value measurements and defined benefit pension plans. The Company is required to adopt the guidance in the first quarter of fiscal 2021, though early adoption is permitted. The Company is currently evaluating the impact of these amendments however, the Company does not expect the guidance to have an impact on its Consolidated Financial Statements.

In June 2016, the FASB amended the existing accounting standards for the measurement of credit losses. The amendments require an entity to estimate its lifetime expected credit loss for most financial instruments, including trade and ~~lease~~financing receivables, and record an allowance for the portion of the amortized cost the entity does not expect to collect. The estimate of expected credit losses should consider historical information, current information, and reasonable and supportable forecasts, including estimates of prepayments. In April 2019, the FASB further clarified the scope of the credit losses standard and addressed issues related to accrued interest receivable balances, recoveries, variable interest rates and prepayment. In May 2019, the FASB issued further guidance to provide entities with an option to irrevocably elect the fair value option applied on an instrument-by-instrument basis for eligible financial instruments. In November 2019, the FASB issued several amendments to the new credit losses standard, including an amendment requiring entities to include certain expected recoveries of the amortized cost basis in the allowance for credit losses for purchased credit deteriorated assets. The Company is required to adopt the guidance in the first quarter of fiscal 2021. ~~Early adoption is permitted beginning in fiscal 2020. The Company is currently evaluating the timing and the impact of these amendments on its Condensed Consolidated Financial Statements.~~

The FASB issued guidance in February 2016, with amendments in 2018 and 2019, which changes the accounting standards for leases. The amendments require lessees to record, at lease inception, a lease liability for the obligation to make lease payments and a right-of-use ("ROU") asset for the right to use the underlying asset for the lease term on their balance sheets. Lessees may elect to not recognize lease liabilities and ROU assets for most leases with terms of 12 months or less. The lease liability is measured at the present value of the lease payments over the lease term. The ROU asset will be based on the liability, adjusted for lease prepayments, lease incentives received, and the lessee's initial direct costs. For finance leases, lease expense will be the sum of interest on the lease obligation and amortization of the ROU asset, resulting in a front-loaded expense pattern. For operating leases, lease expense will generally be recognized on a straight-line basis over the lease term. The amended lessor accounting model is similar to the current model, updated to align with certain changes to the lessee model and the new revenue standard. The current sale-leaseback guidance, including guidance applicable to real estate, is also replaced with a new model for both lessees and lessors. The Company plans to adopt the guidance in the first quarter of fiscal 2020, beginning November 1, 2019, using the transition method whereby prior comparative periods will not be retrospectively presented in the Consolidated Financial Statements. The Company is currently evaluating the impact of these amendments ~~and other available practical expedients~~ on its ~~Condensed~~ Consolidated Financial Statements.

In April 2019, the FASB amended its standards on recognizing and measuring financial instruments to address the scope of the guidance, the requirement for remeasurement when using the measurement alternative and certain disclosure requirements. The Company is required to adopt the guidance in the first quarter of fiscal 2021. ~~Early adoption is permitted.~~ The Company is currently evaluating the ~~timing and the~~ impact of these amendments and does not expect it to be material on its ~~Condensed~~ Consolidated Financial Statements.

There have been no other significant changes to the Company's accounting policies or recently adopted or enacted accounting pronouncements disclosed in the Company's Annual Report on Form 10-K for the fiscal year ended October 31, ~~2018.~~2019.

~~HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES~~

~~Notes to Condensed Consolidated Financial Statements (Continued)~~

~~(Unaudited)~~

Note 2: Segment Information

As described in Note 1, "Overview and Summary of Significant Accounting Policies", effective at the beginning of the first quarter of fiscal 2020, the Company implemented certain organizational changes to align its segment financial reporting more closely with its current business structure. Hewlett Packard Enterprise's operations are now organized into ~~four~~7 segments for financial reporting purposes: ~~Hybrid IT,~~Compute, HPC & MCS, Storage, A & PS, Intelligent Edge, Financial Services ("FS"), and Corporate Investments. 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 ~~its~~the Company's business operations, which include, but are not limited to, customer base and homogeneity of products and technology. The 7 segments are based on this organizational structure and information reviewed by Hewlett Packard Enterprise's management to evaluate segment results.

A summary description of each segment follows.

~~Hybrid IT~~Compute ~~provides~~. HPE's compute portfolio offers both general purpose servers for multi-workload computing and workload optimized servers. HPE's general purpose servers include HPE ProLiant, secure and versatile rack and tower servers; HPE BladeSystem, a ~~broad portfolio of services-led and software-enabled~~modular infrastructure ~~and solutions including secure, software-defined servers, and~~that converges server, storage and networking; and HPE ~~Pointnext~~Synergy, a composable infrastructure for traditional and cloud-native applications. The Company's workload optimized server portfolio includes HPE Cloudline for cloud data centers. Compute offerings also include operational services, ~~thereby combining HPE's hardware, software and services capabilities to make Hybrid IT simple for its customers. Described below are the business unit capabilities within Hybrid IT.~~

~~Hybrid IT Product includes Compute and Storage.~~

◦

~~Compute.~~ To address the full array of our customers' computing needs, HPE's compute portfolio offers both Industry Standard Servers ("ISS"), which are general purpose servers for multi-workload computing, as well as Mission-Critical Servers ("MCS"), which are servers optimized for particular workloads. HPE's general purpose servers include HPE ProLiant, secure and versatile rack and tower servers; HPE BladeSystem, a modular infrastructure that converges server, storage and networking; and HPE Synergy, a composable infrastructure for traditional and cloud-native applications. The Company's workload optimized server portfolio includes HPE Apollo for high performance computing and artificial intelligence, HPE Cloudline for cloud data centers, HPE Edgeline for computing at the network edge, HPE Integrity for mission-critical applications, and HPE SimpliVity, a hyperconverged infrastructure for virtualized workloads.

◦

~~Storage.~~ With storage offerings that are AI-driven and built for cloud environments, HPE provides the right workload optimized destinations for data. Powered by HPE InfoSight advanced analytics and machine learning and HPE Cloud Volumes data mobility, HPE delivers intelligent storage for hybrid cloud environments so that customers can unlock data's full potential and derive business insights. Key solutions include HPE 3PAR Storage and HPE Nimble Storage all-flash arrays for mission critical workloads and general purpose workloads, respectively, and big data solutions running on HPE Apollo Servers. Storage also provides comprehensive data protection with HPE StoreOnce and HPE Recovery Manager Central, solutions for secondary workloads and traditional tape, storage networking and disk products, such as HPE MSA and HPE XP.

HPE Pointnext creates preferred IT experiences that power the digital business. The HPE Pointnext team and the Company's extensive partner network provide value across the IT life cycle delivering advice, transformation projects, professional services and support services. The Compute support team is also a provider of on-premises flexible consumption models, such as HPE GreenLake.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

High Performance Compute & Mission-Critical Systems. HPE's HPC & MCS portfolio offers workload-optimized servers designed to support specific use cases. The HPC portfolio includes the HPE Apollo and Cray products that are sold as supercomputing systems to support data-intensive workloads for high performance computing, data analytics and artificial intelligence applications. The MCS portfolio includes the HPE Superdome Flex, HPE Nonstop and HPE Integrity product lines for critical applications such as payments and transaction processing that require high availability, fault-tolerant computing infrastructure. The HPC & MCS segment also includes the Edge Compute business which consists of the HPE Moonshot and HPE Edgeline products for computing at the network edge. HPC & MCS offerings also include operational services, transformation projects, professional services and ~~operational~~support services. HPC & MCS products can also be purchased through on-premises flexible consumption models, such as HPE GreenLake.

Storage. HPE provides workload optimized storage product and service offerings that are AI-driven and built for cloud environments with GreenLake as-a-service consumption and flexible investment options. Powered by HPE InfoSight advanced analytics and machine learning and HPE Cloud Volumes data mobility, HPE delivers intelligent storage for hybrid cloud environments. Key solutions include an intelligent hyperconverged infrastructure (“HCI”) portfolio with HPE Nimble Storage dHCI, a disaggregated HCI solution for the enterprise data center and HPE SimpliVity, a hyperconverged platform for virtualization. The portfolio also includes HPE Primera, HPE Nimble Storage and HPE 3PAR Storage for mission-critical workloads and general purpose workloads, respectively, and big data solutions running on HPE Apollo Servers along with BlueData and MapR technology for expertise in artificial intelligence, machine learning and analytics data management. Storage also provides comprehensive data protection with HPE StoreOnce and HPE Recovery Manager Central, solutions for secondary workloads and traditional tape, storage networking and disk products, such as HPE Modular Storage Arrays ("MSA") and HPE XP.

Advisory and Professional Services provides consultative-led services, ~~for Hybrid IT. HPE Pointnext~~expertise and advice, implementation services as well as complex solution engagement capabilities. A & PS experts advise their customers through their digital transformation. A & PS is also a provider of on-premises flexible consumption models, such as HPE GreenLake, that enable IT agility, simplify operations, and align cost to ~~business~~ value. ~~HPE Pointnext offerings include Operational Services, and Advisory and Professional Services.~~

~~The~~

Intelligent Edge~~business~~ is comprised of ~~enterprise networking~~a portfolio of secure edge-to-cloud solutions operating under the Aruba brand that includes wired and wireless local area network "(LAN"), campus and data center switching, software-defined wide-area-networking, security, ~~solutions~~and associated services to enable secure connectivity for businesses of any ~~size, offering secure connectivity for campus and branch environments, operating under the Aruba brand.~~size. The primary business drivers for Intelligent Edge solutions are mobility and the Internet of Things ("IoT").

The HPE Aruba ~~Product~~product portfolio includes wired and wireless ~~local area network~~LAN hardware products such as Wi-Fi access points, switches, routers, ~~sensors,~~sensors. The HPE Aruba software and services portfolio includes software products ~~that include~~for cloud-based management, network management, network access control, analytics and assurance, ~~and~~ location services ~~software.~~

~~HPE Aruba Services offers~~software and professional and support services, as well as as-a Service ("aaS") and consumption models for the Intelligent Edge portfolio of products.

Financial Services provides flexible investment solutions, such as leasing, financing, IT consumption, and 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 HPE GreenLake. In order to provide flexible services and capabilities that support the entire IT life cycle, FS partners with customers globally to help build investment ~~strategies that enhance their business agility and support their business transformation.~~strategies. FS offers a wide selection of investment solution capabilities for large enterprise customers and channel partners, along with an array of financial options to SMBs and educational and governmental entities.

~~HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES~~

~~Notes to Condensed Consolidated Financial Statements (Continued)~~

~~(Unaudited)~~

Corporate Investments includes Hewlett Packard Labs which is responsible for research and development and also hosts certain business incubation projects, and the Communications and Media Solutions ("CMS")~~, and certain business incubation projects.~~ business.

Segment Policy

There have been no ~~significant~~ changes to the Company's segment accounting policies disclosed in the Company's Annual Report on Form 10-K for the fiscal year ended October 31, ~~2018,~~2019, except asfor the organizational changes described in ~~the 'Segment Realignment' section below.~~Note 1, "Overview and Summary of Significant Accounting Policies".

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 related to corporate and certain global functions, acquisition, disposition and other related charges, transformation costs, amortization of intangible assets, restructuring charges, disaster charges and separation costs.

~~Segment Realignment~~

Effective at the beginning of the first quarter of fiscal 2019, the Company implemented organizational changes to align its segment financial reporting more closely with its current business structure. These organizational changes primarily include: (i) the transfer of the data center networking ("DC Networking") business, which was previously reported within the Hybrid IT Product business unit in the Hybrid IT segment, to the HPE Aruba Product and HPE Aruba Services business units within the Intelligent Edge segment; (ii) the transfer of the edge compute business, which was previously reported within the HPE Aruba Product business unit in the Intelligent Edge segment, to the Hybrid IT Product business unit within the Hybrid IT segment; and (iii) the transfer of the CMS business, which was previously reported within the HPE Pointnext business unit in the Hybrid IT segment, to the Corporate Investments segment.

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

~~These changes had no impact on Hewlett Packard Enterprise's previously reported consolidated net revenue, earnings from operations, net earnings or net earnings per share ("EPS").~~

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

expense related to corporate and certain global functions, amortization of initial direct costs, amortization of intangible assets, impairment of goodwill, transformation costs, disaster charges (recovery), acquisition, disposition and other related charges.

Segment Operating Results

Hybrid IT Intelligent Edge Financial
Services Corporate
Investments Total
In millions
Three months ended July 31, 2019

Net revenue $ 5,444
$ 758
$ 885
$ 130
$ 7,217
Intersegment net revenue and other 105
4
3
—
112
Total segment net revenue $ 5,549
$ 762
$ 888
$ 130
$ 7,329
Segment earnings (loss) from operations $ 704
$ 37
$ 77
$ (25 ) $ 793
Three months ended July 31, 2018

Net revenue $ 5,925
$ 783
$ 922
$ 134
$ 7,764
Intersegment net revenue and other 184
2
6
—
192
Total segment net revenue $ 6,109
$ 785
$ 928
$ 134
$ 7,956
Segment earnings (loss) from operations $ 624
$ 101
$ 72
$ (25 ) $ 772
Nine months ended July 31, 2019
Net revenue $ 16,745
$ 2,107
$ 2,695
$ 373
$ 21,920
Intersegment net revenue and other 410
7
8
—
425
Total segment net revenue $ 17,155
$ 2,114
$ 2,703
$ 373
$ 22,345
Segment earnings (loss) from operations $ 2,024
$ 66
$ 231
$ (82 ) $ 2,239
Nine months ended July 31, 2018
Net revenue $ 17,649
$ 2,132
$ 2,721
$ 404
$ 22,906
Intersegment net revenue and other 511
15
11
—
537
Total segment net revenue $ 18,160
$ 2,147
$ 2,732
$ 404
$ 23,443
Segment earnings (loss) from operations $ 1,787
$ 191
$ 215
$ (79 ) $ 2,114
Segment net revenue and segment operating results were as follows:


	Compute		HPC & MCS		Storage		A & PS		Intelligent Edge		Financial Services		Corporate Investments		Total
	In millions
Three months ended July 31, 2020
Net revenue	$	3,246	$	632	$	1,105	$	225	$	682	$	807	$	119	$	6,816
Intersegment net revenue	143		17		23		1		2		4		0		190
Total segment net revenue	$	3,389	$	649	$	1,128	$	226	$	684	$	811	$	119	$	7,006
Segment earnings (loss) from operations	$	288	$	36	$	145	$	(4)	$	59	$	65	$	(27)	$	562
Three months ended July 31, 2019
Net revenue	$	3,332	$	614	$	1,238	$	241	$	777	$	885	$	130	$	7,217
Intersegment net revenue	68		19		17		1		4		3		0		112
Total segment net revenue	$	3,400	$	633	$	1,255	$	242	$	781	$	888	$	130	$	7,329
Segment earnings (loss) from operations	$	439	$	51	$	207	$	(9)	$	53	$	77	$	(25)	$	793
Nine months ended July 31, 2020
Net revenue	$	8,743	$	2,012	$	3,400	$	703	$	2,058	$	2,494	$	364	$	19,774
Intersegment net revenue	297		49		64		3		11		9		0		433
Total segment net revenue	$	9,040	$	2,061	$	3,464	$	706	$	2,069	$	2,503	$	364	$	20,207
Segment earnings (loss) from operations	$	699	$	118	$	516	$	(4)	$	202	$	213	$	(82)	$	1,662
Nine months ended July 31, 2019
Net revenue	$	10,034	$	2,038	$	3,878	$	738	$	2,164	$	2,695	$	373	$	21,920
Intersegment net revenue	259		95		51		5		7		8		0		425
Total segment net revenue	$	10,293	$	2,133	$	3,929	$	743	$	2,171	$	2,703	$	373	$	22,345
Segment earnings (loss) from operations	$	1,086	$	241	$	705	$	(55)	$	113	$	231	$	(82)	$	2,239

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

The reconciliation of segment operating results to Hewlett Packard Enterprise ~~condensed consolidated results~~Condensed Consolidated Financial statements was as follows:


	Three Months Ended July 31,						Nine Months Ended July 31,
	2020		2019		2020		2019
	In millions
Net Revenue:
Total segments	$	7,006	$	7,329	$	20,207	$	22,345
Eliminations of intersegment net revenue	(190)		(112)		(433)		(425)
Total Hewlett Packard Enterprise consolidated net revenue	$	6,816	$	7,217	$	19,774	$	21,920
(Loss) earnings before taxes:
Total segment earnings from operations	$	562	$	793	$	1,662	$	2,239
Unallocated corporate costs and eliminations	(65)		(65)		(165)		(179)
Unallocated stock-based compensation expense	(13)		(13)		(46)		(42)
Amortization of initial direct costs	(3)		0		(9)		0
Amortization of intangible assets	(95)		(58)		(299)		(199)
Impairment of goodwill	0		0		(865)		0
Transformation costs	(357)		(170)		(646)		(302)
Disaster (charges) recovery	(2)		0		(24)		7
Acquisition, disposition and other related charges	(15)		(563)		(82)		(710)
Interest and other, net	(71)		(70)		(158)		(139)
Tax indemnification adjustments	(30)		(134)		(86)		89
Non-service net periodic benefit credit	28		12		101		45
Earnings from equity interests	27		3		50		21
Total Hewlett Packard Enterprise consolidated (loss) earnings before taxes	$	(34)	$	(265)	$	(567)	$	830

Three Months Ended
July 31, Nine Months Ended
July 31,
2019 2018 2019 2018
In millions
Net Revenue:

Total segments $ 7,329
$ 7,956
$ 22,345
$ 23,443
Eliminations of intersegment net revenue and other (112 ) (192 ) (425 ) (537 )
Total Hewlett Packard Enterprise condensed consolidated net revenue $ 7,217
$ 7,764
$ 21,920
$ 22,906
Earnings before taxes:

Total segment earnings from operations $ 793
$ 772
$ 2,239
$ 2,114
Unallocated corporate costs and eliminations (65 ) (49 ) (179 ) (169 )
Unallocated stock-based compensation expense (13 ) (14 ) (42 ) (64 )
Amortization of intangible assets (58 ) (72 ) (199 ) (222 )
Restructuring charges —
1
—
(14 )
Transformation costs (170 ) (126 ) (302 ) (491 )
Disaster charges —
—
7
—
Acquisition, disposition and other related charges (563 ) (24 ) (710 ) (70 )
Separation costs —
2
—
—
Interest and other, net (70 ) (64 ) (139 ) (163 )
Tax indemnification adjustments (134 ) 2
89
(1,342 )
Non-service net periodic benefit credit 12
26
45
90
Earnings from equity interests 3
11
21
23
Total Hewlett Packard Enterprise condensed consolidated (loss) earnings from continuing operations before taxes $ (265 ) $ 465
$ 830
$ (308 )

Total assets by segment and the reconciliation of segment assets to Hewlett Packard Enterprise consolidated total assets were as follows:


	As of
	July 31, 2020		October 31, 2019
	In millions
Compute	$	17,742	$	14,066
HPC & MCS	6,466		6,819
Storage	7,776		7,214
A & PS	625		440
Intelligent Edge	3,918		3,318
Financial Services	14,767		14,700
Corporate Investments	580		461
Corporate and unallocated assets	6,365		4,785
Total Hewlett Packard Enterprise consolidated assets	$	58,239	$	51,803

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

~~Net revenue by segment and business unit was as follows:~~

Three Months Ended
July 31, Nine Months Ended
July 31,
2019 2018 2019 2018
In millions
Hybrid IT
Hybrid IT Product
Compute $ 3,151
$ 3,569
$ 9,646
$ 10,350
Storage 844
887
2,761
2,747
Total Hybrid IT Product 3,995
4,456
12,407
13,097
HPE Pointnext 1,554
1,653
4,748
5,063
Total Hybrid IT 5,549
6,109
17,155
18,160
Intelligent Edge
HPE Aruba Product 668
703
1,842
1,914
HPE Aruba Services 94
82
272
233
Total Intelligent Edge 762
785
2,114
2,147
Financial Services 888
928
2,703
2,732
Corporate Investments 130
134
373
404
Total segment net revenue 7,329
7,956
22,345
23,443
Eliminations of intersegment net revenue and other (112 ) (192 ) (425 ) (537 )
Total Hewlett Packard Enterprise condensed consolidated net revenue⁽¹⁾
$ 7,217
$ 7,764
$ 21,920
$ 22,906


~~(1)~~	~~Revenue from leasing arrangements within Financial Services and Eliminations of intersegment net revenue and other are not subject to the new revenue standard.~~

The Company’s net revenue by geographic ~~regions~~region was as follows:


	Three Months Ended July 31,						Nine Months Ended July 31,
	2020		2019		2020		2019
	In millions
Americas:
United States	$	2,362	$	2,435	$	6,586	$	7,120
Americas excluding U.S.	395		475		1,273		1,462
Total Americas	2,757		2,910		7,859		8,582
Europe, Middle East and Africa	2,448		2,614		7,206		8,251
Asia Pacific and Japan	1,611		1,693		4,709		5,087
Total Hewlett Packard Enterprise consolidated net revenue	$	6,816	$	7,217	$	19,774	$	21,920

Three Months Ended July 31, Nine Months Ended July 31,
2019 2018 2019 2018
In millions
Americas $ 2,910
$ 3,153
$ 8,582
$ 9,053
Europe, Middle East and Africa 2,614
2,783
8,251
8,407
Asia Pacific and Japan 1,693
1,828
5,087
5,446
Total Hewlett Packard Enterprise condensed consolidated net revenue⁽¹⁾
$ 7,217
$ 7,764
$ 21,920
$ 22,906

Note 3: Transformation Programs

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

On May 19, 2020, the Board of Directors of HPE (the "Board") approved the cost optimization and prioritization plan which focuses on realigning the workforce to areas of growth while simplifying and evolving its product portfolio strategy, go-to-market configurations, supply chain structures, digital customer support model, marketing experiences, and real estate strategies. This plan is expected to be implemented through fiscal year 2022 during which time the Company expects to incur expenses as a result of changes to the Company’s workforce, business model and business process.

The HPE Next initiative is expected to be implemented through fiscal year 2021 during which time the Company expects to incur expenses predominantly related to streamlining, upgrading and simplifying back-end operations, IT infrastructure and real estate initiatives. These costs are expected to be partially offset by gains from real estate sales.

Transformation Costs

During the three and nine months ended July 31, 2020, the Company incurred $238 million of charges related to the cost optimization and prioritization planwhich is recorded within Transformation costs in the Condensed Consolidated Statements of Earnings, the components of which were as follows:


	Three and nine months ended July 31,
	2020
	In millions
Program management⁽¹⁾	$	14
IT Costs	4
Restructuring charges	220

Total	$	238


~~(1)~~	~~Revenue from leasing arrangements within Financial Services and Eliminations of intersegment net revenue and other are not subject to the new revenue standard.~~

(1)Primarily consists of consulting fees and other direct costs attributable to the design and implementation of the cost optimization and prioritization plan.

~~Note 3: Restructuring~~

~~Summary of Restructuring Plans~~

On September 14, 2015, former Parent's Board of Directors approved a restructuring plan (the "2015 Plan") in connection with the Separation. On May 23, 2012, former Parent adopted a multi-year restructuring plan (the "2012 Plan") designed to simplify business processes, accelerate innovation and deliver better results for customers, employees and stockholders. As of October 31, 2018, the 2015 and 2012 Plans were complete.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

~~Restructuring Activity~~

~~In connection with the 2015 and 2012 Plans, a restructuring credit of $1 million and restructuring charges of $14 million were recorded by the Company for~~During the three and nine months ended July 31, ~~2018,~~2020, the Company incurred $119 million and $408 million respectively, ~~based on restructuring activities impacting the Company's employees and infrastructure. For details on restructuring~~of net charges ~~related~~relating to HPE Next ~~see Note 4, "HPE Next".~~

~~Restructuring activities related to the Company's employees and infrastructure for the 2015 and 2012 Plans are presented in the table below:~~

2015 Plan 2012 Plan

Employee
Severance

Infrastructure
and other

Employee
Severance
and EER

Infrastructure
and other
Total
In millions
Liability as of October 31, 2018 $ 62
$ 10
$ 11
$ 1
$ 84
Cash payments (25 ) (2 ) (5 ) —
(32 )
Liability as of July 31, 2019 $ 37
$ 8
$ 6
$ 1
$ 52
Total costs incurred to date, as of July 31, 2019 $ 751
$ 78
$ 1,268
$ 145
$ 2,242
Total costs expected to be incurred, as of July 31, 2019 $ 751
$ 78
$ 1,268
$ 145
$ 2,242

~~The current restructuring liabilities related to the plans in the table above, reported in Accrued restructuring~~which were recorded within Transformation costs in the Condensed Consolidated Balance Sheets at July 31, 2019 and October 31, 2018, were $33 million and $53 million, respectively. The non-current restructuring liabilities related to the plans in the table above, reported in Other non-current liabilities in the Condensed Consolidated Balance Sheets at July 31, 2019 and October 31, 2018, were $19 million and $31 million, respectively.

~~Note 4: HPE Next~~

~~Transformation Costs~~

The HPE Next initiative is expected to be implemented through fiscal 2020, during which time the Company expects to incur expenses for workforce reductions, to upgrade and simplify its IT infrastructure, and for other non-labor actions. These costs will be partially offset by proceeds received from real estate sales.

~~In association with the HPE Next initiative, during~~Statements of Earnings. During the three and nine months ended July 31, 2019, the Company incurred $172 million and $310 million of net charges, of which $170 million and $302 million were recorded within Transformation costs, and $2 million and $8 million were recorded within Non-service net periodic benefit credit, in the Condensed Consolidated Statements of Earnings, respectively. During the three and nine months ended July 31, 2018, the Company incurred $131 million and $499 million of net charges, of which $126 million and $491 million were recorded within Transformation costs, and $5 million and $8 million were recorded within Non-service net periodic benefit credit, in the Condensed Consolidated Statements of Earnings, respectively.


	Three months ended July 31,						Nine months ended July 31,
	2020		2019		2020		2019
	In millions
Program management⁽¹⁾	$	10	$	3	$	28	$	23
IT costs	25		41		71		94
Restructuring charges	84		92		332		143
(Gain) loss on real estate sales	(7)		8		(44)		1
Impairment on real estate assets	0		19		—		19
Other	7		9		21		30
Total	$	119	$	172	$	408	$	310

Three months ended July 31, Nine months ended July 31,
2019 2018 2019 2018
In millions
Program management⁽¹⁾
$ 3
$ 28
$ 23
$ 82
IT costs 41
38
94
107
Restructuring charges⁽²⁾
92
129
143
385
Loss (gain) on real estate sales 8
(77 ) 1
(114 )
Impairment on real estate assets 19
—
19
—
Other⁽³⁾
9
13
30
39
Total $ 172
$ 131
$ 310
$ 499

~~HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES~~

~~Notes to Condensed Consolidated Financial Statements (Continued)~~

~~(Unaudited)~~


~~(1)~~	~~Primarily consists of consulting fees and other direct costs attributable to the design and implementation of the HPE Next initiative.~~


~~(2)~~	For the three and nine months ended July 31, 2019 and 2018, a portion of these costs were recorded in Non-service net periodic benefit credit in the Condensed Consolidated Statements of Earnings as described above.


~~(3)~~	~~Primarily consists of site relocation costs in connection with the HPE Next initiative.~~

(1)Primarily consists of consulting fees and other direct costs attributable to the design and implementation of the HPE Next initiative.

Restructuring Plan

On May 19, 2020, the Company's Board of Directors approved a restructuring plan in connection with the cost optimization and prioritization plan. The changes to the workforce will vary by country, based on business needs, local legal requirements and consultations with employee works councils and other employee representatives, as appropriate.

On October 16, 2017, the Company's Board of Directors approved a restructuring plan in connection with the HPE Next initiative ~~(the "HPE~~("the HPE Next Plan") and on September 20, 2018, the Company's Board of Directors approved a revision to that restructuring plan. As a result of the revision to the plan, cost amounts and total headcount exits were revised and the completion of the workforce reductions was extended to fiscal year 2020. The changes to the workforce will vary by country, based on business needs, local legal requirements and consultations with employee work councils and other employee representatives, as appropriate.

Employee
Severance Infrastructure
and other
In millions
Liability as of October 31, 2018 $ 291
$ 33
Charges 115
28
Cash payments (209 ) (20 )
Non-cash items (9 ) (9 )
Liability as of July 31, 2019 $ 188
$ 32
Total costs incurred to date, as of July 31, 2019 $ 881
$ 89
Total costs expected to be incurred, as of July 31, 2019 $ 1,200
$ 180


	Cost Optimization and Prioritization Plan						HPE Next Plan
	Employee Severance		Infrastructure and other		Employee Severance		Infrastructure and other
	In millions						In millions
Liability as of October 31, 2019	$	0	$	0	$	178	$	42
Charges	220		0		266		66
Cash payments	0		0		(297)		(35)
Non-cash items	0		0		5		(24)
Liability as of July 31, 2020	$	220	$	0	$	152	$	49
Total costs incurred to date, as of July 31, 2020	$	220	$	0	$	1,186	$	192
Total costs expected to be incurred, as of July 31, 2020	$	800	$	180	$	1,200	$	200

As of July 31, ~~2019~~2020 and October 31, ~~2018,~~2019, the current restructuring liability related to the ~~HPE Next Plan,~~transformation programs, reported in Accrued restructuring in the Condensed Consolidated Balance Sheets, was ~~$190~~$366 million and ~~$241~~$164 million, respectively. The non-current restructuring liability related to the ~~HPE Next Plan,~~transformation programs, reported in Other non-current liabilities in the Condensed Consolidated Balance Sheets as of July 31, ~~2019~~2020 and October 31, ~~2018~~2019 was ~~$30~~$55 million and ~~$83~~$56 million, respectively.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

Note 5:4: Retirement ~~and Post-Retirement~~ Benefit Plans

The Company's net pension benefit cost for defined benefit plans recognized in the Condensed Consolidated Statements of Earnings ~~for the three and nine months ended July 31, 2019 and 2018,~~ was as follows:


	Three months ended July 31,						Nine months ended July 31,
	2020		2019		2020		2019
	In millions
Service cost	$	23	$	21	$	69	$	63
Interest cost⁽¹⁾	35		54		106		165
Expected return on plan assets⁽¹⁾	(133)		(126)		(402)		(386)
Amortization and deferrals⁽¹⁾:
Actuarial loss	65		59		194		176
Prior service benefit	(3)		(4)		(10)		(12)
Net periodic benefit (credit) cost	(13)		4		(43)		6
Settlement loss⁽¹⁾	7		4		8		10
Special termination benefits⁽¹⁾	0		1		1		2
Net benefit (credit) cost	$	(6)	$	9	$	(34)	$	18

Three months ended July 31, Nine months ended July 31,
2019 2018 2019 2018
In millions
Service cost $ 21
$ 26
$ 63
$ 79
Interest cost⁽¹⁾
54
55
165
168
Expected return on plan assets⁽¹⁾
(126 ) (139 ) (386 ) (423 )
Amortization and deferrals⁽¹⁾:

Actuarial loss 59
52
176
158
Prior service benefit (4 ) (4 ) (12 ) (12 )
Net periodic benefit cost (credit) 4
(10 ) 6
(30 )
Settlement loss⁽¹⁾
4
9
10
11
Special termination benefits⁽¹⁾
1
1
2
5
Net benefit cost (credit) $ 9
$ —
$ 18
$ (14 )


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

~~HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES~~

~~Notes to~~ Condensed Consolidated ~~Financial~~ Statements ~~(Continued)~~of Earnings.

~~(Unaudited)~~

~~Net benefit cost for the Company's post-retirement benefit plans was not material for the three and nine months ended July 31, 2019 and 2018.~~

Note 6:5: Taxes on Earnings

Provision for Taxes

The Company's effective tax rate was ~~89.8%~~126.5% and ~~2.8%~~89.8% for the three months ended July 31, ~~2019~~2020 and ~~2018,~~2019, respectively, and ~~31.4%~~15.5% and ~~1,003.9%~~31.4% for the nine months ended July 31, ~~2019~~2020 and ~~2018,~~2019, respectively. The effective tax rates for the three and nine months ended July 31, ~~2019~~2020 were impacted by income tax benefits resulting from tax rate changes and ~~2018~~differed from the statutory tax rate due to favorable tax rates associated with certain earnings from the Company’s operations in lower tax jurisdictions throughout the world. The effective tax rate for the nine months ended July 31, 2020 also included the effects of the non-deductible goodwill impairment. The effective tax rates for the three and nine months ended July 31, 2019 were significantly impacted by the Tax Cuts and Jobs Act of 2017 (the “Tax Act”) and the settlement of certain pre-Separation tax liabilities of HP Inc. The Company's effective tax rate is based on forecasted annual results which may fluctuate significantly through the remainder of fiscal 2020 due to the uncertain economic impact of COVID-19 on the Company's operating results.

For the three and nine months ended July 31, 2020, the Company recorded $86 million and $253 million of net income tax benefits, respectively, related to various items discrete to the period. For the three months ended July 31, 2020, the amount primarily included $72 million of income tax benefits related to transformation costs, and acquisition, disposition and other related charges and $30 million of income tax benefits related to tax rate changes on deferred taxes. For the nine months ended July 31, 2020, the amount primarily included $120 million of income tax benefits related to transformation costs, and acquisition, disposition and other related charges, $57 million of income tax benefits related to Indian distribution tax rate changes, $56 million of income tax benefits related to the change in pre-Separation tax liabilities for which the Company shares joint and several liability with HP Inc. and for which the Company is indemnified by HP Inc., and $30 million of income tax benefits related to tax rate changes on deferred taxes.

For the three and nine months ended July 31, 2019, the Company recorded $303 million of net income tax benefits and $80 million of net income tax charges, respectively, related to various items discrete to the period. For the three months ended July 31, 2019, this amount primarily included $308 million of income tax benefits predominantly related to the change in pre-Separation tax liabilities as a result of the effective settlement of the U.S. federal income tax audit of fiscal years 2013 through 2015 for HP Inc. for which the Company ~~shares~~shared joint and several liability ~~and for which the Company is partially indemnified by HP Inc. under the Tax Matters Agreement~~ and $18 million of net income tax benefits on transformation costs, and acquisition, disposition and other related charges, partially offset by $19 million of income tax charges related to uncertain tax reserves pertaining to separation activities and $14 million of income tax charges related to

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

changes in U.S. state valuation allowances as a result of impacts of the Tax Act. For the nine months ended July 31, 2019, the amount primarily included $365 million of income tax charges related to changes in U.S. federal and state valuation allowances as a result of impacts of the Tax Act, $40 million of income tax charges related to future withholding tax costs on distributions of earnings, and $19 million of income tax charges related to uncertain tax reserves pertaining to separation activities, partially offset by $264 million of income tax benefits related to the change in pre-Separation tax liabilities for which the Company ~~shares~~shared joint and several liability with HP Inc. ~~and for which the Company is partially indemnified by HP Inc. under the Tax Matters Agreement,~~, and $75 million of income tax benefits on transformation costs, and acquisition, disposition and other related charges.

~~For~~On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") was enacted into law in response to COVID-19. The CARES Act, among other things, provides tax relief to businesses, including the deferral of certain payroll taxes, relief for retaining employees, and other income tax provisions. In addition to the CARES Act, governments around the world are also enacting comparable legislation to address COVID-19 economic impacts. The effects of these legislative changes were not material to the Condensed Consolidated Financial Statements for the three and nine months ended July 31, 2018, the Company recorded $68 million and $3.3 billion of net income tax benefits, respectively, related to various items discrete to the period. For the three months ended July 31, 2018, this amount primarily included $38 million of income tax benefits from the release of non-U.S. valuation allowances on deferred tax assets following changes in foreign tax laws, $33 million of net income tax benefits for impacts related to U.S. tax reform and $26 million of net excess tax benefits related to stock-based compensation, partially offset by $7 million of income tax charges related to tax indemnification with HP Inc. For the nine months ended July 31, 2018, this amount primarily included $2.0 billion of income tax benefits for the effects of the settlement of certain pre-Separation Hewlett-Packard Company income tax liabilities, $713 million of net income tax benefits for impacts related to U.S. tax reform, $228 million of income tax benefits from foreign tax credits and from the release of non-U.S. valuation allowances on deferred tax assets and liabilities established in connection with the Everett Transaction following changes in foreign tax laws, $203 million of income tax benefits related to the liquidation of an insolvent non-U.S. subsidiary, $74 million of net income tax benefits on restructuring charges, separation costs and acquisition, disposition, and other related charges, $68 million of net excess tax benefits related to stock-based compensation, and $38 million of income tax benefits from the release of non-U.S. valuation allowances on deferred tax assets following changes in foreign tax laws.

~~Recent Tax Legislation~~

The Tax Act required the Company to incur a one-time Transition Tax on deferred foreign income not previously subject to U.S. income tax at a rate of 15.5% for foreign cash and certain other net current assets and 8% on the remaining income. The GILTI and BEAT provisions of the Tax Act became effective for the Company beginning November 1, 2018.

The Company has an October 31 fiscal year end; therefore, the lower corporate tax rate enacted by the Tax Act was phased in, resulting in a U.S. statutory federal rate of 23.3% for the fiscal year ending October 31, 2018 and 21% for the current and subsequent fiscal years.

The Company completed its accounting for the tax effects of the Tax Act based on currently available legislative and regulatory updates in the first quarter of fiscal 2019, resulting in an additional tax charge of $426 million. This amount includes $438 million of income tax charges relating to additional valuation allowances against certain U.S. federal deferred tax assets, $56 million of income tax benefits resulting from the release of valuation allowances against certain U.S. state deferred tax assets, an additional $7 million of Transition Tax and $37 million of income tax charges related to future withholding tax costs on distributions of

~~HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES~~

~~Notes to Condensed Consolidated Financial Statements (Continued)~~

~~(Unaudited)~~

earnings. No cash payment is anticipated due to the availability of sufficient tax credits to offset the Transition Tax. The Company has elected to treat taxes due on future GILTI inclusions in U.S. taxable income as a current period expense when incurred.2020.

Uncertain Tax Positions

As of July 31, ~~2019~~2020 and October 31, ~~2018,~~2019, the amount of unrecognized tax benefits was ~~$2.6~~$2.2 billion and ~~$8.8~~$2.3 billion, respectively, of which up to ~~$0.8 billion~~$711 million and ~~$1.1 billion,~~$772 million, respectively, would affect the Company's effective tax rate if realized as of their respective periods. The Company is joint and severally liable for certain pre-Separation tax liabilities of HP Inc. HP Inc. is subject to numerous ongoing audits by state and foreign tax authorities. During the nine months ended July 31, 2019, HP Inc. effectively settled with the IRS on pre-Separation Hewlett-Packard Company audits for fiscal years 2013 through 2015, for which the Company had been joint and severally liable, primarily contributing to the reduction in the Company's unrecognized tax benefits of $6.2 billion.

The Company recognizes interest income from favorable settlements and interest expense and penalties accrued on unrecognized tax benefits in ~~(Benefit) provision~~Benefit (provision) for taxes in the Condensed Consolidated Statements of Earnings. The Company recognized $13 million of interest expense and $43 million of interest income for the three months ended July 31, 2020 and 2019, respectively, and $12 million of interest income for each of the nine months ended July 31, 2020 and 2019. As of July 31, ~~2019~~2020 and October 31, ~~2018,~~2019, the Company ~~has recorded $130~~had $117 million and ~~$142~~$129 million, respectively, recorded for interest and penalties in the Condensed Consolidated Balance Sheets.

The Company engages in continuous discussions and negotiations with ~~taxing~~tax authorities regarding tax matters in various jurisdictions. The Company does not expect complete resolution of any audit cycle within the next 12 months. However, it is reasonably possible that certain federal, foreign and state tax issues may be concluded in the next 12 months, including issues involving ~~transfer pricing,~~intercompany transactions, joint and several tax liabilities and other matters. Accordingly, the Company believes it is reasonably possible that its existing unrecognized tax benefits may be reduced by an amount up to ~~$40~~$105 million within the next 12 ~~months, of which $7 million would affect the Company’s effective tax rate if realized.~~months.

Deferred Tax Assets and Liabilities

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

As of
July 31, 2019 October 31, 2018
In millions
Deferred tax assets $ 1,657
$ 2,403
Deferred tax liabilities (278 ) (228 )
Deferred tax assets net of deferred tax liabilities $ 1,379
$ 2,175


	As of
	July 31, 2020		October 31, 2019
	In millions
Deferred tax assets	$	1,705	$	1,515
Deferred tax liabilities	(282)		(311)
Deferred tax assets net of deferred tax liabilities	$	1,423	$	1,204

Tax Matters Agreement with HP Inc., and Other Income Tax Matters

~~In connection with~~On October 30, 2019, the ~~Separation, the~~ Company and HP Inc. entered into a Termination and Mutual Release Agreement and terminated the Tax Matters Agreement. Under the Termination and Mutual Release Agreement, ~~with~~ HP Inc. ~~In connection with~~agreed to pay $300 million of which $200 million was paid in fiscal 2019 and $50 million was paid in the ~~Everett and Seattle Transactions,~~third quarter of fiscal 2020. The Company expects to receive the ~~Company entered into a DXC Tax Matters Agreement with DXC and a Micro Focus Tax Matters Agreement with Micro Focus, respectively. For more details, see the Company's Annual Report on Form 10-K for the~~remaining $50 million in fiscal ~~year ended October 31, 2018.~~2021.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

Note 7:6: Balance Sheet Details

Balance sheet details were as follows:

Cash, ~~and~~ cash equivalents and restricted cash


	As of
	July 31, 2020		October 31, 2019
	In millions
Cash and cash equivalents	$	8,465	$	3,753
Restricted cash⁽¹⁾	472		323
Total	$	8,937	$	4,076

As of
July 31, 2019 October 31, 2018
In millions
Cash and cash equivalents $ 3,693
$ 4,880
Restricted cash 318
204
Cash, cash equivalents and restricted cash $ 4,011
$ 5,084

~~HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES~~

~~Notes to Condensed Consolidated Financial Statements (Continued)~~

~~(Unaudited)~~

~~Inventory~~

As of
July 31, 2019 October 31, 2018
In millions
Finished goods $ 1,225
$ 1,274
Purchased parts and fabricated assemblies 991
1,173
Total $ 2,216
$ 2,447

For the nine months ended July 31, 2019, the decrease in inventory was due primarily to lower commodity costs and slower inventory replenishment as a result of improved market supply availability for key commodities.

~~Other Current Assets~~

As of
July 31, 2019 October 31, 2018
In millions
Value-added tax receivables $ 630
$ 811
Short-term tax receivables and prepaid taxes 225
535
Manufacturer and other receivables 619
937
Prepaid and other current assets 832
793
Restricted cash 318
204
Total $ 2,624
$ 3,280

~~For the nine months ended July 31, 2019, the decrease~~(1) The Company includes restricted cash in Other current assets ~~was due primarily to a decrease in short-term tax receivables and prepaid taxes following the adoption of the new accounting standard related to income taxes~~ in the first quarter of fiscal 2019, a decrease in manufacturer and other receivables as a result of lower collateral receivables and lower receivables from contract manufacturers, and a decrease in value-added tax receivables.accompanying Condensed Consolidated Balance Sheets.

Inventory


	As of
	July 31, 2020		October 31, 2019
	In millions
Finished goods	$	1,463	$	1,198
Purchased parts and fabricated assemblies	2,006		1,189
Total	$	3,469	$	2,387

Property, Plant and Equipment


	As of							As of
	July 31, 2019			October 31, 2018				July 31, 2020		October 31, 2019
	In millions							In millions
Land	$	293		$	294		Land	$	94	$	241
Buildings and leasehold improvements	2,157			2,103			Buildings and leasehold improvements	1,948		2,196
Machinery and equipment, including equipment held for lease	9,460			9,419			Machinery and equipment, including equipment held for lease	9,719		9,464
	11,910			11,816
								11,761		11,901
Accumulated depreciation	(5,910		)	(5,678		)	Accumulated depreciation	(6,052)		(5,847)
Total	$	6,000		$	6,138		Total	$	5,709	$	6,054

~~Notes Payable and Short-Term Borrowings~~

As of
July 31, 2019 October 31, 2018
In millions
Current portion of long-term debt $ 1,180
$ 1,196
FS commercial paper 671
392
Notes payable to banks, lines of credit and other⁽¹⁾
356
417
Total $ 2,207
$ 2,005

~~HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES~~

~~Notes to Condensed Consolidated Financial Statements (Continued)~~

~~(Unaudited)~~


~~(1)~~	As of July 31, 2019 and October 31, 2018, notes payable to banks, lines of credit and other includes $228 million and $361 million, respectively, of borrowing associated with FS and its subsidiaries.

Warranties

The Company's aggregate product warranty liability as of July 31, ~~2019,~~2020, and changes ~~during the nine months then ended~~ were as follows:

Nine Months Ended
July 31, 2019
In millions
Balance at beginning of period $ 430
Accruals for warranties issued 178
Adjustments related to pre-existing warranties 6
Settlements made (212 )
Balance at end of period $ 402


	Nine Months Ended July 31, 2020
	In millions
Balance at beginning of period	$	400
Charges	180
Adjustments related to pre-existing warranties	1
Settlements made	(188)
Balance at end of period	$	393

Contract balances

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

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

Contract Assets

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


	As of
	July 31, 2020		October 31, 2019
	In millions
Accounts receivable, net
Accounts receivable	$	2,700	$	2,782
Unbilled receivables	198		206
Allowance for doubtful accounts	(42)		(31)
Total	$	2,856	$	2,957

As of
July 31, 2019 October 31, 2018
In millions
Accounts receivable, net
Accounts receivable $ 2,786
$ 3,117
Unbilled receivables 210
185
Allowance for doubtful accounts (31 ) (39 )
Total $ 2,965
$ 3,263

As of July 31, 2019
In the Condensed Consolidated Balance Sheets
(i) (ii) (iii) = (i)–(ii) (iv) (v) (vi) = (iii)–(iv)–(v)
Gross Amounts Not Offset

Gross
Amount
Recognized

Gross
Amount
Offset

Net Amount
Presented
Derivatives
Financial
Collateral
Net Amount
In millions
Derivative assets $ 487
$ —
$ 487
$ 125
$ 316

⁽¹⁾
$ 46
Derivative liabilities $ 149
$ —
$ 149
$ 125
$ 5

⁽²⁾
$ 19

As of October 31, 2018
In the Condensed Consolidated Balance Sheets
(i) (ii) (iii) = (i)–(ii) (iv) (v) (vi) = (iii)–(iv)–(v)
Gross Amounts Not Offset

Gross
Amount
Recognized

Gross
Amount
Offset

Net Amount
Presented
Derivatives
Financial
Collateral
Net Amount
In millions
Derivative assets $ 496
$ —
$ 496
$ 179
$ 205

⁽¹⁾
$ 112
Derivative liabilities $ 476
$ —
$ 476
$ 179
$ 302

⁽²⁾
$ (5 )


~~(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 the re-use of counterparty cash collateral as of the respective reporting date for the Company's liability position, net of derivative amounts that could be offset, as of, generally, two business days prior to the respective reporting date. As of July 31, 2019, of the $5 million of collateral posted, $4 million was in cash and $1 million was through re-use of counterparty collateral. As of October 31, 2018, $302 million of collateral posted was entirely in cash.

~~Effect of Derivative Instruments on the Condensed Consolidated Statements of Earnings~~

~~The pre-tax effect of derivative instruments and related hedged items in a fair value hedging relationship for the three and nine months ended July 31, 2019 and 2018 were as follows:~~

Gains (Losses) Recognized in Earnings on Derivative and Related Hedged Item
Derivative Instrument Location Three months ended July 31, 2019 Nine months ended July 31, 2019 Hedged Item Location Three months ended July 31, 2019 Nine months ended July 31, 2019
In millions In millions
Interest rate contracts Interest and other, net $ 123
$ 341
Fixed-rate debt Interest and other, net $ (123 ) $ (341 )

Gains (Losses) Recognized in Earnings on Derivative and Related Hedged Item
Derivative Instrument Location Three months ended July 31, 2018 Nine months ended July 31, 2018 Hedged Item Location Three months ended July 31, 2018 Nine months ended July 31, 2018
In millions In millions
Interest rate contracts Interest and other, net $ 16
$ (194 ) Fixed-rate debt Interest and other, net $ (16 ) $ 194

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)


	As of October 31, 2019
	In the Condensed Consolidated Balance Sheets
	(i)		(ii)		(iii) = (i)–(ii)		(iv)		(v)			(vi) = (iii)–(iv)–(v)
							Gross Amounts Not Offset
	Gross Amount Recognized		Gross Amount Offset		Net Amount Presented		Derivatives		Financial Collateral			Net Amount
	In millions
Derivative assets	$	468	$	0	$	468	$	123	$	263	⁽¹⁾	$	82
Derivative liabilities	$	147	$	0	$	147	$	123	$	19	⁽²⁾	$	5

(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, 2 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, 2 business days prior to the respective reporting date. As of July 31, 2020, $83 million of collateral posted was entirely through re-use of counterparty collateral. As of October 31, 2019, $19 million of collateral posted was entirely by way of re-use of counterparty collateral.

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


	Carrying amount of the hedged assets/ (liabilities)						Cumulative amount of fair value hedging adjustment included in the carrying amount of the hedged assets/ (liabilities)
	As of						As of
	July 31, 2020		October 31, 2019		July 31, 2020		October 31, 2019
	In millions						In millions
Notes payable and short-term borrowings	$	(3,004)	$	(2,987)	$	(4)	$	11
Long-term debt	$	(4,093)	$	(3,908)	$	(255)	$	(72)

The pre-tax effect of derivative instruments in cash flow and net investment hedging relationships ~~for the three and nine months ended July 31, 2019~~recognized in Other Comprehensive Income ("OCI") were as follows:

Gains (Losses) Recognized in Other Comprehensive Income ("OCI") on Derivatives (Effective Portion)
Gains (Losses) Reclassified from Accumulated
OCI Into Earnings (Effective Portion)
Three months ended July 31, 2019 Nine months ended July 31, 2019 Location Three months ended July 31, 2019 Nine months ended July 31, 2019
In millions In millions
Cash flow hedges:

Foreign currency contracts $ 43
$ 102
Net revenue $ 42
$ 168
Foreign currency contracts 20
123
Interest and other, net 16
91
Total cash flow hedges $ 63
$ 225
Net earnings from continuing operations $ 58
$ 259
Net investment hedges:

Foreign currency contracts $ (18 ) $ (23 ) Interest and other, net $ —
$ —


	Gains (Losses) Recognized in OCI on Derivatives
	Three months ended July 31, 2020		Three months ended July 31, 2019		Nine months ended July 31, 2020		Nine months ended July 31, 2019
	In millions
Derivatives in Cash Flow Hedging relationship
Foreign exchange contracts	$	(456)	$	63	$	(79)	$	225
Interest rate contracts	0		0		(6)		0
Derivatives in Net Investment Hedging relationship
Foreign exchange contracts	(83)		(18)		50		(23)
Total	$	(539)	$	45	$	(35)	$	202

~~The pre-tax effect of derivative instruments in cash flow and net investment hedging relationships for the three and nine months ended July 31, 2018 was as follows:~~

Gains (Losses) Recognized in Other Comprehensive Income ("OCI") on Derivatives (Effective Portion)
Gains (Losses) Reclassified from Accumulated
OCI Into Earnings (Effective Portion)
Three months ended July 31, 2018 Nine months ended July 31, 2018 Location Three months ended July 31, 2018 Nine months ended July 31, 2018
In millions In millions
Cash flow hedges:

Foreign currency contracts $ 121
$ 59
Net revenue $ 29
$ (82 )
Foreign currency contracts 28
(9 ) Interest and other, net 14
4
Total cash flow hedges $ 149
$ 50
Net earnings from continuing operations $ 43
$ (78 )
Net investment hedges:

Foreign currency contracts $ 57
$ 31
Interest and other, net $ —
$ —

As of July 31, 2019 and 2018, no portion of the hedging instruments' gain or loss was excluded from the assessment of effectiveness for fair value, cash flow or net investment hedges. Hedge ineffectiveness for fair value, cash flow, and net investment hedges was not material for the three and nine months ended July 31, 2019 and 2018.

~~As of July 31, 2019,~~2020, the Company expects to reclassify an estimated net ~~Accumulated~~accumulated other comprehensive ~~gain~~loss of

approximately ~~$80~~$99 million, net of taxes, to earnings in the next twelve months along with the earnings effects of the related

forecasted transactions associated with cash flow hedges.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

Effect of Derivative Instruments on the Condensed Consolidated Statements of Earnings

The pre-tax effect of derivative ~~instruments not designated as hedging~~ instruments on the Condensed Consolidated Statements of Earnings ~~for the three and nine months ended July 31, 2019 and 2018 was~~were as follows:

Gains (Losses) Recognized in Earnings on Derivatives
Location Three months ended July 31, 2019 Three months ended July 31, 2018 Nine months ended July 31, 2019 Nine months ended July 31, 2018
In millions
Foreign currency contracts Interest and other, net $ 55
$ 233
$ (68 ) $ 104
Other derivatives Interest and other, net (2 ) —
5
—
Total $ 53
$ 233
$ (63 ) $ 104


	Gains (Losses) Recognized in Income
	Three months ended July 31, 2020						Three months ended July 31, 2019						Nine months ended July 31, 2020				Nine months ended July 31, 2019
	Net revenue		Interest and other, net		Net revenue		Interest and other, net		Net revenue		Interest and other, net		Net revenue		Interest and other, net
	In millions
Total amounts of income and expense line items presented in the Condensed Consolidated Statements of Earnings in which the effects of fair value hedges, cash flow hedges and derivatives not designated as hedging instruments are recorded	$	6,816	$	(71)	$	7,217	$	(70)	$	19,774	$	(158)	$	21,920	$	(139)
Gains (losses) on derivatives in fair value hedging relationships
Interest rate contracts
Hedged items	$	0	$	(13)	$	0	$	(123)	$	0	$	(198)	$	0	$	(341)
Derivatives designated as hedging instruments	0		13		0		123		0		198		0		341
Gains (losses) on derivatives in cash flow hedging relationships
Foreign exchange contracts
Amount of gains (losses) reclassified from accumulated other comprehensive income into income	23		(264)		42		16		97		(55)		168		91
Interest rate contracts
Amount of gains (losses) reclassified from accumulated other comprehensive income into income	0		(1)		0		0		0		(1)		0		0
Gains (losses) on derivatives not designated as hedging instruments
Foreign exchange contracts	0		8		0		55		0		53		0		(68)
Other derivatives	0		(6)		0		(2)		0		(1)		0		5
Total gains (losses)	$	23	$	(263)	$	42	$	69	$	97	$	(4)	$	168	$	28

Note 12: Borrowings

~~Commercial Paper~~Notes Payable and Short-Term Borrowings

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


	As of
	July 31, 2020		October 31, 2019
	In millions
Current portion of long-term debt	$	4,594	$	3,441
FS commercial paper	737		698
Notes payable to banks, lines of credit and other	396		286
Total	$	5,727	$	4,425

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

Asset-backed Debt Securities

In June 2020, the Company issued $1.0 billion of asset-backed debt securities in 6 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. As of July 31, 2020, the outstanding balance of the asset-backed debt securities was $1.0 billion.

In February 2020, the Company issued $755 million of asset-backed debt securities in 6 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. As of July 31, 2020, the outstanding balance of the asset-backed debt securities was $622 million.

In September 2019, the Company issued $763 million of asset-backed debt securities in 6 tranches at a weighted average price of 99.99% and a weighted average interest rate of 2.31%, payable monthly from November 2019 with a stated final maturity date of September 2029. As of July 31, 2020, the outstanding balance of the asset-backed debt securities was $462 million.

The future principal payments on these asset-backed debt securities will be based on the underlying loan and lease payment streams. For more information on the asset-backed debt securities, see Note 8 “Accounting for Leases as a Lessor - Variable Interest Entities”.

Hewlett Packard ~~Enterprise's Board~~Enterprise Senior Notes

In fiscal 2020, the Company completed its offering of ~~Directors has authorized~~ the ~~issuance~~following Senior Notes

$1.0 billion issued at discount to par at a price of up99.883% in July 2020 at an interest rate of 1.45% due April 1, 2024, interest payable semi-annually on April 1 and October 1 of each year beginning on April 1, 2021.

$750 million issued at discount to ~~$4.0~~par at a price of 99.820% in July 2020 at an interest rate of 1.75% due April 1, 2026 interest payable semi-annually on April 1 and October 1 of each year beginning on April 1, 2021.

$1.25 billion issued at discount to par at a price of 99.956% in ~~aggregate~~April 2020 at an interest rate of 4.45% due October 2, 2023 interest payable semi-annually on April 2 and October 2 of each year beginning on October 2, 2020.

$1.0 billion issued at discount to par at a price of 99.817% in April 2020 at an interest rate of 4.65% due October 1, 2024 interest payable semi-annually on April 1 and October 1 of each year beginning on October 1, 2020.

The net proceeds from the above Senior Notes were used for the redemption in August 2020 of the $3.0 billion outstanding principal amount of ~~commercial paper by Hewlett Packard Enterprise. Hewlett Packard Enterprise's subsidiaries are authorized to issue up to an additional $1.0 billion~~the 3.6% registered Senior Notes that were originally due in ~~aggregate principal amount of commercial paper.~~ October 2020.

Commercial Paper

Hewlett Packard Enterprise maintains ~~two~~2 commercial paper programs, "the Parent Programs", and a wholly-owned subsidiary maintains a third program. Hewlett Packard Enterprise's U.S. program provides for the issuance of U.S. dollar-denominated commercial paper up to a maximum aggregate principal amount of $4.75 billion which was increased from $4.0 ~~billion.~~billion in March 2020. Hewlett Packard Enterprise's euro commercial paper program provides for the issuance of commercial paper outside of the U.S. denominated in U.S. dollars, euros or British pounds up to a maximum aggregate principal amount of $3.0 billion or the equivalent in those alternative currencies. The combined aggregate principal amount of commercial paper outstanding under those 2 programs at any one time cannot exceed the ~~$4.0~~$4.75 billion as authorized by Hewlett Packard Enterprise's Board of Directors. ~~The~~In addition, the Hewlett Packard Enterprise subsidiary's euro Commercial Paper/Certificate of Deposit Program provides for the issuance of commercial paper in various currencies of up to a maximum aggregate principal amount of $1.0 ~~billion, which was increased from $500 million, by way of an amendment in April 2019.~~billion. As of July 31, ~~2019~~2020 and October 31, ~~2018, no~~2019, 0 borrowings were outstanding under ~~Hewlett Packard Enterprise’s two commercial paper programs,~~the Parent Programs, and ~~$671~~$737 million and ~~$392~~$698 million, respectively, were outstanding under the subsidiary’s program.

~~Revolving Credit Facility~~

On August 16, 2019, the Company entered into a revolving credit facility (the "Credit Agreement"), together with the lenders named therein, JPMorgan Chase Bank, N.A. ("JPMorgan"), as co-administrative agent and administrative processing agent, and Citibank, N.A., as co-administrative agent, providing for a senior, unsecured revolving credit facility withFuture Maturities of Long-term Debt

As of July 31, 2020, aggregate ~~lending commitments~~future maturities of $4.75 billion. Loans under the revolving credit facility may be used for general corporate purposes. Commitments under the Credit Agreement are available for a period of five years, which period may be extended, subject to satisfaction of certain conditions, by up to two one-year periods. Commitment fees, interest rates and other terms of borrowing under the credit facility vary based on Hewlett Packard Enterprise's external credit rating. This credit facility replaces the Company's ~~prior credit facility that was entered into~~long-term debt at face value (excluding a fair value adjustment related to hedged debt of $259 million and a net discount on ~~November 1, 2015, which was terminated in connection with its entering into the new credit facility.~~debt issuance of $10 million), including capital lease obligations were as follows:

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)




Fiscal year	In millions
Remainder of fiscal 2020	3,349
2021	2,780
2022	1,967
2023	2,483
2024	2,018
Thereafter	5,537
Total	$	18,134

Note 13: Stockholders' Equity

Taxes related to Other Comprehensive (Loss) Income

Three months ended July 31, Nine months ended July 31,
2019 2018 2019 2018
In millions
Taxes on change in net unrealized gains (losses) on cash flow hedges:

Tax (provision) on net unrealized gains arising during the period $ (6 ) $ (20 ) $ (24 ) $ (6 )
Tax provision (benefit) on net (gains) losses reclassified into earnings 7
5
31
(11 )
1
(15 ) 7
(17 )
Taxes on change in unrealized components of defined benefit plans:

Tax benefit on net unrealized losses arising during the period 5
3
13
2
Tax provision on amortization of net actuarial loss and prior service benefit (3 ) (4 ) (9 ) (10 )
Tax provision on curtailments, settlements and other —
(5 ) (7 ) (12 )
2
(6 ) (3 ) (20 )
Tax (provision) benefit on change in cumulative translation adjustment (1 ) 2
—
3
Tax benefit (provision) on other comprehensive income $ 2
$ (19 ) $ 4
$ (34 )

~~Changes and reclassifications related to Other Comprehensive Income, net of taxes~~


	Three months ended July 31,						Nine months ended July 31,
	2020		2019		2020		2019
	In millions



Taxes on change in net unrealized (losses) gains on cash flow hedges:
Tax benefit (provision) on net unrealized (losses) gains arising during the period	$	26	$	(6)	$	(6)	$	(24)
Tax provision (benefit) on net losses (gains) reclassified into earnings	5		7		26		31
	31		1		20		7
Taxes on change in unrealized components of defined benefit plans:
Tax benefit (provision) on net unrealized (losses) gains arising during the period	1		5		1		13
Tax (provision) benefit on amortization of net actuarial loss and prior service benefit	(4)		(3)		(12)		(9)
Tax (provision) benefit on curtailments, settlements and other	0		0		0		(7)
	(3)		2		(11)		(3)
Tax (provision) benefit on change in cumulative translation adjustment	0		(1)		4		0
Tax benefit (provision) on other comprehensive (loss) income	$	28	$	2	$	13	$	4

Three months ended July 31, Nine months ended July 31,
2019 2018 2019 2018
In millions
Other comprehensive income, net of taxes:

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

Net unrealized gains (losses) arising during the period $ 3
$ (2 ) $ 8
$ (1 )
Gains reclassified into earnings —
—
(3 ) (9 )
3
(2 ) 5
(10 )
Change in net unrealized gains (losses) on cash flow hedges:

Net unrealized gains arising during the period 57
129
201
44
Net (gains) losses reclassified into earnings⁽¹⁾
(51 ) (38 ) (228 ) 67
6
91
(27 ) 111
Change in unrealized components of defined benefit plans:

Net unrealized losses arising during the period (26 ) (22 ) (65 ) (21 )
Amortization of net actuarial loss and prior service benefit⁽²⁾
51
43
152
133
Curtailments, settlements and other 5
4
5
(1 )
30
25
92
111
Change in cumulative translation adjustment (9 ) (38 ) (2 ) (37 )
Other comprehensive income, net of taxes $ 30
$ 76
$ 68
$ 175

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

Changes and reclassifications related to Other Comprehensive (Loss) Income, net of taxes


	Three months ended July 31,						Nine months ended July 31,
	2020		2019		2020		2019
	In millions
Other comprehensive (loss) income, net of taxes:
Change in net unrealized gains (losses) on available-for-sale securities:
Net unrealized gains (losses) arising during the period	$	6	$	3	$	0	$	8
(Gains) losses reclassified into earnings	(1)		0		(8)		(3)
	5		3		(8)		5
Change in net unrealized (losses) gains on cash flow hedges:
Net unrealized (losses) gains arising during the period	(430)		57		(91)		201
Net losses (gains) reclassified into earnings	247		(51)		(15)		(228)
	(183)		6		(106)		(27)
Change in unrealized components of defined benefit plans:
Net unrealized (losses) gains arising during the period	(18)		(26)		(9)		(65)
Amortization of net actuarial loss and prior service benefit	57		51		171		152
Curtailments, settlements and other	7		5		8		5
	46		30		170		92
Change in cumulative translation adjustment	1		(9)		(42)		(2)
Other comprehensive (loss) income, net of taxes	$	(131)	$	30	$	14	$	68


~~(1)~~	~~For more details on the reclassification of pre-tax net (gains) losses on cash flow hedges into the Condensed Consolidated Statements of Earnings, see Note 11, "Financial Instruments".~~


~~(2)~~	~~These components are included in the computation of net pension and post-retirement benefit cost in Note 5, "Retirement and Post-Retirement Benefit Plans".~~

The components of Accumulated other comprehensive loss, net of taxes as of July 31, ~~2019,~~2020, and changes during the nine months ended July 31, ~~2019~~2020 were as follows:


	Net unrealized gains (losses) on available-for-sale securities		Net unrealized gains (losses) on cash flow hedges		Unrealized components of defined benefit plans		Cumulative translation adjustment		Accumulated other comprehensive loss
	In millions
Balance at beginning of period	$	23	$	53	$	(3,366)	$	(437)	$	(3,727)
Effect of change in accounting principle ⁽¹⁾	0		(10)		0		(33)		(43)
Other comprehensive (loss) income before reclassifications	0		(91)		(9)		(42)		(142)
Reclassifications of (gains) losses into earnings	(8)		(15)		179		0		156
Balance at end of period	$	15	$	(63)	$	(3,196)	$	(512)	$	(3,756)

Net unrealized
gains (losses) on
available-for-sale
securities

Net unrealized
gains (losses)
on cash
flow hedges

Unrealized
components
of defined
benefit plans

Cumulative
translation
adjustment

Accumulated
other
comprehensive
loss
In millions
Balance at beginning of period $ 17
$ 106
$ (2,922 ) $ (419 ) $ (3,218 )
Other comprehensive income (loss) before reclassifications 8
201
(65 ) (2 ) 142
Reclassifications of (gains) losses into earnings (3 ) (228 ) 157
—
(74 )
Balance at end of period $ 22
$ 79
$ (2,830 ) $ (421 ) $ (3,150 )

(1)Reflects the adoption of the FASB guidance on stranded tax effects. For more information, see Note 1 "Overview and Summary of Significant Accounting Policies".

Share Repurchase Program

For the nine months ended July 31, ~~2019,~~2020, the Company repurchased and settled a total of ~~130~~25.3 million shares under its share repurchase program through open market repurchases, which included ~~2.4~~0.5 million shares that were unsettled open market repurchases as of October 31, ~~2018. Additionally, as~~2019. As of July 31, ~~2019,~~2020, the Company had no unsettled open market repurchases of ~~1.2 million~~ shares. Shares repurchased during the nine months ended July 31, ~~2019~~2020 were recorded as a ~~$1.9 billion~~$346 million reduction to stockholders' equity. As of July 31, ~~2019,~~2020, the Company had a remaining authorization of ~~$2.7~~$2.1 billion for future share repurchases.

On April 6, 2020, the Company announced that it suspended purchases under its share repurchase program in response to the global economic uncertainty that resulted from the worldwide spread of COVID-19.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

Note 14: Net Earnings Per Share

The Company calculates basic net EPS using net earnings and the weighted-average number of shares outstanding during the reporting period. Diluted net EPS includes the weighted-average dilutive effect of restricted stock units, stock options, and performance-based awards.

~~HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES~~

~~Notes to Condensed Consolidated Financial Statements (Continued)~~

~~(Unaudited)~~

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


	Three Months Ended July 31,						Nine Months Ended July 31,
	2020		2019		2020		2019
	In millions, except per share amounts
Numerator:
Net earnings (loss)	$	9	$	(27)	$	(479)	$	569
Denominator:
Weighted-average shares used to compute basic net EPS	1,292		1,334		1,294		1,367
Dilutive effect of employee stock plans	8		0		0		13
Weighted-average shares used to compute diluted net EPS	1,300		1,334		1,294		1,380
Net earnings (loss) per share:
Basic	$	0.01	$	(0.02)	$	(0.37)	$	0.42
Diluted	$	0.01	$	(0.02)	$	(0.37)	$	0.41
Anti-dilutive weighted-average stock awards⁽¹⁾	21		44		48		4

Three months ended July 31, Nine months ended July 31,
2019 2018 2019 2018
In millions, except per share amounts
Numerator:

Net (loss) earnings from continuing operations $ (27 ) $ 452
$ 569
$ 2,784
Net loss from discontinued operations —
(1 ) —
(119 )
Net (loss) earnings $ (27 ) $ 451
$ 569
$ 2,665
Denominator:

Weighted-average shares used to compute basic net EPS 1,334
1,513
1,367
1,552
Dilutive effect of employee stock plans —
18
13
26
Weighted-average shares used to compute diluted net EPS 1,334
1,531
1,380
1,578
Basic net (loss) earnings per share:

Continuing operations $ (0.02 ) $ 0.30
$ 0.42
$ 1.79
Discontinued operations⁽¹⁾
—
—
—
(0.07 )
Basic net (loss) earnings per share $ (0.02 ) $ 0.30
$ 0.42
$ 1.72
Diluted net (loss) earnings per share:
Continuing operations $ (0.02 ) $ 0.29
$ 0.41
$ 1.76
Discontinued operations⁽¹⁾⁽²⁾
—
—
—
(0.07 )
Diluted net (loss) earnings per share $ (0.02 ) $ 0.29
$ 0.41
$ 1.69
Anti-dilutive weighted-average stock awards⁽³⁾
44
2
4
3

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


~~(1)~~	~~EPS for discontinued operations was calculated by deducting the EPS from continuing operations from the total EPS.~~


~~(2)~~	U.S. GAAP requires the denominator used in the diluted net EPS calculation for discontinued operations to be the same as that of continuing operations, regardless of net earnings (loss) from continuing operations.


~~(3)~~	The Company excludes shares potentially issuable under employee stock plans that could dilute basic net EPS in the future from the calculation of diluted net earnings (loss) per share, as their effect, if included, would have been anti-dilutive for the periods presented.

Note 15: Litigation and Contingencies

Hewlett Packard Enterprise is involved in various lawsuits, claims, investigations and proceedings including those consisting of Intellectual Property ("IP"), commercial, securities, employment, employee benefits and environmental matters, which arise in the ordinary course of business. In addition, as part of the Separation and Distribution Agreement, Hewlett Packard Enterprise and HP Inc. (formerly known as "Hewlett-Packard Company") agreed to cooperate with each other in managing certain existing litigation related to both parties' businesses. The Separation and Distribution Agreement included provisions that allocate liability and financial responsibility for pending litigation involving the parties, as well as provide for cross-indemnification of the parties against liabilities to one party arising out of liabilities allocated to the other party. The Separation and Distribution Agreement also included provisions that assign to the parties responsibility for managing pending and future litigation related to the general corporate matters of HP Inc. arising prior to the Separation. Hewlett Packard Enterprise records a liability when it believes that it is both probable that a liability has been incurred and the amount of loss can be reasonably estimated. Significant judgment is required to determine both the probability of having incurred a liability and the estimated amount of the liability. Hewlett Packard Enterprise reviews these matters at least quarterly and adjusts these liabilities to reflect the impact of negotiations, settlements, rulings, advice of legal counsel and other updated information and events pertaining to a particular matter. Litigation is inherently unpredictable. However, Hewlett Packard Enterprise believes it has valid defenses with respect to legal matters pending against us. Nevertheless, cash flows or results of operations could be materially affected in any particular period by the resolution of one or more of these contingencies. Hewlett Packard Enterprise believes it has recorded adequate provisions for any such matters and, as of July 31, ~~2019,~~2020, it was not reasonably possible that a material loss had been incurred in connection with such matters in excess of the amounts recognized in its financial statements.

~~HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES~~

~~Notes to Condensed Consolidated Financial Statements (Continued)~~

~~(Unaudited)~~

Litigation, Proceedings and Investigations

~~DXC Technology Indemnification Demand.~~On March 27, 2018, DXC Technology (“DXC”) served an arbitration demand on HPE under the Separation and Distribution Agreement by and between HPE and DXC (f/k/a Everett SpinCo, Inc.) dated May 24, 2016, relating to the separation of HPE’s Enterprise Services business (the “ES Business”). The arbitration demand asserts that HPE is required to indemnify DXC for any transferred long-term capitalized lease obligations of the ES Business that exceed the threshold amount of $250 million. DXC contends that this $250 million threshold was exceeded by approximately $1.0 billion because the valuation of the assets underlying certain leases did not justify their classification as operating leases based on the terms of such leases, thereby rendering them long-term capitalized lease obligations. The arbitration demand follows DXC's November 8, 2017 request for indemnification on this same issue. On August 15, 2019, the arbitration panel ruled in DXC’s favor, issuing DXC an award in the amount of $632 million. The arbitration panel also awarded pre-judgment interest of $34 million.

Ross and Rogus v. Hewlett Packard Enterprise Company. On November 8, 2018, a putative class action complaint was filed in the Superior Court of California, County of Santa Clara alleging that HPE pays its California-based female employees “systemically lower compensation” than HPE pays male employees performing substantially similar work. The complaint alleges various California state law claims, including California’s Equal Pay Act, Fair Employment and Housing Act, and Unfair Competition Law, and seeks certification of a California-only class of female employees employed in certain “Covered Positions.” The complaint seeks damages, statutory and civil penalties, attorneys’ fees and costs. On April 2, 2019, HPE filed a

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

demurrer to all causes of action and an alternative motion to strike portions of the complaint. On July 2, 2019, the court denied HPE’s demurrer as to the claims of the putative class and granted HPE’s demurrer as to the claims of the individual plaintiffs.

India Directorate of Revenue Intelligence Proceedings. On April 30 and May 10, 2010, the India Directorate of Revenue Intelligence (the "DRI") issued show cause notices to Hewlett-Packard India Sales Private Ltd ("HP India"), a subsidiary of HP Inc., ~~seven~~7 HP India employees and ~~one~~1 former HP India employee alleging that HP India underpaid customs duties while importing products and spare parts into India and seeking to recover an aggregate of approximately $370 million, plus penalties. Prior to the issuance of the show cause notices, HP India deposited approximately $16 million with the DRI and agreed to post a provisional bond in exchange for the DRI's agreement to not seize HP India products and spare parts and to not interrupt the transaction of business by HP India.

On April 11, 2012, the Bangalore Commissioner of Customs issued an order on the products-related show cause notice affirming certain duties and penalties against HP India and the named individuals of approximately $386 million, of which HP India had already deposited $9 million. On December 11, 2012, HP India voluntarily deposited an additional $10 million in connection with the products-related show cause notice. On April 20, 2012, the Commissioner issued an order on the parts-related show cause notice affirming certain duties and penalties against HP India and certain of the named individuals of approximately $17 million, of which HP India had already deposited $7 million. After the order, HP India deposited an additional $3 million in connection with the parts-related show cause notice so as to avoid certain penalties.

HP India filed appeals of the Commissioner's orders before the Customs Tribunal along with applications for waiver of the pre-deposit of remaining demand amounts as a condition for hearing the appeals. The Customs Department has also filed cross-appeals before the Customs Tribunal. On January 24, 2013, the Customs Tribunal ordered HP India to deposit an additional $24 million against the products order, which HP India deposited in March 2013. The Customs Tribunal did not order any additional deposit to be made under the parts order. In December 2013, HP India filed applications before the Customs Tribunal seeking early hearing of the appeals as well as an extension of the stay of deposit as to HP India and the individuals already granted until final disposition of the appeals. On February 7, 2014, the application for extension of the stay of deposit was granted by the Customs Tribunal until disposal of the appeals. On October 27, 2014, the Customs Tribunal commenced hearings on the cross-appeals of the Commissioner's orders. The Customs Tribunal rejected HP India's request to remand the matter to the Commissioner on procedural grounds. The hearings were scheduled to reconvene on April 6, 2015, and again on November 3, 2015 and April 11, 2016, but were canceled at the request of the Customs Tribunal. The hearing was rescheduled for January 15, 2019 but was postponed and has not yet been rescheduled.

ECT Proceedings. In January 2011, the postal service of Brazil, Empresa Brasileira de Correios e Telégrafos ("ECT"), notified a former subsidiary of HP Inc. in Brazil ("HP Brazil") that it had initiated administrative proceedings to consider whether to suspend HP Brazil's right to bid and contract with ECT related to alleged improprieties in the bidding and contracting processes whereby employees of HP Brazil and employees of several other companies allegedly coordinated their bids and fixed results for ~~three~~3 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 August 2011, HP Brazil appealed ECT's decision. In April 2013, ECT rejected HP Brazil's appeal, and the administrative proceedings were closed with the penalties against HP Brazil remaining in place. In parallel, in September 2011, HP Brazil filed a civil action against ECT

~~HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES~~

~~Notes to Condensed Consolidated Financial Statements (Continued)~~

~~(Unaudited)~~

seeking to have ECT's decision revoked. HP Brazil also requested an injunction suspending the application of the penalties until a final ruling on the merits of the case. The court of first instance has not issued a decision on the merits of the case, but it has denied HP Brazil's request for injunctive relief. HP Brazil appealed the denial of its request for injunctive relief to the intermediate appellate court, which issued a preliminary ruling denying the request for injunctive relief but reducing the length of the sanctions from five to two years. HP Brazil appealed that decision and, in December 2011, obtained a ruling staying enforcement of ECT's sanctions until a final ruling on the merits of the case. HP Brazil expects the decision to be issued in ~~2019~~2020 and any subsequent appeal on the merits to last several years.

Forsyth, et al. vs. HP Inc. and Hewlett Packard Enterprise. This purported class and collective action was filed on August 18, 2016 and an amended complaint was filed on December 19, 2016 in the United States District Court for the Northern District of California, against HP Inc. and Hewlett Packard Enterprise alleging defendants violated the Federal Age Discrimination in Employment Act ("ADEA"), the California Fair Employment and Housing Act, California public policy and the California Business and Professions Code by terminating older workers and replacing them with younger workers. Plaintiffs seek to certify a nationwide collective action under the ADEA comprised of all individuals aged 40 and older who had their employment terminated by an HP entity pursuant to a work force reduction ("WFR") plan on or after December 9, 2014 for individuals terminated in deferral states and on or after April 8, 2015 in non-deferral states. Plaintiffs also seek to certify a Rule 23 class under California law comprised of all persons 40 years or older employed by defendants in the state of California and terminated pursuant to a WFR plan on or after August 18, 2012. On September 20, 2017, the court granted the defendants'

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

motion to compel arbitration and administratively closed the case pending resolution of the arbitration proceedings. On November 30, 2017, ~~three~~3 named plaintiffs filed a single arbitration demand. ~~Thirteen~~NaN additional plaintiffs later joined the arbitration. On December 22, 2017, defendants filed a motion to (1) stay the case pending arbitrations and (2) enjoin the demanded arbitration and require each plaintiff to file a separate arbitration demand. On February 6, 2018, the court granted the motion to stay and denied the motion to enjoin. The claims of these ~~sixteen~~16 arbitration named plaintiffs have been resolved. Additional opt-in plaintiffs ~~have since been~~were added to the litigation and ~~the parties are engaged in~~these claims also were resolved as part of the arbitration ~~process for those claims.~~process. The stay of the Forsyth class action ~~remains stayed.~~has been lifted and a Third Amended Complaint was filed on January 7, 2020. Defendants filed a motion to dismiss the Third Amended Complaint on February 6, 2020. On May 18, 2020, the court issued an order granting in part and denying in part Defendants’ motion to dismiss. The court granted Plaintiffs leave to amend their complaint. On July 9, 2020, Plaintiffs filed a Fourth Amended Complaint.

Wall v. Hewlett Packard Enterprise Company and HP Inc. This certified California class action and Private Attorney General Act action was filed against Hewlett-Packard Company on January 17, 2012 and the fifth amended (and operative) complaint was filed against HP Inc. and Hewlett Packard Enterprise on June 28, 2016 in the Superior Court of California, County of Orange. The complaint alleges that the defendants paid earned incentive compensation late and failed to timely pay final wages in violation of the California Labor Code. On August 9, 2016, the court ordered the class certified without prejudice to a future motion to amend or modify the class certification order or to decertify. The scheduled January 22, 2018 trial date was vacated following the parties’ notification to the court that they had reached a preliminary agreement to resolve the dispute. The parties subsequently finalized and executed a settlement agreement and, on May 9, 2018, plaintiff filed a motion seeking preliminary approval of the settlement. On July 2, 2018, the court issued an order granting preliminary approval of the settlement. On December 21, 2018, the court issued an order granting final ~~approval of the settlement and setting a hearing for September 27, 2019 to confirm that the settlement distributions have been made.~~approval. A Qualified Settlement Fund has been fully ~~funded.~~funded and distributed to class members. On March 5, 2020, the Court signed an Amendment to Final Approval Order and Judgment, directing that the matter be closed.

Jackson, et al. v. HP Inc. and Hewlett Packard Enterprise. This putative nationwide class action was filed on July 24, 2017 in the United States District Court for the Northern District of California, San Jose Division. Plaintiffs purport to bring the lawsuit on behalf of themselves and other similarly situated African-Americans and individuals over the age of ~~forty.~~forty. Plaintiffs allege that defendants engaged in a pattern and practice of racial and age discrimination in lay-offs and promotions. Plaintiffs filed an amended complaint on September 29, 2017. Plaintiffs seek damages, attorneys’ fees and costs, and declaratory and injunctive relief. On January 12, 2018, defendants moved to transfer the matter to the federal district court in the Northern District of Georgia. Defendants also moved to dismiss the claims on various grounds and to strike certain aspects of the proposed class definition. On July 11, 2018, the court granted defendants' motion to dismiss this action for improper venue, and also partially dismissed and struck certain claims without prejudice to re-filing in the appropriate venue. On July 23, 2018, plaintiffs re-filed their lawsuit in the United States District Court for the Northern District of Georgia. On August 9, 2018, Plaintiffs filed a notice of appeal of the dismissal of the Northern District of California action with the Ninth Circuit Court of Appeals. On August 15, 2018, Plaintiffs filed a motion to stay their lawsuit in the Northern District of Georgia, which was granted by the court. On February 7, 2020, Defendants resolved the claims of the individual plaintiffs and the matters were dismissed.

Hewlett-Packard Company v. Oracle (Itanium). On June 15, 2011, HP Inc. filed suit against Oracle in the Superior Court of California, County of Santa Clara in connection with Oracle's March 2011 announcement that it was discontinuing software support for HP Inc.’s Itanium-based line of mission critical servers. HP Inc. asserted, among other things, that Oracle’s actions breached the contract that was signed by the parties as part of the settlement of the litigation relating to Oracle’s hiring of Mark Hurd. ~~The matter eventually progressed to trial, which~~Trial was bifurcated into ~~two~~2 phases. HP Inc. prevailed in the first phase of the trial, in which the court ruled that the contract at issue required Oracle to continue to offer its software products on HP Inc.'s Itanium-based servers for as long as HP Inc. decided to sell such servers. Phase 2 of the trial was then postponed by Oracle’s appeal of the

~~HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES~~

~~Notes to Condensed Consolidated Financial Statements (Continued)~~

~~(Unaudited)~~

trial court’s denial of Oracle’s “anti-SLAPP” motion, in which Oracle argued that HP Inc.’s damages claim infringed on Oracle’s First Amendment rights. On August 27, 2015, the California Court of Appeal rejected Oracle’s appeal. The matter was remanded to the trial court for Phase 2 of the trial, which began on May 23, 2016, and was submitted to the jury on June 29, 2016. On June 30, 2016, the jury returned a verdict in favor of HP Inc., awarding HP Inc. approximately $3 billion in damages: $1.7 billion for past lost profits and $1.3 billion for future lost profits. On October 20, 2016, the court entered judgment for this amount with interest accruing until the judgment is paid. Oracle’s motion for a new trial was denied on December 19, 2016, and Oracle filed its notice of appeal from the trial court’s judgment on January 17, 2017. On February 2, 2017, HP Inc. filed a notice of cross-appeal challenging the trial court’s denial of prejudgment interest. ~~Oracle filed its opening brief in the California Court of Appeal on March 7, 2019. HP Inc.’s answering/cross-opening brief~~ ~~was filed on~~ ~~June 12, 2019.~~ On May 16, 2019, HP Inc. filed its application to renew the judgment. As of May 16, 2019, the renewed judgment is approximately $3.8 billion. Daily interest on the renewed judgment is now accruing at ~~$1.037 million.~~$1 million and will be recorded upon receipt. The parties have completed appellate briefing in the California Court of Appeal and are awaiting the scheduling of oral argument. Pursuant to the terms of the Separation and Distribution

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

Agreement, HP Inc. and Hewlett Packard Enterprise will share equally in any recovery from Oracle once Hewlett Packard Enterprise has been reimbursed for all costs incurred in the prosecution of the action prior to the HP Inc. /Hewlett Packard Enterprise separation on November 1, 2015.

Oracle America, Inc., et al. v. 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. (“Terix”). Oracle contends that in connection with HPE’s use of Terix as a subcontractor for certain customers of HPE’s multivendor support business, Oracle’s copyrights were infringed, and HPE is liable for vicarious and contributory infringement and related claims. The lawsuit against HPE follows a prior lawsuit brought by Oracle against Terix in 2013 relating to Terix’s alleged unauthorized provision of Solaris patches to customers on Oracle hardware. On June 14, 2018, the court heard oral argument on HPE's and Oracle's cross-motions for summary judgment. ~~The court has not yet ruled on the parties' motions.~~ On January 29, 2019, the court granted HPE’s Motion for Summary Judgment as to all of Oracle’s claims and vacated the trial date. On February 20, 2019, the court entered judgment in favor of HPE, dismissing Oracle’s claims in their entirety. Oracle has appealed the trial court’s ruling to the United States Court of Appeals for the Ninth Circuit. ~~Oracle’s opening brief was filed on July 29, 2019. HPE’s responsive brief currently is due September 27, 2019.~~On August 20, 2020, the United States Court of Appeals for the Ninth Circuit issued its ruling, affirming in part and reversing in part the trial court’s decision granting summary judgment in favor of HPE. The matter will be remanded back to the United States District Court for the Northern District of California for further proceedings consistent with the ruling from the United States Court of Appeals for the Ninth Circuit.

Network-1 Technologies, Inc. v. Alcatel-Lucent USA Inc., et al. This patent infringement action was filed on September 15, 2011 in the United States District Court for the Eastern District of Texas, alleging that various Hewlett Packard Enterprise switches and access points infringe Network-1’s patent relating to the 802.3af and 802.3at “Power over Ethernet” standards. Network-1 seeks damages, attorneys’ fees and costs, and declaratory and injunctive relief. The Network-1 patent at issue expires in 2020. A jury trial was conducted beginning on November 6, 2017. On November 13, 2017, the jury returned a verdict in favor of HPE, finding that HPE did not infringe Network-1’s patent and that the patent was invalid. On August 29 2018, the court denied Network-1's motion for a new trial on infringement and entered the jury's verdict finding that HPE does not infringe the relevant Network-1 patent. The court also granted Network-1's motion for Judgment as a Matter of Law on validity. Network-1 has appealed the jury verdict of non-infringement to the United States Court of Appeals for the Federal Circuit. HPE has cross-appealed the court’s decision to grant Network-1's motion for Judgment as a Matter of Law on validity. Appellate briefing has been completed. The Federal Circuit Court of Appeal held oral argument on November 4, 2019.

Shared Litigation with HP Inc., DXC and Micro Focus

As part of the Separation and Distribution Agreements between Hewlett Packard Enterprise and HP Inc., Hewlett Packard Enterprise and DXC, and Hewlett Packard Enterprise and Seattle SpinCo, the parties to each agreement agreed to cooperate with each other in managing certain existing litigation related to both parties' businesses. The Separation and Distribution Agreements also included provisions that assign to the parties responsibility for managing pending and future litigation related to the general corporate matters of HP Inc. (in the case of the separation of Hewlett Packard Enterprise from HP Inc.) or of Hewlett Packard Enterprise (in the case of the separation of DXC from Hewlett Packard Enterprise and the separation of Seattle SpinCo from Hewlett Packard Enterprise), in each case arising prior to the applicable separation.

Environmental

~~Note 16: Indemnifications~~

~~General Cross-indemnification~~The Company's operations and ~~Tax Matters Agreements with HP Inc., DXC~~products are or may in the future become subject to various federal, state, local and ~~Micro Focus~~

~~In connection with~~foreign laws and regulations concerning environmental protection, including laws addressing the ~~Separation~~discharge of pollutants into the air and water, the management and disposal of hazardous substances and wastes, the clean-up of contaminated sites, the substances and materials used in the Company's products, the energy consumption of products, services and operations and the ~~Everett~~operational or financial responsibility for recycling, treatment and ~~Seattle Transactions, the~~disposal of those products. This includes legislation that makes producers of electrical goods, including servers and networking equipment, financially responsible for specified collection, recycling, treatment and disposal of past and future covered products (sometimes referred to as "product take-back legislation"). The Company ~~entered into a Separation~~could incur substantial costs, its products could be restricted from entering certain jurisdictions, and ~~Distribution Agreement~~it could face other sanctions, if it were to violate or become liable under environmental laws or if its products become non-compliant with environmental laws. The Company's potential exposure includes impacts on revenue, fines and ~~Tax Matters Agreement~~civil or criminal sanctions, third-party property damage or personal injury claims and clean-up costs. The amount and timing of costs to comply with HP Inc., DXC and affiliates, and Micro Focus and affiliates, effective November 1, 2015, March 31, 2017 and September 1, 2017, respectively. For further details on these agreements, see the Company's Annual Report on Form 10-K for the fiscal year ended October 31, 2018.environmental laws are difficult to predict.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

AsIn particular, the Company may become a party to, or otherwise involved in, proceedings brought by U.S. or state environmental agencies under the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), known as "Superfund," or other federal, state or foreign laws and regulations addressing the clean-up of ~~July 31, 2019~~contaminated sites, and ~~October 31, 2018, the Company’s receivable and payable balances~~may become a party to, or otherwise involved in, proceedings brought by private parties for contribution towards clean-up costs. The Company is also contractually obligated to make financial contributions to address actions related to ~~indemnified litigation matters~~certain environmental liabilities, both ongoing and ~~other contingencies,~~arising in the future, pursuant to its Separation and ~~income tax-related indemnification covered by these agreements were as follows:~~Distribution Agreement with HP Inc.

As of
July 31, 2019 October 31, 2018
In millions
Litigation matters and other contingencies
Receivable $ 88
$ 104
Payable $ 57
$ 83

Income tax-related indemnification⁽¹⁾

Net indemnification receivable - long-term⁽²⁾
$ 266
$ 16
Net indemnification receivable - short-term
$ 13
$ 17
Net indemnification payable - long-term
$ 9
$ 9
Net indemnification payable - short-term⁽³⁾
$ 102
$ 26

Table of Contents


~~(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.~~


~~(2)~~	For the nine months ended July 31, 2019, the increase in Net indemnification receivable - long-term was due primarily to the effects of U.S. tax reform on tax attributes related to fiscal periods prior to the Separation.


~~(3)~~	For the nine months ended July 31, 2019, the increase in Net indemnification payable - short-term was due primarily to the effective settlement of the U.S. federal income tax audit of fiscal years 2013 through 2015 for HP Inc. for which the Company was joint and severally liable and for which the Company was partially indemnified by HP Inc. under the Tax Matters Agreement.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

This Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is organized as follows:

•

•COVID-19 Update. A discussion of our response to the novel coronavirus pandemic (“COVID-19”), including our efforts to protect the health and well-being of our workforce, community and customers.

•Overview. A discussion of our business and summary analysis of financial and other highlights, including non-GAAP financial measures, affecting the Company in order to provide context to the remainder of the MD&A, financial statements and footnotes. The Overview analysis compares the three and nine months ended July 31, 2020 to the prior-year periods.

•Critical Accounting Policies and Estimates. A discussion of accounting policies and estimates that we believe are important to understanding the assumptions and judgments incorporated in our reported financial results.

•Results of Operations. An analysis of our financial results comparing the three and nine months ended July 31, 2020 to the prior-year periods. A discussion of the results of operations at the consolidated level is followed by a discussion of the results of operations at the segment level.

•Liquidity and Capital Resources. An analysis of changes in our cash flows and a discussion of our financial condition and liquidity.

• A discussion of our business and overall analysis of financial and other highlights affecting the Company to provide context for the remainder of MD&A. The overview analysis compares the three and nine months ended July 31, 2019 to the prior-year periods.


•	~~Critical Accounting Policies and Estimates.~~ ~~A discussion of accounting policies and estimates that we believe are important to understanding the assumptions and judgments incorporated in our reported financial results.~~


•	~~Results of Operations.~~ An analysis of our financial results comparing the three and nine months ended July 31, 2019 to the prior-year periods. A discussion of the results of operations at the consolidated level is followed by a discussion of the results of operations at the segment level.


•	~~Liquidity and Capital Resources.~~ ~~An analysis of changes in our cash flows and a discussion of our financial condition and liquidity.~~


•	Contractual and Other Obligations. An overview of contractual obligations, retirement and post-retirement benefit plan funding, restructuring plans, uncertain tax positions, cross-indemnifications with HP Inc. (formerly known as "Hewlett-Packard Company"), DXC Technology Company ("DXC"), and Micro Focus International plc ("Micro Focus") and off-balance sheet arrangements.

We intend the discussion of our financial condition and results of operations that follows to provide information that will assist the reader in understanding our Condensed Consolidated Financial Statements, the changes in certain key items in those financial statements from ~~year to year,~~year-to-year, and the primary factors that accounted for those changes, as well as how certain accounting principles, policies and estimates affect our Condensed Consolidated Financial Statements. This discussion should be read in conjunction with our Condensed Consolidated Financial Statements and the related notes that appear elsewhere in this document.

On November 1, 2015, we became an independent publicly-traded company through a pro rata distribution by HP Inc. ("former Parent" or "HPI"), formerly known as Hewlett-Packard Company, of 100% of our outstanding shares to HP Inc.'s stockholders (the "Separation").

On April 1, 2017 and September 1, 2017, we completed the separation and merger of our Enterprise Services business with Computer Sciences Corporation ("CSC") (collectively, the "Everett Transaction") and the separation and merger of our Software business segment with Micro Focus (collectively, the “Seattle Transaction”), respectively. The historical financial results of Everett and Seattle are reported as Net loss from discontinued operations in the Condensed Consolidated Statements of Earnings.

The following Overview, Results of Operations and Liquidity discussions and analysis compare the three and nine months ended July 31, ~~2019~~2020 to the prior-year periods, unless otherwise noted. The Capital Resources and Contractual and Other Obligations discussions present information as of July 31, ~~2019,~~2020, unless otherwise noted.

For purposes of this MD&A section, we use the terms "Hewlett Packard Enterprise", "HPE", the "Company", "we", "us" and "our" to refer to Hewlett Packard Enterprise Company.

COVID-19 UPDATE

COVID-19 continues to have an impact on our financial performance as the pandemic endures and affects global economic activity including ongoing worldwide travel restrictions, prohibitions of non-essential work activities in some markets, disruption and shutdown of businesses in some markets and greater uncertainty in global financial markets. We are currently unable to predict the extent to which COVID-19 may adversely impact our future business operations, financial performance and results of operations. The full extent of the impact of COVID-19 on the Company’s operational and financial performance is currently uncertain and will depend on many factors outside the Company’s control, including, without limitation, the timing, extent, trajectory and duration of the pandemic, the development and availability of effective treatments and vaccines, the imposition of protective public safety measures, and the impact of the pandemic on the global economy and

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Management's Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

demand for our enterprise technology solutions. For a further discussion of the risks, uncertainties and actions taken in response to COVID-19, see risks identified in the section entitled “ Risk Factors” in Part II, Item 1A.

The Company believes its existing balances of cash, cash equivalents and marketable securities, along with commercial paper and other short-term liquidity arrangements, will be sufficient to satisfy its working capital needs, capital asset purchases, dividends, debt repayments and other liquidity requirements associated with its existing operations.

The Company also believes that COVID-19 has forced fundamental changes in businesses and communities that are aligned with the Company's edge-to-cloud platform delivered as-a-service strategy. Navigating through the pandemic and planning for a post-COVID world have increased customers' needs for as-a-service offerings, secure connectivity, remote work capabilities and analytics to unlock insights from data. Our solutions are aligned to these needs, and we see opportunity to help our customers drive digital transformations as they continue to adapt to operate in a new world.

We have prioritized protecting the health and safety of our team members, supporting the global communities in which we live and work and supporting our customers and partners to help them adjust to new and emerging needs.

In the third quarter of fiscal 2020 we announced new return-to-work solutions to help customers accelerate business recovery and reopening plans. The solutions combine expertise from HPE operational services for a fast, seamless transition, with HPE servers for the edge, Aruba AI-powered network infrastructure, and technologies from HPE’s rich ecosystem of partners. Customers that have implemented these solutions include large international airports, global food processing and packaging plants, retail stores, and corporate offices.

While we are actively working to mitigate the impact on our business and operations to address the near-term uncertainty, we have taken and are taking a number of actions to ensure HPE is well positioned to emerge stronger, more agile and digitally enabled for a post-COVID-19 world.

•On May 19, 2020, the Board of Directors of HPE (the "Board") approved a cost optimization and prioritization plan in order to focus our investments, realign our workforce to areas of growth and simplify and evolve our product portfolio strategy, go-to-market configurations, supply chain structures, digital customer support model, marketing experiences, and real estate strategies. We expect that this plan will be implemented through fiscal 2022 and estimate that it will include gross savings of at least $1.0 billion as a result of changes to our workforce, business model and business process, with this plan being expected to deliver annualized net run-rate savings of at least $800 million by the end of fiscal 2022, in both cases relative to our fiscal 2019 exit. In order to achieve this level of cost savings, we estimate related cash funding payments of $1.3 billion over the next three years of which approximately $0.8 billion will relate to labor restructuring, $0.2 billion will relate to non-labor restructuring and $0.3 billion will relate to IT investments and design and execution charges.

•On July 14, 2020, we issued $1.75 billion and on April 9, 2020, we issued $2.25 billion of aggregate principal amount of unsecured Senior Notes. The net proceeds from these offerings were used primarily for the redemption in August 2020 of the $3.0 billion outstanding principal amount of the 3.6% registered Senior Notes that were originally due in October 2020.

•On May 19, 2020, the Board approved temporary base salary adjustments or unpaid leave for certain employees beginning July 1, 2020 through the remainder of fiscal 2020. In addition, we implemented cost containment measures across the Company, including restrictions on external hiring and salary increases through the end of our fiscal year.

•On April 6, 2020, we announced that we suspended purchases under our share repurchase program in response to the global economic uncertainty that resulted from the worldwide spread of COVID-19.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Management's Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

•During the first three quarters of fiscal 2020, we paid a quarterly dividend of $0.12 per share to our shareholders. On August 25, 2020 we declared a quarterly dividend of $0.12 per share, payable on or about October 7, 2020, to stockholders of record as of the close of business on September 9, 2020.

OVERVIEW

We are a global technology leader focused on developing intelligent solutions that allow customers to capture, analyze and act upon data seamlessly from edge to cloud. We enable customers to accelerate business outcomes by driving new business models, creating new customer and employee experiences, and increasing operational efficiency today and into the future. Our legacy dates back to a partnership founded in 1939 by William R. Hewlett and David Packard, and we strive every day to uphold and enhance that legacy through our dedication to providing innovative technological solutions to our customers.

As described in Item 1, Note 1, "Overview and Summary of Significant Accounting Policies", effective at the beginning of the first quarter of fiscal 2020, we implemented certain organizational changes to align our segment financial reporting more closely with our current business structure. As a result, Hewlett Packard Enterprise's operations are now organized into seven segments for financial reporting purposes: Compute, High Performance Compute & Mission-Critical Systems ("HPC & MCS"), Storage, Advisory and Professional Services ("A & PS"), Intelligent Edge, Financial Services ("FS"), and Corporate Investments. 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 our business operations, which include, but are not limited to, customer base and homogeneity of products and technology. The segments are based on this organizational structure and information reviewed by Hewlett Packard Enterprise's management to evaluate segment results.

The following provides an overview of our key financial metrics by segment for the three months ended July 31, 2020, as compared to the prior-year period:


	HPE Consolidated			Compute			HPC & MCS			Storage			A & PS			Intelligent Edge			Financial Services			Corporate Investments
	Dollars in millions, except for per share amounts
Net revenue⁽¹⁾	$	6,816		$	3,389		$	649		$	1,128		$	226		$	684		$	811		$	119
Year-over-year change %	(5.6)		%	(0.3)		%	2.5		%	(10.1)		%	(6.6)		%	(12.4)		%	(8.7)		%	(8.5)		%
Earnings (loss) from operations⁽²⁾	$	12		$	288		$	36		$	145		$	(4)		$	59		$	65		$	(27)
Earnings (loss) from operations as a % of net revenue	0.2		%	8.5		%	5.5		%	12.9		%	(1.8)		%	8.6		%	8.0		%	(22.7)		%
Year-over-year change percentage points	1.3 pts			(4.4) pts			(2.6) pts			(3.6) pts			1.9 pts			1.8 pts			(0.7) pts			(3.5) pts
Net earnings	$	9
Diluted net earnings per share	$	0.01

Supplemental Non-GAAP information:
Non-GAAP earnings from operations	$	484
Non-GAAP earnings from operations as a % of net revenue	7.1		%
Non-GAAP net earnings	$	419
Non-GAAP diluted net earnings per share	$	0.32

(1)HPE consolidated net revenue excludes intersegment net revenue.

(2)Segment earnings from operations exclude certain unallocated corporate costs and eliminations, stock-based compensation expense related to corporate and certain global functions, amortization of initial direct costs, amortization of intangible assets, transformation costs, disaster charges and acquisition, disposition and other related charges.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Management's Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

~~We organize our business into four segments for financial reporting purposes: Hybrid IT, Intelligent Edge, Financial Services ("FS") and Corporate Investments.~~

The following provides an overview of our key financial metrics by segment for the ~~three~~nine months ended July 31, ~~2019,~~2020, as compared to the prior-year period:


	HPE Consolidated			Compute			HPC & MCS			Storage			A & PS			Intelligent Edge			Financial Services			Corporate Investments
	Dollars in millions, except for per share amounts
Net revenue⁽¹⁾	$	19,774		$	9,040		$	2,061		$	3,464		$	706		$	2,069		$	2,503		$	364
Year-over-year change %	(9.8)		%	(12.2)		%	(3.4)		%	(11.8)		%	(5.0)		%	(4.7)		%	(7.4)		%	(2.4)		%
(Loss) earnings from operations⁽²⁾	$	(474)		$	699		$	118		$	516		$	(4)		$	202		$	213		$	(82)
(Loss) earnings from operations as a % of net revenue	(2.4)		%	7.7		%	5.7		%	14.9		%	(0.6)		%	9.8		%	8.5		%	(22.5)		%
Year-over-year change percentage points	(6.1) pts			(2.9) pts			(5.6) pts			(3.0) pts			6.8 pts			4.6 pts			— pts			(0.5) pts
Net loss	$	(479)
Diluted net loss per share	$	(0.37)

Supplemental Non-GAAP information:
Non-GAAP earnings from operations	$	1,451
Non-GAAP earnings from operations as a % of net revenue	7.3		%
Non-GAAP net earnings	$	1,279
Non-GAAP diluted net earnings per share	$	0.98

HPE
Consolidated
Hybrid IT Intelligent Edge Financial Services
Corporate
Investments
Dollars in millions, except for per share amounts
Net revenue⁽¹⁾
$ 7,217
$ 5,549
$ 762
$ 888
$ 130
Year-over-year change % (7.0 )% (9.2 )% (2.9 )% (4.3 )% (3.0 )%
(Loss) earnings from continuing operations⁽²⁾
$ (76 ) $ 704
$ 37
$ 77
$ (25 )
(Loss) earnings from continuing operations as a % of net revenue (1.1 )% 12.7 % 4.9 % 8.7 % (19.2 )%
Year-over-year change percentage points (7.4 )pts 2.5 pts (8.0 )pts 0.9 pts (0.5 )pts
Net loss from continuing operations $ (27 )

Net (loss) earnings per share

Basic net EPS from continuing operations $ (0.02 )

Diluted net EPS from continuing operations $ (0.02 )


~~(1)~~	~~HPE consolidated net revenue excludes intersegment net revenue and other.~~

~~(2)~~

Segment earnings from operations exclude certain unallocated corporate costs and eliminations, stock-based compensation expense related to corporate and certain global functions, acquisition, disposition and other related charges, transformation costs, amortization of intangible assets, restructuring

(1)HPE consolidated net revenue excludes intersegment net revenue.

(2)Segment earnings from operations exclude certain unallocated corporate costs and eliminations, stock-based compensation expense related to corporate and certain global functions, amortization of initial direct costs, amortization of intangible assets, impairment of goodwill, transformation costs, disaster (recovery) charges and ~~separation costs.~~

~~Three months ended July 31, 2019 compared with three months ended July 31, 2018~~

~~Net revenue decreased by $547 million~~, or 7.0% (decreased 5.4% on a constant currency basis), for the three months ended July 31, 2019, as compared to the prior-year period in part due to deliberate actions we are taking to minimize revenue from less profitable product categories and certain markets, from challenges related to market weakness and go-to-market execution issues. The leading contributor to the net revenue decrease was lower revenue of $560 million in Hybrid IT due primarily to a combination of factors which include: a decline in Tier-1 server sales and lower revenue from China, both of which was primarily experienced within Compute; demand weakness resulting in lower revenue from Industry Standard Server ("ISS") core products within Compute and lower HPE Pointnext services revenue; a decline in revenue from Storage products resulting from market weakness; and unfavorable currency fluctuations. Additionally, we experienced a revenue decline in Intelligent Edge due to lower sales of campus switching products within HPE Aruba Products and a revenue decline in Financial Services due to lower rental revenue and unfavorable currency fluctuations. The overall net revenue decline was partially offset by revenue growth in HPE Aruba Services within Intelligent Edge and in HPE Nimble Storage within Hybrid IT.

We continue to execute on our HPE Next initiative, which includes streamlining our offerings and business processes, and shifting investments in innovation towards high growth and higher margin solutions and services, which provided a favorable impact to the performance of certain business units in the current period. Gross margin was 33.9% ($2.4 billion) and 30.5% ($2.4 billion) for the three months ended July 31, 2019 and 2018, respectively. The 3.4 percentage point increase in gross margin was due primarily to Hybrid IT as a result of the year-over-year decrease in commodity costs, cost management initiatives and a lower mix of revenue from Tier-1 server sales along with a higher mix of revenue from higher-margin products. Operating margin decreased 7.4 percentage points in the three months ended July 31, 2019, as compared to the prior-year period, due primarily to higher acquisition, disposition and other related charges as a result of a one-time charge associated with an arbitration settlement, higher transformation costs related to the HPE Next initiative and higher research and development expense and selling, general and administrative expense as a percentage of net revenue, partially offset by the gross margin increase.charges.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Management's Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

The following table provides ~~an overview~~reconciliation of ~~our key financial metrics by segment~~GAAP to non-GAAP measures for the three and nine months ended July 31, 2020.


	Three Months Ended July 31, 2020			Diluted net earnings per share		Nine Months Ended July 31, 2020			Diluted net earnings per share
	In millions					In millions
GAAP net earnings (loss)	$	9		$	0.01	$	(479)		$	(0.37)
Non-GAAP adjustments:
Amortization of initial direct costs	3			—		9			0.01
Amortization of intangible assets	95			0.07		299			0.23
Impairment of goodwill	—			—		865			0.67
Transformation costs	357			0.27		646			0.49

Disaster charges	2			—		24			0.02
Acquisition, disposition and other related charges	15			0.01		82			0.06
Tax indemnification adjustments	30			0.03		86			0.07
Non-service net periodic benefit credit	(28)			(0.02)		(101)			(0.08)
Loss from equity interests⁽¹⁾	36			0.03		110			0.09
Adjustments for taxes	(100)			(0.08)		(262)			(0.21)
Non-GAAP net earnings	$	419		$	0.32	$	1,279		$	0.98
GAAP earnings (loss) from operations	$	12				$	(474)
Non-GAAP adjustments:
Amortization of initial direct costs	3					9
Amortization of intangible assets	95					299
Impairment of goodwill	—					865
Transformation costs	357					646

Disaster charges	2					24
Acquisition, disposition and other related charges	15					82
Non-GAAP earnings from operations	$	484				$	1,451

GAAP operating profit margin	0.2		%			(2.4)		%
Non-GAAP adjustments	6.9		%			9.7		%
Non-GAAP operating profit margin	7.1		%			7.3		%

GAAP Net revenue	$	6,816				$	19,774
GAAP Cost of Sales	4,749					13,511
GAAP Gross profit	$	2,067				$	6,263
Non-GAAP adjustments
Amortization of initial direct costs	$	3				$	9
Acquisition, disposition and other related charges⁽²⁾	$	—				$	27
Non-GAAP Gross Profit	$	2,070				$	6,299

GAAP gross profit margin	30.3		%			31.7		%
Non-GAAP adjustments	0.1		%			0.2		%
Non-GAAP gross profit margin	30.4		%			31.9		%

(1) Represents the amortization of basis difference adjustments related to the H3C divestiture.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Management's Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

(2) For the nine months ended July 31, 2020, amounts represent Acquisition, disposition and other related charges related to a non-cash inventory fair value adjustment in connection with the acquisition of Cray, Inc., which was included in Cost of Sales.

Non-GAAP financial measures

The non-GAAP financial measures presented are net revenue on a constant currency basis, non-GAAP gross profit, non-GAAP gross profit margin, non-GAAP operating profit margin (non-GAAP earnings from operations as a percentage of net revenue), non-GAAP net earnings and non-GAAP diluted net earnings per share. These non-GAAP financial measures are used by management for purposes of evaluating our historical and prospective financial performance, as well as evaluating our performance relative to our competitors. These non-GAAP financial measures are not computed in accordance with, or as an alternative to, generally accepted accounting principles in the United States. The GAAP measure most directly comparable to net revenue on a constant currency basis is net revenue. The GAAP measure most directly comparable to non-GAAP gross profit is gross profit. The GAAP measure most directly comparable to non-GAAP gross profit margin is gross profit margin. The GAAP measure most directly comparable to non-GAAP earnings from operations is earnings from operations. The GAAP measure most directly comparable to non-GAAP operating profit margin (non-GAAP earnings from operations as a percentage of net revenue) is operating profit margin (Earnings from operations as a percentage of net revenue). The GAAP measure most directly comparable to non-GAAP net earnings is net earnings. The GAAP measure most directly comparable to non-GAAP diluted net earnings per share is diluted net earnings per share.

Net revenue on a constant currency basis assumes no change in the foreign exchange rate from the prior-year period. Non-GAAP gross profit and non-GAAP gross profit margin is defined to exclude charges related to the amortization of initial direct costs and certain acquisition, disposition and other related charges. Non-GAAP earnings from operations and non-GAAP operating profit margin (non-GAAP earnings from operations as a percentage of net revenue) consist of earnings from operations excluding any charges related to the amortization of initial direct costs, amortization of intangible assets, impairment of goodwill, transformation costs, disaster charges (recovery) and acquisition, disposition and other related charges. Non-GAAP net earnings and Non-GAAP diluted net earnings per share consist of net earnings or diluted net earnings per share excluding those same charges, as well as an adjustment to tax indemnification adjustments, non-service net periodic benefit credit, loss from equity interests, certain income tax valuation allowances and separation taxes, the impact of U.S. tax reform, structural rate adjustment and excess tax benefit from stock-based compensation. In addition, non-GAAP net earnings and non-GAAP diluted net earnings per share are adjusted by the amount of additional taxes or tax benefits associated with each non-GAAP item. We believe that excluding the items mentioned above from these non-GAAP financial measures allows management to better understand our consolidated financial performance in relation to the operating results of our segments. Management does not believe that the excluded items are reflective of ongoing operating results, and excluding them facilitates a more meaningful evaluation of our current operating performance in comparison to our peers. The excluded items can be inconsistent in amount and frequency and/or not reflective of the operational performance of the business.

These non-GAAP financial measures have limitations as analytical tools, and these measures should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. Some of the limitations in relying on these non-GAAP financial measures are that they can have a material impact on the equivalent GAAP earnings measures, they may be calculated differently by other companies and may not reflect the full economic effect of the loss in value of certain assets.

We compensate for these limitations on the use of non-GAAP financial measures by relying primarily on our GAAP results and using non-GAAP financial measures only as a supplement. We also provide a reconciliation of each non-GAAP financial measure to its most directly comparable GAAP measure. We believe that providing net revenue on a constant currency basis, non-GAAP gross profit, non-GAAP gross profit margin, non-GAAP earnings from operations, non-GAAP operating profit margin, non-GAAP net earnings and non-GAAP diluted net earnings per share in addition to the related GAAP measures provides greater transparency to the information used in our financial and operational decision making and allows the reader of our Condensed Consolidated Financial Statements to see our financial results “through the eyes” of management.

Three months ended July 31, 2020 compared with three months ended July 31, 2019

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Management's Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

The three months ended July 31, 2020 represented our second full quarter of operating under COVID-19. Although we significantly improved our operational and supply chain execution in the third quarter of fiscal 2020, our financial results continued to be impacted by the global pandemic on the demand side of our business operations. Manufacturing partners throughout the supply chain are operating at nominal levels of capacity and resource. To mitigate the risk caused by the pandemic to our manufacturing operations, we worked with our suppliers and manufacturing partners to maintain the assurance of supply and to fulfill orders. As a result, backlog challenges caused by both material shortages and the COVID-19 pandemic continue to show improvement with significant reduction in backlog now being sustained due to our focus on order routing, capacity, resource, and inventory management measures put in place and monitored on a continual basis. The extent to which COVID-19 related events continue to affect our operational performance will depend primarily on the duration of lockdown actions taking place across the globe and access restrictions at customer sites, along with the time it takes for the demand environment to rebound.

Net revenue decreased by $0.4 billion, or 5.6% (decreased 4.1% on a constant currency basis), for the three months ended July 31, 2020, as compared to the prior-year ~~period:~~period, as many of our segments experienced a net revenue decline. The net revenue decline was primarily driven by decreases in Storage, Intelligent Edge and Financial Services partially offset by a net revenue increase in HPC & MCS. The net revenue decline in Storage was due to COVID-19 related events including a weak and uncertain global demand environment and lower revenue from the expiration of a one-time legacy contract. Net revenue declined in Intelligent Edge due to declines in switching and WLAN products due to the weak and uncertain global demand environment resulting from COVID-19 and competitive pricing pressures. Net revenue declined in Financial Services due primarily to a decrease in rental revenue due to lower average operating lease assets and a decline in end-of-lease buyout activity. COVID-19 related constraints, including weak demand resulted in lower net revenue in A & PS.

HPE Consolidated Hybrid IT Intelligent Edge Financial Services Corporate
Investments
Dollars in millions, except for per share amounts
Net revenue⁽¹⁾
$ 21,920
$ 17,155
$ 2,114
$ 2,703
$ 373
Year-over-year change % (4.3 )% (5.5 )% (1.5 )% (1.1 )% (7.7 )%
Earnings (loss) from operations⁽²⁾
$ 814
$ 2,024
$ 66
$ 231
$ (82 )
Earnings (loss) from operations as a % of net revenue 3.7 % 11.8 % 3.1 % 8.5 % (22.0 )%
Year-over-year change percentage points (1.0 )pts 2.0pts
(5.8)pts
0.6pts
(2.4)pts
Net earnings from continuing operations $ 569

Net earnings per share
Basic EPS from continuing operations $ 0.42

Diluted EPS from continuing operations $ 0.41

In the first half of fiscal 2020, the Compute and HPC & MCS segments experienced a variety of challenges resulting from COVID-19 related lockdown restrictions including supply chain constraints, delays meeting customer acceptance milestones, performing on-site installations and processing order fulfillment. These challenges continued but moderated to some extent in the third quarter of fiscal 2020 given the mitigation actions mentioned previously and as lockdown actions eased somewhat in select global regions. As such, net revenue in Compute was largely unchanged from the prior-year period as the impact of unfavorable currency fluctuations and competitive pricing pressures were mostly offset by improved supply chain execution and net revenue increased in HPC & MCS due to incremental revenue from the Cray acquisition and the events highlighted previously.

Our gross profit margin was 30.3% ($2.1 billion) and 33.9% ($2.4 billion) for the three months ended July 31, 2020 and 2019, respectively, representing a decline of 3.6 percentage points. The decline in the gross profit margin was due to multiple factors led by higher commodity costs, competitive pricing pressures, higher supply chain costs as a result of COVID-19, and the net revenue decline which resulted in higher fixed overhead costs as a percentage of net revenue, partially offset by our continued shift to higher-margin products and services. Our operating profit margin was 0.2% and (1.1)% for the three months ended July 31, 2020 and 2019, respectively, representing an increase of 1.3 percentage points. The increase in our operating profit margin was due to a decrease in operating expenses as a percentage of net revenue partially offset by a decrease in gross profit margin. The decrease in operating expenses was due to the prior-year period containing higher acquisition, disposition and other related charges resulting from an arbitration settlement, along with a current year period decline in travel expenses due to cost containment measures we put in place in response to COVID-19, lower variable compensation expense and lower spend on outsourced services. These decreases were partially offset by increased costs due to our expansion of the transformation programs.


~~(1)~~	~~HPE consolidated net revenue excludes intersegment net revenue and other.~~


~~(2)~~	Segment earnings from operations exclude certain unallocated corporate costs and eliminations, stock-based compensation expense related to corporate and certain global functions, acquisition, disposition and other related charges, transformation costs, amortization of intangible assets, restructuring charges and disaster charges.

Nine months ended July 31, ~~2019~~2020 compared with nine months ended July 31, ~~2018~~2019

Net revenue decreased by ~~$986 million,~~$2.1 billion, or ~~4.3%~~9.8% (decreased ~~3.0%~~8.5% on a constant currency basis), for the nine months ended July 31, ~~2019,~~2020, as compared to the prior-year period.

During the first nine months of fiscal 2020, we experienced a net revenue decline due to the impact of COVID-19 on our business operations and the global demand environment along with commodity and manufacturing capacity constraints in North America. The ~~leading contributor~~impact of COVID-19 and resulting lockdown restrictions introduced across the globe created challenges to our supply chain process with processing order fulfillment, brought delays with meeting customer acceptance milestones and limited our ability to perform and complete on-site installations. Manufacturing capacity constraints were in part due to the consolidation of certain locations in North America and also in part due to COVID-19 restrictions, both of which resulted in increased order backlog particularly during the first six months of fiscal 2020. Although we significantly improved operational and supply chain execution in the third quarter of fiscal 2020, our financial results continued to be impacted by a weak and uncertain global demand environment resulting from COVID-19 related restrictions.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Management's Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

From a segment perspective, the net revenue decrease for the first nine months ended July 31, 2020, as compared to the prior year period was primarily driven by declines in Compute, Storage, Financial Services and Intelligent Edge. The net revenue decline in Compute was pronounced as we experienced a combination of factors including the impact of COVID-19 and the resulting weak and uncertain global demand environment, competitive pricing pressures and commodity and manufacturing capacity constraints in North America. Storage net revenue was also impacted by COVID-19 and the resulting weak and uncertain global demand environment, commodity and manufacturing capacity constraints in North America and lower revenue from the expiration of a one-time legacy contract. Financial Services net revenue was impacted due to a decrease in rental revenue due to lower average operating lease assets and unfavorable foreign currency fluctuations. The decline in Intelligent Edge net revenue was primarily due to declines in switching and WLAN products due to the weak and uncertain global demand environment resulting from COVID-19. HPC & MCS experienced a net revenue decline as a result of COVID-19 related challenges, particularly with performing on-site installations and meeting customer acceptance milestones given lockdown constraints taking place across the globe, partially offset by the addition of revenue from the acquisition of Cray Inc. (“Cray”). COVID-19 related constraints also contributed to the net revenue ~~decrease was lower revenue of $1.0 billion in Hybrid IT due to a~~ decline in Tier-1 server sales and decreased revenue from China which was primarily experienced within Compute, lower HPE Pointnext services revenue due to demand weakness and unfavorable currency fluctuations. Additionally, we experienced revenue declines in Intelligent Edge due to lower sales of switching products within HPE Aruba Products and in Financial Services due to unfavorable currency fluctuations and lower rental revenue. The overall net revenue decline was partially offset by growth in HPE Aruba Services within Intelligent Edge and growth in Storage within Hybrid IT driven by HPE Nimble Storage.the A & PS segment.

Gross profit margin was 31.7% ($6.3 billion) and 32.4% ($7.1 ~~billion) and 29.7% ($6.8~~ billion) for the nine months ended July 31, ~~2019~~2020 and ~~2018,~~2019, respectively. The ~~2.7~~0.7 percentage point ~~increase in~~decrease to the gross profit margin was ~~due~~ primarily driven by higher supply chain costs resulting from the impact of COVID-19, competitive pricing pressures, and the scale of net revenue decline, partially offset by our overall shift to ~~Hybrid IT as a result of the year-over-year decrease in commodity costs, cost management initiatives,~~higher-margin products and ~~a lower mix of revenue from Tier-1 server sales~~services along with ~~a higher mix of revenue from higher-margin products. Operating~~lower variable compensation expense. Our operating profit margin ~~decreased 1.0 percentage points in~~was (2.4)% and 3.7% for the nine months ended July 31, 2020 and 2019, respectively, representing a decrease of 6.1 percentage points. The decrease was due to an increase in operating expenses as ~~compared~~a percentage of net revenue coupled with a decrease in gross profit margin. The increase in operating expenses was due to the goodwill impairment charge impacting our HPC & MCS segment in the second quarter of fiscal 2020, in part due to market conditions and business trends caused by the impact of COVID-19 and higher transformation costs partially offset by the prior-year period ~~due primarily to~~containing higher acquisition, disposition and other related charges ~~as a result of a one-time charge associated with~~resulting from an arbitration ~~settlement and higher research and development expense as a percentage of net revenue, partially offset by the gross margin increase and lower transformation costs.~~settlement.

As of July 31, ~~2019,~~2020, cash, cash equivalents and restricted cash ~~and long-term investments~~ were ~~$4.1~~$8.9 billion, representing ~~a decrease~~an increase of approximately ~~$1.0~~$4.8 billion from the October 31, ~~2018~~2019 balance of ~~$5.1~~$4.1 billion. The ~~decrease~~increase was due primarily to the following: ~~share repurchases~~proceeds from debt, net of repayments and ~~cash dividend payments~~issuance costs of ~~$2.4~~$5.4 billion and net cash provided by operating activities of $1.5 billion partially offset by investments in property, plant and equipment, net of sales proceeds, of ~~$1.7 billion, partially offset by cash provided by operating activities of $2.6~~$1.2 billion, and ~~net financial collateral received~~cash dividend payments and share repurchases of ~~$0.4~~$0.8 billion.

In August 2020, we redeemed $3.0 billion of outstanding principal amount of the 3.6% registered Notes that were originally due in October 2020.

Trends and Uncertainties

We are in the process of addressing many challenges facing our business, a discussion of which is available in our Annual Report on Form 10-K for the fiscal year ended October 31, ~~2018.~~2019.

For a further discussion of trends, uncertainties and other factors that could impact our operating results, see the section entitled "Risk Factors" in Item ~~1A.~~1A of Part II.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Management's Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Management's Discussion and Analysis of Financial Condition and Results of Operations is based on our Condensed Consolidated Financial Statements, which have been prepared in accordance with United States ("U.S.") Generally Accepted Accounting Principles ("GAAP"). The preparation of these financial statements requires management to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, net revenues and expenses, and disclosure of contingent liabilities. Estimates are assessed each period and updated to reflect current information, such as the economic considerations related to the impact that COVID-19 could have on our significant accounting estimates. Significant estimates that are based on a forecast include inventory reserves, provision for taxes, valuation allowance for deferred taxes, and impairment assessment of goodwill, intangible assets and other long lived assets. The Company believes that these estimates, judgements and assumptions are reasonable under the circumstances, and are subject to significant uncertainties, some of which are beyond the Company’s control. Should any of these estimates change, it could adversely affect Company’s results of operations. Additionally, as the extent and duration of the impacts from COVID-19 remain unclear, the Company’s estimates, judgements and assumptions may evolve as conditions change. Management believes that there have been no significant changes during the nine months ended July 31, ~~2019,~~2020, with the exception of certain accounting policies that were updated resulting from our adoption of the new ~~revenue recognition~~leasing standard (See Note 1 in Item 1, "Overview and Summary of Significant Accounting Policies"), to the items that we disclosed as our critical accounting policies and estimates in Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended October 31, ~~2018.~~2019.

ACCOUNTING PRONOUNCEMENTS

For a summary of recent accounting pronouncements applicable to our Condensed Consolidated Financial Statements, see Note 1 in Item 1, "Overview and Summary of Significant Accounting Policies".

RESULTS OF OPERATIONS

Revenue from our international operations has historically represented, and we expect will continue to represent, a majority of our overall net revenue. As a result, our revenue growth has been impacted, and we expect will continue to be impacted, by fluctuations in foreign currency exchange rates. In order to provide a framework for assessing performance excluding the impact of foreign currency fluctuations, we present the year-over-year percentage change in revenue on a constant currency basis, which assumes no change in foreign currency exchange rates from the prior-year period and doesn't adjust for any repricing or demand impacts from changes in foreign currency exchange rates. This change in revenue on a constant currency basis is calculated as the quotient of (a) current year revenue converted to U.S. dollars using the prior-year period's foreign currency exchange rates divided by (b) the prior-year period revenue. This information is provided so that revenue can be viewed without the effect of fluctuations in foreign currency exchange rates, which is consistent with how management evaluates our revenue results and trends. This constant currency disclosure is provided in addition to, and not as a substitute for, the year-over-year percentage change in revenue on a GAAP basis. Other companies may calculate and define similarly labeled items differently, which may limit the usefulness of this measure for comparative purposes.

~~HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES~~

~~Management's Discussion and Analysis of~~

~~Financial Condition and Results of Operations (Continued)~~

~~Results of operations in dollars and as a percentage of net revenue were as follows:~~

Three months ended July 31, Nine months ended July 31,
2019 2018 2019 2018
Dollars % of
Revenue Dollars % of
Revenue Dollars % of
Revenue Dollars % of
Revenue
Dollars in millions
Net revenue $ 7,217
100.0 % $ 7,764
100.0 % $ 21,920
100.0 % $ 22,906
100.0 %
Cost of sales 4,768
66.1
5,399
69.5
14,820
67.6
16,114
70.3
Gross profit 2,449
33.9
2,365
30.5
7,100
32.4
6,792
29.7
Research and development 481
6.7
435
5.6
1,404
6.4
1,227
5.4
Selling, general and administrative 1,253
17.3
1,221
15.8
3,678
16.8
3,684
16.1
Amortization of intangible assets 58
0.9
72
0.9
199
0.9
222
1.0
Restructuring charges —
—
(1 ) —
—
—
14
0.1
Transformation costs 170
2.4
126
1.6
302
1.4
491
2.1
Disaster charges —
—
—
—
(7 ) —
—
—
Acquisition, disposition and other related charges 563
7.7
24
0.3
710
3.2
70
0.3
Separation costs —
—
(2 ) —
—
—
—
—
(Loss) earnings from continuing operations (76 ) (1.1 ) 490
6.3
814
3.7
1,084
4.7
Interest and other, net (70 ) (1.0 ) (64 ) (0.7 ) (139 ) (0.6 ) (163 ) (0.6 )
Tax indemnification adjustments (134 ) (1.8 ) 2
—
89
0.4
(1,342 ) (5.9 )
Non-service net periodic benefit credit 12
0.2
26
0.3
45
0.2
90
0.4
Earnings from equity interests 3
—
11
0.1
21
0.1
23
0.1
(Loss) earnings from continuing operations before taxes (265 ) (3.7 ) 465
6.0
830
3.8
(308 ) (1.3 )
Benefit (provision) for taxes 238
3.3
(13 ) (0.2 ) (261 ) (1.2 ) 3,092
13.5
Net (loss) earnings from continuing operations (27 ) (0.4 ) 452
5.8
569
2.6
2,784
12.2
Net loss from discontinued operations —
—
(1 ) —
—
—
(119 ) (0.6 )
Net (loss) earnings $ (27 ) (0.4 )% $ 451
5.8 % $ 569
2.6 % $ 2,665
11.6 %

~~Stock-based compensation expense is included within costs and expenses presented in the table above as follows:~~

Three months ended July 31, Nine months ended July 31,
2019 2018 2019 2018
In millions
Cost of sales $ 7
$ 7
$ 30
$ 34
Research and development 15
14
55
60
Selling, general and administrative 36
35
122
148
Transformation costs —
—
2
3
Acquisition, disposition and other related charges —
1
—
10
Separation costs —
—
—
10
Stock-based compensation expense from continuing operations $ 58
$ 57
$ 209
$ 265

~~Net Revenue~~

For the three months ended July 31, 2019, as compared to the prior-year period, total net revenue decreased by $547 million, or 7.0% (decreased 5.4% on a constant currency basis). U.S. net revenue decreased by $201 million, or 7.6%, to $2.4 billion, and

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Management's Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

Results of operations in dollars and as a percentage of net revenue ~~from outside of~~were as follows:


	Three Months Ended July 31,														Nine Months Ended July 31,
	2020						2019						2020				2019
	Dollars		% of Revenue		Dollars		% of Revenue		Dollars		% of Revenue		Dollars		% of Revenue
	Dollars in millions
Net revenue	$	6,816	100.0	%	$	7,217	100.0	%	$	19,774	100.0	%	$	21,920	100.0	%
Cost of sales	4,749		69.7		4,768		66.1	%	13,511		68.3	%	14,820		67.6	%
Gross profit	2,067		30.3		2,449		33.9	%	6,263		31.7	%	7,100		32.4	%
Research and development	455		6.7		481		6.7	%	1,390		7.0	%	1,404		6.4	%
Selling, general and administrative	1,131		16.6		1,253		17.3	%	3,458		17.6	%	3,678		16.8	%
Amortization of intangible assets	95		1.4		58		0.9	%	299		1.4	%	199		0.9	%
Impairment of goodwill	—		—		—		—	%	865		4.4	%	—		—	%
Transformation costs	357		5.2		170		2.4	%	646		3.3	%	302		1.4	%
Disaster charges (recovery)	2		—		—		—	%	24		0.1	%	(7)		—	%
Acquisition, disposition and other related charges	15		0.2		563		7.7	%	55		0.3	%	710		3.2	%
Earnings (loss) from operations	12		0.2		(76)		(1.1)	%	(474)		(2.4)	%	814		3.7
Interest and other, net	(71)		(1.0)		(70)		(1.0)	%	(158)		(0.8)	%	(139)		(0.6)
Tax indemnification adjustments	(30)		(0.5)		(134)		(1.8)	%	(86)		(0.5)	%	89		0.4
Non-service net periodic benefit credit	28		0.4		12		0.2	%	101		0.5	%	45		0.2
Earnings from equity interests	27		0.4		3		—	%	50		0.3	%	21		0.1
(Loss) earnings before taxes	(34)		(0.5)		(265)		(3.7)	%	(567)		(2.9)	%	830		3.8
Benefit (provision) for taxes	43		0.6		238		3.3	%	88		0.5	%	(261)		(1.2)
Net earnings (loss)	$	9	0.1	%	$	(27)	(0.4)	%	$	(479)	(2.4)	%	$	569	2.6

Stock-based compensation expense is included within costs and expenses presented in the ~~U.S. decreased by $346 million, or 6.7%, to $4.8 billion.~~ table above as follows:


	Three Months Ended July 31,						Nine Months Ended July 31,
	2020		2019		2020		2019
	In millions
Cost of sales	$	8	$	7	$	30	$	30
Research and development	16		15		62		55
Selling, general and administrative	31		36		123		122
Transformation costs	—		—		—		2
Acquisition, disposition and other related charges	—		—		1		—
Total	$	55	$	58	$	216	$	209

Net Revenue

For the ~~nine~~three months ended July 31, ~~2019,~~2020, as compared to the prior-year period, total net revenue ~~decreased~~decreased by ~~$986~~$401 million, or ~~4.3%~~5.6% (decreased ~~3.0% on~~4.1% on a constant currency basis). U.S. net revenue decreased by ~~$329~~$73 million, or ~~4.4%~~3.0%, to $2.4 billion, and net revenue from outside of the U.S. decreased by $328 million, or 6.9%, to ~~$7.1~~$4.4 billion. For the nine months ended July 31, 2020, as compared to the prior-year period, total net revenue decreased by $2.1 billion, or 9.8% (decreased 8.5% on a constant currency basis). U.S. net revenue decreased by $534 million, or 7.5%, to $6.6 billion, and net revenue from outside of the U.S. decreased by ~~$657 million,~~$1.6 billion, or ~~4.3%~~10.9%, to ~~$14.8 billion.~~$13.2 billion.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Management's Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

The components of the weighted net revenue change by segment were as follows:


	Three Months Ended July 31, 2020	Nine Months Ended July 31, 2020
	Percentage points
Compute	(0.2)	(5.7)
HPC & MCS	0.2	(0.3)
Storage	(1.8)	(2.1)
A & PS	(0.2)	(0.2)
Intelligent Edge	(1.3)	(0.5)
Financial Services	(1.1)	(0.9)
Corporate Investments	(0.1)	(0.1)
Total Segment	(4.5)	(9.8)
Elimination of Intersegment net revenue	(1.1)	—
Total HPE	(5.6)	(9.8)

Three months ended July 31, 2019 Nine months ended July 31, 2019
Percentage points
Hybrid IT (7.2 ) (4.4 )
Intelligent Edge (0.3 ) (0.1 )
Financial Services (0.5 ) (0.1 )
Corporate Investments/Other ⁽¹⁾
1.0
0.3
Total HPE (7.0 ) (4.3 )

~~(1) Other primarily relates to the elimination of intersegment net revenue.~~

Three Months Ended July 31, 2020 compared with three months ended July 31, 2019 ~~compared with the three months ended July 31, 2018~~

From a segment perspective, the primary factors contributing to the change in total net revenue are summarized as follows:

~~Hybrid IT~~•Compute net revenue declined due primarily to unfavorable foreign currency fluctuations and competitive pricing pressures;

•HPC & MCS net revenue increased due primarily to the addition of revenue resulting from the acquisition of Cray;

•Storage net revenue decreased due primarily to ~~a combination of factors including: lower Tier-1 server sales~~the weak and uncertain global demand environment resulting from COVID-19 related lockdown restrictions which include supply chain constraints, competitive pricing pressures, lower revenue from China as we continue to exit less profitable product categories and certain markets, which was primarily experienced within Compute, demand weakness resulting in lower revenue from ISS core products within Compute and lower HPE Pointnext services revenue,the expiration of a ~~decline in revenue from Storage products resulting from market weakness,~~one-time legacy contract and unfavorable currency fluctuations;

•A & PS net revenue decreased due primarily to the weak and uncertain global demand environment resulting from COVID-19 related lockdown restrictions, including continued service delivery delays along with unfavorable foreign currency fluctuations;

•Intelligent Edge net revenue decreased due primarily to ~~unfavorable currency fluctuations~~the weak and uncertain global demand environment resulting from COVID-19 related lockdown restrictions, lower ~~sales of campus~~revenue from WLAN and switching products, ~~within HPE Aruba Products driven by sales execution issues;~~competitive pricing pressures, lower software net revenue and unfavorable foreign currency fluctuations; and

FS•Financial Services net revenue decreased due primarily to ~~lower~~a decrease in rental revenue ~~from~~due to lower average operating ~~leases and~~lease assets, unfavorable currency ~~fluctuations.~~fluctuations, along with lower asset management revenue from lease buyouts and lease extensions.

Nine Months Ended July 31, 2020 compared with nine months ended July 31, 2019 ~~compared with the nine months ended July 31, 2018~~

From a segment perspective, the primary factors contributing to the change in total net revenue are summarized as follows:

~~Hybrid IT~~•Compute net revenue declined due to multiple factors including the weak and uncertain global demand environment resulting from COVID-19 related lock down restrictions, competitive pricing pressures, unfavorable foreign currency fluctuations, commodity and manufacturing capacity constraints in North America;

•HPC & MCS net revenue decreased due to ~~a decline in Tier-1 server sales~~challenges resulting from COVID-19 related lockdown restrictions including performing on-site product installations, meeting customer acceptance milestones, and ~~lower revenue from China which was primarily experienced within Compute, lower HPE Pointnext services revenue due to~~the weak and uncertain global demand ~~weakness and unfavorable currency fluctuations;~~environment;

~~Intelligent Edge net revenue decreased due primarily to lower sales of our switching products within HPE Aruba Products driven by sales execution issues; and~~

~~FS net revenue decreased due primarily to unfavorable currency fluctuations and lower rental revenue from lower average operating leases.~~

~~A more detailed discussion of segment revenue is included under "Segment Information" below.~~

~~Gross Margin~~

For the three and nine months ended July 31, 2019, as compared to the prior-year periods, total gross margin increased 3.4 and 2.7 percentage points, respectively. From a segment perspective, the primary factors impacting gross margin performance are summarized as follows:

Hybrid IT gross margin increased for the three and nine months ended July 31, 2019, as compared to the prior-year periods, due primarily to a combination of factors including the year-over-year decrease in commodity costs, cost management

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Management's Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

~~initiatives, and a lower mix of~~•Storage net revenue ~~from Tier-1 server sales coupled with a higher mix of revenue from higher-margin products;~~

~~Intelligent Edge gross margin~~ decreased ~~for the three months ended July 31, 2019, as compared to the prior-year period,~~ due primarily to ~~unfavorable rates~~the weak and uncertain global demand environment predominantly resulting from ~~competitive pressures on products. Intelligent Edge gross margin increased for~~COVID-19 related lockdown restrictions, commodity and North American manufacturing capacity constraints, and lower revenue from the ~~nine months ended July 31, 2019, as compared to the prior-year period,~~expiration of a one-time legacy contract;

•A & PS net revenue decreased due primarily to ~~favorable~~the weak and uncertain global demand environment resulting from COVID-19 related lockdown restrictions, including service delivery delays along with unfavorable foreign currency ~~fluctuations, a higher mix of~~fluctuations;

•Intelligent Edge net revenue ~~from higher-margin WLAN products and HPE Aruba Services, and cost management activities; and~~

~~FS gross margin increased for the three and nine months ended July 31, 2019, as compared to the prior-year periods~~decreased due primarily to ~~higher margins~~lower revenue from switching and WLAN products predominantly driven by the weak and uncertain global demand environment resulting from COVID-19 related lockdown restrictions, lower software net revenue, and unfavorable foreign currency fluctuations; and

•Financial Services net revenue decreased due primarily to a decrease in rental revenue due to lower average operating lease ~~extensions~~assets, unfavorable currency fluctuation, and lower lease ~~buyouts. Additionally, the nine month period had lower bad debt expense compared to the prior-year period.~~equipment buyout revenue.

A more detailed discussion of segment ~~gross margins and operating margins~~revenue is included under "Segment Information" below.

~~Operating Expenses~~Gross Profit

For the three months ended July 31, 2020, as compared to the prior-year period, total gross profit margin decreased 3.6 percentage points. The decline in gross profit margin was due to multiple factors led by higher commodity costs, competitive pricing pressures, increased supply chain costs resulting from COVID-19, and the net revenue decline which resulted in higher fixed overhead costs as a percentage of net revenue, partially offset by our continued shift to higher margin products and services.

For the nine months ended July 31, 2020, as compared to the prior-year period, total gross margin decreased 0.7 percentage points. The gross margin decrease was primarily due to increased supply chain costs resulting from the impact of COVID-19, competitive pricing pressures, and the scale of net revenue decline, partially offset by our overall shift to higher-margin products and services along with lower variable compensation expense.

Research and Development

Research and development ("R&D") expense ~~increased~~decreased by $26 million, or 5%, and by ~~$46~~$14 million, or ~~11% and by $177 million or 14%~~1%, for the three and nine months ended July 31, ~~2019,~~2020, respectively, as compared to the prior-year periods, due primarily to ~~increased investment in new product development in the Hybrid IT and Intelligent Edge segments, higher~~lower variable compensation ~~expenses,~~expense and ~~higher costs associated with recent business acquisitions,~~the impact of cost containment measures we put in place in response to COVID-19, partially offset by ~~favorable currency fluctuations.~~on-going expenses from business acquisitions.

Selling, General and Administrative

Selling, general and administrative expense increased by $32 million or 3% for the three months ended July 31, 2019, as compared to the prior-year period due primarily to higher field selling costs and higher variable compensation expenses, partially offset by favorable currency fluctuations.

~~For the nine months ended July 31, 2019, as compared to the prior-year period, selling,~~ general and administrative expense decreased by $6 million, due primarily to favorable currency fluctuations and lower marketing and administrative expenses as a result of the HPE Next initiative, partially offset by higher field selling costs, variable compensation expenses and higher costs associated with recent business acquisitions.

~~Amortization of Intangible Assets~~

~~Amortization expense decreased by $14~~$122 million, or ~~19%~~10%, and by ~~$23~~$220 million, or ~~10%~~6%, for the three and nine months ended July 31, ~~2019,~~2020, respectively, as compared to the prior-year periods, due primarily to lower variable compensation expense and the impact of cost containmentmeasures we put in place in response to COVID-19, favorable currency fluctuations, partially offset by on-going expenses from business acquisitions.

Amortization of Intangible Assets

Amortization of intangible assets increased by $37 million, or 64%, and by $100 million, or 50%, for the three and nine months ended July 31, 2020, respectively, as compared to the prior-year periods, due to an increase in the amortization of intangible assets from recent acquisitions and the write-off of certain intangible assets, partially offset by certain intangible assets associated with prior acquisitions reaching the end of their amortization ~~periods, partially offset by the addition~~period.

Impairment of ~~intangible assets from recent acquisitions.~~Goodwill

~~Transformation Costs~~

For the three months ended July 31, 2019, HPE Next transformation costs increased by $44 million or 35%, as compared to the prior-year period, due primarily to the benefit from gains on real estate sales in the prior-year period, impairment charges on real estate assets in the current period and higher IT costs, partially offset by lower restructuring charges and program management costs.

For the nine months ended July 31, 2019, HPE Next transformation costs decreased by $189 million or 38%, compared to the prior-year period, due primarily to lower restructuring charges, program management costs and IT costs, partially offset by the benefit from gains on real estate sales in the prior-year period and impairment charges on real estate assets in the current period.

~~Disaster Charges~~

~~Disaster charges~~Impairment of goodwill for the nine months ended July 31, ~~2019, represent~~2020, represents a partial goodwill impairment charge of $865 million recorded in the second quarter of fiscal 2020, as it was determined that the fair value of the HPC & MCS reporting unit was below the carrying value of its net ~~gain from settlements related to the damage sustained at our facilities in Houston, Texas, as a result of Hurricane Harvey.~~assets.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Management's Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

While the other reporting units were negatively impacted by COVID-19, their fair values continued to exceed the carrying value of their net assets and did not result in impairment. In order to evaluate the sensitivity of the estimated fair value of other reporting units for the quantitative goodwill impairment test, the Company applied a hypothetical 10% reduction to the estimated fair value of each of these other reporting units. Based on the results of this hypothetical 10% reduction to the estimated fair value, each of these other reporting units had an excess of fair value over carrying value of their net assets. However, should economic conditions deteriorate further or remain depressed for a prolonged period of time, estimates of future cash flows for each of our reporting units may be insufficient to support the carrying value and the goodwill assigned to them, requiring impairment charges, including additional impairment charges for the HPC & MCS reporting unit. Further impairment charges, if any, may be material to our results of operations and financial position. See Part II, Item 1A, Risk Factors for a discussion of the potential impacts of COVID-19 on the fair value of our assets.

We will continue to evaluate the recoverability of goodwill at the reporting unit level on an annual basis as of the beginning of its fourth fiscal quarter and whenever events or changes in circumstances indicate there may be a potential impairment.

Transformation Costs

Transformation programs are comprised of the cost optimization and prioritization plan we introduced in May 2020, and the HPE Next Initiative.

Transformation costs increased by $187 million, or 110%, for the three months ended July 31, 2020, as compared to the prior-year period, due primarily to the restructuring costs recorded in the third quarter of fiscal 2020 in connection with our cost optimization and prioritization plan.

Transformation costs increased by $344 million, or 114%, for the nine months ended July 31, 2020, as compared to the prior-year period, due primarily to the restructuring charges recorded in the third quarter of fiscal 2020 in connection with our cost optimization and prioritization plan and higher restructuring charges from our HPE Next Initiative, partially offset by higher gains from the sale of real estate.

See Note 3, "Transformation Programs", for discussion of the Transformation Costs.

Disaster charges (recovery)

Disaster charges for the three and nine months ended July 31, 2020, represent direct costs resulting from COVID-19 and are primarily related to HPE hosted, co-hosted, or sponsored events which had to be converted to a virtual format or in some cases cancelled.

For the nine months ended July 31, 2019, disaster recovery amounts represent insurance recoveries in relation to damage to our facilities in Houston, Texas due to Hurricane Harvey in fiscal 2017.

Acquisition, Disposition and Other Related Charges

Acquisition, disposition and other related charges ~~increased~~decreased by ~~$539~~$548 million, or 97%, and ~~$640~~by $655 million, or 92%, for the three and nine months ended July 31, ~~2019,~~2020, respectively, as compared towith the prior-year periods, due primarily to a charge related to a one-time arbitration settlement in the prior-year period, partially offset by ~~reduced~~recent business acquisition costs ~~for acquisition~~ related to retention bonuses and integration activities.

Interest and Other, Net

Interest and other, net expense increased by $6$1 million for the three months ended July 31, ~~2019,~~2020, as compared with the prior-year period, due primarily to higher net interest expense, partially offset by favorable currency fluctuations. Interest and other, net expense increased by $19 million for the nine months ended July 31, 2020, as compared with the prior-year period, due primarily to higher net interest expense and unfavorable currency fluctuations, partially offset by a ~~net~~ gain on the sale of certain assets in the ~~prior-year period, partially offset by lower net interest expense in the~~ current ~~period.~~year.

~~Interest~~

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Management's Discussion and ~~other, net expense decreased by $24 million for the nine months ended July 31, 2019, as compared to the prior-year period, due primarily to a net gain from the sale~~Analysis of ~~investments in the current period~~

Financial Condition and ~~a net loss from the sale~~Results of ~~investments in the prior-year period.~~Operations (Continued)

~~Non-service net periodic benefit credit~~

Non-service net periodic benefit credit for the three and nine months ended July 31, 2019, represent adjustments to the net periodic pension benefit cost resulting from the remeasurement of certain Hewlett Packard Enterprise defined benefit pension and post-retirement benefit plans due to factors such as interest cost, expected return on plan assets, amortization of prior plan amendments, amortized actuarial gains or losses and the impact of any plan settlements or curtailments.

Tax Indemnification Adjustments

We recorded tax indemnification expense of ~~$134~~$30 million and ~~tax indemnification income of $2~~$134 million for the three months ended July 31, 2020 and 2019, respectively, and ~~2018, respectively,~~tax indemnification expense of $86 million and tax indemnification income of $89 million ~~and tax indemnification expense of $1.3 billion~~ for the nine months ended July 31, 2020 and 2019, respectively. For the three and ~~2018, respectively.~~nine months ended July 31, 2020, the amount included tax audit activity at HP Inc. and DXC. The activity for the nine months ended July 31, 2020 also included changes in certain pre-Separation tax liabilities for which we share joint and several liability with HP Inc. and for which we are indemnified by HP Inc. For the three and nine months ended July 31, 2019, the amount was due primarily to the impacts of the effective settlement of the U.S. federal income tax audit of fiscal years 2013 through 2015 for HP Inc. The activity for the nine months ended July 31, 2019 also included the effects of U.S. tax reform on tax attributes related to fiscal periods prior to the Separation. ~~For~~

Non-service net periodic benefit

Non-service net periodic benefit credit increased by $16 million and $56 million for the three and nine months ended July 31, ~~2018,~~2020, respectively, as compared with the amounts resulted from changes in certain pre-Separation tax liabilities for which we share joint and several liability with HP Inc. and for which we are partially indemnified by HP Inc. under the Tax Matters Agreement.prior-year periods, due primarily to lower interest rates.

Earnings from Equity Interests

Earnings from equity interests primarily represents our 49% interest in H3C Technologies' ("H3C") earnings and the amortization of our interest in a basis difference. For the three and nine months ended July 31, ~~2019,~~2020, earnings from equity interests ~~decreased~~increased by $24 million and $29 million, respectively, as compared to the prior-year periods, ~~as a result of lower~~due to higher net income earned by H3C.

Provision for Taxes

Our effective tax rate was ~~89.8%~~126.5% and ~~2.8%~~89.8% for the three months ended July 31, ~~2019~~2020 and ~~2018,~~2019, respectively, and ~~31.4%~~15.5% and ~~1,003.9%~~31.4% for the nine months ended July 31, 2020, and 2019, respectively. The effective tax rates for the three and ~~2018, respectively. Our~~nine months ended July 31, 2020 were impacted by income tax benefits resulting from tax rate changes and differed from the statutory tax rate due to favorable tax rates associated with certain earnings from our operations in lower tax jurisdictions throughout the world. The effective tax rate for the nine months ended July 31, 2020 also included the effects of the non-deductible goodwill impairment. The effective tax rates for the three and nine months ended July 31, 2019 ~~and 2018~~ were significantly impacted by the Tax ~~Cuts and Jobs~~ Act ~~(the “Tax Act”)~~ and the settlement of certain pre-Separation tax liabilities of HP Inc.

On December 22, 2017, the Tax Act was enacted into law, which significantly changed existing U.S. tax law and included numerous provisions that affect our business, such as imposing a one-time Transition Tax on deemed repatriation of deferred foreign income, reducing the U.S. federal statutory Our effective tax rate ~~and adopting a modified territorial tax system. See Note 6, "Taxes~~is based on ~~Earnings", for a full description~~forecasted annual results which may fluctuate significantly through the remainder of fiscal 2020 due to the uncertain economic impact of ~~the Tax Act to~~COVID-19 on our ~~operations.~~operating results.

Segment Information

Effective ~~at the beginning of~~in the first quarter of fiscal ~~2019, the Company~~2020, we implemented certain organizational changes to align ~~its~~our segment financial reporting more closely with ~~its~~our current business structure. We replaced the Hybrid IT segment with four new financial reporting segments, Compute, High Performance Compute & Mission-Critical Systems, Storage and Advisory and Professional Services as follows:

•we created the Compute segment consisting of the general purpose server and workload optimized server portfolios that were previously a part of the Hybrid IT-Compute business unit and the related operational services business that was previously a part of the Hybrid IT-HPE Pointnext business unit;

• we created the HPC & MCS segment consisting of the high performance compute, mission-critical systems and edge compute offerings that were previously a part of the Hybrid IT-Compute business unit and the related operational services business that was previously a part of the Hybrid IT-HPE Pointnext business unit;

•we created the Storage segment consisting of the former Hybrid IT-Storage business unit and the related operational services business that was previously a part of the Hybrid IT-HPE Pointnext business unit and the hyperconverged infrastructure products that were previously a part of the Hybrid IT-Compute business unit;

•we created the A & PS segment consisting of the consultative-led services that were previously a part of the Hybrid IT-HPE Pointnext business unit; and

•we transferred the DC Networking operational services business that was previously a part of the Hybrid IT-HPE Pointnext business unit to the Intelligent Edge segment.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Management's Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

As a result of these realignments, our operations are now organized into seven segments for financial reporting purposes: Compute, HPC & MCS, Storage, A & PS, Intelligent Edge, FS, and Corporate Investments.

For additional information related to these realignments and for a description of the products and services for each segment, see Note 2, "Segment Information".

Compute


	Three months ended July 31,
	2020			2019			% Change
	Dollars in millions
Net revenue	$	3,389		$	3,400		(0.3)	%
Earnings from operations	$	288		$	439		(34.4)	%
Earnings from operations as a % of net revenue	8.5		%	12.9		%


	Nine months ended July 31,
	2020			2019			% Change
	Dollars in millions
Net revenue	$	9,040		$	10,293		(12.2)	%
Earnings from operations	$	699		$	1,086		(35.6)	%
Earnings from operations as a % of net revenue	7.7		%	10.6		%

Three months ended July 31, 2020 compared with three months ended July 31, 2019

Compute net revenue decreased by $11 million, or 0.3% (increased 1.1% on a constant currency basis), for the three months ended July 31, 2020 as compared to the prior-year period.

Net revenue in Compute decreased due primarily to unfavorable currency fluctuations and competitive pricing pressures, the effects of which were partially offset by improved supply chain performance. While Compute experienced an increase in unit shipments driven by improved supply chain execution, average unit selling prices declined due to competitive pricing pressures. Compute continues to be impacted by the weak and uncertain global demand environment resulting from COVID-19 related lockdown restrictions.

Compute earnings from operations as a percentage of net revenue decreased 4.4 percentage points for the three months ended July 31, 2020, as compared to the prior-year period, due to an increase in cost of products as a percentage of net revenue partially offset by a decrease in operating expenses as a percentage of net revenue. The increase in cost of products as a percentage of net revenue was due primarily to higher commodity costs, competitive pricing pressures, increased supply chain logistics costs resulting from COVID-19 and unfavorable currency fluctuations. The decrease in operating expense as a percentage of net revenue was due primarily to lower variable compensation expense and lower spending due to cost containment measures put in place in response to COVID-19. These declines were partially offset by higher field selling costs.

Nine months ended July 31, 2020 compared with nine months ended July 31, 2019

Compute net revenue decreased by $1.3 billion, or 12.2% (decreased 10.9% on a constant currency basis), for the nine months ended July 31, 2020, as compared to the prior-year period.

Net revenue in Compute was impacted by multiple factors including the weak and uncertain global demand environment resulting from COVID-19 related lock down restrictions, competitive pricing pressures, unfavorable currency fluctuations and commodity and manufacturing capacity constraints in North America. As a result, for the first nine months of fiscal 2020, as compared to the prior-year period, Compute experienced a decline in unit shipments and average unit selling prices.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Management's Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

~~Hybrid IT~~

Three months ended July 31,
2019 2018 % Change
Dollars in millions
Net revenue $ 5,549
$ 6,109
(9.2 )%
Earnings from operations $ 704
$ 624
12.8 %
Earnings from operations as a % of net revenue 12.7 % 10.2 %

Nine months ended July 31,
2019 2018 % Change
Dollars in millions
Net revenue $ 17,155
$ 18,160
(5.5 )%
Earnings from operations $ 2,024
$ 1,787
13.3 %
Earnings from operations as a % of net revenue 11.8 % 9.8 %

~~The components of the weighted net revenue change by business unit were as follows:~~

Three months ended July 31,
Net Revenue Weighted
Net Revenue
Change
Percentage
Points
2019 2018 2019
Dollars in millions
Compute $ 3,151
$ 3,569
(6.9 )
Storage 844
887
(0.7 )
Hybrid IT Product 3,995
4,456
(7.6 )
HPE Pointnext 1,554
1,653
(1.6 )
Total Hybrid IT $ 5,549
$ 6,109
(9.2 )

Nine months ended July 31,
Net Revenue Weighted
Net Revenue
Change
Percentage
Points
2019 2018 2019
Dollars in millions
Compute $ 9,646
$ 10,350
(3.9 )
Storage 2,761
2,747
0.1
Hybrid IT Product 12,407
13,097
(3.8 )
HPE Pointnext 4,748
5,063
(1.7 )
Total Hybrid IT $ 17,155
$ 18,160
(5.5 )

~~HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES~~

~~Management's Discussion and Analysis of~~

~~Financial Condition and Results of Operations (Continued)~~

~~Three months ended July 31, 2019 compared with three months ended July 31, 2018~~

Hybrid IT net revenue decreased by $560 million, or 9.2% (decreased 7.7% on a constant currency basis), for the three months ended July 31, 2019, as we continue to execute on our HPE Next initiative, which includes streamlining our offerings and business processes, and shifting investments in innovation towards high growth and higher margin solutions and services. The decrease in Hybrid IT net revenue was due primarily to a decline in Tier-1 server sales and lower revenue from China as we continue to exit less profitable product categories and certain markets, which was primarily experienced within Compute. The net revenue decline was also due to lower revenue from Compute as a result of a decline in ISS core products due to demand weakness resulting in longer sales cycles, a decline in HPE Pointnext revenue due in part to demand weakness and unfavorable currency fluctuations, and a decline in Storage revenue due to market weakness. Partially offsetting this decrease was revenue growth from HPE Nimble Storage.

~~Hybrid IT Product net revenue decreased by $461 million, or 10%, with a decline of 12% in Compute and a decline of 5% in Storage.~~

The net revenue decrease in Compute was due primarily to a combination of factors, including a decline in Tier-1 server sales and revenue decline from China. The net revenue decrease in Compute was also due to the decrease in ISS core products, which was driven by a decrease in unit shipments as a result of demand weakness, while Average Unit Prices ("AUPs") remained flat. The decline in unit shipments was experienced primarily in the blade category. Mission-critical servers ("MCS") experienced a net revenue decrease led by a revenue decline in Itanium and NonStop products.

The net revenue decrease in Storage was due primarily to a decline across product categories primarily 3PAR, Big Data, and traditional storage products driven by market weakness, partially offset by revenue growth in HPE Nimble Storage.

HPE Pointnext net revenue decreased by $99 million, or 6%, due primarily to revenue declines in Operational Services from lower demand in prior periods and the impact of unfavorable currency fluctuations.

~~Hybrid IT~~ earnings from operations as a percentage of net revenue ~~increased 2.5~~decreased 2.9 percentage points for the ~~three~~nine months ended July 31, ~~2019,~~2020, as compared to the prior-year period due primarily to an increase in ~~gross margin which was partially offset by~~costs of products as a percentage of net revenue and an increase in operating expenses as a percentage of net revenue. The increase in ~~gross margin was due primarily to a combination~~cost of ~~factors including the year-over-year decrease in commodity costs, lower costs of services and~~ products due to our cost management initiatives and a lower mix of revenue from Tier-1 server sales coupled with a higher mix of revenue from higher-margin products. The increase in gross margin was partially offset by unfavorable currency fluctuations. The increase in operating expenses as a percentage of net revenue was due primarily to ~~the net revenue decline and an increase in operating expenses driven by higher field selling~~competitive pricing pressures, increased supply chain logistics costs ~~and R&D costs, compared to the prior-year period.~~

~~Nine months ended July 31, 2019 compared with nine months ended July 31, 2018~~

Hybrid IT net revenue decreased by $1.0 billion, or 5.5% (decreased 4.4% on a constant currency basis), for the nine months ended July 31, 2019. The decrease in Hybrid IT net revenue was due primarily to a decline in Tier-1 server sales and a decline in revenue from China, both of which was primarily experienced within Compute, and a decline in HPE Pointnext revenue due to demand weakness and unfavorable currency ~~fluctuations. Partially offsetting this decrease was higher revenue from HPE Nimble Storage.~~

~~Hybrid IT Product net revenue decreased by $690 million, or 5%, with a decline of 7% in Compute and growth of 1% in Storage.~~

The net revenue decrease in Compute was due primarily to a decline in Tier-1 server sales and a decline in revenue from China. Revenue from ISS core remained flat due to a decline in unit shipments, primarily in the blade, tower and rack categories, offset by higher AUPs across core products. MCS experienced a net revenue decrease led by a revenue decline in Itanium and NonStop products.

~~The net revenue increase in Storage was due primarily to revenue growth from HPE Nimble Storage and traditional storage products,~~fluctuations which were partially offset by ~~a decline in revenue from 3PAR and Big Data products.~~

HPE Pointnext net revenue decreased by $315 million, or 6%, due primarily to revenue declines in Operational Services and Advisory and Professional Services resulting in part from demand weakness. Additionally, Advisory and Professional Services experienced lower revenue as a result of our initiative to streamline our go-to-market approach in certain countries. The impact of unfavorable currency fluctuations contributed to the overall revenue decline in HPE Pointnext.

~~HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES~~

~~Management's Discussion and Analysis of~~

~~Financial Condition and Results of Operations (Continued)~~

Hybrid IT earnings from operations as a percentage of net revenue increased 2.0 percentage points for the nine months ended July 31, 2019, as compared to the prior-year period, due to an increase in gross margin which was partially offset by an increase in operating expenses as a percentage of net revenue. The increase in gross margin was due primarily to a combination of factors including the year-over-year decrease in commodity costs, lower costs of services and products due to our cost management initiatives and a lower mix of revenue from Tier-1 server sales coupled with a higher mix of revenue from higher-margin products. The increase to gross margin was partially offset by unfavorable currency fluctuations and higher variable compensation expense. The increase in operating ~~expenses~~expense as a percentage of net revenue was due ~~primarily~~ to the scale of the net revenue decline while total operating expenses declined year-over-year due primarily to lower variable compensation expense and lower spending due to cost containment measures put in place in response to COVID-19. These declines were partially offset by higher ~~R&D~~field selling costs.

~~Intelligent Edge~~

Three months ended July 31,
2019 2018 % Change
Dollars in millions
Net revenue $ 762
$ 785
(2.9 )%
Earnings from operations $ 37
$ 101
(63.4 )%
Earnings from operations as a % of net revenue 4.9 % 12.9 %

Nine months ended July 31,
2019 2018 % Change
Dollars in millions
Net revenue $ 2,114
$ 2,147
(1.5 )%
Earnings from operations $ 66
$ 191
(65.4 )%
Earnings from operations as a % of net revenue 3.1 % 8.9 %
HPC & MCS

~~The components of the weighted net revenue change by business unit were as follows:~~


	Three Months Ended July 31,
	2020			2019			% Change
	Dollars in millions
Net revenue	$	649		$	633		2.5	%
Earnings from operations	$	36		$	51		(29.4)	%
Earnings from operations as a % of net revenue	5.5		%	8.1		%

Three months ended July 31,
Net Revenue Weighted
Net Revenue Change Percentage Points
2019 2018 2019
Dollars in millions
HPE Aruba Product $ 668
$ 703
(4.6 )
HPE Aruba Services 94
82
1.7
Total Intelligent Edge $ 762
$ 785
(2.9 )


	Nine Months Ended July 31,
	2020			2019			% Change
	Dollars in millions
Net revenue	$	2,061		$	2,133		(3.4)	%
Earnings from operations	$	118		$	241		(51.0)	%
Earnings from operations as a % of net revenue	5.7		%	11.3		%

Nine months ended July 31,
Net Revenue Weighted
Net Revenue
Change
Percentage
Points
2019 2018 2019
Dollars in millions
HPE Aruba Product $ 1,842
$ 1,914
(3.3 )
HPE Aruba Services 272
233
1.8
Total Intelligent Edge $ 2,114
$ 2,147
(1.5 )

~~HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES~~

~~Management's Discussion and Analysis of~~

~~Financial Condition and Results of Operations (Continued)~~

Three months ended July 31, ~~2019~~2020 compared with three months ended July 31, ~~2018~~2019

~~Intelligent Edge~~HPC & MCS net revenue ~~decreased~~increased by ~~$23~~$16 million, or ~~2.9% (decreased 1.5%~~2.5% (increased 3.3% on a constant currency basis), for the three months ended July 31, ~~2019,~~2020, as compared to the prior-year period.

The ~~decrease in Intelligent Edge net revenue was due to a net decrease in HPE Aruba Product revenue of $35 million, or 5%, partially offset by an~~ increase in ~~HPE Aruba Services revenue of $12 million, or 15%. The decrease in HPE Aruba Product~~HPC & MCS net revenue was due primarily to the addition of revenue resulting from the acquisition of Cray. This increase was partially offset by unfavorable foreign currency fluctuations and challenges resulting from COVID-19 related lockdown restrictions including performing on-site product installations, meeting customer acceptance milestones and a ~~revenue decline in campus switching products driven by sales execution issues, particularly in the North America region~~weak and ~~weaker~~uncertain global demand ~~while revenue growth from WLAN products was flat. The increase in HPE Aruba Services revenue was due primarily to services attach on a growing product installed base and an increase in renewal rates.~~environment.

~~Intelligent Edge~~HPC & MCS earnings from operations as a percentage of net revenue decreased ~~by 8.0~~2.6 percentage points for the three months ended July 31, 2019, as compared to the prior-year period, due to an increase in operating expenses as a percentage of net revenue as well as a decrease in gross margin. The increase in operating expenses as a percentage of net revenue was due primarily to increased R&D expenses and field selling costs. The gross margin decrease was due primarily to unfavorable rates resulting from competitive pressures on products, partially offset by a higher mix of revenue from higher-margin HPE Aruba Services and WLAN products and cost management activities.

~~Nine months ended July 31, 2019 compared with nine months ended July 31, 2018~~

Intelligent Edge net revenue decreased by $33 million, or 1.5% (decreased 0.8% on a constant currency basis), for the nine months ended July 31, 2019, as compared to the prior-year period. The decrease in Intelligent Edge net revenue was due to a net decrease in HPE Aruba Product revenue of $72 million, or 4%, partially offset by an increase in HPE Aruba Services revenue of $39 million, or 17%. The decrease in HPE Aruba Product revenue was due primarily to a revenue decline in our switching products, driven by sales execution issues, particularly in the North America region and weaker demand, partially offset by a slight revenue increase in WLAN products. The increase in HPE Aruba Services revenue was due primarily to services attach on a growing product installed base and an increase in renewal rates.

~~Intelligent Edge earnings from operations as a percentage of net revenue decreased by 5.8 percentage points for the nine months ended July 31, 2019,~~2020, as compared to the prior-year period, due to an increase in operating expenses as a percentage of net revenue, partially offset by ~~an increase~~lower cost of products and services as a percentage of net revenue. The decrease in ~~gross margin.~~cost of products and services as a percentage of net revenue was due primarily to improved mix of products and services from the acquisition of Cray along with the prior-year period containing higher excess and obsolescence charges. The increase in operating expenses as a percentage of net revenue was due primarily to ~~increased R&D~~the addition of operating expenses from the acquisition of Cray.

Nine months ended July 31, 2020 compared with nine months ended July 31, 2019

HPC & MCS net revenue decreased by $72 million, or 3.4% (decreased 2.8% on a constant currency basis), for the nine months ended July 31, 2020, as compared to the prior-year period.

Net revenue in HPC & MCS decreased due to challenges resulting from COVID-19 related lockdown restrictions including performing on-site product installations, meeting customer acceptance milestones and ~~field selling costs.~~a weak and uncertain global demand environment, partially offset by the addition of revenue resulting from Cray.

HPC & MCS earnings from operations as a percentage of net revenue decreased 5.6 percentage points for the nine months ended July 31, 2020, as compared to the prior-year period, due to an increase in operating expenses as a percentage of net revenue partially offset by lower cost of products and services as a percentage of net revenue. The ~~gross margin increase~~decrease in cost of products and services as a percentage of net revenue was due primarily to ~~favorable currency fluctuations,~~an improved product mix from the acquisition of Cray and lower variable compensation expense. The increase in operating expenses as a ~~higher mix~~percentage of net revenue was due to the addition of operating expenses resulting from ~~higher-margin WLAN products and HPE Aruba Services, and cost management activities,~~the acquisition of Cray partially offset by lower ~~margins from unfavorable rates resulting from competitive pressures on products.~~

~~Financial Services~~variable compensation expense.

Three months ended July 31,
2019 2018 % Change
Dollars in millions
Net revenue $ 888
$ 928
(4.3 )%
Earnings from operations $ 77
$ 72
6.9 %
Earnings from operations as a % of net revenue 8.7 % 7.8 %

Nine months ended July 31,
2019 2018 % Change
Dollars in millions
Net revenue $ 2,703
$ 2,732
(1.1 )%
Earnings from operations $ 231
$ 215
7.4 %
Earnings from operations as a % of net revenue 8.5 % 7.9 %

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Management's Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

Storage


	Three Months Ended July 31,
	2020			2019			% Change
	Dollars in millions
Net revenue	$	1,128		$	1,255		(10.1)	%
Earnings from operations	$	145		$	207		(30.0)	%
Earnings from operations as a % of net revenue	12.9		%	16.5		%


	Nine Months Ended July 31,
	2020			2019			% Change
	Dollars in millions
Net revenue	$	3,464		$	3,929		(11.8)	%
Earnings from operations	$	516		$	705		(26.8)	%
Earnings from operations as a % of net revenue	14.9		%	17.9		%

Three months ended July 31, ~~2019~~2020 compared with three months ended July 31, ~~2018~~2019

FSStorage net revenue decreased by ~~$40~~$127 million or ~~4.3%~~10.1% (decreased ~~2.0%~~8.8% on a constant currency basis), for the three months ended July 31, ~~2019.~~ 2020 as compared to the prior-year period.

Net revenue in Storage was impacted by the weak and uncertain global demand environment resulting from COVID-19 related lockdown restrictions which include supply chain constraints, competitive pricing pressures, lower revenue from the expiration of a one-time legacy contract and unfavorable currency fluctuations. Partially offsetting the net revenue decline was higher revenue from Big Data.

Storage earnings from operations as a percentage of net revenue decreased 3.6 percentage points for the three months ended July 31, 2020, as compared to the prior-year period, due to an increase in cost of products as a percentage of net revenue and an increase in operating expenses as a percentage of net revenue. The increase in cost of product as a percentage of net revenue was due primarily to competitive pricing pressures, unfavorable currency fluctuations, and the scale of the net revenue decline which resulted in higher fixed overhead costs as a percentage of net revenue, the effects of which were partially offset by lower cost of services. The increase in operating expenses as a percentage of net revenue was due primarily to the scale of the net revenue decline and increased investments in R&D, while total operating expenses declined during the period due to lower field selling costs as a result of lower spending due to cost containment measures put in place in response to COVID-19 and lower variable compensation expense.

Nine months ended July 31, 2020 compared with nine months ended July 31, 2019

Storage net revenue decreased by $465 million or 11.8% (decreased 10.6% on a constant currency basis), for the nine months ended July 31, 2020, as compared to the prior-year period.

Net revenue in Storage was impacted by the weak and uncertain global demand environment predominantly resulting from COVID-19 related lockdown restrictions, commodity and North American manufacturing capacity constraints in the first quarter of fiscal 2020, and lower revenue from the expiration of a one-time legacy contract. Partially offsetting the net revenue decrease was revenue growth from Big Data and Storage services.

Storage earnings from operations as a percentage of net revenue decreased 3.0 percentage points for the nine months ended July 31, 2020, as compared to the prior-year period, due to an increase in cost of product and services as a percentage of net revenue and an increase in operating expenses as a percentage of net revenue. The increase in the cost of product and services as a percentage of net revenue was due primarily to unfavorable currency fluctuations and higher fixed overhead costs as a percentage of net revenue, the effects of which were partially offset by lower variable compensation expense and lower cost of services. The increase in operating expenses as a percentage of net revenue was due primarily to higher investments in R&D and to the scale of the net revenue decline, while total operating expenses declined during the period due to lower variable compensation expense and lower spending due to cost containment measures put in place in response to COVID-19.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Management's Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

A & PS


	Three Months Ended July 31,
	2020			2019			% Change
	Dollars in millions
Net revenue	$	226		$	242		(6.6)	%
Loss from operations	$	(4)		$	(9)		55.6	%
Loss from operations as a % of net revenue	(1.8)		%	(3.7)		%


	Nine Months Ended July 31,
	2020			2019			% Change
	Dollars in millions
Net revenue	$	706		$	743		(5.0)	%
Loss from operations	$	(4)		$	(55)		92.7	%
Loss from operations as a % of net revenue	(0.6)		%	(7.4)		%

Three months ended July 31, 2020 compared with three months ended July 31, 2019

A & PS net revenue decreased by $16 million, or 6.6% (decreased 5.4% on a constant currency basis), for the three months ended July 31, 2020 as compared to the prior-year period.

The decrease in A & PS net revenue was primarily due to the weak and uncertain global demand environment resulting from COVID-19 related lockdown restrictions including continued service delivery delays along with unfavorable foreign currency fluctuations partially offset by strength in the Asia Pacific and Japan region.

A & PS earnings from operations as a percentage of net revenue improved 1.9 percentage points for the three months ended July 31, 2020, as compared to the prior-year period, due to lower operating expenses as a percentage of net revenue partially offset by an increase in cost of services as a percentage of net revenue. The increase in cost of services as a percentage of net revenue was primarily due to the impact of fixed compensation expense partially offset by a decrease in variable compensation expense. The lower operating expenses as a percentage of net revenue was primarily due to a reduction in field selling costs due to cost containment measures put in place in response to COVID-19.

Nine months ended July 31, 2020 compared with nine months ended July 31, 2019

A & PS net revenue decreased by $37 million, or 5.0% (decreased 4.3% on a constant currency basis), for the nine months ended July 31, 2020 as compared to the prior-year period.

The decrease in A & PS net revenue was primarily due to the weak and uncertain global demand environment during the second and third quarters, resulting from COVID-19 related lockdown restrictions including service delivery delays along with unfavorable foreign currency fluctuations partially offset by strength in the Asia Pacific and Japan

A & PS earnings from operations as a percentage of net revenue improved 6.8 percentage points for the nine months ended July 31, 2020, as compared to the prior-year period, due to lower cost of services as a percentage of net revenue coupled with a decrease in operating expenses as a percentage of net revenue. The decrease in cost of services as a percentage of net revenue was primarily due to service delivery and overhead efficiencies along with lower variable compensation expense. The decrease to operating expenses as a percentage of net revenue was primarily due to lower spending due to cost containment measures put in place in response to COVID-19.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Management's Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

Intelligent Edge


	Three Months Ended July 31,
	2020			2019			% Change
	Dollars in millions
Net revenue	$	684		$	781		(12.4)	%
Earnings from operations	$	59		$	53		11.3	%
Earnings from operations as a % of net revenue	8.6		%	6.8		%


	Nine Months Ended July 31,
	2020			2019			% Change
	Dollars in millions
Net revenue	$	2,069		$	2,171		(4.7)	%
Earnings from operations	$	202		$	113		78.8	%
Earnings from operations as a % of net revenue	9.8		%	5.2		%

Three months ended July 31, 2020 compared with three months ended July 31, 2019

Intelligent Edge net revenue decreased by $97 million, or 12.4% (decreased 11.4% on a constant currency basis), for the three months ended July 31, 2020, as compared to the prior-year period.

Net revenue declined in the Intelligent Edge due to the weak and uncertain global demand environment resulting from COVID-19 related lockdown restrictions. As a result, we experienced lower revenue from WLAN and switching products, with competitive pricing pressures also adding to the decline in WLAN net revenue. Lower software net revenue and unfavorable foreign currency fluctuations also added to the net revenue decline, partially offset by an increase in net revenue from service renewals.

Intelligent Edge earnings from operations as a percentage of net revenue increased 1.8 percentage points for the three months ended July 31, 2020 as compared to the prior year period due primarily to a decrease in operating expenses as a percentage of net revenue partially offset by an increase in cost of products and services as a percentage of net revenue. The increase in cost of product and services as a percentage of net revenue was due primarily to higher supply chain costs resulting from COVID-19 related lockdown restrictions partially offset by a higher mix of services. The decrease in operating expenses as a percentage of net revenue was due primarily lower spending due to cost containment measures put in place in response to COVID-19 and lower variable compensation expense.

Nine months ended July 31, 2020 compared with Nine months ended July 31, 2019

Intelligent Edge net revenue decreased by $102 million, or 4.7% (decreased 3.5% on a constant currency basis), for the nine months ended July 31, 2020, as compared to the prior-year period.

The decrease in Intelligent Edge net revenue was due primarily to lower revenue from switching and WLAN products predominantly driven by the weak and uncertain global demand environment resulting from COVID-19 related lockdown restrictions along with lower software net revenue and unfavorable foreign currency fluctuations, partially offset by higher revenue from service renewals.

Intelligent Edge earnings from operations as a percentage of net revenue increased 4.6 percentage points for the nine months ended July 31, 2020 as compared to the prior year period due primarily to lower operating expenses as a percentage of net revenue and lower cost of products and services as a percentage of net revenue. The decrease in cost of product and services as a percentage of net revenue was due primarily to a higher mix of services and lower mix of high-cost switching products. The decrease in operating expense as a percentage of net revenue was due primarily to lower field selling costs as a result of lower spending due to cost containment measures we put in place in response to COVID-19 and lower variable compensation expense.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Management's Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

Financial Services


	Three Months Ended July 31,
	2020			2019			% Change
	Dollars in millions
Net revenue	$	811		$	888		(8.7)	%
Earnings from operations	$	65		$	77		(15.6)	%
Earnings from operations as a % of net revenue	8.0		%	8.7		%


	Nine Months Ended July 31,
	2020			2019			% Change
	Dollars in millions
Net revenue	$	2,503		$	2,703		(7.4)	%
Earnings from operations	$	213		$	231		(7.8)	%
Earnings from operations as a % of net revenue	8.5		%	8.5		%

Three months ended July 31, 2020 compared with three months ended July 31, 2019

FS net revenue decreased by $77 million, or 8.7% (decreased 6.3% on a constant currency basis), for the three months ended July 31, 2020, as compared to the prior-year period.

The decrease in net revenue was due primarily to a decrease in rental revenue due to lower average operating ~~leases and~~lease assets, unfavorable currency fluctuations, ~~partially offset by higher~~along with lower asset management revenue from lease ~~extensions~~buyouts and ~~end-of-lease monthly rentals.~~lease extensions.

FS earnings from operations as a percentage of net revenue ~~increased 0.9~~decreased 0.7 percentage points for the three months ended July 31, ~~2019~~2020, as compared to the prior-year period, due primarily to lower cost of services as a percentage of net revenue, partially offset by an increase ~~in gross margin and a decrease in~~to operating expenses as a percentage of net revenue. The ~~increase in gross margin was due primarily~~decrease to ~~higher margins~~cost of services as a percentage of net revenue resulted from ~~lease extensions~~lower borrowing costs and ~~lease buyouts,~~depreciation expense, partially offset by ~~lower portfolio margins from increased borrowing costs. Operating~~higher bad debt expense. The increase to operating expenses as a percentage of net revenue ~~decreased~~was due primarily to lower capitalized initial direct costs as a result of ~~lower variable compensation expense and lower field selling costs.~~adopting the new lease accounting standard, along with the overall decrease in net revenue.

Nine months ended July 31, ~~2019~~2020 compared with nine months ended July 31, ~~2018~~2019

FS net revenue decreased by ~~$29~~$200 million, or ~~1.1% (increased 1.9%~~7.4% (decreased 5.6% on a constant currency basis), for the nine months ended July 31, ~~2019.~~ 2020, as compared to the prior-year period.

The decrease in net revenue was due primarily to ~~unfavorable currency fluctuations and~~ a decrease in rental revenue due to lower average operating ~~leases,~~lease assets, unfavorable currency fluctuations, along with lower lease equipment buyout revenue, partially offset by higher ~~asset management~~ revenue from ~~end-of-lease monthly rentals,~~ lease ~~extensions and lease buyouts.~~extensions.

FS earnings from operations as a percentage of net revenue ~~increased 0.6 percentage points~~was flat for the nine months ended July 31, ~~2019~~2020, as compared to the prior-year period, due primarily to lower cost of services as a percentage of net revenue, offset by an increase ~~in gross margin and a decrease in~~to operating expenses as a percentage of net revenue. The ~~increase in gross margin was due primarily~~decrease to ~~higher margins~~cost of services as a percentage of net revenue resulted from ~~lease extensions~~lower depreciation expense and ~~lease buyouts, and lower bad debt expense,~~borrowing costs, partially offset by ~~lower portfolio margins from increased borrowing costs. Operating~~higher bad debt expense. The increase to operating expenses as a percentage of net revenue ~~decreased~~was due primarily to lower capitalized initial direct costs as a result of ~~lower field selling costs.~~adopting the new lease accounting standard.

Financing Volume


	Three Months Ended July 31,						Nine Months Ended July 31,
	2020		2019		2020		2019
	In millions
Financing volume	$	1,491	$	1,696	$	4,392	$	4,480

Three months ended July 31, Nine months ended July 31,
2019 2018 2019 2018
In millions
Total financing volume $ 1,696
$ 1,658
$ 4,480
$ 4,636

~~New financing~~Financing volume, which represents the amount of financing provided to customers for equipment and related software and services, including intercompany activity, ~~increased~~decreased by ~~2.3%~~12.1% and 2.0% for the three ~~months ended July 31, 2019 as compared to the prior-year period. The increase was primarily driven by higher financing associated with HPE product sales~~ and ~~related service offerings, partially offset by unfavorable currency fluctuations. New financing volume decreased 3.4% for the~~ nine months ended July 31, ~~2019, as compared to the prior-year period, due primarily to unfavorable currency fluctuations.~~2020

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Management's Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

as compared to the prior-year periods. For the three months ended July 31, 2020, the decrease was primarily driven by lower financing associated with third-party and HPE product sales and related service offerings, along with unfavorable currency fluctuations. For the nine months ended July 31, 2020, the decrease was primarily driven by unfavorable currency fluctuations.

Portfolio Assets and Ratios

The portfolio assets and ratios derived from the segment balance sheets for FS were as follows:


	As of
	July 31, 2020			October 31, 2019
	Dollars in millions
Financing receivables, gross	$	9,043		$	8,652
Net equipment under operating leases	4,026			4,084
Capitalized profit on intercompany equipment transactions⁽¹⁾	322			382
Intercompany leases⁽¹⁾	93			100
Gross portfolio assets	13,484			13,218
Allowance for doubtful accounts⁽²⁾	142			131
Operating lease equipment reserve	60			60
Total reserves	202			191
Net portfolio assets	$	13,282		$	13,027
Reserve coverage	1.5		%	1.4		%
Debt-to-equity ratio⁽³⁾	7.0x			7.0x

As of
July 31, 2019 October 31, 2018
Dollars in millions
Financing receivables, gross $ 8,566
$ 8,256
Net equipment under operating leases 4,050
4,212
Capitalized profit on intercompany equipment transactions⁽¹⁾
400
502
Intercompany leases⁽¹⁾
103
125
Gross portfolio assets 13,119
13,095
Allowance for doubtful accounts⁽²⁾
133
120
Operating lease equipment reserve 62
63
Total reserves 195
183
Net portfolio assets $ 12,924
$ 12,912
Reserve coverage 1.5 % 1.4 %
Debt-to-equity ratio⁽³⁾
7.0x
7.0x

(1)Intercompany activity is eliminated in consolidation.


~~(1)~~	~~Intercompany activity is eliminated in consolidation.~~


~~(2)~~	~~Allowance for doubtful accounts for financing receivables includes both the short- and long-term portions.~~

~~(3)~~

Debt benefiting FS consists of intercompany equity that is treated as debt for segment reporting purposes, intercompany debt, and borrowing- and funding-related activity associated with FS and its subsidiaries. Debt benefiting FS totaled $11.5 billion and $11.4 billion at July 31, 2019 and October 31, 2018, respectively, and was determined by applying an assumed debt-to-equity ratio, which management believes to be comparable to that of other similar financing companies. FS equity at both July 31, 2019 and October 31, 2018 was $1.6 billion.

(2)Allowance for doubtful accounts for financing receivables includes both the short- and long-term portions.

(3)Debt benefiting FS consists of intercompany equity that is treated as debt for segment reporting purposes, intercompany debt, and borrowing- and funding-related activity associated with FS and its subsidiaries. Debt benefiting FS totaled $11.8 billion and $11.4 billion at July 31, 2020 and October 31, 2019, respectively, and was determined by applying an assumed debt-to-equity ratio, which management believes to be comparable to that of other similar financing companies. FS equity at July 31, 2020 and October 31, 2019 was $1.7 billion and $1.6 billion, respectively.

As of July 31, ~~2019~~2020 and October 31, ~~2018,~~2019, FS net cash and cash equivalents balances were approximately ~~$574~~$677 million and ~~$735~~$711 million, respectively.

Net portfolio assets as of July 31, ~~2019~~2020 increased ~~0.1%~~2.0% from October 31, ~~2018.~~2019. The increase generally resulted from new financing volume exceeding portfolio runoff during the ~~period.~~period, along with favorable currency fluctuations.

FS bad debt expense includes charges to general reserves, ~~and~~ specific reserves and write-offs for sales-type, direct-financing and operating leases. For the three and nine months ended July 31, 2020, FS recorded net bad debt expense of $25 million and $58 million, respectively. For the three and nine months ended July 31, 2019, FS recorded net bad debt expense of $19 million and $51 million, respectively. ~~For the three and nine months ended~~

As of July 31, ~~2018,~~2020, FS ~~recorded net bad debt expense~~experienced an increase in billed finance receivables compared to October 31, 2019, which included some impact to collections from customers as a result of ~~$22 million and $56 million, respectively.~~COVID-19. We are currently unable to fully predict the extent to which COVID-19 may adversely impact future collections of our receivables.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Management's Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

Corporate Investments

Three months ended July 31,
2019 2018 % Change
Dollars in millions
Net revenue $ 130
$ 134
(3.0 )%
Loss from operations $ (25 ) $ (25 ) — %
Loss from operations as a % of net revenue (19.2 )% (18.7 )%


	Nine months ended July 31,									Three Months Ended July 31,
	2019			2018			% Change			2020			2019			% Change
	Dollars in millions									Dollars in millions
Net revenue	$	373		$	404		(7.7	)%	Net revenue	$	119		$	130		(8.5)	%
Loss from operations	$	(82	)	$	(79	)	(3.8	)%	Loss from operations	$	(27)		$	(25)		(8.0)	%
Loss from operations as a % of net revenue	(22.0		)%	(19.6		)%			Loss from operations as a % of net revenue	(22.7)		%	(19.2)		%


	Nine Months Ended July 31,
	2020			2019			% Change
	Dollars in millions
Net revenue	$	364		$	373		(2.4)	%
Loss from operations	$	(82)		$	(82)		—	%
Loss from operations as a % of net revenue	(22.5)		%	(22.0)		%

Three ~~and nine~~ months ended July 31, ~~2019~~2020 compared with three ~~and nine~~ months ended July 31, ~~2018~~2019

Corporate Investments net revenue decreased by $4$11 million, or ~~3.0%~~8.5% (decreased ~~0.5%~~6.2% on a constant currency basis), for the three months ended July 31, ~~2019, and decreased by $31 million, or 7.7% (decreased 5.1% on a constant currency basis), for the nine months ended July 31, 2019,~~2020 as compared to the prior-year ~~periods, respectively.~~period. The decrease in Corporate Investments net revenue ~~during both periods~~ was due primarily to lower services revenue from the Communications and Media Solutions ("CMS") ~~business.~~business due to the weak and uncertain global demand environment resulting from COVID-19 related lockdown restrictions.

Corporate Investments loss from operations as a percentage of net revenue increased 3.5 percentage points for the three months ended July 31, 2020, as compared to the prior-year period. The increase was due primarily to a higher legal expense, partially offset by lower cost of services.

Nine Months Ended July 31, 2020 compared with nine months ended July 31, 2019

Corporate Investments net revenue decreased by $9 million, or 2.4% (decreased 1.1% on a constant currency basis), for the nine months ended July 31, 2020 as compared to the prior-year period. The decrease in Corporate Investments net revenue was due primarily to lower services revenue from the CMS business due to the weak and uncertain global demand environment resulting from COVID-19 related lockdown restrictions.

Corporate Investments loss from operations as a percentage of net revenue increased 0.5 percentage points for the ~~three months ended July 31, 2019, and increased 2.4 percentage points for the~~ nine months ended July 31, ~~2019,~~2020, as compared to the prior-year ~~periods, respectively. For both periods, the~~period. The increase was due primarily to a higher ~~spending in Hewlett Packard Labs,~~legal expense, partially offset by ~~margin improvements in the CMS business.~~lower cost of services.

LIQUIDITY AND CAPITAL RESOURCES

We use cash generated by operations as our primary source of liquidity. We believe that internally generated cash flows will be generally sufficient to support our operating businesses, capital expenditures, product development initiatives, acquisitions and disposal activities including legal settlements, restructuring activities, transformation costs, indemnifications, maturing debt, interest payments, and income tax payments, in addition to any future investments, ~~and any future~~ share repurchases and ~~future~~ stockholder dividend payments. We expect to supplement this short-term liquidity, if necessary, by accessing the capital markets, issuing commercial paper, and borrowing under credit facilities made available by various domestic and foreign financial institutions. However, our access to capital markets may be constrained and our cost of borrowing may increase under certain business, market and economic conditions. Our liquidity is subject to various risks including the risks identified in the section entitled "Risk Factors" in Item 1A of Part II and market risks identified in the section entitled "Quantitative and Qualitative Disclosures about Market Risk" in Item 3 of Part I.

COVID-19 has severely impacted global economic activity and caused significant volatility and negative pressure in the capital markets, which can increase the cost of capital and adversely impact access to capital. In addition, our businesses has been and may continue to be adversely affected, which may have a material adverse impact on our profitability and cash flows, and the timing and collectability of payments may be adversely affected as a result of the impact of COVID-19 on our customers.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Management's Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

As a result of the continued uncertainty generated by COVID-19, in April 2020, we issued $2.25 billion and in July 2020, we issued $1.75 billion in aggregate principal amount of unsecured Senior Notes. The net proceeds from these offerings were used primarily for the redemption in August 2020 of the $3.0 billion outstanding principal amount of the 3.6% registered Senior Notes that were originally due in October 2020. The pricing on our undrawn $4.75 billion revolving credit facility, maturing in August 2024, remains unchanged. We continue to monitor the severity and duration of the pandemic and its impact on the U.S. and other global economies, consumer behavior, our businesses, results of operations, financial condition and cash flows.

In July 2020, we entered into a definitive agreement to acquire Silver Peak Systems, Inc. ("Silver Peak"), an SD-WAN (Software-Defined Wide Area Network) leader for approximately $925 million in cash. The transaction is expected to close during our fourth quarter of fiscal 2020, subject to regulatory approvals and other customary closing conditions.

In May 2020, our Board of Directors approved a cost optimization and prioritization plan in order to focus our investments and realign the workforce to areas of growth and measures to simplify and evolve our product portfolio strategy, go-to-market configurations, supply chain structures, digital customer support model, marketing experiences, and real estate strategies. We expect that the plan will be implemented through fiscal 2022 and we estimate related cash funding payments of $1.3 billion over the next three years of which approximately $0.8 billion will relate to labor restructuring, $0.2 billion will relate to non-labor restructuring and $0.3 billion will relate to IT investments and design and execution charges.

Our cash and cash equivalent balances are held in numerous locations throughout the world, with a ~~substantial~~majority of the amount held ~~outside of~~in the U.S. We utilize a variety of planning and financing strategies in an effort to ensure that our worldwide cash is available when and where it is needed. Our cash position is strong and we expect that our cash and cash equivalent balances, anticipated cash flow generated from operations and access to capital markets will be sufficient to cover our expected near-term cash outlays.

Amounts held outside of the U.S. are generally utilized to support non-U.S. liquidity ~~needs, although a portion~~needs. Repatriations of ~~those~~ amounts ~~may, from time to time, be subject to short-term intercompany loans into~~held outside the U.S. Due to the enactment of the Tax Act, all of our cash, cash equivalents and investments held by foreign subsidiaries were subject to U.S. taxation under the one-time Transition Tax as further discussed in Note 6, "Taxes on Earnings". Subsequent repatriations generally will not be taxable from a U.S. federal tax perspective, but may be subject to state income or foreign withholding tax. Where local restrictions prevent an efficient intercompany transfer of funds, our intent is to keep cash balances outside of the U.S. and to meet liquidity needs through ongoing cash flows, external borrowings, or both. We do not expect restrictions or potential taxes incurred on repatriation of amounts held outside of the U.S. to have a material effect on our overall liquidity, financial condition or results of operations.

~~HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES~~

~~Management's Discussion and Analysis of~~

~~Financial Condition and Results of Operations (Continued)~~

In connection with the share repurchase program previously authorized by our Board of Directors, during the first nine months of fiscal ~~2019,~~2020, we repurchased 25.3 million shares for an aggregate amount of ~~$2.0 billion.~~$355 million. As of July 31, ~~2019,~~2020, we had a remaining authorization of ~~$2.7~~$2.1 billion for future share repurchases. As a result of increased uncertainty due to COVID-19, purchases under our share repurchase program were suspended and as such, no purchases were made during the three months ended July 31, 2020.

For more information on our share repurchase program, refer to ~~Item 2. Unregistered~~the section entitled "Unregistered Sales of Equity Securities and Use of Proceeds" in Item 2 of Part II. ~~Other Information.~~

Liquidity

Our ~~key~~ cash flow metrics were as follows:

Nine months ended July 31, 2019
2019 2018
In millions
Net cash provided by operating activities $ 2,565
$ 1,638
Net cash used in investing activities (1,399 ) (1,640 )
Net cash used in financing activities (2,239 ) (4,341 )
Net decrease in cash, cash equivalents and restricted cash $ (1,073 ) $ (4,343 )

Following the adoption of the accounting standards update for the classification and presentation of restricted cash in the statements of cash flows, for the nine months ended July 31, 2018, we included $43 million of restricted cash movement during the period, which was previously reported within net cash used in investing activities, and is now reported within Decrease in cash, cash equivalents and restricted cash in our Condensed Consolidated Statement of Cash Flows.


	Nine months ended July 31,
	2020		2019
	In millions
Net cash provided by operating activities	$	1,493	$	2,565
Net cash used in investing activities	(1,154)		(1,399)
Net cash provided by (used in) financing activities	4,522		(2,239)
Net increase (decrease) in cash, cash equivalents and restricted cash	$	4,861	$	(1,073)

Operating Activities

For the nine months ended July 31, ~~2019,~~2020, net cash ~~provided by~~from operating activities ~~increased~~decreased by ~~$927 million,~~$1.1 billion, as compared to the prior-year period. The ~~increase~~decrease was due primarily to lower earnings and higher ~~pre-tax earnings,~~usage of cash for working capital management, as compared to the prior-year ~~period, partially offset by unfavorable net working capital management.~~period.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Management's Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

Working capital metrics for the three months ended July 31, ~~2019~~2020 compared with the three months ~~ended~~ July 31, ~~2018~~2019

Three months ended July 31,
2019 2018 Change
Days of sales outstanding in accounts receivable ("DSO") 37
34
3
Days of supply in inventory ("DOS") 42
46
(4 )
Days of purchases outstanding in accounts payable ("DPO") (98 ) (103 ) 5
Cash conversion cycle (19 ) (23 ) 4

DSO measures the average number of days our receivables are outstanding. DSO is calculated by dividing ending accounts receivable, net of allowance for doubtful accounts, by a 90-day average of net revenue. Compared to the corresponding period in fiscal 2018, DSO increased due primarily to lower reserve balances, an increase in billings with extended payment terms, higher aged receivables and the impact from currency fluctuations, partially offset by higher early payments from customers.

DOS measures the average number of days from procurement to sale of our product. DOS is calculated by dividing ending inventory by a 90-day average of cost of goods sold. Compared to the corresponding period in fiscal 2018, DOS decreased due primarily to a reduction in inventory balances following a reduction in buffer levels as a result of improved market supply availability for key commodities and a decrease in commodity costs.

DPO measures the average number of days our accounts payable balances are outstanding. DPO is calculated by dividing ending accounts payable by a 90-day average of cost of goods sold. Compared to the corresponding period in fiscal 2018, the decrease in DPO was due primarily to a reduction in lease payables due to higher payments earlier in the quarter as compared to the prior-year period.


	Three months ended July 31,
	2020	2019	Change
Days of sales outstanding in accounts receivable ("DSO")	38	37	1
Days of supply in inventory ("DOS")	66	42	24
Days of purchases outstanding in accounts payable ("DPO")	(114)	(98)	(16)
Cash conversion cycle	(10)	(19)	9

The cash conversion cycle is the sum of DSO and DOS less DPO. Items which may cause the cash conversion cycle in a particular period to differ include, but are not limited to, changes in business mix, changes in payment terms (including extended

~~HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES~~

~~Management's Discussion and Analysis of~~

~~Financial Condition and Results of Operations (Continued)~~

payment terms from suppliers), the extent of receivables factoring, seasonal trends, the timing of the revenue recognition and inventory purchases within the period, ~~acquisition activity and~~ the impact of commodity ~~costs.~~costs and acquisition activity.

DSO measures the average number of days our receivables are outstanding. DSO is calculated by dividing ending accounts receivable, net of allowance for doubtful accounts, by a 90-day average of net revenue. Compared to the corresponding three month period in fiscal 2019, DSO increased due primarily to extended payment terms partially offset by favorable billing linearity.

DOS measures the average number of days from procurement to sale of our products. DOS is calculated by dividing ending inventory by a 90-day average of cost of goods sold. Compared to the corresponding three month period in fiscal 2019, DOS increased due primarily to higher purchases of inventory as we position inventory to fulfill planned future shipments and longer inventory cycles in the Cray business.

DPO measures the average number of days our accounts payable balances are outstanding. DPO is calculated by dividing ending accounts payable by a 90-day average of cost of goods sold. Compared to the corresponding three month period in fiscal 2019, DPO increased due primarily to extended payment terms with our design manufacturing partners and higher inventory purchases in order to fulfill planned future shipments.

Investing Activities

For the nine months ended July 31, ~~2019,~~2020, net cash used in investing activities decreased by ~~$241 million,~~$0.2 billion, as compared to the corresponding period in fiscal ~~2018.~~2019. The decrease was due primarily to ~~an increase~~lower investment in ~~net financial collateral received~~ and ~~lower use of cash for business acquisitions, partially offset by a~~ higher ~~investment in~~sales proceeds from property, plant and equipment partially offset by lower cash generated from net ~~of sales proceeds.~~financial collateral activities as compared to the prior-year period.

Financing Activities

For the nine months ended July 31, ~~2019,~~2020, net cash ~~used in~~provided by financing activities ~~decreased~~increased by ~~$2.1~~$6.8 billion, as compared to the corresponding period in fiscal ~~2018.~~2019. The ~~decrease~~increase was due primarily to ahigher net cash generated from the issuance of debt, net of repayment and lower utilization of cash ~~usage~~ for ~~debt repayments and~~ share repurchases as compared to the prior-year period. ~~The prior-year period also included a net transfer of cash from Seattle and to Everett.~~

Capital Resources

~~Debt Levels~~

We maintain debt levels that we establish through consideration of a number of factors, including cash flow expectations, cash requirements for operations, investment plans (including acquisitions), share repurchase activities, ~~and~~ our cost of capital and targeted capital structure.

~~During~~Senior Notes

In fiscal 2020, we completed the ~~first nine months~~offering of ~~fiscal 2019,~~the following Senior Notes:

In July we issued ~~$743~~$1.0 billion at discount to par at a price of 99.883% at an interest rate of 1.45% due April 1, 2024, interest payable semi-annually on April 1 and October 1 of each year beginning on April 1, 2021.

In July we issued $750 million at discount to par at a price of 99.820% at an interest rate of 1.75% due April 1, 2026, interest payable semi-annually on April 1 and ~~repaid $451~~October 1 of each year beginning on April 1, 2021.

In April we issued $1.25 billion at discount to par at a price of 99.956% at an interest rate of 4.45% due October 2, 2023, interest payable semi-annually on April 2 and October 2 of each year beginning on October 2, 2020.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Management's Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

In April we issued $1.0 billion at discount to par at a price of 99.817% at an interest rate of 4.65% due October 1, 2024, interest payable semi-annually on April 1 and October 1 of each year beginning on October 1, 2020.

The net proceeds from the above Senior Notes were used for the redemption in August 2020 of the $3.0 billion outstanding principal amount of the 3.6% registered Senior Notes that were originally due in October 2020. The remaining proceeds from the above Senior Notes will be used for general corporate purposes.

Asset-Backed Debt Securities

In June 2020, we issued $1.0 billion of asset-backed debt securities 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. As of July 31, 2020, the outstanding balance of the asset-backed debt securities was $1.0 billion.

In February 2020, we issued $755 million of ~~commercial paper.~~

~~Our weighted-average~~asset-backed debt securities in 6 tranches at a weighted average price of 99.99% and a weighted average interest rate ~~reflects~~of 1.87%, payable monthly from April 2020 with a stated final maturity date of February 2030. As of July 31, 2020, the ~~average effective rate on our borrowings prevailing during~~outstanding balance of the ~~period and reflects the impact of interest rate swaps. For more information on our interest rate swaps, see Note 11, "Financial Instruments".~~asset-backed debt securities was $622 million.

In December 2017, we filed a shelf registration statement with the Securities and Exchange Commission that allows us to sell, at any time and from time to time, in one or more offerings, debt securities, preferred stock, common stock, warrants, ~~depositary~~depository shares, purchase contracts, guarantees or ~~units.~~units consisting of any of these securities.

~~Revolving Credit Facility~~Commercial Paper

On August 16, 2019, we entered into a five-year revolving credit facility providing for a senior, unsecured revolving credit facility with aggregate lending commitments of $4.8 billion. Loans under the revolving credit facility may be used for general corporate purposes. Commitment fees, interest rates and other terms of borrowing under the credit facility vary based on Hewlett Packard Enterprise's external credit rating. This credit facility replaces our prior credit facility that was entered into on November 1, 2015, which was terminated in connection with us entering into the new credit facility.

~~Available Borrowing Resources~~

Hewlett Packard Enterprise's Board of Directors has authorized the issuance of up to $4.0 billion in aggregate principal amount of commercial paper by Hewlett Packard Enterprise. Hewlett Packard Enterprise's subsidiaries are authorized to issue up to an additional $1.0 billion in aggregate principal amount of commercial paper. Hewlett Packard Enterprise maintainsWe maintain two commercial paper programs, "the Parent Programs", and a wholly-owned subsidiary maintains a third program. ~~Hewlett Packard Enterprise's~~Our U.S. program provides for the issuance of U.S. dollar-denominated commercial paper up to a maximum aggregate principal amount of $4.75 billion which was increased from $4.0 ~~billion. Hewlett Packard Enterprise's~~billion in March 2020. Our euro commercial paper program provides for the issuance of commercial paper outside of the U.S. denominated in U.S. dollars, euros or British pounds up to a maximum aggregate principal amount of $3.0 billion or the equivalent in those alternative currencies. The combined aggregate principal amount of commercial paper outstanding under those programs at any one time cannot exceed ~~the $4.0 billion authorized by Hewlett Packard Enterprise's Board of Directors. The Hewlett Packard Enterprise~~$4.75 billion. In addition, our subsidiary's euro Commercial Paper/Certificate of Deposit Program provides for the issuance of commercial paper in various currencies of up to a maximum aggregate principal amount of $1.0 ~~billion, which was increased from $500 million by way of an amendment in April 2019.~~billion. As of July 31, ~~2019~~2020 and October 31, ~~2018,~~2019, no borrowings were outstanding under ~~Hewlett Packard Enterprise’s two commercial paper programs,~~the Parent Programs, and ~~$671~~$737 million and ~~$392~~$698 million, respectively, were outstanding under ~~the~~our subsidiary’s program.

During the first nine months of fiscal 2020, we issued $701 million and repaid $703 million of commercial paper.

Revolving Credit Facility

We maintain a $4.75 billion five year senior unsecured committed credit facility that was entered into in August 2019. Loans under the revolving credit facility may be used for general corporate purposes, including support of the commercial paper program. Commitments under the Credit Agreement are available for a period of five years, which period may be extended, subject to the satisfaction of certain conditions, by up to two, one-year periods. Commitment fees, interest rates and other terms of borrowing under the credit facility vary based on Hewlett Packard Enterprise's external credit rating. As of July 31, 2020 and October 31, 2019, weno borrowings were outstanding under the Credit Agreement.

Available Borrowing Resources

We had the following additional liquidity resources available if needed:


	As of July 31, 2020
	In millions
Commercial paper programs	$	5,013
Uncommitted lines of credit	$	1,279

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Management's Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

As of
July 31, 2019
In millions
Commercial paper programs $ 4,329
Uncommitted lines of credit $ 1,350

CONTRACTUAL AND OTHER OBLIGATIONS

Contractual Obligations

In July 2020, we entered into a definitive agreement to acquire Silver Peak Systems, Inc. ("Silver Peak"), an SD-WAN (Software-Defined Wide Area Network) leader for approximately $925 million in cash. The transaction is expected to close by the fourth quarter of our fiscal 2020, subject to regulatory approvals and other customary closing conditions.

In fiscal 2020, we completed the offering of the following Senior Notes:

In July we issued $1.0 billion at discount to par at a price of 99.883% at an interest rate of 1.45% due April 1, 2024, interest payable semi-annually on April 1 and October 1 of each year beginning on April 1, 2021.

In July we issued $750 million at discount to par at a price of 99.820% at an interest rate of 1.75% due April 1, 2026, interest payable semi-annually on April 1 and October 1 of each year beginning on April 1, 2021.

The net proceeds from the above Senior Notes were used for the August 2020 redemption of the $3.0 billion outstanding principal amount of the 3.6% registered Senior Notes that was originally due in October 2020. The remaining proceeds from the above Senior Notes will be used for general corporate purposes.

In February 2020, we issued $755 million of asset-backed debt securities in 6 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. As of July 31, 2020, the outstanding balance of the asset-backed debt securities was $622 million.

Our other contractual obligations have not changed materially since October 31, ~~2018.~~2019. For further information see "Contractual and Other Obligations" in Item 7 of Part II of our Annual Report on Form 10-K for the fiscal year ended October 31, ~~2018.~~2019.

Retirement ~~and Post-Retirement~~ Benefit Plan Funding

For the remainder of fiscal ~~2019,~~2020, we anticipate making contributions of approximately ~~$42~~$43 million to our non-U.S. pension plans. Our policy is to fund our pension plans so that we meet at least the minimum contribution requirements, as established by local government, funding and ~~taxing~~tax authorities. ~~For more information on our retirement and post-retirement benefit plans, see Note 5, "Retirement and Post-Retirement Benefit Plans".~~

Restructuring Plans

As of July 31, ~~2019,~~2020, we expect to make future cash payments of approximately ~~$682 million~~$1.2 billion in connection with our approved restructuring plans, which includes ~~$110 million~~$0.1 billion expected to be paid through the remainder of fiscal ~~2019~~2020 and ~~$572 million~~$1.1 billion expected to substantially be paid through fiscal 2022. Of the expected future payments of $1.2 billion, $980 million will relate to the cost optimization and prioritization plan, $223 million will relate to the HPE Next Plan, and $26 million will relate to other restructuring plans. For more information on our restructuring activities, see Note 3, ~~"Restructuring", and Note 4, "HPE Next"~~"Transformation Programs".

Uncertain Tax Positions

As of July 31, ~~2019,~~2020, we had approximately ~~$535~~$499 million of recorded liabilities and related interest and penalties pertaining to uncertain tax positions. These liabilities and related interest and penalties include ~~$21~~$32 million expected to be paid within one year. For the remaining ~~amounts,~~amount, we are unable to make a reasonable estimate as to when cash settlement with ~~the~~ tax authorities might occur due to the uncertainties related to these tax matters. Payments of these obligations would result from settlements with ~~taxing~~tax authorities. For more information on our uncertain tax positions, see Note 6,5, "Taxes on Earnings".

~~Cross-indemnification with HP Inc., DXC~~

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Management's Discussion and ~~Micro Focus~~Analysis of

AsFinancial Condition and Results of July 31, 2019, we had approximately $143 million of recorded net receivables pertaining to income tax indemnifications with HP Inc. These amounts include $130 million expected to be paid and $123 million expected to be received within one year. For the remaining amounts, we are unable to make a reasonable estimate as to when cash settlement with HP Inc. might occur due to the uncertainties related to the underlying tax matters. Payments of and receipts from these obligations would result from settlements under the Tax Matters Agreement with HP Inc. For further details related to our tax indemnification balances, see Note 16, "Indemnifications". For details on the Separation and Distribution Agreements and Tax Matters Agreements with HP Inc., DXC and Micro Focus, see our Annual Report on Form 10-K for the fiscal year ended October 31, 2018.Operations (Continued)

Off-Balance Sheet Arrangements

As part of our ongoing business, we have not participated in transactions that generate material relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, ~~which would have been~~ established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

We have third-party revolving short-term financing arrangements intended to facilitate the working capital requirements of certain customers. For more information on our third-party revolving short-term financing arrangements, see Note 6, "Balance Sheet Details", to the Consolidated Financial Statements in Item 1 of Part I, which is incorporated herein by reference.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk.

For quantitative and qualitative disclosures about market risk affecting HPE, see "Quantitative and Qualitative Disclosures About Market Risk" in Item 7A of Part II of our Annual Report on Form 10-K for the fiscal year ended October 31, ~~2018. Our exposure to~~2019. There have been no material changes in our market risk ~~has not changed materially~~exposures since October 31, ~~2018.~~2019.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act as of the end of the period covered by this report (the "Evaluation Date"). Based on this evaluation, our principal executive officer and principal financial officer concluded as of the Evaluation Date that our disclosure controls and procedures were effective such that the information ~~relating~~related to the Company, including our consolidated subsidiaries, required to be disclosed in our SEC reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (ii) is accumulated and communicated to the Company's management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There were no changes to our internal control over financial reporting during the ~~first nine months of fiscal 2019~~quarter ended July 31, 2020, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. We have not experienced any material impact to our internal controls over financial reporting even though our global workforce continues to primarily work-from-home due to COVID-19. We are continually monitoring and assessing the COVID-19 situation and its impact on our internal controls.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

Information with respect to this item may be found in Note 15, "Litigation and Contingencies".

Item 1A. Risk Factors.

Our operations and financial results are subject to various risks and uncertainties, including those described in Part I, Item 1A, "Risk Factors" in our Annual Report on Form 10-K for the fiscal period ended October 31, ~~2018, and in Part II, Item 1A, "Risk Factors" in our Quarterly Reports on Form 10-Q for the fiscal quarter ended January 31, 2019 and April 30,~~ 2019, which could adversely affect our business, financial condition, results of operations, cash flows, and the trading price of our common ~~stock.~~stock, including certain risks, which have been modified as follows:

We are unable to predict the extent to which the global COVID-19 pandemic may adversely impact our business operations, financial performance and results of operations.

The COVID-19 pandemic and efforts to control its spread have significantly curtailed the movement of people, goods and services worldwide, including in most or all of the regions in which we sell our products and services and conduct our business operations. The pandemic has resulted in a global slowdown of economic activity, including travel restrictions, prohibitions of non-essential activities in some cases, disruption and shutdown of businesses and greater uncertainty in global financial markets. Our operations have been affected by a range of external factors related to the COVID-19 pandemic that are not within our control, including the various restrictions imposed by cities, counties, states and countries on our employees, customers, partners and suppliers designed to limit the spread of COVID-19. The magnitude and duration of the disruption and resulting decline in business activity is highly uncertain and cannot currently be predicted.

In response to the COVID-19 pandemic and to ensure the safety of our employees, we have implemented a global work-from-home policy until further notice that applies to a significant majority of our employees, with the exception of those performing essential activities. Our employees may elect to return to the office in jurisdictions where both local requirements and our own health and safety standards have been met. If such instances occur, employees would return to the office in a phased process. Moreover, certain industry and customer events that we sponsor or at which we present have been canceled, postponed or moved to virtual-only experiences and we may deem it advisable to similarly alter, postpone or cancel entirely additional events in the future. However, work-from-home and other modified business practices introduce additional operational risks, including cybersecurity risks, which may result in inefficiencies or delays, and have affected the way we conduct our product development, sales, customer support and other activities. Unanticipated disruptions in services provided through our localized physical infrastructure caused by the COVID-19 pandemic can curtail the functioning of critical components of our IT systems, and adversely affect our ability to fulfill orders, provide services, respond to customer requests and maintain our worldwide business operations.

The pandemic has adversely affected, and could continue to adversely affect, our business, by negatively impacting the demand for our products and services; restricting our operations and sales, marketing and distribution efforts; disrupting the supply chains of hardware products; and disrupting our research and development capabilities, engineering, design and manufacturing processes and other important business activities. For example, we expect the conditions caused by the COVID-19 pandemic could affect the rate of IT spending, impact our customers’ ability or willingness to purchase our products and services, delay prospective customers’ purchasing decisions, delay the provisioning of our products and services, lengthen payment terms, reduce the value or duration of subscription contracts or affect attrition rates, all of which could adversely affect our sales, operating results and financial performance. There have been, and likely will continue to be, delays of components shipments from our vendors in China and other jurisdictions in which normal business operations are disrupted.

We expect the COVID-19 pandemic could continue to have a negative impact on our sales and our results of operations, the size and duration of which we are currently unable to predict. While such changes were factored into the forecast used to assess assets for reserves and impairment, including goodwill, and to calculate the annualized effective tax rate as of July 31, 2020, any further changes to the profitability for the remainder of the fiscal year could impact the realizability of assets and the annualized effective tax rate applied to earnings. Additionally, concerns over the economic impact of the COVID-19 pandemic have caused extreme volatility in financial and other capital markets which has and may continue to adversely impact our stock price, our ability to access capital markets and our ability to fund liquidity needs. In response, we announced our long-term cost optimization and prioritization plan to focus our investments and realign our workforce to areas of growth combined with short-term cost saving measures, including temporary base salary adjustments or unpaid leave for certain employees and hiring and salary freezes. Execution of the plan may not achieve the results and savings we anticipate and our temporary cost saving measures may negatively affect employee morale and our future recruiting efforts.

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To the extent the COVID-19 pandemic adversely affects our business and financial results, it may also have the effect of heightening many of the other risks described in this “Risk Factors” section and those incorporated by reference herein, such as those related to our products and services, demand and distribution, financial performance, credit rating and debt obligations. Given that developments concerning the COVID-19 pandemic have been constantly evolving, additional impacts and risks may arise that we are not aware of or able to appropriately respond to at this time.

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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Recent Sales of Unregistered Securities

There were no unregistered sales of equity securities during the period covered by this report.

~~Issuer Purchases~~

Period
Total Number
of Shares
Purchased

Average
Price Paid
per Share

Total Number of
Shares Purchased as
Part of Publicly
Announced Plans
or Programs

Approximate Dollar Value of
Shares that May Yet Be
Purchased under the Plans
or Programs
In thousands, except per share amounts
Month 1 (May 2019) 13,596
$ 15.00
13,596
$ 3,121,327
Month 2 (June 2019) 12,744
$ 14.36
12,744
$ 2,938,371
Month 3 (July 2019) 12,752
$ 14.87
12,752
$ 2,748,772
Total 39,092
$ 14.75
39,092

the novel coronavirus. As of July 31, 2020, the Company had no unsettled open market repurchases. During the ~~three~~nine months ended July 31, ~~2019,~~2020, the Company repurchased and settled 3925.3 million shares of the Company's common stock, which included 1.2 million shares that were unsettled open market purchases as of April 30, 2019. Additionally, as of July 31, 2019, the Company had unsettled open market repurchases of 1.2 million shares. Shares repurchased during the quarter were recorded as a $575 million reduction to stockholders' equity. During the nine months ended July 31, 2019, the Company repurchased and settled 130 million shares of the Company's common stock, which included 2.40.5 million shares that were unsettled open market purchases as of October 31, ~~2018.~~2019. Shares repurchased during the nine months ended July 31, ~~2019~~2020 were recorded as a ~~$1.9 billion~~$346 million reduction to ~~stockholders'~~stockholder's equity. As of July 31, ~~2019,~~2020, the Company had a remaining authorization of ~~$2.7~~$2.1 billion for future share repurchases.

Item 5. Other Information.

None.

Item 6. Exhibits.

The Exhibit Index beginning on page 6880 of this report sets forth a list of exhibits.

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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

EXHIBIT INDEX


		Incorporated by Reference
Exhibit Number	Exhibit Description	Form	File No.	Exhibit(s)	Filing Date
2.1	Separation and Distribution Agreement, dated as of October 31, 2015, by and among Hewlett-Packard Company, Hewlett Packard Enterprise Company and the Other Parties Thereto	8-K	001-37483	2.1	November 5, 2015
2.2	Transition Services Agreement, dated as of November 1, 2015, by and between Hewlett-Packard Company and Hewlett Packard Enterprise Company	8-K	001-37483	2.2	November 5, 2015
2.3	Employee Matters Agreement, dated as of October 31, 2015, by and between Hewlett-Packard Company and Hewlett Packard Enterprise Company	8-K	001-37483	2.4	November 5, 2015
2.4	Real Estate Matters Agreement, dated as of October 31, 2015, by and between Hewlett-Packard Company and Hewlett Packard Enterprise Company	8-K	001-37483	2.5	November 5, 2015
2.5	Master Commercial Agreement, dated as of November 1, 2015, by and between Hewlett-Packard Company and Hewlett Packard Enterprise Company	8-K	001-37483	2.6	November 5, 2015
2.6	Information Technology Service Agreement, dated as of November 1, 2015, by and between Hewlett-Packard Company and HP Enterprise Services, LLC	8-K	001-37483	2.7	November 5, 2015
2.7	Agreement and Plan of Merger, dated as of May 24, 2016, among Hewlett Packard Enterprise Company, Computer Sciences Corporation, Everett SpinCo, Inc. and Everett Merger Sub, Inc.	8-K	001-37483	2.1	May 26, 2016
2.8	Separation and Distribution Agreement, dated as of May 24, 2016, between Hewlett Packard Enterprise Company and Everett SpinCo, Inc.	8-K	001-37483	2.2	May 26, 2016
2.9	Agreement and Plan of Merger, dated as of September 7, 2016, by and among Hewlett Packard Enterprise Company, Micro Focus International plc, Seattle SpinCo, Inc., Seattle Holdings, Inc. and Seattle MergerSub, Inc.	8-K	001-37483	2.1	September 7, 2016
2.10	Separation and Distribution Agreement, dated as of September 7, 2016, by and between Hewlett Packard Enterprise Company and Seattle SpinCo, Inc.	8-K	001-37483	2.2	September 7, 2016
2.11	Employee Matters Agreement, dated as of September 7, 2016, by and among Hewlett Packard Enterprise Company, Seattle SpinCo, Inc. and Micro Focus International plc	8-K	001-37483	2.3	September 7, 2016
2.12	First Amendment to the Agreement and Plan of Merger, dated as of May 24, 2016, among Hewlett Packard Enterprise Company, Computer Sciences Corporation, Everett SpinCo, Inc. and Everett Merger Sub, Inc.	8-K	001-37483	2.1	November 2, 2016
2.13	First Amendment to the Separation and Distribution Agreement, dated as of May 24, 2016, between Hewlett Packard Enterprise Company and Everett SpinCo, Inc.	8-K	001-37483	2.2	November 2, 2016
2.14	Agreement and Plan of Merger, dated as of March 6, 2017, by and among Hewlett Packard Enterprise Company, Nimble Storage, Inc. and Nebraska Merger Sub, Inc.	8-K	001-37483	99.1	March 7, 2017
2.15	Tender and Support Agreement, dated as of March 6, 2017, by and among Hewlett Packard Enterprise Company, Nebraska Merger Sub, Inc. and each of the persons set forth on Schedule A thereto	8-K	001-37483	99.2	March 7, 2017

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Incorporated by Reference
Exhibit
Number
Exhibit Description Form File No. Exhibit(s) Filing Date
2.1
Separation and Distribution Agreement, dated as of October 31, 2015, by and among Hewlett-Packard Company, Hewlett Packard Enterprise Company and the Other Parties Thereto
8-K 001-37483 2.1 November 5, 2015
2.2
Transition Services Agreement, dated as of November 1, 2015, by and between Hewlett-Packard Company and Hewlett Packard Enterprise Company
8-K 001-37483 2.2 November 5, 2015
2.3
Tax Matters Agreement, dated as of October 31, 2015, by and between Hewlett-Packard Company and Hewlett Packard Enterprise Company
8-K 001-37483 2.3 November 5, 2015
2.4
Employee Matters Agreement, dated as of October 31, 2015, by and between Hewlett-Packard Company and Hewlett Packard Enterprise Company
8-K 001-37483 2.4 November 5, 2015
2.5
Real Estate Matters Agreement, dated as of October 31, 2015, by and between Hewlett-Packard Company and Hewlett Packard Enterprise Company
8-K 001-37483 2.5 November 5, 2015
2.6
Master Commercial Agreement, dated as of November 1, 2015, by and between Hewlett-Packard Company and Hewlett Packard Enterprise Company
8-K 001-37483 2.6 November 5, 2015
2.7
Information Technology Service Agreement, dated as of November 1, 2015, by and between Hewlett-Packard Company and HP Enterprise Services, LLC
8-K 001-37483 2.7 November 5, 2015
2.8
Agreement and Plan of Merger, dated as of May 24, 2016, among Hewlett Packard Enterprise Company, Computer Sciences Corporation, Everett SpinCo, Inc. and Everett Merger Sub, Inc.
8-K 001-37483 2.1 May 26, 2016
2.9
Separation and Distribution Agreement, dated as of May 24, 2016, between Hewlett Packard Enterprise Company and Everett SpinCo, Inc.
8-K 001-37483 2.2 May 26, 2016
2.10
Agreement and Plan of Merger, dated as of September 7, 2016, by and among Hewlett Packard Enterprise Company, Micro Focus International plc, Seattle SpinCo, Inc., Seattle Holdings, Inc. and Seattle MergerSub, Inc.
8-K 001-37483 2.1 September 7, 2016
2.11
Separation and Distribution Agreement, dated as of September 7, 2016, by and between Hewlett Packard Enterprise Company and Seattle SpinCo, Inc.
8-K 001-37483 2.2 September 7, 2016
2.12
Employee Matters Agreement, dated as of September 7, 2016, by and among Hewlett Packard Enterprise Company, Seattle SpinCo, Inc. and Micro Focus International plc
8-K 001-37483 2.3 September 7, 2016
2.13
First Amendment to the Agreement and Plan of Merger, dated as of May 24, 2016, among Hewlett Packard Enterprise Company, Computer Sciences Corporation, Everett SpinCo, Inc. and Everett Merger Sub, Inc.
8-K 001-37483 2.1 November 2, 2016
2.14
First Amendment to the Separation and Distribution Agreement, dated as of May 24, 2016, between Hewlett Packard Enterprise Company and Everett SpinCo, Inc.
8-K 001-37483 2.2 November 2, 2016
2.15
Agreement and Plan of Merger, dated as of March 6, 2017, by and among Hewlett Packard Enterprise Company, Nimble Storage, Inc. and Nebraska Merger Sub, Inc.
8-K 001-37483 99.1 March 7, 2017


2.16	Employee Matters Agreement, dated March 31, 2017, by and among Computer Sciences Corporation, Hewlett Packard Enterprise Company and Everett SpinCo, Inc.	8-K	001-38033	2.1	April 6, 2017
2.17	Tax Matters Agreement, dated March 31, 2017, by and among Computer Sciences Corporation, Hewlett Packard Enterprise Company and Everett SpinCo, Inc. (Incorporated by reference to Exhibit 2.2 to DXC Technology Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on April 6, 2017.)	8-K	001-38033	2.2	April 6, 2017
2.18	Intellectual Property Matters Agreement, dated March 31, 2017, by and among Hewlett Packard Enterprise Company, Hewlett Packard Enterprise Development LP and Everett SpinCo, Inc.	8-K	001-38033	2.3	April 6, 2017
2.19	Transition Services Agreement, dated March 31, 2017, between Hewlett Packard Enterprise Company and Everett SpinCo, Inc.	8-K	001-38033	2.4	April 6, 2017
2.20	Real Estate Matters Agreement, dated March 31, 2017, between Hewlett Packard Enterprise Company and Everett SpinCo, Inc.	8-K	001-38033	2.5	April 6, 2017
2.21	Fourth Amendment to the Separation and Distribution Agreement, dated March 31, 2017, by and between Hewlett Packard Enterprise Company and Everett SpinCo, Inc.	8-K	001-38033	2.6	April 6, 2017
2.22	Tax Matters Agreement, dated September 1, 2017, by and among Hewlett Packard Enterprise Company, Seattle SpinCo, Inc., and Micro Focus International plc	8-K	001-37483	2.1	September 1, 2017
2.23	Intellectual Property Matters Agreement, dated September 1, 2017, by and among Hewlett Packard Enterprise Company, Seattle SpinCo, Inc., and Micro Focus International plc	8-K	001-37483	2.2	September 1, 2017
2.24	Transition Services Agreement, dated September 1, 2017, by and among Hewlett Packard Enterprise Company, Seattle SpinCo, Inc., and Micro Focus International plc	8-K	001-37483	2.3	September 1, 2017
2.25	Real Estate Matters Agreement, dated September 1, 2017, by and among Hewlett Packard Enterprise Company, Seattle SpinCo, Inc., and Micro Focus International plc	8-K	001-37483	2.4	September 1, 2017
2.26	Agreement and Plan of Merger, dated as of May 16, 2019, by and among Hewlett Packard Enterprise Company, Cray Inc. and Canopy Merger Sub, Inc.	8-K	001-37483	2.1	May 17, 2019
2.27	Agreement and Plan of Merger, dated as of July 11, 2020, by and among Hewlett Packard Enterprise Company, Santorini Merger Sub, Inc., Silver Peak Systems, Inc., and certain other parties thereto	8-K	001-37483	2.1	July 13, 2020
3.1	Registrant's Amended and Restated Certificate of Incorporation	8-K	001-37483	3.1	November 5, 2015
3.2	Registrant's Amended and Restated Bylaws effective October 31, 2015	8-K	001-37483	3.2	November 5, 2015
3.3	Certificate of Designation of Series A Junior Participating Redeemable Preferred Stock	8-K	001-37483	3.1	March 20, 2017
3.4	Certificate of Designation of Series B Junior Participating Redeemable Preferred Stock	8-K	001-37483	3.2	March 20, 2017
4.1	Senior Indenture, dated as of October 9, 2015, between Hewlett Packard Enterprise Company and The Bank of New York Mellon Trust Company, N.A., as Trustee	8-K	001-37483	4.1	October 13, 2015

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2.16
Tender and Support Agreement, dated as of March 6, 2017, by and among Hewlett Packard Enterprise Company, Nebraska Merger Sub, Inc. and each of the persons set forth on Schedule A thereto
8-K 001-37483 99.2 March 7, 2017
2.17
Employee Matters Agreement, dated March 31, 2017, by and among Computer Sciences Corporation, Hewlett Packard Enterprise Company and Everett SpinCo, Inc.
8-K 001-38033 2.1 April 6, 2017
2.18
Tax Matters Agreement, dated March 31, 2017, by and among Computer Sciences Corporation, Hewlett Packard Enterprise Company and Everett SpinCo, Inc. (Incorporated by reference to Exhibit 2.2 to DXC Technology Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on April 6, 2017.)
8-K 001-38033 2.2 April 6, 2017
2.19
Intellectual Property Matters Agreement, dated March 31, 2017, by and among Hewlett Packard Enterprise Company, Hewlett Packard Enterprise Development LP and Everett SpinCo, Inc.
8-K 001-38033 2.3 April 6, 2017
2.20
Transition Services Agreement, dated March 31, 2017, between Hewlett Packard Enterprise Company and Everett SpinCo, Inc.
8-K 001-38033 2.4 April 6, 2017
2.21
Real Estate Matters Agreement, dated March 31, 2017, between Hewlett Packard Enterprise Company and Everett SpinCo, Inc.
8-K 001-38033 2.5 April 6, 2017
2.22
Fourth Amendment to the Separation and Distribution Agreement, dated March 31, 2017, by and between Hewlett Packard Enterprise Company and Everett SpinCo, Inc.
8-K 001-38033 2.6 April 6, 2017
2.23
Tax Matters Agreement, dated September 1, 2017, by and among Hewlett Packard Enterprise Company, Seattle SpinCo, Inc., and Micro Focus International plc
8-K
001-37483

2.1 September 1, 2017
2.24
Intellectual Property Matters Agreement, dated September 1, 2017, by and among Hewlett Packard Enterprise Company, Seattle SpinCo, Inc., and Micro Focus International plc
8-K
001-37483

2.2 September 1, 2017
2.25
Transition Services Agreement, dated September 1, 2017, by and among Hewlett Packard Enterprise Company, Seattle SpinCo, Inc., and Micro Focus International plc
8-K
001-37483

2.3 September 1, 2017
2.26
Real Estate Matters Agreement, dated September 1, 2017, by and among Hewlett Packard Enterprise Company, Seattle SpinCo, Inc., and Micro Focus International plc
8-K
001-37483

2.4 September 1, 2017
2.27
Agreement and Plan of Merger, dated as of May 16, 2019, by and among Hewlett Packard Enterprise Company, Cray Inc. and Canopy Merger Sub, Inc.
8-K 001-37483
2.1 May 17, 2019
3.1
Registrant's Amended and Restated Certificate of Incorporation
8-K 001-37483 3.1 November 5, 2015
3.2
Registrant's Amended and Restated Bylaws effective October 31, 2015
8-K 001-37483 3.2 November 5, 2015
3.3
Certificate of Designation of Series A Junior Participating Redeemable Preferred Stock
8-K 001-37483 3.1 March 20, 2017
3.4
Certificate of Designation of Series B Junior Participating Redeemable Preferred Stock

8-K 001-37483 3.2 March 20, 2017
4.1
Senior Indenture, dated as of October 9, 2015, between Hewlett Packard Enterprise Company and The Bank of New York Mellon Trust Company, N.A., as Trustee
8-K 001-37483 4.1 October 13, 2015


4.2	Third Supplemental Indenture, dated as of October 9, 2015, between Hewlett Packard Enterprise Company and The Bank of New York Mellon Trust Company, N.A., as Trustee, relating to Hewlett Packard Enterprise Company's 3.600% notes due 2020	8-K	001-37483	4.4	October 13, 2015
4.3	Fourth Supplemental Indenture, dated as of October 9, 2015, between Hewlett Packard Enterprise Company and The Bank of New York Mellon Trust Company, N.A., as Trustee, relating to Hewlett Packard Enterprise Company's 4.400% notes due 2022	8-K	001-37483	4.5	October 13, 2015
4.4	Fifth Supplemental Indenture, dated as of October 9, 2015, between Hewlett Packard Enterprise Company and The Bank of New York Mellon Trust Company, N.A., as Trustee, relating to Hewlett Packard Enterprise Company's 4.900% notes due 2025	8-K	001-37483	4.6	October 13, 2015
4.5	Sixth Supplemental Indenture, dated as of October 9, 2015, between Hewlett Packard Enterprise Company and The Bank of New York Mellon Trust Company, N.A., as Trustee, relating to Hewlett Packard Enterprise Company's 6.200% notes due 2035	8-K	001-37483	4.7	October 13, 2015
4.6	Seventh Supplemental Indenture, dated as of October 9, 2015, between Hewlett Packard Enterprise Company and The Bank of New York Mellon Trust Company, N.A., as Trustee, relating to Hewlett Packard Enterprise Company's 6.350% notes due 2045	8-K	001-37483	4.8	October 13, 2015
4.7	Eleventh Supplemental Indenture, dated as of September 19, 2018, between Hewlett Packard Enterprise Company and The Bank of New York Mellon Trust Company, N.A., as Trustee, relating to Hewlett Packard Enterprise Company's 3.500% notes due 2021.	8-K	001-37483	4.2	September 19, 2018
4.8	Twelfth Supplemental Indenture, dated as of September 19, 2018, between Hewlett Packard Enterprise Company and The Bank of New York Mellon Trust Company, N.A., as Trustee, relating to Hewlett Packard Enterprise Company's floating rate notes due 2021.	8-K	001-37483	4.3	September 19, 2018
4.9	Thirteenth Supplemental Indenture, dated as of September 13, 2019, between Hewlett Packard Enterprise Company and The Bank of New York Mellon Trust Company, N.A., as Trustee, relating to Hewlett Packard Enterprise Company's floating rate Notes due 2023	8-K	001-37483	4.2	September 13, 2019
4.10	Fourteenth Supplemental Indenture, dated as of September 13, 2019, between Hewlett Packard Enterprise Company and The Bank of New York Mellon Trust Company, N.A., as Trustee, relating to Hewlett Packard Enterprise Company's floating rate Notes due 2021	8-K	001-37483	4.3	September 13, 2019
4.11	Fifteenth Supplemental Indenture, dated as of April 9, 2020, between Hewlett Packard Enterprise Company and The Bank of New York Mellon Trust Company, N.A., as Trustee, relating to Hewlett Packard Enterprise Company’s 4.450% notes due 2023	8-K	001-37483	4.2	April 9, 2020
4.12	Sixteenth Supplemental Indenture, dated as of April 9, 2020, between Hewlett Packard Enterprise Company and The Bank of New York Mellon Trust Company, N.A., as Trustee, relating to Hewlett Packard Enterprise Company’s 4.650% notes due 2024	8-K	001-37483	4.3	April 9, 2020

Table of Contents

4.2
First Supplemental Indenture, dated as of October 9, 2015, between Hewlett Packard Enterprise Company and The Bank of New York Mellon Trust Company, N.A., as Trustee, relating to Hewlett Packard Enterprise Company's 2.450% notes due 2017
8-K 001-37483 4.2 October 13, 2015
4.3
Second Supplemental Indenture, dated as of October 9, 2015, between Hewlett Packard Enterprise Company and The Bank of New York Mellon Trust Company, N.A., as Trustee, relating to Hewlett Packard Enterprise Company's 2.850% notes due 2018
8-K 001-37483 4.3 October 13, 2015
4.4
Third Supplemental Indenture, dated as of October 9, 2015, between Hewlett Packard Enterprise Company and The Bank of New York Mellon Trust Company, N.A., as Trustee, relating to Hewlett Packard Enterprise Company's 3.600% notes due 2020
8-K 001-37483 4.4 October 13, 2015
4.5
Fourth Supplemental Indenture, dated as of October 9, 2015, between Hewlett Packard Enterprise Company and The Bank of New York Mellon Trust Company, N.A., as Trustee, relating to Hewlett Packard Enterprise Company's 4.400% notes due 2022
8-K 001-37483 4.5 October 13, 2015
4.6
Fifth Supplemental Indenture, dated as of October 9, 2015, between Hewlett Packard Enterprise Company and The Bank of New York Mellon Trust Company, N.A., as Trustee, relating to Hewlett Packard Enterprise Company's 4.900% notes due 2025
8-K 001-37483 4.6 October 13, 2015
4.7
Sixth Supplemental Indenture, dated as of October 9, 2015, between Hewlett Packard Enterprise Company and The Bank of New York Mellon Trust Company, N.A., as Trustee, relating to Hewlett Packard Enterprise Company's 6.200% notes due 2035
8-K 001-37483 4.7 October 13, 2015
4.8
Seventh Supplemental Indenture, dated as of October 9, 2015, between Hewlett Packard Enterprise Company and The Bank of New York Mellon Trust Company, N.A., as Trustee, relating to Hewlett Packard Enterprise Company's 6.350% notes due 2045
8-K 001-37483 4.8 October 13, 2015
4.9
Eighth Supplemental Indenture, dated as of October 9, 2015, between Hewlett Packard Enterprise Company and The Bank of New York Mellon Trust Company, N.A., as Trustee, relating to Hewlett Packard Enterprise Company's floating rate notes due 2017
8-K 001-37483 4.9 October 13, 2015
4.10
Ninth Supplemental Indenture, dated as of October 9, 2015, between Hewlett Packard Enterprise Company and The Bank of New York Mellon Trust Company, N.A., as Trustee, relating to Hewlett Packard Enterprise Company's floating rate notes due 2018
8-K 001-37483 4.10 October 13, 2015
4.11
Guarantee Agreement, dated as of October 9, 2015, between Hewlett-Packard Company, Hewlett Packard Enterprise Company and The Bank of New York Mellon Trust Company, N.A., as Trustee, in favor of the holders of the Notes
8-K 001-37483 4.11 October 13, 2015
4.12
Registration Rights Agreement, dated as of October 9, 2015, among Hewlett Packard Enterprise Company, Hewlett-Packard Company, and the representatives of the initial purchasers of the Notes
8-K 001-37483 4.12 October 13, 2015
4.13
Eighth Supplemental Indenture, dated as of November 1, 2015, among Hewlett Packard Enterprise Company, HP Enterprise Services, LLC and the Bank of New York Mellon Trust Company, N.A., as Trustee, relating to HP Enterprise Services LLC's 7.45% Senior Notes due October 2029
10-K 001-04423 4.13 December 17, 2015


4.13	Seventeenth Supplemental Indenture, dated as of July 17, 2020, between Hewlett Packard Enterprise Company and The Bank of New York Mellon Trust Company, N.A., as Trustee, relating to Hewlett Packard Enterprise Company’s 1.450% notes due 2024	8-K	001-37483	4.2	July 17, 2020
4.14	Eighteenth Supplemental Indenture, dated as of July 17, 2020, between Hewlett Packard Enterprise Company and The Bank of New York Mellon Trust Company, N.A., as Trustee, relating to Hewlett Packard Enterprise Company’s 1.750% notes due 2026	8-K	001-37483	4.3	July 17, 2020
4.15	Registration Rights Agreement, dated as of October 9, 2015, among Hewlett Packard Enterprise Company, Hewlett-Packard Company, and the representatives of the initial purchasers of the Notes	8-K	001-37483	4.12	October 13, 2015
4.16	Form of Indenture between Hewlett Packard Enterprise Company and The Bank of New York Mellon Trust Company, N.A.	S-3ASR	333-222102	4.5	December 15, 2017
10.1	Amended and Restated Hewlett Packard Enterprise Company 2015 Stock Incentive Plan*	8-K	001-37483	10.1	January 30, 2017
10.2	Hewlett Packard Enterprise Company Severance and Long-Term Incentive Change in Control Plan for Executive Officers*	10	001-37483	10.4	September 28, 2015
10.3	Hewlett Packard Enterprise Executive Deferred Compensation Plan*	S-8	333-207679	4.3	October 30, 2015
10.4	Hewlett Packard Enterprise Grandfathered Executive Deferred Compensation Plan*	S-8	333-207679	4.4	October 30, 2015
10.5	Form of Non-Qualified Stock Option Grant Agreement*	8-K	001-37483	10.4	November 5, 2015
10.6	Form of Restricted Stock Unit Launch Grant Agreement*	8-K	001-37483	10.7	November 5, 2015
10.7	Form of Performance-Contingent Non-Qualified Stock Option Launch Grant Agreement*	8-K	001-37483	10.8	November 5, 2015
10.8	Form of Non-Employee Director Stock Options Grant Agreement*	8-K	001-37483	10.9	November 5, 2015
10.9	Form of Non-Employee Director Restricted Stock Unit Grant Agreement*	8-K	001-37483	10.10	November 5, 2015
10.10	Form of Restricted Stock Units Grant Agreement, as amended and restated effective January 1, 2016*	10-Q	001-37483	10.14	March 10, 2016
10.11	Form of Performance-Adjusted Restricted Stock Unit Agreement, as amended and restated effective January 1, 2016*	10-Q	001-37483	10.15	March 10, 2016
10.12	Description of Amendment to Equity Awards (incorporated by reference to Item 5.02 of the 8-K filed on May 26, 2016)*	8-K	001-37483	10.1	May 26, 2016
10.13	Niara, Inc. 2013 Equity Incentive Plan*	S-8	333-207679	4.3	March 6, 2017
10.14	Nimble Storage, Inc. 2008 Equity Incentive Plan*	S-8	333-217349	4.3	April 18, 2017
10.15	Nimble Storage, Inc. 2013 Equity Incentive Plan*	S-8	333-217349	4.4	April 18, 2017
10.16	SimpliVity Corporation 2009 Stock Plan*	S-8	333-217438	4.3	April 24, 2017
10.17	Silicon Graphics International Corp. 2014 Omnibus Incentive Plan, as amended*	10-Q	000-51333	10.1	January 29, 2016
10.18	Silicon Graphics International Corp. 2006 New Recruit Equity Incentive Plan, as amended and restated*	10-K	000-51333	10.48	February 28, 2007
10.19	Silicon Graphics International Corp. 2005 Equity Incentive Plan, as amended*	10-K	000-51333	10.3	September 10, 2012
10.20	Silicon Graphics International Corp. 2005 Non-Employee Directors’ Stock Option*	S-1	000-51333	10.10	February 4, 2005
10.21	Cloud Technology Partners, Inc. 2011 Equity Incentive Plan*	S-8	333-221254	4.3	November 1, 2017

Table of Contents

4.14
Term Loan Agreement, dated as of December 16, 2016, by and among Everett SpinCo, Inc., the lenders and arrangers party thereto and The Bank of Tokyo-Mitsubishi UFJ, Ltd., as administrative agent
8-K
001-37483

10.1
December 22, 2016

4.15
Tenth Supplemental Indenture, dated as of September 20, 2017, between Hewlett Packard Enterprise Company and The Bank of New York Mellon Trust Company, N.A., as Trustee, relating to Hewlett Packard Enterprise Company’s 2.100% notes due 2019
8-K
001-37483

4.1 September 20, 2017
4.16
Form of Indenture between Hewlett Packard Enterprise Company and The Bank of New York Mellon Trust Company, N.A.
S-3ASR 333-222102 4.5 December 15, 2017
4.17
Eleventh Supplemental Indenture, dated as of September 19, 2018, between Hewlett Packard Enterprise Company and The Bank of New York Mellon Trust Company, N.A., as Trustee, relating to Hewlett Packard Enterprise Company's 3.500% notes due 2021.
8-K 001-37483 4.2 September 19, 2018
4.18
Twelfth Supplemental Indenture, dated as of September 19, 2018, between Hewlett Packard Enterprise Company and The Bank of New York Mellon Trust Company, N.A., as Trustee, relating to Hewlett Packard Enterprise Company's floating rate notes due 2021.
8-K 001-37483 4.3 September 19, 2018
10.1
Amended and Restated Hewlett Packard Enterprise Company 2015 Stock Incentive Plan*
8-K 001-37483 10.1 January 30, 2017
10.2
Hewlett Packard Enterprise Company Severance and Long-Term Incentive Change in Control Plan for Executive Officers*
10 001-37483 10.4 September 28, 2015
10.3
Hewlett Packard Enterprise Executive Deferred Compensation Plan*
S-8 333-207679 4.3 October 30, 2015
10.4
Hewlett Packard Enterprise Grandfathered Executive Deferred Compensation Plan*
S-8 333-207679 4.4 October 30, 2015
10.5
Form of Non-Qualified Stock Option Grant Agreement*
8-K 001-37483 10.4 November 5, 2015
10.6
Form of Restricted Stock Unit Launch Grant Agreement*
8-K 001-37483 10.7 November 5, 2015
10.7
Form of Performance-Contingent Non-Qualified Stock Option Launch Grant Agreement*
8-K 001-37483 10.8 November 5, 2015
10.8
Form of Non-Employee Director Stock Options Grant Agreement*
8-K 001-37483 10.9 November 5, 2015
10.9
Form of Non-Employee Director Restricted Stock Unit Grant Agreement*
8-K 001-37483 10.10 November 5, 2015
10.10
Credit Agreement, dated as of November 1, 2015, by and among Hewlett Packard Enterprise Company, JPMorgan Chase Bank, N.A., Citibank, N.A., and the other parties thereto
8-K 001-37483 10.1 November 5, 2015
10.11
Form of Restricted Stock Units Grant Agreement, as amended and restated effective January 1, 2016*
10-Q 001-37483 10.14 March 10, 2016
10.12
Form of Performance-Adjusted Restricted Stock Unit Agreement, as amended and restated effective January 1, 2016*
10-Q 001-37483 10.15 March 10, 2016
10.13
Description of Amendment to Equity Awards (incorporated by reference to Item 5.02 of the 8-K filed on May 26, 2016)*
8-K 001-37483 10.1 May 26, 2016
10.14
Niara, Inc. 2013 Equity Incentive Plan*
S-8 333-207679 4.3 March 6, 2017
10.15
Nimble Storage, Inc. 2008 Equity Incentive Plan*
S-8 001-37483 4.3 April 18, 2017
10.16
Nimble Storage, Inc. 2013 Equity Incentive Plan*
S-8 001-37483 4.4 April 18, 2017
10.17
SimpliVity Corporation 2009 Stock Plan*
S-8 001-37483 4.3 April 24, 2017


10.22	Amendment to the Cloud Technology Partners, Inc. 2011 Equity Incentive Plan*	S-8	333-221254	4.4	November 1, 2017
10.23	Plexxi Inc. 2011 Stock Plan*	S-8	333-226181	4.3	July 16, 2018
10.24	Amended and Restated Hewlett Packard Enterprise Company 2015 Employee Stock Purchase Plan*	10-Q	001-37483	10.29	September, 4, 2018
10.25	Form of Restricted Stock Units Grant Agreement*	10-Q	001-37483	10.30	September, 4, 2018
10.26	Amendment to Hewlett Packard Enterprise Executive Deferred Compensation Plan*	10-Q	001-37483	10.27	December 12, 2018
10.27	First Amendment to the Hewlett Packard Enterprise Company Severance and Long-Term Incentive Change in Control Plan for Executive Officers*	10-Q	001-37483	10.29	December 12, 2018
10.28	BlueData Software Inc. 2012 Stock Incentive Plan*	S-8	333-229449	4.3	January 31, 2019
10.29	Five-Year Credit Agreement, dated as of August 16, 2019, by and among Hewlett Packard Enterprise Company, the lenders party thereto, JPMorgan Chase Bank, N.A., as Administrative Processing Agent and Co-Administrative Agent and Citibank, N.A., as Co-Administrative Agent.	8-K	001-37483	10.1	August 20, 2019
10.30	Cray Inc. Amended and Restated 2013 Equity Incentive Plan	S-8	333-234033	4.3	October 1, 2019
10.31	Termination and Mutual Release Agreement dated as of October 30, 2019 by and between Hewlett Packard Enterprise Company and HP Inc.	10-K	001-37483	10.31	December 13, 2019
10.32	Aircraft Time Sharing Agreement, dated as of December 13, 2019, by and between Hewlett Packard Enterprise Company and Antonio Neri*	10-Q	001-37483	10.32	March 9, 2020
31.1	Certification of Chief Executive Officer pursuant to Rule 13a- 14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended‡
31.2	Certification of Chief Financial Officer pursuant to Rule 13a- 14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended‡
32	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002†
101.INS	XBRL Instance Document‡
101.SCH	XBRL Taxonomy Extension Schema Document‡
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document‡
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document‡
101.LAB	XBRL Taxonomy Extension Label Linkbase Document‡
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document‡

* Indicates management contract or compensation plan, contract or arrangement

‡ Filed herewith

10.18
Silicon Graphics International Corp. 2014 Omnibus Incentive Plan, as amended*
10-Q 000-51333 10.1 January 29, 2016
10.19
Silicon Graphics International Corp. 2006 New Recruit Equity Incentive Plan, as amended and restated*
10-K 000-51333 10.48 February 28, 2007
10.20
Silicon Graphics International Corp. 2005 Equity Incentive Plan, as amended*
10-K 000-51333 10.3 September 10, 2012
10.21
Silicon Graphics International Corp. 2005 Non-Employee Directors’ Stock Option*
S-1 000-51333 10.10 February 4, 2005
10.22
Cloud Technology Partners, Inc. 2011 Equity Incentive Plan*
S-8 333-221254 4.3 October 31, 2017
10.23
Amendment to the Cloud Technology Partners, Inc. 2011 Equity Incentive Plan*
S-8 333-221254 4.4 October 31, 2017
10.24
Plexxi Inc. 2011 Stock Plan*
S-8 333-226181 4.3 July 16, 2018
10.25
Amended and Restated Hewlett Packard Enterprise Company 2015 Employee Stock Purchase Plan*
10-Q 001-37483 10.29 September, 4, 2018
10.26
Form of Restricted Stock Units Grant Agreement*
10-Q 001-37483 10.30 September, 4, 2018
10.27
Amendment to Hewlett Packard Enterprise Executive Deferred Compensation Plan*
10-Q 001-37483 10.27 December 12, 2018
10.28
Philip Davis Retention Incentive Agreement *
10-Q 001-37483 10.28 December 12, 2018
10.29
First Amendment to the Hewlett Packard Enterprise Company Severance and Long-Term Incentive Change in Control Plan for Executive Officers*
10-Q 001-37483 10.29 December 12, 2018
10.30
BlueData Software Inc. 2012 Stock Incentive Plan*
S-8 333-229449 4.3 January 31, 2019
10.31
Five-Year Credit Agreement, dated as of August 16, 2019, by and among Hewlett Packard Enterprise Company, the lenders party thereto, JPMorgan Chase Bank, N.A., as Administrative Processing Agent and Co-Administrative Agent and Citibank, N.A., as Co-Administrative Agent.
8-K 001-37483 10.1 August 20, 2019
31.1
Certification of Chief Executive Officer pursuant to Rule 13a- 14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended‡

31.2
Certification of Chief Financial Officer pursuant to Rule 13a- 14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended‡

32
Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002†

101.INS XBRL Instance Document‡
101.SCH XBRL Taxonomy Extension Schema Document‡
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document‡
101.DEF XBRL Taxonomy Extension Definition Linkbase Document‡
101.LAB XBRL Taxonomy Extension Label Linkbase Document‡
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document‡
† Furnished herewith


*	~~Indicates management contract or compensation plan, contract or arrangement~~


‡	~~Filed herewith~~


†	~~Furnished herewith~~

The registrant agrees to furnish to the Commission supplementally upon request a copy of (1) any instrument with respect to long-term debt not filed herewith as to which the total amount of securities authorized thereunder does not exceed

10% of the total assets of the registrant and its subsidiaries on a consolidated basis and (ii) schedules or exhibits omitted pursuant to Item 601(b)(2) of Regulation S-K of any material plan of acquisition, disposition or reorganization set forth above.

Table of Contents

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



						HEWLETT PACKARD ENTERPRISE COMPANY
						/s/ TAREK A. ROBBIATI
						Tarek A. Robbiati Executive Vice President and Chief Financial Officer (Principal Financial Officer and Authorized Signatory)

Date: ~~August 30, 2019~~

September 3, 2020



~~Delaware~~		~~47-3298624~~
~~(State or other jurisdiction of~~ ~~incorporation or organization)~~		~~(I.R.S. employer~~ ~~identification no.)~~



~~6280 America Center Drive,~~Delaware	~~San Jose,~~	~~California~~	~~95002~~47-3298624
(~~Address~~State or other jurisdiction of ~~principal executive offices)~~ incorporation or organization)		(~~Zip code)~~
~~(650)~~	~~687-5817~~
~~(Registrant's telephone number, including area code)~~I.R.S. employer identification no.)



		Page
Condensed Consolidated Statements of Earnings for the three and nine months ended July ~~31,~~ 3 1 , 2020 and 2019 ~~and 2018~~ (Unaudited)		6

Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended July ~~31,~~ 3 1 , 2020 and 2019 ~~and 2018~~ (Unaudited)		7

Condensed Consolidated Balance Sheets as of July ~~31, 2019~~ 3 1 , 2020 (Unaudited) and October 31, ~~2018~~2019 (Audited)		8

Condensed Consolidated Statements of Cash Flows for the nine months ended July ~~31,~~ 3 1 , 2020 and 2019 ~~and 2018~~ (Unaudited)		9

Condensed Consolidated Statements of Stockholders' Equity for the three and nine months ended July ~~31,~~ 3 1 , 2020 and 2019 ~~and 2018~~ (Unaudited)		10

Notes to Condensed Consolidated Financial Statements (Unaudited)		13

Note 1: Overview and Summary of Significant Accounting Policies		13

Note 2: Segment Information		1916

Note 3: ~~Restructuring~~T r a nsformation Programs		2320

Note 4: ~~HPE Next~~Retirement Benefit Plans		2422

Note 5: ~~Retirement and Post-Retirement Benefit Plans~~Taxes on Earnings		2522

Note 6: ~~Taxes on Earnings~~Balance Sheet Details		2624

Note 7: ~~Balance Sheet Details~~Accounting for Leases as a Lessee		2725

Note 8: ~~Financing Receivables and Operating~~Accounting for Leases as a Lessor		3028

Note 9: Goodwill		3233

Note 10: Fair Value		3234

Note 11: Financial Instruments		3436

Note 12: Borrowings		3839

Note 13: Stockholders' Equity		3941

Note 14: Net Earnings Per Share		4043

Note 15: Litigation and Contingencies		4143

~~Note 16: Indemnifications~~	44



	As of
	July 31, 2019			October 31, 2018
	In millions, except par value
ASSETS
Current assets:
Cash and cash equivalents	$	3,693		$	4,880
Accounts receivable, net of allowance for doubtful accounts	2,965			3,263
Financing receivables	3,567			3,396
Inventory	2,216			2,447
Assets held for sale	52			6
Other current assets	2,624			3,280
Total current assets	15,117			17,272
Property, plant and equipment	6,000			6,138
Long-term financing receivables and other assets	9,092			11,359
Investments in equity interests	2,346			2,398
Goodwill	17,587			17,537
Intangible assets	618			789
Total assets	$	50,760		$	55,493
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable and short-term borrowings	$	2,207		$	2,005
Accounts payable	5,203			6,092
Employee compensation and benefits	1,454			1,412
Taxes on earnings	160			378
Deferred revenue	3,225			3,177
Accrued restructuring	223			294
Other accrued liabilities	4,686			3,840
Total current liabilities	17,158			17,198
Long-term debt	10,453			10,136
Other non-current liabilities	5,569			6,885
Commitments and contingencies
Stockholders' equity
HPE stockholders' equity:
Preferred stock, $0.01 par value (300 shares authorized; none issued and outstanding at July 31, 2019)	—			—
Common stock, $0.01 par value (9,600 shares authorized; 1,310 and 1,423 shares issued and outstanding at July 31, 2019 and October 31, 2018, respectively)	13			14
Additional paid-in capital	28,629			30,342
Accumulated deficit	(7,959		)	(5,899		)
Accumulated other comprehensive loss	(3,150		)	(3,218		)
Total HPE stockholders' equity	17,533			21,239
Non-controlling interests	47			35
Total stockholders' equity	17,580			21,274
Total liabilities and stockholders' equity	$	50,760		$	55,493



	Nine Months Ended July 31,
	2019			2018
	In millions
Cash flows from operating activities:
Net earnings	$	569		$	2,665
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	1,919			1,931
Stock-based compensation expense	207			242
Provision for inventory and doubtful accounts	181			137
Restructuring charges	146			399
Deferred taxes on earnings	885			(1,215		)
Earnings from equity interests	(21		)	(23		)
Dividends received from equity investees	71			47
Other, net	134			55
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable	315			137
Financing receivables	(325		)	(228		)
Inventory	66			(545		)
Accounts payable	(826		)	72
Taxes on earnings	(1,121		)	(2,271		)
Restructuring	(261		)	(540		)
Other assets and liabilities	626			775
Net cash provided by operating activities	2,565			1,638
Cash flows from investing activities:
Investment in property, plant and equipment	(2,153		)	(2,129		)
Proceeds from sale of property, plant and equipment	448			561
Purchases of available-for-sale securities and other investments	(33		)	(32		)
Maturities and sales of available-for-sale securities and other investments	12			96
Financial collateral posted	(332		)	(1,396		)
Financial collateral returned	740			1,454
Payments made in connection with business acquisitions, net of cash acquired	(81		)	(207		)
Proceeds from business divestitures, net	—			13
Net cash used in investing activities	(1,399		)	(1,640		)
Cash flows from financing activities:
Short-term borrowings with original maturities less than 90 days, net	25			84
Proceeds from debt, net of issuance costs	1,010			894
Payment of debt	(872		)	(2,538		)
Net proceeds related to stock-based award activities	24			104
Repurchase of common stock	(1,965		)	(2,585		)
Net transfer of cash and cash equivalents to Everett	—			(41		)
Net transfer of cash and cash equivalents from Seattle	—			156
Cash dividends paid to non-controlling interests	—			(9		)
Cash dividends paid	(461		)	(406		)
Net cash used in financing activities	(2,239		)	(4,341		)
Decrease in cash, cash equivalents and restricted cash	(1,073		)	(4,343		)
Cash, cash equivalents and restricted cash at beginning of period	5,084			9,592
Cash, cash equivalents and restricted cash at end of period	$	4,011		$	5,249



(Mark One)
☒						QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


For the quarterly period ended:	July 31, 2020

~~For the quarterly period ended:~~Or		~~July 31, 2019~~

Or


	Common Stock
Three Months Ended July 31, 2020	Number of Shares	Par Value		Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Equity Attributable to the Company		Non- controlling Interests		Total Equity
	In millions, except number of shares in thousands
Balance at April 30, 2020	1,282,253	$	13	$	28,207	$	(8,385)	$	(3,625)	$	16,210	$	48	$	16,258
Net earnings						9				9		3		12
Other comprehensive loss								(131)		(131)				(131)
Comprehensive (loss) income										(122)		3		(119)
Stock-based compensation expense				55						55				55
Tax withholding related to vesting of employee stock plans				(7)						(7)				(7)
Issuance of common stock in connection with employee stock plans and other	3,753			20		(1)				19				19


Balance at July 31, 2020	1,286,006	$	13	$	28,275	$	(8,377)	$	(3,756)	$	16,155	$	51	$	16,206



	Common Stock
Three Months Ended July 31, 2018	Number of Shares		Par Value			Additional Paid-in Capital			Accumulated Deficit			Accumulated Other Comprehensive Loss			Equity Attributable to the Company			Non- controlling Interests		Total Equity
	In millions, except number of shares in thousands
Balance at April 30, 2018	1,527,381		$	15		$	32,205		$	(5,306	)	$	(2,982	)	$	23,932		$	34	$	23,966
Activity related to separation and merger transactions									(1		)				(1		)			(1		)
Net earnings									451						451			2		453
Other comprehensive income												76			76					76
Comprehensive income															527			2		529
Issuance of common stock in connection with employee stock plans and other	13,711		1			10									11					11
Repurchases of common stock	(58,655	)	(1		)	(934		)							(935		)			(935		)
Cash dividends declared									(165		)				(165		)			(165		)
Stock-based compensation expense						57									57					57
Balance at July 31, 2018	1,482,437		$	15		$	31,338		$	(5,021	)	$	(2,906	)	$	23,426		$	36	$	23,462



	Common Stock
Nine Months Ended July 31, 2018	Number of Shares		Par Value			Additional Paid-in Capital			Accumulated Deficit			Accumulated Other Comprehensive Loss			Equity Attributable to the Company			Non- controlling Interests			Total Equity
	In millions, except number of shares in thousands
Balance at October 31, 2017	1,595,161		$	16		$	33,583		$	(7,238	)	$	(2,895	)	$	23,466		$	39		$	23,505
Activity related to separation and merger transactions									125			(186		)	(61		)				(61		)
Net earnings									2,665						2,665			(3		)	2,662
Other comprehensive income												175			175						175
Comprehensive income															2,840			(3		)	2,837
Issuance of common stock in connection with employee stock plans and other	47,491		1			73									74						74
Repurchases of common stock	(160,215	)	(2		)	(2,583		)							(2,585		)				(2,585		)
Cash dividends declared									(573		)				(573		)				(573		)
Stock-based compensation expense						265									265						265
Balance at July 31, 2018	1,482,437		$	15		$	31,338		$	(5,021	)	$	(2,906	)	$	23,426		$	36		$	23,462



	Three Months Ended July 31, 2018			Nine Months Ended July 31, 2018
	In millions
Cost of products and services	$	(14	)	$	(42	)
Research and development	(1		)	(3		)
Selling, general and administrative	(19		)	(53		)
Restructuring charges and transformation costs	8			8
	$	(26	)	$	(90	)



	Historical Accounting Method			Effect of Adoption			As Adjusted
	In millions
Assets
Accounts receivable	$	3,263		$	38		$	3,301
Inventory	2,447			(14)			2,433
Other current assets	3,280			50			3,330
Long-term financing receivables and other assets	11,359			44			11,403
Subtotal assets	$	20,349		$	118		$	20,467
Liabilities
Taxes on earnings	$	378		$	10		$	388
Deferred revenue	3,177			(36)			3,141
Other accrued liabilities⁽¹⁾	3,840			52			3,892
Other non-current liabilities	6,885			(30)			6,855
Subtotal liabilities	$	14,280		$	(4	)	$	14,276
Stockholders' equity
Accumulated deficit⁽¹⁾	$	(5,899	)	$	122		$	(5,777	)
Subtotal stockholders' equity	$	(5,899	)	$	122		$	(5,777	)
Subtotal liabilities and stockholders' equity	$	8,381		$	118		$	8,499



	Hybrid IT		Intelligent Edge		Financial Services		Corporate Investments			Total
	In millions
Three months ended July 31, 2019
Net revenue	$	5,444	$	758	$	885	$	130		$	7,217
Intersegment net revenue and other	105		4		3		—			112
Total segment net revenue	$	5,549	$	762	$	888	$	130		$	7,329
Segment earnings (loss) from operations	$	704	$	37	$	77	$	(25	)	$	793
Three months ended July 31, 2018
Net revenue	$	5,925	$	783	$	922	$	134		$	7,764
Intersegment net revenue and other	184		2		6		—			192
Total segment net revenue	$	6,109	$	785	$	928	$	134		$	7,956
Segment earnings (loss) from operations	$	624	$	101	$	72	$	(25	)	$	772
Nine months ended July 31, 2019
Net revenue	$	16,745	$	2,107	$	2,695	$	373		$	21,920
Intersegment net revenue and other	410		7		8		—			425
Total segment net revenue	$	17,155	$	2,114	$	2,703	$	373		$	22,345
Segment earnings (loss) from operations	$	2,024	$	66	$	231	$	(82	)	$	2,239
Nine months ended July 31, 2018
Net revenue	$	17,649	$	2,132	$	2,721	$	404		$	22,906
Intersegment net revenue and other	511		15		11		—			537
Total segment net revenue	$	18,160	$	2,147	$	2,732	$	404		$	23,443
Segment earnings (loss) from operations	$	1,787	$	191	$	215	$	(79	)	$	2,114



	2015 Plan						2012 Plan
	Employee Severance			Infrastructure and other			Employee Severance and EER			Infrastructure and other		Total
	In millions
Liability as of October 31, 2018	$	62		$	10		$	11		$	1	$	84
Cash payments	(25		)	(2		)	(5		)	—		(32		)
Liability as of July 31, 2019	$	37		$	8		$	6		$	1	$	52
Total costs incurred to date, as of July 31, 2019	$	751		$	78		$	1,268		$	145	$	2,242
Total costs expected to be incurred, as of July 31, 2019	$	751		$	78		$	1,268		$	145	$	2,242



	Nine Months Ended July 31, 2019
	In millions
Balance at beginning of period	$	430
Accruals for warranties issued	178
Adjustments related to pre-existing warranties	6
Settlements made	(212		)
Balance at end of period	$	402


	Balance Sheet Classification	As of July 31, 2020
		In millions
Operating Leases
ROU Assets	Long-term financing receivables and other assets	$	977
Lease Liabilities:
Operating lease liabilities – current	Other accrued liabilities	$	187
Operating lease liabilities – non-current	Other non-current liabilities	902
Total operating lease liabilities		$	1,089

Finance Leases
Finance lease ROU Assets:	Property, plant and equipment
Gross finance lease ROU assets		$	52
Less: Accumulated depreciation		(3)
Net finance lease ROU assets		$	49
Lease Liabilities:
Finance lease liabilities – current	Notes payable and short-term borrowings	$	4
Finance lease liabilities – non-current	Long-term debt	54
Total finance lease liabilities		$	58

Total ROU assets		$	1,026
Total lease liabilities		$	1,147


	As of July 31, 2020
	Operating Leases		Finance Leases
Weighted-average remaining lease term (in years)	7.1		9.8
Weighted-average discount rate	2.7	%	3.5	%


	Cash Flow Statement Activity	Nine Months Ended July 31, 2020
		In millions
Cash outflows from operating leases	Net cash used in operating activities	$	178

ROU assets obtained in exchange for new operating lease liabilities	Non-cash activities	$	214


~~(1)~~	The Company includes the current portion in Financing receivables, and amounts due after one year, net in Long-term financing receivables and other assets, in the accompanying Condensed Consolidated Balance Sheets.


~~(1)~~	~~Includes billed operating lease receivables and billed and unbilled sales-type and direct-financing lease receivables.~~


~~(1)~~	As a result of the organizational realignments effective during the first quarter of fiscal 2019, which are described in detail in Note 2, "Segment Information", goodwill was reclassified to the respective segments as of the beginning of the period using a relative fair value approach.


~~(2)~~	Goodwill is net of an accumulated impairment loss of $88 million related to the Corporate Investments segment which was recorded during the fourth quarter of fiscal 2018. There is no remaining goodwill in the Corporate Investments segment.


~~(3)~~	~~Goodwill acquired in connection with the acquisition of BlueData.~~



	As of July 31, 2019								As of October 31, 2018
	Fair Value Measured Using								Fair Value Measured Using
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
	In millions
Assets
Cash Equivalents and Investments:
Time deposits	$	—	$	908	$	—	$	908	$	—	$	781	$	—	$	781
Money market funds	609		—		—		609		2,340		—		—		2,340
Foreign bonds	7		125		—		132		7		124		—		131
Other debt securities	—		1		32		33		—		—		25		25
Derivative Instruments:
Interest rate contracts	—		20		—		20		—		—		—		—
Foreign exchange contracts	—		467		—		467		—		496		—		496
Total assets	$	616	$	1,521	$	32	$	2,169	$	2,347	$	1,401	$	25	$	3,773
Liabilities
Derivative Instruments:
Interest rate contracts	$	—	$	32	$	—	$	32	$	—	$	353	$	—	$	353
Foreign exchange contracts	—		116		—		116		—		117		—		117
Other derivatives	—		1		—		1		—		6		—		6
Total liabilities	$	—	$	149	$	—	$	149	$	—	$	476	$	—	$	476



	As of July 31, 2019								As of October 31, 2018
	Cost		Gross Unrealized Gain		Gross Unrealized Loss		Fair Value		Cost		Gross Unrealized Gain		Gross Unrealized Loss			Fair Value
	In millions
Cash Equivalents:
Time deposits	$	908	$	—	$	—	$	908	$	781	$	—	$	—		$	781
Money market funds	609		—		—		609		2,340		—		—			2,340
Total cash equivalents	1,517		—		—		1,517		3,121		—		—			3,121
Available-for-Sale Investments:
Foreign bonds	110		22		—		132		113		18		—			131
Other debt securities	33		—		—		33		26		—		(1		)	25
Total available-for-sale investments	143		22		—		165		139		18		(1		)	156
Total cash equivalents and available-for-sale debt investments	$	1,660	$	22	$	—	$	1,682	$	3,260	$	18	$	(1	)	$	3,277



	July 31, 2019
	Amortized Cost		Fair Value
	In millions
Due in one to five years	$	10	$	10
Due in more than five years	133		155
	$	143	$	165



	Gains (Losses) Recognized in Earnings on Derivative and Related Hedged Item
Derivative Instrument	Location	Three months ended July 31, 2019		Nine months ended July 31, 2019		Hedged Item	Location	Three months ended July 31, 2019			Nine months ended July 31, 2019
		In millions						In millions
Interest rate contracts	Interest and other, net	$	123	$	341	Fixed-rate debt	Interest and other, net	$	(123	)	$	(341	)



	Gains (Losses) Recognized in Other Comprehensive Income ("OCI") on Derivatives (Effective Portion)						Gains (Losses) Reclassified from Accumulated OCI Into Earnings (Effective Portion)
	Three months ended July 31, 2019			Nine months ended July 31, 2019			Location	Three months ended July 31, 2019		Nine months ended July 31, 2019
	In millions							In millions
Cash flow hedges:
Foreign currency contracts	$	43		$	102		Net revenue	$	42	$	168
Foreign currency contracts	20			123			Interest and other, net	16		91
Total cash flow hedges	$	63		$	225		Net earnings from continuing operations	$	58	$	259
Net investment hedges:
Foreign currency contracts	$	(18	)	$	(23	)	Interest and other, net	$	—	$	—



	HPE Consolidated			Hybrid IT			Intelligent Edge			Financial Services			Corporate Investments
	Dollars in millions, except for per share amounts
Net revenue⁽¹⁾	$	7,217		$	5,549		$	762		$	888		$	130
Year-over-year change %		(7.0	)%		(9.2	)%		(2.9	)%		(4.3	)%		(3.0	)%
(Loss) earnings from continuing operations⁽²⁾	$	(76	)	$	704		$	37		$	77		$	(25	)
(Loss) earnings from continuing operations as a % of net revenue		(1.1	)%		12.7	%		4.9	%		8.7	%		(19.2	)%
Year-over-year change percentage points		(7.4	)pts		2.5	pts		(8.0	)pts		0.9	pts		(0.5	)pts
Net loss from continuing operations	$	(27	)
Net (loss) earnings per share
Basic net EPS from continuing operations	$	(0.02	)
Diluted net EPS from continuing operations	$	(0.02	)



	Three months ended July 31,
	Net Revenue				Weighted Net Revenue Change Percentage Points
	2019		2018		2019
	Dollars in millions
Compute	$	3,151	$	3,569	(6.9	)
Storage	844		887		(0.7	)
Hybrid IT Product	3,995		4,456		(7.6	)
HPE Pointnext	1,554		1,653		(1.6	)
Total Hybrid IT	$	5,549	$	6,109	(9.2	)



	Three months ended July 31,
	Net Revenue				Weighted Net Revenue Change Percentage Points
	2019		2018		2019
	Dollars in millions
HPE Aruba Product	$	668	$	703	(4.6	)
HPE Aruba Services	94		82		1.7
Total Intelligent Edge	$	762	$	785	(2.9	)



	As of July 31, 2019
	In millions
Commercial paper programs	$	4,329
Uncommitted lines of credit	$	1,350



Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet Be Purchased under the Plans or Programs
	In thousands, except per share amounts
Month 1 (May 2019)	13,596	$	15.00	13,596	$	3,121,327
Month 2 (June 2019)	12,744	$	14.36	12,744	$	2,938,371
Month 3 (July 2019)	12,752	$	14.87	12,752	$	2,748,772
Total	39,092	$	14.75	39,092



4.2	First Supplemental Indenture, dated as of October 9, 2015, between Hewlett Packard Enterprise Company and The Bank of New York Mellon Trust Company, N.A., as Trustee, relating to Hewlett Packard Enterprise Company's 2.450% notes due 2017	8-K	001-37483	4.2	October 13, 2015
4.3	Second Supplemental Indenture, dated as of October 9, 2015, between Hewlett Packard Enterprise Company and The Bank of New York Mellon Trust Company, N.A., as Trustee, relating to Hewlett Packard Enterprise Company's 2.850% notes due 2018	8-K	001-37483	4.3	October 13, 2015
4.4	Third Supplemental Indenture, dated as of October 9, 2015, between Hewlett Packard Enterprise Company and The Bank of New York Mellon Trust Company, N.A., as Trustee, relating to Hewlett Packard Enterprise Company's 3.600% notes due 2020	8-K	001-37483	4.4	October 13, 2015
4.5	Fourth Supplemental Indenture, dated as of October 9, 2015, between Hewlett Packard Enterprise Company and The Bank of New York Mellon Trust Company, N.A., as Trustee, relating to Hewlett Packard Enterprise Company's 4.400% notes due 2022	8-K	001-37483	4.5	October 13, 2015
4.6	Fifth Supplemental Indenture, dated as of October 9, 2015, between Hewlett Packard Enterprise Company and The Bank of New York Mellon Trust Company, N.A., as Trustee, relating to Hewlett Packard Enterprise Company's 4.900% notes due 2025	8-K	001-37483	4.6	October 13, 2015
4.7	Sixth Supplemental Indenture, dated as of October 9, 2015, between Hewlett Packard Enterprise Company and The Bank of New York Mellon Trust Company, N.A., as Trustee, relating to Hewlett Packard Enterprise Company's 6.200% notes due 2035	8-K	001-37483	4.7	October 13, 2015
4.8	Seventh Supplemental Indenture, dated as of October 9, 2015, between Hewlett Packard Enterprise Company and The Bank of New York Mellon Trust Company, N.A., as Trustee, relating to Hewlett Packard Enterprise Company's 6.350% notes due 2045	8-K	001-37483	4.8	October 13, 2015
4.9	Eighth Supplemental Indenture, dated as of October 9, 2015, between Hewlett Packard Enterprise Company and The Bank of New York Mellon Trust Company, N.A., as Trustee, relating to Hewlett Packard Enterprise Company's floating rate notes due 2017	8-K	001-37483	4.9	October 13, 2015
4.10	Ninth Supplemental Indenture, dated as of October 9, 2015, between Hewlett Packard Enterprise Company and The Bank of New York Mellon Trust Company, N.A., as Trustee, relating to Hewlett Packard Enterprise Company's floating rate notes due 2018	8-K	001-37483	4.10	October 13, 2015
4.11	Guarantee Agreement, dated as of October 9, 2015, between Hewlett-Packard Company, Hewlett Packard Enterprise Company and The Bank of New York Mellon Trust Company, N.A., as Trustee, in favor of the holders of the Notes	8-K	001-37483	4.11	October 13, 2015
4.12	Registration Rights Agreement, dated as of October 9, 2015, among Hewlett Packard Enterprise Company, Hewlett-Packard Company, and the representatives of the initial purchasers of the Notes	8-K	001-37483	4.12	October 13, 2015
4.13	Eighth Supplemental Indenture, dated as of November 1, 2015, among Hewlett Packard Enterprise Company, HP Enterprise Services, LLC and the Bank of New York Mellon Trust Company, N.A., as Trustee, relating to HP Enterprise Services LLC's 7.45% Senior Notes due October 2029	10-K	001-04423	4.13	December 17, 2015



4.14	Term Loan Agreement, dated as of December 16, 2016, by and among Everett SpinCo, Inc., the lenders and arrangers party thereto and The Bank of Tokyo-Mitsubishi UFJ, Ltd., as administrative agent	8-K	001-37483	10.1	December 22, 2016
4.15	Tenth Supplemental Indenture, dated as of September 20, 2017, between Hewlett Packard Enterprise Company and The Bank of New York Mellon Trust Company, N.A., as Trustee, relating to Hewlett Packard Enterprise Company’s 2.100% notes due 2019	8-K	001-37483	4.1	September 20, 2017
4.16	Form of Indenture between Hewlett Packard Enterprise Company and The Bank of New York Mellon Trust Company, N.A.	S-3ASR	333-222102	4.5	December 15, 2017
4.17	Eleventh Supplemental Indenture, dated as of September 19, 2018, between Hewlett Packard Enterprise Company and The Bank of New York Mellon Trust Company, N.A., as Trustee, relating to Hewlett Packard Enterprise Company's 3.500% notes due 2021.	8-K	001-37483	4.2	September 19, 2018
4.18	Twelfth Supplemental Indenture, dated as of September 19, 2018, between Hewlett Packard Enterprise Company and The Bank of New York Mellon Trust Company, N.A., as Trustee, relating to Hewlett Packard Enterprise Company's floating rate notes due 2021.	8-K	001-37483	4.3	September 19, 2018
10.1	Amended and Restated Hewlett Packard Enterprise Company 2015 Stock Incentive Plan*	8-K	001-37483	10.1	January 30, 2017
10.2	Hewlett Packard Enterprise Company Severance and Long-Term Incentive Change in Control Plan for Executive Officers*	10	001-37483	10.4	September 28, 2015
10.3	Hewlett Packard Enterprise Executive Deferred Compensation Plan*	S-8	333-207679	4.3	October 30, 2015
10.4	Hewlett Packard Enterprise Grandfathered Executive Deferred Compensation Plan*	S-8	333-207679	4.4	October 30, 2015
10.5	Form of Non-Qualified Stock Option Grant Agreement*	8-K	001-37483	10.4	November 5, 2015
10.6	Form of Restricted Stock Unit Launch Grant Agreement*	8-K	001-37483	10.7	November 5, 2015
10.7	Form of Performance-Contingent Non-Qualified Stock Option Launch Grant Agreement*	8-K	001-37483	10.8	November 5, 2015
10.8	Form of Non-Employee Director Stock Options Grant Agreement*	8-K	001-37483	10.9	November 5, 2015
10.9	Form of Non-Employee Director Restricted Stock Unit Grant Agreement*	8-K	001-37483	10.10	November 5, 2015
10.10	Credit Agreement, dated as of November 1, 2015, by and among Hewlett Packard Enterprise Company, JPMorgan Chase Bank, N.A., Citibank, N.A., and the other parties thereto	8-K	001-37483	10.1	November 5, 2015
10.11	Form of Restricted Stock Units Grant Agreement, as amended and restated effective January 1, 2016*	10-Q	001-37483	10.14	March 10, 2016
10.12	Form of Performance-Adjusted Restricted Stock Unit Agreement, as amended and restated effective January 1, 2016*	10-Q	001-37483	10.15	March 10, 2016
10.13	Description of Amendment to Equity Awards (incorporated by reference to Item 5.02 of the 8-K filed on May 26, 2016)*	8-K	001-37483	10.1	May 26, 2016
10.14	Niara, Inc. 2013 Equity Incentive Plan*	S-8	333-207679	4.3	March 6, 2017
10.15	Nimble Storage, Inc. 2008 Equity Incentive Plan*	S-8	001-37483	4.3	April 18, 2017
10.16	Nimble Storage, Inc. 2013 Equity Incentive Plan*	S-8	001-37483	4.4	April 18, 2017
10.17	SimpliVity Corporation 2009 Stock Plan*	S-8	001-37483	4.3	April 24, 2017